-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AaPBkHOcz+VPljx5q+c4OKFD9UU3K7/tj+OCaml2oS1maXwz7kY+BE9sWr3EPDPl gSOsacV/DD0a0xDIwMN8bw== 0001183740-07-000257.txt : 20070731 0001183740-07-000257.hdr.sgml : 20070731 20070511195234 ACCESSION NUMBER: 0001183740-07-000257 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20070514 DATE AS OF CHANGE: 20070615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: URANIUM ENERGY CORP CENTRAL INDEX KEY: 0001334933 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] IRS NUMBER: 980399476 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-140722 FILM NUMBER: 07843801 BUSINESS ADDRESS: STREET 1: 9801 ANDERSON MILL ROAD CITY: AUSTIN STATE: TX ZIP: 78750 BUSINESS PHONE: 512-721-1022 MAIL ADDRESS: STREET 1: 9801 ANDERSON MILL ROAD CITY: AUSTIN STATE: TX ZIP: 78750 SB-2/A 1 sb2a2.htm SB2A2

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

Amendment No. 2 to
FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

URANIUM ENERGY CORP.

(Exact name of registrant as specified in charter)

NEVADA
(State or jurisdiction of incorporation or organization)

1090
(Primary Standard Industrial Classification Code Number)

98-0399476
(I.R.S. Employer Identification No.)

9801 Anderson Mill Road, Suite 230, Austin, Texas, U.S.A., 78750
Telephone: (512) 828-6980

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

AMIR ADNANI
President, Chief Executive Officer, Principal Executive Officer and a director
9801 Anderson Mill Road, Suite 230, Austin, Texas, U.S.A., 78750

Telephone: (512) 828-6980

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copy to:
Thomas J. Deutsch, Esq.
LANG MICHENER LLP
1500 Royal Centre, 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7
Telephone: (604) 689-9111 and Facsimile: (604) 685-7084

Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement is declared effective.

If any securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registrations statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities
to be Registered(1)

Amount to be Registered(2)

Proposed Maximum Offering Price Per Share(3)

Proposed Maximum Aggregate Offering Price(3)

Amount of
Registration Fee(4)

Shares of common stock, par value $0.001 per share

2,800,000 shares(5)

$5.85

$16,380,000

$1,752.66

Shares of common stock, par value $0.001 per share, underlying common stock purchase warrants

1,400,000 shares(6)

$5.85

$8,190,000

$876.33

Shares of common stock, par value $0.001 per share

2,400,000 shares(7)

$5.85

$14,040,000

$1,502.28

Shares of common stock, par value $0.001 per share, underlying common stock purchase warrants

1,200,000 shares(8)

$5.85

$7,020,000

$751.14

Shares of common stock, par value $0.001 per share

200,000 shares(9)

$5.85

$1,170,000

$125.19

Shares of common stock, par value $0.001 per share, underlying common stock purchase warrants

100,000 shares(10)

$5.85

$585,000

$62.60

Totals:

8,100,000 shares

 

$47,385,000

$5,070.20


  1. In the event of a stock split, stock dividend or similar transaction involving the common shares of the Registrant, in order to prevent dilution, the number of shares of common stock registered shall be automatically increased to cover additional shares in accordance with Rule 416(a) under the United States Securities Act of 1933, as amended (the "Securities Act").
  2. Includes shares of our common stock, par value $0.001 per share, currently owned by the selling shareholders (each a "Selling Shareholder") and shares of common stock which are issuable upon the exercise of the warrants held by the Selling Shareholders, all of which may be offered pursuant to this registration statement. In addition to the shares set forth in the table, the amount to be registered includes an indeterminate number of shares issuable upon the exercise of the warrants as such number may be adjusted as a result of stock splits, stock dividends and similar transactions in accordance with Rule 416 of the Securities Act.
  3. The Proposed Maximum Offering Price per Share is calculated in accordance with Rule 457(c) and Rule 457(g) of the Securities Act, based upon the last reported bid and ask price for our common stock on the OTC Bulletin Board on February 9, 2007. The Proposed Aggregate Maximum Aggregate Offering Price is based on the Proposed Maximum Offering Price Per Share times the total number of shares of common stock to be registered. These amounts are estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) and Rule 457(g) of the Securities Act.
  4. The fee is calculated in accordance with Rule 457(c) and Rule 457(g) of the Securities Act. We have based the fee calculation on the average of the last reported bid and ask price for our common stock on the OTC Bulletin Board on February 9, 2007.
  5. On December 13, 2006, we issued an aggregate of 2,800,000 units (each an "December 13, 2006 Unit"), at a price of $2.50 per December 13, 2006 Unit, with each December 13, 2006 Unit consisting of one share of common stock and one-half of one common stock purchase warrant (each a "December 13, 2006 Warrant"), to certain of the Selling Shareholders named herein (collectively, the "December 13, 2006 Private Placement"). These 2,800,000 shares of common stock represent the shares of common stock issued in connection with the issuance of the December 13, 2006 Units.
  6. These 1,400,000 shares of common stock represent the 1,400,000 shares of common stock issuable upon exercise of the December 13, 2006 Warrants Each whole December 13, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share. The December 13, 2006 Warrants are exercisable commencing on a date that is at least 61 days after the Selling Shareholder delivers a written notice to the Company and ending on the day which is the earlier of (i) 18 months from December 13, 2006 and (ii) nine months commencing from the effective date of the Company's proposed registration statement related to the December 13, 2006 Private Placement.
  7. On December 22, 2006, we issued an aggregate of 2,400,000 units (each a "December 22, 2006 Unit"), at a price of $2.50 per December 22, 2006 Unit, with each December 22, 2006 Unit consisting of one share of common stock and one-half of one common stock purchase warrant (each a "December 22, 2006 Warrant"), to certain of the Selling Shareholders named herein (collectively, the "December 22, 2006 Private Placement"). These 2,400,000 shares of common stock represent the 2,400,000 shares of common stock issued in connection with the issuance of the December 22, 2006 Units.
  8. These 1,200,000 shares of common stock represent the 1,200,000 shares of common stock issuable upon exercise of the December 22, 2006 Warrants. Each whole December 22, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the Company's proposed registration statement related to the December 22, 2006 Private Placement.
  9. On January 3, 2007, we issued an aggregate of 200,000 Units (each a "January 3, 2007 Unit"), at a price of $2.50 per January 3, 2007 Unit, with each January 3, 2007 Unit consisting of one share of common stock and one common stock purchase warrant (each a "January 3, 2007 Warrant"), to certain of the Selling Shareholders named herein (collectively, the "January 3, 2007 Private Placement"). These 200,000 shares of commons stock represent the 200,000 shares of common stock issued in connection with the issuance of the January 3, 2007 Units.
  10. These 100,000 shares of common stock represent the 100,000 shares of common stock issuable upon exercise of the January 3, 2007 Warrants. Each whole January 3, 2007 Warrant entitles the holder to purchase one-half of one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the Company's proposed registration statement related to the January 3, 2007 Private Placement.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

ii


SUBJECT TO COMPLETION, DATED MAY 11, 2007

PROSPECTUS

URANIUM ENERGY CORP.

OFFERING OF 8,100,000 SHARES OF COMMON STOCK

This prospectus relates to the offering of 5,400,000 shares of our common stock by the selling shareholders (each a "Selling Shareholder") named in this prospectus under the heading "Selling Shareholders". In addition, this prospectus relates to the offering of 2,700,000 shares issuable upon the exercise of certain outstanding warrants to acquire shares of our common stock by the Selling Shareholders. These shares include the following shares, all as described in this prospectus under "Selling Shareholders":

  1. the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 2,800,000 shares of our common stock issued on December 13, 2006 pursuant to a private placement (the "December 13, 2006 Private Placement");
  2. the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 2,400,000 shares of our common stock issued on December 22, 2006 pursuant to a private placement (the "December 22, 2006 Private Placement");
  3. the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 200,000 shares of our common stock issued January 3, 2007 pursuant to a private placement (the "January 3, 2007 Private Placement");
  4. the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 1,400,000 shares of our common stock issuable upon the exercise of 1,400,000 common stock purchase warrants issued pursuant to the December 13, 2006 Private Placement;
  5. the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 1,200,000 shares of our common stock issuable upon the exercise of 1,200,000 common stock purchase warrants issued pursuant to the December 22, 2006 Private Placement; and
  6. the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 100,000 shares of our common stock issuable upon the exercise of 100,000 common stock purchase warrants issued pursuant to the January 3, 2007 Private Placement.

We will not receive any proceeds from the sale of shares by the Selling Shareholders. However, we will receive proceeds upon the exercise of any common stock purchase warrants that may be exercised by the Selling Shareholders. If all of the warrants are exercised we will receive proceeds in an amount of $8,100,000.

Our common stock is registered under Section 12(g) of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is quoted on the NASD Over-the-Counter Bulletin Board (the "OTCBB") under the symbol "URME.OB". The last reported sales price per share of our common stock as reported by the OTCBB on May 10, 2007, was $5.10.

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

The purchase of the securities offered through this prospectus involves a high degree of risk. You should carefully read and consider the section of this prospectus titled "Risk Factors" beginning on page 6 before buying any of our shares of common stock.

The information in this prospectus is not complete and may be changed. The Selling Shareholders may not sell or offer these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offence.

The date of this prospectus is u , 2007

1


The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus.

TABLE OF CONTENTS

Item

Page No.

ABOUT THIS PROSPECTUS

4

REFERENCES

4

PROSPECTUS SUMMARY

5

RISK FACTORS

9

 

Risks Related to Our Business

10

   

We will require significant additional financing in order to continue our exploration activities and our assessment of the commercial viability of our mineral properties.

10

   

As our mineral properties do not contain any reserves or any known body of economic mineralization, we may not discover commercially exploitable quantities of ore on our mineral properties that would enable us to enter into commercial production, achieve revenues and recover the money we spends on exploration.

10

   

Our exploration activities on our mineral properties may not be successful, which could lead us to abandon our plans to develop the property and its investments in exploration.

10

   

Our business is difficult to evaluate because we have a limited operating history.

11

   

We have a history of operating losses and there can be no assurances we will be profitable in the future.

11

   

We will require additional funding in the future.

11

   

As part of our growth strategy, we intend to acquire additional minerals exploration properties.

11

   

We are a new entrant into the uranium minerals exploration industry without profitable operating history.

12

   

The risks associated with exploration and, if applicable, mining could cause personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability.

12

   

The uranium exploration industry is highly competitive and there is no assurance that we will be successful in acquiring the leases.

12

   

The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable.

12

   

Uranium mining operations are subject to comprehensive regulation, which may cause substantial delays or require capital outlays in excess of those anticipated, causing an adverse effect on our business operations.

13

   

Uranium minerals exploration and development and mining activities are subject to certain environmental regulations, which may prevent or delay the commencement or continuance of our operations.

13

   

Any change in government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

13

   

We may be unable to retain key employees or consultants or recruit additional qualified personnel.

14

   

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

14

   

Nevada law and our articles of incorporation may protect our directors from certain types of lawsuits.

14

 

Risks Related to Our Common Stock

14

   

Sales of a substantial number of shares of our common stock into the public market by certain stockholders may result in significant downward pressure on the price of our common stock and could affect your ability to realize the current trading price of our common stock.

14

   

The trading price of our common stock on the OTC Bulletin Board has been and may continue to fluctuate significantly and stockholders may have difficulty reselling their shares.

15

   

One of our shareholders may exercise voting power of more than 8.0% of our common stock.

15

   

Additional issuances of equity securities may result in dilution to our existing stockholders. Our Articles of Incorporation authorize the issuance of 750,000,000 shares of common stock.

15

   

Our common stock is classified as a "penny stock" under SEC rules which limits the market for our common stock.

15

   

A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

16

   

A majority of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.

16

2


FORWARD-LOOKING STATEMENTS

16

USE OF PROCEEDS

16

SELLING SHAREHOLDERS

17

PLAN OF DISTRIBUTION

21

LEGAL PROCEEDINGS

23

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

23

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

25

DESCRIPTION OF SECURITIES

27

EXPERTS

28

INTERESTS OF NAMED EXPERTS AND COUNSEL

28

DISCLOSURE OF SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

28

ORGANIZATION SINCE INCORPORATION

28

DESCRIPTION OF BUSINESS AND PROPERTIES

28

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

45

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

53

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER INFORMATION

59

EXECUTIVE COMPENSATION

62

WHERE YOU CAN FIND MORE INFORMATION

64

FINANCIAL STATEMENTS

64

 

__________

 

3


ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission. The registration statement containing this prospectus, including the exhibits to the registration statement, also contains additional information about Uranium Energy Corp. and the securities offered under this prospectus. That registration statement can be read at the Securities and Exchange Commission's website (located at www.sec.gov) or at the Securities and Exchange Commission's Public Reference Room mentioned under the heading "Where You Can Find More Information" of this prospectus.

You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document. Our business, financial condition or results of operations may have changed since that date.

REFERENCES

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

On January 24, 2004, we completed a reverse stock split of our shares of common stock on the basis of one share for each two outstanding shares. On February 28, 2006, we completed a forward split of our shares of common stock on the basis of 1.5 shares for each outstanding share of our common stock. All share amounts in this prospectus reflect the reverse and subsequent forward split of our shares, unless otherwise indicated.

__________

4


PROSPECTUS SUMMARY

The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements and the notes to the financial statements.

The Company

We are a natural resource exploration company engaged in the exploration of properties that may contain uranium minerals in the United States. Our strategy is to acquire properties that are thought to be prospective for uranium exploration and have undergone some degree of uranium exploration but have not yet been mined. To date, we have acquired interests in 45,748.49 gross acres of leased or staked mineral properties, consisting of claim blocks located in the States of Arizona, Colorado, Utah, New Mexico, Wyoming and Texas that have been either leased or staked, which we intend to explore for economic deposits of uranium. These leases are also subject to 5.0% to 15.25% net royalty interests. Each of these properties has been the subject of historical exploration by other mining companies, and provides indications that further exploration for uranium is warranted. Our view that our properties are prospective for mineral exploration is based on prior exploration conducted by other comp anies, or management information and work product derived from various reports, maps, radioactive rock samples, exploratory drill logs, state organization reports, consultants, geological study, and other exploratory information.

We also have access to historical exploration data consisting chiefly of drill hole assay results, drill hole logs, studies, publicly published works, our own created work product, and maps, that help guide our property acquisition strategy. We plan to use this exploration data as the basis for formulating the exploration programs that we plan to undertake on our properties.

The acreage and location of our mineral properties is summarized as follows:

 

Gross Acres

Net Acres(*)

Arizona

2,231.28

2,231.28

Colorado

4,338.60

4,338.60

New Mexico

25,616.76

18,723.26

Texas

4,491.81

4,223.80

Utah

2,226.94

2,226.94

Wyoming (**)

6,843.10

6,843.10

Total:

45,748.49

38,586.98

(*)       Certain of our interests in our mineral properties in Texas and New Mexico are less than 100%. Accordingly, we have presented the acreage of our mineral properties on a net acre basis.

(**)       Does not include the AB Claim Group (847 acres) in the State of Wyoming as the related lease agreement has been terminated.

Our principal mineral property is the Weesatche project in Goliad County, Texas.

We plan to use our database of exploration data in order to target additional exploration properties for acquisition. In 2007, we have plans to acquire further acres of mineral properties consisting of further claim blocks located in, but not limited to the states of New Mexico, Texas and Wyoming. Our ability to complete these acquisitions will be subject to our obtaining sufficient financing and our being able to conclude agreements with the property owners on terms that are acceptable to us. Other mineral property acquisitions are contemplated in the states of interest that include Arizona, Colorado, and Utah. These potential acquisition properties have not yet been specifically identified.

5


Our properties do not have any reserves. We plan to conduct exploration programs on these properties with the objective of ascertaining whether any of our properties contain economic concentrations of uranium that are prospective for mining. As such, we are considered an exploration or exploratory stage company. Since we are an exploration stage company, there is no assurance that a commercially viable mineral deposit exists on any of our properties, and a great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of uranium or any other type of mineral. Since inception, we have not established any proven or probable reserves on our mineral property interests.

We were incorporated under the laws of the State of Nevada on May 16, 2003 under the name "Carlin Gold Inc." During 2004, we changed our business operations and focus from precious metals exploration in the State of Nevada to the exploration for economic reserves of uranium throughout the United States. On January 24, 2005, we filed an amendment to our articles of incorporation changing our name to "Uranium Energy Corp.".

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

Our executive offices are located at 9801 Anderson Mill Road, Suite 230, Austin, Texas, U.S.A., 78750, and our telephone number is (512) 828 6980.

The Offering

The Issuer:

Uranium Energy Corp.

The Selling Shareholders:

The selling shareholders (each a "Selling Shareholder") are comprised of our existing shareholders who:

  • on December 13, 2006 purchased an aggregate of 2,800,000 Units (each a "December 13, 2006 Unit"), at a price of $2.50 per December 13, 2006 Unit, by way of the December 13, 2006 Private Placement, with each December 13, 2006 Unit consisting of one share of common stock and one-half of one common stock purchase warrant (each a "December 13, 2006 Warrant")
  • on December 22, 2006 purchased an aggregate of 2,400,000 units (each a "December 22, 2006 Unit"), at a price of $2.50 per December 22, 2006 Unit, by way of the December 22, 2006 Private Placement, with each December 22, 2006 Unit consisting of one share of common stock and one-half of one common stock purchase warrant (each a "December 22, 2006 Warrant"); and
  • On January 3, 2007 purchased an aggregate of 200,000 units (each a "January 3, 2007 Unit"), at a price of $2.50 per January 3, 2007 Unit, by way of the January 3, 2007 Private Placement, with each January 3, 2007 Unit consisting of one share of common stock and one-half of one common stock purchase warrant (each a "January 3, 2007 Warrant").

The Selling Shareholders are named in this prospectus under "Selling Shareholders".

6


Shares Offered by the Selling Shareholders:

The Selling Shareholders are offering up to an aggregate of 8,100,000 shares of our common stock comprised of:

  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 2,800,000 shares of our common stock issued on December 13, 2006 pursuant to the December 13, 2006 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 2,400,000 shares of our common stock issued on December 22, 2006 pursuant to the December 22, 2006 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 200,000 shares of our common stock issued on January 3, 2007 pursuant to the January 3, 2007 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 1,400,000 shares of our common stock issuable upon the exercise of the 1,400,000 December 13, 2006 Warrants issued pursuant to the December 13, 2006 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 1,200,000 shares of our common stock issuable upon the exercise of the 1,200,000 December 22, 2006 Warrants issued pursuant to the December 22, 2006 Private Placement; and
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 100,000 shares of our common stock issuable upon the exercise of the 100,000 January 3, 2007 Warrants issued pursuant to the January 3, 2007 Private Placement.

Offering Price:

The Selling Shareholders may, from time to time, sell any or all of their shares of common stock offered by this prospectus on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed prices, at prevailing market prices, at prices related to prevailing market prices, at varying prices or at negotiated prices. The shares may be sold directly or through agents or broker-dealers acting as agents on behalf of the Selling Shareholders. We will pay substantially all the expenses relating to the registration of the shares offered by this prospectus, except for sales commissions and other fees applicable to sales of the shares. See "Plan of Distribution" for a description of the methods of distribution.

Use of Proceeds:

We will not receive any of the proceeds from the sale of shares by the Selling Shareholders. However, we will receive proceeds upon the exercise of any common stock purchase warrants that may be exercised by the Selling Shareholders. If all of the warrants are exercised we will receive proceeds in an amount of $8,100,000. The proceeds, if any, would be used for general corporate purposes including, in order of priority, acquisition costs, exploration expenses and working capital.

7


Market for our Common Stock:

Our common stock is quoted on the OTC Bulletin Board under the symbol "URME.OB". The last report sale price for our shares on the OTC Bulletin Board on May 10, 2007 was $5.10 per share.

Outstanding Shares of Common Stock:

There were 37,317,088 shares of our common stock issued and outstanding as at May 10, 2007. If all warrants offered hereby are exercised, then there would be 40,017,088 shares of our common stock issued and outstanding.

Risk Factors:

See "Risk Factors" and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in our securities.

This prospectus relates to the offer of 5,400,000 shares of our common stock by the Selling Shareholders named in this prospectus under the heading "Selling Shareholders". We will not receive any proceeds from the sale of the currently outstanding common stock by the Selling Shareholders. In addition, this prospectus relates to the offer of 2,700,000 shares issuable upon the exercise of certain outstanding warrants to acquire shares of our common stock by the Selling Shareholders. These shares include the following shares, all as described in this prospectus under "Selling Shareholders":

On December 13, 2006, we issued an aggregate of 2,800,000 December 13, 2006 Units, at a price of $2.50 per December 13, 2006 Unit, with each December 13, 2006 Unit consisting of one share of common stock and one-half of one December 13, 2006 Warrant, to certain of the Selling Shareholders named herein by way of the December 13, 2006 Private Placement. Each whole December 13, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share. The December 13, 2006 Warrants are exercisable commencing on a date that is at least 61 days after the Selling Stockholder delivers a written notice to the Company and ending on the day which is the earlier of (i) 18 months from December 13, 2006 and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered represents the 2,800,000 shares of common stock issued in connection with the issua nce of the December 13, 2006 Units and the 1,400,000 shares of common stock issuable upon exercise of the December 13, 2006 Warrants. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the December 13, 2006 Warrants in the December 13, 2006 Private Placement.

On December 22, 2006, we issued an aggregate of 2,400,000 December 22, 2006 Units, at a price of $2.50 per December 22, 2006 Unit, with each December 22, 2006 Unit consisting of one share of common stock and one-half of one December 22, 2006 Warrant, to certain of the Selling Shareholders named herein by way of the December 22, 2006 Private Placement. Each whole December 22, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered represents the 2,400,000 shares of common stock issued in connection with the issuance of the December 22, 2006 Units and the 1,200,000 shares of common stock issuable upon exercise of the December 22, 2006 Warrants. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the December 22, 2006 Warrants in the December 22, 2006 Private Placement. We agreed to have the registration statement declared effective within four months from the date of the issuance of the December 22, 2006 Units and, in the event that the registration statement is not declared effective by that date, to issue additional warrants to acquire shares in the capital of the Company equal to one one-hundredth of a warrant for each U.S. $1.00 in aggregate funds paid by each subscriber for the December 22, 2006 Units for each 30 calendar day period (or partial period thereof) during which the registration statement has not been declared effective, after the expiry of the four month period.

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On January 3, 2007, we issued an aggregate of 200,000 January 3, 2007 Units, at a price of $2.50 per January 3, 2007 Unit, with each January 3, 2007 Unit consisting of one share of common stock and one-half of one January 3, 2007 Warrant, to certain of the Selling Shareholders named herein by way of the January 3, 2007 Private Placement. Each whole January 3, 2007 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered represents the 200,000 shares of common stock issued in connection with the issuance of the January 3, 2007 Units and the 100,000 shares of common stock issuable upon exercise of the January 3, 2007 Warrants. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the January 3, 2007 Warrants in the January 3, 2007 Private Placement.

Summary of Financial Data

The following consolidated financial data has been derived from and should be read in conjunction with (i) our audited financial statements for the years ended December 31, 2006 and 2005, together with the notes to these financial statements; and (ii) the section of this prospectus entitled "Management's Discussion and Analysis or Plan of Operations", included elsewhere herein.

Balance Sheet Data

 

As at December 31, 2006

 

As at December 31, 2005

 

(Audited)

 

(Audited)

Cash and cash equivalents

$13,581,377

 

$107,160

Working capital (deficiency)

13,460,648

 

(215,828)

Total assets

14,197,695

 

107,460

Total liabilities

532,043

 

323,288

Total stockholders' equity (deficiency)

13,665,652

 

(215,828)

Statement of Operations Data

 

Fiscal Year Ended December 31, 2006

Fiscal Year Ended December 31, 2005

For the Period From
May 16, 2003 (inception) to December 31, 2006

 

(Audited)

(Audited)

(Audited)

Operating expenses

$14,924,525

$1,998,805

$17,075,986

Net loss

14,818,318

1,998,805

16,969,779

Net loss per share

0.56

0.12

--

RISK FACTORS

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below may not be all of the risks facing our company. Additional risks not presently known to us or that we currently consider immaterial may also impair our business operations. You could lose all or part of your investment due to any of these risks.

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Risks Related to Our Business

We will require significant additional financing in order to continue our exploration activities and our assessment of the commercial viability of our mineral properties.

We will need to raise additional financing to complete further exploration of our mineral properties. Furthermore, if the costs of our planned exploration programs are greater than anticipated, we may have to seek additional funds through public or private share offerings or arrangements with corporate partners. There can be no assurance that we will be successful in our efforts to raise these require funds, or on terms satisfactory to us. The continued exploration of our mineral properties and the development of our business will depend upon our ability to establish the commercial viability of our mineral properties and to ultimately develop cash flow from operations and reach profitable operations. We currently are in the exploration stage and we have no revenue from operations and we are experiencing significant negative cash flow. Accordingly, the only other sources of funds presently available to us are through the sale of equity. We presently believe that debt financing will not be an alternative to us as all of our properties are in the exploration stage. Alternatively, we may finance our business by offering an interest in our mineral properties to be earned by another party or parties carrying out further exploration thereof or to obtain project or operating financing from financial institutions, neither of which is presently intended. If we are unable to obtain this additional financing, we will not be able to continue our exploration activities and our assessment of the commercial viability of our mineral properties.

As our mineral properties do not contain any reserves or any known body of economic mineralization, we may not discover commercially exploitable quantities of ore on our mineral properties that would enable us to enter into commercial production, achieve revenues and recover the money we spends on exploration.

Our properties do not contain reserves in accordance with the definitions adopted by the SEC and there is no assurance that any exploration programs that we carry out will establish reserves. All of our mineral properties are in the exploration stage as opposed to the development stage and have no known body of economic mineralization. The known mineralization at these projects has not yet been determined to be economic ore, and may never be determined to be economic. We plan to conduct further exploration activities on our mineral properties, which future exploration may include the completion of feasibility studies necessary to evaluate whether a commercial mineable orebody exists on any of our mineral properties. There is a substantial risk that these exploration activities will not result in discoveries of commercially recoverable quantities of ore. Any determination that our properties contain commercially recoverable quantities of ore may not be reached until such time that f inal comprehensive feasibility studies have been concluded that establish that a potential mine is likely to be economic. There is a substantial risk that any preliminary or final feasibility studies carried out by us will not result in a positive determination that our mineral properties can be commercially developed.

Our exploration activities on our mineral properties may not be successful, which could lead us to abandon our plans to develop the property and its investments in exploration.

We are an exploration stage company and have not as yet established any reserves on our properties. Our long-term success depends on our ability to establish commercially recoverable quantities of ore on our mineral properties that can then be developed into commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate machinery, equipment or labor. The success of uranium exploration is determined in part by the following factors:

  • identification of potential uranium mineralization based on superficial analysis;
  • availability of government-granted exploration permits;
  • the quality of management and geological and technical expertise; and
  • the capital available for exploration.

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Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes to extract metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit will be established or determined to be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. We may invest significant capital and resources in exploration activities and abandon such investments if we are unable to identify commercially exploitable mineral reserves. The decision to abandon a project may reduce the trading price of our common st ock and impair our ability to raise future financing. We cannot provide any assurance to investors that we will discover any mineralized material in sufficient quantities on any of our properties to justify commercial operations. Further, we will not be able to recover the funds that we spend on exploration if we are not able to establish commercially recoverable quantities of ore on our mineral properties.

Our business is difficult to evaluate because we have a limited operating history.

In considering whether to invest in our common stock, you should consider that our inception was May 16, 2003 and, as a result, there is only limited historical financial and operating information available on which to base your evaluation of our performance.

We have a history of operating losses and there can be no assurances we will be profitable in the future.

We have a history of operating losses, expect to continue to incur losses, and may never be profitable, and we must be considered to be in the exploration stage. Further, we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred losses totalling approximately $16,969,779 from May 16, 2003 (inception) to December 31, 2006. As of December 31, 2006, we had an accumulated deficit of $16,969,779 and incurred net losses totalling approximately $14,818,318 during fiscal year ended December 31, 2006. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: (i) the costs to acquire additional uranium exploration claims are more than we currently anticipate; (ii) exploration costs for additional claims increase beyond our expectations; or (iii) we encounte r greater costs associated with general and administrative expenses or offering costs.

Our participation in an increasingly larger number of uranium minerals exploration prospects has required and will continue to require substantial capital expenditures. The uncertainty and factors described throughout this section may impede our ability to economically discover uranium prospects. As a result, we may not be able to achieve or sustain profitability or positive cash flows from operating activities in the future.

We will require additional funding in the future.

Based upon our historical losses from operations, we will require additional funding in the future. If we cannot obtain capital through financings or otherwise, our ability to execute our exploration programs will be greatly limited. Our current plans require us to make capital expenditures for the exploration of our minerals exploration properties. Historically, we have funded our operations through the issuance of equity and short-term debt financing arrangements. We may not be able to obtain additional financing on favorable terms, if at all. Our future cash flows and the availability of financing will be subject to a number of variables, including the market prices of uranium. Further, debt financing could lead to a diversion of cash flow to satisfy debt-servicing obligations and create restrictions on business operations. If we are unable to raise additional funds, it would have a material adverse effect upon our operations.

As part of our growth strategy, we intend to acquire additional minerals exploration properties.

Such acquisitions may pose substantial risks to our business, financial condition, and results of operations. In pursuing acquisitions, we will compete with other companies, many of which have greater financial and other resources to acquire attractive properties. Even if we are successful in acquiring additional properties, some of the properties may not produce positive results of exploration, or we may not complete exploration of such prospects within specified time periods may cause the forfeiture of the lease in that prospect. There can be no assurance that we will be able to successfully integrate acquired properties, which could result in substantial costs and delays or other operational, technical, or financial problems. Further, acquisitions could disrupt ongoing business operations. If any of these events occur, it would have a material adverse effect upon our operations and results from operations.

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We are a new entrant into the uranium minerals exploration industry without profitable operating history.

Since inception, our activities have been limited to organizational efforts, obtaining working capital and acquiring and exploring a very limited number of properties. As a result, there is limited information upon which to base our future success.

The business of minerals exploration is subject to many risks and uncertainties, including those described in this section, and if uranium is found in economic quantities, the profitability of future uranium mining ventures depends upon factors beyond our control. The profitability of mining uranium properties if economic quantities of Uranium are found is dependent upon many factors and risks beyond our control, including, but not limited to: (i) unanticipated ground and water conditions and adverse claims to water rights; (ii) geological problems; (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) accidents; (vii) delays in the receipt of or failure to receive necessary government permits; (viii) delays in transportation; (ix) labor disputes; (x) government permit restrictions and regulation restrictions; (xi) unavailability of materials and equipment; a nd (xii) the failure of equipment or processes to operate in accordance with specifications or expectations.

The risks associated with exploration and, if applicable, mining could cause personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability.

We are not currently engaged in mining operations because we are in the exploration phase and have not yet any proved uranium reserves. We carry some property and liability insurance. Cost effective insurance contains exclusions and limitations on coverage and may be unavailable in some circumstances.

The uranium exploration industry is highly competitive and there is no assurance that we will be successful in acquiring the leases.

The uranium exploration industry is intensely competitive, and we compete with other companies that have greater resources. Many of these companies not only explore for and produce uranium, but also market uranium and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive uranium properties and exploratory prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In addition, these companies may have a greater ability to continue exploration activities during periods of low uranium market prices. Our larger competitors may be able to absorb the burden of present and future federal, state, local and other laws and regulations more easily than we can, which would adversely affect our competitive position. Our ability to acquire additional properties and to explore them in the future will be dependent upon our ability to evaluate and select su itable properties and to consummate transactions in a highly competitive environment. In addition, because we have fewer financial and human resources than many companies in our industry, we may be at a disadvantage in bidding for exploratory prospects.

The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable.

The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include macroeconomic factors, market fluctuations in commodity pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of uranium and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable.

12


 

Uranium mining operations are subject to comprehensive regulation, which may cause substantial delays or require capital outlays in excess of those anticipated, causing an adverse effect on our business operations.

If economic quantities of uranium are found on any lease owned by us in sufficient quantities to warrant uranium mining operations, such mining operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Uranium mining operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods and equipment. Various permits from government bodies are required for mining operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus resulting in an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend material amounts on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain our operations.

Uranium minerals exploration and development and mining activities are subject to certain environmental regulations, which may prevent or delay the commencement or continuance of our operations.

Uranium minerals exploration and development and future potential uranium mining operations are or will be subject to stringent federal, state, provincial, and local laws and regulations relating to improving or maintaining environmental quality. Environmental laws often require parties to pay for remedial action or to pay damages regardless of fault. Environmental laws also often impose liability with respect to divested or terminated operations, even if the operations were terminated or divested of many years ago.

Future potential uranium mining operations and current exploration activities are or will be subject to extensive laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational health, waste disposal, protection and remediation of the environment, protection of endangered and protected species, mine safety, toxic substances and other matters. Uranium mining is also subject to risks and liabilities associated with pollution of the environment and disposal of waste products occurring as a result of mineral exploration and production. Compliance with these laws and regulations will impose substantial costs on us and will subject us to significant potential liabilities.

Costs associated with environmental liabilities and compliance are expected to increase with the increasing scale and scope of operations and we expect these costs may increase in the future.

We believe that our operations comply, in all material respects, with all applicable environmental regulations. However, we are not fully insured at the current date against possible environmental risks.

Any change in government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

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 be changed, applied or interpreted in a manner which will fundamentally alter our ability to carry on business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitably.

13


 

We may be unable to retain key employees or consultants or recruit additional qualified personnel.

Our extremely limited personnel means that we would be required to spend significant sums of money to locate and train new employees in the event any of our employees resign or terminate their employment with us for any reason. Due to our limited operating history and financial resources, we are entirely dependent on the continued service of Amir Adnani, our President, Chief Executive Officer, Principal Executive Officer and a director, D. Bruce Horton, a director, Randall Reneau, our Chief Exploration Officer and a director, and Harry Anthony, our Chief Operating Officer and a director. Further, we do not have key man life insurance on any of these individuals. We may not have the financial resources to hire a replacement if any of our officers were to die. The loss of service of any of these employees could therefore significantly and adversely affect our operations.

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

Our officers and directors serve only part time and are subject to conflicts of interest. Each of our executive officers and directors serves only on a part time basis. Each devotes part of his working time to other business endeavors, including consulting relationships with other corporate entities, and has responsibilities to these other entities. Such conflicts include deciding how much time to devote to our affairs, as well as what business opportunities should be presented to us. Because of these relationships, our officers and directors may be subject to conflicts of interest.

Nevada law and our articles of incorporation may protect our directors from certain types of lawsuits.

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

Risks Related to Our Common Stock

Sales of a substantial number of shares of our common stock into the public market by certain stockholders may result in significant downward pressure on the price of our common stock and could affect your ability to realize the current trading price of our common stock.

Sales of a substantial number of shares of our common stock in the public market by certain stockholders could cause a reduction in the market price of our common stock. As of the date of this prospectus, we have 37,317,088 shares of common stock issued and outstanding. Of the total number of issued and outstanding shares of common stock, certain stockholders are able to resell up to 3,653,583 and 5,091,000 shares of our common stock pursuant to registration statements declared effective on December 5, 2005 and October 20, 2006, respectively. As a result of these registration statements, 8,744,583 shares of our common stock were issued and are available for immediate resale which could have an adverse effect on the price of our common stock. In addition, this prospectus relates to the resale of an aggregate of 8,100,000 shares of our common stock.

As of the date of this prospectus, there are 29,971,088 outstanding shares of our common stock that are restricted securities as that term is defined in Rule 144 under the Securities Act. Although the Securities Act and Rule 144 place certain prohibitions on the sale of restricted securities, restricted securities may be sold into the public market under certain conditions. Further, as of the date of this prospectus, there are an aggregate of 4,407,500 stock options outstanding and an aggregate of 3,950,000 share purchase warrants outstanding.

Any significant downward pressure on the price of our common stock as the selling stockholders sell their shares of our common stock could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our common stock.

14


 

The trading price of our common stock on the OTC Bulletin Board has been and may continue to fluctuate significantly and stockholders may have difficulty reselling their shares.

Our common stock commenced trading on December 5, 2005 on the OTC Bulletin Board and the trading price has fluctuated. In addition to volatility associated with Bulletin Board securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our discovery or development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends.

In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.

One of our shareholders may exercise voting power of more than 8.0% of our common stock.

As of the date of this prospectus, Golden West Investments Ltd. ("Golden West") owns 3,250,000 shares of our common stock, or 8.7 % of our outstanding common stock, and is one of our largest shareholders. Due to its stock ownership, Golden West may be in a viable position to affect the election of the Board of Directors and, therefore, to affect the control our business and affairs including certain significant corporate actions such as acquisitions, the sale or purchase of assets, and the issuance and sale of our securities. Further, Golden West may be able to affect the prevention of or cause a change in control. We also may be prevented from entering into transactions that could be beneficial to us without Golden West's consent. The interest of one of our largest shareholders may differ from the interests of other shareholders.

Additional issuances of equity securities may result in dilution to our existing stockholders. Our Articles of Incorporation authorize the issuance of 750,000,000 shares of common stock.

The Board of Directors has the authority to issue additional shares of our capital stock to provide additional financing in the future and the issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. As a result of such dilution, if you acquire shares of our common stock, your proportionate ownership interest and voting power could be decreased. Further, any such issuances could result in a change of control.

Our common stock is classified as a "penny stock" under SEC rules which limits the market for our common stock.

Because our stock is not traded on a stock exchange or on the NASDAQ National Market or the NASDAQ Small Cap Market, and because the market price of the common stock has fluctuated and may trade at times at less than $5 per share, the common stock may be classified as a "penny stock." SEC Rule 15g-9 under the Exchange Act imposes additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as an "established customer" or an "accredited investor." This includes the requirement that a broker-dealer must make a determination that investments in penny stocks are suitable for the customer and must make special disclosures to the customers concerning the risk of penny stocks. Many broker-dealers decline to participate in penny stock transactions because of the extra requirements imposed on penny stock transactions. Application of the penny stock rules to our common stock reduces the market liquidity o f our shares, which in turn affects the ability of holders of our common stock to resell the shares they purchase, and they may not be able to resell at prices at or above the prices they paid.

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A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

A decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise additional capital for our operations. Because our operations to date have been principally financed through the sale of equity securities, a decline in the price of our common stock could have an adverse effect upon our liquidity and our continued operations. A reduction in our ability to raise equity capital in the future would have a material adverse effect upon our business plan and operations, including our ability to continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

A majority of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.

A majority 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 the United States. As a result, it may be difficult for investors to effect service of process on our directors or officers, or enforce within the United States or Canada any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against them. In addition, investors may not be able to commence an action in a Canadian court predicated upon the civil liability provisions of the securities laws of the United States. The foregoing risks also apply to those experts identified in this prospectus that are not residents of the United States.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this prospectus include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve assumptions, risks and uncertainties regarding, among others, the success of our business plan, availability of funds, government regulations, operating costs, our ability to achieve significant revenues, our business model and products and other factors. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties outlined in this prospectus under "Risk Factors". These factors or any of them may cause our actual results to differ materially from any forward-looking statement made in this prospectus. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. The forward-looking statements in this prospectus are made as of the date of this prospectus and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares of common stock offered by the Selling Shareholders under this prospectus. We would receive gross proceeds in the approximate amount of $8,100,000 assuming the exercise of all warrants of which the underlying common stock are being offered hereby.

All proceeds from the sale of the shares will be for the account of the Selling Shareholders, and they will pay any and all expenses incurred by them for brokerage, accounting or tax services or any other expenses incurred by them in disposing of their shares. We will however incur substantially all of the costs associated with the filing of this prospectus and the registration statement of which it forms a part.

16


 

SELLING SHAREHOLDERS

The Selling Shareholders named in this prospectus are offering all of the 8,100,000 shares of common stock offered through this prospectus. The Selling Shareholders are comprised of our existing shareholders who:

  • on December 13, 2006 purchased an aggregate of 2,800,000 December 13, 2006 Units, at a price of $2.50 per December 13, 2006 Unit, by way of the December 13, 2006 Private Placement, with each December 13, 2006 Unit consisting of one share of common stock and one-half of one December 13, 2006 Warrant;
  • on December 22, 2006 purchased an aggregate of 2,400,000 December 22, 2006 Units, at a price of $2.50 per December 22, 2006 Unit, by way of the December 22, 2006 Private Placement, with each December 22, 2006 Unit consisting of one share of common stock and one-half of one December 22, 2006 Warrant; and
  • on January 3, 2007 acquired an aggregate of 200,000 January 3, 2007 Units, at a price of $2.50 per January 3, 2007 Unit, by way of the January 3, 2007 Private Placement, with each January 3, 2007 Unit consisting of one share of common stock and one-half of one January 3, 2007 Warrant.

On December 13, 2006, we issued an aggregate of 2,800,000 December 13, 2006 Units, at a price of $2.50 per December 13, 2006 Unit, with each December 13, 2006 Unit consisting of one share of common stock and one-half of one December 13, 2006 Warrant, to certain of the Selling Shareholders named herein by way of the December 13, 2006 Private Placement. Each whole December 13, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share. The December 13, 2006 Warrants are exercisable commencing on a date that is at least 61 days after the Selling Stockholder delivers a written notice to the Company and ending on the day which is the earlier of (i) 18 months from December 13, 2006 and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered represents the 2,800,000 shares of common stock issued in connection with the iss uance of the December 13, 2006 Units and the 1,400,000 shares of common stock issuable upon exercise of the December 13, 2006 Warrants. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the December 13, 2006 Warrants in the December 13, 2006 Private Placement.

