10QSB/A 1 a04-14209_110qsba.htm 10QSB/A

 

SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, D.C.  20549

 

FORM 10-QSB/A

(Amendment No. 1)

 

ý  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2004 or

 

o  Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from            to          

 

Commission file number 0-17171

 

URANIUM RESOURCES, INC.

(Exact Name of Small Business Issuer as Specified in Its Charter)

 

DELAWARE

 

75-2212772

(State of Incorporation)

 

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

 

 

 

650 S. Edmonds Lane, Suite 108, Lewisville, Texas 75067

(Address of Principal Executive Offices)

 

 

 

(972) 219-3330

(Issuer’s Telephone Number, Including Area Code)

 

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Title of Each Class of Common Stock

 

Number of Shares Outstanding

 

 

 

 

 

Common Stock, $0.001 par value

 

129,631,198 as of November 11, 2004

 

 

 



 

URANIUM RESOURCES, INC.

2004 THIRD QUARTERLY REPORT ON FORM 10-QSB

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

Consolidated Balance Sheets-
September 30, 2004 (Unaudited) and December 31, 2003

 

 

 

 

 

 

 

Consolidated Statements of Operations -
Three months and nine months ended September 30, 2004 and 2003 (Unaudited)

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows -
Nine months Ended September 30, 2004 and 2003 (Unaudited)

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements -
September 30, 2004 (Unaudited)

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis or Plan of Operation

 

 

 

 

 

 

Item 3.

Controls and Procedures

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

Item 1.

Legal Proceedings

 

 

 

 

 

 

Item 2.

Changes in Securities and Use of Proceeds

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

 

 

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

 

 

 

 

 

 

Item 5.

Other Information

 

 

 

 

 

 

Item 6.

Exhibits and Reports on Form 8-K.

 

 

 

 

SIGNATURES

 

 

 

 

Index to Exhibits

 

 

2



 

URANIUM RESOURCES, INC.

 

CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

 

 

September 30,
2004

 

December 31,
2003

 

 

 

(Unaudited)

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,233,294

 

$

309,625

 

Receivables, net

 

27,719

 

25,250

 

Materials and supplies inventory

 

15,977

 

65,397

 

Prepaid and other current assets

 

102,086

 

13,371

 

Total current assets

 

1,379,076

 

413,643

 

 

 

 

 

 

 

Property, plant and equipment, at cost:

 

 

 

 

 

Uranium properties

 

44,676,070

 

41,788,721

 

Other property, plant and equipment

 

287,651

 

254,960

 

Less-accumulated depreciation, depletion and impairment

 

(41,319,533

)

(41,359,799

)

Net property, plant and equipment

 

3,644,188

 

683,882

 

 

 

 

 

 

 

Other non-current assets

 

11,268

 

 

 

 

 

 

 

 

Long-term investment:

 

 

 

 

 

Certificates of deposit, restricted

 

1,230,842

 

401,120

 

 

 

$

6,265,374

 

$

1,498,645

 

 

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

 

3



 

URANIUM RESOURCES, INC.

 

CONSOLIDATED BALANCE SHEETS

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

September 30,
2004

 

December 31,
2003

 

 

 

(Unaudited)

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

378,333

 

$

107,136

 

Current portion of restoration reserve

 

1,171,380

 

83,000

 

Current portion of long term debt

 

135,000

 

 

Interest payable

 

34,077

 

 

Other accrued liabilities

 

126,712

 

108,358

 

Total current liabilities

 

1,845,502

 

298,494

 

 

 

 

 

 

 

Other long-term liabilities and deferred credits

 

3,584,398

 

4,680,943

 

 

 

 

 

 

 

Long-term debt, less current portion

 

450,000

 

585,000

 

Commitments and contingencies (Notes 1 and 2)

 

 

 

 

 

Shareholders’ deficit:

 

 

 

 

 

Common stock, $.001 par value, shares authorized: 2004—200,000,000; 2003—100,000,000; shares issued and outstanding (net of treasury shares): 2004—128,281,198; 2003—81,824,193

 

128,434

 

81,977

 

