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Use these links to rapidly review the document<BR>
<A HREF="#bg75201_table_of_contents">  TABLE OF CONTENTS</A> <BR>
<A HREF="#fa75201_index_to_consolidated_financia__ind03147">  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Neutron Energy, Inc. and Subsidiaries</A><BR></font>
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<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>As filed with the Securities and Exchange Commission on March&nbsp;30, 2011  </B></FONT></P>

<P ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><B> Registration No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </B></FONT></P>


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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>WASHINGTON, DC 20549  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=5><B>Form&nbsp;S-1<BR>  </B></FONT><FONT SIZE=2><B>REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF&nbsp;1933  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=5><B>Neutron Energy,&nbsp;Inc.<BR>  </B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter) </FONT></P>

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<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Nevada</B></FONT><FONT SIZE=2><BR>
(State or other jurisdiction of<BR>
incorporation or organization)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> 1090</B></FONT><FONT SIZE=2><BR>
(Primary Standard Industrial<BR>
Classification Code Number)</FONT></TD>
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<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> 73-1734293</B></FONT><FONT SIZE=2><BR>
(I.R.S. Employer<BR>
Identification Number)</FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>9000 E. Nichols Avenue, Suite&nbsp;225<BR>
Englewood, Colorado 80112<BR>
(303)&nbsp;531-0470<BR>  </B></FONT><FONT SIZE=2>(Address,&nbsp;including&nbsp;zip&nbsp;code&nbsp;and&nbsp;telephone&nbsp;number,
including&nbsp;area&nbsp;code,&nbsp;of&nbsp;registrant's&nbsp;principal&nbsp;executive&nbsp;offices) </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Edward M. Topham<BR>
Chief Financial Officer<BR>
9000 E. Nichols Avenue<BR>
Englewood, Colorado 80112<BR>
Telephone: (303)&nbsp;531-0470<BR>  </B></FONT><FONT SIZE=2>(Name,&nbsp;address,&nbsp;including&nbsp;zip&nbsp;code&nbsp;and&nbsp;telephone&nbsp;number,
including&nbsp;area&nbsp;code,&nbsp;of&nbsp;agent&nbsp;for&nbsp;service) </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><I>Copies to:</I></B></FONT></P>

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<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Richard J. Mattera<BR>
Hogan Lovells US&nbsp;LLP<BR>
1200 Seventeenth Street, Suite&nbsp;1500<BR>
Denver, Colorado 80202<BR>
Telephone: (303)&nbsp;899-7300</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>David F. Marx<BR>
Christopher L. Doerksen<BR>
Dorsey&nbsp;&amp; Whitney&nbsp;LLP<BR>
136 South Main Street, Suite&nbsp;1000<BR>
Salt Lake City, Utah 84101<BR>
Telephone: (801)&nbsp;933-7360</B></FONT></TD>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximate
date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933, check the
following box.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is filed to register additional securities for an offering pursuant to Rule&nbsp;462(b) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a large accelerated , 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&nbsp;12b-2 of the Exchange Act. </FONT></P>
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<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Large&nbsp;accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Non-accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#253;</FONT><BR></FONT> <FONT SIZE=1>(do not check if a<BR>
smaller reporting company)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Smaller&nbsp;reporting&nbsp;company&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>CALCULATION OF REGISTRATION FEE  </B></FONT></P>

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<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Title of Each Class of Securities<BR>
to be Registered</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Proposed Maximum<BR>
Aggregate Offering<BR>
Price(1)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Amount of<BR>
Registration Fee</B></FONT><BR></TH>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:4pt;text-indent:-4pt;"><FONT SIZE=1><B> </B></FONT><FONT SIZE=2>Common Stock, par value $0.001 per share(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$57,500,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$6,676</FONT></TD>
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<TD COLSPAN=6 VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:5pt;text-indent:-5pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriters' Warrants(3)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
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<TD COLSPAN=6 VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:5pt;text-indent:-5pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common Stock underlying Underwriters' Warrants(4)(5)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$3,450,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$401</FONT></TD>
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<TD COLSPAN=6 VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:5pt;text-indent:-5pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>TOTAL</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$60,950,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$7,077</FONT></TD>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule&nbsp;457(o) under the Securities Act of 1933, as
amended.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
the offering price attributable to shares that the underwriters have the option to purchase solely to cover over-allotments, if any.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>No
separate registration fee is required pursuant to Rule&nbsp;457(g) promulgated under the Securities Act of 1933.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Pursuant
to Rule&nbsp;416 promulgated under the Securities Act of 1933, there are also being registered such additional shares of common stock as may
become issuable pursuant to anti-dilution provisions of the underwriter's warrants.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Estimated
solely for the purpose of calculating the registration fee pursuant to Rule&nbsp;457(g) promulgated under the Securities Act of 1933. We have
agreed to issue warrants to purchase a number of shares of common stock equal to 5% of the number of shares of common stock offered hereby (including any over-allotment), at an exercise
price per share equal to 120% of the price of the common stock offered hereby. </FONT></DD></DL>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall
file&nbsp;a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section&nbsp;8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section&nbsp;8(a), may
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</FONT><FONT COLOR="#FF4040" SIZE=2><B>The information in this prospectus is not complete and may be changed. We may not sell these securities
until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.</B></FONT></P>

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</B></FONT><FONT COLOR="#FF4040" SIZE=2><B>SUBJECT TO COMPLETION, DATED MARCH&nbsp;30, 2011</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Prospectus  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares of Common Stock  </B></FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This is an initial public offering of shares of common stock by Neutron Energy,&nbsp;Inc. Neutron Energy is selling a maximum
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of common stock. The estimated initial public offering price is between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
public market exists for our shares. We have applied for a listing of our common stock on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under the symbol
"&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=3><B>Investing in our common stock involves risks. See "Risk Factors" beginning on page&nbsp;6.  </B></FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="47pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Per Share </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Initial public offering price</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting discounts and commissions(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds to Neutron Energy, before expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
underwriters will receive compensation in addition to the discounts and commissions and as set forth under
"</FONT><FONT SIZE=2><I>Underwriting</I></FONT><FONT SIZE=2>." </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the extent the underwriters sell more than&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock, we have granted the underwriters an option for a period of 30&nbsp;days to
purchase up to
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares of common stock, at the initial public offering price less the underwriting discounts and commissions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal offense.</B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters expect to deliver the shares against payment on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011. </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="64%" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=4><B>Roth Capital Partners</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=4>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=4><B>Cormark Securities (U.S.A.) Limited</B></FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>The
date of this prospectus is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011 </FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=2,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=572235,FOLIO='blank',FILE='DISK132:[11ZAZ1.11ZAZ75201]BE75201A.;40',USER='DTAYLOR',CD='30-MAR-2011;11:08' -->
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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>
<A NAME="BG75201A_main_toc"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="bg75201_table_of_contents"> </A>
<BR></FONT><FONT SIZE=2><B>  TABLE OF CONTENTS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
<A NAME="BG75201_TOC"></A> </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="25pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Page </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#da75201_prospectus_summary"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PROSPECTUS SUMMARY</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#da75201_prospectus_summary"><FONT SIZE=2>1</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#de75201_risk_factors"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>RISK FACTORS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#de75201_risk_factors"><FONT SIZE=2>6</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dg75201_special_note_regarding_forward-looking_statements"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dg75201_special_note_regarding_forward-looking_statements"><FONT SIZE=2>19</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#di75201_use_of_proceeds"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>USE OF PROCEEDS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#di75201_use_of_proceeds"><FONT SIZE=2>20</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#di75201_dividend_policy"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DIVIDEND POLICY</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#di75201_dividend_policy"><FONT SIZE=2>21</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dk75201_capitalization"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CAPITALIZATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk75201_capitalization"><FONT SIZE=2>22</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dm75201_dilution"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DILUTION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm75201_dilution"><FONT SIZE=2>24</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#do75201_selected_historical_consolidated_financial_data"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#do75201_selected_historical_consolidated_financial_data"><FONT SIZE=2>26</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dq75201_management_s_discussion_and_an__man03466"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dq75201_management_s_discussion_and_an__man03466"><FONT SIZE=2>27</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du75201_quantitative_and_quali__du702482"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du75201_quantitative_and_quali__du702482"><FONT SIZE=2>46</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw75201_industry_and_market_data"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INDUSTRY AND MARKET DATA</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw75201_industry_and_market_data"><FONT SIZE=2>47</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy75201_description_of_business"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DESCRIPTION OF BUSINESS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy75201_description_of_business"><FONT SIZE=2>53</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ea75201_description_of_properties"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DESCRIPTION OF PROPERTIES</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ea75201_description_of_properties"><FONT SIZE=2>60</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#em75201_legal_proceedings"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>LEGAL PROCEEDINGS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#em75201_legal_proceedings"><FONT SIZE=2>96</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eo75201_directors,_executive_o__eo702459"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eo75201_directors,_executive_o__eo702459"><FONT SIZE=2>97</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq75201_executive_compensation"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EXECUTIVE COMPENSATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq75201_executive_compensation"><FONT SIZE=2>104</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ew75201_security_ownership_of_certain___sec02525"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ew75201_security_ownership_of_certain___sec02525"><FONT SIZE=2>128</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ew75201_certain_relationships___ew702247"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ew75201_certain_relationships___ew702247"><FONT SIZE=2>131</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ew75201_description_of_capital_stock"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DESCRIPTION OF CAPITAL STOCK</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ew75201_description_of_capital_stock"><FONT SIZE=2>133</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ex75201_underwriting_and_plan_of_distribution"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>UNDERWRITING AND PLAN OF DISTRIBUTION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ex75201_underwriting_and_plan_of_distribution"><FONT SIZE=2>137</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ex75201_shares_available_for_future_sale"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SHARES AVAILABLE FOR FUTURE SALE</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ex75201_shares_available_for_future_sale"><FONT SIZE=2>141</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ey75201_material_united_states_federal__mat02986"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR
NON-U.S.&nbsp;HOLDERS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ey75201_material_united_states_federal__mat02986"><FONT SIZE=2>144</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ey75201_legal_matters"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>LEGAL MATTERS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ey75201_legal_matters"><FONT SIZE=2>148</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ey75201_experts"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EXPERTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ey75201_experts"><FONT SIZE=2>148</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ey75201_transfer_agent_and_registrar"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>TRANSFER AGENT AND REGISTRAR</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ey75201_transfer_agent_and_registrar"><FONT SIZE=2>148</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ey75201_indemnification_matters_and_di__ind04234"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INDEMNIFICATION MATTERS AND DISCLOSURE OF SEC POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ey75201_indemnification_matters_and_di__ind04234"><FONT SIZE=2>148</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ey75201_where_you_can_find_additional_information"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WHERE YOU CAN FIND ADDITIONAL INFORMATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ey75201_where_you_can_find_additional_information"><FONT SIZE=2>149</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ez75201_glossary_of_terms"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>GLOSSARY OF TERMS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ez75201_glossary_of_terms"><FONT SIZE=2>150</FONT></A></TD>
</TR>
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<TD VALIGN="TOP" style="font-family:times;"><A HREF="#fa75201_index_to_consolidated_financia__ind03147"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#fa75201_index_to_consolidated_financia__ind03147"><FONT SIZE=2>F-1</FONT></A></TD>
</TR>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
used in this prospectus, unless the context otherwise requires, the terms "Neutron," "Neutron Energy," "NEI," "the Company," "we," "our" and "us" refer to Neutron Energy,&nbsp;Inc.
and its consolidated subsidiaries. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
as otherwise indicated, all information in this prospectus assumes that the underwriters' over-allotment option will not be exercised. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>You should rely only on the information contained in this prospectus that we authorize to be distributed to you. We have not, and the underwriters have not,
authorized anyone to provide you with information different from or in addition to that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not
rely on it. We are offering to sell and are seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>i</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Our business, financial conditions, results of operations and prospects may have changed since that date.</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
obtained the market, competitive position and similar data used throughout this prospectus from our own research and from surveys or studies conducted by third parties and industry or
general publications. This market, competitive position and similar data include, among other things, statements regarding the global market for uranium and nuclear energy, uranium supply deficits,
sources of uranium, and the historical and projected growth rate of our industry. While we believe that each of these surveys, studies and publications is reliable, we have not independently verified
such data. Similarly, we believe our internal research is reliable, but it has not been verified by any independent sources. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Through and including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011, all dealers that buy, sell or trade our common stock, whether or not participating in this offering,
may be required
to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or
subscriptions.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>ii</FONT></P>

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<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

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<A NAME="toc_da75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PROSPECTUS SUMMARY    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>The following summary highlights information contained elsewhere in this prospectus. Before deciding whether to
buy shares of our common stock, you should read this summary and the more detailed information in this prospectus, including our consolidated financial statements and related notes and the discussion
of the risks of investing in our common stock in the section entitled</I></FONT><FONT SIZE=2> "</FONT><FONT SIZE=2><I>Risk Factors</I></FONT><FONT SIZE=2>" </FONT><FONT SIZE=2><I>starting on
page&nbsp;6.</I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Our Company  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We began operations as an unincorporated entity on March&nbsp;25, 2005 and were incorporated on March&nbsp;29, 2005 under the laws
of the State of Wyoming. On April&nbsp;26, 2007, we transferred our state of domicile from Wyoming to Nevada. We were formed to capitalize on our management's extensive knowledge and experience in
uranium exploration, development and
production, as well as our geologic and engineering data bases covering several uranium districts that historically have been uranium producers. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are a natural resource company engaged in the acquisition and exploration of uranium properties in the United States. Our strategy is to acquire properties that (i)&nbsp;have
undergone some degree of historical uranium exploration and on which uranium mineralized material, but not reserves, have been located, and (ii)&nbsp;are located in mineralized districts that have
undergone some degree of historical uranium exploration and are thought to be prospective for further uranium exploration, but on which no uranium mineralized material has been located. We have
acquired interests in 63,312 net acres of leased or staked mineral properties in New Mexico, South Dakota and Wyoming. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also hold residual mineral interests that we received in the disposition of properties in Arizona and South Dakota. These residual interests were received in consideration of the sale
of our ownership interests in the properties and are primarily comprised of royalty interest, net proceeds interest and our ability to convert the royalty interest into a working interest in the
properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of our mineral properties are exploration stage properties. Some of our mineral properties have been the subject of historical exploration and/or development, and in one case
production, by other mining companies, that provides indications that further uranium exploration is warranted. Our view that these properties are prospective for mineral exploration is based on prior
exploration and/or development conducted by other companies, management information and work product derived from various reports, maps, radiometric assay from down-hole radiometric
logging, exploratory drill logs, state organization reports, consultants, geological study and other exploratory information. If we are able to locate economic uranium reserves that are commercially
viable, we intend to develop the mine site, including mill facilities, and extract uranium for production. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are an exploration stage company and all of our projects are in the exploration stage and do not have any known proven or probable reserves in accordance with the definitions of
reserves under Industry Guide&nbsp;7 issued by the Securities and Exchange Commission (the "SEC"). There can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of
our properties until appropriate exploratory work is completed and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration and permitting beyond the
scope of our planned activities will be required before a final evaluation as to the economic and legal feasibility of mining of any of our properties is determined. There is no assurance that further
exploration will result in a final evaluation that a commercially viable mineral deposit exists on any of our mineral properties. We will require additional financing in order to pursue full
exploration and permitting of these properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of March&nbsp;24, 2011, we had 58,204,141 shares of common stock outstanding. On that date, there were 195 holders of record. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>1</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Corporate Information  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive offices are located at 9000 E. Nichols Avenue, Suite&nbsp;225, Englewood, Colorado&nbsp;80112. Our telephone number
is (303)&nbsp;531-0470. We have a field office in Albuquerque, New&nbsp;Mexico. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Employees  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have 13 full-time and three part-time employees and have engaged geological and technical consultants for
additional day-to-day services. Other services are provided by outsourcing consultants and special purpose contracts. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Business and Growth Strategy  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an exploration stage company engaged in the exploration of uranium. We do not engage in any development activities at this time,
but may engage in development activities should uranium reserves be located on any of our properties. The key elements of our business and growth strategy are as follows: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cibola Project.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Based on historical exploration and development data, we believe our wholly-owned Cibola Project may have future
uranium
reserve potential. We have received the required exploration permits on our Juan Tafoya property and Cebolleta property (together our "Cibola Project") which will allow us to commence confirmation
drilling programs to confirm the uranium mineralized material identified by previous operators. We have substantially completed resource modeling on each of the Juan Tafoya and Cebolleta properties,
based on historical
data we have in our possession. We have received an independent technical report completed in accordance with the provisions of National Instrument&nbsp;43-101, Standards of Disclosure
for Mineral Projects, of the Canadian Securities Administrators ("NI&nbsp;43-101"), which is authored by G.&nbsp;S.&nbsp;Carter,&nbsp;P.&nbsp;Eng., a qualified person. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
of the long lead times for environmental permitting of mining operations in North America, we have commenced the permitting process with the U.S. Nuclear Regulatory Commission
("NRC") on our Cibola Project, primarily through initial planning sessions with the NRC and the collection of environmental baseline data. We believe that commencing the permitting process at this
early stage will allow us to expeditiously commence development of our properties if we move to that stage. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ambrosia Lake Project.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have received the required exploration permit on our Elizabeth Target, included in the Ambrosia Lake Project,
which will
allow us to commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We believe our Elizabeth, Deep Rock, Mesa Redonda, West Endy and West
Ranch targets represent long-term uranium reserve potential. We seek to complete the analysis and digitization of historic geologic data, mapping, and other geophysic and geologic
activities on our Ambrosia Lake Project targets and to commence exploration permitting and exploration programs on selected targets. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Edgemont Project, Copper Mountain Project and Other Wyoming Properties.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We do not anticipate any significant exploration activities
during the next
twelve months on our other properties. We may seek to sell or enter into joint-venture arrangements on these properties with other exploration companies. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extensive Due Diligence of Properties.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our exploration activities are divided into phases dependent on the nature of historical
exploration and
development activities on the property. Our initial phase of exploration includes extensive due diligence and analysis of all historical exploration data available to us or in our possession.
Furthermore, we probe existing and newly drilled holes with gamma probes </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>with
the goal of confirming historical drill results and planning for future development. We will proceed to our second phase if we are able to confirm historical data and drill results. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursue Strategic Acquisitions of Exploration Stage Properties.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are also engaged in the continual review of opportunities to acquire
properties in
the exploration stage that are thought to contain uranium mineralization and have undergone some degree of historical exploration or development. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Historically, we have financed our operations primarily by (i)&nbsp;private placements of convertible subordinated notes
convertible for
either (a)&nbsp;shares of our common stock, or (b)&nbsp;shares of our common stock and warrants to purchase additional shares of our common stock; (ii)&nbsp;private placement of shares of our
common stock to certain individuals and institutional investors; and (iii)&nbsp;senior secured debt credit facilities. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
will require additional funding to implement our business and growth strategy. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> The Offering  </B></FONT></P>
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<TD style="font-family:times;"><FONT SIZE=2>Common stock offered by us</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2>Common stock outstanding immediately after the offering</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Use of proceeds</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>We expect the net proceeds to us from this offering (after deducting underwriting discounts and commissions payable to the underwriters and our estimated offering expenses) to be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. We intend to use the net proceeds (i)&nbsp;to discharge our senior indebtedness in the aggregate principal amount of $24,000,000 plus
accrued interest; (ii)&nbsp;to finance our exploration and permitting activities, design and engineering activities and deposit confirmation drilling activities; and (iii)&nbsp;for general corporate purposes, including the possible acquisition of
additional properties.</FONT></TD>
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<TD style="font-family:times;"><BR><FONT SIZE=2>Dividend policy</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>The holders of our common stock are entitled to receive dividends, if any, as may be declared by our Board of Directors, in its discretion. We currently intend to retain any future earnings to fund the
development and growth of our business. Therefore, we do not currently anticipate paying cash dividends.</FONT></TD>
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<TD style="font-family:times;"><BR><FONT SIZE=2>Risk factors</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>See "</FONT><FONT SIZE=2><I>Risk Factors</I></FONT><FONT SIZE=2>" starting on page&nbsp;6 and other information included in this prospectus for a discussion of factors you should carefully consider
before deciding whether to invest in shares of our common stock.</FONT></TD>
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<TD VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2>Proposed&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;symbol</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
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 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
number of shares of common stock to be outstanding immediately after the offering is based upon 58,204,141 shares of common stock outstanding as of March&nbsp;24, 2011 and the
offering of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock pursuant to this offering and excludes: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>6,291,666 shares of common stock issuable upon the exercise of stock options outstanding at March&nbsp;24, 2011 under
our 2006&nbsp;Stock Option and Restricted Stock&nbsp;Plan (the "2006&nbsp;Plan"), 2007&nbsp;Omnibus Incentive Plan (the "2007&nbsp;Plan") and 2011&nbsp;Equity Incentive Plan (the
"2011&nbsp;Plan") at a weighted average exercise price of $0.75 per share; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>3,000 shares of common stock reserved for future issuance under our 2006 Plan;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>155,334 shares of common stock reserved for future issuance under our 2007&nbsp;Plan;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Up to 2,600,000 shares of common stock reserved for future issuance under our 2011 Plan (the 2011&nbsp;Plan authorizes
us to issue the greater of (A)&nbsp;1,000,000 shares of common stock or (B)&nbsp;the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number
of shares authorized under the 2006&nbsp;Plan and 2007&nbsp;Plan equals 10% of our total issued and outstanding shares of common stock. As of March&nbsp;24, 2011, 1,000,000 shares are authorized
under the 2011&nbsp;Plan and stock options to purchase 400,000 shares of common stock have been issued under the 2011&nbsp;Plan leaving 600,000 reserved for future issuance.); </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>3,051,744 shares of common stock underlying outstanding warrants;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Up to 4,262,541 shares of common stock underlying future warrants that the Company is obligated to issue as is necessary
for the holder of the warrants described above to own, upon exercise of its warrants, 5% of the outstanding common stock of the Company, calculated on a partially diluted basis, of which the Company
expects to issue a warrant to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock as a result of this offering;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2> shares of common stock underlying warrants that the Company will issue to the underwriters in connection
with this offering; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2> shares of common stock issuable pursuant to the underwriters' over-allotment option. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dc75201_summary_historical_consolidated_financial_data"> </A>
<A NAME="toc_dc75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows our summary consolidated statements of operations, balance sheets and other financial and operating data as
of, and for each of the years ended, December&nbsp;31, 2010, 2009, 2008, 2007 and 2006. The summary financial and operating data set forth below are derived from our audited consolidated financial
statements prepared in accordance with United States generally accepted accounting principles ("GAAP"). Our historical results are not necessarily indicative of our results for any future period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following summary historical consolidated financial and other data should be read in conjunction with, and are qualified in their entirety by reference to, the section of this
prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discussion and Analysis of Financial Condition and Results of Operations</I></FONT><FONT SIZE=2>" and our audited consolidated financial
statements and related notes included elsewhere in this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Summary Annual Financial Information (audited)<BR>  </B></FONT><FONT SIZE=2>(In thousands except for per share amounts) </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="8pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="36pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2007 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2006 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Consolidated Balance Sheet Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>174</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,024</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>7,095</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>14,740</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>3,309</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Restricted cash and marketable securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>7,255</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>235</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Working capital (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(17,261</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,119</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>6,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>14,271</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(3,756</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>20,093</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>8,571</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>8,366</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>7,395</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,539</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>28,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>10,182</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>15,670</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>22,283</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>5,278</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>26,750</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>559</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>325</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>506</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>7,110</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Deficit accumulated during the exploration stage</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(36,835</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(28,405</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(21,672</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(13,352</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(5,572</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total stockholders' equity (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,391</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>9,623</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>15,346</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>21,777</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(1,832</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=1>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=1>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="8pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="37pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="37pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="37pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="36pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2007 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2006 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Consolidated Operating Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Revenues</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Mineral property maintenance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,142</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,036</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,664</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>817</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Mineral exploration</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,835</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>3,528</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>4,366</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>2,543</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>519</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>General and administrative</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>2,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>2,821</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>3,501</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>2,279</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Other income (expense)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(3,544</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>324</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(1,550</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(1,607</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(8,749</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(7,328</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(8,762</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(8,036</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(3,957</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss attributable to the company</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(8,429</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(6,733</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(8,319</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(7,780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(3,957</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss per basic and diluted share of common stock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(0.14</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(0.12</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(0.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(0.22</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(0.17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Consolidated Cash Flow Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net cash used by operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(4,694</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(6,455</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(8,027</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(5,394</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(1,979</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net cash used by investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(7,568</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(350</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(632</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(4,847</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(1,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net cash provided by financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>11,413</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>734</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>1,014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>21,672</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>6,513</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net increase (decrease) in cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(850</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(6,071</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>(7,645</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>11,431</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>3,157</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Includes
our April 2010 acquisition of the 49% non-controlling interest in Cibola Resources&nbsp;LLC. See the section of this prospectus
entitled "</FONT><FONT SIZE=1><I>Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Material Commitments&#151;Significant Mineral
Properties&#151;Cebolleta Mineral Property</I></FONT><FONT SIZE=1>" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Includes
(a)&nbsp;current liabilities consisting of accounts payable and accrued expenses of $240,437 and senior debt, net, of $24,844,874 and
(b)&nbsp;long-term liabilities consisting of long-term payable, net, of $325,539 and warrant liability of $1,339,402. For a description of our senior debt, see the section of
this prospectus entitled "</FONT><FONT SIZE=1><I>Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Material Commitments&#151;Senior Debt Credit
Facility</I></FONT><FONT SIZE=1>" and our audited consolidated financial statements and related notes included elsewhere in this prospectus. </FONT></DD></DL>
 </DIV>
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<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  RISK FACTORS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>Investing in our common stock involves a high degree of risk. You should carefully consider the risks described
below, together with the other information in this prospectus, before making an investment decision. If any of the risks described below occurs, our business and financial condition would suffer. As a
result, the trading price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business and operations.</I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Risks Related to Our Business  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have a limited operating history as an uranium exploration and mining company, and our business and prospects should be considered in light of the risks and difficulties
typically encountered by a company with a limited operating history.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have had no revenue generating operations since our incorporation in 2005 and our operating cash flow needs have been financed
solely through offerings of our common stock or other securities and debt. As a result, we have limited historical financial and operating information relating to our ability to generate revenue in
the future available to help you evaluate our performance or an investment in our common stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of our properties are in the exploration stage and require the capital to be obtained from this offering in order to continue with the implementation of our business plan. Until the
commencement of operations, we will not generate any operating revenues. We expect to continue to incur operating deficits as we implement our business plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
estimates of capital, personnel, equipment, and facilities required for our proposed operations are based on certain other existing businesses operating under similar business
conditions and plans. We believe that our estimates are reasonable, but, until our operations have been established, it is not possible to determine the accuracy of such estimates. We have not had any
direct operating experience and therefore have no basis for our projections, other than the experience of other similar businesses from which limited financial histories are available. As a result,
there is no assurance that we will be able to generate profits from operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may not be able to implement our business plan.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business plan requires substantial capital in order to succeed. We will require capital to complete our exploration efforts and
substantial additional capital for mine and mill development. We presently do not have sufficient working capital to pursue our business plan through the various exploration efforts described in this
prospectus. In formulating our business plan, we have relied on the judgment of our officers and their experience in the industry. There can be no assurance that we will be able to obtain sufficient
financing or implement the business plan we have devised. Further, even with sufficient financing, there can be no assurance that we will be able to expand on a regional or national basis or operate
our business on a profitable basis. Our plans are based upon the assumptions that we will identify commercially viable uranium deposits, that the demand for uranium will continue for prolonged
periods, that the proceeds of this offering will be applied efficiently and that the risks described in this prospectus will be dealt with successfully. There can be no assurance that such plans will
be realized or that any of the assumptions will prove to be correct. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All of our mineral properties are in the exploration stage and we have not yet identified, and may never identify, commercially viable mineral deposits that would generate
revenues.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are considered an exploration stage company and will continue to be until we identify commercially viable reserves on our properties
and develop our properties. We have no uranium </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>producing
properties and have never generated any revenue from our operations. All our mineral properties are in the exploration stage and do not contain any known reserves in accordance with the
definitions adopted by the SEC and we have not confirmed that a commercially viable mineral deposit exists on any of our properties and we may never discover uranium in commercially exploitable
quantities. Because the probability of an individual prospect having reserves is uncertain, our properties may not contain any reserves, and any funds spent on exploration may be lost. Further
exploration will be required before a final evaluation as to the economic and legal feasibility. There is no guarantee that we will be able to identify commercially viable mineral deposits on any of
our current or future acquired mineral properties or that if commercially viable mineral deposits are identified, that we will be able to extract deposits profitably. While discovery of commercially
viable mineral deposits may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. If we are not able to identify commercially viable mineral
deposits or profitably extract mineral from such deposits, our business would be materially adversely affected and our investors could lose all or a substantial portion of their investment. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our mineral properties may be subject to defects in title and we are at risk of loss of ownership.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our mineral properties consist of private mineral rights, leases covering state and private lands, leases of patented mining claims,
and unpatented mining claims. Many of our mining properties are unpatented mining claims to which we have only possessory title. The validity of unpatented mining claims is often uncertain and such
validity is always subject to contest. Unpatented mining claims are generally considered subject to greater title risk than patented mining claims or other real property interests that are owned in
fee simple. Because unpatented mining claims are self-initiated and self-maintained, they possess some unique vulnerabilities not associated with other types of property
interests. It is impossible to ascertain the validity of unpatented mining claims from public real property records, and therefore it can be difficult or impossible to confirm that all of the
requisite steps have been followed for location, perfection and maintenance of an unpatented mining claim. The present status of our unpatented mining claims located on public lands allows us the
exclusive right to mine and remove locatable minerals, such as uranium. We also are allowed to use the surface of the land solely for purposes related to mining and processing the
mineral-bearing ores. However, legal ownership of the public land remains with the federal government. We remain at risk that the mining claims may be lost either to the federal government
or to rival private claimants due to failure to comply with statutory
requirements. In addition, we may not have, or may not be able to obtain, all necessary surface rights to develop a property. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
cannot guarantee that title to properties leased by us will not be challenged. Title insurance is generally not available for mineral properties and our ability to ensure that we have
obtained secure title to individual mineral properties or mining claims may be severely constrained. Our mineral properties may be subject to prior unrecorded agreements, transfers or claims, and
title may be affected by, among other things, conflictual title rights and undetected defects. While we believe that the lessor of our Juan Tafoya property has valid title, our title searches have
revealed conflictual title rights to portions of such property. We may incur significant costs related to defending the title to our properties. A successful claim contesting our title to a property
may cause us to compensate other persons or perhaps reduce our interest in the affected property or lose our rights to explore and develop that property. This could result in us not being compensated
for our prior expenditures relating to the property. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will be subject to operating hazards and risks which may result in personal injury or death, environmental damage, delays in mining, monetary losses and possible legal
liability.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mineral exploration involves many hazards and risks, which even a combination of experience, knowledge and careful evaluation may not
be able to overcome. Our operations are subject to the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>7</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>hazards
and risks normally incidental to exploration and, if applicable, development and production, of metals, including, but not limited, to environmental hazards, flooding, fire, periodic or
seasonal hazardous climate and weather conditions, unexpected rock formations, industrial accidents and metallurgical and other processing problems. These risks could result in damage to, or
destruction of, mineral properties, production facilities or other properties; personal injury; environmental damage; work stoppages; delays in mining; increased production costs; monetary losses; and
possible legal liability. We may become subject to liability which we cannot insure against or which we may elect not to insure due to high premium costs or other reasons. Where considered practical
to do so we maintain insurance against risks in the operation of our business in amounts which we believe to be reasonable. Such insurance, however, contains exclusions and limitations on coverage. We
cannot provide any assurance that such insurance will continue to be available, will be available at economically acceptable premiums or will be adequate to cover any resulting liability. In some
cases, coverage is not available or considered too expensive relative to the perceived risk. The potential costs which could be associated with any liabilities not covered by insurance, or in excess
of insurance coverage, could have a material adverse effect upon our financial condition. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have a history of losses, deficits and negative operating cash flows and will likely continue to incur losses in the future. Such losses may impair our ability to pursue
our business plan.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have incurred losses and negative operating cash flows since our inception in 2005 and expect to continue to incur operating losses
and negative cash flows from operations for the foreseeable future. We have made, and will continue to make, substantial capital and other expenditures before we will have sufficient operating income
and cash flow to recover our investments. We are not able to accurately estimate when, if ever, our operating income will be sufficient to cover these investments. Further, we may not achieve or
maintain profitability or generate cash from operations in future periods. We have been dependent on sales of our equity securities and debt financing to meet our cash requirements and such financing
may not continue to be available. We have incurred losses totaling approximately $36,834,600 from our inception on March&nbsp;25, 2005 to December&nbsp;31, 2010. As of December&nbsp;31, 2010, we
had total stockholders' equity of $1,390,817. We do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have substantial capital requirements and do not have operating income. As a result, we have been and continue to be dependent on sales of our equity securities and debt
financing to fund our operating costs.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our current plans require us to make significant capital expenditures for the exploration and potential development of our minerals
exploration properties. Based upon our historical losses from operations and projected future expenditures, we require substantial additional financing in order to pursue our business plan. We have
funded our operations through the issuance of equity and short term debt financing arrangements and we may not be able to continue to obtain all of the financing we require. If we cannot obtain
additional funds through equity or debt financings or otherwise, our ability to execute our plans and achieve production levels will be greatly limited. Depending on our future operations, the market
for uranium and the conditions of the equity capital and debt markets, we may not be able to continue to raise additional equity capital or borrow money on terms acceptable to us or at all. A lack of
adequate financing may adversely affect our ability to pursue our business strategy, respond to changing business and economic conditions and competitive pressures, absorb negative operating results
and fund our continuing operations, capital expenditures or increased working capital requirements. If we are not able to secure financing, we may be forced to change our business plans or our
business may fail. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>8</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our level of indebtedness may make it more difficult for us to pay our debts as they become due.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our aggregate principal indebtedness under our senior credit facility was approximately $24,000,000 as of December&nbsp;31, 2010.
This entire amount, including accrued interest, matures and becomes due and payable in full on June&nbsp;30, 2011. Our ability to repay this debt depends on our ability to raise sufficient capital
through the sale of our equity securities or to refinance such indebtedness. If we are unable to generate sufficient funds from the sale of our securities or are unable to refinance or restructure our
indebtedness prior to maturity, we will be in default, which could require us to pursue a restructuring of our indebtedness or file for protection under the U.S. Bankruptcy Code. Additionally, the
obligation to repay this debt restricts our ability to use the proceeds of the sale of our securities for other purposes, including for operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our acquisition activities may not be successful.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of our growth strategy, we may acquire additional uranium exploration properties. Such acquisitions may pose substantial risks
to our business, financial condition, and results of operations. In pursuing acquisitions, we will compete with other companies, many of which have greater financial and other resources to acquire
attractive properties. Even if we are successful in acquiring additional properties, some of the properties may not contain commercially viable uranium deposits. Furthermore, in some cases, the
failure to develop such prospects within specified time periods may cause the forfeiture of the lease in that prospect. Further, acquisitions could disrupt ongoing business operations and exploration
activities or use capital that could be used in more productive activities. If any of these events occur, it would have a material adverse effect upon our business. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may not be able to compete effectively in the market for uranium.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual
investors, which are actively seeking uranium exploration properties throughout the world together with the equipment, labor and materials required to exploit such properties. The principal area of
competition is encountered in the financial ability to acquire prime minerals properties and then exploit such properties. Competition for the acquisition of uranium exploration properties is intense,
with many properties available in a competitive bidding process in which we may lack technological information, financial resources or expertise available to other bidders. Many of our competitors
have financial resources, staff and facilities substantially greater than ours and our limited resources may put us at a disadvantage in bidding for uranium exploration properties. Further, we may not
be able to secure financing for acquisitions on terms satisfactory to us or at all. Therefore, we may not be successful in acquiring and developing profitable properties in the face of this
competition. Furthermore, we have not commenced mining
operations and therefore do not have experience in mining or milling commercial amounts of uranium. Our actual costs of production may exceed those of our competitors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We rely on key personnel and if we are unable to retain or attract qualified personnel, we may not be able to execute our business plan.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are highly dependent on the services of Messrs.&nbsp;Kelsey L. Boltz, our Executive Chairman, Gary&nbsp;C. Huber, our President
and Chief Executive Officer, and Edward M. Topham, our Chief Financial Officer. The loss of the services of these individuals could harm our business. We do not have key man life insurance on any of
these individuals and may not have the financial resources to hire a replacement if we were to lose any of our officers. Our future success also depends on our ability to attract, train, retain and
motivate other highly qualified technical and managerial personnel. Competition for such personnel is intense and we may not be able to attract, train, retain or motivate such persons in the future. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>9</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Some of our officers and directors do not have technical training or experience in the acquisition and exploration of uranium properties and we may have to hire qualified
personnel.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of our officers and directors have experience with the acquisition, exploration and development of uranium properties but others
do not. Therefore, we may have to hire qualified persons to perform surveying, exploration and, if we find commercially exploitable reserves of uranium, development of our properties. There can be no
assurance that we will have available to us the necessary expertise to explore and develop our uranium properties. Some of our officers and directors have no direct training or experience in these
areas and as a result may not be fully aware of many of the specific requirements related to working within the industry. As a result, their decisions and choices may not take into account standard
engineering or managerial approaches mineral exploration companies commonly use, and our exploration activities, earnings and ultimate financial success could suffer irreparable harm due to certain of
management's decisions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our directors and executive management beneficially own a significant interest in us in the aggregate and can exercise significant influence over us.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors and executive officers beneficially own 19.23% of our issued and outstanding shares of common stock (including shares
subject to options held by such individuals
that are exercisable within 60&nbsp;days). These stockholders may, if they act together, exercise significant influence over all matters requiring stockholder approval, including the election of
directors and the determination of significant corporate actions, as well as control our management, policies and operations. This concentration of ownership could depress our stock price or value or
delay or prevent a change in control that could otherwise be beneficial to our stockholders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our directors may be subject to conflicts of interest.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our directors, except for Gary C. Huber, our President and Chief Executive Officer, serve only part time and may be subject to
conflicts of interest. Each may devote part of his or her working time to other business endeavors, including consulting relationships with other business entities, and may have responsibilities to
these other entities. Such conflicts may include deciding how much time to devote to our affairs, as well as what business opportunities should be presented to us. Because of these relationships, our
directors may be subject to conflicts of interest. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Risks Related to Our Industry  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The profitable mining of uranium is subject to conditions and events beyond our control, which could result in higher operating expenses and/or decreased production and
sales and adversely affect our operating results and cash flows.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business of minerals exploration is subject to many risks and uncertainties, including those described in this section. The
potential profitability of mining uranium properties, if commercially viable deposits of uranium are found, is dependent upon many factors and risks beyond our control, including, but not limited
to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>unanticipated ground and water conditions and adverse claims to water rights and to land;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>assertions that water rights have not been perfected by the application of water to beneficial use or have been
intentionally abandoned;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>geological problems;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>metallurgical and other processing problems;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the occurrence of unusual weather or operating conditions and other force majeure events; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>10</FONT></P>

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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>lower than expected ore grades;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>accidents;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>delays in the receipt of or failure to receive necessary government permits;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>delays in transportation;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>labor disputes;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>government permit restrictions and regulation restrictions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>unavailability of materials and equipment; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the failure of equipment or processes to operate in accordance with specifications or expectations. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
occurrence of any of these conditions or events in the future may adversely affect our ability to profitably mine uranium, which would adversely affect our operating results and cash
flow. Cost effective insurance contains exclusions and limitations on coverage and may be unavailable in some circumstances. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our future profitability and ability to raise capital will be dependent on uranium prices.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because a significant portion of our anticipated revenues are expected to be derived from the sale of uranium, our net earnings, if
any, can be affected by the long and short-term market price of uranium. Uranium prices are subject to wide fluctuation. The price of uranium is affected by numerous factors beyond our
control, including the demand for nuclear power, accidents at nuclear power facilities, worldwide political and economic conditions, uranium supply from secondary sources, legislation, uranium
production levels and costs of production. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Future price of uranium may be impacted by secondary sources of supply.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium is supplied from primary production (the mining of uranium ores) and secondary sources such as the drawdown of excess
inventories and uranium made available from decommissioning of nuclear weapons, re-enriched depleted uranium tails, and used
reactor fuel that has been reprocessed. The price of uranium may be adversely affected by secondary sources of supply being introduced into the market. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The only significant market for uranium is nuclear power plants worldwide, and there are only a few customers.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium producers are dependent on a small 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The price of alternative energy sources affects the demand for and price of uranium.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The attractiveness of uranium as an alternative fuel to generate electricity is to some degree dependent on the prices of oil, gas,
coal and hydro-electricity and the possibility of developing other low cost sources for energy. If the price of alternative energy sources decreases or new low-cost alternative
energy sources are developed, the demand for uranium could decrease, which may result in the decrease in the price of uranium. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>11</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Public acceptance of nuclear energy is uncertain.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. Incidents involving nuclear energy production, such as overheating reactors, radiation leaks and reactor melt-downs, can cause a significant decrease in
public acceptance of nuclear technology and uranium prices. Lack of public acceptance of nuclear technology would adversely affect the demand for nuclear power and likely increase the regulation of
the nuclear power industry. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Government regulation of uranium mining and processing may adversely affect our ability to commence and expand our operations.  </I></B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exploration, mining and processing operations are subject to federal, state, and local laws relating to prospecting, development,
production, exports, taxes, labor standards, occupational health, waste disposal, protection and remediation of the environment, including the removal of natural resources from the ground and the
discharge of materials into the environment, protection of endangered and protected species, protection of cultural properties, mine safety, toxic substances and other matters. Uranium mining
operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods and equipment.
Various permits from government bodies are required for mining operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal,
state, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital
outlays in excess of those anticipated, thus resulting in an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to
insure against due to prohibitive premium costs and other reasons. To date, we have not been required to spend material amounts on compliance with environmental regulations because our exploration
activities to date have been minimal. As we continue to proceed with our exploration activities, and if we move into development and production, however, we will be required to spend material amounts
on compliance with environmental regulations in the future and this may affect our ability to commence or maintain our operations. Compliance with these laws and regulations will impose substantial
costs on us and will subject us to significant potential liabilities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Compliance with environmental laws and regulations may increase our costs and reduce our revenues.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium exploration and development and future potential uranium mining and processing operations are or will likely be subject to
stringent federal, state and local laws and regulations relating to improving or maintaining environmental quality. Failure to comply with these laws and regulations may trigger a variety of
administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements, and the issuance of orders enjoining future
operations. Certain environmental statutes impose strict, joint and several liabilities for costs required to clean up and restore sites where hazardous substances have been disposed or otherwise
released. Environmental laws also may impose liability with respect to divested or terminated operations, even if the operations were terminated or divested of many years ago. In addition, certain
types of operations require the preparation of environmental assessments and environmental impact statements in conjunction with governmental decision-making. Compliance with environmental
laws and regulations will impose substantial costs on us and will subject us to significant potential liabilities. Further, environmental legislation is evolving in a manner which means stricter
standards and enforcement, and more stringent fines and penalties for non-compliance. 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 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>12</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>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. Costs associated with environmental liabilities and compliance are expected to increase with the increasing scale and scope of our current and planned future activities. We expect these
costs may increase in the future. We are not fully insured at the current date against possible environmental risks. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Future changes in the law may adversely affect our ability to profitably extract uranium deposits.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the
United States or any other applicable jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter our ability to carry on our business. We cannot predict what
legislation, regulation or policy will be enacted or adopted in the future or how future laws or regulations will be administered or interpreted. The actions, policies or regulations, or changes
thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us and our ability to operate. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Members
of the U.S. Congress have repeatedly introduced bills which would supplant or alter the provisions of the Mining Law of 1872. Several proposals would, if enacted, impose a
royalty payable to the U.S. Government on existing and future production of minerals from unpatented mining claims in the United States. If enacted, such legislation could change the cost of holding
and conducting operations on unpatented mining claims and could significantly impact our ability to develop mineralized material on unpatented mining claims. Such bills have also proposed, among other
things, to either eliminate or greatly limit the right to a mineral patent. Enactment of any of such bills could adversely affect the potential for development of such mining claims and the economics
of existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our financial performance. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Members
of the State of New Mexico legislature have repeatedly introduced bills which would impose strict liability on landowners and operators, including successor liability, for
environmental contamination resulting from uranium mining activities. If enacted, such legislation could greatly affect our ability to secure mining properties and we may be responsible for all or
part of the costs to clean up contaminated facilities or properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may not be able to obtain all permits and licenses necessary to operate and expand our business.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Various permits and licenses from government bodies are required for exploration, mining and processing operations to be conducted.
There can be no assurance that we will be able to obtain or maintain all necessary permits and licenses that may be required to continue the exploration of our properties or to commence development,
construction or operation of mining and processing facilities at such properties on terms which enable operations to be conducted at economically justifiable costs. The failure to obtain necessary
permits and licenses would impair our ability to pursue our business plan. For example, an NRC license is required to build and operate a mill. In order to obtain such a license, we must demonstrate
that we can deed a fee interest in the relevant property to the NRC. However, we hold only a leasehold interest on a significant portion of our mineral properties without the right to purchase such
properties. There is no guarantee that we will be able to obtain a fee interest in such properties and therefore we may not be able to obtain the required licensing to build and operate a mill if
commercially viable mineral deposits are identified. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Various
permits and licenses from federal, state and local government bodies are required for exploration, mining and milling operations to be conducted. Certain governmental agencies
may have </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>13</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>limited
personnel with experience permitting uranium exploration, mining and milling operations, which may result in delays in issuing the permits required for the Company to conduct its operations. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Energy
and mineral development on Native American lands or activities otherwise deemed to be located within areas known as Indian country, may be subject to principles of Indian law or
tribal law. The legal environment in Indian country can be materially different with respect to law and regulations relating to how development rights must be acquired and the legal standards
applicable to performance under agreements. For example, by Resolution dated April&nbsp;21, 2005, the Navajo Nation Council adopted the Din&eacute; Natural Resources Protection Act of 2005
which provides, in summary, that "no person shall engage in uranium mining and uranium processing on any sites within Navajo Indian Country." Generally speaking, primary jurisdiction over land that is
Indian country rests with the Federal government and the Indian tribe inhabiting it and not with the States. Application of Indian law or tribal law may result in significantly longer permitting
processes, unique approval requirements and restrictions involving the use of Native American lands. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Risks Related to Our Common Stock  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There has been no prior public market for our common stock and an active market may not develop or be maintained, which could limit your ability to sell our common stock.
Even if a market does develop, the stock prices in the market may not exceed the offering price.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this initial public offering, there has not been a public market for our common stock. Although we are applying for listing on
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and the Toronto Stock Exchange ("TSX"), an active public market for shares of our common stock may not develop or continue. We cannot predict
the extent to which investor interest in
our company will lead to the development of an active trading market on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, TSX or otherwise, or how liquid that market may become. If an active
trading market does not develop, you may
have difficulty selling shares of common stock that you buy. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
initial public offering price will be determined by negotiations between us and the underwriters and may not be representative of the market price at which our common stock will
trade after this offering. In particular, we cannot assure you that you will be able to resell our common stock at or above the initial public offering price. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The market price and volume of our common stock may be volatile, which could cause the value of your investment to decline.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market price and volume of our common stock may fluctuate as a result of our performance or events pertaining to the industry as
well as factors unrelated to us or our industry. Many of these factors are outside of our control. Fluctuations in the market price of our common stock may be caused a number of factors, including
(i)&nbsp;disappointing results from our discovery or development efforts; (ii)&nbsp;failure to meet our revenue or profit goals or operating budget; (iii)&nbsp;a decline in demand for our common
stock; (iv)&nbsp;downward revisions in securities analysts' estimates or changes in general market conditions; (v)&nbsp;technological innovations by competitors or in competing technologies;
(vi)&nbsp;a lack of funding generated for operations; (vii)&nbsp;investor perception of our industry or our prospects; (viii)&nbsp;general economic trends; (ix)&nbsp;the market for uranium;
(x)&nbsp;the demand for nuclear energy; (xi)&nbsp;governmental regulation that may materially adversely affect the attractiveness of nuclear energy; (xii)&nbsp;public acceptance of nuclear
energy; and (xiii)&nbsp;other factors described in this prospectus. Variations in any of these factors could cause significant fluctuations in the market price of our common stock. In recent years,
the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly
small-capitalization companies, have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values, or prospects of such
companies. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If securities or industry analysts do not publish research or reports about us, our business or our market, or if they adversely change their recommendations regarding our
common stock, our common stock price and trading volume could decline.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The trading market for our common stock is influenced by the research and reports that industry and securities analysts publish about
us, our business and our market. If one or more of the analysts who cover us change their recommendation regarding our common stock adversely, our common stock price would likely decline. If one or
more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or
trading volume to decline. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our
ability to raise additional capital for our operations. Because our operations to date have been principally financed through the sale of equity securities, a decline in the price of our common stock
could have an adverse effect upon our liquidity and our continued operations. Any reduction in our ability to raise equity capital in the future would have a material adverse effect upon our business
plan and operations, including our ability to continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient
to meet our obligations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The issuance of additional securities could adversely affect the rights of our stock holders  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation authorize the issuance of 200,000,000 shares of common stock. We are also authorized to issue 10,000,000
shares of preferred stock. Our Board of Directors has the authority to issue additional shares of our capital stock without stockholder approval to provide additional financing in the future and the
issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. Our preferred stock is blank check in that our Board of Directors
can set the terms and conditions of the preferred stock without stockholder approval. The issuance by us of additional equity securities of equal or senior rank to our common stock may have the
following effects: decrease our stockholders' proportionate ownership interest in us, diminish the relative voting strength of each previously issued and outstanding share of common stock or cause the
market price of our common stock to decline. In addition, an issuance of additional stock could have a negative impact on the trading price of our shares of common stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The issuance of additional securities, including common stock pursuant to options and warrants, would dilute the interest of stockholders  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have authorized an aggregate of between 7,300,000 and 9,300,000 shares of common stock under our 2006 Plan, 2007 Plan and 2011 Plan.
As of March&nbsp;24, 2011, we have granted (i)&nbsp;options to purchase an aggregate 6,291,666 shares of our common stock that are currently outstanding, and (ii)&nbsp;250,000 shares of common
stock as unrestricted stock awards under our 2006 Plan, 2007 Plan and 2011 Plan. We have outstanding warrants to purchase 3,051,744 shares of common stock and are obligated to issue such additional
warrants as is necessary for the warrant holder to own 5%, calculated on a partially diluted basis, of our issued and outstanding common stock, up to a maximum of 4,262,541 additional shares, of which
we expect to issue an additional warrant to purchase approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock as a result of this offering. We also expect to
issue warrants to the underwriters to
purchase an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock in connection with this offering. Furthermore, our management's plans to finance our
exploration and development costs and
acquisition activities include financing through future sales of our equity or debt </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>securities.
To the extent that we issue any additional securities or outstanding stock options and warrants are exercised, dilution to the interests of our stockholders would occur. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Purchasers in this offering will experience immediate and substantial dilution in net tangible book value per share of common stock.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The initial public offering price per share of common stock is expected to be substantially higher than the net tangible book value per
share of our outstanding common stock. Purchasers of shares of common stock in this offering will experience immediate dilution in the net tangible book value of their shares. Based on an assumed
initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, dilution per share in this offering will be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share (or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the initial
public offering price). See the
section of this prospectus entitled "</FONT><FONT SIZE=2><I>Dilution</I></FONT><FONT SIZE=2>" for additional information. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You may lose your entire investment in our shares.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An investment in our common stock is highly speculative and may result in the loss of your entire investment. Only investors who are
experienced investors in high risk investments and who can afford to lose their entire investment should consider an investment in us. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have not paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future.  </I></B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate that we will retain all future earnings and other cash resources for the future operation and development of our
business. Accordingly, we do not intend to declare or pay any cash dividends on our common stock in the foreseeable future. Payment of any future dividends will be at the discretion of our Board of
Directors after taking into account many factors, including our financial conditions, current and anticipated cash needs and plans for exploration and development of our uranium properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Financial Industry Regulatory Authority, or FINRA, sales practice requirements may limit a stockholder's ability to buy and sell our stock.  </I></B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers,
broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of
these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements may make it more
difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our
shares. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Gain recognized by non-U.S.&nbsp;stockholders on the sale or other disposition of shares of our common stock may be subject to U.S.&nbsp;federal income tax.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we are currently a "U.S.&nbsp;real property holding corporation" under section&nbsp;897(c) of the Internal Revenue
Code ("USRPHC") and there is a substantial likelihood that we will continue to be a USRPHC. Generally, gain recognized by a non-U.S.&nbsp;holder on the sale or other disposition of our
common stock will be subject to U.S.&nbsp;federal income tax on a net income basis at normal graduated U.S.&nbsp;federal income tax rates if we are a USRPHC at any time during the
5-year period ending on the date of the sale or disposition of the common stock (or the non-US holder's holding period for the common stock if shorter). Under an exception to
these USRPHC rules, if the common stock is "regularly traded" on an "established securities market," the common stock will not be treated </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>16</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>as
a USRPHC. This exception is not available, however, to a non-U.S.&nbsp;holder that held or was deemed to hold, directly or under certain constructive ownership rules, more than 5% of
the common stock at any time during the 5-year period ending on the date of the sale or other disposition (or the non-U.S.&nbsp;holder's holding period of the common stock if
shorter). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will incur increased costs as a result of being a publicly-traded company.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have no history of operating as a publicly-traded company. As a publicly-traded company, we will incur
significant legal, accounting and other expenses that we would not incur as a private company. We will become subject to the Sarbanes-Oxley Act of 2002, as well as related rules
implemented by the SEC,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and TSX, which will increase our legal and financial compliance costs and require us to devote additional management
time and resources to these compliance
matters. For example, as a result of becoming a publicly-traded company, we will be required to have at least three independent directors, create additional board committees and adopt
policies regarding internal controls and disclosure controls and procedures, including the preparation of reports on internal control over financial reporting. In addition, we will incur additional
costs associated with our publicly-traded company reporting requirements. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will not be fully subject to the requirements of Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 until the end of 2012. If we fail to maintain an
effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud and, as a result, our business could be harmed and current and potential
stockholders could lose confidence in us, which could cause our stock price to fall.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be required to document our system and process evaluation and testing (and any necessary remediation) to comply with the
management certification and auditor attestation requirements of Section&nbsp;404 of the Sarbanes-Oxley Act of 2002, which we expect will first apply to us for our fiscal year ended
December&nbsp;31, 2012. As a result, we expect to incur substantial additional expenses and diversion of management's time. We cannot be certain as to the timing of completion of our evaluation,
testing and remediation actions or their effect on our operations. If we are not able to implement the requirements of Section&nbsp;404 in a timely manner or with adequate compliance, we may not be
able to accurately report our financial results or prevent fraud and might be subject to sanctions or investigation by regulatory authorities, such as the SEC,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;or TSX. Any such action
could harm our business or investors' confidence in us, and could cause our stock price to fall. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain regulations and legislation associated with being a publicly-traded company, including the Sarbanes-Oxley Act of 2002, may make it difficult
for us to retain or attract officers and directors.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our
effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly-held companies. The Sarbanes-Oxley Act of 2002
has resulted in a series of rules and regulations by the SEC that increased responsibilities and liabilities of directors and executive officers. The increased personal risk associated with these
changes may deter qualified individuals from accepting these roles. As a public company, we expect that it will be more difficult and expensive for us to obtain director and officer liability
insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us
to attract and retain qualified persons to serve on our Board of Directors or as executive officers. We will incur significant incremental costs per year associated with being a
publicly-traded company. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>17</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Provisions in our Articles of Incorporation, Bylaws and Nevada law may make it more difficult to effect a change in control, which could adversely affect the price of our
common stock.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions of our Articles of Incorporation, Bylaws and Nevada law could make it more difficult for a third party to acquire us, even
if doing so would be beneficial to our stockholders. We may issue shares of preferred stock in the future without stockholder approval and upon such terms as our Board of Directors may determine. Our
issuance of this preferred stock could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring a majority of our outstanding stock and
potentially prevent the payment of a premium to stockholders in an acquisition. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore,
our Bylaws include provisions that exclude stockholders from parties entitled to call special meetings, give the Board of Directors the exclusive right to fill all Board of
Director vacancies, and require advance notice of stockholder proposals and specific information regarding director nominees. These provisions could discourage proxy contests and make it more
difficult for stockholders to elect directors and take other corporate actions. As a result, these provisions could make it more difficult for a third party to acquire us, even if doing so would
benefit our stockholders, and may limit the price that investors are willing to pay in the future for shares of our common stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are also subject to Title 7, Chapter&nbsp;78 of the Nevada Revised Statutes (the "Nevada Corporations Act") that, subject to certain exceptions, prohibits business combinations with
persons owning 10% or more of the voting shares of a corporation's outstanding stock for three years following the date that person became an interested stockholder, unless the combination is approved
by the Board of Directors prior to the person owning 10% or more of the stock and after the expiration of the three year period, any such business combination would be subject to special stockholder
approval requirements or various fair price criteria. This provision could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or
may otherwise discourage a potential acquirer from attempting to obtain control from us, which in turn could have a material adverse effect on the market price of our common stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Nevada law and our Articles of Incorporation and Bylaws may protect our directors from certain types of lawsuits.  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nevada law and our Articles of Incorporation provide that our officers and directors will not be liable to us or our stockholders for
monetary damages for all but certain types of conduct as officers and directors. Our Bylaws generally provide for indemnification of directors, officers, employees, agents and certain other
individuals against all damages incurred in connection with our business to the fullest extent permitted by law. While we currently maintain director and officer liability insurance, such insurance
contains exclusions and limitations on coverage and we may be required to use our limited assets to defend or indemnify such individuals on any amounts that fall outside of such insurance coverage. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>18</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to historical information, this prospectus contains forward-looking statements within the meaning of the
federal securities laws. Forward-looking statements convey our current expectations or forecasts of future events. Forward-looking statements include those that express plans,
anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. Any forward-looking statements are based on our current
expectations and projections about future events and are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed
or implied in such statements. In some cases, you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"plan," "potential," "seek," "should," "will" and "would" or other similar words and the negatives of such terms. You should read statements that contain these words carefully because they discuss our
future expectations, contain projections of our future business plans or of our financial position or state other forward-looking information. We note in particular, that estimations of
mineralization are subject to change and notwithstanding historical data or drill results, there can be no assurance that commercially viable deposits may be located. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or
achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such forward-looking statements. The risks described under "</FONT><FONT SIZE=2><I>Risk
Factors</I></FONT><FONT SIZE=2>," as well as any cautionary language in this prospectus, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from
the expectations we describe in our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of the events described in these risk factors
and elsewhere in this prospectus could have a material adverse effect on our business and financial position. We do not intend to update any of the forward-looking statements after the
date of this prospectus or to conform these statements to actual results. </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  USE OF PROCEEDS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We estimate that our net proceeds (after deducting underwriting discounts, commissions and fees payable to the underwriters and
advisors, and our estimated offering expenses) from this offering will be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
($&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million if the underwriters exercise their over-allotment
option in full), based upon an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the mid-point of the offering range indicated on
the cover of this prospectus.
See the "</FONT><FONT SIZE=2><I>Underwriting and Plan of Distribution</I></FONT><FONT SIZE=2>" section contained elsewhere in this prospectus for more information on our estimated proceeds. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
intend to use the net proceeds (i)&nbsp;to discharge our senior indebtedness of approximately $25,760,000; (ii)&nbsp;to finance our exploration and permitting activities, design
and engineering activities and feasibility studies; and (iii)&nbsp;for general corporate purposes, including the possible acquisition of additional properties thought to contain uranium
mineralization, as follows: </FONT></P>
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<TD WIDTH="10pt" style="font-family:times;"></TD>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Gross proceeds from this offering</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Costs associated with this offering:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting discounts, commissions and fees</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal, accounting and other expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
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<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net Proceeds From this Offering</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Senior Debt and Accrued Interest Payment</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25,760,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Mineral Property Exploration, Permitting, Design and Feasibility Activities:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral lease and mining claim maintenance</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,347,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exploration administrative expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,231,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cibola Project:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Mine Permitting, Design and Feasibility Activities:</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Survey, mapping and drilling</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,839,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hydrological characterization and baseline studies</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,984,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mine engineering, design and feasibility</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,898,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Permitting</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,335,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Subtotal</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,056,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Mill Permitting, Design and Feasibility Activities:</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hydrological characterization and baseline studies</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>970,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mill engineering, design and feasibility</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,945,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Permitting</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>201,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Subtotal</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,116,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other exploration activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>179,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Total Mineral Property Exploration</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,929,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General working capital and administrative activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Application of Net Proceeds</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until
we use the net proceeds as described above, we intend to invest the net proceeds in short-term securities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
senior debt has an interest rate equal to the London Interbank Offered Rate ("LIBOR") plus 7%, which is accrued as part of the principal balance on a quarterly basis, and matures on
June&nbsp;30, 2011. We expect that our senior debt will be discharged in its entirety in connection with this offering. For a more detailed discussion of our senior debt, including the use of
proceeds of such indebtedness, </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>20</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=24,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=1022964,FOLIO='20',FILE='DISK132:[11ZAZ1.11ZAZ75201]DI75201A.;8',USER='DTAYLOR',CD='30-MAR-2011;11:09' -->
<A NAME="page_di75201_1_21"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>see
the subsection of this prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Material
Commitments&#151;Senior Debt Credit Facility</I></FONT><FONT SIZE=2>." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing represents our best estimate of our allocations of the proceeds of this offering based on our present plans and business conditions. However, there can be no assurances
that unforeseen events or changes in business conditions will not result in the application of proceeds of this offering in a manner other than is described in this prospectus. Any such reallocation
of the net proceeds of the offering would be substantially limited to the categories set forth above. We believe we will have sufficient working capital for a minimum of 12&nbsp;months following the
date of this offering. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di75201_dividend_policy"> </A>
<A NAME="toc_di75201_2"> </A>
<BR></FONT><FONT SIZE=2><B>  DIVIDEND POLICY    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have never declared or paid cash dividends on our common stock, and we do not anticipate that we will pay cash dividends on our
common stock in the foreseeable future. Future declaration and payment of dividends, if any, on our common stock will be determined by our Board of Directors in light of factors the Board of Directors
deems relevant, including our operations, capital requirements and financial condition and restrictions in any future financing agreements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>21</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
NAME="page_dk75201_1_22"> </A>


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</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk75201_capitalization"> </A>
<A NAME="toc_dk75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  CAPITALIZATION    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our: (i)&nbsp;cash and cash equivalents; (ii)&nbsp;restricted cash and marketable securities;
(iii)&nbsp;total assets; (iv)&nbsp;total liabilities; (v)&nbsp;components of stockholders' equity; (vi)&nbsp;total capitalization; and (vi)&nbsp;outstanding shares of common stock as of
December&nbsp;31, 2010, as follows: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>on an actual basis; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>on a pro forma as adjusted basis to reflect the sale by us of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of
common stock in this offering,
based on an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the range shown on the cover of this prospectus, and
after deduction of estimated underwriting
discounts, commissions and advisory fees and estimated offering expenses payable by us. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should read this table together with the sections of this prospectus entitled "</FONT><FONT SIZE=2><I>Use of Proceeds,</I></FONT><FONT SIZE=2>" as well as our consolidated financial
statements and related notes and the other financial information appearing elsewhere in this prospectus. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:70%;margin-left:15%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="18pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Actual </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma as<BR>
Adjusted </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>174,416</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash and marketable securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,254,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
28,141,069</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,750,252</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stockholders' Equity:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock: 10,000,000 authorized, $0.001 par value</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock: 200,000,000 authorized, $0.001 par value</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>58,204</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>38,167,213</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deficit accumulated during the exploration stage</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(36,834,600</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(36,834,600</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Stockholders' Equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,390,817</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Capitalization</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>28,141,069</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common Stock Outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>58,204,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:15%;">
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(a)&nbsp;current liabilities consisting of accounts payable and accrued expenses of $240,437 and senior debt, net, of $24,844,874 and
(b)&nbsp;long-term liabilities consisting of long-term payable, net, of $325,539 and warrant liability of $1,339,402. For a description of our senior debt, see the section of
this prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Material Commitments&#151;Senior Debt Credit
Facility</I></FONT><FONT SIZE=2>" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>.
</FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
outstanding share information set forth above as of December&nbsp;31, 2010, excludes: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>5,491,666 shares of common stock issuable upon the exercise of stock options outstanding as of December&nbsp;31, 2010
under our 2006 Plan and 2007 Plan at a weighted average exercise price of $0.71 per share;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>3,000 shares of common stock reserved for future issuance under our 2006 Plan as of December&nbsp;31, 2010; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>22</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>555,334 shares of common stock reserved for future issuance under our 2007 Plan as of December&nbsp;31, 2010; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Up to 3,000,000 shares of common stock reserved for future issuance under our 2011 Plan (the 2011 Plan authorizes us to
issue the greater of (A)&nbsp;1,000,000 shares of common stock or (B)&nbsp;the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number of
shares authorized under the 2006 Plan and 2007 Plan equals 10% of our total issued and outstanding shares of common stock. No shares of common stock were authorized or issued under the 2011 Plan as of
December&nbsp;31, 2010);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>3,051,744 shares of common stock underlying outstanding warrants as of December&nbsp;31, 2010; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Up to 4,262,541 shares of common stock underlying future warrants that the Company is obligated to issue as is necessary
for the holder of the warrants described above to own, upon exercise of its warrants, 5% of the outstanding common stock of the Company, calculated on a partially diluted basis, of which the Company
expects to issue a warrant to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock as a result of this offering;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2> shares of common stock underlying warrants that the Company will issue to the underwriters in connection
with this offering; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2> shares of common stock issuable pursuant to the underwriters' over-allotment option. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>23</FONT></P>

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<UL>
<UL>
</UL>
</UL>
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NAME="page_dm75201_1_24"> </A>


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</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm75201_dilution"> </A>
<A NAME="toc_dm75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  DILUTION    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering
price per share of our common stock and the as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share represents the amount
of our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding at December&nbsp;31, 2010. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
historical net tangible book value at December&nbsp;31, 2010 was $827,558, or $.01 per share. After giving effect to the sale of our common stock in this offering at an assumed
initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the mid-point of the offering range indicated on the cover page of this prospectus, and
after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable by us, our adjusted net tangible book value at December&nbsp;31, 2010 would have been
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. This represents an immediate increase in net tangible book value per share of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to existing stockholders and dilution in net tangible book value per share
of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to new investors who purchase shares in the offering. The following table illustrates this per share dilution to new investors:
</FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="26pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Assumed initial public offering price per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Historical net tangible book value per share at December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>.01</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase in net tangible book value per share attributable to new investors</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted net tangible book value per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilution per share to new investors</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth, on the as adjusted basis described above, at December&nbsp;31, 2010, the difference between the number of shares of common stock purchased from us, the
total consideration paid, and the average price per share paid by the existing stockholders and by investors purchasing shares in this offering, before deducting estimated underwriting discounts and
commissions and estimated offering expenses. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:62%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="18pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="37pt" style="font-family:times;"></TD>
<TD WIDTH="18pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="18pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="37pt" style="font-family:times;"></TD>
<TD WIDTH="18pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="83pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Shares Purchased </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total Consideration </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Average Price Per<BR>
Share </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Existing stockholders</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>58,204,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29,947,060</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.51</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New investors</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
discussions and tables above are based on the number of shares of common stock outstanding at December&nbsp;31, 2010. The outstanding share information set forth above
excludes: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>5,491,666 shares of common stock issuable upon the exercise of stock options outstanding as of December&nbsp;31, 2010
under our 2006 Plan and 2007 Plan at a weighted average exercise price of $0.71 per share;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>3,000 shares of common stock reserved for future issuance under our 2006 Plan as of December&nbsp;31, 2010; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>555,334 shares of common stock reserved for future issuance under our 2007 Plan as of December&nbsp;31, 2010; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Up to 3,000,000 shares of common stock reserved for future issuance under our 2011 Plan (the 2011 Plan authorizes us to
issue the greater of (A)&nbsp;1,000,000 shares of common stock or (B)&nbsp;the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number of
shares authorized under the 2006 Plan and 2007 Plan equals 10% </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>24</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dm75201_1_25"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>of
our total issued and outstanding shares of common stock. No shares of common stock were authorized or issued under the 2011 Plan as of December&nbsp;31, 2010);  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>3,051,744 shares of common stock underlying outstanding warrants as of December&nbsp;31, 2010; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Up to 4,262,541 shares of common stock underlying future warrants that the Company is obligated to issue as is necessary
for the holder of the warrants described above to own, upon exercise of its warrants, 5% of the outstanding common stock of the Company, calculated on a partially diluted basis, of which the Company
expects to issue a warrant to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock as a result of this offering;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2> shares of common stock underlying warrants that the Company will issue to the underwriters in connection
with this offering; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2> shares of common stock issuable pursuant to the underwriters' over-allotment option. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>25</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<UL>
<UL>
</UL>
</UL>
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NAME="page_do75201_1_26"> </A>


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</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="do75201_selected_historical_consolidated_financial_data"> </A>
<A NAME="toc_do75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows our selected consolidated statements of operations, balance sheets and other financial and operating data as
of, and for each of the years ended, December&nbsp;31, 2010, 2009, 2008, 2007 and 2006. The selected financial and operating data set forth below are derived from our audited consolidated financial
statements prepared in accordance with GAAP. Our historical results are not necessarily indicative of our results for any future period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following selected historical consolidated financial and other data should be read in conjunction with, and are qualified in their entirety by reference to, the section of this
prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discussion and Analysis of Financial Condition and Results of Operations</I></FONT><FONT SIZE=2>" and our audited consolidated financial
statements and related notes included elsewhere in this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Selected Annual Financial Information (audited)<BR>  </B></FONT><FONT SIZE=2>(In thousands except for per share amounts) </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="47pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="47pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="47pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="47pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2007 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2006 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Balance Sheet Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>174</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,024</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,095</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,740</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,309</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash and marketable securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,255</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>235</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Working capital (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(17,261</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,119</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,271</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,756</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,093</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,571</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,366</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,395</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,539</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>28,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,182</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,670</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22,283</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,278</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,750</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>559</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>325</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>506</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,110</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deficit accumulated during the exploration stage</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(36,835</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(28,405</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(21,672</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(13,352</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,572</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholders' equity (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,391</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,623</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,346</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>21,777</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,832</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="47pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2007 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2006 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Operating Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revenues</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral property maintenance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,142</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,036</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,664</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>817</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral exploration</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,835</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,528</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,366</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,543</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>519</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,821</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,501</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,279</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income (expense)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,544</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>324</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,550</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,607</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,749</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,328</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,762</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,036</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,957</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss attributable to the company</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,429</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,733</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,319</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,957</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss per basic and diluted share of common stock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.14</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.12</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.22</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Cash Flow Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used by operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,694</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,455</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,027</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,394</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,979</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used by investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,568</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(350</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(632</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,847</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,413</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>734</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>21,672</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,513</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net increase (decrease) in cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(850</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,071</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,645</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,431</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,157</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
our April 2010 acquisition of the 49% non-controlling interest in Cibola Resources&nbsp;LLC. See the section of this prospectus
entitled "</FONT><FONT SIZE=2><I>Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Material Commitments&#151;Significant Mineral
Properties&#151;Cebolleta Mineral Property</I></FONT><FONT SIZE=2>" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(a)&nbsp;current liabilities consisting of accounts payable and accrued expenses of $240,437 and senior debt, net, of $24,844,874 and
(b)&nbsp;long-term liabilities consisting of long-term payable, net, of $325,539 and warrant liability of $1,339,402. For a description of our senior debt, see the section of
this prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Material Commitments&#151;Senior Debt Credit
Facility</I></FONT><FONT SIZE=2>" and our audited consolidated financial statements and related notes included elsewhere in this prospectus. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>26</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq75201_management_s_discussion_and_an__man03466"> </A>
<A NAME="toc_dq75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  MANAGEMENT'S DISCUSSION AND ANALYSIS OF<BR>  FINANCIAL CONDITION AND RESULTS OF OPERATIONS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>You should read the following discussion and analysis together with our consolidated financial statements for
the three years ended December&nbsp;31, 2010 and related notes thereto, which have been prepared in accordance with GAAP. This discussion and analysis contains forward-looking statements
that are subject to risks, uncertainties and assumptions, including those discussed under the section of this prospectus entitled "Risk Factors." See the section of this prospectus entitled "Special
Note Regarding Forward-Looking Statements" for information about such statements. Our actual results may differ materially from those expressed in or implied by these
forward-looking statements.</I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Overview  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a natural resource company engaged in the acquisition, exploration and development of uranium properties in the United States.
Our strategy is to acquire properties that (i)&nbsp;have undergone some degree of historical uranium exploration and on which uranium mineralized material, but not reserves, have been located, and
(ii)&nbsp;are located in mineralized districts that have undergone some degree of historical uranium exploration and are thought to be prospective for further uranium exploration, but on which no
uranium mineralized material has been located. We have acquired interests in leased properties and unpatented mining claims in New Mexico, South Dakota and Wyoming. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
hold interests in the following mineral properties: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

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<TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="24pt" style="font-family:times;"></TD>
<TD WIDTH="176pt" style="font-family:times;"></TD>
<TD WIDTH="36pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:47pt;"><FONT SIZE=1><B>Interest Held

<!-- COMMAND=ADD_SCROPPEDRULE,47pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Location </B></FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Federal mining claims: 649<BR>
State mineral lease: 1<BR>
Private (fee) mineral leases: 27</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>New Mexico, USA; McKinley, Sandoval and Cibola counties</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2> Federal mining claims: 449<BR>
State mineral leases: 27<BR>
Private (fee) mineral leases: 17</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Wyoming, USA; Carbon, Crook, and Fremont counties</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2> Federal mining claims: 416<BR>
State mineral leases: 11<BR>
Private (fee) mineral leases: 14</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2>South Dakota, USA; Fall River county</FONT></TD>
</TR>
</TABLE>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also hold residual mineral interests that we received in the disposition of properties in Arizona and South Dakota. These residual interests were received in consideration of the sale
of our ownership interests in the properties and are primarily comprised of a royalty interest, a net proceeds interest and our ability to convert the royalty interest into a working interest in the
properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are an exploration stage company. All of our projects are at the exploration stage and there can be no assurance that a commercially viable mineral deposit, or reserve, exists on any
of our properties until appropriate exploratory work is done and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration beyond the scope of our
planned exploration activities will be required before a final evaluation as to the economic and legal feasibility of mining of any of our properties is determined. There is no assurance that further
exploration will result in a final evaluation that a commercially viable mineral deposit exists on any of our mineral properties. We anticipate that we will require additional financing in order to
pursue full exploration and development of our properties. We do not have sufficient financing to undertake full exploration and development of our mineral properties at present and there is no
assurance that we will be able to obtain the necessary financing. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>27</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=31,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=896085,FOLIO='27',FILE='DISK132:[11ZAZ1.11ZAZ75201]DQ75201A.;15',USER='DTAYLOR',CD='30-MAR-2011;11:09' -->
<A NAME="page_dq75201_1_28"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
plan of operation is to: (i)&nbsp;commence confirmation drilling programs, pursuant to three exploration permits we have received, to confirm the historical exploration and
development data in our possession on our Cibola Project and Ambrosia Lake Project; (ii)&nbsp;conduct feasibility studies, undertake initial mine and mill design and complete the collection of
environmental baseline data necessary for the NRC mill
permit application and New Mexico state mine permit applications on our Cibola Project; (iii)&nbsp;complete and submit the required licensing and permit applications necessary to develop and operate
our Cibola Project mines and mill; and (iv)&nbsp;complete the analysis and digitization of historic geologic data, mapping and other geophysic and geologic activities, exploration permitting and
exploration programs on selected other mineral property interests we own. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
plan of operations will be continually evaluated and modified as exploration results become available. Modifications to our plans will be based on many factors, including: results of
exploration, assessment of data, feasibility studies, weather conditions, exploration costs, the price of uranium and available capital. Further, the extent of our exploration programs that we
undertake will be dependent upon the amount of financing available to us. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Results of Operations  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an exploration stage company and have not generated any revenue to date. The following table sets forth selected financial
information relating to our company for the periods indicated: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Selected Operating Financial Information  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Mineral property maintenance</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>1,141,706</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>1,035,509</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>1,219,549</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Mineral exploration</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B> 1,835,039</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>3,528,324</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>4,366,395</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Selected Components of Mineral Exploration</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Wages and benefits</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,217,701</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,648,306</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,337,963</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Wages and benefits&#151;stock based compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>137,045</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>200,815</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral property expenditures</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>386,583</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>891,133</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,320,450</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Data acquisition</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>520,807</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>265,762</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>230,755</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>331,033</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>241,405</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>General and administrative</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B> 2,227,627</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>2,820,561</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>3,500,900</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Selected Components of General and Administrative</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Wages and benefits</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,021,968</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,166,986</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,262,998</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Wages and benefits&#151;stock based compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,292</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>267,657</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>658,274</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Professional services</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>389,579</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>552,391</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>656,450</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Professional services&#151;stock based compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>192,757</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>172,489</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other general and administrative</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>619,031</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>661,038</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>923,178</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other Income (Expense)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B> (3,544,423</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>56,076</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>324,426</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Selected Components of Other Income (Expense)</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest (expense), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(918,019</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>60,743</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>305,792</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unrealized gain (loss) on warrants</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>240,235</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization&#151;senior debt discount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,338,580</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization&#151;debt issuance costs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,527,895</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating loss</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B> (8,748,795</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>(7,328,318</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>(8,762,418</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>)</B></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net loss attributable to the Company</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B> (8,429,402</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>(6,733,408</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>(8,319,396</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><B>)</B></FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have been funding our operations by way of private placements of our equity and through senior debt borrowings. We expect we will require additional capital to meet our short and long
term </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>28</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dq75201_1_29"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>operating
requirements. We expect to raise additional capital through, among other things, the sale of equity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2010 Compared to Year Ended December&nbsp;31, 2009  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an exploration stage company and have no revenues to date and we anticipate that we will not generate any revenues during the
twelve month period following the date of this prospectus. Our net losses during the year ended December&nbsp;31, 2010 ("2010") were approximately $8,429,402 compared to net losses of $6,733,408 for
the year ended December&nbsp;31, 2009 ("2009"). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2010, we incurred operating losses of $8,748,795 compared to $7,328,318 incurred during 2009. This increase is primarily due to costs and expenses associated with our senior
credit facility which were partially offset by a reduction in exploration expenses and other general and administrative expenses. Significant expenditures and changes are outlined below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Mineral property maintenance expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $106,197 increase in mineral property maintenance expenses incurred during 2010 compared to 2009 is primarily due to private (fee)
mineral lease expenses increasing to $895,326 from $791,261 for the corresponding period in 2009 as a result of having to pay the lease expenses that were paid for by Primary Corp. until we acquired
their 34.56% interest in our now wholly-owned Grants Uranium Project Joint-Venture in October 2009. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Mineral exploration expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $1,693,285 decrease in mineral exploration expenses incurred during 2010 compared to 2009 is primarily due
to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$430,605 decrease in wages and benefits expense attributable to temporary furloughs of employees and employment terminations in 2010;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$137,045 decrease in stock based compensation for wages and benefits expense attributable to the timing of stock option grants to employees;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$504,550 decrease in mineral property exploration expense attributable to reduced legal, lobbying and consulting fees associated with permitting
activities;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iv)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$520,807 decrease in data acquisition expense attributable to the timing of individual data base purchases; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(v)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$100,278 decrease in general and administrative expense attributable to a reduction in the number of employees and travel and field activities. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><I> General and administrative expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $592,934 decrease in general and administrative expenses incurred during 2010 compared to 2009 is primarily due
to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$145,018 decrease in wages and benefits expense attributable to temporary furloughs of employees and employment terminations;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$263,365 decrease in stock based compensation for wages and benefits attributable to the timing of stock option grants to employees; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$162,812 decrease in professional services expense attributable to reduced legal and investment banking fees associated with financing efforts. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>29</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dq75201_1_30"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Other income and expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $3,600,499 increase in other expense incurred during 2010 compared to 2009 is primarily due to costs and expenses associated with
our senior credit facility. In connection with our senior credit facility, we recognized: (i)&nbsp;net interest expense of $918,019; (ii)&nbsp;unrealized gain on warrant liability of $240,235;
(iii)&nbsp;amortization of senior debt discount expense of $1,338,580; and (iv)&nbsp;amortization of debt issuance costs of $1,527,895 for 2010 compared to $60,743 of net interest income for 2009. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2009 Compared to Year Ended December&nbsp;31, 2008  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net losses during 2009, were approximately $6,733,408 compared to net losses of $8,319,396 for the year ended December&nbsp;31,
2008 ("2008"). During 2009, we incurred operating losses of $7,328,318 compared to $8,762,418 incurred during 2008. The decrease is primarily due to a reduction in mineral property maintenance
expenses, exploration expenses, and general and administrative expenses, partially offset by a reduction in other income. We had no revenues during 2009 and 2008. Significant expenditures and changes
are outlined below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Mineral property maintenance expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $184,040 decrease in mineral property maintenance expenses incurred during 2009 compared to 2008 is primarily due to state mineral
leases of $37,279 compared to $306,640 for the corresponding period in 2008 resulting from our not renewing state mineral leases primarily in Wyoming. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Mineral exploration expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $838,071 decrease in mineral exploration expenses incurred during 2009 compared to 2008 is primarily due
to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$310,343 increase in wages and benefits expense attributable to an increase in the number of employees offset partially by a voluntary reduction in
salaries of management;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$63,770 decrease in stock based compensation for wages and benefits expense attributable to the timing of stock option grants to employees;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$1,429,317 decrease in mineral property exploration expense attributable to: (1)&nbsp;decreased permitting activities resulting in corresponding
decreases in legal, public relations and outside consulting expenses; (2)&nbsp;an outside environmental and permitting consultant hired as an employee resulting in reclassification of associated
expenses; and (3)&nbsp;decrease in exploration drilling activity;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iv)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$255,045 increase in data acquisition expense attributable to the timing of individual data base purchases; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(v)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$89,628 increase in general and administrative expense attributable to an increase in employee related travel and field expenses and classification of our
Albuquerque, N.M. office occupancy and administrative expenses as mineral exploration general and administrative expenses previously classified as corporate general and administrative expenses. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><I> General and administrative expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $680,339 decrease in general and administrative expenses incurred during 2009 compared to 2008 is primarily due
to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$96,012 decrease in wages and benefits expense attributable to voluntary salary reductions accepted by management; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>30</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dq75201_1_31"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$390,617 decrease in stock based compensation for wages and benefits expense attributable to the timing of stock option grants to employees;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$104,059 decrease in professional services expense attributable to reduced legal, lobbying and accounting fees partially offset by an increase in
investment banking fees associated with financing efforts;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iv)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$172,489 increase in stock based compensation for professional services expense attributable to stock option grants to outside consultants and our
directors; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(v)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
$262,140 decrease in general and administrative expense attributable to significant non-recurring expenses incurred in 2008 in connection with
recruiting and relocating management and technical employees and relocating our corporate offices from Phoenix, Arizona to Denver, Colorado. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><I> Other income and expenses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $268,350 decrease in other income incurred during 2009 compared to 2008 is primarily due to net interest income of $60,743 compared
to net interest income of $305,792 for the corresponding period in 2008 resulting from lower cash balances and lower effective interest rates. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Liquidity and Capital Resources  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Selected Liquidity and Capital Resources Financial Information  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Balance Sheet Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>174,416</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,023,932</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,094,714</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash and marketable securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,254,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>235,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Working capital (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(17,261,431</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,118,756</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,930,545</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,093,370</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,571,268</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,365,583</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>28,141,069</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,182,442</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,670,395</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,750,252</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>559,272</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>324,595</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deficit accumulated during the exploration stage</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(36,834,600</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(28,405,198</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(21,671,790</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,390,817</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,623,170</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,345,800</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Cash Flow Data</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used by operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,694,371</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,455,406</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,027,124</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used by investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,568,091</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(349,605</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(632,053</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,412,946</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>734,229</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,014,226</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net increase (decrease) in cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(849,516</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,070,782</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,644,951</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B><I> Cash Used in Operating Activities  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not generated positive cash flow from operating activities. Our operations have been primarily financed by proceeds from
issuances of common stock and through senior debt borrowings. We plan to finance future operations with proceeds from this offering and subsequent issuances of common stock. As of December&nbsp;31,
2010, our cash and short term security position was $7,429,083 ($7,254,667 of which was restricted) compared to $1,259,232 ($235,300 of which was restricted) as of December&nbsp;31, 2009 and
$7,094,714 (none of which was restricted) as of December&nbsp;31, 2008. Of the $7,254,667 of restricted cash and marketable securities as of December&nbsp;31, 2010, $7,069,367 was </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>31</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>restricted
pursuant to our senior debt credit facility as described in "</FONT><FONT SIZE=2><I>Material Commitments&#151;Senior Debt Credit Facility</I></FONT><FONT SIZE=2>" below and the
remaining $185,300 was held in certificates of deposit collateralizing various letters of credit issued by the Arizona Business Bank described in "</FONT><FONT SIZE=2><I>Material
Commitments&#151;Credit Agreement and Irrevocable Standby Letters of Credit</I></FONT><FONT SIZE=2>" below that were outstanding as of December&nbsp;31, 2010. We had a working capital deficit
of $17,261,431 as of December&nbsp;31, 2010 compared to working capital of $1,118,756 as of December&nbsp;31, 2009 and $6,930,545 as of December&nbsp;31, 2008. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the fiscal year ended December&nbsp;31, 2010, net cash used in operating activities was $4,694,371, consisting primarily of a net loss of $8,429,402. Net cash flows used in
operating activities are reconciled to our net loss by: (i)&nbsp;increase in cash of $26,260 from changes in our working capital accounts; (ii)&nbsp;decrease in cash of $319,393 from losses
attributable to noncontrolling interests; and (iii)&nbsp;increase in cash of $4,028,164 for non-cash expenses, which includes a $197,049 non-cash expense for stock based
compensation and $3,763,090 non-cash expenses of amortization of debt issuance costs, accretion of discount on senior debt and accrued interest on senior debt. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the fiscal year ended December&nbsp;31, 2009, net cash used in operating activities was $6,455,406, consisting primarily of a net loss of $6,733,408. Net cash flows used in
operating activities are reconciled to our net loss by: (i)&nbsp;increase in cash of $36,523 from changes in our working capital accounts; (ii)&nbsp;decrease in cash of $594,910 from losses
attributable to noncontrolling interests; and (iii)&nbsp;increase in cash of $836,389 for non-cash expenses, which includes a $577,191 non-cash expense for stock based
compensation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the fiscal year ended December&nbsp;31, 2008, net cash used in operating activities was $8,027,124, consisting primarily of a net loss of $8,319,396. Net cash flows used in
operating activities are reconciled to our net loss by: (i)&nbsp;decrease in cash of $268,988 from changes in our working capital accounts; (ii)&nbsp;decrease in cash of $443,022 from losses
attributable to noncontrolling interests; and
(iii)&nbsp;increase in cash of $1,004,282 for non-cash expenses, which includes a $859,089 non-cash expense for stock based compensation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Cash Used in Investing Activities  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For 2010, net cash used in investing activities was $7,568,091 compared to $349,605 in 2009. During 2010, our net cash used in
investing activities consisted primarily of: (i)&nbsp;the purchase of unproven mineral properties for $11,683,643, of which $11,454,312 was financed by senior debt and capitalized investment in a
mineral purchase option; (ii)&nbsp;the investment in a mineral purchase option for $319,393; and (iii)&nbsp;the increase in restricted cash and marketable securities of $7,019,367. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
2009, net cash used in investing activities was $349,605 compared to $632,053 in 2008. During 2009, our net cash used in investing activities consisted primarily of: (i)&nbsp;the
purchase property and equipment for $42,738; (ii)&nbsp;the purchase of unproven mineral properties for $343,647, of which $68,578 was financed by the issuance of common stock; (iii)&nbsp;the
receipt of equity in joint venture partner contributions of $346,321; (iv)&nbsp;the investment in a mineral purchase option for $142,819; and (v)&nbsp;the increase in restricted cash and
marketable securities of $235,300. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
2008, net cash used in investing activities was $632,053, consisting primarily of: (i)&nbsp;the purchase property and equipment for $618,435, of which $2,988 was financed by
accounts payable; (ii)&nbsp;the purchase of unproven mineral properties for $455,591; and (iii)&nbsp;the receipt of equity in joint venture partner contributions of $438,985. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Cash Provided by Financing Activities  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For 2010, net cash provided by financing activities was $11,412,946 compared to $734,229 in 2009. During 2010, net cash provided by
financing consisted consisting primarily of: (i)&nbsp;an investment by a </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>32</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>noncontrolling
interest in a consolidated joint venture of $319,393; (ii)&nbsp;the payment of debt issuance and deferred offering costs of $288,108; and (iii)&nbsp;senior debt financing of
$24,000,000, less (A)&nbsp;$11,000,000 advanced directly to seller in connection with our purchase of the seller's 49% equity interest in our now wholly-owned subsidiary, Cibola
Resources&nbsp;LLC ("Cibola"), and (B)&nbsp;$1,618,340 advanced directly to financier in connection with the issuance of the senior debt. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
2009, net cash provided by financing activities was $734,229 compared to $1,014,226 in 2008. During 2009, net cash provided by financing consisted consisting primarily of:
(i)&nbsp;an investment by a noncontrolling interest in a consolidated joint venture of $613,598; (ii)&nbsp;the payment of deferred offering costs of $168,221; and (iii)&nbsp;the proceeds from a
long-term payable of $288,852. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
2008, net cash provided by financing activities was $1,014,226, consisting primarily of: (i)&nbsp;an investment by a noncontrolling interest in a consolidated joint venture of
$704,610; (ii)&nbsp;the payment of deferred offering costs of $18,913; and (iii)&nbsp;the proceeds from exercise of warrants of $328,529. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Plan of Operations and Funding  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2010, we had restricted cash and cash equivalents of $7,254,667 and unrestricted cash and cash equivalents of
$174,416. We estimate that our cash expenditures for operations over the twelve months immediately following this offering will be approximately $18,509,027 as outlined below. Therefore, our existing
working capital is not expected to be adequate to fund our exploration and permitting related operations over the twelve months immediately following this offering. We have no available lines of
credit. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates
additional increases in operating expenses and capital expenditures relating to: (i)&nbsp;drilling programs, pursuant to three exploration permits we have received, to confirm the historical
exploration and development data in our possession on our Cibola Project and Ambrosia Lake Project; (ii)&nbsp;feasibility studies and possible future reserve definition; (iii)&nbsp;mine and mill
design and completion of the collection of environmental baseline data necessary for NRC and state mine and mill operating permits on our Cibola Project; (iv)&nbsp;submission of required licensing
and permit applications necessary to develop and operate mines and a mill at our Cibola Project; (v)&nbsp;completion of the analysis and digitization of historic geologic data, mapping, other
geophysic and geologic activities, exploration permitting and exploration programs on selected other mineral property interests we own; and (vi)&nbsp;possible future property acquisitions. We intend
to finance these expenses with further issuances of securities and debt issuances. We expect we will need to raise additional capital to meet long-term operating requirements. Additional
issuances of equity or convertible debt securities will result in dilution to our current stockholders. Further, such securities might have rights, preferences or privileges senior to our common
stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of
prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>33</FONT></P>

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<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our planned exploration, preliminary license and permit preparation, preliminary mine and mill design, feasibility studies and amounts due to maintain our mineral
property interests for the twelve months immediately following this offering on our mineral properties, are summarized as follows: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:31pt;"><FONT SIZE=1><B>Property

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Exploration </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Preliminary<BR>
License&nbsp;and<BR>
Permit<BR>
Preparation </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Preliminary<BR>
Mine&nbsp;and<BR>
Mill<BR>
Designs </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Feasibility<BR>
Studies </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Claim/Lease/<BR>
Surface<BR>
Maintenance<BR>
Payments </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cibola Project, NM</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,017,600</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,954,674</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,843,335</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,536,196</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>729,332</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,081,137</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ambrosia Lake Properties, NM</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>390,400</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>390,400</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New Mexico, Other Properties</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>49,280</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>49,280</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Wyoming Properties</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>96,512</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>96,512</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>South Dakota Properties</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>81,171</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>81,171</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exploration administration</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,230,527</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,230,527</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,248,127</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,954,674</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,843,335</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,536,196</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,346,695</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,929,027</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to our planned expenditures noted above, we anticipate repaying our senior debt due June&nbsp;30, 2011 in the amount of $24,000,000
plus accrued interest, totaling approximately $25,760,000, and spending approximately $215,000 for ongoing general and administrative expenses per month for the twelve months immediately following
this offering. The general and administrative expenses for the year will consist primarily of salaries for our officers, management, technical and administrative staff and consulting and professional
fees for the audit and legal work relating to our regulatory filings throughout the year, as well as investor relations and general office expenses. Mineral property acquisitions, if any, will be
additional and dependent upon opportunities that may arise. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
restricted and unrestricted cash of $7,429,083 and planned expenditures of $44,269,027, we anticipate that we will require an additional $36,839,944 to carry out our plan of
operations for the twelve months immediately following this offering. We will require additional financing to pursue our plan of operations for the subsequent 12&nbsp;months. There can be no
assurance that such financing will be available on terms favorable to us or at all. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beyond
the twelve months immediately following this offering, we will require additional financing in order to continue our plan of operations as we anticipate that we will not earn any
revenues in the foreseeable future. We believe that debt financing will not be an alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt
financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or preferred stock. We do not have any financing arranged currently and we
cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our exploration and, if we are able to commence development, our
development programs. In the absence of such financing, we will not be able to continue exploration and begin development of our mineral properties. If we do not continue to obtain additional
financing, we may be forced to abandon our properties and our plan of operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
may consider entering into a joint venture arrangement to provide the required funding to pursue exploration and/or development of our mineral properties. Even if we determined to
pursue a joint venture partner, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration and/or development of our mineral properties.
If we entered into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral properties to the joint venture partner. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
plan of operations will be continually evaluated and modified as exploration results become available. Modifications to our plans will be based on many factors, including: results of
exploration, assessment of data, weather conditions, exploration costs, the price of uranium and available capital. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>34</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>Further,
the extent of our exploration programs that we undertake will be dependent upon the amount of financing available to us. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Going Concern  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We commenced operations on March&nbsp;25, 2005 and have not realized any revenues since inception. As of December&nbsp;31, 2010, we
had a working capital deficit of $17,261,431 and an accumulated deficit of $36,834,600. Existing cash resources are currently not expected to provide sufficient funds through the upcoming year and the
capital expenditures required to achieve planned principal operations may be substantial. Our continuation as a going concern is dependent upon our ability to obtain necessary financing to continue
operations. We are in the exploration stage of our mineral property development and to date have not yet established any proven mineral reserves on our existing properties. Our continued operations
and the recoverability of the carrying value of our assets are ultimately dependent upon our ability to achieve profitable operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Purchase of Significant Equipment  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently do not plan to acquire any significant equipment over the next twelve months. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Off-Balance Sheet Arrangements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on
our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Material Commitments  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Significant Mineral Properties  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since March 2005, we have been acquiring mineral properties for the purpose of exploring for economic deposits of uranium in the states
of Arizona, New Mexico, South Dakota and Wyoming. Our mineral property acquisitions are comprised of: (i)&nbsp;unpatented mining claims which are administrated by the U.S.&nbsp;Bureau of Land
Management ("BLM"); (ii)&nbsp;state mineral leases or exploration permits; (iii)&nbsp;fee mineral leases with the owners of private mineral rights; and (iv)&nbsp;mineral leases with third
parties who acquired mineral rights through (i)&nbsp;and (ii)&nbsp;above. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
as set forth below, all unpatented mining claims may be relinquished by us and state and fee mineral leases may be released by us when exploration and/or development is completed
or the property is abandoned, provided that there may be continuing reclamation and remediation obligations following the completion of exploration and development or abandonment. Our state and fee
mineral
leases are subject to various royalty interests, some of which are indexed to the sale price of uranium. Unpatented mining claims are not subject to royalties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Juan Tafoya Mineral Property  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 2006, we entered into a Uranium Mining and Lease Agreement ("Juan Tafoya Lease") with the Juan Tafoya Land Corporation
("JTLC") in which we leased 4,097 acres of fee (deeded) surface and mineral rights owned by the JTLC ("Juan Tafoya Property") in the state of New Mexico. The Juan Tafoya Lease provides for a term of
ten years and so long thereafter as we are conducting operations on the Juan Tafoya Property. Additionally, the Juan Tafoya Lease, provides for: (i)&nbsp;an initial payment to JTLC of $1,250,000;
(ii)&nbsp;annual rental payments of $225,000 for the first five years of the lease and $337,500 for the second five years; (iii)&nbsp;after the second five years, annual base rent of $75 per acre;
(iv)&nbsp;gross proceeds royalties of 4.65% to 6.5% based on the then current price of uranium; (v)&nbsp;employment opportunities and job-skills training programs for shareholders of
the JTLC; </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>35</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>(vi)&nbsp;periodic
contributions to a community projects fund if mineral production commences from the Juan Tafoya Property; and (vii)&nbsp;funding of a scholarship program for children of the
shareholders of the JTLC. We are obligated to make the first ten years annual rental payments notwithstanding our right to terminate the Juan Tafoya Lease at any time, unless (a)&nbsp;the market
value of uranium drops below $25 per pound, (b)&nbsp;the state of New Mexico bans uranium mining, or (c)&nbsp;the deposit is deemed uneconomical by an independent engineering firm. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2007, we acquired infill fee mineral leases within the boundaries of the Juan Tafoya Lease. We are obligated to make annual lease payments and pay production royalties ranging from
4.65% to 6.5% based on the then current price of uranium. The infill fee mineral leases covering the individually-owned small tracts have similar business terms and royalty provisions as the Juan
Tafoya Lease. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2007, we entered into a letter agreement with International Nuclear,&nbsp;Inc. Pursuant to the letter agreement we acquired a database of information on the Marquez Canyon
deposit located on the Juan Tafoya Property in consideration of a cash payment and a perpetual royalty of $0.25 per pound of uranium recovered from the Juan Tafoya Property with a maximum payout of
$1,000,000. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Cebolleta Mineral Property  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2007, we entered into a Mining Lease and Agreement ("Cebolleta Lease") with La Merced del Pueblo de Cebolleta ("Cebolleta Land
Grant"), a privately held land grant, to lease approximately 6,717 acres of fee (deeded) surface and mineral rights ("Cebolleta Property") in the state of New Mexico. The Cebolleta Lease was affirmed
by the New Mexico District Court in Cibola County in April 2007. The Cebolleta Lease provides for: (i)&nbsp;a term of ten years and so long thereafter as we are conducting operations on the
Cebolleta Property; (ii)&nbsp;initial payments to the Cebolleta Land Grant of $5,000,000 during the first six months; (iii)&nbsp;a recoverable reserve payment equal to $1.00 multiplied by the
number of pounds of recoverable uranium reserves upon completion of a feasibility study to be completed within six years, less (a)&nbsp;the $5,000,000 referred to in (ii)&nbsp;above, and
(b)&nbsp;not more than $1,500,000 in annual advance royalties previously paid pursuant to (iv); (iv)&nbsp;annual advanced royalty payments of $500,000; (v)&nbsp;gross proceeds royalties from
4.50% to 8.00% based on the then current price of uranium; (vi)&nbsp;employment opportunities and job-skills training for the members of the Cebolleta Land Grant; and
(vii)&nbsp;funding of annual higher education scholarships for children of the members of the Cebolleta Land Grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2007, we formed a joint-venture with Uranium Energy Corp. ("UEC") through the formation of Cibola and the execution of a Limited Liability Company Operating Agreement and
Members Agreement. Cibola was originally owned 51% by us and 49% by UEC and we were the managing member of Cibola. The Cebolleta Lease was assigned to Cibola. We consolidated the assets, liabilities
and operating results of Cibola and recognized UEC's noncontrolling interest in the consolidated balance sheets and consolidated statements of operations. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
November 2009, pursuant to our strategic plan to consolidate our ownership interest in our core mineral properties, we entered into an Option Agreement (the "Option Agreement"), as
amended in December 2009, with UEC, in which UEC granted us the exclusive option to purchase and acquire UEC's 49% ownership interest in Cibola for a cash payment of $11,000,000. In consideration for
the Option Agreement and amendment thereto, we funded all of Cibola's operations, from August 2009 through March 2010, including UEC's share. In April 2010, we exercised the Option Agreement, as
amended, and acquired UEC's 49% ownership interest in Cibola and are now the sole member of Cibola. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2009, we entered into an agreement with a former lessee and operator of certain lands now leased by us to acquire historical data related to the Cebolleta Property. The former
lessee delivered the data at the time of the agreement. In consideration, we have made payments to date of $50,000 with a final payment of $400,000 due in August 2013. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>36</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><I> Ambrosia Lake Mineral Properties  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2006, we entered into a lease (the "Endy Lease") on 3,382 acres comprised of 167 unpatented lode mining claims in the
eastern portion of the Ambrosia Lake mining district in New Mexico. Pursuant to the terms of the Endy Lease, we paid $315,000 upon signing, $100,000 in February 2007 and February 2008, and are
obligated to pay an additional $75,000 as an advance royalty each year thereafter through the term of the Endy Lease. The Endy Lease has a primary term of ten years, but may be extended up to an
additional 65&nbsp;years provided that we continue to make advance or production royalty payments. We may terminate the lease at any time without further lease obligations. A 5% production royalty,
based on the gross market value of all minerals extracted, is payable for any production from the Endy Lease properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 2006, we entered into a lease (the "Bonner Lease") on 181 unpatented lode mining claims and one state of New Mexico general mining lease, covering a further 4,132 acres of
mineral rights in the Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Bonner Lease, we paid a rental payment of $180,000 and issued 65,000 shares of our common
stock. We are obligated to pay an annual rental payment of $120,000 on the second through fifth anniversaries of the Bonner Lease. On the sixth anniversary and each anniversary thereafter we are
obligated to pay an annual advance royalty of $240,000. In the event commercial production is achieved during the rental period, then all future rental payments received after commercial production
begins will be credited as minimum advance royalty payments. The Bonner Lease has a primary term of ten years but may be extended up to an additional 65&nbsp;years provided that we continue to make
advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5% production royalty based on the gross market value of all minerals extracted is
payable for any production from the Bonner Lease properties. The surface overlying the New Mexico general mining lease is owned by the State of New Mexico. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2008, we entered into a Mineral Lease Agreement (the "Elizabeth Lease") on 179 acres comprised of eight patented and one unpatented lode mining claims in the eastern portion
of the Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Elizabeth Lease, we paid a $315,000 signing bonus upon signing and we are obligated to pay advance
royalties of $100,000 on the first and second anniversaries and $75,000 every anniversary thereafter so long as the lease is in effect. The Elizabeth Lease has a primary term of ten years, but may be
extended up to an additional 65&nbsp;years provided that we continue to make advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5%
production royalty, based on the gross market value of all minerals extracted, is payable for any production from the Elizabeth Lease properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2006, Primary Corp. ("Primary"), formerly known as Trans America Industries&nbsp;Ltd., and the Company entered into an Exploration, Development and Mine Operating Agreement
("Grants J.V. Agreement") and formed the Grants Uranium Project Joint-Venture ("Grants J.V."). Pursuant to the Grants J.V. Agreement, we contributed to the joint-venture the properties underlying
three large New Mexico leases: the Endy Lease, the Bonner Lease and the Elizabeth Lease. Also pursuant to the Grants J.V. Agreement, Primary reimbursed us for $495,000 in connection with the Endy and
the Bonner Leases during the year ended December&nbsp;31, 2006, in consideration of contribution of the underlying leased properties. Pursuant to the Grants J.V. Agreements, Primary was obligated to
contribute $5,000,000 to fund the joint-venture's operations ("Initial Contribution"), before February&nbsp;1, 2010. In consideration of Primary's payments to us and the funding of the Grants J.V.,
Primary was entitled to a 50% participating interest in the underlying joint-venture properties. We were the managing partner in the joint-venture. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
October 2009, pursuant to our strategic plan to consolidate our ownership interest in our core mineral properties, we entered into a Purchase and Termination Agreement ("Purchase
Agreement") </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>37</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>with
Primary with respect to the Grants J.V. Pursuant to the Purchase Agreement, Primary transferred its ownership interest in Grants J.V. to us on October&nbsp;15, 2009. In consideration, we were
obligated to, at our option, pay Primary $3,519,067 in Canadian funds, or, issue Primary 3,519,067 shares of our common stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December&nbsp;30, 2009, we opted to issue to Primary 3,519,067 shares of our common stock, in lieu of cash, in consideration of our October&nbsp;15, 2009 purchase of Primary's
interest in the Grants J.V. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Senior Debt Credit Facility  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2010, we entered into an arrangement of a $16,000,000 senior secured credit facility ("Credit Facility"), which RMB
Resources,&nbsp;Inc. ("RMB"), an agent of RMB Australia Holdings Limited ("RMBAH", together RMB and RMBAH, the "Lender") advanced in two tranches. Tranche&nbsp;1 proceeds in the amount of
$5,000,000 were used for general working capital consistent with operating activities mutually agreed upon by us and Lender. Tranche&nbsp;2 proceeds in the amount of $11,000,000 were used to fund
our acquisition of UEC's 49% interest in Cibola. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Credit Facility agreement, among other terms and conditions, provides for: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>a.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
payment of outstanding principal, together with accrued interest, on or before December&nbsp;31, 2010.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>b.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Interest
charged on outstanding principal balances is accrued as a part of the principal balance and calculated at a rate equal to LIBOR plus 7%.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>c.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mortgage
and senior security interest in all material "real property" located in New Mexico; all "personal property" of the Company; and a pledge of the
Company's 100% ownership interest in Cibola.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>d.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>All
proceeds from Tranche&nbsp;1 to be deposited into a control proceeds account ("Proceeds Account").
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>e.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>All
future cash proceeds received by the Company, up to $5,000,000, shall be deposited into the Proceeds Account and any cash proceeds in excess of
$5,000,000 must be applied toward prepayment of outstanding accrued interest and principal balances. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
consideration of the Credit Facility agreement, we: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>a.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Paid
the lender an arrangement fee of $1,120,000, equal to 7% of the Credit Facility, plus $190,758 in costs and expenses incurred by lender.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>b.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Issued
RMBAH two warrants to purchase a total of 3,051,744 shares of our common stock on the following terms:
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>i.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
exercise price is $1.75 or the lowest price at which the Company issues shares during the exercise period, which is four years from date of issuance.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>ii.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
estimated fair value of these warrants on the dates of issue was $1,579,637 or $.52 per warrant.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>iii.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Upon
the issuance of warrants above, RMBAH's beneficial ownership of us was slightly less than 5%.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>iv.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Other
significant features of the warrants include: (1)&nbsp;net share settlement exercise rights, (2)&nbsp;adjustment to exercise price for dilutive
issues, and (3)&nbsp;piggy-back registration rights.
<BR><BR></FONT></DD></DL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>c.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We
are obligated to issue additional warrants to RMBAH to purchase up to 1,519,684 additional shares of common stock. The warrants will be issued so as to
allow RMBAH to maintain a beneficial ownership up to 5%, as was achieved by the issuance of the warrants in </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>38</FONT></P>

