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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q/A

For the quarterly period ended March 31, 2012

Or

For the transition period from                to

Commission file number 0-17171

URANIUM RESOURCES, INC.

(Exact Name of Issuer as Specified in Its Charter)

405 State Highway 121 Bypass, Building A, Suite 110, Lewisville, Texas 75067

(Address of Principal Executive Offices)

(972) 219-3330

(Issuer’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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act).  Yes  o  No  x

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

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EXPLANATORY NOTE

This is Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 (“Amendment No.1”), which was originally filed with the Securities and Exchange Commission (“SEC”) on May 10, 2012 (the “Original 10-Q”).  On June 29, 2012, our Form S-4 Registration Statement (“Form S-4”) relating to our proposed merger with Neutron Energy, Inc. was declared effective by the SEC.  This Amendment No. 1 is filed in order to update Part II - Item 1 (Legal Proceedings), Part II - Item 1A (Risk Factors), and the Liquidity section of Part I - Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) in order to conform those sections to the disclosures made in our Form S-4.  Except as specifically referenced herein, this Amendment No. 1 does not reflect any event occurring subsequent to May 10, 2012, the filing date of the Original 10-Q.

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URANIUM RESOURCES, INC.

2012 FIRST QUARTERLY REPORT ON FORM 10-Q

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URANIUM RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

(Unaudited)

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

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LIABILITIES AND SHAREHOLDERS’ EQUITY

(Unaudited)

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

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URANIUM RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

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URANIUM RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

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

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Uranium Resources, Inc.

Notes to Condensed Consolidated Financial Statements March 31, 2012 (Unaudited)

1.                                      BASIS OF PRESENTATION

The accompanying unaudited condensed 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-Q and Item 310(b) of Regulation S-K.  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 2011 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, 2012 are not necessarily indicative of the results that may be expected for any other period including the full year ending December 31, 2012.

2.                                      DESCRIPTION OF BUSINESS

Uranium Resources, Inc. (“URI”) was formed in 1977 and domesticated in Delaware in 1987. The Company is primarily engaged in the business of acquiring, exploring, developing and mining uranium properties, using the in situ recovery (“ISR”) or solution mining process. Historically, the primary customers of the Company have been major utilities who utilize nuclear power to generate electricity. At present the Company owns both developed and undeveloped uranium properties in South Texas and undeveloped uranium properties in New Mexico.

The Company resumed uranium production in 2004 at its Vasquez project, in 2006 at its Kingsville Dome project and in the 3rd quarter of 2008 at its Rosita project, each of such projects are located in South Texas. As a result of declining uranium market prices and high production costs, the Company ceased development of additional wellfields and curtailed production from its South Texas projects as existing production wellfields from each project were depleted. Production at our Vasquez and Rosita projects were shut down in the 4th quarter of 2008 and production was shut-in at the Kingsville Dome project in June 2009. The Vasquez project was mined out in 2008 and is now being restored. At the Kingsville Dome and Rosita projects, our production shut-in was done to conserve the in-place reserve base until higher prices can be realized.

Prior to resuming Vasquez production, the Company had been in production stand-by since the first quarter of 1999 at its Kingsville Dome and Rosita projects. Groundwater restoration and reclamation activities have been conducted at these two sites and are currently ongoing at the Kingsville Dome and Vasquez projects.  Groundwater restoration at Rosita project has been completed for the wellfields that have been depleted and are currently under the stabilization and monitoring phase of the restoration process.

3.                                      LIQUIDITY

As of March 31, 2012, the Company had $9.9 million in cash and our cash balance at April 30, 2012 was approximately $7.0 million.  The Company is not currently conducting uranium production activities and has no uranium inventory. The Company is not projecting any sales revenue and related cash inflows for 2012.

The Company raised $10 million on March 9, 2012 in a private placement with Resource Capital Fund V L.P. (“RCF”). In connection with the transaction we sold 10,259,567 shares of common stock at a price of $0.9747 per share. The capital raise was conducted as a part of an acquisition bid for all of the outstanding shares of Neutron Energy, Inc. See Note 10—“Merger and Financing Agreement with Neutron Energy” for a description of this financing and additional funding commitments made by RCF to the Company.

On October 28, 2011, the Company entered into an At-The-Market Sales Agreement with BTIG, LLC, allowing it to sell from time to time, its common shares having an aggregate offering price of up to $15.0 million, through an “at-the-market” equity offering program (“ATM Sales Agreement”).  The Company will pay BTIG a commission equal to 3.0% of the gross proceeds from the sale of any shares pursuant to the ATM Sales Agreement. Pursuant to a fee sharing agreement, BTIG will pay a portion of the commissions it receives from the Company in connection with the ATM Sales Agreement to Reedland Capital Partners, an Institutional Division of Financial West Group.  In January 2012, a total of 1,815,073 shares of common stock were sold under this program which raised net proceeds of approximately $1,519,000.  The Company has a total of $12.9 million available for future sales under the ATM Sales Agreement.

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.  The Company

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expects that its existing cash, the funding commitments from RCF and funding available under the ATM Sales Agreement will provide it the necessary liquidity for the next twelve months.

4.                                      URANIUM PROPERTIES

Kingsville Dome Project

There was no uranium produced from Kingsville Dome in 2012 or 2011.  The primary activities undertaken at this project in the first quarter of 2012 and 2011 were for restoration, with $265,000 and $240,000 of costs being incurred in each quarter respectively for restoration work at this project.  Total capital expenditures for Kingsville Dome for the first quarter of 2012 was $87,000 and was related to plant construction and land and mineral lease payments. Total capital expenditures for Kingsville Dome for the first quarter of 2011 was $18,000 and was related to land and mineral lease payments.

Rosita

There was no uranium produced from Rosita in 2012 and 2011.  Groundwater restoration for the wellfields that have been depleted has been completed and the wellfields are currently under the stabilization and monitoring phase of the restoration process.  Total capital expenditures for Rosita for the first quarter of 2012 and 2011 was $14,000 and $88,000, respectively, and was related to land and mineral lease payments.

Vasquez Project

Production at the Vasquez project was shut-in during October 2008. The economically recoverable reserves from this project have been mined out.  The primary activities undertaken at this project in the first quarter of 2012 and 2011 were for restoration, with $165,000 and $122,000 in costs being incurred in each quarter respectively for restoration work at this project.  There were no capital expenditures for Vasquez for the first quarter of 2012.Capital expenditures for Vasquez for the first quarter of 2011 were $6,600 and were primarily for land and mineral lease payments.

Los Finados Project

The exploration rights to the Los Finados project were acquired in December 2010. Evaluation of the uranium mineralization of this property began in the second quarter of 2011 and may continue for up to three years.

In November 2011, the Company and Cameco announced its intent to move forward with Phase II exploration program on Los Finados Project. The second phase of drilling began in December 2011 and is expected to be completed by the end of November 2012. URI has committed an additional $1.5 million in exploration activities during the twelve-month period ended November 30, 2012, in order to maintain the option to lease the property. Under Phase II of the agreement with URI, Cameco will fund $1.0 million toward those exploration activities and will earn an additional 10% interest in Los Finados, raising its interest in the project to 50%.

The timing for the Company’s decision to continue exploration under phase three of the program is November 30, 2012.  Investment or drilling in excess of the minimum requirement in any year counts toward the following year’s requirements.  Cameco may elect to fund the entire $1.5 million by moving into Phase III of the program. At March 31, 2012, the Company has incurred and billed approximately $500,000 in costs to Cameco under Phase II of the agreement.