Paid-in capital

 

59,750,789

 

53,211,487

 

Accumulated deficit

 

(59,484,331

)

(57,349,838

)

Less: Treasury stock (152,500 shares), at cost

 

(9,418

)

(9,418

)

Total shareholders’ equity (deficit)

 

385,474

 

(4,065,792

)

 

 

$

6,265,374

 

$

1,498,645

 

 

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

 

4



 

URANIUM RESOURCES, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine months Ended
September 30,

 

 

 

2004

 

2003

 

2004

 

2003

 

 

 

 

 

(Restated)

 

 

 

(Restated)

 

Revenues:

 

 

 

 

 

 

 

 

 

Uranium sales—

 

$

 

$

 

$

 

$

 

Total revenue

 

0

 

0

 

0

 

0

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of uranium sales—

 

 

 

 

 

 

 

 

 

Operating expenses

 

239,847

 

59,180

 

569,703

 

390,160

 

Provision for restoration and reclamation costs

 

64,424

 

 

(6,646

)

 

Accretion expense for restoration reserves

 

158,832

 

84,560

 

289,687

 

253,681

 

Depreciation and depletion

 

8,067

 

6,933

 

21,238

 

23,060

 

Writedown of uranium properties and other uranium assets

 

46,188

 

109,316

 

46,188

 

251,962

 

Total cost of uranium sales

 

517,358

 

259,989

 

920,170

 

918,863

 

Loss from operations before corporate expenses

 

(517,358

)

(259,989

)

(920,170

)

(918,863

)

 

 

 

 

 

 

 

 

 

 

Corporate expenses—

 

 

 

 

 

 

 

 

 

General and administrative

 

553,941

 

189,562

 

1,270,832

 

643,825

 

Depreciation

 

1,860

 

886

 

3,560

 

3,093

 

Total corporate expenses

 

555,801

 

190,448

 

1,274,392

 

646,918

 

Loss from operations

 

(1,073,159

)

(450,437

)

(2,194,562

)

(1,565,781

)

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense

 

(2,042

)

(6,937

)

(6,081

)

(14,501

)

Interest and other income, net

 

6,980

 

241,054

 

66,150

 

259,457

 

Loss before accounting change

 

(1,068,221

)

(216,320

)

(2,134,493

)

(1,320,825

)

Cumulative effect of accounting change, net of tax

 

 

 

 

1,447,070

 

Net earnings (loss)

 

$

(1,068,221

)

$

(216,320

)

$

(2,134,493

)

$

126,245

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before accounting change per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.01

)

$

0.00

 

$

(0.02

)

$

(0.02

)

Diluted

 

(0.01

)

0.00

 

(0.02

)

(0.02

)

Cumulative effect of accounting change per common share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

0.02

 

Diluted

 

 

 

 

0.02

 

Net earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.01

)

$

0.00

 

$

(0.02

)

$

0.00

 

Diluted

 

$

(0.01

)

$

0.00

 

$

(0.02

)

$

0.00

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common equivalent shares per share date

 

 

 

 

 

 

 

 

 

Basic

 

128,281,198

 

73,704,193

 

109,427,883

 

71,989,449

 

Diluted

 

128,281,198

 

73,704,193

 

109,427,883

 

71,989,449

 

 

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

 

5



 

URANIUM RESOURCES, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months Ended
September 30

 

 

 

2004

 

2003

 

 

 

 

 

(Restated)

 

Cash flows from operations:

 

 

 

 

 

Net earnings (loss)

 

$

(2,134,493

)

$

126,245

 

Reconciliation of net earnings (loss) to cash used in operations—

 

 

 

 

 

Credit for restoration and reclamation costs

 

(6,646

)

 

Cumulative effect of accounting change

 

 

(1,447,070

)

Accretion of restoration liability

 

289,687

 

253,681

 

Depreciation and depletion

 

24,798

 

26,153

 

Writedown of uranium properties and other assets

 

46,188

 

251,962

 

Decrease in restoration and reclamation accrual

 

(328,996

)

 

Deferred compensation

 

132,519

 

95,779

 