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<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>b
above. The fair value of these warrants has not been established as these warrants are not issuable at March&nbsp;24, 2011. Any such additional warrants issued to RMBAH will have the same terms
and conditions as the warrants in b above. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;4, 2010, we and Lender executed the Credit Facility agreement and closed on Tranche&nbsp;1 of the Credit Facility. On April&nbsp;12, 2010, the Lender funded
Tranche&nbsp;2 providing proceeds for our purchase of UEC's 49% interest in Cibola for $11,000,000 pursuant to the Option Agreement, as amended. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December&nbsp;22, 2010, we entered into the First Amendment Agreement to the Credit Facility agreement ("Amended Credit Facility") with Lender with respect to the amendment of the
April 2010 Credit Facility. Pursuant to the Amended Credit Facility, the Lender extended the maturity of the Credit Facility from December&nbsp;31, 2010 to June&nbsp;30, 2011, and advanced
$8,000,000 in Tranche&nbsp;3, which increased the Credit Facility from $16,000,000 to $24,000,000. The terms of the Amended Credit Facility are: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>a.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We
paid the Lender an arrangement fee of $320,000, equal to 4% of the increase in amount of the Credit Facility, an extension fee of $160,000, equal to 1% of
the original Credit Facility, plus, $21,233 in costs and expenses incurred by the Lender.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>b.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We
are obligated to issue additional warrants to RMBAH to purchase up to 2,742,857 additional shares of common stock. The warrants will be issued so as to
allow RMBAH to maintain a beneficial ownership up to 5%. The fair value of these warrants has not been established as these warrants are not issuable at March&nbsp;24, 2011. Any such additional
warrants issued to RMBAH will have the same terms and conditions as the warrants issued to RMBAH in connect with the original Credit Facility.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>c.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>All
other terms and conditions remain the same. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B><I> Credit Agreements and Irrevocable Standby Letters of Credit  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2008, Arizona Business Bank issued us an Irrevocable Standby Letter of Credit in favor of Cognac Highland Court&nbsp;LLC,
(the "Landlord") as a security deposit on the lease of the corporate headquarters in Englewood, Colorado. The Letter of Credit is secured by a credit facility in favor of us and has an interest rate
of Arizona Business Bank's prime rate and automatically renews every 12&nbsp;months expiring on October&nbsp;31, 2011. The credit facility is collateralized by a certificate of deposit which pays
2.8% interest. As of March&nbsp;24, 2011, both the Letter of Credit and the certificate of deposit were in the amount of $25,000. The certificate of deposit will be released in October 2011. Upon
our default of the lease agreement, the Landlord may draw upon the Letter of Credit for any rent or other obligations in default of the terms of the lease. The Landlord has not drawn down any
principal under the Letter of Credit. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of March&nbsp;24, 2011, Arizona Business Bank has issued us six Irrevocable Standby Letters of Credit in favor of the Mining and Minerals Division of the New Mexico Energy, Minerals
and Natural Resources Department ("MMD") to satisfy the bond requirements for completion of surface and subsurface reclamation pursuant to the permits issued by the state of New Mexico for the
"Marquez Canyon Exploration Project," "Elizabeth Claims Exploration Project" and the "Cebolleta Exploration Project." Each of the Letters of Credit issued in favor of the MMD is secured by a credit
facility in favor of us and has an interest rate of Arizona Business Bank's prime rate and automatically renews every 12&nbsp;months until the requirements of the permit are satisfied. Each credit
facility is collateralized by a certificate of deposit equal to the value of the Letter of Credit which pays 2.8% interest. The total amount of the six certificates of deposit is $273,905. Upon our
default of the requirements of either of the permits, the MMD may draw upon the appropriate Letter of Credit for any costs related to uncompleted reclamation. The MMD has not drawn down any principal
under the Letters of Credit. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>39</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>Upon
completion of all reclamation activities, the corresponding standby letter of credit may be terminated by us. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Finance and Consulting Agreements  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;26, 2009, we entered into an engagement letter with Jefferies&nbsp;&amp; Company,&nbsp;Inc. ("Jefferies") as an
exclusive agent to sell equity-based securities. We paid a $100,000 engagement fee upon signing the engagement letter. The agreement requires us to pay an "Equity Fee" equal to 7% of the aggregate
gross proceeds from the issuance of any equity instruments. If we issue warrants to investors, we are obligated issue warrants or securities of like tenor equal to 7% of the warrants issued to such
investors with similar terms and conditions. Furthermore, upon consummation of a merger or acquisition and financing transaction, we are obligated to pay an "M&amp;A&nbsp;Transaction Fee" equal to 15%
of the transaction value not to exceed an aggregate of $1,500,000. On April&nbsp;30, 2010, we terminated the engagement letter. Pursuant to the terminated engagement letter we remain obligated to
pay the fees set forth in the engagement letter should we enter into an agreement for an equity or equity linked financing (i)&nbsp;within six months of termination, or (ii)&nbsp;within
12&nbsp;months of termination if Jefferies contacted the financing party on our behalf during the term of the engagement letter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January&nbsp;14, 2010, we entered into a finder's fee agreement with Nuclear Fuel Cycle Consulting&nbsp;LLC (the "Consultant"), the principal of which is James&nbsp;J. Graham,
who subsequently became one of our directors, to provide introductions to certain industry contacts in connection with our financing efforts. Should we conclude a transaction through the efforts of
the Consultant, the agreement requires us to pay a 1% fee on proceeds received by us. The finder's fee agreement was non-exclusive and terminable at any time upon 30&nbsp;days notice. On
February&nbsp;11, 2011, we terminated the agreement, however, we remain obligated to pay the fees set forth therein should we complete a transaction within 12&nbsp;months of termination if the
Consultant introduced the financing party on our behalf during the term of the agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;15, 2010, we entered into a strategic consulting and advisory agreement (the "Advisory Agreement") with the Consultant, the principal of which is James J. Graham, who
subsequently became one of our directors, to provide advisory services in connection with our evaluation of pursuing one or more strategic transactions, such as off-take agreements,
forward sales contracts, joint ventures and mineral property acquisitions or dispositions. Should we conclude a strategic transaction through efforts of the Consultant, the Advisory Agreement requires
us to pay a 1.5% fee on debt proceeds received by us and a 5% fee on proceeds received by us through equity financing, asset dispositions or a joint venture earn-in. In addition, we
granted the Consultant a stock option to purchase 100,000 shares of common stock exercisable within five years at an exercise price of $1.00 per share of common stock, all of which has vested. The
Advisory Agreement was non-exclusive and terminable at any time upon 30&nbsp;days notice. We terminated the Advisory Agreement on February&nbsp;11, 2011, however, we remain obligated
to pay the fees set forth in the Advisory Agreement should we complete a transaction within 12&nbsp;months of termination if the Consultant contacted the financing party on our behalf during the
term of the Advisory Agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August&nbsp;3, 2010, we entered into an agreement with RMB Resources,&nbsp;Inc. Pursuant to the agreement, we are obligated to pay a success fee of 5% of the gross proceeds of any
investment in us or the sale of our assets where the investor or acquirer had been introduced to us by RMB Resources,&nbsp;Inc. The agreement is non-exclusive and terminable at any time
upon written notice, subject to a six month fee tail. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>40</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;4, 2011, we entered into a financial advisory agreement with Primary Capital,&nbsp;Inc., an affiliate of Primary ("Primary Capital"). Pursuant
to the agreement Primary Capital will consult with us with respect to (i)&nbsp;any merger, amalgamation, plan of arrangement, reorganization or other business combination, or (ii)&nbsp;the
issuance by us, or a counterparty of a business combination, of securities in connection with an initial public offering or a private placement. Should we conclude a transaction, the financial
advisory agreement requires us to pay a 1% completion fee on the transaction value, defined as the gross proceeds received by us in a financing transaction and the aggregate unrestricted cash balances
of any counterparty in connection with a business combination. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February&nbsp;11, 2011, we entered into a consulting agreement with the Consultant, the principal of which is James J. Graham, who subsequently became one of our directors, to
provide advice and consultation to us, on a as needed basis, with respect to (i)&nbsp;marketing and operational strategies, goals and objectives; (ii)&nbsp;implementation and execution of
strategic initiatives; and (iii)&nbsp;evaluation of performance and results. In consideration of Consultant's services we agreed to pay Consultant a $5,000 per month retainer to be offset by a
$1,000 per day consulting fee. In addition, we granted the Consultant a stock option to purchase 200,000 shares of common stock exercisable within ten years at an exercise price of $1.00 per share of
common stock, which vests one-half six months after the agreement date and the balance twelve months after the agreement date. The consulting agreement is non-exclusive and may
be terminated at any time upon 30&nbsp;days notice. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Agreements Related to Employment  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Employment Agreements  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into employment agreements with Messrs.&nbsp;Boltz, Huber, Ludwig, Neumann and Topham. Our salary commitments under
these employment agreements are approximately $835,000 annually. See the subsection of this prospectus entitled "</FONT><FONT SIZE=2><I>Executive Compensation&#151;Employment
Agreement</I></FONT><FONT SIZE=2>" for a more detailed discuss of these employment agreements. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
employment agreements also provide for various payments upon certain terminations of employment of such employees. For a description of the estimated potential payments upon
termination of employment that would be payable to each of Messrs.&nbsp;Boltz, Huber, Ludwig, Neumann and Topham see the subsection of this prospectus entitled "</FONT><FONT SIZE=2><I>Executive
Compensation&#151;Potential Payments Upon Termination or Change-in-Control</I></FONT><FONT SIZE=2>." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I> 401(k) Retirement Plan  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2007, we adopted a non-contributory 401(k) plan for our full-time employees and employees who work at
least 1,000&nbsp;hours per year. Effective January&nbsp;1, 2008, we elected to implement non-elective contributions equal to 3% of eligible compensation for all employees meeting
certain eligibility requirements. The contributions meet the tax deferral "safe harbor" requirements provided for in the Internal Revenue Code. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>41</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> Contractual Obligations  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following sets forth our contractual obligations in tabular form as at December&nbsp;31, 2010. </FONT></P>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Payments due by period </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Less than<BR>
1&nbsp;year </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>1 to 3&nbsp;years </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>3 to 5&nbsp;years </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>More than<BR>
5&nbsp;years </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>129,804</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>129,804</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>343,807</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>694,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>694,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,517</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,741,392</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Senior debt(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term payable(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>400,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>400,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,473,611</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,094,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>694,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,517</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,271,196</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Principal
amount of senior debt, does not include unaccreted discount or accrued and unpaid interest. <BR>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Principal
amount of long-term payable, does not include unaccreted discount. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><B> Critical Accounting Policies and Estimates  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Basis of Presentation and Principles of Consolidation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our consolidated financial statements and related notes are presented in accordance with GAAP and are expressed in U.S. dollars. Our
consolidated financial statements include the accounts of us and our wholly-owned subsidiaries, Cibola and Grants J.V. Prior to our purchase of the noncontrolling interests in Grants J.V. on
October&nbsp;15, 2009, and Cibola on April&nbsp;12, 2010, the consolidated financial statements included the accounts of us, our majority owned subsidiary, Cibola, and our proportionate share of
assets, liabilities and operations of our unincorporated joint-venture, Grants J.V. All inter-company transactions and balances have been eliminated. Our fiscal year end is December&nbsp;31. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Use of Estimates  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring management's estimates and assumptions are determining the fair value of
transactions involving common stock, convertible debentures and financial instruments. Other areas requiring estimates include deferred tax balances, valuation allowances, allocations of expenditures
to resource property interests and asset impairment tests. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mineral Property Costs  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been in the exploration stage since our incorporation on March&nbsp;29, 2005 and have not yet realized any revenues from our
planned operations. We are primarily engaged in the acquisition and exploration of uranium mineral properties. Mineral property exploration costs are expensed as incurred. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mineral
property acquisition costs are initially capitalized when incurred. In the event that mineral property acquisition costs are paid with shares of our common stock, those shares
are valued at estimated fair value at the time the shares are issued or at the time the rights are obtained. We assess the carrying costs of our mineral properties for impairment on at least an annual
basis. We will recognize impairment of a mineral property if the carrying amount of the mineral property is not recoverable and exceeds its fair value. Costs to maintain mineral rights and leases are
expensed in the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>42</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>period
in which they occur. Mineral property exploration costs are expensed in the period in which they occur. When management has determined that probable future benefits consisting of a contribution
to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted
exploration and development expenditures, the costs incurred to develop that property are capitalized. Such costs will be amortized using the units-of-production method based
on estimated recoverable proven reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. Mineral property acquisition costs are
expensed as incurred if the criteria for capitalization are not met. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Reclamation and Remediation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations may become subject to standards for mine reclamation which have been established by various governmental agencies. We
record the fair value of an asset retirement obligation as a liability in the period in which we incur a legal obligation for the retirement of tangible long-lived assets. A corresponding
asset is also recorded and depleted over the life of the asset. After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to
reflect changes in the estimated discounted future cash flows based on when the spending activity will occur for the underlying obligation. Determination of any amounts recognized is based upon
numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates. As of the date of our consolidated financial
statements, we have no mine reclamation costs. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
accrue costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are based on
management's estimate of amounts expected to be incurred when the remediation work is performed. As of the date of our consolidated financial statements, we have no remediation liabilities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Impairment Of Long-Lived Assets  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We review property and equipment and certain identifiable intangible assets, excluding goodwill, for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted net
cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which
the carrying value of the assets exceeds its fair value. During the periods covered by our consolidated financial statements, we had no material impairment of our long-lived assets. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Income Taxes  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Potential benefits of income tax losses are not recognized in our consolidated financial statements until realization is more likely
than not. We compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in our consolidated financial statements
because we cannot be assured it is more likely
than not that we will utilize the net operating losses carried forward in future years and therefore recorded a 100% valuation allowance against the deferred tax asset for such losses. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
follow the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>43</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
apply a "more likely than not" threshold to the recognition of tax positions based on the technical merits of the position. We recognize interest and penalties related to uncertain
tax positions in income tax expense. As of each period presented our consolidated financial statements, we made no provisions for interest and penalties related to uncertain tax positions. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Derivatives  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we enter into transactions which contain conversion privileges, the settlement of which may entitle the holder or us
to settle obligations by issuance of our securities. These transactions, the value of which may be derived from the fair value of our securities are estimated using the Black-Scholes or other
appropriate pricing models. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Stock Based Compensation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a stock plan for our employees, non-employee directors and key consultants. From time to time, we receive services
from employees, directors or consultants in exchange for (a)&nbsp;equity instruments of the enterprise or (b)&nbsp;liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by the issuance of such equity instruments. These stock-based awards are accounted for using a fair-value-based method. We use the Black-Scholes
option-pricing model to determine the fair-value of stock-based awards. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Recent Accounting Pronouncements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Recent Accounting Guidance Adopted in 2010  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No.&nbsp;2009-16 which amends the accounting for the transfers of financial assets. This Accounting Standards Update revises "</FONT><FONT SIZE=2><I>Transfers and Servicing (Topic 860):
Accounting for Transfers of Financial Assets</I></FONT><FONT SIZE=2>," to improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation
guidance. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets.
Comparability and consistency in accounting for transferred financial assets will also be improved. The new guidance is effective on a prospective basis for the annual period beginning after
November&nbsp;15, 2009 and interim and annual periods thereafter. We adopted the provisions of this ASU on January&nbsp;1, 2010, which did not have a material impact on our results of operations,
financial position or liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2009, the FASB issued ASU No.&nbsp;2009-17 "</FONT><FONT SIZE=2><I>Consolidation (Topic 810), Improvements to Financial Reporting by Enterprises Involved with
Variable Interest Entities.</I></FONT><FONT SIZE=2>" The amendments in this ASU replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a
controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that
most significantly impact the entity's economic performance and (1)&nbsp;the obligation to absorb losses of the entity or (2)&nbsp;the right to receive benefits from the entity. The amendments in
this ASU also require additional disclosures about a reporting entity's involvement in variable interest entities and an ongoing assessment of whether a company is the primary beneficiary. The revised
guidance is effective for all variable interest entities owned on or formed after January&nbsp;1, 2010. We adopted the provisions of this ASU on January&nbsp;1, 2010, which did not have a material
impact on our results of operations, financial position or liquidity. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>44</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2010, the FASB issued ASU No.&nbsp;2010-06, "</FONT><FONT SIZE=2><I>Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements.</I></FONT><FONT SIZE=2>" The guidance requires
some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in the the Accounting Standards Codification ("ASC"). The FASB's objective is to
improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, the guidance now requires (1)&nbsp;a reporting entity should disclose separately the amounts of
significant transfers in and out of Level&nbsp;1 and Level&nbsp;2 fair value measurements and describe the reasons for the transfers; and (2)&nbsp;in the reconciliation for fair value
measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In addition, the guidance clarifies the
requirements of the following existing disclosures for purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining
the appropriate classes of assets and liabilities; and a reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and
nonrecurring fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December&nbsp;15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in Level&nbsp;3 fair value measurements. Those disclosures are effective for fiscal years beginning after December&nbsp;15, 2010, and for
interim periods within those fiscal years. We adopted the provisions of this standard on January&nbsp;1, 2011, which did not have a material impact on our results of operations, financial position
or liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2010, the FASB issued ASU No.&nbsp;2010-09, "Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements". The amendments in
the ASU remove the requirement for a SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements
include financial statements revised as a result of either correction of an error or retrospective application of GAAP. The FASB also clarified that if the financial statements have been revised, then
an entity that is not an SEC filer should disclose both the date that the financial statements were issued or available to be issued and the date the revised financial statements were issued or
available to be issued. The FASB believes these amendments remove potential conflicts with the SEC's literature. All of the amendments in the ASU were effective upon issuance except for the use of the
issued date for conduit debt obligors. We adopted the provisions of this standard on January&nbsp;1, 2010, which did not have a material impact on our results of operations, financial position or
liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Recent Accounting Guidance Adopted Since January&nbsp;1, 2011  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2010, the FASB issued ASU No.&nbsp;2010-13, </FONT><FONT SIZE=2><I>"Compensation-Stock Compensation (Topic
718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades."</I></FONT><FONT SIZE=2> The ASU addresses
the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a
share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades shall not be considered to contain a
market, performance or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in this update are
effective for fiscal years, and interim periods within those fiscal years, beginning on or after December&nbsp;15, 2010. We adopted the provisions of this standard on January&nbsp;1, 2011, and do
not expect it to have a material impact on our results of operations, financial position or liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2010, the FASB issued ASU 2010-29, </FONT><FONT SIZE=2><I>"Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business
Combinations.</I></FONT><FONT SIZE=2>" The objective of this update is to address diversity in practice about the interpretation of the proforma revenue and earnings disclosure requirements for
business combinations. The amendments in this update specify that if a public entity </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>45</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>presents
comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had
occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a
description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The
amendments in this update are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after
December&nbsp;15, 2010. We adopted the provisions of this standard on January&nbsp;1, 2011, and do not expect it to have a material impact on our results of operations, financial position or
liquidity. </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not exposed to risks associated with commodity prices, interest rates and credit. Commodity price risk is defined as the
potential loss that we may incur as a result of changes in the fair value of uranium. Interest rate risk results from our debt instruments that we issue to provide financing and liquidity for our
business. We are charged an interest rate of LIBOR plus 7% under our Amended Credit Facility, but the Amended Credit Facility will be paid in full with the proceeds from this offering. Further, the
principal amounts of our letters of credit are not significant. Credit risk would arise from the extension of credit throughout all aspects of our business but is not yet significant. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>46</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  INDUSTRY AND MARKET DATA    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Industry and Uranium Market Overview  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Uranium  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium (chemical symbol U)&nbsp;is the heaviest of all the naturally occurring elements. Like other elements, uranium occurs in
different forms known as "isotopes." These isotopes differ from each other in the number of particles (neutrons) in the nucleus. Uranium as found in the earth's crust largely comprises two isotopes:
uranium-238 (U<SUP>238</SUP>) (approximately 99.3%) and uranium-235 (U<SUP>235</SUP>) (approximately 0.711%). The isotope U<SUP>235</SUP> plays an important role
because it can yield substantial energy under certain conditions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Uranium Uses  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The most common commercial use for U<SUB>3</SUB>O<SUB>8</SUB> is as a fuel for nuclear power plants. Through the process of nuclear
fission, the uranium isotope U<SUP>235</SUP> undergoes a nuclear reaction whereby its nucleus is split into smaller particles. Nuclear fission releases significant amounts of energy, and is the
basis of power generation in the nuclear industry. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
first practical use of nuclear power occurred in 1951, when an experimental nuclear reactor at a research center in Idaho Falls, Idaho lit four ordinary light bulbs. In the late
1950s, the first full-scale nuclear power plants went into service in the U.S., the United Kingdom, the Soviet Union and France. The nuclear industries of these countries and several
others grew rapidly during the 1960's and 1970's. The first export orders for nuclear power reactors were awarded in 1958 and were followed by the spread of nuclear electricity generation to many
other countries, including Canada, Germany, Switzerland, Spain, Belgium, Finland and Japan. Reactor technology was also exported by the Soviet Union to several Eastern European countries, including
the former East Germany, the former Czechoslovakia, Bulgaria and Hungary. Many of these countries developed their own nuclear expertise, leading to the development of today's international nuclear
industry. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> The Nuclear Fuel Cycle  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The nuclear fuel cycle comprises the following activities: uranium mining, conversion and enrichment, fuel fabrication, power
generation and used fuel management. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Uranium mining  </I></B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium is extracted from both open pit and underground mines. Alternative techniques include in-situ leach mining (ISR) in
which acid or alkaline solutions are pumped into underground deposits to dissolve uranium. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mined
ore is then milled and the uranium is extracted through a multi-stage metallurgical process which separates the uranium from the waste rock. The resulting uranium rich slurries are
then dried to produce U<SUB>3</SUB>O<SUB>8</SUB>. U<SUB>3</SUB>O<SUB>8</SUB> is a powder which contains approximately 80% uranium oxide. It is commonly referred to as "yellowcake." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Conversion  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are four main conversion and storage facilities in the world, Cameco (Canada), ConverDyn (U.S.), Comurhex (France) and Rosatom
(Russia). In order to increase the concentration of U<SUP>235</SUP>, U<SUB>3</SUB>O<SUB>8</SUB> is converted into uranium hexafluoride, or UF<SUB>6</SUB>. Conversion involves a series of dry or
wet chemical processes that purify the U<SUB>3</SUB>O<SUB>8</SUB> and convert it into UF<SUB>6</SUB>. The industry's inventory of U<SUB>3</SUB>O<SUB>8</SUB> is stored primarily at the licensed
conversion facilities. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>47</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
U<SUB>3</SUB>O<SUB>8</SUB> is shipped and stored at licensed conversion facilities in steel drums and in ISO sea containers and is stored on site until it is converted. Once it
arrives at the storage facility, U<SUB>3</SUB>O<SUB>8</SUB> is pooled with existing inventories held at the facility and is regarded as a fungible material. The owner of the
U<SUB>3</SUB>O<SUB>8</SUB> has its account credited with the amount of material delivered. The U<SUB>3</SUB>O<SUB>8</SUB> may then be transferred to other account holders of the storage facility
via a book transfer mechanism. Transfers of material between facilities may occur by means of a similar mechanism, or title or location swaps, which reduces the need for physical shipment of
U<SUB>3</SUB>O<SUB>8</SUB>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Enrichment  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Enrichment of uranium is the third step in the nuclear fuel cycle of more than 96% of operating reactors worldwide. Once converted,
UF<SUB>6</SUB> is transported in steel cylinders to an enricher. The four main enrichers are Eurodif&nbsp;S.A. (France), the United States Enrichment Corporation, or USEC (U.S.), Rosatom (Russia)
and Urenco (a joint venture among the United Kingdom, German and Dutch governments). During the enrichment process, the concentration of the U<SUP>235</SUP> isotope in the UF<SUB>6</SUB> is
normally increased from 0.711% to between 3% and 5%. The resultant enriched UF<SUB>6</SUB> is known as Low Enriched Uranium, or LEU. Enrichment is performed by either a gaseous diffusion or a gas
centrifuge process. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Fuel fabrication  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to produce fuel for use in nuclear power stations, LEU is first converted to uranium dioxide then further manufactured into
ceramic pellets that are inserted into zirconium rods, which are then configured into nuclear fuel assemblies for use in the core of nuclear reactors. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Power generation and used fuel management  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nuclear fuel assemblies are loaded into nuclear reactors. The subsequent fission reaction generates heat which is used to produce steam
that drives a turbine and an electric generator. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
variety of types of reactors are in operation around the world. The most commonly used designs are varieties of water-cooled reactors of the Boiling Water Reactor (BWR) or Pressurized
Water Reactor (PWR) types. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
a planned period of time, the U<SUP>235</SUP> in the fuel loses it optimal efficiency and is deemed used. The fuel assemblies are then discharged into a temporary cooling pond
at the reactor site. After a cooling period, the used nuclear fuel is then placed into onsite dry storage casks pending final disposal through deep geological burial or is reprocessed to recover
unused uranium and plutonium. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Demand  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The demand for U<SUB>3</SUB>O<SUB>8</SUB> is directly linked to the level of electricity generated by nuclear power plants. The cost
structure of nuclear power generation, which involves much higher capital costs and generally lower fuel costs compared to most other forms of power generation, dictates that nuclear plants are kept
operational at high load factors to achieve optimal economics and is commonly referred to as base load power. As a result, the demand for uranium fuel is more predictable than most other commodities.
Demand forecasts for uranium depend largely on installed and operable nuclear power generation capacity plus new reactors under construction or ordered, regardless of economic fluctuations or the
demand for other forms of power. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumption
of uranium for nuclear fuel purposes has steadily increased since the 1960's as nuclear fuel technology has become more widely used. In 2009, the World Nuclear Association,
or the WNA, estimated in its bi-annual market report "The Global Nuclear Fuel Market: Supply and Demand 2009-2030" that the annual demand for uranium for power generation in
2008 was approximately </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>48</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>170&nbsp;million
pounds of U<SUB>3</SUB>O<SUB>8</SUB>. The WNA's reference case projects that demand for uranium will increase to 240&nbsp;million pounds and 276&nbsp;million pounds of
U<SUB>3</SUB>O<SUB>8</SUB> by 2020 and 2030, respectively. This represents an annual growth rate of approximately 2.2% from 2008 to 2030. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;World
net electricity generation is expected to nearly double from 2005 to 2030, according to the Energy Information Administration's (EIA) International Energy Outlook 2008, or the IEO
2008, reference case forecast. Total electricity generation is projected to increase on average by 2.6% per year from 17.3 trillion kilowatt hours in 2005 to 33.3 trillion kilowatt hours in 2030.
Electricity generation for the non-Organization for Economic Co-operation and Development, or OCED, countries is projected to increase by 4.0% per year, according to the IEO
2008 reference case forecast, while growth of electricity generation in OECD nations is expected to average 1.3% per year from 2005 to 2030. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According
to the WNA, as of January&nbsp;1, 2011, there were a total of 441 operable commercial nuclear power plants globally with an aggregate installed generating capacity of 377,000
megawatts of electricity and requiring over 180&nbsp;million pounds of uranium per year. In 2009, commercial nuclear plants generated approximately 15% of the world's total electricity. Today,
another 61 commercial nuclear reactors (representing approximately 60,000 megawatts of electricity) are under construction and many more are planned or proposed. New construction is presently centered
in Asian countries, principally in China, South Korea, India, and Russia. While it is unclear whether nuclear power will grow as a percentage of future global power production, the WNA believes that
there will be rapid nuclear power growth in Asia. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
demand for uranium will also be increased by the trend toward improving plant load factors, but may be offset by the premature closing of some older nuclear power plants. Factors
increasing fuel demand are expected to continue to be offset in part by a trend in increased efficiency in nuclear power plants and reductions in uranium tails assay during the enrichment process.
Recently, many utilities have reduced their enrichment tails assay in order to optimize uranium and enrichment reported as separative work units, or SWU, utilization. Lower tails assay results in
lower uranium demand and is a function between the cost of uranium and SWU. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand
for uranium may also increase as a result of government initiatives to reduce CO<SUB>2</SUB> emissions. Nuclear energy plants produce far fewer greenhouse gases than fossil fuel
energy plants. According to the International Energy Agency, or the IEA, CO<SUB>2</SUB> emissions are likely to be approximately 60% higher by 2030. Current levels of nuclear power generation are
believed to prevent the emission of approximately 2.6&nbsp;billion tons of CO<SUB>2</SUB> each year. Additional nuclear power generation is one way in which governments can meet targets for the
reduction in CO<SUB>2</SUB> emissions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Supply  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium is supplied from primary production (the mining of uranium ores) and secondary sources such as the drawdown of excess
inventories and uranium made available from the decommissioning of nuclear weapons, re-enriched depleted uranium tails, and reprocessed used reactor fuel. According to Energy Resources
International,&nbsp;Inc.'s 2009&nbsp;Market Study, an estimated 89% of annual uranium consumption was sourced from primary production in 2009. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Primary Production  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The uranium production industry is characterized by a small number of companies operating in relatively few countries. WNA data shows
that the four largest uranium companies produced over 60% of the world's primary production of uranium supply in 2009. In 2009, approximately 89% of the estimated world production was provided by nine
producers: Rio Tinto (17%), Cameco (16%), KazAtomProm (16%), Areva (15%), Armz (9%), BHP Billiton (6%), Navoi Mining (5%), Uranium One (3%), and Paladin (2%). According to the UxC 2009 Special report,
in 2020 the shares of world </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>production
are projected to be: Areva (17%), KazAtomProm (14%), Cameco (14%), BHP Billiton (14%), Armz (11%), Rio Tinto (10%), Uranium One (4%), Navoi Mining (3%), and Paladin (3%). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately
93% of estimated world production of uranium was sourced from eight countries and approximately 63% of the estimated world production was sourced from three counties in
2009: Kazakhstan (27%), Canada (20%), Australia (16%), Namibia (9%), Russia (7%), Niger (6%), Uzbekistan (5%) and the United States (3%). The Canadian uranium industry has been the leading supplier of
uranium in recent years with production of an estimated 25.4&nbsp;million pounds U<SUB>3</SUB>O<SUB>8</SUB> in 2010, which represented nearly 20% of world production. However, in 2009 they were
overtaken by Kazakhstan, who produced 28% of world production with production of approximately 46.3&nbsp;million pounds of U<SUB>3</SUB>O<SUB>8</SUB> in 2010. According to the WNA, this output is
expected to rise to an estimated 50.9&nbsp;million pounds in 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Secondary Sources  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over the last several years, primary production of uranium has satisfied 50-70% of world requirements. The remainder has
been provided from secondary sources. The de-enrichment of nuclear weapons through blending with low enriched uranium from conventional production sources has contributed the largest
proportion of secondary supply and meets about 13% of world reactor requirements. Also, some utilities in Europe and Asia use reprocessed uranium and plutonium derived from used reactor fuel as a
source of supply. Depleted uranium tails from the uranium enrichment process can be re-enriched and added to the fuel mix. Mixed oxide fuel, or MOX, provided about 2% of new fuel in 2009,
and World Nuclear News Reports that in 2010, 5% of reactors were powered by MOX fuel. Excess inventories held by utilities, producers, other fuel cycle participants and governments have also served as
a source of supply, although this is a finite source. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Uranium from Nuclear Disarmament  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The most significant secondary source of uranium is from de-enriching nuclear weapons. In February 1993, the U.S. and
Russia entered into an agreement, the Russian HEU Agreement, to manage the sale of highly enriched uranium, or HEU. Under the Russian HEU Agreement, over a term of 20&nbsp;years ending with
deliveries in 2013, 500 tons of HEU derived from dismantling nuclear weapons are to be diluted in Russia from HEU to LEU, the Disarmament Uranium, and delivered to the United States, suitable for use
in nuclear power plants. The official arrangement between the governments of the U.S. and Russia calls for the enrichment services component the Disarmament Uranium to be purchased by USEC. The
natural uranium content of the Disarmament Uranium scheduled for delivery over the 20-year period represents approximately 400&nbsp;million pounds of U<SUB>3</SUB>O<SUB>8</SUB>. As of
the end 2010, Russia had delivered the equivalent of over approximately 390 tons of HEU equivalent to the United States Government. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
March 1999, Cameco Corporation, Areva and RWE NUKEM,&nbsp;Inc., or the Western Companies, entered into an agreement, the Western Agreement, whereby they would purchase a substantial
portion of the Disarmament Uranium. Cameco Corporation reports that as a result of various amendments to the Western Agreement, the Western Companies committed to the purchasing and selling of almost
163&nbsp;million pounds of U<SUB>3</SUB>O<SUB>8</SUB> from 2004 through to the end of 2013. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Russia,
through its agent Techsnabexport, or TENEX, has, in the past, sold a portion of the Disarmament Uranium not purchased by the Western Companies. Russia currently consumes
significantly more U<SUB>3</SUB>O<SUB>8</SUB> than it produces and is proceeding with an ambitious nuclear power development program which will further decrease the supply of
U<SUB>3</SUB>O<SUB>8</SUB> into the western commercial market. As a result, TENEX has recently reduced selling the natural uranium derived from the Disarmament Uranium thus reducing the amount of
uranium that would have been available to the market in the western world by up to 74&nbsp;million pounds of U<SUB>3</SUB>O<SUB>8</SUB> over the period from 2004 to 2013. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>50</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Russia
has made official declarations that the HEU Agreement will not be extended beyond 2013, and that its main interest in the commercial nuclear fuel markets is to sell enrichment
services. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Trade Actions Against Russian Origin Uranium  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1991, prompted by complaints from U.S. industry uranium producers, the U.S. Department of Commerce, or the DOC, initiated an action
to investigate the dumping by Russia of uranium into the U.S. market. This action led to the formulation of a Suspension Agreement between the United States and Russian governments under which the DOC
investigation would be suspended in exchange for Russia's compliance with a set of principles intended to stop the entry of most Russian origin uranium into the U.S. market, and to impede any swaps,
exchanges or similar activities that would lead to the indirect entry of Russian origin uranium into the U.S. market. Under the Suspension Agreement, high tariffs are imposed on Russian origin uranium
entering the U.S. market. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September of 2007, in an unrelated case, the U.S. Court of International Trade mandated DOC to review its stance on the continuing usefulness and initial legal justification of the
Suspension Agreement. An amendment to the Suspension Agreement was signed on February&nbsp;1, 2008. Under the amended Suspension Agreement, Russian SWU is allowed to enter the U.S. in small
quantities from 2011 to 2013. From the end of 2013, when the HEU Agreement expires, to 2020, when the suspension agreement expires, the amendment allows Russian SWU to account for about 20% of
projected U.S. demand. That figure does not include initial cores for new reactors, which are not subject to the amendment's quotas. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September of 2008, the U.S. Congress passed and the President signed into law the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, which included
an amendment to the United States Enrichment Corporation Privatization Act that extended potential opportunities to the Russian Federation to continue to down-blend HEU to LEU after 2012
through 2020 in exchange for increased access to U.S. commercial uranium markets. Any implementation would require additional negotiations between the United States and the Russian Federation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> The Uranium Market and Prices  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities secure a substantial percentage of their uranium requirements by entering into medium and long-term contracts
with uranium producers. These contracts typically provide for deliveries to begin one to three years after signing and continue for five to ten years thereafter. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
is currently no regulated commodity market underwritten by a market maker for the various components of nuclear fuel. As such, market participants rely upon multiple published
price opinions based on historical data and market sentiment. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contracted
uranium prices are established by a number of methods, including base price levels adjusted by inflation indices, reference prices (multiple published spot price opinions as
well as long term reference prices) and annual price negotiations. Many contracts also contain floor prices, ceiling prices and other negotiated provisions which affect the price ultimately paid.
Uranium prices under uranium supply contracts are usually confidential. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities
also acquire uranium by way of spot and near-term purchases from producers and traders. Spot market purchases are those that call for delivery within one year.
Traders generally source their uranium from organizations, including utilities, producers and governments, which hold excess inventory. The estimated spot market volume in 2010 was approximately
20&nbsp;million pounds and represented about 12% of reactor uranium requirements. The downward trend seen in spot price in mid-2007 reversed and increased through most of 2010, with the
price increasing weekly. With small spikes in the spot price aside, the price of U<SUB>3</SUB>O<SUB>8</SUB> increase from $48.00/lb with a volume of 1.9&nbsp;million </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>lbs
of U<SUB>3</SUB>O<SUB>8</SUB> in January of 2009 to $62.50/lb with a volume of 3.29&nbsp;million lbs U<SUB>3</SUB>O<SUB>8</SUB> in December of 2010. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium
spot market prices rose sharply during 2006, starting the year at approximately $36.50/lb of U<SUB>3</SUB>O<SUB>8</SUB> and ending at $72.00/lb. The spot price continued to
rise during 2007, reaching its peak in June 2007 of over $135.00/lb. The extent of the price rise (more than a tenfold increase since early 2003) took the uranium market to historic levels in both
real (inflation adjusted) and nominal terms. This substantial increase was mainly a market reaction to the realization that primary uranium production must rise to meet growing demand for nuclear
electricity. After the spot price reached its peak in mid-2007, it dropped back to $75.00/lb in October 2007 before rebounding to $93.00/lb in November 2007 and ended the year at $90/lb.
During the first half of 2008, the spot price declined more gradually, reaching $57.00/lb in June 2008. The spot price then increased to reach $64.50/lb in July 2008 and remained at this level until
September 2008. The spot price then declined to $44.00/lb in October 2008 and subsequently increased to $54.00/lb by the end of December 2008. By December 2009 the spot price had dropped to $44.50/lb.
The spot price per pound in 2010 remained between $40.00-$45.00 until November when it increased to $60.00 and has steadily increased each month since. As of March&nbsp;24, 2011, the
spot price was $62.00/lb as quoted by TradeTech,&nbsp;LLC. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Supply Deficit  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each year since 1989, the consumption of uranium has exceeded primary production. To date, this large supply gap has been accommodated
by sales from existing inventories, former stockpiles stored in Russia, recycling programs and de-enrichment of nuclear weapons. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that the uranium market will face a growing supply deficit until new mine production can be implemented. Uranium mining has proven to be a very challenging endeavor, with
several world class projects in operation or development having suffered flood, fire and other unexpected losses, necessitating significant delays or interruptions over the last few years. In
addition, on the demand side, China, Russia and India have officially announced large increases in their nuclear power programs over the next 20&nbsp;years. Without significant indigenous supplies
of uranium, these countries have recently begun aggressive resource acquisition, exploration and development plans for properties throughout the world. We believe that the long term fundamentals of
the uranium market are positive. </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  DESCRIPTION OF BUSINESS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Company Overview  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We began operations as an unincorporated entity on March&nbsp;25, 2005 and were incorporated on March&nbsp;29, 2005 under the laws
of the State of Wyoming. On April&nbsp;26, 2007 we transferred our state of domicile from Wyoming to Nevada. We were formed to capitalize on our management's extensive knowledge and experience in
uranium exploration, development and production, as well as our geologic and engineering data bases covering several uranium districts that historically have been uranium producers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are a natural resource company engaged in the acquisition and exploration of uranium properties in the United States. Our strategy is to acquire properties that (i)&nbsp;have
undergone some degree of historical uranium exploration and on which uranium mineralized material, but not reserves, have been located, and (ii)&nbsp;are located in mineralized districts that have
undergone some degree of historical uranium exploration and are thought to be prospective for further uranium exploration, but on which no uranium mineralized material has been located. We have
acquired interests in 63,312 net acres of leased or staked properties in New Mexico, South Dakota and Wyoming. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also hold residual mineral interests that we received in the disposition of properties in Arizona and South Dakota. These residual interests were received in consideration of the sale
of our ownership interests in the properties and are primarily comprised of royalty interest, net proceeds interest and our ability to convert the royalty interest into a working interest in the
properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of our mineral properties are exploration stage properties. Some of our mineral properties have been the subject of historical exploration and/or development, and in one case
production, by other mining companies, that provides indications that further uranium exploration is warranted. Our view that these properties are prospective for mineral exploration is based on prior
exploration and/or development conducted by other companies, management information and work product derived from various reports, maps, radiometric assay from down-hole radiometric
logging, exploratory drill logs, state organization reports, consultants, geological study and other exploratory information. If we are able to locate economic uranium reserves that are commercially
viable, we intend to develop the mine site, including mill facilities, and extract uranium for production. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are an exploration stage company and all of our projects are in the exploration stage and do not have any known proven or probable reserves in accordance with the definitions of
reserves under Industry Guide 7 ("SEC Guide 7") issued by the SEC. There can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of our properties until appropriate
exploratory work is completed and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration and permitting beyond the scope of our planned activities
will be required before a final evaluation as to the economic and legal feasibility of mining of any of our properties is determined. There is no assurance that further exploration will result in a
final evaluation that a commercially viable mineral deposit exists on any of our mineral properties. We will require additional financing in order to pursue full exploration and permitting of these
properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of March&nbsp;24, 2011, we had 58,204,141&nbsp;shares of common stock outstanding. On that date, there were 195 holders of record. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Corporate Information  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive offices are located at 9000 E. Nichols Avenue, Suite&nbsp;225, Englewood, Colorado 80112. Our telephone number is
(303)&nbsp;531-0470. We have a field office in Albuquerque, New Mexico. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Employees  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have 13 full-time and three part-time employees and have engaged geological and technical consultants for
additional day-to-day services. Other services are provided by outsourcing consultants and special purpose contracts. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Business and Growth Strategy  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an exploration stage company engaged in the exploration of uranium. We do not engage in any development activities at this time,
but may engage in development activities should uranium reserves be located on any of our properties. The key elements of our business and growth strategy are as follows: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Cibola Project  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on historical exploration and development data, we believe our wholly-owned Cibola Project may have future uranium reserve
potential. We have received the required exploration permits on our Juan Tafoya Property and Cebolleta Property which will allow us to
commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We have substantially completed resource modeling on each of the Juan Tafoya
Property and Cebolleta Property, based on historical data we have in our possession. We have received an independent technical report completed in accordance with the provisions of
NI&nbsp;43-101 ("Cibola NI&nbsp;43-101"). The Cibola NI&nbsp;43-101 is authored by G. S. Carter, P. Eng., a qualified person as defined in
NI&nbsp;43-101. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
of the long lead times for environmental permitting of mining operations in North America, we have commenced the permitting process with the NRC on our Cibola Project, primarily
through initial planning sessions with the NRC and the collection of environmental baseline data. We believe that commencing the permitting process at this early stage will allow us to expeditiously
commence development of our properties if we move to that stage. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Ambrosia Lake Project  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have received the required exploration permit on our Elizabeth Target, included in the Ambrosia Lake Project, which will allow us to
commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We believe our Elizabeth, Deep Rock, Mesa Redonda, West Endy and West Ranch
targets represent long-term uranium reserve potential. We seek to complete the analysis and digitization of historic geologic data, mapping and other geophysic and geologic activities on
our Ambrosia Lake Project targets and to commence exploration permitting and exploration programs on selected targets. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Edgemont Project, Copper Mountain Project and Other Wyoming Properties  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not anticipate any significant exploration activities during the next twelve months on our other properties. We may seek to sell
or enter into joint-venture arrangements on these properties with other exploration companies. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Extensive Due Diligence of Properties  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our exploration activities are divided into phases dependent on the nature of historical exploration and development activities on the
property. Our initial phase of exploration includes extensive due diligence and analysis of all historical exploration data available to us or in our
possession. Furthermore, we probe existing and newly drilled holes with gamma probes with the goal of confirming historical drill results and planning for future development. We will proceed to our
second phase if we are able to confirm historical data and drill results. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> Pursue Strategic Acquisitions of Exploration Stage Properties  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also engaged in the continual review of opportunities to acquire properties in the exploration stage that are thought to contain
uranium mineralization and have undergone some degree of historical exploration or development. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Financing  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, we have financed our operations primarily by (i)&nbsp;private placements of convertible subordinated notes convertible
for either (a)&nbsp;shares of our common stock, or (b)&nbsp;shares of our common stock and warrants to purchase additional shares of our common stock; (ii)&nbsp;private placement of shares of
our common stock to certain individuals and institutional investors; and (iii)&nbsp;senior secured debt credit facilities. The following sets forth our significant financing
transactions: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Pursuant
to a letter agreement we entered into with Primary in 2005 and a Subscription Agreement we entered into with Primary in 2006, we issued 10,750,000
shares of our common stock in January 2006 in exchange for $1,250,000, which Primary paid in periodic payments between May 2005 and January 2006.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
June 2006, we issued 7.5% Series&nbsp;A Convertible Subordinated Notes due May&nbsp;31, 2007 ("Series&nbsp;A Notes") in the aggregate principal
amount of $1,069,300. The Series&nbsp;A Notes were convertible at $0.22 per share. In August 2007 all of the Series&nbsp;A Notes were converted into a total of 4,860,456 shares of common stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Between
October and November 2006, we issued 7.5% Series&nbsp;B Convertible Subordinated Notes due September&nbsp;30, 2007 ("Series&nbsp;B Notes")
in the aggregate principal amount of $5,722,516. The Series&nbsp;B Notes were convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of
common stock at an exercise price of $1.00. In April 2007, we issued a waiver allowing the Series&nbsp;B Note holders to receive and exercise their warrants prior to converting their Series&nbsp;B
Notes. During April and May 2007, the warrants related to $5,254,676 principal amount of the Series&nbsp;B notes were exercised and we issued 7,727,465 shares of common stock and received $7,727,465
in gross proceeds. In August 2007, we offered to prepay the Series&nbsp;B Notes subject to the holders' right to convert the Series&nbsp;B Notes into shares of common stock at $.68 per share.
Holders of Series&nbsp;B Notes in the aggregate face value of $5,652,136 converted their Series&nbsp;B Notes into a total of 8,311,965 shares of common stock and we repaid the remaining
Series&nbsp;B Notes in the aggregate principal amount of $70,380.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(iv)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Between
March and April 2007, we issued 7.5% Convertible Subordinated Notes due February&nbsp;28, 2008 ("Series&nbsp;C Notes") in the aggregate
principal amount of $999,713. The Series&nbsp;C Notes were convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock at a
purchase price of $1.00. In April 2007, we issued a waiver allowing the Series&nbsp;C Note holders to receive and exercise their warrants prior to converting their Series&nbsp;C Notes. During
April and May 2007, the warrants related to Series&nbsp;C Notes in the aggregate principal amount of $766,713 were exercised and we issued 1,127,519 shares common stock and received $1,127,519 in
gross proceeds. In August 2007, we offered to prepay the Series&nbsp;C Notes subject to the holders' right to convert the Series&nbsp;C Notes into shares of common stock at $.68 per share. All of
the Series&nbsp;C Notes were converted into a total of 1,470,166 shares of common stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(v)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>During
September through November 2007, we issued 7,061,474 shares of common stock in a private placement at $1.50 per share. Gross proceeds from the
private placement were $10,592,211. </FONT></DD></DL>
</UL>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(vi)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
April 2010, pursuant to the Credit Facility agreement, we entered into a $16,000,000 senior secured credit facility, which the lender advanced in two
tranches. Tranche&nbsp;1 proceeds in the amount of $5,000,000 were used for general working capital and Tranche&nbsp;2 proceeds in the amount of $11,000,000 were used to fund our acquisition of
UEC's 49% interest in Cibola.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(vii)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
December 2010, we entered into the First Amendment Agreement to the Credit Facility agreement. The lender extended the maturity of the credit facility
from December&nbsp;31, 2010 to June&nbsp;30, 2011, and increased the credit facility by $8,000,000, from $16,000,000 to $24,000,000. See the subsection of this prospectus entitled
"</FONT><FONT SIZE=2><I>Management's Discussion and Analysis&#151;Material Commitments&#151;Senior Debt Credit Facility</I></FONT><FONT SIZE=2>" for a more detail discussion of the
senior secured credit facility and first amendment. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that the proceeds from this offering will satisfy cash requirements of the Company for a minimum of 12&nbsp;months but that we will require additional funding to continue to
implement our business and growth strategy after that period. See the section of this prospectus entitled "</FONT><FONT SIZE=2><I>Use of Proceeds</I></FONT><FONT SIZE=2>." </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Competition  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual
investors, which are actively seeking uranium minerals exploration properties throughout the world together with the equipment, labor and materials required to exploit such properties. Many of our
competitors have financial resources, staff and facilities substantially greater than ours. The principal area of competition is encountered in the financial ability to acquire prime minerals
exploration prospects and then exploit such prospects. Competition for the acquisition of uranium minerals exploration properties is intense, with many properties available in a competitive bidding
process in which we may lack technological information or expertise available to other bidders. Therefore, we may not be successful in acquiring, exploring and developing profitable properties in the
face of this competition. No assurance can be given that a sufficient number of suitable uranium minerals exploration properties will be available for acquisition, exploration and development. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
uranium production industry is characterized by a small number of companies operating in relatively few countries. WNA data shows that the four largest uranium companies produced
over 60% of the world's primary production of uranium supply in 2009. In 2009, approximately 89% of the estimated world production was provided by nine producers: Rio Tinto (17%), Cameco (16%),
KazAtomProm (16%), Areva (15%), Armz (9%), BHP Billiton (6%), Navoi Mining (5%), Uranium One (3%), and Paladin (2%). According to the UxC 2009 Special report, in 2020 the shares of world production
are projected to be: Areva (17%), KazAtomProm (14%), Cameco (14%), BHP Billiton (14%), Armz (11%), Rio Tinto (10%), Uranium One (4%), Navoi Mining (3%), and Paladin (3%). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Financial Information  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not have reporting segments for accounting purposes and has not generated any revenues since its inception in 2005.
For a more detailed discussion on the Company's financial performance, see the section of the prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discussion and Analysis of Financial Condition
and Results of Operations</I></FONT><FONT SIZE=2>" and our audited consolidated financial statements and related notes. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Reporting Company  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this registration statement becoming effective, we did not file reports with the SEC but we will become a reporting company
upon this registration statement becoming effective. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Government Regulations  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minerals exploration operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays
in excess of those anticipated causing an adverse effect on us. Minerals exploration operations are subject to federal, state, and local laws relating to the protection of the environment, including
laws regulating removal of natural resources from the ground and the discharge of materials into the environment and remediation, and relating to prospecting, development, production, exports, taxes,
waste disposal, protection of endangered and protected species, mine safety, toxic substances and other matters. Minerals exploration operations are also subject to federal, state, and local laws and
regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling
operations to be conducted and no assurance can be given that such permits will be received. Compliance with such laws may cause substantial delays or require capital outlays in excess of those
anticipated. Moreover, noncompliance with applicable laws and regulations can result in assessment of penalties and/or capital expenditures to achieve compliance. In addition, some laws may allow for
third party claims for damages caused by pollution conditions for which we have legal responsibility. Costs associated with any of these may have an adverse effect on us.
At this time management believes that we are in substantial compliance with current applicable environmental laws and regulations and we are not aware of any material liabilities related to
environmental laws and regulations. Environmental standards imposed by federal, state, or local authorities may be changed and any such changes may have material adverse effects on our activities.
Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. The principal
laws and regulations our business is subject to are described below. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Uranium Mining and Milling Licenses  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium mining operations, such as the conventional shafts or surface (strip) mines are licensed by the individual states where the
mines are located. However, the Atomic Energy Act of 1954 (as amended) gives the NRC jurisdiction over uranium once its physical or chemical properties are altered for eventual use in the nuclear fuel
cycle. As a result, an NRC license is required for uranium mills, the facilities that process the ore into uranium oxide, or "yellowcake." There is another type of uranium recovery, called in situ
recovery (ISR), which injects a solution into the ground to extract uranium from the rock; the resulting uranium solution is then pumped to the surface for processing. The NRC licenses and regulates
ISR facilities because the uranium processing begins underground. The NRC licenses both uranium mills and ISR facilities under 10 CFR Part&nbsp;40, "Domestic Licensing of Source Material." License
applications require a thorough evaluation of the proposed facility, the radiological impacts of the facility, and an open, robust public participation process. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Resource Conservation and Recovery Act (RCRA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RCRA, and comparable state statutes, affect minerals exploration and production activities by imposing regulations on the generation,
transportation, treatment, storage, disposal and cleanup of "hazardous wastes" and on the disposal of non hazardous wastes. Under the auspices of the U.S. Environmental Protection Agency ("EPA"), the
individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CERCLA imposes joint and several liability for costs of investigation and remediation and for natural resource damages, without regard
to fault or the legality of the original conduct, on certain classes of persons with respect to the release into the environment of substances designated under CERCLA as hazardous substances
("Hazardous Substances"). These classes of persons or potentially </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>57</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>responsible
parties include the current and certain past owners and operators of a facility or property where there is or has been a release or threat of release of a Hazardous Substance and persons
who disposed of or arranged for the disposal of the Hazardous Substances found at such a facility. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Clean Air Act (CAA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Clean Air Act, as amended, restricts the emission of air pollutants from many sources, including mining and processing activities.
Our mining activities may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy
construction equipment, which are subject to review, monitoring and/or control requirements under the CAA and state and local air quality laws. New facilities may be required to obtain air permits
before work can begin. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Clean Water Act (CWA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CWA imposes restrictions and strict controls regarding the discharge of wastes, including mineral processing wastes, into waters of the
United States, a term broadly defined. Permits must be obtained to discharge pollutants into federal waters. In addition, the EPA has promulgated regulations that may require us to obtain permits to
discharge storm water runoff. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United States unless authorized
by an appropriately issued permit. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> The Safe Drinking Water Act (SDWA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Safe Drinking Water Act (SDWA) and the Underground Injection Control (UIC) program promulgated thereunder, regulate the drilling
and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The program
requires that a permit be obtained before drilling a disposal or injection well. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> National Environmental Policy Act, 1970 (NEPA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal agencies must comply with NEPA for major federal actions, such as the issuance of a source material license for a uranium mill.
Compliance with NEPA typically requires preparation of an Environmental Assessment (EA) or Environmental Impact Statement (EIS). Preparation of an EA or EIS requires agencies to examine the
environmental consequences of a proposed action, evaluate alternatives to the proposed action, and consider mitigation of potential impacts from the proposed action, but it does not prevent Federal
agencies from authorizing actions that might have harmful environmental impacts. The EA and EIS process involve substantial public input. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Endangered Species Act, 1973 (ESA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the ESA is to provide a program for the conservation of threatened and endangered species of plants and animals, and the
habitats in which they are found. It applies to all agencies and all lands, whether publicly or privately owned and requires a Federal agency to consult with the National Marine Fisheries Service or
the Fish and Wildlife Service if the agency is proposing an action (including for example issuance of a permit) that may affect a listed species or its habitat. This law may trigger the preparation of
Biological Assessments by qualified individuals for specific projects such as a mine or mill if the project may affect a listed species or the habitats that would support the listed species. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>58</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> National Historic Preservation Act, 1966 (NHPA)  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among other things, NHPA requires Federal agencies to comply with Section&nbsp;106 of NHPA with respect to federal actions (including
issuance of a permit) if that action has the potential to affect certain historic resources. The Section&nbsp;106 process often requires archaeological and cultural resource surveys to identify such
sites or properties and requires that the Federal agency consult with appropriate state and local officials, Indian tribes, and members of the public, among others, before making a final decision on
the action. The presence of certain historic resources may require avoidance of those resources during development, or further investigation of the significance of those resources if the resources
cannot be avoided. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>59</FONT></P>

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<A NAME="toc_ea75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  DESCRIPTION OF PROPERTIES    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron's acquisition and exploration activities have been focused in the Western United States. We are an exploration stage company
engaged in the acquisition and exploration of uranium properties. "Uranium" used in this context refers to U<SUB>3</SUB>O<SUB>8</SUB>. U<SUB>3</SUB>O<SUB>8</SUB> or "yellowcake" is triuranium
octoxide produced from uranium ore and is the most actively traded uranium-related commodity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have interest in properties located in the states of New Mexico, South Dakota, Wyoming, and Arizona as shown in the Figure&nbsp;1. Currently, the Company's primary focus is to
advance our Cibola Project in New Mexico with the objective of assessing its viability for commercial uranium mining. All of our projects are at the exploration stage without known reserves and there
can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of our properties until appropriate exploratory work is done and a comprehensive evaluation based on such work
concludes legal and economic feasibility. Further exploration will be required before a final evaluation as to the economic, technical and legal feasibility of mining of any of our properties is
determined. Concurrent with our exploration activities, we intend to progress permitting activities so that if we determine in the future that the Cibola Project is commercially viable, necessary
environmental and regulatory studies will be in
process. There is no assurance that further exploration will result in a final evaluation that a commercially viable mineral deposit exists on any of our mineral properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
administrative and operating activities are primarily conducted in leased office space in Englewood, Colorado and Albuquerque, New Mexico. Our corporate headquarters are located in
Englewood, Colorado, where we lease 7,232 square feet under a lease that expires on October&nbsp;31, 2011. The Albuquerque lease covers 2,412 square feet and has been extended through March 2012. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g897769.jpg" ALT="GRAPHIC" WIDTH="565" HEIGHT="504">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Figure&nbsp;1.
Location map of mineral properties (March 2011) </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>60</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Table below lists our Mineral Properties in which we have an interest. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Table of Properties  </B></FONT></P>
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<TD WIDTH="" style="font-family:times;"></TD>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:116pt;"><FONT SIZE=1><B>Property (location/project/target)

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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Nature of Interest </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage (net) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>New Mexico</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cibola Project</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Juan Tafoya</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Lease-fee minerals within Spanish Land Grant</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,097</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cebolleta</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Lease-fee minerals within Spanish Land Grant</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,717</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ambrosia Lake</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deep Rock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Unpatented mining claims</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,632</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Elizabeth</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Lease-patented and unpatented mining claims</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>179</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mesa Redonda</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Lease-unpatented mining claims</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,748</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>West Endy</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Lease-unpatented mining claims, state lease</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,026</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>West Ranch</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Unpatented mining claims</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,117</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hogan</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Unpatented mining claims</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,108</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rio Puerco</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Unpatented mining claims</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,325</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>South Dakota</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Edgemont</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unpatented mining claims, leased fee and state leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
19,062</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Wyoming</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Copper Mountain</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unpatented mining claims, lease fee and state leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
9,313</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Black Hills</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>State lease</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,638</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shirley Basin</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Unpatented mining claims and state leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sundance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>State leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,641</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>63,312</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other Residual Mineral Interests</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Arizona</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Breccia Pipes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Royalty interest and option to participate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
2,898</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>South Dakota</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dewy-Burdock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net proceeds interest</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
6,288</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<P style="font-family:times;"><FONT SIZE=2><B> Technical Reports  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have obtained the following technical reports that were prepared in accordance with NI&nbsp;43-101 for our New Mexico
and South Dakota projects: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="157pt" style="font-family:times;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:56pt;"><FONT SIZE=1><B>Name of Report

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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Author of Technical Report </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Date of Report </B></FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>Technical Report on the Uranium<BR>
Resources at The Cibola Uranium<BR>
Project, Cibola, McKinley and<BR>
Sandoval Counties, New Mexico, USA</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>G.S. Carter, P. Eng.<BR>
Broad Oak Associates<BR>
365 Bay Street<BR>
Suite&nbsp;304<BR>
Toronto, Ontario<BR>
Canada, M5H&nbsp;2V1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>January&nbsp;14, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Technical Report on the Uranium<BR>
Resources at Ambrosia Lake<BR>
Uranium Project, McKinley County,<BR>
New Mexico, USA</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>G.S. Carter, P. Eng.<BR>
Broad Oak Associates<BR>
365 Bay Street<BR>
Suite&nbsp;304<BR>
Toronto, Ontario<BR>
Canada, M5H&nbsp;2V1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>January&nbsp;18, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Technical Report on the Uranium<BR>
Resources on The Edgemont<BR>
Uranium Project, Fall River County,<BR>
South Dakota, USA</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>G.S. Carter, P. Eng.<BR>
Broad Oak Associates<BR>
365 Bay Street<BR>
Suite&nbsp;304<BR>
Toronto, Ontario<BR>
Canada, M5H&nbsp;2V1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>January&nbsp;18, 2011</FONT></TD>
</TR>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Cautionary Note to United States Investors  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are simultaneously filing in Canada to be listed on the TSX and are required by Canadian law to provide disclosure in accordance
with NI&nbsp;43-101. This required disclosure includes the preparation and filing of technical reports on our material mineral properties with Canadian securities commissions under
NI&nbsp;43-101. These technical
reports will be furnished by us to the SEC on Form&nbsp;8-K upon effectiveness of this registration statement in order to satisfy our "public disclosure" obligations under SEC
Regulation&nbsp;FD and are not filed with the SEC. U.S. reporting requirements for disclosure of mineral properties, including disclosure required in this prospectus, are governed by the SEC Guide
7. The standards of disclosure of mineral properties under NI&nbsp;43-101 and SEC Guide 7 are substantially different. All mineral resources disclosed in our NI&nbsp;43-101
technical reports referenced herein have been estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and
Petroleum referred to in NI&nbsp;43-101. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
NI&nbsp;43-101 technical reports referenced herein use the terms "mineral resource," "indicated mineral resource," and "inferred mineral resource." We advise investors
that these terms are defined in and required to be disclosed by NI&nbsp;43-101; however, these terms are not defined terms under SEC Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into SEC Guide 7
reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of any mineral resource exists or is economically or legally mineable. The SEC
normally </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>62</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>only
permits issuers to report mineralization that does not constitute "reserves" by SEC standards as non reserve in-place mineralized material. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> NEW MEXICO  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> General  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our mineral properties located in the State of New Mexico are subdivided into two separate groups and consist of the Cibola Project and
the Ambrosia Lake Project. The Company's principal mineral project is the Cibola Project which consists of the Juan Tafoya Property and the Cebolleta Property. Within the lands that comprise the
Ambrosia Lake Project, we have
identified five principal target areas: Deep Rock, Elizabeth, Mesa Redonda, West Endy, and West Ranch properties. Figure&nbsp;2. below shows the location of our New Mexico Properties. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g536219.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="484">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;2.
Location Map of New Mexico Properties (March 2011) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Regional Geologic Setting  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The properties in the Cibola Project and the Ambrosia Lake Project are situated within the Grants mineral belt, on the southern flank
of the San Juan Basin. The basin is a significant geological and topographic feature that covers much of the northwest portion of the state of New Mexico, and is a major geological and physiographic
feature of the Colorado Plateau geologic province. The mineral belt is a west-northwest trending zone of sandstone-hosted (and some limestone-hosted) uranium mineralized areas that extends
from the western edge of the Rio Grande Rift, east of the town of Laguna, west-northwesterly for a distance of more than 100 miles (160.9 kilometers) to the vicinity of </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>the
city of Gallup. Locally the belt attains a width of approximately 25 miles (40.2 kilometers). This belt of mineralized areas includes mining districts north of Laguna, the Ambrosia
Lake-San Mateo area (north of Grants), Smith Lake, Crownpoint, and Church Rock. Collectively, the mineralized areas of the belt have produced more that 348&nbsp;million pounds of uranium
which was more than 44% of all uranium produced in the United States through 1980. One of the districts in the mineral belt, Ambrosia Lake, has produced nearly 190&nbsp;million pounds of
U<SUB>3</SUB>O<SUB>8</SUB>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Stratigraphy  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal uranium mineralized areas of the Grants mineral belt are hosted in fluvial sandstones of the Jurassic-aged
Morrison Formation. The Morrison
Formation has been subdivided into three formal Members (in ascending order): </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The Recapture Member is the lower-most unit of the Morrison Formation. The unit ranges from 70 to 250 feet (21
to 76 meters) in thickness in the Ambrosia Lake area, although it may locally be absent due to "scouring" by channels of the overlying Westwater Canyon Member. In the Ambrosia Lake area the Recapture
Member is composed of clayey sandstone, sandy claystone, eolian sandstone, claystone and siltstone. The sandstones are moderately-to-poorly sorted. This unit is lithologically
identical to sandstones in the overlying Westwater Canyon Member, and may be difficult to distinguish from the Westwater Canyon Member;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The Westwater Canyon Member overlies the Recapture Member, and is the principal unit of economic interest in the Ambrosia
Lake Project area. The unit ranges from 90 to 290 feet (27 to 88 meters) in thickness in the Ambrosia Lake district. It regularly forms "ledgy" cliffs and grit-covered slopes. It is a fine
to very fine grained sandstone and contains locally conglomeratic, poorly sorted friable feldspathic sandstones and local zones and interbeds of variegated mudstone. The Westwater Canyon Member was
deposited in a braided stream, fluvial environment. A prominent sandstone, the Poison Canyon sandstone, of local usage, which hosts significant uranium mineralized areas in the southern part of the
Ambrosia Lake district, is present in the upper-most part of the Westwater Canyon Member, and it interfingers with the overlying Brushy Basin Member. There is some debate about whether the
Poison Canyon is an upper-most "tongue" of sandstone at the top of the Westwater Canyon Member or a distinct sandstone body in the lower portion of the overlying Brushy Basin Member. The
Poison Canyon sandstone is approximately 20 to 90 feet (6 to 27 meters) thick, and is compositionally similar to sandstones of the Westwater Canyon; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The upper-most unit of the Morrison Formation is the Brushy Basin Member, which ranges from 40 to 220 feet (12
to 67 meters) in thickness, overlies the Westwater Canyon Member, and inter-fingers with the Poison Canyon sandstone. The unit is predominantly clay facies, and ranges from claystone to very fine
grained sandstones. In the southern portion of the Cibola Project, on the Cebolleta Property, the Jackpile sandstone (of local and economic usage) is a unit of the Brushy Basin Member. This sandstone
contains significant uranium mineralized areas. The Jackpile sandstone extends in a northeasterly-trending belt that may be as much as 13 miles (20.9 kilometers) wide and more than 65 miles (104.6
kilometers) long. The unit may achieve a thickness of 200 feet (61 meters) but commonly ranges from 80 to 120 feet (24 to 37 meters) in thickness where it hosts uranium mineralization. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Cretaceous-age Dakota Sandstone overlies the Brushy Basin Member of the Morrison Formation throughout the project area. The Dakota ranges from 135 to 250 feet (41 to 76
meters) in thickness. Overlying the Dakota is the Cretaceous-age Mancos Shale, a thick sequence (695 to 800 feet, or 212 to 244 meters) of shale with minor sandstones. The Gallup Sandstone
and Crevasse Canyon Formation overly the Mancos Shale, particularly on the east side of the project area. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> Grants Mineral Belt  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium mineralization in the Grants mineral belt (which includes the Cibola Project and the Ambrosia Lake Project) occurs as
sandstone-hosted mineralized areas hosted primarily in fluvial clastic units of the Jurassic-aged Morrison Formation. Two major types of sandstone-hosted mineralized areas have been
identified in the area: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Trend mineralized areas, which have also been described as "pre-fault" or "primary" mineralized areas. The
trend mineralized areas occur as broad, undulating layers of uranium mineralization controlled primarily by the stratigraphic characteristics of the host sandstones. Mineralization in the trend
mineralized areas was localized by humic acids (humates) which acted as the reductants to precipitate uranium from ground water; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Redistributed mineralized areas, which have also been described as "post-fault," "stack," or "secondary"
mineralized areas, are irregularly shaped zones of mineralization that were controlled by both the stratigraphic characteristics of the host rocks, as well as structural features. The redistributed
mineralized areas are the product of destruction (or remobilization) of trend uranium mineralized areas by oxidation, and have little, if any, humate remaining associated with the mineralization.
There is some geologic evidence that suggests that a number of the redistributed mineralized areas, including some on Neutron's properties, have geological and geochemical characteristics that are
similar to "roll-front" deposits of Wyoming and south Texas. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Individual
uranium mineralized areas in the project area range in size from a few tons to several million tons. The mineralized areas are roughly tabular and irregular in shape, and may
be elongate in a west-northwest direction (reflecting some of the characteristics and orientation of the host channel sandstone units of the Westwater Canyon Member of the Morrison
Formation). Individual mineralized areas range in size from a few feet in thickness, width and length to mineralized areas which may be several tens of feet in thickness, several hundred feet in
width, and several thousand feet in length. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Cibola Project  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> General  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Cibola Project is located approximately 45 miles (72.4 kilometers) west-northwest of the city of Albuquerque, New
Mexico. We control leases covering approximately 10,814 acres (4,376 hectares) of privately owned surface and mineral rights, in two separate non-contiguous blocks that are separated by a
distance of approximately 10 miles (16.1 kilometers), owned by the Cebolleta Land Grant, the JTLC and various private property owners. The leased properties are parts of a Spanish Land Grant and are
fee-simple (patented and deeded privately-held) lands. The properties that comprise the Cibola Project consist of the Cebolleta Property and the Juan Tafoya Property. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Cibola Project properties are held by Cibola under leases, and the leases convey to Cibola the right to explore for and mine uranium and associated minerals from the leased lands.
All of the lands that make up the various components of the Cibola Project are parts of the formerly extensive Cebolleta Land Grant that was granted the King of Spain, prior to the time that New
Mexico became a territory of the United States. After the conclusion of the 1848 Mexican-American War, the Treaty of
Guadalupe Hidalgo approved by the Congress of the United States officially recognized the existence of and protected the rights of the owners of the Cebolleta Land Grant and other Spanish and Mexican
land grants. The Cebolleta Land Grant was never owned by or subjected to the land management practices of the United States government. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
the leased properties are parts of a Spanish Land Grant, most of the area was never "sectionalized" under the United States section, township and range land designation system.
Several </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>65</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>surveys
of the boundaries of the lands under lease have been completed, and the boundaries of the leased properties have been verified by the State of New Mexico District Court. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mining Lease Descriptions  </I></B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I> Cebolleta Property  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2007, we entered into the Cebolleta Lease with the Cebolleta Land Grant, a privately held land grant, to lease the Cebolleta
Property, which is composed of approximately 6,717 acres (2,718 hectares) of fee (deeded) surface and mineral rights. The Cebolleta Lease was affirmed by the New Mexico District Court in Cibola County
in April 2007. The Cebolleta Lease provides for: (i)&nbsp;a term of ten years and so long thereafter as we are conducting operations on the Cebolleta Property; (ii)&nbsp;initial payments to the
Cebolleta Land Grant of $5,000,000 during the first six months; (iii)&nbsp;a recoverable reserve payment equal to $1.00 multiplied by the number of pounds of recoverable uranium reserves upon
completion of a feasibility study to be completed within six years, less (a)&nbsp;the $5,000,000 referred to in (ii)&nbsp;above, and (b)&nbsp;not more than $1,500,000 in annual advance royalties
previously paid pursuant to (iv); (iv)&nbsp;annual advanced royalty payments of $500,000; (v)&nbsp;gross proceeds royalties from 4.50% to 8.00% based on the then current price of uranium;
(vi)&nbsp;employment opportunities and job-skills training for the members of the Cebolleta Land Grant; and (vii)&nbsp;funding of annual higher education scholarships for children of
the members of the Cebolleta Land Grant. The Cebolleta Lease provides Cibola with the right to explore for, mine, and process uranium deposits present on the Cebolleta Property and allows Cibola to
use certain water rights controlled by the Cebolleta Land Grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
2010 we have spent $20.4&nbsp;million on the Cebolleta Property. This property was developed and uranium was mined in the past. However, all plant and equipment have been
removed from the Cebolleta Property and the Cebolleta Property has no significant plant or equipment, including subsurface improvements and equipment. Electric power is available for mining activities
at the Cebolleta Property. Two high voltage electrical transmission lines cross the region several miles north of the Cebolleta Property and electrical lines have been constructed to the site of the
former Sohio L-Bar uranium mine. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2009, we entered into an agreement with a former lessee and operator of certain lands now leased by us to acquire historical data related to the Cebolleta Property. The former
lessee delivered the data at the time of the agreement. In consideration, we have made payments to date of $50,000 with a final payment of $400,000 due in August 2013. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
the subsection of this prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discuss and Analysis of Financial Condition and Results of Operations&#151;Material
Commitments</I></FONT><FONT SIZE=2>" for a further discussion of the Cebolleta Lease. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I> Juan Tafoya Property  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 2006, we entered into the Juan Tafoya Lease with the JTLC in which we leased the Juan Tafoya Property, which consists of
4,097 acres (1,658 hectares) of fee (deeded) surface and mineral rights owned by the JTLC. The Juan Tafoya Lease provides for a term of ten years and so long thereafter as we are conducting operations
on the Juan Tafoya Property. Additionally, the Juan Tafoya Lease, provides for: (i)&nbsp;an initial payment to JTLC of $1,250,000; (ii)&nbsp;annual rental payments of $225,000 for the first five
years of the lease and $337,500 for the second five years; (iii)&nbsp;after the second five years, annual base rent of $75 per acre; (iv)&nbsp;gross proceeds royalties of 4.65% to 6.5% based on
the then current price of uranium; (v)&nbsp;employment opportunities and job-skills training programs for shareholders of the JTLC; (vi)&nbsp;periodic contributions to a community
projects fund if mineral production commences from the Juan Tafoya Property; and (vii)&nbsp;funding of a scholarship program for children of the shareholders of the JTLC. We are obligated to make
the first ten years annual rental payments notwithstanding our right to terminate the Juan Tafoya Lease at any time, </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>unless
(a)&nbsp;the market value of uranium drops below $25 per pound, (b)&nbsp;the state of New Mexico bans uranium mining, or (c)&nbsp;the deposit is deemed uneconomical by an independent
engineering firm. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2007, we acquired infill fee mineral leases within the boundaries of the Juan Tafoya Lease. We are obligated to make annual lease payments and pay production royalties ranging from
4.65% to 6.5%
based on the then current price of uranium. The infill fee mineral leases covering the individually-owned small tracts have similar business terms and royalty provisions as the Juan Tafoya Lease. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Juan Tafoya Lease and the infill fee mineral leases provide Neutron with the right to explore for, mine, and process uranium deposits present on the leased premises, and the Juan
Tafoya Lease allows Neutron to use certain water rights controlled by the JTLC. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2007, we entered into a letter agreement with International Nuclear,&nbsp;Inc. Pursuant to the letter agreement we acquired a database of information on the Marquez Canyon
deposit located on the Juan Tafoya Property in consideration of a cash payment and a perpetual royalty of $0.25 per pound of uranium recovered from the Juan Tafoya Property with a maximum payout of
$1,000,000. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
2010 we have spent $6.5&nbsp;million on the Juan Tafoya Property. Historically, the Juan Tafoya Property was almost fully developed for uranium mining and processing with the
construction of a mill and related mine infrastructure. However, all plant and equipment have been removed from the Juan Tafoya Property and the Juan Tafoya Property has no significant plant or
equipment, including subsurface improvements and equipment. Electrical power is available for both mining and milling activities at Juan Tafoya. A high voltage electrical transmission line exists
south of the Juan Tafoya Property and separate electrical power lines have been constructed to the former shaft site and mill site. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Accessibility, Climate, Local Resources, Infrastructure and Physiography  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Cibola Project is located in west-central New Mexico, approximately 45 miles (72.4 kilometers)
west-northwest of the city of Albuquerque, and from 10 to 25 miles (16.1 to 40.2 kilometers) northeast of the town of Laguna. Access to the project area from Albuquerque is over a paved
Interstate highway to the town of Laguna (a distance of approximately 45 miles, or 72.4 kilometers) and a paved two-lane highway (for a distance of 15 miles, or 24.1 kilometers) to the
village of Seboyeta and a further 3 to 16 miles (4.8 to 25.7 kilometers) over a well-maintained graded county-owned gravel road. Several private roads of varying quality cross the project
lands and provide access to nearly all parts of the project area. Rail service is available from the BNSF Railroad at Grants and Milan, and regularly scheduled air service is available in Albuquerque. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
project area is situated on the southern margin of the San Juan Basin of west-central New Mexico. The northwestern portion of the leased property adjoins Mesa Chivato, a
broad volcanic capped mesa that flanks the eastern and northern sides of Mount Taylor, and includes Canon de Marquez, a narrow and steep-walled canyon that has eroded into the eastern part of Mesa
Chivato. Elevations within the project area range from 6,000 to 7,100 feet above sea level (1,829
to 2,164 meters). Topography is typical of the mesa-canyon form in this region of New Mexico, with sharp local variations in elevation, on the order of 200 to 400 feet (61 meters to 122
meters) over short distances. A series of rounded hills, raising 200 to 300 feet (61 to 91 meters) above the surrounding landscape, are present in the vicinity of the former Sohio uranium mine (in the
southwestern part of the project area). Prominent canyons, developed along Meyer Draw and Arroyo Pedro Padilla, cut the southern part of the project area where the former St.&nbsp;Anthony mines are
located. In spite of these variations in topography, access to essentially all of the project area is good. The area is populated with sparse mixed grasses, stands of mesquite, pinion pine, and oak
trees, typical of a semi-arid high desert climate. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temperatures
at Grants (the nearest town with meaningful weather records) range from lows of approximately 50&deg; Fahrenheit to daytime highs of 80&deg; Fahrenheit
(9.9&deg; to 26.6&deg; Celsius) in the summer </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>season,
and 10&deg; to 40&deg; Fahrenheit (-12.2&deg; to +4.4&deg; Celsius) in the winter. The area receives approximately 11 inches (279 millimeters) of
precipitation annually, much of which comes in the form of afternoon thundershowers during the months of July and August. There can be as much as 13 inches (330 millimeters) of snow during the winter
months. Winter snows and summer thunderstorms may create muddy ground conditions that interrupt access for short periods of time. Other than these short periods of muddy ground conditions, mineral
exploration and mining activities can be conducted mostly without interruption throughout the year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
project area has sufficient surface resources to support mining and processing operations, tailings disposal facilities, and mine waste dumps. There are adequate sources of water,
electricity, and fuel in the area. Two high voltage electrical transmission lines cross part of the leased lands and the intervening property (not leased by Neutron), and electrical lines have been
constructed to the sites of the former Bokum Resources Corporation uranium mill and the shaft site in Marquez Canyon from an electrical sub-station located on the intervening lands. Three
water wells are present on the Juan Tafoya Property, with approximately 1,850 acre-feet (1.746&nbsp;billion liters) of water rights available. While some personnel previously experienced
in underground mining, construction, and mineral processing reside in the communities of Grants and Milan (40 miles, or 64.4 kilometers, to the southwest of the project area) and elsewhere in the
region, it will be necessary to train staff for the project. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> History  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Cibola Project area has been of considerable interest to the U.S. uranium industry since the original discovery of the Jackpile
uranium mineralized area (located immediately southwest of the southern boundary of the Cibola Project) in late 1951. Exploration was
carried out by the Anaconda Company during the 1950's on the southern portion of the Cibola Project area, on what is now part of the lands Neutron has leased from the Cebolleta Land Grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
first mining at the Cibola Project was undertaken by the Climax Uranium Company, who developed an underground mine in the St.&nbsp;Anthony area in 1957. During the period of
Climax's mining operation, which ended in 1960, approximately 321,000 pounds of U<SUB>3</SUB>O<SUB>8</SUB> were produced. At a later date, United Nuclear Corporation and its subsidiary Teton
Exploration Drilling Company carried out an extensive exploration program in the area of the former Climax mine, and its vicinity. United Nuclear subsequently developed two open pits and one
underground mine on lands leased from the Cebolleta Land Grant, with their initial development commencing in 1975. Ore from the St.&nbsp;Anthony mines was processed primarily at United Nuclear's
Church Rock mill near Gallup. Mining was suspended at St.&nbsp;Anthony in 1979, and the milling of stockpile material was completed in 1980. Mines at St.&nbsp;Anthony are reported to have produced
approximately 2.5&nbsp;million pounds of U<SUB>3</SUB>O<SUB>8</SUB>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reserve
Oil and Minerals, a New Mexico-based mineral resource company purchased the Evans Ranch, which adjoins the St.&nbsp;Anthony mine area to the north, in 1968. Reserve sold an
undivided 50% interest in the ranch, including the mineral rights, to Sohio Western (then a subsidiary of the Standard Oil Company of Ohio) in 1969 and the two companies formed a joint venture to
explore for and mine uranium mineralized areas on the Evans Ranch. Sohio operated the joint venture and discovered extensive uranium mineralization on the property, and subsequently developed an
underground mine and uranium mill complex (the Sohio mine and mill). In 1982, Sohio acquired Reserve's interests in the property, and after final closure of the Sohio mill and underground mine, deeded
a portion of their property interests in the area to the Cebolleta Land Grant in 1989. The Sohio mine was reported to have produced 2.2&nbsp;million pounds of U<SUB>3</SUB>O<SUB>8</SUB>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
northern part of the project area, in the vicinity of the village of Marquez, was first explored by W. Rodney Devilliers in 1969, and the Devilliers holdings were purchased by Bokum
Resources Corporation in 1975. Bokum carried out a comprehensive exploration drilling program on a portion of the JTLC property and completed more than 500 rotary and core holes. Work undertaken by
Bokum </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>resulted
in the discovery of two significant uranium mineralized areas on the property, the Marquez and Southeast mineralized areas. Bokum commenced with the development of one of these mineralized
areas, Marquez, by sinking a 14-foot (4.3-meter) diameter shaft to a depth of 1,842 feet (561 meters) and completed a 5-foot (1.5-meter) diameter
ventilation shaft to a depth of approximately 2,100 feet (640 meters). Bokum also constructed a 2,200 short ton (1,996 tonnes) per day uranium extraction plant (mill) located approximately 1.5 miles
(2.4 kilometers) east of the shaft site. Additionally, Bokum constructed access roads, power lines, drainage diversion structures, the initial phases of a tailings impoundment facility, and process
water wells. The mine surface facilities (hoist, head frame, etc.) and the mill were subsequently dismantled and removed from the property. No ore was ever mined or processed at these facilities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long
Island Lighting Company (LILCO), a New York-based utility, entered into a series of uranium supply transactions with Bokum Resources Corporation beginning in 1976 and
LILCO provided long-term financing to Bokum for the advancement of the Marquez exploration and development drilling programs and facilities construction. As a consequence of bankruptcy
proceedings involving Bokum Resources Corporation, LILCO, through its wholly-owned subsidiary Marquez Development Corporation, initiated a foreclosure action against Bokum's interests in the Juan
Tafoya properties, and a final decree of foreclosure to LILCO in September, 1991. Over the life of the project, Bokum and LILCO collectively invested approximately $65&nbsp;million in the project
including costs for drilling, shaft sinking, surface support facilities and construction of the mill. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exxon
Minerals Corporation acquired several leases of small, privately-held lands adjoining and enclosed by the Bokum properties. Exxon carried out drilling programs on these
properties, resulting in the discovery of significant uranium mineralization that is part of the Marquez uranium mineralized area. Bokum acquired the Exxon leases in August, 1978, but they were
relinquished by Marquez Development Corporation in 1986. These former Exxon and Bokum leases are now largely held by us. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>69</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> Mineralization&#151;Juan Tafoya Property  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Juan Tafoya Property hosts the Marquez and the Southeast mineralized areas as shown in Figure&nbsp;3 below: </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;3.
Juan Tafoya Property (March 2011) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Nature of Mineralization  </I></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Marquez and Southeast mineralized areas are comprised of three distinct pods, or lenses, of tabular mineralization hosted in
sandstones of the Westwater Canyon Member of the Morrison Formation. The three lenses are: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The "Blue" horizon is a thin and somewhat discontinuous lens of mineralization and is the upper-most zone of
the mineralized area. Of the three mineralized lenses that make up the Marquez mineralized area, the "Blue" zone is the least developed (geologically) and has the lowest tonnage of the three lenses.
It lies anywhere from 0 to 50 feet (15 meters) below the "K" shale marker horizon. The zone is situated within the western-most portion of the Marquez mineralized area and is not
significantly mineralized in the Southeast mineralized area. Mineralization in the "Blue" horizon is reported to be in radiometric equilibrium;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The "Green" (or "Middle") zone is a thick interval of mineralization situated in the middle to lower portion of the
Westwater Canyon and is located 30 to 60 feet (9 to 18 meters) above the Westwater Canyon&#151;Recapture contact (the lower contact of the Westwater Canyon Member). The "Green" mineralized
horizon contains the bulk of the uranium mineralization in the Marquez mineralized area, as well as all of the known mineralization in the Southeast mineralized area; and </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>70</FONT></P>

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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The "Red" (or "Lower") horizon is a thick and continuous zone of uranium mineralization that is situated at, or very near,
the lower-most contact of the Westwater Canyon Member (with the underlying Recapture Member). A recent analysis of historical drilling, geological, and geophysical data by geologists of
Neutron indicates that at various locations within the Marquez mineralized area the "Red" and "Green" appear to merge, suggesting that they may be parts of the same mineralized zone, or lens. It is
most significant in the north-central portion of the Marquez mineralized area. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
main mineralized areas are all lenticular and tabular in form, and plunge gently to the west. The geometry of the individual mineralized zones seems to have been strongly influenced
by the size, shape, and orientation of the host channel systems. The majority of the mineralization was localized in a braided fluvial system, although two areas show the characteristics of a
meandering fluvial system. The uranium is believed to have been precipitated from ground waters by reduction from humates and perhaps other carbonaceous matter in the Westwater Canyon sandstones. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
mineralized zones display good continuity from hole-to-hole throughout the Marquez mineralized area. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Disequilibrium  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium disequilibrium can be defined as the ratio of chemical uranium (cU<SUB>3</SUB>O<SUB>8</SUB>) over gamma-ray
equivalent uranium (eU<SUB>3</SUB>O<SUB>8</SUB>). The first determination is made in a laboratory, as described below, whereas the second determination is typically a field measurement
(radiometric), from which an indirect or equivalent estimate of uranium content can be made. The ratio, or disequilibrium, between "chemical" laboratory techniques and "equivalent" field techniques
exists because of the ongoing radioactive decay of uranium over time. A positive disequilibrium ratio of 1.0 or greater indicates the presence of more chemical uranium than equivalent uranium. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
part of the then-ongoing exploration and development activities at the Marquez mineralized area, Bokum Resources drilled eleven core holes (core "tails" on rotary drill
holes), including ten holes in the Marquez mineralized area and one hole in the Southeast mineralized area to provide samples for determination of disequilibrium ratios. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comparison
of chemical and radiometric assays show a strong general trend of individual samples, in all grade ranges, to have higher chemical assays than the corresponding radiometric
assays. An analysis of the available chemical assays and the corresponding radiometric assays support the historical determination that the "blue" mineralized zone is in general radiometric/chemical
equilibrium and the "red" and "green" mineralized zones have higher actual uranium contents than the radiometric assays otherwise indicate. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mineralization&#151;Cebolleta Property  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Several important uranium mineralized areas are located in the southern part of the Cibola Project area. The Sohio area, which is in
the southern portion of the project, includes five distinct mineralized areas: Areas I, II, III, IV, and V (see Figure&nbsp;4). While these uranium mineralized areas are hosted in the Jackpile
sandstone unit of the Morrison formation, which is a different host sandstone than that at the Marquez and Southeast mineralized areas (hosted in the Westwater Canyon Member of the Morrison
Formation), the overall geological characteristics of the mineralized areas are similar to the Westwater Canyon-hosted mineralized areas in the north part of the project area. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>71</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;4.
Cebolleta Property (March 2011) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mining
operations undertaken by Sohio Western Mining were limited to the Area&nbsp;II and V mineralized areas, but based upon historical resources data prepared by Sohio after the
closure of the Sohio mine, mineralization remains in both mineralized areas. The Area I mineralized area, located in the southern-most part of the Sohio complex, which was never mined,
extends south of the former property boundary into the St.&nbsp;Anthony area, and additional uranium mineralization is present in the St.&nbsp;Anthony area adjacent to the north side of the
St.&nbsp;Anthony North pit and the St.&nbsp;Anthony mine. The uranium mineralized areas in the southern part of the project area share a common set of geological characteristics. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Nature of Mineralization  </I></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Nearly all of the mineralization is hosted by the Jackpile sandstone, although minor amounts of mineralization hosted in
sands of the Brushy Basin Member of the Morrison Formation and the Dakota Sandstone are present in the St.&nbsp;Anthony area;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Most of the mineralization is hosted in medium to coarse-grained sandstones that exhibit&nbsp;a high degree of
large-scale tabular cross-stratification;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The mineralization thins appreciably near the margins of the mineralized areas, although halos of low-grade
mineralization surround the mineralized areas;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Higher grade mineralization usually occurs in the core of the mineralized zones; </FONT></DD></DL>
</UL>
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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Strong mineralization appears to be concentrated in the lowermost portions of the Jackpile sandstone, although anomalous
concentrations of uranium are present throughout the vertical extent of the unit;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Most of the mineralization appears to be "reduced," with only isolated small pods, especially in the St.&nbsp;Anthony
underground area, of discontinuous mineralization exhibiting oxidation;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Extensive chemical and radiometric analyses on core holes by Sohio demonstrated that the mineralization is generally
within equilibrium;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Individual mineralized areas do not show a preferred orientation or trend, and do not fully reflect the orientation of the
main Jackpile sandstone channel trend;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Nearly all of the mineralized areas show a strong spatial and genetic relationship with carbonaceous material; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The mineralized areas range in depth from approximately 200 feet (61 meters) in the south, at the St.&nbsp;Anthony area,
to nearly 700 feet (213 meters) in the vicinity of the Area II and Area III mineralized areas at Sohio. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the Sohio area, mineralization occurs in tabular bodies that may be more than 1,000 feet (305 meters) in length, and attain thicknesses of 6 to 12 feet (1.8 to 3.7 meters). The upper
and lower boundaries of these mineralized bodies are generally quite abrupt. There is some tendency for individual mineralized areas to develop in clusters. Locally, these clusters may be related to
the coalescence of separate channel sandstone bodies. In this instance, mineralization is often thicker and higher grade than adjoining areas. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Disequilibrium  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sohio reported that "experience has shown that the uranium grades determined radiometrically at the Sohio property corresponded well
with grades determined chemically." This work verified earlier studies by Sohio, based upon 150 core samples, that the mineralized areas were generally in radiometric equilibrium. Chemical and
radiometric assays from eight core holes drilled by Sohio in the Area II and Area III mineralized areas generally demonstrate
no clear bias toward either the chemical or radiometric grades in the core. Data for the St.&nbsp;Anthony mine area is comprised of 1,466 samples collected and analyzed from 47 core holes drilled at
various localities within the area. Overall, the uranium mineralization, as depicted by this data set, is slightly out of equilibrium in favor of chemical assays. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Data Base  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the course of Neutron's involvement with the various properties that comprise the Cibola Project, the Company has undertaken
considerable effort to acquire as much of the historical exploration and development data that was generated by the previous operators of the properties as possible, especially from Bokum Resources
and LILCO for the Marquez and Southeast mineralized areas and the "Bokum" mill, Sohio Western Mining for the Area I&#151;V mineralized areas and the Sohio underground mine, and Teton
Exploration/United Nuclear/UNC Resources for the various surface and underground mines at St.&nbsp;Anthony and the adjoining undeveloped uranium mineralized areas. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>73</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;5.
Drill hole locations on the Juan Tafoya Property (March 2011) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the case of the Marquez and Southeast mineralized area, Neutron is in possession of gamma-ray/electric geophysical logs for 547 drill holes within the lease boundaries
(most of which are the original logs), re-probe logs for more than 89 drill holes, assay certificates from third-party chemical analysis of mineralized core, disequilibrium studies,
down-hole deviation (drift) surveys for these holes, drill hole location maps, survey data for the drill hole locations (including drill hole collar coordinate data (X, Y, Z directions),
historical geologic cross-sections, historical mineral resource estimates, third-party independent technical audit reports, metallurgical test work reports, metallurgical design reports, mill design
and "as built" drawings of the Bokum mill, historical environmental reports, tailings storage facility studies, water-rights reports and other relevant information. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the former Sohio properties, including the Sohio underground mine, Neutron has acquired approximately 1,500 gamma-ray/electric geophysical logs, drill hole location maps,
mineralization intercept maps, historical geologic cross-sections, relevant survey data, underground mine maps (including monthly mining advance maps), mineral resource estimate reports, technical
studies for a potential re-start of mining operations in 1984, mine production records, and metallurgical test data. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information
pertaining to the former St.&nbsp;Anthony mines and uranium mineralized areas include approximately 2,400 gamma-ray/electric geophysical logs, assay
certificates for chemical assaying of core, drill hole location maps, drill hole mineral intercept and composites with elevations, mineral resource polygon maps, mineral resource estimates,
metallurgical reports (including third-party independent studies of the amenability of St.&nbsp;Anthony mineralization to the Bokum mill process), mining feasibility studies, geologic reports,
geologic cross-sections, open pit and underground workings maps, production records, and various other relevant data on the former St.&nbsp;Anthony operations and property. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>74</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron has constructed a comprehensive database for the project, has scanned most of the geophysical logs, and essentially all of the other information and
entered it into the database. The geophysical logs, which are in-situ assays of the mineralized zones, have been or are being digitized, and many of the historical grade calculations have
been checked with re-calculations using an automated digital method. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
extensive set of geologic and mineral correlation cross-sections and longitudinal-sections have been prepared by Neutron's geologists. This effort is continuing for the remaining
mineralized areas within the project boundaries. Structure contour maps have been prepared for key geologic surfaces and GT (grade-thickness product) maps have been constructed for many of the
project's mineralized areas. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
historic mine workings data for the Sohio underground mine have been digitized for use in the block model for the Area II&#151;V mineralized areas, where the mine is located. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
comprehensive block model of the Marquez mineralized area has been constructed and in-house mineral resource estimates, based upon existing data have been completed. A
similar model has also been constructed for the Southeast mineralized area. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historical
mineral resource estimates for the Marquez, Area I, and Area III uranium mineralized areas have been checked by an independent geological and engineering firm, using
inverse-distance estimation methodologies and historical data. The results of these studies are consistent with the historical resource estimates, which were prepared using either polygonal, general
outline or circle-tangent estimation methods. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has acquired two extensive sets of historical data for the Juan Tafoya Project, including drill hole location maps and survey data, polygon maps of mineralized material,
geological and mineralization cross-sections, gamma-ray and S-P/Resistivity logs for nearly 557 holes, assay certificates comparing chemical and radiometric assays for core
samples, and various technical reports including engineering reports, reports on mineralized material calculations carried out by LILCO and independent consulting firms, and a comprehensive set of
metallurgical test reports and various engineering drawings and design material for the former Bokum Resources' uranium mill. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron
has acquired an extensive technical database for the Cebolleta Project including various geological reports, engineering and metallurgical studies (including production reports
from the former L-Bar underground mine), maps depicting the locations of drill holes, tabulations of drill hole results (recording thicknesses and average grades of mineralization), over
4,000 drill hole gamma-ray logs, drill hole coordinates and elevations of the mineralized intervals, estimates of mineralized material prepared by the former operators of the property and
third-party consultants, environmental reports and studies undertaken by independent consultants. Neutron is in the process of converting the remaining historical drill hole data at the
St.&nbsp;Anthony area into a digital database to facilitate the construction of mineralization block models and mine models. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>75</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Figure&nbsp;6.
Drill hole locations at Cebolleta Property (March 2011) </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><I> Mineralized Material  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with SEC guidance materials on non-reserve mineralized material, we show the estimate of in-place
mineralized uranium material for our Cibola Project in the following table. The estimate of mineralized material for each of the mineralized areas listed below was obtained from the Technical Report
on the Uranium Resources at The Cibola Project, Cibola, McKinley and Sandoval Counties, New Mexico, USA. The technical report is dated January&nbsp;14, 2011 and was completed by Broad Oak
Associates, an independent engineer. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following in-place non-reserve mineralized material has been modeled and calculated utilizing the digital data base of the verified historical data discussed
above and reported in the technical report. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> SUMMARY OF IN-PLACE NON-RESERVE MINERALIZED MATERIAL IN THE CIBOLA PROJECT  </B></FONT></P>
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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Tonnage Millions </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Grade Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Marquez</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Southeast</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.14</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Area I</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.16</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Area II</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.18</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Area III</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Area V</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.21</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally,
as described in the Technical Report on the Uranium Resources at the Cibola Project, we have historical reports that show the St.&nbsp;Anthony area contains
4.5&nbsp;million tons of mineralize material at an average grade of 0.09%. This mineralized material is considered historical in nature and no other calculations have yet been completed because the
St.&nbsp;Anthony digital data base preparation and modeling is continuing. Upon completion of the modeling we anticipate the technical report will be updated by the independent engineer. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Environmental and Permits  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has completed archaeological, biological, and radiological surveys of the Marquez mineralized area, as well as the Sohio
Areas I and III and portions of the St.&nbsp;Anthony mine area in support of its application for drilling permits, and has completed several environmental evaluations required to support license
applications for a proposed mill and tailings storage area. Several other baseline studies are underway or planned to provide all additional data needed for the source material license application for
the mill and tailings sites, and for the mine permit applications. Environmental studies that have been completed in the Marquez mineralized area include: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Meteorology: </FONT> <FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Over 2.5&nbsp;years worth of data collected at the proposed mill site including wind speed and direction, temperatures
at 2 and 10 meters, relative humidity, direct solar radiation, evaporation pan rates and precipitation.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD></DL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Air quality: </FONT> <FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Five air quality monitoring stations are currently in operation; three for radionuclides and two for particulate matter
(i.e.&nbsp;dust); and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Monitoring has been in progress for more than two years with better than 95% data recovery (EPA standard is 90%). </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD></DL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Ecology: </FONT> <FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Biological inventories and on-going bird surveys; </FONT></DD></DL>
</DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>77</FONT></P>

