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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1995 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______ to _______
Commission file number 0-17171
URANIUM RESOURCES, INC.
(exact name of Registrant as specified in its Charter)
DELAWARE 75-2212772
(State of Incorporation) (I.R.S. Employer Identification No.)
12750 MERIT DRIVE, SUITE 1210, DALLAS, TEXAS 75251
(Address of principal executive offices, including zip code)
(214) 387-7777
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X ] No [ ]
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, $.001 par value 8,049,307 as of May 19, 1995
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URANIUM RESOURCES, INC.
1995 FIRST QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1995 (Unaudited) and
December 31, 1994 3
Consolidated Statements of Operations -
Three Months Ended March 31, 1995 and 1994
(Unaudited) 5
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1995
and 1994 (Unaudited) 6
Notes to Consolidated Financial
Statements - March 31, 1995 (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II -- OTHER INFORMATION 11
SIGNATURES 12
Index to Exhibits E-1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994 (NOTE 1)
ASSETS
MARCH 31, DECEMBER 31,
1995 1994
------------ ------------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 43,468 $ 2,527,600
Short-term investments:
Certificate of Deposit, restricted 562,341 562,211
Receivables 80,368 52,740
Uranium inventory 3,426,067 4,031,611
Materials and supplies inventory 162,365 162,417
Prepaid and other current assets 186,070 96,751
------------ ------------
Total current assets 4,460,679 7,433,330
------------ ------------
Property, plant and equipment, at cost:
Uranium properties 53,707,527 53,210,132
Other property, plant and equipment 461,918 461,918
Less - accumulated depreciation and depletion (16,420,512) (16,345,645)
------------ ------------
Net property, plant and equipment 37,748,933 37,326,405
Other Assets 90,491 90,491
------------ ------------
$ 42,300,103 $ 44,850,226
------------ ------------
The accompanying notes to financial statements are an integral part of these
consolidated balance sheets.
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URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994 (NOTE 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
MARCH 31, DECEMBER 31,
1995 1994
------------- -------------
(Unaudited)
Current Liabilities:
Accounts payable $ 1,621,517 $ 1,283,265
Short-term notes 6,491,738 7,739,225
Borrowings from related parties 90,000 -
Accrued interest payable 163,248 27,744
Current portion of long-term debt 142,000 82,000
Royalties payable 509,606 509,606
Current portion of restoration reserve 65,000 90,000
Other accrued liabilities 603,290 246,790
------------ ------------
Total current liabilities 9,686,399 9,978,630
------------ ------------
Other long-term liabilities and deferred credits 2,341,910 2,337,624
Long-term debt, less current portion 1,345,507 1,405,507
Deferred federal income taxes 2,415,000 2,910,000
Shareholders' equity:
Common stock, $.001 par value, 12,500,000
shares authorized; shares issued and
outstanding (net of treasury shares):
1995 - 8,049,307; 1994 - 7,954,683 8,237 8,142
Paid-in capital 15,317,234 15,040,064
Retained earnings 11,197,396 13,181,839
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26,522,867 28,230,045
Less: Treasury stock (187,500 shares), at cost (11,580) (11,580)
------------ ------------
Total shareholders' equity 26,511,287 28,218,465
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$ 42,300,103 $ 44,850,226
------------ ------------
The accompanying notes to financial statements are an integral part of these
consolidated balance sheets.