At the conclusion of the exploration program, the parties may enter into an operating joint venture to develop and produce any discovered uranium resources and reserves.  The uranium would be processed at URI’s Kingsville Dome or Rosita processing facility, with Cameco’s share of production being processed under a toll processing agreement with URI.

Impairment of Uranium Properties

At March 31, 2012, we determined the carrying value of our project assets at each of our South Texas production locations exceeded their fair value.  A decline in the market price of uranium and an increase in the estimated costs for each of our South Texas projects resulted in a decrease in the estimated future cash flow to be generated from each site.  Such determination resulted in an impairment provision of approximately $269,000 and $306,000 for the first quarters of 2012 and 2011, respectively.

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The impairment provision for the first quarters of 2012 and 2011, respectively were $168,000 and $151,000 related to Kingsville Dome, $87,000 and $67,000 related to Vasquez and $14,000 and $88,000 for Rosita.  The net carrying values of the Kingsville Dome, Rosita and Vasquez projects are approximately $5.0 million, $4.9 million and $445,000 at March 31, 2012.

5.                                      STOCK BASED COMPENSATION

Our stock based compensation programs consist of stock option and restricted stock grants made to employees and directors.

Stock Compensation Expense

Stock compensation expense for the three months March 31, 2012 and 2011 was $193,000 and $374,000, respectively. Stock compensation expense is recorded as a component of general and administrative expenses for each period. The Company did not recognize a tax benefit from the stock compensation expense because the Company considers it is more likely than not that the related deferred tax assets, which have been reduced by a full valuation allowance, will not be realized.

A total of 100,571 shares of restricted stock were granted on March 30, 2012 to the President/CEO.  This grant was made in connection with 2011 performance criteria in accordance with his employment agreement.  The Company recognized stock compensation expense for the restricted share grants of $92,000 in the first quarter of 2012 in connection with this issuance.

A total of 56,700 shares of restricted stock were granted on March 30, 2012 to the four executive officers.  This grant was made in connection with 2011 performance criteria in accordance with the Company’s Long Term Incentive Plan.  The Company recognized stock compensation expense for the restricted share grants of $39,000 in the first quarter of 2012 in connection with this issuance.

A total of 42,553 shares of restricted stock were issued on January 3, 2011 to the President/CEO.  This grant was made in connection with 2011 performance criteria in accordance with his employment agreement.  The Company recognized stock compensation expense for the restricted share grants of $140,000 in the first quarter of 2011 in connection with this issuance.

The total estimated unrecognized compensation cost from the unvested stock options and restricted grants at March 31, 2012 was approximately $440,000, which is expected to be recognized over the weighted average vesting period of the individual grants which range from 1-3 years.

Stock Options for the Three Months Ended March 31, 2012

The following table summarizes stock options outstanding and changes during the three month period ended March 31, 2012:

Shares available for grant under the Stock Option Plans as of March 31, 2012 were 2,564,291.

Stock options outstanding and currently exercisable at March 31, 2012 are as follows:

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6.                                       ASSET RETIREMENT OBLIGATIONS

The following table shows the change in the balance of the restoration and reclamation liability during the three months ended March 31, 2012:

7.                                      SHAREHOLDERS’ EQUITY

The following table details the changes in shareholders equity for the quarter ended March 31, 2012:

See Note 5 — Stock Based Compensation, for further discussion of stock compensation expense and restricted stock issuance.

8.                                      EARNINGS PER SHARE

Basic earnings per share includes no dilution and is computed by dividing income or loss attributed to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if stock options were exercised or converted into common stock.  Potentially dilutive shares of 3,974,002 were excluded from the calculation of earning per share because they were anti-dilutive due to our net loss position for the quarter ended March 31, 2012.

9.                                      COMMITMENTS AND CONTINGENCIES

The Company’s mining operations are subject to federal and state regulations for the protection of the environment, including water quality. These laws are constantly changing and generally becoming more restrictive. Future mine closure and reclamation costs are provided for as each pound of uranium is produced on a unit-of-production basis. The Company reviews its reclamation obligations each year and determines the appropriate unit charge. The Company also evaluates the status of current environmental laws and their potential impact on its accrual for costs. The Company believes its operations are in compliance with current environmental regulations.

The Company is from time to time involved in various legal proceedings of a character normally incident to its business. Management does not believe that adverse decisions in any pending or threatened proceedings will have a material adverse effect on the Company’s financial condition or results of operations.

The Company has filed a registration statement under the Securities Act of 1933, as amended, to register the resale of the shares of its common stock issued in a May 2008 private placement. Such shares are subject to certain resale registration rights that would include penalties in the event the registration statement fails to remain effective. At March 31, 2012, the Company’s registration statement was and remains effective.

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10.                               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 Energy, Inc. (“Neutron”). As part of the Transaction, Resource Capital Fund V L.P. (“RCF”) has agreed to provide $20 million in funding to retire the majority of Neutron’s outstanding debt owed to RMB Australia Holdings Limited (“RMB”). The remainder of Neutron debt owed to RMB will be converted into URI common stock, resulting in URI acquiring Neutron on a debt-free basis. The Transaction, which has been unanimously approved by the Boards of Directors of both URI and Neutron, is subject to shareholder approval of each company.

In connection with the Transaction, URI has also entered into an investment agreement with RCF pursuant to which RCF provided $10 million in funding to URI through the purchase of 10.3 million shares of the Company’s common stock. This $10 million capital infusion was completed on March 9, 2012. Upon closing of the Transaction, URI, at its option, can receive an additional $5 million in financing from RCF through the sale of additional shares of the Company’s common stock.

Under the terms of a credit and funding agreement, the Company has agreed to fund the operating and development budgets for Neutron, up to $4.5 million prior to the closing of the Transaction. In connection with the credit and funding agreement, the Company and Neutron entered into a pledge and security agreement pursuant to which the Company has acquired a security interest in all personal property and fixtures of Neutron to secure the loans provided pursuant to the credit and funding Agreement.  Pursuant to an intercreditor agreement among the Company, Neutron, RMB and certain other parties, the Company and RMB have agreed to share (in the event the Transaction is not consummated and the Company’s and RMB’s loans to Neutron are foreclosed) in the collective collateral securing RMB’s existing approximately $28 million loan to Neutron and the Company’s up to $4.5 million loan.   RMB and the Company would share in the proceeds of any foreclosure on a pari passu basis.  The Company has agreed that it may not institute foreclosure proceedings without the consent of RMB until the passage of 180 days.  At March 31, 2012 the Company had provided $917,000 to Neutron under the terms of the credit and funding agreement with such funding recorded as a note receivable. Repayment of the note receivable and accrued interest are due to the Company at the earliest of (i) the closing of the transaction, (ii) the termination of the merger agreement or (iii) October 31, 2012.  Interest on the amount funded accrues at the rate of LIBOR plus 7%.  Through May 10, 2012, the Company had provided a total of $2.4 million in funding under the terms of the credit and funding agreement.

In January and February, 2012, prior to the execution of the merger agreement, the Company purchased certain assets from Neutron for $200,000.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and any financial data incorporated herein by reference to the Company’s reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934.  Forward-looking statements convey our current expectations or forecasts of future events. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are generally identifiable by use of the words “estimate”, “project”, “believe”, “intend”, “plan”, “anticipate”, “expect” and similar expressions. These forward-looking statements include management’s expectations regarding our liquidity and burn rate, reserves and mineralized uranium material, timing of receipt of mining permits, production capacity of mining operations planned for properties in South Texas and New Mexico and dates for commencement of production at such properties. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Actual results could differ materially from those in forward-looking statements because of, among other reasons, the factors described below and in the periodic reports that we file with the SEC from time to time, including Forms 10-K, 10-Q and 8-K and any amendments thereto. The forward-looking statements are not guarantees of future performance. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks.