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<UL>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Vegetation surveys, mapping, and productivity studies (currently underway); and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Wetlands delineation.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD></DL>
</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Radiology Data Collection and Studies: </FONT> <FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Surface and sub-surface soils;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Radionuclide air particulates (3 sites);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Seasonal ambient radon flux measurements in tailings basin;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Vegetation and animal tissue samples;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Direct gamma measurements of entire tailings basin area and proposed mine permit area; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Direct gamma and radon measurements at nearest downwind residence.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD></DL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Archaeological and cultural resource surveys;  </FONT> <FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Approximately 1,850 acres (749 hectares) inventoried in proposed tailings management basin area; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Approximately 200 acres (81 hectares) inventoried in mine/drill area.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD></DL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Socioeconomic studies are in progress.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Hydrology: </FONT> <FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Regional data collection and hydrogeologic characterization studies have been completed;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Some groundwater sampling from existing wells and regional springs has been completed; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Comprehensive ground and surface water characterization work plans have been completed but have not yet been implemented. </FONT></DD></DL>
</DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
studies have been completed by or are being undertaken by highly qualified, New Mexico-based environmental consulting firms under direct contract to Neutron. All studies have been
designed to meet or exceed applicable federal agency (NRC, EPA) or State agency requirements (New Mexico Energy, Minerals, and Natural Resources Department, NM Environment Department, NM State
Historical Preservation Office, NM Department of Game and Fish, NM Office of State Engineer). Neutron staff has met numerous times with jurisdictional agencies at the State and Federal levels to
present work plans and ensure that all data is being collected in accordance with relevant standards or guidelines. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are no federally designated Threatened or Endangered (T&amp;E) species occurring within the entire project area. Numerous raptors are present in the general project area, including one
active Golden Eagle nest, but it is located beyond the buffer zone established around the tailings basin area. A state-designated Sensitive Species, the Gray Vireo (a migratory song bird), was
observed in surveys conducted in 2009 but not during surveys in 2010. No threatened and endangered plant species have been identified over the course of multiple vegetation surveys conducted at
different times of the year. The very limited wetlands area within the tailings basin is an artificial habitat created by the Bokum Resources tailings dam but it would not be impacted by planned
development activities. Several archaeological sites considered eligible for listing to the National Registry of Historic Places have been identified in the proposed mine area and numerous sites
identified within the proposed tailings basin. Current planning suggests that all the sites in the proposed mine area can be avoided. Many sites within the proposed tailings basin area would be
impacted by construction under the current conceptual design and will require mitigation (i.e.&nbsp;data recovery through site excavation work). </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>78</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
southern part of the leased property is the site of several former underground and open pit uranium mines. Open pit and underground mines in the St.&nbsp;Anthony area of the
Cebolleta Lease are currently being reclaimed by the former operator of those mines, UNC Resources (a subsidiary of General Electric) in accordance with directives of various State of New Mexico
governmental agencies. The Sohio mine and uranium mill were reclaimed by the successor to Sohio Western Mining Company, Kennecott Energy Company, and the site of the former (now dismantled and
reclaimed) Sohio mill has been transferred to the U.S. Department of Energy for long-term monitoring and management under the UMTRA (Uranium Mill Tailings Remedial Action Project) program.
The former Sohio mill site is not a part of the lease from Cebolleta Land Grant. An examination of the files of the State of New Mexico Environment Department and the New Mexico Energy, Minerals and
Natural Resources Department indicates that Kennecott has some limited reclamation obligations relating to subsidence associated with several ventilation holes for the former JJ #1 (Sohio) underground
mine. As of January 2011, Kennecott was completing these final reclamation obligations as identified by the State of New Mexico. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
the Juan Tafoya Property was formerly the site of a partially-developed underground uranium mine and processing plant (uranium mill), there has never been any uranium production
from the property. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
with all drilling projects proposed in the State of New Mexico, we are required to obtain exploration permits from the MMD. The Company has received a "Subpart&nbsp;4 Exploration
Permit" (MK023ER), which was issued by MMD on March&nbsp;27, 2009 to cover a proposed drilling program on the lands leased from the JTLC and adjoining leases in the northern part of the project
area. The permit was issued for a period of one year and has been renewed by Neutron and the MMD (MK023ER-R1). A permit application for eighty-four drill holes in the southern part of the
project area (St.&nbsp;Anthony and Sohio) was submitted, and was deemed "administratively complete" on April&nbsp;26, 2010 by MMD. The permit (CI 014 ER) has been issued to Neutron. As all of the
lands that constitute the Cibola Project are privately held, there are no requirements for drilling permits from agencies of the U.S. government. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mining
and milling operations will require additional permits from the MMD, the New Mexico Environment Department, as well as the EPA and NRC. As the leased lands are
privately-held, they are not subject to federal land-management rules and regulations. The Company has undertaken early-stage discussions with the staff of the NRC regarding a
"source materials license" for a milling permit for the Cibola Project. In November, 2008 a "pre-application" meeting was held with staff of the NRC, and a NRC docket number was assigned
to the project at that time. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>79</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Ambrosia Lake Project  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> General  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Ambrosia Lake area historically was the largest and most significant uranium producing area in the United States. Within the lands
that comprise the Ambrosia Lake Project, Neutron has identified five principal target areas: Deep Rock, Elizabeth, Mesa Redonda, West Endy, and West Ranch as shown in Figure&nbsp;7. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g195781.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="447">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;7.
Ambrosia Lake Targets (March 2011) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium
mineralized areas on our properties and elsewhere in the Grants mineral belt are primarily hosted in sandstones within the Poison Canyon sandstone and the Westwater Canyon Member
of the Jurassic-aged Morrison Formation. These uranium mineralized areas are associated with channel sandstones within a broad fluvial and alluvial fan complex in the Brushy Basin and
Westwater Canyon Members, and often mimic the shape, orientation, and geometry of the host channels. Uranium minerals coat sand grains, occasionally replace clastic fragments in the sandstones, and
fill voids between individual sand grains. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mining Leases and Patented and Unpatented Lode Mining Claims Descriptions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Ambrosia Lake Project of Neutron is situated on the southern flank of the San Juan Basin, approximately 60 miles (96.5 kilometers)
west-northwest of the city of Albuquerque, New Mexico. The project is comprised of the (i)&nbsp;Endy Lease which is comprised of 167 unpatented lode mining claims and covers 3,382 acres
(1,369 hectares) in the eastern portion of the Ambrosia Lake Project; (ii)&nbsp;Bonner Lease which is comprised of 181 unpatented lode mining claims and one state of New Mexico general mining lease
covering a further 4,132 acres (1,672 hectares); (iii)&nbsp;the Elizabeth Lease which is comprised of eight patented and one unpatented lode mining claims covering 179 acres (72 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>80</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>hectares);
and (iv)&nbsp;292 unpatented lode mining claims for 5,442 acres (2,2202 hectares) that are owned directly by the Company. Collectively, the Endy Lease, Bonner Lease, Elizabeth Lease and
the claims owned by the Company cover an area of approximately 13,135 acres (5,316 hectares). The surface lands covering the patented and unpatented mining claims are managed by the BLM, the U.S.
Forest Service ("USFS") or a private land owner. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2006, we entered into the Endy Lease covering 3,382 acres (1,369 hectares) comprised of 167 unpatented lode mining claims in the eastern portion of the Ambrosia Lake mining
district. Pursuant to the terms of the Endy Lease, we paid $315,000 upon signing, $100,000 in February 2007 and February 2008, and are obligated to pay an additional $75,000 as an advance royalty each
year
thereafter through the term of the Endy Lease. The Endy Lease has a primary term of ten years, but may be extended up to an additional 65&nbsp;years provided that we continue to make advance or
production royalty payments. We may terminate the lease at any time without further lease obligations. A 5% production royalty, based on the gross market value of all minerals extracted, is payable
for any production from the Endy Lease properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 2006, we entered into the Bonner Lease covering 181 unpatented lode mining claims and one state of New Mexico general mining lease, covering a further 4,132 acres (1,672
hectares) of mineral rights in the Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Bonner Lease, we paid a rental payment of $180,000 and issued 65,000 shares of
our common stock. We are obligated to pay an annual rental payment of $120,000 on the second through fifth anniversaries of the Bonner Lease. On the sixth anniversary and each anniversary thereafter
we are obligated to pay an annual advance royalty of $240,000. In the event commercial production is achieved during the rental period, then all future rental payments received after commercial
production begins will be credited as minimum advance royalty payments. The Bonner Lease has a primary term of ten years but may be extended up to an additional 65&nbsp;years provided that we
continue to make advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5% production royalty based on the gross market value of all
minerals extracted is payable for any production from the Bonner Lease properties. The surface overlying the New Mexico general mining lease is owned by the State of New Mexico. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2008, we entered into the Elizabeth Lease covering 179 acres (72 hectares) comprised of eight patented and one unpatented lode mining claims in the eastern portion of the
Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Elizabeth Lease, we paid a $315,000 signing bonus upon signing and we are obligated to pay advance royalties of
$100,000 on the first and second anniversaries and $75,000 every anniversary thereafter so long as the lease is in effect. The Elizabeth Lease has a primary term of ten years, but may be extended up
to an additional 65&nbsp;years provided that we continue to make advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5% production
royalty, based on the gross market value of all minerals extracted, is payable for any production from the Elizabeth Lease properties. Most of the properties covered by the Elizabeth Lease are
patented lode mining claims in which the surface is privately owned. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
292 unpatented lode mining claims owned directly by the Company do not have any royalty obligations attached to them. Of which, 223 of the claims were acquired as part of the
Powertech transaction as discussed below in the subsection entitled "</FONT><FONT SIZE=2><I>Description of Properties&#151;South Dakota.</I></FONT><FONT SIZE=2>" </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
surface estate covering portions of West Endy and Deep Rock targets is managed by the USFS. Surface management responsibilities for Mesa Redonda and portions of West Endy are vested
with the BLM. All the unpatented mining claims in the project area are subject to a $140 annual claim maintenance fee payable on each claim to the BLM. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>81</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
the subsection of this prospectus entitled "</FONT><FONT SIZE=2><I>Management's Discuss and Analysis of Financial Condition and Results of Operations&#151;Material
Commitments</I></FONT><FONT SIZE=2>" for a further discussion of the Ambrosia Lake leases and lode mining claims. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Accessibility, Climate, Local Resources, Infrastructure and Physiography  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The project is approximately 60 miles (96.5 kilometers) west-northwest of the city of Albuquerque, and 20 miles (32.2
kilometers) north-northeast of the town of Grants. A paved highway from the town of Milan (Grants) to the village of San Mateo and the Ambrosia Lake area provides excellent access to eastern and
northern parts of the project area. Numerous dirt USFS and private ranch roads cross the project lands and provide access to nearly all parts of the project area. Rail service is available from the
BNSF Railroad at Grants and Milan, and scheduled air service is available in Albuquerque. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Ambrosia Lake Project is situated on the southern margin of the San Juan Basin of west-central New Mexico. The project area is generally characterized by a broad valley
that contains the Ambrosia Lake mining district. The valley is surrounded by numerous small to large mesas that stand as high as 1,000 feet (304 meters) above the surrounding countryside. The dominant
topographic feature in the vicinity of the project is Mount Taylor, a dormant volcano which has an elevation of 11,302 feet (3,445 meters) above sea level. Elsewhere in the project area, elevations
range from 7,300 to more than 7,800 feet (2,250 to 2,377 meters) above sea level. The overall topography of the project area is flat to gently sloping within the valley floor and on the mesa tops,
while the flanks of the mesas are dominated by very rugged topographic features and steep slopes. The area is populated with sparse mixed grasses, with stands of juniper and pinion pine trees, and is
in a semi-arid high desert climate. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temperatures
at Grants (the nearest town with meaningful weather records) range from lows of approximately 50&deg; Fahrenheit to daytime highs of 80&deg; Fahrenheit
(9.9&deg; to 26.6&deg; Celsius) in the summer season, and 10&deg; to 40&deg; Fahrenheit (-12.2&deg; to +4.4&deg; Celsius) in the winter. The
area receives approximately 11 inches (279 millimeters) of precipitation annually, much of which comes in the form of afternoon thundershowers during the months of July and August. There can be as
much as 13 inches (330 millimeters) of snow during the winter months. Winter snows and summer thunderstorms may create muddy ground conditions that interrupt access for short periods of time. Other
than these short periods of muddy ground conditions, mineral exploration and mining activities can be conducted mostly without interruption throughout the year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
project area is located in the Ambrosia Lake mining district, which had numerous underground mines and uranium processing mills. Electrical lines cross the project area and provided
electricity to the historic mills and mines. All of the historic mills have been dismantled and removed but the remaining electrical power lines could be a source of power. There are no plant
facilities or equipment on the properties of the project, including subsurface improvements and equipment. Through 2010 we have spent $3.4&nbsp;million on the Ambrosia Lake Project. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> History  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the Ambrosia Lake area mineral exploration and development programs (including underground and small-scale open pit mining and
milling) commenced in the early 1950's and continued into the 1990's. During that period of time nearly 190&nbsp;million pounds of U<SUB>3</SUB>O<SUB>8</SUB> were produced from sandstone and
limestone-hosted mineralized areas in the district, and a significant amount of uranium mineralization remains in place in the district. During the period of operation of the Ambrosia Lake mining
district, underground uranium mines were discovered, developed and operated by numerous companies, including Kerr McGee Nuclear, Homestake Mining Company, United Nuclear/UNC Resources, Phillips
Petroleum, Ranchers Exploration, Gulf Mineral Resources, and others. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>82</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lands
that comprise Neutron's Ambrosia Lake Project have been explored by several firms (including Conoco, Homestake Mining, Kerr-McGee, Bokum Resources, Pathfinder Mines and
United Nuclear Corporation) periodically since the mid 1950's, and numerous exploration holes have been drilled on the Company's leased properties. Much of the drilling and related data from several
of these historical programs are currently in the possession of Neutron, and have served as a portion of the basis of evaluating the mineral potential of the properties. This geological data provided
a foundation for the identification of five key uranium targets on the Company's properties: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Deep Rock;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Elizabeth;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mesa Redonda;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>West Endy; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>West Ranch. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extensive
historical exploration drilling programs on properties that comprise Neutron's Ambrosia Lake Project have resulted in the identification of numerous zones of sandstone-hosted
uranium mineralization. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mineralization  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> General  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historical exploration drilling information, which was carried out prior to the adoption of National
Instrument&nbsp;43-101 , indicates numerous zones of significant uranium mineralization are present on the subject properties, including areas at the Deep Rock, Elizabeth, Mesa Redonda,
West Endy, and West Ranch target areas. All of the important uranium mineralization in the project area is hosted in the Westwater Canyon member of the Morrison Formation, except at Mesa Redonda and
West Ranch, where mineralization is hosted in the Poison Canyon sandstone unit or the Brushy Basin Member of the Morrison Formation. Historical mineral resources (not compliant with
NI&nbsp;43-101) have been calculated by former property operators at the Elizabeth, Mesa Redonda, and West Endy properties, and details of this mineralization are discussed below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Deep Rock Target  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Deep Rock exploration target is situated on leased unpatented lode mining claims. The target area is located immediately
west-northwest of the Mount Taylor mine (developed by Gulf Mineral Resources, and now owned by Rio Grande Resources) and adjoins the eastern edge of the Roca Honda project of Strathmore
Minerals Corp. While some initial exploration drilling was carried out on the target by the Anaconda Company (who drilled three holes), the target area was first explored in a comprehensive way by the
minerals division of Continental Oil Company (Conoco) in the late 1970's. Conoco drilled 14 holes (one hole was terminated prior to reaching the target horizon), and encountered uranium mineralization
in Westwater Canyon sandstones, although Conoco did not follow-up on this work due to a precipitous drop in the uranium price. During the 1980's, Homestake Mining Company drilled one
additional hole in the mineralized zone, and encountered similar mineralization to what had been intersected by Conoco in the same area. There has been no physical work on the Deep Rock target since
the completion of the Homestake drilling program. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>83</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Deep Rock Mineral Interests  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="31pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:47pt;"><FONT SIZE=1><B>Claim Group

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>BLM/State Serial Numbers </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Count </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>GIL</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-173422 to 173425, 173427 to 173439, 174454</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>19</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>392.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ENDY</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-171232 to 171261, 171265 to 171266, 171268 to 171291, 171328 to 171331</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>60</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,239.7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>79</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,632.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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<IMG SRC="g384964.jpg" ALT="GRAPHIC" WIDTH="666" HEIGHT="543">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Figure&nbsp;8.
Deep Rock Target (March 2011) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Elizabeth Target  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are two zones of uranium mineralization at the Elizabeth target. Considerable exploration drilling was carried out by several
companies on the Elizabeth claims between the mid-1950's and the early 1980's. This mineralization, which is hosted within sandstone units of the Westwater Canyon Member of the Morrison
Formation, is part of a very extensive complex of "trend" type uranium mineralized areas which constitute the main body of the Ambrosia Lake uranium mining district. The southwestern mineralized area
of the Elizabeth target is contiguous with and is part of the Section&nbsp;35 mineralized area, which is southeast of the Elizabeth claims, and the Ann Lee/Section&nbsp;27 mineralized </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>84</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>area,
which adjoins the Elizabeth claims to the west-northwest. The adjoining Section&nbsp;35 mineralized area was formerly operated by Kerr McGee, the major historical operator in the
Ambrosia Lake district, and the Ann Lee/Section&nbsp;27 underground mines were formerly operated by Phillips Petroleum and United Nuclear/UNC Resources. A portion of the Elizabeth southwest uranium
mineralized area was mined by Kerr McGee and United Nuclear, but the Elizabeth east mineralized area has not been mined. Various 'historical' operators of the Elizabeth claims have prepared mineral
resource estimates for the two uranium mineralized areas situated on Neutron's claims at the Elizabeth target. These estimates, which reflect advancing knowledge based on available drilling results,
updated gamma-ray logging data, and improved understanding of bulk densities and tonnage factors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Elizabeth Mineral Interests  </B></FONT></P>
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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>BLM/State Serial Numbers </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Count </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ELIZ-9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-176522</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ELIZ-1 to 8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Patented claims</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>165.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>179.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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<IMG SRC="g807406.jpg" ALT="GRAPHIC" WIDTH="682" HEIGHT="492">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;9.
Elizabeth Target (March 2011) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
extensive drilling programs undertaken by prior companies on the Elizabeth claim block defined the eastern and southwestern uranium mineralized areas, and some production was derived
from the southwestern mineralized area. This work has resulted in the identification of historical mineral resources described in the following mineralized material section. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>85</FONT></P>

<HR NOSHADE>
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</FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> West Endy Target  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The West Endy target is comprised of two contiguous blocks of unpatented lode mining claims and one State of New Mexico general mining
lease (site of the inactive Cliffside mine). At least 97 exploration holes have been drilled on the West Endy target by various companies, in particular Enerdyne Corporation, Homestake Mining Company
and United Nuclear. Zones of uranium mineralization have been outlined by drilling on the target. We have copies of gamma ray logs for each of these mineralized areas and plan to construct a digital
data base. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
New Mexico general mining lease is the site of the inactive Cliffside underground mine that was discovered in 1956, and brought into production in 1960. The Cliffside mine was one of
the last underground mines to operate in the district and was closed in 1985. According to McLemore and Chenoweth, 1991, total production from the mine has been reported to be over 6&nbsp;million
pounds of U<SUB>3</SUB>O<SUB>8</SUB> at an average grade of 0.41% U<SUB>3</SUB>O<SUB>8</SUB>. Data in Neutron's possession, as well as the results from Neutron's confirmation drilling program,
demonstrate that the West Endy uranium mineralized area extends onto the northeast portion of the New Mexico general mining lease. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> West Endy Mineral Interests  </B></FONT></P>
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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="31pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:47pt;"><FONT SIZE=1><B>Claim Group

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>BLM/State Serial Numbers </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Count </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ZAC</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-172966 to 172977</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>243.8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ENDY</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-171172 to 171231, 171262 to 171264, 171267, 171292 to 171327, 171332 to 171333, 190103 to 190107</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>107</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,142.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>N.M. State Lease</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>HG-0078-1</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>640.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>120</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,026.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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<IMG SRC="g144704.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="439">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;10.
West Endy Target (March 2011) </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>86</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Mesa Redonda Target  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mesa Redonda target is on the western edge of the Ambrosia Lake mining district is believed to host several discrete uranium
mineralized areas in the Poison Canyon sandstone unit of the Morrison Formation. Detailed exploration drilling was carried out in the Mesa Redonda area by Pathfinder Mines, Devilliers Nuclear,
Homestake Mining/UNC Resources and private interests in the 1970's and early 1980's. This work resulted in the discovery of uranium mineralization on the properties held by Neutron. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Mesa Redonda Mineral Interests  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>BLM/State Serial Numbers </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Count </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ALTOS</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-171917 to 171934, 173129 to 173160, 173162, 173164</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>987.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>BRK</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-172749 to 172774, 173165 to 173176</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>38</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>760.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>90</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,747.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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 <P style="font-family:times;"><FONT SIZE=2><I> West Ranch Target  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The West Ranch target, which is on the western part of the Ambrosia Lake mining district, is comprised of 223 lode mining claims that
were acquired as part of the Powertech transaction discussed below in the subsection entitled "</FONT><FONT SIZE=2><I>Description of Properties&#151;South Dakota</I></FONT><FONT SIZE=2>." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the vicinity of these claims are several small-scale uranium mines that are reported to have operated in the 1950's and 1960's. Additionally there is considerable evidence of
exploration conducted by Energy Fuels Nuclear, Phillips Petroleum and United Nuclear during the 1970's. The mineralization outlined in the area in the 1970's is situated in sandstones of the Brushy
Basin Member of the Morrison Formation. Several of the former uranium mines are situated in close proximity to Neutron's mining claims, and there is evidence that some exploration drilling was
conducted on the properties now controlled by Neutron. Data pertaining to the historical exploration programs are not currently available to the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> West Ranch Mineral Interests  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="31pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:47pt;"><FONT SIZE=1><B>Claim Group

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>BLM/State Serial Numbers </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Count </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PTI</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-174518 to 174534, 174541 to 174543, 174465 to 174474, 174535 to 174540, 174544 to 174610, 174612 to 174629</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>121</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,277.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ELK</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NMMC-174663 to 174716, 174630, 174611, 174723 to 174768</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>102</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,840.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>223</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,117.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Mineralized Material  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with SEC guidance materials on non-reserve mineralized material, we show the estimate of in-place
mineralized uranium material for our Ambrosia Project in the following table. The estimate of mineralized material for each of the mineralized areas listed below was obtained from the Technical Report
on the Uranium Resources at The Ambrosia Lake Project, McKinley County, New Mexico, USA. The technical report is dated January&nbsp;18, 2011 and was completed by Broad Oak Associates, an independent
engineer. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>87</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally,
as described in the Technical Report on the Uranium Resources at Ambrosia Lake Project, we have historical reports that show the mineralized areas in this project contain
non-reserve mineralized material listed in the table below. The calculation of mineralized material was prepared by prior mining companies and is considered historical in nature and no
other calculations have yet been completed because the digital data base has not been prepared for modeling. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> SUMMARY OF IN-PLACE NON-RESERVE MINERALIZED MATERIAL<BR>
IN THE AMROSIA LAKE PROJECT  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:50%;margin-left:25%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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</FONT></P>

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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="37pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:61pt;"><FONT SIZE=1><B>Mineralized Area

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Tonnage<BR>
Millions </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Grade<BR>
Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Elizabeth</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.19</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mesa Redonda</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.16</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>West Endy</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Environmental and Permits  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exploration and mining activities conducted on lands managed by the USFS and BLM are governed by agency rules and regulations.
Additional permits are required from the MMD. The BLM, USFS and MMD entered into a Memorandum of Understanding (MOU), effective January&nbsp;20, 2004, to provide for cooperation between the agencies
and elimination of duplication of efforts between the agencies in the assessment and processing of exploration and mining permit applications. In addition to the requirements for permits to conduct
exploration and mining activities, the State requires that all drill holes be "plugged" to prevent contamination of ground water aquifers or communication between aquifers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
properties are located in the historic Grants mineral belt. There are no known environmental issues affecting the Ambrosia Lake Project properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have a permit to drill 28 drill holes at the Elizabeth target. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron
formerly held a "minimal impact" exploration permit (MK013EM), issued by the MMD on February&nbsp;21, 2007 for drilling on Section&nbsp;36, Township 14 North, Range 9 West,
McKinley County, New
Mexico, the location of the inactive Cliffside mine. Neutron carried out a drilling program at this area (which covers a portion of the West Endy uranium mineralized area), as outlined in this permit.
All of the drill holes in Neutron's drilling program were completed, "plugged" and abandoned in compliance with applicable State regulations, and under supervision of the New Mexico regulatory
authorities. All surface disturbances related to this work program were reclaimed in compliance with applicable State rules and regulations, and this work has been inspected and found to be in full
compliance with the applicable regulations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> SOUTH DAKOTA  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We initiated an exploration and acquisition program in southwestern South Dakota in 2005. We identified two areas of interest, as
described below. Through 2010 we have spent $1.7&nbsp;million in South Dakota. We do not consider any of our South Dakota property interests to be material to our business and plan of operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Powertech Uranium Corp Transaction  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We hold a 30% net proceeds interest from future uranium production from certain unpatented lode mining claims, fee leases and State
leases (all formerly held by Neutron) currently controlled by Powertech Uranium (USA) ("Powertech") in the Dewey-Burdock area, which is located approximately six miles (9.7 kilometers) northwest of
our current Edgemont Project property holdings in South </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>88</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:times;"><FONT SIZE=2>Dakota.
We transferred our property interest in the Dewy-Burdock area to Powertech for which we received (i)&nbsp;a 30% net proceeds interest of future uranium production and sales from
our former lands, (ii)&nbsp;327 acres (132 hectares) of mining claims and state leases along with associated historical drilling logs near our Edgemont Project, (iii)&nbsp;4,117acres (1,666
hectares) of mining claims in the Ambrosia Lake mining district in New Mexico, and (iv)&nbsp;1,708 acres (691 hectares) of mining claims and leases in the Shirley Basin area of Wyoming. Powertech
has filed permit applications with the NRC and EPA and submitted a Plan of Operation to the BLM for its Dewy-Burdock uranium in-situ recovery project. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
former acreage that is subject to the 30% net proceeds interest payable to us consists of approximately 1,620 acres (656 hectares) of claims and leases within the Powertech's
proposed Dewy-Burdock permit area and an additional 4,667 acres (1,888 hectares) of prospective
claims and leases adjacent to their project permit area. This acreage has historical drilling and adds future development potential to the project. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Edgemont Project  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> General  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron controls a significant land position in the Edgemont mining district of southwestern South Dakota. The Company's land holdings
in the district, which include more than 19,062 acres (7,714 hectares) of mineral rights, cover several zones of historically-identified and undeveloped uranium mineralization. The properties hold
good potential for the discovery of additional uranium mineralization. While there has been historic uranium mining from the project area (see history below), there are no facilities or equipment
remaining on the property, including subsurface improvements and equipment. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Mining Leases and Unpatented Lode Mining Claims Descriptions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Edgemont Project is located on the southwest flank of the Black Hills, about 55 miles (88.5 kilometers) southwest of Rapid City,
South Dakota and 8 miles (12.9 kilometers) north-northwest of the city of Edgemont. The Company holds 11 State of South Dakota mineral leases, totaling 3,875 acres (1,568 hectares). These parcels were
acquired through various competitive lease auctions in 2005, 2006, 2007, and 2008. The leases require annual rental payments to maintain the properties, and a 2% "gross returns" royalty (which has
provisions for the deduction of mineral processing and transportation costs) on production from the property. The state leases provide for up to a 15&nbsp;year term with escalating annual payments
that range from the current $2.00 per acre to $50.00 per acre in year 15. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron
also holds 416 unpatented lode mining claims, covering an area of approximately 7,087 acres (2,868 hectares) in the project area. Certain of the Company's mining claims in the
project area are situated on deeded (fee) surface over federal-managed minerals. Neutron has acquired access to these "split estate" lands for exploration and production purposes by negotiating
Surface Use and Disturbance Agreements (SUDA's) with the surface owners of the properties. The SUDA agreements have provisions for the payment of a 2% net proceeds royalty to the surface owners for
any production
from the claims that underlie the private surface. The Company holds 14 fee (deeded) mineral leases covering 8,100 net acres (3,278 hectares) within the project area. These leases have primary terms
of ten years each and generally require $1.00 per acre annual rental payments. Production royalties on the private mineral parcels are set at the level of 5% of net proceeds for production from the
leased lands. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>89</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><A
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<P style="font-family:times;"><FONT SIZE=2><B> Edgemont Mineral Interests  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="128pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="31pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="49pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:47pt;"><FONT SIZE=1><B>Claim Group

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>BLM/State Serial Numbers </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Count </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DRIFTWOOD</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SDMMC-215674 TO 215691</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>327.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NE</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SDMMC-215322 to 515330, 215270 to 215288, 215270 to 215288, 215291 to 215293, 215467 to 215523, 216753 to 216780, 216353 to 216366, 216781,
216367 to 216384, 216782 to 216793, 216385 to 216431, 217397 to 217413, 216890 to 216935, 216938 to 216943, 217506 to 217538, 218037 to 218038, 217539 to 217553, 218039 to 218040, 217554 to 217578, 218555 to 218564, 218905 to 218910, 218877 to
218904</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>398</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,759.8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State Leases-SD</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>No.&nbsp;27RC072095 to 27RC072096, 27SL072097 to 27SL072098, 27RC072099 to 27RC072102, 27SL072103 to 27SL072105</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,875.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fee mineral leases</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,100.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>441</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>19,062.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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<IMG SRC="g576080.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="528">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;11.
Edgemont Project Property Map (March 2011) </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>90</FONT></P>

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</FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Accessibility, Climate, Local Resources, Infrastructure and Physiography  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Edgemont Project is located in Fall River County on the southwestern flank of the Black Hills, a major physiographic feature in
southwest South Dakota. Access to the project area is very good, with paved highways located several miles to the west and south, and by well maintained gravel roads that traverse much of the area.
Private agricultural access roads are also available for use. U.S. Highway 18 runs east-west through Edgemont, and connects the area with Newcastle, Wyoming to the west and with Hot
Springs, South Dakota to the east. The nearest major population center and airport is at Rapid City, located about 55 miles (88.5 kilometers) to the northeast of the project area. A main line of the
Burlington Northern Santa Fe Railroad, connecting Alliance, Nebraska and Gillette, Wyoming is situated on the western side of the project area. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
terrain in much of the project area is gentle, at an elevation of approximately 3,700 feet (1,127 meters) above sea level. The topography is modified somewhat by hills and ridges
that stand as much as 500 feet (152 meters) above the surrounding countryside. Sparse to moderate grasses and sage are the dominant vegetation, with stands of juniper and ponderosa pines on the hills. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Average
temperatures range from 20&deg; Fahrenheit (-6.7&deg; Celsius) in January to more than 70&deg; Fahrenheit (21.1&deg; Celsius) in July.
Precipitation is lower than the United States' average, ranging from less than one inch (25 millimeters) in January to a maximum of 2.5 inches (64 millimeters) in May and June. March is the snowiest
month with snow totals averaging approximately nine inches (229 millimeters). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
town of Edgemont is located within two miles (3.2 kilometers) of the southern boundary of the project and major high voltage electric power lines serve the town. Electrical power
lines also cross the project area. Mining and milling of uranium ores were previously conducted in the area. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> History  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium mineralization was first discovered at Craven Canyon, about eight miles (12.9 kilometers) north of the town of Edgemont, in
1951. During the 1950's, 1960's, and 1970's numerous small to medium scale uranium mineralized areas were mined by open pit and underground methods near Edgemont, and farther northwest in the
Dewey-Burdock area. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ore
from these modest mining operations in the Black Hills was initially shipped to the Union Carbide mill at Rifle, Colorado, and later to a U.S. Atomic Energy Commission
ore-buying station located at Edgemont. In response to increasing local and regional (including the northern Black Hills and the southern Powder River Basin) mine production
Susquehanna-Western,&nbsp;Inc., constructed a mill to recover uranium and vanadium in 1956 and it operated through 1968. The mill has since been decommissioned and dismantled, and the mill site is
managed by the Department of Energy under the Uranium Mine Tailings Radiation Control Act program. Total production from the mill was approximately 5&nbsp;million pounds of uranium; however, more
than half of this production, or about 3.1&nbsp;million pounds of uranium and 4.4&nbsp;million pounds vanadium, was derived from ores produced from mines in the northern Black Hills and the Powder
River Basin. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the mid-to late-1970s and early 1980's, the Tennessee Valley Authority (TVA) carried out a comprehensive exploration drilling program down-dip
(west and southwest) from mines, prospects, and surface exposures of uranium in the Inyan Kara Group in the Dewey-Burdock area. The results of this program (along with earlier and concurrent
exploration drilling programs in the Edgemont district by Federal Resources, Homestake Mining Company, Susquehanna-Western, Union Carbide, and Wyoming Minerals) outlined numerous roll front systems in
several sandstone units of the Lakota and Fall River Formations. The properties comprising Neutron's Edgemont Project were previously held by several other companies, and were part of the historical
mineral exploration programs outlined above. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>91</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> Geology and Mineralization  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Edgemont Project is situated on the southwestern flank of the Black Hills Uplift, a north to north-northwest trending arcuate,
elongate, and asymmetric anticline that is situated in western South Dakota, northeastern Wyoming and southeastern Montana. The uplift extends in a north-northwest direction for a distance of 160
miles (257.5 kilometers), and is about 50 miles (80.5 kilometers) wide. The Paleozoic and Mesozoic sediments that flank the uplift dip outward, away from the Precambrian crystalline and
metasedimentary rocks that are the core of the uplift. In the vicinity of the Edgemont Project the sedimentary rocks dip to the west and southwest toward the Powder River Basin, and southward toward
the Crawford Basin. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium
and vanadium mineralization in the Edgemont Project area occurs as sandstone-hosted small, tabular mineralized "pods" (especially in areas close to the outcrops of the host
rocks), and substantial and wide-spread roll front systems in the Fall River and Lakota Formations down-dip of the near surface uranium occurrences. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium
mineralized areas in the Edgemont mining district, which includes the mineralization at Neutron's Edgemont Project, are hosted in lower Cretaceous-aged sandstones of
the Fall River and Lakota Formations. The individual uranium mineralized areas take the form of either small "pod-like" bodies of mineralization usually in close proximity to the regional
outcrop of the Fall River and Lakota Formations, and as extensive roll-front mineralized areas that are situated down-dip of surface occurrences (pod-like
mineralized areas) of mineralization. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mineralized Material  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with SEC guidance materials on non-reserve mineralized material, we show the estimate of in-place
mineralized uranium material for our Edgemont Project. The estimate of mineralized material was obtained from the Technical Report on the Uranium Resources on The Edgemont Project, Fall River County,
South Dakota, USA. The technical report is dated January&nbsp;18, 2011 and was completed by Broad Oak Associates, an independent engineer. All of the mineralized material estimates quoted in the
Technical Report on the Uranium
Resources on the Edgemont Project are historical in nature, and were based on data and reports prepared by the previous operators of the properties or their independent consultants. As described in
the Technical Report we have historical reports that show our Edgemont Project area contains 197&nbsp;thousand tons of mineralize material at an average grade of 0.17%. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> WYOMING  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Copper Mountain Project  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> General  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron controls a significant land position in the Copper Mountain area of central Wyoming. The Company's land holdings in the area,
which include approximately 9,313 net acres (3,769 hectare) of mineral rights, cover several zones of historically-identified and undeveloped uranium mineralization. The properties hold good potential
for the discovery of additional uranium mineralization. We do not consider our Copper Mountain Project to be material to our business and plan of operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mining Leases and Unpatented Lode Mining Claims Descriptions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We control approximately 9,313 net acres (3,769 hectares) of mineral rights, through mining claims, fee leases, and mineral leases
granted by the State of Wyoming, in the Copper Mountain area of central Wyoming. Included in this package of properties are six "Uranium and Associated Minerals" leases granted by the State of Wyoming
covering 2,200 acres (890 hectares), 17 fee (deeded) mineral leases covering an area of 644 net acres (261 hectares), and 366 unpatented lode mining claims </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>92</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>covering
an area of approximately 6,468 acres (2,618 hectares). The state leases have a primary term of ten years. Annual rental payments of $1.00 per acre per year are for the first five years and
$2.00 per acre per year from the sixth year through the twentieth year. Once the discovery of commercial quantities of minerals on the leased lands has been made, the annual rental will be $2.00 per
acre. A royalty of 5% of the gross value ("fair market value") of uranium mined from the properties is payable to the State of Wyoming, and the State has the right to take its royalty "in kind."
Through 2010 we have spent $760,000 on the Copper Mountain Project. There are no plant facilities or equipment located on the property, including subsurface improvements and equipment. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Copper Mountain Mineral Interests  </B></FONT></P>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="31pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:47pt;"><FONT SIZE=1><B>Claim Group

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>BLM/State Serial Numbers </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Count </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Acreage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>ARROW</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WMC-154410 to 238811</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CM</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WMC-295655 to 295803, 282107 to 282160</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>203</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,619.7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DH</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WMC-281914 to 281931</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>320.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DL</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WMC-282161 to 282242, 285346 to 285381</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>118</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,054.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>LC</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WMC-282243 to 282267</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>440.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fee mineral leases</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>643.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State Leases-WY</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>No.&nbsp;0-41262 to 0-41264, 0-42208, 0-42232 to 0-42233</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,200.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>389</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,312.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g851286.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="513">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Figure&nbsp;12.
Copper Mountain Project Map (March 2011) </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>93</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> Accessibility, Climate, Local Resources, Infrastructure and Physiography  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Copper Mountain Project is situated in foothills on the southeastern flank of the Owl Creek Mountains of north-central Wyoming. The
property is located approximately 35 miles (56.3 kilometers) east-northeast of the city of Riverton, which is the county seat of Fremont County, and about 70 miles (112.7 kilometers) west
of the city of Casper. The elevation of the Copper Mountain Project area ranges from 5,500 to 6,400 feet (1,676 to 1,951 meters) above sea level. The climate of the region is typical of the
intermontane basins of the Rocky Mountain region of the western United States. It is semi-arid, with a mean annual precipitation rate of approximately 8 inches (203 millimeters) and an
average annual temperature of 43<SUP>o</SUP> Fahrenheit (6.1<SUP>o</SUP> Celsius). Climatic conditions at Copper Mountain are such that exploration and mining activities can be reasonably
conducted during all twelve months of the year, with only short interruptions for wet and muddy ground conditions due to summer thunderstorms or occasional winter snow storms. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Access
to the Copper Mountain Project is good. An east-west paved highway (US 20-26) between Riverton and Casper is located 14 miles (22.5 kilometers) south of
the project area, and a north-south paved highway (US 20), between the towns of Shoshoni and Thermopolis is located 11 miles (17.7 kilometers) west. The immediate project area is accessible from a
network of graded county roads and unimproved ranch roads which traverse a broad valley along the south flank of the Owl Creek Mountains and enter the mineralized areas from the south. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> History  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Copper Mountain district hosts five significant low-grade uranium mineralized areas, hosted primarily in
Precambrian-aged granite, syenite, and metamorphic rocks and in clastic sediments of Tertiary age. The Copper Mountain area has had a long history of exploration, prospecting, and minor
mineral production, beginning in the late 1800's. This initial phase of prospecting activity was focused upon copper, gold and silver prospects. Uranium mineralization was first discovered in the
Copper Mountain area in 1953 by a local rancher-prospector, at a locality that was later to become the Arrowhead Mine. Additional work was conducted in the area by Kerr McGee, who discovered
mineralization in the district in 1953 and in 1955 by the U. S. Atomic Energy Commission, both of whom drilled a number of holes to test potential targets in sediments of the Tertiary-aged
Tepee Trail formation/Wagon Bed Formation. Uranium mining commenced at the Arrowhead Mine of Susquehanna Western in March, 1955, and ore was shipped to Susquehanna's mill near Riverton, Wyoming
periodically until 1971, when the mine was closed. Utah Construction and Mining discovered the Fuller mineralized area in the late 1950's, and in 1965 Kerr McGee discovered the Knob mineralized area.
Other companies that carried out uranium exploration programs in the Copper Mountain area include the Anaconda Copper Company, Nuclear Dynamics, Teton Exploration, Urania Exploration, and Western
Nuclear. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
most comprehensive exploration program in the Copper Mountain Project area was undertaken by Rocky Mountain Energy Company, previously known as Union Pacific Mining, which acquired
several claim blocks in the district in 1969. They completed a feasibility study in the late 1970's after extensive drilling and metallurgical testing and considered building a mill. Their program was
terminated due to the low uranium price subsequent to the feasibility study. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Geology and Mineralization  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Uranium mineralization at the Copper Mountain Project occurs in two distinct geologic environments: fracture-controlled uranium
mineralization hosted in Archaean-aged granite, syenite, isolated occurrences along the margins of diabase dikes, and in association with meta-sediment inclusions in granite;
and as disseminations in
coarse-grained sandstones and coatings on cobbles and boulders in the Tertiary-aged Wagon Bed Formation at the Arrowhead Mine and other localities. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>94</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's exploration activities on the Copper Mountain properties have been limited to geologic examination of surface exposures of uranium mineralized areas and zones of altered
granite and sandstones on the properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> ARIZONA  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we undertook an exploration and acquisition program for breccia pipe hosted uranium mineralized areas in northern Arizona.
Breccia pipe uranium mineralized areas represent some of the highest grade uranium mineralized areas in the United States. Several of the targets we acquired had evidence of historical drilling by
several companies that were primarily active in the late 1970's and 1980's, including Energy Fuels, Energy Reserves Group, Pathfinder Mines and Rocky Mountain Energy Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Breccia
pipes in northern Arizona were formed as the result of the collapse of dissolution caverns in the Redwall Limestone. This collapse formed pipes containing broken sedimentary rock
which in turn provided an excellent setting for uranium deposition. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2009, we terminated our breccias pipe exploration activities and transferred certain properties, in two separate transactions, to VANE Minerals Company and Arizona Strip
Partners&nbsp;LLC. We transferred 2,738 acres (1,108 hectares) to VANE Minerals (US)&nbsp;LLC and reserved a 2% royalty, unless production is from a state lease with a base royalty greater than
5%, then the royalty is reduced to 1%. We transferred 160 acres (65 hectares) to Arizona Strip Partners&nbsp;LLC, a venture between Energy Fuels and Royal Resources from Australia and reserved a 2%
royalty. In both transactions we have the option to back-in for a 30% interest after a feasibility study has been completed. We do not consider these residual mineral interests to be
material to our business and plan of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>95</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="em75201_legal_proceedings"> </A>
<A NAME="toc_em75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  LEGAL PROCEEDINGS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we are engaged in legal proceedings in the ordinary course of business. We are not a party to any pending legal
proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations and we are unaware of any such
proceedings being contemplated by any governmental authorities. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>96</FONT></P>

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<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="eo75201_directors,_executive_o__eo702459"> </A>
<A NAME="toc_eo75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth information about our directors and executive officers as of March&nbsp;24, 2011. </FONT></P>
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="210pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="20pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:21pt;"><FONT SIZE=1><B>Name

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Age </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Position With Company </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>Kelsey L. Boltz</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>81</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Executive Chairman of the Board of Directors</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Gary C. Huber</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>59</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>President, Chief Executive Officer and Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>James J. Graham</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>64</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Director and independent contractor</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>John K. Campbell</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>78</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Jerry Nelson</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>80</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Henry G. Grundstedt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>82</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Richard Mallery</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>73</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Carolyn C. Loder</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>58</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Edward M. Topham</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>53</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Chief Financial Officer, Treasurer and Secretary</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Mark J. Ludwig</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>55</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Vice President of Operations</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Mike R. Neumann</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>57</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Vice President of Environmental Services</FONT></TD>
</TR>
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 <P style="font-family:times;"><FONT SIZE=2><B> Term of Office  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our directors hold office until the next annual meeting of our stockholders or until their successors are elected and qualified,
unless his office is earlier vacated in accordance with the Bylaws of the Company, or with the applicable provisions of the Nevada Corporations Act. Our officers are appointed by our Board of
Directors and hold office until the expiration of their employment agreement, if such officer has entered into an employment agreement with the Company, or their earlier death, retirement, resignation
or removal. Each of Messrs.&nbsp;Boltz and Huber entered into a two year employment agreement with the Company that expires on October&nbsp;28, 2011. Each of Messrs.&nbsp;Ludwig, Neumann and
Topham entered into a one year employment agreement with the Company that expires on September&nbsp;30, 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following is a description of the business background of the directors and executive officers of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Kelsey L. Boltz, P.E., P. Geol., C.P.G.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Boltz founded the Company and has served as a director since our inception in March
2005 and as
our Executive Chairman since August 2007. Mr.&nbsp;Boltz served as our President and Chief Executive Officer from our inception to August 2007. In 1982, Mr.&nbsp;Boltz co-founded
Century Capital Corporation, a venture capital and retail brokerage firm which provided several hundred million dollars for companies in various industries, including the minerals industry. In 1954,
Mr.&nbsp;Boltz founded Colamer Corporation and was responsible for the discovery and production of several uranium deposits in the Grants District of New Mexico. During the 1970's, Mr.&nbsp;Boltz
was President and Chief Executive Officer of Nuclear Dynamics,&nbsp;Inc., a publicly held company, which conducted uranium exploration and development programs as joint venture partner with such
companies as Bethlehem Steel, Phillips Petroleum, Conoco and Cleveland Cliffs Iron Company. From April&nbsp;2005 to September&nbsp;2009, Mr.&nbsp;Boltz served as a director of Exmin
Resources,&nbsp;Inc., a publicly traded gold exploration company. Mr.&nbsp;Boltz has considerable experience in corporate structure and integration, uranium mining business startup and
development, mergers and acquisitions, and strategic planning. Mr.&nbsp;Boltz has over 50&nbsp;years experience in the minerals industry and specifically in the </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>uranium
mining industry. Mr.&nbsp;Boltz graduated from the Colorado School of Mines with the Professional Degree of Geological Engineer in 1953. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Mr.&nbsp;Boltz should serve as a director due to his extensive experience in uranium mining business startup and development and business and executive
management. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gary C. Huber, Ph.D.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Huber has served as our President and Chief Executive Officer and a director since August 2007. From
October 2006 to
August 2007, Dr.&nbsp;Huber served as a manager of IRC Capital Group, an investment arm of International Royalty Corporation (subsequently merged into Royal Gold&nbsp;Inc.). In 1979,
Dr.&nbsp;Huber helped found Canyon Resources Corporation (recently merged with Atna Resources&nbsp;Ltd.) for the purpose of uranium exploration in the western United States. From 1979 to January
2006 he held various positions with Canyon Resources, including director, Chief Financial Officer, and Vice President of Finance. His responsibilities included financing three open pit gold mines, two
mergers with public entities, Canyon Resources' initial public offering, several secondary share offerings and numerous mineral property acquisitions and exploration and development joint ventures.
From 1988 to 1998, Dr.&nbsp;Huber was also President and Chief Executive Officer of Canyon Resources' industrial minerals subsidiary, CR Minerals, which produced and sold functional fillers and
specialty products through a nationwide distributor network. Prior responsibilities in the 1970's included uranium property acquisition, mine development and uranium production and sales to regional
mills from three underground mines for Energy Reserves Group in the central Colorado Plateau area. Since August 2010, Dr.&nbsp;Huber has served as a director of Capital Gold Corporation, a publicly
traded company listed on the NYSE Amex. Dr.&nbsp;Huber is a mining company executive with over 35&nbsp;years of diversified natural resource experience and holds a Ph.D. from the Colorado School
of Mines. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Mr.&nbsp;Huber should serve as a director due to his extensive experience in the resource industry and in mining operations, coupled with his business and
executive management experience. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;John K. Campbell.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Campbell has served as a director since January 2006. Since June 2008, Mr.&nbsp;Campbell has served as
President of
Teslin Mines&nbsp;Ltd., a private company. From May 1986 to June 2008, Mr.&nbsp;Campbell served as President of Trans America Industries&nbsp;Ltd ("TSA"), and was responsible for TSA's
participation in the Burnt Timber gold project in Manitoba, which was subsequently brought into production by Cazador Explorations. In addition, Mr.&nbsp;Campbell was responsible for TSA's
participation in the Aguas Blancas property in Chile, which is now among the largest producers of iodine in the world. In June 2008, through an amalgamation, TSA became Primary Corp.
Mr.&nbsp;Campbell resigned as President and has continued as a director since June 2008. Primary Corp. currently holds 24.5% of the issued and outstanding common stock of the Company at the time
immediately prior to this offering. Mr.&nbsp;Campbell currently serves as a director of Primary Corp. and Envoy Capital Group&nbsp;Inc. He also served as a director of American Natural
Energy&nbsp;Inc. from April 2000 to November 2010, AMG Oil&nbsp;Ltd. from March 2006 to July 2009, Exmin Resources&nbsp;Inc. from April 2005 to July 2008 and Gleichen Resources&nbsp;Ltd. from
April 2007 to June 2009. Mr.&nbsp;Campbell received his Juris Doctor from the University of British Columbia in 1960 and practiced law from 1970 to 1985. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Mr.&nbsp;Campbell should serve as a director due to his legal background and extensive experience in the natural resource industry, as well as his experience
in capital formation in Canada. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jerry Nelson.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Nelson has served as a director since August 2006. Mr.&nbsp;Nelson, retired, served as the President of Pinnacle
Peak Land
Company and Pinnacle Paradise from 1970 to 2000. Through these entities and their affiliates, he has, since 1971, developed Pinnacle Peak Village, Pinnacle Peak Country Club and Shopping Plaza, Troon
Village and Troon Golf&nbsp;&amp; Country Club, Troon North and Troon North golf course. Current developments are proceeding in Scottsdale and Prescott, Arizona and </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>Cabo
San Lucas, BCS, Mexico. Additionally, Mr.&nbsp;Nelson co-founded TicketMaster. Mr.&nbsp;Nelson has also funded the creation and startup of numerous companies, including Simulnet,
Video Electronics, Antenna Technology Corporation and Technology Control Services. Mr.&nbsp;Nelson was appointed by Arizona Governor Bruce Babbitt to the Urban Lands Advisory Commission in the early
1980's and, in 1997, was inducted into Scottsdale's History Maker Hall of Fame. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Mr.&nbsp;Nelson should serve as a director due to his extensive real estate, leadership and executive management experience. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Henry G. Grundstedt.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Grundstedt has served as a director since August 2008. Mr.&nbsp;Grundstedt retired in 1999. From 1992 to
1999 he
served as a consultant to Capital Group,&nbsp;Inc., a resources fund manager with over $1.2 trillion in assets. From 1972 to 1990, Mr.&nbsp;Grundstedt served in various positions at Capital
Guardian Trust Company, a money manager of pension and mutual funds, including Senior Vice President from 1985 to 1990. Mr.&nbsp;Grundstedt specialized in investments in the mining and metals
industry and was responsible for global resources related investments. From 1962 to 1972, Mr.&nbsp;Grundstedt was the Publisher of the World Mining Magazine, a global technical journal devoted to
metals&nbsp;&amp; mining. From June 1992 to June 2001, Mr.&nbsp;Grundstedt served as a Member of the Board of Directors for Homestake Mining. He also served as a director of Emerging Market Gold Fund
from 1992 to 1994 and AZCO Mining Corporation from 1993 to 1995. He is a registered Professional Engineer (Mining) and graduated from the University of Arizona in 1951, with graduate studies at the
Colorado School of Mines, and San Francisco State University. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Mr.&nbsp;Grundstedt should serve as a director due to his extensive experience in natural resource investment management, industry knowledge and board
experience. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James J. Graham.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Graham has served as a director of the company since February 2011. From April 2009 to the present he has
served as the
Chief Executive Officer of Nuclear Fuel Cycle Consulting&nbsp;LLC, which provides services for the front end of the nuclear fuel cycle. From June 1993 to March 2009, he served as President and CEO
of ConverDyn, a partnership between Honeywell International and General Atomics where he managed the global marketing of uranium conversion services and oversight of Honeywell's Metropolis Facility in
Metropolis, Illinois. ConverDyn was one of only four primary uranium converters in the world. During this time, from October 1992 to January 2004, Mr.&nbsp;Graham was also a Senior Vice President of
General Atomics and responsible for the company's nuclear fuel cycle activities. He was responsible for developing the Beverley ISL uranium mine in South Australia over a four and a half year period.
Beverley was the first insitu leach (ISL) in Australia and was able to reach mining agreements with both the Native Title groups and the South Australian government. As senior management for General
Atomics, he oversaw the acquisition and uranium operations in Colorado, Texas and New Mexico. From 1983 to 1992, Mr.&nbsp;Graham was the President and Chief Operating Officer for NUEXCO Trading
Company, a large uranium trading and brokerage group. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Graham
has held 18 board positions in the industry and educational institutions. From June 1993, Mr.&nbsp;Graham served as a Director for the ConverDyn Partnership. From
October 1992 to January 2003, he served as Director and CEO of Nuclear Fuels Corporation. From March 1996 to January 2003, he served as Managing Director and CEO of Heathgate Pty&nbsp;Ltd.
Mr.&nbsp;Graham also served as Managing Director and CEO of Quasar Resources PTY&nbsp;Ltd from January 2000 to January 2003, as Chairman of Cotter Corporation from February 2000 to January 2003,
and as Chairman and CEO of TRIGA Technologies,&nbsp;Inc. from 1998 to 2001. He has held number third party board positions, including: Nuclear Energy Institute from 2007 through 2009, World Fuel
Marker from 1998 through 2003, Nuclear Fuel Supply Forum of the NEI from 1998 through 2001, Michigan Tech Fund Board from 1990 through 1999, Ventures Trident Gold from 1985 through 1992, and
St&nbsp;Mary's Academy from 1995 through 2003. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Graham
has 40 plus years of experience in the mining and energy industries and the last 27&nbsp;years of his experience were in the nuclear fuel industry.
Mr.&nbsp;Graham's experience also covers mining in potash, coal, gold and uranium using insitu leach, open pit and underground methods as well as building, operating and supervising processing
plants, milling and insitu leach recovery facilities, evaluation, acquisition, design and construction, operation, management and trouble shooting for the various types of properties and facilities.
Mr.&nbsp;Graham also Co-Chaired the World Nuclear Association's 2007 Global Nuclear Fuel Market study in London. Mr.&nbsp;Graham received his bachelor's degree in metallurgical/mining
engineering in 1970 from Michigan Technological University. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Mr.&nbsp;Graham should serve as a director due to his extensive nuclear industry, executive management and board experience. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Carolyn C. Loder.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Loder has served as a director since February 2011. Ms.&nbsp;Loder has served as a Senior Land Manager for
Lafarge
North America since April, 2008, where she is responsible for strategic planning, acquisitions and divestments regarding aggregates, ready mix and asphalt operations. From February 1997 to February
2008, she served as an Acquisitions Manager for Vulcan Materials Company where she oversaw the construction of the Agua Fria River Flood Control Levee to remove mined and un-mined lands
from floodplain jurisdiction and alleviate long term flood hazards and acquired an aggregate lease on Tribal lands in New Mexico through a landmark land exchange between multiple federal governmental
agencies and tribes and resolved 400-year old ancestral tribal land claims to allow mining. From 1988 to 1996, Ms.&nbsp;Loder also served as the President and a Vice President of Sonora
Mining Corp., which operated a large open pit gold flotation mining&nbsp;&amp; mining facility in North America with annual gold production of 100,000 ounces and average mine production of 35,000 tons
per day. From 1978 to 1987, she served as an executive director for the Merced County Association of Governments where she directed land use, air quality, water, transportation and safety programs for
multiple governmental agencies. During that time she also oversaw a $100,000,000 Army Corps of Engineer's Flood Control Project and was responsible to review authority on $100,000,000 annually in
transportation funding. Ms.&nbsp;Loder has been a director of the New Mexico Mining Association since 1999 and Arizona Rock Products Association since 2009 and has Chaired the New Mexico Mining Hall
of Fame since 2005. Ms.&nbsp;Loder has received numerous awards including New Mexico Mining Association's Marvin Watts/Doc Weiler Award for Professionalism in 2011, the Lafarge Award for Reserve
Acquisitions in 2009 and 2010, National Association of Women in Construction's Person-of-the Year for Lifetime Achievements in 2010, and Santo Domingo Pueblo's Outstanding
Support and Dedication to the Tribe award. Ms.&nbsp;Loder received an M.A. and B.A. in geography with a minor in geology from California State University in 1977, and will receive a Masters of
Native American/Indian Law from Arizona State University, Sandra Day O'Connor School of Law in May 2011. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Ms.&nbsp;Loder should serve as a director due to her extensive natural resource industry, executive management and Native American knowledge and experience. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Richard Mallery.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Mallery has served as a director since February 2011. Mr.&nbsp;Mallery is a senior partner with
Snell&nbsp;&amp;
Wilmer&nbsp;LLP, a law firm he joined in 1964. Since 2001, Mr.&nbsp;Mallery has served as the founding chair and Chief Executive Officer of The International Genomics Consortium, which was the
driving force behind the creation of the Translational Genomics Research Institute and the Biodesign Institute of Arizona State University. He has been a member of the Council on Foreign Relations in
New York since 1977. He was a member of the Board of Overseers for the Hoover Institution of Stanford University from February 1994 to December 2008. Mr.&nbsp;Mallery is the recipient of numerous
awards and recognitions including Southwest Super Lawyer, Law&nbsp;&amp; Politics Magazine in 2008, The Business Journal's 25 Leaders and Legends of Phoenix Over the Past 25 Years in 2005, Phoenix
Community Alliance's Leadership Award, in 2004, Valley Leadership's Man of the Year in 2003 and THE BEST LAWYERS IN AMERICA&reg; from 2003 to 2006 and WHO'S WHO IN THE WORLD&reg;.
Mr.&nbsp;Mallery received a J.D. from Stanford Law School in 1963, an M.A for Cornell University in 1960 and a B.A. from DePauw University in 1959. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board determined that Mr.&nbsp;Mallery should serve as a director due to his extensive legal experience as a practicing attorney and executive skills and experience. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Edward M. Topham.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Topham has served as our Chief Financial Officer, Treasurer and Secretary since September 2005. From April
2004 to
December 2005, Mr.&nbsp;Topham served as chief financial officer of Stenberg Welding and Fabricating,&nbsp;Inc., a Minnesota based manufacturing company. From December 1997 to April 2004,
Mr.&nbsp;Topham was a self employed consultant providing business and financial advice. From 1994 to 1997, Mr.&nbsp;Topham served as chief financial officer and director of Freemont Gold
Corporation, a publicly held gold exploration company with operations in Chile and chief financial officer and director of Laminco Resources, Inc, a publicly held gold exploration company with
operations in Mexico. From 1988 to 1994, Mr.&nbsp;Topham served as chief financial officer and director of Action Performance Company,&nbsp;Inc., an NYSE listed manufacturer of NASCAR related
collectables and president of ILX,&nbsp;Inc., publicly held vacation resort developer. From 1984 to 1988, Mr.&nbsp;Topham served as vice president of corporate finance for Fitzgerald,
DeArmen&nbsp;&amp; Roberts,&nbsp;Inc., a regional investment banking and securities brokerage firm, where his responsibilities included the supervision and management of the firm's public offerings,
private financings and merger activities. From 1982 to 1984, Mr.&nbsp;Topham worked as an associate for KPMG Peat Marwick, an international public accounting firm. Mr.&nbsp;Topham has more than
26&nbsp;years experience in accounting and corporate finance and has acted as agent or principal in numerous finance transactions and has served as a senior officer in several private
companies that he ultimately brought to the public markets. Mr.&nbsp;Topham graduated with a B.S.B.A., majoring in accounting and finance, from the University of Arizona in 1982. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mark J. Ludwig, P.E.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ludwig has served as our Vice President of Operations since August 2008. From January 2005 to August 2008,
Mr.&nbsp;Ludwig held various positions with Hecla Mining Company, including that of Manager of Corporate Development. His responsibilities at Hecla included underground mine development and
production in Venezuela and evaluation for acquisition of both existing mining operations and development projects in Latin America. From September 1989 to December 2004, Mr.&nbsp;Ludwig held
various management and senior engineering positions related to underground mine development and production with BHP Billiton. Responsibilities with BHP included development of the underground Redstone
nickel mine in Canada, feasibility and construction of San Juan underground mine in New Mexico and feasibility and construction of the underground Panda Mine in Canada. Prior to his tenure with BHP
Billiton, Mr.&nbsp;Ludwig held positions with Moylcorp Minerals at the Questa Mine and Climax Metals at the Henderson and Climax mines. Mr.&nbsp;Ludwig has over 35&nbsp;years of diverse
experience in the mining industry. Mr.&nbsp;Ludwig graduated from the Colorado School of Mines with a degree in mining engineering and is a registered Professional Engineer in the State of New
Mexico. Mr.&nbsp;Ludwig received a Masters in Business Administration from Regis University in 2006. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael R. Neumann.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Neumann began with Neutron in March 2007, and has served as our Vice President of Environmental Services
since October
2008. From April 2006 to March 2007, Mr.&nbsp;Neumann served as President of Neumann Environmental Services,&nbsp;Inc., which provided environmental consulting services to Neutron. From October
2005 to April 2006, Mr.&nbsp;Neumann served as Land Use Director for Rio Blanco County. From 2001 to October 2005, he served as Open Space Supervisor for the City of Steamboat Springs. From 1994 to
2001, Mr.&nbsp;Neumann was the Environmental Group Manager for the Mining Division of Montgomery Watson, a global engineering firm now known as MWH. During his seven years at MWH, he supervised a
staff of 12-15 employees while concurrently serving as Senior Project Manager for several coal, copper, molybdenum, industrial minerals and uranium mine permitting projects. Major clients
included Peabody Coal, Kennecott, W.R. Grace, Newmont Gold, Cypress Minerals, Equatorial Resources and Cameco Corp. Mr.&nbsp;Neumann worked on both domestic and international projects including
Cameco's JV Inkai uranium project in Kazakhstan. Prior to joining MWH, Mr.&nbsp;Neumann founded his own mine permitting consulting business, which he ran from 1992 to 1994. From 1978 to 1992,
Mr.&nbsp;Neumann worked for Rocky </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>Mountain
Energy Company ("RME"), Union Pacific's mining subsidiary permitting uranium exploration projects throughout the western U.S. While at RME he also served as on-site Environmental
Coordinator for two uranium in-situ recovery projects, performed permitting for the Company's Bear Creek Uranium mine and managed all environmental studies and permitting for the Sage
breccia pipe mine in Northern Arizona. Mr.&nbsp;Neumann has over 30&nbsp;years experience in mine planning, permitting and reclamation, with particular expertise in and knowledge of uranium
mining. Mr.&nbsp;Neumann has written and presented papers on groundwater restoration at in-situ uranium mines, uranium mine decommissioning costs,
and exploration permitting under NEPA regulations. He is a former chairman of the Wyoming Mining Association In-Situ Committee and very familiar with all environmental laws and regulations
affecting the uranium mining industry. Mr.&nbsp;Neumann obtained a Bachelor's of Science degree in Range Management from the University of Wyoming in 1978. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Arrangements between Directors and Officers  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To our knowledge, there is no arrangement or understanding between any of our directors or officers and any other person pursuant to
which the director or officer was selected to serve as a director or an officer. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Family Relationships  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no family relationships between, or among any of our directors or executive officers. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Involvement in Certain Legal Proceedings  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of our directors, executive officers, advisory board members or control persons has been involved in any of the events prescribed
by Item&nbsp;401(f) of Regulation&nbsp;S-K during the past ten years. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Membership of the Board of Directors  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business and affairs are managed under the direction of our Board of Directors. Our Board of Directors currently consists of eight
directors and one vacancy. The size of the Board of Directors may be fixed from time to time by the Board of Directors as provided in the Bylaws of the Company. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has determined that four of our eight directors are "independent" according to the rules and regulations of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Item&nbsp;407(a)(1) of
Regulation&nbsp;S-K and the Company's Corporate Governance Guidelines, or as otherwise set forth by our Board of Directors. The "independent" members of our Board of Directors are
Messrs.&nbsp;Campbell, Grundstedt, Loder and Nelson. A copy of the Company's Corporate Governance Guidelines, committee charters and other corporate governance documents can be viewed on our
corporate website at: www.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Board Committees  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors has a standing audit committee, compensation committee, nominating and corporate governance committee and
marketing and operations committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit Committee.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The audit committee is responsible, among its other duties and responsibilities, for engaging, overseeing and
evaluating our
independent registered public accounting firm, pre-approving all audit and non-audit services by that firm, reviewing the scope of the audit plan and the results of each audit
with management and our independent registered public accounting firm, reviewing the internal audit function, reviewing the adequacy of our system of internal accounting controls and disclosure
controls and procedures, reviewing the financial statements and related financial information we will include in our SEC filings, reviewing and approving related-party transactions and exercising
oversight with respect to our code of conduct and other policies and procedures regarding adherence with legal requirements. The members of our audit committee
are&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, who serves as </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>chair
of the committee,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;is an "audit committee financial expert," as that term is defined under the SEC rules implementing Section&nbsp;407 of the
Sarbanes-Oxley Act of 2002. Our Board of Directors has determined that each member of our audit committee is independent pursuant to Rule&nbsp;10A-3 under the Securities Exchange Act and
the rules and regulations of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Committee.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The compensation committee is responsible, among its other duties and responsibilities, for establishing the
compensation and
benefits of our executive officers and other key employees, monitoring compensation arrangements applicable to management employees for consistency with corporate objectives and stockholders'
interests and administering our incentive plans. The members of our compensation committee are&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, who serves as chair of the committee,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. Our Board of
Directors has determined that each member of our compensation committee is independent pursuant to the rules and regulations of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nominating and Corporate Governance Committee.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The nominating and corporate governance committee is responsible for recommending
candidates for
election to the Board of Directors. The committee is also responsible, among its other duties and responsibilities, for making recommendations to the Board of Directors or otherwise acting with
respect to corporate governance matters, including board size and membership qualifications, new director orientation, committee structure and membership, non-employee director
compensation, succession planning for officers and key executives and communications with stockholders. The members of our nominating and corporate governance committee
are&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, who serves
as chair of the committee,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
Our Board of Directors has determined that each member of our nominating and corporate governance committee is independent pursuant to
the rules and regulations of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketing and Operations Committee.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The marketing and operations committee is responsible, among it other duties and responsibilities,
for the
oversight of operations, production, marketing and environmental, health and safety issues. The members of our compensation committee are Mr.&nbsp;Graham, who serves as chair of the committee,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
member of our audit committee, compensation committee and nominating and corporate governance committee is "independent" according to board and committee independence standards, as
applicable, set forth in the rules and regulations of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, Item&nbsp;407(a)(1) of Regulation&nbsp;S-K, the Company's Corporate Governance
Guidelines and the applicable
committee charter. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>103</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  EXECUTIVE COMPENSATION    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Compensation Discussion and Analysis  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion and analysis of compensation arrangements of our executive officers for 2010 (as set forth in the 2010 Summary
Compensation Table and below) should be read together with the compensation tables and related disclosures set forth below. This discussion contains forward-looking statements that are
based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from the currently
planned programs summarized in this discussion. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Overview  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our total compensation philosophy is to offer our executive officers compensation and benefits that are competitive and that meet our
goals of attracting, retaining and motivating highly skilled management so that we can achieve our financial and strategic objectives. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilizing
this philosophy, our compensation programs have been designed to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>be "market-based" and reflect the competitive environment;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>align the interests of our executive officers with those of our stockholders;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>focus on simplicity, flexibility and choice wherever possible; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>openly communicate the details of our compensation programs with our executive officers, as well as all of our employees
generally, to ensure that our programs and goals are understood. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February&nbsp;22, 2011, our Board of Directors formed our compensation committee. The compensation committee will make compensation decisions for our executive officers for 2012 and
thereafter. Before the formation of the compensation committee, compensation decisions were made by our Board of Directors. Compensation shown below in the executive compensation tables for 2010 was
set by our Board of Directors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the future, the compensation committee of the Board of Directors will oversee our compensation programs, which are designed specifically for our executive officers and senior
management, including the Chief Executive Officer, Chief Financial Officer and the other executive officers named in the 2010
Summary Compensation Table below, collectively, the named executive officers. Additionally, the compensation committee is charged with, among other things, (i)&nbsp;setting the compensation of the
Chief Executive Officer, (ii)&nbsp;the review and approval of all annual compensation decisions relating to the other named executive officers and (iii)&nbsp;the review and approval of the
granting of equity-based grants to the named executive officers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Elements of Our Compensation  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a total rewards package, we design our compensation program to enable us to attract and retain talented personnel. Compensation
opportunities for our executive officers are designed to be competitive with peer companies. The three key elements of our total compensation package since our inception in 2005 have been base salary,
stock option grants and benefits. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
year beginning with 2012, the compensation committee will review and set the compensation of the Chief Executive Officer and review and approve the compensation for each other
executive officer based on subjective evaluations of each individual's performance, the Company's performance, the complexity of the individual's position, the experience of the individual and a
comparison of compensation ranges for executives in comparable positions at exploration-stage mining companies in the United States, primarily those involved in the exploration and mining
of uranium. In particular, we compare the compensation ranges for executives at Uranium Energy Corp., Uranium Resource,&nbsp;Inc. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>104</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>and
Uranerz Energy Corporation. In years past and for 2011, our Board of Directors reviewed executive compensation and set compensation for each executive officer based on the foregoing factors. The
Board of Directors did not have, and the compensation committee does not have, a specific formula to determine the amount of executive compensation and what portion of such compensation would be in
the form of cash and equity securities. Therefore, the determination of an executive's salary including the amount of cash and equity securities may be considered arbitrary taking into account the
foregoing factors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2006, December 2007 and February 2011, we adopted the 2006 Plan, the 2007 Plan, and the 2011&nbsp;Plan, respectively, pursuant to which we may grant stock options or
restricted stock to eligible employees, directors and consultants, including the named executive officers. We do not currently use performance based compensation elements in our total compensation
package (with the exception of stock option, which are inherently performance based). We are an exploration stage company, do not yet have mine development activities or mining operations, and have
not generated any revenues from operations. The Board of Directors and compensation committee do not consider performance targets feasible at this time. In the future we may expand our compensation
program to include, for example, annual performance-based cash bonuses, performance-based equity
compensation, and other forms of equity compensation such as restricted stock units, stock appreciation rights or other performance-based incentive programs. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Base Salary  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The base salary for 2010 and 2011 for each of our executive officers was fixed by our Board of Directors. Starting in 2012 and
thereafter, base salary for our executive officers will be reviewed and fixed or approved by our compensation committee. Base salary is intended to reflect each individual's role and responsibility
within the Company as well as each individual's experience and prior performance. We believe a competitive base salary is a key factor in attracting and retaining the services of qualified executives.
In determining a competitive base salary, our Board of Directors considered each individual's performance, the Company's performance, the complexity of the individual's position, the experience of the
individual and a comparison of base salary ranges for executives in comparable positions at Uranium Energy Corp., Uranium Resource,&nbsp;Inc. and Uranerz Energy Corporation. We have entered into
employment agreements with Messrs.&nbsp;Boltz, Huber, Ludwig, Neumann and Topham, each of which set base salary levels. Please see the subsection entitled "</FONT><FONT SIZE=2><I>Employment
Agreements</I></FONT><FONT SIZE=2>" below for a description of the employment agreements with our named executive officers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Bonus  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not currently have a bonus program, but may consider a bonus plan in the future. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Equity-Based Awards  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Types of Awards  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have sought to design our equity programs to be both affordable and competitive in relation to the market. We review market
compensation data, including available compensation data regarding our peer companies, and adjust our equity programs as needed. Stock options and other forms of equity compensation are designed to
reflect and reward a high level of sustained individual performance over time. The amount of equity compensation granted by us also reflects our financial condition and currently we have no revenues.
Since adopting the 2006 Plan, 2007 Plan and 2011&nbsp;Plan, we have granted stock options to purchase a total of 6,445,000 shares of common stock, 153,334 of which have been forfeited, to directors,
executive officers, other employees and consultants. Stock options are inherently performance-based as their value only increases if the price of our common stock increases, </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>105</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>thereby
aligning the interest of our executives with the interests of our stockholders. We have also granted 250,000 shares of common stock as unrestricted stock awards since adopting our 2006 Plan,
2007 Plan and 2011&nbsp;Plan. In addition to the factors we consider in determining base salary, we consider our financial and liquidity condition when determining equity compensation. We do not
have any security ownership requirements for our named executive officers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Timing of Awards  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our practice has been to make stock option grants at the first meeting of the Board of Directors following an employee's hire or
promotion date, but such grants will now be made at the first meeting of the compensation committee following an employee's hire or promotion date. If it is determined that a particular executive
officer should receive an additional equity award, we will make such award at the time of the compensation committee's decision. Other than the annual grant of stock options to purchase 30,000 shares
of our common stock to each non-employee member of our Board of Directors, we do not have any program, plan or practice currently in place to award additional stock options on a regular
basis or to time stock options grants in coordination with the release of material non-public information. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> 2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors unanimously approved the 2006 Plan, on February&nbsp;2, 2006, and our stockholders approved the 2006 Plan on
February&nbsp;10, 2006. The 2006 Plan authorizes the Company to issue up to 3,500,000 shares of common stock. As of March&nbsp;24, 2011, we have (A)&nbsp;granted 3,467,000 stock options, 70,000
of which have been forfeited, for a total of 3,397,000 outstanding stock options and (B)&nbsp;issued 100,000 shares of common stock as unrestricted stock awards under the 2006 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Board of Directors unanimously approved the 2007 Plan, on December&nbsp;13, 2007, and our stockholders approved the 2007 Plan on September&nbsp;19, 2008. The 2007 Plan authorizes
the Company to issue up to 2,800,000 shares of common stock. As of March&nbsp;24, 2011, we have (A)&nbsp;granted 2,578,000 stock options, 83,334 of which have been forfeited, for a total of
2,494,666 outstanding stock options and (B)&nbsp;issued 150,000 shares of common stock as unrestricted stock awards under the 2007 Plan. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Board of Directors unanimously approved the 2011&nbsp;Plan, on February&nbsp;22, 2011, and the 2011&nbsp;Plan will be presented to our stockholders for approval at our next
meeting of the stockholders. The 2011&nbsp;Plan authorizes the Company to issue the greater of (A)&nbsp;1,000,000 shares of our common stock or (B)&nbsp;the number of shares of common stock, up
to a maximum of 3,000,000 shares, that when added together with the number of shares authorized under the 2006 Plan and 2007 Plan equals 10% of the total issued and outstanding shares of common stock
of the Company. As of March&nbsp;24, 2011, 1,000,000 shares of common stock of the Company are authorized under the 2011&nbsp;Plan. As of March&nbsp;24, 2011, we have granted 400,000 stock
options, none of which have been forfeited, under the 2011 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
granting of further awards, under either the 2006 Plan, the 2007 Plan or the 2011&nbsp;Plan, is within the discretion of the compensation committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
objective of the 2006 Plan, 2007 Plan and 2011&nbsp;Plan is to attract, reward and retain key personnel to the Company and provide incentives to our key employees, directors and
consultants to achieve financial results aimed at increasing stockholder value. Persons eligible to be granted stock options or restricted stock under any of the plans will be those persons whose
performance, in the judgment of the Board of Directors or compensation committee, can have significant effect on the Company's success. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>106</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
exercise price of each stock option grant will be fixed by the compensation committee but in no case, except for stock options granted upon assumption of or in substitution for
outstanding awards, will the exercise price be less than the fair market value of our common stock on the grant date. In previous years and for 2011, the determination of the exercise price and the
appropriate fair market value was made by the Board of Directors. In the absence of a public trading market, the Board of Directors considered numerous objective and subjective factors to determine
its best estimate of the fair market value of our common stock as of the date of each option grant, including but not limited to, the following factors: (i)&nbsp;valuations of our common stock;
(ii)&nbsp;the trading price of the common stock of our peer companies from which a public trading market does exist; (iii)&nbsp;the price and market for uranium; (iv)&nbsp;general economic
conditions; and (v)&nbsp;the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of the Company, given
prevailing market conditions. Generally, stock options granted to our directors vest immediately. Stock options granted to employees and independent contractors generally fully vest within three years
of the date of grant. In connection with voluntary salary reductions by our directors, executive officers and highest compensated employees in February 2009, the exercise price of stock options
granted to such individuals was reduced from $1.50 or $1.00, respectively, to $0.68. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
2006 Plan, 2007 Plan and 2011&nbsp;Plan provide for a potential acceleration of outstanding awards in the event of a change in control. Please see the subsection entitled,
"</FONT><FONT SIZE=2><I>Potential Payments Upon Termination or Change-in-Control</I></FONT><FONT SIZE=2>," below for a description of the potential acceleration of outstanding
awards in the event of a change in control. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Actions Subsequent to December&nbsp;31, 2010  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As discussed above, our Board of Directors unanimously approved the 2011&nbsp;Plan on February&nbsp;22, 2011, which will be
presented to our stockholders for approval at the next stockholder meeting scheduled for&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Stock Options Issued Subsequent to December&nbsp;31, 2010 to Directors, Executive Officers and Employees  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;22, 2011, our Board of Directors granted options to purchase 200,000 shares of our common stock at an exercise price
of $1.00 per share to each of Messrs.&nbsp;Graham, Loder and Mallery in connection with their appointment to the Board of Directors, which fully vested upon the grant and expire after ten years. On
February&nbsp;11, 2011, our Board of Directors granted options, which expire after ten years, to purchase 200,000 shares of our common stock at an exercise price of $1.00 per share to
Mr.&nbsp;Graham in connection with Mr.&nbsp;Graham entering into a consulting agreement with the Company, of which half vests on August&nbsp;11, 2011 and the remaining half vests on
February&nbsp;11, 2012. For a description of the consulting agreement entered into with Mr.&nbsp;Graham, see the
section of this prospectus entitled "</FONT><FONT SIZE=2><I>Certain Relations and Related Person Transactions&#151;Related Person Transactions</I></FONT><FONT SIZE=2>." The options granted to
Mr.&nbsp;Loder and Mr.&nbsp;Mallery were issued under the 2011&nbsp;Plan and the options granted to Mr.&nbsp;Graham were issued under the 2007 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Benefits Programs  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design our benefits programs, such as our basic health benefits, 401(k) program and life insurance, to be both affordable and
competitive in relation to the market while conforming with local laws and practices. We review market benefit program data, including available benefit program data regarding our peer companies, and
adjust our benefit programs as needed. We design our benefits programs to provide an element of core benefits, including medical benefits for employees and their spouses and dependents,
non-elective 401(k) contributions equal to 3% of eligible compensation for all full-time employees and employees who work at least 1,000&nbsp;hours during the applicable
year, life insurance policies in the amount of one year's salary and short-term disability, and to the extent possible, offer options for additional benefits. We also design our benefits
to balance costs and cost </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>107</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>sharing
between us and our executives. The named executive officers are treated the same as all of our employees with respect to our benefit programs. We do not intend to establish any deferred
compensation plans, defined benefit pension plans or similar benefit plans. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Perquisites  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a general matter, we do not offer any perquisites to any executive officer because we believe we can better incentivize desired
performance with compensation in the forms described above. We recognize that, from time to time, it may be appropriate to provide certain perquisites in order to attract, motivate and retain our
executives and any such decision will be reviewed and approved by the compensation committee as needed. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Severance and Change in Control Arrangements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into employment agreements with Messrs.&nbsp;Boltz, Huber, Ludwig, Neumann and Topham that provide for severance
payment arrangements and/or acceleration of stock option vesting in the event such individual's employment is terminated under certain circumstances. Please see the subsection entitled
"</FONT><FONT SIZE=2><I>Employment Agreements</I></FONT><FONT SIZE=2>" below for a description of the severance and change in control arrangements. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our 2006 Plan, 2007 Plan and 2011&nbsp;Plan provide for a potential acceleration of outstanding awards in the event we undergo a change in control. Please see the
subsections entitled "</FONT><FONT SIZE=2><I>Stock Option Plans</I></FONT><FONT SIZE=2>" and "</FONT><FONT SIZE=2><I>Potential Payments Upon Termination or
Change-in-Control</I></FONT><FONT SIZE=2>" below for a description of the change in control provisions contained in such plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Impact of Accounting and Tax Treatment on Compensation Decisions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors has considered the potential future effects of Section&nbsp;162(m) of the Internal Revenue Code on the
compensation paid to our executive officers. Section&nbsp;162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1,000,000 in any taxable year for
our President and Chief Executive Officer and each of the other named executive officers (other than our Chief Financial Officer), unless compensation is performance based. As we are not currently
publicly-traded, our Board of Directors has not previously taken the deductibility limit imposed by Section&nbsp;162(m) into consideration in setting compensation. Furthermore, as
discussed further above, our compensation committee and Board of Directors do not view performance targets as a feasible component of our executive compensation program at this time. Should our
executive compensation program be expanded to include performance-based compensation, our compensation committee may in the future adopt a policy that, where reasonably practicable, we
will seek to qualify the variable compensation paid to our executive officers for an exemption from the deductibility limitations of Section&nbsp;162(m). As such, in approving the amount and form of
compensation for our executive officers in the future, our compensation committee will consider all elements of the cost to our company of providing such compensation, including the potential impact
of Section&nbsp;162(m). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Role of Executives in Executive Compensation Decisions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, each element of compensation has been recommended to the Board of Directors by our Chief Executive Officer for
compensation of each executive officer other
than himself. The amount of each element of compensation for our Chief Executive Officer has been determined by the Board of Directors and will be determined by the compensation committee in the
future. The Board of Directors also works with our Chief Financial Officer in evaluating the financial, accounting, tax and retention implications of our various compensation programs. Neither our
Chief Executive Officer nor any of our other executives participates in deliberations relating to his or her own compensation. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>108</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Employment Agreements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Definition of Certain Terms used in the Employment Agreements  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following definitions apply only to this section entitled "</FONT><FONT SIZE=2><I>Employment Agreements</I></FONT><FONT SIZE=2>"
and are summaries of the definitions of such terms for the employment agreements discussed below. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Cause"
includes any of the following actions of the employee: (i)&nbsp;the willful and continued failure to perform substantially the duties as set forth in the employment agreement
and the failure to cure after a demand by, and resolution of, the Board of Directors; (ii)&nbsp;a material violation of any of the Company's policies; (iii)&nbsp;a breach by the employee of any
obligations under the employment agreement; and (iv)&nbsp;being charged with illegal conduct or engaging in gross misconduct that is materially injurious to the Company as determined by the Board of
Directors. Notwithstanding the forgoing, under Messrs.&nbsp;Topham's, Ludwig's and Neumann's employment agreements, illegal conduct constitutes "cause" only if it is criminal and can reasonably be
expected to harm the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Change
of control" includes (i)&nbsp;a merger, consolidation or corporate reorganization where more than 50% of the combined voting power of the Company is owned by persons that were
not stockholders of the Company immediately prior to such merger, consolidation, or reorganization; (ii)&nbsp;a sale, transfer or other disposition of all or substantially all of the assets of the
Company to an entity in which the Company does not own stock representing more than 50% of the voting power in the elections for directors; (iii)&nbsp;a change in the composition of the Board of
Directors where less than half of the
incumbent directors are directors who either (A)&nbsp;had been directors of the Company 24&nbsp;months prior to such change or (B)&nbsp;were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of the directors who had been directors of the Company 24&nbsp;months prior to such change and who were still in office at the time of the
election or nomination; and (iv)&nbsp;the acquisition by any person of more than 33% of the voting power of the Company. "Change of control" does not include a transaction where the sole purpose of
such transaction is (i)&nbsp;to change the Company's state of incorporation; or (ii)&nbsp;to create a holding company that will be owned in substantially the same proportions by the persons who
were stockholders of the Company immediately prior to such transaction. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Disability"
means the absence of an employee from his or her duties with the Company on a full-time basis for 120 consecutive business days as a result of incapacity due to
mental or physical illness certified by a physician selected by the Company or its insurers and acceptable to such employee or such employee's legal representative. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Good
reason" includes the following actions of the Company: (i)&nbsp;an assignment to the employee of duties that are inconsistent with the employment agreement; (ii)&nbsp;a
material diminution in the employee's position, authority, duties or responsibilities; (iii)&nbsp;the failure to pay the compensation as provided in the employment agreement; (iv)&nbsp;any
purported termination of the employee's employment not expressly permitted by the employment agreement; (v)&nbsp;any action of the Board of Directors in connection with a "change of control" that
results in the removal of the employee as an executive of the Company; and (vi)&nbsp;the failure to require any successor of the Company to expressly assume and agree to perform the employment
agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Kelsey L. Boltz&#151;Employment Agreement  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Boltz is employed as the Company's Executive Chairman under an Employment Agreement dated October&nbsp;29, 2009. The term
of Mr.&nbsp;Boltz's employment under his employment agreement is two years, which expires on October&nbsp;28, 2011. Under his employment agreement, Mr.&nbsp;Boltz is entitled to receive an
annual base salary of $140,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of understanding and agreement entered into between
Mr.&nbsp;Boltz and the Company on October&nbsp;1, 2010, Mr.&nbsp;Boltz agreed to a temporary reduction in </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>109</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>his
annual base salary from $140,000 to $130,000, effective February&nbsp;15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer.
His full salary was reinstated as of January&nbsp;1, 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Mr.&nbsp;Boltz's employment other than for "cause," death or "disability," or if Mr.&nbsp;Boltz terminates his
employment with "good reason," Neutron has agreed to pay Mr.&nbsp;Boltz a severance payment equal to (i)&nbsp;24&nbsp;months of his base salary paid out over the period that the compensation
would have been due had the termination not occurred; (ii)&nbsp;any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii)&nbsp;any accrued vacation pay; (iv)&nbsp;any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr.&nbsp;Boltz vest
immediately upon such a termination and the Company is required to continue benefits to Mr.&nbsp;Boltz and/or his family under its welfare benefit plans to the same extent as if Mr.&nbsp;Boltz had
not been terminated or, if more favorable to Mr.&nbsp;Boltz, as is in effect generally at any time thereafter with respect to other executives of Neutron and their families, for the remainder of the
term of his employment agreement or such longer period as set forth in such plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement and within two years after a "change of control," Neutron terminates Mr.&nbsp;Boltz's employment other than for "cause," death or
"disability," or if Mr.&nbsp;Boltz terminates his employment with "good reason," (i)&nbsp;Neutron will pay all compensation that would have been payable over the longer of
(A)&nbsp;24&nbsp;months or (B)&nbsp;the period then remaining under Mr.&nbsp;Boltz's employment agreement, which is to be paid out over the period that the compensation would have been due had
the termination not occurred; and (ii)&nbsp;all unvested stock options issued to Mr.&nbsp;Boltz immediately vest. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Boltz's employment is terminated by reason of his death, all stock options granted to Mr.&nbsp;Boltz fully vest and the
Company must pay to Mr.&nbsp;Boltz's legal representative (i)&nbsp;any death benefit compensation due under other contracts; and (ii)&nbsp;any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related
to death benefits in place at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or at the date of his death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Boltz's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr.&nbsp;Boltz fully vest and the Company must provide or pay (i)&nbsp;fully paid welfare benefits for the balance of the term of his employment agreement; (ii)&nbsp;base
salary through the date of termination, (iii)&nbsp;accrued bonus through the date of termination, (iv)&nbsp;payment of pension or 401(k), and (v)&nbsp;any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or any time thereafter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company terminates Mr.&nbsp;Boltz's employment for any reason other than for "cause" or if Mr.&nbsp;Boltz terminates his employment for "good reason," the Company will provide
him with the same health care coverage as he would have been entitled to if he were still an employee beginning on the date of his employment agreement and ending on the earlier of (i)&nbsp;the term
of his employment agreement plus six months, but not more than a total of two years, or (ii)&nbsp;the date of his death. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Mr.&nbsp;Boltz's employment for "cause," Neutron has agreed to pay Mr.&nbsp;Boltz (i)&nbsp;his base salary
through the date of termination; (ii)&nbsp;the amount of any compensation previously deferred by Mr.&nbsp;Boltz; and (iii)&nbsp;any other amounts </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>110</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:times;"><FONT SIZE=2>payable
under any plan, program, policy or practice or contract or agreement of the Company including any death or disability benefits, if applicable. If Mr.&nbsp;Boltz voluntarily terminates his
employment without "good reason," Neutron has agreed to pay Mr.&nbsp;Boltz (i)&nbsp;his base salary through the date of termination; (ii)&nbsp;the amount of any compensation previously deferred
by Mr.&nbsp;Boltz; (iii)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company; and (iv)&nbsp;accrued but unpaid vacation leave. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Boltz's
employment agreement also contains confidentiality and non-competition provisions whereby Mr.&nbsp;Boltz is prohibited from (i)&nbsp;at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii)&nbsp;during the term
of his employment and for any period during which he receives base salary severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops or
mines uranium properties or provides advice, assistance or consultation to any such business; and (iii)&nbsp;during his employment with the Company and for 12&nbsp;months thereafter, hiring or
soliciting for hire any person who is, or during the previous 12&nbsp;months was, employed by the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Gary C. Huber&#151;Employment Agreement  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Huber is employed as the Company's Chief Executive Officer and President under an Employment Agreement dated
October&nbsp;29, 2009. The term of Dr.&nbsp;Huber's employment under his employment agreement is two years, which expires on October&nbsp;28, 2011. Under his employment agreement,
Dr.&nbsp;Huber is entitled to receive an annual base salary of $220,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of
understanding and agreement entered into between Dr.&nbsp;Huber and the Company on October&nbsp;1, 2010, Dr.&nbsp;Huber agreed to a temporary reduction in his annual base salary from $220,000 to
$175,000, effective February&nbsp;15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer, which currently is Dr.&nbsp;Huber.
His full salary was reinstated as of January&nbsp;1, 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Dr.&nbsp;Huber's employment other than for "cause," death or "disability," or if Dr.&nbsp;Huber terminates his
employment with "good reason," Neutron has agreed to pay Dr.&nbsp;Huber a severance payment equal to (i)&nbsp;24&nbsp;months of his base salary paid out over the period that the compensation
would have been due had the termination not occurred;
(ii)&nbsp;any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii)&nbsp;any accrued vacation pay; (iv)&nbsp;any amounts payable under any defined benefit pension plan
or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and (v)&nbsp;any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Dr.&nbsp;Huber vest immediately upon such a termination and the Company is
required to continue benefits to Dr.&nbsp;Huber and/or his family under its welfare benefit plans to the same extent as if Dr.&nbsp;Huber had not been terminated or, if more favorable to
Dr.&nbsp;Huber, as is in effect generally at any time thereafter with respect to other executives of Neutron and their families, for the remainder of the term of his employment agreement or such
longer period as set forth in such plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement and within two years after a "change of control," Neutron terminates Dr.&nbsp;Huber's employment other than for "cause," death or
"disability," or if Dr.&nbsp;Huber terminates his employment with "good reason," (i)&nbsp;Neutron will pay all compensation that would have been payable over the longer of
(A)&nbsp;24&nbsp;months or (B)&nbsp;the period then remaining under Dr.&nbsp;Huber's employment agreement, which is to be paid out over the period that the compensation would have been due had
the termination not occurred; and (ii)&nbsp;all unvested stock options issued to Dr.&nbsp;Huber immediately vest. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>111</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Dr.&nbsp;Huber's employment is terminated by reason of his death, all stock options granted to Dr.&nbsp;Huber fully vest and the
Company must pay to Dr.&nbsp;Huber's legal representative (i)&nbsp;any death benefit compensation due under other contracts; and (ii)&nbsp;any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related
to death benefits in place at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or at the date of his death. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Dr.&nbsp;Huber's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Dr.&nbsp;Huber fully vest and the Company must provide or pay (i)&nbsp;fully paid welfare benefits for the balance of the term of his employment agreement; (ii)&nbsp;base
salary through the date of termination, (iii)&nbsp;accrued bonus through the date of termination, (iv)&nbsp;payment of pension or 401(k), and (v)&nbsp;any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or any time thereafter. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company terminates Dr.&nbsp;Huber's employment for any reason other than for "cause" or if Dr.&nbsp;Huber terminates his employment for "good reason," the company will provide
him with the same
health care coverage as he would have been entitled to if he were still an employee beginning on the date of his employment agreement and ending on the earlier of (i)&nbsp;the term of his employment
agreement plus six months, but not more than a total of two years, or (ii)&nbsp;the date of his death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Dr.&nbsp;Huber's employment for "cause," Neutron has agreed to pay Dr.&nbsp;Huber (i)&nbsp;his base salary
through the date of termination; (ii)&nbsp;the amount of any compensation previously deferred by Dr.&nbsp;Huber; and (iii)&nbsp;any other amounts payable under any plan, program, policy or
practice or contract or agreement of the Company including any death or disability benefits, if applicable. If Dr.&nbsp;Huber voluntarily terminates his employment without "good reason," Neutron has
agreed to pay Dr.&nbsp;Huber (i)&nbsp;his base salary through the date of termination; (ii)&nbsp;the amount of any compensation previously deferred by Dr.&nbsp;Huber; (iii)&nbsp;any other
amounts payable under any plan, program, policy or practice or contract or agreement of the Company; and (iv)&nbsp;accrued but unpaid vacation leave. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Huber's
employment agreement also contains confidentiality and non-competition provisions whereby Dr.&nbsp;Huber is prohibited from (i)&nbsp;at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii)&nbsp;during the term
of his employment and for any period during which he receives base salary severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops or
mines uranium properties or provides advice, assistance or consultation to any such business; and (iii)&nbsp;during his employment with the Company and for 12&nbsp;months thereafter, hiring or
soliciting for hire any person who is, or during the previous 12&nbsp;months was, employed by the Company. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I> Edward M. Topham&#151;Employment Agreement  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Topham is employed as the Company's Chief Financial Officer, Corporate Secretary and Treasurer under an Employment Agreement
dated October&nbsp;1, 2010. The term of Mr.&nbsp;Topham's employment under his employment agreement is one year, which expires on September&nbsp;30, 2011. Under his employment agreement,
Mr.&nbsp;Topham is entitled to receive an annual base salary of $170,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of
understanding and agreement entered into between Mr.&nbsp;Topham and the Company on </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>112</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>October&nbsp;1,
2010, Mr.&nbsp;Topham agreed to a temporary reduction in his annual base salary from $170,000 to $155,000, effective February&nbsp;15, 2009, with the timing and extent of
reinstatement of his salary solely at the discretion of the Chief Executive Officer. His full salary was reinstated as of January&nbsp;1, 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Mr.&nbsp;Topham's employment other than for "cause," death or "disability," or if Mr.&nbsp;Topham terminates his
employment with "good reason," Neutron has agreed to pay Mr.&nbsp;Topham a severance payment equal to (i)&nbsp;12&nbsp;months of his base salary paid out over the period that the compensation
would have been due had the termination not occurred; (ii)&nbsp;any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii)&nbsp;any accrued vacation pay; (iv)&nbsp;any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr.&nbsp;Topham vest
immediately upon such a termination and the Company is required to provide Mr.&nbsp;Topham and/or his family, during the period that it makes severance payments to him, benefits under its welfare
benefit plans at least equal to those that would be provided if his employment had not been terminated or, if more favorable to Mr.&nbsp;Topham, as is in effect generally at any time thereafter with
respect to other executives of Neutron and their families. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement and after a "change of control," Neutron terminates Mr.&nbsp;Topham's employment other than for "cause," death or "disability," or if
Mr.&nbsp;Topham terminates his employment with "good reason," (i)&nbsp;Neutron will pay all compensation that would have been payable over the longer of (A)&nbsp;18&nbsp;months or
(B)&nbsp;the period then remaining under Mr.&nbsp;Topham's employment agreement, which is to be paid out over the period that the compensation would have been due had the termination not occurred;
and (ii)&nbsp;that all unvested stock options issued to Mr.&nbsp;Topham immediately vest. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Topham's employment is terminated by reason of his death, all stock options granted to Mr.&nbsp;Topham fully vest and the
Company must pay to Mr.&nbsp;Topham's legal representative (i)&nbsp;any death benefit compensation due under other contracts; and (ii)&nbsp;any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related
to death benefits in place at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or at the date of his death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Topham's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr.&nbsp;Topham fully vest and the Company must provide or pay (i)&nbsp;fully paid welfare benefits for the balance of the term of his employment agreement; (ii)&nbsp;base
salary through the date of termination, (iii)&nbsp;accrued bonus through the date of termination, (iv)&nbsp;payment of pension or 401(k), and (v)&nbsp;any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or any time thereafter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company terminates Mr.&nbsp;Topham's employment for any reason other than for "cause" or if Mr.&nbsp;Topham terminates his employment for "good reason," the company will
provide him with the same health care coverage as he would have been entitled to if he were still an employee for a six month period beginning on the date of termination. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>113</FONT></P>

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 </FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If, during the term of his employment agreement, Neutron terminates Mr.&nbsp;Topham's employment for "cause," or if Mr.&nbsp;Topham voluntarily terminates his
employment without "good reason," Neutron has agreed to pay Mr.&nbsp;Topham (i)&nbsp;his base salary through the date of termination; (ii)&nbsp;the amount of any compensation previously deferred
by Mr.&nbsp;Topham; (iii)&nbsp;accrued but unpaid vacation leave; and (iv)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company
including any death or disability benefits, if applicable. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Topham's
employment agreement also contains confidentiality and non-competition provisions whereby Mr.&nbsp;Topham is prohibited from (i)&nbsp;at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii)&nbsp;during the term
of his employment, engaging, participating, investing or being employed by any business which acquires, explores, develops or mines uranium properties or provides advice, assistance or consultation to
any such business; (iii)&nbsp;during any period during which he receives severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops
or mines uranium properties or provides advice, assistance or consultation to any such business within the same counties in those states which Neutron has properties as of the date of
Mr.&nbsp;Topham's termination; and (iv)&nbsp;during his employment with the Company and for 12&nbsp;months thereafter, hiring or soliciting for hire any person who is, or during the previous
12&nbsp;months was, employed by the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Mark J. Ludwig&#151;Employment Agreement  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ludwig is employed as the Company's Vice President of Operations under an Employment Agreement dated October&nbsp;1, 2010.
The term of Mr.&nbsp;Ludwig's employment under his employment agreement is one year, which expires on September&nbsp;30, 2011. Under his employment agreement, Mr.&nbsp;Ludwig is entitled to
receive an annual base salary of $165,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of understanding and agreement entered into
between Mr.&nbsp;Ludwig and the Company on October&nbsp;1, 2010, Mr.&nbsp;Ludwig agreed to a temporary reduction in his annual base salary from $165,000 to $150,000, effective
February&nbsp;15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer. His full salary was reinstated as of January&nbsp;1,
2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Mr.&nbsp;Ludwig's employment other than for "cause," death or "disability," or if Mr.&nbsp;Ludwig terminates his
employment with "good reason," Neutron has agreed to pay Mr.&nbsp;Ludwig a severance payment equal to (i)&nbsp;six months of his base salary paid out over the period that the compensation would
have been due had the termination not occurred; (ii)&nbsp;any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii)&nbsp;any accrued vacation pay; (iv)&nbsp;any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr.&nbsp;Ludwig vest
immediately upon such a termination and the Company is required to provide Mr.&nbsp;Ludwig and/or his family, during the period that it makes severance payments to him, benefits under its welfare
benefit plans at least equal to those that would be provided if his employment had not been terminated or, if more favorable to Mr.&nbsp;Ludwig, as is in effect generally at any time thereafter with
respect to other executives of Neutron and their families. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement and after a "change of control," Neutron terminates Mr.&nbsp;Ludwig's employment other than for "cause," death or "disability," or if
Mr.&nbsp;Ludwig terminates his employment with "good reason," (i)&nbsp;Neutron will pay all compensation that would have been payable over the longer of (A)&nbsp;12&nbsp;months or
(B)&nbsp;the period then remaining under Mr.&nbsp;Ludwig's employment agreement, which is to be paid out over the period that the compensation would have </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>114</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;"><FONT SIZE=2>been
due had the termination not occurred; and (ii)&nbsp;that all unvested stock options issued to Mr.&nbsp;Ludwig immediately vest. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Ludwig's employment is terminated by reason of his death, all stock options granted to Mr.&nbsp;Ludwig fully vest and the
Company must pay to Mr.&nbsp;Ludwig's legal representative (i)&nbsp;any death benefit compensation due under other contracts; and (ii)&nbsp;any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company,
including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related to death benefits in place at any time during the
120&nbsp;day period immediately preceding the date of his employment agreement or at the date of his death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Ludwig's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr.&nbsp;Ludwig fully vest and the Company must provide or pay (i)&nbsp;fully paid welfare benefits for the balance of the term of his employment agreement; (ii)&nbsp;base
salary through the date of termination, (iii)&nbsp;accrued bonus through the date of termination, (iv)&nbsp;payment of pension or 401(k), and (v)&nbsp;any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or any time thereafter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company terminates Mr.&nbsp;Ludwig's employment for any reason other than for "cause" or if Mr.&nbsp;Ludwig terminates his employment for "good reason," the company will
provide him with the same health care coverage as he would have been entitled to if he were still an employee for a six month period beginning on the date of termination. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Mr.&nbsp;Ludwig's employment for "cause," or if Mr.&nbsp;Ludwig voluntarily terminates his employment without
"good reason," Neutron has agreed to pay Mr.&nbsp;Ludwig (i)&nbsp;his base salary through the date of termination; (ii)&nbsp;the amount of any compensation previously deferred by
Mr.&nbsp;Ludwig; (iii)&nbsp;accrued but unpaid vacation leave; and (iv)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company
including any death or disability benefits, if applicable. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ludwig's
employment agreement also contains confidentiality and non-competition provisions whereby Mr.&nbsp;Ludwig is prohibited from (i)&nbsp;at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii)&nbsp;during the term
of his employment, engaging, participating, investing or being employed by any business which acquires, explores, develops or mines uranium properties or provides advice, assistance or consultation to
any such business; (iii)&nbsp;during any period during which he receives severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops
or mines uranium properties or provides advice, assistance or consultation to any such business within the same counties in those states which Neutron has properties as of the date of
Mr.&nbsp;Ludwig's termination; and (iv)&nbsp;during his employment with the Company and for 12&nbsp;months thereafter, hiring or soliciting for hire any person who is, or during the previous
12&nbsp;months was, employed by the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Michael R. Neumann&#151;Employment Agreement  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Neumann is employed as the Company's Vice President of Environmental Services under an Employment Agreement dated
October&nbsp;1, 2010. The term of Mr.&nbsp;Neumann's employment under his employment agreement is one year, which expires on September&nbsp;30, 2011. Under his employment agreement,
Mr.&nbsp;Neumann is entitled to receive an annual base salary of $140,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>115</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;"><FONT SIZE=2>understanding
and agreement entered into between Mr.&nbsp;Neumann and the Company on October&nbsp;1, 2010, Mr.&nbsp;Neumann agreed to a temporary reduction in his annual base salary from
$140,000 to $130,000, effective February&nbsp;15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer. His full salary was
reinstated as of January&nbsp;1, 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Mr.&nbsp;Neumann's employment other than for "cause," death or "disability," or if Mr.&nbsp;Neumann terminates his
employment with "good reason," Neutron has agreed to pay Mr.&nbsp;Neumann a severance payment equal to (i)&nbsp;six months of his base salary paid out over the period that the compensation would
have been due had the termination not occurred; (ii)&nbsp;any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii)&nbsp;any accrued vacation pay; (iv)&nbsp;any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr.&nbsp;Neumann vest
immediately upon such a termination of employment and the Company is required to provide Mr.&nbsp;Neumann and/or his family, during the period that it makes severance payments to him, benefits under
its welfare benefit plans at least equal to those that would be provided if his employment had not been terminated or, if more favorable to Mr.&nbsp;Neumann, as is in effect generally at any time
thereafter with respect to other executives of Neutron and their families. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement and after a "change of control," Neutron terminates Mr.&nbsp;Neumann's employment other than for "cause," death or "disability," or if
Mr.&nbsp;Neumann terminates his employment with "good reason," (i)&nbsp;Neutron will pay all compensation that would have been payable over the longer of (A)&nbsp;12&nbsp;months or
(B)&nbsp;the period then remaining under Mr.&nbsp;Neumann's employment agreement, which is to be paid out over the period that the compensation would have been due had the termination not
occurred; and (ii)&nbsp;that all unvested stock options issued to Mr.&nbsp;Neumann immediately vest. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Neumann's employment is terminated by reason of his death, all stock options granted to Mr.&nbsp;Neumann fully vest and the
Company must pay to Mr.&nbsp;Neumann's legal representative (i)&nbsp;any death benefit compensation due under other contracts; and
(ii)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates
and beneficiaries of any other executive of the Company related to death benefits in place at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or at
the date of his death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Mr.&nbsp;Neumann's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr.&nbsp;Neumann fully vest and the Company must provide or pay (i)&nbsp;fully paid welfare benefits for the balance of the term of his employment agreement; (ii)&nbsp;base
salary through the date of termination, (iii)&nbsp;accrued bonus through the date of termination, (iv)&nbsp;payment of pension or 401(k), and (v)&nbsp;any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120&nbsp;day period immediately preceding the date of his employment agreement or any time thereafter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company terminates Mr.&nbsp;Neumann's employment for any reason other than for "cause" or if Mr.&nbsp;Neumann terminates his employment for "good reason," the company will
provide him with the same health care coverage as he would have been entitled to if he were still an employee for a six month period beginning on the date of termination. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
during the term of his employment agreement, Neutron terminates Mr.&nbsp;Neumann's employment for "cause," or if Mr.&nbsp;Neumann voluntarily terminates his employment without
"good reason," Neutron </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>116</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;"><FONT SIZE=2>has
agreed to pay Mr.&nbsp;Neumann (i)&nbsp;his base salary through the date of termination; (ii)&nbsp;the amount of any compensation previously deferred by Mr.&nbsp;Neumann;
(iii)&nbsp;accrued but unpaid vacation leave; and (iv)&nbsp;any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company including any death or
disability benefits, if applicable. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Neumann's
employment agreement also contains confidentiality and non-competition provisions whereby Mr.&nbsp;Neumann is prohibited from (i)&nbsp;at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii)&nbsp;during the term
of his employment, engaging, participating, investing or being employed by any business which acquires, explores, develops or mines uranium properties or provides advice, assistance or consultation to
any such business; (iii)&nbsp;during any period during which he receives severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops
or mines uranium properties or provides advice, assistance or consultation to any such business within the same counties in those states which Neutron has properties as of the date of
Mr.&nbsp;Neumann's termination; and (iv)&nbsp;during his employment with the Company and for 12&nbsp;months thereafter, hiring or soliciting for hire any person who is, or during the previous
12&nbsp;months was, employed by the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> 2010 Summary Compensation Table  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the compensation paid during the year ended December&nbsp;31, 2010 to our Chief Executive Officer,
Chief Financial Officer and our three other most highly compensated executives. These individuals are sometimes referred to collectively as the named executive officers. </FONT></P>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="67pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:102pt;"><FONT SIZE=1><B>Name and Principal Position