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URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (NOTE 1)
(UNAUDITED)
MARCH 31, MARCH 31,
1995 1994
------------ -----------
Revenues:
Uranium Sales -
Produced uranium $ - $ 33,465
Purchased uranium 1,251,013 878,664
----------- -----------
Uranium sales 1,251,013 912,129
Costs and expenses:
Cost of uranium sales -
Direct cost of purchased uranium 612,813 530,686
Royalties and brokers' fees - 1,077
Operating expenses 245,584 337,351
Provision for restoration and reclamation costs - 1,312
Depreciation and depletion 40,465 71,929
Loss on termination of joint venture 1,000,953 -
Loss on transfer to stockholder (Note 2) 1,080,000 -
Corporate expenses -
General and administrative 636,575 459,122
Depreciation 7,319 8,023
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Total costs and expenses 3,623,709 1,409,500
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Loss from operations (2,372,696) (497,371)
Other income (expense):
Interest expense, net of capitalized interest (154,980) (1,880)
Interest and other income, net 48,233 54,443
----------- -----------
Loss before income tax benefit (2,479,443) (444,808)
Federal income tax benefit:
Current - (155)
Deferred (495,000) (89,000)
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Net loss $(1,984,443) $ (355,653)
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Net loss per common and common equivalent share $ (0. 25) $ (0.05)
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Weighted average common shares and common equivalent
shares per share data 8,024,607 6,643,142
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The accompanying notes to financial statements are an integral part of these
consolidated statements.
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URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (NOTE 1)
(UNAUDITED)
MARCH 31, MARCH 31,
1995 1994
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Cash flows from operations:
Net loss $(1,984,443) $ (355,653)
Reconciliation of net income to cash provided by
operations-
Provision for restoration and reclamation costs - 1,312
Depreciation and depletion 47,784 79,952
Amortization of other assets - 56,257
Credit for deferred income taxes (495,000) (89,000)
Decrease in restoration and reclamation accrual (22,243) (5,029)
Other non-cash items, net 46,480 70,194
----------- -----------
Cash flow used in operations, before changes in
operating working capital items (2,407,422) (241,967)
Effect of changes in operating working capital items -
(Increase) decrease in receivables (27,628) 564,632
Decrease in inventories 612,221 40,119
(Increase) decrease in prepaid and other
current assets (122,416) 8,352
Increase (decrease) in payables and accrued
liabilities 830,256 (2,592,901)
----------- -----------
Net cash used in operations (1,114,989) (2,221,765)
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Investing activities:
Increase in investments (130) (170)
Additions to property, plant and equipment -
Kingsville Dome (29,893) (52,616)
Rosita (215,994) (22,647)
Churchrock (166,473) (232,061)
Crownpoint (54,186) (156,795)
Other property (22,245) (24,619)
Increase in other assets - (733)
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Net cash used in investing activities (488,921) (489,641)
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Financing activities:
Proceeds from borrowings from related parties 90,000 -
Proceeds from other borrowings - 1,125,000
Payments and refinancings of principal (1,247,487) (656,517)
Issuance of common stock 277,265 17,640
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Net cash provided by (used in) financing activities (880,222) 486,123
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Net decrease in cash and cash equivalents (2,484,132) (2,225,283)
Cash and cash equivalents, beginning of period 2,527,600 2,529,741
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Cash and cash equivalents, end of period $ 43,468 $ 304,458
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The accompanying notes to financial statements are an integral part of these
consolidated statements.
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URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The accompanying statements should be read
in conjunction with the audited financial statements included in the Company's
1994 Annual Report on Form 10-K. 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 three months ended
March 31, 1995 are not necessarily indicative of the results that may be
expected for the full calendar year ending December 31, 1995.
2. LIQUIDITY ISSUES
During January 1995, when Oren L. Benton was Chairman of the Company's
Board of Directors, the Company transferred $1.0 million to certain companies
controlled by Mr. Benton, in connection with a planned joint venture to process
uranium. Because Mr. Benton and certain companies controlled by him (the
"Benton Companies") filed for bankruptcy in February, it is doubtful that the
Company will recover its investment. Also in January, Mr. Benton and the then
Chief Financial Officer of the Company transferred $1.08 million out of the
Company without the authorization of the Company's Board of Directors. The
$1.08 million has not been recovered and it is uncertain whether the Company's
efforts to pursue remedies for both transfers will be successful. The Company
has recorded losses for these transactions in the first quarter of 1995 of
$2.08 million.