On December 22, 2006, we issued an aggregate of 2,400,000 December 22, 2006 Units, at a price of $2.50 per December 22, 2006 Unit, with each December 22, 2006 Unit consisting of one share of common stock and one-half of one December 22, 2006 Warrant, to certain of the Selling Shareholders named herein by way of the December 22, 2006 Private Placement. Each whole December 22, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered represents the 2,400,000 shares of common stock issued in connection with the issuance of the December 22, 2006 Units and the 1,200,000 shares of common stock issuable upon exercise of the December 22, 2006 Warrants. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the December 22, 2006 Warrants in the December 22, 2006 Private Placement. We agreed to have the registration statement declared effective within four months from the date of the issuance of the December 22, 2006 Units and, in the event that the registration statement is not declared effective by that date, to issue additional warrants to acquire shares in the capital of the Company equal to one one-hundredth of a warrant for each U.S. $1.00 in aggregate funds paid by each subscriber for the December 22, 2006 Units for each 30 calendar day period (or partial period thereof) during which the registration statement has not been declared effective, after the expiry of the four month period.

17


 

On January 3, 2007, we issued an aggregate of 200,000 January 3, 2007 Units, at a price of $2.50 per January 3, 2007 Unit, with each January 3, 2007 Unit consisting of one share of common stock and one-half of one January 3, 2007 Warrant, to certain of the Selling Shareholders named herein by way of the January 3, 2007 Private Placement. Each whole January 3, 2007 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered represents the 200,000 shares of common stock issued in connection with the issuance of the January 3, 2007 Units and the 100,000 shares of common stock issuable upon exercise of the January 3, 2007 Warrants. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the January 3, 2007 Warrants in the January 3, 2007 Private Placement.

The private placement transactions were completed in reliance of Rule 506 of Regulation D of the Securities Act, with respect to investors in the United States, and in reliance of Rule 903 of Regulation S of the Securities Act, with respect to those investors who were not "U.S. Persons", within the meaning of Regulation S, and who were otherwise outside of the United States. Sales to United States investors pursuant to Rule 506 of Regulation D were limited to investors who qualified as "accredited investors" within the meaning of Rule 501(a) of Regulation D.

The selling shareholders are offering up to an aggregate of 8,100,000 shares of our common stock comprised of:

  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 2,800,000 shares of our common stock issued on December 13, 2006 pursuant to the December 13, 2006 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 2,400,000 shares of our common stock issued on December 22, 2006 pursuant to the December 22, 2006 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 200,000 shares of our common stock issued on January 3, 2007 pursuant to the January 3, 2007 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 1,400,000 shares of our common stock issuable upon the exercise of the 1,400,000 December 13, 2006 Warrants issued pursuant to the December 13, 2006 Private Placement;
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 1,200,000 shares of our common stock issuable upon the exercise of the December 22, 2006 Warrants issued pursuant to the December 22, 2006 Private Placement; and
  • the resale by certain Selling Shareholders, and their transferees, donees or successors, of an aggregate of 100,000 shares of our common stock issuable upon the exercise of the 100,000 January 3, 2007 Warrants issued pursuant to the January 3, 2007 Private Placement.

The following table sets forth information as of May 10, 2007 regarding the ownership of the shares of common stock to be sold by the Selling Shareholders. The number of shares indicated for each Selling Shareholder includes both the shares issued in the private placement transactions and the shares issuable to the Selling Shareholders upon exercise of the warrants.

18


 

Information with respect to ownership is based upon information obtained from the Selling Shareholders. Information with respect to "Shares Owned Prior to this Offering" includes the shares issuable upon exercise of the warrants held by the Selling Shareholders even though some of these warrants are not exercisable within 60 days of May 10, 2007. The "Number of Shares Being Offered" includes the shares acquired by the Selling Shareholders in the private placement transactions described above and the shares that are issuable upon exercise of the warrants acquired by the Selling Shareholders. Information with respect to "Shares Owned After this Offering" assumes the sale of all of the shares offered by this prospectus and no other purchases or sales of our common stock by the Selling Shareholders. Except as described below and to our knowledge, the named Selling Shareholders own and have sole voting and investment power over all shares or rights to these shares. Except for their ownership of common stock described below, none of the Selling Shareholders had or have any material relationship with us. On information and belief based upon query by the Company to the Selling Shareholders, we do not believe that any Selling Shareholders are registered broker-dealers or affiliates of registered broker-dealers.

 

Shares Owned
Prior To This Offering

Number of Shares Being Offered

Shares Owned
After This Offering

Name of Selling Shareholder

Number(1)

Percentage(2)

Number

Number

Percentage(2)

December 13, 2006 Private Placement(3)

         

Morgan Stanley & Co. fbo Passport Global Master Fund SPC Ltd. for and on behalf of Portfolio A - Global Strategy(4),(5)

2,113,000

5.67%

2,100,000

13,000

*

Morgan Stanley & Co. fbo Passport Materials Master Fund, LP(4),(5)

2,113,000

5.67%

2,100,000

13,000

*

December 22, 2006 Private Placement(6)

         

Ashdon Select Manager Trust Ashdon Investment Mgmt, LLC(7)

20,400

*

20,400

Nil

Nil

Compass SAV, LLC(7)

247,500

*

247,500

Nil

Nil

Compass Offshore SAV PCC Limit(7)

247,500

*

247,500

Nil

Nil

Daimler Chrysler Retirement Trust(7)

521,850

1.34%

521,850

Nil

Nil

Harry-Anna Investment Fund, Inc.(7)

153,600

*

153,600

Nil

Nil

Hallador Equity Fund, LLC(7)

98,100

*

98,100

Nil

Nil

QueensCare(7)

109,200

*

109,200

Nil

Nil

Westcliff Aggressive Growth, LP(7)

181,500

*

181,500

Nil

Nil

Westcliff Energy Partners, LP(7)

144,900

*

83,100

61,800

*

Westcliff Foundation(7)

23,800

*

13,800

10,000

*

Westcliff Fund, LP(7)

1,217,700

3.26%

1,217,700

Nil

Nil

Westcliff Long /Short LP(7)

145,500

*

145,500

Nil

Nil

Westcliff Master Fund LP(7)

248,450

*

91,650

156,800

*

Westcliff Partners LP(7)

184,650

*

184,650

Nil

Nil

Westcliff Small Cap(7)

73,500

*

73,500

Nil

Nil

Westcliff Venture Fund, LP(7)

210,450

*

210,450

Nil

Nil

January 3, 2007 Private Placement(8)

         

Gold Arrow Global Mining Fund(9)

225,000

*

225,000

Nil

Nil

Musgrave Investments Limited(10)

75,000

*

75,000

Nil

Nil

19


 

Shares Owned
Prior To This Offering

Number of Shares Being Offered

Shares Owned
After This Offering

Name of Selling Shareholder

Number(1)

Percentage(2)

Number

Number

Percentage(2)

Total:

8,354,600

 

8,100,000

   

*     Less than one percent.

  1. Includes shares of common stock currently held by the Selling Shareholder and shares issuable upon exercise of all warrants owned by the Selling Shareholder, even though some of these warrants are not exercisable within 60 days of May 10, 2007.
  2. The applicable percentage of ownership is based on 37,317,088 shares of common stock outstanding as of May 10, 2007, plus the number of shares of common stock that would be outstanding if all of the warrants held by such Selling Shareholder were exercised.
  3. Comprised of the shares underlying the December 13, 2006 Units. On December 13, 2006, we issued an aggregate of 2,800,000 December 13, 2006 Units, at a price of $2.50 per December 13, 2006 Unit, with each December 13, 2006 Unit consisting of one share of common stock and one-half of one December 13, 2006 Warrant, to certain of the Selling Shareholders named in the table above by way of the December 13, 2006 Private Placement. The common stock registered represents the 2,800,000 shares of common stock issued in connection with the issuance of the December 13, 2006 Units and also represents the 1,400,000 shares of common stock issuable upon exercise of the December 13, 2006 Warrants. Each whole December 13, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share. The December 13, 2006 Warrants are exercisable commencing on a date that is at least 61 days after the Selling Stockholder delivers a written notice to the Company and ending on the day which is the earlier of (i) 18 months from December 13, 2006 and (ii) nine months commencing from the effective date of the Company's proposed registration statement related to the December 13, 2006 Private Placement. Because the December 13, 2006 Warrants are not exercisable within 60 days, these Selling Shareholders are not considered the beneficial owners of the shares of common stock underlying the December 13, 2006 Warrants for purposes of Rule 13d-3 under the Securities Act.
  4. Includes 13,000 shares held by Partners Group Alternative Strategies PCC Limited Gold Iota Cell, a Guernsey protected cell company ("Passport Iota Cell"). Passport Holdings, LLC, a Delaware limited liability company ("Passport Holdings"), is the General Partner of the Passport Materials Master Fund, LP ("Materials Fund"), and Passport Management, LLC, a Delaware limited liability company ("Passport Management") serves as investment manager to Materials Fund and Passport Global Master Fund SPC Ltd and serves as Trading Advisor to Passport Iota Cell. Passport Capital, LLC, a Delaware limited liability company ("Passport Capital") is the managing member of Passport Management and of Passport Holdings.  John Burbank, a natural person, is the sole managing member of Passport Capital.  As a result, each of Passport Management, Passport Holdings, Passport Capital and John Burbank may be considered to indirectly beneficially own the securities directly beneficially owned by these S elling Stockholders.
  5. Pursuant to Rule 16a-1(a)(2)(ii)(B) under the Exchange Act, Mr. Burbank is deemed to be a beneficial owner of the shares beneficially owned by these Selling Stockholders only to the extent of the greater of his respective direct or indirect interest in the profits or capital account of such Selling Stockholders. Pursuant to Rule 16a-1(a)(4) under the Exchange Act, this filing shall not be deemed an admission that Mr. Burbank is, for purposes of Section 16 of the Act or otherwise, the beneficial owner of any securities owned by the Funds in excess of such amount.
  6. Comprised of the shares underlying the December 22, 2006 Units. On December 22, 2006, we issued an aggregate of 2,400,000 December 22, 2006 Units, at a price of $2.50 per December 22, 2006 Unit, with each December 22, 2006 Unit consisting of one share of common stock and one-half of one December 22, 2006 Warrant, to the Selling Shareholders named in the table above by way of the December 22, 2006 Private Placement. The common stock registered represents the 2,400,000 shares of common stock issued in connection with the issuance of the December 22, 2006 Units and the 1,200,000 shares of common stock issuable upon exercise of the December 22, 2006 Warrants. Each whole December 22, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the Company's proposed registration statement related to the December 22, 2006 Private Placement.
  7. Ashdon Select Manger Trust Ashdon Investment Mgmt, LLC, Compass SAV, LLC, Compass Offshore SAV PCC Limited, Daimler Chrysler Retirement Trust, Harry-Anna Investment Fund, Inc., Hallador Equity Fund, LLC, QueensCare, Westcliff Aggressive Growth, LP, Westcliff Energy Partners, LP, Westcliff Foundation, Westcliff Long/Short, LP, Westcliff Master Fund, LP, Westcliff Partners, LP, Westcliff Small Cap Fund, LP, and Westcliff Ventures Fund, LP, are investment limited partnerships and other clients of which Westcliff Capital Management, LLC ("Westcliff"), is the general partner and/or investment adviser. Richard S. Spencer, as managing member of Westcliff, has discretionary authority to purchase, vote and dispose of the securities on behalf of its clients. Westcliff and Mr. Spencer disclaim beneficial ownership as to such securities except to the extent of their respective pecuniary interests therein.
  8. Comprised of the shares underlying the January 3, 2007 Units. On January 3, 2007, we issued an aggregate of 200,000 January 3, 2007 Units, at a price of $2.50 per January 3, 2007 Unit, with each January 3, 2007 Unit consisting of one share of common stock and one-half of one January 3, 2007 Warrant, to the Selling Shareholders named in the table above by way of the January 3, 2007 Private Placement. The common stock registered represents the 200,000 shares of common stock issued in connection with the issuance of the January 3, 2007 Units and the 100,000 shares of common stock issuable upon exercise of the January 3, 2007 Warrants. Each whole January 3, 2007 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the Company's pro posed registration statement related to the January 3, 2007 Private Placement.
  9. Kjeld Thygesen, portfolio manager for Gold Arrow Global Mining Fund, has discretionary authority to purchase, vote and dispose of the securities on behalf of Gold Arrow Global Mining Fund. Mr. Thygesen disclaim beneficial ownership as to such securities except to the extent of their respective pecuniary interests therein.
  10. Peter Grut, portfolio manager for Musgrave Investments Limited, has discretionary authority to purchase, vote and dispose of the securities on behalf of its client. Mr. Grut disclaim beneficial ownership as to such securities except to the extent of their respective pecuniary interests therein.

Because a Selling Shareholder may offer by this prospectus all or some part of the common shares which it holds, no estimate can be given as of the date hereof as to the number of common shares actually to be offered for sale by a Selling Shareholder or as to the number of common shares that will be held by a Selling Shareholder upon the termination of such offering.

20


 

PLAN OF DISTRIBUTION

Timing of Sales

The Selling Shareholders may offer and sell the shares covered by this prospectus at various times. The Selling Shareholders will act independently of us in making decisions with respect to the timing, manner and size of each sale.

No Known Agreements to Resell the Shares

To our knowledge, no Selling Shareholder has any agreement or understanding, directly or indirectly, with any person to resell the shares covered by this prospectus.

Offering Price

The Selling Shareholders will sell their shares to the public at:

1.          the market price prevailing at the time of sale;

2.         a price related to such prevailing market price; or

3.         such other price as the selling shareholders determine from time to time.

The sales price to the public will vary according to the selling decisions of each Selling Shareholder and the market for our stock at the time of resale.

Manner of Sale

The shares may be sold by means of one or more of the following methods:

4.         a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

5.         purchases by a broker-dealer as principal and resale by that broker-dealer for its account pursuant to this prospectus;

6.         ordinary brokerage transactions in which the broker solicits purchasers;

7.         through options, swaps or derivative;

8.         in transactions to cover short sales;

9.         privately negotiated transactions; or

10.       in a combination of any of the above methods.

The Selling Shareholders may sell their shares directly to purchasers or may use brokers, dealers, underwriters or agents to sell their shares. Brokers or dealers engaged by the selling shareholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions, discounts or concessions from the Selling Shareholders, or, if any such broker-dealer acts as agent for the purchaser of shares, from the purchaser in amounts to be negotiated immediately prior to the sale. The compensation received by brokers or dealers may, but is not expected to, exceed that which is customary for the types of transactions involved. Broker-dealers may agree with a Selling Shareholder to sell a specified number of shares at a stipulated price per share, and, to the extent the broker-dealer is unable to do so acting as agent for a Selling Shareholder, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to the Selling Sharehol der. Broker-dealers who acquire shares as principal may thereafter resell the shares from time to time in transactions, which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above, in the over-the-counter market or otherwise at prices and on terms then prevailing at the time of sale, at prices then related to the then-current market price or in negotiated transactions. In connection with resales of the shares, broker-dealers may pay to or receive from the purchasers of shares commissions as described above.

21


 

We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the warrants in the December 13, 2006 Private Placement, December 22, 2006 Private Placement and January 3, 2007 Private Placement, completed pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S under the Securities Act. We agreed to have the registration statement declared effective within four months from the date of the issuance of the December 22, 2006 Units and, in the event that the registration statement is not declared effective by that date, to issue additional warrants to the Selling Shareholders under the December 22, 2006 Private Placement to acquire shares in the capital of the Company equal to one one-hundredth of a warrant for each U.S. $1.00 in aggregate funds paid by each subscriber for the December 22, 2006 Units for each 30 ca lendar day period (or partial period thereof) during which the registration statement has not been declared effective, after the expiry of the four month period.

We will keep the registration statement effective for a period of not less than nine months from the effective date of the registration statement, including the filing of such amendments and supplements to the registration statement and this prospectus as may be necessary to comply with the provisions of the Securities Act.

If our Selling Shareholders enter into arrangements with brokers or dealers, as described above, we are obligated to file a post-effective amendment to this registration statement disclosing such arrangements, including the names of any broker dealers acting as underwriters.

Sales Pursuant to Rule 144

Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus.

Regulation M

We will advise the Selling Shareholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the Selling Shareholders and their affiliates. Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for, or purchasing for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Accordingly, the Selling Shareholders are not permitted to cover short sales by purchasing shares while the distribution is taking place. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. In addition, we will make copies of this prospectus available to the Selling Shareholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act.

State Securities Laws

Under the securities laws of some states, the common shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the common shares may not be sold unless the shares have been registered or qualified for sale in the state or an exemption from registration or qualification is available and is complied with.

Expenses of Registration

We are bearing all costs relating to the registration of the common stock, including the Selling Shareholders' expenses relating to the registration. These expenses are estimated to be $44,570.20, including, but not limited to, legal, accounting, printing and mailing fees. The Selling Shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.

22


 

LEGAL PROCEEDINGS

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this registration statement, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our directors and executive officers and their respective ages as of May 10, 2007 are as follows:

Name

Age

Position with the Company

Amir Adnani

29

President, Chief Executive Officer, Principal Executive Officer and a director

Alan P. Lindsay

56

Chairman and a director

Harry Anthony

59

Chief Operating Officer and a director

Randall Reneau

58

Chief Exploration Officer and a director

Ivan Obolensky

82

Director

Erik Essiger

41

Director

Pat Obara

51

Secretary, Treasurer, Chief Financial Officer and Principal Accounting Officer

The following describes the business experience of each of our directors and executive officers, including other directorships held in reporting companies:

Amir Adnani. Mr. Amir Adnani has been our President, Chief Executive Officer, Principal Executive Officer and a director since January 24, 2005. Mr. Adnani is an entrepreneur with an extensive background in business development and marketing. In September 2004, he founded and is currently a director of and, from September 2004 to January 2007 had been President of, Blender Media Inc., a Vancouver based company that provides strategic marketing and financial communications services to public companies and investors in mineral exploration, mining, and energy sectors. In June 2001, Mr. Adnani co-founded, and from June 2001 to September 2004, was a director and officer of Fort Sun Investments Inc, a strategic marketing and financial communications services company for public companies. Mr. Adnani holds a Bachelor of Science degree from the University of British Columbia. Mr. Adnani is not a director or officer of any other U.S. reporting company.

Alan P. Lindsay. Mr. Alan P. Lindsay has been our Chairman and a director since May 16, 2003. Mr. Lindsay has extensive experience and expertise in the mining and biomedical fields. From 2000 to the present, he has been the chairman, president and chief executive officer of MIV Therapeutics Inc., a publicly-listed biomedical company focused on biocompatible coating technology for stents and medical devices, and was also a co-founder of GeneMax Pharmaceuticals, a biotech company with a novel cancer treatment technology discovered at the University of British Columbia. Mr. Lindsay was the founder of AZCO Mining Inc. and served as Chairman, President and CEO of AZCO from 1992 to 2000. During his term, AZCO obtained listings on both the Toronto and American Stock Exchanges. AZCO developed the Sanchez copper deposit and Piedras Verdes copper deposits with a combined SX-EW oxide copper resource of 3.25 billion pounds of copper. Mr. Lindsay negotiated a business transaction with Phelps Do dge Corporation that led to the sale of the Sanchez deposit for $55 million and a joint venture on the Piedras Verdes deposit. Mr. Lindsay is not a director or officer of any other U.S. reporting company.

23


 

Harry Anthony. Mr. Harry Anthony has been our Chief Operating Officer and a director since February 2005. Mr. Anthony has over thirty years of experience in the uranium mining industry. From approximately 1997 to present, Mr. Anthony has been a consultant through Anthony Engineering Services for several major uranium companies and international agencies, which duties generally include project evaluation, operations "trouble shooter" and technical and financial expert. From approximately 1990 through 1997, Mr. Anthony was a senior vice president of Uranium Resources, Inc., where he managed all facets of operations and technical support to achieve production goals, drilling, ion exchange, reverse osmosis, software development and equipment design. His duties also included oversight of construction, technical aspects, and daily operations of plants and wellfields, budget planning and forecasting, property evaluations and reserve estimations. Mr. Anthony also previously served as the v ice-president of engineering/engineering manager of Uranium Resources, Inc., and a project superintendent and project engineer for Union Carbide Corp. Mr. Anthony was on the board of directors of Uranium Resources, Inc. from 1984 through 1994. He is the author of several publications and the recipient of the awards "Distinguished Member of the South Texas Mineral Section of AIME -1987" and "1999 Outstanding Citizen of the Year - Kingsville Chamber of Commerce". Mr. Anthony received an M.S. in Engineering Mechanics in 1973 and a B.S. in Engineering Mechanics in 1969 from Pennsylvania State University. Mr. Anthony is not a director or officer of any other U.S. reporting company.

Randall Reneau. Mr. Randall Reneau has been our Chief Exploration Officer and a director since January 24, 2005. Mr. Reneau is registered as a Certified Professional Geologist with over 30 years of experience in mineral exploration and project management in the United States, Mexico, Brazil and West Africa. Mr. Reneau has significant experience exploring for uranium in the United States, specifically in Texas, Arizona, New Mexico and Wyoming, the states known to hold the largest uranium reserves. He extensively explored these states while employed in a senior position for Conoco Uranium, a subsidiary of Conoco Ltd., and Wold Nuclear, a privately-held company. For the past 10 years, he has been an independent contractor, performing geology services for mining and exploration companies internationally. He obtained his M.S. in Environmental Engineering from Kennedy-Western University, Boise, Idaho, and a B.A. in Geology from Central Washington University. Mr. Reneau is not a director or officer of any other U.S. reporting company.

Erik Essiger. Mr. Essiger became a director of our company and a member of our Audit Committee on August 23, 2006. During the past five years Mr. Essiger has been: the Managing Director and the founder of Precisetech GmbH, a corporate finance advisory company focused on international M&A transactions (from October 2004 to present); a member of the Supervisory Board of Corix Capital AG (from December 2003 to present); the Senior Manager, Transaction Services Strategy Group, with PricewaterhouseCoopers AG, heading up the commercial and due diligence practice of that group in Germany which provided services mainly to private equity clients of the firm (from April 2003 to September 2004); and a member of the Executive Board (Vorstand) of MultiMedia Technologies AG, a producer of set-top-boxes and a company operating in the fields of interactive digital television and the streaming media market (from July 2000 to July 2002) Mr. Essiger also has extensive international experience i n corporate restructuring; especially in Germany, Russia, Hong Kong and Switzerland; and he was a member of the German-Russian co-operation council. Mr. Essiger is not a director or officer of any other U.S. reporting company.

Ivan Obolensky. Mr. Obolensky has 40 years experience in the investment banking business as a financial analyst, with specific expertise in the defense aerospace, oil and gas, nuclear power, metals and minerals, publishing and high technology industries. He has been an executive of several investment banks, including Sterling Grace & Co., Jesup, Josephthal & Co., Dominick and Dominick, Inc., Middendorf Colgate, and CB Richard Ellis Mosley Hallgarten. Currently, Mr. Obolensky is a Vice President of Shields & Company, an Investment Bank and Member of the New York Stock Exchange. Ivan Obolensky is a Registered Investment Advisor and a member of the New York Society of Security Analysts. He has made frequent appearances as a guest on CNBC, CNNfn, and Bloomberg TV. Mr. Obolensky is also a member of various foundations and philanthropic organizations, and serves as Chairman and CEO of the Soldiers' Sailors' Marines' and Airmen's Club in New York. He is a graduate of Yal e University and a retired Lieutenant (Junior Grade) in the U.S. Naval Air Corps.

24


 

Pat Obara. Mr. Obara became our Secretary, Treasurer, Chief Financial Officer and Principal Accounting Officer on August 23, 2006. During the past five years Mr. Obara has worked as a consultant to several private and publicly listed companies providing various consulting services in the areas of corporate finance and administration. From March of 2003 to present Mr. Obara has provided various administrative consulting services to private companies involved in business activities in Asia and North America. Prior to April of 2004 Mr. Obara served as the Chief Financial Officer and a director of two public companies listed on the TSX Venture Exchange. Mr. Obara was involved in the restructuring, organizing and management of these early stage companies which were involved in the resource and technology sectors. Mr. Obara is not a director or officer of any other U.S. reporting company.

Term of Office

All of our directors hold office until the next annual general meeting of the shareholders or until their successors are elected and qualified. Our officers are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal.

Significant Employees

There are no significant employees other than our executive officers.

Audit Committee

Our board of directors has established an Audit Committee, comprised of Mr. Alan Lindsay, Mr. Erik Essiger and Mr. Ivan Obolensky. The Audit Committee operates pursuant to a charter adopted by the board.

Family Relationships

Alan Lindsay is the father-in-law of Amir Adnani.

Involvement in Certain Legal Proceedings

None of our directors, executive officers or control persons have been involved in any of the following events during the past five years:

  1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
  2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
  3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
  4. being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated. As of May 10, 2007, there are 37,317,088 shares of common stock issued and outstanding.

25


Name and Address of Beneficial Owner(1)

Amount and Nature of Beneficial Ownership(1)

Percentage of Beneficial Ownership

Directors and Officers:

   

Amir Adnani
2303 - 930 Cambie Street
Vancouver, British Columbia, Canada V6B 5X6

2,157,701(2)

5.78%

Alan P. Lindsay
2701 - 1500 Hornby Street
Vancouver, British Columbia, Canada, V6Z 2R1

2,069,787(3)

5.55%

Harry Anthony
P.O. Box 1328
Kingsville, Texas, U.S.A., 78364

1,363,500(4)

3.65%

Randall Reneau
9302 Mystic Oak Trail
Austin, Texas, U.S.A., 78750

1,702,500(5)

4.56%

Ivan Obolensky
425 East 79th Street
New York, NY, U.S.A., 10021

112,500(6)

*

Erik Essiger
P.O. Box 37491, Dubai, UAE

100,000(7)

*

Pat Obara
2791 West 35th Avenue, Vancouver,
British Columbia, Canada, V6N 2M1

225,000(8)

*

All executive officers and directors as a group (7 persons)

7,730,988(9)

20.73%

Major Shareholders:

   

Isaiah Capital Trust
28 - 30 The Parade
St. Heller, Jersey, Channel Islands, JE4 8XY

2,711,667(10)

7.27%

Golden West Investments
P.O. Box 97, Leeward Highway
Provenciales, Turks & Caicos Islands, BWI

3,250,000(11)

8.71%

Morgan Stanley & Co. fbo Passport Global Master Fund SPC Ltd. for and on behalf of Portfolio A - Global Strategy
402 Jackson Street, San Francisco, USA 94111(15) (16)

2,113,000(12)

5.71%

Morgan Stanley & Co. fbo Passport Materials Master Fund, LP
402 Jackson Street, San Francisco, USA 94111(15) (16)

2,113,000(13)

5.71%

Sprott Asset Management Inc.

2,250,000(14)

6.03%

*       Less than one percent.

  1. Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. A s a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding on May 10, 2007. As of May 10, 2007, there were 37,317,088 shares issued and outstanding. Beneficial ownership amounts reflect the forward stock split effective February 28, 2006.
  2. This figures represents (i) 1,730,201 shares of common stock, (ii) stock options to purchase 202,500 shares of our common stock at an exercise price of $0.33 per share expiring on December 20, 2015 and (iii) stock options to purchase 225,000 shares of our common stock at an exercise price of $3.30 per share expiring on January 2, 2017.
  3. 26


     

  4. This figure represents (i) 1,306,287 shares of common stock, (ii) 163,500 shares of common stock held of record by Alan P. Lindsay's wife and (iii) stock options to purchase 600,000 shares of our common stock at an exercise price of $0.33 per share expiring on December 20, 2015.
  5. This figure represents (i) 763,500 shares of common stock, (ii) stock options to purchase 375,000 shares of our common stock at an exercise price of $0.33 per share as to 202,500 shares and 172,500 shares expiring on December 20, 2015 and February 14, 2016, respectively, and (iii) stock options to purchase 225,000 shares of our common stock at an exercise price of $3.30 per share expiring on January 2, 2017.
  6. This figure represents (i) 1,500,000 shares of common stock and (ii) stock options to purchase 202,500 shares of our common stock at an exercise price of $0.33 per share expiring on December 20, 2015.
  7. This figure represents (i) 12,500 shares of common stock and (ii) stock options to purchase 100,000 shares of our common stock at $5.70 per share expiring on March 30, 2017.
  8. This figure represents stock options to purchase 100,000 shares of our common stock at $1.30 per share expiring on October 10, 2016.
  9. This figure represents (i) stock options to purchase 200,000 shares of our common stock at $1.30 per share expiring on October 10, 2016, and (ii) stock options to purchase 25,000 shares of our common stock at $3.30 per share expiring on January 2, 2017.
  10. This figure represents (i) 5,569,788 shares of common stock and (ii) stock options to purchase 2,155,000 shares of our common stock.
  11. Isaiah Capital Trust is a trust organized under the laws of Jersey, Channel Islands. The trustee of Isaiah Capital Trust is Equity Trust (Jersey) Limited.
  12. Golden West Investments Ltd. is a corporation organized under the laws of Belize. The sole director of Golden West Investments Ltd. is Trustell Ltd.
  13. This figures includes (i) 1,400,000 shares of common stock and (ii) warrants to purchase 700,000 shares of our common stock at a price of $3.00 per share held by this Selling Shareholder. However, the warrants are not exercisable within 60 days, and therefore the stockholder named above disclaims beneficial ownership of the shares underlying the warrants for purposes of Rule 13d-3 under the Securities Act. See "Selling Shareholders" for more information about this Selling Shareholder.
  14. This figures includes (i) 1,400,000 shares of common stock and (ii) warrants to purchase 700,000 shares of our common stock at a price of $3.00 per share held by this Selling Shareholder. However, the warrants are not exercisable within 60 days, and therefore the stockholder named above disclaims beneficial ownership of the shares underlying the warrants for purposes of Rule 13d-3 under the Securities Act. See "Selling Shareholders" for more information about this Selling Shareholder..
  15. This figures represents (i) 1,125,000 shares of common stock and (ii) warrants to purchase 1,125,000 shares of our common stock at a price of $2.00 per share. We are not aware who presently exercises dispositive and voting power with respect to the shares of common stock owned by Sprott Asset Management Inc.; and this shareholder has no known relationship with our company. We are also informed that Sprott Asset Management Inc. acquired our securities as a portfolio manager in the ordinary course of business for their own account without any view or intention to distribute their securities and that, at the time of purchase, they had no agreements or understandings, directly or indirectly, with the Company or with any other party to distribute the securities.
  16. Includes 13,000 shares held by Partners Group Alternative Strategies PCC Limited Gold Iota Cell, a Guernsey protected cell company ("Passport Iota Cell"). Passport Holdings, LLC, a Delaware limited liability company ("Passport Holdings"), is the General Partner of the Passport Materials Master Fund, LP ("Materials Fund"), and Passport Management, LLC, a Delaware limited liability company ("Passport Management") serves as investment manager to Materials Fund and Passport Global Master Fund SPC Ltd and serves as Trading Advisor to Passport Iota Cell. Passport Capital, LLC, a Delaware limited liability company ("Passport Capital") is the managing member of Passport Management and of Passport Holdings.  John Burbank, a natural person, is the sole managing member of Passport Capital.  As a result, each of Passport Management, Passport Holdings, Passport Capital and John Burbank may be considered to indirectly beneficially own the securities directly beneficially owned by these S elling Stockholders.
  17. Pursuant to Rule 16a-1(a)(2)(ii)(B) under the Exchange Act, Mr. Burbank is deemed to be a beneficial owner of the shares beneficially owned by these Selling Stockholders only to the extent of the greater of his respective direct or indirect interest in the profits or capital account of such Selling Stockholders. Pursuant to Rule 16a-1(a)(4) under the Exchange Act, this filing shall not be deemed an admission that Mr. Burbank is, for purposes of Section 16 of the Act or otherwise, the beneficial owner of any securities owned by the Funds in excess of such amount.

Changes in Control

We are unaware of any contract, or other arrangement or provision, the operation of which may at a subsequent date result in a change of control of our company.

DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 750,000,000 shares of common stock with a par value of $0.001 per share. As of May 10, 2007, there were 37,317,088 shares of our common stock issued and outstanding.

Upon liquidation, dissolution or winding up of our company, the holders of common stock are entitled to share rateably in all net assets available for distribution to common stockholders after payment to secured convertible promissory note holders and creditors. The common stock is not convertible or redeemable and has no pre-emptive, subscription or conversion rights. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of stockholders. There are no cumulative voting rights. The holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available therefore at such times and in such amounts as our Board of Directors may from time to time determine. In the event of a merger or consolidation all holders of common stock will be entitled to receive the same per share consideration.

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EXPERTS

The audited consolidated financial statements included in this prospectus have been audited by Dale Matheson Carr-Hilton LaBonte LLP, Chartered Accountants, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere in this prospectus. These financial statements are included in reliance upon the authority of said firm as an expert in auditing and accounting.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock offered hereby was employed on a contingency basis, or had, or is to receive, in connection with such offering, a substantial interest, direct or indirect, in the Company, nor was any such person connected with the Company as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

DISCLOSURE OF SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our directors and officers are indemnified as provided by the Nevada Revised Statutes, our Articles of Incorporation and our Bylaws.

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court's decision.

ORGANIZATION SINCE INCORPORATION

Our company was incorporated under the laws of the State of Nevada on May 16, 2003 under the name "Carlin Gold Inc." During 2004 we changed our business operations and focus from precious metals exploration in the State of Nevada to the exploration for economic reserves of uranium throughout the United States. On January 24, 2005, we filed an amendment to our Articles of Incorporation changing our name to "Uranium Energy Corp.".

On January 24, 2004, we completed a reverse stock split of our shares of common stock on the basis of one share for each two outstanding shares. Effective February 28, 2006, we completed a forward split of our shares of common stock on the basis of 1.5 shares for each outstanding share to increase liquidity for our shares of common stock. Effective February 28, 2006, we filed an amendment to our Articles of Incorporation with the Nevada Secretary of State which revised Section 3 of the Articles of Incorporation increasing the authorized capital stock from 75,000,000 shares of common stock, with a $0.001 par value, to 750,000,000 shares of common stock with a similar par value.

Alan Lindsay, Erik Essiger and Ivan Obolensky are "independent" directors of the Company as that term is defined in Rule 121 of the American Stock Exchange listing standards.

DESCRIPTION OF BUSINESS AND PROPERTIES

General

We are a natural resource exploration company engaged in the exploration of properties that may contain uranium minerals in the United States. Our strategy is to acquire properties that are prospective for uranium exploration and have undergone some degree of uranium exploration but have not yet been mined. To date, we have acquired interests in 45,748.49 gross acres of leased or staked mineral properties, consisting of claim blocks located in the States of Arizona, Colorado, New Mexico, Texas, Utah and Wyoming. In 2007, we have plans to acquire further acres of mineral properties subject to adequate funding being completed. Other mineral property acquisitions are contemplated in states of interest that include Arizona, Colorado, New Mexico, Texas, Utah, and Wyoming. These potential acquisition properties have not yet been specifically identified. Our ability to complete these acquisitions will be subject to our obtaining sufficient financing an d our being able to conclude agreements with the property owners on terms that are acceptable to us.

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As of the date of this prospectus, we have interests in an aggregate of 45,748.49 gross acres (38,586.98 net mineral acres) of properties that have been either leased or staked, which we intend to explore for economic deposits of uranium. These leases are also subject to 5.0% to 15.0% net royalty interests. These properties consist of claim blocks located in the States of Arizona, Colorado, New Mexico, Texas, Utah, and Wyoming. Each of these properties has been the subject of historical exploration by other mining companies, and provides indications that further exploration for uranium is warranted.

Our properties do not have any reserves. We plan to conduct exploration programs on these properties with the objective of ascertaining whether any of our properties contain economic concentrations of uranium that are prospective for mining. As such, we are considered an exploration or exploratory stage company. Since we are an exploration stage company, there is no assurance that a commercially viable mineral deposit exists on any of our properties, and a great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of uranium or any other type of mineral. Since inception, we have not established any proven or probable reserves on our mineral property interests.

Background

The United States is generally the largest consumer of uranium in the world and consumed approximately 15 million pounds of uranium in 2006. Production of uranium in the United States in 2006 was approximately three million pounds, which supplied approximately 20% of the electricity consumed in the United States in 2006.

The price for uranium is generally determined by supply and demand. Over the past five years, the price for uranium has been gradually increasing and, on April 30, 2007, the spot price for uranium was approximately $113.00 per pound. We believe that there is potential for further increases in the price for uranium based upon an expected decrease in the available supply for uranium in 2008 and 2009.

Between 1960 and 1985, a significant amount of exploration work was conducted in the United States for uranium. A large number of these exploration projects were not pursued, however, these projects accumulated a significant amount of exploration data.

We have acquired a significant amount of this exploration data and have acquired interests in properties that we believe warrant further exploration for uranium based upon the exploration data we have acquired. Our properties do not have any reserves. We plan to conduct exploration programs on these properties with the objective of ascertaining whether any of our properties contain economic concentrations of uranium that are prospective for mining. We are also reviewing the exploration data we have acquired to determine other properties that we believe warrant further exploration for uranium and plan to acquire interests in such properties. We have identified a number of low grade projects that we believe we can fast track to production by conducting a number of different exploration and permitting activities at that same time, specifically in the state of Texas. Currently, most of our exploration activity is focused in the state of Texas. We are currently targeting the third or four th quarter of 2009 to be in production. However, there can be no assurance that we will achieve our objectives in this regard, within the time frames targeted or at all.

We plan to follow the In-situ recovery method when mining for uranium, which is an alternative to conventional mining. We believe that this method of mining requires lower capital expenditures and has less impact on the environment, as well as a shorter lead time than conventional mining with respect to beginning production. In-situ leach mining of uranium involves pumping oxidized water through the underground uranium deposit, dissolving it and then pumping it to surface for further processing. Monitor wells on sides of the deposit assure none of the uranium-rich waters leak away from the production zone. We plan to offer our In-situ recovery engineering services as third party expertise to our peers as well.

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According to a survey by the U.S. Department of Energy, in 1979 there were over 20,000 people employed in the uranium mining industry, compared to just over 400 people in 2004. We believe that there is a shortage of human resources in the uranium mining industry currently, which acts as a barrier in respect of the exploration for uranium. We have a team of 11 highly experienced uranium mining professionals, comprised primarily of geologists and engineers, which we believe is a competitive advantage for our company. These persons are involved in the review of the historical exploration data we have acquired in order to determine projects that warrant pursuing, as well as the exploration of our properties.

Our Database

We have acquired historical exploration data that may provide indications of locations that warrant further exploration for uranium. This prior exploration data consists of management information and work product derived from various reports, drill hole assay results, drill hole logs, studies, maps, radioactive rock samples, exploratory drill logs, state organization reports, consultants, geological study, and other exploratory information.

The following provides information relating to our database:

Paul Pierce

The Paul Pierce database covers the 6,700 acre Cebolleta property located in the Grants Mineral District, New Mexico, and consists of 601,486 feet of drill logs from 996 holes, drill hole location maps, geological and mine planning maps, various geological and mining reports, and surface and underground mine facility designs that were related to the past-producing JJ Number 1/L-Bar uranium mining and milling complex. The locations of multiple pre-existing mine shafts and underground access ways to uranium mineralized zones are also detailed.

This database was complied by the Standard Oil Company of Ohio (SOHIO) during the course of their development and production at JJ Number 1/L-Bar. We acquired the database from Paul Pierce, the Company's Manager of Mine Production. Mr. Pierce was employed by SOHIO from 1981 to 1986 as Senior Mining Engineer and Resource Development Specialist at the L-Bar operations.

We have exclusive ownership of this database.

Halterman

The Halterman database consists of exploratory and development work compiled during the 1970s and 80s, including extensive data on significant prospects and projects in the following known uranium districts in the states of Colorado, New Mexico and Utah: Grants, San Juan Basin, Chama Basin, Moab, Lisbon Valley, Dove Creek, Slick Rock and Uravan.

This database includes drilling and logging data from over 200,000 feet of uranium exploration and development drilling, resource evaluations and calculations, drill-hole locations and grade thickness maps, competitor activity maps as well as several dozen geological and project evaluation reports covering uranium projects in New Mexico, Colorado, Utah, Texas and California. These reports will be used by our geologists to assess uranium potential in various districts and to identify key land parcels for acquisition.

We have exclusive ownership of this database.

Brenniman

The Brenniman database includes drilling and logging data from over 1 million feet of uranium exploration and development drilling, resource calculation reports and various other geological reports, drill hole location maps and other mapping. This database includes approximately 142 drill hole gamma and E-logs. The data was originally compiled from 1972 to 1981 by various exploration companies, and covers over 100 uranium prospects in 15 southern US states. This library will be used by our technical personnel to determine locations of where drill-indicated uranium may exist.

30


 

We have exclusive ownership of this database.

Nueces

We have acquired copies of uranium drill logs from previous uranium exploration drilling projects covering a large area in the South Texas uranium trend. The data consists of approximately 150,000 feet of drill logs from 366 drill holes. This drill data provides regional geologic information and will be used to locate possible mineralized zones within the area of the South Texas uranium trend.