Other non-cash items, net

 

156,465

 

101,066

 

Cash flow used in operations, before changes in operating working capital items

 

(1,820,478

)

(592,184

)

 

 

 

 

 

 

Effect of changes in operating working capital items—

 

 

 

 

 

Increase in receivables

 

(2,469

)

(25,250

)

(Increase) decrease in inventories

 

(2,992

)

1,692

 

Increase in prepaid and other current assets

 

(205,813

)

(122,449

)

Increase (decrease) in payables and accrued liabilities

 

291,593

 

(955,215

)

Net cash used in operations

 

(1,740,159

)

(1,693,406

)

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

(Increase) decrease in certificate of deposit, restricted

 

(829,722

)

997,858

 

Additions to property, plant and equipment—

 

 

 

 

 

Kingsville Dome

 

(660,712

)

(68,010

)

Rosita

 

(35,898

)

(27,741

)

Vasquez

 

(2,100,526

)

(110,784

)

Churchrock

 

(109,948

)

(12,776

)

Crownpoint

 

(54,877

)

(21,551

)

Other property

 

(52,248

)

(11,100

)

Net cash provided by (used in) investing activities

 

(3,843,931

)

745,896

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Proceeds from borrowings

 

 

 

Issuance of common stock, net

 

6,507,759

 

175,000

 

Net cash provided by financing activities

 

6,507,759

 

175,000

 

Net increase (decrease) in cash and cash equivalents

 

923,669

 

(772,510

)

Cash and cash equivalents, beginning of period

 

309,625

 

1,025,469

 

Cash and cash equivalents, end of period

 

$

1,233,294

 

$

252,959

 

 

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

 

6



 

Uranium Resources, Inc.

Notes to Consolidated Financial Statements

September 30, 2004 (Unaudited)

 

1.                                      BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  The accompanying statements should be read in conjunction with the audited financial statements included in the Company’s 2003 Annual Report on Form 10-KSB.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the full calendar year ending December 31, 2004.

 

2.                                      FUTURE OPERATIONS

 

The financial statements of the Company have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Because of depressed uranium prices in 1999, we reduced our payroll and shut-in our uranium producing properties. From August 2000 through February 2004, we have had to rely on equity infusions to remain in business. We have raised a total of approximately $6.5 million allowing us to maintain the critical employees and assets of the Company until such time that uranium prices reached a level where it was prudent to commence operations. During this period uranium prices have ranged from a low of $7.10 per pound in 2001to $20.25 at November 8, 2004. Also during this period, we performed ongoing restoration and reclamation at certain of our wellfields at Rosita and Kingsville Dome under restoration agreements with the State of Texas and our bonding company that allowed us access to $3.2 million that had been pledged to secure restoration bonds.

 

In April 2003, October 2003, January 2004 and February 2004 the Company completed four private placements raising an aggregate of $175,000, $406,000, $350,000 and $325,000, respectively through the issuance of 4,375,000, 8,120,000, 3,500,000 and 3,250,000 shares of common stock, respectively. The funds raised in the private placements were used to fund the non-restoration overhead costs of the Company.

 

In May 2004, we sold 39,317,005 shares of common stock in two private placements at $0.15 per share, receiving cash of $5,832,757, net of offering costs.  With this funding we have commenced the development and mining of our Vasquez property in South Texas. We project that of the $5.9 million, $2.9 million will be utilized for wellfield and plant capital and $0.9 million will be for initial bonding requirements. We project the balance, or approximately $2.1 million, will be utilized for product operating costs and overheads until the uranium is available for sale.

 

Initial uranium production from Vasquez has been slower than originally projected, but current production rates are continuing to increase and additional wells are being brought online to ramp up production.  A continued improvement should result in the originally projected production rates being achieved by year end.  The lower than anticipated initial production rates means that production for 2004 should be approximately 115,000 pounds rather than the previously announced 300,000 to 350,000 pounds.  The Company now expects to sell 100,000 pounds during the fourth quarter rather than the previously announced 231,000 pounds, with the difference being moved into 2005 sales.  The fourth quarter sales will also occur later in the quarter than originally projected.  The shift in sales will defer revenues into the first quarter of 2005, and the Company currently expects that it will be able to satisfy any resulting cash needs through the exercise of certain options by one or more officers of the Company and certain other sources.