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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Salary </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Bonus </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Stock<BR>
Awards </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Option<BR>
Awards </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>All Other<BR>
Compensation </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


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 Kelsey L. Boltz</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>131,978</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,845</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>137,823</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>


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 Executive Chairman</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gary C. Huber</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
175,645</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
32,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
207,790</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Chief Executive Officer and Director</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Edward M. Topham</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
155,290</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
31,343</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>(3)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
186,633</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Chief Financial Officer</I></FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mark J. Ludwig</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
150,516</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
23,705</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>(4)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
174,221</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Vice President&#151;Operations</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Michael R. Neumann</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
131,767</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
12,996</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>(5)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
144,763</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Vice President&#151;Environmental Services</I></FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="26%" ALIGN="LEFT" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="26%" ALIGN="LEFT" >


<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
$1,848 for medical, dental, short term disability and life insurance and $3,997 for contributions under our 401(k) plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
$26,707 for medical, dental, short term disability and life insurance and $5,438 for contributions under our 401(k) plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
$26,628 for medical, dental, short term disability and life insurance and $4,715 for contributions under our 401(k) plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
$19,140 for medical, dental, short term disability and life insurance and $4,565 for contributions under our 401(k) plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
$9,046 for medical, dental, short term disability and life insurance and $3,950 for contributions under our 401(k) plan. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>117</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=121,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=18488,FOLIO='117',FILE='DISK132:[11ZAZ1.11ZAZ75201]ES75201A.;13',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_es75201_1_118"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:times;"></FONT></P>
 </DIV>

<P style="font-family:times;"><FONT SIZE=2><B> Grants of Plan-Based Awards  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The named executive offices did not receive any grants of plan-based awards in the year ended December&nbsp;31, 2010. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Outstanding Equity Awards at Fiscal Year End  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information with respect to the outstanding equity awards at December&nbsp;31, 2010 for the named
executive officers. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="35pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="40pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>OPTION AWARDS </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>STOCK AWARDS </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:83pt;"><FONT SIZE=1><B>Name and Principal Position

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Options (#)<BR>
Exercisable(1) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Options (#)<BR>
Unexercisable </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Equity<BR>
Incentive<BR>
Plan Awards:<BR>
Number of<BR>
Securities<BR>
Underlying<BR>
Unexercised<BR>
Unearned<BR>
Options (#) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Option<BR>
Exercise<BR>
Base<BR>
Price<BR>
($/sh)(2) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Option<BR>
Expiration<BR>
Date </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Shares<BR>
or Units<BR>
of Stock<BR>
That<BR>
Have Not<BR>
Vested (#) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Market<BR>
Value of<BR>
Shares or<BR>
Units of<BR>
Stock<BR>
That<BR>
Have Not<BR>
Vested ($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Equity<BR>
Incentive<BR>
Awards:<BR>
Number of<BR>
Unearned<BR>
Shares,<BR>
Units or<BR>
Other<BR>
Rights<BR>
That Have<BR>
Not Vested (#) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Equity<BR>
Incentive<BR>
Awards:<BR>
Market<BR>
Payout Value<BR>
of Unearned<BR>
Shares, Units<BR>
or Other<BR>
Rights That<BR>
Have Not<BR>
Vested ($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Kelsey L. Boltz</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>100,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>02/15/19</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Executive Chairman</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gary C Huber</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
800,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
07/31/17</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Chief Executive Officer</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>200,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>07/31/18</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>and Director</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>200,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>02/15/19</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Edward M. Topham</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
100,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
11/26/16</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Chief Financial Officer</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>100,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>03/14/17</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


</FONT>
</TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>100,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>02/15/19</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mark J. Ludwig</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
200,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
07/31/18</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Vice President&#151;Operations</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>50,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>02/15/19</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



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 Michael R. Neumann</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
441,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
03/14/17</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>


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 Vice President&#151;</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>44,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>02/15/19</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>


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 Environmental Services</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
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<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="26%" ALIGN="LEFT" >


<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>All
exercisable stock options are fully vested.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
exercise price of (i)&nbsp;200,000 of the options granted to each of Mr.&nbsp;Huber and Mr.&nbsp;Ludwig was reduced from $1.50 to $0.68 and
(ii)&nbsp;800,000 of the options granted to Mr.&nbsp;Huber was reduced from $1.00 to $0.68 in connection with voluntary salary reductions by Mr.&nbsp;Huber and Mr.&nbsp;Ludwig in February
2009. Exercise price for all other option awards is the fair market value per share of our common stock on the grant date, as determined by the board of Directors. Please see the subsection entitled,
"</FONT><FONT SIZE=2><I>2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan</I></FONT><FONT SIZE=2>," above for a description of assumptions used by
the Board of Directors in determining the fair market value per share of our common stock. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Options Exercised and Stock Vested  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The named executive officers did not exercise any of their options in the year ended December&nbsp;31, 2010. No stock awards to named
executive officers vested in the year ended December&nbsp;31, 2010. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Potential Payments Upon Termination or Change-in-Control  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into employment agreements with each of our named executive officers that provide that, in the event the employee is
terminated for other than for cause, death or disability, or the employee terminates for good reason, the Company will pay the employee, in addition to other amounts, the amount of his base salary for
a specific number of months, which varies from six to </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>118</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=122,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=169605,FOLIO='118',FILE='DISK132:[11ZAZ1.11ZAZ75201]ES75201A.;13',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_es75201_1_119"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>24&nbsp;months.
The employment agreements also provide for other payments upon a termination (i)&nbsp;by the Company with cause, (ii)&nbsp;by the employee without good reason, (iii)&nbsp;due
to death, or (iv)&nbsp;due to disability. Please see the subsection entitled "</FONT><FONT SIZE=2><I>Employment Agreements</I></FONT><FONT SIZE=2>" above for a description of the severance and
change in control arrangements with these executive officers and employees. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our 2006 Plan, 2007 Plan and 2011 Plan provide for a potential acceleration of outstanding awards in the event of a change in control. Please see the subsection entitled
"</FONT><FONT SIZE=2><I>Stock Option Plans</I></FONT><FONT SIZE=2>" below for a description of the potential acceleration of outstanding awards in the event of a change in control. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table reflects the estimated potential payments upon certain terminations of employment or a change in control that would be payable to each of the named executive officers
who were employed on December&nbsp;31, 2010. For purposes of calculating the potential payments set forth in the tables below, we have assumed that (i)&nbsp;the date of termination or change in
control was December&nbsp;31, 2010; and (ii)&nbsp;the value of each share subject to a stock option or a restricted stock grant that would be accelerated in the circumstances set forth in the
table below equals $1.00, which represents the fair market value of our common stock as of December&nbsp;31, 2010 as determined by our Board of Directors using the factors discussed under the
subsection entitled "</FONT><FONT SIZE=2><I>Equity-Based Awards&#151;2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive
Plan</I></FONT><FONT SIZE=2>" above in connection with the Board of Director's determination of exercise price for stock options. Severance payments are generally paid in a lump sum in cash within
30&nbsp;days of the date of termination other than (i)&nbsp;payments based off of annual base salary, which are paid out over the period such payments would have been made but for the termination;
and (ii)&nbsp;continued coverage under any benefit or welfare plan. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="9pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="86pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="101pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="82pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:90pt;"><FONT SIZE=1><B>Name and Principal Position

<!-- COMMAND=ADD_SCROPPEDRULE,90pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Termination Without<BR>
Cause or Resignation<BR>
for Good Reason ($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Termination Without<BR>
Cause or Resignation for<BR>
Good Reason after a<BR>
Change of Control ($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Death ($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Disability ($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Termination for<BR>
Cause or<BR>
Resignation without<BR>
Good Reason ($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Kelsey L. Boltz</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>344,014</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>353,246</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(6)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>37,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(11)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>55,614</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(16)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(21)</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>



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 Executive Chairman</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gary C. Huber</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
879,741</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(2)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
897,556</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(7)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
390,932</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(12)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
426,541</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(17)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
6,932</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(22)</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Chief Executive Officer and Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Edward M. Topham</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
303,869</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(3)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
404,732</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(8)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
102,141</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(13)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
122,112</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(18)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
6,141</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(23)</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Chief Financial Officer</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mark J. Ludwig</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
184,231</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(4)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
282,520</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(9)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
85,942</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(14)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
105,913</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(19)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
5,942</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(24)</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Vice President&#151;Operations</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Michael R. Neumann</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
242,020</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(5)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
323,690</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(10)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
160,350</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(15)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
174,705</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(20)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
5,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(25)</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Vice President&#151;Environmental Services</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="26%" ALIGN="LEFT" -->
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$280,000 (representing 24&nbsp;months of base salary pursuant to employment agreement) paid out over 24&nbsp;months,
(ii)&nbsp;$18,464 in continued welfare benefits paid out over 16&nbsp;months, (iii)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$32,000
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;401(k) contributions totaling $8,550 payable each year in February, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$440,000 (representing 24&nbsp;months of base salary pursuant to employment agreement) paid out over 24&nbsp;months,
(ii)&nbsp;$35,609 in continued welfare benefits paid out over 16&nbsp;months, (iii)&nbsp;$6,730 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$384,000
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;401(k) contributions totaling $13,402 payable each year in February, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$170,000 (representing 12&nbsp;months of base salary pursuant to employment agreement) paid out over 12&nbsp;months,
(ii)&nbsp;$26,628 in continued welfare benefits paid out over 12&nbsp;months, (iii)&nbsp;$5,962 in accrued but unused </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>119</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_es75201_1_120"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:times;"></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>vacation
pay paid within 30&nbsp;days of termination, (iv)&nbsp;$96,000 which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;a 401(k) contributions of
$5,279 payable in February 2012, calculated as 3% of the amount of (i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$82,500 (representing 6&nbsp;months of base salary pursuant to employment agreement) paid out over 6&nbsp;months,
(ii)&nbsp;$13,314 in continued welfare benefits paid out over 6&nbsp;months, (iii)&nbsp;$5,769 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$80,000
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;a 401(k) contribution of $2,648 payable in February 2012, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$70,000 (representing 6&nbsp;months of base salary pursuant to employment agreement) paid out over 6&nbsp;months, (ii)&nbsp;$9,570
in continued welfare benefits paid out over 6&nbsp;months, (iii)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$155,200 which is the net
value of stock options as exercised, exercisable immediately, and (v)&nbsp;a 401(k) contribution of $2,250 payable in February 2012, calculated as 3% of the amount of (i)&nbsp;plus
(iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$280,000 (representing 24&nbsp;months of 2010 base salary pursuant to employment agreement) paid out over 24&nbsp;months,
(ii)&nbsp;$27,696 in continued welfare benefits paid out over 24&nbsp;months, (iii)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$32,000
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;401(k) contributions totaling $8,550 payable each year in February, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$440,000 (representing 24&nbsp;months of 2010 base salary pursuant to employment agreement) paid out over 24&nbsp;months,
(ii)&nbsp;$53,424 in continued welfare benefits paid out over 24&nbsp;months, (iii)&nbsp;$6,730 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$384,000
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;401(k) contributions totaling $13,402 payable each year in February, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$255,000 (representing 18&nbsp;months of base salary pursuant to employment agreement) paid out over 18&nbsp;months,
(ii)&nbsp;$39,941 in continued welfare benefits paid out over 18&nbsp;months, (iii)&nbsp;$5,962 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$96,000
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;a 401(k) contributions of $7,829 payable in February 2012, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$165,000 (representing 12&nbsp;months of base salary pursuant to employment agreement) paid out over 12&nbsp;months,
(ii)&nbsp;$26,628 in continued welfare benefits paid out over 12&nbsp;months, (iii)&nbsp;$5,769 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$80,000
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;a 401(k) contribution of $5,123 payable in February 2012, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$140,000 (representing 12&nbsp;months of base salary pursuant to employment agreement) paid out over 12&nbsp;months,
(ii)&nbsp;$19,140 in continued welfare benefits paid out over 12&nbsp;months, (iii)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (iv)&nbsp;$155,200
which is the net value of stock options as exercised, exercisable immediately, and (v)&nbsp;a 401(k) contribution of $4,350 payable in February 2012, calculated as 3% of the amount of
(i)&nbsp;plus (iii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (ii)&nbsp;$32,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii)&nbsp;a 401(k) contribution of $150 payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal
year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$6,730 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (ii)&nbsp;$384,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii)&nbsp;a 401(k) contribution of $202 payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal
year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(13)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,962 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (ii)&nbsp;$96,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii)&nbsp;a 401(k) contribution of $179 payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal
year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(14)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,769 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (ii)&nbsp;$80,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii)&nbsp;a 401(k) contribution of $173 payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal
year. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>120</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:times;"></FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(15)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, (ii)&nbsp;$155,200 which is the net value of
stock options as exercised, exercisable immediately, and (iii)&nbsp;a 401(k) contribution of $150 payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal
year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(16)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$18,464 in continued welfare benefits paid out over the remaining 16&nbsp;months of the employment agreement, (ii)&nbsp;$5,000 in
accrued but unused vacation pay paid within 30&nbsp;days of termination, (iii)&nbsp;$32,000 which is the net value of stock options as exercised, exercisable immediately, and (iv)&nbsp;a 401(k)
contribution of $150 payable in February 2012, calculated as 3% of the amount of (ii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(17)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$35,609 in continued welfare benefits paid out over the remaining 16&nbsp;months of the employment agreement, (ii)&nbsp;$6,730 in
accrued but unused vacation pay paid within 30&nbsp;days of termination, (iii)&nbsp;$384,000 which is the net value of stock options as exercised, exercisable immediately, and (iv)&nbsp;a 401(k)
contribution of $202 payable in February 2012, calculated as 3% of the amount of (ii)&nbsp;paid in the preceding fiscal.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(18)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$19,971 in continued welfare benefits paid out over the remaining 9&nbsp;months of the employment agreement, (ii)&nbsp;$5,962 in
accrued but unused vacation pay paid within 30&nbsp;days of termination, (iii)&nbsp;$96,000 which is the net value of stock options as exercised, exercisable immediately, and (iv)&nbsp;a 401(k)
contribution of $179 payable in February 2012, calculated as 3% of the amount of (ii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(19)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$19,971 in continued welfare benefits paid out over the remaining 9&nbsp;months of the employment agreement, (ii)&nbsp;$5,769 in
accrued but unused vacation pay paid within 30&nbsp;days of termination, (iii)&nbsp;$80,000 which is the net value of stock options as exercised, exercisable immediately, and (iv)&nbsp;a 401(k)
contribution of $173 payable in February 2012, calculated as 3% of the amount of (ii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(20)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$14,355 in continued welfare benefits paid out over the remaining 9&nbsp;months of the employment agreement, (ii)&nbsp;$5,000 in
accrued but unused vacation pay paid within 30&nbsp;days of termination, (iii)&nbsp;$155,200 which is the net value of stock options as exercised, exercisable immediately, and (iv)&nbsp;a 401(k)
contribution of $150 payable in February 2012, calculated as 3% of the amount of (ii)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(21)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, and (ii)&nbsp;a 401(k) contribution of $150
payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(22)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$6,730 in accrued but unused vacation pay paid within 30&nbsp;days of termination, and (ii)&nbsp;a 401(k) contribution of $202
payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(23)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,962 in accrued but unused vacation pay paid within 30&nbsp;days of termination, and (ii)&nbsp;a 401(k) contribution of $179
payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(24)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,769 in accrued but unused vacation pay paid within 30&nbsp;days of termination, and (ii)&nbsp;a 401(k) contribution of $173
payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal year.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(25)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
(i)&nbsp;$5,000 in accrued but unused vacation pay paid within 30&nbsp;days of termination, and (ii)&nbsp;a 401(k) contribution of $150
payable in February 2012, calculated as 3% of the amount of (i)&nbsp;paid in the preceding fiscal year. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Stock Option Plans  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> 2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary is qualified in its entirety by the detailed provisions of the 2006 Plan, the 2007 Plan, and the 2011 Plan, which are
filed as exhibits to the registration statement of which this prospectus is a part. The 2006 Plan, 2007, and 2011 Plan are collectively referred to as the "Plans." </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Purpose  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The objective of the Plans is to attract, reward and retain key personnel to the Company and provide incentives to our key employees,
directors and consultants to achieve financial results aimed at increasing stockholder value. Persons eligible to be granted stock options or restricted stock under any of the Plans will be those
persons whose performance, in the judgment of the Board of Directors or compensation committee, can have significant effect on the Company's success. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><I> Effective Date and Term  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 2006 Plan was effective as of February&nbsp;10, 2006 and will expire on February&nbsp;10, 2016, unless earlier terminated by
our Board of Directors. The 2007 Plan was effective as of December&nbsp;13, 2007 and will expire on December&nbsp;13, 2017, unless earlier terminated by our Board of Directors. The 2011 Plan was
effective as of February&nbsp;22, 2011, subject to stockholder approval, and will expire on February&nbsp;22, 2021, unless earlier terminated by our Board of Directors. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I> Administration of the Plans  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee administers each of the Plans, interprets the terms and intent of the Plans, determines eligibility for and
terms of awards for participants and makes all other determinations necessary or advisable for the administration of any Plan. Our Board of Directors fulfilled these responsibilities until it
delegated the authority to administer the Plans to the compensation committee on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011. During any period of time in which we do not have a
compensation committee, the Plans will be
administered by our Board of Directors or another committee appointed
by our Board of Directors. References below to the compensation committee include a reference to the Board of Directors or another committee appointed by the Board of Directors for those periods in
which the Board of Directors or such other committee appointed by the Board of Directors is acting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Eligibility  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our officers and employees and the officers and employees of our subsidiaries and affiliates are eligible to receive awards
under each Plan. In addition, our non-employee directors and consultants and advisors who perform services for us, our subsidiaries and our affiliates may receive awards under any Plan,
other than incentive stock options. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Shares Subject to the Plan  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to adjustment as described below, (i)&nbsp;a total of 3,500,000 shares of our common stock are authorized for issuance under
the 2006 Plan, (ii)&nbsp;a total of 2,800,000 shares of our common stock are authorized for issuance under our 2007 Plan and (iii)&nbsp;between 1,000,000 and 3,000,000 shares are authorized for
issuance under our 2011 Plan. The 2011 Plan authorizes the greater of (A)&nbsp;1,000,000 shares of our common stock or (B)&nbsp;the number of shares of common stock, up to a maximum of 3,000,000
shares, that when added together with the number of shares authorized under the 2006 Plan and 2007 Plan equals 10% of the total issued and outstanding shares of common stock of the Company. As of
March&nbsp;24, 2011, 1,000,000 shares of common stock were authorized for issuance under the 2011 Plan. Shares issued under any of the Plans may be authorized but unissued shares or treasury shares. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
maximum number of shares of common stock subject to options or share appreciation rights that can be issued to any person is (i)&nbsp;250,000 in any single calendar year (or
500,000 shares in the year that the person is first employed) under the 2011 Plan, and (ii)&nbsp;500,000 in any 12&nbsp;month period under the 2007 Plan. The maximum number of shares that can be
issued to any person other than pursuant to an option or share appreciation right is (i)&nbsp;100,000 shares in any single calendar year (or 200,000 shares in the year that the person is first
employed) under the 2011 Plan, and (ii)&nbsp;250,000 shares in any 12&nbsp;month period under the 2007 Plan. The maximum amount that may be earned as an annual incentive award or other cash award
by any one person is (i)&nbsp;$100,000 in any calendar year (or $200,000 in the year that the person is first employed) under the 2011 Plan, and (ii)&nbsp;$500,000 in any 12&nbsp;month period
under the 2007 Plan. The maximum amount that may be earned as a performance award or other cash award in respect of a performance period by any one person is (i)&nbsp;$250,000 in any calendar year
(or $500,000 for a performance period beginning with or immediately after the year that </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>the
person is first employed) under the 2011 Plan, and (ii)&nbsp;$500,000 in any 12&nbsp;month period under the 2007 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the 2006 Plan, the aggregate fair market value of the common stock with respect to which incentive stock options are exercisable for the first time by any individual in any
calendar year may not exceed $100,000. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Adjustment of Shares  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of any increase or decrease in the number of outstanding shares of our stock, or in the event such shares are changed into
or exchanged for a different number or kind of shares or other securities of our company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital stock, our Board of Directors will make proportionate adjustments that it deems appropriate in the aggregate number of
shares of common stock that may be issued under each Plan and the terms of outstanding awards. If any options or share appreciation rights terminate, expire or are canceled, forfeited, exchanged or
surrendered without having been exercised or paid or if any share awards, performance shares, performance units or other equity-based awards are forfeited or expire or otherwise terminate without the
delivery of any shares of common stock or are settled in cash, the shares of common stock subject to such awards will again be available for purposes of the Plans. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Option Awards  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plans authorize our compensation committee to grant incentive stock options (under Section&nbsp;421 of the Internal Revenue Code)
and options that do not qualify as incentive stock options. The exercise price of each option will be determined by the compensation committee, provided that the price will be equal to at least the
fair market value of the shares of common stock on the date on which the option is granted. If we were to grant incentive stock options to any 10% stockholder, the exercise price may not be less than
110% of the fair market value of our shares of common stock on the date of grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
term of an option cannot exceed ten years from the date of grant. If we were to grant incentive stock options to any 10% stockholder, the term cannot exceed five years from the date
of grant. The compensation committee determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment
during which options may be exercised. Options may be made exercisable in installments. The exercisability of options may be accelerated by the compensation committee. The exercise price of an option
may not be amended or modified after the grant of the option, and an option may not be surrendered in consideration of or exchanged for a grant of a new option having an exercise price below that of
the option which was surrendered or exchanged without stockholder approval. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Share Awards  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plans also provide for the grant of share awards (which includes restricted shares and share units). A share award is an award of
shares of common stock that may be subject to restrictions on transferability and other restrictions as our compensation committee determines in its sole discretion on the date of grant. The
restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments or otherwise, as our compensation committee may determine. A participant who
receives a share award will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the
shares, except that the compensation committee may require any dividends to be reinvested in shares. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><I> Share Appreciation Rights  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plans authorize our compensation committee to grant share appreciation rights that provide the recipient with the right to receive,
upon exercise of the share appreciation right, cash, shares of common stock or a combination of the two. The amount that the recipient will receive upon exercise of the share appreciation right
generally will equal the excess of the fair market value of our common stock on the date of exercise over the shares' fair market value on the date of grant. Share appreciation rights will become
exercisable in accordance with terms determined by our compensation committee. Share appreciation rights may be granted in tandem with an option grant or independently from an option grant. The term
of a share appreciation right cannot exceed 10&nbsp;years from the date of grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Performance Units  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 2007 Plan and 2011 Plan also authorize our compensation committee to grant performance units. Performance units represent the
participant's right to receive a compensation amount, based on the value of the shares of common stock, if performance goals established by the compensation committee are met. Our compensation
committee will determine the applicable performance period, the performance goals and such other conditions that apply to the performance unit. Performance goals may relate to our financial
performance or the financial performance of our operating units, the participant's performance or such other criteria determined by the compensation committee. If the performance goals are met,
performance units will be paid in cash, shares of common stock or a combination thereof. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Bonuses  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash performance bonuses payable under the 2007 Plan and 2011 Plan may be based on the attainment of performance goals that are
established by the compensation committee and relate to one or more performance criteria described in such Plan. Cash performance bonuses, for which there is no minimum, must be based upon objectively
determinable bonus formulas established in accordance with such Plan, as determined by the compensation committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Dividend Equivalents  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee may grant dividend equivalents in connection with the grant of any equity-based award under the 2007 Plan
and 2011 Plan. Dividend equivalents may be paid currently or may be deemed to be reinvested in additional shares of stock, which may thereafter accrue additional equivalents, and may be payable in
cash, shares of common stock or a combination of the two. Our compensation committee will determine the terms of any dividend equivalents. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I> Other Equity-Based Awards  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee may grant other types of equity-based awards under the 2011 Plan. Other equity-based awards are payable in
cash, shares of common stock or other equity, or a combination thereof, and may be restricted or unrestricted, as determined by our compensation committee. The terms and conditions that apply to other
equity-based awards are determined by the compensation committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> Change of Control  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the 2007 Plan and 2011 Plan, if we experience a change in control in which equity-based awards that are not exercised prior to
the change in control will not be assumed or continued by the surviving entity, unless otherwise provided in an award: (i)&nbsp;all restricted shares will vest, and all share units will vest and the
underlying shares will be delivered immediately before the change in control, and (ii)&nbsp;at the compensation committee's discretion either all options and share appreciation rights will </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>become
exercisable 15&nbsp;days before the change in control and terminate upon the consummation of the change in control, or all options, share appreciation rights, restricted shares and share
units will be cashed out in an amount equal to the value, which is the excess fair value of the shares underlying the options over the exercise price of the options, of the award before the change in
control. In the case of performance shares, if more than half of the performance period has lapsed, the performance shares will be converted into restricted shares based on actual performance to date.
If less than half of the performance period has lapsed, or if actual performance is not determinable, the performance shares will be converted into restricted shares assuming target performance has
been achieved. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
an award is assumed or substituted in connection with a change of control and the holder is terminated without cause within a year following a change in control, the award will be
fully vested and may be exercised in full, to the extent applicable, beginning on the date of such termination and for the one-year period immediately following such termination or for
such longer period as the compensation committee shall determine. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
defined in the 2007 Plan and 2011 Plan, a "corporate transaction" or "change of control" means: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the dissolution or liquidation of the Company or a merger, consolidation or reorganization of the Company with one or more
other entities in which we are not the surviving entity;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a sale of substantially all of our assets to another person or entity; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>any transaction which results in any person or entity owning 50% or more of the combined voting power of all classes of
the Company's stock. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the 2006 Plan, if we experience a change in control, any unvested awards vest immediately prior to the closing of the change of control and the compensation committee may provide
for the award recipient's election alternatives regarding the terms and conditions for the exercise of or modification of any outstanding awards without the consent of the holder of the award so long
as it does not affect the then current exercise provisions. In addition, the compensation committee may require that awards granted under the 2006 Plan must be exercised in connection with the closing
of the change of control and any awards not so exercised will expire. Under the 2006 Plan, all outstanding awards terminate immediately upon a dissolution or liquidation of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
defined in the 2006 Plan, a "change of control" means: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>any person or group acquires more than 50% of either the total fair market value of all our common stock issued and
outstanding or the total voting power of all shares of capital stock authorized to vote for the election of our directors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>any person or group acquires 35% or more of the voting power of all shares of capital stock authorized to vote for the
election of our directors in any 12&nbsp;month period;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a majority of the members of the Board of Directors is replaced during any 12&nbsp;month period by directors whose
appointment was not endorsed by a majority of the members of the Board of Directors; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>any person or group acquires more than 40% of the total gross fair market value of all our assets in any 12&nbsp;month
period. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provided
that a "change of control" under the 2006 Plan does not include: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>any transaction involving any stockholder that individually or as a group owned more than 50% of the outstanding common
stock on February&nbsp;10, 2006, until such time as such stockholder first owns less than 40% of the total outstanding common stock of the Company; or </FONT></DD></DL>
</UL>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of the Company's capital stock. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><I> Amendment; Termination  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors may amend or terminate any Plan at any time; provided that no amendment may adversely impair the benefits of
participants with outstanding awards. Our stockholders must approve any amendment if such approval is required under applicable law
or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;regulations. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
compensation committee may provide in any agreement under any of the Plans for different provisions to apply to an award than those described above. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Director Compensation  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the compensation for our non-employee directors for the year ended December&nbsp;31, 2010.
Kelsey Boltz and Gary Huber both serve as directors, but as company employees they receive no compensation for their services as directors. The compensation for Kelsey Boltz and Gary Huber is reported
in the executive compensation tables. </FONT></P>
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<TD WIDTH="36pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:21pt;"><FONT SIZE=1><B>Name

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fees<BR>
Earned<BR>
or Paid<BR>
in Cash<BR>
($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Stock<BR>
Awards<BR>
($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Option<BR>
Awards<BR>
($)(1) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>All Other<BR>
Compensation<BR>
($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total<BR>
($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Options<BR>
Outstanding at<BR>
December&nbsp;31,<BR>
2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John K. Campbell</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>75,997</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>85,997</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>290,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jerry Nelson</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>75,997</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>135,997</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>290,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Henry G. Grundstedt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>75,997</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>85,997</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>260,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>James J. Graham</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>66,760</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>66,760</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Richard Mallery</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>300,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Carolyn C. Loder</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>During
the year ended December&nbsp;31, 2010, each of Messrs.&nbsp;Campbell, Nelson and Grundstedt received a stock option award for 30,000 common
shares. The amounts in this column reflect the amounts we recorded under FASB ASC Topic&nbsp;718 "Compensation&#151;Stock Compensation" as stock-based compensation in our financial statements
for the fiscal years stated in connection with options we granted in the fiscal years stated. The assumptions we used in valuing options are described in Note&nbsp;10 to our Consolidated Financial
Statements included elsewhere in this prospectus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
May 2010, we granted Mr.&nbsp;Nelson 50,000 shares of common stock as an unrestricted stock award in consideration of and in connection with a $500,000
standby credit facility. We did not draw on the credit facility and it was subsequently terminated. The grant date fair value of the stock award was $50,000.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
May 2010, we granted Mr.&nbsp;Graham stock option awards of 100,000 in consideration of, and in connection with, an April&nbsp;15, 2010 Strategic
Consulting and Advisory Agreement, which was terminated on February&nbsp;11, 2011. The grant date fair value of the May 2010 stock option awards was $66,760. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors
who are not our employees receive annual fees of $20,000, and fees of $2,000 for each board meeting or committee meeting attended in person, in consideration for
out-of-town travel. All such fees are paid in cash. Directors who are our employees receive no fees for their services on the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>126</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;"><FONT SIZE=2>Board
of Directors. All directors are entitled to reimbursement for their reasonable out-of-pocket travel expenditures. Each non-employee director is entitled to
receive options to purchase 200,000 shares of common stock upon joining the board and 30,000 annually. All outstanding options granted as fees to our non-employee directors have been
issued under our 2006 Plan, 2007 Plan and 2011 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2009, in conjunction with certain salary reductions for our executive officers, our Board of Directors reduced its annual fees by 50%. In connection with this reduction in
compensation, we agreed to modify the terms of, 30,000 stock options issued to Mr.&nbsp;Campbell, 30,000 stock options issued to Mr.&nbsp;Nelson and 200,000 stock options issued to
Mr.&nbsp;Grundstedt. We modified the terms of the stock options by reducing the exercise price from $1.50 to $.68 per share on 30,000, 30,000 and 200,000 stock options issued to Mr.&nbsp;Campbell,
Mr.&nbsp;Nelson and Mr.&nbsp;Grundstedt, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February&nbsp;22, 2011, our Board of Directors granted options to purchase 200,000 shares of our common stock at an exercise price of $1.00 per share to each of
Messrs.&nbsp;Graham, Loder and Mallery in connection with their appointment to the Board of Directors, which fully vested upon the grant and expire after ten years. On February&nbsp;11, 2011, our
Board of Directors granted options, which expire after ten years, to purchase 200,000 shares of our common stock at an exercise price of $1.00 per share to Mr.&nbsp;Graham in connection with
Mr.&nbsp;Graham entering into a consulting agreement with the Company, of which half vests on August&nbsp;11, 2011 and the remaining half vests on February&nbsp;11, 2012. For a description of
the consulting agreement entered into with Mr.&nbsp;Graham, see the section of this prospectus entitled "</FONT><FONT SIZE=2><I>Certain Relations and Related Person Transactions&#151;Related
Person Transactions</I></FONT><FONT SIZE=2>." The options granted to Mr.&nbsp;Loder and Mr.&nbsp;Mallery were issued under the 2011 Plan and the options granted to Mr.&nbsp;Graham were issued
under the 2007 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Limitations on Liability and Indemnification Matters  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See "</FONT><FONT SIZE=2><I>Indemnification Matters and Disclosure of SEC Position on Indemnification for Securities Act
Liabilities</I></FONT><FONT SIZE=2>" on page&nbsp;148. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Compensation Committee Interlocks and Insider Participation  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;22, 2011, the Company formed a compensation committee to determine the compensation of the executive officers and to
set the guidelines for compensation for the employees of the Company. During the fiscal year ended December&nbsp;31, 2010, the Company did not have a compensation committee. No employees or officers
of the Company, other than Dr.&nbsp;Huber and Mr.&nbsp;Boltz who serve as both officers and directors, participated in deliberations of our Board of Directors concerning executive officer
compensation. Dr.&nbsp;Huber and Mr.&nbsp;Boltz were not present during the Board of Directors deliberations concerning their own compensation. During the last fiscal year, none of our executive
officers served as a member of a Board of Directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers
that served as a member of our Board of Directors or compensation committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>127</FONT></P>

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<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ew75201_security_ownership_of_certain___sec02525"> </A>
<A NAME="toc_ew75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables set forth, as of March&nbsp;24, 2011, information regarding persons known by us to be the beneficial owner of
more than 5% of the outstanding shares of our common stock. Shown separately in the second table below is information regarding the beneficial ownership of our common stock by (i)&nbsp;each director
and nominee; (ii)&nbsp;each named executive officer; and (iii)&nbsp;all directors and executive officers together as a group. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
number of shares beneficially owned and the percentage of shares beneficially owned are based on the 58,204,141 shares of common stock that were issued and outstanding as of
March&nbsp;24, 2011. For the purposes of the information provided below, shares subject to options and warrants that are exercisable within 60&nbsp;days following March&nbsp;24, 2011 are deemed
to be outstanding and beneficially owned by the holder for the purpose of computing the number of shares and percentage ownership of that holder but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated or as affected by
applicable community property laws. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Principal Stockholders  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="111pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="89pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:139pt;"><FONT SIZE=1><B>Name and Address of Beneficial Owner

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount and Nature of<BR>
Beneficial Ownership(1) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent of Class(2) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



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 Primary Corp</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14,269,067</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>24.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


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 130 King Street West, Ste. 2110</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


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 Toronto, ON M5X&nbsp;1B1 Canada</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kelsey Boltz</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
6,909,293</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(3)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
11.85</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>6066 N Hillside Dr.</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Scottsdale, AZ 85253 U.S.</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


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 Passport Capital,&nbsp;LLC</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
4,666,666</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(4)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
8.02</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


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 30 Hotaling Place, Ste. 300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



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 San Francisco, CA 94111 U.S.</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Under
Rule&nbsp;13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i)&nbsp;voting power, which includes the power to vote, or to direct the voting of shares; and (ii)&nbsp;investment power, which includes
the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within
60&nbsp;days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not
necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of the date of this prospectus. As of the date of this
prospectus, there were 58,204,141 shares issued and outstanding.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
percent of common stock owned is calculated using the sum of (i)&nbsp;the number of shares of common stock beneficially owned, plus (ii)&nbsp;the
number of warrants and options </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>128</FONT></P>

<HR NOSHADE>
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<!-- ZEQ.=1,SEQ=132,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=525379,FOLIO='128',FILE='DISK132:[11ZAZ1.11ZAZ75201]EW75201A.;15',USER='DTAYLOR',CD='30-MAR-2011;15:17' -->
<A NAME="page_ew75201_1_129"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:20%;">
<p style="font-family:times;"></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>of
the beneficial owner that are exercisable within sixty (60)&nbsp;days, as the numerator, and the sum of (a)&nbsp;the total number of shares of common stock of the Company outstanding, plus
(b)&nbsp;the number of warrants and options of the beneficial owner that are exercisable within sixty (60)&nbsp;days, as the denominator.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
6,809,293 shares of common stock held by Kelsey L. Boltz and Barbara B. Boltz Family Revocable Trust and 100,000 shares issuable upon exercise of
stock options granted pursuant to our 2007 Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes,
(i)&nbsp;2,333,333 shares of common stock held by Passport Materials Master Fund&nbsp;LP, (ii)&nbsp;1,253,000 shares of common stock held by
Passport Global Strategies&nbsp;II&nbsp;Ltd., and (iii)&nbsp;1,080,333 shares of common stock held by Passport Global Strategies&nbsp;III&nbsp;Ltd. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Directors and Executive Officers  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="111pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="89pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:93pt;"><FONT SIZE=1><B>Name of Beneficial Owner

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount and Nature of<BR>
Beneficial Ownership(1) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent of Class(2) </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kelsey Boltz, </FONT><FONT SIZE=2><I>Executive Chairman of the Board</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,909,293</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>11.85%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gary C. Huber, </FONT><FONT SIZE=2><I>Chief Executive Officer, Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1,400,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(4)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2.36%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Edward M. Topham, </FONT><FONT SIZE=2><I>Chief Financial Officer</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
855,283</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(5)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>1.46%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mark J. Ludwig, </FONT><FONT SIZE=2><I>V.P. Operations</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
250,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(6)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mike R. Neumann, </FONT><FONT SIZE=2><I>V.P. Environmental Services</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
485,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(7)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John K. Campbell, </FONT><FONT SIZE=2><I>Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
360,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(8)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jerry Nelson, </FONT><FONT SIZE=2><I>Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
476,364</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(9)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Henry G. Grundstedt, </FONT><FONT SIZE=2><I>Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
260,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(10)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>James J. Graham, </FONT><FONT SIZE=2><I>Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
300,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(11)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Carolyn C. Loder, </FONT><FONT SIZE=2><I>Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
200,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(12)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Richard Mallery, </FONT><FONT SIZE=2><I>Director</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
500,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>(13)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>All directors and officers as a group (11&nbsp;individuals)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
11,995,940</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>19.23%</FONT></TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Less
than one percent
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Under
Rule&nbsp;13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i)&nbsp;voting power, which includes the power to vote, or to direct the voting of shares; and (ii)&nbsp;investment power, which includes
the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within
60&nbsp;days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) </FONT></DD></DL>
 </DIV>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>129</FONT></P>

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<p style="font-family:times;"></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>by
reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power
with respect to the number of shares of common stock actually outstanding as of the date of this prospectus. As of the date of this prospectus, there were 58,204,141 shares issued and outstanding. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
percent of common stock owned is calculated using the sum of (i)&nbsp;the number of shares of common stock beneficially owned, plus (ii)&nbsp;the
number of warrants and options of the beneficial owner that are exercisable within sixty (60)&nbsp;days, as the numerator, and the sum of (a)&nbsp;the total number of shares of common stock of the
Company outstanding, plus (b)&nbsp;the number of warrants and options of the beneficial owner that are exercisable within sixty (60)&nbsp;days, as the denominator.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
6,809,293 shares of common stock held by Kelsey L. Boltz and Barbara B. Boltz Family Revocable Trust and 100,000 shares issuable upon exercise of
stock options granted pursuant to our 2007&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
800,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan, and 400,000 shares issuable upon exercise of stock
options granted pursuant to our 2007&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan and 100,000 shares issuable upon exercise of stock options
granted pursuant to our 2007&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
250,000 shares issuable upon exercise of stock options granted pursuant to our 2007&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
485,000 shares issuable upon exercise of stock options granted pursuant to our 2006&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan and 90,000 shares issuable upon exercise of stock options
granted pursuant to our 2007 Plan. Mr.&nbsp;John K. Campbell, a director of the Company, is a director and a shareholder of Primary Corp, a publicly held corporation traded on the Toronto Stock
Exchange.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan and 90,000 shares issuable upon exercise of stock options
granted pursuant to our 2007&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
260,000 shares issuable upon exercise of stock options granted pursuant to our 2007&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
300,000 shares issuable upon exercise of stock options granted pursuant to our 2007&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2011&nbsp;Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(13)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
300,000 shares issuable upon exercise of stock options granted pursuant to our 2007 Plan and 200,000 shares issuable upon exercise of stock
options granted pursuant to our 2011&nbsp;Plan. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Changes in Control  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are unaware of any contract, or other arrangement or provision, the operation of which may at a subsequent date result in a change
of control of our company. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>130</FONT></P>

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<A NAME="toc_ew75201_2"> </A>
<BR></FONT><FONT SIZE=2><B>  CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Policies and Procedures for Related Person Transactions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;22, 2011, we adopted a written Related Person Transaction Policy, pursuant to which the Company is not permitted to
enter into any transaction required to be disclosed under Item&nbsp;404(a) of Regulation&nbsp;S-K (a "Related-Person Transaction") without (i)&nbsp;reporting it to our Chief
Executive Officer or Chief Financial Officer and (ii)&nbsp;obtaining the prior, whenever practical, consent of our audit committee. If our Chief Executive Officer or Chief Financial Officer
determines that prior approval of a Related-Person Transaction is not practicable, our audit committee shall review and may ratify such a transaction at its next meeting. Our Chief Executive Officer
or Chief Financial Officer may also present a Related-Party Transaction to the chairperson of our audit committee, who shall review and may approve such transaction subject to ratification by our
audit committee at its next meeting. In approving or rejecting a Related-Party Transaction, our audit committee will review all relevant information available to it about the Related-Person
Transaction.
After review, our audit committee may approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines
in the good faith exercise of its discretion. In approving a Related-Person Transaction, our audit committee may, in its sole discretion, impose such conditions as it deems appropriate on the Company
or the related person. A copy of our Related Person Transaction Policy and other corporate governance documents can be viewed on our corporate website at:
www.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Related Person Transactions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the following related person transactions was entered into before the adoption of our Related Person Transaction Policy and
therefore was not subject to the terms and conditions of such policy. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Transactions with Richard Mallery  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2009, we paid a law firm $239,449 in legal fees. Richard Mallery, a director of the Company since February&nbsp;15, 2011, was
the attorney representing us and is a partner in that law firm. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2009, we granted Mr.&nbsp;Mallery stock options to purchase 300,000 shares of our common stock at an exercise price of $0.68 per share for additional strategic consulting
services. The options had an aggregate estimated fair value of $124,259 at grant date. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Transactions with Primary  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2009, we issued 3,519,067 shares of our common stock to Primary, a principal stockholder of the Company, in consideration
for our October&nbsp;15, 2009 purchase of Primary's 34.56% interest in the Grants J.V. pursuant to the Purchase Agreement that we entered into with Primary in October&nbsp;2009. The fair value of
the shares on the date of issuance was $3,519,067. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January&nbsp;4, 2011, we entered into a financial advisory agreement with Primary Capital, an affiliate of Primary. Pursuant to the agreement Primary Capital will consult with us
with respect to (i)&nbsp;any merger,
amalgamation, plan of arrangement, reorganization or other business combination, or (ii)&nbsp;the issuance by us, or a counterparty of a business combination, of securities in connection with an
initial public offering or a private placement. Should we conclude a transaction, the financial advisory agreement requires us to pay a 1% completion fee on the transaction value, defined as the gross
proceeds received by us in a financing transaction or the aggregate unrestricted cash balances of any counterparty in connection with a business combination. Assuming the completion of this offering,
a completion fee of approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;will be paid to Primary. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>131</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B><I> Transactions with James J. Graham  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into three agreements with the Consultant, the principal of which is James J. Graham, a director of the Company since
February&nbsp;15, 2011. As the principal of the Consultant, Mr.&nbsp;Graham has a direct interest in all amounts paid to the Consultant. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January&nbsp;14, 2010, we entered into a finder's fee agreement with the Consultant to provide introductions to certain industry contacts in connection with our financing efforts.
Should we conclude a transaction through the efforts of the Consultant, the agreement requires us to pay a 1% fee on proceeds received by us. The finder's fee agreement was non-exclusive
and terminable at any time upon 30&nbsp;days notice. On February&nbsp;11, 2011, we terminated the agreement, however, we remain obligated to pay the fees set forth therein should we complete a
transaction within 12&nbsp;months of termination if the Consultant introduced the financing party on our behalf during the term of the agreement. As of March&nbsp;24, 2011, no financing
transactions have been entered into and no payments have been made or are due and owing to the Consultant under the finder's fee agreement. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;15, 2010, we entered into the Advisory Agreement with the Consultant to provide advisory services in connection with our evaluation of pursuing one or more strategic
transactions, such as off-take agreements, forward sales contracts, joint ventures and mineral property acquisitions or dispositions. Should we conclude a strategic transaction through
efforts of the Consultant, the Advisory Agreement requires us to pay a 1.5% fee on debt proceeds received by us and a 5% fee on proceeds received by us through equity financing, asset dispositions or
a joint venture earn-in. In addition, we granted the Consultant a stock option to purchase 100,000 shares of common stock exercisable within five years at an exercise price of $1.00 per
share of common stock, all of which has vested. The stock option had an estimated fair value of $66,760 at grant date. The Advisory Agreement was non-exclusive and terminable at any time
upon 30&nbsp;days notice. We terminated the Advisory Agreement on February&nbsp;11, 2011, however, we remain obligated to pay the fees set forth in the consulting agreement should we complete a
transaction within 12&nbsp;months of termination if the Consultant contacted the financing party on our behalf during the term of the
Advisory Agreement. To date, no strategic transactions have been entered into and no payments, other than the stock option grant, have been made or are due and owing to the Consultant under the
Advisory Agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February&nbsp;11, 2011, we entered into a consulting agreement with the Consultant to provide advice and consultation to us, on a as needed basis, with respect to
(i)&nbsp;marketing and operational strategies, goals and objectives; (ii)&nbsp;implementation and execution of strategic initiatives; and (iii)&nbsp;evaluation of performance and results. In
consideration of Consultant's services we agreed to pay Consultant a $5,000 per month retainer to be offset by a $1,000 per day consulting fee. In addition, we granted the Consultant a stock option to
purchase 200,000 shares of common stock exercisable within ten years at an exercise price of $1.00 per share of common stock, which vests one-half six months after the agreement date and
the balance twelve months after the agreement date. The stock option had a fair value of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;at grant date. The consulting agreement is
non-exclusive and may be terminated at
any time upon 30&nbsp;days notice. As of March&nbsp;29, 2011, the Company has paid $18,422, in addition to the stock option grant, to the Consultant under the consulting agreement. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>132</FONT></P>

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<A NAME="toc_ew75201_3"> </A>
<BR></FONT><FONT SIZE=2><B>  DESCRIPTION OF CAPITAL STOCK    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of our common stock and preferred stock and is qualified in its entirety by the provisions of our Articles
of Incorporation and Bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part. Our authorized capital stock consists of 200,000,000 shares of common stock,
par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. No other class or series of capital stock is currently authorized under our Articles of Incorporation.
As of March&nbsp;24, 2011, 58,204,141 shares of common stock are outstanding, 6,291,666 shares of common stock are issuable upon exercise of outstanding options and 3,051,744 shares of common stock
are issuable upon exercise of outstanding warrants. As of March&nbsp;24, no shares of preferred stock are outstanding. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Common Stock  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of common stock are entitled to cast one vote for each share held of record on all matters submitted to a vote of the
stockholders, including the election of directors. Cumulative voting for directors is not permitted. Accordingly, the holders of a majority of the
shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they so choose. Subject to preferences that may be applicable to any then
outstanding preferred stock of the Company, holders of common stock are entitled to receive, on a pro rata basis, dividends and distributions, if any, that the Board of Directors may declare out of
legally available funds. Any dividends declared on the common stock will not be cumulative. Upon our liquidation, dissolution or winding up, holders of common stock will be entitled to share equally
and ratably in any assets remaining after the payment of all debt and other liabilities, subject to the prior rights, if any, of holders of any outstanding shares of preferred stock. In the event of a
merger or consolidation, all holders of common stock will be entitled to receive the same per share consideration. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
holders of our common stock do not have any preemptive, cumulative voting, subscription, conversion, redemption or sinking fund rights. The absence of preemptive rights could result
in a dilution of the interest of existing stockholders should additional shares of common stock be issued. The common stock is not subject to future calls or assessments by us. Except as otherwise
required by law, holders of the common stock are not entitled to vote on any amendment or certificate of designation relating to the terms of any series of preferred stock if the holders of the
affected series are entitled to vote on such amendment or certificate of designation under our Articles of Incorporation. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of March&nbsp;24, 2011, there is no public market for our common stock and we have 195 stockholders of record of our common stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
our Articles of Incorporation, the Board of Directors has the authority, without further action by our stockholders, and within the limits set forth in the Nevada Corporations Act,
to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>designate in whole or in part, the powers, preferences, limitations, and relative rights, of any class of capital stock
before the issuance of any shares of that class;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>create one or more series within a class of capital stock, fix the number of shares of each such series, and designate, in
whole or part, the powers, preferences, limitations, and relative rights of such series, all before the issuance of any shares of that series;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>alter or revoke the powers, preferences, limitations, and relative rights granted to or imposed upon any wholly unissued
class or series of capital stock;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>increase or decrease the number of shares constituting any series of capital stock, the number of shares of which was
originally fixed by the Board of Directors, at any time; </FONT></DD></DL>
</UL>
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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>determine the dividend rate on the shares of any class or series of capital stock, whether dividends will be cumulative,
and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that class or series of capital stock;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>determine whether that class or series of capital stock will have voting rights, in addition to the voting rights provided
by law, and, if so, the terms of such voting rights;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>determine whether that class or series of capital stock will have conversion privileges and, if so, the terms and
conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>determine whether or not the shares of that class or series of capital stock will be redeemable and, if so, the terms and
conditions of such redemption, including the date or dates upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>determine whether that class or series of capital stock will have any sinking fund rights and, if so, the terms and amount
of such sinking fund rights;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>determine the rights of the shares of that class or series of capital stock in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that class or series of capital stock; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>determine any other relative rights, preferences and limitations of that class or series. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
the Board of Directors has the power to establish the preferences, powers and rights of the shares of any additional series of capital stock, including preferred stock, it may
afford holders of any such capital stock preferences, powers and rights, including voting and dividend rights, senior to the rights of holders of any series of common stock, which could adversely
affect the holders of such common stock and could discourage a takeover of us even if a change of control of our company would be beneficial to the interests of our stockholders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Preferred Stock  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our Articles of Incorporation, the Board of Directors has the authority, without further action by our stockholders, to issue up
to 10,000,000 shares of preferred stock in one or more series and to establish the preferences, powers and rights of such series of preferred stock as described above. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Warrants  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;24, 2011, there are two outstanding warrants to purchase an aggregate of 3,051,744 shares of our common stock at an
exercise price of the lesser of (i)&nbsp;$1.75 per share, and (ii)&nbsp;the lowest price of any shares of common stock issued in connection with any equity capital raising undertaken by the
Company, which are held by RMBAH (the "Warrants"). The exercise period of each Warrant commenced on the date of issuance and expires four years after such date. One warrant, which represents 1,428,571
shares, expires on April&nbsp;4, 2014 and the other warrant, which represents 1,623,173 shares, expires on April&nbsp;11, 2014. The Company is also obligated under the Senior Debt Facility to
issue such additional warrants to purchase up to a maximum of 4,262,541 additional shares of our common stock as is necessary for RMBAH to own 5%, calculated on a partially diluted basis, of our
issued and outstanding common stock on the same terms as the Warrants (the "Additional
Warrant Obligation"). Pursuant to the Additional Warrant Obligation, we expect to issue an additional warrant to purchase approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock (the "IPO Warrant") as a
result of this offering. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, we expect to issue warrants to the underwriters to purchase an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock in connection with this offering,
which equals an
aggregate of 5% of the shares </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>134</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>of
common stock sold in this offering (assuming the underwriters do not exercise the over-allotment option). The warrants will have an exercise price equal to 120% of the offering price for the shares
of common stock. The warrants are exercisable commencing&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;after the effective date of the registration statement related to this offering and
will be exercisable for five years
thereafter. The warrants are not redeemable by us and are subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA. See the section of this prospectus entitled
"Underwriting&#151;Underwriters' Warrants" for a more detailed discussion of these warrants. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Registration Rights  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Warrants we agreed to use our best efforts to file&nbsp;a registration statement on Form&nbsp;S-1 or
other available form to register all securities which are issuable upon exercise of the Warrants concurrently with any initial public offering of our common stock and to use our best efforts to cause
such registration statement to become effective within six months from the date on which such registration statement is filed. We must also register any such securities under any applicable securities
or "blue sky" laws of each state of the United States which RMBAH reasonably requests. The securities which are issuable upon exercise of any additional warrants issued to RMBAH pursuant to the
Additional Warrant Obligation, including the IPO Warrant, will also have the same registration rights. After these shares are registered, they will be freely tradable without restriction under the
Securities Act. We have agreed with RMBAH to file&nbsp;a separate Form&nbsp;S-1 registration statement on or about&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to register the shares
underlying the Warrants and
the IPO Warrant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Anti-Takeover Effect of Our Charter and Bylaw Provisions and Nevada Law  </B></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><I> Articles of Incorporation and Bylaws.  </I></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Incorporation and Bylaws have provisions that could discourage a takeover of us even if a change of control of the
Company would be beneficial to the interests of our stockholders. Our Articles of Incorporation allows our directors to issue preferred stock as described above that could impede the success of any
attempt to change our control. Furthermore, our stockholders do not have cumulative voting rights. As a result, our stockholders holding a majority of shares of common stock outstanding will be able
to elect all of our directors. Our Bylaws provide that only our Board of Directors, Chairman or President, or as otherwise provided by the Nevada Corporations Act, may call a special meeting of
stockholders. Section&nbsp;78.310 of the Nevada Corporations Act does not currently allow stockholders to call special meetings. Our Bylaws also include advance notice provisions that require
stockholders to provide at least 120&nbsp;days advance notice to nominate directors at an annual meeting and to include in any such notice certain specified information, including all information
about the director nominee required under the Exchange Act. These provisions may make it more difficult for our existing stockholders to replace our Board of Directors, as well as another party to
obtain control of us by replacing our Board of Directors. Such provisions may also have the effect of preventing changes in our management, since our Board of Directors has the power to retain and
discharge officers. </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2><I> Nevada Laws.  </I></FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The "acquisition of controlling interest" provisions of Sections&nbsp;78.378 to 78.3793, inclusive, of the Nevada Corporations Act
provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a Nevada corporation that does business in Nevada and has 200 or more stockholders of record,
at least 100 of whom have addresses in Nevada appearing on the stock ledger of the corporation, in the secondary public or private market may be denied voting rights with respect to the acquired
shares, unless (i)&nbsp;a majority of the disinterested stockholders of the corporation and a majority of the disinterested stockholders of each class or series of outstanding shares that will be
adversely affected by the acquisition of controlling interest elect to restore such voting rights in whole </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>135</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>or
in part, or (ii)&nbsp;the Articles of Incorporation or Bylaws of the corporation provide that the "acquisition of controlling interest" provisions of the Nevada Corporations Act do not apply to
the corporation. Our Articles of Incorporation provides that we are not to be governed by or subject to the "acquisition of controlling interest" provisions of the Nevada Corporations Act. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
completion of this offering, we will be subject to the "Combination with Interested Shareholders" provisions of Sections&nbsp;78.411 to 78.444, inclusive, of the Nevada
Corporations Act that restrict the ability
of a resident domestic corporation to engage in any combination with an interested stockholder for three years after the date the stockholder became an interested stockholder, unless the combination
or the purchase of shares by the interested stockholder that caused such stockholder to become an interested stockholder is approved by the Board of Directors of the resident domestic corporation
before the date the person became an interested stockholder. If the combination was not previously approved, the interested stockholder may effect a combination after the three-year period
only if such stockholder receives approval from a majority of the disinterested shares or the offer meets various fair price criteria. For purposes of the foregoing provisions, "resident domestic
corporation" means a Nevada corporation that has 200 or more stockholders and "interested stockholder" generally means the beneficial owner, directly or indirectly, of 10% or more of the voting power
of then outstanding shares of the resident domestic corporation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Limitations on Liability and Indemnification  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See "</FONT><FONT SIZE=2><I>Indemnification Matters and Disclosure of SEC Position on Indemnification for Securities Act
Liabilities</I></FONT><FONT SIZE=2>" on page&nbsp;148. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market Listing  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will apply to have our common stock listed on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under the symbol
"&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;". We will also apply to have our
common stock listed on TSX under the symbol "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;". </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>136</FONT></P>

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<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=2><B>  UNDERWRITING AND PLAN OF DISTRIBUTION    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms and subject to the conditions in the underwriting agreement,
dated&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011, by and among the Company,
Roth Capital Partners,&nbsp;LLC, which we refer to as Roth, acting as sole book-runner and lead co-underwriter, and Cormark Securities&nbsp;Inc., together with its U.S.
affiliate Cormark Securities (U.S.A.) Limited, which we collectively refer to as Cormark, acting as lead co-underwriter, pursuant to which Roth and Cormark, collectively the underwriters,
have severally and not jointly agreed to purchase from us, and we have agreed to sell to the underwriters, on a firm commitment basis, the number of shares of common stock provided below opposite
their name, at the public offering price, less the underwriting discount set forth on the cover page of this prospectus. </FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of Shares </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Roth Capital Partners,&nbsp;LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cormark Securities&nbsp;Inc.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cormark Securities (U.S.A) Limited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
offering is being made concurrently in the United States and in various Provinces in Canada. Roth and Cormark Securities (U.S.A.) Limited will serve as the underwriters in the United
States and Cormark Securities&nbsp;Inc. will serve as the underwriter in Canada. </FONT><FONT SIZE=2><B>Subject to applicable law, the underwriters or their affiliates may offer the shares of
common stock for sale outside of the United States or Canada.</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the
obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel
and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters
are not required to take or pay for the shares covered by the underwriters' over-allotment option described below. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to
certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the underwriter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Over-Allotment Option  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted to the underwriters an option, exercisable for 30&nbsp;days from the date of this prospectus, to purchase up to 15%
additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option
solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. If the underwriters exercise all
or part of this option, each underwriter will purchase the number of additional shares of common stock, approximately proportionate to its initial commitment amount reflected in the above table,
covered by the option at the public offering price that appears on the cover page of this prospectus, less the underwriting discounts and commissions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Commission and Expenses  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The underwriters have advised us that they propose to offer the shares to the public at the public offering price set forth on the
cover page of this prospectus and to certain dealers at that price less a concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. The underwriters may allow,
and certain dealers may reallow, a
discount from the concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to certain brokers and </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>137</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>dealers.
After this offering, the public offering price, concession and reallowance to dealers may be changed by the underwriters. No such change shall change the amount of proceeds to be received by
us as set forth on the cover page of this prospectus. The shares are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any
order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both
no exercise and full exercise of the underwriters' option to purchase additional shares of common stock to cover over-allotments. </FONT></P>
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<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
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<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Per Share </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>No Exercise </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Full Exercise </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Public offering price</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting discounts and commissions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds, before expenses, to us</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
estimated offering expenses payable by us in connection with this offering, exclusive of the underwriting discounts and commissions, are approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. In addition,
we have agreed to reimburse the underwriters for certain out-of-pocket expenses incurred by them with respect to this offering. In the event the offering is not consummated, we
have agreed to reimburse the underwriters for certain out-of-pocket expenses incurred by them. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have agreed to sell the shares at the offering price less the underwriting discount set forth on the cover page of this prospectus. We cannot be sure that the offering price will
correspond to the price at which our common stock will trade following this offering. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Underwriters' Warrants  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have also agreed to issue to the underwriters warrants to purchase the number of shares of common stock equal to an aggregate of 5%
of the shares of common stock sold in this offering (including any shares sold under the over-allotment option). Assuming the underwriters do not exercise the over-allotment
option, we will issue to the underwriters warrants to purchase a total of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock. The total dollar value of the warrants is
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The warrants will have an
exercise price equal to 120% of the offering price for the shares of common stock. The warrants are exercisable commencing&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;after the effective
date of the registration statement
related to this offering, and will be exercisable for five years thereafter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
warrants are not redeemable by us. The warrants and the underlying shares of common stock have been deemed compensation by FINRA and are therefore subject to a 180-day
lock-up pursuant to Rule&nbsp;5110(g)(1) of FINRA. The underwriters (or permitted assignees under the Rule) may not sell, transfer, assign, pledge or hypothecate the warrants or the
securities underlying the warrants, nor will they engage in any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the warrants or the
underlying securities for a period of 180&nbsp;days from the date of this prospectus. The warrants may be exercised on a cashless basis. The warrants will provide for adjustment in the number and
price of such warrants (and the shares of common stock underlying such warrants) in the event of recapitalization, merger or other structural transaction to prevent mechanical dilution. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Exchange Listing  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are applying to list our common stock on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under the trading symbol
"&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;." We are also applying to list
our common stock on TSX under the trading symbol "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>138</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Lock-Up Agreements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We, our executive officers, directors and certain of our significant stockholders have agreed to a 180-day
"lock-up" from the date of this prospectus relating to shares of our common stock or any securities convertible into or exchangeable for our common stock. This means that, for a period of
180&nbsp;days following the date of this prospectus, we and such persons may not offer, sell, purchase, pledge or otherwise transfer or dispose of, directly or indirectly, these securities without
the prior written consent of the underwriters, subject to certain exceptions. The lock-up period described in the preceding sentence will be extended if (1)&nbsp;during the period that
begins on the date that is 15 calendar days plus three business days before the last day of the lock-up period and ends on the last day of the lock-up period, we issue an
earnings release or material news or a material event relating to us occurs; or (2)&nbsp;prior to the expiration of the initial lock-up period, we announce that we will release earnings
results during the 16- day period beginning on the last day of the lock-up period, in which case the lock-up period automatically will be extended until the
expiration of the date that is 15 calendar days plus three business days after the date on which the issuance of the earnings release or the material news or material event occurs. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Stabilization  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A
short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close
out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the
underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in
excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely
affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize
the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the
common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Indemnification  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the underwriting agreement, we have agreed to indemnify the underwriters against certain liabilities, including liabilities
under the Securities Act, and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments which the underwriters or other
indemnified parties may be required to make in respect of any such liabilities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Electronic Distribution  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus may be made available in electronic format on Internet sites or through other online services maintained by the
underwriters or its affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. Other than this prospectus in electronic format, any
information on the underwriters' or their affiliates' websites and any information contained in any other website maintained by the underwriters or any affiliate of the underwriters is </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>139</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>not
part of this prospectus or the registration statement of which this prospectus forms&nbsp;a part, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by
investors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Pricing of the Offering  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this offering, there has been no established public market for our common stock. The initial public offering price was
determined following arm's length negotiations between us and the underwriters. Among the factors considered in determining the initial public offering price in addition to prevailing market
conditions, were our future prospects and those of our industry in general, uranium mineralization on our uranium properties and market prices of securities and certain financial and operating
information of companies engaged in activities similar to ours. There can be no assurance that the initial public offering price of the common stock will correspond to the price at which the common
stock will trade in the public market subsequent to this offering or that an active public market for the common stock will develop and continue after this offering. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Financial Advisors  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Financial Advisory Agreement that we entered into in January 2011 with Primary, Primary will advise us with respect to
the issuance of the securities offered in this offering in exchange for a fee in the amount of 1% of the gross proceeds received by the Company upon completion of this offering.
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;will be payable to Primary assuming no exercise and full exercise of the underwriters' option to purchase additional shares of common stock
to cover over-allotments,
respectively. The fees payable to Primary are for financial advice as Primary is not an underwriter and is not participating in this offering. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>140</FONT></P>

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<A NAME="toc_ex75201_2"> </A>
<BR></FONT><FONT SIZE=2><B>  SHARES AVAILABLE FOR FUTURE SALE    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this offering, there has been no public market for our common stock. As of March&nbsp;24, 2011, there are approximately 195
holders of our common stock. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing
from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales
of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to
raise equity capital in the future. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
on the number of shares outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011, upon the completion of this offering,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock will be outstanding, assuming no
exercise of the underwriters' overallotment option, no exercise of outstanding warrants and no exercise of outstanding options. Of the outstanding shares, all of the shares sold in this offering will
be freely tradable, except that any shares held by our affiliates, as that term is defined in Rule&nbsp;144 under the Securities Act, may only be sold in compliance with the limitations described
below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
remaining&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding after this offering will be restricted as a result of securities laws or lock-up agreements as
described
below. Following the expiration of the lock-up period, all shares will be eligible for resale in compliance with Rule&nbsp;144 or Rule&nbsp;701. "Restricted securities" as defined
under Rule&nbsp;144 were issued and sold by us in reliance on exemptions from the registration requirements of the Securities Act. These shares may be sold in the
public market only if registered pursuant to an exemption from registration, such as Rule&nbsp;144 or Rule&nbsp;701 under the Securities Act. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Rule&nbsp;144  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell
their securities provided that (i)&nbsp;such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90&nbsp;days preceding, a sale and (ii)&nbsp;we are
subject to the Exchange Act periodic reporting requirements for at least 90&nbsp;days before the sale. Persons who have beneficially owned restricted shares of our common stock for at least six
months but who are our affiliates at the time of, or any time during the 90&nbsp;days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell
within any three-month period only a number of securities that does not exceed the greater of either of the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>1% of the number of shares of our common stock then outstanding, which will equal
approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
immediately after this offering, based on the number of shares of common stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the average weekly trading volume of our common stock on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;during the
four calendar weeks preceding the
filing of a notice on Form&nbsp;144 with respect to the sale; </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>provided,
in each case, that we are subject to the Exchange Act periodic reporting requirements for at least 90&nbsp;days before the sale. Such sales both by affiliates and by
non-affiliates must also comply with the manner of sale, current public information and notice provisions of Rule&nbsp;144. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Rule&nbsp;701  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rule&nbsp;701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon
Rule&nbsp;144 but without compliance with certain restrictions of Rule&nbsp;144, including the holding period requirement. Most of our employees, executive officers or directors who purchased
shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule&nbsp;701, but all holders of Rule&nbsp;701 shares are required to wait until
90&nbsp;days after the date of this </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>prospectus
before selling their shares. However, substantially all Rule&nbsp;701 shares are subject to lock-up agreements as described below and under the section entitled
"</FONT><FONT SIZE=2><I>Underwriting</I></FONT><FONT SIZE=2>" included elsewhere in this prospectus and will become eligible for sale upon the expiration of the restrictions set forth in those
agreements. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Lock-Up Agreements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our directors and officers and certain of our significant stockholders have signed lock-up agreements under which
they have agreed not to sell, transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common
stock without the prior written consent of the underwriters for a period of 180&nbsp;days, subject to a possible extension under certain circumstances, after the date of this prospectus. The holders
of approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding shares of common stock have executed lock-up agreements. These agreements are described in the section of
this prospectus entitled
"</FONT><FONT SIZE=2><I>Underwriting</I></FONT><FONT SIZE=2>." </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Registration Rights  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 3,051,744 shares of common stock underlying the Warrants and any shares of common stock, up to a maximum of 4,262,541, underlying
any additional warrants issued pursuant to the Additional Warrant Obligation, including the IPO Warrant, are entitled to registration when this registration statement become effective. For a
description of these registration rights, please see "</FONT><FONT SIZE=2><I>Description of Capital Stock&#151;Registration Rights</I></FONT><FONT SIZE=2>." We have agreed to file&nbsp;a
Form&nbsp;S-1 registration statement under the Securities Act on or about&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to register the shares of our common stock underlying the Warrants
and any additional warrants
issued pursuant to
the Additional Warrant Obligation, including the IPO Warrant, and, upon such registration, such shares will be eligible for sale in the public markets without restriction under the Securities Act. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Stock Options  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;24, 2011, 6,291,666 shares of common stock are subject to outstanding options. All such options were issued under
our 2006 Plan, 2007 Plan or 2011 Plan. As soon as practicable after the completion of this offering, we intend to file&nbsp;a Form&nbsp;S-8 registration statement under the Securities
Act to register shares of our common stock subject to options outstanding or reserved for issuance under our 2006 Plan, 2007 Plan and 2011 Plan. This registration statement will become effective
immediately upon filing, and shares covered by this registration statement will thereupon be eligible for sale in the public markets, subject to vesting restrictions, the lock-up
agreements described above and Rule&nbsp;144 limitations applicable to affiliates. For a more complete discussion of our stock plans, see the sections of this prospectus entitled
"</FONT><FONT SIZE=2><I>Executive Compensation&#151;Equity-Based Awards</I></FONT><FONT SIZE=2>" and "</FONT><FONT SIZE=2><I>Executive Compensation&#151;Stock Option
Plans</I></FONT><FONT SIZE=2>." </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Dividends  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a discussion of the company's history of dividends and dividend policy see the section of this prospectus entitled
"</FONT><FONT SIZE=2><I>Dividend Policy</I></FONT><FONT SIZE=2>." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>142</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B> Securities Authorized for Issuance Under Equity Compensation Plans  </B></FONT></P>
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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of securities to be issued<BR>
upon exercise of outstanding<BR>
options, warrants and rights<BR>
(a) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-average exercise price<BR>
of outstanding options, warrants<BR>
and rights<BR>
(b) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of securities remaining<BR>
available for future issuance<BR>
under equity compensation plans<BR>
(excluding securities reflected in<BR>
column (a)) as of March&nbsp;24, 2011<BR>
(c) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity compensation plans approved by security holders</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,891,666</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.73</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>158,334</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity compensation plans not approved by security holders</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>400,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1.00</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>600,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,291,666</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.75</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>758,334</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
addition to the options to purchase 5,891,666 shares of common stock that the Company granted under the 2006 Plan and 2007 Plan, the Company has granted
250,000 shares of common stock as unrestricted stock awards under the 2006 Plan and 2007 Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>This
number assumes that 1,000,000 shares of common stock are authorized under the 2011 Plan. The 2011 Plan authorizes the greater of (A)&nbsp;1,000,000
shares of our common stock or (B)&nbsp;the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number of shares authorized under the 2006 Plan
and 2007 Plan equals 10% of the total issued and outstanding shares of common stock of the Company. As of March&nbsp;24, 2011, 1,000,000 shares of common stock were authorized under the 2011 Plan. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a discussion of our equity incentive plans, see the sections of this prospectus entitled "</FONT><FONT SIZE=2><I>Executive
Compensation&#151;Equity-Based Awards</I></FONT><FONT SIZE=2>" and "</FONT><FONT SIZE=2><I>Executive Compensation&#151;Stock Option Plans</I></FONT><FONT SIZE=2>." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>143</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ey75201_material_united_states_federal__mat02986"> </A>
<A NAME="toc_ey75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  MATERIAL UNITED STATES FEDERAL INCOME TAX<BR>  CONSIDERATIONS FOR NON-U.S. HOLDERS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the material United States federal income tax consequences to non-U.S. holders (defined
below) of the ownership and disposition of the shares of common stock purchased in the offering. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
used herein, "non-U.S. holders" are beneficial owners of the shares of our common stock purchased in the offering, other than partnerships, that are not U.S. holders.
"U.S. holders" are beneficial owners of the shares of our common stock purchased in the offering who, or that are, for United States federal income tax purposes, (1)&nbsp;individual citizens or
residents of the United States, (including alien residents who are lawful permanent residents of the United States or meet the "substantial presence" test under Section&nbsp;7701(b) of the of the
Internal Revenue Code of 1986, as amended (the "Code"), (2)&nbsp;corporations (or other entities treated as corporations for United States federal income tax purposes), created or organized in, or
under the laws of, the United States, any state thereof or the District of Columbia, (3)&nbsp;estates, the income of which is subject to United States federal income taxation regardless of its
source, or (4)&nbsp;trusts if (A)&nbsp;a court within the United States is able to exercise primary supervision over the administration of the trust and (B)&nbsp;one or more United States
persons have the authority to control all substantial decisions of the trust. In addition, certain
trusts in existence on August&nbsp;20, 1996 and treated as United States persons prior to such date may also be treated as U.S. holders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a partnership (including for this purpose any entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of the shares of our common stock
purchased in the offering, the treatment of a partner in the partnership will generally depend upon the status of the partner and upon the activities of the partnership. Holders of shares of our
common stock that are partnerships, and partners in such partnerships should consult their tax advisors about the United States federal income tax consequences of owning and disposing of our common
stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
summary does not describe all of the United States federal income tax consequences that may be relevant to a holder in light of its particular circumstances. For example, it does
not deal with special classes of holders, such as banks, thrifts, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies or
tax-exempt investors. This summary also does not address the tax consequences to (i)&nbsp;persons that have a functional currency other than the U.S. dollar, (ii)&nbsp;certain U.S.
expatriates or (iii)&nbsp;stockholders, shareholders or beneficiaries of a holder of such shares of common stock, a "controlled foreign corporation," a "foreign personal holding company," a "passive
foreign investment company," a person who acquired shares of our common stock in a compensatory transaction, a trader in securities that has elected the mark-to-market method
of accounting for its securities, or an entity taxable as a partnership for U.S. federal income tax purposes or other pass-through entity or an owner thereof. This summary is limited to
holders that hold our common stock as a capital asset within the meaning of Section&nbsp;1221 of the Code. It also does not discuss the shares of our common stock purchased in the offering held as
part of a hedge, straddle, conversion, "synthetic security" or other integrated transaction. Further, it does not include any description of any alternative minimum tax consequences or the tax laws of
any state or local government or of any foreign government that may be applicable to such shares of common stock. This summary is based upon the Code, United States Treasury Regulations, Internal
Revenue Service, and Internal Revenue Service ("IRS") rulings and pronouncements and judicial decisions in effect as of the date of this prospectus, any of which may be subsequently changed, possibly
retroactively, or interpreted differently by the IRS, so as to result in United States federal income tax consequences different from those discussed below. There can be no assurance that the IRS will
not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, any rulings from the IRS with respect to the United States federal income tax
consequences of the ownership and disposition of such shares of common stock. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>144</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PERSONS
CONSIDERING ACQUIRING OUR COMMON STOCK SHOULD CONSULT WITH THEIR INDEPENDENT TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME, FRANCHISE, PERSONAL PROPERTY,
ESTATE, GIFT, TRANSFER AND ANY OTHER TAX CONSEQUENCES (INCLUDING ANY ASSOCIATED REPORTING REQUIREMENTS) OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR
COMMON STOCK, INCLUDING THE EFFECT OF ANY TREATIES ON THE FOREGOING OR OTHERWISE. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Our Common Stock  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rules governing United States federal income taxation of the ownership and disposition, by a non-U.S. holder of our
common stock are complex and no attempt is made herein to provide more than a summary of such rules. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Distributions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If distributions are paid on shares of our common stock, the distributions will constitute dividends for U.S. federal income tax
purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent a distribution exceeds our current or
accumulated earnings and profits, it will constitute a return of capital that is applied against and reduces, but not below zero, the adjusted tax basis of your shares in our common stock. Any
remainder will constitute gain from the sale or exchange of the common stock, the treatment of which is described below under the section entitled "</FONT><FONT SIZE=2><I>&#151;Sale or
Exchange of Common Stock</I></FONT><FONT SIZE=2>." Dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at the rate of 30% or such lower
rate as may be specified by an applicable income tax treaty, the benefits of which may be available to a non-U.S. holder. If the dividend is effectively connected with the
non-U.S. holder's conduct of a trade or business in the United States, and, if an applicable tax treaty requires, is also attributable to a U.S. permanent establishment maintained by such
non-U.S. holder, the dividend will not be subject to any withholding tax, provided certain certification requirements are satisfied (as described below), but will be subject to U.S.
federal income tax imposed on net income on the same basis that applies to U.S. persons generally. A corporate non-U.S. holder under certain circumstances also may be subject to an
additional branch profits tax equal to 30%, or such lower rate as may be specified by an applicable income tax treaty, the benefits of which may be available to a non-U.S. holder, on a
portion of its effectively connected earnings and profits for the taxable year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-U.S.
holders should consult their own tax advisors regarding the potential applicability of any income tax treaty in their particular circumstances. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
claim the benefit of a tax treaty or to claim exemption from withholding because the income is effectively connected with the conduct of a trade or business in the United States, a
non-U.S. holder must provide a properly executed IRS Form&nbsp;W-8BEN for
treaty benefits or Form&nbsp;W-8ECI for effectively connected income, or such successor forms as the IRS designates, prior to the payment of dividends. These forms must be periodically
updated. Non-U.S. holders generally may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Sale or Exchange of Common Stock  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A non-U.S. holder generally will not be subject to United States federal income tax and, in certain cases, withholding tax
on the sale, exchange or other disposition of our common stock received in the offering unless (1)&nbsp;the gain is effectively connected with a United States trade or business of the
non-U.S. holder and, if an applicable tax treaty requires, is also attributable to a U.S. permanent establishment maintained by such non-U.S. holder, (2)&nbsp;in the case of
a non-U.S. holder who is an individual, such holder is present in the United States for a period or periods aggregating 183&nbsp;days or </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>145</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>more
during the taxable year of the disposition, and either (A)&nbsp;such holder has a "tax home" in the United States or (B)&nbsp;income from such disposition is attributable to an office or
other fixed place of business maintained by such holder in the United States, or (3)&nbsp;Neutron Energy is or has been a "U.S. real property holding corporation," or "USRPHC," as defined for United
States federal income tax purposes. Generally, a U.S. corporation is a USRPHC if at least 50% of the value of the real property and certain other assets consists of "U.S. real property interests." We
believe that we currently are a USRPHC and that there is a substantial likelihood that we will continue to be a USRPHC. Notwithstanding the foregoing, so long as our common stock is regularly traded
on an established securities market, and, if applicable, certain volume trading thresholds are met, as determined under applicable Treasury regulations, non-U.S. holders who have never
beneficially owned more than 5% of our common stock generally will not be subject to U.S. federal income tax on any gain realized on the sale, exchange or redemption of common stock solely because we
are or have been a USRPHC. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a non-U.S. holder falls under clause&nbsp;(1) or (3)&nbsp;above, such holder generally will be taxed on the net gain derived from a sale in the same manner as U.S.
persons generally, and, in the case of (3)&nbsp;above, such holder generally will be subject to a 10% withholding tax applied to the gross proceeds received. Any amount withheld as discussed above
may be applied as a credit against the non-U.S. holder's substantive United States federal income tax liability. If an individual-non-U.S. holder falls under
clause&nbsp;(2) above, such individual generally will be subject to a flat 30% tax (or such lower rate as may be specified by an applicable income tax treaty) on the gain derived from a sale, which
may be offset by certain United States capital losses (notwithstanding the fact that such individual is not considered a resident of the United States). Individual non-U.S. holders who
have spent (or expect to spend) 183&nbsp;days or more in the United States in the taxable year in which they contemplate a sale of common stock are urged to consult their tax advisors as to the tax
consequences of such sale. In addition, if a corporate non-U.S. holder falls under clause&nbsp;(1) above, it may be subject to an additional branch
profits tax on such effectively connected income at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-U.S.
holders should consult their own tax advisors regarding the potential applicability of any income tax treaty in their particular circumstances. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Information Reporting and Backup Withholding Tax  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information reporting and backup withholding (currently at a 28% rate) may apply to dividends paid with respect to our common stock and
to proceeds from the sale or other disposition of our common stock. In certain circumstances, non-U.S. holders may avoid information reporting and backup withholding if they certify under
penalties of perjury as to their status as non-U.S. holders or otherwise establish an exemption and certain other requirements are met. Non-U.S. holders should consult their
own tax advisors regarding the application of the information reporting and backup withholding rules to them. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Backup
withholding is not an additional tax. Amounts withheld under the backup withholding rules from a payment to a non-U.S. holder generally may be refunded or credited
against the non-U.S. holder's U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Effects of Certain New Legislation  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recently enacted legislation may impose withholding taxes on certain types of payments made to "foreign financial institutions" and
certain other non-U.S. entities. Under this legislation, the failure to comply with additional certification, information reporting and other specified requirements could result in
withholding tax being imposed on payments of dividends and sales proceeds to U.S. holders that own the stock through foreign accounts or foreign intermediaries and to certain Non-U.S.
holders. </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>The
legislation imposes a 30% withholding tax on dividends on, and gross proceeds from the sale or other disposition of, our common stock paid to a foreign financial institution or to a foreign
nonfinancial entity, unless (i)&nbsp;the foreign financial institution undertakes certain diligence and reporting obligations or (ii)&nbsp;the foreign non-financial entity either
certifies it does not have any
substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. In addition, if the payee is a foreign financial institution, it generally must enter into an
agreement with the U.S. Treasury Department that requires, among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report
certain information about such accounts, and withhold 30% on payments to certain other account holders. This legislation applies to payments made after December&nbsp;31, 2012. Holders should consult
their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of our common stock. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE
UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO ALL TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS, AND THE POSSIBLE EFFECTS OF ANY CHANGES THEREIN. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>147</FONT></P>

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<A NAME="toc_ey75201_2"> </A>
<BR></FONT><FONT SIZE=2><B>  LEGAL MATTERS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the shares of common stock offered by this prospectus will be passed upon for us by Hogan Lovells US&nbsp;LLP,
Denver, Colorado. Certain matters regarding Canadian law will be passed upon for us by Fraser Milner Casgrain&nbsp;LLP. Dorsey&nbsp;&amp; Whitney&nbsp;LLP, Salt Lake City, Utah, is acting as counsel
to the underwriters. Certain matters regarding Canadian law will be passed upon for the underwriters by Wildeboer Dellelce&nbsp;LLP. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ey75201_experts"> </A>
<A NAME="toc_ey75201_3"> </A>
<BR></FONT><FONT SIZE=2><B>  EXPERTS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of Neutron Energy,&nbsp;Inc. as of December&nbsp;31, 2010 and 2009, and for each of the years
in the three year period ended December&nbsp;31, 2010 and for the period from inception (March&nbsp;25, 2005) through December&nbsp;31, 2010 included herein and in the registration statement on
From S-1 have been audited by Mayer Hoffman McCann P.C., an independent registered public accounting firm, as set forth in their report appearing
elsewhere herein, and are included in reliance upon such report given on the authority of said firm as experts in accounting and auditing. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information
related to our properties that constitute the Cibola Project, Ambrosia Lake Project and Edgemont Project in this prospectus have been derived from the following independent
technical reports, each of which were completed by Broad Oak Associates, an independent engineer, in accordance with the provisions of NI&nbsp;43-101: (i)&nbsp;the Technical Report on
the Uranium Resources at Ambrosia Lake Uranium Project, McKinley County, New Mexico, USA, dated January&nbsp;18, 2011; (ii)&nbsp;the Technical Report on the Uranium Resources at The Cibola
Project, Cibola, McKinley and Sandoval Counties, New Mexico, USA, dated January&nbsp;14, 2011; and (iii)&nbsp;the Technical Report on the Uranium Resources on The Edgemont Uranium Project, Fall
River County, South Dakota, USA, dated January&nbsp;18, 2011, each completed by Broad Oak Associates, an independent engineer. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ey75201_transfer_agent_and_registrar"> </A>
<A NAME="toc_ey75201_4"> </A>
<BR></FONT><FONT SIZE=2><B>  TRANSFER AGENT AND REGISTRAR    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The transfer agent and registrar for our common stock is Computershare. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ey75201_indemnification_matters_and_di__ind04234"> </A>
<A NAME="toc_ey75201_5"> </A>
<BR></FONT><FONT SIZE=2><B>  INDEMNIFICATION MATTERS AND DISCLOSURE OF SEC POSITION ON<BR>  INDEMNIFICATION FOR SECURITIES ACT LIABILITIES    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Incorporation contain a provision which eliminates the personal monetary liability of our officers and directors to the
extent allowed under Nevada law. Under the Nevada Corporations Act, our directors or officers are not individually liable, subject to certain exceptions, to the Corporation or our stockholders or
creditors for any damages as a result of any act or failure to act in their capacity as a director or officer unless it is proven that such conduct constituted a breach of their fiduciary duties as a
director or officer and that the breach involved intentional misconduct, fraud or a knowing violation of law. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our Articles of Incorporation and Bylaws provide that we will indemnify our directors, officers, employees and other agents to the fullest extent permitted by Nevada law,
provided the director, officer, employee or other agent acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. However, no indemnification will be made in respect of any claim, issue or matter
as to which any such person is adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought determines upon application that such person
is fairly and reasonably entitled to indemnity for such expenses. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the authorization in its Bylaws, the Company purchased and maintains liability insurance on behalf of its directors and officers. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>148</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has not entered into indemnification agreements with our directors, officers, employees and other agents, and indemnification for those individuals is limited to the
foregoing disclosure. However, we may in the future enter into agreements to indemnify our directors and executive officers, in addition to the indemnification provided for in our Articles of
Incorporation and Bylaws. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the
foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ey75201_where_you_can_find_additional_information"> </A>
<A NAME="toc_ey75201_6"> </A>
<BR></FONT><FONT SIZE=2><B>  WHERE YOU CAN FIND ADDITIONAL INFORMATION    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed with the SEC a registration statement on Form&nbsp;S-1, including exhibits, schedules and amendments filed
with the registration statement, under the Securities Act with respect to the common stock to be sold in the offering. This prospectus does not contain all of the information contained in the
registration statement. For further information about us and our common stock, we refer you to the registration statement. For additional information, you should refer to the exhibits and schedules
that have been filed with our registration statement on Form&nbsp;S-1. Statements in this prospectus concerning the contents of any contract or any other document are not necessarily
complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to that exhibit. Each statement in this prospectus relating to a contract or document filed
as an exhibit to the registration statement is qualified by the filed exhibit. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
completion of the offering, we will become subject to the reporting and information requirements of the Securities Exchange Act and, as a result, will file periodic and current
reports, proxy statements and other information with the SEC. You may read and copy, at prescribed rates, all or any portion of the registration statement or any other information that we file with
the SEC at the SEC's public reference room at 100&nbsp;F Street, N.E., Washington, D.C. 20549. You may obtain information concerning the operation of the SEC's public reference room by calling the
SEC at
1-800-SEC-0330. Our SEC filings, including the registration statement, will also be available to the public on the SEC's Internet site at </FONT> <FONT SIZE=2><I>http://www.sec.gov</I></FONT><FONT SIZE=2>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
and including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011 (the 25th&nbsp;day after the date of this prospectus), U.S. federal securities laws may require all dealers that effect
transactions in our
common stock, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>149</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ez75201_glossary_of_terms"> </A>
<A NAME="toc_ez75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  GLOSSARY OF TERMS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Assay</B></FONT><FONT SIZE=2>" means to test ores or minerals by chemical or other methods for the purpose of determining the amount of valuable metals contained. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Breccia</B></FONT><FONT SIZE=2>" means rock consisting of fragments, more or less angular, in a matrix of finer-grained material or of cementing material. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Carbonaceous</B></FONT><FONT SIZE=2>" means a rock rich in carbon or coaly material. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Clastic</B></FONT><FONT SIZE=2>" means a sedimentary rock formed from mineral particles (clasts) that were mechanically transported. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Conglomerate</B></FONT><FONT SIZE=2>" means a sedimentary rock that contains rounded particles greater than two millimeters in diameter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Cretaceous</B></FONT><FONT SIZE=2>" means the final period of the Mesozoic era. Covers the time span of approximately 145 to 65&nbsp;million years ago. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Deposit</B></FONT><FONT SIZE=2>" is an informal term for an accumulation of minerals. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Diabase</B></FONT><FONT SIZE=2>" means a fine-grained igneous rock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Dike</B></FONT><FONT SIZE=2>" means a tabular body of igneous rock that was injected into a fissure. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>EIS</B></FONT><FONT SIZE=2>" means Environmental Impact Statement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Facies</B></FONT><FONT SIZE=2>" means </FONT><FONT SIZE=2><B>t</B></FONT><FONT SIZE=2>he characteristics of a rock mass that reflect its depositional environment. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Fault</B></FONT><FONT SIZE=2>" means a fracture in rock along which there has been displacement of the two sides parallel to the fracture. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Fee</B></FONT><FONT SIZE=2>" means deeded, or privately-owned, land. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Feldspathic</B></FONT><FONT SIZE=2>" means a sedimentary rock containing feldspar. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Fluvial</B></FONT><FONT SIZE=2>" means fine to coarse-grained sedimentary rocks such as sandstone or conglomerate produced by stream or river action. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Gamma-ray log</B></FONT><FONT SIZE=2>" means a down-hole geophysical survey used in uranium exploration and development to measure the intensity of
radioactivity and uranium mineralization within a drill hole. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Granite</B></FONT><FONT SIZE=2>" means a coarse-grained igneous rock containing quartz, feldspar and mica. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>HEU</B></FONT><FONT SIZE=2>" means highly enriched uranium. Uranium enriched to an assay of 20% or more. For military application, this enrichment level may exceed 90%. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Humate</B></FONT><FONT SIZE=2>" means an organic compound derived from decayed plant substances. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Jurassic</B></FONT><FONT SIZE=2>" means the second period of the Mesozoic era. Covers the time span of approximately 200&nbsp;million to 145&nbsp;million years ago. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Lease</B></FONT><FONT SIZE=2>" means a contract between a land owner and a tenant for exploration, development and mining purposes. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>LEU</B></FONT><FONT SIZE=2>" means low-enriched uranium. Uranium enriched to an assay of less than 20%. LEU typically has a 3% to 5% uranium assay when used as
fuel for nuclear reactors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Logging</B></FONT><FONT SIZE=2>" means a down-hole geophysical survey which measures the levels of radioactivity and electrical properties of rocks within the
drill hole. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Mesozoic</B></FONT><FONT SIZE=2>" means one of the great divisions or eras of geologic time. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>150</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Mineralization</B></FONT><FONT SIZE=2>" means the concentration of metals within a body of rock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Mineralized material</B></FONT><FONT SIZE=2>" is a mineralized body which has been delineated by appropriately spaced drilling and/or underground sampling to support a
sufficient tonnage and average grade of metal(s). Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors
conclude legal and economic feasibility. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Mining Claim</B></FONT><FONT SIZE=2>" means a statutorily created, possessory mining interest giving its holder the right to prospect, explore for and exploit minerals within
a defined area of land. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>NI&nbsp;43-101</B></FONT><FONT SIZE=2>" refers to a Technical Report prepared in accordance with "National
Instrument&nbsp;43-101&#151;</FONT><FONT SIZE=2><I>Standards of Disclosure for Mineral Projects</I></FONT><FONT SIZE=2> of the Canadian Securities Administrators." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Ore</B></FONT><FONT SIZE=2>" means material containing minerals that can be economically extracted. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Oxidation/reduction</B></FONT><FONT SIZE=2>" means a chemical interface in sandstones where roll front uranium deposits are often formed. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Paleozoic</B></FONT><FONT SIZE=2>" means one of the eras of geologic time between the Precambrian and the Mesozoic eras. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Recovery</B></FONT><FONT SIZE=2>" means that portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Reserves</B></FONT><FONT SIZE=2>" means that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Roll front</B></FONT><FONT SIZE=2>" means a type of uranium deposit that is hosted in sandstone. They are arcuate bodies of uranium mineralization that were formed by the
deposition of uranium carried in ground water at an oxidation-reduction boundary. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Royalty</B></FONT><FONT SIZE=2>" means an amount of money paid to the owner of land or mineral rights, based upon a certain amount or a percentage of mineral production from a
property. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Sampling</B></FONT><FONT SIZE=2>" means selecting a fractional, but representative, part of a mineral deposit for analysis. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Sandstone</B></FONT><FONT SIZE=2>" means sedimentary rock comprised of sand-sized particles of quartz and/or feldspar. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Sediment</B></FONT><FONT SIZE=2>" means solid material settled from suspension in a liquid. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Separative Work Unit (SWU)</B></FONT><FONT SIZE=2>" means a measure of the effort expended in a uranium enrichment plant to separate uranium of a given U-235
content into two components, one having a higher percentage of U-235 and the other a lower concentration. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Syenite</B></FONT><FONT SIZE=2>" means a granular igneous rock composed of feldspar, hornblende, mica and other minerals. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Tailings</B></FONT><FONT SIZE=2>" means material rejected from a mill after most of the valuable minerals have been extracted. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Tertiary</B></FONT><FONT SIZE=2>" means the earlier of the two geologic periods that comprise the Cenozoic era. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>TSX</B></FONT><FONT SIZE=2>" means the Toronto Stock Exchange. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Ton</B></FONT><FONT SIZE=2>" means a short ton (2,000 pounds) and one Ton is equal to 0.907 Tonnes. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Tonne</B></FONT><FONT SIZE=2>" means a metric ton (2,204.6 pounds) and one Tonne is equal to 1.1023 Tons. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>U<SUB>3</SUB>O<SUB>8</SUB></B></FONT><FONT SIZE=2>" means triuranium octaoxide (U<SUB>3</SUB>O<SUB>8</SUB>), an oxide form of uranium that is the most common chemical form
found in nature. U<SUB>3</SUB>O<SUB>8</SUB> is the most common form that uranium is marketed. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Uranium</B></FONT><FONT SIZE=2>" means a heavy gray radioactive metal which, when processed, is used as fuel for nuclear power plants. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>"</FONT><FONT
SIZE=2><B>Waste</B></FONT><FONT SIZE=2>" means rock lacking sufficient grade and/or other characteristics of ore. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>151</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fa75201_index_to_consolidated_financia__ind03147"> </A>
<BR></FONT><FONT SIZE=2><B>  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS<BR>  <BR>    Neutron Energy,&nbsp;Inc. and Subsidiaries    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
<A NAME="FA75201_TOC"></A> </FONT></P>
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<TD VALIGN="TOP" style="font-family:times;"><A HREF="#fc75201_report_of_independent___fc702279"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Report of Independent Registered Public Accounting Firm</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#fc75201_report_of_independent___fc702279"><FONT SIZE=2>F-2</FONT></A></TD>
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<TD VALIGN="TOP" style="font-family:times;"><A HREF="#fe75201_neutron_energy,_inc._and_subsi__neu03651"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Balance Sheets</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#fe75201_neutron_energy,_inc._and_subsi__neu03651"><FONT SIZE=2>F-3</FONT></A></TD>
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<TD VALIGN="TOP" style="font-family:times;"><A HREF="#fe75201_neutron_energy,_inc._and_subsi__neu04135"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Statements of Operations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#fe75201_neutron_energy,_inc._and_subsi__neu04135"><FONT SIZE=2>F-4</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#Flows"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Statements of Cash Flows</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#Flows"><FONT SIZE=2>F-5</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#Equity"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Statements of Changes in Stockholders' Equity (Deficit)</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#Equity"><FONT SIZE=2>F-6</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#Notes"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to Consolidated Financial Statements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#Notes"><FONT SIZE=2>F-8</FONT></A></TD>
</TR>
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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fc75201_report_of_independent___fc702279"> </A>
<A NAME="toc_fc75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>To
the Board of Directors and Shareholders of<BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have audited the accompanying consolidated balance sheets of Neutron Energy,&nbsp;Inc. and Subsidiaries (an exploration stage company) as of December&nbsp;31, 2010 and 2009 and
the related consolidated statements of operations, changes in stockholders' equity (deficit), and cash flows for the years ended December&nbsp;31, 2010, 2009 and 2008 and for the period from
March&nbsp;25, 2005 (Inception) through December&nbsp;31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Neutron Energy,&nbsp;Inc. and Subsidiaries
as of December&nbsp;31, 2010 and 2009 and the results of their operations and their cash flows for the years ended December&nbsp;31, 2010, 2009 and 2008 and for the period from March&nbsp;25,
2005 (Inception) through December&nbsp;31, 2010 in conformity with accounting principles generally accepted in the United States of America. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the consolidated financial statements, the
Company has generated cumulative net losses of $36,834,600, has not realized any significant revenues since its Inception on March&nbsp;25, 2005 through December&nbsp;31, 2010, and has senior debt
with a maturity date of June&nbsp;30, 2011. As discussed in Note&nbsp;2 to the consolidated financial statements, the Company's significant cumulative operating losses and lack of liquidity raise
substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note&nbsp;2. The consolidated financial statements do not
include any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to
continue as a going concern. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Mayer
Hoffman McCann P.C.<BR>
Denver, Colorado </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>March&nbsp;8,
2011 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-2</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fe75201_neutron_energy,_inc._and_subsi__neu03651"> </A>
<A NAME="toc_fe75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>  (An Exploration Stage Company)    <BR>    <BR>    Consolidated Balance Sheets    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="9pt" style="font-family:times;"></TD>
<TD WIDTH="9pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Current Assets</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>174,416</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,023,932</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash and marketable securities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,069,367</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid expenses and other current assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>48,057</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>86,498</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred offering costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,325</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Debt issuance costs, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>532,040</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral interest purchase option</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>142,819</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Current Assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,823,880</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,378,574</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Property and Equipment, at cost</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unproven mineral properties</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19,607,711</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,924,068</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>903,477</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>903,477</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less accumulated depreciation</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(434,595</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(273,054</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20,076,593</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,554,491</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Construction in progress</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16,777</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16,777</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net Property and Equipment</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20,093,370</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,571,268</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other Assets</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash and marketable securities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>185,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>210,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred offering costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31,219</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deposits</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Other Assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>223,819</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>232,600</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>TOTAL ASSETS</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>28,141,069</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,182,442</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Current Liabilities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>65,149</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>67,924</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>175,288</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>191,894</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Senior debt, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>24,844,874</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Current Liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25,085,311</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>259,818</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Long-term Liabilities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term payable, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>325,539</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>299,454</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warrant liability</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,339,402</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Long-term Liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,664,941</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>299,454</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>TOTAL LIABILITIES</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>26,750,252</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>559,272</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Commitments and Contingencies</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Stockholders' Equity</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock: 10,000,000 authorized, $0.001 par value; none issued or outstanding</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock: 200,000,000 authorized, $0.001 par value; 58,204,141 and 58,154,141 issued and outstanding, respectively</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>58,204</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>58,154</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>38,167,213</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35,495,714</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deficit accumulated during the exploration stage</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(36,834,600</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(28,405,198</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,390,817</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,148,670</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Noncontrolling interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,474,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Stockholders' Equity</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,390,817</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,623,170</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>28,141,069</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,182,442</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>
The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-3</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=158,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=224842,FOLIO='F-3',FILE='DISK132:[11ZAZ1.11ZAZ75201]FE75201A.;14',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fe75201_1_4"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fe75201_neutron_energy,_inc._and_subsi__neu04135"> </A>
<A NAME="toc_fe75201_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>  (An Exploration Stage Company)    <BR>    <BR>    Consolidated Statements of Operations    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:73%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"110%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="110%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>From Inception<BR>
(March&nbsp;25, 2005)<BR>
through<BR>
December&nbsp;31,<BR>
2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Revenue</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating Expenses</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral property maintenance</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,141,706</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,035,509</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,219,549</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,503,389</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral exploration</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,835,039</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,528,324</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,366,395</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14,067,257</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,227,627</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,820,561</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,500,900</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,557,258</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Operating Expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,204,372</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,384,394</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,086,844</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32,127,904</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other Income (Expense)</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,549,105</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,602</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(7,183,105</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,682</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>71,345</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>305,792</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>698,749</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income (expense)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4,667</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,634</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>164,559</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Other Income (Expense)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,544,423</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>56,076</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>324,426</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(6,319,797</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating Loss</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,748,795</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(7,328,318</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,762,418</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(38,447,701</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net Loss</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,748,795</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(7,328,318</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,762,418</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(38,447,701</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Net loss attributable to noncontrolling interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
319,393</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
594,910</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
443,022</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1,613,101</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net loss attributable to Neutron Energy, Inc.</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,429,402</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(6,733,408</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,319,396</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(36,834,600</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss per basic and diluted share of common stock</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.14</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.12</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.15</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.89</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average number of basic and diluted common shares outstanding</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
58,186,419</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
54,644,741</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
54,378,705</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
41,280,757</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>The
accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-4</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=159,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=94705,FOLIO='F-4',FILE='DISK132:[11ZAZ1.11ZAZ75201]FE75201A.;14',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
<A NAME="Flows"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fg75201_neutron_energy,_inc._and_subsi__neu04108"> </A>
<A NAME="toc_fg75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>  (An Exploration Stage Company)    <BR>    <BR>    Consolidated Statements of Cash Flows    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=1>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="8pt" style="font-family:times;"></TD>
<TD WIDTH="8pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended<BR>
December&nbsp;31, </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>From Inception<BR>
(March&nbsp;25, 2005)<BR>
through<BR>
December&nbsp;31,<BR>
2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Cash Flows From Operating Activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,429,402</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(6,733,408</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,319,396</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(36,834,600</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Adjustments to reconcile net loss to net cash used in operating activities:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Provision for bad debts</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>30,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Depreciation of property and equipment</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>161,541</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>164,827</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>103,661</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>446,060</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Loss on disposal of equipment</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>15,873</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>16,705</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Stock based compensation</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>197,049</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>577,191</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>859,089</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>3,520,210</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Beneficial conversion feature recorded as interest expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,533,231</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Amortization of debt issuance costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,338,580</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,935,992</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accretion of disount on senior debt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,527,895</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,527,895</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Unrealized gain on warrant liability</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(240,235</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(240,235</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Deferred offering costs write-off</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>112,734</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>67,896</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>41,532</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>222,162</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Mineral purchase option write-off</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7,900</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7,900</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Warrants issued in connection with registration rights agreement</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>995,774</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Interest accretion on long-term payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>26,085</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>10,602</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>36,687</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accrued interest on senior debt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>896,615</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>896,615</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Losses attributable to noncontrolling interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(319,393</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(594,910</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(443,022</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1,613,101</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Changes in assets and liabilities:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Prepaid expenses and other assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>53,441</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>79,782</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(63,472</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(55,357</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accounts payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2,775</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(16,898</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(106,804</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>62,161</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accrued expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(24,406</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(47,879</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>134,853</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>167,488</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Joint venture partners payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>21,518</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(233,565</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net cash used in operating activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4,694,371</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(6,455,406</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,027,124</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(27,344,413</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Cash Flows From Investing Activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Disbursements on loans receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(30,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Increase in restricted cash and marketable securities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(7,019,367</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(235,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(7,254,667</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Purchase of property and equipment</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(42,738</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(615,447</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(945,436</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Purchase of unproven mineral properties</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(229,331</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(275,069</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(455,591</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,382,943</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Reimbursement received for unproven mineral properties purchased</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>315,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Investment in mineral purchase option</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(319,393</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(142,819</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(462,212</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Equity in joint venture partner contributions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>346,321</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>438,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,932,536</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net cash used in investing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(7,568,091</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(349,605</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(632,053</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(14,827,722</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Cash Flows From Financing Activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Proceeds from convertible notes payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7,330,949</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Debt issuance costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(252,280</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(389,112</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Proceeds from issuance of common stock</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>11,592,211</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Offering costs paid in connection with issuance of common stock</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(690,414</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Proceeds from exercise of warrants</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>328,529</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,303,513</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Commissions paid in connection with the exercise of warrants</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(492,749</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Proceeds from stock subscription receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>250,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Deferred offering costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(35,828</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(168,221</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(18,913</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(245,581</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Principal payments on retirement of convertible debt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(70,380</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Long-term payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>288,852</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>288,852</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Proceeds from senior debt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>11,381,661</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>11,381,661</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Investment by noncontrolling interest in consolidated joint venture</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>319,393</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>613,598</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>704,610</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4,087,601</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net cash provided by financing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>11,412,946</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>734,229</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,014,226</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>42,346,551</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Net (decrease) increase in cash and cash equivalents</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(849,516</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(6,070,782</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(7,644,951</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>174,416</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Cash and cash equivalents, beginning of period</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,023,932</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7,094,714</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>14,739,665</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Cash and cash equivalents, end of period</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>174,416</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,023,932</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7,094,714</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>174,416</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Supplemental Disclosures of Cash Flow Information</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash paid for interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>496,981</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash paid for income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>
The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-5</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=160,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=118715,FOLIO='F-5',FILE='DISK132:[11ZAZ1.11ZAZ75201]FG75201A.;11',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="Equity"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fg75201_neutron_energy,_inc._and_subsi__neu05230"> </A>
<A NAME="toc_fg75201_2"> </A></FONT> <FONT SIZE=2><B><BR>  Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>  (An Exploration Stage Company)    <BR>    <BR>    Consolidated Statements of Changes in Stockholders' Equity (Deficit)    <BR>
</B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=1>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="140%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="8pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="63pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=4 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=4 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Deficit<BR>
Accumulated<BR>
During the<BR>
Exploration<BR>
Stage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Common Stock </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total<BR>
Stockholders'<BR>
Equity<BR>
(Deficit) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Additonal<BR>
Paid-in<BR>
Capital </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-<BR>
Controlling<BR>
Interest </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Shares </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, Inception (March&nbsp;25, 2005)</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-top:9pt;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Initial capitalization issued for services at $0.01 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
6,877,565</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
6,878</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
61,898</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
68,776</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued in private placement at $0.12 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,600,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,600</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>991,400</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,000,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Stock subscription receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>250,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>250,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued for services at $0.12 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>5,807,435</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>5,807</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>669,476</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>675,283</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1,614,978</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1,614,978</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, December&nbsp;31, 2005</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>21,285,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>21,285</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,972,774</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1,614,978</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>379,081</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued pursuant to stock subscription receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,150,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued for lease acquisition at $0.27 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>65,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>65</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>16,813</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>16,878</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Beneficial conversion feature from issuance of Series&nbsp;A convertible notes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>221,287</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>221,287</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Beneficial conversion feature from issuance of Series&nbsp;B convertible notes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,146,161</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,146,161</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Compensation expense from issuance of common stock options</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>186,915</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>186,915</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Equity in capital contributions made by joint venture partner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>175,156</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>175,156</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(3,957,337</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(3,957,337</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, December&nbsp;31, 2006</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>23,500,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>23,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>3,716,956</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(5,572,315</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1,831,859</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued for services at $1.00 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>49,950</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued for services at $1.50 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>74,950</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>75,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Compensation expense from issuance of common stock options</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>830,907</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>830,907</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Beneficial conversion feature from issuance of Series&nbsp;C convertible notes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>165,783</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>165,783</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Warrants issued in connection with registration rights agreement</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>995,774</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>995,774</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Exercise of warrants at $1.00 per share (net of commissions of $492,749)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,854,984</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,855</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,353,380</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,362,235</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Exercise of warrants at $1.60 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>75,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>75</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>119,925</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>120,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Conversion of Series&nbsp;A convertible notes at $0.22 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4,860,456</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4,861</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,064,439</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,069,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Conversion of Series&nbsp;B and C convertible notes at $0.68 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,782,131</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,782</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>6,642,067</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>6,651,849</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued in private placement at $1.50 per share (net of offering costs of $690,414)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7,061,474</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7,061</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,894,736</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,901,797</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Investment in consolidated subsidiary by noncontrolling interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,450,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,450,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Equity in capital contributions made by joint venture partner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>972,074</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>972,074</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(7,780,079</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(255,776</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,035,855</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, December&nbsp;31, 2007</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,234,045</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,234</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>32,880,941</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(13,352,394</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,194,224</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>21,777,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>
The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-6</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=161,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=77206,FOLIO='F-6',FILE='DISK132:[11ZAZ1.11ZAZ75201]FG75201A.;11',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fg75201_1_7"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Continued) </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=1>