The data was acquired from Nueces Minerals Company, a privately-held oil and gas production company which owns the mineral rights to 72,000 contiguous acres covering portions of four counties in south Texas. 

We do not have ownership or exclusive rights to this data.

Kirkwood

We acquired a database of uranium exploration results covering an area of approximately 13,000 acres within the uranium zone known as the Poison Spider area, in central Wyoming.  The area covered includes property already held by us, as well as by other publicly-traded uranium exploration companies. The database was compiled by William Kirkwood of North American Mining and Minerals Company ("NAMMCO") a significant player in the uranium, coal, gold and oil and gas industries in the western United States since the 1960s.The data acquired was generated from exploration originally conducted by companies such as Homestake Mining, Kennecott Corp, Rampart Exploration, as well as Kirkwood Oil and Gas, largely between 1969 and 1982 . The database consists of drill hole assay logs for 470 holes, including 16,000 feet of drilling, 22,000 feet of gamma logs, drill hole location maps, cross sections, geological maps, geological reports, and other assay data and will be used to loc ate possible mineralized zones in the Poison Spider area in central Wyoming. 

We have exclusive ownership of this database.

Knupke

We acquired the exclusive rights to a uranium database consisting of 40 years worth of uranium exploration results, gathered largely from the South Texas uranium trend, where we have already been actively acquiring interests in land, on the basis of the data and will be used to locate possible mineralized zones.

The rights to this exploration database were provided to the Company by James A. Knupke, Consulting Geologist of Corpus Christi, Texas.  Under terms of an agreement, Mr. Knupke provided consulting services to the Company which included the review of his data base. Upon review of the database we acquired several prospective properties. We have terminated the agreement as we had substantially exhausted our review of Mr. Knupke's data.

We do not own or have exclusive rights to this database.

Odell

We acquired the rights to a database containing over 50 years of uranium exploration data for the state of Wyoming.

This database consists of 315,000 feet of drill logs, over 400 maps, copies of all US geological survey uranium publications dating back to 1954, and geological reports on uranium ore bodies throughout Wyoming. The database will be used to locate possible mineralized zones. The database is made available to the Company by Robert Odell, the compiler and publisher of the Rocky Mountain Uranium Minerals Scout since 1974. 

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We have not acquired ownership of this database, but rather the exclusive use of it as long as the owner remains our employee. Should he resign, we would be required to negotiate an agreement to acquire ownership.

Moore

We acquired a database of US uranium exploration results from Moore Energy Corporation, a private Oklahoma-based uranium exploration company.

The Moore Energy US uranium database consists of over 30 years of uranium exploration information in the states of Texas, New Mexico, and Wyoming, originally conducted during the 1970s, '80s and '90s.  It includes results of over 10,000 drill holes, plus primary maps, and geological reports.  It covers approximately one million acres of prospective uranium claims, in the South Texas uranium trend, New Mexico, and Powder River Basin, Wyoming, as well as zones in Texas, and will be used to locate possible mineralized zones.

The database also provides the Company with exploration data about its Goliad Project in south Texas, including 250,000 feet of drill logs and further delineates zones of potential uranium mineralization. It also contains drilling results from properties that are being developed by other uranium exploration companies, and also widespread regional data from throughout the South Texas uranium trend.

We have exclusive ownership of this database.

Additional information is set out in the discussion of our properties below.

Our Plan of Operations

Our plan of operations for the next 12 months is to conduct further exploratory drilling at the Weesatche project in Goliad County, Texas as described under "Plan of Exploration - 2007/2008" under the discussion relating to the Weesatche project below.

We also plan to undertake the exploration work programs described below under "Mineral Exploration Properties" in the next 12 months.

We also plan to acquire further acres of mineral properties in the states of interest that include Arizona, Colorado, New Mexico, Texas, Utah and Wyoming. Our ability to complete these acquisitions will be subject to our obtaining sufficient financing and our being able to conclude agreements with the property owners on terms that are acceptable to us.

Our Principal Mineral Properties

Our principal mineral property is the Weesatche project in Goliad County, Texas. The property is without any known reserves and the program at the property is currently exploratory in nature. None of our other properties are currently considered material properties and we plan to conduct further exploration of these properties to determine mineralization thereon in due course.

Drilling was completed during September and October on the AB-claim group (41 unpatented lode mining claims) in the North Shirley Basin in the State of Wyoming, which consists of 847 acres held pursuant to a lease dated May 1, 2006. Thirty (30) holes totalling approximately 19,500 feet were drilled and logged.  Uranium mineralization was encountered in a majority of the holes, but grades were lower than historical drilling indicated.  The Company has terminated its lease agreement with the lessor, has restored the drill sites, and applied to the DEQ for the return of its restoration and plugging bond and, therefore, the Shirley Basin AB Claims are no longer considered a material project of our company and are not included in the total gross and net property acreages for the state of Wyoming.

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The following provides information relating to our principal mineral property:

Weesatche Leases, Goliad County, Texas

The Weesatche project is located approximately 90 miles southeast of San Antonio, Texas, and is reached by car from San Antonio via Interstate 10 East to Highway 183 South to Weser, Texas. The Weesatche Project is 1 mile east-southeast of Weser, Texas, off State Highway 183, 15 miles north of the city of Goliad, Goliad County, Texas. Various areas of the project are accessable by numerous County roads.

Ownership Interest

Our company has currently leased thirteen tracts for 1,717.20 gross acres (1,567.37 net acres) in the Weesatche project area of Goliad County, Texas. The leases are for a five year primary term with an option for five additional years. All leases acquired to date have royalties payable to mineral owners at a fixed rate of 8.25% of actual sales price of yellowcake, minus certain costs. In order to retain title, we must pay annual delay rentals of $3.50 per acre due on the first anniversary of each lease and yearly thereafter for the first five year period of the lease, then the lease-specific renewal amount for the next five year period. Leases allow for In-Situ mining of uranium and related fissionable materials.

To date we have incurred $7,895,914 in acquisition costs comprised of $323,454 in cash payments and $7,572,460 in stock based compensation for the Weesatche project and total exploration expenditures to date are approximately $2,088,225. We anticipate spending approximately $755,511 in respect of the Weesatche project in the next twelve months. See "Management's Discussion and Analysis or Plan of Operations".

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History of Previous Operations

Wide spaced exploration drilling was carried out by Coastal States Uranium in 1980 across the northern half of Goliad County during which time several significant shows were identified. Based on the shows, Coastal put together a land package of approximately 55,000 acres, and named the prospect Weesatche. Moore Energy Corporation ("Moore") picked up Weesatche in 1982 and initiated a drilling program based on the Coastal data that extended over a period of several years. Moore drilled approximately 500 exploration test holes for a total footage of approximately 225,000 feet.

Present Condition of the Property

The property under lease by Uranium Energy Corporation consists of open range land and is under exploration. No physical structures or equipment have been installed on the property. There are no mining or processing facilities present at Weesatche. This project is still in the exploration stage. Drilling rigs and associated support vehicles are the only equipment on the project site. There is no infrastructure or facilities at this time. Electric power is obtained from Guadalupe Valley Electric Cooperative, Inc., and water is obtained from American Pumping and Trucking, Inc. of Victoria, TX.

Geology of the Property

The Weesatche Project is located in the South Texas Uranium Trend along the depositional strike of the Tertiary sedimentary trend. The Tertiary and younger beds outcrop on concentric arcs paralleling the Gulf Coast. Striking north to northeast, the beds dip to the Gulf at approximately 20 to 80 feet per mile. The oldest uranium producing horizons in the district are in the Jackson Group of Eocene age. Overlying are the Oligocene Frio and Catahoula, Miocene Fleming and Oakville Formations, all overlain by the Goliad Formation of Pliocene age. The latter is the host formation for the uranium in the Weesatche. The Goliad Formation is comparatively coarse-grained, consisting of sand and some gravel with interbedded clay and silty clays. The formation is approximately 450 feet thick in the project area.

Uranium mineralization occurs along the flanks of paleo sand channels. Following deposition, the oxygen-rich groundwater (whose movement is primarily influenced by the regional southeast dip) transports the uranium in solution, until it encounters areas of reducing conditions where the uranium is then precipitated out of solution. At that point, uranium roll front deposits are formed. The areas of reduced geochemistry were formed near the many down-to-the-coast normal faults that intersected the paleo channels. These faults served as conduits for the reductant gases such as hydrogen sulfide. This mineralization occurs as roll fronts along the paleo stream channels. A schematic of a roll front is shown below.

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Schematic of a South Texas Roll Front Uranium Deposit

At Weesatche, four distinct fluvial sand facies have been defined. These basal units of the Goliad Formation have been named the A, B, C and D sands, and the tops of the sand units occur at the following depths below ground surface of 90 feet, 180 feet, 235 feet and 340 feet, respectively. Each sand unit is bounded above and below by massive, impermeable clays averaging 60 feet in thickness. Groundwater is under confined conditions with a static water level of fifty feet below ground surface. Uranium mineralization occurs in all four sands, with the bulk currently being concentrated in the A and D sands. The reductant source is gas derived from deeper hydrocarbon deposits seeping upward along fault planes with are located proximal to the ore deposits.

Included in the set of exploration techniques is 3D modelling of the mineralization. Company geologists have input drilling results from the Company's drilling program into 3D rendering software for the purpose of creating theoretical representations of the underground mineralized zones. This technique converts drilling results into images that aid geologists in comprehending the spatial dimensions of the mineralization, and may aid in the planning of future phases of exploration.

Since drilling operations were initiated on the property in May of 2006, a total of 343 holes have been drilled for a total drilling footage of 108,479 feet. All exploration holes have been plugged and abandoned per our exploration permit administered by the Texas Railroad Commission. A total of 6 holes have been drilled and cased to function as monitor wells in support of our permitting efforts at the Weesatche Project. Also, a total of 6 holes were drilled for the collection of core samples.

The property is without any known reserves and the program at the property is currently exploratory in nature.

Plan of Exploration - 2007/2008

Our company completed the planned 32,000-foot drilling program during the fourth quarter of 2006. Based on encouraging results, a two-fold, follow-on program was designed to be performed during 2007 to support mine permitting, mine planning and expansion of existing resources. All 2007 drilling at Weesatche will be carried out under our approved Texas Railroad Commission Exploration Permit No. 123 dated February 3, 2006. The Permit has been extended for an additional year (until February 3, 2008).

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The first phase of the new program will be to support ongoing environmental permitting. An additional 216 holes will be drilled. Total drilling footage for this part of the program will be approximately 75,840 feet.

The first phase will also involve a total of 5 core holes averaging 300 feet in depth. The cores will be collected and sent to an analytical laboratory to have agitation leach analyses run to best determine the composition of the mine lixiviant amenable to in-situ recovery methodology.

Following the coring program, at total of 5 cased holes will be installed and utilized as groundwater monitor wells. Groundwater will be sampled and analyzed as part of the ongoing environmental mine permitting application process. These six monitor wells will be drilled and cased to an average depth of 300 feet below ground surface. The entire cost of this first phase program will be approximately $595,000. It is anticipated that this first phase drilling program will be completed during the second quarter of 2007.

The second phase of drilling planned at Weesatche will be designed to explore additional acreage acquired during our company's 2006 - 2007 leasing program. It is anticipated that at least 500 exploratory holes will be required to adequately define the presence or absence of mineralization on the newly acquired acreage. The 500 holes will account for an approximate total of 227,250 feet of drilling and cost $1,500,000. This drilling program should be initiated during the second quarter of 2007 and extend into the first quarter of 2008.

Geologists and engineers performing work at the Weesatche project have developed a timetable of forecasted workflow, which includes the forecasted completion dates of various tasks which have been assigned to various personnel. The workflow has been broken down into two broad categories, which have then been further broken down into individual tasks, many of which can be performed contemporaneously. The two major categories of work relate to radioactive materials licenses and mine permits.

Within these two broad categories of work, are included the following tasks, many of which are required by the regulatory bodies to whom the Company is subject to oversight for exploration activities. The forecasted dates of completion of these tasks is also indicated. These are internal forecasts only, and the actual dates of the beginning or completion of these tasks may differ materially from the forecasts:

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Radioactive Materials License

 

  • Archeology/History study

Q2 2006 - Q4 2006

 

  • Ecology study

Q1 2007 - Q4 2008

 

  • Soils/Sediments/Gamma testing

Q1 2007 - Q3 2007

 

  • Gamma/Radon-222 testing

Q1 2007 - Q4 2007

 

  • Socioeconomic study

Q1 2007 - Q3 2007

 

  • Radiological assessment

Q1 2007 - Q4 2008

 

  • MILDOS survey

Q1 2007 - Q3 2007

 

  • Feasibility Study

Q1 2007 - Q3 2007

 

  • Agency review and approval

Q4 2007 - Q4 2008

Mine Permit

 

  • Area groundwater baseline study

Q3 2006 - Q1 2007

 

  • Geology/Hydrology study

Q1 2007 - Q3 2007

 

  • Deep disposal well test

Q1 2007 - Q3 2007

 

  • Mine permit review and approval

Q2 2007 - Q1 2008

 

  • Disposal well review and approval

Q1 2007 - Q4 2007

 

  • Air exemption permit

Q4 2007 - Q1 2008

 

  • EPA aquifer exemption

Q1 2008 - Q1 2009

 

  • PAA review and approval

Q1 2008 - Q1 2009

Upon the satisfactory completion of these tasks, and with approval of all applicable regulatory agencies involved in these tasks, the Company may then proceed with uranium extraction, provided that this exploration property can establish economic uranium reserves.

Mineral Exploration Properties

We are participating in our mineral properties in the States of Arizona, New Mexico, Wyoming and Colorado by way of mining claims and mineral leases. The properties were staked and claimed by us and registered with the United States Bureau of Land Management ("BLM"). There are claim blocks acquired in this manner in Arizona, and further claim blocks in Colorado and New Mexico. We have surface access and complete mineral rights to an unlimited depth below surface. The claims are in effect for an indefinite period provided the claims are kept in good standing with the BLM and the counties. The claims were entered into between November 4, 2004 and October 2006. Annual maintenance fees to be paid to the BLM are relatively nominal. We will also be required to remediate the land upon release of the claim - bringing the land back into the state it was originally in prior to the commencement of our exploration activities. These costs are determined by the BLM and bonded accordingly.

In the States of Utah and Texas, we are participating in our mineral properties by way of property lease directly from the owners of the land/mineral rights. As of the date of this prospectus, we have executed one lease in Utah, and further leases in Texas. These leases give us similar access and privileges as described above, however with some important differences. Although we will have access to the surface, the mineral rights below surface are restricted to uranium and associated fissionable minerals only, with any other minerals and hydro carbons, including, for example, petroleum, retained by the lessor. The lease terms are for five years, and include five-year renewal periods. After the expiration of the second five-year term, the leases will be either held by production or the leases will be terminated. Royalty payments must be made to the lessor in event that we extract uranium ore from the properties. Royalty payments vary from 6.25% to 15.25%, or based on a sliding scale tied t o the price of uranium. All royalties are based on the gross sales revenue less certain charges and fees.

We have the following gross and net acre mineral property interests in states indicated below under lease:

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Gross Acres

Net Acres(*)

Arizona

2,231.28

2,231.28

Colorado

4,338.60

4,338.60

New Mexico

25,616.76

18,723.26

Texas

4,491.81

4,223.80

Utah

2,226.94

2,226.94

Wyoming **

6,843.10

6,843.10

Total:

45,748.49

38,586.98

(*)   Certain of our interests in our mineral properties in New Mexico and Texas are less than 100%. Accordingly, we have presented the acreage of our mineral properties on a net acre basis.

(**) Does not include the AB claim Group (847 acres) in the State of Wyoming as the related lease agreement has been terminated.

These properties do not have any indicated or inferred minerals or reserves. We plan to conduct exploration programs on these properties with the intent to prove or disprove the existence of economic concentrations of uranium.

Since inception, we have not established any proven or probable reserves on our mineral property interests.

On October 11, 2005, we entered into a Mineral Asset Option Agreement (the "Option") with Brad A. Moore giving us the option to acquire certain uranium leases from Mr. Moore in the State of Texas. In consideration for the Option, we have paid Mr. Moore a cash payment of $50,000 and issued 1,000,000 shares of our restricted common stock. The Option, if exercised, will require the further issuance of 2,000,000 restricted common shares in varying share instalments over the three, six month intervals following the effective date of the Option (October 11, 2005). A further payment of $150,000 has been paid under the Option on February 1, 2006. Title to the properties to be acquired will transfer upon payment of all remaining stock required under the Option, the timing of which may be accelerated at our discretion. During the Option term, we have the right as operator to conduct or otherwise direct all the exploration on the properties to be acquired. As of this date all cash co nsideration and share issuances required pursuant to the terms of the Option have been completed.

On May 1, 2007, we entered into a joint venture with Neutron Energy Inc. ("NEI"), a Wyoming corporation, in connection with the exploration of a property covering approximately 6,700 acres located in Cibola County, New Mexico for uranium resources. In connection with the joint venture, Cibola Resources LLC ("Cibola"), a limited liability company under the laws of the State of Delaware, was formed to undertake the exploration activities contemplated by the parties. NEI acquired the mining lease to the property from La Merced del Pueblo de Cebolleta ("Ceboletta"), a private entity that has the authority over the natural resources of the property, pursuant to a letter agreement between Cebolleta and NEI dated January 27, 2007, and has contributed the lease to Cibola. In connection with the acquisition of the lease, NEI has made cash payments to Cebolleta of $3,000,000 to date. The Company has reimbursed an aggregate of $1,470,000 to NEI to date. As a result, NEI and the Compan y hold a 51% and 49% interest, respectively, in Cibola.

Arizona

All of our Arizona claims were previously the subject of exploration drilling for the incidence of Uranium by companies such as Noranda, Inc., Uranerz Energy Corp., Homestake Mining Co., and Oklahoma Public Services. We have acquired a 1979 Oklahoma Public Services ("OPS") geologic report contiguous to our claims (Artillery Peak) that indicates the possibility of incidence of uranium. OPS drilling continued on to our claims as evidenced by drill holes verified on the ground, and such drill cuttings were found to be radioactive. Close spaced developmental drilling is indicated on our claims located at Artillery Peak.

 

Other claims staked by us (Esther Basin, Crow Canyon and Dry Mountain) in Arizona were staked on known uranium occurrences as shown on Arizona State publication, "Occurrences of Uranium in Miscellaneous Sedimentary Formations, Diatremes and Pipes and Veins". Additionally, these claims were previously drilled by companies including Homestake Mining Co., Uranerz Energy Corp., and Noranda, Inc. in the 1970's uranium boom. Our management has confirmed prior claim ownership as verified with the United States Department of Interior - Bureau of Land Management. In addition, ground surveys completed by us have located various previous drill locations and radioactive anomalies as evidenced in ground and drill cuttings. We confirm that as of the date of this prospectus, our Arizona located claims contain no uranium reserves, and require extensive exploration by us.

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The following provides information relating to such claims:

Property

Number of Claims or Leases Held

Acres

Artillery Peak 1

19 claims

392.54 gross acres
392.54 net acres

Artillery Peak 2

31 claims

640.46 gross acres
640.46 net acres

Dry Mountain

28 claims

578.48 gross acres
578.48 net acres

Esther Basin

10 claims

206.60 gross acres
206.60 net acres

Gunsight Canyon 1

11 claims

227.26 gross acres
227.26 net acres

Gunsight Canyon 2

9 claims

185.94 gross acres
185.94 net acres

Colorado

Claims acquired by us in Colorado have historical production tonnages and grades published in the Colorado Geological Survey, Bulletin 40 - "Radioactive Mineral Occurrences of Colorado". Additionally, a third party consulting miner/engineer was utilized by us for his first hand knowledge of the Colorado properties acquired. Also, our Chief Geologist previously evaluated and acquired a portion of the claims currently owned by us (the Carnotite Mine) while consulting for another company, International Texas Industries, Inc. We confirm that at the current date, our Colorado located claims contain no uranium reserves and require extensive exploration by us.

The following provides information relating to such claims:

Property

Number of Claims or Leases Held

Acres

Carnotite

18 claims

371.88 gross acres
371.88 net acres

Ambrosia Lake

158 claims

3,264.28 gross acres
3,264.28 net acres

Raven Mine Group

22 claims

454.52 gross acres
454.52 net acres

Triangulation Mine Group

12 claims

247.92 gross acres
247.92 net acres

Texas

We currently own two leases located in a South Texas uranium trend that have been the subject of substantial historical exploration by Wold Nuclear Corporation in the 1970's and 1980's, and constitute some of our most prospective exploration targets. Wold Nuclear was a private uranium exploration company based in Casper, Wyoming and owned by former Wyoming U.S. Congressman, John S. Wold. Wold Nuclear, discovered a number of large uranium deposits in Wyoming which were later acquired and put into production by major uranium production companies. Wold Nuclear's Texas operations were a joint exploration venture with Cotter Corporation. Our Chief Geologist was employed by Wold Nuclear as district and chief geologist of its Texas based operations.

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Wold Nuclear's previous work conducted on and around the Uranium Energy Corp. exploration targets located in South Texas (Zavala County) is in a certain formation that was not the focus of uranium exploration in previous uranium booms (the "New Formation") (formation is not provided for competitive reasons). The New Formation represents a new "out of traditional trend" host rock for possible uranium mineralization. We have acquired a number of drill hole gamma logs, as well as one drill core whose chemical analysis supports the indication of uranium, along with lease and drill hole location maps. Insufficient drilling in past exploration programs did not quantify any reserves for Wold Nuclear.

The expected mineralized area comprising the New Formation has been defined in geological area by our own work product. The New Formation host rock is up to 250 feet thick and has the potential for uranium mineralization similar to Wyoming's Powder River Basin. As of the date of this prospectus, we have acquired two leases (473.06 gross acres) in an area where previous drilling and coring indicated uranium mineralization.

The following provides information relating to such leases:

Property

Number of Claims or Leases Held

Acres

Carrizo

9 leases

1,043.93 gross acres
966.51 net acres

Weesatche

13 leases

1,717.20 gross acres
1,567.37 net acres

Maetze

3 leases

166.83 gross acres
158.47 net acres

Nichols

3 leases

1,040.70 gross acres
1,020.13 net acres

Devillier

3 leases

654.85 gross acres
386.56 net acres

Goehring

2 leases

124.78 gross acres
124.78 net acres

Utah

Our Utah property (Crain Lease) was the subject of prior exploration drilling conducted by Pioneer-Uravan, Inc. and Truchas Limited in the 1970's to search for uranium indications. We have acquired gamma drill log interpretation worksheets from work previously conducted by Pioneer-Uravan, Inc. In addition, drill hole location maps have been obtained from work conducted for Pioneer-Uravan, Inc. and Truchas Limited. Further assay reports on core samples from exploration drilling previously conducted by Pioneer-Uravan, Inc. as verified by that company's commissioned assay report have also been obtained, as well as certain drill indicated uranium findings that provide the basis for preliminary reserve information as previously conducted and defined in a Truchas Limited summary and report (1979). We confirm that at the date of this prospectus, our Utah located claims contain no uranium reserves that we have independently verified, and require extensive exploration by us.

A gamma drill log interpretation worksheet is work product created from a listing of sensory information created at routine intervals that forms the output or log of a uranium testing technique used when exploring depths of the earth beneath the surface through exploratory drilling.

The following provides information relating to such claims and leases:

Property

Number of Claims or Leases Held

Acres

Crain

1 lease

640 gross acres
640 net acres

Ambrosia Lake

21 claims

433.86 gross acres
433.86 net acres

 

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Exploration Work Programs - Arizona and Colorado

Our Chief Exploration Officer, Randall Reneau, a Certified Professional Geologist, based on historical data previously outlined and our own work product, has developed exploration programs unique to each state and claim block with the intent of proving or disproving the existence of uranium on these prospects. In order to carry out these exploration programs, $204,500 and approximately twelve months will be required, according to the exploration budget and schedule recommended by our Chief Exploration Officer. As of the date of this prospectus, we believe we currently have sufficient capital required to complete Phase I exploration costs. Our ability to pay for Phase I exploration costs is not expected to be impacted by possible further property acquisitions. Additional capital for possible future uranium exploration property related acquisitions will be funded through additional offerings of debt and equity on an as required basis.

The total cost of expected Phase II exploration on all mineral properties contemplated at this time is equal to $125,000 including contingency cost allowance. Additional costs for Phase II exploration work and for further lease and land acquisitions are expected to be funded by future financings from debt and equity sources. See "Management's Discussion and Analysis or Plan of Operations."

Phase I Work Programs - Arizona and Colorado

The work program that has been recommended for the mineral properties is dependent on the nature of the exploration conducted prior to our acquisition. The intended Phase I work programs will be on the claims located in both Arizona and Colorado.

During Phase I work programs on these particular mineral claims, we plan to review and analyze all historical exploration data available to us in our current possession, and to probe existing drill holes with gamma probes, with a strategy that attempts to confirm historical drill results. Costs have been estimated at $14,500 per claim block.

Phase I Work Programs - South Texas Leases

We currently own two (2) leases located in a known and established South Texas uranium trend that have been the subject of substantial historical exploration by Wold Nuclear in the 1970's and 1980's, and constitute the Company's most prospective exploration targets. We plan to review all historical exploration data and to probe historical drill holes, at an estimated cost of $30,000. Included in Phase I for these particular leases will also include 9,450 feet of new drilling, at an estimated cost of $94,500. A further $5,000 cost has been estimated for mobilization and demobilization, as well as $2,500 for surface remediation. The total cost of Phase I exploration on all mineral properties contemplated at this time is equal to $204,500.

The new drilling noted in the preceding paragraph will be performed utilizing a truck-mounted rotary drill. Due to the nature of the formations, a drilling mud system will be developed to ensure the resulting borehole can be advanced efficiently and will remain stable during subsequent geophysical logging. Drill hole spacings will be on the order of 400 to 100 feet apart based on the nature of the mineralization. It is anticipated that drill depths will be to 500 feet below ground surface on these project. During mud rotary drilling operations, the "cuttings" or drilled material flow up the boring between the boring wall and drill pipe, suspended in the mud, and are collected at the surface in a mud pit. At ten-foot intervals during drilling, a sample of the cuttings will be collected for visual analyses by the well-site geologist. The analysis will consist of describing rock types and noting any alteration to the drilled rock. Following the analysis, the samples will be disposed of in the mud pit.

During this exploration drilling program, samples may be sent to a laboratory for analyses, such as recovery amenability testing. The samples would be under a strict monitoring and tracking system from log-in to completion. Samples would be logged-in immediately upon receipt and carefully checked for any special handling that may be needed. All analytical procedures, sample handling, and preservation techniques are EPA approved (where applicable) and strictly adhered to. The laboratory duplicates every tenth sample to measure and control the precision of their work. Where applicable, the laboratory also spikes every tenth sample to test for accuracy. Reference samples from the EPA or from private sources are tested by the laboratory with every set of samples to provide a third measure of the performance of the laboratory's equipment and personnel.

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Based on exploration databases acquired during 2006 we were able to establish five separate lease positions with the South Texas uranium trend. Four of these lease positions are within Goliad County and would compliment our existing Weesatche project. One of the positions was heavily drilled by Mobil Oil during the 1970's and 1980's. The three remaining Goliad County lease positions are highly encouraging prospects that we plan to drill during 2007 to prove or disprove the occurrence of uranium resources. The fifth lease position is within Duval County and falls within the Catahoula Formation, an historic uranium host formation of prolific proportions for South Texas. As previously stated, these lease position were developed by Company geologist during 2006 from historic databases. Land acquisition costs for these five prospects total $432,000 and drilling costs are approximated to be $562,000.

The exploration databases used to develop the five lease positions described above were obtained during the acquisition of the Moore Energy Corporation information and the acquisition of the Knupke database. Both databases consist primarily of numerous geophysical logs with corresponding maps, field reports, and regional maps. The Moore Energy database was developed over a period of approximately 10 years and consists of a compilation of their exploration projects and prospects and is quite reliable. This database will be used to guide in the development of the Weesatche Project and to develop additional projects and prospects. It is exclusively used by the Company. The Knupke database was developed by an individual over a period of approximately 20 years and consists of past project information, map and logs, and potential prospects developed through analysis of regional geology. This database was used exclusively by the Company during 2006.

Phase II Work Programs

The purpose of Phase I exploration work on the Artillery Peak, Esther Basin, and Dry Mountain claims in Arizona is chiefly to determine which areas require new drilling. Once the drill targets have been established, an estimated 7,500 feet of drilling is planned for all three properties, at an estimated cost of $75,000. The drill program will be allocated as follows: 3,000 feet at Artillery Peak; 1,500 feet at Esther Basin; 3,000 feet at Dry Mountain. These exploratory holes must then be logged using geophysical methods at an estimated cost of $15,000. A further $2,500 per property has been estimated for mobilization of drill equipment and again for demobilization, as well as $2,500 per property for surface remediation following drilling operations.

The total cost of Phase II exploration on all mineral properties contemplated at this time is equal to $125,000 including contingency cost allowance. Additional costs for Phase II exploration work and for further lease and land acquisitions are expected to be funded by future financings from debt and equity sources. We expect minimal effect on our ability to proceed with Phase II exploration should they be required in conjunction with further lease and land acquisitions as the amounts projected for Phase II exploration costs are not substantial in relation to budgeted total annual capital and operating expense expenditures. If however, additional land and lease expenditures during the next twelve months create a lack of capital for Phase II exploration costs beyond that anticipated in relation to available capital, we may not be in a financial position to conduct Phase II exploration if required.

In all cases, results from Phase I of exploration on our properties will determine whether we proceed to Phase II of the exploration program, or discontinue exploration on the property. Phase II costs, if any, will be incurred in the subsequent 12-month period, and would require additional financing.

We expect to purchase and build a Prompt Fission Neutron ("PFN") Logging Truck for a total aggregate cost of approximately $157,000. A PFN Logging Truck will enable company geologists to directly read uranium values in a borehole under "real time" conditions. A standard logging truck, running a gamma ray probe, reads all radioactive emitting elements in the hole and does not discriminate uranium. In the past, a core sample would need to be collected, sent to a laboratory for analysis of uranium before a geologist would know the exact uranium concentration in a bore hole. A PFN Logging Truck provides this information in the field and saves considerable time and money. We took delivery of this equipment in April 2007.

Our operational business plan calls for the acquisition of further uranium exploration properties in Arizona, Colorado, New Mexico, Texas, Utah and Wyoming. We have developed detailed exploration programs for each claim block area of interest based on historical data derived from past uranium exploration by other companies with a mandate to prove or disprove the existence of uranium resources.

42


 

Competition

We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual investors, which are actively seeking uranium minerals exploration properties throughout the world together with the equipment, labour and materials required to exploit such properties. Many of our competitors have financial resources, staff and facilities substantially greater than ours. The principal area of competition is encountered in the financial ability to cost effectively acquire prime minerals exploration prospects and then exploit such prospects. Competition for the acquisition of uranium minerals exploration properties is intense, with many properties available in a competitive bidding process in which we may lack technological information or expertise available to other bidders. Therefore, we may not be successful in acquiring, exploring and developing profitable properties in the face of this competition. No assurance can be given that a suf ficient number of suitable uranium minerals exploration properties will be available for acquisition, exploration and development.

Minerals Exploration Regulation

Our minerals exploration activities are, or will be, subject to extensive laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational health, waste disposal, protection and remediation of the environment, protection of endangered and protected species, mine safety, toxic substances and other matters. Minerals exploration is also subject to risks and liabilities associated with pollution of the environment and disposal of waste products occurring as a result of mineral exploration and production. Compliance with these laws and regulations may impose substantial costs on us and will subject us to significant potential liabilities. Changes in these regulations could require us to expend significant resources to comply with new laws or regulations or changes to current requirements and could have a material adverse effect on our business operations.

Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations. In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry and our current operations have not expanded to a point where either compliance or cost of compliance with environmental regulation is a significant issue for us. Costs have been incurred to date with respect to compliance with environmental laws, primarily relating to the posting of a performance bond, and costs are only expected to increase with the increasing scale and scope of exploration operations, especially with the advent of Phase II exploration costs.

Minerals exploration operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our business operations. Minerals exploration operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Minerals exploration operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, state, or local authorities may be changed and any such changes may have material adverse effects on our activities. Mo reover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. As of the date of this prospectus, other than with respect to the posting of a performance bond, we have not been required to spend material amounts on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain our operations. Environmental regulation is discussed in further detail in the following section.

43


 

Environmental Regulation

Our activities will be subject to existing federal, state and local laws and regulations governing environmental quality and pollution control. Our operations will be subject to stringent environmental regulation by state and federal authorities including the Environmental Protection Agency ("EPA"). Such regulation can increase the cost of such activities. In most instances, the regulatory requirements relate to water and air pollution control measures.

Waste Disposal

The Resource Conservation and Recovery Act ("RCRA"), and comparable state statutes, affect minerals exploration and production activities by imposing regulations on the generation, transportation, treatment, storage, disposal and cleanup of "hazardous wastes" and on the disposal of non-hazardous wastes. Under the auspices of the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements.

CERCLA

The federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") imposes joint and several liability for costs of investigation and remediation and for natural resource damages, without regard to fault or the legality of the original conduct, on certain classes of persons with respect to the release into the environment of substances designated under CERCLA as hazardous substances ("Hazardous Substances"). These classes of persons or potentially responsible parties include the current and certain past owners and operators of a facility or property where there is or has been a release or threat of release of a Hazardous Substance and persons who disposed of or arranged for the disposal of the Hazardous Substances found at such a facility. CERCLA also authorizes the EPA and, in some cases, third parties to take actions in response to threats to the public health or the environment and to seek to recover the costs of such action. We may also in the future be come an owner of facilities on which Hazardous Substances have been released by previous owners or operators. We may in the future be responsible under CERCLA for all or part of the costs to clean up facilities or property at which such substances have been released and for natural resource damages.

Air Emissions

Our operations are subject to local, state and federal regulations for the control of emissions of air pollution. Major sources of air pollutants are subject to more stringent, federally imposed permitting requirements. Administrative enforcement actions for failure to comply strictly with air pollution regulations or permits are generally resolved by payment of monetary fines and correction of any identified deficiencies. Alternatively, regulatory agencies could require us to forego construction, modification or operation of certain air emission sources.

Clean Water Act

The Clean Water Act ("CWA") imposes restrictions and strict controls regarding the discharge of wastes, including mineral processing wastes, into waters of the United States, a term broadly defined. Permits must be obtained to discharge pollutants into federal waters. The CWA provides for civil, criminal and administrative penalties for unauthorized discharges of hazardous substances and other pollutants. It imposes substantial potential liability for the costs of removal or remediation associated with discharges of oil or hazardous substances. State laws governing discharges to water also provide varying civil, criminal and administrative penalties and impose liabilities in the case of a discharge of petroleum or it derivatives, or other hazardous substances, into state waters. In addition, the EPA has promulgated regulations that may require us to obtain permits to discharge storm water runoff. In the event of an unauthorized discharge of wastes, we may be liable for penalties an d costs. Management believes that we are in substantial compliance with current applicable environmental laws and regulations.

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Research and Development Activities

No research and development expenditures have been incurred, either on our account or sponsored by customers for the past three years.

Employees

Amir Adnani is our President and Chief Executive Officer, Pat Obara is our Chief Financial Officer, Randall Reneau is our Chief Exploration Officer, and Harry Anthony is our Chief Operating Officer. These individuals are primarily responsible for all our day-to-day operations. Other services are provided by outsourcing and consultant and special purpose contracts. We currently employee 11 persons on a full time basis and contract with approximately 13 individuals on a full time basis for ongoing services provided to the Company.

Leased Premises

We lease our principal office space located at 9801 Anderson Mill Road, Suite 230, Austin Texas, U.S.A., 78750, pursuant to a one-year lease ending on April 30, 2008. The office space cost is $2,948 per month. We also have a one-year lease ending on June 30, 2007 for an office located at Suite 210, 100 E. Kleberg Avenue, Kingsville, Texas, U.S.A., 78363. The office space cost is $1,500 per month. We also have a one-year lease ending on May 31, 2007 for an office located at Suite 230, 232 East Second Street, Casper, Wyoming, U.S.A., 82601. The office space costs $886 per month. We also have a two-year lease ending on March 1, 2009 for an office located at 6100 Indian School Road, NE, Suite 225, Albuquerque, NM, 87110. The office space cost is $1,859 per month for the first year of the lease and $1,909 for the second year of the lease.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The following discussion should be read in conjunction with our audited financial statements as at and for the years ended December 31, 2006 and 2005 and the related notes and the section of this prospectus entitled "Description of Business and Properties" that appear elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this prospectus, particularly in the section entitled "Risk Factors". Our financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Plan of Operations

Our plan of operations for the next twelve months is to continue with the exploration of our mineral properties. Our planned geological exploration programs are described in detail in this prospectus under "Description of Business and Properties".

Our planned exploration expenditures for the next twelve months on our mineral properties, together with amounts due to maintain our interest in these claims, are summarized as follows:

Name of Property

Planned Exploration Expenditures

Amounts of Claims Maintenance Due

Amount of Property Payment Due

Total

Weesatche

$740,935

$14,576

Nil

$755,511

The following sets forth information relating to all fees and other payments required to be made by us in the next twelve months:

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Mining Claims

Lease Maintenance Payments

Access Agreement Fees

Database Maintenance Fees

$500,000 (Holley Option Payment)

$164,294

$nil

$nil

In addition, we will incur general and administrative expenses throughout the year that we anticipate will consist primarily of professional fees for the audit and legal work relating to our regulatory filings throughout the year, as well as transfer agent fees, management fees, investor relations and general office expenses.

We had cash in the amount of $13,581,377 and a working capital surplus in the amount of $13,460,648 as of December 31, 2006. We completed private placement financings in December 2006 and January 2007 whereby we raised $13,500,000 in financing. Based on this financing, we anticipate that we will be able to carry out our exploration programs and plan of operations for the next twelve months without additional financing.

Beyond the next twelve months, we will be required to obtain additional financing in order to continue our plan of operations as we anticipate that we will not earn any revenues in the foreseeable future. We believe that debt financing will not be an alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our exploration programs. In the absence of such financing, we will not be able to continue exploration of our mineral claims. Even if we are successful in obtaining equity financing to fund our exploration programs, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of our mine ral claims following the completion of preliminary exploration. If we do not continue to obtain additional financing, we may be forced to abandon our properties and our plan of operations

We may consider entering into a joint venture arrangement to provide the required funding to pursue drilling and advanced exploration of our mineral claims. Even if we determined to pursue a joint venture partner, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of our mineral claims. If we entered into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral claims to the joint venture partner.

Our exploration plans will be continually evaluated and modified as exploration results become available. Modifications to our plans will be based on many factors, including: results of exploration, assessment of data, weather conditions, exploration costs, the price of uranium and available capital. Further, the extent of our exploration programs that we undertake will be dependent upon the amount of financing available to us.

Results of Operations

We are an exploration stage company and have not generated any revenue to date. The following table sets forth selected financial information relating to our company for the periods indicated:

 

Year Ended
December 31, 2006

Year Ended
December 31, 2005

For the Period from
May 16, 2003 (inception) to December 31, 2006

Mineral property expenditures, net of recoveries

$4,716,223 

$975,514 

$5,749,903 

Consulting fees
- - stock based

4,665,967 

684,008 

5,349,975 

General and administrative

2,496,900 

136,739 

2,647,172 

Management fees
- - stock based

923,253 

923,253 

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Year Ended
December 31, 2006

Year Ended
December 31, 2005

For the Period from
May 16, 2003 (inception) to December 31, 2006

Consulting fees

708,555 

708,555 

Management fees

647,248 

128,860 

820,709 

Wages and benefits
- - stock based

431,078 

431,078 

Professional fees

315,564 

73,684 

425,604 

Depreciation

19,737 

19,737 

Net loss

$(14,818,318)

$(1,998,805)

$(16,969,779)

We have been funding our initial operations by way of private placements. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Our net loss for fiscal year ended December 31, 2006 was approximately ($14,818,318) compared to a net loss of ($1,998,805) during fiscal year ended December 31, 2005 (an increase of $12,819,513). During fiscal years ended December 31, 2006 and 2005, we did not generate any revenue.

During fiscal year ended December 31, 2006, we incurred expenses of approximately $14,924,525 compared to $1,998,805 incurred during fiscal year ended December 31, 2005 (an increase of $12,925,720). These operating expenses incurred during fiscal year ended December 31, 2006 consisted of: (i) mineral property expenditures of $4,716,223 net of recoveries, (2005: $975,514); (ii) general and administrative expenses of $2,496,900 (2005: $136,739); (iii) management fees of $647,248 (2005: $128,860); (iv) professional fees of $315,564 (2005: $73,684); (v) management fees - stock-based relating to the valuation of stock options granted to our officers and directors of $923,253 (2005: $-0-); (vi) consulting fees of $708,555 (2005: $-0-); (vii) wages and benefits - stock-based relating to the valuation of stock options granted to our employees of $431,078 (2005: $-0-); (vii) consulting fees - stock based relating to the valuation of stock options granted to our consultants of $4,665,967 (2205: $684 ,008); and (viii) depreciation in the amount of $19,737 (2005 $-0-).