 

In 2005 we expect to deliver between 545,000 and 590,000 pounds, with 600,000 pounds of uranium scheduled for delivery in each of the years 2006 through 2008. All of the 2006 through 2008 deliveries and 300,000 pounds of deliveries in 2005 are subject to quantity flexibility, allowing, at the option of the buyer, an increase or

 

7



 

decrease to their deliveries by 15%.  The Company expects that deliveries during 2005 through 2008 should be met under two contracts entered into in August 2003 and January 2004 at then prevailing rates for long-term contracts.

 

The total cash bonding requirements for the Vasquez project is expected to amount to approximately $2.8 million, the majority of which we anticipate will be funded via the proceeds from operations.

 

3.                                      EARNINGS PER SHARE (EPS)

 

The Company computes EPS by applying the provisions of Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share. As the Company reported net losses for the periods presented, inclusion of common stock equivalents would have an antidilutive effect on per share amounts. Accordingly, the Company’s basic and diluted EPS computations are the same for the periods presented. For the three months ended September 30, 2004 and 2003, common stock equivalents that were not included in the computation of diluted EPS were 20,071,185 and 12,756,586, respectively. Common stock equivalents for the nine months ended September 30, 2004 and 2003 that were not included in the computation of diluted EPS were 16,269,437 and 12,755,480, respectively.

 

4.                                      STOCK BASED COMPENSATION

 

The Company has four stock option plans, the Employees’ Stock Option Plan, the Amended and Restated 1995 Stock Incentive Plan, the Directors’ Stock Option Plan and the 2004 Directors’ Stock Option Plan. The Company accounts for these plans under APB Opinion No. 25, under which no compensation cost has been recognized. Had compensation cost for these plans been determined consistent with FAS 148, the Company’s net earnings (loss) and earnings (loss) per share (“EPS”) for the three and nine months ended September 30, 2004 and 2003 would have been adjusted to the following pro forma amounts:

 

 

 

Three Months Ended
September 30,

 

Nine months Ended
September 30,

 

 

 

2004

 

2003

 

2004

 

2003

 

Net Earnings (Loss): As reported

 

$

(1,001,333

)

$

(216,320

)

$

(2,067,605

)

$

126,245

 

Pro forma stock based compensation costs
under the fair value method, net of tax

 

(112,363

)

(27,961

)

(156,590

)

(82,998

)

Pro forma

 

$

(1,113,696

)

(244,281

)

$

(2,224,195

)

43,247

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

(0.01

)

$

0.00

 

$

(0.02

)

$

0.00

 

Basic EPS:     Pro forma

 

$

(0.01

)

$

0.00

 

$

(0.02

)

$

0.00

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

(0.01

)

$

0.00

 

$

(0.02

)

$

0.00

 

Diluted EPS:     Pro forma

 

$

(0.01

)

$

0.00

 

$

(0.02

)

$

0.00

 

 

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2004: expected volatility of 149% and 179% and risk-free interest rates of 5.03% and 4.24%. Expected lives of 9.4 years and 5.7 years were used for options granted to employees and directors, respectively. The weighted average fair value of options granted in 2004 was $0.29. For grants in 2003: expected volatility of 165% and risk-free interest rates of 5.50%. An expected life of 5.7 years was used for options granted to employees and directors, respectively. The weighted average fair value of options granted in 2003 was $0.04.

 

The FAS 123 method of accounting has not been applied to options granted prior to January 1, 1995, and accordingly the resulting pro forma compensation cost may not be representative of that to be expected in future years.

 

5.                                      ASSET RETIREMENT OBLIGATION

 

Effective January 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (“FAS 143”) which establishes an accounting standard requiring the recording of the fair value of liabilities associated with the retirement of long-lived assets in the period in which they are incurred. The Company adopted FAS 143 effective January 1, 2003.