Key factors that could cause actual results to be different than expected or anticipated include, but are not limited to the price of uranium; weather conditions; operating conditions at our mining projects; government regulation of the mining industry and the nuclear power industry; the world-wide supply and demand of uranium; availability of capital; timely receipt of mining and other permits from regulatory agencies; and the risks set forth herein and in the Company’s 2011 Annual Report on Form 10-K under the caption “Risk Factors.”

In light of these risks, uncertainties and assumptions, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. When considering forward-looking statements, you should keep in mind the cautionary statements in this report. We are not under any obligation, and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in or incorporated by reference may or may not occur.

Financial Condition and Results of Operations

Comparison of Three Months Ended March 31, 2012 and 2011

Cost of Uranium Sales.  While we had no uranium production in the first quarter of 2012 or 2011, we have maintained stand-by, maintenance and restoration activities at our South Texas projects and as a result have incurred operating costs.  Our cost of uranium sales from the sale of produced uranium in the first quarter of 2012 was $655,000 compared with $760,000 in the same period of 2011.  Total cost of uranium sales includes operating expenses, depreciation and depletion expenses, amortization of our restoration and reclamation cost estimates, impairment of uranium properties and exploration costs incurred.

The costs for the first quarter ended March 31, 2012 and 2011 resulted from shut-in costs at our Kingsville Dome, Rosita and Vasquez projects.

Impairment of Uranium Properties.  During the first quarter of 2012 and 2011, we determined the carrying value of our uranium assets were impaired and recorded an impairment provision of approximately $269,000 and $306,000 in 2012 and 2011, respectively.

Accretion and Amortization of Future Restoration Costs.  Accretion and amortization of future restoration costs in the first quarter of 2012 and 2011 was $23,000 and $38,000, respectively.

General and Administrative Charges.  We incurred general and administrative charges and corporate depreciation of $3.0 million and $2.3 million, respectively in the three months ended March 31, 2012 and 2011.

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Significant expenditures for general and administrative expenses for the three months ended March 31, 2012 and 2011 were:

The non-cash stock compensation expense decrease for the quarter ended March 31, 2012 compared to the same period in 2011 resulted primarily from the amortization of the stock option and restricted stock grants made in December 2011. The value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of the option award and stock price volatility.

Compensation costs increased $466,000 in the first quarter of 2012 over the same quarter in 2011 because of bonuses for executive officers and middle management granted in March 2012 in connection with performance criteria for 2011 and an increase in employee count in 2012 compared to 2011.

The Company’s legal, accounting and public company expenses increased by $449,000 in the first quarter of 2012 compared with 2011. The main increase resulted from legal activities incurred in 2012 related to the merger activity with Neutron Energy, Inc., litigation defense costs incurred in South Texas and permitting/licensing costs related to our New Mexico projects.

Consulting and professional service expenses decreased by $84,000 for the quarter ended March 31, 2012, compared with 2011 as a result of work performed in connection with the preparation of the Company’s New Mexico feasibility studies in 2011, compensation consultant costs incurred in 2011 and costs in South Texas to advance our presence in the local community in 2011.

Net Losses.  For the three months ended March 31, 2012 and 2011, we had net losses of $3.6 million and $3.0 million, respectively.

Cash Flow.  At of March 31, 2012, we had a cash balance of approximately $9.9 million compared with $11.1 million at the same date in 2011.

In the first quarter of 2012, we had cash used in operations of $2.5 million. We used $1,918,000 in investing activities during the first quarter of 2012 which was primarily from a note receivable of $917,000 issued in March 2012 and made additions to our South Texas and New Mexico property, plant and equipment of $965,000 during the quarter.  These expenditures were primarily for land and mineral lease payments and plant construction during the quarter.

In the first quarter of 2011, we had cash used in operations of $3.5 million. We used $732,000 in investing activities during the first quarter of 2011 which was primarily from an increase in the collateral supporting our South Texas financial surety requirements by $500,000 and made additions to our South Texas and New Mexico property, plant and equipment of $222,000 during the quarter.  These expenditures were primarily for land and mineral lease payments during the quarter.

Liquidity—Cash Sources and Uses for 2012

As of March 31, 2012, the Company had $9.9 million in cash and our cash balance at May 31, 2012 was approximately $5.0 million.  The Company is not currently conducting uranium production activities and has no uranium inventory. The Company is not projecting any sales revenue and related cash inflows for 2012.

The Company raised $10 million on March 9, 2012 in a private placement with Resource Capital Fund V L.P. (“RCF”). In connection with the transaction we sold 10,259,567 shares of common stock at a price of $0.9747 per share. The capital raise was conducted as a part of an acquisition bid for all of the outstanding shares of Neutron Energy, Inc. See (Note 10—“Merger and Financing Agreement with Neutron Energy”) for a description of this financing and the additional funding commitment from RCF.

On October 28, 2011, the Company entered into an At-The-Market Sales Agreement with BTIG, LLC, allowing it to sell from time to time, its common shares having an aggregate offering price of up to $15.0 million, through an “at-the-market” equity offering

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program (“ATM Sales Agreement”).  The Company will pay BTIG a commission equal to 3.0% of the gross proceeds from the sale of any shares pursuant to the ATM Sales Agreement. Pursuant to a fee sharing agreement, BTIG will pay a portion of the commissions it receives from the Company in connection with the ATM Sales Agreement to Reedland Capital Partners, an Institutional Division of Financial West Group.  In January 2012, a total of 1,815,073 shares of common stock were sold under this program which raised net proceeds of approximately $1,491,000.  The Company has a total of $12.9 million in share value available for future sales under the ATM Sales Agreement.

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.  The Company expects that its existing cash, the additional funding commitment from RCF and funding available under the ATM Sales Agreement will provide it the necessary liquidity for the next twelve months. In order to make use of its ATM Sales Agreement prior to the closing of the merger with Neutron Energy, Inc., the Company will require the consent of Neutron Energy, RCF and RMB Australia Holdings Limited. The Company also expects that it will need to secure between $30 million and $50 million in additional capital for the development of its Churchrock uranium project in New Mexico in 2012.  There can be no assurance that we will be able to raise sufficient funds under the ATM program or the funds necessary to allow the Company to move forward with its future development plans in New Mexico.

Cameco Exploration Agreement

The exploration rights to the Los Finados project were acquired in December 2010. Evaluation of the uranium mineralization of this property began in the second quarter of 2011 and may continue for up to three years. The lease option agreement included a $1 million fee paid at signing. The lease option includes a three phase exploration program which requires a minimum exploration obligation of one hundred exploration wells or $1.0 million investment in the first year, an additional two hundred exploration wells or $1.5 million investment in the second year and, in the third year, an additional two hundred exploration wells or $2.0 million investment. The timing for the Company’s decision to continue exploration under phase three of the program is November 30, 2012.  Investment or drilling in excess of the minimum requirement in any year counts toward the following year’s requirements.