Operating expenses incurred during fiscal year ended December 31, 2006 increased primarily due to the increase in exploration costs associated with the increased acquisition and exploration of our uranium properties and related infrastructure. General and administrative expenses incurred during fiscal year ended December 31, 2006 primarily increased relating to corporate marketing and increased business operations pertaining to the increased number of uranium properties acquired. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs. Stock based compensation relating to management fees, consulting fees and wages and benefits incurred during fiscal year ended December 31, 2006 substantially increased due to the recording of the non-cash expense of $4,665,967, $923,253 and $431,078, respectively, in connection with the grant of stock options to our officers/directors, employees and consultan ts.

Of the $14,924,525 incurred as operating expenses during fiscal year ended December 31, 2006, an aggregate of $216,680 was incurred payable to International Market Trend ("IMT") for amounts due and owing for operational, administrative and financial services rendered during fiscal year ended December 31, 2006. On December 1, 2005, we entered into a financial consulting agreement with IMT (the "Consulting Agreement"). In accordance with the terms and provisions of the Consulting Agreement: (i) we pay to IMT $10,000 monthly for services rendered by IMT; and (ii) we granted to IMT and/or its designates 1,300,000 Stock options exercisable at $0.50 per share.

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Of the $14,924,525 incurred as operating expenses during fiscal year ended December 31, 2006, an aggregate of $647,248 was incurred payable to certain officers and directors in management and consulting fees. Of the $647,248: (i) we incurred to our President/Chief Executive Officer an aggregate of $130,000 in connection with performance of managerial, administrative and business development services and an additional $130,000 as bonus; (ii) we incurred to our Chief Operating Officer an aggregate of $137,143 in connection with performance of managerial and operational services; (iii we incurred to our Chief Exploration Officer an aggregate of $182,000 in connection with performance of exploration related services; and (iv) we incurred to our Chief Financial Officer an aggregate of $37,019 in connection with performance of administrative and financial services. As at December 31, 2006, there were no amounts due and owing to our directors and officers with the exception of the bonuses in the amounts of $225,581 due and owing to our President/Chief Executive Officer, Chief Operating Officer, Chief Exploration Officer and Chief Financial Officer. We also paid an aggregate $10,224 to a private company of which Amir Adnani, our President/Chief Executive Officer, is a director for marketing and media services rendered on our behalf. See "Item 10. Executive Compensation" and "Item 12. Certain Relationships and Related Transactions and Director Independence."

Operating expenses incurred during fiscal year ended December 31, 2006 were offset by income aggregating $106,207 consisting of $76,494 in interest income and $29,713 in other income from proceeds received for consulting services provided, resulting in a net loss of ($14,818,318). Operating expenses incurred during fiscal year ended December 31, 2005 were not offset by any income resulting in a net loss of ($1,998,805).

Our net loss during fiscal year ended December 31, 2006 was ($14,818,318) or ($0.56) per share compared to a net loss of ($1,998,805) or ($0.12) per share during fiscal year ended December 31, 2005. The weighted average number of shares outstanding was 26,342,512 for fiscal year ended December 31, 2006 compared to 17,298,582 for fiscal year ended December 31, 2005.

Liquidity and Capital Resources

 

As at
December 31, 2006

As at
December 31, 2005

Cash and cash equivalents

$13,581,377

$107,160

Working capital (deficiency)

13,460,648

(215,828)

Total assets

14,197,695

107,460

Total liabilities

(532,043)

(323,288)

Stockholders' equity (deficiency)

13,665,652

(215,828)

Fiscal Year Ended December 31, 2006

As at fiscal year ended December 31, 2006, our current assets were $13,992,691 and our current liabilities were $532,043, which resulted in a working capital surplus of $13,460,648. As at fiscal year ended December 31, 2006, current assets were comprised of: (i) $13,581,377 in cash and cash equivalents; (ii) $235,040 in an agreement receivable; (iii) $20,020 in accounts receivable; and (iv) $19,796 in other current assets. As at fiscal year ended December 31, 2006, current liabilities were comprised of: (i) $306,462 in accounts payable and accrued liabilities; and (ii) $225,581 due to related parties.

As at fiscal year ended December 31, 2006, our total assets were $14,197,695 comprised of: (i) $13,992,691 in current assets; and (ii) $205,004 in property and equipment. The increase in total assets during fiscal year ended December 31, 2006 from fiscal year ended December 31, 2005 was primarily due to the increase in cash and cash equivalents resulting from receipt of proceeds from the private placement offerings and exercise of stock options.

As at fiscal year ended December 31, 2006, our total liabilities were $532,043 comprised entirely of current liabilities. The increase in liabilities during fiscal year ended December 31, 2006 from fiscal year ended December 31, 2005 was primarily due to the increase in amounts payable and accrued liabilities.

Stockholders' equity increased from ($215,828) for fiscal year ended December 31, 2005 to $13,665,652 for fiscal year ended December 31, 2006.

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Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For fiscal year ended December 31, 2006, net cash flows used in operating activities was ($6,060,585), consisting primarily of a net loss of ($14,818,318). Net cash flows used in operating activities was adjusted by $6,020,298 to reconcile the non-cash expense of stock options granted and by $2,783,500 to reconcile non-cash mineral property expenditures.

For fiscal year ended December 31, 2005, net cash flow used in operating activities was $(751,610), consisting primarily of a net loss of $(1,998,805). The change in net cash flows used in operating activities during fiscal year ended December 31, 2006 from fiscal year ended December 31, 2005 related primarily to the increase in the non-cash expense of stock options granted of $6,020,298 (2005: $684,008) and non-cash mineral property expenditures of $2,783,500 (2005: $275,000). In fiscal year ended December 31, 2006, an increase in accounts payable provided cash of $192,006 compared to $85,601 in fiscal year ended December 31, 2005.

Cash Flows from Investing Activities

For fiscal year ended December 31, 2006, net cash flows used in investing activities was ($361,198) consisting of the purchase of equipment of $224,740 (2005 $-0-) and restricted cash deposits of $136,458 (2005: $-0-).

There were no cash flows from investing activities in fiscal year ended December 31, 2005.

Cash Flows from Financing Activities

We have financed our operations primarily from the issuance of equity and debt instruments. For fiscal year ended December 31, 2006, net cash flows from financing activities was $19,896,000 compared to $452,500 for fiscal year ended December 31, 2005, pertaining primarily to proceeds received from the sale of our common stock and offset by payment of financing charges of $329,700. We completed private placement financings in December 2006 and January 2007 whereby we sold an aggregate of 5,400,000 units at a price of $2.50 per unit for gross proceeds of $13,500,000.

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Plan of Operation and Funding

Our existing working capital is expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) uranium exploration operating activities; (ii) possible future reserve definition; (iii) possible future mining initiatives on current and future properties; and (iv) future possible property acquisitions. We intend to finance these expenses with further issuances of securities, and debt issuances. We expect we will need to raise additional capital to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, pref erences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

During fiscal year ended December 31, 2006, we engaged in private placement offerings under Regulation D and Regulation S of the Securities Act. Pursuant to the terms of the private placements, we issued aggregate amounts of our restricted common stock at subscription prices and under terms as follows:

49


 

  • On April 1, 2006, we closed the April 2006 Private Placement Offering whereby we issued an aggregate of 300,000 April 2006 Units at a subscription price of $1.00 per April 2006 Unit for aggregate gross proceeds of $300,000. The aggregate April 2006 Units comprised 300,000 shares of our restricted common stock and 300,000 April 2006 Warrants with piggyback registration rights for all securities underlying the April 2006 Units issued. The April 2006 Warrants are exercisable at $1.50 per share for a term from the date of issuance and ending on the earlier of: (1) twelve months from the date of issuance, or (ii) six months from the effective date of registration.
  • During May and June 2006, we closed the May and June 2006 Private Placement Offerings in the aggregate amount of 2,525,000 May and June 2006 Units at a subscription price of $2.00 per May and June 2006 Unit for total aggregate gross proceeds of $5,050,000. The aggregate May and June 2006 Units comprised 2,525,000 shares of our restricted common stock and 1,262,500 May and June 2006 Warrants with piggyback registration rights for all securities underlying the May and June 2006 Units issued. The May and June 2006 Warrants are exercisable at $2.50 per share for a term commencing on the date of issuance and ending on the earlier of: (i) twelve months from the date of issuance, or (ii) six months from the effective date of registration.

We filed a Form SB-2 Registration Statement under the Securities Act to register an aggregate of 5,091,000 shares, including the 3,057,500 common shares issued in the respective private placement offerings and the 2,033,500 common shares underlying the respective warrants. The Registration Statement was declared effective October 20, 2006.

  • During December 2006, we closed the December 2006 Private Placement Offerings in the aggregate amount of 5,200,000 December 2006 Units at a subscription price of $2.50 per December 2006 Unit for aggregate gross proceeds of $13,000,000. The aggregate December 2006 Units comprised 5,200,000 shares of our restricted common stock and 2,600,000 December 2006 Warrants with piggyback registration rights for all securities underlying the December 2006 Units issued. The December 2006 Units are exercisable at $3.00 per share for a term commencing on the date of issuance and ending on the earlier of: (i) 18 months from the date of issuance, or (ii) nine months commencing from the effective date of the proposed registration statement.
  • During January 2007, we closed the January 2007 Private Placement Offering in the aggregate amount of 200,000 January 2007 Units at a subscription price of $2.50 per January 2007 Unit for aggregate gross proceeds of $500,000. The aggregate January 2007 Units comprised 200,000 shares of our restricted common stock and 100,000 January 2007 Warrants with piggyback registration rights for all securities underlying the January 2007 Units issued. The January 2007 Units are exercisable at $3.00 per share for a term commencing on the date of issuance and ending on the earlier of: (i) 18 months from the date of issuance, or (ii) nine months commencing from the effective date of the proposed registration statement.
  • There were no fees due or payable in connection with the December 2006 and January 2007 Private Placement offerings.

We filed a Form SB-2 Registration Statement of which this prospectus forms a part under the Securities Act to register an aggregate of 8,100,000 shares, including the 5,400,000 common shares issued in the respective private placement offerings and the 2,700,000 common shares underlying the respective warrants.

We have also received an aggregate $1,625,700 from the exercise of stock options at varying share exercise prices and an aggregate $1,053,125 from the exercise of 400,000 warrants at varying share exercise prices.

Going Concern

We commenced operations on May 16, 2003 and have not realized any significant revenues since inception. As at December 31, 2006, we have working capital of $13,460,648 and an accumulated deficit of $16,969,779 (December 31, 2005 - $2,151,461). We are in the exploration stage of our mineral properties and to date have not yet established any known mineral reserves on any of our existing properties. Our continued operations and the recoverability of the carrying value of our assets is ultimately dependent upon our ability to achieve profitable operations. We intend to continue to fund our initial operations by way of private placements as may be required. To date, we have completed private placements and exercised stock options for total proceeds of $20,926,396 from the issuance of shares of the our common stock.

50


 

Material Commitments

During March 2006, we committed to spend approximately $450,000 on company image and market development. As a result we executed a consulting agreement between the Company and EurXchange dated April 1, 2006 (the "Consulting Agreement") and in accordance with the terms and provisions of the Consulting Agreement: (i) we agreed to pay an aggregate of 290,000 EUR ($375,000 U.S. Dollars), with the first installment paid as of April 1, 2006 and the second and third installments of 80,000 EUR each paid on April 30, 2006 and May 30, 2006, respectively; (ii) EurXchange agreed to render to us consulting services including, but not limited to, translations of webpage, business plan and new releases into German, establishment of communication during European business hours, chat line coordination, web portal presence through Wallstreet Online, production and distribution of a MIDAS research report and a penny stock report, presentation of roadshows, production of certain mailers, and establishment of a Stock Hotline telephone line; and (iii) we issued to EurXchange an aggregate of 400,000 shares of our restricted common stock.

As of the date of this prospectus, we have paid to EurXchange an aggregate of 290,000 EUR pursuant to the terms and provisions of the Consulting Agreement. All fees have been paid to EurXchange and there are no further ongoing commitments due by the Company in connection with the Consulting Agreement.

We are also committed to pay our key executives a total of approximately $480,000 per year.

Purchase of Significant Equipment

We intend to purchase and build a Prompt Fission Neutron ("PFN") logging truck for a total aggregate cost of approximately $157,000. The truck has been purchased and a further deposit of $50,000 has been paid towards the purchase and installation of the PFN equipment. A further final payment of approximately $70,000 was paid upon delivery of the logging truck in the second quarter of 2007.

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 effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies

Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Mineral Property Costs

We are primarily engaged in the acquisition and exploration of mineral properties. Mineral property acquisition costs are capitalized in accordance with EITF 04-2 when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that mineral property acquisition costs are paid with shares of our common stock, those shares are valued at market at the time the shares are due.

51


 

Mineral property exploration costs are expensed as incurred.

When mineral properties are acquired under option agreements with future acquisition payments to be made at our sole discretion, those future payments, whether in cash or shares, are recorded only when we have made or are obliged to make the payment or issue the shares. Because option payments do not meet the definition of tangible property under EITF 04-2, all option payments are expensed as incurred.

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre feasibility, the costs incurred to develop such property are capitalized.

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

As of the date of these financial statements, we have incurred only acquisition and exploration costs which have been expensed. To date we have not established any proven or probable reserves on its mineral properties.

Asset Retirement Obligations

We have adopted the provisions of SFAS No. 143 "Accounting for Asset Retirement Obligations," which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. The adoption of this standard has had no effect on our financial position or results of operations. To December 31, 2006, any potential costs relating to the ultimate disposition of our mineral property interests have not yet been determinable.

Impairment of Long-Lived Assets

We review property, plant, and equipment and certain identifiable intangibles, excluding goodwill, for impairment in accordance with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate.

If property, plant, and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value. For the two fiscal years ended December 31, 2006 and 2005, we had no material impairment of our long-lived assets.

Stock-Based Compensation

On January 1, 2006, we adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and instead generally requires that such transactions be accounted for using a fair-value-based method. We use the Black-Scholes-Merton ("BSM") option-pricing mode l to determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation. We have elected the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior periods have not been restated to reflect the impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on January 1, 2006, the first day of our fiscal year 2006. Stock-based compensation expense for awards granted prior to January 1, 2006 is based on the grant date fair-value as determined under the pro forma provisions of SFAS No. 123.

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Prior to the adoption of SFAS No. 123R, we measured compensation expense for our employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. We applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of the Company's employee stock options was equal to the market price of the underlying stock on the date of the grant, no compensation expense was recognized.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions

On December 16, 2005, the Company issued 750,000, 750,000 and 450,000 shares of restricted common stock at a price of $0.333 per share for a value of $650,000 to three members of management, Amir Adnani, Randall Reneau and Leonard Garcia, respectively, as per their management agreements with the Company.

On December 20, 2005, 400,000, 200,000, 200,000, 135,000, 135,000, 50,000, and 50,000 pre-split stock options were granted at $0.50 per share to each of Alan Lindsay, Johnathan Lindsay, Grant Atkins, Amir Adnani, Randall Reneau, Bruce Horton and Steve Jewett, respectively, who were then officers and directors of the Company. The term of these options is ten years. The fair value of these options at the date of grant of $458,084 was estimated using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 4.47%, a dividend yield of 0% and an expected volatility of 55.21%.

During the year ended December 31, 2005, the Company had transactions with certain officers and directors of the Company as follows: the Company incurred $168,154 in management fees due, collectively, to Amir Adnani, Randall Reneau and Johnathan Lindsay, as to $57,458, $80,122 and 30,574, respectively; $118,154 was paid against outstanding management fees as to $7,458, $80,122 and $30,574 to each of Amir Adnani, Randall Reneau and Johnathan Lindsay, respectively; and $150,000 was advanced to the Company by a shareholder and consultant of the Company. Also, during the year ended December 31, 2005, Amir Adnani, an officer of the Company, incurred expenses on behalf of the Company totalling $8,832. As at December 31, 2005, $208,832 is owing in fees and expenses as to $58,832 to Amir Adnani and $150,000 to a Company consultant.

During fiscal year ended December 31, 2006, we had transactions with certain of our officers and directors as follows: (i) we incurred an aggregate of $647,248 in management and/or consulting fees to Amir Adnani, Alan Lindsay, Randall Reneau, Harry Anthony and Pat Obara in the amounts of $260,000, $21,000, $182,000, $137,143 and $37,019, respectively; and (ii) we recorded an additional aggregate $923,253 in stock based compensation expense. Also, during fiscal year ended December 31, 2006, $150,000 of advances to us from a shareholder and consultant were settled pursuant to the exercise of 450,000 stock options at $0.333 per share.

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During fiscal year ended December 31, 2006, we paid $10,224 for marketing and media services to Blender Media, a private company of which Mr. Adnani, our President, is a director.

We executed the Anthony Employment Agreement pursuant to which we committed to pay him a monthly fee of $10,000 and grant an aggregate of 375,000 post-split stock options in 2005 and 2006 exercisable over ten year terms at $0.333 per share for a value of $121,890. Of the aggregate 375,000 stock options granted, 202,500 stock options were granted on December 20, 2005 and 172,500 on February 1, 2006.

Amir Adnani and Alan Lindsay are the founders, and may be considered promoters, of the Company. Mr. Adnani and Mr. Lindsay were issued an aggregate of 1,575,000 shares of our common stock at a price of $0.0013 per share for total proceeds of $2,100 at the time of the organization of the Company. Neither Mr. Adnani nor Mr. Lindsay have received anything of value from the Company in their capacities as promoters of the Company.

Amounts owing to related parties are unsecured, non-interest bearing and without specific terms of repayment.

Material Contracts

Anthony Employment Agreement

On February 15, 2006, our Board of Directors authorized and approved the execution of the "Anthony Employment Agreement". On July 1, 2006 our Board of Directors approved an amendment to the Anthony Employment Agreement extending the initial term thereunder to July 1, 2008. Pursuant to the terms and provisions of the Anthony Employment Agreement, as amended: (i) Mr. Anthony shall provide duties to us commensurate with his executive position as our Chief Operating Officer and he will also become a member of our Board of Directors; (ii) we shall pay to Mr. Anthony a monthly fee of $10,000.00; (iii) we granted an aggregate of 250,000 pre forward split stock options to Mr. Anthony to purchase shares of our restricted common stock at $0.50 per share for a ten-year term; and (iv) the Anthony Employment Agreement may be terminated without cause by either of us by providing prior written notice of the intention to terminate at least 90 days (in the case of our company after the initial te rm) or 30 days (in the case of Mr. Anthony) prior to the effective date of such termination.

Reneau Services Agreement

From June 30, 2004, and as formalized in a letter agreement dated December 1, 2004 between us and Randall Reneau (the "Reneau Services Agreement"), Mr. Reneau has performed geological consulting services for us in exchange for $350 per diem plus expenses. During fiscal year ended December 31, 2004, Mr. Reneau invoiced us, and has been compensated, in the amount of $12,506. During fiscal year ended December 31, 2005, Mr. Reneau invoiced us, and has been compensated, in the amount of $72,838.

Corporate Relations Consulting Services Agreement

On March 1, 2006, we entered into a corporate relations consulting services agreement (the "Corporate Relations Consulting Agreement") with Michael Baybak and Company Inc., which is related to one of our shareholders ("Michael Baybak"). In accordance with the terms and provisions of the Corporate Relations Consulting Agreement: (i) the term is for an initial six-month period; (ii) we agreed to pay up to $5,000 per month during the initial six-month period for services rendered; and (iii) we issued an aggregate of 500,000 warrants exercisable at $1.00 per share for a ten-year term. The shares of common stock underlying the warrants have piggyback registration rights.

Management and Consulting Services

On December 16, 2005, our Board of Directors authorized and approved the issuance of an aggregate of 1,300,000 pre-forward stock split shares of restricted common stock as follows (1,950,000 post-forward stock split shares): (i) 500,000 pre-forward stock split shares (750,000 post-forward stock split shares) to Amir Adnani, one of our directors and our President and Chief Executive Officer, as compensation for management and consulting services provided to us; (ii) 500,000 pre-forward stock split shares (750,000 post-forward stock split shares) to Randall Reneau, one of our directors and our Chief Exploration Officer, as compensation for management and consulting services provided to us; and (iii) 300,000 pre-forward stock split shares (450,000 post-forward stock split shares) to an unaffiliated third party for consulting services provided to us.

54


 

Adnani Executive Services Agreement

On July 1, 2006, our Board of Directors authorized and approved the execution of the "Adnani Executive Services Agreement". Pursuant to the terms and provisions of the Adnani Executive Services Agreement: (i) Mr. Adnani shall continue to provide duties to us commensurate with his current executive positions as our President and Chief Executive Officer; (ii) we shall pay to Mr. Adnani a monthly fee of $10,000.00 for an initial term of two years expiring on July 1, 2008; (iii) we confirmed the previous granting of his existing pre forward split stock options; and (iv) the Adnani Executive Services Agreement may be terminated without cause by either of us by providing prior written notice of the intention to terminate at least 90 days (in the case of our company after the initial term) or 30 days (in the case of Mr. Adnani) prior to the effective date of such termination.

Brad Moore Mineral Asset Option Agreement

On October 11, 2005, we entered into a Mineral Asset Option Agreement (the "Option") with Brad A. Moore giving us the option to acquire certain uranium leases from Mr. Moore in the State of Texas. In consideration for the Option, we paid Mr. Moore a cash payment of $50,000 and issued 1,000,000 shares of our restricted common stock. The Option, if exercised will require the further issuance of 2,000,000 restricted common shares in varying share instalments over the three, six month intervals following the effective date of the Option (October 11, 2005). A further payment of $150,000 has been paid under the Option on February 1, 2006. Title to the properties to be acquired will transfer upon payment of all remaining stock required under the Option, the timing of which may be accelerated at our discretion. During the Option term, we have the right as operator to conduct or otherwise direct the all exploration on the properties to be acquired.

Harry A. Moore Trust Agreement

On December 12, 2005, our Board of Directors authorized and approved the execution of an agreement (the "Moore Trust Agreement") with Harry A. Moore Trust (the "Moore Trust"). Pursuant to the terms and provisions of the Moore Trust Agreement, we acquired an undivided 100% legal, beneficial and registerable interest in and to certain assets consisting of certain drill and assay data regarding prospective tracts located in Goliad, Waller, Duval and McMullen Counties in the State of Texas. Pursuant to further terms and provisions of the Moore Trust Agreement, we paid to the Moore Trust certain payments aggregating $50,000.00 and issued an aggregate of 75,000 shares.

Eurotrade Management Group Ltd. Agreement

On February 1, 2006, our Board of Directors, pursuant to unanimous written consent, authorized and approved the execution of a corporate finance consulting services agreement (the "Consulting Services Agreement") with Eurotrade Management Group Ltd. ("Eurotrade"). Pursuant to the terms and provisions of the Consulting Services Agreement, we agreed to: (i) retain Eurotrade as a consultant for a one-year period effective February 1, 2006 (the "Effective Date"); (ii) within ten calendar days from the Effective Date, issue to Eurotrade an aggregate 515,000 pre-forward stock split shares of our restricted common stock (772,500 post-forward stock split); and (iii) reimburse Eurotrade for all pre-approved, direct and reasonable expenses actually and properly incurred by Eurotrade for our benefit in connection with its performance of consulting services.

Pursuant to further terms and provisions of the Consulting Services Agreement, Eurotrade agrees to perform certain corporate finance consulting services to us including, but not limited to, the following: (i) assist in the initiation, coordination, implementation and management of all aspects of any program or project in connection with the corporate finance development and maintenance of our various business interests; (ii) assist in the organization and preparation of any and all business plans, technical reports, news releases and special shareholder or investment reports; (iii) assist in the liaison with and the setting up of all corporate alliances and regulatory associations; (iv) assist in the negotiation and structuring of any proposed transaction which will maximize our interests in each subject transaction together with the presentation of a written summary of said structure; and (v) assist in all other matters and services in connection with the corporate finance development and maintenance of our various business interests as may be determined by the Board of Directors.

55


 

On February 1, 2006, our Board of Directors subsequently authorized and approved the issuance to Eurotrade of an aggregate 515,000 pre-forward stock split shares (772,500 post-forward stock split shares) of our restricted common stock at $0.50 per share in accordance with the terms and provisions of the Consulting Services Agreement.

Drilling Database Information Agreement

On December 12, 2005, we entered into a drilling database information agreement (the "Drilling Database Agreement") with Jim Knupke. In accordance with the terms and provisions of the Drilling Database Agreement: (i) we are required to make cash payments to Mr. Knupke of $2,000 per month payable quarterly; (ii) issue an aggregate of 12,500 pre-forward stock split shares of our restricted common stock (18,750 post-forward stock split); and (iii) issue a further 12,500 restricted common shares quarterly for the next three quarters following the effective date of the Drilling Database Agreement.

Uranium Mining Lease

On June 13, 2006, we entered into a ten-year uranium mining lease (the "Lease") with John G. Jebsen and John Triantis (collectively, the "Lessor"), pursuant to which the Lessor granted and leased to us certain acreage consisting of 41 unpatented lode mining claims located in Carbon County, Wyoming. In accordance with the terms and provisions of the Lease, we shall: (i) investigate, explore, prospect, drill, solution mine, produce, extract, treat, process, and store uranium, thorium and other fissionable associated substances (the "Leased Substances"); (ii) pay to the Lessor an aggregate of $50,000 for the Lease; and (iii) pay to the Lessor a production royalty as follows: (a) in the event the sales price for the Leased Substances mined by us is less than $0.50 per pound, five percent (5%) of the net proceeds received, and (b) in the event the sales price for the Leased Substances mined by us exceeds $0.50 per pound, six percent (6%) of the net proceeds received. In addition to the payments required to be made by us under the terms of the Lease as discussed, we shall pay additional minimum advance royalties as follows: (i) $30,000 on or before September 15, 2006; which sum has been paid; (ii) $30,000 on or before January 1, 2007; (iii) $50,000 on or before June 1, 2007; (iv) $500,00 on or before December 1, 2007; (v) $500,00 on or before December 1, 2008; (vi) $50,000 on or before December 1, 2009; and (vi) $50,000 on or before December 1st of every year subsequent to December 1, 2009 and as long thereafter as Leased Substances are being produced in commercial quantities from the property subject to the Lease.

Option to Purchase Assets Agreement

On July 27, 2006, we entered into an option to purchase assets (the "Option") with High Plains Uranium Inc. ("High Plains"), pursuant to which we agreed to sell our unencumbered database consisting of 813 mobile drill logs (e-logs and lithlogs), 242 Moore Energy logs and certain drill hole location maps, reserve calculations, survey data and core analyses (collectively, the "Cadena Database"). In accordance with the terms and provisions of the Option: (i) High Plains shall within thirty calendar days (the "Option Period") pay us a non-refundable cash payment in the aggregate amount of $150,000, with an initial option payment of $25,000 paid on the date of execution of the Option and the final option payment of $125,000 on or before the end of the Option Period; and (ii) High Plains shall issue to us 333,333 shares of their common stock. Prior to exercise of the Option, High Plains may terminate the Option by providing a notice of termination to us in writing of its desire to do so at least five days prior to its decision to terminate. In the event the Option is terminated, High Plains shall have no right or entitlement to the Cadena Data or option payments made to date. To date we have received $150,000 in cash and the 333,333 shares of common stock of High Plains, which have been submitted to the transfer agent for re-issuance in the prescribed amount of common stock of Energy Metals Corp. pursuant to a plan of arrangement between Energy Metals Corp. and High Plains.

56


 

Epoch Consulting Agreement

On February 1, 2007 we entered into a 12 month Financial Consulting Agreement ("Agreement") with Epoch Financial Group, Inc. ("Epoch"), whereby Epoch, pursuant to terms of the Agreement will disseminate information about the Company to the investment community, assist in our public relations and create investor awareness programs. Epoch will arrange meetings with securities analysts, stock brokers and portfolio managers on a one to one and conference basis for the purpose of public exposure of the Company. We will compensate Epoch in the amount of $6,500 per month and will issue Epoch 2,500 restricted common shares of the Company per month through the term of the Agreement.

Market Pathways Services Agreement

On March 21, 2007 entered into a Web Services Agreement with Market Pathways Financial Relations Inc., whereby Market Pathways will provide dissemination of 5 news oriented distributions to its database of investors and Coverage by SmallCap Sentinel via enhanced news wire "investment opinion circuit". Total consideration for this service was $24,000 (paid).

Holley Option Agreement

On March 28, 2007, the Company entered into a letter option agreement with Betty, Fred and Marty Holley (the "Holley Option") granting the Company the option to acquire certain mineral property leases, which are located in the states of Colorado, New Mexico and Utah, together with certain historical database records and certain drilling rig equipment related to the same, for total consideration of $1,594,690. Under the terms of the Holley Option, and in order to maintain its option to acquire the assets, the Company is required to make the following option price payments totalling $1,400,000 to the order and direction of the Holley Option holders in the following manner:

(a)       an initial non-refundable payment of $25,000 on the Execution Date (paid) ;

(b)       a refundable payment of $100,000 on March 28, 2007 (paid) for the purchase of the drilling rig equipment and secured by way of promissory note pending the Company's continuance of the option;

(c)       a non-refundable payment of $475,000 on or before April 27, 2007 (paid);

(d)       a further non-refundable payment of $500,000 on or before April 27, 2008; and

(e)       a final non-refundable payment of $400,000 on or before April 27, 2009.

Upon execution of the Holley Option we also reimbursed the Holley Option holders with approximately $95,000 in prior regulatory property payments. In addition, we are required to pay a royalty of 2% or 3% of the gross proceeds received from the sale of any uranium or vanadium produced in relation to any mineral claim covered under the Holley Option and, at any time during the option period, or thereafter, the Company may elect to purchase the royalty interest at a base cost of $300,000 for each 1% interest it wishes to acquire.

EuroXchange Consulting Agreement

On March 29, 2007 the Company entered into a six month Consulting Agreement with EurXchange Consulting Ltd., whereby EurXchange will provide consulting services in connection with financial and investor public relations services in the Federal Republic of Germany. The Company will pay EurXchange a total amount of 300,178 Euros, with the first instalment of 209,000 Euros due on the effective date of the agreement (paid). The second instalment of 91,178 EUR is due 90 days from the effective date of the agreement.

Database Agreement

On April 4, 2007, the Company acquired a database from Paul Pierce for a total cash consideration of $75,000 (paid). The Paul Pierce database covers the 6,700 acre Cebolleta property located in the Grants Mineral District, New Mexico, and consists of 601,486 feet of drill logs from 996 holes, drill hole location maps, geological and mine planning maps, various geological and mining reports, and surface and underground mine facility designs that were related to the past-producing JJ Number 1/L-Bar uranium mining and milling complex. The locations of multiple pre-existing mine shafts and underground access ways to uranium mineralized zones are also detailed.

57


 

We have exclusive ownership of this database.

Neutron Agreements

On May 1, 2007, the Company entered into a Members' Agreement and Operating Agreement in respect of the Cibola property. The lease relating to the Cibola property was obtained pursuant to a letter agreement with the lessor.

Members' Agreement

The Members' Agreement sets forth the rights of NEI and the Company in respect of their interests in Cibola. Under the terms of the Members' Agreement, each of NEI and the Company (each a "Member") are obligated to contribute funds to Cibola to fund adopted programs and budgets in proportion to their respective interests in Cibola. NEI has been appointed as the manager to have overall management responsibility for the operations of Cibola. The Members' Agreement contains representations and warranties of each of the parties that are customary for agreements of this type. In addition, Cibola has agreed to indemnify each of NEI and the Company for losses arising as a result of any act or omission (other than willful misconduct or gross negligence) of NEI or the Company believed by them, in good faith, to be within the scope of authority conferred under the terms of the Members' Agreement. The resignation of a Member or any reduction of a Member's ownership interest in Cibola shall n ot relieve such Member of its share of any liability arising out of operations conducted or any other matter occurring prior to such resignation or reduction.

Upon the dissolution, liquidation or termination of Cibola, each Member shall remain liable to the other for its proportionate share of any continuing obligations arising out of or relating to Cibola for any liability. Each of NEI and the Company have granted a lien upon and a security interest in its ownership interest in Cibola to the other to secure every obligation and liability under the agreement. Neither NEI nor the Company may transfer all or any part of its rights or obligations under the agreement except with the consent of the other party. The parties have agreed that any interest or right to acquire any interest in real property or water rights within the Area of Interest (as defined in the Letter Agreement) in respect of the Cibola property that is acquired or proposed to be acquired during the term of the agreement by a Member shall be subject to the other Member's right to participate ratably in such interest.

Operating Agreement

The Operating Agreement sets forth terms relating to the conduct of exploration activities at the Cibola property and other matters relating to the management and operations of Cibola and otherwise. The agreement is effective for so long as the lease relating to the Cibola property remains in effect and thereafter until mining has permanently ceased on the Cibola property. Under the terms of the Operating Agreement, Cibola has assumed from the Members all environmental liabilities relating to the Cibola property. The Operating Agreement contains provisions relating to the elimination of an interest smaller than 10% in Cibola whereby any such interest shall be relinquished and shall be deemed to have accrued automatically to the other Member. The Operating Agreement sets forth the same representations and warranties provided in the Members' Agreement. The Operating Agreement also provides for preemptive rights in the event a Member desires to transfer its interest in Cibola to a th ird party whereby the non-transferring Member shall have the preemptive right to acquire any interest proposed to be transferred by the transferring Member. Under the terms of the Operating Agreement, the Members are required, within 180 days of the date of the Agreement, to prepare and adopt an initial exploration program and budget and the operations of Cibola shall be conducted in accordance therewith.

The Operating Agreement provides that Cibola shall be dissolved upon the occurrence of, among other things, unanimous written consent of the Members, at the election of a Member upon 60 days notice of termination to the other Member if an annual program and budget for the nine months after the expiration of the latest adopted program and budget is not adopted, upon the resignation of a Member pursuant to the provision in that regard set forth in the agreement or upon the bankruptcy, insolvency, dissolution or assignment for the benefit of creditors of a Member. A Member may elect to resign from Cibola by giving written notice to the other Member of such resignation and, upon such resignation, the resigning Member shall be deemed to have transferred to the remaining Member all of its ownership interest in Cibola.

58


 

Letter Agreement

Under the terms of the letter agreement, in addition to the amounts already paid to Cebolleta, a further payment of $2,000,000 is required to be made to Cebolleta six months after the date of the letter agreement by Cibola. In addition, every year after the date of the letter agreement until production starts at a mine on the Cibola property, Cibola is required to pay an advance royalty of $500,000 to Cebolleta. As soon as an independent mining engineering firm completes a feasibility study with respect to the property, Cibola is required to make an additional cash payment to Cebolleta of $1.00 x the number of pounds of recoverable uranium reserved on the property within measured and indicated mineral reserves calculated in compliance with Canadian guidelines, subject to certain adjustments.

Cibola is also required to pay to Cebolleta a gross proceeds royalty on all uranium mined from the property according to the following schedule:

Royalty Rate

Uranium Sales Price

4.50%

$40.00 or less/lb

5.00%

$40.01 - $65.00/lb

5.75%

$65.01 - $75.00/lb

6.50%

$75.01 - $100.00/lb

7.00%

$100.01 - $125.00/lb

7.50%

$125.01 - $150.00/lb

8.00%

$150.01 or more/lb

The lease is effective for a ten year term and thereafter so long as Cibola is in good faith actively conducting operations on the property. During the term of the lease, Cibola is required to pay an agreed upon dollar amount as compensation for damage to or loss of use of each acre of cultivated crops, grazing range land, improved pasture and livestock lost as a result of exploration activities on the property. Cibola is also required to provide preferential contracting and employment opportunities for members of Cebolleta and conduct a program for training members of Cebolleta and other employees in mining technology and skilled trades. Furthermore, Cibola may not use water produced on the property if such use would, in any way, diminish the amount of water available to Cebolleta or its members for domestic, agricultural, ranching and other existing uses.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER INFORMATION

Shares of our common stock commenced trading on the OTC Bulletin Board under the symbol "URME 'OB" on December 5, 2005. The market for our common stock is limited, and can be volatile. The following table sets forth the high and low bid prices relating to our common stock on a quarterly basis for the periods indicated as quoted by the NASDAQ stock market. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions, and may not reflect actual transactions.

Month Ended

High Bid

Low Bid

March 31, 2007

$5.91

$5.61

December 31, 2006

$3.58

$2.67

September 30, 2006

$3.25

$1.72

June 30, 2006

$4.85

$2.00

March 31, 2006

$7.33

$0.83

December 31, 2005

Nil

Nil

 

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As of May 10, 2007, we had 89 shareholders of record.

Dividend Policy

No dividends have been declared or paid on our common stock. We have incurred recurring losses and do not currently intend to pay any cash dividends in the foreseeable future.

Securities Authorized For Issuance Under Compensation Plans

We have one equity compensation plan approved by securityholders, the Uranium Energy Corp. 2006 Stock Incentive Plan (the "2006 Plan"). The table set forth below presents information relating to our equity compensation plans as of the date of this prospectus:

Plan Category

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a)

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
(b)

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding column (a))

Equity Compensation Plans Approved by Security Holders (2006 Stock Incentive Plan)

4,407,500

$1.40

1,760,000

Equity Compensation Plans Not Approved by Security Holders

3,950,000(1)

$2.65

Nil

(1) Represents shares of our common stock to be issued upon the exercise of warrants issued pursuant to private placements conducted by the Company as described below.

2006 Stock Incentive Plan

On December 19, 2005, our Board of Directors authorized and approved the adoption of the 2005 stock option plan effective December 19, 2005. On October 10, 2006, we adopted the 2006 Stock Incentive Plan in place of the 2005 Stock Option Plan, under which an aggregate of 10,000,000 of our shares may be issued. All securities issued under the 2005 Stock Option Plan are covered by the 2006 Plan. We have registered the shares underlying the 2006 Plan pursuant to a registration statement on Form S-8 with the SEC.

The purpose of the 2006 Plan is to enhance our long-term stockholder value by offering opportunities to our directors, officers, employees and eligible consultants to acquire and maintain stock ownership in order to give these persons the opportunity to participate in our growth and success, and to encourage them to remain in our service.

The 2006 Plan is to be administered by our Board of Directors or a committee appointed by and consisting of two or more members of the Board of Directors, which shall determine, among other things, (i) the persons to be granted awards under the 2006 Plan; (ii) the number of shares or amount of other awards to be granted; and (iii) the terms and conditions of the awards granted. The Company may issue restricted shares, options, stock appreciation rights, deferred stock rights, dividend equivalent rights, among others, under the 2006 Plan. An aggregate of 10,000,000 of our shares may be issued pursuant to the grant of awards under the 2006 Plan.

An award may not be exercised after the termination date of the award and may be exercised following the termination of an eligible participant's continuous service only to the extent provided by the administrator under the 2006 Plan. If the administrator under the 2006 Plan permits a participant to exercise an award following the termination of continuous service for a specified period, the award terminates to the extent not exercised on the last day of the specified period or the last day of the original term of the award, whichever occurs first. In the event an eligible participant's service has been terminated for "cause", he or she shall immediately forfeit all rights to any of the awards outstanding. The 2006 Plan is subjective to approval by the shareholders of the Company within twelve (12) months from the date of adoption of the 2006 Plan by the Company's board.

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The foregoing summary of the 2006 Stock Incentive Plan is not complete and is qualified in its entirety by reference to the 2006 Stock Incentive Plan, a copy of which has been filed with the SEC.

During fiscal year ended December 31, 2006, we granted an aggregate of 2,485,000 stock options at varying exercise prices ranging from $0.33 per share to $2.46 per share. During fiscal year ended December 31, 2006, an aggregate of 3,137,500 stock options were exercised for at varying exercise prices resulting in receipt of aggregate proceeds of $1,625,700. We granted a further aggregate 1,030,000 stock options subsequent to December 31, 2006 as to 615,000 shares and 415,000 shares exercisable at $3.30 and $5.70 per share, respectively. Subsequent to December 31, 2006, an aggregate 995,000 stock options were exercised at varying exercise prices resulting in receipt of aggregate proceeds of $831,666.

As of the date of this prospectus, there are an aggregate of 4,407,500 stock options granted and outstanding.

Common Stock Purchase Warrants

As of the date of this prospectus, there are an aggregate of 3,950,000 common stock purchase warrants issued and outstanding. During fiscal year ended December 31, 2006 and January 2007, we issued an aggregate 5,233,500 common stock purchase warrants. The warrants to purchase shares of common stock and the shares of common stock underlying the warrants were issued in private placements by us during fiscal year 2006 and in January 2007 as follows: (i) on March 1, 2006 we issued 500,000 warrants to acquire up to 500,000 shares of our common stock at an exercise price of $1.00 per share during the period commencing on March 1, 2006 and ending on March 1 2016; (ii) on April 1, 2006, we issued 300,000 warrants to acquire up to 300,000 shares of our common stock at an exercise price of $1.50 per share during the period commencing on April 1, 2006 and ending on the day which is earlier of (a) April 1, 2007, or (b) six months commencing from the effective date of our registration statement (the "April 2006 Warrants"); (iii) during May/June 2006, we issued 1,262,500 warrants to acquire up to 1,262,500 shares of our common stock at an exercise price of $2.50 per share during the period commencing on the effective date of the registration statement and ending on the day which is the earlier of (a) twelve months from the date of issuance, or (b) six months commencing from the effective date of the Company's proposed registration statement (the "May 2006 Warrants"); on March 28, 2007, we extended the expiration period of certain holders of these warrants to September 5, 2007 in the aggregate amount of 750,000 warrants. The exercise price remains unchanged. (iv) in May and June of 2006, we issued an aggregate of 471,000 non-transferable Finder's Fee warrants to acquire 471,000 shares of our common stock as a finder's fees in connection with the offering of the May 2006 Units, which Finder's Fee warrants have the same terms and conditions as the May 2006 Warrants; (v) on December 13, 2006, we issued 1,400,000 warrants to acquire up to 1,400,000 shares at an exercise price of $3.00 per share commencing on a date that is at least 61 days after a shareholder delivers to us a written notice and ending on a day which is the earlier of (a) 18 months from December 13, 2006, or (b) nine months commencing from the effective date of the pending Registration Statement (the "December 13, 2006 Warrants"); (vi) on December 22, 2006, we issued 1,200,000 warrants to acquire up to 1,200,000 shares at an exercise price of $3.00 per share until the earlier of (a) 18 months from the date of issuance, or (b) nine months commencing from the effective date of the pending Registration Statement (the "December 22, 2006 Warrants"); and (vii) on January 3, 2007, we issued 100,000 warrants to acquire up to 100,000 shares at an exercise price of $3.00 per share until the earlier of (a) 18 months from the date of issuance, or (b) nine months commencing from the effective date of the pending Registration Statement (th e "January 2007 Warrants").