The bankruptcy could also cause a review of the transactions entered into
by the Company with the Benton Companies that could potentially result in
claims against the Company. The Company is unable to assess what adverse
consequences, if any, might result from such review.
On May 10, 1995, the Company reached an agreement with Ryback Management
Company ("Ryback") on the principal terms of a proposed $6 million loan to the
Company by two mutual funds managed by Ryback. Proceeds will be used to pay
down existing payables and fund the reopening of the Company's Rosita and
Kingsville Dome production facilities. See "Proposed Convertible Debt
Financing" on page 8 herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
For the quarter ended March 31, 1995, the Company's cash and cash
equivalents decreased $2,484,000 as compared to a decrease of $2,225,000 for
1994. The Company's uranium operations generated negative cash flow from
operations of $1,115,000 for the quarter ended March 31, 1995, in comparison to
negative cash flow from operations in the same period in 1994 of $2,222,000.
The increase in 1995 cash flow from operations resulted primarily from the
Company's inability to pay down existing payables.
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The Company's net working capital at March 31, 1995, was a negative
$5,226,000. This negative working capital includes $6,491,738 in a current
note payable to Union Bank of Switzerland (the "UBS Note"). Under the terms of
the note, the Company anticipates that it will within the next six months
completely repay the UBS Note by applying substantially all the proceeds from
its long-term sales contracts against this obligation. As a result of the
Company applying the proceeds from these contracts in satisfaction of the UBS
Note, the Company's only current source of cash flow will be from the proposed
convertible debt financing. See Note 2 - Liquidity Issues. The Company
defaulted on an interest payment of approximately $132,000 due on March 31,
1995 on the UBS Note. The Company cured the default on April 14, 1995.
The Company has begun certain development activities at its Rosita site in
anticipation of resuming production at this location in June, 1995. During the
first quarter of 1995, $216,000 in development expenditures were incurred at
Rosita. Capital expenditures to be incurred for the remainder of 1995 at Rosita
are expected to be $2,218,000. Pre-production capital expenditures of
$1,486,000 are anticipated to be expended at Kingsville Dome starting in
August, 1995 with anticipation of production commencing in January, 1996.
Additional capital expenditures including permitting, land acquisition and land
holding costs at Churchrock, Crownpoint and Vasquez are expected to amount to
approximately $542,000. Approximately $243,000 in capital expenditures were
incurred on these properties in the first quarter of 1995.
In mid-1994, the Company received notice from its largest uranium customer
of a reduction in the 1995 deliveries to be made under the sales contract with
that customer. The reduction was made due to reduced uranium requirements for
the customer's nuclear reactors. Deliveries under this contract will be
reduced to 55,000 pounds instead of the 240,000 pounds originally expected to
be delivered under the terms of the contract. This change in scheduled
deliveries under the contract will reduce the net income and cash flow
originally expected in 1995 by approximately $3,400,000 when compared to the
original base deliveries scheduled for the year. The 1995 deliveries represent
the final year of sales to this customer under this contract.
The Company continues actively to pursue obtaining new long-term matched
sales contracts. The Company has contracted to deliver amounts in the future
which are equal to its 1994 matched sales quota and has sales, pending contract
finalization, which would meet a majority of the Company's 1995 quota. The
Company must get at least one of its properties into production to take
advantage of the matched sales program. However, the Company is unable to
predict its liquidity situation on a long-term basis. Its future earnings and
cash flow are dependent upon its ability to enter into additional long-term
sales contracts at prices above its production costs.
PROPOSED CONVERTIBLE DEBT FINANCING
On May 10, 1995, the Company reached an agreement with Ryback on the
principal terms of a $6 million loan to the Company by two mutual funds managed
by Ryback. The loan will be for a term of three years, bear interest at an
annual rate of 6.5% per annum and will be convertible into shares of the
Company's common stock at an initial conversion price of $4.00 per share. The
loan will be non-callable and secured by a mortgage on the Company's Rosita and
Kingsville Dome uranium properties in Texas. In addition, the lender will
receive a three-year warrant to purchase 1.5 million shares of the Company's
common stock at an initial price of $4.00 per share. Following closing, the
Company will seek ratification of the loan by its shareholders. Failure to
receive shareholder ratification will constitute a default under the loan.