 

8



 

As a result of adoption of the FAS 143, the Company recorded a net reduction in its restoration liability of approximately $1.4 million at January 1, 2003. The Company had previously recorded the undiscounted future estimated restoration costs into expense. Under FAS 143, future restoration liabilities are usually added to the carrying value of the related asset but the Company has recorded them to expense because the associated properties had been fully impaired as of January 1, 2003.  Under FAS 143 the present value of the restoration costs are recorded instead of the undiscounted amount. The difference between the present value and the undiscounted amounts of $1,447,000 as of December 31, 2002 appears in the September 30, 2003 Consolidated Statement of Operations as a cumulative effect of change in accounting principle. The estimated accretion expense for the change in the present value of the estimated liability recorded for the quarter ended September 30, 2004 and 2003 was $72,771 and $84,560, respectively. The estimated accretion expense for the change in the present value of the estimated liability recorded for the nine months ended September 30, 2004 and 2003 was $203,626 and $253,681, respectively.

 

The Company’s financial statements for the nine months ended September 30, 2003 have been restated to reflect the adoption of FAS 143 as of January 1, 2003.  The adoption of FAS 143 resulted in increasing accretion expense by $253,681 and recording cumulative effect of the change in accounting principle of $1,447,070 for an increase in net income of $1,193,389 or $0.02 per share for the nine months ended September 30, 2003.

 

The following table shows the change in the balance of the restoration and reclamation liability during the three months and nine months ended September 30, 2004 and 2003, respectively:

 

 

 

Three Months Ended
September 30,

 

Nine months Ended
September 30,

 

 

 

2004

 

2003

 

2004

 

2003

 

Reserve for future restoration and reclamation costs beginning of period

 

$

3,413,619

 

$

3,343,804

 

$

3,480,656

 

$

3,174,683

 

Accretion expense

 

158,832

 

84,560

 

289,687

 

253,681

 

Restoration provision adjustment

 

(208,044

)

 

(405,936

)

 

Reserve for future restoration and reclamation costs at end of period

 

$

3,364,407

 

$

3,428,364

 

$

3,364,407

 

$

3,428,364

 

 

6.                                      SHAREHOLDERS’ EQUITY

 

Equity Infusion

 

In 2003 and 2004 the Company sold shares of common stock in the following private placements:

 

Date

 

Price per Share

 

Amount

 

Shares Issued

 

 

 

 

 

 

 

 

 

May 2004

 

$

0.15

 

$

5,897,550

 

39,317,005

 

February 2004

 

$

0.10

 

$

325,000

 

3,250,000

 

January 2004

 

$

0.10

 

$

350,000

 

3,500,000

 

October 2003

 

$

0.05

 

$

506,000

 

8,120,000

 

April 2003

 

$

0.04

 

$

175,000

 

4,375,000

 

 

Increase in Authorized Shares

 

In January 2004, the Company’s stockholders approved an amendment to the Company’s Restated Certificate of Incorporation to increase the authorized shares of Common Stock, par value $0.001 per share (the “Common Stock”), from 100,000,000 to 200,000,000.

 

9



 

ITEM 2.                  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

 

Forward Looking Statements

 

This Item 2 contains “forward-looking statements”.  These statements include, without limitation, statements relating to liquidity, financing of operations, continued volatility of uranium prices, estimates of future capital expenditures, and other such matters.  The words “believes,” “expects,” “projects,” “targets,” or “estimates” and similar expressions identify forward-looking statements.  The Company does not undertake to update, revise or correct any of the forward-looking information.  Readers are cautioned that such forward-looking statements should be read in conjunction with the Company’s disclosures under the heading: “Cautionary Statements” in the Company’s 2003 Annual Report on Form 10-KSB.

 

Plan of Operation and Liquidity

 

As we have reported previously, because of severely depressed uranium prices, in mid-1999 we reduced our payroll and shut in our producing uranium properties. From August 2000 through February 2004, we have had to rely on equity infusions to remain in business. We have raised a total of approximately $6.5 million allowing us to maintain the critical employees and assets of the Company until such time that uranium prices reached a level where it was prudent to commence operations.  During this period uranium prices have ranged from a low of $7.10 per pound in 2001 to $20.25 at October 4, 2004.  Also during this period, we performed ongoing restoration and reclamation at certain of our wellfields at Rosita and Kingsville Dome under an agreement with the State of Texas and our bonding company that allowed us access to $3.2 million that had been pledged to secure restoration bonds.