In addition, an aggregate of 2,700,000 shares of common stock underlying common stock purchase warrants are registered under this prospectus.

As of the date of this prospectus, 1,283,500 share purchase warrants have been exercised for aggregate proceeds of $2,908,750, and there are 3,950,000 share purchase warrants granted and outstanding.

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EXECUTIVE COMPENSATION

The following table sets forth the compensation paid to our Chief Executive Officer and those executive officers that earned in excess of $100,000 during 2006 (collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

Name and Principal Position

Year

Salary
($)

Bonus
($)

Stock Awards
($)

Option Awards ($)

Total
($)

Amir Adnani, President and CEO

2006

130,000(1)

130,000(2)

250,000(3)

---

510,000

Randall Reneau, Chief Exploration Officer

2006

120,000(1)

62,000

250,000(3)

---

432,000

Pat Obara, Secretary, Treasurer and CFO

2006

28,438(1)

8,581

---

232,000(4)

269,019

Harry Anthony, COO

2006

112,143(1)

25,000

---

75,253(4)

212,396

  1. These amounts represent fees paid by the Company to the Named Executive Officers during the past year pursuant to various employment and consulting services agreements, as between the Company and the Named Executive Officers, which are more particularly described in this registration statement and, specifically, under the matter captioned "Employment and Consulting Agreements" hereinbelow.
  2. This amount represents a discretionary bonus which was accrued by the Company and authorized to be paid to Amir Adnani during the past fiscal year by the Company's Compensation Committee (which was paid in January of 2007) under the terms of Mr. Adnani's existing Executive Services Agreement with the Company which is more particularly described under the matter captioned "Employment and Consulting Agreements" hereinbelow.
  3. These amounts represent the deemed value at the date of issuance of 750,000 bonus shares which were issued by the Company to each of the Named Executive Officers during the 2005 fiscal year; the expense of which was deferred by the Company and amortized over the 2006 fiscal year.
  4. These amounts represent the fair value of these options at the date of grant which was estimated using the Black-Scholes option pricing model.

The following table sets forth information as at December 31, 2006 relating to options that have been granted to the Named Executive Officers:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

Option Awards

Name

Number of Securities Underlying Unexercised Options Exercisable
(#)

Number of Securities Underlying Unexercised Options Unexercisable
(#)

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)

Option Exercise Price
($)

Option
Expiration
Date
(m/d/y)

Harry Anthony, COO

202,500
and 172,500

---

---

0.33
0.33

12/20/15
02/01/16

Amir Adnani, President and CEO

202,500

---

---

0.33

12/20/15

Randall Reneau, Chief Exploration Officer

202,500

---

---

0.33

12/20/15

Pat Obara, Secretary, Treasury and CFO

200,000

---

---

1.30

10/10/16

 

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The following table sets forth information relating to compensation paid to our directors in 2006:

DIRECTOR COMPENSATION TABLE

Name

Fees Earned or Paid in Cash
($)

Stock Awards
($)

Option Awards
($)

Total
($)

Alan Lindsay, Chairman

21,000(1)

---

---

21,000

Amir Adnani, President and CEO

---

 

---

---

Harry Anthony, COO

---

 

---

---

Randall Reneau, Chief Exploration Officer

---

 

---

---

D. Bruce Horton, director

---

 

---

---

Erik Essiger, director

10,087(2)

-

116,000(3)

126,087

  1. Alan Lindsay receives $3,000 per month for the provision of various management consulting services provided by Mr. Lindsay to the Company on a monthly basis and from time to time.
  2. Erik Essiger received a one-time payment of $10,087 as a fee and for the reimbursement to him of certain expenses incurred by him as a consequence of his attending certain Board of Directors' meetings of the Company during the past year.
  3. This amount represents the fair value of these options at the date of grant which was estimated using the Black-Scholes option pricing model.

Employment and Consulting Agreements

From June 30, 2004, and as formalized in a letter agreement dated December 1, 2004 between us and Randall Reneau (the "Reneau Services Agreement"), Mr. Reneau has performed geological consulting services for us in exchange for $350 per diem plus expenses. During fiscal year ended December 31, 2006, an aggregate of $120,000 was incurred by us to Mr. Reneau under the terms and provisions of the Reneau Services Agreement. During fiscal year ended December 31, 2006, we incurred an aggregate of $182,000 to Mr. Reneau including a $62,000 bonus. As of the date of this Prospectus, an aggregate of $-0- remains due and owing to Mr. Reneau as compensation under the Reneau Services Agreement.

On February 15, 2006, our Board of Directors authorized and approved the execution of an employment agreement between us and Harry Anthony (the "Anthony Employment Agreement"). On July 1, 2006 our Board of Directors approved an amendment to the Anthony Employment Agreement extending the initial term thereunder to July 1, 2008. Pursuant to the terms and provisions of the Anthony Employment Agreement, as amended: (i) Mr. Anthony shall provide duties to us commensurate with his executive position as our Chief Operating Officer and he will also become a member of our Board of Directors; (ii) we shall pay to Mr. Anthony a monthly fee of $10,000 to October 1, 2007 when the monthly fee paid to Mr. Anthony will increase to $12,500; (iii) we granted an aggregate of 250,000 pre forward split stock options to Mr. Anthony to purchase shares of our restricted common stock at $0.50 per share for a ten-year term; and (iv) the Anthony Employment Agreement may be terminated without cause by either of us by providing prior written notice of the intention to terminate at least 90 days (in the case of our company after the initial term) or 30 days (in the case of Mr. Anthony) prior to the effective date of such termination.

During fiscal year ended December 31, 2006, an aggregate of $112,143 was incurred by us to Mr. Anthony under the terms and provisions of the Anthony Employment Agreement. During fiscal year ended December 31, 2006, we incurred an aggregate of $137,143 to Mr. Anthony including a $25,000 bonus. As of the date of this Prospectus, an aggregate of $-0- remains due and owing to Mr. Anthony as compensation under the Anthony Employment Agreement.

On July 1, 2006, our Board of Directors authorized and approved the execution of the execution of an executive services agreement between us and Amir Adnani (the "Adnani Executive Services Agreement"). Pursuant to the terms and provisions of the Adnani Executive Services Agreement: (i) Mr. Adnani shall continue to provide duties to us commensurate with his current executive positions as our President and Chief Executive Officer; (ii) we shall pay to Mr. Adnani a monthly fee of $10,000.00 for an initial term of two years expiring on July 1, 2008; (iii) we confirmed the previous granting of his existing pre forward split stock options; and (iv) the Adnani Executive Services Agreement may be terminated without cause by either of us by providing prior written notice of the intention to terminate at least 90 days (in the case of our company after the initial term) or 30 days (in the case of Mr. Adnani) prior to the effective date of such termination.

63


 

During fiscal year ended December 31, 2006, an aggregate of $130,000 was incurred by us to Mr. Adnani under the terms and provisions of the Adnani Executive Services Agreement. During fiscal year ended December 31, 2006, we incurred an aggregate of $260,000 to Mr. Adnani, including a bonus of $130,000. As of the date of this Prospectus, an aggregate of $0 remains due and owing to Mr. Adnani.

WHERE YOU CAN FIND MORE INFORMATION

We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's Public Reference Room at One Station Place, 100 F Street, N.E., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the SEC's website at http://www.sec.gov.

We have filed with the SEC a registration statement on Form SB-2 under the Securities Act with respect to the securities offered under this prospectus. This prospectus, which forms a part of that registration statement, does not contain all information included in the registration statement. Certain information is omitted and you should refer to the registration statement and its exhibits. With respect to references made in this prospectus to any contract or other document of the Company, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract or document.

No agent of the Company or other person has been authorized to give any information or to make any representation in connection with this offering other than those contained in this prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date of this prospectus.

FINANCIAL STATEMENTS

The annual audited consolidated financial statements of Uranium Energy Corp. for the years ended December 31, 2005 and 2006 are included in this prospectus. These financial statements have been prepared on the basis of accounting principles generally accepted in the United States and are expressed in U.S. dollars.

 

64


 

 

 

 

 

 

 

 

URANIUM ENERGY CORP.
(an exploration stage company)

FINANCIAL STATEMENTS

 

DECEMBER 31, 2006

 

 

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BALANCE SHEETS

STATEMENTS OF OPERATIONS

STATEMENT OF STOCKHOLDERS' EQUITY

STATEMENTS OF CASH FLOWS

 

NOTES TO FINANCIAL STATEMENTS

65


 

 

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Stockholders and Board of Uranium Energy Corp.:

We have audited the balance sheets of Uranium Energy Corp., an exploration stage company, as at December 31, 2006 and 2005 and the statement of operations, stockholders' equity and cash flows for the years ended December 31, 2006 and 2005 and for the period May 16, 2003 (inception) to December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluatin g the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2006 and 2005 and the results of its operations and its cash flows and the changes in stockholders' equity for the years then ended, and for the period May 16, 2003 (inception) to December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

"DMCL"

DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED ACCOUNTANTS

February 26, 2007
Vancouver, Canada

 

 

66


URANIUM ENERGY, CORP.
(an exploration stage company)

BALANCE SHEETS

 

December 31,

December 31,

2006

2005

CURRENT ASSETS

   Cash and cash equivalents

$ 13,581,377 

$ 107,160 

   Restricted cash (Notes 3 and 5)

136,458 

   Accounts receivable

20,020 

    Agreement receivable (Note 3)

235,040 

   Other current assets

19,796 

300 

13,992,691 

107,460 

PROPERTY AND EQUIPMENT (Note 4)

205,004 

          - 

$ 14,197,695 

$ 107,460 

CURRENT LIABILITIES

   Accounts payable and accrued liabilities

$ 306,462 

$ 114,456 

   Due to related parties (Note 9)

225,581 

208,832 

532,043 

323,288 

CONTINGENCIES AND COMMITMENTS (Notes 3, 4 & 10)

STOCKHOLDERS' EQUITY (DEFICIENCY)

   Capital Stock (Note 6)

          Common stock $0.001 par value: 75,000,000 shares authorized

         34,371,088 shares issued and outstanding

         (2005 - 20,461,083)

34,371 

20,461 

   Additional paid-in capital

29,604,624 

2,565,172 

   Common stock purchase warrants

992,894 

   Share subscriptions received (Note 6)

250,000 

   Deferred compensation (Note 6)

(246,458)

(650,000)

   Deficit accumulated during the exploration stage

(16,969,779)

(2,151,461)

13,665,652 

(215,828)

$ 14,197,695 

$ 107,460 

 

 

 

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

67


URANIUM ENERGY, CORP.
(an exploration stage company)

STATEMENTS OF OPERATIONS

 

 

For the Year
Ended
December 31, 2006

For the Year
Ended
December 31, 2005

For the Period from
May 16, 2003 (inception) to December 31, 2006

EXPENSES

   Mineral property expenditures, net of recoveries

$4,716,223 

$975,514 

$5,749,903 

   Consulting fees - stock based

4,665,967 

684,008 

5,349,975 

   General and administrative

2,496,900 

136,739 

2,647,172 

   Management fees - stock based

923,253 

923,253 

   Consulting fees

708,555 

708,555 

   Management fees

647,248 

128,860 

820,709 

   Wages and benefits - stock based

431,078 

431,078 

   Professional fees

315,564 

73,684 

425,604 

   Depreciation

19,737 

          - 

19,737 

14,924,525 

1,998,805 

17,075,986 

LOSS BEFORE OTHER ITEMS

(14,924,525)

(1,998,805)

(17,075,986)

INTEREST INCOME

76,494 

76,494 

OTHER INCOME

29,713 

          - 

29,713 

106,207 

          - 

106,207 

NET LOSS FOR THE YEAR

$(14,818,318)

$(1,998,805)

$(16,969,779)

BASIC AND FULLY DILUTED NET LOSS
   PER SHARE

$(0.56)

$(0.12)

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING,
   BASIC AND FULLY DILUTED

26,342,512 

17,298,582 

 

 

 

 

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

68


URANIUM ENERGY, CORP.

(an exploration stage company)

STATEMENT OF STOCKHOLDERS' EQUITY
FROM MAY 16, 2003 (INCEPTION) TO DECEMBER 31, 2006

Common Stock

Additional

Stock Purchase

Subscriptions

Deferred

Accumulated

Stockholders'

Shares

Amount

Paid-in Capital

Warrants

Received

Compensation

Deficit

Equity

Balance, May 16, 2003

$          - 

$          - 

$          - 

$          - 

$          - 

$          - 

$          - 

Net loss for the period

          - 

          - 

          - 

          - 

          - 

          - 

(24,486)

(24,486)

Balance, December 31, 2003

(24,486)

(24,486)

 

 

 

 

 

 

 

 

Issued for cash at - $0.0013 per share

11,550,000 

7,700 

7,700 

15,400 

- $0.20 per share

2,413,936 

1,610 

481,186 

482,796 

 

 

 

 

 

 

 

 

Issued on conversion of debenture at

 

 

 

 

 

 

 

 

- $0.0013 per share

2,250,000 

1,500 

1,500 

3,000 

- $0.20 per share

35,000 

23 

6,977 

7,000 

 

 

 

 

 

 

 

 

Issued on settlement of debts

79,647 

53 

15,876 

15,929 

 

 

 

 

 

 

 

 

Net loss for the year

          - 

          - 

          - 

          - 

          - 

          - 

(128,170)

(128,170)

Balance, December 31, 2004

16,328,583 

10,886 

513,239 

(152,656)

371,469 

 

 

 

 

 

 

 

 

Issued for cash at - at $0.333 per share

1,357,500 

905 

451,595 

452,500 

 

 

 

 

 

 

 

 

Issued pursuant to mineral property acquisition

825,000 

550 

274,450 

275,000 

 

 

 

 

 

 

 

 

Issued pursuant to service agreement

1,950,000 

1,300 

648,700 

(650,000)

 

 

 

 

 

 

 

 

Stock based compensation

684,008 

684,008 

 

 

 

 

 

 

 

 

Reclassification for stock split

6,820 

(6,820)

 

 

 

 

 

 

 

 

Net loss for the year

          - 

          - 

          - 

          - 

          - 

          - 

(1,998,805)

(1,998,805)

Balance, December 31, 2005

20,461,083 

$20,461 

$2,565,172 

$           - 

$          - 

$(650,000)

$(2,151,461)

$(215,828)

69


URANIUM ENERGY, CORP.
(an exploration stage company)

STATEMENT OF STOCKHOLDERS' EQUITY
FROM MAY 16, 2003 (INCEPTION) TO DECEMBER 31, 2006

Common Stock

Additional

Stock Purchase

Subscriptions

Deferred

Accumulated

Stockholders'

Shares

Amount

Paid-in Capital

Warrants

Received

Compensation

Deficit

Equity

Balance, December 31, 2005

20,461,083 

$20,461 

$2,565,172 

$- 

$- 

$(650,000) 

$(2,151,461) 

$(215,828) 

 

 

 

 

 

 

 

 

Issued for cash at - $1.00 per share

300,000 

300 

299,700 

300,000 

- $2.00 per share

2,525,000 

2,525 

5,047,475 

5,050,000 

- $2.50 per share

5,200,000 

5,200 

12,994,800 

250,000 

13,250,000 

Financing fees- cash

(329,700)

(329,700)

- warrants

(992,894)

992,894 

Issued on the exercise of options

3,137,505 

3,137 

1,622,563 

1,625,700 

Issued pursuant to mineral property acquisition

1,500,000 

1,500 

2,586,000 

2,587,500 

Issued pursuant to drilling database information agreement (Note 6)

18,750 

19 

6,231 

6,250 

Issued pursuant to service agreements (Note 6)

 

 

 

 

 

 

 

 

- consulting services

1,172,500 

1,173 

1,156,327 

(246,458)

911,042 

- property expenditures

56,250 

56 

138,694 

138,750 

Stock based compensation

 

 

 

 

 

 

 

 

- options for consulting services

2,130,149 

2,130,149 

- options for management fees and wages

704,331 

704,331 

- vested options for property expenditures

57,250 

57,250 

- warrants for consulting services

1,618,526 

1,618,526 

Amortization of deferred compensation

650,000 

650,000 

Net loss for the year

          - 

          - 

          - 

          - 

          - 

          - 

(14,818,318)

(14,818,318)

 

 

 

 

 

 

 

 

Balance, December 31, 2006

34,371,088 

$34,371 

$29,604,624 

$992,894 

$250,000 

$(246,458)

$(16,969,779)

$13,665,652 

All share amounts have been restated to reflect the 2:1 reverse share consolidation in January 2005 and the 1.5:1 forward share split as of the date of record, February 28, 2006. (refer to Note 6)

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

70


URANIUM ENERGY, CORP.
(an exploration stage company)
STATEMENTS OF CASH FLOWS

For the Year
Ended
December 31,
2006

For the Year
Ended
December 31,
2005

For the Period from May 16, 2003
(inception) to
December 31,
2006

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss for the year

$(14,818,318)

$(1,998,805)

$(16,969,779)

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

     Stock based compensation

6,020,298 

684,008 

6,704,306 

     Non-cash mineral property expenditures

2,783,500 

275,000 

3,055,429 

     Depreciation

19,736 

19,736 

Changes in operating assets and liabilities:

     Accounts receivable

(20,020)

(20,020)

     Agreement receivable

(235,040)

(235,040)

     Other current assets

(19,496)

1,313 

731 

     Accounts payable and accrued liabilities

192,006 

85,601 

294,935 

     Due to related parties

16,749 

201,273 

225,581 

NET CASH FLOWS USED IN
   OPERATING ACTIVITIES

(6,060,585)

(751,610)

(6,924,121)

CASH FLOWS FROM FINANCING ACTIVITIES

     Issuance of shares for cash

19,975,700 

452,500 

20,926,396 

     Share subscriptions

250,000 

250,000 

     Convertible debenture proceeds

20,000 

     Financing charges

(329,700)

          - 

(329,700)

NET CASH FLOWS FROM
   FINANCING ACTIVITIES

19,896,000 

452,500 

20,866,696 

CASH FLOWS FROM INVESTING ACTIVITIES

     Purchase of property and equipment

(224,740)

(224,740)

     Restricted cash deposits

(136,458)

          - 

(136,458)

NET CASH FLOWS USED IN
   INVESTING ACTIVITIES

(361,198)

          - 

(361,198)

INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS

13,474,217 

(299,110)

13,581,377 

CASH AND CASH EQUIVALENTS,
   BEGINNING OF YEAR

107,160 

406,270 

          - 

CASH AND CASH EQUIVALENTS, END OF YEAR

$13,581,377 

$107,160 

$13,581,377 

       

CASH AND CASH EQUIVALENTS CONSIST OF:

 

Cash in bank

$579,535 

$107,160 

$579,535 

Short term investments

13,001,842 

          - 

13,001,842 

 

$13,581,377 

$107,160 

$13,581,377 

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

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

71


NOTE 1:          NATURE OF OPERATIONS

Uranium Energy Corp. (the "Company") was incorporated on May 16, 2003 in the State of Nevada as Carlin Gold, Inc. The Company is an exploration stage company that was originally organized to explore and develop precious metals in the United States.

During 2004, the Company changed its business direction from the exploration of precious metals to the exclusive focus on the exploration and development of uranium deposits in the United States and internationally. Due to the change in the Company's core business direction, the Company disposed of its 18 mineral property claims in the State of Nevada. In addition, the Company commenced reorganization, including a reverse stock split by the issuance of 1 new share for each 2 outstanding shares of the Company's common stock and the raising of further capital for its new operating directives (refer to Notes 3 and 9). On January 24, 2005, the Company approved a special resolution to change the name of the Company from Carlin Gold, Inc. to Uranium Energy Corp. On February 28, 2006; the Company completed a forward stock split by the issuance of 1.5 new shares for each 1 outstanding shares of the Company's common stock.

Since November 1, 2004, the Company has acquired mineral leases, directly and under options, for the purposes of exploring for economic deposits of uranium in the States of Arizona, Texas, New Mexico, Wyoming, Colorado, and Utah. To December 31, 2006, interests in approximately 18,712 net acres of mineral properties have been staked or leased by the Company. In May of 2006 the Company began drilling operation on the Goliad Project in south Texas. The Phase I program calls for 32,000 feet of drilling, consisting of 70 test holes.

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America with the on-going assumption applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

The Company commenced operations on May 16, 2003 and has not realized any significant revenues since inception. As at December 31, 2006, the Company has an accumulated deficit of $16,969,779. The Company is in the exploration stage of its mineral property development and to date has not yet established any known mineral reserves on any of its existing properties. The continued operations of the Company and the recoverability of the carrying value of its assets is ultimately dependent upon the ability of the Company to achieve profitable operations. The Company intends to continue to fund its initial operations by way of private placements as may be required. To date, the Company has completed private placements and received funding through the exercise of stock options for total proceeds of $20,926,396 from the issuance of shares of the Company's common stock.

NOTE 2:          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Company was incorporated on May 16, 2003 in the State of Nevada.

Basis of Presentation

These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant areas requiring management's estimates and assumptions are determining the fair value of transactions involving common stock, convertible debentures and financial instruments, Other areas requiring estimates include deferred tax balances, valuation allowances, allocations of expenditures to resource property interests and asset impairment tests.

72


 

Mineral Property Costs

The Company is primarily engaged in the acquisition, exploration and development of mineral properties.

Mineral property acquisition costs are capitalized in accordance with EITF 04-2 when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that mineral property acquisition costs are paid with Company shares, those shares are valued at market at the time the shares are due.

Mineral property exploration costs are expensed as incurred.

When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments, whether in cash or shares, are recorded only when the Company has made or is obliged to make the payment or issue the shares. Because option payments do not meet the definition of tangible property under EITF 04-2, all option payments are expensed as incurred.

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre feasibility, the costs incurred to develop such property are capitalized.

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

As of the date of these financial statements, the Company has incurred only acquisition and exploration costs which have been expensed.

To date the Company has not established any proven or probable reserves on its mineral properties.

Asset Retirement Obligations

The Company has adopted the provisions of SFAS No. 143 "Accounting for Asset Retirement Obligations," which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. The adoption of this standard has had no effect on the Company's financial position or results of operations. To December 31, 2006 any potential costs relating to the ultimate disposition of the Company's mineral property interests have not yet been determinable.

Impairment of Long-Lived Assets

The Company reviews property, plant, and equipment and certain identifiable intangibles, excluding goodwill, for impairment in accordance with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate. If property, plant, and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value. For the two fiscal years ended December 31, 2006, the Company had no material impairment of its long-lived assets.

73


 

Financial Instruments

The fair values of cash and cash equivalents, restricted cash, other current monetary assets, accounts payable and accrued liabilities and amounts due to related parties were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The fair value of the Company's net smelter royalty obligations (refer to Note 3) is not determinable at the current stage of the Company's exploration program. Accordingly, no value has been assigned by management. The Company's operations and financing activities are conducted primarily in United States dollars, and as a result the Company is not subject to significant exposure to market risks from changes in foreign currency rates. Management has determined that the Company is not exposed to significant credit risk.

Loss per Common Share

Basic loss per share includes no dilution and is computed by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings (loss) of the Company. The common shares potentially issuable on conversion of outstanding convertible debentures and exercise of stock options were not included in the calculation of weighted average number of shares outstanding because the effect would be anti-dilutive.

The financial statements are presented in United States dollars. In accordance with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. As at December 31, 2006, the Company had net operating loss carry forwards; however, due to the uncertainty of realization, the Company has provided a full valuation allowance for the potential deferred tax assets resulting from these losses carry forwards.

Stock-Based Compensation

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and instead generally requires that such transactions be accounted for using a fair-value-based method. The Company uses the Black-Scholes-Merton ("BSM") opt ion-pricing model to determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation. The Company has elected the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior periods have not been restated to reflect the impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on January 1, 2006 the first day of the Company's fiscal year 2006. Stock-based compensation expense for awards granted prior to January 1, 2006 is based on the grant date fair-value as determined under the pro forma provisions of SFAS No. 123.

74


 

Prior to the adoption of SFAS No. 123R, the Company measured compensation expense for its employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. The Company applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of the Company's employee stock options was equal to the market price of the underlying stock on the date of the grant, no compensation expense was recognized.

The following table illustrates the effect on net income after taxes and net income per common share as if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based compensation during the year ended December 31, 2005:

   

Year ended
December 31, 2005

Net loss for the year

As reported

$    (1,998,805)

SFAS 123 compensation expense

Pro-forma

(458,084)

Net loss for the year

Pro-forma

$    (2,456,889)

Pro-forma basic net loss per share

Pro-forma

$             (0.14)

Pro-forma diluted net loss per share

Pro-forma

$             (0.14)

Property and Equipment

Property and equipment are recorded at cost and are amortized using the straight-line method over their estimated useful lives at the following rates:

Computer Equipment

3 years

Furniture and Fixtures

5 years

Mining Equipment

5 years

Vehicles

5 years

Recent Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with ear lier application allowed. This standard is not expected to have a significant effect on the Company's future reported financial position or results of operations.

75


 

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fi scal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on the Company's future reported financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". The objective of SFAS 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R)". This statement requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The provisions of SFAS No. 158 are effective for employers with publicly traded equity securities as of the end of the fiscal year ending after December 15, 2006. The adoption of this statement is not expe cted to have a material effect on the Company's future reported financial position or results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB No. 108 is effective for periods ending after November 15, 2006. The Company is currently evaluating the impact of adopting SAB No. 108 but does not expect that it will have a material effect on its financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities". This Statement permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS No. 159 on its financial position and results of operations.

NOTE 3:          MINERAL EXPLORATION PROPERTIES

Uranium Exploration

Since November 1, 2004, the Company has been acquiring mineral leases for the purpose of exploring for economic deposits of uranium in the states of Arizona, Colorado, Utah, Wyoming, and Texas. During 2005, the Company acquired five year lease interests in twenty-one further uranium exploration mineral properties totaling 7,413 gross acres in the states of Arizona, Colorado, Texas, Wyoming, and Utah, for the consideration of $181,113. The Company has an option to renew these leases for five years on terms similar to the original lease.

76


 

During 2006 the Company acquired an additional 11,299 net acres in Wyoming, Texas and New Mexico at a cost of $266,814. As of December 31, 2006, a total of 19,304 gross acres (18,712 net mineral acres) of mineral properties have been staked or leased by the Company in the States of Arizona, Colorado, Wyoming, Texas, New Mexico and Utah for the purposes of uranium exploration for a total cost of $447,927. These leases are subject to 5.0% to 15.25% net royalty interests. As of December 31, 2006, total annual lease payments of $76,617, excluding any share issuance requirements on the Moore Option, are required to maintain existing acquisitions. A regional breakdown of 2006 mineral property expenditures is provided below and where applicable, costs are allocated to individual projects.

During 2006, the Company incurred exploration and drilling costs on two projects, the i) Weesatche project, Goliad country, South Texas, and ii) AB Claim Group project, North Shirley Basin, Wyoming.

Weesatche Property

On October 11, 2005, the Company entered into a Mineral Asset Option Agreement (the "Moore Option") granting the Company the option to acquire certain mineral property leases in the State of Texas for total consideration of $200,000 and 3,000,000 post-split restricted common shares at a fair value of $0.33 per share. In consideration for the Option and its partial exercise over the option term, the Company has to date made cash payments totaling $200,000 and issued 2,225,000 post-split shares of restricted common stock. The Option, requires a further issuance of 750,000 post-split shares of restricted common stock on or before April 11, 2007. Upon completion of the terms of the Option title to the leases will be transferred to the Company. During the Option term, the Company has the right as operator to conduct or otherwise direct all exploration on the properties to be acquired under the Option.

AB Claim Group Property

In December 2006 the Company terminated a ten year mining lease agreement in North Shirley Basin, Wyoming due to results from its 2006 exploration program that were lower than historically indicated. Under the terms of the lease agreement, the Company paid an initial lease payment of $50,000 in June 2006, and an additional $30,000 in September 2006. Gross and net mineral acres associated with the terminated lease have not been included in the totals above. The Company has applied for the release of $136,458 in certificates of deposit which were incurred prior to exploration activities commencing on the leased property (refer to Note 5).

Historical Mining Databases

On July 27, 2006 the Company entered into an option agreement to sell its Cadena historical mining database, which was originally a part of the total database contents included in the Moore Asset Option Agreement, to High Plains Uranium, Inc., for $150,000 cash (received), 333,333 shares of common stock in the Canadian based public company, valued at approximately $235,040, and a 1% royalty on any mined substance produced on any mineral interest or claim covered by the data base. A total of $385,040 has been recorded as a recovery of mineral property expenditures and the estimated value of the shares of $235,040, has been recorded as an agreement receivable. The shares were subsequently received. As of January 19, 2006 High Plains Uranium Inc. ("HPU") completed a business combination agreement with Energy Metals Corp. ("EMC"), a TSX listed Canadian based public company. As a result, the 333,333 shares of HPU are being exchanged for 53,763 shares of EMC. As of December 31, 2006 the 53,763 shares of EMC have a fair market value of $543,006.

On November 28, 2006 the Company entered into an option agreement to purchase a database covering prospects primarily in Wyoming and New Mexico. The agreement calls for a $25,000 payment at the date of execution (paid) and an additional $25,000 prior to the end of the six month option period. Additionally, the Company issued 50,000 stock options with an estimated fair value of $114,500, of which 25,000 options vested upon execution and the remaining 25,000 options vest at the end of the six month term. The agreement also calls for a 1% royalty on any mined substance produced on any mineral interest or claim covered by the database.

77


 

On December 12, 2005, we entered into an agreement with Harry A. Moore Trust (the "Moore Trust"). Pursuant to the terms and provisions of the Moore Trust Agreement, we acquired an undivided 100% legal, beneficial and registerable interest in and to certain assets consisting of certain drill and assay data regarding prospective tracts located in Goliad, Waller, Duval and McMullen Counties in the State of Texas. Pursuant to further terms and provisions of the Moore Trust Agreement, we paid to the Moore Trust certain payments aggregating $50,000 and issued an aggregate of 75,000 shares.

Total mineral property expenditures for the 2006 fiscal year include the following:

   

Year ended
December 31, 2006

     

Arizona

 

 

   Acquisition costs

 

$14,256 

   

 

Colorado

 

 

   Acquisition costs

 

6,850 

   

 

New Mexico

 

 

   Acquisition costs

 

117,056 

   Property exploration

 

48,834 

   

165,890 

   

 

Texas

 

 

   Weesatche property

 

 

      Acquisition costs, net of recoveries

 

2,507,938 

      Drilling

 

1,122,757 

      Exploration

 

195,733 

   

3,826,428 

   Other acquisition costs

 

211,830 

   Other property exploration

 

110,737 

   

4,148,995 

   

 

Wyoming

 

 

   AB Claim Group Property

 

 

      Acquisition costs

 

105,420 

      Drilling

 

149,928 

      Exploration

 

63,376 

   

318,724 

   Other acquisition costs

 

4,200 

   Other property exploration

 

57,308 

   

380,232 

Total Mineral Property Expenditures

 

$4,716,223 

NOTE 4:          PROPERTY AND EQUIPMENT

 

December 31, 2006

December 31, 2005

     

Computer Equipment

$35,963

$        -

Furniture and Fixtures

14,373

          -

Mining Equipment

110,690

          -

Vehicles

63,714

          -

 

224,740

          -

Less: accumulated depreciation

(19,736)

          -

$205,004

$          -

 

78


Effective August 24, 2006, the Company committed to spend approximately $140,000 on a logging truck which is currently under construction. As of December 31, 2006, $50,000 has been paid towards this commitment and has been included with mining equipment.

NOTE 5:          RESTRICTED CASH

Restricted cash consists of amounts restricted for more than 12 months and accordingly is included in non-current assets. Restricted cash includes certificates of deposit issued to the Wyoming Department of Environmental Quality, Land Quality Division, in lieu of a surety bond. The certificates of deposit accrue interest at 3.5% per annum, are automatically renewable and are protected by federal insurance up to $100,000. In December 2006 the Company ceased exploration on the applicable property and has applied for the release of the certificates of deposit (refer to Note 3).

NOTE 6:          CAPITAL STOCK

Share Capital

The Company's capitalization at December 31, 2006 was 750,000,000 authorized common shares with a par value of $0.001 per share. On January 9, 2006, a majority of shareholders voted to amend the Company's Articles of Incorporation to increase the authorized capital from 75,000,000 shares of common stock to 750,000,000 shares of common stock. The increase in authorized capital was effective on February 1, 2006.

On January 24, 2005, a majority of shareholders and the directors of the Company approved a special resolution to undertake a reverse stock split of the common stock of the Company on a 1 new share for 2 old shares basis. The par value and the number of authorized but un-issued shares of the Company's common stock was not changed as a result of the reverse stock split. On February 14, 2006, the directors of the Company approved a special resolution to undertake a forward stock split of the common stock of the Company on a 1.5 new shares for 1 old share basis whereby 7,484,116 common shares were issued pro-rata to shareholders of the Company as of the record date on February 28, 2006.

All references in these financial statements to the number of common shares, price per share and weighted average number of common shares outstanding prior to the 1:2 reverse stock split and the 1.5:1 forward stock split have been adjusted to reflect these stock splits on a retroactive basis, unless otherwise noted.

2006 Share Transactions

Pursuant to the Moore Option (refer to Note 3) the Company issued:

(i)       500,000 post-split restricted common shares on April 9, 2006 at a value of $2.30 per share for a total value of $1,150,000; and

(ii)      an additional 250,000 post-split restricted common shares on September 28, 2006 at a value of $1.85 per share, to adjust the share consideration paid to date for the forward 1.5 forward split of the Company's common stock, for an additional value of $462,500; and

(iii)     an additional 750,000 post-split restricted common shares on October 10, 2006 at a value of $1.30 per share, for an additional value of $975,000. As at December 31, 2006, the total value of the shares issued under the terms of the Moore Option is $2,837,500 which has been recorded as mineral property expenditures (refer to Note 3).

On January 15 and February 28, 2006 the Company issued an aggregate amount of 18,750 restricted common shares at a price of $0.3333 per share for a value of $6,250 in connection with a drilling database information agreement. The agreement requires cash payments of $2,000 per month payable quarterly and quarterly issuances of 18,750 restricted common shares for three further quarters following the effective date of the agreement. In accordance with the terms of the Agreement the Company issued 12,500 restricted common shares at $2.40 per share for a value of $30,000 on May 11, 2006, 25,000 restricted common shares at $1.95 per share for a value of $48,750 on September 21, 2006, and 18,750 restricted common shares at $3.20 per share for a value of $60,000 on December 26, 2006. A total of $145,000 has been recorded as mineral property expenditures in the year.

79


 

On March 10, 2006, the Company received a subscription for 250,000 units at $1.00 per share purchase unit from a shareholder and consultant to the Company for net proceeds to the Company of $250,000. These shares were issued in April, 2006. The 250,000 units are comprised of 250,000 restricted common shares and 250,000 common share purchase warrants in the capital of the Company with piggyback registration rights for all securities underlying the units issued. The warrants are exercisable at $1.50 per share for a term which is the earlier of (i) 12 months from the date of issuance or (ii) six months from the effective date of registration.

On April 24, 2006, the Company received a subscription for 50,000 units at $1.00 per share purchase unit from a shareholder and consultant to the Company for net proceeds to the Company of $50,000. These shares were issued in July of 2006. The 50,000 units are comprised of 50,000 restricted common shares and 50,000 common share purchase warrants in the capital of the Company with piggyback registration rights for all securities underlying the units issued. The warrants are exercisable at $1.50 per share for a term which is the earlier of (i) 12 months from the date of issuance or (ii) six months from the effective date of registration.

On May 25, 2006 the Company completed a private placement of 2,500,000 Units at a subscription price of $2.00 per Unit for gross proceeds to the Company of $5,000,000. Each Unit is comprised of one common share and one-half warrant of one non-transferable share purchase warrant of the Company. Each whole warrant entitles the share purchaser to an additional common share of the Company until the earlier of 12 months from the date of issuance of the units or six months from the effective date of the Company's proposed registration statement and exercisable at $2.50 per share. The Company has paid a finders' fees in conjunction with the completion of the private placement in the amount of $329,700 in cash and 471,000 non-transferable common share purchase warrants having the same terms and conditions of the private placement warrants. The fair value of these warrants at the date of grant of $992,894 was estimated using the Black-Scholes option pricing model with an expected life of 1 yea r, a risk free interest rate of 5.09%, a dividend yield of 0%, and an expected volatility of 374.15%. All finders' fees have been recorded against the proceeds of the private placement and the warrants have been recorded as a separate component of stockholders' equity.

On June 13, 2006 the Company completed an additional non-brokered private placement of 25,000 Units which were subscribed to under the same terms and conditions as the May 25, 2006 private placement, for gross proceeds to the Company of $50,000.

2006 Share Transactions (continued)

On December 13, 2006 and December 22, 2006 the Company completed private placements in a total aggregate amount of 5,200,000 Units at a subscription price of $2.50 for gross proceeds to the Company of $13,000,000. Each Unit is comprised of one common share and one-half warrant of one non-transferable share purchase warrant of the company. Each whole warrant entitles the holder to purchase an additional common share of the Company until the earlier of 18 months from the date of issuance of the Units or nine months from the effective date of the Company's proposed registration statement and are exercisable at $3.00 per share during this period. The Company also received subscriptions of $250,000 towards an additional private placement under the same terms and conditions which completed subsequent to the year end (refer to Note 12 (g)).

Share Purchase Warrants

A summary of the Company's stock purchase warrants as of December 31, 2006 and changes during the year is presented below:

 

Number of
warrants

Weighted average
exercise price

Weighted average
remaining life (years)

Balance, December 31, 2005

-

$     -

-

Issued

5,133,500

2.55

1.76

Exercised

-

-

-

Balance, December 31, 2006

5,133,500

$2.55

1.76

 

80


Deferred Compensation

On December 16, 2005 the Company issued 1,950,000 shares of restricted common stock at a price of $0.333 per share for a value of $650,000 to three members of management as per management agreements with the Company which are for a one year term commencing January 1, 2006. Accordingly, a $650,000 charge was recorded as deferred compensation and has been expensed over the year.

On February 1, 2006, the Company issued 772,500 restricted common shares at a price of $0.3333 per share for a value of $257,500 to a consultant in connection with a one year corporate finance consulting services agreement of the same date. The consultant will provide among other things, assistance in the initiation, coordination, implementation and management of all aspects of any program or project in connection with the corporate finance development and maintenance of the Company's various business interests. The $257,500 charge was recorded as deferred compensation and is being expensed over a one year term. Accordingly, $236,042 has been expensed as consulting fees during the year.

On March 1, 2006, the Company entered into a six month corporate relations consulting services agreement with a shareholder of the Company. Under the terms of the agreement the Company was required to (a) pay $5,000 per month during the initial term (paid); and (b) issue 500,000 warrants exercisable at $1.00 per share for a ten year term. The shares underlying the warrants have piggy back registration rights. The fair value of these warrants at the date of grant of $1,618,526 was estimated using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 5.09%, a dividend yield of 0%, and an expected volatility of 79%. Accordingly, the $1,618,526 charge has been expensed as consulting fees during the year. The Company has continued the consulting arrangement on a month to month basis and accordingly has incurred a total $50,000 in consulting fees during the year ended December 31, 2006 with respect to this consultant.

On April 1, 2006 the Company entered into a twelve month Consulting Agreement with EurXchange Consulting Ltd., to provide consulting services including financial and investor public relations and related matters in the Federal Republic of Germany. The Company paid approximately $370,000 (290,000 EUR) in cash for current contract expenditures and issued 400,000 restricted common shares of the Company at a price of $2.25 per share for a value of $900,000. The $900,000 charge has been recorded as deferred compensation and is being expensed over a one year period. Accordingly, $675,000 has been expensed as consulting fees during the year.

NOTE 7:          STOCK OPTION PLAN

On December 19, 2005 the Board of Directors of the Company ratified, approved and adopted a Stock Option Plan for the Company in the amount of 5,250,000 shares at $0.333 per share. A majority of shareholders of the Company ratified and approved the Stock Option Plan effective February 1, 2006. On April 10, 2006 the Company amended its 2005 Stock Option Plan whereby, subject to adjustment from time to time as provided in Article 11.1, whereby the number of common shares available for issuance under the Plan was increased from 3,500,000 shares to 7,500,000 shares.