Consummation of the loan is subject to satisfaction of certain conditions,
including execution of mutually agreeable definitive documentation. If the
conditions are met, the parties expect to consummate the transaction within 30
days. The proceeds of the loan would be used to pay down existing payables and
fund the reopening of uranium production at the Company's Rosita and Kingsville
Dome production facilities.
ENVIRONMENTAL ASPECTS
The Company utilizes ISL solution mining technology as its only mining
method. Unlike conventional uranium mining companies, the Company's mining
technology does not create "tailings". Nevertheless, the Company is highly
regulated. Its primary environmental costs to date have been related to
obtaining and complying with environmental mining permits and, once mining is
completed, the reclamation and restoration of the surface areas and underground
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water quality to a condition consistent with applicable requirements. Accruals
for the estimated future cost of such activities are made on a per-pound basis
as part of production costs. See the Consolidated Statements of Operations for
the applicable provisions for such future costs. See also Note 1 -
"Restoration and Reclamation Costs" of Notes to Consolidated Financial
Statements in the Company's Form 10-K as of December 31, 1994.
RESULTS OF OPERATIONS
Revenues, earnings from operations and net income for the Company can
fluctuate significantly on a quarter to quarter basis during the year because
of the timing of deliveries requested by its utility customers. The Company's
customers have generally elected, where possible, to take delivery of the bulk
of the annual deliveries under their long term sales contracts later in each
year. Accordingly, operating results for any quarter or year-to-date period are
not necessarily comparable and may not be indicative of the results which may
be expected for future quarters or the entire year.
Three Months Ended March 31, 1995 and 1994
The following is a summary of the key operational and financial statistics
related to the Results of Operations:
Three Months Ended
-------------------
1995 1994
-------- --------
(In Thousands)
Uranium Sales Revenue $ 1,251 $ 912
Total Pounds Delivered 66.3 48.8
Average Sales Price/Pound $ 18.88 $ 18.71
Pounds Produced -- --
Pounds Purchased/Borrowed -- 50
Average Production Cost of Produced Pounds $ -- $ --
Average Cost of Purchased/Borrowed Pounds $ -- $ 9.49
Average Cost of Produced Pounds Sold $ -- $ 14.11
Average Cost of Purchased Pounds Sold $ 9.25 $ 11.29
Uranium sales revenues in 1995 increased by $339,000 from 1994 levels.
Deliveries in 1995 were higher than those in 1994 (66,250 pounds in 1995 versus
48,750 pounds in 1994).
Details of the cost of uranium sales were as follows:
Three Months Ended
------------------
1995 1994
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(In Thousands)
Cost of purchased uranium $613 $531
Royalties and brokers' fees -- 1
Operating expenses 246 337
Provision for restoration and reclamation costs -- 1
Depreciation and depletion of uranium properties 40 72
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Total cost of uranium sales $899 $942
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The Company has had significant production from its Kingsville Dome and
Rosita properties since the startup of Kingsville Dome in 1988 and Rosita in
1990. Due to declines in the spot price of uranium to levels at or below the
Company's production costs, both of these facilities were placed on standby
since September 1990 for Kingsville Dome and March 1992 for Rosita. The
decline in production, and ultimately the shutdown of these two locations was
done to enable the Company to take advantage of the low spot market prices
available in order to purchase material to meet its long-term sales contract
delivery commitments. Since January 1995, spot market prices have increased
almost 30%. The Company has decided to commence production at Rosita in 1995
and commence pre-production development at Kingsville Dome towards production
in early 1996 because of the increase in the spot market prices and in order to
meet future deliveries under the Company's anticipated matched sales contracts.