In May 2011, the Company entered into a joint venture agreement with Cameco Resources (“Cameco”) for a three-phase, three-year exploration program on the Los Finados property in Kenedy County, Texas.  The first phase of the drilling program began on June 21, 2011 and was completed by November 30, 2011 at a cost of approximately $1 million. A total of 19 holes totaling 24,560 feet were drilled in the initial phase. Under this agreement Cameco will fund the majority of the exploration costs and can earn up to a 70% interest in the project in consideration for their investment. Upon execution of the exploration agreement, CTI paid the Company $300,000.

In November 2011, the Company and Cameco announced its intent to move forward with Phase II exploration program on Los Finados Project. The second phase of drilling began in December 2011 and is expected to be completed by the end of November 2012. URI has committed an additional $1.5 million in exploration activities during the twelve-month period ended November 30, 2012, in order to maintain the option to lease the property. Under Phase II of the agreement with URI, Cameco will fund $1.0 million toward those exploration activities and will earn an additional 10% interest in Los Finados, raising its interest in the project to 50%. Cameco may elect to fund the entire $1.5 million by moving into Phase III of the program. At March 31 30, 2012, the Company has incurred and billed approximately $500,000 in costs to Cameco under Phase II of the agreement.

At the conclusion of the exploration program, the parties may enter into an operating joint venture to develop and produce any discovered uranium resources and reserves.  The uranium would be processed at URI’s Kingsville Dome or Rosita processing facility, with Cameco’s share of production being processed under a toll processing agreement with URI.

Contingent Liabilities—Off Balance Sheet Arrangements

The Company has obtained financial surety relating to certain of its future restoration and reclamation obligations as required by the State of Texas regulatory agencies. The Company has bank Letters of Credit (the “L/C’s) and performance bonds issued for the benefit of the Company to satisfy such regulatory requirements. The L/C’s were issued by Bank of America and the performance bonds have been issued by United States Fidelity and Guaranty Company (“USF&G”). L/C’s for $5,858,000 were issued at March 31, 2012 and December 31, 2011, respectively, such L/C’s are collateralized in their entirety by certificates of deposit.

Performance bonds totaling $2,835,000 were issued for the benefit of the Company at March 31, 2012 and December 31, 2011. USF&G has required that the Company deposit funds collateralizing a portion of the bonds. In September 2010, the Company received notice from the bonding company requesting that the Company either increase the collateral supporting the bonds to 100% of the bond amount by making quarterly payments of $500,000 or cause the release of the bonds by the fourth quarter of 2011. The amount of the collateral exceeds the amount of bonding issued by USF&G by $88,000 at March 31, 2012 and $60,000 at December 31, 2011.  In the event that USF&G is required to perform under its bonds or the bonds are called by the state agencies, the Company would be obligated to pay any expenditure in excess of the collateral.

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Critical Accounting Policies

Our significant accounting policies are described in Note 2 to the consolidated financial statements included in the Company’s 2011 Annual Report on Form 10-K.  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 discounted cash flow analysis, 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.

The accounts of the Company are maintained in United States dollars. All dollar amounts in the financial statements are stated in United States dollars except where indicated.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Uranium Price Volatility

The Company is subject to market risk related to the market price of uranium. We have two uranium supply contracts whose pricing mechanisms are based upon the market price of uranium. Future sales under these contracts would be impacted by both spot and long-term uranium price fluctuations. The Company’s cash flow has historically been dependent on the price of uranium, which is determined primarily by global supply and demand, relative to the Company’s costs of production. Historically, uranium prices have been subject to fluctuation, and the price of uranium has been and will continue to be affected by numerous factors beyond the Company’s control, including the demand for nuclear power, political and economic conditions, and governmental legislation in uranium producing and consuming countries and production levels and costs of production of other producing companies.

The spot market price for uranium has demonstrated a large range since January 2001. Prices have risen from $7.10 per pound at January 2001 to a high of $136.00 per pound as of June 2007. The spot market price was $52.00 per pound as of May 7, 2012.

ITEM 4.  CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings with the Securities and Exchange Commission (SEC) are recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating the disclosure controls and procedures, management has recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply judgment in evaluating its controls and procedures

During the fiscal period covered by this report, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have certified that our disclosure controls and procedures were effective as of March 31, 2012

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

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accordance with accounting principles generally accepted in the United States of America (GAAP). The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

The Company conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2011. This evaluation was based on the framework in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Based on the Company’s evaluation under the framework in Internal Control—Integrated Framework, our Chief Executive Officer and Chief Financial Officer concluded that internal control over financial reporting was effective as of December 31, 2011.

Changes in Internal Controls

During the first three months of 2012 no material changes have been made in our internal control over financial reporting that may have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Endaum Litigation

As previously disclosed, Eastern Navajo Dine Against Uranium Mining (“ENDAUM”) has filed a Complaint for Declaratory and Injunctive Relief and a Motion for Preliminary Injunction against the New Mexico Environment Department (“NMED.  We have intervened.  A hearing on ENDAUM’s motion for summary judgment was held on March 8, 2012. The Court ruled that the summary judgment motion was not ripe for review at this time because no construction or activity had taken place on Section 8 and a hearing on the Motion for Preliminary Injunction scheduled for April 2, 2012 was cancelled based upon this ruling. We are completing briefing on our motion for summary judgment challenging ENDAUM’s standing to bring their case against NMED.  The case is scheduled for trial on June 18, 2012.

Dispute over Kleberg County Settlement Agreement

On September 28, 2007, the Company filed suit against the County in the 105th Judicial District Court, Kleberg County, Texas for declaratory relief interpreting the December 2004 Settlement Agreement between Kleberg County and the Company as to the level of groundwater restoration the Company agreed to achieve in Kingsville Dome Production Areas 1 and 2 and for recovery of the Company’s legal fees and costs of the suit.  The County filed a counterclaim alleging the Company had breached the terms of the December 2004 Settlement Agreement and asked for a Declaratory Judgment and injunctive relief ordering the Company to cure various alleged breaches of that agreement and asked that the County be awarded its legal fees and costs of suit.

Trial to the bench commenced on December 12, 2011, and continued through December 16, 2011 at which time the trial was recessed. After multiple delays, the trial resumed on February 12, 2012 and continued through February 23, 2012.  The trial resumed on May 14, 2012 and closed on May 18, 2012 with the court rendering a ruling from the bench on that date.  The court found that:

·                  The Company had not breached the agreement and  had fulfilled the terms of the most highly disputed portion of the agreement which allowed the Company, upon compliance with its terms, to recommence mining in Kingsville Dome Production Area 3;

·                  The Company had the right to and should be allowed to mine in the Kingsville Dome;

·                  The Company must continue to restore Well I-11, until it has been returned to its previous use, which is suitable for irrigation purposes; and

·                  Each side should bear its costs and attorneys’ fees.

The Court requested that each side submit a proposed final judgment reflecting the Court’s ruling.  The Company submitted its proposed judgment on May 25, 2012, and the County has submitted a proposed judgment and a request for the Court to reconsider its ruling regarding attorneys’ fees.  If the court does not enter an order for at least partial attorneys’ fees for the County and does not reverse its ruling with regard to the resumption of mining in the Kingsville Dome, the Company expects that the County will appeal the court’s judgment.  The Company has continued to offer to discuss a resolution of this matter as long as the resolution includes termination of the December 2004 Settlement Agreement and the end of this litigation. If the County decides to appeal, the Company believes it also has appealable issues to present.  The Company would request its attorneys’ fees and costs on appeal.