On February 1, 2006, the Company granted 285,000 stock options as follows: 172,500 to an officer and 112,500 to an employee, at $0.333 per share. The term of these options is ten years. The fair value of these options at the date of grant of $124,331 was estimated using the Black-Scholes option pricing model with an expected life of 3 years, a risk free interest rate of 5.09%, a dividend yield of 0%, and expected volatility of 130% and has been recorded as a stock based compensation expense in the period.

On February 9, 2006, the Company filed a Form S-8 to register 2,000,000 stock options.

On February 14, 2006, 1,200,000 stock options were exercised at $0.333 per share by consultants to the Company for net proceeds of $400,000.

On March 2, 2006, 300,000 stock options were exercised at $0.333 per share by consultants to the Company for net proceeds of $100,000.

81


 

On April 10, 2006, 1,500,000 stock options were granted to consultants at $1.00 per share. The term of these options is ten years. The fair value of these options at the date of grant of $1,956,149 was estimated using the Black-Scholes option pricing model with an expected life of one month due to market price at the time of grant, a risk free interest rate of 5.09%, a dividend yield of 0%, and an expected volatility of 374.15% and has been recorded as stock based compensation expense in the period. On April 21, 2006 the Company filed a Form S-8 to register these 1,500,000 stock options.

On April 21, 2006, the Company issued 610,000 S-8 registered common shares in connection with the exercise of stock options by consultants to the Company for $450,000 net proceeds to the Company.

On April 24, 2006, the Company issued 500,000 S-8 registered common shares in connection with the exercise of stock options by consultants to the Company for $500,000 net proceeds to the Company.

On May 3, 2006, the Company issued 300,000 S-8 registered common shares in connection with the exercise of stock options by consultants to the Company for $100,000 net proceeds to the Company.

On June 3, 2006, the Company issued 112,500 S-8 registered common shares in connection with the exercise of stock options by a consultant to the Company for $37,500 net proceeds to the Company.

On August 30, 2006, 40,000 share options were exercised at $0.333 per share by a consultant to the Company for net proceeds of $13,200.

On October 10, 2006, a total of 650,000 stock options were granted to employees, consultants, directors and officers at an exercise price of $1.30 per share. The term of these options is ten years. The fair value of these options at the date of grant of $754,000 was estimated using the Black-Scholes option pricing model with an expected life of 1 year, a risk free interest rate of 4.09%, a dividend yield of 0%, and an expected volatility of 264.00% and has been recorded as stock based compensation expense in the period.

On October 26, 2006, 75,000 share options were exercised at $0.333 per share by a director of the Company for net proceeds of $25,000.

On November 28, 2006, under the terms of an option to purchase assets 50,000 stock options were granted to the Optionor at an exercise price of $2.46 per share. Under terms of the agreement 25,000 option shares will vest upon the next day following the effective date of the agreement and the balance of 25,000 option shares will vest six months from the effective date of the agreement should the Company exercise its option to purchase the assets. The term of these options is ten years. The fair value of these options at the date of grant of $114,500 was estimated using the Black-Scholes option pricing model with an expected life of 1 year, a risk free interest rate of 3.94%, a dividend yield of 0%, and an expected volatility of 264.00%. The vested portion of the value of these options, being $57,250 been recorded as mineral property expenditures in the year.

A summary of the Company's stock options as of December 31, 2006 and changes during the year is presented below:

 

Number of
options

Weighted average
exercise price

Weighted average
remaining life (years)

Balance, December 31, 2005

4,725,000

$0.333

9.23

Issued

2,485,000

0.717

10.00

Exercised

(3,137,505)

-

-

Balance, December 31, 2006

4,072,495

$0.610

9.17

NOTE 8:          INCOME TAXES

The Company has adopted FASB No. 109 for reporting purposes. As of December 31, 2006, the Company had net operating loss carry forwards of approximately $11,775,000 that may be available to reduce future years' taxable income. These carry forwards will begin to expire, if not utilized, commencing in 2023. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry forwards.

82


 

The Company reviews its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in management's judgment about the recoverability of future tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

A reconciliation of income tax computed at the federal and state statutory tax rates and the Company's effective tax rate is as follows:

 

Year ended
December 31, 2006

Year ended
December 31, 2005

     

Federal income tax provision at statutory rate

(35.0)%

(35.0)%

States income tax provision at statutory rates,
   net of federal income tax effect

(7.0)%

(7.0)%

     

Total income tax provision

(42.0)%

(42.0)%

The actual income tax provisions differ from the expected amounts calculated by applying the combined federal and state corporate income tax rates to the Company's loss before income taxes. The components of these differences are as follows:

 

2006

2005

     

Loss before income taxes

$ (14,818,318)

$ (1,998,805)

Corporate tax rate

42.00%

42.00%

     

Expected tax expense (recovery)

(6,223,694)

(839,498)

     

Increase (decrease) resulting from:

   

   Non-deductible stock option expenses

1,894,308

287,283

   Valuation allowance

4,329,386

552,215

Future income tax provision (recovery)

$                  -

$                  -

The Company's deferred tax asset is as follows:

 

2006

2005

     

Long-term deferred tax asset

   

    Loss carry forwards

4,945,000

616,330

Valuation allowance

(4,945,000)

(616,330)

 

                -

                -

As the criteria for recognizing future income tax assets have not been met due to the uncertainty of realization, a valuation allowance of 100% has been recorded for the current and prior year.

NOTE 9:          DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

The Company executed an employment agreement with its Chief Operating Officer and committed to pay him a monthly fee of $10,000 and grant him a total of 375,000 stock options exercisable over a ten year term at $0.333 per share. The options were granted as follows: 202,500 on December 20, 2005 and 172,500 on February 1, 2006 (refer to Note 10).

During the year ended December 31, 2006, the Company had transactions with certain officers and directors of the Company as follows:

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(a)       incurred $647,248 in management and consulting fees and recorded an additional $923,253 in stock based compensation expense (refer to Notes 6 & 7); and

(b)       paid $10,224 for marketing and media services to a private company of which our president is a director.

During the year, the Company authorized a $130,000 bonus due to its Chief Executive Officer, which has been accrued as an amount due to related parties and is included in management fees. Of this accrued amount, $65,000 was paid subsequent to year end and the balance of $65,000 is payable on or before March 31, 2007. Additionally during the year the Company accrued bonuses due to its Chief Operating Officer, Chief Exploration Officer and Chief Financial Officer in the amounts of $25,000, $62,000 and $8,581, respectively and these amounts are included in management fees and due to related parties.

All related party transactions involving provision of services or tangible assets were recorded at the exchange amount, which is the value established and agreed to by the related parties reflecting arms length consideration payable for similar services or transfers. Other related party transactions are disclosed in notes 3, 6 and 7.

NOTE 10:        COMMITMENTS

On December 1, 2005 the Company entered into a Financial Consulting Services Agreement with International Market Trend, AG ("IMT"). The term of the Agreement is for twelve months, effective February 1, 2006. In consideration for IMT entering into this Agreement, the Company granted to IMT or its nominees 1,300,000 stock options of the Company's common stock exercisable at a price of $0.50 per share on December 20, 2005. In addition, IMT will receive $10,000 per month. (Refer to Note 12(g).)

The Company is also committed to pay its key executives a total of approximately $480,000 per year for management services.

The Company is currently leasing premises in Texas and Wyoming with total monthly payments of $3,840. All agreements have a maximum term of one year and will expire no later than June 30, 2007.

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

Year Ended December 31,

 

2006

2005

     

Interest paid

$          -

$          -

Income taxes paid

$          -

$          -

NOTE 12:        SUBSEQUENT EVENTS

a)       On January 2, 2007 the Company granted 615,000 stock options to its employees, consultants, officers and directors. The options have an exercise price of $3.30 and a ten year term.

b)       On January 2, 2007 the Company entered into an agreement to purchase a database consisting of drilling, mapping and logging reports covering uranium and associated metals prospects located primarily in New Mexico. Consideration for the asset purchase was a one time cash payment of $20,000 (paid) and 50,000 stock options vesting as to 25,000 option shares upon the effective date of the Agreement and the final 25,000 option shares vesting six months from the effective date of the Agreement. The stock options are exercisable for a period of two years from the date of grant. Should the Company or any party related to the Company acquire any mineral property interest within the prospects covered by the database, the Company will be obligated to pay an overriding royalty of 1% or 2% on lands with and without an underlying royalty interest respectively.

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c)       On January 3, 2007 the Company completed a private placement for 200,000 units at a subscription price of $2.50 per Unit for gross proceeds of $500,000, of which $250,000 was received prior to the fiscal year end. Each unit is comprised of one common share and one-half warrant of one non-transferable share purchase warrant of the Company. Each whole warrant entitles the holder to purchase an additional common share of the Company until the earlier of 18 months from the date of issuance of the Units or nine months from the effective date of the Company's proposed registration statement and are exercisable at $3.00 per share during this period.

d)        In January and February 2007, a total amount of 441,250 warrants were exercised at $1.50 and $2.50 per share as to 50,000 and 391,250 warrants respectively for total proceeds of $1,053,125.

e)        On February 1, 2007 the Company entered into a Financial Consulting Agreement for a 12 month term. The Consultant will: i) disseminate the Company's news releases, investor packages, research reports and corporate and industry sector materials; ii) promote investor awareness and manage financial public relations to the investment community; and iii) arrange meetings with industry sector analysts, stock brokers and portfolio managers. The Company will pay the Consultant $6,500 and 2,500 restricted common shares per month.

f)        In February 2007, 150,000 stock options were exercised at $0.3333 per share, and 250,000 stock options were exercised at $1.00 per share by consultants to the Company for total aggregate proceeds of $300,000.

g)        In February 2007, the Company elected to extend the Financial Consulting Services Agreement with International Market Trend for one month through February 28, 2007, under the same terms. On February 26, 2007 the Company provided 30 days prior written notice concluding its agreement with International Market Trend AG.

h)        In February 2007 the Company filed a Form SB-2 Registration Statement under the Securities Act to register an aggregate of 8,100,000 shares, including the 5,400,000 common shares issued in the respective private placement offerings and the 2,700,000 common shares underlying the respective warrants. As of the date of these financial statements, the Registration Statement has not been declared effective.

 

85


Dealer Prospectus Delivery Obligation

Until ___________, 2007, all dealers that effect transactions in these securities, whether or not participating in the offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

 

 

 

 

 

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.          INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our officers and directors are indemnified as provided by the Nevada Revised Statutes ("NRS"), our Articles of Incorporation and our Bylaws.

NRS Section 78.7502 provides that:

(i)       a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to be lieve his conduct was unlawful;

(ii)      a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, a fter exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper; and

(iii)     to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.

NRS Section 78.751 provides that we may make any discretionary indemnification only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

(a)       by our stockholders;

(b)       by our board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;

(c)       if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion;

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(d)       if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion; or

(e)       by court order.

Our Certificate of Incorporation and Articles provide that no director or officer shall be personally liable to our company, any of our stockholders or any other for damages for breach of fiduciary duty as a director or officer involving any act or omission of such director or officer unless such acts or omissions involve intentional misconduct, fraud or a knowing violation of law, or the payment of dividends in violation of the General Corporate Law of Nevada.

Further, our Bylaws provide that we shall, to the fullest and broadest extent permitted by law, indemnify all persons whom we may indemnify pursuant thereto. We may, but shall not be obligated to, maintain insurance, at our expense, to protect ourselves and any other person against any liability, cost or expense. We shall not indemnify persons seeking indemnity in connection with any threatened, pending or completed action, suit or proceeding voluntarily brought or threatened by such person unless such action, suit or proceeding has been authorized by a majority of the entire Board of Directors.

Insofar as indemnification for liabilities arising under the Securities Act might be permitted to directors, officers or persons controlling our company under the provisions described above, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

ITEM 25.          OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is a list of the expenses to be incurred by us in connection with the preparation and filing of this registration statement. All amounts shown are estimates except for the SEC registration fee:

SEC registration fee

$5,070.20

Accounting fees and expenses

$5,000.00

Legal fees and expenses

$30,000.00

Transfer agent and registrar fees

$2,000.00

Fees and expenses for qualification under state securities laws

$1,500.00

Miscellaneous (including Edgar filing fees)

$1,000.00

Total:

$44,570.20

We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage or underwriting discounts or commissions paid by the selling shareholders to broker-dealers in connection with the sale of their shares.

ITEM 26.          RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, we have sold unregistered securities in private placement offerings, issued stock in exchange for debts or pursuant to contractual agreements as set forth below.

Founders Share Issuances

On July 27, 2004, we issued 1,575,000 shares of common stock to the original founders of the Company at a price of $0.0013 per share for total proceeds of $2,100.

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Share Issuances Pursuant to Contractual Agreements

On August 23, 2004, we issued 79,647 shares were issued to settle amounts owing to related parties in the aggregate amount of $15,929, and 35,000 shares for the conversion of debentures in the aggregate amount of $7,000 at a price of $0.20 per share.

On December 7, 2004, we issued 12,225,000 shares of common stock to the Company's new management team, consultants, and stakeholders in connection with the reorganization and change of business direction of the Company, at a price of $0.0013 per share for total proceeds of $16,300 of which 2,250,000 shares were issued on the conversion of debentures in the aggregate amount of $3,000.

On October 11, 2005, we entered into a Mineral Asset Option Agreement (the "Option") granting the Company the option to acquire certain uranium leases in the State of Texas. In consideration for the Option, we made a cash payment of $50,000 and issued 750,000 post forward split shares of restricted common stock at a value of $0.333 per share for a total value of $250,000 which was recorded with mineral property costs. Subsequent to the 2005 year end, we made a further cash payment of $150,000 on February 1, 2006 under the terms of the Option. The Option, if fully exercised will require the further issuance of an additional 2,250,000 post forward split shares of restricted common stock in 750,000 share installments due six, twelve, and eighteen months from the effective date of the Option.

On December 12, 2005, we entered into an Agreement to acquire drill data from a third party in consideration for a cash payment of $5,000 and issued 75,000 shares of restricted common stock at a price of $0.333 per share for a total value of $25,000 which was included with mineral property costs.

On December 16, 2005 we issued 1,950,000 shares of restricted common stock at a price of $0.333 per share for a value of $650,000 to three members of management as per their management agreement with the Company which is for a one year term commencing January 1, 2006. Accordingly this cost has been recorded as deferred compensation in the statement of stockholders' equity as of December 31, 2005 and will be expensed in 2006.

Private Placement Offering of Shares of Common Stock

On August 23, 2004, we issued 235,173 shares of common stock at $0.20 per share for total proceeds of $47,035 in connection with the Company's original precious metal exploration program.

On December 31, 2004, we issued 2,178,764 shares of common stock in connection with private placements of common stock at a price of $0.20 per share for total proceeds of $435,758 to fund the Company's intended uranium exploration program.

On March 31, 2005, April 28, 2005, May 18, 2005, Sept 16, 2005 and November 30, 2005, we issued an aggregate of 1,357,500 shares of common stock in connection with private placements of common stock at a price of $0.333 per share for aggregate total proceeds of $452,500 to fund the Company's intended uranium exploration program.

During fiscal year ended December 31, 2005, we engaged in a private placement offering under Regulation S and Rule 506 of Regulation D of the Securities Act. Pursuant to the terms of the private placement, we issued 905,000 pre-forward stock split shares of our restricted common stock at a subscription price of $0.50 per share for aggregate gross proceeds of $452,500. The per share price of the offering was arbitrarily determined by our Board of Directors based upon analysis of certain factors including, but not limited to, stage of development, industry status, investment climate, perceived investment risks, assets and net estimated worth of the Company. We issued shares of restricted common stock to investors who were either deemed an accredited investor as that term is defined under Regulation D or sophisticated. The investors executed subscription agreements and acknowledged that the securities to be issued have not been registered under the Securities Act of 1933, as amended, that the y understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities. 750,000 pre-forward stock split shares were registered on the Company's registration statement on Form SB-2. 155,000 pre-forward stock split shares have piggy back registration rights to be registered on subsequent offerings.

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On November 15, 2005, we issued an aggregate of 155,000 shares of common stock, at a price of $0.50 per share, to certain of the selling shareholders by way of the November 2005 Private Placement. On February 28, 2006, we completed a forward split of our shares of common stock, on the basis of 1.5 shares for each outstanding share of our common stock, of which these shares of common stock result. The common stock registered represents the post-forward split 232,500 shares of common stock issued in connection with the November 2005 Private Placement. We had agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued in the November 2005 Private Placement, completed pursuant to Rule 903 of Regulation S under the Securities Act.

On April 1, 2006, we issued an aggregate of 300,000 April 2006 Units, at a price of $1.00 per April 2006 Unit, with each April 2006 Unit consisting of one share of common stock and one non-transferable April 2006 Warrant, to certain of the selling shareholders by way of the April 2006 Private Placement. The common stock registered represents the 300,000 shares of common stock issued in connection with the issuance of the April 2006 Units. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the April 2006 Warrants in the April 2006 Private Placement, completed pursuant to Rule 506 of Regulation D under the Securities Act. Each April 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $1.50 per share during the period commencing on April 1, 2006 and ending on the day which is th e earlier of (i) April 1, 2007 and (ii) six months commencing from the effective date of the Company's proposed registration statement related to the April 2006 Private Placement. The common stock registered represents the 300,000 shares of common stock issuable upon exercise of the April 2006 Warrants.

In May and June of 2006 we issued an aggregate of 2,525,000 May 2006 Units, at a price of $2.00 per May 2006 Unit, with each May 2006 Unit consisting of one share of common stock and one-half of one non-transferable May 2006 Warrant, to certain of the selling shareholders by way of the May 2006 Private Placement. The common stock registered represents the 2,525,000 shares of common stock issued in connection with the issuance of the May 2006 Units. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the May 2006 Warrants in the May 2006 Private Placement, completed pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S under the Securities Act. We agreed to use our reasonable commercial efforts to file a registration statement within 120 days from the date of completion of the May 2006 Private Placement. E ach whole May 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $2.50 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 12 months from the date of issuance and (ii) six months commencing from the effective date of the Company's proposed registration statement related to the May 2006 Private Placement. The common stock registered represents the 1,262,500 shares of common stock issuable upon exercise of the May 2006 Warrants.

In May and June of 2006 we issued an aggregate of 471,000 non-transferable Finder's Fee Warrants to acquire 471,000 shares of our common stock as finder's fees in connection with the offering of the May 2006 Units. The common stock registered represents the 471,000 shares of common stock issuable upon exercise of the Finder's Fee Warrants. The Finder's Fee Warrants have the same terms and conditions as the May 2006 Warrants.

The private placement transactions were completed in reliance of Rule 506 of Regulation D of the Securities Act, with respect to investors in the United States, and in reliance of Rule 903 of Regulation S of the Securities Act, with respect to those investors who were not "U.S. Persons", within the meaning of Regulation S, and who were otherwise outside of the United States. Sales to United States investors pursuant to Rule 506 of Regulation D were limited to investors who qualified as "accredited investors" within the meaning of Rule 501(a) of Regulation D.

II-4


 

The per share price of these offerings was arbitrarily determined by our Board of Directors based upon analysis of certain factors including, but not limited to, stage of development, industry status, investment climate, perceived investment risks, our assets and net estimated worth. We issued Units to investors who are non-U.S. residents. The investors executed subscription agreements and acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities. Finder's fees payable on the transaction is 7% of the gross proceeds raised from the sale of the units payable in cash plus 10% of the gross units issued payable in warrants identical to those provided in the units.

On December 13, 2006, we issued an aggregate of 2,800,000 December 13, 2006 Units, at a price of $2.50 per December 13, 2006 Unit, with each December 13, 2006 Unit consisting of one share of common stock and one-half of one December 13, 2006 Warrant, to certain of the Selling Shareholders named herein by way of the December 13, 2006 Private Placement. Each whole December 13, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share. The December 13, 2006 Warrants are exercisable commencing on a date that is at least 61 days after the Selling Stockholder delivers a written notice to the Company and ending on the day which is the earlier of (i) 18 months from December 13, 2006 and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered represents the 2,800,000 shares of common stock issued in connection with the iss uance of the December 13, 2006 Units and the 1,400,000 shares of common stock issuable upon exercise of the December 13, 2006 Warrants. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the December 13, 2006 Warrants in the December 13, 2006 Private Placement, completed pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S under the Securities Act.

On December 22, 2006, we issued an aggregate of 2,400,000 December 22, 2006 Units, at a price of $2.50 per December 22, 2006 Unit, with each December 22, 2006 Unit consisting of one share of common stock and one-half of one December 22, 2006 Warrant, to certain of the Selling Shareholders named herein by way of the December 22, 2006 Private Placement. The common stock registered represents the 2,400,000 shares of common stock issued in connection with the issuance of the December 22, 2006 Units. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the December 22, 2006 Warrants in the December 22, 2006 Private Placement, completed pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S under the Securities Act. We agreed to have the registration statement declared effective within four months from th e date of the issuance of the December 22, 2006 Units and, in the event that the registration statement is not declared effective by that date, to issue additional warrants to acquire shares in the capital of the Company equal to one one-hundredth of a warrant for each U.S. $1.00 in aggregate funds paid by each subscriber for the December 22, 2006 Units for each 30 calendar day period (or partial period thereof) during which the registration statement has not been declared effective, after the expiry of the four month period. Each whole December 22, 2006 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 9 months from the date of issuance and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered also represents the 1,200,000 shares of common stock issua ble upon exercise of the December 22, 2006 Warrants.

On January 3, 2007, we issued an aggregate of 200,000 January 3, 2007 Units, at a price of $2.50 per January 3, 2007 Unit, with each January 3, 2007 Unit consisting of one share of common stock and one-half of one January 3, 2007 Warrant, to certain of the Selling Shareholders named herein by way of the January 3, 2007 Private Placement. The common stock registered represents the 200,000 shares of common stock issued in connection with the issuance of the January 3, 2007 Units. We agreed to file a registration statement with the SEC in accordance with the requirements of the Securities Act in order to register the resale by the investors of the shares issued and the shares issuable upon exercise of the January 3, 2007 Warrants in the January 3, 2007 Private Placement, completed pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S under the Securities Act. Each whole January 3, 2007 Warrant entitles the holder to purchase one share of common stock at an exercise price of $3.00 per share during the period commencing on the date of issuance and ending on the day which is the earlier of (i) 18 months from the date of issuance and (ii) nine months commencing from the effective date of the registration statement of which this prospectus forms a part. The common stock registered also represents the 100,000 shares of common stock issuable upon exercise of the January 3, 2007 Warrants.

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ITEM 27.          EXHIBITS

The following exhibits are filed with this registration statement on Form SB-2:

Exhibit Number

Description of Exhibit

3.1

Articles of Incorporation, as amended(1)

3.1.1

Certificate of Amendment to Articles of Incorporation(2)

3.2

Bylaws(1)

3.3

Audit Committee Charter(1)

3.4

Ethics Charter(1)

4.1

Consulting Agreement between Uranium Energy Corp. and Randall Reneau(3)

4.2

Mineral Asset Option Agreement(3)

4.3

Agreement and Addendum between Harry A. Moore Trust and Uranium Energy Corp.(4)

4.4

Financial Consulting Services Agreement between Uranium Energy Corp. and International Market Trend AG(5)

4.5

Harry A. Moore Trust Agreement(5)

4.6

Amending Agreement to Employment Agreement between Uranium Energy Corp. and Harry Anthony(6)

4.7

Consulting Services and Right of First Refusal Agreement between Uranium Energy Corp. and Jim Knupke(5)

4.8

Corporate Relations Consulting Services Agreement between Uranium Energy Corp. and Michael Baybak and Corp. Inc.(5)

4.9

Corporate Finance Consulting Services Agreement between Uranium Energy Corp. and Eurotrade Management Group Ltd.(5)

4.10

Executive Services Agreement between Uranium Energy Corp. and Amir Adnani(6)

4.11

Reneau Services Agreement between Uranium Energy Corp. and Randall Reneau(6)

4.12

Uranium Mining Lease among Uranium Energy Corp., John G. Jebsen and John Triantis(7)

4.13

Consulting Agreement dated February 1, 2007 between the Company and Epoch Financial Group Inc.

4.14

Web Services Agreement dated March 21, 2007 between the Company and Market Pathways Financial Relations Inc.

4.15

Letter Option Agreement dated March 28, 2007 between the Company and Betty, Fred and Marty Holley

4.16

Consulting Agreement dated March 29, 2007 between the Company and EuroXchange Consulting Ltd.

4.17

Database Agreement dated April 4, 2007 between the Company and Paul Pierce

4.18

Letter Agreement between La Merced del Pueblo de Cebolleta and Neutron Energy, Inc.(11)

4.19

Limited Liability Company Members' Agreement of Cibola Resources LLC between Neutron Energy, Inc. and Uranium Energy Corp.(11)

4.20

Limited Liability Company Members' Agreement of Cibola Resources LLC between Neutron Energy, Inc. and Uranium Energy Corp.(11)

5.1

Opinion of Lang Michener LLP, with consent to use, regarding the legality of the securities being registered, previously filed herewith as an exhibit

10.1

2005 Stock Option Plan of Uranium Energy Corp.(8)

10.2

Amended 2005 Stock Option Plan (9).

10.3

2006 Stock Incentive Plan of Uranium Energy Corp.(10)

23.1

Consent of Independent Auditors, Dale Matheson Carr-Hilton LaBonte LLP, filed herewith as an exhibit

II-6

 


  1. Incorporated by reference to our Registration Statement on Form SB-2 filed with the SEC on August 4, 2005.
  2. Incorporated by reference to our Current Report on Form 8-K filed with the SEC on February 9, 2006.
  3. Incorporated by reference to the amendment to our Registration Statement on Form SB-2 filed with the SEC on November 9, 2005.
  4. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on December 21, 2005.
  5. Incorporated by reference to our Annual Report on Form 10-KSB for the year ended December 31, 2005 filed with the SEC on April 13, 2006.
  6. Incorporated by reference to our Registration Statement on Form SB-2 filed with the SEC on October 4, 2006.
  7. Incorporated by reference to our Quarterly Report on Form 10-QSB filed with the SEC on August 21, 2006.
  8. Incorporated by reference to our Current Report on Form 8-K filed with the SEC on December 21, 2005.
  9. Incorporated by reference to our Quarterly Report on Form 10-QSB filed with the SEC on May 15, 2006.
  10. Incorporated by reference to our Quarterly Report on Form 10-QSB filed with the SEC on November 20, 2006.
  11. Incorporated by reference to our Current Report on Form 8-K filed with the SEC on May 4, 2007.

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ITEM 28.          UNDERTAKINGS

The undersigned registrant hereby undertakes:

1.       To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)       To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)      To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in this registration statement; provided that any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

(iii)     To include any additional or changed material information with respect to the plan of distribution.

2.       That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

3.       To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the offering;

4.       That, for the purpose of determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)       Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424 of Regulation C of the Securities Act;

(ii)      Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii)     The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv)      Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable.

II-8


 

In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act of 1933, and we will be governed by the final adjudication of such issue.

Each prospectus filed pursuant to Rule 424(b) of the Securities Act of 1933 as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

__________

 

 

 

II-9


SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this amendment to the registration statement to be signed on its behalf by the undersigned in the City of Vancouver, Province of British Columbia, Canada, on May 11, 2007.

   

URANIUM ENERGY CORP.

By:     /s/ Amir Adnani
                                                                  
Amir Adnani
President, Chief Executive Officer, Principal Executive Officer and a director

POWER OF ATTORNEY

Know all persons by these presents that that each individual whose signature appears below constitutes and appoints Amir Adnani as a true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by this registration statement that is to be effective upon filing under Rule 462 promulgated under the Securities Act of 1933, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intent s and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any one of them, or his or their substitutes, may lawfully do or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act of 1933, this amendment to the registration statement was signed by the following persons in the capacities and on the dates stated.

Signature

Title

Date


/s/Amir Adnani

Amir Adnani


President, Chief Executive Officer, Principal Executive Officer and a director

May 11, 2007


/s/ Alan P. Lindsay
Alan P. Lindsay


Chairman and a director

May 11, 2007


/s/ Harry Anthony
Harry Anthony


Chief Operating Officer and a director

May 11, 2007


/s/ Randall Reneau
Randall Reneau


Chief Exploration Officer and a director

May 11, 2007


/s/ Ivan Obolensky
Ivan Obolensky


Director

May 11, 2007


/s/ Eric Essiger
Eric Essiger


Director

May 11, 2007


/s/ Pat Obara
Pat Obara


Secretary, Treasurer, Chief Financial Officer and Principal Accounting Officer

May 11, 2007

 

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Exhibit 4.13

FINANCIAL CONSULTING AGREEMENT

 

            This Agreement is made and entered into as of the 1st day of February, 2007 (the "Effective Date") between EPOCH FINANCIAL GROUP, INC. ("Consultant"), having offices at 5 Concourse, Suite 3000, Atlanta, Georgia 30328, and URANIUM ENERGY CORP. ("Company"), having offices at 9801 Anderson Mill Road, Suite 230, Austin, TX 78750.

            In consideration of the mutual promises made herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

            1.          Engagement. The Company hereby engages the Consultant to render financial consulting advice to the Company upon the terms and conditions set forth herein.

                          It is understood and acknowledged by the parties that the value of the Consultant's advice is not susceptible of quantification and that, although the Consultant shall be obligated to render the advice contemplated by this Agreement upon the reasonable request of the Company, the Consultant shall not be obligated to spend any specific amount of time in so doing. Further, in rendering services under this Agreement the Consultant may use materials such as mailing lists which are proprietary and owned by the Consultant, which ownership the Company will acknowledge at the request of Consultant and will not attempt to contest.

                          The Consultant's duties will include:

                          (a)       Disseminating information about the Company to the investment community at large by means of one or more of the following;

    • preparing fact sheets/research reports
    • creating and maintaining shareholder databases
    • designing and distributing investor packages
    • orchestrating targeted mailings to the investment community
    • distributing press releases and fact sheets
    • initiating and maintaining financial media relations
    • developing advertising programs to the financial community

                          (b)       Assisting in the Company's financial public relations and assisting to create investor awareness programs by means of one or more of the following;

    • developing marketing strategies for the company to the investor and broker communities
    • contacting retail sales managers/stockholders and analysts
    • contacting mutual fund, portfolio and pension fund managers
    • contacting financial publication writers
    • establishing stockbroker lead programs

                          (c)       Arranging, on behalf of the Company, at appropriate times, meetings with securities analysts, stock brokers and portfolio managers on a one to one and conference basis for the purpose of public exposure of the Company, and not for capital raising purposes;

                          (d)       Rendering advice as requested with regard to the following internal operations:

    • the formation of corporate goals and their implementation
    • the Company's financial structure and its divisions or subsidiaries
    • corporate organization and personnel.

1


 

                          (e)       Rendering advice with regard to the following corporate finance matters as requested:

    • changes in the capitalization of the Company
    • changes in the Company's corporate structure
    • redistribution of shareholdings of the Company's stock
    • offerings of securities in public and private transactions
    • alternative uses of corporate assets
    • structure and use of debt
    • sales of stock by insiders pursuant to Rule 144 or otherwise

                          The Consultant also will render other financial consulting services as mutually agreed upon by the Consultant and the Company from time to time.

            2.          Compensation.

                          For the services rendered by the Consultant to the Company under Section 1 of this Agreement, the Company will pay the following fees:

                          (a)       From the Effective Date and during each month during the Initial Term (as hereinafter defined) and continuance of this Agreement, the Consultant will be paid Six Thousand Five Hundred (U.S. $6,500) Dollars, payable in advance, on the first business day of each such month (the "Fee").

                          (b)       From the Effective Date and during the Initial Term (as hereinafter defined) and continuance of this Agreement, and on the first business day of each such month during the Initial Term and during the continuance of this Agreement, the Company shall issue to the order and direction of the Company 2,500 restricted common shares from the treasury of the Company (collectively, the "Shares"), which Shares will issued to the Consultant, as an accredited investor, in accordance with the appropriate exemption contained under the United States Securities Act of 1933, as amended.

            3.          Expenses. In addition to the Fees payable and Shares issuable under Section 2 of this Agreement for consulting services, the Company will also reimburse the Consultant for all pre-approved and reasonable travel and out-of-pocket expenses incurred in connection with the services performed by Consultant pursuant to this Agreement during the Initial Term and during the continuance of this Agreement promptly after submission to the Company of appropriate evidence of such pre-approved expenses.

            4.          Company Covenants. The Company covenants and agrees to furnish to the Consultant disclosure and filing materials, financial statements, business plans, promotional materials, annual reports and press releases; all of which must already form and be a part of the Company's public record and existing regulatory filings.

            5.          Company Representations. The Company hereby represents and warrants that all opinions and advice (written or oral) given by Consultant to the Company in connection with Consultant's engagement are intended solely for the benefit and use of the Company in considering the transaction to which they relate, and the Company agrees that no person or entity other than the Company shall be entitled to make use of or rely upon the advice of the Consultant to be given hereunder, and no such opinion or advice shall be used for any manner or for any purpose, nor may the Company make any public references to the Consultant, or use the Consultant's name in any annual reports or any other reports or releases of the Company, without the Consultant's prior written consent.

            6.          Company Information. The Company recognizes and confirms that, in advising the Company hereunder, the Consultant will use and rely on data, material and other information furnished to the Consultant by the Company, without independently verifying the accuracy, completeness or veracity of same. The Consultant may, with the prior written approval of the Company, disseminate through the use of the media and advertisement the Company data, material or other furnished information and any research reports about the Company to order to attract potential investors as well as the brokerage community.

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            7.          Confidentiality. The Consultant will hold in confidence any confidential information which the Company provides to the Consultant pursuant to this Agreement which is designated by an appropriate stamp or legend as being confidential. Notwithstanding the foregoing, the Consultant shall not be required to maintain confidentiality with respect to information: (i) which is or becomes part of the public domain not due to the breach of this Agreement by Consultant; (ii) of which it had independent knowledge prior to disclosure; (iii) which comes into the possession of the Consultant in the normal and routine course of its own business from and through independent non-confidential sources; or (iv) which is required to be disclosed by the Consultant by applicable laws, rules or regulations. If the Consultant is requested or required to disclo se any confidential information supplied to it by the Company, the Consultant shall, unless prohibited by law, promptly notify the Company of any such request so that the Company may seek an appropriate protective order.

            8.          Business Activities. The Company acknowledges that the Consultant or its affiliates are in the business of providing financial services and consulting advice to others. Nothing herein contained shall be construed to limit or restrict the Consultant in conducting any such business with others, or in rendering such advice to others, as long as the Consultant, while retained by the Company hereunder, continues to act in good faith and in the best interests of the Company at all times.

            9.          Initial Term and Renewal. The initial term of this Agreement (the "Initial Term") is for a period of 12 months commencing on the Effective Date hereof. Notwithstanding any other provision of this Agreement, this Agreement may be terminated by either party hereto at any time after the Effective Date and during the Initial Term and during the continuance of this Agreement upon that parties' delivery to the other party of prior written notice of its intention to do so (the "Notice of Termination" herein) at least 30 calendar days prior to the effective date of any such termination (the end of such 30-day period from such Notice of Termination being the "Effective Termination Date" herein). In any such event the Consultant's ongoing obligation to provide its advice and services hereunder will continue only until the Effective Termination Date and the Company's ongoing obligation to pay and to provide the Consultant the Fees, Shares and expenses otherwise payable and issuable under Sections 2 and 3 hereinabove will continue only until the Effective Termination Date.

                          Subject at all times to the foregoing provision and Initial Term, this Agreement shall renew automatically if not specifically terminated in accordance with the following provisions. The Company agrees to notify the Consultant in writing at least 30 calendar days prior to the end of the Initial Term of its intent not to renew this Agreement (the "Company's Non-Renewal Notice"). Should the Company fail to provide a Company's Non-Renewal Notice then this Agreement shall automatically renew on a month-to-month term renewal basis after the Initial Term until otherwise specifically renewed in writing by each of the parties hereto for the next one-month term of renewal or, otherwise, terminated upon delivery by the Company of a corresponding and follow-up 30 calendar day Company's Non-Renewal Notice in connection with and within 30 c alendar days prior to the end of any such one-month term renewal period. Any such renewal on a one-month basis shall be on the same terms and conditions contained herein unless modified and agreed to in writing by the Parties in advance.

            10.        Indemnity. Each party hereto agrees to indemnify and hold harmless the other party hereto, together with its respective directors, officers, employees, agents, representatives and controlling persons (each an "Indemnified Person"), from and against any and all losses, claims, damages, liabilities, costs and expenses of or resulting from any suits, actions, investigations or other proceedings and , including, without limitation, reasonable attorneys' fees and expenses, as and when incurred (collectively, the "Damages"), if such Damages were, directly or indirectly, caused by, related to, based upon or arising out of the terms and conditions of this Agreement or the services and compensation rendered or payable hereunder, so long as the Indemnified Person shall not have engaged in any intentional or willful misconduct, or shall have acted grossly ne gligent, in connection with the matter, services or compensation provided which form the basis of the claim for indemnification from the Indemnified Person hereunder. This paragraph shall survive the termination of this Agreement.

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            11.        Independent Contractor. The Consultant shall perform its services hereunder as an independent contractor and not as an employee or agent of the Company or any affiliate thereof. The Consultant shall have no authority to act for, represent or bind the Company or any affiliate thereof in any manner, except as may be expressly agreed to by the Company in writing from time to time.

            12.        Cooperation. The parties agree to execute and deliver such documents and instruments, whether expressly provided for herein or not, as may be necessary or appropriate to effectuate any of the provisions of this Agreement.

            13.        Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. No provision of this Agreement may be amended, modified or waived, except in a writing signed by both parties. If any provision of this Agreement be invalid or unenforceable, the remainder of the Agreement or the application of the provision to persons or circumstances other than those as to which it is held invalid or unenforceable, will not be affected thereby, and each provision of this Agreement will be valid and be enforced to the fullest extent permitted by law. This Agreement shall be binding upon and inure to the benefit of each of the parties and their respective successors, legal representatives and assigns. This Agreement may be executed in counterparts. Notices under this Agreement will be sufficient if in writing and sent by certified mail to the address of the recipient stated above and will be deemed given on the date it is placed, postage prepaid in a depository of the United States mail. In the event of any dispute under this Agreement, then and in such event, each party agrees that the same shall be submitted to the American Arbitration Association ("AAA"), in the City of Atlanta, for its decision and determination in accordance with its rules and regulations then in effect. Each of the parties agrees that the decision and/or award made by the AAA may be entered as judgment of the Courts or the State of Georgia, and shall be enforceable as such. This Agreement shall be construed and enforced in accordance with the laws of the State of Georgia, without giving effect to conflict of laws. The prevailing party in any action or proceeding brought to enforce or otherwise recover under this agreement will be entitled to an award of all reasonable attorneys' fees and expenses incurred in connection therewith .

                          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written.

EPOCH FINANCIAL GROUP, INC.

          /s/ J. Todd Atenhan
By:______________________________
Name: J. Todd Atenhan
Title: President

 

URANIUM ENERGY CORP.

          /s/ Amir Adnani
By:__________________________________
Name: Amir Adnani
Title: CEO and President

 

 

 

4

EX-4.14 7 ex4-14.htm WEB SERVICES AGREEMENT DATED MARCH 21, 2007 EX4-14

Exhibit 4.14

Agreement for Web Services

 

Date: March 21, 2007

Agreement between Market Pathways Financial Relations Inc. (MP) and Uranium Energy Corp. (OTCBB: URME) 9801 Anderson Mill Road, Suite 230, Austin, TX 78750 - Phone: 512-828-6980. MP agrees to provide advertising services for distribution of company information via its Web properties and its proprietary database of 1 million+ investors.

 

MP will disseminate approved information regarding URME on mutually agreed upon dates, subject to the availability of the publication, as follows:

e-Mail Distribution Program & Terms

a.   Five news-oriented distributions featuring URME to our database of 1 million+ investors
b.   Coverage by SmallCap Sentinel via enhanced news wire "investment opinion circuit"

Payment shall be $24,000 US delivered via wire transfer as follows:

Wells Fargo Bank - California             Phone: 888-384-8400
ABA Routing # 121000248                  To Credit Account # 0206995414
Account Name: Market Pathways Financial Relations, Inc.

 

URME understands that this Agreement does not entitle it to ownership of the proprietary database owned by MP. MP will only "lease" access to the list as described above. Since MP must at all times rely upon the accuracy and completeness of information supplied to it by URME, URME agrees to indemnify, hold harmless, and defend, MP, its officers, directors, agents, employees and other representatives at its expense, in any proceeding or suit, which may arise out of and/or due to the gross negligence of URME or its officers, directors, agents, employees or other representatives that may arise from the inaccuracy or incompleteness of such material supplied in writing by URME to MP.

The Parties to this Agreement understand that this program is designed to expose URME to MP's database. MP makes no warranty that such exposure will create volume, buying or price appreciation for URME shares.

MP will compile a profile on URME from available information. MP will edit, comment and suggest copy changes for URME. However, URME is responsible for creating or supplying all original content and for approval of the finished copy and content. URME will approve on any content it requests MP to distribute on its behalf and URME will take full responsibility for that content. URME understands that this program has been discounted based upon a multiple placement commitment and that earlier termination of the program will not result in a discount or refund.