<!-- COMMAND=ADD_TABLEWIDTH,"140%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="140%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="8pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="63pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=4 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=4 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Deficit<BR>
Accumulated<BR>
During the<BR>
Exploration<BR>
Stage </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Common Stock </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total<BR>
Stockholders'<BR>
Equity<BR>
(Deficit) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Additonal<BR>
Paid-in<BR>
Capital </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-<BR>
Controlling<BR>
Interest </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Shares </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, December&nbsp;31, 2007</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,234,045</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,234</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>32,880,941</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(13,352,394</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,194,224</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>21,777,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Compensation expense from issuance of common stock options</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>784,089</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>784,089</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued for services at $0.75 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>100,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>100</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>74,900</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>75,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Exercise of warrants at $1.00 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>273,529</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>274</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>273,255</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>273,529</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Exercise of warrants at $2.00 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>27,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>27</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,973</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>55,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Investment in consolidated subsidiary by noncontrolling interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>704,610</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>704,610</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Equity in capital contributions made by joint venture partner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>438,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>438,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,319,396</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(443,022</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,762,418</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, December&nbsp;31, 2008</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,635,074</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,635</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>34,507,143</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(21,671,790</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,455,812</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>15,345,800</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Compensation expense from issuance of common stock options</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>577,191</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>577,191</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Investment in consolidated subsidiary by noncontrolling interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>613,598</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>613,598</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued for joint venture partner's interest at $1.00 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>3,519,067</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>3,519</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>65,059</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>68,578</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Equity in capital contributions made by joint venture partner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>346,321</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>346,321</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(6,733,408</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(594,910</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(7,328,318</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, December&nbsp;31, 2009</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>58,154,141</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>58,154</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>35,495,714</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(28,405,198</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,474,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,623,170</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common stock issued for services at $1.00 per share</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>49,950</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>50,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Compensation expense from issuance of common stock options</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>147,049</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>147,049</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Investment in consolidated subsidiary by noncontrolling interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>319,393</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>319,393</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Purchase of noncontrolling interest in consolidated subsidiary</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,474,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2,474,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,429,402</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(319,393</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,748,795</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance, December&nbsp;31, 2010</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>58,204,141</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>58,204</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>38,167,213</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(36,834,600</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,390,817</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-7</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
<A NAME="Notes"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fk75201_neutron_energy,_inc._and_subsi__neu04313"> </A>
<A NAME="toc_fk75201_1"> </A></FONT> <FONT SIZE=2><B><BR>  Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>  (An Exploration Stage Company)    <BR>    <BR>    Notes to Consolidated Financial Statements    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;1 Nature of Operations  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neutron Energy,&nbsp;Inc. ("NEI") began operations as an unincorporated entity on March&nbsp;25, 2005, was originally organized under the laws of the state of Wyoming on
March&nbsp;29, 2005 and subsequently reincorporated under the laws of the state of Nevada on April&nbsp;26, 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From
Inception through December&nbsp;31, 2010, NEI has staked or leased mineral properties in Arizona, New Mexico, South Dakota, and Wyoming. In April&nbsp;2006, certain mineral
properties in New Mexico became subject to a joint-venture agreement, ("Grants J.V. Agreement"), which formed the Grants Uranium Project Joint-Venture ("Grants J.V."), with Canada-based Primary Corp.
("Primary"), an affiliate of the Company, formerly known as Trans-America Industries,&nbsp;Ltd. Pursuant to the Grants J.V. Agreement, Primary had the right to earn a 50% interest upon funding
$5,000,000 in property acquisition and exploration activities. In October&nbsp;2009, NEI entered into a Purchase and Termination Agreement with Primary to purchase Primary's interest in Grants J.V.
As of October&nbsp;16, 2009, NEI became the sole owner of Grants J.V. The terms of both the Grants J.V. Agreement and the Purchase and Termination Agreement are detailed in Note&nbsp;6. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April&nbsp;2007, other mineral properties located in New Mexico, became subject to joint ownership with Uranium Energy Corporation ("UEC") through the formation of Cibola
Resources&nbsp;LLC ("Cibola"). Upon formation, NEI owned 51% of Cibola and was the managing member. In November&nbsp;2009, as amended in December&nbsp;2009, NEI entered into an Option Agreement
with UEC to purchase UEC's
interest in Cibola, the terms of which are set forth in Note&nbsp;6. In April&nbsp;2010, NEI purchased UEC's 49% interest in Cibola and became the sole owner of Cibola. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Collectively,
NEI, Grants J.V. and Cibola are referred to as the "Company". </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is an Exploration Stage Company. The Company's principal business is the acquisition and exploration of uranium mineral resources. The Company has not presently determined
whether its properties contain mineral reserves that are economically recoverable. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2 Summary of Significant Accounting Policies  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Basis of Presentation and Principles of Consolidation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in
the United States of America, and are expressed in U.S. dollars. These consolidated financial statements include the accounts of NEI and its wholly owned subsidiaries, Cibola and Grants J.V. Prior to
the purchase of the noncontrolling interests in Grants J.V. on October&nbsp;15, 2009, and Cibola on April&nbsp;12, 2010, the consolidated financial statements included the accounts of NEI, its
majority owned subsidiary, Cibola, and the Company's proportionate share of assets, liabilities and operations of its unincorporated joint-venture, Grants J.V. All inter-company transactions and
balances have been eliminated. The Company's fiscal year end is December&nbsp;31. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Use of Estimates  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles
("U.S.&nbsp;GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring
management's estimates and assumptions are determining the fair value of transactions involving </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-8</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2 Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>common
stock, convertible debentures and financial instruments. Other areas requiring estimates include deferred tax balances, valuation allowances, allocations of expenditures to resource property
interests and asset impairment tests. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Plan of Operations  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material. The
continued operations of the Company and the recoverability of the carrying value of its assets are ultimately dependent upon the ability of the Company to achieve profitable operations. The Company
commenced operations on March&nbsp;25, 2005, and has not realized any significant revenues since inception. As of December&nbsp;31, 2010, the Company has a working capital deficit of $17,261,431
and an accumulated deficit of $36,834,600. In April&nbsp;2010, the Company entered into a credit facility with a lender, which was increased and extended in an amendment of the credit facility in
December&nbsp;2010, as more fully described in Note&nbsp;8. Although management believes the credit facility provides sufficient cash resources through June&nbsp;30, 2011, the Company must
access the capital markets through the offering of equity or debt securities or the sale of ownership interests in certain mineral properties in order to satisfy the credit facility's June&nbsp;30,
2011 due date for outstanding principal and accrued interest. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
continuation of the Company as a going concern is also dependent upon the ability of the Company to obtain necessary financing to continue operations. The Company's current operating
plan is to focus existing financial and human resources on raising additional equity capital and continuing the permitting and exploration of its core mineral properties located in New Mexico. The
Company has sold, and will continue to sell to, and joint venture with, third parties, its non-core
mineral properties. Other non-core properties not deemed to have sufficient exploration potential will be abandoned as their annual renewals become due. Additionally, the Company has
commenced the process of accessing the capital markets seeking additional financing through a strategic alliance with an industry partner, a private placement or an initial public offering of its
equity securities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Cash and Cash Equivalents  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash
equivalents. The Company places its temporary cash investments with high credit quality financial institutions. At times such investments may be in excess of the Federal Deposit Insurance Corporation
("FDIC") insurance limit. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Restricted Cash  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2010 and 2009, the Company had current restricted cash and marketable securities of $7,069,367 and $25,000,
respectively, and noncurrent pledged certificates of deposit ("CDs") and money market accounts of $185,300 and $210,300, respectively. The CDs are classified as
held-to-maturity securities and are recorded at amortized cost. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-9</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2 Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Property and Equipment  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements,
maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided for over the estimated useful lives of the related assets using the
straight-line method for financial
statement purposes. The estimated useful lives for property and equipment which is comprised of: furniture and equipment, computer hardware and software, and other mining-related equipment, are 7, 5
and 10&nbsp;years, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Revenue Recognition  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recognizes revenue from the sale of goods or services, and related costs of goods or services sold, where persuasive
evidence of an arrangement exists, delivery has occurred, the seller's price is fixed or determinable and collectability is reasonably assured. This generally occurs when the purchaser receives the
goods or services or at the time title passes to the purchaser. Although the Company's strategic plan is to become a production company operating uranium mines, for the period from Inception
(March&nbsp;25, 2005) through December&nbsp;31, 2010, the Company had no operating revenues and does not expect to have operating revenues in the foreseeable future. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mineral Property Costs  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has been in the exploration stage since its inception on March&nbsp;25, 2005 and has not yet realized any significant
revenues from its planned operations. It is primarily engaged in the acquisition and exploration of uranium mineral properties. Mineral property exploration costs are expensed as incurred. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mineral
property acquisition costs are initially capitalized when incurred. In the event that mineral property acquisition costs are paid with shares of the Company's common stock, those
shares are valued at estimated fair value at the time the shares are issued or at the time the rights are obtained. The Company assesses the carrying costs of its mineral properties for impairment on
at least an annual basis. The Company will recognize impairment of a mineral property if the carrying amount of the mineral property is not recoverable and exceeds its fair value. Costs to maintain
mineral rights and leases are expensed in the period in which they occur. Mineral property exploration costs are expensed in the period in which they occur. When management has determined that
probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the
terms of property acquisition and budgeted exploration and development expenditures, the costs incurred to develop that property are capitalized. Such costs will be amortized using the
units-of-production method based on estimated recoverable proven reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged
to operations. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-10</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2 Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has incurred the following mineral property maintenance and mineral property exploration costs: </FONT></P>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>From Inception<BR>
(March&nbsp;25, 2005)<BR>
through<BR>
December&nbsp;31,<BR>
2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral property maintenance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,141,706</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,035,509</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,219,549</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,503,389</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mineral property exploration</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,835,039</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,528,324</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,366,395</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,067,257</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Costs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,976,745</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,563,833</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,585,944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,570,646</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B><I> Reclassifications  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain amounts in the prior periods presented have been reclassified to conform to the current consolidated financial statement
presentation. Such reclassifications do not represent corrections of errors; rather, they represent reclassifications made to conform to the current period's presentation. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Reclamation and Remediation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's operations may become subject to standards for mine reclamation which have been established by various governmental
agencies. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of tangible
long-lived assets. A corresponding asset is also recorded and depleted over the life of the asset. After the initial measurement of the asset retirement obligation, the liability will be
adjusted at the end of each reporting period to reflect changes in the estimated discounted future cash flows based on when the spending activity will occur for the underlying obligation.
Determination of any amounts recognized is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free
interest rates. As of the date of these consolidated financial statements the Company has no mine reclamation costs. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are
based on management's estimate of amounts expected to be incurred when the remediation work is performed. As of the date of these consolidated financial statements the Company has no remediation
liabilities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Impairment Of Long-Lived Assets  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company reviews property and equipment and certain identifiable intangible assets, excluding goodwill, for impairment whenever
events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future
undiscounted net cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals
the amount by which the carrying value of the assets exceeds its fair value. During the periods covered by these consolidated financial statements, the Company had no material impairment of its
long-lived assets. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-11</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=166,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=960118,FOLIO='F-11',FILE='DISK132:[11ZAZ1.11ZAZ75201]FK75201A.;12',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fk75201_1_12"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2 Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Debt Issuance Costs  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt issuance costs are capitalized and amortized over the term of the notes on a straight-line basis, which approximates
the effective interest method due to the short term nature of the notes, and are included in interest expense. When debt is paid in full, any unamortized debt issuance costs are removed from the
related accounts and charged to operations. The amount of debt issuance costs charged to operations for the following periods were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:70%;margin-left:15%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Year Ended December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,338,580</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Year Ended December&nbsp;31, 2009</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Year Ended December&nbsp;31, 2008</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Period From Inception (March&nbsp;25, 2005) through December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,935,992</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B><I> Deferred Offering Costs  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transaction costs incurred prior to the closing of an equity offering are capitalized until the sooner of the completion of the equity
offering or a determination is made not to proceed with the offering. The costs are charged to additional paid-in capital at the time of completion of the offering or charged to operations
at the time the determination is made not to proceed with the equity offering. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Income Taxes  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Potential benefits of income tax losses are not recognized in the consolidated financial statements until realization is more likely
than not. The Company computes tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these consolidated financial
statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years and, therefore, recorded a 100% valuation
allowance against the deferred tax asset for such losses. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the date of enactment. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company applies a "more likely than not" threshold to the recognition of tax positions based on the technical merits of the position. The Company recognizes interest and penalties
related to uncertain tax positions in income tax expense. As of each period presented within these consolidated financial statements, the Company made no provisions for interest and penalties related
to uncertain tax positions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Derivatives  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, the Company enters into transactions which contain conversion privileges, the settlement of which may entitle the
holder or the Company to settle obligations by issuance of </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-12</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=167,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=449445,FOLIO='F-12',FILE='DISK132:[11ZAZ1.11ZAZ75201]FK75201A.;12',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fk75201_1_13"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2 Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>Company
securities. These transactions, the value of which may be derived from the fair value of the Company's securities, are estimated using the Black-Scholes or other appropriate pricing models. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Stock Based Compensation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has a stock plan for its employees, non-employee directors and key consultants. From time to time, the Company
receives services from employees, directors or consultants in exchange for a)&nbsp;equity instruments of the enterprise or b)&nbsp;liabilities that are based on the fair value of the enterprise's
equity instruments or that may be settled by the issuance of such equity instruments. These stock-based awards are accounted for using a fair-value-based method. The Company uses the
Black-Scholes option-pricing model to determine the fair-value of stock-based awards. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Basic and Diluted Net Income (Loss) Per Share  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company computes net income (loss) per share for both basic and diluted earnings per share ("EPS") in the statements of operations.
Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives
effect to all potentially dilutive common shares outstanding during the period. Diluted EPS and the weighted average number of common shares exclude all potentially dilutive shares, as the Company
reported a net loss for all periods presented, making their effect anti-dilutive. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following securities have been excluded in the computation of diluted net earnings per share since the effect of including these securities would have been anti-dilutive: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>From Inception<BR>
(March&nbsp;25, 2005)<BR>
through<BR>
December&nbsp;31,<BR>
2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Options to purchase common stock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,491,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,335,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,199,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,491,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warrants to purchase common stock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,051,744</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,333,332</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,051,744</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Convertible subordinated notes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,543,410</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,335,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,532,332</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,543,410</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;3 Recent Accounting Pronouncements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.&nbsp;2009-16 which amends the accounting for the
transfers of financial assets. This Accounting Standards Update revises "</FONT><FONT SIZE=2><I>Transfers and Servicing (Topic&nbsp;860): Accounting for Transfers of Financial
Assets,</I></FONT><FONT SIZE=2>" to improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance. In addition, the amendments
require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. Comparability and consistency in
accounting for transferred financial assets will also be improved. The new guidance is effective on a prospective basis for the annual period beginning after November&nbsp;15, 2009 and interim and
annual periods thereafter. The Company adopted the provisions of this ASU on January&nbsp;1, 2010 which did not have a material impact on its results of operations, financial position or liquidity. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-13</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_fk75201_1_14"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;3 Recent Accounting Pronouncements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December&nbsp;2009, the FASB issued ASU No.&nbsp;2009-17, "</FONT><FONT SIZE=2><I>Consolidation (Topic&nbsp;810), Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities.</I></FONT><FONT SIZE=2>" The amendments in this ASU replace the quantitative-based risks and rewards calculation for determining which reporting entity, if
any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest
entity that most significantly impact the entity's economic performance and 1)&nbsp;the obligation to absorb losses of the entity or 2)&nbsp;the right to receive benefits from the entity. The
amendments in this ASU also require additional disclosures about a reporting entity's involvement in variable interest entities and an ongoing assessment of whether a company is the primary
beneficiary. The revised guidance is effective for all variable interest entities owned on or formed after January&nbsp;1, 2010. The Company adopted the provisions of this ASU on January&nbsp;1,
2010, which did not have a material impact on its results of operations, financial position or liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January&nbsp;2010, the FASB issued ASU No.&nbsp;2010-06, </FONT><FONT SIZE=2><I>"Fair Value Measurements and Disclosures (Topic&nbsp;820): Improving Disclosures
about Fair Value Measurements."</I></FONT><FONT SIZE=2> The guidance requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in the
ASC. The FASB's objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, the guidance now requires 1)&nbsp;a reporting entity should
disclose separately the amounts of significant transfers in and out of Level&nbsp;1 and Level&nbsp;2 fair value measurements and describe the reasons for the transfers; and 2)&nbsp;in the
reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In
addition, the guidance clarifies the requirements of the following existing disclosures for purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity
needs to use judgment in determining the appropriate classes of assets and liabilities; and a reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair
value for both recurring and nonrecurring fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December&nbsp;15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level&nbsp;3 fair value measurements. Those disclosures are effective for fiscal years beginning
after December&nbsp;15, 2010, and for interim periods within those fiscal years. The Company adopted the provisions of this standard on January&nbsp;1, 2010, which did not have a material impact
on its results of operations, financial position or liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February&nbsp;2010, the FASB issued ASU No.&nbsp;2010-09, </FONT><FONT SIZE=2><I>"Subsequent Events (Topic&nbsp;855): Amendments to Certain Recognition and
Disclosure Requirements."</I></FONT><FONT SIZE=2> The amendments in the ASU remove the requirement for a Securities and Exchange Commission (SEC) filer to disclose a date through which subsequent
events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or
retrospective application of U.S.&nbsp;GAAP. The FASB also clarified that if the financial statements have been revised, then an entity that is not an SEC filer should disclose both the date that
the financial statements were issued or available to be issued and the date the revised financial statements were issued or available to be issued. The FASB believes these amendments remove potential
conflicts with the SEC's literature. All of the amendments in the ASU were effective upon issuance except for the use of the issued date for conduit debt obligors. The Company adopted the provisions
of this standard on January&nbsp;1, 2010, which did not have a material impact on its results of operations, financial position or liquidity. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-14</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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</FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company)  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;3 Recent Accounting Pronouncements (Continued)  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Recent Accounting Guidance Not Yet Adopted  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2010, the FASB issued ASU No.&nbsp;2010-13, </FONT><FONT SIZE=2><I>"Compensation-Stock Compensation (Topic
718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades."</I></FONT><FONT SIZE=2> The ASU addresses
the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a
share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades shall not be considered to contain a
market, performance or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in this update are
effective for fiscal years, and interim periods within those fiscal years, beginning on or after December&nbsp;15, 2010. The Company plans to adopt the provisions of this standard on
January&nbsp;1, 2011, and does not expect it to have a material impact on its results of operations, financial position or liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2010, the FASB issued ASU 2010-29, </FONT><FONT SIZE=2><I>"Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business
Combinations.</I></FONT><FONT SIZE=2>" The objective of this Update is to address diversity in practice about the interpretation of the proforma revenue and earnings disclosure requirements for
business combinations. The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity
as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this Update also
expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business
combination included in the reported pro forma revenue and earnings. The amendments in this Update are effective prospectively for business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after December&nbsp;15, 2010. The Company plans to adopt the provisions of this standard on January&nbsp;1, 2011, and does not
expect it to have a material impact on its results of operations, financial position or liquidity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;4 Significant Mineral Properties  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since March 2005, the Company has been acquiring mineral properties for the purpose of exploring for economic deposits of uranium in the states of Arizona, New Mexico, South Dakota and
Wyoming. The Company's mineral property acquisitions are comprised of: i)&nbsp;federal mining claims which are administrated by the Bureau of Land Management; ii)&nbsp;state mineral leases or
exploration permits; iii)&nbsp;fee mineral leases with the owners of private mineral rights; or iv)&nbsp;mineral leases with third parties who acquired mineral rights through i)&nbsp;and
ii)&nbsp;above. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
as set forth below, all federal mining claims, state and fee mineral leases are cancellable by the Company when exploration and/or development is completed or the property is
abandoned. The Company's state and fee mineral leases are subject to various royalty interests, some of which are indexed to the sale price of uranium. Federal mining claims are not subject to
royalties. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-15</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_fm75201_1_16"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;4 Significant Mineral Properties (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Juan Tafoya Property  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 2006, the Company entered into a Uranium Mining and Lease Agreement ("Juan Tafoya Lease") with the Juan Tafoya Land
Corporation ("JTLC") in which the Company leased fee (deeded) surface and mineral rights owned by the JTLC. The Juan Tafoya Lease provides for a term of ten (10)&nbsp;years and so long thereafter as
the Company is conducting active mining operations. Additionally, the Juan Tafoya Lease provides for an initial payment to JTLC of $1,250,000, annual rental payments of $225,000 for the first five
years and $337,500 for the second five years, gross proceeds royalties of 4.65% to 6.5% based on the then current price of uranium, and an annual
payment to a community program of 1% of net profits. The Company is obligated to make the first 10&nbsp;years annual rental payments notwithstanding its right to terminate the lease at any time,
unless: i)&nbsp;the market value of uranium drops below $25 per pound; ii)&nbsp;the state of New Mexico bans uranium mining; or iii)&nbsp;the deposit is deemed uneconomical by an independent
engineering firm. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2007, the Company acquired infill fee mineral leases within the boundaries of the Juan Tafoya Lease. The Company is obligated to make annual lease payments and pay production
royalties ranging from 4.65% to 6.5% based on the then current price of uranium. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2007, the Company entered into a Letter Agreement with International Nuclear,&nbsp;Inc. Pursuant to the Letter Agreement the Company acquired a database of information on
the Marquez Canyon deposit located on the Juan Tafoya property in consideration of a cash payment and a perpetual royalty of $0.25 per pound of uranium recovered from the Juan Tafoya property, with a
maximum payout of $1,000,000. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;5 Property and Equipment  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment consists of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unproven mineral properties</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>19,607,711</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,924,068</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>903,477</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>903,477</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less accumulated depreciation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(434,595</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(273,054</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,076,593</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,554,491</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Construction in progress</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,777</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,777</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Property and Equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,093,370</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,571,268</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P style="font-family:times;"><FONT SIZE=2>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation expense charged to operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>161,541</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>164,827</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>103,661</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-16</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=171,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=416721,FOLIO='F-16',FILE='DISK132:[11ZAZ1.11ZAZ75201]FM75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fm75201_1_17"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6 Joint-Ventures  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Grants Uranium Joint-Venture  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2006, NEI leased unpatented lode mining claims in the eastern portion of the Ambrosia Lake mining district in New Mexico
(the "Endy Lease"). Pursuant to the terms of the Endy Lease, NEI paid $315,000 upon signing and is obligated to pay additional advance royalties each year thereafter through the term of the lease. The
Endy Lease has a primary term of ten years, but may be extended up to an additional sixty five years provided that NEI continues to make advance or production royalty payments. NEI may terminate the
lease at any time without further lease obligations. A five percent production royalty, based on the gross market value of all minerals extracted, is payable for any production from the Endy Lease
properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 2006, NEI leased unpatented lode mining claims and one (1)&nbsp;state of New Mexico general mining lease, covering mineral rights in the Ambrosia Lake mining district in New
Mexico (the "Bonner Lease"). Pursuant to the terms of the Bonner Lease, NEI paid a rental payment of $180,000 and issued 65,000 shares of the Company's common stock. NEI shall pay a rental payment of
$120,000 on the fifth anniversary of the lease in 2011. On the sixth anniversary and on each anniversary thereafter during which the Bonner Lease is in force, NEI shall pay an advance royalty payment
of $240,000. In the event commercial production is achieved during the rental period, all future rental payments received after commercial production begins will be credited as minimum advance royalty
payments. The Bonner Lease has a primary term of ten years but may be extended up to an additional sixty five years provided that NEI continues to make advance or production royalty payments. NEI may
terminate the lease at any time without future lease obligations. A five percent production royalty based on the gross market value of all minerals extracted is payable for any production from the
Bonner Lease properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2008, the Company leased patented and unpatented lode mining claims in the eastern portion of the Ambrosia Lake mining district in New Mexico (the "Elizabeth Lease"). Pursuant
to the terms of the Elizabeth Lease, the Company paid a $315,000 signing bonus upon signing and is obligated to pay advance royalties of $75,000 in 2011 and every year thereafter so long as the lease
is in effect. The Elizabeth Lease has a primary term of ten years, but may be extended up to an additional sixty five years provided that the Company continues to make advance or production royalty
payments. The Company may terminate the lease at any time without future lease obligations. A five percent production royalty, based on the gross market value of all minerals extracted, is payable for
any production from the Elizabeth Lease properties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2006, NEI and Primary entered into an Exploration, Development and Mine Operating Agreement ("Grants J.V. Agreement") and formed the Grants J.V. Pursuant to the Grants J.V.
Agreement, NEI contributed, to the joint-venture, the properties underlying three New Mexico leases: the Endy Lease, the Bonner Lease and the Elizabeth Lease. Also, Primary reimbursed NEI for $495,000
in connection with the Endy and the Bonner Leases during the year ended December&nbsp;31, 2006, in consideration of contribution of the underlying leased properties. Pursuant to the Grants J. V.
Agreements, Primary was obligated to contribute $5,000,000 to fund the joint-venture's operations ("Initial Contribution") before February&nbsp;1, 2010. In consideration of Primary's payments to NEI
and the funding of the Grants J.V., Primary was entitled to a fifty percent participating interest in the underlying properties. The Company was named the managing partner in the joint-venture. At the
time the Company entered into the Grants J.V. Agreement the Company believed the likelihood of Primary's </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-17</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=172,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=919866,FOLIO='F-17',FILE='DISK132:[11ZAZ1.11ZAZ75201]FM75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fm75201_1_18"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6 Joint-Ventures (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>making
its full Initial Contribution increases in proportion to its aggregate Initial Contributions made to date. Accordingly, the Company accounted for Primary's participating interest as accretive
to Primary as it makes its Initial Contribution. The Company consolidated the assets, liabilities and operating results of the joint-venture in accordance with the proportionate consolidation method
until October&nbsp;15, 2009, when NEI acquired Primary's interest in Grants J.V. Primary's historical contributions and accretive percentage of ownership are outlined below. </FONT></P>
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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="102pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Ownership Percentages </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Primary<BR>
Contributions to Date </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Primary </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>NEI </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>October&nbsp;15, 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,632,771</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34.56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>65.44</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>December&nbsp;31, 2008</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,101,085</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29.52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>70.48</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>December&nbsp;31, 2007</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,442,696</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22.33</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>77.67</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE></DIV>
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 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
October 2009, the Company entered into a Purchase and Termination Agreement ("Purchase Agreement") with Primary with respect to the Grants J.V. Pursuant to the Purchase Agreement,
Primary transferred its ownership interest in Grants J.V. to the Company on October&nbsp;15, 2009. In consideration, the Company was obligated to, at its option, pay Primary $3,519,067 in Canadian
funds, or, issue Primary 3,519,067 shares of the Company's common stock. From the inception (April&nbsp;28, 2006), through October&nbsp;15, 2009, Primary had contributed $2,632,771 to fund the
operations of Grants J.V., in addition to the $495,000 reimbursed to NEI for lease costs for a total investment of $3,127,771. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company accounted for the purchase as an equity transaction and no gain or loss was recognized on the transaction. The net equity in Grants J.V. at the date of acquisition was
$198,341, and the Company valued Primary's 34.56% proportionate share at $68,578. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December&nbsp;30, 2009, the Company opted to issue to Primary 3,519,067 shares of its common stock, in lieu of cash, in consideration of its October&nbsp;15, 2009 purchase of
Primary's interest in the Grants J.V. The Company recorded an increase in common stock and additional paid in capital and relieved the liability recorded at the date of transaction. As a result of the
transaction and issuance of shares,
Primary, an affiliate of the Company, holds 14,269,067 total shares of the Company's common stock, or 24.5% of the Company's issued and outstanding shares. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Cibola Resources&nbsp;LLC  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2007, the Company entered into a Mining Lease and Agreement with La Merced del Pueblo de Cebolleta ("Cebolleta Lease") a
privately held land grant, to lease approximately 6,717 acres of fee (deeded) surface and mineral rights ("Cebolleta Property") in New Mexico. The mineral lease agreement provides for a term of ten
(10)&nbsp;years and so long thereafter as the Company is conducting active mining operations. Additionally, the mineral lease agreement provides for initial payments to Cebolleta of $5,000,000,
annual advanced royalty payments of $500,000, a recoverable reserve payment equal to $1.00 multiplied by the number of pounds of recoverable uranium reserves upon completion of a feasibility study
less the $5,000,000 in initial payments and up to $1,500,000 in annual advance royalties previously paid pursuant to the Cebolleta Lease, and gross proceeds royalties from 4.50% to 8.00% based on the
then current price of uranium. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-18</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=173,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=204837,FOLIO='F-18',FILE='DISK132:[11ZAZ1.11ZAZ75201]FM75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fm75201_1_19"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6 Joint-Ventures (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2007, NEI formed a joint-venture with UEC through the formation of Cibola, and the execution of a Limited Liability Company Operating Agreement and Members Agreement. Cibola was
owned 51% by NEI and 49% by UEC. Both parties funded the acquisition, exploration, and other costs of the Cebolleta Property in proportion to their ownership interests. The Company assigned the
Cebolleta Lease to Cibola. The Company was the managing member of Cibola. As the managing member, the Company received a management fee equal to 15% of exploration and other expenditures, excluding
property acquisition expenditures and legal fees. The Company consolidated the assets, liabilities and operating results of Cibola and recognized UEC's noncontrolling interest in the consolidated
balance sheets and consolidated statements of operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
November 2009, the Company entered into an Option Agreement (the "Option Agreement") with UEC, in which UEC granted the Company the exclusive option to purchase and acquire UEC's 49%
ownership interest for a cash payment of $11&nbsp;million. In consideration for the Option Amendment, the Company funded 49% of Cibola's operations, from August 2009 through March 2010 on behalf of
UEC. As of April&nbsp;12, 2010, the Company is the sole owner of Cibola. From August&nbsp;1, 2009 to April&nbsp;12, 2010, Cibola recognized a total of $927,166 of operating expenses. NEI funded
100% of these costs with $858,976 in exploration expenses advanced on behalf of Cibola and an account payable to Cibola for $68,190. Of the aforementioned $927,166 contribution by NEI, Cibola
allocated $472,854, or 51%, to NEI's equity account and $454,312, or 49%, to UEC's equity account. As of April&nbsp;12, 2010, the Company capitalized $454,312 as a mineral interest purchase option.
Therefore, the Company
recognized a total purchase price of $11,454,312, comprised of a cash payment of $11&nbsp;million and the mineral purchase option of $454,312. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company recognized no gain or loss on the acquisition of the noncontrolling interest in consolidated net income or comprehensive income. The Company estimated the fair value of its
additional interest in Cibola to be equivalent to the purchase price, or $11,454,312, and recognized an increase of $11,454,312 in unproven mineral properties. The estimated fair value was based on
significant other observable and unobservable inputs (Level&nbsp;3), more specifically, comparable transactions with industry peers, accepted industry in-situ valuation techniques and
the Company's evaluation of the discounted cash flows, all adjusted for risks and uncertainty. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Pro Forma Results of Operations  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisitions of Grants J.V. and
Cibola had occurred at the beginning of the period presented below: </FONT></P>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revenue</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,748,795</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,539,290</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss per basic and diluted share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.13</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited proforma net loss and net loss per share for the year ended December&nbsp;31, 2010 presented above do not include the assumption of additional financing costs incurred as
a result of the acquisition of the 49% noncontrolling interest of Cibola. In April 2010, the Company financed the $11M acquisition of the noncontrolling interest in Cibola with proceeds from the RMB
Credit Facility </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-19</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_fm75201_1_20"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6 Joint-Ventures (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>(See
Note&nbsp;8). The net loss per share includes the assumed issuance of 3,519,067 shares of common stock at the beginning of 2009 in connection with the acquisition of the noncontrolling interest
of the Grants J.V. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had
the acquisitions been consummated as of that time, nor is it intended to be a projection of future results. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7 Convertible Subordinated Notes  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Series&nbsp;"A" 7.5% Convertible Subordinated Notes ("Series&nbsp;A")  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2006, the Company issued 41 Convertible Subordinated Notes due May&nbsp;31, 2007. The principal balance of $1,069,300 was
convertible at $.22 per share of common stock. Interest was accrued monthly and payable on the first anniversary of the date of issue in cash or restricted common stock, valued at $.22 per share, at
the Company's discretion. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
convertible notes contained a beneficial conversion feature in the amount of $221,287. The discount attributable to the beneficial conversion feature was credited to additional
paid-in capital and charged to interest expense on that date. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2007, the Company extended an offer to the Series&nbsp;A note holders to: a)&nbsp;extend the maturity date to September&nbsp;30, 2007; b)&nbsp;receive payment of the note
in full on May&nbsp;31, 2007; or c)&nbsp;convert the notes into common stock. All 41 note holders agreed to extend the maturity dates of their notes. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2007, the Company offered to prepay the Series&nbsp;A note holders subject to their right to convert the notes into shares of common stock at $.22 per share. The Company
converted all 41 notes with a face value of $1,069,300 into 4,860,456 shares of common stock and paid accrued interest of $98,117 in cash. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Series&nbsp;"B" 7.5% Convertible Subordinated Notes ("Series&nbsp;B")  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October and November 2006, the Company issued 118 Convertible Subordinated Notes due September&nbsp;30, 2007. The principal
balance of $5,722,516 was convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock at an exercise price of $1.00. Interest was
accrued monthly and payable on the first anniversary of the date of issue in cash or restricted common stock, valued at $.68 per share, at the Company's discretion. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
convertible notes contained a beneficial conversion feature in the amount of $1,146,161. The discount attributable to the beneficial conversion feature was credited to additional
paid-in capital and charged to interest expense on that date. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-20</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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NAME="page_fo75201_1_21"> </A>


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</FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company)  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7 Convertible Subordinated Notes (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2007, the Company issued a waiver allowing the Series&nbsp;B note holders to receive and exercise their warrants prior to converting their notes. During April and May 2007,
the warrants related to $5,254,676 principal amount of the Series&nbsp;B notes were exercised and the Company issued 7,727,465 shares of common stock and received $7,727,465 in gross proceeds and
paid $430,006 in commissions resulting in $7,297,459 net proceeds. In connection with this offer, the Company agreed to issue to the
Series&nbsp;B note holders who exercised their underlying warrant an additional one-half warrant should it fail to file&nbsp;a registration statement with the appropriate regulatory
agencies in the United States and Canada on or before August&nbsp;31, 2007. The Company was unable to file&nbsp;a registration statement by this date. Accordingly, the Company issued 3,863,734
Series&nbsp;B warrants ("Series&nbsp;B Warrants") dated September&nbsp;1, 2007, exercisable at $1.60 per share of common stock if exercised before December&nbsp;31, 2007 and at $2.00 per share
of common stock thereafter until their expiration on August&nbsp;31, 2008. The Company credited additional paid-in capital and recognized a charge to interest expense of $868,981,
representing the estimated fair value of the warrants, in the year ended December&nbsp;31, 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following assumptions were used in the Binomial-Lattice Model to estimate the fair value of warrants issued in connection with the Series&nbsp;B holders' exercise of warrants: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:40%;margin-left:30%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2007 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected term (in years)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected volatility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56.66</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected dividend yield</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk free interest rate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2007, the Company offered to prepay the Series&nbsp;B note holders subject to their right to convert the notes into shares of common stock at $.68 per share. Of the 118 note
holders, 116 chose to convert their notes into common stock. On August&nbsp;24, 2007, the Company converted notes with a face value of $5,652,136 into 8,311,965 shares of common stock. In connection
with the conversion of the Series&nbsp;B notes, those note holders who did not elect to exercise their warrants prior to converting their notes in connection with the Company's April 2007 waiver,
were issued 588,000 Series&nbsp;A warrants ("Series&nbsp;A Warrants") pursuant to the terms of the Series&nbsp;B notes. Two notes with a principal balance of $70,380 were paid in cash. The
Company also paid an aggregate $364,550 in accrued interest in cash. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Series&nbsp;"C" 7.5% Convertible Subordinated Notes ("Series&nbsp;C")  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Between March and April 2007, the Company issued 20 Convertible Subordinated Notes due February&nbsp;28, 2008. The principal balance
of $999,713 was convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock at a purchase price of $1.00. Interest was accrued
monthly and payable on the maturity date in cash or restricted common stock, valued at $.68 per share, at the Company's discretion. The Company paid $64,498 of debt issuance costs in 2007, the entire
amount was charged to interest expense in 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
convertible notes contained a beneficial conversion feature in the amount of $165,783. The discount attributable to the beneficial conversion feature was credited to additional
paid-in capital and charged to interest expense on that date. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-21</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_fo75201_1_22"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7 Convertible Subordinated Notes (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2007, the Company issued a waiver allowing the Series&nbsp;C note holders to receive and exercise their warrants prior to converting their notes. During April and May 2007,
the warrants related to $766,713 principal amount of the Series&nbsp;C notes were exercised and the Company issued 1,127,519 shares common stock and received $1,127,519 in gross proceeds and paid
$62,743 in commissions resulting in $1,064,776 in net proceeds. In connection with this offer, the Company agreed to issue the Series&nbsp;C note holders who exercised their underlying warrant an
additional one-half warrant should it fail to file&nbsp;a registration statement with the appropriate regulatory agencies in the United States and Canada on or before August&nbsp;31,
2007. The Company was unable to file&nbsp;a registration statement by this date. Accordingly, the Company issued 563,758 Series&nbsp;B Warrants dated September&nbsp;1, 2007, exercisable at $1.60
per share of common stock if exercised before December&nbsp;31, 2007 and at $2.00 per share of common stock thereafter until their expiration on August&nbsp;31, 2008. The Company credited
additional paid-in capital and recognized a charge to interest expense of $126,793, representing the estimated fair value of the warrants, in the year ended December&nbsp;31, 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following assumptions were used in the Binomial-Lattice Model to estimate the fair value of warrants issued in connection with the Series&nbsp;C holders' exercise of warrants: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:40%;margin-left:30%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2007 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected term (in years)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected volatility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56.66</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected dividend yield</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk free interest rate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2007, the Company offered to prepay the Series&nbsp;C note holders subject to their right to convert the notes into shares of common stock at $.68 per share. The Company
converted 20 notes with a face value of $999,713 into 1,470,166 shares of common stock. In connection with the conversion of the Series&nbsp;C notes, those note holders who did not elect to exercise
their warrants prior to converting their notes in connection with the Company's April 2007 waiver, were issued 342,647 Series&nbsp;A Warrants ("Series&nbsp;A Warrants") pursuant to the terms of
the Series&nbsp;C notes. The Company also paid an aggregate $34,314 in accrued interest in cash. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-22</FONT></P>

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<!-- ZEQ.=2,SEQ=177,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=1008508,FOLIO='F-22',FILE='DISK132:[11ZAZ1.11ZAZ75201]FO75201A.;10',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7 Convertible Subordinated Notes (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
summary of the transactions involving the conversion of debt and issuance of the Series&nbsp;A Warrants is shown below: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Changes
Resulting From Conversion of Debt in August 2007 </FONT></P>
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<TD WIDTH="69pt" style="font-family:times;"></TD>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="69pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="69pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Series&nbsp;A Notes </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Series&nbsp;B Notes </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Series&nbsp;C Notes </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Principal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,069,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,722,516</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>999,713</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,791,529</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Conversion price</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>.22/Share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>.68/Unit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>.68/Unit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underlying units</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,415,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,470,166</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,885,631</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares underlying principal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
4,860,456</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
8,415,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
1,470,166</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
14,746,087</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less shares underlying debt paid</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(103,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(103,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares issued</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,860,456</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,311,965</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,470,166</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,642,587</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Principal converted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,069,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,652,136</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>999,713</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,721,149</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warrants underlying units</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,415,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,470,166</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,885,631</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warrants previously exercised</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,727,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,127,519</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,854,984</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less warrants underlying debt paid</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(100,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(100,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;A Warrants issued</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>588,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>342,647</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>930,647</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
summary of the transactions involving the Company's April 2007 waiver and subsequent early exercise of warrants, and the Company's inability to file&nbsp;a registration statement by
August&nbsp;31, 2007, resulting in the issuance of the Series&nbsp;B Warrants, is shown below: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="69pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="69pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Series&nbsp;B Notes </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Series&nbsp;C Notes </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares issued in connection with early exercise</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,727,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,127,519</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,854,984</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;B Warrants issued</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,863,734</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>563,758</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,427,492</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;8 Senior Debt Facility  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Credit Facility  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2010, the Company entered into an arrangement of a $16&nbsp;million senior secured credit facility ("Credit Facility"),
which the lender advanced in two tranches. Tranche&nbsp;1 proceeds in the amount of $5&nbsp;million were used for general working capital consistent with operating activities mutually agreed upon
by the Company and lender. Tranche&nbsp;2 proceeds in the amount of $11&nbsp;million were used to fund the Company's acquisition of UEC's 49% interest in Cibola. The Credit Facility agreement,
among other terms and conditions, provides for: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>a.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
payment of outstanding principal, together with accrued interest, on or before December&nbsp;31, 2010.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>b.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Interest
charged on outstanding principal balances is accrued as a part of the principal balance and calculated at a rate equal to LIBOR plus 7%. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-23</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=178,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=15363,FOLIO='F-23',FILE='DISK132:[11ZAZ1.11ZAZ75201]FO75201A.;10',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fo75201_1_24"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;8 Senior Debt Facility (Continued) </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>c.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mortgage
and senior security interest in all material "real property" located in New Mexico; all "personal property" of the Company; and a pledge of the
Company's 100% ownership interest in Cibola. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
consideration of the Credit Facility agreement, the Company: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>a.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Paid
the lender an arrangement fee of $1,120,000, equal to 7% of the Credit Facility, plus $190,758 in costs and expenses incurred by lender.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>b.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Issued
the lender warrants to purchase a total of 3,051,744 shares of common stock of the Company on the following terms: The exercise price is $1.75 or the
lowest price at which the Company issues shares during the exercise period, which is four years from date of issuance. The estimated fair value of these warrants on the dates of issue was $1,579,637
or $.52 per warrant, as estimated using the Black-Scholes option pricing model with an exercise price of $1.75, an expected life of 4&nbsp;years, a risk free interest rate of 2.13% to 2.26%, a
dividend yield of 0%, and an expected volatility of 86.3% to 86.5%.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>c.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Upon
issuance of additional shares by the Company, the Company is obligated to issue additional warrants to lender to purchase up to 1,519,684 additional
shares of common stock. The warrants will be issued so as to allow the lender to maintain a beneficial ownership up to five percent (5%), as was achieved by the issuance of the warrants in b above.
The fair value of these warrants has not been established as these warrants are not issuable at December&nbsp;31, 2010. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B><I> Amended Credit Facility  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;22, 2010, the Company entered into the First Amendment Agreement to the Credit Facility Agreement ("Amended Credit
Facility") with lender with respect to the amendment of the April 2010 Credit Facility. The Lender extended the maturity of the Credit Facility from December&nbsp;31, 2010 to June&nbsp;30, 2011,
and advanced $8&nbsp;million in Tranche&nbsp;3, which increased the Credit Facility from $16&nbsp;million to $24&nbsp;million. The terms of the Amended Credit Facility
are: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>a.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
Company paid the lender an arrangement fee of $320,000, equal to 4% of the increase in amount of the credit facility, an extension fee of $160,000, equal
to 1% of the original credit facility, plus, $21,233 in costs and expenses incurred by the lender.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>b.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Upon
issuance of additional shares by the Company, the Company is obligated to issue additional warrants to lender to purchase up to 2,742,857 additional
shares of common stock. The warrants will be issued so as to allow the lender to maintain a beneficial ownership up to five percent (5%). The fair value of these warrants has not been established as
these warrants are not issuable at December&nbsp;31, 2010.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>c.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>All
other terms and conditions remain the same. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B><I> Discount on Senior Debt  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company accounted for the senior credit facility in a manner that allocated the proceeds from the senior credit facility based on
the relative fair values of the debt instrument without the warrants and of the warrants themselves at the time of issuance. The portion of the senior debt proceeds </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-24</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=179,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=381521,FOLIO='F-24',FILE='DISK132:[11ZAZ1.11ZAZ75201]FO75201A.;10',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fo75201_1_25"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;8 Senior Debt Facility (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>allocated
to the warrants resulted in a discount on the debt to be recognized as a part of interest expense in the Company's consolidated statements of operations. The Company recorded $1,579,637 as a
discount on senior debt on the date of issuance. As of December&nbsp;31, 2010, the Company has amortized $1,527,895 as interest expense in connection with the accretion of the senior debt discount. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Warrant Liability  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the downround protection feature (reset provision) of the warrants issued in connection with the senior credit facility,
the warrants are considered a derivative for financial reporting purposes. Therefore, the Company recorded the fair value allocated to the warrants as a liability on the Company's consolidated balance
sheets and is subject to ongoing fair value measurement. The Company recorded the estimated fair value of the 3,051,744 issued warrants in the amount of $1,579,637 as a warrant liability on the date
of issuance. As of December&nbsp;31, 2010, the Company recognized an unrealized gain on warrant liability of $240,235, to reflect the change in estimated fair value of the warrant liability as of
that date. The amount is included as a component of interest expense within the consolidated statements of operations. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Restricted Cash&#151;Proceeds Account  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Credit Facility and Amended Credit Facility, the net proceeds from Tranche&nbsp;1 and Tranche&nbsp;3 were deposited
in a proceeds account controlled by the lender. Working capital is transferred to the Company under the terms of the cash budget agreed upon between the Company and the lender. Accordingly, the
December&nbsp;31, 2010 proceeds account balance of
$7,044,367 is classified as short-term restricted cash and is reported in restricted cash and marketable securities on the consolidated balance sheets. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;9 Common Stock  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth the number of shares of common stock and other potentially dilutive securities of the Company as of each balance sheet date: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>58,204,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>58,154,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilutive securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warrants issued in connection with senior debt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,051,744</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stock options</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,491,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,335,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilutive securities outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,543,410</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,335,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted shares of common stock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>66,747,551</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>63,489,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-25</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;9 Common Stock (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2005, Common Stock Transactions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During March and May 2005, as part of the initial incorporation of the Company, the Company issued 6,877,565 shares of common stock at
$.01 per share to a founding officer of the Company for services, resulting in the Company's recognition of $68,776 in non-cash compensation expense. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2005, the Company signed a letter agreement with Primary granting Primary the right to purchase 10,750,000 shares of common stock. Under the agreement Primary was to make
periodic payments totaling $1,250,000. The Company received $1,000,000 during the year ended December&nbsp;31, 2005 and recorded a Stock Subscription Receivable of $250,000 as of that date.
Accordingly, for accounting purposes, 8,600,000 common shares were considered issued and outstanding as of December&nbsp;31, 2005. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2005, the Company issued 5,807,435 shares of common stock to officers, employees and technical consultants of the Company. The shares of common stock were issued at an estimated
fair value of $.12 per share, resulting in the Company's recognition of $675,283 in non-cash compensation expense. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2006, Common Stock Transactions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2006, the Company issued 10,750,000 common shares to Primary, of which 2,150,000 shares were considered issued to Primary in
2006 for accounting purposes, upon payment of the final $250,000 as required by the stock subscription agreement. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 2006, as part of a lease agreement, the Company issued 65,000 shares of common stock, in addition to cash consideration, to the lessor. The shares of common stock were issued at
an estimated fair value of $.27 per share, resulting in the Company's capitalization of $16,878 in unproven mineral properties on a consolidated basis. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2007, Common Stock Transactions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2007, in connection with the re-incorporation of the Company into Nevada, the number of authorized shares of the
Company's stock was increased to two hundred and ten million (210,000,000) of which 200,000,000 are common stock and 10,000,000 are preferred shares. Each share of common stock was changed from a par
value of $.01 to $.001. All share amounts have been retroactively restated to give effect to the change in par value. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April and May 2007, the Company issued 8,854,984 shares of common stock to Series&nbsp;B and Series&nbsp;C note holders who exercised their warrants for $1.00 per share. The
Company received gross proceeds of $8,854,984 from the warrants exercised. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2007, the Company issued 50,000 shares of common stock to an officer. The shares have an estimated fair value of $1.00 per share and a non-cash compensation expense
of $50,000 was recognized. In September 2007, the Company issued an additional 50,000 shares of common stock to an officer at an estimated fair value of $1.50 per share, and $75,000 was recognized as
non-cash compensation expense. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2007, the Company issued 14,642,587 shares of common stock to Series&nbsp;"A", "B", and "C" note holders by converting notes into common stock. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-26</FONT></P>

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</FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company)  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;9 Common Stock (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During September through November 2007, the Company issued 7,061,474 shares of common stock in a private placement at $1.50 per share. Gross proceeds from the private placement were
$10,592,211. Offering costs for this private placement were $690,414 for net proceeds of $9,901,797. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2007, warrants were exercised to purchase 75,000 shares of common stock at an exercise price of $1.60 for total proceeds of $120,000 to the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2008, Common Stock Transactions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 2008, the Company issued 100,000 shares of common stock to an officer pursuant to the Company's 2007 Omnibus Incentive Plan.
The shares had an estimated fair value of $0.75 per share and non-cash compensation expense of $75,000 was recognized. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2008, Series&nbsp;A Stock Purchase Warrants were exercised to purchase 273,529 shares of common stock at an exercise price of $1.00 per share of common stock, for proceeds of
$273,529 to the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
August 2008, Series&nbsp;B Stock Purchase Warrants were exercised to purchase 27,500 shares of common stock at an exercise price of $2.00 per share of common stock, for proceeds of
$55,000 to the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2009, Common Stock Transactions  </I></B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2009, the Company issued 3,519,067 shares of common stock to Primary Corp. in consideration for its October&nbsp;15, 2009
purchase of Primary's 34.56% interest in Grants J.V. Details of the transaction are discussed in Note&nbsp;6. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2010, Common Stock Transactions  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May 2010, the Company issued 50,000 shares of common stock to a director of the Company in consideration of a short-term
standby letter of credit. The shares were valued at $1.00 per share and $50,000 was recognized as non-cash compensation expense. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;10 Stock Option Plan  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Stock Option Plans  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2006, the Board of Directors adopted the 2006 Stock Option and Restricted Stock Plan (the "2006 Plan"). Shareholders
approved the 2006 Plan in February 2006. The 2006 Plan authorizes the Company to issue 3,500,000 shares of common stock upon exercise of options and grants of restricted and unrestricted stock awards.
The Plan authorizes the Company to grant i)&nbsp;to the key employees incentive stock options to purchase shares of common stock and non-qualified stock options to purchase shares of
common stock and restricted and unrestricted stock awards and ii)&nbsp;to non-employee directors and consultants' non-qualified stock options and restricted and unrestricted
stock awards. At December&nbsp;31, 2010, the Company had granted 3,397,000 stock options and 100,000 shares of common stock as stock awards under the 2006 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2007 the Board of Directors adopted the 2007 Omnibus Incentive Plan (the "2007 Plan"). Shareholders approved the 2007 Plan in September 2008. The 2007 Plan authorizes the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-27</FONT></P>

<HR NOSHADE>
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<A NAME="page_fq75201_1_28"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;10 Stock Option Plan (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>Company
to issue 2,800,000 shares of common stock upon exercise of options and grant of restricted and unrestricted stock awards. The 2007 Plan authorizes the Company to grant i)&nbsp;incentive
stock options and non-qualified stock options, ii)&nbsp;stock appreciation rights, iii)&nbsp;restricted stock and stock units awards and iv)&nbsp;unrestricted stock awards. At
December&nbsp;31, 2010, the Company had granted 2,094,666 stock options and 150,000 shares of common stock as stock awards under the 2007 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Stock Options Issued  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 2006, the Company granted 1,220,000 stock options under the 2006 Plan with an exercise price of $.68 as follows: 770,000 to
officers; 50,000 to an employee; and 400,000 to directors. The term of these options is ten years with vesting periods ranging from immediate vesting to 30&nbsp;months. The weighted average fair
value of these options at the date of grant was $.374 per option, for a total of $456,072, estimated using the Black-Scholes options pricing model. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the year ended December&nbsp;31, 2007, the Company granted a total of 2,159,000 stock options under the 2006 Plan as follows: 921,000 to officers, 1,188,000 to employees, and 50,000
to consultants. Of those options, 1,099,000 were issued at an exercise price of $.68; 1,010,000 were issued at an exercise price of $1.00 and 50,000 were issued at an exercise price of $1.50 for a
weighted average exercise price of $.85 per share. The term of these options ranges from five to ten years with vesting periods ranging from immediate vesting to 36&nbsp;months. The weighted average
fair value was $.45 per option at the respective grant dates for a total of $967,756, which was estimated using the Black-Scholes options pricing model. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the year ended December&nbsp;31, 2008, the Company granted a total of 870,000 stock options under the 2007 Plan as follows: 400,000 to officers, 140,000 to employees, 260,000 to
independent directors and 70,000 to consultants, all at an exercise price of $1.50 per share. The contracted term of these options ranges from fifty-four months to ten years with vesting
periods ranging from immediate vesting to 24&nbsp;months. The weighted average fair value was $.67 per option at the respective grant dates for a total of $587,099, which was estimated using the
Black-Scholes options pricing model. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2009, the Company sought, and received, an indefinite voluntary reduction in salaried compensation paid to its six executive officers and four highest compensated employees.
The reduction in salaried compensation ranged from 7% to 20% for executive officers and from 5% to 12% for employees. In addition, the Company's Board of Directors reduced its quarterly compensation
by 50%. In connection with this reduction in compensation, the Company agreed to modify the terms of 1,200,000 stock options issued to two executive officers, 120,000 stock options issued to an
employee and 260,000 stock options issued to three directors of the Company. The Company modified the terms of the stock options by reducing the exercise price from $1.00 to $.68 per share on 800,000
stock options and from $1.50 to $.68 per share on 780,000 stock options. The Company treats a modification of terms of a stock option as an exchange of the original stock options for new stock options
and the incremental share-based compensation is measured and recognized as the excess, if any, of the fair value of the modified stock options over the fair value of the original stock options
measured immediately before the terms are modified. Accordingly, the Company recognized incremental share-based compensation of $1,752 and $80,586 in the years ended December&nbsp;31, 2010 and 2009,
respectively. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-28</FONT></P>

<HR NOSHADE>
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<A NAME="page_fq75201_1_29"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;10 Stock Option Plan (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2009, also in connection with the reduction in compensation, the Company's Board of Directors authorized, and the Company subsequently issued, the following stock
options: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>a)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
Company granted 538,000 stock options to six executive officers, 88,000 under the 2006 Plan and the remainder under the 2007 Plan, at an exercise price
of $.68 per share, which vest upon issuance and have a term of 10&nbsp;years;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>b)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
Company granted 228,000 stock options to four employees under the 2007 Plan at an exercise price of $.68 per share, which vest upon issuance and have a
term of 10&nbsp;years; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>c)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
Company granted 90,000 stock options to three directors under the 2007 Plan at an exercise price of $.68 per share, which vest upon issuance and have a
term of 10&nbsp;years. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
estimated fair value of these stock options was $271,196, or $.32 per stock option. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2009, the Company granted 350,000 stock options under the 2007 Plan as follows: 50,000 to an employee and 300,000 to a consultant, all at an exercise price of $.68 per share with
a term of ten years with vesting periods ranging from immediate vesting to 20&nbsp;months. The weighted average fair value was $.40 per option at the respective grant dates for a total of $140,643,
which was estimated using the Black-Scholes options pricing model. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2010, in accordance with its compensation plan, the Company's Board authorized, and the Company subsequently granted 100,000 stock options to a strategic outside consultant at an
exercise price of $1.00 per share, one-half vested upon issuance and the balance vested in October 2010, and has a five year term. The estimated fair value of these options was $66,760, or
$.67 per share. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2010, in accordance with its compensation plan, the Company's Board authorized, and the Company subsequently granted 90,000 stock options to three non-executive
directors at an exercise price of $1.00 per share, which vest upon issuance and have a ten year term. The estimated fair value of these options was $75,997, or $.84 per share. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the recognized compensation expense for the following periods: </FONT></P>
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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>From Inception<BR>
(March&nbsp;25, 2005)<BR>
through<BR>
December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Recognized compensation expense&#151;stock options</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>147,049</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>577,191</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>784,089</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,526,151</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Recognized compensation expense&#151;stock awards</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>75,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>994,059</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>197,049</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>577,191</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>859,089</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,520,210</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December&nbsp;31, 2010, the Company has no unrecognized share-based compensation. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-29</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=184,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=453660,FOLIO='F-29',FILE='DISK132:[11ZAZ1.11ZAZ75201]FQ75201A.;8',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fq75201_1_30"> </A>


<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;10 Stock Option Plan (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
grants of stock options for the years ended December 2010, 2009, and 2008 are detailed in the table below: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="78pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:50pt;"><FONT SIZE=1><B>Stock Options

<!-- COMMAND=ADD_SCROPPEDRULE,50pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Options </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted<BR>
Average Exercise<BR>
Price </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2007</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,379,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.77</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>870,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cancelled/Expired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(50,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2008</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,199,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.93</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,786,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cancelled/Expired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,580,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(70,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,335,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.70</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>190,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(33,334</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,491,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.71</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table summarizes certain additional information about the Company's total and exercisable stock options outstanding as of December&nbsp;31, 2010: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="77pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="67pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="69pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
Outstanding </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted<BR>
Average<BR>
Remaining<BR>
Contractual Life </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted<BR>
Average<BR>
Exercise Price </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Intrinsic Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stock options</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,491,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6.92</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.71</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,622,933</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exercisable stock options</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,491,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6.92</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.71</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,622,933</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
estimated fair value of the Company's common stock on December&nbsp;31, 2010 was $1.00 per share. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-30</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=185,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=119058,FOLIO='F-30',FILE='DISK132:[11ZAZ1.11ZAZ75201]FQ75201A.;8',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fq75201_1_31"> </A>


<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;10 Stock Option Plan (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table summarizes the activity in nonvested stock options for the years ended December&nbsp;31, 2010, 2009, and 2008. As of December&nbsp;31, 2010, no options have been
exercised and 153,334 options have been forfeited. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="82pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Nonvested </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:50pt;"><FONT SIZE=1><B>Stock Options

<!-- COMMAND=ADD_SCROPPEDRULE,50pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Options </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested, December&nbsp;31, 2007</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,847,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.46</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>870,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.67</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,429,333</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(50,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.81</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested, December&nbsp;31, 2008</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,237,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.44</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,786,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.32</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,097,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.33</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cancelled/Expired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(706,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.51</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(70,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.29</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested, December&nbsp;31, 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.32</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>190,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.75</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(306,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.58</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cancelled/Expired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(33,334</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.33</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested, December&nbsp;31, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
value of each option award is estimated at the date of grant using the Black-Scholes options pricing model that utilizes the assumptions included in the table below. Since the
Company has no historical exercise data, the expected term assumption was computed using the simplified method. In addition, because of this limited data, the Company has determined the volatility
assumption by using the volatility of similar public companies in its peer group. The risk free interest rate reflects the U.S. Treasury yield curve for a similar expected life instrument in effect at
the time of grant. The assumptions utilized for the years ended December&nbsp;31, 2010, 2009, and 2008 are as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="98pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="98pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="86pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected term (in years)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5.00&nbsp;-&nbsp;10.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5.00&nbsp;-&nbsp;10.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4.6&nbsp;-&nbsp;10.0</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected forfeiture rate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0%&nbsp;-&nbsp;75%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected volatility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>83.24%&nbsp;-&nbsp;83.99%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>83.36%&nbsp;-&nbsp;86.17%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>64.0%&nbsp;-&nbsp;86.9%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected dividend yield</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk free interest rate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2.26%&nbsp;-&nbsp;3.26%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.68%&nbsp;-&nbsp;3.22%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2.28%&nbsp;-&nbsp;3.45%</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-31</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=186,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=300906,FOLIO='F-31',FILE='DISK132:[11ZAZ1.11ZAZ75201]FQ75201A.;8',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fq75201_1_32"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;11 Stock Purchase Warrants  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Series&nbsp;A and B Warrants  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2007, the Company issued 9,785,631 Series&nbsp;A Warrants in conjunction with the April and May 2007 issuance and exercise and the
August 2007 conversion of the Series&nbsp;B and Series&nbsp;C notes. Of those, 273,529 and 8,854,984 warrants were exercised at $1.00 per share in 2008 and 2007, respectively. The remaining
657,118 warrants expired unexercised. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2007, the Company issued 4,427,492 Series&nbsp;B Warrants to those Series&nbsp;B and Series&nbsp;C note holders who elected to April and May 2007 early issuance and exercise of
their warrants underlying their Series&nbsp;B and Series&nbsp;C notes, as a penalty for not filing an initial public offering prior to August 2007. Of these, 75,000 warrants were exercised at
$1.60 per share in 2007 and 27,500 warrants were exercised at $2.00 per share in 2008. The remaining 4,324,992 warrants expired unexercised. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Performance Based Warrants  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 2008, the Company entered into an agreement ("Agreement") with an institutional stockholder to make an introduction and
arrange a meeting between the Company and a utility company that owns and/or operates a nuclear generating facility. In consideration of the Agreement, the Company issued the Institution a warrant to
purchase 2,333,332 shares of common stock of the Company at $2.25 per share on or before November&nbsp;7, 2009. The contingencies were not met, therefore the warrants expired unexercised. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;12 Income Taxes  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summarizes the components of the Company's deferred tax assets and liabilities: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exploration expenditures</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,680,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,612,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stock option compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>321,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>244,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leasehold acquisition costs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>37,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cibola joint venture</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>801,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>409,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net operating losses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,817,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,503,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>17,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total deferred tax assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,673,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,814,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(9,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(20,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(32,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(25,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total deferred tax liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(41,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(45,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Valuation allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(11,632,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(7,769,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net deferred tax assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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</FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company)  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;12 Income Taxes (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to establish when it is more likely than not that all or a portion of the deferred tax assets will not be realized, the Company reviewed all available positive and negative
evidence, including the Company's performance, the market environment in which the Company operates, forecasts of future profitability, the utilization of past tax credits, length of carry forward
periods and similar factors. It is difficult to conclude that a valuation allowance is not needed when there is negative evidence such as cumulative losses in recent years. Therefore, cumulative
losses weigh heavily in the overall assessment.
The tax years 2007-2010 remain open to examination by the Internal Revenue Service of the United States. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December&nbsp;31, 2010, the Company has generated net operating loss carry forwards for federal and state income tax purposes of approximately $19.6 and $22.2&nbsp;million
respectively, which expire from 2011 to 2030. The Company expects to continue to record a full valuation allowance on any future tax benefits until it has achieved several quarters of consecutive
profitable results coupled with an expectation of continued profitability. As of December 2010 and 2009, the valuation allowance totaled $11.6&nbsp;million and $7.8&nbsp;million, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
income tax benefit differs from the amount computed by applying the statutory U.S. federal income tax rate of 34% to losses from continuing operations before income taxes as follows: </FONT></P>
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=17 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>From Inception<BR>
(March&nbsp;25, 2005)<BR>
through<BR>
December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Federal income tax benefit at statuatory rate</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,975,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,289,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,828,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(12,633,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State taxes, net of federal benefit</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(702,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(424,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(319,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,701,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Changes in valuation allowance</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,865,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,288,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,716,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-33</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,633,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-32</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(188,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>425,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>431,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,701,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>-7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Benefit from income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;13 Related Party Transactions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2005, the Company entered into an agreement with Primary to issue 10,750,000 shares of the Company's common stock in exchange for cash subscriptions to the Company totaling
$1,250,000. On
January&nbsp;17, 2006, the final payment was received and shares were issued. In January 2006, Primary's president was appointed as a member of the Company's Board of Directors. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2006, the Company made an expense advance payment of $12,000 to an officer, which was paid in full in 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2006, the Company entered into a joint-venture agreement with Primary, a principal shareholder of the Company, to establish the Grants J.V. Primary's then president was a member
of the Company's Board of Directors, and continues to serve as a board member of Primary. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-33</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=188,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=733131,FOLIO='F-33',FILE='DISK132:[11ZAZ1.11ZAZ75201]FS75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fs75201_1_34"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;13 Related Party Transactions (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2009, the Company issued 3,519,067 shares of common stock to Primary in consideration for its October&nbsp;15, 2009 purchase of Primary's 34.56% interest in Grants J.V. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2010 and 2009, the Company paid a law firm $1,128 and $239,449, respectively, in legal fees. The attorney representing the Company was a partner in that law firm. In May 2009, the
Company granted the attorney 300,000 stock options in consideration of non-legal strategic consulting services. The options had an estimated fair value of $124,259 at the grant date. In
February 2011, the attorney was appointed to the Company's Board of Directors. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2010, the Company entered into the first of three agreements with a consultant, who subsequently became a member of the Board of Directors. The three agreements were:
i)&nbsp;a finder's fee agreement in January 2010, which would pay the consultant a 1% contingent fee on introductions leading to financing of the Company, which was terminated in February 2011;
ii)&nbsp;a consulting agreement in April 2010, which provided for a grant of 100,000 stock options with an estimated fair value of $66,760 plus contingent fees, which was terminated in February
2011; and iii)&nbsp;a subsequent consulting agreement in February 2011, which provided for a grant of 200,000 stock options and a monthly retainer of $5,000. In February 2011, the consultant was
appointed to the Company's Board of Directors. Further details of agreements i)&nbsp;and ii)&nbsp;are presented in Note&nbsp;14. Details of agreement iii)&nbsp;and the addition of new board
members are presented in Note&nbsp;18. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2010, a member of the Board of Directors was issued 50,000 shares of common stock, with an estimated fair value of $50,000, in consideration of a standby credit facility issued to
the Company. The standby letter of credit was not used and was subsequently terminated. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2011, the Company entered into a financial advisory agreement with Primary, as detailed in Note&nbsp;18. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;14 Commitments and Contingencies  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> 401(k) Retirement Plan  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2007, the Company adopted a non-contributory 401(k) Plan for its full-time employees and employees who
work at least 1,000&nbsp;hours per year. Effective January&nbsp;1, 2008, the Company elected to implement non-elective contributions equal to 3% of eligible compensation for employees
meeting certain eligibility requirements. The contributions meet the tax deferral "safe harbor" requirements provided for in the Internal Revenue Code. Contributions are accrued monthly and paid after
the close of the fiscal year. The Company accrued 401(k) expenses of $52,720, $67,450 and $60,772 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Mineral Leases  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company entered into a ten year Lease Agreement with JTLC in October 2006 as detailed in Note&nbsp;4. Pursuant to the terms of
the lease, the Company is obligated to make annual payments for the next five years of $337,500 for the main lease. Additional in-fill property leases obligate the Company to annual
payments of up to $9,500 for the next six years. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
other land leases are cancellable by the Company when exploration and/or development is completed or the property is abandoned. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-34</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=189,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=782292,FOLIO='F-34',FILE='DISK132:[11ZAZ1.11ZAZ75201]FS75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fs75201_1_35"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;14 Commitments and Contingencies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Office Leases  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company entered into leases for office space in Englewood, Colorado; Albuquerque, New Mexico; and Grants, New Mexico. The Englewood
lease is for a period of 38&nbsp;months ending October 2011. The Albuquerque lease, initially a three-year term, has been extended through March 2011. The remaining lease is a on a
month-to-month basis. During the years ended December&nbsp;31, 2010, 2009, and 2008, and the period from inception (March&nbsp;25, 2005) through December&nbsp;31, 2010,
the Company incurred $194,037, $203,257, $161,581, and $673,177, respectively, in rental expense that was charged to operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future
minimum lease commitments for Mineral and office leases at December&nbsp;31, 2010 are as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="63pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:47pt;"><FONT SIZE=1><B>Years Ending<BR>
December&nbsp;31,

<!-- COMMAND=ADD_SCROPPEDRULE,47pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Office Leases </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Mineral Leases </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total<BR>
Commitments </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>129,804</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>343,807</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>473,611</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2015</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>347,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Thereafter</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,517</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,517</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>129,804</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,741,392</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,871,196</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B><I> Credit Agreement with Arizona Business Bank  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2008, Arizona Business Bank issued the Company an Irrevocable Standby Letter of Credit in favor of the Landlord as a security
deposit on the lease of the corporate headquarters in Englewood, Colorado. The credit facility is collateralized by a certificate of deposit which pays 2.8% interest. As of December&nbsp;31, 2010,
the certificate of deposit in the amount of $25,000 is reported as a component of short-term restricted cash and marketable securities on the consolidated balance sheets, as it is to be
released in October 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December&nbsp;31, 2010, Arizona Business Bank has issued the Company four Irrevocable Standby Letters of Credit in favor of the New Mexico Energy, Minerals and Natural Resources
Department to satisfy the bond requirements for completion of surface and subsurface reclamation pursuant to the permits issued by the state of New Mexico. Each credit facility is collateralized by a
certificate of deposit equal to the value of the Letter of Credit which pays 2.8% interest. The total amount of the four certificates of deposit is $185,300. As of December&nbsp;31, 2010, the
certificates of deposit are reported as components of restricted cash and marketable securities on the consolidated balance sheets. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Long-term Payable  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 2009, the Company entered into an agreement with a former lessor and operator of certain lands now leased by the Company to
acquire historical data related to the Cebolleta project. The former lessor delivered the data at the time of the agreement. In consideration, the Company </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-35</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=190,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=473507,FOLIO='F-35',FILE='DISK132:[11ZAZ1.11ZAZ75201]FS75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fs75201_1_36"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;14 Commitments and Contingencies (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>made
payments to date of $50,000 with a final payment of $400,000 due in August 2013, which is recorded on the balance sheet as a long-term liability discounted at 8%, the borrowing rate
of the Company. Interest is amortized over the life of the contract. As of December&nbsp;31, 2010 and 2009, the long-term account payable is recorded at $325,539 and $299,454,
respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Employment Contracts and Termination and Change of Control Obligations  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has entered into employment agreements with five executive officers and one employee that provide that, in the event the
employee is terminated for other than for cause, death or disability, or the employee terminates for good reason, the Company will pay the employee the amount of his base salary for a specific number
of months, which varies from six to twenty-four months, provided that the salary continuation period falls within the period that compensation would have been paid had the termination not
occurred. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Agreements Containing Contingent Fees  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2010, the Company entered into a finder's fee agreement with a consultant, who subsequently became a director of the
Company, to provide introductions in connection with the Company's financing efforts. Should the Company conclude a transaction through the efforts on the consultant, the agreement requires the
Company to pay a 1% fee on proceeds received from the transaction. In February 2011, the Company terminated the agreement, however, the Company remains obligated to pay the fees set forth therein
should the Company complete a transaction within 12&nbsp;months of termination if the consultant introduced the financing party during the term of the agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2010, the Company entered into a strategic consulting and advisory agreement with a consultant, who subsequently became a director of the Company, to provide advisory services in
connection with the Company's evaluation of pursuing one or more strategic transactions, such as off-take agreements, forward sales contracts, joint ventures and mineral property
acquisitions or dispositions. Should the Company conclude a strategic transaction through efforts of the consultant, the consulting agreement requires the Company to pay a 1.5% fee on debt proceeds
received by the Company and a 5% fee on proceeds received by the Company through equity financing, asset dispositions or a joint venture earn-in. In addition, the Company granted the
consultant 100,000 stock options exercisable within five years at an exercise price of $1.00 per share of common stock, which vested one-half upon issuance and the balance on
October&nbsp;15, 2010. The agreement was terminated in February 2011, however, the Company remains obligated to pay the fees set forth in the agreement should the Company complete a transaction
within 12&nbsp;months of termination if the consultant contacted the financing party on behalf of the Company during the term of the agreement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Officer Indemnification  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Company's organizational documents, the Company's officers, employees and directors are indemnified against certain
liabilities arising out of the performance of their duties. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company
that have not yet occurred. However, based on experience, the Company expects any risk of loss to be remote. The Company also has an insurance policy for its directors and </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-36</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=191,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=214979,FOLIO='F-36',FILE='DISK132:[11ZAZ1.11ZAZ75201]FS75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fs75201_1_37"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;14 Commitments and Contingencies (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>officers
to insure them against liabilities arising from their performance in their positions with the Company or its subsidiaries. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;15 Fair Value of Financial Instruments  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disclosures about fair value of the Company's financial instruments are presented in the table below. These calculations are subjective in nature and involve uncertainties and
significant matters of judgment and do not include income tax considerations. Therefore, the results cannot be determined with precision and cannot be substantiated by comparison to independent market
values and may not be realized in actual sale or settlement of the instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used could
significantly affect the results. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table presents a summary of the Company's financial instruments: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:67%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"120%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="120%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="88pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fair Value Measurements at Reporting Date Using </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:41pt;"><FONT SIZE=1><B>Description

<!-- COMMAND=ADD_SCROPPEDRULE,41pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Carrying Amount<BR>
as of<BR>
December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Quoted Prices in<BR>
Active Markets<BR>
for Identical<BR>
Assets<BR>
(Level&nbsp;1) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Significant Other<BR>
Observable<BR>
Inputs<BR>
(Level&nbsp;2) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Significant<BR>
Unobservable<BR>
Inputs<BR>
(Level&nbsp;3) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current Assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>174,416</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>174,416</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash and marketable securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,069,367</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,069,367</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other Assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash and marketable securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>185,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>185,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current Liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Senior debt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,844,874</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,844,874</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term payable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>325,539</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>253,685</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warrant liability</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,339,402</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,339,402</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
carrying amounts for cash and cash equivalents, restricted cash and marketable securities, accounts payable, and accrued expenses approximate fair value because of the short
maturities of these financial instruments. As of December&nbsp;31, 2010, the carrying amount of the senior debt approximated fair value due to the fact that there were no changes to the terms and
the short term nature thereof. The fair value of the warrant liability was determined using the Black-Scholes model, which is detailed in Note&nbsp;8. The estimated fair value of the Company's
long-term payable was determined by discounting the related cash flows over the underlying contractual period using the Company's credit risk adjusted cost of debt. The credit risk
adjusted cost of debt utilized was based on the most recent capital transaction consummated by the Company which was the Amended Credit Facility in December 2010 and was estimated at 17.37%. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;16 Concentrations of Credit Risk  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and marketable securities. The Company
places its </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-37</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=192,EFW="2203031",CP="NEUTRON ENERGY, INC.",DN="1",CHK=149418,FOLIO='F-37',FILE='DISK132:[11ZAZ1.11ZAZ75201]FS75201A.;7',USER='DTAYLOR',CD='30-MAR-2011;11:10' -->
<A NAME="page_fs75201_1_38"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;16 Concentrations of Credit Risk (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>cash
and cash equivalents with high quality financial institutions and limits its credit exposure with any one financial institution. At times, the Company's bank account balances may exceed federally
insured limits. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;17 Non-Cash Investing and Financing Activities  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplemental disclosure of non-cash investing and financing activities: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="88pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended December&nbsp;31, </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>From Inception<BR>
(March&nbsp;25, 2005)<BR>
through<BR>
December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Activities:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock issued upon conversion of convertible notes payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,721,149</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock issued for acquisition of unproven mineral properties</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16,878</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock issued upon receipt of stock subscription receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Debt issuance costs financed by convertible notes payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>460,580</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock issued for acquisition of Primary's 34.56% interest in Grants J.V.&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>68,578</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>68,578</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchase of equipment financed by accounts payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,988</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchase of unproven mineral properties financed by senior debt and capitalized investment in mineral purchase option</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,454,312</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,454,312</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Debt issuance costs financed by senior debt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,618,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,618,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred offering costs financed by accrued expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,800</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,800</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Estimated fair value of warrant liability recognized in connection with warrants issued in senior debt transaction</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,579,637</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,579,637</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Noncontrolling interest reclassified to additional paid-in- capital upon purchase of Cibola</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,474,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,474,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;18 Subsequent Events  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Agreements Containing Contingent Fees  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2011, the Company entered into a financial advisory agreement with a related party. Pursuant to the agreement the financial
advisor will consult with the Company with respect to a)&nbsp;any merger, amalgamation, plan of arrangement, reorganization or other business combination, b)&nbsp;the issuance by the Company, or a
counterparty of a business combination, of securities in connection with an initial public offering or a private placement. Should the Company conclude a transaction, the financial advisory agreement
requires the Company to pay a 1% completion fee on the transaction </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-38</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Neutron Energy,&nbsp;Inc. and Subsidiaries<BR>
(An Exploration Stage Company) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Notes to Consolidated Financial Statements (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;18 Subsequent Events (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2>value,
defined as the gross proceeds received in a financing and the aggregate unrestricted cash balances of any counterparty in connection with a business combination. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Standby Letters of Credit  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2011, Arizona Business Bank issued the Company two additional Irrevocable Standby Letters of Credit in favor of the New
Mexico Energy, Minerals and Natural Resources Department to satisfy the bond requirements for completion of surface and subsurface reclamation pursuant to the permits issued by the state of New
Mexico. Each credit facility
is collateralized by a certificate of deposit equal to the value of the Letter of Credit which pays 2.8% interest. The total amount of the two certificates of deposit is $88,605. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I> Increase in Size of Board of Directors  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2011, the Company increased the size of the Board of Directors from five to eight members. The three new board members were
appointed and each granted 200,000 stock options at an exercise price of $1.00 per share of common stock. The options have a term of ten years and vest immediately. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Consulting Agreement  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2011, the Company entered into a consulting agreement with one of the newly appointed directors to provide advice and
consultation to the Company, on an as needed basis, with respect to: i)&nbsp;marketing and operational strategies, goals and objectives; ii)&nbsp;implementation and execution of strategic
initiatives; and iii)&nbsp;evaluation of performance and results. In consideration, the Company agreed to pay a month retainer to be offset by a daily consulting fee. In addition, the Company
granted the consultant 200,000 stock options exercisable within ten years at an exercise price of $1.00 per share of common stock and vests one-half six months after the agreement date and
the balance twelve months after the agreement date. The consulting agreement is non-exclusive and may be terminated at any time upon 30&nbsp;days notice. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> 2011 Equity Incentive Plan  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2011, the Board of Directors unanimously approved the 2011 Equity Incentive Plan, ("2011 Plan"). The 2011 Plan authorizes
the Company to issue a maximum of between 1,000,000 and 3,000,000 shares of common stock depending on the total number of issued and outstanding shares of common stock of the Company. The 2011 Plan is
subject to the approval of the Company's shareholders within a period of one year. The 2011 Plan authorized, among other things, the Company to grant i)&nbsp;incentive stock options and
non-qualified stock options, ii)&nbsp;stock appreciation rights, iii)&nbsp;restricted stock and stock unit awards, and iv)&nbsp;unrestricted stock awards. The Company has granted
400,000 non-qualified stock options as of the date of issuance of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-39</FONT></P>

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 </FONT> <FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><div
style="width:100%;border-top:solid #000000 3.0pt;padding:0in 0in 0in 0in;font-size:3.0pt;"></div>
<div style="width:100%;border-top:solid #000000 1.0pt;padding:0in 0in 0in 0in;font-size:4.0pt;"></div> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B>
<IMG SRC="g735584.jpg" ALT="GRAPHIC" WIDTH="234" HEIGHT="90">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B> Common Stock  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=3><B>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=3><B> PROSPECTUS  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=3><B>

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  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B>Roth Capital
Partners&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cormark Securities (U.S.A.) Limited
  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B>Through and including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011, all dealers that buy, sell
or trade our common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><div
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<div style="width:100%;border-top:solid #000000 3.0pt;padding:0in 0in 0in 0in;font-size:4.0pt;"></div> </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ja75201_part_ii_information_not_required_in_prospectus"> </A>
<A NAME="toc_ja75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PART II    <BR>    <BR>    Information Not Required in Prospectus    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="ja75201_item_13._other_expenses_of_issuance_and_distribution"> </A>
<A NAME="toc_ja75201_2"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;Other Expenses of Issuance and Distribution    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the various fees and expenses payable by Neutron Energy,&nbsp;Inc. in connection with the sale of the
common stock being registered hereby. All amounts shown are estimates except for the SEC registration fee, the FINRA fee,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;fee and TSX fee.
Neutron Energy will pay all of the expenses
shown below. </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SEC registration fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,077</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>FINRA filing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,595</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;filing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>TSX filing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounting fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Printing expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer agent and registrar fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Director and officer liability insurance premiums</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Miscellaneous expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
be provided by amendment. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><A
NAME="ja75201_item_14._indemnification_of_directors_and_officers"> </A>
<A NAME="toc_ja75201_3"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of Directors and Officers    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Incorporation contain a provision which eliminates the personal monetary liability of our officers and directors to the
extent allowed under Nevada law. Under the Nevada Revised Statutes, our directors or officers are not individually liable, subject to certain exceptions, to the Corporation or our stockholders or
creditors for any damages as a result of any act or failure to act in their capacity as a director or officer unless it is proven that such conduct constituted a breach of their fiduciary duties as a
director or officer and that the breach involved intentional misconduct, fraud or a knowing violation of law. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our Articles of Incorporation and Bylaws provide that we will indemnify our directors, officers, employees and other agents to the fullest extent permitted by Nevada law,
provided the director, officer, employee or other agent acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. However, no indemnification will be made in respect of any claim, issue or matter
as to which any such person is adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought determines upon application that such person
is fairly and reasonably entitled to indemnity for such expenses. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the authorization in its Bylaws, the Company purchased and maintains liability insurance on behalf of its directors and officers. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has not entered into indemnification agreements with our directors, officers, employees and other agents, and indemnification for those individuals is limited to the
foregoing disclosure. However, we may in the future enter into agreements to indemnify our directors and executive officers, in addition to the indemnification provided for in our Articles of
Incorporation and Bylaws. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-1</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="ja75201_item_15._recent_sales_of_unregistered_securities"> </A>
<A NAME="toc_ja75201_4"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;Recent Sales of Unregistered Securities    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information presented below describes our sales and issuances of unregistered securities for the past three years. Unless otherwise
indicated, the consideration for all such sales and issuances, other than issuances of stock options, was cash. The information presented below regarding the aggregate consideration received by us is
provided before deduction of offering and other related expenses. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Common Stock Issuances  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;10, 2010, we issued 50,000 shares of common stock to a director of the Company in consideration of a $500,000
short-term standby credit facility. The fair value of the shares on the date of issuance was $1.00 per share. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December&nbsp;30, 2009, we issued 3,519,067 shares of our common stock to Primary Corp. ("Primary"), formerly known as Trans America Industries&nbsp;Ltd., in exchange for
Primary's 34.56% ownership interest in the Grants Uranium Project Joint Venture (the "Grants J.V.") between Primary and the Company pursuant to a Purchase and Termination Agreement dated
October&nbsp;15, 2009. The value of Primary's ownership interest in the Grants J.V. was determined to be $3,519,067, or $1.00 per share of common stock issued by us in connection with its
acquisition and the fair value of the shares on the date of issuance was $3,519,067. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August&nbsp;31, 2008 we issued 273,529 shares of common stock in connection with the exercise of warrants at an exercise price of $1.00 per share. These warrants were part of a
group of warrants ("Series&nbsp;A Warrants") that were issued in connection with the issuance convertible notes in 2006 and 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August&nbsp;31, 2008, we issued 27,500 shares of common stock in connection with the exercise of warrants ("Series&nbsp;B Warrants") at an exercise price of $2.00 per share. The
Series&nbsp;B Warrants were issued to holders who exercised their Series&nbsp;A Warrants as a penalty for not conducting an initial public offering prior to August 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August&nbsp;1, 2008, we issued 100,000 shares of common stock to an officer of the Company pursuant to the Company's 2007 Omnibus Incentive Plan in consideration for services
provided to the Company. The shares had an estimated fair value of $0.75 per share on the date of issuance. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Warrant Issuances  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;22, 2008, we issued a contingent warrant to each of Passport Material Master Fund,&nbsp;LP and Passport Global
Master Fund SPC&nbsp;Ltd for and on behalf of Portfolio A&#151;Global Strategy to purchase 1,166,666 shares of our common stock at $2.25 per share in connection with an agreement for Passport
Management,&nbsp;LLC to arrange a meeting between the Company and a utility company that owns and/or operates a nuclear generating facility. However, the contingencies set forth in the warrant were
never satisfied and the warrants expired unvested and unexercised on November&nbsp;7, 2009. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;4, 2010 and April&nbsp;12, 2010, we issued two warrants to RMB Australia Holdings Limited ("RMBAH") to purchase an aggregate of 3,051,744 shares of our common stock at
an exercise price of the lesser of (i)&nbsp;$1.75 per share, and (ii)&nbsp;the lowest price of any shares of common stock issued in connection with any equity capital raising undertaken by the
Company, in connection with the execution of our Credit Facility Agreement with RMB Resources, Inc, an agent of RMBAH. The exercise periods of the warrants commence on the date of issuance of the
warrant and terminates 48&nbsp;months thereafter. The warrants also have piggy-back registration rights. In addition, the Company obligated itself to issue such additional warrants to
purchase up to a maximum of 1,519,684 additional shares of common stock as is necessary for RMBAH to own 5%, calculated on a partially diluted basis, </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-2</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>of
our issued and outstanding common stock on the same terms as the issued warrants. These warrants were issued as partial consideration for financing provided by RMBAH. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December&nbsp;22, 2010, we agreed in connection with an amendment to an existing loan agreement to issue to RMBAH such additional warrants to purchase up to a maximum of 2,742,857
shares, in addition to the warrants already issued or obligated to be issued, as is necessary for RMBAH to own
5%, calculated on a partially diluted basis, of our issued and outstanding common stock on the same terms as the issued warrants. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Option Award Issuances  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since March&nbsp;1, 2008, we have issued to directors, officers and employees options to purchase approximately 3,066,000 shares of
our common stock at exercise prices from $0.68 to $1.50 per share under our 2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
issuances of securities in the foregoing transactions were effected without registration under the Securities Act in reliance on Section&nbsp;4(2) or Section&nbsp;3(a)(9)
thereof, Regulation&nbsp;D thereunder or Rule&nbsp;701 thereunder. None of such transactions was effected using any form of general advertising or general solicitation as such terms are used in
Regulation&nbsp;D under the Securities Act. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or
for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates or other instruments issued in such transactions. All such recipients either
received adequate information about Neutron Energy or had access, through employment or other relationships with Neutron Energy, to such information.  </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><A
NAME="ja75201_item_16._exhibits_and_financial_statement_schedules"> </A>
<A NAME="toc_ja75201_5"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits and Financial Statement Schedules    <BR>    </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>(a)</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Exhibits</B></FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
exhibits to this registration statement are listed on the exhibit index, which appears elsewhere herein and is incorporated by reference.  </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>(b)</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Financial Statement Schedules</B></FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are no schedules to the consolidated financial statements.  </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="ja75201_item_17._undertakings"> </A>
<A NAME="toc_ja75201_6"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;Undertakings    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment us of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-3</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned registrant hereby undertakes that: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule&nbsp;430A and contained in a form of prospectus filed by the registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared effective. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;For
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-4</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="jc75201_signatures"> </A>
<A NAME="toc_jc75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SIGNATURES    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Denver, Sate of Colorado, on March&nbsp;30, 2011. </FONT></P>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2> NEUTRON ENERGY,&nbsp;INC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>  By:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;GARY&nbsp;C. HUBER<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Name: Gary&nbsp;C. Huber<BR>
Title: </FONT><FONT SIZE=2><I>President and Chief Executive Officer</I></FONT></TD>
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NAME="jc75201_power_of_attorney"> </A>
<A NAME="toc_jc75201_2"> </A>
<BR></FONT><FONT SIZE=2><B>  POWER OF ATTORNEY    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each person whose signature appears below constitutes and appoints Gary&nbsp;C. Huber and Edward&nbsp;M. Topham, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, from such person and in each person's name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement or any Registration Statement relating to this Registration Statement
under Rule&nbsp;462 and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. </FONT></P>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>/s/&nbsp;KELSEY L. BOLTZ<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Kelsey L. Boltz</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Executive Chairman of the Board of Directors</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
</TR>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;GARY&nbsp;C. HUBER<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Gary&nbsp;C. Huber</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>President, Chief Executive Officer and Director<BR>
(Principal Executive Officer)</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;EDWARD&nbsp;M. TOPHAM<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Edward&nbsp;M. Topham</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Chief Financial Officer, Treasurer and Secretary<BR>
(Principal Financial and Principal Accounting Officer)</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;JOHN&nbsp;K. CAMPBELL<BR>


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</FONT> <FONT SIZE=2> John&nbsp;K. Campbell</FONT></TD>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>/s/&nbsp;JAMES&nbsp;J. GRAHAM<BR>


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</FONT> <FONT SIZE=2> James&nbsp;J. Graham</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;HENRY&nbsp;G. GRUNDSTEDT<BR>


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</FONT> <FONT SIZE=2> Henry&nbsp;G. Grundstedt</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;CAROLYN&nbsp;C. LODER<BR>


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</FONT> <FONT SIZE=2> Carolyn&nbsp;C. Loder</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
</TR>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;RICHARD MALLERY<BR>



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</FONT> <FONT SIZE=2> Richard Mallery</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;JERRY NELSON<BR>