Navajo Notice of Violation

On April 5, 2012, Hydro Resources, Inc. (“HRI”), the Company’s wholly-owned subsidiary, received a Notice of Violation and Order to Comply with the Navajo Nation Civil Trespass Act (the “Order”) from the Navajo Nation Division of Natural Resources.  The Order assessed a $50 civil assessment for alleged trespasses on Section 9, Township 16 North, Range 16 West, N.M.P.M. (“Section 9”), which is land held in trust by the United States for the Navajo Nation (“Trust Lands”).  The Order also asserts that HRI’s Section 8 Churchrock property cannot be reached from State Highway 566 without crossing either Section 9 or Section 17, both of which are Trust Lands, and that the Highway 566 right-of-way does not abut or extend into the Section 8 Churchrock property.  The Order orders HRI to cease entering upon and crossing Section 9 and Section 17 for the purpose of transporting vehicles, equipment and/or personnel to the Section 8 Churchrock property until HRI obtains an appropriate right-of-way from the Navajo Nation, or provides documentation of a validly existing right-of-way or easement.  On April 18, 2012, HRI and the Navajo Nation entered into a tolling agreement to stay the time for HRI to appeal the Order while negotiations were ongoing. On May 11, 2012, the Navajo Nation terminated the tolling agreement in accordance with its terms.  On May 24, 2012, HRI filed a notice of appeal with the Navajo Nation Office of Hearings and Appeals Division of Natural Resources.  The appeal is pending.  The Company continues to attempt to have a dialogue with the Navajo Nation.  If the Order is not lifted or vacated, the Company’s development plan could be materially adversely affected.

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ITEM 1A.  RISK FACTORS

The factors identified below are important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company. Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to the future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result, or be achieved or accomplished. Taking into account the foregoing, the following are identified as important risk factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.

General Risks and Uncertainties

Operations History—Planned Production Startup

In New Mexico, the Company completed a technical report on its Churchrock Section 8 project which was subjected to a peer review by an independent engineering firm in order to validate the economic determinations and engineering plans. The feasibility study completed by the engineering firm is currently under review by the Company.  The Company’s ability to begin plant construction and wellfield development in New Mexico in 2012 with production following in 2013 is subject to receipt of necessary approvals for access to the property (See “Item 2.—Properties—New Mexico—Churchrock/Mancos” in the Company’s 2011 Annual Report on Form 10-K), availability of financing and activation of the Company’s permits and licenses.

In South Texas, our Vasquez project was mined out in 2008 and is now being restored. In October 2008, Rosita production was shut-in due to depressed pricing and technical challenges in the first new wellfield that made mining uneconomical. The decline in uranium prices throughout 2008 also led to a decision in October 2008 to defer new wellfield development at Rosita and Kingsville Dome. Production continued in two existing wellfields at Kingsville Dome and was completed in July 2009. While the Company has approximately 664,000 pounds of in-place uranium mineralized material at its South Texas properties, the Company is not planning to commence production at any of these properties until the Company is able to acquire additional reserves and uranium prices recover to levels that will ensure that production, once resumed, is sustainable in the 300,000 to 500,000 pound range per year.

We are not producing uranium at this time. As a result, we currently have no sources of operating cash. If we cannot monetize certain existing company assets, partner with another company that has cash resources, find other means of generating revenue other than uranium production and/or have the ability to access additional sources of private or public capital, we may not be able to remain in business.

While the Company has approximately 664,000 pounds of in-place uranium mineralized material at its South Texas properties, the Company is not planning to commence production at any of these properties until the Company is able to acquire additional reserves and uranium prices recover to levels that will ensure that production, once resumed, is sustainable in the 300,000 to 500,000 pound range per year. The Company’s ability to begin plant construction and wellfield development in New Mexico in 2012 with production following in 2013 is subject to the receipt of necessary approvals for access to the property (See “Item 2.—Properties—New Mexico—Churchrock/Mancos” in the Company’s 2011 Annual Report on Form 10-K), availability of financing and activation of our permits and licenses. In order to stay on schedule for production from Churchrock Section 8 by the fourth quarter of 2013, the Company believes it will need to have begun construction and development activities by the end of the third quarter of 2012.  Our ability to meet our construction and development schedule is dependent on resolution of access issues relating to Churchrock Section 8 (See “—The Navajo Nation’s ban on uranium mining in Indian Country and opposition to the transportation of radioactive substances over and across Navajo Nation lands may have a material adverse effect on the Company’s future operations”).  Until we begin uranium production we have no way to generate cash inflows unless we monetize certain Company assets or through financing activities. In addition, our Vasquez project has been depleted of its economically recoverable reserves and our Rosita and

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Kingsville Dome projects have limited identified economically recoverable reserves. Our future uranium production, cash flow and income are dependent upon the results of exploration as well as our ability to bring on new, as yet unidentified wellfields and to acquire and develop additional reserves. We can provide no assurance that ours properties will be placed into production or that we will be able to continue to find, develop, acquire and finance additional reserves.

We will require additional financing in order to complete our plan of operations, whether the merger with Neutron Energy, Inc. (“Neutron”) is consummated or not. We may not be able to obtain all of the financing we require. Our ability to obtain additional financing is subject to a number of factors, including the market price of uranium, market conditions, investor acceptance of our business plan, and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. The detrimental effects of the weak economy and cessation of production could result in material adverse effects on our business, revenues, operating results and prospects.

Because we are not currently producing uranium, we have limited liquidity.

We had $2.9 million in cash at December 31, 2011 and $5.0 million at May 31, 2012. On March 9, 2012, under the terms of the Investment Agreement with RCF, we completed a $10 million sale of our common stock to RCF at a price of $0.9747 per share. The Company currently has two available commitments to raise capital in the equity markets.  It has an At-The Market financing arrangement with BTIG LLC for an additional $13 million, and, provided that the merger with Neutron is completed, it has up to an additional $5 million commitment from RCF under the terms of the Investment Agreement. In order to make use of its At-The-Market financing arrangement prior to the closing of the merger, the Company will require the consent of Neutron, RCF and RMB Australia Holdings Limited. While the Company believes that its cash on hand and these financing sources will be sufficient to meet its liquidity requirements for the next 12 months, certain amounts of these financings will be dependent upon the Company’s share price, market conditions and continued listing on the NASDAQ Capital Market, and there can be no assurance that such activities will result in the ability to raise the entire amount. In addition, if the merger is consummated, the Company may require additional funding in order to integrate Neutron and cover Neutron’s cash requirements.  We do project that with the cash on hand at May 31, 2012 and these financing sources that we will be able to maintain our liquidity into 2013. At such time, additional sources of cash may be required to further maintain our liquidity.

Our ability to function as an operating mining company will be dependent on our ability to mine our properties at a profit sufficient to finance further mining activities and for the acquisition and development of additional properties. The volatility of uranium prices makes long-range planning uncertain and raising capital difficult.

In addition to ceasing all production, we have deferred activities for exploration, delineation and development of new wellfields at all of our South Texas projects except for the Los Finados project. This decision limits our ability to be immediately ready to begin production should uranium prices improve suddenly. Our ability to operate on a positive cash flow basis will be dependent on mining sufficient quantities of uranium at a profit sufficient to finance our operations and for the acquisition and development of additional mining properties. Any profit will necessarily be dependent upon, and affected by, the long and short term market prices of uranium, which are subject to significant fluctuation. Uranium prices have been and will continue to be affected by numerous factors beyond our control. These factors include the demand for nuclear power, political and economic conditions in uranium producing and consuming countries, uranium supply from secondary sources and uranium production levels and costs of production. A significant, sustained drop in uranium prices may make it impossible to operate our business at a level that will permit us to cover our fixed costs or to remain in operation.

