Uranium Energy (UEC) - 2022 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Unaudited condensed consolidated financial statements for Q3 2021 show increased assets, reduced net loss, and significant capital raising Condensed Consolidated Balance Sheets Total assets increased to $232.7 million by October 31, 2021, driven by higher cash and inventories, boosting stockholders' equity Condensed Consolidated Balance Sheet Highlights (as of October 31, 2021) | Balance Sheet Item | Oct 31, 2021 | July 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $96,304,124 | $44,312,780 | | Inventories | $36,217,420 | $29,172,480 | | Total Current Assets | $134,427,054 | $75,045,362 | | Total Assets | $232,718,651 | $169,541,085 | | Liabilities & Equity | | | | Total Current Liabilities | $13,019,322 | $13,269,210 | | Total Liabilities | $17,837,105 | $18,085,941 | | Total Equity | $214,881,546 | $151,455,144 | | Total Liabilities and Equity | $232,718,651 | $169,541,085 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss significantly improved to $2.1 million for the three months ended October 31, 2021, driven by investment income and a realized gain on securities Statement of Operations Summary (Three Months Ended October 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Loss from Operations | $(4,871,667) | $(3,386,630) | | Income (loss) from equity-accounted investment | $2,753,167 | $(703,605) | | Net Loss for the Period | $(2,073,826) | $(4,963,537) | | Net Loss Per Share (Basic and Diluted) | $(0.01) | $(0.03) | | Weighted Average Shares Outstanding | 246,859,322 | 189,955,499 | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $12.3 million, offset by $63.9 million from financing, leading to a $52.0 million increase in cash and equivalents Cash Flow Summary (Three Months Ended October 31) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(12,283,278) | $(2,575,118) | | Net Cash Provided by Financing Activities | $63,918,267 | $14,130,965 | | Net Cash Provided by (Used in) Investing Activities | $356,355 | $(10,002,903) | | Net Change in Cash, Cash Equivalents and Restricted Cash | $51,991,344 | $1,552,944 | Notes to the Condensed Consolidated Financial Statements Notes detail accounting policies, 'Exploration Stage' status, increased uranium inventories and commitments, substantial capital raising, and the subsequent U1A acquisition - The company remains in the 'Exploration Stage' as defined by the SEC because it has not established proven or probable reserves. As a result, exploration and pre-extraction expenditures are expensed as incurred, which leads to reporting larger losses than if it were in the 'Production Stage'[29][32][33] - During the quarter, the company entered into agreements to purchase 400,000 pounds of uranium concentrate under its Physical Uranium Initiative Program[34] Uranium Inventory Purchase Commitments (as of Oct 31, 2021) | Fiscal Year | Purchase Commitments (Pounds) | Total Purchase Price | | :--- | :--- | :--- | | 2022 | 700,000 | $21,965,000 | | 2023 | 1,205,000 | $39,409,000 | | 2024 | 495,000 | $16,913,250 | | 2025 | 400,000 | $14,130,000 | | 2026 | 100,000 | $3,620,000 | | Total | 2,900,000 | $96,037,250 | - During the quarter, the company issued 20,743,878 shares under its May 2021 ATM Offering for net cash proceeds of $62,671,123. Subsequent to the quarter, it raised an additional $31.5 million through ATM offerings[64] - Subsequent to October 31, 2021, the company entered into a definitive agreement to acquire Uranium One Americas, Inc. (U1A) for a total consideration of $125.4 million[80] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 'hub-and-spoke' strategy, positive uranium market, and quarterly results, noting reduced net loss and strengthened liquidity for future acquisitions - The company utilizes a 'hub-and-spoke' strategy in South Texas, with the fully-licensed Hobson Processing Facility serving as the central hub for processing materials from the Palangana Mine and future satellite projects[86] - Subsequent to the quarter, the company agreed to acquire Uranium One Americas, Inc. (U1A) for $125.4 million, consisting of $111.6 million in cash and assumption of a $13.8 million surety deposit[90][115] - Working capital increased by $59.6 million during the quarter to $121.4 million, primarily due to net proceeds of $62.7 million from the May 2021 ATM Offering[113] - Management believes existing cash resources are sufficient to complete the U1A Acquisition, fulfill uranium purchase commitments, repay $10.0 million in debt, and fund planned operations for the next 12 months[116] Quantitative and Qualitative Disclosures About Market Risk This section refers to the disclosures about market risk provided in the company's Annual Report on Form 10-K for the fiscal year ended July 31, 2021 - The company directs readers to Item 7A of its Form 10-K for Fiscal 2021 for a full discussion of quantitative and qualitative disclosures about market risk[144] Controls and Procedures Management concluded disclosure controls and procedures were effective as of October 31, 2021, with no material changes to internal controls during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of October 31, 2021[145] - There were no changes in the company's internal control over financial reporting during the fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[147] PART II – OTHER INFORMATION Legal Proceedings The company discloses ongoing legal matters, including a pending appeal for Goliad Project permits and disputes over Paraguay concession extensions - An appeal is pending against the Texas Commission on Environmental Quality (TCEQ) regarding permits for the Goliad Project. The company has intervened and believes the appeal is without merit[150] - The company is in a dispute with Paraguay's mining regulator (MOPC) over the eligibility for extension of concessions for its Yuty and Alto Parana Projects and has filed appeals to protect its rights[151] Risk Factors This section outlines material risks, including limited operating history, financing dependence, exploration risks, and challenges in the Physical Uranium Initiative and U1A acquisition - The company has a history of significant negative cash flow and an accumulated deficit of $293.7 million as of October 31, 2021, and its long-term success depends on achieving profitability[156] - Operations are capital intensive, and the company will require significant additional financing. Its ability to raise capital depends on factors like uranium prices and market conditions[160] - The company has not established proven or probable reserves for any of its projects, including the operating Palangana Mine, which makes its mining activities inherently riskier[169][170] - The Physical Uranium Initiative Program is subject to risks, including price fluctuations, potential losses if uranium is sold below acquisition cost, and counterparty default risk[176][177] - The closing of the U1A Acquisition is subject to certain conditions precedent which may not be met[214] Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company issued unregistered equity securities for services and a property purchase, relying on Securities Act exemptions - On September 30, 2021, 4,607 shares were issued to a consultant for services[225] - On October 14, 2021, 64,149 shares were issued to a vendor for a property purchase[225] Mine Safety Disclosures For the quarter ended October 31, 2021, the Palangana Mine was not subject to regulation under the Mine Safety Act - For the quarter ended October 31, 2021, the Palangana Mine was not subject to regulation under the Mine Safety Act[224] Exhibits Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL documents (101 series) - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL documents (101 series)[226]