 

In August 2003 we requested and received a refund of approximately $238,000 that we had deposited in escrow with the Bureau of Indian Affairs (the “BIA”) for certain mineral leases with Navajo allottees on three separate parcels of land in northwest New Mexico. The leases were subject to approval by the BIA. We had been waiting on that approval since 1992. Because of our projected timing for mining those properties and because of our cash needs, we elected to drop those leases. We expect to be able to re-sign leases on those properties in the future.

 

In May 2004, we sold 39,317,005 shares of common stock in two private placements at $0.15 per share, receiving cash of $5,832,757, net of offering costs.  With this funding we have commenced the development and mining of our Vasquez property in South Texas. We project that of the $5.9 million, $2.9 million will be utilized for wellfield and plant capital and $0.9 million will be for initial bonding requirements. We project the balance, or approximately $2.1 million, will be utilized for product operating costs and overheads until the uranium is available for sale.

 

Initial uranium production from Vasquez has been slower than originally projected, but current production rates are continuing to increase and additional wells are being brought online to ramp up production.  A continued improvement should result in the originally projected production rates being achieved by year end.  The lower than anticipated initial production rates means that production for 2004 should be approximately 115,000 pounds rather than the previously announced 300,000 to 350,000 pounds.  The Company now expects to sell 100,000 pounds during the fourth quarter rather than the previously announced 231,000 pounds, with the difference being moved into 2005 sales.  The fourth quarter sales will also occur later in the quarter than originally projected.  The shift in sales will defer revenues into the first quarter of 2005, and the Company currently expects that it will be able to satisfy any resulting cash needs through the exercise of certain options by one or more officers of the Company and certain other sources.

 

In 2005 we expect to deliver between 545,000 and 590,000 pounds, with 600,000 pounds of uranium scheduled for delivery in each of the years 2006 through 2008. All of the 2006 through 2008 deliveries and 300,000 pounds of deliveries in 2005 are subject to quantity flexibility, allowing, at the option of the buyer, an increase or decrease to their deliveries by 15%.  The Company expects that deliveries during 2005 through 2008 should be met under two contracts entered into in August 2003 and January 2004 at then prevailing rates for long-term contracts.

 

The total cash bonding requirements for the Vasquez project is expected to amount to approximately $2.8 million, the majority of which we anticipate will be funded via the proceeds from operations. As of September 30, 2004, we have spent approximately $2,101,000 on the pre-production activities at the Vasquez property.

 

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During 2004, we plan to continue actively working towards the completion of the Production Area Authorization #3 review at Kingsville Dome (see “Legal Proceedings” in the Company’s 2003 Annual Report on Form 10-KSB). It is anticipated that the review will be complete by early 2005, allowing the commencement of production at Kingsville Dome later that year. The Company is currently evaluating contracting opportunities for the Kingsville Dome production.

 

As of September 30, 2004 we have a cash balance of approximately $1,233,000.

 

Off-Balance Sheet Arrangements

 

United States Fidelity and Guaranty Company (“USF&G”) has issued performance bonds on our behalf to secure our future restoration and reclamation obligations as required by the State of Texas regulatory agencies. The amounts of these bonds were $2,900,000 at September 30, 2003 and $2,800,000 at September 30, 2004. We have deposited about $334,000 as cash collateral for these bonds. In the event that USF&G is required to perform under the bonds, we would be obligated to pay USF&G for its expenditures in excess of the collateral.

 

To meet the recent financial surety requirements of our mine sites in Texas the Company entered in to Letter of Credit agreements with Bank of America, NA (“BOA”) whereby BOA has issued letters of credit on our behalf to the Texas regulatory agencies.  Such letters of credit are collateralized by certificates of deposit equal to the amount of the letter of credit.  At September 30, 2004 these amounts totaled approximately $898,000.