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</FONT> <FONT SIZE=2> Jerry Nelson</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>March&nbsp;30, 2011</FONT></TD>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-6</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg75201a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ka75201_exhibit_index"> </A>
<A NAME="toc_ka75201_1"> </A>
<BR></FONT><FONT SIZE=2><B>  EXHIBIT INDEX    <BR>    </B></FONT></P>
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<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>**1.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Underwriting Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**3.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Articles of Incorporation of the Company</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**3.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Bylaws of the Company</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**4.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of certificate representing the common stock, $0.001 par value per share, of the Company</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**4.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Warrant Certificate No.&nbsp;W-1, dated April&nbsp;5, 2010, from the Company to RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**4.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Warrant Certificate No.&nbsp;W-2, dated April&nbsp;12, 2010, from the Company to RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**5.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Opinion of Hogan Lovells US&nbsp;LLP regarding the validity of the common stock</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>2006 Stock Option and Restricted Stock Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Nonqualified Stock Option Award Agreement under the 2006 Stock Option and Restricted Stock Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Stock Award Agreement under the 2006 Stock Option and Restricted Stock Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>2007 Omnibus Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Nonqualified Stock Option Award Agreement under the 2007 Omnibus Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Stock Award Agreement under the 2007 Omnibus Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Incentive Stock Option Award Agreement under the 2007 Omnibus Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>2011 Equity Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Nonqualified Stock Option Award Agreement under the 2011 Equity Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.10</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Stock Award Agreement under the 2011 Equity Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.11</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Employment Agreement between the Company and Kelsey L. Boltz dated October&nbsp;29, 2009</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.12</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Letter of Understanding and Agreement dated October&nbsp;1, 2010 between the Company and Kelsey L. Boltz.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.13</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Employment Agreement between the Company and Gary C. Huber dated October&nbsp;29, 2009.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.14</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Letter of Understanding and Agreement dated October&nbsp;1, 2010 between the Company and Gary C. Huber.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.15</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Employment Agreement between the Company and Mark J. Ludwig dated October&nbsp;1, 2010.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.16</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Letter of Understanding and Agreement dated October&nbsp;1, 2010 between the Company and Mark J. Ludwig.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.17</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Employment Agreement between the Company and Michael R. Neumann dated October&nbsp;1, 2010.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.18</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Letter of Understanding and Agreement dated October&nbsp;1, 2010 between the Company and Michael R. Neumann.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.19</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Employment Agreement between the Company and Edward M. Topham dated October&nbsp;1, 2010.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.20</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Letter of Understanding and Agreement dated October&nbsp;1, 2010 between the Company and Edward M. Topham.</FONT></TD>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg75201a_main_toc">Table of Contents</A></FONT></P>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>**10.21</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Facility Agreement, dated April&nbsp;12, 2010, between the Company, RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.22</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>First Amendment Agreement to Facility Agreement, dated December 2010, between the Company, Cibola, RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.23</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Security Agreement, dated April&nbsp;5, 2010, between the Company, RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.24</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Security Agreement, dated April&nbsp;12, 2010, between Cibola, RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.25</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Pledge Agreement, dated April&nbsp;12, 2010, between the Company, RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.26</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, effective April&nbsp;12, 2010, from the Company and Cibola to RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.27</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, effective April&nbsp;5, 2010, from the Company to RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.28</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, effective April&nbsp;5, 2010, from the Company to RMB Resources,&nbsp;Inc. and RMB Australia Holdings Limited.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.29</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Letter Agreement, dated January&nbsp;4, 2011, between the Company and Primary Capital</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.30</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Letter Agreement, dated August&nbsp;3, 2010, between the Company and RMB Resources&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.31</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consulting Agreement, dated February&nbsp;11, 2011, between the Company and Nuclear Fuel Cycle Consulting,&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.32</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Finder's Fee Agreement, dated January&nbsp;14, 2010, between the Company and Nuclear Fuel Cycle Consulting,&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.33</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Termination of Finder's Fee Agreement, dated February&nbsp;11, 2011, between the Company and Nuclear Fuel Cycle Consulting,&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Strategic Consulting and Advisory Agreement, dated April&nbsp;15, 2010, between the Company and Nuclear Fuel Cycle Consulting,&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.35</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Termination of Strategic Consulting and Advisory Agreement, dated February&nbsp;11, 2011, between the Company and Nuclear Fuel Cycle Consulting,&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.36</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Uranium Mining Lease and Agreement, dated October&nbsp;12, 2006, between Juan Tafoya Land Corporation and the Company.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.37</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Mining Lease and Agreement, dated March&nbsp;11, 2007, between La Merced del Pueblo de Cebolleta and the Company.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.38</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Mineral Lease Agreement, dated January&nbsp;4, 2008, between Enerdyne Endy Claims&nbsp;LLC and the Company.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.39</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Mineral Lease Agreement, dated February&nbsp;1, 2006, between Enerdyne Endy Claims&nbsp;LLC and the Company.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.40</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Mineral Lease Agreement, dated June&nbsp;1, 2006, between James A. Bonner, Julianne K. Bonner and the Company.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.41</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Data Purchase Agreement, dated August&nbsp;18, 2009, between United Nuclear Corporation and the Company.</FONT></TD>
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<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>**10.42</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Letter Agreement, dated January&nbsp;25, 2007, between International Nuclear,&nbsp;Inc. and the Company.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.43</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Exploration, Development and Mine Operating Agreement, dated April&nbsp;28, 2006, between the Company and Trans America Industries&nbsp;Ltd. (k/n/a Primary Corp.), as amended by Amendment No.&nbsp;1 on July&nbsp;21,
2008.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.44</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Purchase and Termination Agreement, dated October&nbsp;15, 2009, between Primary Corp. and the Company as amended by the First Amendment of Purchase and Termination Agreement, dated December&nbsp;15, 2009.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.45</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Option Agreement, dated November&nbsp;5, 2009, between Uranium Energy Corp and the Company as amended by the First Amendment to Option Agreement, dated December&nbsp;29, 2009.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**10.46</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Lease Agreement, dated April&nbsp;15, 2008, between Cognac Highland Court&nbsp;LLC and the Company</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>*21.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>List of Subsidiaries</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>*23.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consent of Mayer Hoffman McCann P.C.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>**23.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consent of Hogan Lovells US&nbsp;LLP (included in Exhibit&nbsp;5.1)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>*23.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consent of Broad Oak Associates</FONT></TD>
</TR>
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<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>*24.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Power of Attorney (included on signature page)</FONT></TD>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Filed
herewith.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>**</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
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Use these links to rapidly review the document
TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Neutron Energy, Inc. and Subsidiaries
Table of Contents
As filed with the Securities and Exchange Commission on March 30, 2011
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Neutron Energy, Inc.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of
incorporation or organization)
1090
(Primary Standard Industrial
Classification Code Number)
73-1734293
(I.R.S. Employer
Identification Number)
9000 E. Nichols Avenue, Suite 225
Englewood, Colorado 80112
(303) 531-0470
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
Edward M. Topham
Chief Financial Officer
9000 E. Nichols Avenue
Englewood, Colorado 80112
Telephone: (303) 531-0470
(Name, address, including zip code and telephone number,
including area code, of agent for service)
Copies to:
Richard J. Mattera
Hogan Lovells US LLP
1200 Seventeenth Street, Suite 1500
Denver, Colorado 80202
Telephone: (303) 899-7300
David F. Marx
Christopher L. Doerksen
Dorsey & Whitney LLP
136 South Main Street, Suite 1000
Salt Lake City, Utah 84101
Telephone: (801) 933-7360
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box.
o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
Indicate by check mark whether the registrant is a large accelerated , 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.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
ý
(do not check if a
smaller reporting company)
Smaller reporting company
o
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities
to be Registered
Proposed Maximum
Aggregate Offering
Price(1)
Amount of
Registration Fee
Common Stock, par value $0.001 per share(2)
$57,500,000
$6,676
Underwriters' Warrants(3)
—
—
Common Stock underlying Underwriters' Warrants(4)(5)
$3,450,000
$401
TOTAL
$60,950,000
$7,077
(1)
Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as
amended.
(2)
Includes
the offering price attributable to shares that the underwriters have the option to purchase solely to cover over-allotments, if any.
(3)
No
separate registration fee is required pursuant to Rule 457(g) promulgated under the Securities Act of 1933.
(4)
Pursuant
to Rule 416 promulgated under the Securities Act of 1933, there are also being registered such additional shares of common stock as may
become issuable pursuant to anti-dilution provisions of the underwriter's warrants.
(5)
Estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457(g) promulgated under the Securities Act of 1933. We have
agreed to issue warrants to purchase a number of shares of common stock equal to 5% of the number of shares of common stock offered hereby (including any over-allotment), at an exercise
price per share equal to 120% of the price of the common stock offered hereby.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may
determine.
Table of Contents
The information in this prospectus is not complete and may be changed. We may not sell these securities
until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 30, 2011
Prospectus
Shares of Common Stock
This is an initial public offering of shares of common stock by Neutron Energy, Inc. Neutron Energy is selling a maximum
of                  
shares of common stock. The estimated initial public offering price is between $                  and
$                  per share.
No
public market exists for our shares. We have applied for a listing of our common stock on                  under the symbol
"                  ."
Investing in our common stock involves risks. See "Risk Factors" beginning on page 6.
Per Share
Total
Initial public offering price
$
$
Underwriting discounts and commissions(1)
$
$
Proceeds to Neutron Energy, before expenses
$
$
(1)
The
underwriters will receive compensation in addition to the discounts and commissions and as set forth under
"
Underwriting
."
To
the extent the underwriters sell more than                  shares of common stock, we have granted the underwriters an option for a period of 30 days to
purchase up to
                  additional shares of common stock, at the initial public offering price less the underwriting discounts and commissions.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
underwriters expect to deliver the shares against payment on                  , 2011.
Roth Capital Partners
Cormark Securities (U.S.A.) Limited
The
date of this prospectus is                  , 2011
Table of Contents
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY
1
RISK FACTORS
6
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
19
USE OF PROCEEDS
20
DIVIDEND POLICY
21
CAPITALIZATION
22
DILUTION
24
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
27
QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
46
INDUSTRY AND MARKET DATA
47
DESCRIPTION OF BUSINESS
53
DESCRIPTION OF PROPERTIES
60
LEGAL PROCEEDINGS
96
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
97
EXECUTIVE COMPENSATION
104
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
128
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
131
DESCRIPTION OF CAPITAL STOCK
133
UNDERWRITING AND PLAN OF DISTRIBUTION
137
SHARES AVAILABLE FOR FUTURE SALE
141
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS
144
LEGAL MATTERS
148
EXPERTS
148
TRANSFER AGENT AND REGISTRAR
148
INDEMNIFICATION MATTERS AND DISCLOSURE OF SEC POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
148
WHERE YOU CAN FIND ADDITIONAL INFORMATION
149
GLOSSARY OF TERMS
150
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
As
used in this prospectus, unless the context otherwise requires, the terms "Neutron," "Neutron Energy," "NEI," "the Company," "we," "our" and "us" refer to Neutron Energy, Inc.
and its consolidated subsidiaries.
Except
as otherwise indicated, all information in this prospectus assumes that the underwriters' over-allotment option will not be exercised.
You should rely only on the information contained in this prospectus that we authorize to be distributed to you. We have not, and the underwriters have not,
authorized anyone to provide you with information different from or in addition to that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not
rely on it. We are offering to sell and are seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock.
i
Table of Contents
Our business, financial conditions, results of operations and prospects may have changed since that date.
We
obtained the market, competitive position and similar data used throughout this prospectus from our own research and from surveys or studies conducted by third parties and industry or
general publications. This market, competitive position and similar data include, among other things, statements regarding the global market for uranium and nuclear energy, uranium supply deficits,
sources of uranium, and the historical and projected growth rate of our industry. While we believe that each of these surveys, studies and publications is reliable, we have not independently verified
such data. Similarly, we believe our internal research is reliable, but it has not been verified by any independent sources.
Through and including                  , 2011, all dealers that buy, sell or trade our common stock, whether or not participating in this offering,
may be required
to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or
subscriptions.
ii
Table of Contents
PROSPECTUS SUMMARY
The following summary highlights information contained elsewhere in this prospectus. Before deciding whether to
buy shares of our common stock, you should read this summary and the more detailed information in this prospectus, including our consolidated financial statements and related notes and the discussion
of the risks of investing in our common stock in the section entitled
"
Risk Factors
"
starting on
page 6.
Our Company
We began operations as an unincorporated entity on March 25, 2005 and were incorporated on March 29, 2005 under the laws
of the State of Wyoming. On April 26, 2007, we transferred our state of domicile from Wyoming to Nevada. We were formed to capitalize on our management's extensive knowledge and experience in
uranium exploration, development and
production, as well as our geologic and engineering data bases covering several uranium districts that historically have been uranium producers.
We
are a natural resource company engaged in the acquisition and exploration of uranium properties in the United States. Our strategy is to acquire properties that (i) have
undergone some degree of historical uranium exploration and on which uranium mineralized material, but not reserves, have been located, and (ii) are located in mineralized districts that have
undergone some degree of historical uranium exploration and are thought to be prospective for further uranium exploration, but on which no uranium mineralized material has been located. We have
acquired interests in 63,312 net acres of leased or staked mineral properties in New Mexico, South Dakota and Wyoming.
We
also hold residual mineral interests that we received in the disposition of properties in Arizona and South Dakota. These residual interests were received in consideration of the sale
of our ownership interests in the properties and are primarily comprised of royalty interest, net proceeds interest and our ability to convert the royalty interest into a working interest in the
properties.
All
of our mineral properties are exploration stage properties. Some of our mineral properties have been the subject of historical exploration and/or development, and in one case
production, by other mining companies, that provides indications that further uranium exploration is warranted. Our view that these properties are prospective for mineral exploration is based on prior
exploration and/or development conducted by other companies, management information and work product derived from various reports, maps, radiometric assay from down-hole radiometric
logging, exploratory drill logs, state organization reports, consultants, geological study and other exploratory information. If we are able to locate economic uranium reserves that are commercially
viable, we intend to develop the mine site, including mill facilities, and extract uranium for production.
We
are an exploration stage company and all of our projects are in the exploration stage and do not have any known proven or probable reserves in accordance with the definitions of
reserves under Industry Guide 7 issued by the Securities and Exchange Commission (the "SEC"). There can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of
our properties until appropriate exploratory work is completed and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration and permitting beyond the
scope of our planned activities will be required before a final evaluation as to the economic and legal feasibility of mining of any of our properties is determined. There is no assurance that further
exploration will result in a final evaluation that a commercially viable mineral deposit exists on any of our mineral properties. We will require additional financing in order to pursue full
exploration and permitting of these properties.
As
of March 24, 2011, we had 58,204,141 shares of common stock outstanding. On that date, there were 195 holders of record.
1
Table of Contents
Corporate Information
Our executive offices are located at 9000 E. Nichols Avenue, Suite 225, Englewood, Colorado 80112. Our telephone number
is (303) 531-0470. We have a field office in Albuquerque, New Mexico.
Employees
We have 13 full-time and three part-time employees and have engaged geological and technical consultants for
additional day-to-day services. Other services are provided by outsourcing consultants and special purpose contracts.
Business and Growth Strategy
We are an exploration stage company engaged in the exploration of uranium. We do not engage in any development activities at this time,
but may engage in development activities should uranium reserves be located on any of our properties. The key elements of our business and growth strategy are as follows:
Cibola Project.
Based on historical exploration and development data, we believe our wholly-owned Cibola Project may have future
uranium
reserve potential. We have received the required exploration permits on our Juan Tafoya property and Cebolleta property (together our "Cibola Project") which will allow us to commence confirmation
drilling programs to confirm the uranium mineralized material identified by previous operators. We have substantially completed resource modeling on each of the Juan Tafoya and Cebolleta properties,
based on historical
data we have in our possession. We have received an independent technical report completed in accordance with the provisions of National Instrument 43-101, Standards of Disclosure
for Mineral Projects, of the Canadian Securities Administrators ("NI 43-101"), which is authored by G. S. Carter, P. Eng., a qualified person.
Because
of the long lead times for environmental permitting of mining operations in North America, we have commenced the permitting process with the U.S. Nuclear Regulatory Commission
("NRC") on our Cibola Project, primarily through initial planning sessions with the NRC and the collection of environmental baseline data. We believe that commencing the permitting process at this
early stage will allow us to expeditiously commence development of our properties if we move to that stage.
Ambrosia Lake Project.
We have received the required exploration permit on our Elizabeth Target, included in the Ambrosia Lake Project,
which will
allow us to commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We believe our Elizabeth, Deep Rock, Mesa Redonda, West Endy and West
Ranch targets represent long-term uranium reserve potential. We seek to complete the analysis and digitization of historic geologic data, mapping, and other geophysic and geologic
activities on our Ambrosia Lake Project targets and to commence exploration permitting and exploration programs on selected targets.
Edgemont Project, Copper Mountain Project and Other Wyoming Properties.
We do not anticipate any significant exploration activities
during the next
twelve months on our other properties. We may seek to sell or enter into joint-venture arrangements on these properties with other exploration companies.
Extensive Due Diligence of Properties.
Our exploration activities are divided into phases dependent on the nature of historical
exploration and
development activities on the property. Our initial phase of exploration includes extensive due diligence and analysis of all historical exploration data available to us or in our possession.
Furthermore, we probe existing and newly drilled holes with gamma probes
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with
the goal of confirming historical drill results and planning for future development. We will proceed to our second phase if we are able to confirm historical data and drill results.
Pursue Strategic Acquisitions of Exploration Stage Properties.
We are also engaged in the continual review of opportunities to acquire
properties in
the exploration stage that are thought to contain uranium mineralization and have undergone some degree of historical exploration or development.
Financing.
Historically, we have financed our operations primarily by (i) private placements of convertible subordinated notes
convertible for
either (a) shares of our common stock, or (b) shares of our common stock and warrants to purchase additional shares of our common stock; (ii) private placement of shares of our
common stock to certain individuals and institutional investors; and (iii) senior secured debt credit facilities.
We
will require additional funding to implement our business and growth strategy.
The Offering
Common stock offered by us
shares
Common stock outstanding immediately after the offering
shares
Use of proceeds
We expect the net proceeds to us from this offering (after deducting underwriting discounts and commissions payable to the underwriters and our estimated offering expenses) to be approximately
$                  . We intend to use the net proceeds (i) to discharge our senior indebtedness in the aggregate principal amount of $24,000,000 plus
accrued interest; (ii) to finance our exploration and permitting activities, design and engineering activities and deposit confirmation drilling activities; and (iii) for general corporate purposes, including the possible acquisition of
additional properties.
Dividend policy
The holders of our common stock are entitled to receive dividends, if any, as may be declared by our Board of Directors, in its discretion. We currently intend to retain any future earnings to fund the
development and growth of our business. Therefore, we do not currently anticipate paying cash dividends.
Risk factors
See "
Risk Factors
" starting on page 6 and other information included in this prospectus for a discussion of factors you should carefully consider
before deciding whether to invest in shares of our common stock.
Proposed                  symbol
The
number of shares of common stock to be outstanding immediately after the offering is based upon 58,204,141 shares of common stock outstanding as of March 24, 2011 and the
offering of                  shares of common stock pursuant to this offering and excludes:
•
6,291,666 shares of common stock issuable upon the exercise of stock options outstanding at March 24, 2011 under
our 2006 Stock Option and Restricted Stock Plan (the "2006 Plan"), 2007 Omnibus Incentive Plan (the "2007 Plan") and 2011 Equity Incentive Plan (the
"2011 Plan") at a weighted average exercise price of $0.75 per share;
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•
3,000 shares of common stock reserved for future issuance under our 2006 Plan;
•
155,334 shares of common stock reserved for future issuance under our 2007 Plan;
•
Up to 2,600,000 shares of common stock reserved for future issuance under our 2011 Plan (the 2011 Plan authorizes
us to issue the greater of (A) 1,000,000 shares of common stock or (B) the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number
of shares authorized under the 2006 Plan and 2007 Plan equals 10% of our total issued and outstanding shares of common stock. As of March 24, 2011, 1,000,000 shares are authorized
under the 2011 Plan and stock options to purchase 400,000 shares of common stock have been issued under the 2011 Plan leaving 600,000 reserved for future issuance.);
•
3,051,744 shares of common stock underlying outstanding warrants;
•
Up to 4,262,541 shares of common stock underlying future warrants that the Company is obligated to issue as is necessary
for the holder of the warrants described above to own, upon exercise of its warrants, 5% of the outstanding common stock of the Company, calculated on a partially diluted basis, of which the Company
expects to issue a warrant to purchase                  shares of common stock as a result of this offering;
•
shares of common stock underlying warrants that the Company will issue to the underwriters in connection
with this offering; and
•
shares of common stock issuable pursuant to the underwriters' over-allotment option.
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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table shows our summary consolidated statements of operations, balance sheets and other financial and operating data as
of, and for each of the years ended, December 31, 2010, 2009, 2008, 2007 and 2006. The summary financial and operating data set forth below are derived from our audited consolidated financial
statements prepared in accordance with United States generally accepted accounting principles ("GAAP"). Our historical results are not necessarily indicative of our results for any future period.
The
following summary historical consolidated financial and other data should be read in conjunction with, and are qualified in their entirety by reference to, the section of this
prospectus entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations
" and our audited consolidated financial
statements and related notes included elsewhere in this prospectus.
Summary Annual Financial Information (audited)
(In thousands except for per share amounts)
As of December 31,
2010
2009
2008
2007
2006
Consolidated Balance Sheet Data
Cash and cash equivalents
$
174
$
1,024
$
7,095
$
14,740
$
3,309
Restricted cash and marketable securities
7,255
235
—
—
—
Working capital (deficit)
(17,261
)
1,119
6,931
14,271
(3,756
)
Net property and equipment
20,093
(1)
8,571
8,366
7,395
1,539
Total assets
28,141
10,182
15,670
22,283
5,278
Total liabilities
26,750
(2)
559
325
506
7,110
Deficit accumulated during the exploration stage
(36,835
)
(28,405
)
(21,672
)
(13,352
)
(5,572
)
Total stockholders' equity (deficit)
1,391
9,623
15,346
21,777
(1,832
)
Years Ended December 31,
2010
2009
2008
2007
2006
Consolidated Operating Data
Revenues
$
—
$
—
$
—
$
—
$
—
Mineral property maintenance
1,142
1,036
1,220
1,664
817
Mineral exploration
1,835
3,528
4,366
2,543
519
General and administrative
2,228
2,821
3,501
2,279
1,013
Other income (expense)
(3,544
)
56
324
(1,550
)
(1,607
)
Operating loss
(8,749
)
(7,328
)
(8,762
)
(8,036
)
(3,957
)
Net loss attributable to the company
(8,429
)
(6,733
)
(8,319
)
(7,780
)
(3,957
)
Net loss per basic and diluted share of common stock
(0.14
)
(0.12
)
(0.15
)
(0.22
)
(0.17
)
Consolidated Cash Flow Data
Net cash used by operations
$
(4,694
)
$
(6,455
)
$
(8,027
)
$
(5,394
)
$
(1,979
)
Net cash used by investing activities
(7,568
)
(350
)
(632
)
(4,847
)
(1,376
)
Net cash provided by financing activities
11,413
734
1,014
21,672
6,513
Net increase (decrease) in cash and cash equivalents
(850
)
(6,071
)
(7,645
)
11,431
3,157
(1)
Includes
our April 2010 acquisition of the 49% non-controlling interest in Cibola Resources LLC. See the section of this prospectus
entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations—Material Commitments—Significant Mineral
Properties—Cebolleta Mineral Property
" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
(2)
Includes
(a) current liabilities consisting of accounts payable and accrued expenses of $240,437 and senior debt, net, of $24,844,874 and
(b) long-term liabilities consisting of long-term payable, net, of $325,539 and warrant liability of $1,339,402. For a description of our senior debt, see the section of
this prospectus entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations—Material Commitments—Senior Debt Credit
Facility
" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described
below, together with the other information in this prospectus, before making an investment decision. If any of the risks described below occurs, our business and financial condition would suffer. As a
result, the trading price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business and operations.
Risks Related to Our Business
We have a limited operating history as an uranium exploration and mining company, and our business and prospects should be considered in light of the risks and difficulties
typically encountered by a company with a limited operating history.
We have had no revenue generating operations since our incorporation in 2005 and our operating cash flow needs have been financed
solely through offerings of our common stock or other securities and debt. As a result, we have limited historical financial and operating information relating to our ability to generate revenue in
the future available to help you evaluate our performance or an investment in our common stock.
All
of our properties are in the exploration stage and require the capital to be obtained from this offering in order to continue with the implementation of our business plan. Until the
commencement of operations, we will not generate any operating revenues. We expect to continue to incur operating deficits as we implement our business plan.
Our
estimates of capital, personnel, equipment, and facilities required for our proposed operations are based on certain other existing businesses operating under similar business
conditions and plans. We believe that our estimates are reasonable, but, until our operations have been established, it is not possible to determine the accuracy of such estimates. We have not had any
direct operating experience and therefore have no basis for our projections, other than the experience of other similar businesses from which limited financial histories are available. As a result,
there is no assurance that we will be able to generate profits from operations.
We may not be able to implement our business plan.
Our business plan requires substantial capital in order to succeed. We will require capital to complete our exploration efforts and
substantial additional capital for mine and mill development. We presently do not have sufficient working capital to pursue our business plan through the various exploration efforts described in this
prospectus. In formulating our business plan, we have relied on the judgment of our officers and their experience in the industry. There can be no assurance that we will be able to obtain sufficient
financing or implement the business plan we have devised. Further, even with sufficient financing, there can be no assurance that we will be able to expand on a regional or national basis or operate
our business on a profitable basis. Our plans are based upon the assumptions that we will identify commercially viable uranium deposits, that the demand for uranium will continue for prolonged
periods, that the proceeds of this offering will be applied efficiently and that the risks described in this prospectus will be dealt with successfully. There can be no assurance that such plans will
be realized or that any of the assumptions will prove to be correct.
All of our mineral properties are in the exploration stage and we have not yet identified, and may never identify, commercially viable mineral deposits that would generate
revenues.
We are considered an exploration stage company and will continue to be until we identify commercially viable reserves on our properties
and develop our properties. We have no uranium
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producing
properties and have never generated any revenue from our operations. All our mineral properties are in the exploration stage and do not contain any known reserves in accordance with the
definitions adopted by the SEC and we have not confirmed that a commercially viable mineral deposit exists on any of our properties and we may never discover uranium in commercially exploitable
quantities. Because the probability of an individual prospect having reserves is uncertain, our properties may not contain any reserves, and any funds spent on exploration may be lost. Further
exploration will be required before a final evaluation as to the economic and legal feasibility. There is no guarantee that we will be able to identify commercially viable mineral deposits on any of
our current or future acquired mineral properties or that if commercially viable mineral deposits are identified, that we will be able to extract deposits profitably. While discovery of commercially
viable mineral deposits may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. If we are not able to identify commercially viable mineral
deposits or profitably extract mineral from such deposits, our business would be materially adversely affected and our investors could lose all or a substantial portion of their investment.
Our mineral properties may be subject to defects in title and we are at risk of loss of ownership.
Our mineral properties consist of private mineral rights, leases covering state and private lands, leases of patented mining claims,
and unpatented mining claims. Many of our mining properties are unpatented mining claims to which we have only possessory title. The validity of unpatented mining claims is often uncertain and such
validity is always subject to contest. Unpatented mining claims are generally considered subject to greater title risk than patented mining claims or other real property interests that are owned in
fee simple. Because unpatented mining claims are self-initiated and self-maintained, they possess some unique vulnerabilities not associated with other types of property
interests. It is impossible to ascertain the validity of unpatented mining claims from public real property records, and therefore it can be difficult or impossible to confirm that all of the
requisite steps have been followed for location, perfection and maintenance of an unpatented mining claim. The present status of our unpatented mining claims located on public lands allows us the
exclusive right to mine and remove locatable minerals, such as uranium. We also are allowed to use the surface of the land solely for purposes related to mining and processing the
mineral-bearing ores. However, legal ownership of the public land remains with the federal government. We remain at risk that the mining claims may be lost either to the federal government
or to rival private claimants due to failure to comply with statutory
requirements. In addition, we may not have, or may not be able to obtain, all necessary surface rights to develop a property.
We
cannot guarantee that title to properties leased by us will not be challenged. Title insurance is generally not available for mineral properties and our ability to ensure that we have
obtained secure title to individual mineral properties or mining claims may be severely constrained. Our mineral properties may be subject to prior unrecorded agreements, transfers or claims, and
title may be affected by, among other things, conflictual title rights and undetected defects. While we believe that the lessor of our Juan Tafoya property has valid title, our title searches have
revealed conflictual title rights to portions of such property. We may incur significant costs related to defending the title to our properties. A successful claim contesting our title to a property
may cause us to compensate other persons or perhaps reduce our interest in the affected property or lose our rights to explore and develop that property. This could result in us not being compensated
for our prior expenditures relating to the property.
We will be subject to operating hazards and risks which may result in personal injury or death, environmental damage, delays in mining, monetary losses and possible legal
liability.
Mineral exploration involves many hazards and risks, which even a combination of experience, knowledge and careful evaluation may not
be able to overcome. Our operations are subject to the
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hazards
and risks normally incidental to exploration and, if applicable, development and production, of metals, including, but not limited, to environmental hazards, flooding, fire, periodic or
seasonal hazardous climate and weather conditions, unexpected rock formations, industrial accidents and metallurgical and other processing problems. These risks could result in damage to, or
destruction of, mineral properties, production facilities or other properties; personal injury; environmental damage; work stoppages; delays in mining; increased production costs; monetary losses; and
possible legal liability. We may become subject to liability which we cannot insure against or which we may elect not to insure due to high premium costs or other reasons. Where considered practical
to do so we maintain insurance against risks in the operation of our business in amounts which we believe to be reasonable. Such insurance, however, contains exclusions and limitations on coverage. We
cannot provide any assurance that such insurance will continue to be available, will be available at economically acceptable premiums or will be adequate to cover any resulting liability. In some
cases, coverage is not available or considered too expensive relative to the perceived risk. The potential costs which could be associated with any liabilities not covered by insurance, or in excess
of insurance coverage, could have a material adverse effect upon our financial condition.
We have a history of losses, deficits and negative operating cash flows and will likely continue to incur losses in the future. Such losses may impair our ability to pursue
our business plan.
We have incurred losses and negative operating cash flows since our inception in 2005 and expect to continue to incur operating losses
and negative cash flows from operations for the foreseeable future. We have made, and will continue to make, substantial capital and other expenditures before we will have sufficient operating income
and cash flow to recover our investments. We are not able to accurately estimate when, if ever, our operating income will be sufficient to cover these investments. Further, we may not achieve or
maintain profitability or generate cash from operations in future periods. We have been dependent on sales of our equity securities and debt financing to meet our cash requirements and such financing
may not continue to be available. We have incurred losses totaling approximately $36,834,600 from our inception on March 25, 2005 to December 31, 2010. As of December 31, 2010, we
had total stockholders' equity of $1,390,817. We do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates.
We have substantial capital requirements and do not have operating income. As a result, we have been and continue to be dependent on sales of our equity securities and debt
financing to fund our operating costs.
Our current plans require us to make significant capital expenditures for the exploration and potential development of our minerals
exploration properties. Based upon our historical losses from operations and projected future expenditures, we require substantial additional financing in order to pursue our business plan. We have
funded our operations through the issuance of equity and short term debt financing arrangements and we may not be able to continue to obtain all of the financing we require. If we cannot obtain
additional funds through equity or debt financings or otherwise, our ability to execute our plans and achieve production levels will be greatly limited. Depending on our future operations, the market
for uranium and the conditions of the equity capital and debt markets, we may not be able to continue to raise additional equity capital or borrow money on terms acceptable to us or at all. A lack of
adequate financing may adversely affect our ability to pursue our business strategy, respond to changing business and economic conditions and competitive pressures, absorb negative operating results
and fund our continuing operations, capital expenditures or increased working capital requirements. If we are not able to secure financing, we may be forced to change our business plans or our
business may fail.
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Our level of indebtedness may make it more difficult for us to pay our debts as they become due.
Our aggregate principal indebtedness under our senior credit facility was approximately $24,000,000 as of December 31, 2010.
This entire amount, including accrued interest, matures and becomes due and payable in full on June 30, 2011. Our ability to repay this debt depends on our ability to raise sufficient capital
through the sale of our equity securities or to refinance such indebtedness. If we are unable to generate sufficient funds from the sale of our securities or are unable to refinance or restructure our
indebtedness prior to maturity, we will be in default, which could require us to pursue a restructuring of our indebtedness or file for protection under the U.S. Bankruptcy Code. Additionally, the
obligation to repay this debt restricts our ability to use the proceeds of the sale of our securities for other purposes, including for operations.
Our acquisition activities may not be successful.
As part of our growth strategy, we may acquire additional uranium exploration properties. Such acquisitions may pose substantial risks
to our business, financial condition, and results of operations. In pursuing acquisitions, we will compete with other companies, many of which have greater financial and other resources to acquire
attractive properties. Even if we are successful in acquiring additional properties, some of the properties may not contain commercially viable uranium deposits. Furthermore, in some cases, the
failure to develop such prospects within specified time periods may cause the forfeiture of the lease in that prospect. Further, acquisitions could disrupt ongoing business operations and exploration
activities or use capital that could be used in more productive activities. If any of these events occur, it would have a material adverse effect upon our business.
We may not be able to compete effectively in the market for uranium.
We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual
investors, which are actively seeking uranium exploration properties throughout the world together with the equipment, labor and materials required to exploit such properties. The principal area of
competition is encountered in the financial ability to acquire prime minerals properties and then exploit such properties. Competition for the acquisition of uranium exploration properties is intense,
with many properties available in a competitive bidding process in which we may lack technological information, financial resources or expertise available to other bidders. Many of our competitors
have financial resources, staff and facilities substantially greater than ours and our limited resources may put us at a disadvantage in bidding for uranium exploration properties. Further, we may not
be able to secure financing for acquisitions on terms satisfactory to us or at all. Therefore, we may not be successful in acquiring and developing profitable properties in the face of this
competition. Furthermore, we have not commenced mining
operations and therefore do not have experience in mining or milling commercial amounts of uranium. Our actual costs of production may exceed those of our competitors.
We rely on key personnel and if we are unable to retain or attract qualified personnel, we may not be able to execute our business plan.
We are highly dependent on the services of Messrs. Kelsey L. Boltz, our Executive Chairman, Gary C. Huber, our President
and Chief Executive Officer, and Edward M. Topham, our Chief Financial Officer. The loss of the services of these individuals could harm our business. We do not have key man life insurance on any of
these individuals and may not have the financial resources to hire a replacement if we were to lose any of our officers. Our future success also depends on our ability to attract, train, retain and
motivate other highly qualified technical and managerial personnel. Competition for such personnel is intense and we may not be able to attract, train, retain or motivate such persons in the future.
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Some of our officers and directors do not have technical training or experience in the acquisition and exploration of uranium properties and we may have to hire qualified
personnel.
Some of our officers and directors have experience with the acquisition, exploration and development of uranium properties but others
do not. Therefore, we may have to hire qualified persons to perform surveying, exploration and, if we find commercially exploitable reserves of uranium, development of our properties. There can be no
assurance that we will have available to us the necessary expertise to explore and develop our uranium properties. Some of our officers and directors have no direct training or experience in these
areas and as a result may not be fully aware of many of the specific requirements related to working within the industry. As a result, their decisions and choices may not take into account standard
engineering or managerial approaches mineral exploration companies commonly use, and our exploration activities, earnings and ultimate financial success could suffer irreparable harm due to certain of
management's decisions.
Our directors and executive management beneficially own a significant interest in us in the aggregate and can exercise significant influence over us.
Our directors and executive officers beneficially own 19.23% of our issued and outstanding shares of common stock (including shares
subject to options held by such individuals
that are exercisable within 60 days). These stockholders may, if they act together, exercise significant influence over all matters requiring stockholder approval, including the election of
directors and the determination of significant corporate actions, as well as control our management, policies and operations. This concentration of ownership could depress our stock price or value or
delay or prevent a change in control that could otherwise be beneficial to our stockholders.
Our directors may be subject to conflicts of interest.
All of our directors, except for Gary C. Huber, our President and Chief Executive Officer, serve only part time and may be subject to
conflicts of interest. Each may devote part of his or her working time to other business endeavors, including consulting relationships with other business entities, and may have responsibilities to
these other entities. Such conflicts may include deciding how much time to devote to our affairs, as well as what business opportunities should be presented to us. Because of these relationships, our
directors may be subject to conflicts of interest.
Risks Related to Our Industry
The profitable mining of uranium is subject to conditions and events beyond our control, which could result in higher operating expenses and/or decreased production and
sales and adversely affect our operating results and cash flows.
The business of minerals exploration is subject to many risks and uncertainties, including those described in this section. The
potential profitability of mining uranium properties, if commercially viable deposits of uranium are found, is dependent upon many factors and risks beyond our control, including, but not limited
to:
•
unanticipated ground and water conditions and adverse claims to water rights and to land;
•
assertions that water rights have not been perfected by the application of water to beneficial use or have been
intentionally abandoned;
•
geological problems;
•
metallurgical and other processing problems;
•
the occurrence of unusual weather or operating conditions and other force majeure events;
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•
lower than expected ore grades;
•
accidents;
•
delays in the receipt of or failure to receive necessary government permits;
•
delays in transportation;
•
labor disputes;
•
government permit restrictions and regulation restrictions;
•
unavailability of materials and equipment; and
•
the failure of equipment or processes to operate in accordance with specifications or expectations.
The
occurrence of any of these conditions or events in the future may adversely affect our ability to profitably mine uranium, which would adversely affect our operating results and cash
flow. Cost effective insurance contains exclusions and limitations on coverage and may be unavailable in some circumstances.
Our future profitability and ability to raise capital will be dependent on uranium prices.
Because a significant portion of our anticipated revenues are expected to be derived from the sale of uranium, our net earnings, if
any, can be affected by the long and short-term market price of uranium. Uranium prices are subject to wide fluctuation. The price of uranium is affected by numerous factors beyond our
control, including the demand for nuclear power, accidents at nuclear power facilities, worldwide political and economic conditions, uranium supply from secondary sources, legislation, uranium
production levels and costs of production.
Future price of uranium may be impacted by secondary sources of supply.
Uranium is supplied from primary production (the mining of uranium ores) and secondary sources such as the drawdown of excess
inventories and uranium made available from decommissioning of nuclear weapons, re-enriched depleted uranium tails, and used
reactor fuel that has been reprocessed. The price of uranium may be adversely affected by secondary sources of supply being introduced into the market.
The only significant market for uranium is nuclear power plants worldwide, and there are only a few customers.
Uranium producers are dependent on a small 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 is to some degree dependent on the prices of oil, gas,
coal and hydro-electricity and the possibility of developing other low cost sources for energy. If the price of alternative energy sources decreases or new low-cost alternative
energy sources are developed, the demand for uranium could decrease, which may result in the decrease in the price of uranium.
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Public acceptance of nuclear energy is uncertain.
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. Incidents involving nuclear energy production, such as overheating reactors, radiation leaks and reactor melt-downs, can cause a significant decrease in
public acceptance of nuclear technology and uranium prices. Lack of public acceptance of nuclear technology would adversely affect the demand for nuclear power and likely increase the regulation of
the nuclear power industry.
Government regulation of uranium mining and processing may adversely affect our ability to commence and expand our operations.
Exploration, mining and processing operations are subject to federal, state, and local laws relating to prospecting, development,
production, exports, taxes, labor standards, occupational health, waste disposal, protection and remediation of the environment, including the removal of natural resources from the ground and the
discharge of materials into the environment, protection of endangered and protected species, protection of cultural properties, mine safety, toxic substances and other matters. Uranium mining
operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods and equipment.
Various permits from government bodies are required for mining operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal,
state, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital
outlays in excess of those anticipated, thus resulting in an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to
insure against due to prohibitive premium costs and other reasons. To date, we have not been required to spend material amounts on compliance with environmental regulations because our exploration
activities to date have been minimal. As we continue to proceed with our exploration activities, and if we move into development and production, however, we will be required to spend material amounts
on compliance with environmental regulations in the future and this may affect our ability to commence or maintain our operations. Compliance with these laws and regulations will impose substantial
costs on us and will subject us to significant potential liabilities.
Compliance with environmental laws and regulations may increase our costs and reduce our revenues.
Uranium exploration and development and future potential uranium mining and processing operations are or will likely be subject to
stringent federal, state and local laws and regulations relating to improving or maintaining environmental quality. Failure to comply with these laws and regulations may trigger a variety of
administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements, and the issuance of orders enjoining future
operations. Certain environmental statutes impose strict, joint and several liabilities for costs required to clean up and restore sites where hazardous substances have been disposed or otherwise
released. Environmental laws also may impose liability with respect to divested or terminated operations, even if the operations were terminated or divested of many years ago. In addition, certain
types of operations require the preparation of environmental assessments and environmental impact statements in conjunction with governmental decision-making. Compliance with environmental
laws and regulations will impose substantial costs on us and will subject us to significant potential liabilities. Further, environmental legislation is evolving in a manner which means stricter
standards and enforcement, and more stringent fines and penalties for non-compliance. 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
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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. Costs associated with environmental liabilities and compliance are expected to increase with the increasing scale and scope of our current and planned future activities. We expect these
costs may increase in the future. We are not fully insured at the current date against possible environmental risks.
Future changes in the law may adversely affect our ability to profitably extract uranium deposits.
The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the
United States or any other applicable jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter our ability to carry on our business. We cannot predict what
legislation, regulation or policy will be enacted or adopted in the future or how future laws or regulations will be administered or interpreted. The actions, policies or regulations, or changes
thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us and our ability to operate.
Members
of the U.S. Congress have repeatedly introduced bills which would supplant or alter the provisions of the Mining Law of 1872. Several proposals would, if enacted, impose a
royalty payable to the U.S. Government on existing and future production of minerals from unpatented mining claims in the United States. If enacted, such legislation could change the cost of holding
and conducting operations on unpatented mining claims and could significantly impact our ability to develop mineralized material on unpatented mining claims. Such bills have also proposed, among other
things, to either eliminate or greatly limit the right to a mineral patent. Enactment of any of such bills could adversely affect the potential for development of such mining claims and the economics
of existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our financial performance.
Members
of the State of New Mexico legislature have repeatedly introduced bills which would impose strict liability on landowners and operators, including successor liability, for
environmental contamination resulting from uranium mining activities. If enacted, such legislation could greatly affect our ability to secure mining properties and we may be responsible for all or
part of the costs to clean up contaminated facilities or properties.
We may not be able to obtain all permits and licenses necessary to operate and expand our business.
Various permits and licenses from government bodies are required for exploration, mining and processing operations to be conducted.
There can be no assurance that we will be able to obtain or maintain all necessary permits and licenses that may be required to continue the exploration of our properties or to commence development,
construction or operation of mining and processing facilities at such properties on terms which enable operations to be conducted at economically justifiable costs. The failure to obtain necessary
permits and licenses would impair our ability to pursue our business plan. For example, an NRC license is required to build and operate a mill. In order to obtain such a license, we must demonstrate
that we can deed a fee interest in the relevant property to the NRC. However, we hold only a leasehold interest on a significant portion of our mineral properties without the right to purchase such
properties. There is no guarantee that we will be able to obtain a fee interest in such properties and therefore we may not be able to obtain the required licensing to build and operate a mill if
commercially viable mineral deposits are identified.
Various
permits and licenses from federal, state and local government bodies are required for exploration, mining and milling operations to be conducted. Certain governmental agencies
may have
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limited
personnel with experience permitting uranium exploration, mining and milling operations, which may result in delays in issuing the permits required for the Company to conduct its operations.
Energy
and mineral development on Native American lands or activities otherwise deemed to be located within areas known as Indian country, may be subject to principles of Indian law or
tribal law. The legal environment in Indian country can be materially different with respect to law and regulations relating to how development rights must be acquired and the legal standards
applicable to performance under agreements. For example, by Resolution dated April 21, 2005, the Navajo Nation Council adopted the Diné Natural Resources Protection Act of 2005
which provides, in summary, that "no person shall engage in uranium mining and uranium processing on any sites within Navajo Indian Country." Generally speaking, primary jurisdiction over land that is
Indian country rests with the Federal government and the Indian tribe inhabiting it and not with the States. Application of Indian law or tribal law may result in significantly longer permitting
processes, unique approval requirements and restrictions involving the use of Native American lands.
Risks Related to Our Common Stock
There has been no prior public market for our common stock and an active market may not develop or be maintained, which could limit your ability to sell our common stock.
Even if a market does develop, the stock prices in the market may not exceed the offering price.
Prior to this initial public offering, there has not been a public market for our common stock. Although we are applying for listing on
                  and the Toronto Stock Exchange ("TSX"), an active public market for shares of our common stock may not develop or continue. We cannot predict
the extent to which investor interest in
our company will lead to the development of an active trading market on                  , TSX or otherwise, or how liquid that market may become. If an active
trading market does not develop, you may
have difficulty selling shares of common stock that you buy.
The
initial public offering price will be determined by negotiations between us and the underwriters and may not be representative of the market price at which our common stock will
trade after this offering. In particular, we cannot assure you that you will be able to resell our common stock at or above the initial public offering price.
The market price and volume of our common stock may be volatile, which could cause the value of your investment to decline.
The market price and volume of our common stock may fluctuate as a result of our performance or events pertaining to the industry as
well as factors unrelated to us or our industry. Many of these factors are outside of our control. Fluctuations in the market price of our common stock may be caused a number of factors, including
(i) disappointing results from our discovery or development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) a decline in demand for our common
stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies;
(vi) a lack of funding generated for operations; (vii) investor perception of our industry or our prospects; (viii) general economic trends; (ix) the market for uranium;
(x) the demand for nuclear energy; (xi) governmental regulation that may materially adversely affect the attractiveness of nuclear energy; (xii) public acceptance of nuclear
energy; and (xiii) other factors described in this prospectus. Variations in any of these factors could cause significant fluctuations in the market price of our common stock. In recent years,
the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly
small-capitalization companies, have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values, or prospects of such
companies.
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If securities or industry analysts do not publish research or reports about us, our business or our market, or if they adversely change their recommendations regarding our
common stock, our common stock price and trading volume could decline.
The trading market for our common stock is influenced by the research and reports that industry and securities analysts publish about
us, our business and our market. If one or more of the analysts who cover us change their recommendation regarding our common stock adversely, our common stock price would likely decline. If one or
more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or
trading volume to decline.
A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.
A decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our
ability to raise additional capital for our operations. Because our operations to date have been principally financed through the sale of equity securities, a decline in the price of our common stock
could have an adverse effect upon our liquidity and our continued operations. Any reduction in our ability to raise equity capital in the future would have a material adverse effect upon our business
plan and operations, including our ability to continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient
to meet our obligations.
The issuance of additional securities could adversely affect the rights of our stock holders
Our articles of incorporation authorize the issuance of 200,000,000 shares of common stock. We are also authorized to issue 10,000,000
shares of preferred stock. Our Board of Directors has the authority to issue additional shares of our capital stock without stockholder approval to provide additional financing in the future and the
issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. Our preferred stock is blank check in that our Board of Directors
can set the terms and conditions of the preferred stock without stockholder approval. The issuance by us of additional equity securities of equal or senior rank to our common stock may have the
following effects: decrease our stockholders' proportionate ownership interest in us, diminish the relative voting strength of each previously issued and outstanding share of common stock or cause the
market price of our common stock to decline. In addition, an issuance of additional stock could have a negative impact on the trading price of our shares of common stock.
The issuance of additional securities, including common stock pursuant to options and warrants, would dilute the interest of stockholders
We have authorized an aggregate of between 7,300,000 and 9,300,000 shares of common stock under our 2006 Plan, 2007 Plan and 2011 Plan.
As of March 24, 2011, we have granted (i) options to purchase an aggregate 6,291,666 shares of our common stock that are currently outstanding, and (ii) 250,000 shares of common
stock as unrestricted stock awards under our 2006 Plan, 2007 Plan and 2011 Plan. We have outstanding warrants to purchase 3,051,744 shares of common stock and are obligated to issue such additional
warrants as is necessary for the warrant holder to own 5%, calculated on a partially diluted basis, of our issued and outstanding common stock, up to a maximum of 4,262,541 additional shares, of which
we expect to issue an additional warrant to purchase approximately                  shares of our common stock as a result of this offering. We also expect to
issue warrants to the underwriters to
purchase an aggregate of                  shares of our common stock in connection with this offering. Furthermore, our management's plans to finance our
exploration and development costs and
acquisition activities include financing through future sales of our equity or debt
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securities.
To the extent that we issue any additional securities or outstanding stock options and warrants are exercised, dilution to the interests of our stockholders would occur.
Purchasers in this offering will experience immediate and substantial dilution in net tangible book value per share of common stock.
The initial public offering price per share of common stock is expected to be substantially higher than the net tangible book value per
share of our outstanding common stock. Purchasers of shares of common stock in this offering will experience immediate dilution in the net tangible book value of their shares. Based on an assumed
initial public offering price of $                  per share, dilution per share in this offering will be
$                  per share (or                  % of the initial
public offering price). See the
section of this prospectus entitled "
Dilution
" for additional information.
You may lose your entire investment in our shares.
An investment in our common stock is highly speculative and may result in the loss of your entire investment. Only investors who are
experienced investors in high risk investments and who can afford to lose their entire investment should consider an investment in us.
We have not paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future.
We anticipate that we will retain all future earnings and other cash resources for the future operation and development of our
business. Accordingly, we do not intend to declare or pay any cash dividends on our common stock in the foreseeable future. Payment of any future dividends will be at the discretion of our Board of
Directors after taking into account many factors, including our financial conditions, current and anticipated cash needs and plans for exploration and development of our uranium properties.
The Financial Industry Regulatory Authority, or FINRA, sales practice requirements may limit a stockholder's ability to buy and sell our stock.
The FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers,
broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of
these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements may make it more
difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our
shares.
Gain recognized by non-U.S. stockholders on the sale or other disposition of shares of our common stock may be subject to U.S. federal income tax.
We believe that we are currently a "U.S. real property holding corporation" under section 897(c) of the Internal Revenue
Code ("USRPHC") and there is a substantial likelihood that we will continue to be a USRPHC. Generally, gain recognized by a non-U.S. holder on the sale or other disposition of our
common stock will be subject to U.S. federal income tax on a net income basis at normal graduated U.S. federal income tax rates if we are a USRPHC at any time during the
5-year period ending on the date of the sale or disposition of the common stock (or the non-US holder's holding period for the common stock if shorter). Under an exception to
these USRPHC rules, if the common stock is "regularly traded" on an "established securities market," the common stock will not be treated
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as
a USRPHC. This exception is not available, however, to a non-U.S. holder that held or was deemed to hold, directly or under certain constructive ownership rules, more than 5% of
the common stock at any time during the 5-year period ending on the date of the sale or other disposition (or the non-U.S. holder's holding period of the common stock if
shorter).
We will incur increased costs as a result of being a publicly-traded company.
We have no history of operating as a publicly-traded company. As a publicly-traded company, we will incur
significant legal, accounting and other expenses that we would not incur as a private company. We will become subject to the Sarbanes-Oxley Act of 2002, as well as related rules
implemented by the SEC,                  and TSX, which will increase our legal and financial compliance costs and require us to devote additional management
time and resources to these compliance
matters. For example, as a result of becoming a publicly-traded company, we will be required to have at least three independent directors, create additional board committees and adopt
policies regarding internal controls and disclosure controls and procedures, including the preparation of reports on internal control over financial reporting. In addition, we will incur additional
costs associated with our publicly-traded company reporting requirements.
We will not be fully subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until the end of 2012. If we fail to maintain an
effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud and, as a result, our business could be harmed and current and potential
stockholders could lose confidence in us, which could cause our stock price to fall.
We will be required to document our system and process evaluation and testing (and any necessary remediation) to comply with the
management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which we expect will first apply to us for our fiscal year ended
December 31, 2012. As a result, we expect to incur substantial additional expenses and diversion of management's time. We cannot be certain as to the timing of completion of our evaluation,
testing and remediation actions or their effect on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may not be
able to accurately report our financial results or prevent fraud and might be subject to sanctions or investigation by regulatory authorities, such as the SEC,
                  or TSX. Any such action
could harm our business or investors' confidence in us, and could cause our stock price to fall.
Certain regulations and legislation associated with being a publicly-traded company, including the Sarbanes-Oxley Act of 2002, may make it difficult
for us to retain or attract officers and directors.
We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our
effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly-held companies. The Sarbanes-Oxley Act of 2002
has resulted in a series of rules and regulations by the SEC that increased responsibilities and liabilities of directors and executive officers. The increased personal risk associated with these
changes may deter qualified individuals from accepting these roles. As a public company, we expect that it will be more difficult and expensive for us to obtain director and officer liability
insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us
to attract and retain qualified persons to serve on our Board of Directors or as executive officers. We will incur significant incremental costs per year associated with being a
publicly-traded company.
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Provisions in our Articles of Incorporation, Bylaws and Nevada law may make it more difficult to effect a change in control, which could adversely affect the price of our
common stock.
Provisions of our Articles of Incorporation, Bylaws and Nevada law could make it more difficult for a third party to acquire us, even
if doing so would be beneficial to our stockholders. We may issue shares of preferred stock in the future without stockholder approval and upon such terms as our Board of Directors may determine. Our
issuance of this preferred stock could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring a majority of our outstanding stock and
potentially prevent the payment of a premium to stockholders in an acquisition.
Furthermore,
our Bylaws include provisions that exclude stockholders from parties entitled to call special meetings, give the Board of Directors the exclusive right to fill all Board of
Director vacancies, and require advance notice of stockholder proposals and specific information regarding director nominees. These provisions could discourage proxy contests and make it more
difficult for stockholders to elect directors and take other corporate actions. As a result, these provisions could make it more difficult for a third party to acquire us, even if doing so would
benefit our stockholders, and may limit the price that investors are willing to pay in the future for shares of our common stock.
We
are also subject to Title 7, Chapter 78 of the Nevada Revised Statutes (the "Nevada Corporations Act") that, subject to certain exceptions, prohibits business combinations with
persons owning 10% or more of the voting shares of a corporation's outstanding stock for three years following the date that person became an interested stockholder, unless the combination is approved
by the Board of Directors prior to the person owning 10% or more of the stock and after the expiration of the three year period, any such business combination would be subject to special stockholder
approval requirements or various fair price criteria. This provision could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or
may otherwise discourage a potential acquirer from attempting to obtain control from us, which in turn could have a material adverse effect on the market price of our common stock.
Nevada law and our Articles of Incorporation and Bylaws may protect our directors from certain types of lawsuits.
Nevada law and our Articles of Incorporation provide that our officers and directors will not be liable to us or our stockholders for
monetary damages for all but certain types of conduct as officers and directors. Our Bylaws generally provide for indemnification of directors, officers, employees, agents and certain other
individuals against all damages incurred in connection with our business to the fullest extent permitted by law. While we currently maintain director and officer liability insurance, such insurance
contains exclusions and limitations on coverage and we may be required to use our limited assets to defend or indemnify such individuals on any amounts that fall outside of such insurance coverage.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus contains forward-looking statements within the meaning of the
federal securities laws. Forward-looking statements convey our current expectations or forecasts of future events. Forward-looking statements include those that express plans,
anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. Any forward-looking statements are based on our current
expectations and projections about future events and are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed
or implied in such statements. In some cases, you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"plan," "potential," "seek," "should," "will" and "would" or other similar words and the negatives of such terms. You should read statements that contain these words carefully because they discuss our
future expectations, contain projections of our future business plans or of our financial position or state other forward-looking information. We note in particular, that estimations of
mineralization are subject to change and notwithstanding historical data or drill results, there can be no assurance that commercially viable deposits may be located.
Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or
achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such forward-looking statements. The risks described under "
Risk
Factors
," as well as any cautionary language in this prospectus, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from
the expectations we describe in our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of the events described in these risk factors
and elsewhere in this prospectus could have a material adverse effect on our business and financial position. We do not intend to update any of the forward-looking statements after the
date of this prospectus or to conform these statements to actual results.
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USE OF PROCEEDS
We estimate that our net proceeds (after deducting underwriting discounts, commissions and fees payable to the underwriters and
advisors, and our estimated offering expenses) from this offering will be $                   million
($                   million if the underwriters exercise their over-allotment
option in full), based upon an assumed initial public offering price of $                  per share, which is the mid-point of the offering range indicated on
the cover of this prospectus.
See the "
Underwriting and Plan of Distribution
" section contained elsewhere in this prospectus for more information on our estimated proceeds.
We
intend to use the net proceeds (i) to discharge our senior indebtedness of approximately $25,760,000; (ii) to finance our exploration and permitting activities, design
and engineering activities and feasibility studies; and (iii) for general corporate purposes, including the possible acquisition of additional properties thought to contain uranium
mineralization, as follows:
Gross proceeds from this offering
$
Costs associated with this offering:
Underwriting discounts, commissions and fees
(
)
Legal, accounting and other expenses
(
)
Net Proceeds From this Offering
$
Senior Debt and Accrued Interest Payment
$
25,760,000
Mineral Property Exploration, Permitting, Design and Feasibility Activities:
Mineral lease and mining claim maintenance
1,347,000
Exploration administrative expenses
1,231,000
Cibola Project:
Mine Permitting, Design and Feasibility Activities:
Survey, mapping and drilling
1,839,000
Hydrological characterization and baseline studies
2,984,000
Mine engineering, design and feasibility
1,898,000
Permitting
1,335,000
Subtotal
8,056,000
Mill Permitting, Design and Feasibility Activities:
Hydrological characterization and baseline studies
970,000
Mill engineering, design and feasibility
3,945,000
Permitting
201,000
Subtotal
5,116,000
Other exploration activities
179,000
Total Mineral Property Exploration
15,929,000
General working capital and administrative activities
Application of Net Proceeds
$
Until
we use the net proceeds as described above, we intend to invest the net proceeds in short-term securities.
Our
senior debt has an interest rate equal to the London Interbank Offered Rate ("LIBOR") plus 7%, which is accrued as part of the principal balance on a quarterly basis, and matures on
June 30, 2011. We expect that our senior debt will be discharged in its entirety in connection with this offering. For a more detailed discussion of our senior debt, including the use of
proceeds of such indebtedness,
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see
the subsection of this prospectus entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations—Material
Commitments—Senior Debt Credit Facility
."
The
foregoing represents our best estimate of our allocations of the proceeds of this offering based on our present plans and business conditions. However, there can be no assurances
that unforeseen events or changes in business conditions will not result in the application of proceeds of this offering in a manner other than is described in this prospectus. Any such reallocation
of the net proceeds of the offering would be substantially limited to the categories set forth above. We believe we will have sufficient working capital for a minimum of 12 months following the
date of this offering.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock, and we do not anticipate that we will pay cash dividends on our
common stock in the foreseeable future. Future declaration and payment of dividends, if any, on our common stock will be determined by our Board of Directors in light of factors the Board of Directors
deems relevant, including our operations, capital requirements and financial condition and restrictions in any future financing agreements.
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CAPITALIZATION
The following table sets forth our: (i) cash and cash equivalents; (ii) restricted cash and marketable securities;
(iii) total assets; (iv) total liabilities; (v) components of stockholders' equity; (vi) total capitalization; and (vi) outstanding shares of common stock as of
December 31, 2010, as follows:
•
on an actual basis; and
•
on a pro forma as adjusted basis to reflect the sale by us of                  shares of
common stock in this offering,
based on an assumed initial public offering price of $                  per share, which is the midpoint of the range shown on the cover of this prospectus, and
after deduction of estimated underwriting
discounts, commissions and advisory fees and estimated offering expenses payable by us.
You
should read this table together with the sections of this prospectus entitled "
Use of Proceeds,
" as well as our consolidated financial
statements and related notes and the other financial information appearing elsewhere in this prospectus.
As of December 31, 2010
Actual
Pro Forma as
Adjusted
Cash and cash equivalents
$
174,416
$
Restricted cash and marketable securities
7,254,667
Total Assets
$
28,141,069
$
Total Liabilities
$
26,750,252
(1)
$
(2)
Stockholders' Equity:
Preferred stock: 10,000,000 authorized, $0.001 par value
—
—
Common stock: 200,000,000 authorized, $0.001 par value
58,204
Additional paid-in capital
38,167,213
Deficit accumulated during the exploration stage
(36,834,600
)
(36,834,600
)
Total Stockholders' Equity
1,390,817
Total Capitalization
$
28,141,069
Common Stock Outstanding
58,204,141
(1)
Includes
(a) current liabilities consisting of accounts payable and accrued expenses of $240,437 and senior debt, net, of $24,844,874 and
(b) long-term liabilities consisting of long-term payable, net, of $325,539 and warrant liability of $1,339,402. For a description of our senior debt, see the section of
this prospectus entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations—Material Commitments—Senior Debt Credit
Facility
" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
(2)
.
The
outstanding share information set forth above as of December 31, 2010, excludes:
•
5,491,666 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2010
under our 2006 Plan and 2007 Plan at a weighted average exercise price of $0.71 per share;
•
3,000 shares of common stock reserved for future issuance under our 2006 Plan as of December 31, 2010;
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•
555,334 shares of common stock reserved for future issuance under our 2007 Plan as of December 31, 2010;
•
Up to 3,000,000 shares of common stock reserved for future issuance under our 2011 Plan (the 2011 Plan authorizes us to
issue the greater of (A) 1,000,000 shares of common stock or (B) the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number of
shares authorized under the 2006 Plan and 2007 Plan equals 10% of our total issued and outstanding shares of common stock. No shares of common stock were authorized or issued under the 2011 Plan as of
December 31, 2010);
•
3,051,744 shares of common stock underlying outstanding warrants as of December 31, 2010;
•
Up to 4,262,541 shares of common stock underlying future warrants that the Company is obligated to issue as is necessary
for the holder of the warrants described above to own, upon exercise of its warrants, 5% of the outstanding common stock of the Company, calculated on a partially diluted basis, of which the Company
expects to issue a warrant to purchase                  shares of common stock as a result of this offering;
•
shares of common stock underlying warrants that the Company will issue to the underwriters in connection
with this offering; and
•
shares of common stock issuable pursuant to the underwriters' over-allotment option.
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DILUTION
If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering
price per share of our common stock and the as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share represents the amount
of our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding at December 31, 2010.
Our
historical net tangible book value at December 31, 2010 was $827,558, or $.01 per share. After giving effect to the sale of our common stock in this offering at an assumed
initial public offering price of $                  per share, which is the mid-point of the offering range indicated on the cover page of this prospectus, and
after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable by us, our adjusted net tangible book value at December 31, 2010 would have been
$                   million
or $                  per share. This represents an immediate increase in net tangible book value per share of
$                  to existing stockholders and dilution in net tangible book value per share
of $                  to new investors who purchase shares in the offering. The following table illustrates this per share dilution to new investors:
Assumed initial public offering price per share
$
Historical net tangible book value per share at December 31, 2010
$
.01
Increase in net tangible book value per share attributable to new investors
$
Adjusted net tangible book value per share
$
Dilution per share to new investors
$
The
following table sets forth, on the as adjusted basis described above, at December 31, 2010, the difference between the number of shares of common stock purchased from us, the
total consideration paid, and the average price per share paid by the existing stockholders and by investors purchasing shares in this offering, before deducting estimated underwriting discounts and
commissions and estimated offering expenses.
Shares Purchased
Total Consideration
Average Price Per
Share
Number
Percent
Amount
Percent
Existing stockholders
58,204,141
%
$
29,947,060
%
$
0.51
New investors
%
%
Total
100
%
$
100
%
$
The
discussions and tables above are based on the number of shares of common stock outstanding at December 31, 2010. The outstanding share information set forth above
excludes:
•
5,491,666 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2010
under our 2006 Plan and 2007 Plan at a weighted average exercise price of $0.71 per share;
•
3,000 shares of common stock reserved for future issuance under our 2006 Plan as of December 31, 2010;
•
555,334 shares of common stock reserved for future issuance under our 2007 Plan as of December 31, 2010;
•
Up to 3,000,000 shares of common stock reserved for future issuance under our 2011 Plan (the 2011 Plan authorizes us to
issue the greater of (A) 1,000,000 shares of common stock or (B) the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number of
shares authorized under the 2006 Plan and 2007 Plan equals 10%
24
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of
our total issued and outstanding shares of common stock. No shares of common stock were authorized or issued under the 2011 Plan as of December 31, 2010);
•
3,051,744 shares of common stock underlying outstanding warrants as of December 31, 2010;
•
Up to 4,262,541 shares of common stock underlying future warrants that the Company is obligated to issue as is necessary
for the holder of the warrants described above to own, upon exercise of its warrants, 5% of the outstanding common stock of the Company, calculated on a partially diluted basis, of which the Company
expects to issue a warrant to purchase                  shares of common stock as a result of this offering;
•
shares of common stock underlying warrants that the Company will issue to the underwriters in connection
with this offering; and
•
shares of common stock issuable pursuant to the underwriters' over-allotment option.
25
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table shows our selected consolidated statements of operations, balance sheets and other financial and operating data as
of, and for each of the years ended, December 31, 2010, 2009, 2008, 2007 and 2006. The selected financial and operating data set forth below are derived from our audited consolidated financial
statements prepared in accordance with GAAP. Our historical results are not necessarily indicative of our results for any future period.
The
following selected historical consolidated financial and other data should be read in conjunction with, and are qualified in their entirety by reference to, the section of this
prospectus entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations
" and our audited consolidated financial
statements and related notes included elsewhere in this prospectus.
Selected Annual Financial Information (audited)
(In thousands except for per share amounts)
As of December 31,
2010
2009
2008
2007
2006
Consolidated Balance Sheet Data
Cash and cash equivalents
$
174
$
1,024
$
7,095
$
14,740
$
3,309
Restricted cash and marketable securities
7,255
235
—
—
—
Working capital (deficit)
(17,261
)
1,119
6,931
14,271
(3,756
)
Net property and equipment
20,093
(1)
8,571
8,366
7,395
1,539
Total assets
28,141
10,182
15,670
22,283
5,278
Total liabilities
26,750
(2)
559
325
506
7,110
Deficit accumulated during the exploration stage
(36,835
)
(28,405
)
(21,672
)
(13,352
)
(5,572
)
Total stockholders' equity (deficit)
1,391
9,623
15,346
21,777
(1,832
)
Years Ended December 31,
2010
2009
2008
2007
2006
Consolidated Operating Data
Revenues
$
—
$
—
$
—
$
—
$
—
Mineral property maintenance
1,142
1,036
1,220
1,664
817
Mineral exploration
1,835
3,528
4,366
2,543
519
General and administrative
2,228
2,821
3,501
2,279
1,013
Other income (expense)
(3,544
)
56
324
(1,550
)
(1,607
)
Operating loss
(8,749
)
(7,328
)
(8,762
)
(8,036
)
(3,957
)
Net loss attributable to the company
(8,429
)
(6,733
)
(8,319
)
(7,780
)
(3,957
)
Net loss per basic and diluted share of common stock
(0.14
)
(0.12
)
(0.15
)
(0.22
)
(0.17
)
Consolidated Cash Flow Data
Net cash used by operations
$
(4,694
)
$
(6,455
)
$
(8,027
)
$
(5,394
)
$
(1,979
)
Net cash used by investing activities
(7,568
)
(350
)
(632
)
(4,847
)
(1,376
)
Net cash provided by financing activities
11,413
734
1,014
21,672
6,513
Net increase (decrease) in cash and cash equivalents
(850
)
(6,071
)
(7,645
)
11,431
3,157
(1)
Includes
our April 2010 acquisition of the 49% non-controlling interest in Cibola Resources LLC. See the section of this prospectus
entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations—Material Commitments—Significant Mineral
Properties—Cebolleta Mineral Property
" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
(2)
Includes
(a) current liabilities consisting of accounts payable and accrued expenses of $240,437 and senior debt, net, of $24,844,874 and
(b) long-term liabilities consisting of long-term payable, net, of $325,539 and warrant liability of $1,339,402. For a description of our senior debt, see the section of
this prospectus entitled "
Management's Discussion and Analysis of Financial Condition and Results of Operations—Material Commitments—Senior Debt Credit
Facility
" and our audited consolidated financial statements and related notes included elsewhere in this prospectus.
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Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with our consolidated financial statements for
the three years ended December 31, 2010 and related notes thereto, which have been prepared in accordance with GAAP. This discussion and analysis contains forward-looking statements
that are subject to risks, uncertainties and assumptions, including those discussed under the section of this prospectus entitled "Risk Factors." See the section of this prospectus entitled "Special
Note Regarding Forward-Looking Statements" for information about such statements. Our actual results may differ materially from those expressed in or implied by these
forward-looking statements.
Overview
We are a natural resource company engaged in the acquisition, exploration and development of uranium properties in the United States.
Our strategy is to acquire properties that (i) have undergone some degree of historical uranium exploration and on which uranium mineralized material, but not reserves, have been located, and
(ii) are located in mineralized districts that have undergone some degree of historical uranium exploration and are thought to be prospective for further uranium exploration, but on which no
uranium mineralized material has been located. We have acquired interests in leased properties and unpatented mining claims in New Mexico, South Dakota and Wyoming.
We
hold interests in the following mineral properties:
Interest Held
Location
Federal mining claims: 649
State mineral lease: 1
Private (fee) mineral leases: 27
New Mexico, USA; McKinley, Sandoval and Cibola counties
Federal mining claims: 449
State mineral leases: 27
Private (fee) mineral leases: 17
Wyoming, USA; Carbon, Crook, and Fremont counties
Federal mining claims: 416
State mineral leases: 11
Private (fee) mineral leases: 14
South Dakota, USA; Fall River county
We
also hold residual mineral interests that we received in the disposition of properties in Arizona and South Dakota. These residual interests were received in consideration of the sale
of our ownership interests in the properties and are primarily comprised of a royalty interest, a net proceeds interest and our ability to convert the royalty interest into a working interest in the
properties.
We
are an exploration stage company. All of our projects are at the exploration stage and there can be no assurance that a commercially viable mineral deposit, or reserve, exists on any
of our properties until appropriate exploratory work is done and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration beyond the scope of our
planned exploration activities will be required before a final evaluation as to the economic and legal feasibility of mining of any of our properties is determined. There is no assurance that further
exploration will result in a final evaluation that a commercially viable mineral deposit exists on any of our mineral properties. We anticipate that we will require additional financing in order to
pursue full exploration and development of our properties. We do not have sufficient financing to undertake full exploration and development of our mineral properties at present and there is no
assurance that we will be able to obtain the necessary financing.
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Our
plan of operation is to: (i) commence confirmation drilling programs, pursuant to three exploration permits we have received, to confirm the historical exploration and
development data in our possession on our Cibola Project and Ambrosia Lake Project; (ii) conduct feasibility studies, undertake initial mine and mill design and complete the collection of
environmental baseline data necessary for the NRC mill
permit application and New Mexico state mine permit applications on our Cibola Project; (iii) complete and submit the required licensing and permit applications necessary to develop and operate
our Cibola Project mines and mill; and (iv) complete the analysis and digitization of historic geologic data, mapping and other geophysic and geologic activities, exploration permitting and
exploration programs on selected other mineral property interests we own.
Our
plan of operations will be continually evaluated and modified as exploration results become available. Modifications to our plans will be based on many factors, including: results of
exploration, assessment of data, feasibility studies, weather conditions, exploration costs, the price of uranium and available capital. Further, the extent of our exploration programs that we
undertake will be dependent upon the amount of financing available to us.
Results of Operations
We are an exploration stage company and have not generated any revenue to date. The following table sets forth selected financial
information relating to our company for the periods indicated:
Selected Operating Financial Information
Years Ended December31,
2010
2009
2008
Mineral property maintenance
$
1,141,706
$
1,035,509
$
1,219,549
Mineral exploration
1,835,039
3,528,324
4,366,395
Selected Components of Mineral Exploration
Wages and benefits
1,217,701
1,648,306
1,337,963
Wages and benefits—stock based compensation
—
137,045
200,815
Mineral property expenditures
386,583
891,133
2,320,450
Data acquisition
—
520,807
265,762
General and administrative
230,755
331,033
241,405
General and administrative
2,227,627
2,820,561
3,500,900
Selected Components of General and Administrative
Wages and benefits
1,021,968
1,166,986
1,262,998
Wages and benefits—stock based compensation
4,292
267,657
658,274
Professional services
389,579
552,391
656,450
Professional services—stock based compensation
192,757
172,489
—
Other general and administrative
619,031
661,038
923,178
Other Income (Expense)
(3,544,423
)
56,076
324,426
Selected Components of Other Income (Expense)
Interest (expense), net
(918,019
)
60,743
305,792
Unrealized gain (loss) on warrants
240,235
—
—
Amortization—senior debt discount
(1,338,580
)
—
—
Amortization—debt issuance costs
(1,527,895
)
—
—
Operating loss
(8,748,795
)
(7,328,318
)
(8,762,418
)
Net loss attributable to the Company
(8,429,402
)
(6,733,408
)
(8,319,396
)
We
have been funding our operations by way of private placements of our equity and through senior debt borrowings. We expect we will require additional capital to meet our short and long
term
28
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operating
requirements. We expect to raise additional capital through, among other things, the sale of equity.
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
We are an exploration stage company and have no revenues to date and we anticipate that we will not generate any revenues during the
twelve month period following the date of this prospectus. Our net losses during the year ended December 31, 2010 ("2010") were approximately $8,429,402 compared to net losses of $6,733,408 for
the year ended December 31, 2009 ("2009").
During
2010, we incurred operating losses of $8,748,795 compared to $7,328,318 incurred during 2009. This increase is primarily due to costs and expenses associated with our senior
credit facility which were partially offset by a reduction in exploration expenses and other general and administrative expenses. Significant expenditures and changes are outlined below.
Mineral property maintenance expenses
The $106,197 increase in mineral property maintenance expenses incurred during 2010 compared to 2009 is primarily due to private (fee)
mineral lease expenses increasing to $895,326 from $791,261 for the corresponding period in 2009 as a result of having to pay the lease expenses that were paid for by Primary Corp. until we acquired
their 34.56% interest in our now wholly-owned Grants Uranium Project Joint-Venture in October 2009.
Mineral exploration expenses
The $1,693,285 decrease in mineral exploration expenses incurred during 2010 compared to 2009 is primarily due
to:
(i)
a
$430,605 decrease in wages and benefits expense attributable to temporary furloughs of employees and employment terminations in 2010;
(ii)
a
$137,045 decrease in stock based compensation for wages and benefits expense attributable to the timing of stock option grants to employees;
(iii)
a
$504,550 decrease in mineral property exploration expense attributable to reduced legal, lobbying and consulting fees associated with permitting
activities;
(iv)
a
$520,807 decrease in data acquisition expense attributable to the timing of individual data base purchases; and
(v)
a
$100,278 decrease in general and administrative expense attributable to a reduction in the number of employees and travel and field activities.
General and administrative expenses
The $592,934 decrease in general and administrative expenses incurred during 2010 compared to 2009 is primarily due
to:
(i)
a
$145,018 decrease in wages and benefits expense attributable to temporary furloughs of employees and employment terminations;
(ii)
a
$263,365 decrease in stock based compensation for wages and benefits attributable to the timing of stock option grants to employees; and
(iii)
a
$162,812 decrease in professional services expense attributable to reduced legal and investment banking fees associated with financing efforts.
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Table of Contents
Other income and expenses
The $3,600,499 increase in other expense incurred during 2010 compared to 2009 is primarily due to costs and expenses associated with
our senior credit facility. In connection with our senior credit facility, we recognized: (i) net interest expense of $918,019; (ii) unrealized gain on warrant liability of $240,235;
(iii) amortization of senior debt discount expense of $1,338,580; and (iv) amortization of debt issuance costs of $1,527,895 for 2010 compared to $60,743 of net interest income for 2009.
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
Our net losses during 2009, were approximately $6,733,408 compared to net losses of $8,319,396 for the year ended December 31,
2008 ("2008"). During 2009, we incurred operating losses of $7,328,318 compared to $8,762,418 incurred during 2008. The decrease is primarily due to a reduction in mineral property maintenance
expenses, exploration expenses, and general and administrative expenses, partially offset by a reduction in other income. We had no revenues during 2009 and 2008. Significant expenditures and changes
are outlined below.
Mineral property maintenance expenses
The $184,040 decrease in mineral property maintenance expenses incurred during 2009 compared to 2008 is primarily due to state mineral
leases of $37,279 compared to $306,640 for the corresponding period in 2008 resulting from our not renewing state mineral leases primarily in Wyoming.
Mineral exploration expenses
The $838,071 decrease in mineral exploration expenses incurred during 2009 compared to 2008 is primarily due
to:
(i)
a
$310,343 increase in wages and benefits expense attributable to an increase in the number of employees offset partially by a voluntary reduction in
salaries of management;
(ii)
a
$63,770 decrease in stock based compensation for wages and benefits expense attributable to the timing of stock option grants to employees;
(iii)
a
$1,429,317 decrease in mineral property exploration expense attributable to: (1) decreased permitting activities resulting in corresponding
decreases in legal, public relations and outside consulting expenses; (2) an outside environmental and permitting consultant hired as an employee resulting in reclassification of associated
expenses; and (3) decrease in exploration drilling activity;
(iv)
a
$255,045 increase in data acquisition expense attributable to the timing of individual data base purchases; and
(v)
a
$89,628 increase in general and administrative expense attributable to an increase in employee related travel and field expenses and classification of our
Albuquerque, N.M. office occupancy and administrative expenses as mineral exploration general and administrative expenses previously classified as corporate general and administrative expenses.
General and administrative expenses
The $680,339 decrease in general and administrative expenses incurred during 2009 compared to 2008 is primarily due
to:
(i)
a
$96,012 decrease in wages and benefits expense attributable to voluntary salary reductions accepted by management;
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(ii)
a
$390,617 decrease in stock based compensation for wages and benefits expense attributable to the timing of stock option grants to employees;
(iii)
a
$104,059 decrease in professional services expense attributable to reduced legal, lobbying and accounting fees partially offset by an increase in
investment banking fees associated with financing efforts;
(iv)
a
$172,489 increase in stock based compensation for professional services expense attributable to stock option grants to outside consultants and our
directors; and
(v)
a
$262,140 decrease in general and administrative expense attributable to significant non-recurring expenses incurred in 2008 in connection with
recruiting and relocating management and technical employees and relocating our corporate offices from Phoenix, Arizona to Denver, Colorado.
Other income and expenses
The $268,350 decrease in other income incurred during 2009 compared to 2008 is primarily due to net interest income of $60,743 compared
to net interest income of $305,792 for the corresponding period in 2008 resulting from lower cash balances and lower effective interest rates.
Liquidity and Capital Resources
Selected Liquidity and Capital Resources Financial Information
As of December 31,
2010
2009
2008
Consolidated Balance Sheet Data
Cash and cash equivalents
$
174,416
$
1,023,932
$
7,094,714
Restricted cash and marketable securities
7,254,667
235,300
—
Working capital (deficit)
(17,261,431
)
1,118,756
6,930,545
Net property and equipment
20,093,370
8,571,268
8,365,583
Total assets
28,141,069
10,182,442
15,670,395
Total liabilities
26,750,252
559,272
324,595
Deficit accumulated during the exploration stage
(36,834,600
)
(28,405,198
)
(21,671,790
)
Total stockholders' equity
1,390,817
9,623,170
15,345,800
Years Ended December 31,
2010
2009
2008
Consolidated Cash Flow Data
Net cash used by operations
$
(4,694,371
)
$
(6,455,406
)
$
(8,027,124
)
Net cash used by investing activities
(7,568,091
)
(349,605
)
(632,053
)
Net cash provided by financing activities
11,412,946
734,229
1,014,226
Net increase (decrease) in cash and cash equivalents
(849,516
)
(6,070,782
)
(7,644,951
)
Cash Used in Operating Activities
We have not generated positive cash flow from operating activities. Our operations have been primarily financed by proceeds from
issuances of common stock and through senior debt borrowings. We plan to finance future operations with proceeds from this offering and subsequent issuances of common stock. As of December 31,
2010, our cash and short term security position was $7,429,083 ($7,254,667 of which was restricted) compared to $1,259,232 ($235,300 of which was restricted) as of December 31, 2009 and
$7,094,714 (none of which was restricted) as of December 31, 2008. Of the $7,254,667 of restricted cash and marketable securities as of December 31, 2010, $7,069,367 was
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restricted
pursuant to our senior debt credit facility as described in "
Material Commitments—Senior Debt Credit Facility
" below and the
remaining $185,300 was held in certificates of deposit collateralizing various letters of credit issued by the Arizona Business Bank described in "
Material
Commitments—Credit Agreement and Irrevocable Standby Letters of Credit
" below that were outstanding as of December 31, 2010. We had a working capital deficit
of $17,261,431 as of December 31, 2010 compared to working capital of $1,118,756 as of December 31, 2009 and $6,930,545 as of December 31, 2008.
For
the fiscal year ended December 31, 2010, net cash used in operating activities was $4,694,371, consisting primarily of a net loss of $8,429,402. Net cash flows used in
operating activities are reconciled to our net loss by: (i) increase in cash of $26,260 from changes in our working capital accounts; (ii) decrease in cash of $319,393 from losses
attributable to noncontrolling interests; and (iii) increase in cash of $4,028,164 for non-cash expenses, which includes a $197,049 non-cash expense for stock based
compensation and $3,763,090 non-cash expenses of amortization of debt issuance costs, accretion of discount on senior debt and accrued interest on senior debt.
For
the fiscal year ended December 31, 2009, net cash used in operating activities was $6,455,406, consisting primarily of a net loss of $6,733,408. Net cash flows used in
operating activities are reconciled to our net loss by: (i) increase in cash of $36,523 from changes in our working capital accounts; (ii) decrease in cash of $594,910 from losses
attributable to noncontrolling interests; and (iii) increase in cash of $836,389 for non-cash expenses, which includes a $577,191 non-cash expense for stock based
compensation.
For
the fiscal year ended December 31, 2008, net cash used in operating activities was $8,027,124, consisting primarily of a net loss of $8,319,396. Net cash flows used in
operating activities are reconciled to our net loss by: (i) decrease in cash of $268,988 from changes in our working capital accounts; (ii) decrease in cash of $443,022 from losses
attributable to noncontrolling interests; and
(iii) increase in cash of $1,004,282 for non-cash expenses, which includes a $859,089 non-cash expense for stock based compensation.
Cash Used in Investing Activities
For 2010, net cash used in investing activities was $7,568,091 compared to $349,605 in 2009. During 2010, our net cash used in
investing activities consisted primarily of: (i) the purchase of unproven mineral properties for $11,683,643, of which $11,454,312 was financed by senior debt and capitalized investment in a
mineral purchase option; (ii) the investment in a mineral purchase option for $319,393; and (iii) the increase in restricted cash and marketable securities of $7,019,367.
For
2009, net cash used in investing activities was $349,605 compared to $632,053 in 2008. During 2009, our net cash used in investing activities consisted primarily of: (i) the
purchase property and equipment for $42,738; (ii) the purchase of unproven mineral properties for $343,647, of which $68,578 was financed by the issuance of common stock; (iii) the
receipt of equity in joint venture partner contributions of $346,321; (iv) the investment in a mineral purchase option for $142,819; and (v) the increase in restricted cash and
marketable securities of $235,300.
For
2008, net cash used in investing activities was $632,053, consisting primarily of: (i) the purchase property and equipment for $618,435, of which $2,988 was financed by
accounts payable; (ii) the purchase of unproven mineral properties for $455,591; and (iii) the receipt of equity in joint venture partner contributions of $438,985.
Cash Provided by Financing Activities
For 2010, net cash provided by financing activities was $11,412,946 compared to $734,229 in 2009. During 2010, net cash provided by
financing consisted consisting primarily of: (i) an investment by a
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noncontrolling
interest in a consolidated joint venture of $319,393; (ii) the payment of debt issuance and deferred offering costs of $288,108; and (iii) senior debt financing of
$24,000,000, less (A) $11,000,000 advanced directly to seller in connection with our purchase of the seller's 49% equity interest in our now wholly-owned subsidiary, Cibola
Resources LLC ("Cibola"), and (B) $1,618,340 advanced directly to financier in connection with the issuance of the senior debt.
For
2009, net cash provided by financing activities was $734,229 compared to $1,014,226 in 2008. During 2009, net cash provided by financing consisted consisting primarily of:
(i) an investment by a noncontrolling interest in a consolidated joint venture of $613,598; (ii) the payment of deferred offering costs of $168,221; and (iii) the proceeds from a
long-term payable of $288,852.
For
2008, net cash provided by financing activities was $1,014,226, consisting primarily of: (i) an investment by a noncontrolling interest in a consolidated joint venture of
$704,610; (ii) the payment of deferred offering costs of $18,913; and (iii) the proceeds from exercise of warrants of $328,529.
Plan of Operations and Funding
As of December 31, 2010, we had restricted cash and cash equivalents of $7,254,667 and unrestricted cash and cash equivalents of
$174,416. We estimate that our cash expenditures for operations over the twelve months immediately following this offering will be approximately $18,509,027 as outlined below. Therefore, our existing
working capital is not expected to be adequate to fund our exploration and permitting related operations over the twelve months immediately following this offering. We have no available lines of
credit. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates
additional increases in operating expenses and capital expenditures relating to: (i) drilling programs, pursuant to three exploration permits we have received, to confirm the historical
exploration and development data in our possession on our Cibola Project and Ambrosia Lake Project; (ii) feasibility studies and possible future reserve definition; (iii) mine and mill
design and completion of the collection of environmental baseline data necessary for NRC and state mine and mill operating permits on our Cibola Project; (iv) submission of required licensing
and permit applications necessary to develop and operate mines and a mill at our Cibola Project; (v) completion of the analysis and digitization of historic geologic data, mapping, other
geophysic and geologic activities, exploration permitting and exploration programs on selected other mineral property interests we own; and (vi) possible future property acquisitions. We intend
to finance these expenses with further issuances of securities and debt issuances. We expect we will need to raise additional capital to meet long-term operating requirements. Additional
issuances of equity or convertible debt securities will result in dilution to our current stockholders. Further, such securities might have rights, preferences or privileges senior to our common
stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of
prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
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Our planned exploration, preliminary license and permit preparation, preliminary mine and mill design, feasibility studies and amounts due to maintain our mineral
property interests for the twelve months immediately following this offering on our mineral properties, are summarized as follows:
Property
Exploration
Preliminary
License and
Permit
Preparation
Preliminary
Mine and
Mill
Designs
Feasibility
Studies
Claim/Lease/
Surface
Maintenance
Payments
Total
Cibola Project, NM
$
2,017,600
$
3,954,674
$
5,843,335
$
1,536,196
$
729,332
$
14,081,137
Ambrosia Lake Properties, NM
—
—
—
—
390,400
390,400
New Mexico, Other Properties
—
—
—
—
49,280
49,280
Wyoming Properties
—
—
—
—
96,512
96,512
South Dakota Properties
—
—
—
—
81,171
81,171
Exploration administration
1,230,527
—
—
—
—
1,230,527
Total
$
3,248,127
$
3,954,674
$
5,843,335
$
1,536,196
$
1,346,695
$
15,929,027
In addition to our planned expenditures noted above, we anticipate repaying our senior debt due June 30, 2011 in the amount of $24,000,000
plus accrued interest, totaling approximately $25,760,000, and spending approximately $215,000 for ongoing general and administrative expenses per month for the twelve months immediately following
this offering. The general and administrative expenses for the year will consist primarily of salaries for our officers, management, technical and administrative staff and consulting and professional
fees for the audit and legal work relating to our regulatory filings throughout the year, as well as investor relations and general office expenses. Mineral property acquisitions, if any, will be
additional and dependent upon opportunities that may arise.
With
restricted and unrestricted cash of $7,429,083 and planned expenditures of $44,269,027, we anticipate that we will require an additional $36,839,944 to carry out our plan of
operations for the twelve months immediately following this offering. We will require additional financing to pursue our plan of operations for the subsequent 12 months. There can be no
assurance that such financing will be available on terms favorable to us or at all.
Beyond
the twelve months immediately following this offering, we will require additional financing in order to continue our plan of operations as we anticipate that we will not earn any
revenues in the foreseeable future. We believe that debt financing will not be an alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt
financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or preferred stock. We do not have any financing arranged currently and we
cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our exploration and, if we are able to commence development, our
development programs. In the absence of such financing, we will not be able to continue exploration and begin development of our mineral properties. If we do not continue to obtain additional
financing, we may be forced to abandon our properties and our plan of operations.
We
may consider entering into a joint venture arrangement to provide the required funding to pursue exploration and/or development of our mineral properties. Even if we determined to
pursue a joint venture partner, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration and/or development of our mineral properties.
If we entered into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral properties to the joint venture partner.
Our
plan of operations will be continually evaluated and modified as exploration results become available. Modifications to our plans will be based on many factors, including: results of
exploration, assessment of data, weather conditions, exploration costs, the price of uranium and available capital.
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Further,
the extent of our exploration programs that we undertake will be dependent upon the amount of financing available to us.
Going Concern
We commenced operations on March 25, 2005 and have not realized any revenues since inception. As of December 31, 2010, we
had a working capital deficit of $17,261,431 and an accumulated deficit of $36,834,600. Existing cash resources are currently not expected to provide sufficient funds through the upcoming year and the
capital expenditures required to achieve planned principal operations may be substantial. Our continuation as a going concern is dependent upon our ability to obtain necessary financing to continue
operations. We are in the exploration stage of our mineral property development and to date have not yet established any proven mineral reserves on our existing properties. Our continued operations
and the recoverability of the carrying value of our assets are ultimately dependent upon our ability to achieve profitable operations.
Purchase of Significant Equipment
We currently do not plan to acquire any significant equipment over the next twelve months.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on
our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Material Commitments
Significant Mineral Properties
Since March 2005, we have been acquiring mineral properties for the purpose of exploring for economic deposits of uranium in the states
of Arizona, New Mexico, South Dakota and Wyoming. Our mineral property acquisitions are comprised of: (i) unpatented mining claims which are administrated by the U.S. Bureau of Land
Management ("BLM"); (ii) state mineral leases or exploration permits; (iii) fee mineral leases with the owners of private mineral rights; and (iv) mineral leases with third
parties who acquired mineral rights through (i) and (ii) above.
Except
as set forth below, all unpatented mining claims may be relinquished by us and state and fee mineral leases may be released by us when exploration and/or development is completed
or the property is abandoned, provided that there may be continuing reclamation and remediation obligations following the completion of exploration and development or abandonment. Our state and fee
mineral
leases are subject to various royalty interests, some of which are indexed to the sale price of uranium. Unpatented mining claims are not subject to royalties.
Juan Tafoya Mineral Property
In October 2006, we entered into a Uranium Mining and Lease Agreement ("Juan Tafoya Lease") with the Juan Tafoya Land Corporation
("JTLC") in which we leased 4,097 acres of fee (deeded) surface and mineral rights owned by the JTLC ("Juan Tafoya Property") in the state of New Mexico. The Juan Tafoya Lease provides for a term of
ten years and so long thereafter as we are conducting operations on the Juan Tafoya Property. Additionally, the Juan Tafoya Lease, provides for: (i) an initial payment to JTLC of $1,250,000;
(ii) annual rental payments of $225,000 for the first five years of the lease and $337,500 for the second five years; (iii) after the second five years, annual base rent of $75 per acre;
(iv) gross proceeds royalties of 4.65% to 6.5% based on the then current price of uranium; (v) employment opportunities and job-skills training programs for shareholders of
the JTLC;
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(vi) periodic
contributions to a community projects fund if mineral production commences from the Juan Tafoya Property; and (vii) funding of a scholarship program for children of the
shareholders of the JTLC. We are obligated to make the first ten years annual rental payments notwithstanding our right to terminate the Juan Tafoya Lease at any time, unless (a) the market
value of uranium drops below $25 per pound, (b) the state of New Mexico bans uranium mining, or (c) the deposit is deemed uneconomical by an independent engineering firm.
In
2007, we acquired infill fee mineral leases within the boundaries of the Juan Tafoya Lease. We are obligated to make annual lease payments and pay production royalties ranging from
4.65% to 6.5% based on the then current price of uranium. The infill fee mineral leases covering the individually-owned small tracts have similar business terms and royalty provisions as the Juan
Tafoya Lease.
In
January 2007, we entered into a letter agreement with International Nuclear, Inc. Pursuant to the letter agreement we acquired a database of information on the Marquez Canyon
deposit located on the Juan Tafoya Property in consideration of a cash payment and a perpetual royalty of $0.25 per pound of uranium recovered from the Juan Tafoya Property with a maximum payout of
$1,000,000.
Cebolleta Mineral Property
In March 2007, we entered into a Mining Lease and Agreement ("Cebolleta Lease") with La Merced del Pueblo de Cebolleta ("Cebolleta Land
Grant"), a privately held land grant, to lease approximately 6,717 acres of fee (deeded) surface and mineral rights ("Cebolleta Property") in the state of New Mexico. The Cebolleta Lease was affirmed
by the New Mexico District Court in Cibola County in April 2007. The Cebolleta Lease provides for: (i) a term of ten years and so long thereafter as we are conducting operations on the
Cebolleta Property; (ii) initial payments to the Cebolleta Land Grant of $5,000,000 during the first six months; (iii) a recoverable reserve payment equal to $1.00 multiplied by the
number of pounds of recoverable uranium reserves upon completion of a feasibility study to be completed within six years, less (a) the $5,000,000 referred to in (ii) above, and
(b) not more than $1,500,000 in annual advance royalties previously paid pursuant to (iv); (iv) annual advanced royalty payments of $500,000; (v) gross proceeds royalties from
4.50% to 8.00% based on the then current price of uranium; (vi) employment opportunities and job-skills training for the members of the Cebolleta Land Grant; and
(vii) funding of annual higher education scholarships for children of the members of the Cebolleta Land Grant.
In
April 2007, we formed a joint-venture with Uranium Energy Corp. ("UEC") through the formation of Cibola and the execution of a Limited Liability Company Operating Agreement and
Members Agreement. Cibola was originally owned 51% by us and 49% by UEC and we were the managing member of Cibola. The Cebolleta Lease was assigned to Cibola. We consolidated the assets, liabilities
and operating results of Cibola and recognized UEC's noncontrolling interest in the consolidated balance sheets and consolidated statements of operations.
In
November 2009, pursuant to our strategic plan to consolidate our ownership interest in our core mineral properties, we entered into an Option Agreement (the "Option Agreement"), as
amended in December 2009, with UEC, in which UEC granted us the exclusive option to purchase and acquire UEC's 49% ownership interest in Cibola for a cash payment of $11,000,000. In consideration for
the Option Agreement and amendment thereto, we funded all of Cibola's operations, from August 2009 through March 2010, including UEC's share. In April 2010, we exercised the Option Agreement, as
amended, and acquired UEC's 49% ownership interest in Cibola and are now the sole member of Cibola.
In
August 2009, we entered into an agreement with a former lessee and operator of certain lands now leased by us to acquire historical data related to the Cebolleta Property. The former
lessee delivered the data at the time of the agreement. In consideration, we have made payments to date of $50,000 with a final payment of $400,000 due in August 2013.
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Ambrosia Lake Mineral Properties
In February 2006, we entered into a lease (the "Endy Lease") on 3,382 acres comprised of 167 unpatented lode mining claims in the
eastern portion of the Ambrosia Lake mining district in New Mexico. Pursuant to the terms of the Endy Lease, we paid $315,000 upon signing, $100,000 in February 2007 and February 2008, and are
obligated to pay an additional $75,000 as an advance royalty each year thereafter through the term of the Endy Lease. The Endy Lease has a primary term of ten years, but may be extended up to an
additional 65 years provided that we continue to make advance or production royalty payments. We may terminate the lease at any time without further lease obligations. A 5% production royalty,
based on the gross market value of all minerals extracted, is payable for any production from the Endy Lease properties.
In
June 2006, we entered into a lease (the "Bonner Lease") on 181 unpatented lode mining claims and one state of New Mexico general mining lease, covering a further 4,132 acres of
mineral rights in the Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Bonner Lease, we paid a rental payment of $180,000 and issued 65,000 shares of our common
stock. We are obligated to pay an annual rental payment of $120,000 on the second through fifth anniversaries of the Bonner Lease. On the sixth anniversary and each anniversary thereafter we are
obligated to pay an annual advance royalty of $240,000. In the event commercial production is achieved during the rental period, then all future rental payments received after commercial production
begins will be credited as minimum advance royalty payments. The Bonner Lease has a primary term of ten years but may be extended up to an additional 65 years provided that we continue to make
advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5% production royalty based on the gross market value of all minerals extracted is
payable for any production from the Bonner Lease properties. The surface overlying the New Mexico general mining lease is owned by the State of New Mexico.
In
January 2008, we entered into a Mineral Lease Agreement (the "Elizabeth Lease") on 179 acres comprised of eight patented and one unpatented lode mining claims in the eastern portion
of the Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Elizabeth Lease, we paid a $315,000 signing bonus upon signing and we are obligated to pay advance
royalties of $100,000 on the first and second anniversaries and $75,000 every anniversary thereafter so long as the lease is in effect. The Elizabeth Lease has a primary term of ten years, but may be
extended up to an additional 65 years provided that we continue to make advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5%
production royalty, based on the gross market value of all minerals extracted, is payable for any production from the Elizabeth Lease properties.
In
April 2006, Primary Corp. ("Primary"), formerly known as Trans America Industries Ltd., and the Company entered into an Exploration, Development and Mine Operating Agreement
("Grants J.V. Agreement") and formed the Grants Uranium Project Joint-Venture ("Grants J.V."). Pursuant to the Grants J.V. Agreement, we contributed to the joint-venture the properties underlying
three large New Mexico leases: the Endy Lease, the Bonner Lease and the Elizabeth Lease. Also pursuant to the Grants J.V. Agreement, Primary reimbursed us for $495,000 in connection with the Endy and
the Bonner Leases during the year ended December 31, 2006, in consideration of contribution of the underlying leased properties. Pursuant to the Grants J.V. Agreements, Primary was obligated to
contribute $5,000,000 to fund the joint-venture's operations ("Initial Contribution"), before February 1, 2010. In consideration of Primary's payments to us and the funding of the Grants J.V.,
Primary was entitled to a 50% participating interest in the underlying joint-venture properties. We were the managing partner in the joint-venture.
In
October 2009, pursuant to our strategic plan to consolidate our ownership interest in our core mineral properties, we entered into a Purchase and Termination Agreement ("Purchase
Agreement")
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with
Primary with respect to the Grants J.V. Pursuant to the Purchase Agreement, Primary transferred its ownership interest in Grants J.V. to us on October 15, 2009. In consideration, we were
obligated to, at our option, pay Primary $3,519,067 in Canadian funds, or, issue Primary 3,519,067 shares of our common stock.
In
December 30, 2009, we opted to issue to Primary 3,519,067 shares of our common stock, in lieu of cash, in consideration of our October 15, 2009 purchase of Primary's
interest in the Grants J.V.
Senior Debt Credit Facility
In April 2010, we entered into an arrangement of a $16,000,000 senior secured credit facility ("Credit Facility"), which RMB
Resources, Inc. ("RMB"), an agent of RMB Australia Holdings Limited ("RMBAH", together RMB and RMBAH, the "Lender") advanced in two tranches. Tranche 1 proceeds in the amount of
$5,000,000 were used for general working capital consistent with operating activities mutually agreed upon by us and Lender. Tranche 2 proceeds in the amount of $11,000,000 were used to fund
our acquisition of UEC's 49% interest in Cibola.
The
Credit Facility agreement, among other terms and conditions, provides for:
a.
The
payment of outstanding principal, together with accrued interest, on or before December 31, 2010.
b.
Interest
charged on outstanding principal balances is accrued as a part of the principal balance and calculated at a rate equal to LIBOR plus 7%.
c.
Mortgage
and senior security interest in all material "real property" located in New Mexico; all "personal property" of the Company; and a pledge of the
Company's 100% ownership interest in Cibola.
d.
All
proceeds from Tranche 1 to be deposited into a control proceeds account ("Proceeds Account").
e.
All
future cash proceeds received by the Company, up to $5,000,000, shall be deposited into the Proceeds Account and any cash proceeds in excess of
$5,000,000 must be applied toward prepayment of outstanding accrued interest and principal balances.
In
consideration of the Credit Facility agreement, we:
a.
Paid
the lender an arrangement fee of $1,120,000, equal to 7% of the Credit Facility, plus $190,758 in costs and expenses incurred by lender.
b.
Issued
RMBAH two warrants to purchase a total of 3,051,744 shares of our common stock on the following terms:
i.
The
exercise price is $1.75 or the lowest price at which the Company issues shares during the exercise period, which is four years from date of issuance.
ii.
The
estimated fair value of these warrants on the dates of issue was $1,579,637 or $.52 per warrant.
iii.
Upon
the issuance of warrants above, RMBAH's beneficial ownership of us was slightly less than 5%.
iv.
Other
significant features of the warrants include: (1) net share settlement exercise rights, (2) adjustment to exercise price for dilutive
issues, and (3) piggy-back registration rights.
c.
We
are obligated to issue additional warrants to RMBAH to purchase up to 1,519,684 additional shares of common stock. The warrants will be issued so as to
allow RMBAH to maintain a beneficial ownership up to 5%, as was achieved by the issuance of the warrants in
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b
above. The fair value of these warrants has not been established as these warrants are not issuable at March 24, 2011. Any such additional warrants issued to RMBAH will have the same terms
and conditions as the warrants in b above.
On
April 4, 2010, we and Lender executed the Credit Facility agreement and closed on Tranche 1 of the Credit Facility. On April 12, 2010, the Lender funded