Our common stock is subject to delisting, and we may not be able to maintain our listing on the NASDAQ Capital Market.

The Company’s common stock is currently traded on the NASDAQ Capital Market.  On January 17, 2012, we received notice from NASDAQ that we had failed to maintain compliance with the $1.00 per share minimum bid price for 30 consecutive business days. The Company has been provided a “compliance period” of 180 calendar days to regain compliance with the applicable NASDAQ requirements. We will regain compliance with the minimum bid requirement if at any time before July 16, 2012, the bid price for our common stock closes at $1.00 per share or above for a minimum of 10 consecutive business days. In the event that the Company does not regain compliance with the minimum bid price rule by July 16, 2012, NASDAQ may provide the Company with an

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additional 180 day compliance period.  If the Company does not receive the additional 180 day compliance period, or does receive the additional 180 day compliance period, but fails to regain compliance by the end of such period, NASDAQ will provide us with written notification that our common stock is subject to delisting from the NASDAQ Capital Market. The Company may appeal NASDAQ’s determination to delist its common stock at that time.  If our common stock is delisted from NASDAQ, a reliable trading market for the Company’s securities could cease to exist, the market price of our common stock could be negatively impacted, we could face difficulty raising additional capital and if Neutron, RCF and RMB do not waive the applicable closing condition, the Company will not be able to complete the merger with Neutron.  In addition, there may be negative tax consequences if our common stock is delisted from NASDAQ and a reliable trading market is not found.

Exploration and development of uranium properties are risky and subject to great uncertainties.

The exploration for and development of uranium deposits involve significant risks. It is impossible to ensure that the current and future exploration programs on our existing properties will establish reserves. Whether a uranium ore body will be commercially viable depends on a number of factors, including, but not limited to: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; uranium prices, which cannot be predicted and which have been highly volatile in the past; mining, processing and transportation costs; perceived levels of political risk and the willingness of lenders and investors to provide project financing; availability of labor, labor costs and possible labor strikes; availability of drilling rigs, and governmental regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental protection, employment, worker safety, transportation, and reclamation and closure obligations. Most exploration projects do not result in the discovery of commercially mineable deposits of uranium and there can be no assurance that any of our exploration stage properties will be commercially mineable or can be brought into production.

The developments at the Fukushima Daiichi Nuclear Power Plant in Japan continue to have a negative impact on the uranium markets and public acceptance of nuclear energy is uncertain.

The developments at the Fukushima Daiichi Nuclear Power Plant following the earthquake and tsunami that struck parts of Japan in March 2011 created heightened concerns regarding the safety of nuclear power plants and the ability to safeguard the material used to fuel nuclear power plants. The impact on the perception of the safety of nuclear power resulting from this event may cause increased volatility of uranium prices in the near to mid-term as well as uncertainty involving the continued use and expansion of nuclear power in certain countries. A reduction in the current or the future generation of electricity from nuclear power could result in a reduced requirement for uranium to fuel nuclear power plants which may negatively impact the Company in the future.

Maintaining the demand for uranium at current levels and future growth in demand will depend upon acceptance of nuclear technology as a means of generating electricity. The developments at the Fukushima Daiichi Nuclear Power Plant may affect public acceptance of nuclear technology. Lack of public acceptance of nuclear technology would adversely affect the demand for nuclear power and potentially increase the regulation of the nuclear power industry.

The only significant market for uranium is nuclear power plants world-wide, and there are a limited number of customers.

We are dependent on a limited number of electric utilities that buy uranium for nuclear power plants. Because of the limited market for uranium, a reduction in purchases of newly produced uranium by electric utilities for any reason (such as plant closings) would adversely affect the viability of our business.

The price of alternative energy sources affects the demand for and price of uranium.

The attractiveness of uranium as an alternative fuel to generate electricity may to some degree be dependent on the relative prices of oil, gas, coal, and hydro-electricity and the possibility of developing other low-cost sources of energy. If the prices of alternative energy sources decrease or new low-cost alternative energy sources are developed, the demand for uranium could decrease, which may result in a decrease in the price of uranium.

We may not be able to mine a substantial portion of our uranium in New Mexico until a mill is built in New Mexico.

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A substantial portion of our uranium in New Mexico lends itself most readily to conventional mining methods and may not be able to be mined unless a mill is built in New Mexico. We have has no immediate plans to build, nor are we aware of any third party’s plan to build, a mill in New Mexico and there can be no guarantee that a mill will be built. In the event that a mill is not built, a substantial portion of our uranium may not be able to be mined. Our inability to mine all or a portion of our uranium in New Mexico would have a material adverse effect on future operations.

We do not have a committed source of financing for the development of our New Mexico Properties, including the Churchrock Property, which is the property we expect to develop first in New Mexico.

We do not have a committed source of financing for the development of our Churchrock property. There can be no assurance that we will be able to obtain financing for this project or our other New Mexico projects. Our inability to develop the New Mexico properties would have a material adverse effect on our future operations.

The Navajo Nation’s ban on uranium mining in Indian Country and opposition to the transportation of radioactive substances over and across Navajo Nation lands may have a material adverse effect on our future operations.

In April 2005, the Navajo Nation Council passed the Diné Natural Resources Protection Act of 2005 prohibiting uranium mining and processing on any sites within Indian Country as defined under 18 U.S.C. § 1151. We believe that the ban is beyond the jurisdiction of the Navajo Nation. However, the ban may prevent us from developing and operating our properties located in Indian Country. While the United States Court of Appeals for the Tenth Circuit held, en banc, that the Company’s Section 8 property in Churchrock, New Mexico is not Indian Country, approximately 49% of our in place mineralized uranium material is located in Indian Country. The term “Indian Country” is derived from jurisdictional determinations in criminal law enforcement proceedings under 18 U.S.C. § 1151 and understood to encompass territory situated within Indian reservations, land owned by Indian allottees and land within a dependent Indian community. Our ability to mine will be adversely affected unless the ban is overturned.

In February 2012, the Navajo Nation Council passed The Radioactive and Related Substances, Equipment, Vehicles, Persons and Materials Transportation Act of 2012 which would prohibit the transport across Navajo Nation lands of any equipment, vehicles, persons or materials for the purposes of exploring for or mining, producing, processing or milling any uranium ore, yellowcake, radioactive waste or other radioactive products on or under the surface of or adjacent to Navajo Nation lands unless the transporter has first (i) obtained Navajo Nation consent and a federal grant of easement, (ii) consented to full subject matter and personal jurisdiction of the Navajo Nation, and (iii) agreed to terms and conditions regarding clean-up and remediation. The Act would also require the Navajo Nation Environmental Protection Agency (“NNEPA”) to promulgate regulations implementing notice requirements, license fees, bonding requirements, route restrictions and curfews for the transportation of radioactive substances over and across Navajo Nation lands or otherwise within Navajo Indian Country. The Company believes that certain provisions of the Act may not be enforceable. If the Act is enforceable, it could have a material adverse effect on our future operations, including our ability to transport equipment and personnel to and from our properties and to transport resin from New Mexico to our processing facilities in Texas.