 

Critical Accounting Policies

 

Our significant accounting policies are described in Note 1 to the consolidated financial statements included in the Company’s 2003 Annual Report on Form 10-KSB.  We believe our most critical accounting policies involve those requiring the use of significant estimates and assumptions in determining values or projecting future costs.

 

Specifically regarding our uranium properties, significant estimates were utilized in determining the carrying value of these assets. These assets have been recorded at their estimated net realizable value for impairment purposes on a liquidation basis, which is less than our cost. The actual value realized from these assets may vary significantly from these estimates based upon market conditions, financing availability and other factors.

 

Regarding our reserve for future restoration and reclamation costs, significant estimates were utilized in determining the future costs to complete the groundwater restoration and surface reclamation at our mine sites.  The actual cost to conduct these activities may vary significantly from these estimates.

 

Such estimates and assumptions 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 expenses during the reporting period.

 

ITEM 3.                  CONTROLS AND PROCEDURES

 

The management of the company has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report (“Evaluation date”) and has concluded that the disclosure controls and procedures are adequate and effective based upon their evaluation as of the Evaluation date.

 

There were no significant changes in our internal controls or in other factors that could significantly affect internal controls during our most recent quarter, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

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PART II - OTHER INFORMATION

 

ITEM 1.                                                     LEGAL PROCEEDINGS

 

See the Company’s Form 10-QSB for period ended June 30, 2004 for discussion regarding legal proceedings.

 

ITEM 2.                                                     CHANGES IN SECURITIES AND USE OF PROCEEDS.

 

None

 

ITEM 3.                                                     DEFAULTS UPON SENIOR SECURITIES.

 

None

 

ITEM 4.                                                     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

None

 

ITEM 5.  OTHER INFORMATION.

 

None

 

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

 

(a)                                  Exhibits

 

See the Index to Exhibits on Page E-1 for a listing of the exhibits that are filed as part of this Quarterly Report.

 

(b)                                 Reports on Form 8-K

 

The Company filed a current report on Form 8-K dated August 18, 2004 which announced that the Company’s registration statement on Form SB-2 was declared effective. The registration statement covers the resale by selling stockholders of up to 115,724,859 shares of the Company’s common stock.

 

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SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

URANIUM RESOURCES, INC.

 

 

 

 

Dated: November 30, 2004

 

By:

 

/S/  Paul K. Willmott

 

 

Paul K. Willmott

 

Director, President and

 

Chief Executive Officer

 

 

 

 

Dated: November 30, 2004

 

By:

 

/S/  Thomas H. Ehrlich

 

 

Thomas H. Ehrlich

 

Vice President - Finance and

 

Chief Financial Officer

 

(Principal Financial and Accounting Officer)

 

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EXHIBIT INDEX

 

Exhibit Number

 

Description

3.1*

 

Restated Certificate of Incorporation of the Company dated February 15, 2004 (filed with the Company’s Registration Statement on Form SB-2 dated July 26, 2004, SEC File Number 333-117653).

 

 

 

3.2*

 

Restated Bylaws of the Company (filed with the Company’s Form S-3 Registration No. 333-17875 on December 16, 1996).

 

 

 

4.1*

 

Common Stock Purchase Agreement dated February 28, 2001 between the Company and Purchasers of the Common Stock of the Company (filed with the Company’s Annual Report on Form 10-KA dated July 26, 2001, SEC File Number 000-17171).

 

 

 

10.1*

 

Amended and Restated Directors Stock Option Plan (filed with the Company’s Form S-8 Registration No. 333- 00349 on January 22, 1996).

 

 

 

10.2*

 

Amended and Restated Employee’s Stock Option Plan (filed with the Company’s Form S-8 Registration No. 333-00403 on January 24, 1996).

 

 

 

10.3*

 

Amended and restated 1995 Stock Incentive Plan (filed with the Company’s Form SB-2 Registration No. 333- 117653 on July 26, 2004).