Tranche 2 providing proceeds for our purchase of UEC's 49% interest in Cibola for $11,000,000 pursuant to the Option Agreement, as amended.
On
December 22, 2010, we entered into the First Amendment Agreement to the Credit Facility agreement ("Amended Credit Facility") with Lender with respect to the amendment of the
April 2010 Credit Facility. Pursuant to the Amended Credit Facility, the Lender extended the maturity of the Credit Facility from December 31, 2010 to June 30, 2011, and advanced
$8,000,000 in Tranche 3, which increased the Credit Facility from $16,000,000 to $24,000,000. The terms of the Amended Credit Facility are:
a.
We
paid the Lender an arrangement fee of $320,000, equal to 4% of the increase in amount of the Credit Facility, an extension fee of $160,000, equal to 1% of
the original Credit Facility, plus, $21,233 in costs and expenses incurred by the Lender.
b.
We
are obligated to issue additional warrants to RMBAH to purchase up to 2,742,857 additional shares of common stock. The warrants will be issued so as to
allow RMBAH to maintain a beneficial ownership up to 5%. The fair value of these warrants has not been established as these warrants are not issuable at March 24, 2011. Any such additional
warrants issued to RMBAH will have the same terms and conditions as the warrants issued to RMBAH in connect with the original Credit Facility.
c.
All
other terms and conditions remain the same.
Credit Agreements and Irrevocable Standby Letters of Credit
In April 2008, Arizona Business Bank issued us an Irrevocable Standby Letter of Credit in favor of Cognac Highland Court LLC,
(the "Landlord") as a security deposit on the lease of the corporate headquarters in Englewood, Colorado. The Letter of Credit is secured by a credit facility in favor of us and has an interest rate
of Arizona Business Bank's prime rate and automatically renews every 12 months expiring on October 31, 2011. The credit facility is collateralized by a certificate of deposit which pays
2.8% interest. As of March 24, 2011, both the Letter of Credit and the certificate of deposit were in the amount of $25,000. The certificate of deposit will be released in October 2011. Upon
our default of the lease agreement, the Landlord may draw upon the Letter of Credit for any rent or other obligations in default of the terms of the lease. The Landlord has not drawn down any
principal under the Letter of Credit.
As
of March 24, 2011, Arizona Business Bank has issued us six Irrevocable Standby Letters of Credit in favor of the Mining and Minerals Division of the New Mexico Energy, Minerals
and Natural Resources Department ("MMD") to satisfy the bond requirements for completion of surface and subsurface reclamation pursuant to the permits issued by the state of New Mexico for the
"Marquez Canyon Exploration Project," "Elizabeth Claims Exploration Project" and the "Cebolleta Exploration Project." Each of the Letters of Credit issued in favor of the MMD is secured by a credit
facility in favor of us and has an interest rate of Arizona Business Bank's prime rate and automatically renews every 12 months until the requirements of the permit are satisfied. Each credit
facility is collateralized by a certificate of deposit equal to the value of the Letter of Credit which pays 2.8% interest. The total amount of the six certificates of deposit is $273,905. Upon our
default of the requirements of either of the permits, the MMD may draw upon the appropriate Letter of Credit for any costs related to uncompleted reclamation. The MMD has not drawn down any principal
under the Letters of Credit.
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Upon
completion of all reclamation activities, the corresponding standby letter of credit may be terminated by us.
Finance and Consulting Agreements
On August 26, 2009, we entered into an engagement letter with Jefferies & Company, Inc. ("Jefferies") as an
exclusive agent to sell equity-based securities. We paid a $100,000 engagement fee upon signing the engagement letter. The agreement requires us to pay an "Equity Fee" equal to 7% of the aggregate
gross proceeds from the issuance of any equity instruments. If we issue warrants to investors, we are obligated issue warrants or securities of like tenor equal to 7% of the warrants issued to such
investors with similar terms and conditions. Furthermore, upon consummation of a merger or acquisition and financing transaction, we are obligated to pay an "M&A Transaction Fee" equal to 15%
of the transaction value not to exceed an aggregate of $1,500,000. On April 30, 2010, we terminated the engagement letter. Pursuant to the terminated engagement letter we remain obligated to
pay the fees set forth in the engagement letter should we enter into an agreement for an equity or equity linked financing (i) within six months of termination, or (ii) within
12 months of termination if Jefferies contacted the financing party on our behalf during the term of the engagement letter.
On
January 14, 2010, we entered into a finder's fee agreement with Nuclear Fuel Cycle Consulting LLC (the "Consultant"), the principal of which is James J. Graham,
who subsequently became one of our directors, to provide introductions to certain industry contacts in connection with our financing efforts. Should we conclude a transaction through the efforts of
the Consultant, the agreement requires us to pay a 1% fee on proceeds received by us. The finder's fee agreement was non-exclusive and terminable at any time upon 30 days notice. On
February 11, 2011, we terminated the agreement, however, we remain obligated to pay the fees set forth therein should we complete a transaction within 12 months of termination if the
Consultant introduced the financing party on our behalf during the term of the agreement.
On
April 15, 2010, we entered into a strategic consulting and advisory agreement (the "Advisory Agreement") with the Consultant, the principal of which is James J. Graham, who
subsequently became one of our directors, to provide advisory services in connection with our evaluation of pursuing one or more strategic transactions, such as off-take agreements,
forward sales contracts, joint ventures and mineral property acquisitions or dispositions. Should we conclude a strategic transaction through efforts of the Consultant, the Advisory Agreement requires
us to pay a 1.5% fee on debt proceeds received by us and a 5% fee on proceeds received by us through equity financing, asset dispositions or a joint venture earn-in. In addition, we
granted the Consultant a stock option to purchase 100,000 shares of common stock exercisable within five years at an exercise price of $1.00 per share of common stock, all of which has vested. The
Advisory Agreement was non-exclusive and terminable at any time upon 30 days notice. We terminated the Advisory Agreement on February 11, 2011, however, we remain obligated
to pay the fees set forth in the Advisory Agreement should we complete a transaction within 12 months of termination if the Consultant contacted the financing party on our behalf during the
term of the Advisory Agreement.
On
August 3, 2010, we entered into an agreement with RMB Resources, Inc. Pursuant to the agreement, we are obligated to pay a success fee of 5% of the gross proceeds of any
investment in us or the sale of our assets where the investor or acquirer had been introduced to us by RMB Resources, Inc. The agreement is non-exclusive and terminable at any time
upon written notice, subject to a six month fee tail.
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On January 4, 2011, we entered into a financial advisory agreement with Primary Capital, Inc., an affiliate of Primary ("Primary Capital"). Pursuant
to the agreement Primary Capital will consult with us with respect to (i) any merger, amalgamation, plan of arrangement, reorganization or other business combination, or (ii) the
issuance by us, or a counterparty of a business combination, of securities in connection with an initial public offering or a private placement. Should we conclude a transaction, the financial
advisory agreement requires us to pay a 1% completion fee on the transaction value, defined as the gross proceeds received by us in a financing transaction and the aggregate unrestricted cash balances
of any counterparty in connection with a business combination.
On
February 11, 2011, we entered into a consulting agreement with the Consultant, the principal of which is James J. Graham, who subsequently became one of our directors, to
provide advice and consultation to us, on a as needed basis, with respect to (i) marketing and operational strategies, goals and objectives; (ii) implementation and execution of
strategic initiatives; and (iii) evaluation of performance and results. In consideration of Consultant's services we agreed to pay Consultant a $5,000 per month retainer to be offset by a
$1,000 per day consulting fee. In addition, we granted the Consultant a stock option to purchase 200,000 shares of common stock exercisable within ten years at an exercise price of $1.00 per share of
common stock, which vests one-half six months after the agreement date and the balance twelve months after the agreement date. The consulting agreement is non-exclusive and may
be terminated at any time upon 30 days notice.
Agreements Related to Employment
Employment Agreements
We have entered into employment agreements with Messrs. Boltz, Huber, Ludwig, Neumann and Topham. Our salary commitments under
these employment agreements are approximately $835,000 annually. See the subsection of this prospectus entitled "
Executive Compensation—Employment
Agreement
" for a more detailed discuss of these employment agreements.
The
employment agreements also provide for various payments upon certain terminations of employment of such employees. For a description of the estimated potential payments upon
termination of employment that would be payable to each of Messrs. Boltz, Huber, Ludwig, Neumann and Topham see the subsection of this prospectus entitled "
Executive
Compensation—Potential Payments Upon Termination or Change-in-Control
."
401(k) Retirement Plan
In June 2007, we adopted a non-contributory 401(k) plan for our full-time employees and employees who work at
least 1,000 hours per year. Effective January 1, 2008, we elected to implement non-elective contributions equal to 3% of eligible compensation for all employees meeting
certain eligibility requirements. The contributions meet the tax deferral "safe harbor" requirements provided for in the Internal Revenue Code.
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Contractual Obligations
The following sets forth our contractual obligations in tabular form as at December 31, 2010.
Payments due by period
Less than
1 year
1 to 3 years
3 to 5 years
More than
5 years
Total
Operating leases
$
129,804
$
—
$
—
$
—
$
129,804
Mineral leases
343,807
694,034
694,034
9,517
1,741,392
Senior debt(1)
24,000,000
—
—
—
24,000,000
Long-term payable(2)
—
400,000
—
—
400,000
Total
$
24,473,611
$
1,094,034
$
694,034
$
9,517
$
26,271,196
(1)
Principal
amount of senior debt, does not include unaccreted discount or accrued and unpaid interest.
(2)
Principal
amount of long-term payable, does not include unaccreted discount.
Critical Accounting Policies and Estimates
Basis of Presentation and Principles of Consolidation
Our consolidated financial statements and related notes are presented in accordance with GAAP and are expressed in U.S. dollars. Our
consolidated financial statements include the accounts of us and our wholly-owned subsidiaries, Cibola and Grants J.V. Prior to our purchase of the noncontrolling interests in Grants J.V. on
October 15, 2009, and Cibola on April 12, 2010, the consolidated financial statements included the accounts of us, our majority owned subsidiary, Cibola, and our proportionate share of
assets, liabilities and operations of our unincorporated joint-venture, Grants J.V. All inter-company transactions and balances have been eliminated. Our fiscal year end is December 31.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring management's estimates and assumptions are determining the fair value of
transactions involving common stock, convertible debentures and financial instruments. Other areas requiring estimates include deferred tax balances, valuation allowances, allocations of expenditures
to resource property interests and asset impairment tests.
Mineral Property Costs
We have been in the exploration stage since our incorporation on March 29, 2005 and have not yet realized any revenues from our
planned operations. We are primarily engaged in the acquisition and exploration of uranium mineral properties. Mineral property exploration costs are expensed as incurred.
Mineral
property acquisition costs are initially capitalized when incurred. In the event that mineral property acquisition costs are paid with shares of our common stock, those shares
are valued at estimated fair value at the time the shares are issued or at the time the rights are obtained. We assess the carrying costs of our mineral properties for impairment on at least an annual
basis. We will recognize impairment of a mineral property if the carrying amount of the mineral property is not recoverable and exceeds its fair value. Costs to maintain mineral rights and leases are
expensed in the
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period
in which they occur. Mineral property exploration costs are expensed in the period in which they occur. When management has determined that probable future benefits consisting of a contribution
to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted
exploration and development expenditures, the costs incurred to develop that property are capitalized. Such costs will be amortized using the units-of-production method based
on estimated recoverable proven reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. Mineral property acquisition costs are
expensed as incurred if the criteria for capitalization are not met.
Reclamation and Remediation
Our operations may become subject to standards for mine reclamation which have been established by various governmental agencies. We
record the fair value of an asset retirement obligation as a liability in the period in which we incur a legal obligation for the retirement of tangible long-lived assets. A corresponding
asset is also recorded and depleted over the life of the asset. After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to
reflect changes in the estimated discounted future cash flows based on when the spending activity will occur for the underlying obligation. Determination of any amounts recognized is based upon
numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates. As of the date of our consolidated financial
statements, we have no mine reclamation costs.
We
accrue costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are based on
management's estimate of amounts expected to be incurred when the remediation work is performed. As of the date of our consolidated financial statements, we have no remediation liabilities.
Impairment Of Long-Lived Assets
We review property and equipment and certain identifiable intangible assets, excluding goodwill, for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted net
cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which
the carrying value of the assets exceeds its fair value. During the periods covered by our consolidated financial statements, we had no material impairment of our long-lived assets.
Income Taxes
Potential benefits of income tax losses are not recognized in our consolidated financial statements until realization is more likely
than not. We compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in our consolidated financial statements
because we cannot be assured it is more likely
than not that we will utilize the net operating losses carried forward in future years and therefore recorded a 100% valuation allowance against the deferred tax asset for such losses.
We
follow the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The
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effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment.
We
apply a "more likely than not" threshold to the recognition of tax positions based on the technical merits of the position. We recognize interest and penalties related to uncertain
tax positions in income tax expense. As of each period presented our consolidated financial statements, we made no provisions for interest and penalties related to uncertain tax positions.
Derivatives
From time to time, we enter into transactions which contain conversion privileges, the settlement of which may entitle the holder or us
to settle obligations by issuance of our securities. These transactions, the value of which may be derived from the fair value of our securities are estimated using the Black-Scholes or other
appropriate pricing models.
Stock Based Compensation
We have a stock plan for our employees, non-employee directors and key consultants. From time to time, we receive services
from employees, directors or consultants in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by the issuance of such equity instruments. These stock-based awards are accounted for using a fair-value-based method. We use the Black-Scholes
option-pricing model to determine the fair-value of stock-based awards.
Recent Accounting Pronouncements
Recent Accounting Guidance Adopted in 2010
In December 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No. 2009-16 which amends the accounting for the transfers of financial assets. This Accounting Standards Update revises "
Transfers and Servicing (Topic 860):
Accounting for Transfers of Financial Assets
," to improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation
guidance. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets.
Comparability and consistency in accounting for transferred financial assets will also be improved. The new guidance is effective on a prospective basis for the annual period beginning after
November 15, 2009 and interim and annual periods thereafter. We adopted the provisions of this ASU on January 1, 2010, which did not have a material impact on our results of operations,
financial position or liquidity.
In
December 2009, the FASB issued ASU No. 2009-17 "
Consolidation (Topic 810), Improvements to Financial Reporting by Enterprises Involved with
Variable Interest Entities.
" The amendments in this ASU replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a
controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that
most significantly impact the entity's economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. The amendments in
this ASU also require additional disclosures about a reporting entity's involvement in variable interest entities and an ongoing assessment of whether a company is the primary beneficiary. The revised
guidance is effective for all variable interest entities owned on or formed after January 1, 2010. We adopted the provisions of this ASU on January 1, 2010, which did not have a material
impact on our results of operations, financial position or liquidity.
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In
January 2010, the FASB issued ASU No. 2010-06, "
Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements.
" The guidance requires
some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in the the Accounting Standards Codification ("ASC"). The FASB's objective is to
improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, the guidance now requires (1) a reporting entity should disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and (2) in the reconciliation for fair value
measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In addition, the guidance clarifies the
requirements of the following existing disclosures for purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining
the appropriate classes of assets and liabilities; and a reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and
nonrecurring fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for
interim periods within those fiscal years. We adopted the provisions of this standard on January 1, 2011, which did not have a material impact on our results of operations, financial position
or liquidity.
In
February 2010, the FASB issued ASU No. 2010-09, "Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements". The amendments in
the ASU remove the requirement for a SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements
include financial statements revised as a result of either correction of an error or retrospective application of GAAP. The FASB also clarified that if the financial statements have been revised, then
an entity that is not an SEC filer should disclose both the date that the financial statements were issued or available to be issued and the date the revised financial statements were issued or
available to be issued. The FASB believes these amendments remove potential conflicts with the SEC's literature. All of the amendments in the ASU were effective upon issuance except for the use of the
issued date for conduit debt obligors. We adopted the provisions of this standard on January 1, 2010, which did not have a material impact on our results of operations, financial position or
liquidity.
Recent Accounting Guidance Adopted Since January 1, 2011
In April 2010, the FASB issued ASU No. 2010-13,
"Compensation-Stock Compensation (Topic
718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades."
The ASU addresses
the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a
share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades shall not be considered to contain a
market, performance or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in this update are
effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. We adopted the provisions of this standard on January 1, 2011, and do
not expect it to have a material impact on our results of operations, financial position or liquidity.
In
December 2010, the FASB issued ASU 2010-29,
"Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business
Combinations.
" The objective of this update is to address diversity in practice about the interpretation of the proforma revenue and earnings disclosure requirements for
business combinations. The amendments in this update specify that if a public entity
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presents
comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had
occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a
description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The
amendments in this update are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after
December 15, 2010. We adopted the provisions of this standard on January 1, 2011, and do not expect it to have a material impact on our results of operations, financial position or
liquidity.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are not exposed to risks associated with commodity prices, interest rates and credit. Commodity price risk is defined as the
potential loss that we may incur as a result of changes in the fair value of uranium. Interest rate risk results from our debt instruments that we issue to provide financing and liquidity for our
business. We are charged an interest rate of LIBOR plus 7% under our Amended Credit Facility, but the Amended Credit Facility will be paid in full with the proceeds from this offering. Further, the
principal amounts of our letters of credit are not significant. Credit risk would arise from the extension of credit throughout all aspects of our business but is not yet significant.
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INDUSTRY AND MARKET DATA
Industry and Uranium Market Overview
Uranium
Uranium (chemical symbol U) is the heaviest of all the naturally occurring elements. Like other elements, uranium occurs in
different forms known as "isotopes." These isotopes differ from each other in the number of particles (neutrons) in the nucleus. Uranium as found in the earth's crust largely comprises two isotopes:
uranium-238 (U
238
) (approximately 99.3%) and uranium-235 (U
235
) (approximately 0.711%). The isotope U
235
plays an important role
because it can yield substantial energy under certain conditions.
Uranium Uses
The most common commercial use for U
3
O
8
is as a fuel for nuclear power plants. Through the process of nuclear
fission, the uranium isotope U
235
undergoes a nuclear reaction whereby its nucleus is split into smaller particles. Nuclear fission releases significant amounts of energy, and is the
basis of power generation in the nuclear industry.
The
first practical use of nuclear power occurred in 1951, when an experimental nuclear reactor at a research center in Idaho Falls, Idaho lit four ordinary light bulbs. In the late
1950s, the first full-scale nuclear power plants went into service in the U.S., the United Kingdom, the Soviet Union and France. The nuclear industries of these countries and several
others grew rapidly during the 1960's and 1970's. The first export orders for nuclear power reactors were awarded in 1958 and were followed by the spread of nuclear electricity generation to many
other countries, including Canada, Germany, Switzerland, Spain, Belgium, Finland and Japan. Reactor technology was also exported by the Soviet Union to several Eastern European countries, including
the former East Germany, the former Czechoslovakia, Bulgaria and Hungary. Many of these countries developed their own nuclear expertise, leading to the development of today's international nuclear
industry.
The Nuclear Fuel Cycle
The nuclear fuel cycle comprises the following activities: uranium mining, conversion and enrichment, fuel fabrication, power
generation and used fuel management.
Uranium mining
Uranium is extracted from both open pit and underground mines. Alternative techniques include in-situ leach mining (ISR) in
which acid or alkaline solutions are pumped into underground deposits to dissolve uranium.
Mined
ore is then milled and the uranium is extracted through a multi-stage metallurgical process which separates the uranium from the waste rock. The resulting uranium rich slurries are
then dried to produce U
3
O
8
. U
3
O
8
is a powder which contains approximately 80% uranium oxide. It is commonly referred to as "yellowcake."
Conversion
There are four main conversion and storage facilities in the world, Cameco (Canada), ConverDyn (U.S.), Comurhex (France) and Rosatom
(Russia). In order to increase the concentration of U
235
, U
3
O
8
is converted into uranium hexafluoride, or UF
6
. Conversion involves a series of dry or
wet chemical processes that purify the U
3
O
8
and convert it into UF
6
. The industry's inventory of U
3
O
8
is stored primarily at the licensed
conversion facilities.
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The
U
3
O
8
is shipped and stored at licensed conversion facilities in steel drums and in ISO sea containers and is stored on site until it is converted. Once it
arrives at the storage facility, U
3
O
8
is pooled with existing inventories held at the facility and is regarded as a fungible material. The owner of the
U
3
O
8
has its account credited with the amount of material delivered. The U
3
O
8
may then be transferred to other account holders of the storage facility
via a book transfer mechanism. Transfers of material between facilities may occur by means of a similar mechanism, or title or location swaps, which reduces the need for physical shipment of
U
3
O
8
.
Enrichment
Enrichment of uranium is the third step in the nuclear fuel cycle of more than 96% of operating reactors worldwide. Once converted,
UF
6
is transported in steel cylinders to an enricher. The four main enrichers are Eurodif S.A. (France), the United States Enrichment Corporation, or USEC (U.S.), Rosatom (Russia)
and Urenco (a joint venture among the United Kingdom, German and Dutch governments). During the enrichment process, the concentration of the U
235
isotope in the UF
6
is
normally increased from 0.711% to between 3% and 5%. The resultant enriched UF
6
is known as Low Enriched Uranium, or LEU. Enrichment is performed by either a gaseous diffusion or a gas
centrifuge process.
Fuel fabrication
In order to produce fuel for use in nuclear power stations, LEU is first converted to uranium dioxide then further manufactured into
ceramic pellets that are inserted into zirconium rods, which are then configured into nuclear fuel assemblies for use in the core of nuclear reactors.
Power generation and used fuel management
Nuclear fuel assemblies are loaded into nuclear reactors. The subsequent fission reaction generates heat which is used to produce steam
that drives a turbine and an electric generator.
A
variety of types of reactors are in operation around the world. The most commonly used designs are varieties of water-cooled reactors of the Boiling Water Reactor (BWR) or Pressurized
Water Reactor (PWR) types.
After
a planned period of time, the U
235
in the fuel loses it optimal efficiency and is deemed used. The fuel assemblies are then discharged into a temporary cooling pond
at the reactor site. After a cooling period, the used nuclear fuel is then placed into onsite dry storage casks pending final disposal through deep geological burial or is reprocessed to recover
unused uranium and plutonium.
Demand
The demand for U
3
O
8
is directly linked to the level of electricity generated by nuclear power plants. The cost
structure of nuclear power generation, which involves much higher capital costs and generally lower fuel costs compared to most other forms of power generation, dictates that nuclear plants are kept
operational at high load factors to achieve optimal economics and is commonly referred to as base load power. As a result, the demand for uranium fuel is more predictable than most other commodities.
Demand forecasts for uranium depend largely on installed and operable nuclear power generation capacity plus new reactors under construction or ordered, regardless of economic fluctuations or the
demand for other forms of power.
Consumption
of uranium for nuclear fuel purposes has steadily increased since the 1960's as nuclear fuel technology has become more widely used. In 2009, the World Nuclear Association,
or the WNA, estimated in its bi-annual market report "The Global Nuclear Fuel Market: Supply and Demand 2009-2030" that the annual demand for uranium for power generation in
2008 was approximately
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170 million
pounds of U
3
O
8
. The WNA's reference case projects that demand for uranium will increase to 240 million pounds and 276 million pounds of
U
3
O
8
by 2020 and 2030, respectively. This represents an annual growth rate of approximately 2.2% from 2008 to 2030.
World
net electricity generation is expected to nearly double from 2005 to 2030, according to the Energy Information Administration's (EIA) International Energy Outlook 2008, or the IEO
2008, reference case forecast. Total electricity generation is projected to increase on average by 2.6% per year from 17.3 trillion kilowatt hours in 2005 to 33.3 trillion kilowatt hours in 2030.
Electricity generation for the non-Organization for Economic Co-operation and Development, or OCED, countries is projected to increase by 4.0% per year, according to the IEO
2008 reference case forecast, while growth of electricity generation in OECD nations is expected to average 1.3% per year from 2005 to 2030.
According
to the WNA, as of January 1, 2011, there were a total of 441 operable commercial nuclear power plants globally with an aggregate installed generating capacity of 377,000
megawatts of electricity and requiring over 180 million pounds of uranium per year. In 2009, commercial nuclear plants generated approximately 15% of the world's total electricity. Today,
another 61 commercial nuclear reactors (representing approximately 60,000 megawatts of electricity) are under construction and many more are planned or proposed. New construction is presently centered
in Asian countries, principally in China, South Korea, India, and Russia. While it is unclear whether nuclear power will grow as a percentage of future global power production, the WNA believes that
there will be rapid nuclear power growth in Asia.
The
demand for uranium will also be increased by the trend toward improving plant load factors, but may be offset by the premature closing of some older nuclear power plants. Factors
increasing fuel demand are expected to continue to be offset in part by a trend in increased efficiency in nuclear power plants and reductions in uranium tails assay during the enrichment process.
Recently, many utilities have reduced their enrichment tails assay in order to optimize uranium and enrichment reported as separative work units, or SWU, utilization. Lower tails assay results in
lower uranium demand and is a function between the cost of uranium and SWU.
Demand
for uranium may also increase as a result of government initiatives to reduce CO
2
emissions. Nuclear energy plants produce far fewer greenhouse gases than fossil fuel
energy plants. According to the International Energy Agency, or the IEA, CO
2
emissions are likely to be approximately 60% higher by 2030. Current levels of nuclear power generation are
believed to prevent the emission of approximately 2.6 billion tons of CO
2
each year. Additional nuclear power generation is one way in which governments can meet targets for the
reduction in CO
2
emissions.
Supply
Uranium is supplied from primary production (the mining of uranium ores) and secondary sources such as the drawdown of excess
inventories and uranium made available from the decommissioning of nuclear weapons, re-enriched depleted uranium tails, and reprocessed used reactor fuel. According to Energy Resources
International, Inc.'s 2009 Market Study, an estimated 89% of annual uranium consumption was sourced from primary production in 2009.
Primary Production
The uranium production industry is characterized by a small number of companies operating in relatively few countries. WNA data shows
that the four largest uranium companies produced over 60% of the world's primary production of uranium supply in 2009. In 2009, approximately 89% of the estimated world production was provided by nine
producers: Rio Tinto (17%), Cameco (16%), KazAtomProm (16%), Areva (15%), Armz (9%), BHP Billiton (6%), Navoi Mining (5%), Uranium One (3%), and Paladin (2%). According to the UxC 2009 Special report,
in 2020 the shares of world
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production
are projected to be: Areva (17%), KazAtomProm (14%), Cameco (14%), BHP Billiton (14%), Armz (11%), Rio Tinto (10%), Uranium One (4%), Navoi Mining (3%), and Paladin (3%).
Approximately
93% of estimated world production of uranium was sourced from eight countries and approximately 63% of the estimated world production was sourced from three counties in
2009: Kazakhstan (27%), Canada (20%), Australia (16%), Namibia (9%), Russia (7%), Niger (6%), Uzbekistan (5%) and the United States (3%). The Canadian uranium industry has been the leading supplier of
uranium in recent years with production of an estimated 25.4 million pounds U
3
O
8
in 2010, which represented nearly 20% of world production. However, in 2009 they were
overtaken by Kazakhstan, who produced 28% of world production with production of approximately 46.3 million pounds of U
3
O
8
in 2010. According to the WNA, this output is
expected to rise to an estimated 50.9 million pounds in 2011.
Secondary Sources
Over the last several years, primary production of uranium has satisfied 50-70% of world requirements. The remainder has
been provided from secondary sources. The de-enrichment of nuclear weapons through blending with low enriched uranium from conventional production sources has contributed the largest
proportion of secondary supply and meets about 13% of world reactor requirements. Also, some utilities in Europe and Asia use reprocessed uranium and plutonium derived from used reactor fuel as a
source of supply. Depleted uranium tails from the uranium enrichment process can be re-enriched and added to the fuel mix. Mixed oxide fuel, or MOX, provided about 2% of new fuel in 2009,
and World Nuclear News Reports that in 2010, 5% of reactors were powered by MOX fuel. Excess inventories held by utilities, producers, other fuel cycle participants and governments have also served as
a source of supply, although this is a finite source.
Uranium from Nuclear Disarmament
The most significant secondary source of uranium is from de-enriching nuclear weapons. In February 1993, the U.S. and
Russia entered into an agreement, the Russian HEU Agreement, to manage the sale of highly enriched uranium, or HEU. Under the Russian HEU Agreement, over a term of 20 years ending with
deliveries in 2013, 500 tons of HEU derived from dismantling nuclear weapons are to be diluted in Russia from HEU to LEU, the Disarmament Uranium, and delivered to the United States, suitable for use
in nuclear power plants. The official arrangement between the governments of the U.S. and Russia calls for the enrichment services component the Disarmament Uranium to be purchased by USEC. The
natural uranium content of the Disarmament Uranium scheduled for delivery over the 20-year period represents approximately 400 million pounds of U
3
O
8
. As of
the end 2010, Russia had delivered the equivalent of over approximately 390 tons of HEU equivalent to the United States Government.
In
March 1999, Cameco Corporation, Areva and RWE NUKEM, Inc., or the Western Companies, entered into an agreement, the Western Agreement, whereby they would purchase a substantial
portion of the Disarmament Uranium. Cameco Corporation reports that as a result of various amendments to the Western Agreement, the Western Companies committed to the purchasing and selling of almost
163 million pounds of U
3
O
8
from 2004 through to the end of 2013.
Russia,
through its agent Techsnabexport, or TENEX, has, in the past, sold a portion of the Disarmament Uranium not purchased by the Western Companies. Russia currently consumes
significantly more U
3
O
8
than it produces and is proceeding with an ambitious nuclear power development program which will further decrease the supply of
U
3
O
8
into the western commercial market. As a result, TENEX has recently reduced selling the natural uranium derived from the Disarmament Uranium thus reducing the amount of
uranium that would have been available to the market in the western world by up to 74 million pounds of U
3
O
8
over the period from 2004 to 2013.
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Russia
has made official declarations that the HEU Agreement will not be extended beyond 2013, and that its main interest in the commercial nuclear fuel markets is to sell enrichment
services.
Trade Actions Against Russian Origin Uranium
In 1991, prompted by complaints from U.S. industry uranium producers, the U.S. Department of Commerce, or the DOC, initiated an action
to investigate the dumping by Russia of uranium into the U.S. market. This action led to the formulation of a Suspension Agreement between the United States and Russian governments under which the DOC
investigation would be suspended in exchange for Russia's compliance with a set of principles intended to stop the entry of most Russian origin uranium into the U.S. market, and to impede any swaps,
exchanges or similar activities that would lead to the indirect entry of Russian origin uranium into the U.S. market. Under the Suspension Agreement, high tariffs are imposed on Russian origin uranium
entering the U.S. market.
In
September of 2007, in an unrelated case, the U.S. Court of International Trade mandated DOC to review its stance on the continuing usefulness and initial legal justification of the
Suspension Agreement. An amendment to the Suspension Agreement was signed on February 1, 2008. Under the amended Suspension Agreement, Russian SWU is allowed to enter the U.S. in small
quantities from 2011 to 2013. From the end of 2013, when the HEU Agreement expires, to 2020, when the suspension agreement expires, the amendment allows Russian SWU to account for about 20% of
projected U.S. demand. That figure does not include initial cores for new reactors, which are not subject to the amendment's quotas.
In
September of 2008, the U.S. Congress passed and the President signed into law the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, which included
an amendment to the United States Enrichment Corporation Privatization Act that extended potential opportunities to the Russian Federation to continue to down-blend HEU to LEU after 2012
through 2020 in exchange for increased access to U.S. commercial uranium markets. Any implementation would require additional negotiations between the United States and the Russian Federation.
The Uranium Market and Prices
Utilities secure a substantial percentage of their uranium requirements by entering into medium and long-term contracts
with uranium producers. These contracts typically provide for deliveries to begin one to three years after signing and continue for five to ten years thereafter.
There
is currently no regulated commodity market underwritten by a market maker for the various components of nuclear fuel. As such, market participants rely upon multiple published
price opinions based on historical data and market sentiment.
Contracted
uranium prices are established by a number of methods, including base price levels adjusted by inflation indices, reference prices (multiple published spot price opinions as
well as long term reference prices) and annual price negotiations. Many contracts also contain floor prices, ceiling prices and other negotiated provisions which affect the price ultimately paid.
Uranium prices under uranium supply contracts are usually confidential.
Utilities
also acquire uranium by way of spot and near-term purchases from producers and traders. Spot market purchases are those that call for delivery within one year.
Traders generally source their uranium from organizations, including utilities, producers and governments, which hold excess inventory. The estimated spot market volume in 2010 was approximately
20 million pounds and represented about 12% of reactor uranium requirements. The downward trend seen in spot price in mid-2007 reversed and increased through most of 2010, with the
price increasing weekly. With small spikes in the spot price aside, the price of U
3
O
8
increase from $48.00/lb with a volume of 1.9 million
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lbs
of U
3
O
8
in January of 2009 to $62.50/lb with a volume of 3.29 million lbs U
3
O
8
in December of 2010.
Uranium
spot market prices rose sharply during 2006, starting the year at approximately $36.50/lb of U
3
O
8
and ending at $72.00/lb. The spot price continued to
rise during 2007, reaching its peak in June 2007 of over $135.00/lb. The extent of the price rise (more than a tenfold increase since early 2003) took the uranium market to historic levels in both
real (inflation adjusted) and nominal terms. This substantial increase was mainly a market reaction to the realization that primary uranium production must rise to meet growing demand for nuclear
electricity. After the spot price reached its peak in mid-2007, it dropped back to $75.00/lb in October 2007 before rebounding to $93.00/lb in November 2007 and ended the year at $90/lb.
During the first half of 2008, the spot price declined more gradually, reaching $57.00/lb in June 2008. The spot price then increased to reach $64.50/lb in July 2008 and remained at this level until
September 2008. The spot price then declined to $44.00/lb in October 2008 and subsequently increased to $54.00/lb by the end of December 2008. By December 2009 the spot price had dropped to $44.50/lb.
The spot price per pound in 2010 remained between $40.00-$45.00 until November when it increased to $60.00 and has steadily increased each month since. As of March 24, 2011, the
spot price was $62.00/lb as quoted by TradeTech, LLC.
Supply Deficit
Each year since 1989, the consumption of uranium has exceeded primary production. To date, this large supply gap has been accommodated
by sales from existing inventories, former stockpiles stored in Russia, recycling programs and de-enrichment of nuclear weapons.
We
believe that the uranium market will face a growing supply deficit until new mine production can be implemented. Uranium mining has proven to be a very challenging endeavor, with
several world class projects in operation or development having suffered flood, fire and other unexpected losses, necessitating significant delays or interruptions over the last few years. In
addition, on the demand side, China, Russia and India have officially announced large increases in their nuclear power programs over the next 20 years. Without significant indigenous supplies
of uranium, these countries have recently begun aggressive resource acquisition, exploration and development plans for properties throughout the world. We believe that the long term fundamentals of
the uranium market are positive.
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DESCRIPTION OF BUSINESS
Company Overview
We began operations as an unincorporated entity on March 25, 2005 and were incorporated on March 29, 2005 under the laws
of the State of Wyoming. On April 26, 2007 we transferred our state of domicile from Wyoming to Nevada. We were formed to capitalize on our management's extensive knowledge and experience in
uranium exploration, development and production, as well as our geologic and engineering data bases covering several uranium districts that historically have been uranium producers.
We
are a natural resource company engaged in the acquisition and exploration of uranium properties in the United States. Our strategy is to acquire properties that (i) have
undergone some degree of historical uranium exploration and on which uranium mineralized material, but not reserves, have been located, and (ii) are located in mineralized districts that have
undergone some degree of historical uranium exploration and are thought to be prospective for further uranium exploration, but on which no uranium mineralized material has been located. We have
acquired interests in 63,312 net acres of leased or staked properties in New Mexico, South Dakota and Wyoming.
We
also hold residual mineral interests that we received in the disposition of properties in Arizona and South Dakota. These residual interests were received in consideration of the sale
of our ownership interests in the properties and are primarily comprised of royalty interest, net proceeds interest and our ability to convert the royalty interest into a working interest in the
properties.
All
of our mineral properties are exploration stage properties. Some of our mineral properties have been the subject of historical exploration and/or development, and in one case
production, by other mining companies, that provides indications that further uranium exploration is warranted. Our view that these properties are prospective for mineral exploration is based on prior
exploration and/or development conducted by other companies, management information and work product derived from various reports, maps, radiometric assay from down-hole radiometric
logging, exploratory drill logs, state organization reports, consultants, geological study and other exploratory information. If we are able to locate economic uranium reserves that are commercially
viable, we intend to develop the mine site, including mill facilities, and extract uranium for production.
We
are an exploration stage company and all of our projects are in the exploration stage and do not have any known proven or probable reserves in accordance with the definitions of
reserves under Industry Guide 7 ("SEC Guide 7") issued by the SEC. There can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of our properties until appropriate
exploratory work is completed and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration and permitting beyond the scope of our planned activities
will be required before a final evaluation as to the economic and legal feasibility of mining of any of our properties is determined. There is no assurance that further exploration will result in a
final evaluation that a commercially viable mineral deposit exists on any of our mineral properties. We will require additional financing in order to pursue full exploration and permitting of these
properties.
As
of March 24, 2011, we had 58,204,141 shares of common stock outstanding. On that date, there were 195 holders of record.
Corporate Information
Our executive offices are located at 9000 E. Nichols Avenue, Suite 225, Englewood, Colorado 80112. Our telephone number is
(303) 531-0470. We have a field office in Albuquerque, New Mexico.
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Employees
We have 13 full-time and three part-time employees and have engaged geological and technical consultants for
additional day-to-day services. Other services are provided by outsourcing consultants and special purpose contracts.
Business and Growth Strategy
We are an exploration stage company engaged in the exploration of uranium. We do not engage in any development activities at this time,
but may engage in development activities should uranium reserves be located on any of our properties. The key elements of our business and growth strategy are as follows:
Cibola Project
Based on historical exploration and development data, we believe our wholly-owned Cibola Project may have future uranium reserve
potential. We have received the required exploration permits on our Juan Tafoya Property and Cebolleta Property which will allow us to
commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We have substantially completed resource modeling on each of the Juan Tafoya
Property and Cebolleta Property, based on historical data we have in our possession. We have received an independent technical report completed in accordance with the provisions of
NI 43-101 ("Cibola NI 43-101"). The Cibola NI 43-101 is authored by G. S. Carter, P. Eng., a qualified person as defined in
NI 43-101.
Because
of the long lead times for environmental permitting of mining operations in North America, we have commenced the permitting process with the NRC on our Cibola Project, primarily
through initial planning sessions with the NRC and the collection of environmental baseline data. We believe that commencing the permitting process at this early stage will allow us to expeditiously
commence development of our properties if we move to that stage.
Ambrosia Lake Project
We have received the required exploration permit on our Elizabeth Target, included in the Ambrosia Lake Project, which will allow us to
commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We believe our Elizabeth, Deep Rock, Mesa Redonda, West Endy and West Ranch
targets represent long-term uranium reserve potential. We seek to complete the analysis and digitization of historic geologic data, mapping and other geophysic and geologic activities on
our Ambrosia Lake Project targets and to commence exploration permitting and exploration programs on selected targets.
Edgemont Project, Copper Mountain Project and Other Wyoming Properties
We do not anticipate any significant exploration activities during the next twelve months on our other properties. We may seek to sell
or enter into joint-venture arrangements on these properties with other exploration companies.
Extensive Due Diligence of Properties
Our exploration activities are divided into phases dependent on the nature of historical exploration and development activities on the
property. Our initial phase of exploration includes extensive due diligence and analysis of all historical exploration data available to us or in our
possession. Furthermore, we probe existing and newly drilled holes with gamma probes with the goal of confirming historical drill results and planning for future development. We will proceed to our
second phase if we are able to confirm historical data and drill results.
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Pursue Strategic Acquisitions of Exploration Stage Properties
We are also engaged in the continual review of opportunities to acquire properties in the exploration stage that are thought to contain
uranium mineralization and have undergone some degree of historical exploration or development.
Financing
Historically, we have financed our operations primarily by (i) private placements of convertible subordinated notes convertible
for either (a) shares of our common stock, or (b) shares of our common stock and warrants to purchase additional shares of our common stock; (ii) private placement of shares of
our common stock to certain individuals and institutional investors; and (iii) senior secured debt credit facilities. The following sets forth our significant financing
transactions:
(i)
Pursuant
to a letter agreement we entered into with Primary in 2005 and a Subscription Agreement we entered into with Primary in 2006, we issued 10,750,000
shares of our common stock in January 2006 in exchange for $1,250,000, which Primary paid in periodic payments between May 2005 and January 2006.
(ii)
In
June 2006, we issued 7.5% Series A Convertible Subordinated Notes due May 31, 2007 ("Series A Notes") in the aggregate principal
amount of $1,069,300. The Series A Notes were convertible at $0.22 per share. In August 2007 all of the Series A Notes were converted into a total of 4,860,456 shares of common stock.
(iii)
Between
October and November 2006, we issued 7.5% Series B Convertible Subordinated Notes due September 30, 2007 ("Series B Notes")
in the aggregate principal amount of $5,722,516. The Series B Notes were convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of
common stock at an exercise price of $1.00. In April 2007, we issued a waiver allowing the Series B Note holders to receive and exercise their warrants prior to converting their Series B
Notes. During April and May 2007, the warrants related to $5,254,676 principal amount of the Series B notes were exercised and we issued 7,727,465 shares of common stock and received $7,727,465
in gross proceeds. In August 2007, we offered to prepay the Series B Notes subject to the holders' right to convert the Series B Notes into shares of common stock at $.68 per share.
Holders of Series B Notes in the aggregate face value of $5,652,136 converted their Series B Notes into a total of 8,311,965 shares of common stock and we repaid the remaining
Series B Notes in the aggregate principal amount of $70,380.
(iv)
Between
March and April 2007, we issued 7.5% Convertible Subordinated Notes due February 28, 2008 ("Series C Notes") in the aggregate
principal amount of $999,713. The Series C Notes were convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock at a
purchase price of $1.00. In April 2007, we issued a waiver allowing the Series C Note holders to receive and exercise their warrants prior to converting their Series C Notes. During
April and May 2007, the warrants related to Series C Notes in the aggregate principal amount of $766,713 were exercised and we issued 1,127,519 shares common stock and received $1,127,519 in
gross proceeds. In August 2007, we offered to prepay the Series C Notes subject to the holders' right to convert the Series C Notes into shares of common stock at $.68 per share. All of
the Series C Notes were converted into a total of 1,470,166 shares of common stock.
(v)
During
September through November 2007, we issued 7,061,474 shares of common stock in a private placement at $1.50 per share. Gross proceeds from the
private placement were $10,592,211.
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(vi)
In
April 2010, pursuant to the Credit Facility agreement, we entered into a $16,000,000 senior secured credit facility, which the lender advanced in two
tranches. Tranche 1 proceeds in the amount of $5,000,000 were used for general working capital and Tranche 2 proceeds in the amount of $11,000,000 were used to fund our acquisition of
UEC's 49% interest in Cibola.
(vii)
In
December 2010, we entered into the First Amendment Agreement to the Credit Facility agreement. The lender extended the maturity of the credit facility
from December 31, 2010 to June 30, 2011, and increased the credit facility by $8,000,000, from $16,000,000 to $24,000,000. See the subsection of this prospectus entitled
"
Management's Discussion and Analysis—Material Commitments—Senior Debt Credit Facility
" for a more detail discussion of the
senior secured credit facility and first amendment.
We
believe that the proceeds from this offering will satisfy cash requirements of the Company for a minimum of 12 months but that we will require additional funding to continue to
implement our business and growth strategy after that period. See the section of this prospectus entitled "
Use of Proceeds
."
Competition
We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual
investors, which are actively seeking uranium minerals exploration properties throughout the world together with the equipment, labor and materials required to exploit such properties. Many of our
competitors have financial resources, staff and facilities substantially greater than ours. The principal area of competition is encountered in the financial ability to acquire prime minerals
exploration prospects and then exploit such prospects. Competition for the acquisition of uranium minerals exploration properties is intense, with many properties available in a competitive bidding
process in which we may lack technological information or expertise available to other bidders. Therefore, we may not be successful in acquiring, exploring and developing profitable properties in the
face of this competition. No assurance can be given that a sufficient number of suitable uranium minerals exploration properties will be available for acquisition, exploration and development.
The
uranium production industry is characterized by a small number of companies operating in relatively few countries. WNA data shows that the four largest uranium companies produced
over 60% of the world's primary production of uranium supply in 2009. In 2009, approximately 89% of the estimated world production was provided by nine producers: Rio Tinto (17%), Cameco (16%),
KazAtomProm (16%), Areva (15%), Armz (9%), BHP Billiton (6%), Navoi Mining (5%), Uranium One (3%), and Paladin (2%). According to the UxC 2009 Special report, in 2020 the shares of world production
are projected to be: Areva (17%), KazAtomProm (14%), Cameco (14%), BHP Billiton (14%), Armz (11%), Rio Tinto (10%), Uranium One (4%), Navoi Mining (3%), and Paladin (3%).
Financial Information
The Company does not have reporting segments for accounting purposes and has not generated any revenues since its inception in 2005.
For a more detailed discussion on the Company's financial performance, see the section of the prospectus entitled "
Management's Discussion and Analysis of Financial Condition
and Results of Operations
" and our audited consolidated financial statements and related notes.
Reporting Company
Prior to this registration statement becoming effective, we did not file reports with the SEC but we will become a reporting company
upon this registration statement becoming effective.
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Government Regulations
Minerals exploration operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays
in excess of those anticipated causing an adverse effect on us. Minerals exploration operations are subject to federal, state, and local laws relating to the protection of the environment, including
laws regulating removal of natural resources from the ground and the discharge of materials into the environment and remediation, and relating to prospecting, development, production, exports, taxes,
waste disposal, protection of endangered and protected species, mine safety, toxic substances and other matters. Minerals exploration operations are also subject to federal, state, and local laws and
regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling
operations to be conducted and no assurance can be given that such permits will be received. Compliance with such laws may cause substantial delays or require capital outlays in excess of those
anticipated. Moreover, noncompliance with applicable laws and regulations can result in assessment of penalties and/or capital expenditures to achieve compliance. In addition, some laws may allow for
third party claims for damages caused by pollution conditions for which we have legal responsibility. Costs associated with any of these may have an adverse effect on us.
At this time management believes that we are in substantial compliance with current applicable environmental laws and regulations and we are not aware of any material liabilities related to
environmental laws and regulations. Environmental standards imposed by federal, state, or local authorities may be changed and any such changes may have material adverse effects on our activities.
Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. The principal
laws and regulations our business is subject to are described below.
Uranium Mining and Milling Licenses
Uranium mining operations, such as the conventional shafts or surface (strip) mines are licensed by the individual states where the
mines are located. However, the Atomic Energy Act of 1954 (as amended) gives the NRC jurisdiction over uranium once its physical or chemical properties are altered for eventual use in the nuclear fuel
cycle. As a result, an NRC license is required for uranium mills, the facilities that process the ore into uranium oxide, or "yellowcake." There is another type of uranium recovery, called in situ
recovery (ISR), which injects a solution into the ground to extract uranium from the rock; the resulting uranium solution is then pumped to the surface for processing. The NRC licenses and regulates
ISR facilities because the uranium processing begins underground. The NRC licenses both uranium mills and ISR facilities under 10 CFR Part 40, "Domestic Licensing of Source Material." License
applications require a thorough evaluation of the proposed facility, the radiological impacts of the facility, and an open, robust public participation process.
Resource Conservation and Recovery Act (RCRA)
RCRA, and comparable state statutes, affect minerals exploration and production activities by imposing regulations on the generation,
transportation, treatment, storage, disposal and cleanup of "hazardous wastes" and on the disposal of non hazardous wastes. Under the auspices of the U.S. Environmental Protection Agency ("EPA"), the
individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements.
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
CERCLA imposes joint and several liability for costs of investigation and remediation and for natural resource damages, without regard
to fault or the legality of the original conduct, on certain classes of persons with respect to the release into the environment of substances designated under CERCLA as hazardous substances
("Hazardous Substances"). These classes of persons or potentially
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responsible
parties include the current and certain past owners and operators of a facility or property where there is or has been a release or threat of release of a Hazardous Substance and persons
who disposed of or arranged for the disposal of the Hazardous Substances found at such a facility.
Clean Air Act (CAA)
The Clean Air Act, as amended, restricts the emission of air pollutants from many sources, including mining and processing activities.
Our mining activities may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy
construction equipment, which are subject to review, monitoring and/or control requirements under the CAA and state and local air quality laws. New facilities may be required to obtain air permits
before work can begin.
Clean Water Act (CWA)
CWA imposes restrictions and strict controls regarding the discharge of wastes, including mineral processing wastes, into waters of the
United States, a term broadly defined. Permits must be obtained to discharge pollutants into federal waters. In addition, the EPA has promulgated regulations that may require us to obtain permits to
discharge storm water runoff. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United States unless authorized
by an appropriately issued permit.
The Safe Drinking Water Act (SDWA)
The Safe Drinking Water Act (SDWA) and the Underground Injection Control (UIC) program promulgated thereunder, regulate the drilling
and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The program
requires that a permit be obtained before drilling a disposal or injection well.
National Environmental Policy Act, 1970 (NEPA)
Federal agencies must comply with NEPA for major federal actions, such as the issuance of a source material license for a uranium mill.
Compliance with NEPA typically requires preparation of an Environmental Assessment (EA) or Environmental Impact Statement (EIS). Preparation of an EA or EIS requires agencies to examine the
environmental consequences of a proposed action, evaluate alternatives to the proposed action, and consider mitigation of potential impacts from the proposed action, but it does not prevent Federal
agencies from authorizing actions that might have harmful environmental impacts. The EA and EIS process involve substantial public input.
Endangered Species Act, 1973 (ESA)
The purpose of the ESA is to provide a program for the conservation of threatened and endangered species of plants and animals, and the
habitats in which they are found. It applies to all agencies and all lands, whether publicly or privately owned and requires a Federal agency to consult with the National Marine Fisheries Service or
the Fish and Wildlife Service if the agency is proposing an action (including for example issuance of a permit) that may affect a listed species or its habitat. This law may trigger the preparation of
Biological Assessments by qualified individuals for specific projects such as a mine or mill if the project may affect a listed species or the habitats that would support the listed species.
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National Historic Preservation Act, 1966 (NHPA)
Among other things, NHPA requires Federal agencies to comply with Section 106 of NHPA with respect to federal actions (including
issuance of a permit) if that action has the potential to affect certain historic resources. The Section 106 process often requires archaeological and cultural resource surveys to identify such
sites or properties and requires that the Federal agency consult with appropriate state and local officials, Indian tribes, and members of the public, among others, before making a final decision on
the action. The presence of certain historic resources may require avoidance of those resources during development, or further investigation of the significance of those resources if the resources
cannot be avoided.
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DESCRIPTION OF PROPERTIES
Neutron's acquisition and exploration activities have been focused in the Western United States. We are an exploration stage company
engaged in the acquisition and exploration of uranium properties. "Uranium" used in this context refers to U
3
O
8
. U
3
O
8
or "yellowcake" is triuranium
octoxide produced from uranium ore and is the most actively traded uranium-related commodity.
We
have interest in properties located in the states of New Mexico, South Dakota, Wyoming, and Arizona as shown in the Figure 1. Currently, the Company's primary focus is to
advance our Cibola Project in New Mexico with the objective of assessing its viability for commercial uranium mining. All of our projects are at the exploration stage without known reserves and there
can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of our properties until appropriate exploratory work is done and a comprehensive evaluation based on such work
concludes legal and economic feasibility. Further exploration will be required before a final evaluation as to the economic, technical and legal feasibility of mining of any of our properties is
determined. Concurrent with our exploration activities, we intend to progress permitting activities so that if we determine in the future that the Cibola Project is commercially viable, necessary
environmental and regulatory studies will be in
process. There is no assurance that further exploration will result in a final evaluation that a commercially viable mineral deposit exists on any of our mineral properties.
Our
administrative and operating activities are primarily conducted in leased office space in Englewood, Colorado and Albuquerque, New Mexico. Our corporate headquarters are located in
Englewood, Colorado, where we lease 7,232 square feet under a lease that expires on October 31, 2011. The Albuquerque lease covers 2,412 square feet and has been extended through March 2012.
Figure 1.
Location map of mineral properties (March 2011)
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The
Table below lists our Mineral Properties in which we have an interest.
Table of Properties
Property (location/project/target)
Nature of Interest
Acreage (net)
New Mexico
Cibola Project
Juan Tafoya
Lease-fee minerals within Spanish Land Grant
4,097
Cebolleta
Lease-fee minerals within Spanish Land Grant
6,717
Ambrosia Lake
Deep Rock
Unpatented mining claims
1,632
Elizabeth
Lease-patented and unpatented mining claims
179
Mesa Redonda
Lease-unpatented mining claims
1,748
West Endy
Lease-unpatented mining claims, state lease
3,026
West Ranch
Unpatented mining claims
4,117
Other
Hogan
Unpatented mining claims
1,108
Rio Puerco
Unpatented mining claims
1,325
South Dakota
Edgemont
Unpatented mining claims, leased fee and state leases
19,062
Wyoming
Copper Mountain
Unpatented mining claims, lease fee and state leases
9,313
Black Hills
State lease
3,638
Shirley Basin
Unpatented mining claims and state leases
1,709
Sundance
State leases
5,641
Total
63,312
Other Residual Mineral Interests
Arizona
Breccia Pipes
Royalty interest and option to participate
2,898
South Dakota
Dewy-Burdock
Net proceeds interest
6,288
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Technical Reports
We have obtained the following technical reports that were prepared in accordance with NI 43-101 for our New Mexico
and South Dakota projects:
Name of Report
Author of Technical Report
Date of Report
Technical Report on the Uranium
Resources at The Cibola Uranium
Project, Cibola, McKinley and
Sandoval Counties, New Mexico, USA
G.S. Carter, P. Eng.
Broad Oak Associates
365 Bay Street
Suite 304
Toronto, Ontario
Canada, M5H 2V1
January 14, 2011
Technical Report on the Uranium
Resources at Ambrosia Lake
Uranium Project, McKinley County,
New Mexico, USA
G.S. Carter, P. Eng.
Broad Oak Associates
365 Bay Street
Suite 304
Toronto, Ontario
Canada, M5H 2V1
January 18, 2011
Technical Report on the Uranium
Resources on The Edgemont
Uranium Project, Fall River County,
South Dakota, USA
G.S. Carter, P. Eng.
Broad Oak Associates
365 Bay Street
Suite 304
Toronto, Ontario
Canada, M5H 2V1
January 18, 2011
Cautionary Note to United States Investors
We are simultaneously filing in Canada to be listed on the TSX and are required by Canadian law to provide disclosure in accordance
with NI 43-101. This required disclosure includes the preparation and filing of technical reports on our material mineral properties with Canadian securities commissions under
NI 43-101. These technical
reports will be furnished by us to the SEC on Form 8-K upon effectiveness of this registration statement in order to satisfy our "public disclosure" obligations under SEC
Regulation FD and are not filed with the SEC. U.S. reporting requirements for disclosure of mineral properties, including disclosure required in this prospectus, are governed by the SEC Guide
7. The standards of disclosure of mineral properties under NI 43-101 and SEC Guide 7 are substantially different. All mineral resources disclosed in our NI 43-101
technical reports referenced herein have been estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and
Petroleum referred to in NI 43-101.
The
NI 43-101 technical reports referenced herein use the terms "mineral resource," "indicated mineral resource," and "inferred mineral resource." We advise investors
that these terms are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into SEC Guide 7
reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of any mineral resource exists or is economically or legally mineable. The SEC
normally
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only
permits issuers to report mineralization that does not constitute "reserves" by SEC standards as non reserve in-place mineralized material.
NEW MEXICO
General
Our mineral properties located in the State of New Mexico are subdivided into two separate groups and consist of the Cibola Project and
the Ambrosia Lake Project. The Company's principal mineral project is the Cibola Project which consists of the Juan Tafoya Property and the Cebolleta Property. Within the lands that comprise the
Ambrosia Lake Project, we have
identified five principal target areas: Deep Rock, Elizabeth, Mesa Redonda, West Endy, and West Ranch properties. Figure 2. below shows the location of our New Mexico Properties.
Figure 2.
Location Map of New Mexico Properties (March 2011)
Regional Geologic Setting
The properties in the Cibola Project and the Ambrosia Lake Project are situated within the Grants mineral belt, on the southern flank
of the San Juan Basin. The basin is a significant geological and topographic feature that covers much of the northwest portion of the state of New Mexico, and is a major geological and physiographic
feature of the Colorado Plateau geologic province. The mineral belt is a west-northwest trending zone of sandstone-hosted (and some limestone-hosted) uranium mineralized areas that extends
from the western edge of the Rio Grande Rift, east of the town of Laguna, west-northwesterly for a distance of more than 100 miles (160.9 kilometers) to the vicinity of
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the
city of Gallup. Locally the belt attains a width of approximately 25 miles (40.2 kilometers). This belt of mineralized areas includes mining districts north of Laguna, the Ambrosia
Lake-San Mateo area (north of Grants), Smith Lake, Crownpoint, and Church Rock. Collectively, the mineralized areas of the belt have produced more that 348 million pounds of uranium
which was more than 44% of all uranium produced in the United States through 1980. One of the districts in the mineral belt, Ambrosia Lake, has produced nearly 190 million pounds of
U
3
O
8
.
Stratigraphy
The principal uranium mineralized areas of the Grants mineral belt are hosted in fluvial sandstones of the Jurassic-aged
Morrison Formation. The Morrison
Formation has been subdivided into three formal Members (in ascending order):
•
The Recapture Member is the lower-most unit of the Morrison Formation. The unit ranges from 70 to 250 feet (21
to 76 meters) in thickness in the Ambrosia Lake area, although it may locally be absent due to "scouring" by channels of the overlying Westwater Canyon Member. In the Ambrosia Lake area the Recapture
Member is composed of clayey sandstone, sandy claystone, eolian sandstone, claystone and siltstone. The sandstones are moderately-to-poorly sorted. This unit is lithologically
identical to sandstones in the overlying Westwater Canyon Member, and may be difficult to distinguish from the Westwater Canyon Member;
•
The Westwater Canyon Member overlies the Recapture Member, and is the principal unit of economic interest in the Ambrosia
Lake Project area. The unit ranges from 90 to 290 feet (27 to 88 meters) in thickness in the Ambrosia Lake district. It regularly forms "ledgy" cliffs and grit-covered slopes. It is a fine
to very fine grained sandstone and contains locally conglomeratic, poorly sorted friable feldspathic sandstones and local zones and interbeds of variegated mudstone. The Westwater Canyon Member was
deposited in a braided stream, fluvial environment. A prominent sandstone, the Poison Canyon sandstone, of local usage, which hosts significant uranium mineralized areas in the southern part of the
Ambrosia Lake district, is present in the upper-most part of the Westwater Canyon Member, and it interfingers with the overlying Brushy Basin Member. There is some debate about whether the
Poison Canyon is an upper-most "tongue" of sandstone at the top of the Westwater Canyon Member or a distinct sandstone body in the lower portion of the overlying Brushy Basin Member. The
Poison Canyon sandstone is approximately 20 to 90 feet (6 to 27 meters) thick, and is compositionally similar to sandstones of the Westwater Canyon; and
•
The upper-most unit of the Morrison Formation is the Brushy Basin Member, which ranges from 40 to 220 feet (12
to 67 meters) in thickness, overlies the Westwater Canyon Member, and inter-fingers with the Poison Canyon sandstone. The unit is predominantly clay facies, and ranges from claystone to very fine
grained sandstones. In the southern portion of the Cibola Project, on the Cebolleta Property, the Jackpile sandstone (of local and economic usage) is a unit of the Brushy Basin Member. This sandstone
contains significant uranium mineralized areas. The Jackpile sandstone extends in a northeasterly-trending belt that may be as much as 13 miles (20.9 kilometers) wide and more than 65 miles (104.6
kilometers) long. The unit may achieve a thickness of 200 feet (61 meters) but commonly ranges from 80 to 120 feet (24 to 37 meters) in thickness where it hosts uranium mineralization.
The
Cretaceous-age Dakota Sandstone overlies the Brushy Basin Member of the Morrison Formation throughout the project area. The Dakota ranges from 135 to 250 feet (41 to 76
meters) in thickness. Overlying the Dakota is the Cretaceous-age Mancos Shale, a thick sequence (695 to 800 feet, or 212 to 244 meters) of shale with minor sandstones. The Gallup Sandstone
and Crevasse Canyon Formation overly the Mancos Shale, particularly on the east side of the project area.
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Grants Mineral Belt
Uranium mineralization in the Grants mineral belt (which includes the Cibola Project and the Ambrosia Lake Project) occurs as
sandstone-hosted mineralized areas hosted primarily in fluvial clastic units of the Jurassic-aged Morrison Formation. Two major types of sandstone-hosted mineralized areas have been
identified in the area:
•
Trend mineralized areas, which have also been described as "pre-fault" or "primary" mineralized areas. The
trend mineralized areas occur as broad, undulating layers of uranium mineralization controlled primarily by the stratigraphic characteristics of the host sandstones. Mineralization in the trend
mineralized areas was localized by humic acids (humates) which acted as the reductants to precipitate uranium from ground water; and
•
Redistributed mineralized areas, which have also been described as "post-fault," "stack," or "secondary"
mineralized areas, are irregularly shaped zones of mineralization that were controlled by both the stratigraphic characteristics of the host rocks, as well as structural features. The redistributed
mineralized areas are the product of destruction (or remobilization) of trend uranium mineralized areas by oxidation, and have little, if any, humate remaining associated with the mineralization.
There is some geologic evidence that suggests that a number of the redistributed mineralized areas, including some on Neutron's properties, have geological and geochemical characteristics that are
similar to "roll-front" deposits of Wyoming and south Texas.
Individual
uranium mineralized areas in the project area range in size from a few tons to several million tons. The mineralized areas are roughly tabular and irregular in shape, and may
be elongate in a west-northwest direction (reflecting some of the characteristics and orientation of the host channel sandstone units of the Westwater Canyon Member of the Morrison
Formation). Individual mineralized areas range in size from a few feet in thickness, width and length to mineralized areas which may be several tens of feet in thickness, several hundred feet in
width, and several thousand feet in length.
Cibola Project
General
The Cibola Project is located approximately 45 miles (72.4 kilometers) west-northwest of the city of Albuquerque, New
Mexico. We control leases covering approximately 10,814 acres (4,376 hectares) of privately owned surface and mineral rights, in two separate non-contiguous blocks that are separated by a
distance of approximately 10 miles (16.1 kilometers), owned by the Cebolleta Land Grant, the JTLC and various private property owners. The leased properties are parts of a Spanish Land Grant and are
fee-simple (patented and deeded privately-held) lands. The properties that comprise the Cibola Project consist of the Cebolleta Property and the Juan Tafoya Property.
The
Cibola Project properties are held by Cibola under leases, and the leases convey to Cibola the right to explore for and mine uranium and associated minerals from the leased lands.
All of the lands that make up the various components of the Cibola Project are parts of the formerly extensive Cebolleta Land Grant that was granted the King of Spain, prior to the time that New
Mexico became a territory of the United States. After the conclusion of the 1848 Mexican-American War, the Treaty of
Guadalupe Hidalgo approved by the Congress of the United States officially recognized the existence of and protected the rights of the owners of the Cebolleta Land Grant and other Spanish and Mexican
land grants. The Cebolleta Land Grant was never owned by or subjected to the land management practices of the United States government.
Because
the leased properties are parts of a Spanish Land Grant, most of the area was never "sectionalized" under the United States section, township and range land designation system.
Several
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surveys
of the boundaries of the lands under lease have been completed, and the boundaries of the leased properties have been verified by the State of New Mexico District Court.
Mining Lease Descriptions
Cebolleta Property
In March 2007, we entered into the Cebolleta Lease with the Cebolleta Land Grant, a privately held land grant, to lease the Cebolleta
Property, which is composed of approximately 6,717 acres (2,718 hectares) of fee (deeded) surface and mineral rights. The Cebolleta Lease was affirmed by the New Mexico District Court in Cibola County
in April 2007. The Cebolleta Lease provides for: (i) a term of ten years and so long thereafter as we are conducting operations on the Cebolleta Property; (ii) initial payments to the
Cebolleta Land Grant of $5,000,000 during the first six months; (iii) a recoverable reserve payment equal to $1.00 multiplied by the number of pounds of recoverable uranium reserves upon
completion of a feasibility study to be completed within six years, less (a) the $5,000,000 referred to in (ii) above, and (b) not more than $1,500,000 in annual advance royalties
previously paid pursuant to (iv); (iv) annual advanced royalty payments of $500,000; (v) gross proceeds royalties from 4.50% to 8.00% based on the then current price of uranium;
(vi) employment opportunities and job-skills training for the members of the Cebolleta Land Grant; and (vii) funding of annual higher education scholarships for children of
the members of the Cebolleta Land Grant. The Cebolleta Lease provides Cibola with the right to explore for, mine, and process uranium deposits present on the Cebolleta Property and allows Cibola to
use certain water rights controlled by the Cebolleta Land Grant.
Through
2010 we have spent $20.4 million on the Cebolleta Property. This property was developed and uranium was mined in the past. However, all plant and equipment have been
removed from the Cebolleta Property and the Cebolleta Property has no significant plant or equipment, including subsurface improvements and equipment. Electric power is available for mining activities
at the Cebolleta Property. Two high voltage electrical transmission lines cross the region several miles north of the Cebolleta Property and electrical lines have been constructed to the site of the
former Sohio L-Bar uranium mine.
In
August 2009, we entered into an agreement with a former lessee and operator of certain lands now leased by us to acquire historical data related to the Cebolleta Property. The former
lessee delivered the data at the time of the agreement. In consideration, we have made payments to date of $50,000 with a final payment of $400,000 due in August 2013.
See
the subsection of this prospectus entitled "
Management's Discuss and Analysis of Financial Condition and Results of Operations—Material
Commitments
" for a further discussion of the Cebolleta Lease.
Juan Tafoya Property
In October 2006, we entered into the Juan Tafoya Lease with the JTLC in which we leased the Juan Tafoya Property, which consists of
4,097 acres (1,658 hectares) of fee (deeded) surface and mineral rights owned by the JTLC. The Juan Tafoya Lease provides for a term of ten years and so long thereafter as we are conducting operations
on the Juan Tafoya Property. Additionally, the Juan Tafoya Lease, provides for: (i) an initial payment to JTLC of $1,250,000; (ii) annual rental payments of $225,000 for the first five
years of the lease and $337,500 for the second five years; (iii) after the second five years, annual base rent of $75 per acre; (iv) gross proceeds royalties of 4.65% to 6.5% based on
the then current price of uranium; (v) employment opportunities and job-skills training programs for shareholders of the JTLC; (vi) periodic contributions to a community
projects fund if mineral production commences from the Juan Tafoya Property; and (vii) funding of a scholarship program for children of the shareholders of the JTLC. We are obligated to make
the first ten years annual rental payments notwithstanding our right to terminate the Juan Tafoya Lease at any time,
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unless
(a) the market value of uranium drops below $25 per pound, (b) the state of New Mexico bans uranium mining, or (c) the deposit is deemed uneconomical by an independent
engineering firm.
In
2007, we acquired infill fee mineral leases within the boundaries of the Juan Tafoya Lease. We are obligated to make annual lease payments and pay production royalties ranging from
4.65% to 6.5%
based on the then current price of uranium. The infill fee mineral leases covering the individually-owned small tracts have similar business terms and royalty provisions as the Juan Tafoya Lease.
The
Juan Tafoya Lease and the infill fee mineral leases provide Neutron with the right to explore for, mine, and process uranium deposits present on the leased premises, and the Juan
Tafoya Lease allows Neutron to use certain water rights controlled by the JTLC.
In
January 2007, we entered into a letter agreement with International Nuclear, Inc. Pursuant to the letter agreement we acquired a database of information on the Marquez Canyon
deposit located on the Juan Tafoya Property in consideration of a cash payment and a perpetual royalty of $0.25 per pound of uranium recovered from the Juan Tafoya Property with a maximum payout of
$1,000,000.
Through
2010 we have spent $6.5 million on the Juan Tafoya Property. Historically, the Juan Tafoya Property was almost fully developed for uranium mining and processing with the
construction of a mill and related mine infrastructure. However, all plant and equipment have been removed from the Juan Tafoya Property and the Juan Tafoya Property has no significant plant or
equipment, including subsurface improvements and equipment. Electrical power is available for both mining and milling activities at Juan Tafoya. A high voltage electrical transmission line exists
south of the Juan Tafoya Property and separate electrical power lines have been constructed to the former shaft site and mill site.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The Cibola Project is located in west-central New Mexico, approximately 45 miles (72.4 kilometers)
west-northwest of the city of Albuquerque, and from 10 to 25 miles (16.1 to 40.2 kilometers) northeast of the town of Laguna. Access to the project area from Albuquerque is over a paved
Interstate highway to the town of Laguna (a distance of approximately 45 miles, or 72.4 kilometers) and a paved two-lane highway (for a distance of 15 miles, or 24.1 kilometers) to the
village of Seboyeta and a further 3 to 16 miles (4.8 to 25.7 kilometers) over a well-maintained graded county-owned gravel road. Several private roads of varying quality cross the project
lands and provide access to nearly all parts of the project area. Rail service is available from the BNSF Railroad at Grants and Milan, and regularly scheduled air service is available in Albuquerque.
The
project area is situated on the southern margin of the San Juan Basin of west-central New Mexico. The northwestern portion of the leased property adjoins Mesa Chivato, a
broad volcanic capped mesa that flanks the eastern and northern sides of Mount Taylor, and includes Canon de Marquez, a narrow and steep-walled canyon that has eroded into the eastern part of Mesa
Chivato. Elevations within the project area range from 6,000 to 7,100 feet above sea level (1,829
to 2,164 meters). Topography is typical of the mesa-canyon form in this region of New Mexico, with sharp local variations in elevation, on the order of 200 to 400 feet (61 meters to 122
meters) over short distances. A series of rounded hills, raising 200 to 300 feet (61 to 91 meters) above the surrounding landscape, are present in the vicinity of the former Sohio uranium mine (in the
southwestern part of the project area). Prominent canyons, developed along Meyer Draw and Arroyo Pedro Padilla, cut the southern part of the project area where the former St. Anthony mines are
located. In spite of these variations in topography, access to essentially all of the project area is good. The area is populated with sparse mixed grasses, stands of mesquite, pinion pine, and oak
trees, typical of a semi-arid high desert climate.
Temperatures
at Grants (the nearest town with meaningful weather records) range from lows of approximately 50° Fahrenheit to daytime highs of 80° Fahrenheit
(9.9° to 26.6° Celsius) in the summer
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season,
and 10° to 40° Fahrenheit (-12.2° to +4.4° Celsius) in the winter. The area receives approximately 11 inches (279 millimeters) of
precipitation annually, much of which comes in the form of afternoon thundershowers during the months of July and August. There can be as much as 13 inches (330 millimeters) of snow during the winter
months. Winter snows and summer thunderstorms may create muddy ground conditions that interrupt access for short periods of time. Other than these short periods of muddy ground conditions, mineral
exploration and mining activities can be conducted mostly without interruption throughout the year.
The
project area has sufficient surface resources to support mining and processing operations, tailings disposal facilities, and mine waste dumps. There are adequate sources of water,
electricity, and fuel in the area. Two high voltage electrical transmission lines cross part of the leased lands and the intervening property (not leased by Neutron), and electrical lines have been
constructed to the sites of the former Bokum Resources Corporation uranium mill and the shaft site in Marquez Canyon from an electrical sub-station located on the intervening lands. Three
water wells are present on the Juan Tafoya Property, with approximately 1,850 acre-feet (1.746 billion liters) of water rights available. While some personnel previously experienced
in underground mining, construction, and mineral processing reside in the communities of Grants and Milan (40 miles, or 64.4 kilometers, to the southwest of the project area) and elsewhere in the
region, it will be necessary to train staff for the project.
History
The Cibola Project area has been of considerable interest to the U.S. uranium industry since the original discovery of the Jackpile
uranium mineralized area (located immediately southwest of the southern boundary of the Cibola Project) in late 1951. Exploration was
carried out by the Anaconda Company during the 1950's on the southern portion of the Cibola Project area, on what is now part of the lands Neutron has leased from the Cebolleta Land Grant.
The
first mining at the Cibola Project was undertaken by the Climax Uranium Company, who developed an underground mine in the St. Anthony area in 1957. During the period of
Climax's mining operation, which ended in 1960, approximately 321,000 pounds of U
3
O
8
were produced. At a later date, United Nuclear Corporation and its subsidiary Teton
Exploration Drilling Company carried out an extensive exploration program in the area of the former Climax mine, and its vicinity. United Nuclear subsequently developed two open pits and one
underground mine on lands leased from the Cebolleta Land Grant, with their initial development commencing in 1975. Ore from the St. Anthony mines was processed primarily at United Nuclear's
Church Rock mill near Gallup. Mining was suspended at St. Anthony in 1979, and the milling of stockpile material was completed in 1980. Mines at St. Anthony are reported to have produced
approximately 2.5 million pounds of U
3
O
8
.
Reserve
Oil and Minerals, a New Mexico-based mineral resource company purchased the Evans Ranch, which adjoins the St. Anthony mine area to the north, in 1968. Reserve sold an
undivided 50% interest in the ranch, including the mineral rights, to Sohio Western (then a subsidiary of the Standard Oil Company of Ohio) in 1969 and the two companies formed a joint venture to
explore for and mine uranium mineralized areas on the Evans Ranch. Sohio operated the joint venture and discovered extensive uranium mineralization on the property, and subsequently developed an
underground mine and uranium mill complex (the Sohio mine and mill). In 1982, Sohio acquired Reserve's interests in the property, and after final closure of the Sohio mill and underground mine, deeded
a portion of their property interests in the area to the Cebolleta Land Grant in 1989. The Sohio mine was reported to have produced 2.2 million pounds of U
3
O
8
.
The
northern part of the project area, in the vicinity of the village of Marquez, was first explored by W. Rodney Devilliers in 1969, and the Devilliers holdings were purchased by Bokum
Resources Corporation in 1975. Bokum carried out a comprehensive exploration drilling program on a portion of the JTLC property and completed more than 500 rotary and core holes. Work undertaken by
Bokum
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resulted
in the discovery of two significant uranium mineralized areas on the property, the Marquez and Southeast mineralized areas. Bokum commenced with the development of one of these mineralized
areas, Marquez, by sinking a 14-foot (4.3-meter) diameter shaft to a depth of 1,842 feet (561 meters) and completed a 5-foot (1.5-meter) diameter
ventilation shaft to a depth of approximately 2,100 feet (640 meters). Bokum also constructed a 2,200 short ton (1,996 tonnes) per day uranium extraction plant (mill) located approximately 1.5 miles
(2.4 kilometers) east of the shaft site. Additionally, Bokum constructed access roads, power lines, drainage diversion structures, the initial phases of a tailings impoundment facility, and process
water wells. The mine surface facilities (hoist, head frame, etc.) and the mill were subsequently dismantled and removed from the property. No ore was ever mined or processed at these facilities.
Long
Island Lighting Company (LILCO), a New York-based utility, entered into a series of uranium supply transactions with Bokum Resources Corporation beginning in 1976 and
LILCO provided long-term financing to Bokum for the advancement of the Marquez exploration and development drilling programs and facilities construction. As a consequence of bankruptcy
proceedings involving Bokum Resources Corporation, LILCO, through its wholly-owned subsidiary Marquez Development Corporation, initiated a foreclosure action against Bokum's interests in the Juan
Tafoya properties, and a final decree of foreclosure to LILCO in September, 1991. Over the life of the project, Bokum and LILCO collectively invested approximately $65 million in the project
including costs for drilling, shaft sinking, surface support facilities and construction of the mill.
Exxon
Minerals Corporation acquired several leases of small, privately-held lands adjoining and enclosed by the Bokum properties. Exxon carried out drilling programs on these
properties, resulting in the discovery of significant uranium mineralization that is part of the Marquez uranium mineralized area. Bokum acquired the Exxon leases in August, 1978, but they were
relinquished by Marquez Development Corporation in 1986. These former Exxon and Bokum leases are now largely held by us.
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Mineralization—Juan Tafoya Property
The Juan Tafoya Property hosts the Marquez and the Southeast mineralized areas as shown in Figure 3 below:
Figure 3.
Juan Tafoya Property (March 2011)
Nature of Mineralization
The Marquez and Southeast mineralized areas are comprised of three distinct pods, or lenses, of tabular mineralization hosted in
sandstones of the Westwater Canyon Member of the Morrison Formation. The three lenses are:
•
The "Blue" horizon is a thin and somewhat discontinuous lens of mineralization and is the upper-most zone of
the mineralized area. Of the three mineralized lenses that make up the Marquez mineralized area, the "Blue" zone is the least developed (geologically) and has the lowest tonnage of the three lenses.
It lies anywhere from 0 to 50 feet (15 meters) below the "K" shale marker horizon. The zone is situated within the western-most portion of the Marquez mineralized area and is not
significantly mineralized in the Southeast mineralized area. Mineralization in the "Blue" horizon is reported to be in radiometric equilibrium;
•
The "Green" (or "Middle") zone is a thick interval of mineralization situated in the middle to lower portion of the
Westwater Canyon and is located 30 to 60 feet (9 to 18 meters) above the Westwater Canyon—Recapture contact (the lower contact of the Westwater Canyon Member). The "Green" mineralized
horizon contains the bulk of the uranium mineralization in the Marquez mineralized area, as well as all of the known mineralization in the Southeast mineralized area; and
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•
The "Red" (or "Lower") horizon is a thick and continuous zone of uranium mineralization that is situated at, or very near,
the lower-most contact of the Westwater Canyon Member (with the underlying Recapture Member). A recent analysis of historical drilling, geological, and geophysical data by geologists of
Neutron indicates that at various locations within the Marquez mineralized area the "Red" and "Green" appear to merge, suggesting that they may be parts of the same mineralized zone, or lens. It is
most significant in the north-central portion of the Marquez mineralized area.
The
main mineralized areas are all lenticular and tabular in form, and plunge gently to the west. The geometry of the individual mineralized zones seems to have been strongly influenced
by the size, shape, and orientation of the host channel systems. The majority of the mineralization was localized in a braided fluvial system, although two areas show the characteristics of a
meandering fluvial system. The uranium is believed to have been precipitated from ground waters by reduction from humates and perhaps other carbonaceous matter in the Westwater Canyon sandstones.
The
mineralized zones display good continuity from hole-to-hole throughout the Marquez mineralized area.
Disequilibrium
Uranium disequilibrium can be defined as the ratio of chemical uranium (cU
3
O
8
) over gamma-ray
equivalent uranium (eU
3
O
8
). The first determination is made in a laboratory, as described below, whereas the second determination is typically a field measurement
(radiometric), from which an indirect or equivalent estimate of uranium content can be made. The ratio, or disequilibrium, between "chemical" laboratory techniques and "equivalent" field techniques
exists because of the ongoing radioactive decay of uranium over time. A positive disequilibrium ratio of 1.0 or greater indicates the presence of more chemical uranium than equivalent uranium.
As
part of the then-ongoing exploration and development activities at the Marquez mineralized area, Bokum Resources drilled eleven core holes (core "tails" on rotary drill
holes), including ten holes in the Marquez mineralized area and one hole in the Southeast mineralized area to provide samples for determination of disequilibrium ratios.
Comparison
of chemical and radiometric assays show a strong general trend of individual samples, in all grade ranges, to have higher chemical assays than the corresponding radiometric
assays. An analysis of the available chemical assays and the corresponding radiometric assays support the historical determination that the "blue" mineralized zone is in general radiometric/chemical
equilibrium and the "red" and "green" mineralized zones have higher actual uranium contents than the radiometric assays otherwise indicate.
Mineralization—Cebolleta Property
Several important uranium mineralized areas are located in the southern part of the Cibola Project area. The Sohio area, which is in
the southern portion of the project, includes five distinct mineralized areas: Areas I, II, III, IV, and V (see Figure 4). While these uranium mineralized areas are hosted in the Jackpile
sandstone unit of the Morrison formation, which is a different host sandstone than that at the Marquez and Southeast mineralized areas (hosted in the Westwater Canyon Member of the Morrison
Formation), the overall geological characteristics of the mineralized areas are similar to the Westwater Canyon-hosted mineralized areas in the north part of the project area.
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Figure 4.
Cebolleta Property (March 2011)
Mining
operations undertaken by Sohio Western Mining were limited to the Area II and V mineralized areas, but based upon historical resources data prepared by Sohio after the
closure of the Sohio mine, mineralization remains in both mineralized areas. The Area I mineralized area, located in the southern-most part of the Sohio complex, which was never mined,
extends south of the former property boundary into the St. Anthony area, and additional uranium mineralization is present in the St. Anthony area adjacent to the north side of the
St. Anthony North pit and the St. Anthony mine. The uranium mineralized areas in the southern part of the project area share a common set of geological characteristics.
Nature of Mineralization
•
Nearly all of the mineralization is hosted by the Jackpile sandstone, although minor amounts of mineralization hosted in
sands of the Brushy Basin Member of the Morrison Formation and the Dakota Sandstone are present in the St. Anthony area;
•
Most of the mineralization is hosted in medium to coarse-grained sandstones that exhibit a high degree of
large-scale tabular cross-stratification;
•
The mineralization thins appreciably near the margins of the mineralized areas, although halos of low-grade
mineralization surround the mineralized areas;
•
Higher grade mineralization usually occurs in the core of the mineralized zones;
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•
Strong mineralization appears to be concentrated in the lowermost portions of the Jackpile sandstone, although anomalous
concentrations of uranium are present throughout the vertical extent of the unit;
•
Most of the mineralization appears to be "reduced," with only isolated small pods, especially in the St. Anthony
underground area, of discontinuous mineralization exhibiting oxidation;
•
Extensive chemical and radiometric analyses on core holes by Sohio demonstrated that the mineralization is generally
within equilibrium;
•
Individual mineralized areas do not show a preferred orientation or trend, and do not fully reflect the orientation of the
main Jackpile sandstone channel trend;
•
Nearly all of the mineralized areas show a strong spatial and genetic relationship with carbonaceous material; and
•
The mineralized areas range in depth from approximately 200 feet (61 meters) in the south, at the St. Anthony area,
to nearly 700 feet (213 meters) in the vicinity of the Area II and Area III mineralized areas at Sohio.
In
the Sohio area, mineralization occurs in tabular bodies that may be more than 1,000 feet (305 meters) in length, and attain thicknesses of 6 to 12 feet (1.8 to 3.7 meters). The upper
and lower boundaries of these mineralized bodies are generally quite abrupt. There is some tendency for individual mineralized areas to develop in clusters. Locally, these clusters may be related to
the coalescence of separate channel sandstone bodies. In this instance, mineralization is often thicker and higher grade than adjoining areas.
Disequilibrium
Sohio reported that "experience has shown that the uranium grades determined radiometrically at the Sohio property corresponded well
with grades determined chemically." This work verified earlier studies by Sohio, based upon 150 core samples, that the mineralized areas were generally in radiometric equilibrium. Chemical and
radiometric assays from eight core holes drilled by Sohio in the Area II and Area III mineralized areas generally demonstrate
no clear bias toward either the chemical or radiometric grades in the core. Data for the St. Anthony mine area is comprised of 1,466 samples collected and analyzed from 47 core holes drilled at
various localities within the area. Overall, the uranium mineralization, as depicted by this data set, is slightly out of equilibrium in favor of chemical assays.
Data Base
During the course of Neutron's involvement with the various properties that comprise the Cibola Project, the Company has undertaken
considerable effort to acquire as much of the historical exploration and development data that was generated by the previous operators of the properties as possible, especially from Bokum Resources
and LILCO for the Marquez and Southeast mineralized areas and the "Bokum" mill, Sohio Western Mining for the Area I—V mineralized areas and the Sohio underground mine, and Teton
Exploration/United Nuclear/UNC Resources for the various surface and underground mines at St. Anthony and the adjoining undeveloped uranium mineralized areas.
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Figure 5.
Drill hole locations on the Juan Tafoya Property (March 2011)
In
the case of the Marquez and Southeast mineralized area, Neutron is in possession of gamma-ray/electric geophysical logs for 547 drill holes within the lease boundaries
(most of which are the original logs), re-probe logs for more than 89 drill holes, assay certificates from third-party chemical analysis of mineralized core, disequilibrium studies,
down-hole deviation (drift) surveys for these holes, drill hole location maps, survey data for the drill hole locations (including drill hole collar coordinate data (X, Y, Z directions),
historical geologic cross-sections, historical mineral resource estimates, third-party independent technical audit reports, metallurgical test work reports, metallurgical design reports, mill design
and "as built" drawings of the Bokum mill, historical environmental reports, tailings storage facility studies, water-rights reports and other relevant information.
For
the former Sohio properties, including the Sohio underground mine, Neutron has acquired approximately 1,500 gamma-ray/electric geophysical logs, drill hole location maps,
mineralization intercept maps, historical geologic cross-sections, relevant survey data, underground mine maps (including monthly mining advance maps), mineral resource estimate reports, technical
studies for a potential re-start of mining operations in 1984, mine production records, and metallurgical test data.
Information
pertaining to the former St. Anthony mines and uranium mineralized areas include approximately 2,400 gamma-ray/electric geophysical logs, assay
certificates for chemical assaying of core, drill hole location maps, drill hole mineral intercept and composites with elevations, mineral resource polygon maps, mineral resource estimates,
metallurgical reports (including third-party independent studies of the amenability of St. Anthony mineralization to the Bokum mill process), mining feasibility studies, geologic reports,
geologic cross-sections, open pit and underground workings maps, production records, and various other relevant data on the former St. Anthony operations and property.
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Neutron has constructed a comprehensive database for the project, has scanned most of the geophysical logs, and essentially all of the other information and
entered it into the database. The geophysical logs, which are in-situ assays of the mineralized zones, have been or are being digitized, and many of the historical grade calculations have
been checked with re-calculations using an automated digital method.
An
extensive set of geologic and mineral correlation cross-sections and longitudinal-sections have been prepared by Neutron's geologists. This effort is continuing for the remaining
mineralized areas within the project boundaries. Structure contour maps have been prepared for key geologic surfaces and GT (grade-thickness product) maps have been constructed for many of the
project's mineralized areas.
The
historic mine workings data for the Sohio underground mine have been digitized for use in the block model for the Area II—V mineralized areas, where the mine is located.
A
comprehensive block model of the Marquez mineralized area has been constructed and in-house mineral resource estimates, based upon existing data have been completed. A
similar model has also been constructed for the Southeast mineralized area.
Historical
mineral resource estimates for the Marquez, Area I, and Area III uranium mineralized areas have been checked by an independent geological and engineering firm, using
inverse-distance estimation methodologies and historical data. The results of these studies are consistent with the historical resource estimates, which were prepared using either polygonal, general
outline or circle-tangent estimation methods.
The
Company has acquired two extensive sets of historical data for the Juan Tafoya Project, including drill hole location maps and survey data, polygon maps of mineralized material,
geological and mineralization cross-sections, gamma-ray and S-P/Resistivity logs for nearly 557 holes, assay certificates comparing chemical and radiometric assays for core
samples, and various technical reports including engineering reports, reports on mineralized material calculations carried out by LILCO and independent consulting firms, and a comprehensive set of
metallurgical test reports and various engineering drawings and design material for the former Bokum Resources' uranium mill.
Neutron
has acquired an extensive technical database for the Cebolleta Project including various geological reports, engineering and metallurgical studies (including production reports
from the former L-Bar underground mine), maps depicting the locations of drill holes, tabulations of drill hole results (recording thicknesses and average grades of mineralization), over
4,000 drill hole gamma-ray logs, drill hole coordinates and elevations of the mineralized intervals, estimates of mineralized material prepared by the former operators of the property and
third-party consultants, environmental reports and studies undertaken by independent consultants. Neutron is in the process of converting the remaining historical drill hole data at the
St. Anthony area into a digital database to facilitate the construction of mineralization block models and mine models.
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Table of Contents
Figure 6.
Drill hole locations at Cebolleta Property (March 2011)
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Mineralized Material
In accordance with SEC guidance materials on non-reserve mineralized material, we show the estimate of in-place
mineralized uranium material for our Cibola Project in the following table. The estimate of mineralized material for each of the mineralized areas listed below was obtained from the Technical Report
on the Uranium Resources at The Cibola Project, Cibola, McKinley and Sandoval Counties, New Mexico, USA. The technical report is dated January 14, 2011 and was completed by Broad Oak
Associates, an independent engineer.
The
following in-place non-reserve mineralized material has been modeled and calculated utilizing the digital data base of the verified historical data discussed
above and reported in the technical report.
SUMMARY OF IN-PLACE NON-RESERVE MINERALIZED MATERIAL IN THE CIBOLA PROJECT
Mineralized Area
Tonnage Millions
Grade Percent
Marquez
3.2
0.15
Southeast
0.6
0.14
Area I
1.4
0.16
Area II
3.1
0.18
Area III
1.5
0.17
Area V
0.7
0.21
Additionally,
as described in the Technical Report on the Uranium Resources at the Cibola Project, we have historical reports that show the St. Anthony area contains
4.5 million tons of mineralize material at an average grade of 0.09%. This mineralized material is considered historical in nature and no other calculations have yet been completed because the
St. Anthony digital data base preparation and modeling is continuing. Upon completion of the modeling we anticipate the technical report will be updated by the independent engineer.
Environmental and Permits
The Company has completed archaeological, biological, and radiological surveys of the Marquez mineralized area, as well as the Sohio
Areas I and III and portions of the St. Anthony mine area in support of its application for drilling permits, and has completed several environmental evaluations required to support license
applications for a proposed mill and tailings storage area. Several other baseline studies are underway or planned to provide all additional data needed for the source material license application for
the mill and tailings sites, and for the mine permit applications. Environmental studies that have been completed in the Marquez mineralized area include:
•
Meteorology:
•
Over 2.5 years worth of data collected at the proposed mill site including wind speed and direction, temperatures
at 2 and 10 meters, relative humidity, direct solar radiation, evaporation pan rates and precipitation.
•
Air quality:
•
Five air quality monitoring stations are currently in operation; three for radionuclides and two for particulate matter
(i.e. dust); and
•
Monitoring has been in progress for more than two years with better than 95% data recovery (EPA standard is 90%).
•
Ecology:
•
Biological inventories and on-going bird surveys;
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•
Vegetation surveys, mapping, and productivity studies (currently underway); and
•
Wetlands delineation.
•
Radiology Data Collection and Studies:
•
Surface and sub-surface soils;
•
Radionuclide air particulates (3 sites);
•
Seasonal ambient radon flux measurements in tailings basin;
•
Vegetation and animal tissue samples;
•
Direct gamma measurements of entire tailings basin area and proposed mine permit area; and
•
Direct gamma and radon measurements at nearest downwind residence.
•
Archaeological and cultural resource surveys;
•
Approximately 1,850 acres (749 hectares) inventoried in proposed tailings management basin area;
•
Approximately 200 acres (81 hectares) inventoried in mine/drill area.
•
Socioeconomic studies are in progress.
•
Hydrology:
•
Regional data collection and hydrogeologic characterization studies have been completed;
•
Some groundwater sampling from existing wells and regional springs has been completed; and
•
Comprehensive ground and surface water characterization work plans have been completed but have not yet been implemented.
All
studies have been completed by or are being undertaken by highly qualified, New Mexico-based environmental consulting firms under direct contract to Neutron. All studies have been
designed to meet or exceed applicable federal agency (NRC, EPA) or State agency requirements (New Mexico Energy, Minerals, and Natural Resources Department, NM Environment Department, NM State
Historical Preservation Office, NM Department of Game and Fish, NM Office of State Engineer). Neutron staff has met numerous times with jurisdictional agencies at the State and Federal levels to
present work plans and ensure that all data is being collected in accordance with relevant standards or guidelines.
There
are no federally designated Threatened or Endangered (T&E) species occurring within the entire project area. Numerous raptors are present in the general project area, including one
active Golden Eagle nest, but it is located beyond the buffer zone established around the tailings basin area. A state-designated Sensitive Species, the Gray Vireo (a migratory song bird), was
observed in surveys conducted in 2009 but not during surveys in 2010. No threatened and endangered plant species have been identified over the course of multiple vegetation surveys conducted at
different times of the year. The very limited wetlands area within the tailings basin is an artificial habitat created by the Bokum Resources tailings dam but it would not be impacted by planned
development activities. Several archaeological sites considered eligible for listing to the National Registry of Historic Places have been identified in the proposed mine area and numerous sites
identified within the proposed tailings basin. Current planning suggests that all the sites in the proposed mine area can be avoided. Many sites within the proposed tailings basin area would be
impacted by construction under the current conceptual design and will require mitigation (i.e. data recovery through site excavation work).
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The
southern part of the leased property is the site of several former underground and open pit uranium mines. Open pit and underground mines in the St. Anthony area of the
Cebolleta Lease are currently being reclaimed by the former operator of those mines, UNC Resources (a subsidiary of General Electric) in accordance with directives of various State of New Mexico
governmental agencies. The Sohio mine and uranium mill were reclaimed by the successor to Sohio Western Mining Company, Kennecott Energy Company, and the site of the former (now dismantled and
reclaimed) Sohio mill has been transferred to the U.S. Department of Energy for long-term monitoring and management under the UMTRA (Uranium Mill Tailings Remedial Action Project) program.
The former Sohio mill site is not a part of the lease from Cebolleta Land Grant. An examination of the files of the State of New Mexico Environment Department and the New Mexico Energy, Minerals and
Natural Resources Department indicates that Kennecott has some limited reclamation obligations relating to subsidence associated with several ventilation holes for the former JJ #1 (Sohio) underground
mine. As of January 2011, Kennecott was completing these final reclamation obligations as identified by the State of New Mexico.
Although
the Juan Tafoya Property was formerly the site of a partially-developed underground uranium mine and processing plant (uranium mill), there has never been any uranium production
from the property.
As
with all drilling projects proposed in the State of New Mexico, we are required to obtain exploration permits from the MMD. The Company has received a "Subpart 4 Exploration
Permit" (MK023ER), which was issued by MMD on March 27, 2009 to cover a proposed drilling program on the lands leased from the JTLC and adjoining leases in the northern part of the project
area. The permit was issued for a period of one year and has been renewed by Neutron and the MMD (MK023ER-R1). A permit application for eighty-four drill holes in the southern part of the
project area (St. Anthony and Sohio) was submitted, and was deemed "administratively complete" on April 26, 2010 by MMD. The permit (CI 014 ER) has been issued to Neutron. As all of the
lands that constitute the Cibola Project are privately held, there are no requirements for drilling permits from agencies of the U.S. government.
Mining
and milling operations will require additional permits from the MMD, the New Mexico Environment Department, as well as the EPA and NRC. As the leased lands are
privately-held, they are not subject to federal land-management rules and regulations. The Company has undertaken early-stage discussions with the staff of the NRC regarding a
"source materials license" for a milling permit for the Cibola Project. In November, 2008 a "pre-application" meeting was held with staff of the NRC, and a NRC docket number was assigned
to the project at that time.
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Ambrosia Lake Project
General
The Ambrosia Lake area historically was the largest and most significant uranium producing area in the United States. Within the lands
that comprise the Ambrosia Lake Project, Neutron has identified five principal target areas: Deep Rock, Elizabeth, Mesa Redonda, West Endy, and West Ranch as shown in Figure 7.
Figure 7.
Ambrosia Lake Targets (March 2011)
Uranium
mineralized areas on our properties and elsewhere in the Grants mineral belt are primarily hosted in sandstones within the Poison Canyon sandstone and the Westwater Canyon Member
of the Jurassic-aged Morrison Formation. These uranium mineralized areas are associated with channel sandstones within a broad fluvial and alluvial fan complex in the Brushy Basin and
Westwater Canyon Members, and often mimic the shape, orientation, and geometry of the host channels. Uranium minerals coat sand grains, occasionally replace clastic fragments in the sandstones, and
fill voids between individual sand grains.
Mining Leases and Patented and Unpatented Lode Mining Claims Descriptions
The Ambrosia Lake Project of Neutron is situated on the southern flank of the San Juan Basin, approximately 60 miles (96.5 kilometers)
west-northwest of the city of Albuquerque, New Mexico. The project is comprised of the (i) Endy Lease which is comprised of 167 unpatented lode mining claims and covers 3,382 acres
(1,369 hectares) in the eastern portion of the Ambrosia Lake Project; (ii) Bonner Lease which is comprised of 181 unpatented lode mining claims and one state of New Mexico general mining lease
covering a further 4,132 acres (1,672 hectares); (iii) the Elizabeth Lease which is comprised of eight patented and one unpatented lode mining claims covering 179 acres (72
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hectares);
and (iv) 292 unpatented lode mining claims for 5,442 acres (2,2202 hectares) that are owned directly by the Company. Collectively, the Endy Lease, Bonner Lease, Elizabeth Lease and
the claims owned by the Company cover an area of approximately 13,135 acres (5,316 hectares). The surface lands covering the patented and unpatented mining claims are managed by the BLM, the U.S.
Forest Service ("USFS") or a private land owner.
In
February 2006, we entered into the Endy Lease covering 3,382 acres (1,369 hectares) comprised of 167 unpatented lode mining claims in the eastern portion of the Ambrosia Lake mining
district. Pursuant to the terms of the Endy Lease, we paid $315,000 upon signing, $100,000 in February 2007 and February 2008, and are obligated to pay an additional $75,000 as an advance royalty each
year
thereafter through the term of the Endy Lease. The Endy Lease has a primary term of ten years, but may be extended up to an additional 65 years provided that we continue to make advance or
production royalty payments. We may terminate the lease at any time without further lease obligations. A 5% production royalty, based on the gross market value of all minerals extracted, is payable
for any production from the Endy Lease properties.
In
June 2006, we entered into the Bonner Lease covering 181 unpatented lode mining claims and one state of New Mexico general mining lease, covering a further 4,132 acres (1,672
hectares) of mineral rights in the Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Bonner Lease, we paid a rental payment of $180,000 and issued 65,000 shares of
our common stock. We are obligated to pay an annual rental payment of $120,000 on the second through fifth anniversaries of the Bonner Lease. On the sixth anniversary and each anniversary thereafter
we are obligated to pay an annual advance royalty of $240,000. In the event commercial production is achieved during the rental period, then all future rental payments received after commercial
production begins will be credited as minimum advance royalty payments. The Bonner Lease has a primary term of ten years but may be extended up to an additional 65 years provided that we
continue to make advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5% production royalty based on the gross market value of all
minerals extracted is payable for any production from the Bonner Lease properties. The surface overlying the New Mexico general mining lease is owned by the State of New Mexico.
In
January 2008, we entered into the Elizabeth Lease covering 179 acres (72 hectares) comprised of eight patented and one unpatented lode mining claims in the eastern portion of the
Ambrosia Lake mining district in the state of New Mexico. Pursuant to the terms of the Elizabeth Lease, we paid a $315,000 signing bonus upon signing and we are obligated to pay advance royalties of
$100,000 on the first and second anniversaries and $75,000 every anniversary thereafter so long as the lease is in effect. The Elizabeth Lease has a primary term of ten years, but may be extended up
to an additional 65 years provided that we continue to make advance or production royalty payments. We may terminate the lease at any time without future lease obligations. A 5% production
royalty, based on the gross market value of all minerals extracted, is payable for any production from the Elizabeth Lease properties. Most of the properties covered by the Elizabeth Lease are
patented lode mining claims in which the surface is privately owned.
The
292 unpatented lode mining claims owned directly by the Company do not have any royalty obligations attached to them. Of which, 223 of the claims were acquired as part of the
Powertech transaction as discussed below in the subsection entitled "
Description of Properties—South Dakota.
"
The
surface estate covering portions of West Endy and Deep Rock targets is managed by the USFS. Surface management responsibilities for Mesa Redonda and portions of West Endy are vested
with the BLM. All the unpatented mining claims in the project area are subject to a $140 annual claim maintenance fee payable on each claim to the BLM.
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See
the subsection of this prospectus entitled "
Management's Discuss and Analysis of Financial Condition and Results of Operations—Material
Commitments
" for a further discussion of the Ambrosia Lake leases and lode mining claims.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The project is approximately 60 miles (96.5 kilometers) west-northwest of the city of Albuquerque, and 20 miles (32.2
kilometers) north-northeast of the town of Grants. A paved highway from the town of Milan (Grants) to the village of San Mateo and the Ambrosia Lake area provides excellent access to eastern and
northern parts of the project area. Numerous dirt USFS and private ranch roads cross the project lands and provide access to nearly all parts of the project area. Rail service is available from the
BNSF Railroad at Grants and Milan, and scheduled air service is available in Albuquerque.
The
Ambrosia Lake Project is situated on the southern margin of the San Juan Basin of west-central New Mexico. The project area is generally characterized by a broad valley
that contains the Ambrosia Lake mining district. The valley is surrounded by numerous small to large mesas that stand as high as 1,000 feet (304 meters) above the surrounding countryside. The dominant
topographic feature in the vicinity of the project is Mount Taylor, a dormant volcano which has an elevation of 11,302 feet (3,445 meters) above sea level. Elsewhere in the project area, elevations
range from 7,300 to more than 7,800 feet (2,250 to 2,377 meters) above sea level. The overall topography of the project area is flat to gently sloping within the valley floor and on the mesa tops,
while the flanks of the mesas are dominated by very rugged topographic features and steep slopes. The area is populated with sparse mixed grasses, with stands of juniper and pinion pine trees, and is
in a semi-arid high desert climate.
Temperatures
at Grants (the nearest town with meaningful weather records) range from lows of approximately 50° Fahrenheit to daytime highs of 80° Fahrenheit
(9.9° to 26.6° Celsius) in the summer season, and 10° to 40° Fahrenheit (-12.2° to +4.4° Celsius) in the winter. The
area receives approximately 11 inches (279 millimeters) of precipitation annually, much of which comes in the form of afternoon thundershowers during the months of July and August. There can be as
much as 13 inches (330 millimeters) of snow during the winter months. Winter snows and summer thunderstorms may create muddy ground conditions that interrupt access for short periods of time. Other
than these short periods of muddy ground conditions, mineral exploration and mining activities can be conducted mostly without interruption throughout the year.
The
project area is located in the Ambrosia Lake mining district, which had numerous underground mines and uranium processing mills. Electrical lines cross the project area and provided
electricity to the historic mills and mines. All of the historic mills have been dismantled and removed but the remaining electrical power lines could be a source of power. There are no plant
facilities or equipment on the properties of the project, including subsurface improvements and equipment. Through 2010 we have spent $3.4 million on the Ambrosia Lake Project.
History
In the Ambrosia Lake area mineral exploration and development programs (including underground and small-scale open pit mining and
milling) commenced in the early 1950's and continued into the 1990's. During that period of time nearly 190 million pounds of U
3
O
8
were produced from sandstone and
limestone-hosted mineralized areas in the district, and a significant amount of uranium mineralization remains in place in the district. During the period of operation of the Ambrosia Lake mining
district, underground uranium mines were discovered, developed and operated by numerous companies, including Kerr McGee Nuclear, Homestake Mining Company, United Nuclear/UNC Resources, Phillips
Petroleum, Ranchers Exploration, Gulf Mineral Resources, and others.
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Lands
that comprise Neutron's Ambrosia Lake Project have been explored by several firms (including Conoco, Homestake Mining, Kerr-McGee, Bokum Resources, Pathfinder Mines and
United Nuclear Corporation) periodically since the mid 1950's, and numerous exploration holes have been drilled on the Company's leased properties. Much of the drilling and related data from several
of these historical programs are currently in the possession of Neutron, and have served as a portion of the basis of evaluating the mineral potential of the properties. This geological data provided
a foundation for the identification of five key uranium targets on the Company's properties:
•
Deep Rock;
•
Elizabeth;
•
Mesa Redonda;
•
West Endy; and
•
West Ranch.
Extensive
historical exploration drilling programs on properties that comprise Neutron's Ambrosia Lake Project have resulted in the identification of numerous zones of sandstone-hosted
uranium mineralization.
Mineralization
General
Historical exploration drilling information, which was carried out prior to the adoption of National
Instrument 43-101 , indicates numerous zones of significant uranium mineralization are present on the subject properties, including areas at the Deep Rock, Elizabeth, Mesa Redonda,
West Endy, and West Ranch target areas. All of the important uranium mineralization in the project area is hosted in the Westwater Canyon member of the Morrison Formation, except at Mesa Redonda and
West Ranch, where mineralization is hosted in the Poison Canyon sandstone unit or the Brushy Basin Member of the Morrison Formation. Historical mineral resources (not compliant with
NI 43-101) have been calculated by former property operators at the Elizabeth, Mesa Redonda, and West Endy properties, and details of this mineralization are discussed below.
Deep Rock Target
The Deep Rock exploration target is situated on leased unpatented lode mining claims. The target area is located immediately
west-northwest of the Mount Taylor mine (developed by Gulf Mineral Resources, and now owned by Rio Grande Resources) and adjoins the eastern edge of the Roca Honda project of Strathmore
Minerals Corp. While some initial exploration drilling was carried out on the target by the Anaconda Company (who drilled three holes), the target area was first explored in a comprehensive way by the
minerals division of Continental Oil Company (Conoco) in the late 1970's. Conoco drilled 14 holes (one hole was terminated prior to reaching the target horizon), and encountered uranium mineralization
in Westwater Canyon sandstones, although Conoco did not follow-up on this work due to a precipitous drop in the uranium price. During the 1980's, Homestake Mining Company drilled one
additional hole in the mineralized zone, and encountered similar mineralization to what had been intersected by Conoco in the same area. There has been no physical work on the Deep Rock target since
the completion of the Homestake drilling program.
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Deep Rock Mineral Interests
Claim Group
BLM/State Serial Numbers
Count
Acreage
GIL
NMMC-173422 to 173425, 173427 to 173439, 174454
19
392.6
ENDY
NMMC-171232 to 171261, 171265 to 171266, 171268 to 171291, 171328 to 171331
60
1,239.7
79
1,632.3
Figure 8.
Deep Rock Target (March 2011)
Elizabeth Target
There are two zones of uranium mineralization at the Elizabeth target. Considerable exploration drilling was carried out by several
companies on the Elizabeth claims between the mid-1950's and the early 1980's. This mineralization, which is hosted within sandstone units of the Westwater Canyon Member of the Morrison
Formation, is part of a very extensive complex of "trend" type uranium mineralized areas which constitute the main body of the Ambrosia Lake uranium mining district. The southwestern mineralized area
of the Elizabeth target is contiguous with and is part of the Section 35 mineralized area, which is southeast of the Elizabeth claims, and the Ann Lee/Section 27 mineralized
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area,
which adjoins the Elizabeth claims to the west-northwest. The adjoining Section 35 mineralized area was formerly operated by Kerr McGee, the major historical operator in the
Ambrosia Lake district, and the Ann Lee/Section 27 underground mines were formerly operated by Phillips Petroleum and United Nuclear/UNC Resources. A portion of the Elizabeth southwest uranium
mineralized area was mined by Kerr McGee and United Nuclear, but the Elizabeth east mineralized area has not been mined. Various 'historical' operators of the Elizabeth claims have prepared mineral
resource estimates for the two uranium mineralized areas situated on Neutron's claims at the Elizabeth target. These estimates, which reflect advancing knowledge based on available drilling results,
updated gamma-ray logging data, and improved understanding of bulk densities and tonnage factors.
Elizabeth Mineral Interests
Claim Group
BLM/State Serial Numbers
Count
Acreage
ELIZ-9
NMMC-176522
1
14.0
ELIZ-1 to 8
Patented claims
8
165.1
9
179.1
Figure 9.
Elizabeth Target (March 2011)
The
extensive drilling programs undertaken by prior companies on the Elizabeth claim block defined the eastern and southwestern uranium mineralized areas, and some production was derived
from the southwestern mineralized area. This work has resulted in the identification of historical mineral resources described in the following mineralized material section.
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West Endy Target
The West Endy target is comprised of two contiguous blocks of unpatented lode mining claims and one State of New Mexico general mining
lease (site of the inactive Cliffside mine). At least 97 exploration holes have been drilled on the West Endy target by various companies, in particular Enerdyne Corporation, Homestake Mining Company
and United Nuclear. Zones of uranium mineralization have been outlined by drilling on the target. We have copies of gamma ray logs for each of these mineralized areas and plan to construct a digital
data base.
The
New Mexico general mining lease is the site of the inactive Cliffside underground mine that was discovered in 1956, and brought into production in 1960. The Cliffside mine was one of
the last underground mines to operate in the district and was closed in 1985. According to McLemore and Chenoweth, 1991, total production from the mine has been reported to be over 6 million
pounds of U
3
O
8
at an average grade of 0.41% U
3
O
8
. Data in Neutron's possession, as well as the results from Neutron's confirmation drilling program,
demonstrate that the West Endy uranium mineralized area extends onto the northeast portion of the New Mexico general mining lease.
West Endy Mineral Interests
Claim Group
BLM/State Serial Numbers
Count
Acreage
ZAC
NMMC-172966 to 172977
12
243.8
ENDY
NMMC-171172 to 171231, 171262 to 171264, 171267, 171292 to 171327, 171332 to 171333, 190103 to 190107
107
2,142.2
N.M. State Lease
HG-0078-1
1
640.0
120
3,026.0
Figure 10.
West Endy Target (March 2011)
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Mesa Redonda Target
The Mesa Redonda target is on the western edge of the Ambrosia Lake mining district is believed to host several discrete uranium
mineralized areas in the Poison Canyon sandstone unit of the Morrison Formation. Detailed exploration drilling was carried out in the Mesa Redonda area by Pathfinder Mines, Devilliers Nuclear,
Homestake Mining/UNC Resources and private interests in the 1970's and early 1980's. This work resulted in the discovery of uranium mineralization on the properties held by Neutron.
Mesa Redonda Mineral Interests
Claim Group
BLM/State Serial Numbers
Count
Acreage
ALTOS
NMMC-171917 to 171934, 173129 to 173160, 173162, 173164
52
987.6
BRK
NMMC-172749 to 172774, 173165 to 173176
38
760.3
90
1,747.9
West Ranch Target
The West Ranch target, which is on the western part of the Ambrosia Lake mining district, is comprised of 223 lode mining claims that
were acquired as part of the Powertech transaction discussed below in the subsection entitled "
Description of Properties—South Dakota
."
In
the vicinity of these claims are several small-scale uranium mines that are reported to have operated in the 1950's and 1960's. Additionally there is considerable evidence of
exploration conducted by Energy Fuels Nuclear, Phillips Petroleum and United Nuclear during the 1970's. The mineralization outlined in the area in the 1970's is situated in sandstones of the Brushy
Basin Member of the Morrison Formation. Several of the former uranium mines are situated in close proximity to Neutron's mining claims, and there is evidence that some exploration drilling was