In April 2012, the Company’s subsidiary Hydro Resources, Inc. (“HRI”) received a Notice of Violation and Order to Comply with the Navajo Nation Civil Trespass Act (the “Order”) which, among other things, ordered HRI to cease entering upon and crossing the adjacent Section 9 and Section 17 for the purpose of transporting vehicles, equipment and/or personnel to the Section 8 Churchrock property until HRI obtains an appropriate right-of-way from the Navajo Nation, or provides documentation of a validly existing right-of-way or easement.  On April 18, 2012, HRI and the Navajo Nation entered into a tolling agreement to stay the time for HRI to appeal the Order while negotiations were ongoing. On May 11, 2012, the Navajo Nation terminated the tolling agreement in accordance with its terms.  On May 24, 2012, HRI filed a notice of appeal with the Navajo Nation Office of Hearings and Appeals Division of Natural Resources.  The appeal is pending.  The Company continues to attempt to have a dialogue with the Navajo Nation.  If the Order is not lifted or vacated, the Company’s development plan could be materially adversely affected.

Our operations are subject to environmental risks.

We are required to comply with environmental protection laws and regulations and permitting requirements, and we anticipate that we will be required to continue to do so in the future. We have expended

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significant resources, both financial and managerial, to comply with environmental protection laws, regulations and permitting requirements and we anticipate that we will be required to continue to do so in the future. The material laws and regulations within the U.S. that the Company must comply with include the Atomic Energy Act, Uranium Mill Tailings Radiation Control Act of 1978, or UMTRCA, Clean Air Act, Clean Water Act, Safe Drinking Water Act, Federal Land Policy Management Act, National Park System Mining Regulations Act, the State Mined Land Reclamation Acts or State Department of Environmental Quality regulations and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as applicable.

We are required to comply with the Atomic Energy Act, as amended by UMTRCA, by applying for and maintaining an operating license from the NRC and the state of Texas. Uranium operations must conform to the terms of such licenses, which include provisions for protection of human health and the environment from endangerment due to radioactive materials. The licenses encompass protective measures consistent with the Clean Air Act and the Clean Water Act. We intend to utilize specific employees and consultants in order to comply with and maintain our compliance with the above laws and regulations. Mining operations may be subject to other laws administered by the USEPA and other agencies.

The uranium industry is subject not only to the worker health and safety and environmental risks associated with all mining businesses, but also to additional risks uniquely associated with uranium mining and milling. The possibility of more stringent regulations exists in the areas of worker health and safety, storage of hazardous materials, standards for heavy equipment used in mining or milling, the disposition of wastes, the decommissioning and reclamation of exploration, mining and ISR sites, climate change and other environmental matters, each of which could have a material adverse effect on the cost or the viability of a particular project.

We cannot predict what environmental legislation, regulation or policy will be enacted or adopted in the future or how future laws and regulations will be administered or interpreted. The recent trend in environmental legislation and regulation, generally, is toward stricter standards, and this trend is likely to continue in the future. This recent trend includes, without limitation, laws and regulations relating to air and water quality, mine reclamation, waste handling and disposal, the protection of certain species and the preservation of certain lands. These regulations may require the acquisition of permits or other authorizations for certain activities. These laws and regulations may also limit or prohibit activities on certain lands. Compliance with more stringent laws and regulations, as well as potentially more vigorous enforcement policies or stricter interpretation of existing laws, may necessitate significant capital outlays, may materially affect our results of operations and business or may cause material changes or delays in our intended activities.

Our operations may require additional analysis in the future including environmental, cultural and social impact and other related studies. Certain activities require the submission and approval of environmental impact assessments. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers, and employees. We cannot  provide assurance that we will be able to obtain or maintain all necessary permits that may be required to continue our operation or our exploration of our properties or, if feasible, to commence development, construction or operation of mining facilities at such properties on terms which enable operations to be conducted at economically justifiable costs. If we are unable to obtain or maintain permits or water rights for development of our properties or otherwise fail to manage adequately future environmental issues, our operations could be materially and adversely affected.

Because mineral exploration and development activities are inherently risky, we may be exposed to environmental liabilities and other dangers. If we are unable to maintain adequate insurance, or liabilities exceed the limits of our insurance policies, we may be unable to continue operations.

The business of mineral exploration and extraction involves a high degree of risk. Few properties that are explored are ultimately developed into production. Unusual or unexpected formations, formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are other risks involved in extraction operations and the conduct of exploration programs. Previous mining operations may have caused environmental damage at certain of our properties. It may be difficult or impossible to assess the extent to which such damage was caused by us or by the activities of previous operators, in which case, any indemnities and exemptions from liability may be ineffective. If any of our properties are found to have commercial quantities of uranium, we would be subject to additional risks respecting any development and production activities.

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Although we carry liability insurance with respect to our mineral exploration operations, we may become subject to liability for damage to life and property, environmental damage, cave-ins or hazards against which it cannot insure or against which it may elect not to insure because of cost or other business reasons. In addition, the insurance industry is undergoing change and premiums are being increased. If we are unable to procure adequate insurance because of cost, unavailability or otherwise, we might be forced to cease operations.

Our inability to obtain financial surety would threaten our ability to continue in business.

Future financial surety requirements to comply with federal and state environmental and remediation requirements and to secure necessary licenses and approvals will increase significantly as future development and production occurs at certain of our sites in Texas and New Mexico. The amount of the financial surety for each producing property is subject to annual review and revision by regulators. We expect that the issuer of the financial surety instruments will require us to provide cash collateral equal to the face amount of the bond to secure the obligation. In the event we are not able to raise, secure or generate sufficient funds necessary to satisfy these requirements, we will be unable to develop our sites and bring them into production, which inability will have a material adverse impact on our business and may negatively affect our ability to continue to operate.

Competition from better-capitalized companies affects prices and our ability to acquire properties and personnel.

There is global competition for uranium properties, capital, customers and the employment and retention of qualified personnel. In the production and marketing of uranium, there are a number of producing entities, some of which are government controlled and all of which are significantly larger and better capitalized than we are. Many of these organizations also have substantially greater financial, technical, manufacturing and distribution resources than we have.

Our uranium production also competes with uranium recovered from the de-enrichment of highly enriched uranium obtained from the dismantlement of United States and Russian nuclear weapons and imports to the United States of uranium from the former Soviet Union and from the sale of uranium inventory held by the United States Department of Energy. In addition, there are numerous entities in the market that compete with us for properties and are attempting to become licensed to operate ISR and/or underground mining facilities. If we are unable to successfully compete for properties, capital, customers or employees or alternative uranium sources, it could have a materially adverse effect on our results of operations.

Because we have limited capital, inherent mining risks pose a significant threat to us compared with their larger competitors.

Because we have limited capital, we are unable to withstand significant losses that can result from inherent risks associated with mining, including environmental hazards, industrial accidents, flooding, earthquake, interruptions due to weather conditions and other acts of nature which larger competitors could withstand. Such risks could result in damage to or destruction of our infrastructure and production facilities, as well as to adjacent properties, personal injury, environmental damage and processing and production delays, causing monetary losses and possible legal liability.

Our business could be harmed if we lose the services of our key personnel.

Our business and mineral exploration programs depend upon our ability to employ the services of geologists, engineers and other experts. In operating our business and in order to continue our programs, we compete for the services of professionals with other mineral exploration companies and businesses. In addition, several entities have expressed an interest in hiring certain of our employees. Our ability to maintain and expand our business and continue ours exploration programs may be impaired if we are unable to continue to employ or engage those parties currently providing services and expertise to us or identify and engage other qualified personnel to do so in their place. To retain key employees, we may face increased compensation costs, including potential new stock incentive grants and there can be no assurance that the incentive measures we implement will be successful in helping us retain its key personnel.