Deliveries in the first quarter of 1995 consisted of 66,250 purchased
pounds, at an average cost per pound of $9.25. No uranium was purchased in
1995. Purchases of uranium in the first quarter of 1994 were made at an average
price of $9.49 per pound. Deliveries in 1994 consisted of 47,001 purchased
pounds, at an average cost per pound of $11.29 and 1,749 previously produced
pounds at $14.11 per pound. Operating expenses attributable to the sale of the
Company's produced pounds totaled approximately $13,000 for the first quarter
of 1994. Operating expenses and depreciation and depletion in the first
quarter of 1995 and 1994 include standby costs for Kingsville Dome and Rosita.
These costs have been recorded as direct charges to operations. Standby costs
for the first quarters of 1995 and 1994 where $286,000 and $394,000,
respectively.
The provision for restoration and reclamation in the first quarter of 1994
consists entirely of the $0.75 per pound provision for Rosita production sold
during the year of $1,300.
The first quarter 1995 provision for depreciation and depletion is
comprised entirely of Rosita and Kingsville Dome depreciation while on standby
of $40,000. The provision for depreciation and depletion in the first quarter
of 1994 was comprised of the $5.70 rate per pound ($10,000) for Rosita
production sold and Rosita and Kingsville Dome depreciation while on standby of
$62,000.
Corporate expenses consisting of general and administrative ("G & A")
expenses and depreciation of G & A fixed assets increased to $644,000 in the
first quarter of 1995 from $467,000 in the first quarter of 1994. This increase
resulted primarily from legal and accounting fees and other non-recurring
expenses relating to the bankruptcy proceedings of certain of the Benton
Companies and the Company's liquidity issues.
Loss from operations in the first quarter of 1995 was $2,373,000 compared
to a loss in the first quarter of 1994 of $497,000. This reduction was
attributable to a loss on the termination of a proposed joint venture of $1.0
million and a loss on a transfer to the Benton Companies of $1.08 million. See
Note 2 - Liquidity Issues for a further discussion.
Total interest costs in 1995, including capitalized amounts, decreased by
$24,000 when compared to 1994. This decrease from $182,000 in 1994 to $158,000
in 1995, was a result of a lower average outstanding debt balance in the
current year. Of the total interest costs, $3,000, and $180,000 were
capitalized in the 1995 and 1994 periods, respectively.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The Company defaulted on an interest payment of approximately $132,000
due on March 31, 1995 on the UBS Note. The Company cured the default
on April 14, 1995.
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
10.1 Promissory Note in the amount of $65,000 dated
February 24, 1995 between URI, Inc. and the Company all
as the maker and Wallace M. Mays as lender
10.2 Promissory Note in the amount of $25,000 dated
March 27, 1995 between URI, Inc. and the Company all as
the maker and Wallace M. Mays as lender
10.3 Deed of Trust, Security Agreement and Financing
Statement dated March 27, 1995 between URI, Inc. as the
debtor and Wallace M. Mays as the secured party
27 Financial Data Schedule
(b) Reports on Form 8-K.
None
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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: May 19, 1995 By: /s/ WALLACE M. MAYS
Wallace M. Mays,
Director and Chief Executive Officer
(Principal Executive Officer)
Dated: May 19, 1995 By: /s/ PAUL K. WILLMOTT
Paul K. Willmott,
President, Director and Principal
Financial and Accounting Officer
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INDEX TO EXHIBITS
SEQUENTIALLY
NUMBERED
EXHIBITS DESCRIPTION PAGE
- -------- ----------- ------------
10.1 Promissory Note in the amount of $65,000 dated
February 24, 1995 between URI, Inc. and the Company all
as the maker and Wallace M. Mays as lender
10.2 Promissory Note in the amount of $25,000 dated
March 27, 1995 between URI, Inc. and the Company all as
the maker and Wallace M. Mays as lender
10.3 Deed of Trust, Security Agreement and Financing
Statement dated March 27, 1995 between URI, Inc. as the
debtor and Wallace M. Mays as the secured party
27 Financial Data Schedule
E-1