 

 

 

10.4*

 

Non-Qualified Stock Option Agreement dated June 19, 2001 between the Company and Leland O. Erdahl (filed with the Company’s 10-QSB dated August 13, 2001, SEC File Number 000-17171).

 

 

 

10.5*

 

Non-Qualified Stock Option Agreement dated June 19, 2001 between the Company and George R. Ireland (filed with the Company’s 10-QSB dated August 13, 2001, SEC File Number 000-17171).

 

 

 

10.7*

 

Summary of Supplemental Health Care Plan (filed with Amendment No. 1 to the Company’s Form S-1 Registration Statement (File No. 33-32754) as filed with the Securities and Exchange Commission on February 20, 1990).

 

 

 

10.9*

 

License to Explore and Option to Purchase dated March 25, 1997 between Santa Fe Pacific Gold Corporation and Uranco, Inc. (filed with the Company’s Annual Report on Form 10-K dated June 30, 1997, SEC File Number 000-17171).

 

 

 

10.12*

 

Compensation Agreement dated June 2, 1997 between the Company and Paul K. Willmott (filed with the Company’s Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).

 

 

 

10.13*

 

Compensation Agreement dated June 2, 1997 between the Company and Richard A. Van Horn (filed with the Company’s Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).

 

 

 

10.14*

 

Compensation Agreement dated June 2, 1997 between the Company and Thomas H. Ehrlich (filed with the Company’s Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).

 

 

 

10.15*

 

Compensation Agreement dated June 2, 1997 between the Company and Mark S. Pelizza (filed with the Company’s Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).

 

 

 

10.16*

 

Uranium Resources, Inc. 1999 Deferred Compensation Plan (filed with the Company’s Annual Report on Form 10-K dated June 30, 1999, SEC File Number 000-17171).

 

 

 

10.22*

 

Uranium Resources, Inc. Deferred Compensation Plan for 2002 (filed with the Company’s Quarterly Report on Form 10-QSB dated November 13, 2002, SEC File Number 000-17171).

 

 

 

10.23*

 

Uranium Resources, Inc. Deferred Compensation Plan for 2003 (filed with the Company’s Quarterly Report on Form 10-QSB dated November 13, 2002, SEC File Number 000-17171).

 

 

 

10.24*

 

Uranium Resources, Inc. Deferred Compensation Plan for 2004 (filed with the Company’s Quarterly Report on Form 10-QSB dated May 14, 2004, SEC File Number 000-17171).

 

 

 

10.25*

 

Groundwater Performance Restoration Agreement dated March 1, 2004 between the Company, the Texas Commission on Environmental Quality, the Texas Department of Health and the United States Fidelity & Guaranty Company (filed with the Company’s Quarterly Report on Form 10-QSB dated May 14, 2004, SEC File Number 000-17171).

 

14



 

Exhibit Number

 

Description

 

 

 

10.26*

 

2004 Directors Stock Option Plan dated June 2, 2004 (filed with the Company’s Registration Statement on Form SB-2 dated July 26, 2004, SEC File Number 333-117653).

 

 

 

10.27*

 

Contract for the Purchase of Natural Uranium Concentrates (U3O8) dated August 12, 2003.

 

 

(filed with the Company's Form 10-QSB dated November 15, 2004,  SEC File Number 000-171711).

 

 

 

10.28*

 

Contract for the Purchase of Natural Uranium Concentrates (U3O8) dated January 13, 2004.

 

 

(filed with the Company's Form 10-QSB dated November 15, 2004,  SEC File Number 000-171711).

 

 

 

10.29*

 

Amendment #1 to Exhibit 10.28.  (filed with the Company's Form 10-QSB dated November 15, 2004,  SEC File Number 000-171711).

 

 

 

14*

 

Uranium Resources, Inc. Code of Ethics for Senior Executives. (filed with the Company’s Annual Report on Form 10-KSB dated March 30, 2004, SEC File Number 000-17171).

 

 

 

31.1

 

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2

 

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1

 

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2

 

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 


*                                         Not filed herewith. Incorporated by reference pursuant to Rule 12b-32 under the Securities Exchange Act of 1934.

 

(1)  Certain provisions have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

 

15