Approximately 24.6% of our common stock is controlled by three significant stockholders and management.

As of June 15, 2012, approximately 20.2% of our common stock is controlled by three significant stockholders, including approximately 9.6% controlled by RCF. In addition, as of June 15, 2012, our directors and

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officers are the beneficial owners of approximately 4.3% of our common stock. This includes, with respect to both groups, shares that may be purchased upon the exercise of outstanding options.  If the merger with Neutron closes, RCF will own an additional 24.6 million shares of our common stock (not including our right to sell an additional $5 million of our common stock to RCF under the terms of the Investment Agreement).  In connection with the execution of the Investment Agreement, the Company entered into a Stockholders’ Agreement with RCF. Under the Stockholders’ Agreement, RCF was entitled to have one designee placed in nomination for a seat on the Company’s Board of Directors at the 2012 annual meeting, and RCF was granted the right to participate in future equity offerings by the Company in proportion to its percentage ownership of the outstanding shares of the Company’s common stock.  Such ownership by the Company’s principal stockholders, executive officers and directors, and the terms of the Stockholders’ Agreement, may have the effect of delaying, deferring, preventing or facilitating a sale of the Company or a business combination with a third party.

The availability for sale of a large amount of shares may depress the market price of our common stock.

As of June 15, 2012, 106,420,250 shares of our common stock were outstanding, all of which, except for the approximately 10.3 million shares owned by RCF, are freely transferable.  In connection with the execution of the Investment Agreement, the Company and RCF entered into a registration rights agreement whereby RCF is granted certain registration rights with respect to the shares of the Company’s common stock issued under the Investment Agreement.  The registration rights agreement obligates the Company to file a registration statement immediately following the consummation of the merger with Neutron to enable RCF to sell its common stock in a continuous offering under Rule 415 of the Securities Act.  As of June 15, 2012, approximately 3.97 million shares of our common stock were reserved for issuance upon the exercise of outstanding options and warrants. The availability for sale of a large amount of shares by any one or several stockholders may depress the market price of our common stock and impair our ability to raise additional capital through the public sale of common stock. We have no arrangement with any of the holders of the foregoing shares to address the possible effect on the price of our common stock of the sale by them of their shares.

Terms of subsequent financings may adversely impact our stockholders.

In order to finance our future production plans and working capital needs, we may have to raise funds through the issuance of equity or debt securities. We currently have no authorized preferred stock. Depending on the type and the terms of any financing we pursue, stockholders’ rights and the value of their investment in our common stock could be reduced. For example, if we have to issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest on these debt securities would increase costs and negatively impact operating results. If the issuance of new securities results in diminished rights to holders of our common stock, the market price of our common stock could be negatively impacted.

Our stockholders could be diluted if we were to use common stock to raise capital.

As previously noted, we may need to seek additional capital in the future to satisfy our working capital requirements. This financing could involve one or more types of securities including common stock, convertible debt, preferred stock or warrants to acquire common or preferred stock. These securities could be issued at or below the then prevailing market price for our common stock. Any issuance of additional shares of our common stock could be dilutive to existing stockholders and could adversely affect the market price of our common stock.

Risks Relating to the Company’s proposed merger with Neutron

The benefits of integrating the companies may not be realized.

To be successful after the merger, the Company will need to combine and integrate the operations of the Company and Neutron into one company. Integration will require substantial management attention and could detract attention from the day-to-day business of the combined company. We could encounter difficulties in the integration process, such as the need to revisit assumptions about reserves, future production, revenues, capital expenditures and operating costs, including synergies, the loss of key employees or commercial relationships or the need to address unanticipated liabilities. If we cannot integrate our and Neutron’s businesses successfully, we may fail to realize the expected benefits of the merger.

Failure to complete the merger or delays in completing the merger could negatively affect the Company’s stock price and future businesses and operations.

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If the merger is not completed for any reason, the Company may be subject to a number of risks, including the following:

·               we will not realize the benefits expected from the merger, including a potentially enhanced financial and competitive position;

·               the current market price of the Company’s common stock may reflect a market assumption that the merger will occur and a failure to complete the merger could result in a negative perception by the stock market of the Company and a resulting decline in the market price of our common stock;

·               certain costs relating to the merger, including certain investment banking, financing, legal and accounting fees and expenses, must be paid even if the merger is not completed; and

·               there may be substantial disruption to the Company’s business and distraction of the Company’s management and employees from day-to-day operations because matters related to the merger (including integration planning) may require substantial commitments of time and resources, which could otherwise have been devoted to other opportunities that could have been beneficial to the Company.

Delays in completing the merger could exacerbate uncertainties concerning the effect of the merger, which may have an adverse effect on the business following the merger and could defer or detract from the realization of the benefits expected to result from the merger.

Ownership by our stockholders will be diluted by the merger and the issuance of shares of our common stock in connection with the merger.

The merger and the issuance of shares of our common stock in connection with the merger will dilute the ownership position of our current stockholders. Under the terms of the transaction agreements with Neutron, RCF and RMB Australia Holdings Limited (“RMB”), approximately 37 million shares of our common stock will be issued in connection with the merger. The shares of our common stock to be issued will be distributed as follows: approximately 24.6 million shares to RCF; approximately 8.4 million shares to RMB; approximately 3.8 million shares to be distributed to current stockholders of Neutron; and approximately 0.2 million shares will be issued to Roth to satisfy certain obligations of Neutron.

If the merger does not occur, the Company will still have a loan outstanding to Neutron, who will have limited ability to repay.

In connection with the execution of the merger agreement, on March 1, 2012, the Company, Neutron and Cibola Resources LLC entered into a Credit and Funding Agreement.  Under the Credit and Funding Agreement, during the period from March 1, 2012 until the effective time of the Merger, the Company has agreed to loan to Neutron up to $4.5 million to fund Neutron’s working capital needs during that period, including its transaction costs for the Merger.  The loans are secured by a security interest in substantially all of Neutron’s real and personal property, to be shared by RMB and the Company on a pari passu basis in the event that the merger is not consummated and RMB and the Company foreclose on the collateral.

If the Company fails to implement an effective system of internal controls with respect to Neutron after the merger, it may not be able to accurately report its financial results or prevent fraud and, as a result, its business could be harmed and current and potential stockholders could lose confidence in the Company, which could cause the Company’s value to fall.

If the Company is not able to establish and maintain effective internal controls with respect to Neutron in a timely manner following the merger or with adequate compliance, it may not be able to accurately report the financial results of the combined company or prevent fraud and might be subject to sanctions or investigation by, among others, the NASDAQ Capital Market. Any such action could harm its business or investors’ confidence in the Company, and could cause its stock price to fall.

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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 9, 2012, the Company sold 10,259,567 shares of common stock to Resource Capital Fund V L.P. (“RCF”) at a price of $0.9747 per share, for total consideration to the Company of $10 million.  The sale was pursuant to the Investment Agreement dated March 1, 2012 by and among the Company, RCF and Neutron Energy, Inc. (“Neutron”).  Up to $4.5 million of the proceeds of the sale will be used to fund the working capital of the Company and Neutron.  The sale was made through an offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(2) of the Securities Act.  RCF has represented to the Company that RCF is an “accredited investor” as defined in Regulation D under the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None

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

None

ITEM 5.  OTHER INFORMATION.

None

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ITEM 6.  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.

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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.

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EXHIBIT INDEX

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

** Filed or furnished as Exhibit to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 10, 2012.

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