 

Page 1

 


 

 

Market Pathways Financial Relations, Inc.                 Email: sts@marketpathways.com
17595 Harvard Avenue, Suite C519                                 Phone: 949-955-0107
Irvine, CA 92614                                                            Fax: 949-705-6624

 

 

Market Pathways agrees:

/s/ Shannon Squyres
__________________________
Shannon Squyres, President

Uranium Energy Corp. agrees:

/s/
Pat Obara
__________________________
Pat Obara, CFO

 

EX-4.15 8 ex4-15.htm LETTER OPTION AGREEMENT DATED MARCH 28, 2007 EX4-15

Exhibit 4.15

URANIUM ENERGY CORP.
9801 Anderson Mill Road, Suite 230, Austin, Texas 78750

______________________________________________________________________________

 

March 28, 2007

Mr. FRED HOLLEY and Mr. MARTY HOLLEY and BETTY HOLLEY
Each c/o u

Dear Gentlemen:

Re:

Option to Acquire certain Assets by Uranium Energy Corp. (the "Optionee")
from Mr. Fred Holley and Mr. Marty Holley (collectively, the "Optionor")
OPTION TO PURCHASE ASSETS

          The Optionor is the 100% legal, registered and beneficial owner of a certain unencumbered mineral property claim and state lease interests, which are located in Colorado, Utah and New Mexico (each a "Mineral Claim"), together with a certain database containing various drilling, logging, mapping and reports respecting the subject Mineral Claims (collectively, the "Database"), and together with certain drilling rig equipment (collectively, the "Drilling Rig Equipment"); an initial listing of such Mineral Claims, Database and Drilling Rig Equipment (collectively, the "Assets") being set forth in Schedule "A" which is attached to this letter agreement (the "Agreement"); and the Optionor and the Optionee being, collectively, the "Parties" herein.

          The purpose of this Agreement is to set forth the mutual intentions and understandings of the Parties regarding the within granting by the Optionor to the Optionee of an exclusive option to acquire, subject to the "Royalty" (as hereinafter defined) provided for herein, a 100% legal and beneficial interest in and to the unencumbered Assets (the "Option"). This Agreement is not a letter of intent but a binding agreement imposing obligations on the Parties and acknowledging that this Agreement supersedes and replaces all prior agreements or understandings between the Parties hereto.

1.        Option transaction.

1.1      Option to purchase the Assets. In order to keep the right and Option granted to the Optionee in respect of the Assets in good standing and in force and effect during the Option period hereof (the "Option Period"); the Option Period being a period of two years and five business days from the "Effective Date" (as hereinafter defined) hereof; the Optionee shall be obligated to provide the following cash payments (each an "Option Price Payment"), the following regulatory filing fees and reimbursements (each an "Option Price Reimbursement Payments") and the following Mineral Claim maintenance payments (each an "Option Price Maintenance Payment"); and the Option Price Payments, the Option Price Reimbursement Payments and the Option Price Maintenance Payments being, collectively, the "Option Price" herein) to the Optionor in the following manner prior to the end of the Option Period in this instance:

(a)       Option Price Payments: pay to the order and direction of the Optionor the following Option Price Payments in the aggregate sum of U.S. $1,400,000.00 during the Option Period and in the following manner:


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(i)       an initial and non-refundable Option Price Payment of U.S. $25,000.00 (the "Initial Option Price Payment") prior to the execution date of this Agreement by each of the Parties hereto (such date being the "Execution Date" herein; and which Option Price Payment is hereby acknowledged as already having been made by the Optionee to the Optionor prior to the Execution Date hereof);

(ii)      a further and refundable Option Price Payment of U.S. $100,000.00 upon the Execution Date of this Agreement by the Optionor (the "Drilling Rig Equipment Payment"; and which Drilling Rig Equipment Payment will be secured by the "Promissory Note" (as hereinafter defined) to be provided from the Optionor to the Optionee commensurate with said Drilling Rig Equipment Payment);

(iii)     a further and non-refundable Option Price Payment of U.S. $475,000.00 on or before the five business days of the Effective Date (as hereinafter defined);

(iv)      a further and non-refundable Option Price Payment of U.S. $500,000.00 on or before the date which is the first anniversary date of the Effective Date; and

(v)       a final and non-refundable Option Price Payment of U.S. $400,000.00 on or before the date which is the second anniversary date of the Effective Date;

(b)       Option Price Reimbursements Payments: pay or provided to the order and direction of the Optionor the following and non-refundable Option Price Reimbursements Payments in the aggregate sum of U.S. $94,690.00 during the Option Period and in the following manner:

(i)       an initial Option Price Reimbursement Payment of U.S. $76,330.00 to the Bureau of Land Management (the "BLM"); and representing certain outstanding regulatory filing fees of the Optionor to the BLM; will be provided by the Optionee to the Optionor within five calendar days of the Execution Date; and

(ii)      a final Option Price Reimbursement Payment of U.S. $18,360.00; and representing certain BLM NOITL regulatory filing fees having already been advanced by the Optionor to the BLM; will be provided by the Optionee to the order and direction of the Optionor within five calendar days of the Execution Date; and

(c)       Option Price Maintenance Payments: pay, or cause to be paid, to or on the Optionor's behalf as the Optionee may determine, in the Optionee's sole and absolute discretion, all underlying option, regulatory and governmental fees, payments and assessment work required to keep the Mineral Claims and Database interests comprising the Assets and any underlying option agreements respecting any of the Mineral Claims and Database interests comprising the Assets in goodstanding during the Option Period of this Agreement.

          For the purposes of securing the exact details of and due diligence respecting the within Drilling Rig Equipment prior to the Effective Date hereof, it is hereby acknowledged and agreed that, prior to the Optionee's decision to continue with the within Option after the Effective Date, the Drilling Rig Equipment Payment will be secured for repayment to the Optionee by the Optionor by way of a demand promissory note for the full value of said Drilling Rig Equipment Payment (the "Promissory Note") advanced upon the Execution Date hereof; and which Promissory Note will become null and void and, correspondingly, the Drilling Rig Equipment Payment non-refundable, should the Optionee determine to continue with the Option after the Effective Date hereof.


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1.2      Termination of Option. The Option shall terminate upon five-calendar days' prior written notice being first being provided by the Optionor to the Optionee:

(a)       if the Optionee fails to make any of the required Option Price Payments to the order and direction of the Optionor in accordance with section 1.1(a) hereinabove within the time periods specified in section 1.1(a);

(b)       if the Optionee fails to make the required Option Price Reimbursement Payments to the order and direction of the Optionor in accordance with section 1.1(b) hereinabove within the time periods specified in section 1.1(b); or

(c)       if the Optionee fails to make the required Option Price Maintenance Payments in accordance with section 1.1(c) hereinabove.

1.3      Right of Optionee to terminate Option. Prior to the exercise of the Option the Optionee may terminate the Option by providing a notice of termination to the Optionor in writing of its desire to do so at least 30 calendar days prior to its decision to do so. After such 30-calendar days' period the Optionee shall have no further obligations, financial or otherwise, under this Agreement, except that the provisions of section 1.5 hereinbelow shall become immediately applicable to the Optionee upon providing such notice of termination to the Optionor.

1.4      Termination of Option and no interest acquired in the Assets. If the Option is so terminated in accordance with either of sections 1.2 or 1.3 hereinabove, then the Optionee shall have no right, entitlement or interest, legally or equitably, in and to any of the Assets, and (i) any Option Price payments or reimbursement(s) theretofore made to the Optionor by the Optionee shall continue to be non-refundable, for which the Optionee shall have no recourse whatsoever.

1.5      Obligations upon termination of the Option. If the Option is terminated, otherwise than upon the exercise thereof, then the Optionee shall deliver at no cost to the Optionor, within 30 calendar days of such termination, all originals and all copies of any materials comprising the Assets and including, without limitation, all reports, maps, assay results and other relevant technical data compiled by or in the possession of the Optionee with respect to the interests comprising the Assets and not theretofore already furnished to the Optionor.

1.6      Deemed exercise of Option. At such time as the Optionee has made each of the required Option Price payments and reimbursements in accordance with section 1.1 hereinabove, within the Option Period and the time periods as specified in section 1.1, then the Option shall be deemed to have been exercised by the Optionee, and the Optionee shall have thereby, in accordance with the terms and conditions of this Agreement and without any further act required on its behalf, acquired, subject to the underlying "Royalty" (as hereinafter defined), a 100% legal and beneficial and unencumbered interest in and to the Assets.

1.7      Right of First Refusal for Optionor drilling services. At any time during the Option Period and thereafter the Optionee shall have the sole and exclusive right and option, exercisable at any time, in its sole and absolute discretion, and at such commercially competitive consulting rates as may be reasonably agreed upon by each of the Parties hereto from time to time, to employ either the Optionor, and the Optionor's authorized affiliates or associates, as the case may be, on an exclusive basis to provide any and all required drilling services in connection with any of the Mineral Claim property interests comprising the Assets under Option hereunder. Any dispute under this section shall be decided by arbitration as provided for in the Agreement.


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2.        Royalty and the Right to Purchase Royalty.

2.1      Royalty. At any time during the Option Period and thereafter; however, subject to section 2.2 hereinbelow; and as a condition to the due and complete exercise of the within Option by the Optionee in accordance with the terms and conditions of this Agreement, the Optionee will be obligated to pay to the order and direction of the Optionor an overriding royalty (in each case being a "Royalty" herein) in connection with any uranium which is produced and sold in relation to any Mineral Claim property interest comprising the Assets under Option hereunder equal to the following and in the following manner:

(a)       a two percent (2%) Royalty of the gross proceeds received by the Optionee from the sale of any uranium and vanadium from any Mineral Claim property interests located in Utah and comprising the Assets hereunder;

(b)       a two percent (2%) Royalty of the gross proceeds received by the Optionee from the sale of any uranium and vanadium from any Mineral Claim property interests located in either Colorado or New Mexico and comprising the Assets when the 30-calendar day previous average uranium spot price is then less than equal to U.S. $90.00 per pound; and

(c)       a three percent (3%) Royalty of the gross proceeds received by the Optionee from the sale of any uranium and uranium from any Mineral Claim property interests located in either Colorado or New Mexico and comprising the Assets when the 30-calendar day previous average uranium spot price is then greater than U.S. $90.00 per pound.

                       For the purposes of calculating and paying the subject Royalty the following provisions shall apply:

(i)       the Optionee shall give notice to the Optionor of the date on which uranium is first mined or extracted from any of the Mineral Claim property interests;

(ii)      the amount of the Royalty payable to the Optionor shall be calculated by the Optionee each quarter and at the end of such quarter and shall be paid to the Optionor on or before the last day of the next following quarter. Any adjustments in the payment of the Royalty hereunder arising out of an audit referred to in paragraph "(iv)" hereinbelow shall be made and paid at that time;

(iii)     for the purposes of calculating the amount of the Royalty payable to the Optionor hereunder only, if, after the date that uranium is first mined or extracted from any of the Mineral Claim property interests, the Optionee sells any uranium to one of its subsidiaries or affiliates, and if the sale price of such uranium is not negotiated on an arm's length basis, the Optionee shall, for the purposes of calculating the Royalty only, and notwithstanding the actual amount of such sale price, add to the proceeds from the sale of such uranium an amount which would be sufficient to make such sale price represent a reasonable net sale price for such uranium as if negotiated at pertinent circumstances (including, without limitation, then current market conditions relating to uranium);


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(iv)      the Optionee shall by notice inform the Optionor of the quantum of such reasonable net sale price and if the Optionor does not object thereto within 30 calendar days after receipt of such notice, said quantum shall be final and binding for the purposes of this paragraph;

(v)       on or before the last day of each quarter of each year after uranium is first mined or extracted from any of the Mineral Claim property interests the Optionee shall deliver to the Optionor a statement indicating, in reasonable detail, as of the last day of the immediately preceding quarter, the calculation of the Royalty and the aggregate Royalty payable for such quarter;

(vi)      the Optionee agrees to maintain for each operation on any of the Mineral Claim property interests up-to-date and complete records relating to the uranium and sales thereof and the Optionor or its agents shall have the right at all reasonable times, including for a period of 12 months following the expiration or termination of the Agreement, to inspect such records and make copies thereof at its own expense for the purpose of verifying the amount of the Royalty payments to be made by the Optionee to the Optionor pursuant hereto. The Optionor shall have the right at its own expense to have such accounts audited by independent auditors once each year, and if the Optionor's audit reveals a shortfall of any nature whatsoever, the cost of such audit shall be borne by the Optionee;

(vii)     the Optionee shall have an audited statement prepared by its auditors for each year with respect to the Royalty payable to the Optionor hereunder, by the 31st day of March in the following year, and the Optionee shall forthwith deliver a copy of such statement to the Optionor; and

(viii)    all the Royalty payments shall be considered final and in full satisfaction of all obligations of the Optionee making the same in respect thereof if such payments or the calculations in respect thereof are not disputed by the Optionor within 60 calendar days after receipt by the Optionor of the audited statement referred to in paragraph "(vii)" hereinabove. Any disputes under this paragraph shall be decided by arbitration as provided for in the Agreement.

2.2      Right to Purchase Royalty. At any time during the Option Period and thereafter the Optionee shall have the sole and exclusive right and further option, exercisable at any time, in its sole and absolute discretion; however, subject at all times, to the Royalty then due and payable having been paid in full to the Optionor; to acquire such portion of the Royalty interest which is otherwise then applicable from the Optionee to Optionor hereunder at a Royalty purchase price of U.S. $300,000.00 for each one percent (1%) percentage interest which is then applicable under the terms of section 2.1 hereinabove (each a "Royalty Purchase Price"); with any such Royalty Purchase Price to be due and payable by the Optionee to the order and direction the Optionor within five calendar days of the Optionee's election to do so; failing any such then Royalty Purchase Price payment by the Optionee to the Optionor the required Royalty Purchase Price payment shall then increase by twenty-five percent (25%) upon each occurrence of default on behalf of the Optionee to make any such Royalty Purchase Price payment hereunder.

3.        Due Diligence and the Effective Date hereof.

3.1      From the date of the Optionor's acceptance of this Agreement and for a period of 30 calendar days thereafter the Optionee may conduct due diligence investigations in respect of the Optionor and its Assets (such period in time being the "Optionee's Due Diligence Period" herein). For purposes of such investigations the Optionor will give to the Optionee and its agents and representatives on the Execution Date full access to its Assets and all books, records, financial and operating data and other information concerning the Assets as the Optionee and its agents and representatives may reasonably request. If, at any time during the Optionee's Due Diligence Period, the Optionee determines that it is not satisfied, in its sole discretion, with the results of such investigations, it may elect not to proceed with the transactions contemplated hereby. In such instance the Optionee will notify the Optionor of such fact and thereupon this Agreement and the Option will terminate and the Parties hereto will have not further obligations hereunder except the obligations set forth in section 4 below. For the purposes of this Agreement, "Effective Date" means the day upon which the Optionee's Due Diligence Period ends hereunder.


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4.        Closing and the Transfer of Asset interests.

4.1      Closing. The final closing (the "Closing") of the within purchase and delivery of the Assets, together with all of the transactions contemplated by this Agreement, shall occur on the day which is not greater than five business days following the due and complete exercise of the Option herein in accordance with section 1.6 herein, or on such earlier or later closing date (the "Closing Date") as may be agreed to in advance and in writing by each of the Parties hereto, and will be closed at the offices of the Optionor, located at 9801 Anderson Mill Road, Suite 230, Austin, Texas, U.S.A., 78750, at 2:00 p.m. (Austin, Texas, time) on the Closing Date. If the Closing Date has not occurred by June 30, 2009 this Agreement will be terminated and unenforceable unless the Parties hereto agree in writing to grant an extension of the Closing Date.

4.2      Transfer of Asset interests. At such time as the Optionee has made each of the required Initial Option Price Payment, the Equipment Rig Equipment Payment and the Option Price Reimbursements Payments in accordance with the Option Period time periods as specified in section 1.1 hereinabove, then, and for the purposes, in part, of allowing the Optionee to further explore, develop and potentially finance the various Assets hereunder, the Optionor shall then cause a 100% legal, beneficial, registered and unencumbered interest in and to the Assets to be transferred to the Optionee subject only to the remaining terms and conditions of this Agreement which may continue to be registered as against such Asset interests hereunder and until the final Closing Date.

4.3      Copy of the Assets. The Optionor may retain one copy of the Assets for its internal use. The Optionor will not disclose the Assets or any portion thereof or any information or data that is a part thereof to any entity not a party to this Agreement without obtaining the Optionee's prior written consent. The Optionee may in its sole discretion withhold giving its consent to any such proposed disclosure.

5.        Disclosure.

5.1      Due diligence. Each Party may in a reasonable manner carry out such investigations and due diligence as to the other Party, at all times subject to the confidentiality provisions hereinbelow, as each Party deems necessary. In that regard the Parties agree that each shall have full and complete access to such documents and materials of the other Party as they, or their respective counsel, may deem reasonable and necessary to conduct an adequate due diligence investigation of each such Party, its respective operations and financial condition prior to the Closing Date.

5.2      Non-disclosure. Subject to the provisions hereinbelow, the Parties, for themselves, their officers, directors, shareholders, consultants, employees and agents agree that they each will not disseminate or disclose, or knowingly allow, permit or cause others to disseminate or disclose to third parties who are not subject to express or implied covenants of confidentiality, without the other Party's express written consent, either: (i) the fact or existence of this Agreement or discussions and/or negotiations between them involving, inter alia, possible business transactions; (ii) the possible substance or content of those discussions; (iii) the possible terms and conditions of any proposed transaction; (iv) any statements or representations (whether verbal or written) made by either Party in the course of or in connection with those discussions; or (v) any written material generated by or on behalf of any Party and such contacts, other th an such disclosure as may be required under applicable securities legislation or regulations, pursuant to any order of a Court or on a "need to know" basis to each of the Parties respective professional advisors. Notwithstanding the provisions of this section, the Parties agree to make such public announcements of this Agreement promptly upon its execution in accordance with the requirements of applicable securities legislation and regulations.


- 7 -

6.        General provisions.

6.1      Assignment and amendment. No Party may sell, assign, pledge or mortgage or otherwise encumber all or any part of its interest herein without the prior written consent of the other Party hereto. This Agreement and any provision thereof may only be amended in writing and only by duly authorized signatories of each of the respective Parties hereto.

6.2      Arbitration. The Parties agree that all questions or matters in dispute with respect to this Agreement shall be submitted to arbitration pursuant to the terms hereof. It shall be a condition precedent to the right of any Party to submit any matter to arbitration pursuant to the provisions hereof that any Party intending to refer any matter to arbitration shall have given not less than five calendar days' prior written notice of its intention to do so to the other Party together with particulars of the matter in dispute. On the expiration of such five calendar days the Party who gave such notice may proceed to refer the dispute to arbitration as provided for herein. The Party desiring arbitration shall appoint one arbitrator, and shall notify the other Party of such appointment, and the other Party shall, within five calendar days after receiving such notice, appoint an arbitrator, and the two arbitrators so named, before proceeding to act, shall, within five calendar days of the appointment of the last appointed arbitrator, unanimously agree on the appointment of a third arbitrator, to act with them and be chairperson of the arbitration herein provided for. If the other Party shall fail to appoint an arbitrator within five calendar days after receiving notice of the appointment of the first arbitrator, and if the two arbitrators appointed by the Parties shall be unable to agree on the appointment of the chairperson, the chairperson shall be appointed under the provisions of the Rules of the American Arbitration Association (collectively, the "Arbitration Rules"). Except as specifically otherwise provided in this section, the arbitration herein provided for shall be conducted in accordance with such Arbitration Rules. The chairperson shall fix a time and place in Austin, Texas, for the purpose of hearing the evidence and presentations of the Parties, and he shall preside over the arbitration and determine all questions of procedure n ot provided for under such Arbitration Rules or this section. After hearing any evidence and presentations that the Parties may submit, the arbitrators shall make an award and reduce the same to writing, and deliver one copy thereof to each of the Parties. The award only shall be for the direct actual damages incurred by the Party and shall not include any indirect, special, exemplary, or punitive damages whether based on breach of contract, tort or other theory of law. The expense of the arbitration shall be paid as specified in the award. The Parties agree that the award of a majority of the arbitrators shall be final and binding upon each of them.

6.3      Notice. Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be sent by prepaid registered mail deposited in a post office addressed to the Party entitled to receive the same, or delivered to such Party, at the address for such Party specified above. The date of receipt of such notice, demand or other communication shall be the date of delivery thereof if delivered, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the third calendar day after the same shall have been so mailed, or 15 calendar days in the case of an addressee with an address for service in a country other than a country in which the Party giving the notice, demand or other communication resides, except in the case of interruption of postal services for any reason whatsoever, in which case the date of receipt shall be the date on which the notice, demand or other communic ation is actually received by the addressee. Either Party may at any time and from time to time notify the other Party in writing of a change of address and the new address to which notice shall be given to it thereafter until further change.


- 8 -

6.4      Entire Agreement. This Agreement constitutes the entire agreement to date between the Parties hereto and supersedes every previous agreement, communication, expectation, negotiation, representation or understanding, whether oral or written, express or implied, statutory or otherwise, between the Parties with respect to the subject matter of this Agreement.

6.5      Enurement. This Agreement will enure to the benefit of and will be binding upon the Parties, their respective heirs, executors, administrators and assigns.

6.6      Applicable law. The situs of this Agreement is Austin, Texas, U.S.A., and for all purposes this Agreement will be governed exclusively by and construed and enforced in accordance with the laws and Courts prevailing in the State of Texas, U.S.A.

6.7      Further assurances. The Parties hereto hereby, jointly and severally, covenant and agree to forthwith, upon request, execute and deliver, or cause to be executed and delivered, such further and other deeds, documents, assurances and instructions as may be required by the Parties hereto or their respective counsel in order to carry out the true nature and intent of this Agreement.

6.8      Severability and construction. Each article, section, paragraph, term and provision of this Agreement, and any portion thereof, shall be considered severable, and if, for any reason, any portion of this Agreement is determined to be invalid, contrary to or in conflict with any applicable present or future law, rule or regulation in a final unappealable ruling issued by any court, agency or tribunal with valid jurisdiction in a proceeding to any of the Parties hereto is a party, that ruling shall not impair the operation of, or have any other effect upon, such other portions of this Agreement as may remain otherwise intelligible (all of which shall remain binding on the Parties and continue to be given full force and agreement as of the date upon which the ruling becomes final).

6.9      Counterparts. This Agreement may be signed by the Parties hereto in as many counterparts as may be necessary, and via facsimile if necessary, each of which so signed being deemed to be an original and such counterparts together constituting one and the same instrument and, notwithstanding the date of execution, being deemed to bear the effective execution date as set forth on the front page of this Agreement.

          Acceptance and execution.

          Please acknowledge your acceptance of the terms and conditions of this Agreement by kindly executing the same in the space provided hereinbelow. This offer is only open for acceptance until 5:00 p.m. (Austin, Texas, time) on March 30, 2007, failing which this offer will be deemed to be null and void and of no further force and effect.


- 9 -

          Yours very truly,

          URANIUM ENERGY CORP.
          Per:
          /s/ Clyde L. Yancy
          __________________________________________________________
          Clyde L. Yancy, P.G., Authorized Signatory for the Optionee

          The within offer and terms of this Agreement are hereby accepted by the Optionor effective on this 28th day of March, 2007 (the Execution Date hereunder):

 

 

 

/s/ Fred Holley                                                                               /s/ Marty Holley
FRED HOLLEY
                                   and                              MARTY HOLLEY

/s/ Betty Holley
BETTY HOLLEY

 

___

 

 


Schedule A

 

          This is Schedule "A" to that certain letter Agreement as entered into between Uranium Energy Corp. (as the Optionee) and each of Messrs. Fred Holley and Marty Holley (as the Optionor) and respecting an Option to acquire certain Assets of the Optionor by the Optionee as detailed below.

Assets

Mineral Claims:

As listed hereinbelow:


Colorado:     Betty - 3 claims; Eagles - 29 claims; Gotchas - 15 claims; Boo's - 13 claims; Pick - 27 claims; Hoe - 8 claims; Shovel - 36 claims; and Ax - 27 claims;.

Utah:     Utah's - 21 claims; 2 State Sections; and

New Mexico:     Copper - 36 claims; Rabbit - 36 claims; Mole - 27 claims; Gopher - 36 claims; Cedar - 36 claims; Redcliff - 20 claims; Fox - 36 claims; Fir - 36 claims; Minx - 36 claims; Pine - 36 claims; Pinyon - 36 claims; Katy - 36 claims; Payday - 35 claims; and Angus - 36 claims.

Database:

As previously provided and as to be more particularly provided by the Optionor to the Optionee immediately after the Execution Date.

Drilling Rig Equipment:

As previously provided and as to be more particularly provided by the Optionor to the Optionee immediately after the Execution Date.

__________

EX-4.16 9 ex4-16.htm CONSULTING AGREEMENT DATED MARCH 29, 2007 EX4-16

Exhibit 4.16

CONSULTING AGREEMENT

AGREEMENT, made this day 29th of March, 2007 by and between Uranium Energy Corp., having its principal place of business at 9801 Anderson Mill Road, Suite 230, Austin, Texas 78750 (hereinafter the "Company") and EurXchange Consulting Ltd., having its principal place of business at 666 Burrard Street, Suite 1240, Vancouver, B.C., V6C 2X8 (hereinafter the "Consultant").

          WHEREAS, the Company desires to retain the Consultant for consulting services in connection with financial and investor public relations and related matters in the Federal Republic of Germany and the Consultant desires to provide such services as set forth herein.

          NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

A.        CONSULTAION

          1.          Consultant. The Company hereby retains the Consultant to render to the Company the consulting services as described in Section A hereof, and the Consultant hereby accepts such assignment upon the terms and conditions hereinafter set forth.

          2.          Independent Relationship. The Consultant shall provide the consulting services required to be rendered by it hereunder solely as an independent contractor and nothing contained herein shall be construed as giving rise to and employment or agency relationship, joint venture, partnership or other form of business relationship.

          3.          No Authority to Obligate the Company. Without the consent of the board of directors or appropriate officer of the Company, the Consultant shall have no authority to take, nor shall it take, any action committing or obligating the Company in any manner, and it shall not represent itself to others as having such authority.

          4.          Term. The term of the Consultant's consultation to the Company hereunder shall commence as of the date hereof and shall extend for a term of six (6) months.

B.        OBLIGATIONS OF THE CONSULTANT

          1.          Consulting Services. During the term of this Agreement, Consultant will render advice and assistance to the Company on public and investor relations related matters, and in connection therewith the Consultant shall perform and render the consulting services enumerated in Schedule A hereto.

1


 

ALL OF THE FOREGOING CONSULTANT PREPARED DOCUMENTATION CONCERNING THE COMPANY, INCLUDING, BUT LIMITED TO, DUE DILIGENCE REPORTS, CORPORATE PROFILE, FACT SHEETS, AND QUARTERLY NEWSLETTERS, SHALL BE PREPARED BY THE CONSULTANT FROM MATERIALS SUPPLIED TO IT BY THE COMPANY AND SHALL BE APPROVED BY THE COMPANY IN WRITING PRIOR TO DISSEMINATION BY THE CONSULTANT.

 

          2.          Nonexclusive Engagement; Extent of Services.

                      a. The parties agree that the consultation contemplated by this Agreement is a nonexclusive engagement and that the Consultant now renders and may continue to render consulting services to other companies which may or may not conduct activities similar to those of the Company.

                      b. The Consultant will devote such time and effort to the affairs of the Company as Consultant deems reasonable and adequate to render the consulting services contemplated by this Agreement. The Consultant's work will not include any services that constitute the rendering of any legal opinions or performance of work that is in the ordinary purview of certified public accountants.

          3.          Confidentiality. The Consultant will not, either during its engagement by the Company pursuant to this Agreement or at any other time thereafter, disclose, use or make known for its or another's benefit, any confidential information, knowledge, or data of the Company or any of its affiliates in any way acquired or used by the Consultant during its engagement by the Company. Confidential information, knowledge or data of the Company and its affiliates shall not include any information which is or becomes generally available to the public other than as a result of a disclosure by the Consultant or its representatives.

C.        OBLIGATIONS OF THE COMPANY

          1.          Compensation.

a. Cash Retainer. The Company will pay according to Schedule A the amount of 300,178 EUR in total. The first installment of 209,000 EUR is due on the date hereof. The second installment of 91,178 EUR is payable 90 days from the signing of this agreement..

          2.          Reimbursement of Expenses.

a. Out-of Pocket Expenses. The Company shall reimburse the Consultant for actual out-of-pocket expenses including, but not limited to, facsimile, postage, printing, photocopying, and entertainment, incurred by the Consultant without the prior consent of the Company and in connection with the performance by the Consultant of its duties hereunder in amounts up to one-thousand dollars ($1,000) per month. The prior consent of the Company shall be required for reimbursement of expenses in excess of one-thousand dollars ($1,000) per month.

2


b. Travel and Related Expenses. The Company shall reimburse the Consultant for the costs of all travel and related expenses incurred by the Consultant in connection with the performance of its services hereunder, provided that all such costs and expenses have been authorized, in advance, by the Company.

c. General. Expenses shall be due and payable when billed and after they have been incurred.

 

D.        MISCELLANEOUS

          1.           Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the engagement of Consultant by the Company as a consultant and supersedes and replaces any and all prior understandings, agreements or correspondence between the parties relating to the subject matter hereof.

          2.          Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both the parties hereto. No waiver of any other provisions hereof (whether or not similar) shall be binding unless executed in writing by both the parties hereto nor shall such waiver constitute a continuing waiver.

          3.          Governing Law. This Agreement has been made in and shall be interpreted according to the laws of the State of Texas without any reference to the conflicts of laws rules thereof. The parties hereto submit to the jurisdiction of the courts of the State of Texas for the purpose of any actions or proceedings which may be required to enforce any of the provisions of this agreement.

          4.           Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns and upon the Consultant and the Consultant's successors and assigns.

          5.          Severability. If any provision or provisions of this agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:

                    a.          the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable) shall not in any be affected or impaired thereby; and

3


                    b.          to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this agreement containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

          6.          Further Assurances. From and after the execution and delivery of this Agreement, upon request of either party, the other shall do, execute, acknowledge and deliver all such further acts, assurances and other instruments and papers as may be required to carry out the transactions contemplated by this agreement.

          7.           Headings. The headings of the paragraphs of this agreement are inserted for convenience only and shall not be deemed to constitute part of this agreement or to affect the construction hereof.

          8.          Notices. Any notice to be given hereunder shall be given in writing. All notices under this Agreement shall be either hand delivered receipt acknowledged, or sent by registered or certified mail, return receipt requested as follows:

 

(a) If to the Company, to:

Uranium Energy Corp.
320-1111 West Hastings Street
Vancouver, B.C. V6E 2J3
Attn: Mr. Amir Adnani
Facsimile No.: (604) 682-3591

 

(b) If to the Consultant, to:

EurXchange Consulting Ltd.
1240-666 Burrard Street
Vancouver, BC, V6C 2X8
Facsimile No.: (604) 633-0298
Attn: Mr. Kay Jessel

          All such notices shall be deemed given when delivered, if personally delivered as aforesaid, or within five business days after mailing, as aforesaid.

          9.          Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

 

 

4


          IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

URANIUM ENERGY CORP.:


By: /s/ Amir Adnani                              
          Amir Adnani, President






EURXCHANGE CONSULTING, LTD.


By: /s/ Kay Jessel                                 
          Kay Jessel, Director

 

 

 

5

EX-4.17 10 ex4-17.htm DATABASE AGREEMENT DATED APRIL 4, 2007 EX4-17

Exhibit 4.17

INVOICE

DATE:

April 4, 2007

TO:

Pat Obara
Chief Financial Officer
Uranium Energy Corporation
Suite 320 - 1111 W. Hastings Street
Vancouver, British Columbia
Canada, V6E 2J3

FROM:

Paul E. Pierce
Uranium Energy Corporation
6100 Indian School NE Suite 225
Albuquerque, NM 87110

 

DESCRIPTION

One (1) lot of analyses/studies, reports, exploratory borehole locations and mineralization (elevations, thicknesses, grade), design, and maps for the property known as the L-Bar or South L-Bar Ranch as detailed in the attachment.

 

Price:    $75,000.00


ATTACHMENT
L-BAR DATA SET

SOHIO Western Mining Company Staff Studies

  1. J.W. Burgess, G.T. Fitzgerald, & L.R. Hatcher, Mining Economic Analysis of Area V, L-Bar Uranium Property, 21Aug79.
  2. Conrad Parrish & N.M. Naiknimbalker, JJ No. 1 Mine Detailed Projection, July 1980 through June 1981, June 1980.
  3. Unspecified Author, Long Range Mine Plan, South L-Bar Operation, May80.
  4. J.H. Olsen Jr, N.M. Naiknimbalkar, & E.E. Maurer, SOHIO Western Mining Company, South L-Bar Operation, J.J. No. 1 Mine, 1200 Ore Ton/Day Mine Plan & 7-on 7-off Mill Plan.
  5. Unspecified Author, SOHIO Western Mining Company L-Bar Mine & Mill, Proposed 1981 - 1983 Operating Budget/Forecast, Cases A&B, 15Dec80.
  6. J. Olsen, In-Place & Mineable Reserves--June 30, 1981, Hand-written spreadsheets, 5 sheets.
  7. J.H. Olsen Jr & N.M. Naiknimbalkar, SOHIO Western Mining Company, South L-Bar Property, Life-of-Mine Plan, 1Jan81.
  8. G.W. Cady & R.G. Boyd, South L-Bar Property, Area II & V, Detailed Ore Reserves, Cutoff 6' of .120% U3O8 for Surface and Longhole Reserves, Cutoff 6' of .100% U3O8 for Pillar Reserves, Through March 31, 1981, Apr81.
  9. J.J. Oliver, SOHIO Western Mining Company, L-Bar Mine & Mill, 1981 Mid-Year Update, 26May81.
  10. Gretchen W. Cady, In-Place Ore Reserve Calculations Through June 30, 1981, undated.
  11. P.E. Pierce, Drawings: Mine Pattern Projections for Area II and Area V, Blocks 1, 8, and 10, 26Aug81.
  12. P.E. Pierce, J.J. No.1 Mine Production Plan, Six Months Following Startup, 31Aug81.
  13. Ronald G. Boyd, Dr. Lynn C. Jacobsen, Erwin K. Kopp, & J.H. Olsen Jr, South L-Bar Operations, Variable Ore Reserve Study & 1984 Revised Mine Plan.

  14. J.H. Osen Jr & E.K. Kopp, South L-Bar Life-of-Mine Plan, Oct82.
  15. Unspecified Author (likely J.H. Olsen Jr), South L-Bar Operations, Revised Reclamation Plans, Requirements and Estimated Costs, Mar84.
  16. P.E. Pierce, Mill Tailings Pond, Drawing, 11"x17" size, undated.
  17. Computer Printouts, Mine & Mill Production Reports, 1978 - 1981, 11"x14" sheets.
  18. File: South L-Bar In-Situ Leach, [Maps, misc. notes, correspondence].
  19. Five Assorted Mill Processing Files: Titled--Circuits, CCD and Flocculant, Sulfate Stripping, Soda Ash Stripping & Hydrogen Peroxide Precipitation, and Hydrogen Peroxide Precipation, [Consultant studies, periodicals, staff notes.]
  20. Twelve 24"x36" blueprint drawings of slot/sandfill mining and miscellaneous underground structures.

Borehole & Ore Reserve Information

  1. Geo-Management, Inc., SOHIO Petroleum & Reserve Oil and Minerals, Evans Ranch--Drilling Summary, Aug 1969 - Oct 1971.
  2. Geo-Management, Inc., L-Bar Ranch Drill Hole Coordinates & Surface Elevations.
  3. Borehole logs copied to blueprint. Five sheets; 65 boreholes represented. [Borehole information for Area III].
  4. Blueprint of South L-Bar Shaft Site Core Hole (Gamma Log & Stratigraphy), 24"x36" size.
  5. Blueprint of Drill Hole Locations, Grades, Thicknesses, & Elevations, 24"x36" size.
  6. Blueprint of Surface Topography for South L-Bar with Mineralized Areas, 24"x36" size.

Consultant Studies

  1. David S. Robertson & Associates, Mining Operation Feasibility Study on South L-Bar Tract for SOHIO Natural Resources Company and Reserve Oil and Minerals Corporation, 11Dec78.
  2. Rust Tractor (Albuquerque Caterpillar Distributor), SOHIO Corporation, L-Bar Uranium Mine Area I--Job Analysis, [Open pit mining & haulage study by vendor], Nov76.

  3. Woodward-Clyde Consultants, Draft Environmental Report, L-Bar Uranium Project, Valencia County, New Mexico, Jun80.
  4. EXXON Minerals Company, Radioactive Material License Application & Environmental Report, 1May80.
  5. George E. Hoffman (Hydrologist), Hydro-Engineering, Ground-Water Monitoring Near The L-Bar Tailings Reservoir, First Semi-Annual 1986 Analysis, Aug86.

 

Mine & Mill Project Construction Information by Fluor Utah Inc.

  1. Project Specification No. 2A-Z-01 for Design Basis--Mine, 11Jan74.
  2. Project Specification No. 3A-Z-01 for Design Basis--Mill Process, 28Feb74.
  3. Structural Steel & Concrete Design (Mill, Leach, C.C.D. & S-X Areas), Book I.
  4. Structural Steel & Concrete Design (Mine Area), Book II.
  5. Structural Steel & Concrete Design (Precipitation Area, Mill Office--Lab Bldg., Warehouse--Shop Bldg., Bldg. Coordinates), Book III.
  6. Structural Steel & Concrete Design (Ore Receiving Facility), Book IV.
  7. Structural Steel & Concrete Design (Civil Calculations), Book V.
  8. L-Bar Uranium Mine Reduced Drawing Set (11"x17" size) [Total surface & underground mine plant design].
  9. L-Bar Uranium Mill Area Reduced Drawings (Complete set)

Adjacent Off-Site Studies

  1. Harold H. Zehner, Hydrology and Water-Quality Monitoring Considerations, Jackpile Uranium Mine, Northwestern New Mexico, U.S.G.S. Water Resources Investigation Report 85-4226, 1985.
  2. U.S. Department of the Interior, Bureau of Land Management, Bureau of Indian Affairs, Final Environmental Impact Statement for the Jackpile-Paguate Uranium Mine Reclamation Project, Laguna Indian Reservation,Cibola Count, New Mexico, Volumes I & II, 24Oct86.
  3. USGS Quadrangle Maps: Moquino, Seboyeta, Laguna, Mesita.

 

EX-23.1 11 ex23-1.htm EX23-1

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the use in this Registration Statement on Amendment No. 2 to Form SB-2 of our report dated February 26, 2007 relating to the financial statements of Uranium Energy Corp., and to the reference to our firm under the caption "Experts" in the related Prospectus of Uranium Energy Corp., for the registration of up to 5,400,000 shares of its common stock and 2,700,000 shares, underlying common stock purchase warrants.

 

"DMCL"

 

Dale Matheson Carr-Hilton LaBonte LLP
Chartered Accountants

Vancouver, Canada
May 11, 2007

 

 

 

CORRESP 12 filename12.htm COVER

Lang Michener LLP
BARRISTERS & SOLICITORS

Vancouver
Toronto
Ottawa
1500 - 1055 West Georgia Street, P.O. Box 11117
Vancouver, British Columbia, Canada V6E 4N7
Telephone (604) 689-9111
Facsimile (604) 685-7084

File Number:     57562/0016

Web site: www.langmichener.com

Direct Line: (604) 691-7445
Direct Fax Line: (604) 893-2679
E-Mail: tdeutsch@lmls.com

BY COURIER AND
FILED BY EDGAR

United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549-7010

Attention:        H. Roger Schwall

Dear Sirs:

Uranium Energy Corp. (the "Company")
Amendment No. 2 to Registration Statement on Form SB-2
SEC File No. 333-140722

We write on behalf of the Company in response to the letter of March 15, 2007 from the Securities and Exchange Commission (the "Commission") commenting on Amendment No. 1 to the Registration Statement on Form SB-2 (the "Registration Statement") filed February 15, 2007 with the Commission by the Company (the "Comment Letter"). On behalf of the Company, we have filed with the Commission via the EDGAR system, Amendment No. 2 to the Registration Statement on Form SB-2 that updates the Registration Statement pursuant to the comments set out in the Comment Letter. We enclose with this letter two copies of the amended Registration Statement, plus two copies that have been redlined to show the changes from the Registration Statement. In addition, we enclose two copies of an annotated transcript of the interview given by Mr. Adnani on February 14, 2007.

On behalf of the Company, we also provide below our item-by-item responses to the comments made in the Comment Letter. The factual information provided herein relating to the Company has been made available to us by the Company. Paragraph numbering used for each response corresponds to the numbering used in the Comment Letter. Capitalized terms used herein and not defined have the same meanings given such terms in the amended Registration Statement.


Page 2

General 

1.       Please update the financial statements and related disclosure included in the registration statement in accordance with Section 310 of Regulation S-B.

We have updated the financial statements and related disclosure in the amended Registration Statement.

2.       Please confirm that the executive and director compensation tables have been updated through the most recent fiscal year ended December 31, 2006.

We confirm that the executive and director compensation tables have been updated through the most recent fiscal year ended December 31, 2006.

