MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

12 Months Ended

Dec. 31, 2012

MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

5. MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

In March 2012, the Company executed a merger agreement to acquire 100% of the equity (the “Transaction”) of Neutron. As part of the Transaction, Resource Capital Fund V L.P. (“RCF”) provided $20 million in funding in exchange for 2.5 million shares of the Company’s common stock to retire the majority of Neutron’s outstanding debt owed to RMB Australia Holdings Limited (“RMB”). The remainder of Neutron debt owed to RMB was converted into 836,000 shares of the Company’s common stock, resulting in URI acquiring Neutron on a debt-free basis. The Transaction, which was unanimously approved by the Boards of Directors of both URI and Neutron, was approved by both Neutron’s and URI’s stockholders at special stockholders meetings that were held on August 23, and August 29, 2012, respectively. The Transaction closed on August 31, 2012.

At the effective time of the merger, each share of Neutron’s common stock ceased to be outstanding and was converted into the right to receive 0.00643 shares of URI’s common stock, with approximately 384,000 shares of URI common stock being issued to former Neutron stockholders in the aggregate.

In connection with the Transaction, URI also entered into an investment agreement with RCF pursuant to which RCF provided $10 million in funding to URI through the purchase of 1.0 million shares of the Company’s common stock on March 9, 2012 and provided an additional $5 million in funding through the purchase of 969,000 additional shares of the Company’s common stock on September 5, 2012. At the closing date of the Transaction the Company had provided $3.6 million to Neutron to fund its operations from March 2012 through August 31, 2012. Such funding was recorded as a note due to the Company from Neutron prior to the closing. The amount of the note was deemed as additional consideration paid in connection with the Transaction and was allocated as a component of the fair value of the net assets acquired.

With the Transaction the Company added property interests in the states of New Mexico, South Dakota, Wyoming, and Arizona. All of the projects acquired in the Transaction are at the exploration stage without known reserves and there can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of the properties until appropriate exploratory work is done and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration will be required before a final evaluation as to the economic, technical and legal feasibility of mining of any of the properties is determined. There is no assurance that further exploration will result in a final evaluation that a commercially viable mineral deposit, or reserve, exists on any of the properties acquired in the Transaction.

The primary properties acquired in the Transaction are located in the State of New Mexico and are subdivided into two separate groups and consist of the Cibola Project and the Ambrosia Lake Project. Neutron’s principal mineral project is the Cibola Project which consists of the Juan Tafoya Property where Neutron has a lease covering approximately 4,097 acres and the Cebolleta Property where Neutron has a lease covering approximately 6,717 acres. The Ambrosia Lake Project is comprised of the (i) Endy Lease which is comprised of 167 unpatented lode mining claims and covers 3,382 acres in the eastern portion of the Ambrosia Lake Project; (ii) Bonner Lease which is comprised of 181 unpatented lode mining claims and one state of New Mexico general mining lease covering a further 4,132 acres ; (iii) the Elizabeth Lease which is comprised of eight patented and one unpatented lode mining claims covering 179 acres ; and (iv) 292 unpatented lode mining claims for 5,442 acres that are owned directly by Neutron. Collectively, the Endy Lease, Bonner Lease, Elizabeth Lease and the claims owned by Neutron cover an area of approximately 13,135 acres.

The estimated fair value of the total consideration transferred was $20,136,000 excluding share issuance costs of $146,000. The acquisition date estimated fair value of each class of consideration transferred was as follows:

Common shares	$	16,577,000
Note receivable—Neutron	3,559,000
Total purchase price	$	20,136,000

The Company issued 3.7 million shares of common stock in the Transaction. Fair value of common stock issued was determined by the closing price of the Company’s common stock on the closing date of the Transaction. The total purchase price has been preliminarily allocated to the net tangible assets of Neutron as follows:

Cash	$	28,000
Restricted cash	273,000
Other current assets	11,000
Uranium properties—value beyond proven and probable	20,274,000
Other property, plant and equipment	323,000
Other non-current assets	12,000
Total assets	20,921,000
Total current liabilities	785,000
Total liabilities	785,000
Net tangible and intangible assets acquired	$	20,136,000

During 2012, the Company recorded acquisition expenses totaling $2.036 million in general and administrative expenses. During 2012, the Company recognized a net loss from Neutron operations of $387,000.

Unaudited Pro Forma Results

ASC Topic 805 requires supplemental information on a pro forma basis to disclose the results of operations as though the business combination had been completed as of the beginning of the periods being reported.

The following condensed unaudited pro forma information gives effect to these acquisitions as if they had occurred on January 1, 2010. The pro forma information has been included in the notes as required by U.S. generally accepted accounting principles and is provided for comparison purposes only. The pro forma financial information is not necessarily indicative of the financial results that would have occurred had these acquisitions been effective on the dates as indicated and should not be viewed as indicative of operations in the future.

	Unaudited Pro Forma Financial Data Years ended December 31
	2012			2011
Revenue	$	—		$	—
Net loss(Restated)	$	(20,635,981	)	$	(17,545,103	)