3.       Please provide the disclosure required by Item 404(c) of Regulation S-B with respect to promoters of the registrant.

We have amended the Registration Statement to provide the information required by Item 404(c) of Regulation S-B with respect to the promoters of the Company.

4.       We note the interview given by Mr. Amir Adnani, the Chief Executive Officer as posted on the Wall Street Analyst Forum on February 14, 2007, the same date as the filing date of the registration statement. Moreover, it appears that the link to the interview remains active during the pendency of the registration statement. The interview and transcript thereof could be deemed to be a non-conforming prospectus and may have the effect of conditioning the market. Moreover, it does not appear that the safe harbour communication provisions referenced in Release 33-8591 are applicable to you.

Given the nature of the information contained in that interview and the timing of its appearance relative to the filing of the registration, provide us with a detailed analysis of the consideration given to the requirements of Section 5 of the Securities Act. Among other things, address why this communication should not be deemed to be a prospectus. We may have further comment.

We respectfully submit that the interview and transcript thereof would not constitute a non-conforming prospectus (as defined in Rule 2(a)(10) of the Securities Act of 1933, as amended) as there was no offer or solicitation in respect of the Company's securities made to any person during the interview. No mention was made in the interview of the offering and neither the transcript of the interview nor any other materials relating to the Company were disseminated to any person by the Company, and the link to the interview on the Company's website was removed. Mr. Adnani was not attending a road show or similar event in connection with an offering of the Company's securities, but rather gave the interview at an annual analyst conference at which officers of numerous companies made presentations about their businesses.


Page 3

Furthermore, the Registration Statement relates to a secondary offering of securities issued to the selling securityholders named therein, and no mention of the offering was made in the interview and no materials were disseminated to any person by the Company relating to the interview. The interview was given at an analyst conference and not in connection with an offering of securities by the Company. Accordingly, there was no intention on the part of the Company to condition the market for the resale of these securities. In addition, a period of more than twelve weeks will have passed since the date of the interview and the effective time of the Registration Statement thereby providing a "cooling off" period. Since the date of the interview, the trading price of the Company's shares has decreased.

5.       Much of the information provided by Mr. Adnani in the February 14, 2007 interview does not appear in the registration statement. For example, we noted Mr. Adnani's reference to the trends in the uranium production, specifically in the state of Texas, the step-out drilling program the Company intends to commence in April, the states in which it is anticipated ISR-amenable projects will be "fast-tracked", and the extensive details provided regarding the Company's plan of operations, inclusive of the Company's plan to enter into the production phase of operations by the third or fourth quarter of 2009. Provide us with an annotated copy of the article, indicating where that information is contained in the registration statement.

Some of the information relating to the Company that was discussed by Mr. Adnani in the interview was generally referenced in the Registration Statement, such as the step-out drilling program and databases, and other industry information provided by Mr. Adnani in the interview is available in the public domain. We have amended the Registration Statement to include or expand upon certain of the information provided by Mr. Adnani in the interview relating to the Company's operations. We have enclosed an annotated copy of the interview indicating where in the Registration Statement such information provided in the interview is referenced.

6.       In this regard, and consistent with the requirements of Item 101 of Regulation S-B, revise your disclosure to include material information regarding the Company's business plans. In this regard, if appropriate, provide the disclosure required by Item 101(b) of Regulation S-B. We note for example, that Mr. Adnani disclosed details regarding the database the Company plans on using in its exploration and development efforts. Clarify who owns the database and if responsive to disclosure requirements in Item 101(b) of Regulation S-B, include material information regarding the database in your filing. In this regard, please note that any assertions made with respect to the database should be accompanied with objective and verifiable support. We may have further comment.

We have amended the Registration Statement to update the information regarding the Company's business plans, in particular additional disclosure relating to the Company's database and its plan to use the database in its exploration efforts has been included.


Page 4

7.       We note that you refer to or use the terms such as historic resources, drill indicated resources and/or resources on your website. As you may know, for U.S. reporting purposes, measures of mineral reserves must be consistent with the definitions set forth in Industry guide 7 and resource estimates are not permitted. The reserve measurements found in Industry Guide 7 generally differ from other estimation systems, which define mineral resources. If you continue to make references on your web site to measurements other than those recognized by the SEC, please accompany such disclosure with the following cautionary language:

"Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission limits disclosure for U.S. reporting purposes to mineral deposits that a company can economically and legally extract or produce. We use certain terms on this web site, such as "reserves", "resources", "geologic resources", "proven", "probable", "measured", "indicated" or "inferred", which may not be consistent with the reserve definitions established by the SEC. U.S. investors are urged to consider closely the disclosure in our Form SB-2, File No. 000-51663. You can review and obtain copies of these filings from the SEC's website at http://www.sec.gov/edgar.shtml".

The above cautionary language has been included in the Company's website.

8.       The words "development" and "production" have very specific meanings under Industry Guide7(a)(4), (see www.sec.gov/divisions/corpfin/forms/ industry.htm@secguide7). The terms reference the "development stage" when companies are engaged in preparing reserves for production, and "production stage" when companies are engaged in commercial-scale, profit-oriented extraction of minerals. If the Company does not disclose any reserves, as defined by Guide 7, please remove all the terms as "develop", "development" or "production" throughout the document, and replace this terminology, as needed, with the terms "explore" or "exploration". This also includes the using of the terms in the Financial Statement head notes and foot notes see Instruction 1 to paragraph (a), Industry Guide 7.


Page 5

We have amended the Registration Statement to remove references to "develop", "development", "production" and other similar terms and replaced them with references to "explore", "exploration" and other similar terms, as appropriate.

Selling Shareholders, page 13

9.       Please identify in the selling shareholder table the natural persons who exercise voting and/or investment power over each of the entities listed. In this regard, we note that no such disclosure is provided with respect to the entities that acquired shares in the January 2007 private placement. Refer to Interpretation 4S of the Regulation S-K portion of the March 1999 supplement to the 1997 CF Manual of Publicly Available Telephone Interpretations.

We have amended the selling shareholder table in the Registration Statement to include the natural persons who exercise voting and/or investment power over the entities that acquired shares in the January 2007 Private Placement.

Directors, Executive Officers, Promoters, and Control Persons, page 20

10.      Please revise to provide a complete biographical sketch of Mr. Adnani. The biography should reference the month and year during the past five years of each position held by Mr. Adnani.

We have amended the biographical sketch of Mr. Adnani in the Registration Statement to reference the month and year during the past give years of each position held by Mr. Adnani.

Our Principal Mineral Properties, page 26

11.      You refer to the AB-claim group (41 claims) in the North Shirley Basin in this section. Please identify the state in which this claim group is located, define the total acreage the forty-one claims cover, and specify the type of claim or lease. Please clarify if this acreage is included in your total property acreage for the state of Wyoming.

We have amended the principal mineral properties section in the Registration Statement to clarify that the AB-claim group in the North Shirley Basin consists of 41 unpatented lode mining claims and is located in the State of Wyoming and covers a total of 847 acres under a lease. We have clarified that the 847 acres are not included in the total property acreage for the State of Wyoming as the lease agreement in respect of the property has been terminated.


Page 6

12.      Please disclose the information required under paragraph (b) of Industry Guide 7 for all material properties listed under this heading. Summary information by state allows these properties to be agglomerated, but specific information by property would best inform potential investors. For any properties identified which are not material, include a statement to that effect, clarifying your intentions. For each material property, include the following information:

  • The location and means of access to the property, including the mode of transportation utilized to and from the property.
  • Any conditions that must be met in order to obtain or retain title to the property.
  • A brief description of the rock formations and mineralization of existing or potential economic significance on the property.
  • A description of any work completed on the property and its present condition.
  • The details as to modernization and physical condition of the plant and equipment, including subsurface improvements and equipment.
  • A description of equipment, infrastructure, and other facilities.
  • The current state of exploration of the property.
  • The total costs incurred to date and all planned future costs.
  • The source of power and water that can be utilized at the property.
  • If applicable, provide a clear statement that the property is without known reserves and the proposed program is exploratory in nature.

You may refer to Industry Guide 7, paragraphs (b) (1) through (5), for specific guidance pertaining to the foregoing, available on our website at the following address: http://www.sec.gov/divisions/colpfin/forms/industry.htm# secguide7.

We have amended the Registration Statement to include the information required by paragraph (b) of Industry Guide 7 for the Weesatche project in Goliad County, Texas, which is the only material property currently owned by the Company. We have also clarified that all other properties owned by the Company are not currently considered material and the Company's intentions in respect of these properties is to conduct exploration of these properties in due course.

13.      The cut-off grade is a critical component used to evaluate the economic potential of the mineral properties. Please disclose the assumed uranium price, operating costs, and recovery parameters used to determine your historic cutoff grade thickness estimate. Show that this calculation demonstrates the cutoff grade or tenor used to define a mineral resource has reasonable prospects for economic extraction. In establishing the cut-off grade, it must realistically reflect the location, deposit scale, continuity, assumed mining method, metallurgical processes, costs, and reasonable metal prices.


Page 7

We have deleted the paragraph that discusses the cut-off grade.

Geology of the Property, page 28

14.      You also refer to "...holes drilled on an approximate 100 x 200 foot grid and the reserves have been adjusted for chemical disequilibrium..." followed two paragraphs later by "...define the historic resource initially defined by Moore Energy Corporation". Unless your company has prepared a recent updated feasibility study of this mineralization and are prepared declare proven and/or probable reserves, please remove all references to reserves from the filing. Please also remove all references to "resource" or "resources" from this filing as resource estimates are not permitted under Industry Guide 7.

We have amended the Registration Statement to remove all references to "reserves" and "resources" and other similar terms, as appropriate. The above-noted paragraphs have been deleted.

15.      You also refer to "...existing ore grade or near ore grade mineralization as defined by Moore...". Please define this ore grade in relation to your cutoff grade along with the assumed uranium price, operating costs, and metallurgical recoveries. Please also note that the terms "ores" or "ore body" are treated the same as the term "reserve."

We have amended the Registration Statement to remove all references to "ores" and "ore body" and other similar terms, as appropriate. The paragraph in which the above-noted disclosure appears has been deleted.

Mineral Exploration Properties, page 29

16.      Please clarify whether these claims are patented or unpatented mining claims, federal, state or private lands. Please disclose the number of claims, leases, and the associated acreage by property within a state heading.

We have amended the Registration Statement to clarify that these mineral exploration properties are held by way of mining claims or leases and have disclosed for each such property within a state heading the number of claims or leases, as applicable, and associated acreage.


Page 8

Arizona, page 30

17.      Insert a small-scale map showing the location and access to each property, as required by Instruction 3(b) to Item 102 of Regulation S-K. Note that SEC's EDGAR program now accepts Adobe PDF files and digital maps, so please include these maps in any amendments that are uploaded to EDGAR. It is relatively easy to include automatic links at the appropriate locations within the document to GIF or JPEG files, which will allow figures and diagrams to appear in the right location when the document is viewed on the Internet. For more information, please consult the EDGAR manual, and if additional assistance is required, please call Filer Support at 202-551-8900. We believe the guidance in Instruction 3(b) of Rule 102 of Regulation S-K would generally require maps and drawings with the following features:

  • A legend or explanation showing, by means of pattern or symbol, every pattern or symbol used on the map or drawing.
  • A graphical bar scale should be included. Additional representations of scale such as "one inch equals one mile" may be utilized provided the original scale of the map has not been altered.
  • A north arrow.
  • An index map showing where the property is situated in relationship to the state or province, etc., in which it was located.
  • A title of the map or drawing, and the date on which it was drawn.
  • In the event interpretive data is submitted in conjunction with any map, the identity of the geologist or engineer that prepared such data.

Any drawing should be simple enough or of sufficiently large scale to clearly show all features on the drawing.

Other than the Weesatche project in Goliad County, Texas, none of the properties are currently considered to be material to the Company. Accordingly, we have not included a map showing the location and access to each such property.

Phase I Work Programs - South Texas Leases, page 32

18.      Please describe the type of drilling to be performed, the drill hole spacing, hole depth, and your sampling techniques. We also recommend that a brief description of the QA/QC protocols be provided to inform others regarding sample preparation, controls, custody, assay precision and accuracy. This would apply to exploration and operational analytical procedures.


Page 9

We have amended the Registration Statement to describe the type of drilling to be performed, the drill hole spacing, hole depth and sampling techniques with respect to the South Texas Leases, and have also discussed the QA/QC protocols relating to samples that may be sent to a laboratory for analysis.

19.      You refer to the "...exploration databases acquired during 2006...". Please describe the contents of these databases and elaborate on their history, contents, reliability, quality, and possible use. Please state whether you have exclusive use of this information or whether the information is shared with other companies or competitors.

We have amended the Registration Statement to further describe the database and its use, and have clarified the Company's interest in respect of this information.

Phase II Work Programs, page 32

20.      We note that you utilize a significant amount of technical terminology in describing your plans and properties that may not be familiar to the average investor, particularly the term PFN. Revise your filing to convey the meaning of technical words through the context of your discussion as much as possible. Provide definitions of geologic and technical terms in a glossary for words that cannot be adequately defined in the text.

We have amended the Registration Statement to convey the meaning of technical terms as much as possible within the context of the discussions in which they are used.

Plan of Operations, page 35

21.      Please include the annual assessment amount required to keep your entire unpatented mining claims in good standing, all lease payments, access agreements, and database maintenance fees.

We have amended the plan of operations set out under the Management's Discussion and Analysis or Plan of Operations section in the Registration Statement to include annual assessment amounts, lease and other payments and database maintenance fees.


Page 10

If you require further information or have any questions, please contact the undersigned at (604) 691-7445.

Yours truly,

/s/ Thomas J. Deutsch

Thomas J. Deutsch
for Lang Michener llp

TJD/lmr
Encl.

cc.       Ms. Mellissa Campbell Duru

cc.       Uranium Energy Corp.
           Attn: Mr. Amir Adnani, CEO

CORRESP 13 filename13.htm TRANSCRIPT

URANIUM ENERGY CORP.

WALL STREET ANALYST FORUM
PRESENTATION TRANSCRIPT

[Response to Item 5 of the SEC comment letter
to the Company dated March 15, 2007]

In response to Item 5 of the SEC comment letter dated March 15, 2007, the following sets out the location in the Description of Business and Properties section of the Form SB-2 of Uranium Energy Corp. in which the statements made below by Mr. Adnani at the analyst conference held on February 14, 2007 relating to trends in uranium production, the step out drilling program, fast-tracking of projects and the Company's plan of operations are referenced. We have indicated where the information is located in the right-hand column and have noted the references made in the Form SB-2 below each paragraph. We note that certain of the industry information provided by Mr. Adnani is available in the public domain.

We also note that the transcript of the interview was generated by a computer program that converts voice into text and we believe there are a number of errors in the transcript with respect to Mr. Adnani's comments in the interview and what is reflected in the transcript of the interview. We have set out what we believe are some of the errors.

     

Location of Information in Description of Business and Properties Section

1.

Thank you for taking part in this presentation today. Good morning. Uranium Energy Corp. is a company that we are going to be talking about. Here's just a quick slide on forward-looking statements that I will be making in our standard disclaimer.

[Not applicable]

 

N/A

2.

We will start up with just covering a few important parameters about the uranium market and specifically looking at the commodity, the uranium commodity, it's important to pay attention to where we feel this is heading and some of the fundamental shifts that are taking place on the supply side of uranium.

[Not applicable]

 

N/A


          

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Location of Information in Description of Business and Properties Section

3.

Spot uranium currently is at about $75 a pound. When looking at some of the historic prices that it's achieved within uranium inflation adjusted on the price of uranium, we see that $120 a pound is where the inflation adjusted all time high. We believe that there is still room for the price of uranium on the commodity side to grow and rise. And this has been further exaggerated with so of the news that came out of Cameco's Cigar Lake project recently in October about the flooding of the Cigar Lake mine and some of the pressure that is added -- significant pressure that is added to the production coming on-stream in 2008 and 2009.

[Reference is made to Uranium prices and the potential for price increases due to an expected decrease in available supply.]

 

Background

4.

Just got a couple of recent headlines here in the slide for you. February 8th, the gold and euro up in Canada, there was further news that uranium sales are going to be postponed up to seven years out of Cigar Lake. This is again something that community -- the mining community and the uranium industry is trying to digest and understand what is going to happen with the Cameco's project, and in March there is will be more updates coming out of that.

[Reference is made to potential price increases due to an expected decrease in available supply.]

 

Background

5.

Greg Barnes, who has been analyst for TD Newcrest wrote, this is likely in our view to provide further upward momentum behind the uranium price, so, again, there seems to be unanimous support for this swap price for uranium reaching higher levels.

[Reference is made to potential price increases due to an expected decrease in available supply.]

 

Background

6.

Now, specifically, our company when looking at the uranium space, Uranium Energy Corp. is really focused on the sub-sector looking at the various opportunities in the uranium sector, the sub-sector being US uranium industry. We believe that -- we have looked at the various ways where companies could be developed and brought on stream to successfully take advantage and develop value in the space.

[Reference is made to the Company being engaged in the exploration of properties that may contain uranium minerals in the United States.]

 

General


          

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Location of Information in Description of Business and Properties Section

7.

We feel that the US represents one of the best opportunities available out there right now, for a number of reasons. This is by far the largest consumer of uranium in the world, the US domestic market has 104 nuclear reactors and this country consumes about 15 million tones of uranium annually. And production as of last year was only about 3 million tones from US soil.

[Reference is made to uranium consumption and production in the United States.]

 

Background

8.

As we move forward in order to support this very important and strategic industry that supplies about 20% of our electricity. It's very important that the uranium mining industry in the US gets back up on its feet again and becomes a growing concern.

[Reference is made to uranium production in the United States supplying approximately 20% of the electricity consumed in the United States.]

 

Background

9.

Historically a lot of exploration work has been done in the US for uranium between 1960 and 1985. Every single oil and -- major oil and gas company had uranium division. There were a lot independent operators that were active in this space. This has led to many discoveries that were made historically and a lot of projects that are available today in the US. What the US uranium industry needs, in our opinion today, is not more exploration but production and we have really become focused on how we can give up our company and become a near strong producer. And I will get into that in a second but here's our business model.

[Reference is made to historical exploration for uranium in the United States.]

 

Background

10.

Our business model is two-fold at the end of the day. We feel that these development stage projects that were abandoned by the previous discoverers and operators, provides us tremendous opportunity for us to go out there and accumulate a project portfolio. Our objective is over the next year to accumulate close to 50 million tones of uranium, historic uranium resources in the ground throughout the US state that we feel are the friendly states where uranium mining and the right places to be at. We have specifically also identified a number of low grade ISR-amenable projects that we feel we can fast track to production specifically in the states of Texas and Wyoming.

[Reference is made to historical exploration for uranium in the United States and the acquisition of historical exploration data as well as fast-tracking of projects.]

 

Background


          

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Location of Information in Description of Business and Properties Section

11.

In terms of people and in terms of intellectual capital, I would like to just touch on these few things for a second. With two building blocks and value drivers in our business, our historic information, historic information which basically represents work that was completed by previous operators. A lot of these databases follows an old maps and reports. Lot of rates available or perhaps still are available, in total we have gone out there and we have acquired indifferent historic databases, followed by more unique and held on to by geologists and engineers that were active in this business and held on to this information.

[Reference is made to historical exploration for uranium in the United States and the acquisition of historical exploration data.]

 

Background; Our Database

12.

In today we have over 4.8 million feet of drilling info for over hundreds of different projects throughout the US. This is our intellectual capital. This is what is driving our acquisition initiatives, this is what's driving our initiatives to develop exploration program around the projects that we have identified. This has let us to acquire over 19,000 acres of land in six different states. Again, every single project that we have acquired was previously subject of exploration for uranium. There is a historic relevance attached to every project. And our ongoing acquisition initiatives are guided by this historic informational library that I am talking about.

[Reference is made to historical exploration for uranium in the United States and the acquisition of historical exploration data as well as interests in over 19,000 gross acres of land.]

 

General; Background; Mineral Exploration Properties; Our Database

13.

The second important thing to sort of highlight here is the fact that we then taken these databases and we have separated them by states. So we have got a number of field offices that we have opened up over the past year and a half in Casper, in Albuquerque, Austin and Kingsville. Every single office is filled with geologists and engineers that are going through the data, were housing the data in these places. And again this has been a systematic process to go out there and really position ourselves as a leading uranium company with holdings in the US which we believe is very strategic moving forward.

[Reference is made to historical exploration data acquired and our properties being the subject of historical exploration.]

 

General; Background; Our Database


          

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Location of Information in Description of Business and Properties Section

14.

Second volume driver in the company is really built on the fact that recognition has to be made here, that the human resources in the uranium industry is extremely thin right now. We looked at a number of labor related statistics for uranium mining in the US; we looked at data that was provided by the Department of Energy. And we looked at, earlier on referred to, the price of uranium at an all time high price of uranium, which is about a $120 a pound which occurred in 1979.

[Reference is made to labour statistics and the Company's team of highly experienced professionals.]

 

Background

15.

And in 1979, there were over 20,000 people employed and working in the uranium mining industry in the US. In 2004, there were just over 400 individuals according to the BOE survey employed in this industry. As you can see the opportunity to become a uranium company and the opportunity to bring uranium production on stream is phenomenal given that the upside potential the price of uranium has, but the manpower and the human resources is in our opinion the most important bottleneck for companies to pay attention to.

[Reference is made to labour statistics and the Company's team of highly experienced professionals as well as a barrier created by a shortage of human resources.]

 

Background

16.

And our company has really taken this opportunity and has developed a competitive advantage around this by assembling one of the most unique and unparallel technical teams out there.

[Reference is made to our team of mining professionals which is believed to be a competitive advantage for the Company.]

 

Background

17.

We have put together a team 11 geologists and engineers and uranium mining professional. These are individuals that have spent their entire careers in the uranium mining industry, exploring for uranium deposits, developing operations, to go into production for uranium.

[Reference is made to our team of highly experienced professionals.]

 

Background; Employees


          

- 6 -

     

Location of Information in Description of Business and Properties Section

18.

Collectively, the team of these 11 individuals, we've got 320 years worth of aggregate uranium experience. This in our opinion is a competitive advantage for our company, and it allows us to demonstrate that we not only have the projects and intellectual capital but the people to be able to move projects -- the company's interests forward, especially at a time where again we have this limitation and bottleneck on people and manpower.

[Reference is made to our team of highly experienced professionals.]

 

Background

19.

And specifically, again, when you look at our technical team, they have been involved with every notable interest or recovery uranium project in the US. They've built both these things. They have operated them.

[Reference is made to our team of highly experienced professionals.]

 

Background

20.

Of the 3 million pounds of uranium that's produced annually in the US right now, a number of -- some of the key members of technical team are responsible for having built about 85% of these projects. This again is quite unparallel than -- and unprecedented between other junior uranium companies that are active in the States, right now.

[Reference is made to our team of highly experienced professionals.]

 

Background

21.

So where is this -- let us assume that utilizing the people that I talked about, combining that with the exploration databases, which is intellectual capital that we talked about, it's got to construe a situation just recovering our project portfolio. We are between the 19 different projects that we have acquired in six different US states.

[Reference is made to our exploration database and our mineral projects.]

 

Background; Our Database; Mineral Exploration Properties

22.

And the states that we're active in are classic uranium exploration and mining states. We are talking about Wyoming, Utah, Colorado, Arizona, New Mexico and Texas. In total, in terms of acreages, it's again over 90,000 acreages. This is just a quick breakdown of number of historic resources that were documented by the previous operators that managed these properties before we acquired them.

[Reference is made to the states in which we hold our interests being historically active in uranium exploration and our exploration database.]

 

Background; Our Database


          

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Location of Information in Description of Business and Properties Section

23.

And the potential that we feel these various projects hold are quite significant and we will be able to develop further with exploration initiatives to be able to prove up additional resources and potential ideas at these projects.

[Reference is made to our properties being the subject of historical exploration.]

 

General; Background; Our Database

24.

When looking at our company, we have amended to grow our land closing and our project portfolio through the acquisition of projects that I demonstrated in the previous slide. We also have the objective of being in production in the next two to three years. And we will get into the production timeline in a second, but most of our activity in terms of identifying the key state that we can get into production has been focused on Texas.

[Reference is made to our plan to acquire additional properties and our plan to be in production in the second half of 2009 and related workflow.]

 

General; Background; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008

25.

Texas is where we have our most advanced stage project, which is our Goliad project. The Goliad project has a historic resource of 5.2 million tons uranium. This is a project that was previously identified and acquired and worked on by a couple of companies named Moore Energy and Coastal States.

[Reference is made to the history of previous operations at the Weesatche Project.]

 

Weesatche Leases, Goliad County, Texas - History of Previous Operations

26.

We looked at the South Texas uranium trend as being a uranium trend that has been extremely prolific for uranium mines and uranium operations that have come on stream. Again it's hosted -- it's previously been hosted by 31 different uranium mines historic and present. And it's been home to about 26 of these projects being ISR recoverable, which is again the method of mining that we are focused on.

[Reference is made to the South Texas uranium trend that has previously been the subject of substantial historical exploration and the related rock formation.]

 

Mineral Exploration Properties, Texas - Texas


          

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Location of Information in Description of Business and Properties Section

27.

Texas is also an agreement state, meaning that most and all of the regulatory and environmental permitting issues that we need to overcome is done and handled at the state level and allowed us to again touch start the production sooner. The Goliad project is the project that we have mobilized about five drilling rigs on, since June of 2006. We are doing confirmatory drilling there to prove up the 5.2 million tons of historic resource that we talked about.

[Reference is made to regulatory and environmental permitting issues in Texas being handled at the state level. Reference is also made to the drilling program for the Weesatche property]

 

Background; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008

28.

Since this drilling program started, we have had two press releases, whereby, we've successful announced that we have been able to match the old geophysical values that Moore Energy had received on this project based on 400 delineation holes that they had completed. We have completed close to 350 holes ourselves. And our program there in terms of confirmation drilling is ongoing, and we are expecting to finish it over the next two to three weeks.

[Reference is made to drilling operations at the Weesatche property.]

 

Weesatche Leases, Goliad County, Texas - Geology of the Property

29.

Here is just a quick map of the Goliad project. Again, as you can see, we have got the lease foundry here showing in the green segment, in the red, orange, and the blue that you see in the middle is where the uranium occurs -- the uranium mineralization occurs. We have a number of old step-out drilling holes that were completed made up for these holes that demonstrated that the Goliad Project had uranium mineralization encountered on extension.

[The map included in the Form SB-2 relating to the Weesatche property is essentially the same as the one shown at the interview, with some colour and notation differences. Reference is also made to the step out drilling program.]

 

Weesatche Leases, Goliad County, Texas; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008

30.

What that means in essence is that the project has the potential and the capacity in grow in size. In about 60 days, we are going to start a step-out drilling program. And what that allows us to do over the next few months is to be able to prove up whether the Goliad project can contain more than the 5.2 million tons resource that we are talking about.

[Reference is made to the step out drilling program.]

 

Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008


          

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Location of Information in Description of Business and Properties Section

31.

Some of the historic reports that were written on the project based on the extension drilling discussed the potential for an additional 15 million tons [NB: should be "pounds"] of uranium at the Goliad Project. So we feel that this project has a great sort of building block for us in the initial 5.2 million where we can fast track that to production. But it gives us great upside to be able to prove up additional accounts and make it into a fairly large project and significant in the US Uranium industry.

[Reference is made to fast tracking of certain projects. Reference is made to previous work conducted on the property.]

 

Background; Weesatche Leases, Goliad County, Texas - Texas

32.

It shows you sort of what we've put together so far on our 3D analysis of the project and getting it closer for pre-production and some of our initiatives on the production side. About six months ago, we started an environmental baseline study to be able to file for a mine permit application and a radioactive material license for this project.

[Reference is made to the 3D analysis of the project. Reference is made to ongoing environmental permitting activities.]

 

Weesatche Leases, Goliad County, Texas - Geology of the Property; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008

33.

Our timing in terms of making sure that the project can be in production as one of the next uranium mine that's come -- that will come on stream in the US is by 2009. We are targeting Q3 or Q4 of 2009. And when you look at that, when you look at sort of the alternatives out there in terms of companies that have actually got projects, databases and people to bring new uranium mines into production, this is quite compelling.

[Reference is made to our plan to be in production in the second half of 2009 and related workflow.]

 

Background; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008


          

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Location of Information in Description of Business and Properties Section

34.

As you can see, we've got a very detailed critical top tier of how this project is going to move to production -- the various steps associated on the permitting front, the various steps associated with the pre-feasibility and the feasibility studies, well field development, and again the possibility of the conventional production beginning in '09.

[Reference is made to our plan to be in production in the second half of 2009 and related workflow.]

 

Background; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008

35.

On that and again just to kind of explain the importance of why we are able to fast track this project, we need to really look at our method of recovery and how we are working on the metallurgy side. In-situ recovery Uranium mining is where we feel the future of the Uranium mining in both US and the world. And the reason why this is extremely important is because in-situ recovery represents an alternative to conventional mining, all compete and underground mining.

[Reference is made to the use of the In-Situ recovery method.]

 

Background

36.

In essence it could be regard to a solution mining. Every single pound of uranium that's mined from US soil today, has mined through in-situ recovery. I mean about 21% of all global uranium production is mine through this method.

[Reference is made to the use of the In-Situ recovery method.]

 

Background

37.

Today with the shortage of the commodity in terms of stock house and inventories of Uranium. And the rise in demand for this commodity, and furthermore with that adding the complexities of conventional mining as evidence by why it would have taken place at the Cigar Lake Project. You can see that the importance and value of this type of mining, a method of mining that is much lower in terms of capital expenditure, that is, in terms of an environmental impact it has much less environmental impact.

[Reference is made to potential price increases due to an expected decrease in available supply, as well as to the lower capital expenditures of In-Situ recovery method.]

 

Background


          

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38.

And in terms of lead time, the lead time to bring an in-situ recovery for operation and to production is much quicker than a conventional mining project. The key of amenability of the projects and the geology of the project to this method of mining and most of what is available and what we are targeting in the state of Texas and in the state, in the state of Wyoming.

[Reference is made to the shorter lead time for In-Situ recovery than conventional mining.]

 

Background

39.

It is geology that would be amenable to this method of mining. Our Goliad project is something that we're targeting, to again have in-situ recovery conducted on. Again, in terms of lead time and we already looked at the fact that, that project would be brought on stream in 2009. This is really due to method of mining that we are experts and that we have chosen to move forward.

[Reference is made to In-Situ recovery and the plan to begin production in the second half of 2009 and related workflow.]

 

Background; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008

40.

Our company has also viewed in-situ recovery as being an important enough of the technique to the Uranium industry especially again, given the circumstances that we have on the supply side of the commodity. And we have come out and we have become a company that is going to be offering our in-situ recovery engineering services as third party expertise to our peers that lack such expertise.

[Reference is made to our plan to offer in-situ recovery engineering services to our peers.]

 

Background

41.

We feel that this provision is favorably for what is bound to be the next chapter of development in the Uranium Industry, which in our opinion is that of consolidation and we feel that given that we controlled a very important element of this business right now, that being a technical expertise. We can achieve great positioning for our company and the consolidation phase of the Uranium development a story in the US and globally.

[Reference is made to our team of experienced mining professionals.]

 

Background


          

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42.

We feel that the company's trading information and what we spent. We have been a publicly traded company on the OTC Bulletin Board, since February of 2006 so we have only been in the public capital markets for about a year's history. And our company has still quite unknown. In terms of the liquidity our average trading volume for the past three months is about 180,000 shares a day. And we have a dual listening on the Frankfurt Stock Exchange and the Berlin, Munich and Stuttgart Exchange's over in Germany and our average trading volume there for the past three months is about 83,000 shares.

[Reference is made to the Company's trading history.]

 

Market For Common Equity and Related Stockholder Matters

43.

We have about 34 million shares outstanding. 15 million US in the bank on a fully diluted basis, the company will have about $30 million in the bank and about 44 million shares outstanding, about 20% of our company is institutionally held.

[Reference is made to the number of shares outstanding, the Company's cash position and shareholdings in the Company.]

 

Summary; Security Ownership of Certain Beneficial Owners and Management

44.

And really just in summary, and I would like to cover up a few key points about the way, we view our company in terms of the investment propositions and highlights that we have at this stage and the value that we have recorded in our company.

[Not Applicable]

 

N/A

45.

We feel that, again that the key driver and the success of Uranium company's, at a time when there is a proliferation of Uranium Company's out there, its technical expertise. You have to be able to demonstrate that you have the team and the manpower to advance the company's interest forward and execute.

[Reference is made to our team of experienced mining professionals.]

 

Background

46.

The exposure to In-Situ recovery as a method of mining is exceptionally the key right now, especially given that there is a shortage of Uranium and there is complexities of projects once they correlate. The importance of bringing projects and counts into production quickly is an extreme, although it is of extreme importance and I think we have build the great value and premium in our company from that regards.

[Reference is made to the use of In-Situ recovery.]

 

Background


          

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47.

Our property acquisition initiatives are going to continue throughout 2007. Again, this is driven by the intellectual capital that we have in the historic databases that I talked about. And we planned to get closer-and-closer to be having one of the largest land holdings in historic resource profiles in the US for projects that demonstrate potential for Uranium mineralization.

[Reference is made to our database of exploration data.]

 

Background; Our Database

48.

Our advanced stage project and the Goliad project could be in production by 2009, I've talked about. And when you look at basket of Uranium companies out there that are at development stage -- that a development stage with near term production insight.

[Reference is made to our plan to be in production in the second half of 2009 and related workflow.]

 

Background; Weesatche Leases, Goliad County, Texas - Plan of Exploration - 2007/2008

49.

We recognized that our company is the least expensive in terms of market capitalization out there. We feel that we are still for the time being under the radar and once we can graduate to more senior exchange and develop a larger audience for our company, should be able to achieve greater valuations and move forward from there on.

[Not Applicable]

 

N/A

50.

So I thank you for listening to this presentation today. I appreciate it and we will now switch over to the question and answer session.

[Not Applicable]

 

N/A


          

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51.

Unidentified Audience Member
[Question Inaudible].
Amir Adnani

Okay. So the question is, if we have purchased exclusive access to this database -- databases that I've talked about. This is definitely exclusive. It's not at all a public information that was out there and available, a digital copy is available.

At 99% of the time these are old files and reports that geologist or engineers that were in charge of developing these projects historically for other companies had have longed to or the company themselves had basically, had these databases up for sale.

And in lot of cases we purchased them directly from the previous operators that have databases up for sale. We are talking physical file format and we are actually going through the process of digitizing most of this after we deployed them. Any other questions? Yes, sir.

[Reference is made to the database of exploration data we have acquired.]

 

 

 

Background; Our Database


          

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52.

Unidentified Audience Member
[Question Inaudible]
Amir Adnani

Sure. So just -- the question is how -- so in my view our company's view on the development of pricing Uranium is going to be in the next 10 or 15 years. We feel that the fundamental is driving the price of Uranium are quite strong and our links with a number of key drivers here.

The simple supply demand side of the commodity. It's strong from the perspective that that 104 nuclear power plants we have in the US. There is no plan of any of these plants being mass sold yet. And there is plans to bring new nuclear power plants on stream between now and the next 20 years across the world in China, in India. And some of their emerging economies in Asia are really looking at this is as a fundamental shift towards sustainability of their energy supplies moving forward.

The dependency on possible fields is simply something that should not be ignored and its something that nuclear power is really being look towards as increasing our energy mix. Not a question of replacing some of the sources, but really increasing the energy mix that we have available.

Some of the concerns over the global warming are also really addressed towards more of a shift and dependency on nuclear power. And so when we look at the long term trend we see that this is really driven by long term fundamental planning on products, government in conserving those towards the expansion of nuclear capacity through out the world, and because of this long term initiative and planning behind that increase of that capacity, uranium is the only fuel that is used in the generation of electricity in a power plant.

It's really the key commodity and that supply of it that's going to a down rate now the low levels of inventory on that supply demand chart moving forward. We don't see that gap really being properly filled and reaching the level of equilibrium, until 2016 and perhaps high.

But if the capacity of the nuclear power plants continues to increase which is what is being talked about and the progress towards increase the amount of electricity we generate in the US going from 20% to perhaps 50%. All these initiatives turn out and again there will continuous demand and need for uranium as the key fuel for this power plant.

[Reference is made to uranium prices, the potential for increases in the price of uranium due to an expected decrease in supply and consumption of uranium.]

 

 

 

Background


          

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53.

Unidentified Audience Member

What percentage of the US will be in the market 2015? And second question, do you have problems crossing borders at all in terms of selling product?

Amir Adnani

No. I mean our -- from our standpoint we're really concentrated on the US market. And our focus is to be the domestic producer and generally being a provider of this fuel to the domestic market that consumes it. And in terms of -- I am sorry what was the second question? I just listened to - could you repeat that....

[Reference is made to the Company being engaged in the exploration for uranium in the United States.]

 

 

Background


          

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54.

Unidentified Audience Member
[Question Inaudible]
Amir Adnani

Okay. There we go. Yes, sir.

Unidentified Audience Member
[Question Inaudible]
Amir Adnani

Sure. This question is how we read FXR Eurasia deal or merger that was announced the other day?

We feel that and generally speaking and not speaking to the actual how the deal was structured per se. But generally speaking we feel it goes to heart of what we're talking about, which is the fact, the next sort of chapter in terms of the uranium story and development of this industry is going to be data consolidation, and consolidation is going to be the key level of activity -- business activity, because I think really paid attention to the most uranium companies.

We feel that it demonstrated what we were talking about all along for the past six months. Talking about how the sector has to begin more critical for us, through M&A and consolidation. It proves that and it proves that the investment community and capital markets are willing to support and embrace companies that can achieve larger scale operation and production from various sources, jurisdictionally speaking and mine operational speaking.

And we feel that this really is what is the opportunity in the US uranium industry. We feel that the US uranium industry is extremely right in position for consolidation and we view the news of the FXR deal as extremely positive for the industry.

[Not applicable.]

 

 

 

 

 

 

N/A

55.

Unidentified Audience Member
[Question Inaudible]
Amir Adnani

The valuation was up I can't really comment on that.

[Not Applicable.]

 

N/A


          

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56.

Unidentified Audience Member
[Question Inaudible]
Amir Adnani

I can't really comment on it, just because I haven't looked at the numbers too much myself, yet. It just happened the other day and we haven't really gone into that yet. Okay any other questions. Yes sir.

[Not Applicable.]

 

 

 

N/A

57.

Unidentified Audience Member

Back to your technological point that as one of the large players in this industry looking to roll up smaller companies, are they going to be looking land maps and technology or both or what are the key things that they are looking for?

Amir Adnani

We strongly believe that the key element, the key -- again, sort of, driver behind consolidation and winner in a larger company emerging it beyond, if it is going to be technical expertise.

Early on the presentation I highlighted the fact that we've gone front 20,000 people working in the US uranium industry in '79 down to over 400 individual working in this industry in 2004, 2005. The key driver is people and expertise and the technology is not something that's available by third party engineering firms.

The technology is something that is really what's in the industry and held within the expertise that individual that were miners and that's been in the business for and during the 20-year downturn cycle that uranium had. And that is the key element in our mines to look to. And we feel that, obviously, there is a financing environment out there where company's can get finance and can talk into the capital markets effectively.

But, again, there is -- well, there is limitation is in the human resources side and we really think that's the key point to pay attention to.

[Reference is made to our team of experienced mining professionals.]

 

 

Background


          

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58.

Unidentified Audience Member

Follow up, do you get that expertise through hands on expertise in the industry overtime or you look guys from -- out of School Of Mines or what?

Amir Adnani

No we -- I mean initial -- we have about 25 employees right now in our company. I highlighted above 11 of our technical experts, which have spend their careers in the uranium mining industry. So we really recruited that expertise originally from what was available in the industry and effectively by doing that we know we are able recruit the under geologist and engineers that then we can have sort of an in-house team that can then train and work with these individuals and bring them up to speed on the various initiatives that we have.

[Reference is made to our team of experienced mining professionals.]

 

 

Background

59.

Unidentified Audience Member
[Question Inaudible].
Amir Adnani

Sure.

[Not Applicable.]

 

 

 

N/A


          

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60.

Unidentified Audience Member
[Question Inaudible].
Amir Adnani

There is no doubt that this a tough business, it's people intensive, it's capital intensive. But at the end of the day we feel that jurisdictionally speaking, we were positioned favorably in Texas. This is a state that is very much resource driven.

There are -- there is a tremendous amount of contractors available for drilling for various other initiatives that we have on the go and so far we haven't had any issues in sourcing the right contractors and the necessary contractors to move forward. There is no doubt that and every single mining operation in the world now is affected by rising material cost, rising again human resource cost.

It's just a reality, again, of the nature of bringing new operations on stream. What that affects us for the end of the day is perhaps, we have a lower CapEx spend then what we would have anticipated tow or three years ago but at the same time we have got the higher price of uranium to make up for that potential incremental increase.

But at the end of the day, I think that you look to people and when you look the people in our company, that have build these before, they have operated them before, then the expertise and understanding of how to bring the night to direct contractors and manpower and keeping projects on cost becomes manageable when you bet on the people that have done it past.

[Not Applicable.]

 

 

 

N/A

61.

Okay. Well, there is no other question. Again, thank you for taking part in this presentation. And I will be back again that's sometimes 11:04 of the second one.

[Not Applicable.]

 

N/A

May 11, 2007

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