conducted on the properties now controlled by Neutron. Data pertaining to the historical exploration programs are not currently available to the Company.
West Ranch Mineral Interests
Claim Group
BLM/State Serial Numbers
Count
Acreage
PTI
NMMC-174518 to 174534, 174541 to 174543, 174465 to 174474, 174535 to 174540, 174544 to 174610, 174612 to 174629
121
2,277.1
ELK
NMMC-174663 to 174716, 174630, 174611, 174723 to 174768
102
1,840.0
223
4,117.1
Mineralized Material
In accordance with SEC guidance materials on non-reserve mineralized material, we show the estimate of in-place
mineralized uranium material for our Ambrosia Project in the following table. The estimate of mineralized material for each of the mineralized areas listed below was obtained from the Technical Report
on the Uranium Resources at The Ambrosia Lake Project, McKinley County, New Mexico, USA. The technical report is dated January 18, 2011 and was completed by Broad Oak Associates, an independent
engineer.
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Additionally,
as described in the Technical Report on the Uranium Resources at Ambrosia Lake Project, we have historical reports that show the mineralized areas in this project contain
non-reserve mineralized material listed in the table below. The calculation of mineralized material was prepared by prior mining companies and is considered historical in nature and no
other calculations have yet been completed because the digital data base has not been prepared for modeling.
SUMMARY OF IN-PLACE NON-RESERVE MINERALIZED MATERIAL
IN THE AMROSIA LAKE PROJECT
Mineralized Area
Tonnage
Millions
Grade
Percent
Elizabeth
1.1
0.19
Mesa Redonda
0.7
0.16
West Endy
1.4
0.11
Environmental and Permits
Exploration and mining activities conducted on lands managed by the USFS and BLM are governed by agency rules and regulations.
Additional permits are required from the MMD. The BLM, USFS and MMD entered into a Memorandum of Understanding (MOU), effective January 20, 2004, to provide for cooperation between the agencies
and elimination of duplication of efforts between the agencies in the assessment and processing of exploration and mining permit applications. In addition to the requirements for permits to conduct
exploration and mining activities, the State requires that all drill holes be "plugged" to prevent contamination of ground water aquifers or communication between aquifers.
The
properties are located in the historic Grants mineral belt. There are no known environmental issues affecting the Ambrosia Lake Project properties.
We
have a permit to drill 28 drill holes at the Elizabeth target.
Neutron
formerly held a "minimal impact" exploration permit (MK013EM), issued by the MMD on February 21, 2007 for drilling on Section 36, Township 14 North, Range 9 West,
McKinley County, New
Mexico, the location of the inactive Cliffside mine. Neutron carried out a drilling program at this area (which covers a portion of the West Endy uranium mineralized area), as outlined in this permit.
All of the drill holes in Neutron's drilling program were completed, "plugged" and abandoned in compliance with applicable State regulations, and under supervision of the New Mexico regulatory
authorities. All surface disturbances related to this work program were reclaimed in compliance with applicable State rules and regulations, and this work has been inspected and found to be in full
compliance with the applicable regulations.
SOUTH DAKOTA
We initiated an exploration and acquisition program in southwestern South Dakota in 2005. We identified two areas of interest, as
described below. Through 2010 we have spent $1.7 million in South Dakota. We do not consider any of our South Dakota property interests to be material to our business and plan of operations.
Powertech Uranium Corp Transaction
We hold a 30% net proceeds interest from future uranium production from certain unpatented lode mining claims, fee leases and State
leases (all formerly held by Neutron) currently controlled by Powertech Uranium (USA) ("Powertech") in the Dewey-Burdock area, which is located approximately six miles (9.7 kilometers) northwest of
our current Edgemont Project property holdings in South
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Dakota.
We transferred our property interest in the Dewy-Burdock area to Powertech for which we received (i) a 30% net proceeds interest of future uranium production and sales from
our former lands, (ii) 327 acres (132 hectares) of mining claims and state leases along with associated historical drilling logs near our Edgemont Project, (iii) 4,117acres (1,666
hectares) of mining claims in the Ambrosia Lake mining district in New Mexico, and (iv) 1,708 acres (691 hectares) of mining claims and leases in the Shirley Basin area of Wyoming. Powertech
has filed permit applications with the NRC and EPA and submitted a Plan of Operation to the BLM for its Dewy-Burdock uranium in-situ recovery project.
Our
former acreage that is subject to the 30% net proceeds interest payable to us consists of approximately 1,620 acres (656 hectares) of claims and leases within the Powertech's
proposed Dewy-Burdock permit area and an additional 4,667 acres (1,888 hectares) of prospective
claims and leases adjacent to their project permit area. This acreage has historical drilling and adds future development potential to the project.
Edgemont Project
General
Neutron controls a significant land position in the Edgemont mining district of southwestern South Dakota. The Company's land holdings
in the district, which include more than 19,062 acres (7,714 hectares) of mineral rights, cover several zones of historically-identified and undeveloped uranium mineralization. The properties hold
good potential for the discovery of additional uranium mineralization. While there has been historic uranium mining from the project area (see history below), there are no facilities or equipment
remaining on the property, including subsurface improvements and equipment.
Mining Leases and Unpatented Lode Mining Claims Descriptions
The Edgemont Project is located on the southwest flank of the Black Hills, about 55 miles (88.5 kilometers) southwest of Rapid City,
South Dakota and 8 miles (12.9 kilometers) north-northwest of the city of Edgemont. The Company holds 11 State of South Dakota mineral leases, totaling 3,875 acres (1,568 hectares). These parcels were
acquired through various competitive lease auctions in 2005, 2006, 2007, and 2008. The leases require annual rental payments to maintain the properties, and a 2% "gross returns" royalty (which has
provisions for the deduction of mineral processing and transportation costs) on production from the property. The state leases provide for up to a 15 year term with escalating annual payments
that range from the current $2.00 per acre to $50.00 per acre in year 15.
Neutron
also holds 416 unpatented lode mining claims, covering an area of approximately 7,087 acres (2,868 hectares) in the project area. Certain of the Company's mining claims in the
project area are situated on deeded (fee) surface over federal-managed minerals. Neutron has acquired access to these "split estate" lands for exploration and production purposes by negotiating
Surface Use and Disturbance Agreements (SUDA's) with the surface owners of the properties. The SUDA agreements have provisions for the payment of a 2% net proceeds royalty to the surface owners for
any production
from the claims that underlie the private surface. The Company holds 14 fee (deeded) mineral leases covering 8,100 net acres (3,278 hectares) within the project area. These leases have primary terms
of ten years each and generally require $1.00 per acre annual rental payments. Production royalties on the private mineral parcels are set at the level of 5% of net proceeds for production from the
leased lands.
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Edgemont Mineral Interests
Claim Group
BLM/State Serial Numbers
Count
Acreage
DRIFTWOOD
SDMMC-215674 TO 215691
18
327.2
NE
SDMMC-215322 to 515330, 215270 to 215288, 215270 to 215288, 215291 to 215293, 215467 to 215523, 216753 to 216780, 216353 to 216366, 216781,
216367 to 216384, 216782 to 216793, 216385 to 216431, 217397 to 217413, 216890 to 216935, 216938 to 216943, 217506 to 217538, 218037 to 218038, 217539 to 217553, 218039 to 218040, 217554 to 217578, 218555 to 218564, 218905 to 218910, 218877 to
218904
398
6,759.8
State Leases-SD
No. 27RC072095 to 27RC072096, 27SL072097 to 27SL072098, 27RC072099 to 27RC072102, 27SL072103 to 27SL072105
11
3,875.4
Fee mineral leases
14
8,100.0
441
19,062.4
Figure 11.
Edgemont Project Property Map (March 2011)
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Accessibility, Climate, Local Resources, Infrastructure and Physiography
The Edgemont Project is located in Fall River County on the southwestern flank of the Black Hills, a major physiographic feature in
southwest South Dakota. Access to the project area is very good, with paved highways located several miles to the west and south, and by well maintained gravel roads that traverse much of the area.
Private agricultural access roads are also available for use. U.S. Highway 18 runs east-west through Edgemont, and connects the area with Newcastle, Wyoming to the west and with Hot
Springs, South Dakota to the east. The nearest major population center and airport is at Rapid City, located about 55 miles (88.5 kilometers) to the northeast of the project area. A main line of the
Burlington Northern Santa Fe Railroad, connecting Alliance, Nebraska and Gillette, Wyoming is situated on the western side of the project area.
The
terrain in much of the project area is gentle, at an elevation of approximately 3,700 feet (1,127 meters) above sea level. The topography is modified somewhat by hills and ridges
that stand as much as 500 feet (152 meters) above the surrounding countryside. Sparse to moderate grasses and sage are the dominant vegetation, with stands of juniper and ponderosa pines on the hills.
Average
temperatures range from 20° Fahrenheit (-6.7° Celsius) in January to more than 70° Fahrenheit (21.1° Celsius) in July.
Precipitation is lower than the United States' average, ranging from less than one inch (25 millimeters) in January to a maximum of 2.5 inches (64 millimeters) in May and June. March is the snowiest
month with snow totals averaging approximately nine inches (229 millimeters).
The
town of Edgemont is located within two miles (3.2 kilometers) of the southern boundary of the project and major high voltage electric power lines serve the town. Electrical power
lines also cross the project area. Mining and milling of uranium ores were previously conducted in the area.
History
Uranium mineralization was first discovered at Craven Canyon, about eight miles (12.9 kilometers) north of the town of Edgemont, in
1951. During the 1950's, 1960's, and 1970's numerous small to medium scale uranium mineralized areas were mined by open pit and underground methods near Edgemont, and farther northwest in the
Dewey-Burdock area.
Ore
from these modest mining operations in the Black Hills was initially shipped to the Union Carbide mill at Rifle, Colorado, and later to a U.S. Atomic Energy Commission
ore-buying station located at Edgemont. In response to increasing local and regional (including the northern Black Hills and the southern Powder River Basin) mine production
Susquehanna-Western, Inc., constructed a mill to recover uranium and vanadium in 1956 and it operated through 1968. The mill has since been decommissioned and dismantled, and the mill site is
managed by the Department of Energy under the Uranium Mine Tailings Radiation Control Act program. Total production from the mill was approximately 5 million pounds of uranium; however, more
than half of this production, or about 3.1 million pounds of uranium and 4.4 million pounds vanadium, was derived from ores produced from mines in the northern Black Hills and the Powder
River Basin.
In
the mid-to late-1970s and early 1980's, the Tennessee Valley Authority (TVA) carried out a comprehensive exploration drilling program down-dip
(west and southwest) from mines, prospects, and surface exposures of uranium in the Inyan Kara Group in the Dewey-Burdock area. The results of this program (along with earlier and concurrent
exploration drilling programs in the Edgemont district by Federal Resources, Homestake Mining Company, Susquehanna-Western, Union Carbide, and Wyoming Minerals) outlined numerous roll front systems in
several sandstone units of the Lakota and Fall River Formations. The properties comprising Neutron's Edgemont Project were previously held by several other companies, and were part of the historical
mineral exploration programs outlined above.
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Geology and Mineralization
The Edgemont Project is situated on the southwestern flank of the Black Hills Uplift, a north to north-northwest trending arcuate,
elongate, and asymmetric anticline that is situated in western South Dakota, northeastern Wyoming and southeastern Montana. The uplift extends in a north-northwest direction for a distance of 160
miles (257.5 kilometers), and is about 50 miles (80.5 kilometers) wide. The Paleozoic and Mesozoic sediments that flank the uplift dip outward, away from the Precambrian crystalline and
metasedimentary rocks that are the core of the uplift. In the vicinity of the Edgemont Project the sedimentary rocks dip to the west and southwest toward the Powder River Basin, and southward toward
the Crawford Basin.
Uranium
and vanadium mineralization in the Edgemont Project area occurs as sandstone-hosted small, tabular mineralized "pods" (especially in areas close to the outcrops of the host
rocks), and substantial and wide-spread roll front systems in the Fall River and Lakota Formations down-dip of the near surface uranium occurrences.
Uranium
mineralized areas in the Edgemont mining district, which includes the mineralization at Neutron's Edgemont Project, are hosted in lower Cretaceous-aged sandstones of
the Fall River and Lakota Formations. The individual uranium mineralized areas take the form of either small "pod-like" bodies of mineralization usually in close proximity to the regional
outcrop of the Fall River and Lakota Formations, and as extensive roll-front mineralized areas that are situated down-dip of surface occurrences (pod-like
mineralized areas) of mineralization.
Mineralized Material
In accordance with SEC guidance materials on non-reserve mineralized material, we show the estimate of in-place
mineralized uranium material for our Edgemont Project. The estimate of mineralized material was obtained from the Technical Report on the Uranium Resources on The Edgemont Project, Fall River County,
South Dakota, USA. The technical report is dated January 18, 2011 and was completed by Broad Oak Associates, an independent engineer. All of the mineralized material estimates quoted in the
Technical Report on the Uranium
Resources on the Edgemont Project are historical in nature, and were based on data and reports prepared by the previous operators of the properties or their independent consultants. As described in
the Technical Report we have historical reports that show our Edgemont Project area contains 197 thousand tons of mineralize material at an average grade of 0.17%.
WYOMING
Copper Mountain Project
General
Neutron controls a significant land position in the Copper Mountain area of central Wyoming. The Company's land holdings in the area,
which include approximately 9,313 net acres (3,769 hectare) of mineral rights, cover several zones of historically-identified and undeveloped uranium mineralization. The properties hold good potential
for the discovery of additional uranium mineralization. We do not consider our Copper Mountain Project to be material to our business and plan of operations.
Mining Leases and Unpatented Lode Mining Claims Descriptions
We control approximately 9,313 net acres (3,769 hectares) of mineral rights, through mining claims, fee leases, and mineral leases
granted by the State of Wyoming, in the Copper Mountain area of central Wyoming. Included in this package of properties are six "Uranium and Associated Minerals" leases granted by the State of Wyoming
covering 2,200 acres (890 hectares), 17 fee (deeded) mineral leases covering an area of 644 net acres (261 hectares), and 366 unpatented lode mining claims
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covering
an area of approximately 6,468 acres (2,618 hectares). The state leases have a primary term of ten years. Annual rental payments of $1.00 per acre per year are for the first five years and
$2.00 per acre per year from the sixth year through the twentieth year. Once the discovery of commercial quantities of minerals on the leased lands has been made, the annual rental will be $2.00 per
acre. A royalty of 5% of the gross value ("fair market value") of uranium mined from the properties is payable to the State of Wyoming, and the State has the right to take its royalty "in kind."
Through 2010 we have spent $760,000 on the Copper Mountain Project. There are no plant facilities or equipment located on the property, including subsurface improvements and equipment.
Copper Mountain Mineral Interests
Claim Group
BLM/State Serial Numbers
Count
Acreage
ARROW
WMC-154410 to 238811
2
34.4
CM
WMC-295655 to 295803, 282107 to 282160
203
3,619.7
DH
WMC-281914 to 281931
18
320.0
DL
WMC-282161 to 282242, 285346 to 285381
118
2,054.5
LC
WMC-282243 to 282267
25
440.0
Fee mineral leases
17
643.9
State Leases-WY
No. 0-41262 to 0-41264, 0-42208, 0-42232 to 0-42233
6
2,200.0
389
9,312.5
Figure 12.
Copper Mountain Project Map (March 2011)
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Accessibility, Climate, Local Resources, Infrastructure and Physiography
The Copper Mountain Project is situated in foothills on the southeastern flank of the Owl Creek Mountains of north-central Wyoming. The
property is located approximately 35 miles (56.3 kilometers) east-northeast of the city of Riverton, which is the county seat of Fremont County, and about 70 miles (112.7 kilometers) west
of the city of Casper. The elevation of the Copper Mountain Project area ranges from 5,500 to 6,400 feet (1,676 to 1,951 meters) above sea level. The climate of the region is typical of the
intermontane basins of the Rocky Mountain region of the western United States. It is semi-arid, with a mean annual precipitation rate of approximately 8 inches (203 millimeters) and an
average annual temperature of 43
o
Fahrenheit (6.1
o
Celsius). Climatic conditions at Copper Mountain are such that exploration and mining activities can be reasonably
conducted during all twelve months of the year, with only short interruptions for wet and muddy ground conditions due to summer thunderstorms or occasional winter snow storms.
Access
to the Copper Mountain Project is good. An east-west paved highway (US 20-26) between Riverton and Casper is located 14 miles (22.5 kilometers) south of
the project area, and a north-south paved highway (US 20), between the towns of Shoshoni and Thermopolis is located 11 miles (17.7 kilometers) west. The immediate project area is accessible from a
network of graded county roads and unimproved ranch roads which traverse a broad valley along the south flank of the Owl Creek Mountains and enter the mineralized areas from the south.
History
The Copper Mountain district hosts five significant low-grade uranium mineralized areas, hosted primarily in
Precambrian-aged granite, syenite, and metamorphic rocks and in clastic sediments of Tertiary age. The Copper Mountain area has had a long history of exploration, prospecting, and minor
mineral production, beginning in the late 1800's. This initial phase of prospecting activity was focused upon copper, gold and silver prospects. Uranium mineralization was first discovered in the
Copper Mountain area in 1953 by a local rancher-prospector, at a locality that was later to become the Arrowhead Mine. Additional work was conducted in the area by Kerr McGee, who discovered
mineralization in the district in 1953 and in 1955 by the U. S. Atomic Energy Commission, both of whom drilled a number of holes to test potential targets in sediments of the Tertiary-aged
Tepee Trail formation/Wagon Bed Formation. Uranium mining commenced at the Arrowhead Mine of Susquehanna Western in March, 1955, and ore was shipped to Susquehanna's mill near Riverton, Wyoming
periodically until 1971, when the mine was closed. Utah Construction and Mining discovered the Fuller mineralized area in the late 1950's, and in 1965 Kerr McGee discovered the Knob mineralized area.
Other companies that carried out uranium exploration programs in the Copper Mountain area include the Anaconda Copper Company, Nuclear Dynamics, Teton Exploration, Urania Exploration, and Western
Nuclear.
The
most comprehensive exploration program in the Copper Mountain Project area was undertaken by Rocky Mountain Energy Company, previously known as Union Pacific Mining, which acquired
several claim blocks in the district in 1969. They completed a feasibility study in the late 1970's after extensive drilling and metallurgical testing and considered building a mill. Their program was
terminated due to the low uranium price subsequent to the feasibility study.
Geology and Mineralization
Uranium mineralization at the Copper Mountain Project occurs in two distinct geologic environments: fracture-controlled uranium
mineralization hosted in Archaean-aged granite, syenite, isolated occurrences along the margins of diabase dikes, and in association with meta-sediment inclusions in granite;
and as disseminations in
coarse-grained sandstones and coatings on cobbles and boulders in the Tertiary-aged Wagon Bed Formation at the Arrowhead Mine and other localities.
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The
Company's exploration activities on the Copper Mountain properties have been limited to geologic examination of surface exposures of uranium mineralized areas and zones of altered
granite and sandstones on the properties.
ARIZONA
In 2006, we undertook an exploration and acquisition program for breccia pipe hosted uranium mineralized areas in northern Arizona.
Breccia pipe uranium mineralized areas represent some of the highest grade uranium mineralized areas in the United States. Several of the targets we acquired had evidence of historical drilling by
several companies that were primarily active in the late 1970's and 1980's, including Energy Fuels, Energy Reserves Group, Pathfinder Mines and Rocky Mountain Energy Company.
Breccia
pipes in northern Arizona were formed as the result of the collapse of dissolution caverns in the Redwall Limestone. This collapse formed pipes containing broken sedimentary rock
which in turn provided an excellent setting for uranium deposition.
In
2009, we terminated our breccias pipe exploration activities and transferred certain properties, in two separate transactions, to VANE Minerals Company and Arizona Strip
Partners LLC. We transferred 2,738 acres (1,108 hectares) to VANE Minerals (US) LLC and reserved a 2% royalty, unless production is from a state lease with a base royalty greater than
5%, then the royalty is reduced to 1%. We transferred 160 acres (65 hectares) to Arizona Strip Partners LLC, a venture between Energy Fuels and Royal Resources from Australia and reserved a 2%
royalty. In both transactions we have the option to back-in for a 30% interest after a feasibility study has been completed. We do not consider these residual mineral interests to be
material to our business and plan of operations.
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LEGAL PROCEEDINGS
From time to time, we are engaged in legal proceedings in the ordinary course of business. We are not a party to any pending legal
proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations and we are unaware of any such
proceedings being contemplated by any governmental authorities.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The table below sets forth information about our directors and executive officers as of March 24, 2011.
Name
Age
Position With Company
Kelsey L. Boltz
81
Executive Chairman of the Board of Directors
Gary C. Huber
59
President, Chief Executive Officer and Director
James J. Graham
64
Director and independent contractor
John K. Campbell
78
Director
Jerry Nelson
80
Director
Henry G. Grundstedt
82
Director
Richard Mallery
73
Director
Carolyn C. Loder
58
Director
Edward M. Topham
53
Chief Financial Officer, Treasurer and Secretary
Mark J. Ludwig
55
Vice President of Operations
Mike R. Neumann
57
Vice President of Environmental Services
Term of Office
All of our directors hold office until the next annual meeting of our stockholders or until their successors are elected and qualified,
unless his office is earlier vacated in accordance with the Bylaws of the Company, or with the applicable provisions of the Nevada Corporations Act. Our officers are appointed by our Board of
Directors and hold office until the expiration of their employment agreement, if such officer has entered into an employment agreement with the Company, or their earlier death, retirement, resignation
or removal. Each of Messrs. Boltz and Huber entered into a two year employment agreement with the Company that expires on October 28, 2011. Each of Messrs. Ludwig, Neumann and
Topham entered into a one year employment agreement with the Company that expires on September 30, 2011.
The
following is a description of the business background of the directors and executive officers of the Company.
Kelsey L. Boltz, P.E., P. Geol., C.P.G.
Mr. Boltz founded the Company and has served as a director since our inception in March
2005 and as
our Executive Chairman since August 2007. Mr. Boltz served as our President and Chief Executive Officer from our inception to August 2007. In 1982, Mr. Boltz co-founded
Century Capital Corporation, a venture capital and retail brokerage firm which provided several hundred million dollars for companies in various industries, including the minerals industry. In 1954,
Mr. Boltz founded Colamer Corporation and was responsible for the discovery and production of several uranium deposits in the Grants District of New Mexico. During the 1970's, Mr. Boltz
was President and Chief Executive Officer of Nuclear Dynamics, Inc., a publicly held company, which conducted uranium exploration and development programs as joint venture partner with such
companies as Bethlehem Steel, Phillips Petroleum, Conoco and Cleveland Cliffs Iron Company. From April 2005 to September 2009, Mr. Boltz served as a director of Exmin
Resources, Inc., a publicly traded gold exploration company. Mr. Boltz has considerable experience in corporate structure and integration, uranium mining business startup and
development, mergers and acquisitions, and strategic planning. Mr. Boltz has over 50 years experience in the minerals industry and specifically in the
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uranium
mining industry. Mr. Boltz graduated from the Colorado School of Mines with the Professional Degree of Geological Engineer in 1953.
The
Board determined that Mr. Boltz should serve as a director due to his extensive experience in uranium mining business startup and development and business and executive
management.
Gary C. Huber, Ph.D.
Dr. Huber has served as our President and Chief Executive Officer and a director since August 2007. From
October 2006 to
August 2007, Dr. Huber served as a manager of IRC Capital Group, an investment arm of International Royalty Corporation (subsequently merged into Royal Gold Inc.). In 1979,
Dr. Huber helped found Canyon Resources Corporation (recently merged with Atna Resources Ltd.) for the purpose of uranium exploration in the western United States. From 1979 to January
2006 he held various positions with Canyon Resources, including director, Chief Financial Officer, and Vice President of Finance. His responsibilities included financing three open pit gold mines, two
mergers with public entities, Canyon Resources' initial public offering, several secondary share offerings and numerous mineral property acquisitions and exploration and development joint ventures.
From 1988 to 1998, Dr. Huber was also President and Chief Executive Officer of Canyon Resources' industrial minerals subsidiary, CR Minerals, which produced and sold functional fillers and
specialty products through a nationwide distributor network. Prior responsibilities in the 1970's included uranium property acquisition, mine development and uranium production and sales to regional
mills from three underground mines for Energy Reserves Group in the central Colorado Plateau area. Since August 2010, Dr. Huber has served as a director of Capital Gold Corporation, a publicly
traded company listed on the NYSE Amex. Dr. Huber is a mining company executive with over 35 years of diversified natural resource experience and holds a Ph.D. from the Colorado School
of Mines.
The
Board determined that Mr. Huber should serve as a director due to his extensive experience in the resource industry and in mining operations, coupled with his business and
executive management experience.
John K. Campbell.
Mr. Campbell has served as a director since January 2006. Since June 2008, Mr. Campbell has served as
President of
Teslin Mines Ltd., a private company. From May 1986 to June 2008, Mr. Campbell served as President of Trans America Industries Ltd ("TSA"), and was responsible for TSA's
participation in the Burnt Timber gold project in Manitoba, which was subsequently brought into production by Cazador Explorations. In addition, Mr. Campbell was responsible for TSA's
participation in the Aguas Blancas property in Chile, which is now among the largest producers of iodine in the world. In June 2008, through an amalgamation, TSA became Primary Corp.
Mr. Campbell resigned as President and has continued as a director since June 2008. Primary Corp. currently holds 24.5% of the issued and outstanding common stock of the Company at the time
immediately prior to this offering. Mr. Campbell currently serves as a director of Primary Corp. and Envoy Capital Group Inc. He also served as a director of American Natural
Energy Inc. from April 2000 to November 2010, AMG Oil Ltd. from March 2006 to July 2009, Exmin Resources Inc. from April 2005 to July 2008 and Gleichen Resources Ltd. from
April 2007 to June 2009. Mr. Campbell received his Juris Doctor from the University of British Columbia in 1960 and practiced law from 1970 to 1985.
The
Board determined that Mr. Campbell should serve as a director due to his legal background and extensive experience in the natural resource industry, as well as his experience
in capital formation in Canada.
Jerry Nelson.
Mr. Nelson has served as a director since August 2006. Mr. Nelson, retired, served as the President of Pinnacle
Peak Land
Company and Pinnacle Paradise from 1970 to 2000. Through these entities and their affiliates, he has, since 1971, developed Pinnacle Peak Village, Pinnacle Peak Country Club and Shopping Plaza, Troon
Village and Troon Golf & Country Club, Troon North and Troon North golf course. Current developments are proceeding in Scottsdale and Prescott, Arizona and
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Cabo
San Lucas, BCS, Mexico. Additionally, Mr. Nelson co-founded TicketMaster. Mr. Nelson has also funded the creation and startup of numerous companies, including Simulnet,
Video Electronics, Antenna Technology Corporation and Technology Control Services. Mr. Nelson was appointed by Arizona Governor Bruce Babbitt to the Urban Lands Advisory Commission in the early
1980's and, in 1997, was inducted into Scottsdale's History Maker Hall of Fame.
The
Board determined that Mr. Nelson should serve as a director due to his extensive real estate, leadership and executive management experience.
Henry G. Grundstedt.
Mr. Grundstedt has served as a director since August 2008. Mr. Grundstedt retired in 1999. From 1992 to
1999 he
served as a consultant to Capital Group, Inc., a resources fund manager with over $1.2 trillion in assets. From 1972 to 1990, Mr. Grundstedt served in various positions at Capital
Guardian Trust Company, a money manager of pension and mutual funds, including Senior Vice President from 1985 to 1990. Mr. Grundstedt specialized in investments in the mining and metals
industry and was responsible for global resources related investments. From 1962 to 1972, Mr. Grundstedt was the Publisher of the World Mining Magazine, a global technical journal devoted to
metals & mining. From June 1992 to June 2001, Mr. Grundstedt served as a Member of the Board of Directors for Homestake Mining. He also served as a director of Emerging Market Gold Fund
from 1992 to 1994 and AZCO Mining Corporation from 1993 to 1995. He is a registered Professional Engineer (Mining) and graduated from the University of Arizona in 1951, with graduate studies at the
Colorado School of Mines, and San Francisco State University.
The
Board determined that Mr. Grundstedt should serve as a director due to his extensive experience in natural resource investment management, industry knowledge and board
experience.
James J. Graham.
Mr. Graham has served as a director of the company since February 2011. From April 2009 to the present he has
served as the
Chief Executive Officer of Nuclear Fuel Cycle Consulting LLC, which provides services for the front end of the nuclear fuel cycle. From June 1993 to March 2009, he served as President and CEO
of ConverDyn, a partnership between Honeywell International and General Atomics where he managed the global marketing of uranium conversion services and oversight of Honeywell's Metropolis Facility in
Metropolis, Illinois. ConverDyn was one of only four primary uranium converters in the world. During this time, from October 1992 to January 2004, Mr. Graham was also a Senior Vice President of
General Atomics and responsible for the company's nuclear fuel cycle activities. He was responsible for developing the Beverley ISL uranium mine in South Australia over a four and a half year period.
Beverley was the first insitu leach (ISL) in Australia and was able to reach mining agreements with both the Native Title groups and the South Australian government. As senior management for General
Atomics, he oversaw the acquisition and uranium operations in Colorado, Texas and New Mexico. From 1983 to 1992, Mr. Graham was the President and Chief Operating Officer for NUEXCO Trading
Company, a large uranium trading and brokerage group.
Mr. Graham
has held 18 board positions in the industry and educational institutions. From June 1993, Mr. Graham served as a Director for the ConverDyn Partnership. From
October 1992 to January 2003, he served as Director and CEO of Nuclear Fuels Corporation. From March 1996 to January 2003, he served as Managing Director and CEO of Heathgate Pty Ltd.
Mr. Graham also served as Managing Director and CEO of Quasar Resources PTY Ltd from January 2000 to January 2003, as Chairman of Cotter Corporation from February 2000 to January 2003,
and as Chairman and CEO of TRIGA Technologies, Inc. from 1998 to 2001. He has held number third party board positions, including: Nuclear Energy Institute from 2007 through 2009, World Fuel
Marker from 1998 through 2003, Nuclear Fuel Supply Forum of the NEI from 1998 through 2001, Michigan Tech Fund Board from 1990 through 1999, Ventures Trident Gold from 1985 through 1992, and
St Mary's Academy from 1995 through 2003.
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Mr. Graham
has 40 plus years of experience in the mining and energy industries and the last 27 years of his experience were in the nuclear fuel industry.
Mr. Graham's experience also covers mining in potash, coal, gold and uranium using insitu leach, open pit and underground methods as well as building, operating and supervising processing
plants, milling and insitu leach recovery facilities, evaluation, acquisition, design and construction, operation, management and trouble shooting for the various types of properties and facilities.
Mr. Graham also Co-Chaired the World Nuclear Association's 2007 Global Nuclear Fuel Market study in London. Mr. Graham received his bachelor's degree in metallurgical/mining
engineering in 1970 from Michigan Technological University.
The
Board determined that Mr. Graham should serve as a director due to his extensive nuclear industry, executive management and board experience.
Carolyn C. Loder.
Ms. Loder has served as a director since February 2011. Ms. Loder has served as a Senior Land Manager for
Lafarge
North America since April, 2008, where she is responsible for strategic planning, acquisitions and divestments regarding aggregates, ready mix and asphalt operations. From February 1997 to February
2008, she served as an Acquisitions Manager for Vulcan Materials Company where she oversaw the construction of the Agua Fria River Flood Control Levee to remove mined and un-mined lands
from floodplain jurisdiction and alleviate long term flood hazards and acquired an aggregate lease on Tribal lands in New Mexico through a landmark land exchange between multiple federal governmental
agencies and tribes and resolved 400-year old ancestral tribal land claims to allow mining. From 1988 to 1996, Ms. Loder also served as the President and a Vice President of Sonora
Mining Corp., which operated a large open pit gold flotation mining & mining facility in North America with annual gold production of 100,000 ounces and average mine production of 35,000 tons
per day. From 1978 to 1987, she served as an executive director for the Merced County Association of Governments where she directed land use, air quality, water, transportation and safety programs for
multiple governmental agencies. During that time she also oversaw a $100,000,000 Army Corps of Engineer's Flood Control Project and was responsible to review authority on $100,000,000 annually in
transportation funding. Ms. Loder has been a director of the New Mexico Mining Association since 1999 and Arizona Rock Products Association since 2009 and has Chaired the New Mexico Mining Hall
of Fame since 2005. Ms. Loder has received numerous awards including New Mexico Mining Association's Marvin Watts/Doc Weiler Award for Professionalism in 2011, the Lafarge Award for Reserve
Acquisitions in 2009 and 2010, National Association of Women in Construction's Person-of-the Year for Lifetime Achievements in 2010, and Santo Domingo Pueblo's Outstanding
Support and Dedication to the Tribe award. Ms. Loder received an M.A. and B.A. in geography with a minor in geology from California State University in 1977, and will receive a Masters of
Native American/Indian Law from Arizona State University, Sandra Day O'Connor School of Law in May 2011.
The
Board determined that Ms. Loder should serve as a director due to her extensive natural resource industry, executive management and Native American knowledge and experience.
Richard Mallery.
Mr. Mallery has served as a director since February 2011. Mr. Mallery is a senior partner with
Snell &
Wilmer LLP, a law firm he joined in 1964. Since 2001, Mr. Mallery has served as the founding chair and Chief Executive Officer of The International Genomics Consortium, which was the
driving force behind the creation of the Translational Genomics Research Institute and the Biodesign Institute of Arizona State University. He has been a member of the Council on Foreign Relations in
New York since 1977. He was a member of the Board of Overseers for the Hoover Institution of Stanford University from February 1994 to December 2008. Mr. Mallery is the recipient of numerous
awards and recognitions including Southwest Super Lawyer, Law & Politics Magazine in 2008, The Business Journal's 25 Leaders and Legends of Phoenix Over the Past 25 Years in 2005, Phoenix
Community Alliance's Leadership Award, in 2004, Valley Leadership's Man of the Year in 2003 and THE BEST LAWYERS IN AMERICA® from 2003 to 2006 and WHO'S WHO IN THE WORLD®.
Mr. Mallery received a J.D. from Stanford Law School in 1963, an M.A for Cornell University in 1960 and a B.A. from DePauw University in 1959.
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The
Board determined that Mr. Mallery should serve as a director due to his extensive legal experience as a practicing attorney and executive skills and experience.
Edward M. Topham.
Mr. Topham has served as our Chief Financial Officer, Treasurer and Secretary since September 2005. From April
2004 to
December 2005, Mr. Topham served as chief financial officer of Stenberg Welding and Fabricating, Inc., a Minnesota based manufacturing company. From December 1997 to April 2004,
Mr. Topham was a self employed consultant providing business and financial advice. From 1994 to 1997, Mr. Topham served as chief financial officer and director of Freemont Gold
Corporation, a publicly held gold exploration company with operations in Chile and chief financial officer and director of Laminco Resources, Inc, a publicly held gold exploration company with
operations in Mexico. From 1988 to 1994, Mr. Topham served as chief financial officer and director of Action Performance Company, Inc., an NYSE listed manufacturer of NASCAR related
collectables and president of ILX, Inc., publicly held vacation resort developer. From 1984 to 1988, Mr. Topham served as vice president of corporate finance for Fitzgerald,
DeArmen & Roberts, Inc., a regional investment banking and securities brokerage firm, where his responsibilities included the supervision and management of the firm's public offerings,
private financings and merger activities. From 1982 to 1984, Mr. Topham worked as an associate for KPMG Peat Marwick, an international public accounting firm. Mr. Topham has more than
26 years experience in accounting and corporate finance and has acted as agent or principal in numerous finance transactions and has served as a senior officer in several private
companies that he ultimately brought to the public markets. Mr. Topham graduated with a B.S.B.A., majoring in accounting and finance, from the University of Arizona in 1982.
Mark J. Ludwig, P.E.
Mr. Ludwig has served as our Vice President of Operations since August 2008. From January 2005 to August 2008,
Mr. Ludwig held various positions with Hecla Mining Company, including that of Manager of Corporate Development. His responsibilities at Hecla included underground mine development and
production in Venezuela and evaluation for acquisition of both existing mining operations and development projects in Latin America. From September 1989 to December 2004, Mr. Ludwig held
various management and senior engineering positions related to underground mine development and production with BHP Billiton. Responsibilities with BHP included development of the underground Redstone
nickel mine in Canada, feasibility and construction of San Juan underground mine in New Mexico and feasibility and construction of the underground Panda Mine in Canada. Prior to his tenure with BHP
Billiton, Mr. Ludwig held positions with Moylcorp Minerals at the Questa Mine and Climax Metals at the Henderson and Climax mines. Mr. Ludwig has over 35 years of diverse
experience in the mining industry. Mr. Ludwig graduated from the Colorado School of Mines with a degree in mining engineering and is a registered Professional Engineer in the State of New
Mexico. Mr. Ludwig received a Masters in Business Administration from Regis University in 2006.
Michael R. Neumann.
Mr. Neumann began with Neutron in March 2007, and has served as our Vice President of Environmental Services
since October
2008. From April 2006 to March 2007, Mr. Neumann served as President of Neumann Environmental Services, Inc., which provided environmental consulting services to Neutron. From October
2005 to April 2006, Mr. Neumann served as Land Use Director for Rio Blanco County. From 2001 to October 2005, he served as Open Space Supervisor for the City of Steamboat Springs. From 1994 to
2001, Mr. Neumann was the Environmental Group Manager for the Mining Division of Montgomery Watson, a global engineering firm now known as MWH. During his seven years at MWH, he supervised a
staff of 12-15 employees while concurrently serving as Senior Project Manager for several coal, copper, molybdenum, industrial minerals and uranium mine permitting projects. Major clients
included Peabody Coal, Kennecott, W.R. Grace, Newmont Gold, Cypress Minerals, Equatorial Resources and Cameco Corp. Mr. Neumann worked on both domestic and international projects including
Cameco's JV Inkai uranium project in Kazakhstan. Prior to joining MWH, Mr. Neumann founded his own mine permitting consulting business, which he ran from 1992 to 1994. From 1978 to 1992,
Mr. Neumann worked for Rocky
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Mountain
Energy Company ("RME"), Union Pacific's mining subsidiary permitting uranium exploration projects throughout the western U.S. While at RME he also served as on-site Environmental
Coordinator for two uranium in-situ recovery projects, performed permitting for the Company's Bear Creek Uranium mine and managed all environmental studies and permitting for the Sage
breccia pipe mine in Northern Arizona. Mr. Neumann has over 30 years experience in mine planning, permitting and reclamation, with particular expertise in and knowledge of uranium
mining. Mr. Neumann has written and presented papers on groundwater restoration at in-situ uranium mines, uranium mine decommissioning costs,
and exploration permitting under NEPA regulations. He is a former chairman of the Wyoming Mining Association In-Situ Committee and very familiar with all environmental laws and regulations
affecting the uranium mining industry. Mr. Neumann obtained a Bachelor's of Science degree in Range Management from the University of Wyoming in 1978.
Arrangements between Directors and Officers
To our knowledge, there is no arrangement or understanding between any of our directors or officers and any other person pursuant to
which the director or officer was selected to serve as a director or an officer.
Family Relationships
There are no family relationships between, or among any of our directors or executive officers.
Involvement in Certain Legal Proceedings
None of our directors, executive officers, advisory board members or control persons has been involved in any of the events prescribed
by Item 401(f) of Regulation S-K during the past ten years.
Membership of the Board of Directors
Our business and affairs are managed under the direction of our Board of Directors. Our Board of Directors currently consists of eight
directors and one vacancy. The size of the Board of Directors may be fixed from time to time by the Board of Directors as provided in the Bylaws of the Company.
The
Board of Directors has determined that four of our eight directors are "independent" according to the rules and regulations of                  ,
Item 407(a)(1) of
Regulation S-K and the Company's Corporate Governance Guidelines, or as otherwise set forth by our Board of Directors. The "independent" members of our Board of Directors are
Messrs. Campbell, Grundstedt, Loder and Nelson. A copy of the Company's Corporate Governance Guidelines, committee charters and other corporate governance documents can be viewed on our
corporate website at: www.                  .
Board Committees
The Board of Directors has a standing audit committee, compensation committee, nominating and corporate governance committee and
marketing and operations committee.
Audit Committee.
The audit committee is responsible, among its other duties and responsibilities, for engaging, overseeing and
evaluating our
independent registered public accounting firm, pre-approving all audit and non-audit services by that firm, reviewing the scope of the audit plan and the results of each audit
with management and our independent registered public accounting firm, reviewing the internal audit function, reviewing the adequacy of our system of internal accounting controls and disclosure
controls and procedures, reviewing the financial statements and related financial information we will include in our SEC filings, reviewing and approving related-party transactions and exercising
oversight with respect to our code of conduct and other policies and procedures regarding adherence with legal requirements. The members of our audit committee
are                  , who serves as
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chair
of the committee,
                  and                  .     
             is an "audit committee financial expert," as that term is defined under the SEC rules implementing Section 407 of the
Sarbanes-Oxley Act of 2002. Our Board of Directors has determined that each member of our audit committee is independent pursuant to Rule 10A-3 under the Securities Exchange Act and
the rules and regulations of                  .
Compensation Committee.
The compensation committee is responsible, among its other duties and responsibilities, for establishing the
compensation and
benefits of our executive officers and other key employees, monitoring compensation arrangements applicable to management employees for consistency with corporate objectives and stockholders'
interests and administering our incentive plans. The members of our compensation committee are                  , who serves as chair of the committee,
                  and                  . Our Board of
Directors has determined that each member of our compensation committee is independent pursuant to the rules and regulations of                  .
Nominating and Corporate Governance Committee.
The nominating and corporate governance committee is responsible for recommending
candidates for
election to the Board of Directors. The committee is also responsible, among its other duties and responsibilities, for making recommendations to the Board of Directors or otherwise acting with
respect to corporate governance matters, including board size and membership qualifications, new director orientation, committee structure and membership, non-employee director
compensation, succession planning for officers and key executives and communications with stockholders. The members of our nominating and corporate governance committee
are                  , who serves
as chair of the committee,                  , and                  .
Our Board of Directors has determined that each member of our nominating and corporate governance committee is independent pursuant to
the rules and regulations of                  .
Marketing and Operations Committee.
The marketing and operations committee is responsible, among it other duties and responsibilities,
for the
oversight of operations, production, marketing and environmental, health and safety issues. The members of our compensation committee are Mr. Graham, who serves as chair of the committee,
                  and                  .
Each
member of our audit committee, compensation committee and nominating and corporate governance committee is "independent" according to board and committee independence standards, as
applicable, set forth in the rules and regulations of                  , Item 407(a)(1) of Regulation S-K, the Company's Corporate Governance
Guidelines and the applicable
committee charter.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following discussion and analysis of compensation arrangements of our executive officers for 2010 (as set forth in the 2010 Summary
Compensation Table and below) should be read together with the compensation tables and related disclosures set forth below. This discussion contains forward-looking statements that are
based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from the currently
planned programs summarized in this discussion.
Overview
Our total compensation philosophy is to offer our executive officers compensation and benefits that are competitive and that meet our
goals of attracting, retaining and motivating highly skilled management so that we can achieve our financial and strategic objectives.
Utilizing
this philosophy, our compensation programs have been designed to:
•
be "market-based" and reflect the competitive environment;
•
align the interests of our executive officers with those of our stockholders;
•
focus on simplicity, flexibility and choice wherever possible; and
•
openly communicate the details of our compensation programs with our executive officers, as well as all of our employees
generally, to ensure that our programs and goals are understood.
On
February 22, 2011, our Board of Directors formed our compensation committee. The compensation committee will make compensation decisions for our executive officers for 2012 and
thereafter. Before the formation of the compensation committee, compensation decisions were made by our Board of Directors. Compensation shown below in the executive compensation tables for 2010 was
set by our Board of Directors.
In
the future, the compensation committee of the Board of Directors will oversee our compensation programs, which are designed specifically for our executive officers and senior
management, including the Chief Executive Officer, Chief Financial Officer and the other executive officers named in the 2010
Summary Compensation Table below, collectively, the named executive officers. Additionally, the compensation committee is charged with, among other things, (i) setting the compensation of the
Chief Executive Officer, (ii) the review and approval of all annual compensation decisions relating to the other named executive officers and (iii) the review and approval of the
granting of equity-based grants to the named executive officers.
Elements of Our Compensation
As a total rewards package, we design our compensation program to enable us to attract and retain talented personnel. Compensation
opportunities for our executive officers are designed to be competitive with peer companies. The three key elements of our total compensation package since our inception in 2005 have been base salary,
stock option grants and benefits.
Each
year beginning with 2012, the compensation committee will review and set the compensation of the Chief Executive Officer and review and approve the compensation for each other
executive officer based on subjective evaluations of each individual's performance, the Company's performance, the complexity of the individual's position, the experience of the individual and a
comparison of compensation ranges for executives in comparable positions at exploration-stage mining companies in the United States, primarily those involved in the exploration and mining
of uranium. In particular, we compare the compensation ranges for executives at Uranium Energy Corp., Uranium Resource, Inc.
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and
Uranerz Energy Corporation. In years past and for 2011, our Board of Directors reviewed executive compensation and set compensation for each executive officer based on the foregoing factors. The
Board of Directors did not have, and the compensation committee does not have, a specific formula to determine the amount of executive compensation and what portion of such compensation would be in
the form of cash and equity securities. Therefore, the determination of an executive's salary including the amount of cash and equity securities may be considered arbitrary taking into account the
foregoing factors.
In
February 2006, December 2007 and February 2011, we adopted the 2006 Plan, the 2007 Plan, and the 2011 Plan, respectively, pursuant to which we may grant stock options or
restricted stock to eligible employees, directors and consultants, including the named executive officers. We do not currently use performance based compensation elements in our total compensation
package (with the exception of stock option, which are inherently performance based). We are an exploration stage company, do not yet have mine development activities or mining operations, and have
not generated any revenues from operations. The Board of Directors and compensation committee do not consider performance targets feasible at this time. In the future we may expand our compensation
program to include, for example, annual performance-based cash bonuses, performance-based equity
compensation, and other forms of equity compensation such as restricted stock units, stock appreciation rights or other performance-based incentive programs.
Base Salary
The base salary for 2010 and 2011 for each of our executive officers was fixed by our Board of Directors. Starting in 2012 and
thereafter, base salary for our executive officers will be reviewed and fixed or approved by our compensation committee. Base salary is intended to reflect each individual's role and responsibility
within the Company as well as each individual's experience and prior performance. We believe a competitive base salary is a key factor in attracting and retaining the services of qualified executives.
In determining a competitive base salary, our Board of Directors considered each individual's performance, the Company's performance, the complexity of the individual's position, the experience of the
individual and a comparison of base salary ranges for executives in comparable positions at Uranium Energy Corp., Uranium Resource, Inc. and Uranerz Energy Corporation. We have entered into
employment agreements with Messrs. Boltz, Huber, Ludwig, Neumann and Topham, each of which set base salary levels. Please see the subsection entitled "
Employment
Agreements
" below for a description of the employment agreements with our named executive officers.
Bonus
We do not currently have a bonus program, but may consider a bonus plan in the future.
Equity-Based Awards
Types of Awards
We have sought to design our equity programs to be both affordable and competitive in relation to the market. We review market
compensation data, including available compensation data regarding our peer companies, and adjust our equity programs as needed. Stock options and other forms of equity compensation are designed to
reflect and reward a high level of sustained individual performance over time. The amount of equity compensation granted by us also reflects our financial condition and currently we have no revenues.
Since adopting the 2006 Plan, 2007 Plan and 2011 Plan, we have granted stock options to purchase a total of 6,445,000 shares of common stock, 153,334 of which have been forfeited, to directors,
executive officers, other employees and consultants. Stock options are inherently performance-based as their value only increases if the price of our common stock increases,
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thereby
aligning the interest of our executives with the interests of our stockholders. We have also granted 250,000 shares of common stock as unrestricted stock awards since adopting our 2006 Plan,
2007 Plan and 2011 Plan. In addition to the factors we consider in determining base salary, we consider our financial and liquidity condition when determining equity compensation. We do not
have any security ownership requirements for our named executive officers.
Timing of Awards
Our practice has been to make stock option grants at the first meeting of the Board of Directors following an employee's hire or
promotion date, but such grants will now be made at the first meeting of the compensation committee following an employee's hire or promotion date. If it is determined that a particular executive
officer should receive an additional equity award, we will make such award at the time of the compensation committee's decision. Other than the annual grant of stock options to purchase 30,000 shares
of our common stock to each non-employee member of our Board of Directors, we do not have any program, plan or practice currently in place to award additional stock options on a regular
basis or to time stock options grants in coordination with the release of material non-public information.
2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan
Our Board of Directors unanimously approved the 2006 Plan, on February 2, 2006, and our stockholders approved the 2006 Plan on
February 10, 2006. The 2006 Plan authorizes the Company to issue up to 3,500,000 shares of common stock. As of March 24, 2011, we have (A) granted 3,467,000 stock options, 70,000
of which have been forfeited, for a total of 3,397,000 outstanding stock options and (B) issued 100,000 shares of common stock as unrestricted stock awards under the 2006 Plan.
Our
Board of Directors unanimously approved the 2007 Plan, on December 13, 2007, and our stockholders approved the 2007 Plan on September 19, 2008. The 2007 Plan authorizes
the Company to issue up to 2,800,000 shares of common stock. As of March 24, 2011, we have (A) granted 2,578,000 stock options, 83,334 of which have been forfeited, for a total of
2,494,666 outstanding stock options and (B) issued 150,000 shares of common stock as unrestricted stock awards under the 2007 Plan.
Our
Board of Directors unanimously approved the 2011 Plan, on February 22, 2011, and the 2011 Plan will be presented to our stockholders for approval at our next
meeting of the stockholders. The 2011 Plan authorizes the Company to issue the greater of (A) 1,000,000 shares of our common stock or (B) the number of shares of common stock, up
to a maximum of 3,000,000 shares, that when added together with the number of shares authorized under the 2006 Plan and 2007 Plan equals 10% of the total issued and outstanding shares of common stock
of the Company. As of March 24, 2011, 1,000,000 shares of common stock of the Company are authorized under the 2011 Plan. As of March 24, 2011, we have granted 400,000 stock
options, none of which have been forfeited, under the 2011 Plan.
The
granting of further awards, under either the 2006 Plan, the 2007 Plan or the 2011 Plan, is within the discretion of the compensation committee.
The
objective of the 2006 Plan, 2007 Plan and 2011 Plan is to attract, reward and retain key personnel to the Company and provide incentives to our key employees, directors and
consultants to achieve financial results aimed at increasing stockholder value. Persons eligible to be granted stock options or restricted stock under any of the plans will be those persons whose
performance, in the judgment of the Board of Directors or compensation committee, can have significant effect on the Company's success.
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The
exercise price of each stock option grant will be fixed by the compensation committee but in no case, except for stock options granted upon assumption of or in substitution for
outstanding awards, will the exercise price be less than the fair market value of our common stock on the grant date. In previous years and for 2011, the determination of the exercise price and the
appropriate fair market value was made by the Board of Directors. In the absence of a public trading market, the Board of Directors considered numerous objective and subjective factors to determine
its best estimate of the fair market value of our common stock as of the date of each option grant, including but not limited to, the following factors: (i) valuations of our common stock;
(ii) the trading price of the common stock of our peer companies from which a public trading market does exist; (iii) the price and market for uranium; (iv) general economic
conditions; and (v) the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of the Company, given
prevailing market conditions. Generally, stock options granted to our directors vest immediately. Stock options granted to employees and independent contractors generally fully vest within three years
of the date of grant. In connection with voluntary salary reductions by our directors, executive officers and highest compensated employees in February 2009, the exercise price of stock options
granted to such individuals was reduced from $1.50 or $1.00, respectively, to $0.68.
The
2006 Plan, 2007 Plan and 2011 Plan provide for a potential acceleration of outstanding awards in the event of a change in control. Please see the subsection entitled,
"
Potential Payments Upon Termination or Change-in-Control
," below for a description of the potential acceleration of outstanding
awards in the event of a change in control.
Actions Subsequent to December 31, 2010
As discussed above, our Board of Directors unanimously approved the 2011 Plan on February 22, 2011, which will be
presented to our stockholders for approval at the next stockholder meeting scheduled for                  , 2011.
Stock Options Issued Subsequent to December 31, 2010 to Directors, Executive Officers and Employees
On February 22, 2011, our Board of Directors granted options to purchase 200,000 shares of our common stock at an exercise price
of $1.00 per share to each of Messrs. Graham, Loder and Mallery in connection with their appointment to the Board of Directors, which fully vested upon the grant and expire after ten years. On
February 11, 2011, our Board of Directors granted options, which expire after ten years, to purchase 200,000 shares of our common stock at an exercise price of $1.00 per share to
Mr. Graham in connection with Mr. Graham entering into a consulting agreement with the Company, of which half vests on August 11, 2011 and the remaining half vests on
February 11, 2012. For a description of the consulting agreement entered into with Mr. Graham, see the
section of this prospectus entitled "
Certain Relations and Related Person Transactions—Related Person Transactions
." The options granted to
Mr. Loder and Mr. Mallery were issued under the 2011 Plan and the options granted to Mr. Graham were issued under the 2007 Plan.
Benefits Programs
We design our benefits programs, such as our basic health benefits, 401(k) program and life insurance, to be both affordable and
competitive in relation to the market while conforming with local laws and practices. We review market benefit program data, including available benefit program data regarding our peer companies, and
adjust our benefit programs as needed. We design our benefits programs to provide an element of core benefits, including medical benefits for employees and their spouses and dependents,
non-elective 401(k) contributions equal to 3% of eligible compensation for all full-time employees and employees who work at least 1,000 hours during the applicable
year, life insurance policies in the amount of one year's salary and short-term disability, and to the extent possible, offer options for additional benefits. We also design our benefits
to balance costs and cost
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sharing
between us and our executives. The named executive officers are treated the same as all of our employees with respect to our benefit programs. We do not intend to establish any deferred
compensation plans, defined benefit pension plans or similar benefit plans.
Perquisites
As a general matter, we do not offer any perquisites to any executive officer because we believe we can better incentivize desired
performance with compensation in the forms described above. We recognize that, from time to time, it may be appropriate to provide certain perquisites in order to attract, motivate and retain our
executives and any such decision will be reviewed and approved by the compensation committee as needed.
Severance and Change in Control Arrangements
We have entered into employment agreements with Messrs. Boltz, Huber, Ludwig, Neumann and Topham that provide for severance
payment arrangements and/or acceleration of stock option vesting in the event such individual's employment is terminated under certain circumstances. Please see the subsection entitled
"
Employment Agreements
" below for a description of the severance and change in control arrangements.
In
addition, our 2006 Plan, 2007 Plan and 2011 Plan provide for a potential acceleration of outstanding awards in the event we undergo a change in control. Please see the
subsections entitled "
Stock Option Plans
" and "
Potential Payments Upon Termination or
Change-in-Control
" below for a description of the change in control provisions contained in such plan.
Impact of Accounting and Tax Treatment on Compensation Decisions
Our Board of Directors has considered the potential future effects of Section 162(m) of the Internal Revenue Code on the
compensation paid to our executive officers. Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1,000,000 in any taxable year for
our President and Chief Executive Officer and each of the other named executive officers (other than our Chief Financial Officer), unless compensation is performance based. As we are not currently
publicly-traded, our Board of Directors has not previously taken the deductibility limit imposed by Section 162(m) into consideration in setting compensation. Furthermore, as
discussed further above, our compensation committee and Board of Directors do not view performance targets as a feasible component of our executive compensation program at this time. Should our
executive compensation program be expanded to include performance-based compensation, our compensation committee may in the future adopt a policy that, where reasonably practicable, we
will seek to qualify the variable compensation paid to our executive officers for an exemption from the deductibility limitations of Section 162(m). As such, in approving the amount and form of
compensation for our executive officers in the future, our compensation committee will consider all elements of the cost to our company of providing such compensation, including the potential impact
of Section 162(m).
Role of Executives in Executive Compensation Decisions
Historically, each element of compensation has been recommended to the Board of Directors by our Chief Executive Officer for
compensation of each executive officer other
than himself. The amount of each element of compensation for our Chief Executive Officer has been determined by the Board of Directors and will be determined by the compensation committee in the
future. The Board of Directors also works with our Chief Financial Officer in evaluating the financial, accounting, tax and retention implications of our various compensation programs. Neither our
Chief Executive Officer nor any of our other executives participates in deliberations relating to his or her own compensation.
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Employment Agreements
Definition of Certain Terms used in the Employment Agreements
The following definitions apply only to this section entitled "
Employment Agreements
"
and are summaries of the definitions of such terms for the employment agreements discussed below.
"Cause"
includes any of the following actions of the employee: (i) the willful and continued failure to perform substantially the duties as set forth in the employment agreement
and the failure to cure after a demand by, and resolution of, the Board of Directors; (ii) a material violation of any of the Company's policies; (iii) a breach by the employee of any
obligations under the employment agreement; and (iv) being charged with illegal conduct or engaging in gross misconduct that is materially injurious to the Company as determined by the Board of
Directors. Notwithstanding the forgoing, under Messrs. Topham's, Ludwig's and Neumann's employment agreements, illegal conduct constitutes "cause" only if it is criminal and can reasonably be
expected to harm the Company.
"Change
of control" includes (i) a merger, consolidation or corporate reorganization where more than 50% of the combined voting power of the Company is owned by persons that were
not stockholders of the Company immediately prior to such merger, consolidation, or reorganization; (ii) a sale, transfer or other disposition of all or substantially all of the assets of the
Company to an entity in which the Company does not own stock representing more than 50% of the voting power in the elections for directors; (iii) a change in the composition of the Board of
Directors where less than half of the
incumbent directors are directors who either (A) had been directors of the Company 24 months prior to such change or (B) were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of the directors who had been directors of the Company 24 months prior to such change and who were still in office at the time of the
election or nomination; and (iv) the acquisition by any person of more than 33% of the voting power of the Company. "Change of control" does not include a transaction where the sole purpose of
such transaction is (i) to change the Company's state of incorporation; or (ii) to create a holding company that will be owned in substantially the same proportions by the persons who
were stockholders of the Company immediately prior to such transaction.
"Disability"
means the absence of an employee from his or her duties with the Company on a full-time basis for 120 consecutive business days as a result of incapacity due to
mental or physical illness certified by a physician selected by the Company or its insurers and acceptable to such employee or such employee's legal representative.
"Good
reason" includes the following actions of the Company: (i) an assignment to the employee of duties that are inconsistent with the employment agreement; (ii) a
material diminution in the employee's position, authority, duties or responsibilities; (iii) the failure to pay the compensation as provided in the employment agreement; (iv) any
purported termination of the employee's employment not expressly permitted by the employment agreement; (v) any action of the Board of Directors in connection with a "change of control" that
results in the removal of the employee as an executive of the Company; and (vi) the failure to require any successor of the Company to expressly assume and agree to perform the employment
agreement.
Kelsey L. Boltz—Employment Agreement
Mr. Boltz is employed as the Company's Executive Chairman under an Employment Agreement dated October 29, 2009. The term
of Mr. Boltz's employment under his employment agreement is two years, which expires on October 28, 2011. Under his employment agreement, Mr. Boltz is entitled to receive an
annual base salary of $140,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of understanding and agreement entered into between
Mr. Boltz and the Company on October 1, 2010, Mr. Boltz agreed to a temporary reduction in
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his
annual base salary from $140,000 to $130,000, effective February 15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer.
His full salary was reinstated as of January 1, 2011.
If,
during the term of his employment agreement, Neutron terminates Mr. Boltz's employment other than for "cause," death or "disability," or if Mr. Boltz terminates his
employment with "good reason," Neutron has agreed to pay Mr. Boltz a severance payment equal to (i) 24 months of his base salary paid out over the period that the compensation
would have been due had the termination not occurred; (ii) any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii) any accrued vacation pay; (iv) any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr. Boltz vest
immediately upon such a termination and the Company is required to continue benefits to Mr. Boltz and/or his family under its welfare benefit plans to the same extent as if Mr. Boltz had
not been terminated or, if more favorable to Mr. Boltz, as is in effect generally at any time thereafter with respect to other executives of Neutron and their families, for the remainder of the
term of his employment agreement or such longer period as set forth in such plan.
If,
during the term of his employment agreement and within two years after a "change of control," Neutron terminates Mr. Boltz's employment other than for "cause," death or
"disability," or if Mr. Boltz terminates his employment with "good reason," (i) Neutron will pay all compensation that would have been payable over the longer of
(A) 24 months or (B) the period then remaining under Mr. Boltz's employment agreement, which is to be paid out over the period that the compensation would have been due had
the termination not occurred; and (ii) all unvested stock options issued to Mr. Boltz immediately vest.
If,
during the term of his employment agreement, Mr. Boltz's employment is terminated by reason of his death, all stock options granted to Mr. Boltz fully vest and the
Company must pay to Mr. Boltz's legal representative (i) any death benefit compensation due under other contracts; and (ii) any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related
to death benefits in place at any time during the 120 day period immediately preceding the date of his employment agreement or at the date of his death.
If,
during the term of his employment agreement, Mr. Boltz's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr. Boltz fully vest and the Company must provide or pay (i) fully paid welfare benefits for the balance of the term of his employment agreement; (ii) base
salary through the date of termination, (iii) accrued bonus through the date of termination, (iv) payment of pension or 401(k), and (v) any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120 day period immediately preceding the date of his employment agreement or any time thereafter.
If
the Company terminates Mr. Boltz's employment for any reason other than for "cause" or if Mr. Boltz terminates his employment for "good reason," the Company will provide
him with the same health care coverage as he would have been entitled to if he were still an employee beginning on the date of his employment agreement and ending on the earlier of (i) the term
of his employment agreement plus six months, but not more than a total of two years, or (ii) the date of his death.
If,
during the term of his employment agreement, Neutron terminates Mr. Boltz's employment for "cause," Neutron has agreed to pay Mr. Boltz (i) his base salary
through the date of termination; (ii) the amount of any compensation previously deferred by Mr. Boltz; and (iii) any other amounts
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payable
under any plan, program, policy or practice or contract or agreement of the Company including any death or disability benefits, if applicable. If Mr. Boltz voluntarily terminates his
employment without "good reason," Neutron has agreed to pay Mr. Boltz (i) his base salary through the date of termination; (ii) the amount of any compensation previously deferred
by Mr. Boltz; (iii) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company; and (iv) accrued but unpaid vacation leave.
Mr. Boltz's
employment agreement also contains confidentiality and non-competition provisions whereby Mr. Boltz is prohibited from (i) at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii) during the term
of his employment and for any period during which he receives base salary severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops or
mines uranium properties or provides advice, assistance or consultation to any such business; and (iii) during his employment with the Company and for 12 months thereafter, hiring or
soliciting for hire any person who is, or during the previous 12 months was, employed by the Company.
Gary C. Huber—Employment Agreement
Dr. Huber is employed as the Company's Chief Executive Officer and President under an Employment Agreement dated
October 29, 2009. The term of Dr. Huber's employment under his employment agreement is two years, which expires on October 28, 2011. Under his employment agreement,
Dr. Huber is entitled to receive an annual base salary of $220,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of
understanding and agreement entered into between Dr. Huber and the Company on October 1, 2010, Dr. Huber agreed to a temporary reduction in his annual base salary from $220,000 to
$175,000, effective February 15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer, which currently is Dr. Huber.
His full salary was reinstated as of January 1, 2011.
If,
during the term of his employment agreement, Neutron terminates Dr. Huber's employment other than for "cause," death or "disability," or if Dr. Huber terminates his
employment with "good reason," Neutron has agreed to pay Dr. Huber a severance payment equal to (i) 24 months of his base salary paid out over the period that the compensation
would have been due had the termination not occurred;
(ii) any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii) any accrued vacation pay; (iv) any amounts payable under any defined benefit pension plan
or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and (v) any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Dr. Huber vest immediately upon such a termination and the Company is
required to continue benefits to Dr. Huber and/or his family under its welfare benefit plans to the same extent as if Dr. Huber had not been terminated or, if more favorable to
Dr. Huber, as is in effect generally at any time thereafter with respect to other executives of Neutron and their families, for the remainder of the term of his employment agreement or such
longer period as set forth in such plan.
If,
during the term of his employment agreement and within two years after a "change of control," Neutron terminates Dr. Huber's employment other than for "cause," death or
"disability," or if Dr. Huber terminates his employment with "good reason," (i) Neutron will pay all compensation that would have been payable over the longer of
(A) 24 months or (B) the period then remaining under Dr. Huber's employment agreement, which is to be paid out over the period that the compensation would have been due had
the termination not occurred; and (ii) all unvested stock options issued to Dr. Huber immediately vest.
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If,
during the term of his employment agreement, Dr. Huber's employment is terminated by reason of his death, all stock options granted to Dr. Huber fully vest and the
Company must pay to Dr. Huber's legal representative (i) any death benefit compensation due under other contracts; and (ii) any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related
to death benefits in place at any time during the 120 day period immediately preceding the date of his employment agreement or at the date of his death.
If,
during the term of his employment agreement, Dr. Huber's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Dr. Huber fully vest and the Company must provide or pay (i) fully paid welfare benefits for the balance of the term of his employment agreement; (ii) base
salary through the date of termination, (iii) accrued bonus through the date of termination, (iv) payment of pension or 401(k), and (v) any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120 day period immediately preceding the date of his employment agreement or any time thereafter.
If
the Company terminates Dr. Huber's employment for any reason other than for "cause" or if Dr. Huber terminates his employment for "good reason," the company will provide
him with the same
health care coverage as he would have been entitled to if he were still an employee beginning on the date of his employment agreement and ending on the earlier of (i) the term of his employment
agreement plus six months, but not more than a total of two years, or (ii) the date of his death.
If,
during the term of his employment agreement, Neutron terminates Dr. Huber's employment for "cause," Neutron has agreed to pay Dr. Huber (i) his base salary
through the date of termination; (ii) the amount of any compensation previously deferred by Dr. Huber; and (iii) any other amounts payable under any plan, program, policy or
practice or contract or agreement of the Company including any death or disability benefits, if applicable. If Dr. Huber voluntarily terminates his employment without "good reason," Neutron has
agreed to pay Dr. Huber (i) his base salary through the date of termination; (ii) the amount of any compensation previously deferred by Dr. Huber; (iii) any other
amounts payable under any plan, program, policy or practice or contract or agreement of the Company; and (iv) accrued but unpaid vacation leave.
Dr. Huber's
employment agreement also contains confidentiality and non-competition provisions whereby Dr. Huber is prohibited from (i) at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii) during the term
of his employment and for any period during which he receives base salary severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops or
mines uranium properties or provides advice, assistance or consultation to any such business; and (iii) during his employment with the Company and for 12 months thereafter, hiring or
soliciting for hire any person who is, or during the previous 12 months was, employed by the Company.
Edward M. Topham—Employment Agreement
Mr. Topham is employed as the Company's Chief Financial Officer, Corporate Secretary and Treasurer under an Employment Agreement
dated October 1, 2010. The term of Mr. Topham's employment under his employment agreement is one year, which expires on September 30, 2011. Under his employment agreement,
Mr. Topham is entitled to receive an annual base salary of $170,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of
understanding and agreement entered into between Mr. Topham and the Company on
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October 1,
2010, Mr. Topham agreed to a temporary reduction in his annual base salary from $170,000 to $155,000, effective February 15, 2009, with the timing and extent of
reinstatement of his salary solely at the discretion of the Chief Executive Officer. His full salary was reinstated as of January 1, 2011.
If,
during the term of his employment agreement, Neutron terminates Mr. Topham's employment other than for "cause," death or "disability," or if Mr. Topham terminates his
employment with "good reason," Neutron has agreed to pay Mr. Topham a severance payment equal to (i) 12 months of his base salary paid out over the period that the compensation
would have been due had the termination not occurred; (ii) any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii) any accrued vacation pay; (iv) any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr. Topham vest
immediately upon such a termination and the Company is required to provide Mr. Topham and/or his family, during the period that it makes severance payments to him, benefits under its welfare
benefit plans at least equal to those that would be provided if his employment had not been terminated or, if more favorable to Mr. Topham, as is in effect generally at any time thereafter with
respect to other executives of Neutron and their families.
If,
during the term of his employment agreement and after a "change of control," Neutron terminates Mr. Topham's employment other than for "cause," death or "disability," or if
Mr. Topham terminates his employment with "good reason," (i) Neutron will pay all compensation that would have been payable over the longer of (A) 18 months or
(B) the period then remaining under Mr. Topham's employment agreement, which is to be paid out over the period that the compensation would have been due had the termination not occurred;
and (ii) that all unvested stock options issued to Mr. Topham immediately vest.
If,
during the term of his employment agreement, Mr. Topham's employment is terminated by reason of his death, all stock options granted to Mr. Topham fully vest and the
Company must pay to Mr. Topham's legal representative (i) any death benefit compensation due under other contracts; and (ii) any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related
to death benefits in place at any time during the 120 day period immediately preceding the date of his employment agreement or at the date of his death.
If,
during the term of his employment agreement, Mr. Topham's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr. Topham fully vest and the Company must provide or pay (i) fully paid welfare benefits for the balance of the term of his employment agreement; (ii) base
salary through the date of termination, (iii) accrued bonus through the date of termination, (iv) payment of pension or 401(k), and (v) any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120 day period immediately preceding the date of his employment agreement or any time thereafter.
If
the Company terminates Mr. Topham's employment for any reason other than for "cause" or if Mr. Topham terminates his employment for "good reason," the company will
provide him with the same health care coverage as he would have been entitled to if he were still an employee for a six month period beginning on the date of termination.
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If, during the term of his employment agreement, Neutron terminates Mr. Topham's employment for "cause," or if Mr. Topham voluntarily terminates his
employment without "good reason," Neutron has agreed to pay Mr. Topham (i) his base salary through the date of termination; (ii) the amount of any compensation previously deferred
by Mr. Topham; (iii) accrued but unpaid vacation leave; and (iv) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company
including any death or disability benefits, if applicable.
Mr. Topham's
employment agreement also contains confidentiality and non-competition provisions whereby Mr. Topham is prohibited from (i) at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii) during the term
of his employment, engaging, participating, investing or being employed by any business which acquires, explores, develops or mines uranium properties or provides advice, assistance or consultation to
any such business; (iii) during any period during which he receives severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops
or mines uranium properties or provides advice, assistance or consultation to any such business within the same counties in those states which Neutron has properties as of the date of
Mr. Topham's termination; and (iv) during his employment with the Company and for 12 months thereafter, hiring or soliciting for hire any person who is, or during the previous
12 months was, employed by the Company.
Mark J. Ludwig—Employment Agreement
Mr. Ludwig is employed as the Company's Vice President of Operations under an Employment Agreement dated October 1, 2010.
The term of Mr. Ludwig's employment under his employment agreement is one year, which expires on September 30, 2011. Under his employment agreement, Mr. Ludwig is entitled to
receive an annual base salary of $165,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of understanding and agreement entered into
between Mr. Ludwig and the Company on October 1, 2010, Mr. Ludwig agreed to a temporary reduction in his annual base salary from $165,000 to $150,000, effective
February 15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer. His full salary was reinstated as of January 1,
2011.
If,
during the term of his employment agreement, Neutron terminates Mr. Ludwig's employment other than for "cause," death or "disability," or if Mr. Ludwig terminates his
employment with "good reason," Neutron has agreed to pay Mr. Ludwig a severance payment equal to (i) six months of his base salary paid out over the period that the compensation would
have been due had the termination not occurred; (ii) any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii) any accrued vacation pay; (iv) any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr. Ludwig vest
immediately upon such a termination and the Company is required to provide Mr. Ludwig and/or his family, during the period that it makes severance payments to him, benefits under its welfare
benefit plans at least equal to those that would be provided if his employment had not been terminated or, if more favorable to Mr. Ludwig, as is in effect generally at any time thereafter with
respect to other executives of Neutron and their families.
If,
during the term of his employment agreement and after a "change of control," Neutron terminates Mr. Ludwig's employment other than for "cause," death or "disability," or if
Mr. Ludwig terminates his employment with "good reason," (i) Neutron will pay all compensation that would have been payable over the longer of (A) 12 months or
(B) the period then remaining under Mr. Ludwig's employment agreement, which is to be paid out over the period that the compensation would have
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been
due had the termination not occurred; and (ii) that all unvested stock options issued to Mr. Ludwig immediately vest.
If,
during the term of his employment agreement, Mr. Ludwig's employment is terminated by reason of his death, all stock options granted to Mr. Ludwig fully vest and the
Company must pay to Mr. Ludwig's legal representative (i) any death benefit compensation due under other contracts; and (ii) any other amounts payable under any plan, program,
policy or practice or contract or agreement of the Company,
including the most favorable benefits provided by the Company to the estates and beneficiaries of any other executive of the Company related to death benefits in place at any time during the
120 day period immediately preceding the date of his employment agreement or at the date of his death.
If,
during the term of his employment agreement, Mr. Ludwig's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr. Ludwig fully vest and the Company must provide or pay (i) fully paid welfare benefits for the balance of the term of his employment agreement; (ii) base
salary through the date of termination, (iii) accrued bonus through the date of termination, (iv) payment of pension or 401(k), and (v) any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120 day period immediately preceding the date of his employment agreement or any time thereafter.
If
the Company terminates Mr. Ludwig's employment for any reason other than for "cause" or if Mr. Ludwig terminates his employment for "good reason," the company will
provide him with the same health care coverage as he would have been entitled to if he were still an employee for a six month period beginning on the date of termination.
If,
during the term of his employment agreement, Neutron terminates Mr. Ludwig's employment for "cause," or if Mr. Ludwig voluntarily terminates his employment without
"good reason," Neutron has agreed to pay Mr. Ludwig (i) his base salary through the date of termination; (ii) the amount of any compensation previously deferred by
Mr. Ludwig; (iii) accrued but unpaid vacation leave; and (iv) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company
including any death or disability benefits, if applicable.
Mr. Ludwig's
employment agreement also contains confidentiality and non-competition provisions whereby Mr. Ludwig is prohibited from (i) at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii) during the term
of his employment, engaging, participating, investing or being employed by any business which acquires, explores, develops or mines uranium properties or provides advice, assistance or consultation to
any such business; (iii) during any period during which he receives severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops
or mines uranium properties or provides advice, assistance or consultation to any such business within the same counties in those states which Neutron has properties as of the date of
Mr. Ludwig's termination; and (iv) during his employment with the Company and for 12 months thereafter, hiring or soliciting for hire any person who is, or during the previous
12 months was, employed by the Company.
Michael R. Neumann—Employment Agreement
Mr. Neumann is employed as the Company's Vice President of Environmental Services under an Employment Agreement dated
October 1, 2010. The term of Mr. Neumann's employment under his employment agreement is one year, which expires on September 30, 2011. Under his employment agreement,
Mr. Neumann is entitled to receive an annual base salary of $140,000, subject to annual increases if approved by the Board of Directors in its sole discretion. Pursuant to a letter of
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understanding
and agreement entered into between Mr. Neumann and the Company on October 1, 2010, Mr. Neumann agreed to a temporary reduction in his annual base salary from
$140,000 to $130,000, effective February 15, 2009, with the timing and extent of reinstatement of his salary solely at the discretion of the Chief Executive Officer. His full salary was
reinstated as of January 1, 2011.
If,
during the term of his employment agreement, Neutron terminates Mr. Neumann's employment other than for "cause," death or "disability," or if Mr. Neumann terminates his
employment with "good reason," Neutron has agreed to pay Mr. Neumann a severance payment equal to (i) six months of his base salary paid out over the period that the compensation would
have been due had the termination not occurred; (ii) any declared and accrued, but as of then unpaid, bonus or stock options grant; (iii) any accrued vacation pay; (iv) any
amounts payable under a defined benefit pension plan or 401(k) plan including such amounts which would have accrued if his employment had continued for the term of his employment agreement; and
(v) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company. In addition, all stock options owned by or granted to Mr. Neumann vest
immediately upon such a termination of employment and the Company is required to provide Mr. Neumann and/or his family, during the period that it makes severance payments to him, benefits under
its welfare benefit plans at least equal to those that would be provided if his employment had not been terminated or, if more favorable to Mr. Neumann, as is in effect generally at any time
thereafter with respect to other executives of Neutron and their families.
If,
during the term of his employment agreement and after a "change of control," Neutron terminates Mr. Neumann's employment other than for "cause," death or "disability," or if
Mr. Neumann terminates his employment with "good reason," (i) Neutron will pay all compensation that would have been payable over the longer of (A) 12 months or
(B) the period then remaining under Mr. Neumann's employment agreement, which is to be paid out over the period that the compensation would have been due had the termination not
occurred; and (ii) that all unvested stock options issued to Mr. Neumann immediately vest.
If,
during the term of his employment agreement, Mr. Neumann's employment is terminated by reason of his death, all stock options granted to Mr. Neumann fully vest and the
Company must pay to Mr. Neumann's legal representative (i) any death benefit compensation due under other contracts; and
(ii) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to the estates
and beneficiaries of any other executive of the Company related to death benefits in place at any time during the 120 day period immediately preceding the date of his employment agreement or at
the date of his death.
If,
during the term of his employment agreement, Mr. Neumann's employment is terminated by reason of "disability" after proper notice and expiration of the cure period, all stock
options granted to Mr. Neumann fully vest and the Company must provide or pay (i) fully paid welfare benefits for the balance of the term of his employment agreement; (ii) base
salary through the date of termination, (iii) accrued bonus through the date of termination, (iv) payment of pension or 401(k), and (v) any other amounts payable under any plan,
program, policy or practice or contract or agreement of the Company, including the most favorable benefits provided by the Company to any disabled executives and/or their families related to
disability in effect at any time during the 120 day period immediately preceding the date of his employment agreement or any time thereafter.
If
the Company terminates Mr. Neumann's employment for any reason other than for "cause" or if Mr. Neumann terminates his employment for "good reason," the company will
provide him with the same health care coverage as he would have been entitled to if he were still an employee for a six month period beginning on the date of termination.
If,
during the term of his employment agreement, Neutron terminates Mr. Neumann's employment for "cause," or if Mr. Neumann voluntarily terminates his employment without
"good reason," Neutron
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has
agreed to pay Mr. Neumann (i) his base salary through the date of termination; (ii) the amount of any compensation previously deferred by Mr. Neumann;
(iii) accrued but unpaid vacation leave; and (iv) any other amounts payable under any plan, program, policy or practice or contract or agreement of the Company including any death or
disability benefits, if applicable.
Mr. Neumann's
employment agreement also contains confidentiality and non-competition provisions whereby Mr. Neumann is prohibited from (i) at any time,
divulging any secret, proprietary or confidential information, knowledge or data related to the Company and its business that he obtained while employed with the Company; (ii) during the term
of his employment, engaging, participating, investing or being employed by any business which acquires, explores, develops or mines uranium properties or provides advice, assistance or consultation to
any such business; (iii) during any period during which he receives severance payments, engaging, participating, investing or being employed by any business which acquires, explores, develops
or mines uranium properties or provides advice, assistance or consultation to any such business within the same counties in those states which Neutron has properties as of the date of
Mr. Neumann's termination; and (iv) during his employment with the Company and for 12 months thereafter, hiring or soliciting for hire any person who is, or during the previous
12 months was, employed by the Company.
2010 Summary Compensation Table
The following table sets forth the compensation paid during the year ended December 31, 2010 to our Chief Executive Officer,
Chief Financial Officer and our three other most highly compensated executives. These individuals are sometimes referred to collectively as the named executive officers.
Name and Principal Position
Salary
Bonus
Stock
Awards
Option
Awards
All Other
Compensation
Total
Kelsey L. Boltz
$
131,978
$
—
$
—
$
—
$
5,845
(1)
$
137,823
Executive Chairman
Gary C. Huber
175,645
—
—
—
32,145
(2)
207,790
Chief Executive Officer and Director
Edward M. Topham
155,290
—
—
—
31,343
(3)
186,633
Chief Financial Officer
Mark J. Ludwig
150,516
—
—
—
23,705
(4)
174,221
Vice President—Operations
Michael R. Neumann
131,767
—
—
—
12,996
(5)
144,763
Vice President—Environmental Services
(1)
Includes
$1,848 for medical, dental, short term disability and life insurance and $3,997 for contributions under our 401(k) plan.
(2)
Includes
$26,707 for medical, dental, short term disability and life insurance and $5,438 for contributions under our 401(k) plan.
(3)
Includes
$26,628 for medical, dental, short term disability and life insurance and $4,715 for contributions under our 401(k) plan.
(4)
Includes
$19,140 for medical, dental, short term disability and life insurance and $4,565 for contributions under our 401(k) plan.
(5)
Includes
$9,046 for medical, dental, short term disability and life insurance and $3,950 for contributions under our 401(k) plan.
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Grants of Plan-Based Awards
The named executive offices did not receive any grants of plan-based awards in the year ended December 31, 2010.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information with respect to the outstanding equity awards at December 31, 2010 for the named
executive officers.
OPTION AWARDS
STOCK AWARDS
Name and Principal Position
Number of
Securities
Underlying
Options (#)
Exercisable(1)
Number of
Securities
Underlying
Options (#)
Unexercisable
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Option
Exercise
Base
Price
($/sh)(2)
Option
Expiration
Date
Number
of Shares
or Units
of Stock
That
Have Not
Vested (#)
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested ($)
Equity
Incentive
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested (#)
Equity
Incentive
Awards:
Market
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)
Kelsey L. Boltz
100,000
—
—
0.68
02/15/19
—
—
—
—
Executive Chairman
Gary C Huber
800,000
—
—
0.68
07/31/17
—
—
—
—
Chief Executive Officer
200,000
—
—
0.68
07/31/18
—
—
—
—
and Director
200,000
—
—
0.68
02/15/19
—
—
—
—
Edward M. Topham
100,000
—
—
0.68
11/26/16
—
—
—
—
Chief Financial Officer
100,000
—
—
0.68
03/14/17
—
—
—
—
100,000
—
—
0.68
02/15/19
—
—
—
—
Mark J. Ludwig
200,000
—
—
0.68
07/31/18
—
—
—
—
Vice President—Operations
50,000
—
—
0.68
02/15/19
—
—
—
—
Michael R. Neumann
441,000
—
—
0.68
03/14/17
—
—
—
—
Vice President—
44,000
—
—
0.68
02/15/19
—
—
—
—
Environmental Services
(1)
All
exercisable stock options are fully vested.
(2)
The
exercise price of (i) 200,000 of the options granted to each of Mr. Huber and Mr. Ludwig was reduced from $1.50 to $0.68 and
(ii) 800,000 of the options granted to Mr. Huber was reduced from $1.00 to $0.68 in connection with voluntary salary reductions by Mr. Huber and Mr. Ludwig in February
2009. Exercise price for all other option awards is the fair market value per share of our common stock on the grant date, as determined by the board of Directors. Please see the subsection entitled,
"
2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan
," above for a description of assumptions used by
the Board of Directors in determining the fair market value per share of our common stock.
Options Exercised and Stock Vested
The named executive officers did not exercise any of their options in the year ended December 31, 2010. No stock awards to named
executive officers vested in the year ended December 31, 2010.
Potential Payments Upon Termination or Change-in-Control
We have entered into employment agreements with each of our named executive officers that provide that, in the event the employee is
terminated for other than for cause, death or disability, or the employee terminates for good reason, the Company will pay the employee, in addition to other amounts, the amount of his base salary for
a specific number of months, which varies from six to
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24 months.
The employment agreements also provide for other payments upon a termination (i) by the Company with cause, (ii) by the employee without good reason, (iii) due
to death, or (iv) due to disability. Please see the subsection entitled "
Employment Agreements
" above for a description of the severance and
change in control arrangements with these executive officers and employees.
In
addition, our 2006 Plan, 2007 Plan and 2011 Plan provide for a potential acceleration of outstanding awards in the event of a change in control. Please see the subsection entitled
"
Stock Option Plans
" below for a description of the potential acceleration of outstanding awards in the event of a change in control.
The
following table reflects the estimated potential payments upon certain terminations of employment or a change in control that would be payable to each of the named executive officers
who were employed on December 31, 2010. For purposes of calculating the potential payments set forth in the tables below, we have assumed that (i) the date of termination or change in
control was December 31, 2010; and (ii) the value of each share subject to a stock option or a restricted stock grant that would be accelerated in the circumstances set forth in the
table below equals $1.00, which represents the fair market value of our common stock as of December 31, 2010 as determined by our Board of Directors using the factors discussed under the
subsection entitled "
Equity-Based Awards—2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive
Plan
" above in connection with the Board of Director's determination of exercise price for stock options. Severance payments are generally paid in a lump sum in cash within
30 days of the date of termination other than (i) payments based off of annual base salary, which are paid out over the period such payments would have been made but for the termination;
and (ii) continued coverage under any benefit or welfare plan.
Name and Principal Position
Termination Without
Cause or Resignation
for Good Reason ($)
Termination Without
Cause or Resignation for
Good Reason after a
Change of Control ($)
Death ($)
Disability ($)
Termination for
Cause or
Resignation without
Good Reason ($)
Kelsey L. Boltz
344,014
(1)
353,246
(6)
37,150
(11)
55,614
(16)
5,150
(21)
Executive Chairman
Gary C. Huber
879,741
(2)
897,556
(7)
390,932
(12)
426,541
(17)
6,932
(22)
Chief Executive Officer and Director
Edward M. Topham
303,869
(3)
404,732
(8)
102,141
(13)
122,112
(18)
6,141
(23)
Chief Financial Officer
Mark J. Ludwig
184,231
(4)
282,520
(9)
85,942
(14)
105,913
(19)
5,942
(24)
Vice President—Operations
Michael R. Neumann
242,020
(5)
323,690
(10)
160,350
(15)
174,705
(20)
5,150
(25)
Vice President—Environmental Services
(1)
Includes
(i) $280,000 (representing 24 months of base salary pursuant to employment agreement) paid out over 24 months,
(ii) $18,464 in continued welfare benefits paid out over 16 months, (iii) $5,000 in accrued but unused vacation pay paid within 30 days of termination, (iv) $32,000
which is the net value of stock options as exercised, exercisable immediately, and (v) 401(k) contributions totaling $8,550 payable each year in February, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal year.
(2)
Includes
(i) $440,000 (representing 24 months of base salary pursuant to employment agreement) paid out over 24 months,
(ii) $35,609 in continued welfare benefits paid out over 16 months, (iii) $6,730 in accrued but unused vacation pay paid within 30 days of termination, (iv) $384,000
which is the net value of stock options as exercised, exercisable immediately, and (v) 401(k) contributions totaling $13,402 payable each year in February, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal year.
(3)
Includes
(i) $170,000 (representing 12 months of base salary pursuant to employment agreement) paid out over 12 months,
(ii) $26,628 in continued welfare benefits paid out over 12 months, (iii) $5,962 in accrued but unused
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vacation
pay paid within 30 days of termination, (iv) $96,000 which is the net value of stock options as exercised, exercisable immediately, and (v) a 401(k) contributions of
$5,279 payable in February 2012, calculated as 3% of the amount of (i) plus (iii) paid in the preceding fiscal year.
(4)
Includes
(i) $82,500 (representing 6 months of base salary pursuant to employment agreement) paid out over 6 months,
(ii) $13,314 in continued welfare benefits paid out over 6 months, (iii) $5,769 in accrued but unused vacation pay paid within 30 days of termination, (iv) $80,000
which is the net value of stock options as exercised, exercisable immediately, and (v) a 401(k) contribution of $2,648 payable in February 2012, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal year.
(5)
Includes
(i) $70,000 (representing 6 months of base salary pursuant to employment agreement) paid out over 6 months, (ii) $9,570
in continued welfare benefits paid out over 6 months, (iii) $5,000 in accrued but unused vacation pay paid within 30 days of termination, (iv) $155,200 which is the net
value of stock options as exercised, exercisable immediately, and (v) a 401(k) contribution of $2,250 payable in February 2012, calculated as 3% of the amount of (i) plus
(iii) paid in the preceding fiscal year.
(6)
Includes
(i) $280,000 (representing 24 months of 2010 base salary pursuant to employment agreement) paid out over 24 months,
(ii) $27,696 in continued welfare benefits paid out over 24 months, (iii) $5,000 in accrued but unused vacation pay paid within 30 days of termination, (iv) $32,000
which is the net value of stock options as exercised, exercisable immediately, and (v) 401(k) contributions totaling $8,550 payable each year in February, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal.
(7)
Includes
(i) $440,000 (representing 24 months of 2010 base salary pursuant to employment agreement) paid out over 24 months,
(ii) $53,424 in continued welfare benefits paid out over 24 months, (iii) $6,730 in accrued but unused vacation pay paid within 30 days of termination, (iv) $384,000
which is the net value of stock options as exercised, exercisable immediately, and (v) 401(k) contributions totaling $13,402 payable each year in February, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal year.
(8)
Includes
(i) $255,000 (representing 18 months of base salary pursuant to employment agreement) paid out over 18 months,
(ii) $39,941 in continued welfare benefits paid out over 18 months, (iii) $5,962 in accrued but unused vacation pay paid within 30 days of termination, (iv) $96,000
which is the net value of stock options as exercised, exercisable immediately, and (v) a 401(k) contributions of $7,829 payable in February 2012, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal year.
(9)
Includes
(i) $165,000 (representing 12 months of base salary pursuant to employment agreement) paid out over 12 months,
(ii) $26,628 in continued welfare benefits paid out over 12 months, (iii) $5,769 in accrued but unused vacation pay paid within 30 days of termination, (iv) $80,000
which is the net value of stock options as exercised, exercisable immediately, and (v) a 401(k) contribution of $5,123 payable in February 2012, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal year.
(10)
Includes
(i) $140,000 (representing 12 months of base salary pursuant to employment agreement) paid out over 12 months,
(ii) $19,140 in continued welfare benefits paid out over 12 months, (iii) $5,000 in accrued but unused vacation pay paid within 30 days of termination, (iv) $155,200
which is the net value of stock options as exercised, exercisable immediately, and (v) a 401(k) contribution of $4,350 payable in February 2012, calculated as 3% of the amount of
(i) plus (iii) paid in the preceding fiscal year.
(11)
Includes
(i) $5,000 in accrued but unused vacation pay paid within 30 days of termination, (ii) $32,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii) a 401(k) contribution of $150 payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal
year.
(12)
Includes
(i) $6,730 in accrued but unused vacation pay paid within 30 days of termination, (ii) $384,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii) a 401(k) contribution of $202 payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal
year.
(13)
Includes
(i) $5,962 in accrued but unused vacation pay paid within 30 days of termination, (ii) $96,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii) a 401(k) contribution of $179 payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal
year.
(14)
Includes
(i) $5,769 in accrued but unused vacation pay paid within 30 days of termination, (ii) $80,000 which is the net value of
stock options as exercised, exercisable immediately, and (iii) a 401(k) contribution of $173 payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal
year.
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(15)
Includes
(i) $5,000 in accrued but unused vacation pay paid within 30 days of termination, (ii) $155,200 which is the net value of
stock options as exercised, exercisable immediately, and (iii) a 401(k) contribution of $150 payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal
year.
(16)
Includes
(i) $18,464 in continued welfare benefits paid out over the remaining 16 months of the employment agreement, (ii) $5,000 in
accrued but unused vacation pay paid within 30 days of termination, (iii) $32,000 which is the net value of stock options as exercised, exercisable immediately, and (iv) a 401(k)
contribution of $150 payable in February 2012, calculated as 3% of the amount of (ii) paid in the preceding fiscal year.
(17)
Includes
(i) $35,609 in continued welfare benefits paid out over the remaining 16 months of the employment agreement, (ii) $6,730 in
accrued but unused vacation pay paid within 30 days of termination, (iii) $384,000 which is the net value of stock options as exercised, exercisable immediately, and (iv) a 401(k)
contribution of $202 payable in February 2012, calculated as 3% of the amount of (ii) paid in the preceding fiscal.
(18)
Includes
(i) $19,971 in continued welfare benefits paid out over the remaining 9 months of the employment agreement, (ii) $5,962 in
accrued but unused vacation pay paid within 30 days of termination, (iii) $96,000 which is the net value of stock options as exercised, exercisable immediately, and (iv) a 401(k)
contribution of $179 payable in February 2012, calculated as 3% of the amount of (ii) paid in the preceding fiscal year.
(19)
Includes
(i) $19,971 in continued welfare benefits paid out over the remaining 9 months of the employment agreement, (ii) $5,769 in
accrued but unused vacation pay paid within 30 days of termination, (iii) $80,000 which is the net value of stock options as exercised, exercisable immediately, and (iv) a 401(k)
contribution of $173 payable in February 2012, calculated as 3% of the amount of (ii) paid in the preceding fiscal year.
(20)
Includes
(i) $14,355 in continued welfare benefits paid out over the remaining 9 months of the employment agreement, (ii) $5,000 in
accrued but unused vacation pay paid within 30 days of termination, (iii) $155,200 which is the net value of stock options as exercised, exercisable immediately, and (iv) a 401(k)
contribution of $150 payable in February 2012, calculated as 3% of the amount of (ii) paid in the preceding fiscal year.
(21)
Includes
(i) $5,000 in accrued but unused vacation pay paid within 30 days of termination, and (ii) a 401(k) contribution of $150
payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal year.
(22)
Includes
(i) $6,730 in accrued but unused vacation pay paid within 30 days of termination, and (ii) a 401(k) contribution of $202
payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal year.
(23)
Includes
(i) $5,962 in accrued but unused vacation pay paid within 30 days of termination, and (ii) a 401(k) contribution of $179
payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal year.
(24)
Includes
(i) $5,769 in accrued but unused vacation pay paid within 30 days of termination, and (ii) a 401(k) contribution of $173
payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal year.
(25)
Includes
(i) $5,000 in accrued but unused vacation pay paid within 30 days of termination, and (ii) a 401(k) contribution of $150
payable in February 2012, calculated as 3% of the amount of (i) paid in the preceding fiscal year.
Stock Option Plans
2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan
This summary is qualified in its entirety by the detailed provisions of the 2006 Plan, the 2007 Plan, and the 2011 Plan, which are
filed as exhibits to the registration statement of which this prospectus is a part. The 2006 Plan, 2007, and 2011 Plan are collectively referred to as the "Plans."
Purpose
The objective of the Plans is to attract, reward and retain key personnel to the Company and provide incentives to our key employees,
directors and consultants to achieve financial results aimed at increasing stockholder value. Persons eligible to be granted stock options or restricted stock under any of the Plans will be those
persons whose performance, in the judgment of the Board of Directors or compensation committee, can have significant effect on the Company's success.
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Effective Date and Term
The 2006 Plan was effective as of February 10, 2006 and will expire on February 10, 2016, unless earlier terminated by
our Board of Directors. The 2007 Plan was effective as of December 13, 2007 and will expire on December 13, 2017, unless earlier terminated by our Board of Directors. The 2011 Plan was
effective as of February 22, 2011, subject to stockholder approval, and will expire on February 22, 2021, unless earlier terminated by our Board of Directors.
Administration of the Plans
Our compensation committee administers each of the Plans, interprets the terms and intent of the Plans, determines eligibility for and
terms of awards for participants and makes all other determinations necessary or advisable for the administration of any Plan. Our Board of Directors fulfilled these responsibilities until it
delegated the authority to administer the Plans to the compensation committee on                  , 2011. During any period of time in which we do not have a
compensation committee, the Plans will be
administered by our Board of Directors or another committee appointed
by our Board of Directors. References below to the compensation committee include a reference to the Board of Directors or another committee appointed by the Board of Directors for those periods in
which the Board of Directors or such other committee appointed by the Board of Directors is acting.
Eligibility
All of our officers and employees and the officers and employees of our subsidiaries and affiliates are eligible to receive awards
under each Plan. In addition, our non-employee directors and consultants and advisors who perform services for us, our subsidiaries and our affiliates may receive awards under any Plan,
other than incentive stock options.
Shares Subject to the Plan
Subject to adjustment as described below, (i) a total of 3,500,000 shares of our common stock are authorized for issuance under
the 2006 Plan, (ii) a total of 2,800,000 shares of our common stock are authorized for issuance under our 2007 Plan and (iii) between 1,000,000 and 3,000,000 shares are authorized for
issuance under our 2011 Plan. The 2011 Plan authorizes the greater of (A) 1,000,000 shares of our common stock or (B) the number of shares of common stock, up to a maximum of 3,000,000
shares, that when added together with the number of shares authorized under the 2006 Plan and 2007 Plan equals 10% of the total issued and outstanding shares of common stock of the Company. As of
March 24, 2011, 1,000,000 shares of common stock were authorized for issuance under the 2011 Plan. Shares issued under any of the Plans may be authorized but unissued shares or treasury shares.
The
maximum number of shares of common stock subject to options or share appreciation rights that can be issued to any person is (i) 250,000 in any single calendar year (or
500,000 shares in the year that the person is first employed) under the 2011 Plan, and (ii) 500,000 in any 12 month period under the 2007 Plan. The maximum number of shares that can be
issued to any person other than pursuant to an option or share appreciation right is (i) 100,000 shares in any single calendar year (or 200,000 shares in the year that the person is first
employed) under the 2011 Plan, and (ii) 250,000 shares in any 12 month period under the 2007 Plan. The maximum amount that may be earned as an annual incentive award or other cash award
by any one person is (i) $100,000 in any calendar year (or $200,000 in the year that the person is first employed) under the 2011 Plan, and (ii) $500,000 in any 12 month period
under the 2007 Plan. The maximum amount that may be earned as a performance award or other cash award in respect of a performance period by any one person is (i) $250,000 in any calendar year
(or $500,000 for a performance period beginning with or immediately after the year that
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the
person is first employed) under the 2011 Plan, and (ii) $500,000 in any 12 month period under the 2007 Plan.
Under
the 2006 Plan, the aggregate fair market value of the common stock with respect to which incentive stock options are exercisable for the first time by any individual in any
calendar year may not exceed $100,000.
Adjustment of Shares
In the event of any increase or decrease in the number of outstanding shares of our stock, or in the event such shares are changed into
or exchanged for a different number or kind of shares or other securities of our company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital stock, our Board of Directors will make proportionate adjustments that it deems appropriate in the aggregate number of
shares of common stock that may be issued under each Plan and the terms of outstanding awards. If any options or share appreciation rights terminate, expire or are canceled, forfeited, exchanged or
surrendered without having been exercised or paid or if any share awards, performance shares, performance units or other equity-based awards are forfeited or expire or otherwise terminate without the
delivery of any shares of common stock or are settled in cash, the shares of common stock subject to such awards will again be available for purposes of the Plans.
Option Awards
The Plans authorize our compensation committee to grant incentive stock options (under Section 421 of the Internal Revenue Code)
and options that do not qualify as incentive stock options. The exercise price of each option will be determined by the compensation committee, provided that the price will be equal to at least the
fair market value of the shares of common stock on the date on which the option is granted. If we were to grant incentive stock options to any 10% stockholder, the exercise price may not be less than
110% of the fair market value of our shares of common stock on the date of grant.
The
term of an option cannot exceed ten years from the date of grant. If we were to grant incentive stock options to any 10% stockholder, the term cannot exceed five years from the date
of grant. The compensation committee determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment
during which options may be exercised. Options may be made exercisable in installments. The exercisability of options may be accelerated by the compensation committee. The exercise price of an option
may not be amended or modified after the grant of the option, and an option may not be surrendered in consideration of or exchanged for a grant of a new option having an exercise price below that of
the option which was surrendered or exchanged without stockholder approval.
Share Awards
The Plans also provide for the grant of share awards (which includes restricted shares and share units). A share award is an award of
shares of common stock that may be subject to restrictions on transferability and other restrictions as our compensation committee determines in its sole discretion on the date of grant. The
restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments or otherwise, as our compensation committee may determine. A participant who
receives a share award will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the
shares, except that the compensation committee may require any dividends to be reinvested in shares.
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Share Appreciation Rights
The Plans authorize our compensation committee to grant share appreciation rights that provide the recipient with the right to receive,
upon exercise of the share appreciation right, cash, shares of common stock or a combination of the two. The amount that the recipient will receive upon exercise of the share appreciation right
generally will equal the excess of the fair market value of our common stock on the date of exercise over the shares' fair market value on the date of grant. Share appreciation rights will become
exercisable in accordance with terms determined by our compensation committee. Share appreciation rights may be granted in tandem with an option grant or independently from an option grant. The term
of a share appreciation right cannot exceed 10 years from the date of grant.
Performance Units
The 2007 Plan and 2011 Plan also authorize our compensation committee to grant performance units. Performance units represent the
participant's right to receive a compensation amount, based on the value of the shares of common stock, if performance goals established by the compensation committee are met. Our compensation
committee will determine the applicable performance period, the performance goals and such other conditions that apply to the performance unit. Performance goals may relate to our financial
performance or the financial performance of our operating units, the participant's performance or such other criteria determined by the compensation committee. If the performance goals are met,
performance units will be paid in cash, shares of common stock or a combination thereof.
Bonuses
Cash performance bonuses payable under the 2007 Plan and 2011 Plan may be based on the attainment of performance goals that are
established by the compensation committee and relate to one or more performance criteria described in such Plan. Cash performance bonuses, for which there is no minimum, must be based upon objectively
determinable bonus formulas established in accordance with such Plan, as determined by the compensation committee.
Dividend Equivalents
Our compensation committee may grant dividend equivalents in connection with the grant of any equity-based award under the 2007 Plan
and 2011 Plan. Dividend equivalents may be paid currently or may be deemed to be reinvested in additional shares of stock, which may thereafter accrue additional equivalents, and may be payable in
cash, shares of common stock or a combination of the two. Our compensation committee will determine the terms of any dividend equivalents.
Other Equity-Based Awards
Our compensation committee may grant other types of equity-based awards under the 2011 Plan. Other equity-based awards are payable in
cash, shares of common stock or other equity, or a combination thereof, and may be restricted or unrestricted, as determined by our compensation committee. The terms and conditions that apply to other
equity-based awards are determined by the compensation committee.
Change of Control
Under the 2007 Plan and 2011 Plan, if we experience a change in control in which equity-based awards that are not exercised prior to
the change in control will not be assumed or continued by the surviving entity, unless otherwise provided in an award: (i) all restricted shares will vest, and all share units will vest and the
underlying shares will be delivered immediately before the change in control, and (ii) at the compensation committee's discretion either all options and share appreciation rights will
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become
exercisable 15 days before the change in control and terminate upon the consummation of the change in control, or all options, share appreciation rights, restricted shares and share
units will be cashed out in an amount equal to the value, which is the excess fair value of the shares underlying the options over the exercise price of the options, of the award before the change in
control. In the case of performance shares, if more than half of the performance period has lapsed, the performance shares will be converted into restricted shares based on actual performance to date.
If less than half of the performance period has lapsed, or if actual performance is not determinable, the performance shares will be converted into restricted shares assuming target performance has
been achieved.
If
an award is assumed or substituted in connection with a change of control and the holder is terminated without cause within a year following a change in control, the award will be
fully vested and may be exercised in full, to the extent applicable, beginning on the date of such termination and for the one-year period immediately following such termination or for
such longer period as the compensation committee shall determine.
As
defined in the 2007 Plan and 2011 Plan, a "corporate transaction" or "change of control" means:
•
the dissolution or liquidation of the Company or a merger, consolidation or reorganization of the Company with one or more
other entities in which we are not the surviving entity;
•
a sale of substantially all of our assets to another person or entity; or
•
any transaction which results in any person or entity owning 50% or more of the combined voting power of all classes of
the Company's stock.
Under
the 2006 Plan, if we experience a change in control, any unvested awards vest immediately prior to the closing of the change of control and the compensation committee may provide
for the award recipient's election alternatives regarding the terms and conditions for the exercise of or modification of any outstanding awards without the consent of the holder of the award so long
as it does not affect the then current exercise provisions. In addition, the compensation committee may require that awards granted under the 2006 Plan must be exercised in connection with the closing
of the change of control and any awards not so exercised will expire. Under the 2006 Plan, all outstanding awards terminate immediately upon a dissolution or liquidation of the Company.
As
defined in the 2006 Plan, a "change of control" means:
•
any person or group acquires more than 50% of either the total fair market value of all our common stock issued and
outstanding or the total voting power of all shares of capital stock authorized to vote for the election of our directors;
•
any person or group acquires 35% or more of the voting power of all shares of capital stock authorized to vote for the
election of our directors in any 12 month period;
•
a majority of the members of the Board of Directors is replaced during any 12 month period by directors whose
appointment was not endorsed by a majority of the members of the Board of Directors; or
•
any person or group acquires more than 40% of the total gross fair market value of all our assets in any 12 month
period.
Provided
that a "change of control" under the 2006 Plan does not include:
•
any transaction involving any stockholder that individually or as a group owned more than 50% of the outstanding common
stock on February 10, 2006, until such time as such stockholder first owns less than 40% of the total outstanding common stock of the Company; or
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•
any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of the Company's capital stock.
Amendment; Termination
Our Board of Directors may amend or terminate any Plan at any time; provided that no amendment may adversely impair the benefits of
participants with outstanding awards. Our stockholders must approve any amendment if such approval is required under applicable law
or                  regulations.
The
compensation committee may provide in any agreement under any of the Plans for different provisions to apply to an award than those described above.
Director Compensation
The following table sets forth the compensation for our non-employee directors for the year ended December 31, 2010.
Kelsey Boltz and Gary Huber both serve as directors, but as company employees they receive no compensation for their services as directors. The compensation for Kelsey Boltz and Gary Huber is reported
in the executive compensation tables.
Name
Fees
Earned
or Paid
in Cash
($)
Stock
Awards
($)
Option
Awards
($)(1)
All Other
Compensation
($)
Total
($)
Number of
Securities
Underlying
Options
Outstanding at
December 31,
2010
John K. Campbell
10,000
—
75,997
—
85,997
290,000
Jerry Nelson
10,000
—
75,997
50,000
(2)
135,997
290,000
Henry G. Grundstedt
10,000
—
75,997
—
85,997
260,000
James J. Graham
—
—
—
66,760
(3)
66,760
100,000
Richard Mallery
—
—
—
—
—
300,000
Carolyn C. Loder
—
—
—
—
—
—
(1)
During
the year ended December 31, 2010, each of Messrs. Campbell, Nelson and Grundstedt received a stock option award for 30,000 common
shares. The amounts in this column reflect the amounts we recorded under FASB ASC Topic 718 "Compensation—Stock Compensation" as stock-based compensation in our financial statements
for the fiscal years stated in connection with options we granted in the fiscal years stated. The assumptions we used in valuing options are described in Note 10 to our Consolidated Financial
Statements included elsewhere in this prospectus.
(2)
In
May 2010, we granted Mr. Nelson 50,000 shares of common stock as an unrestricted stock award in consideration of and in connection with a $500,000
standby credit facility. We did not draw on the credit facility and it was subsequently terminated. The grant date fair value of the stock award was $50,000.
(3)
In
May 2010, we granted Mr. Graham stock option awards of 100,000 in consideration of, and in connection with, an April 15, 2010 Strategic
Consulting and Advisory Agreement, which was terminated on February 11, 2011. The grant date fair value of the May 2010 stock option awards was $66,760.
Directors
who are not our employees receive annual fees of $20,000, and fees of $2,000 for each board meeting or committee meeting attended in person, in consideration for
out-of-town travel. All such fees are paid in cash. Directors who are our employees receive no fees for their services on the
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Board
of Directors. All directors are entitled to reimbursement for their reasonable out-of-pocket travel expenditures. Each non-employee director is entitled to
receive options to purchase 200,000 shares of common stock upon joining the board and 30,000 annually. All outstanding options granted as fees to our non-employee directors have been
issued under our 2006 Plan, 2007 Plan and 2011 Plan.
In
February 2009, in conjunction with certain salary reductions for our executive officers, our Board of Directors reduced its annual fees by 50%. In connection with this reduction in
compensation, we agreed to modify the terms of, 30,000 stock options issued to Mr. Campbell, 30,000 stock options issued to Mr. Nelson and 200,000 stock options issued to
Mr. Grundstedt. We modified the terms of the stock options by reducing the exercise price from $1.50 to $.68 per share on 30,000, 30,000 and 200,000 stock options issued to Mr. Campbell,
Mr. Nelson and Mr. Grundstedt, respectively.
On
February 22, 2011, our Board of Directors granted options to purchase 200,000 shares of our common stock at an exercise price of $1.00 per share to each of
Messrs. Graham, Loder and Mallery in connection with their appointment to the Board of Directors, which fully vested upon the grant and expire after ten years. On February 11, 2011, our
Board of Directors granted options, which expire after ten years, to purchase 200,000 shares of our common stock at an exercise price of $1.00 per share to Mr. Graham in connection with
Mr. Graham entering into a consulting agreement with the Company, of which half vests on August 11, 2011 and the remaining half vests on February 11, 2012. For a description of
the consulting agreement entered into with Mr. Graham, see the section of this prospectus entitled "
Certain Relations and Related Person Transactions—Related
Person Transactions
." The options granted to Mr. Loder and Mr. Mallery were issued under the 2011 Plan and the options granted to Mr. Graham were issued
under the 2007 Plan.
Limitations on Liability and Indemnification Matters
See "
Indemnification Matters and Disclosure of SEC Position on Indemnification for Securities Act
Liabilities
" on page 148.
Compensation Committee Interlocks and Insider Participation
On February 22, 2011, the Company formed a compensation committee to determine the compensation of the executive officers and to
set the guidelines for compensation for the employees of the Company. During the fiscal year ended December 31, 2010, the Company did not have a compensation committee. No employees or officers
of the Company, other than Dr. Huber and Mr. Boltz who serve as both officers and directors, participated in deliberations of our Board of Directors concerning executive officer
compensation. Dr. Huber and Mr. Boltz were not present during the Board of Directors deliberations concerning their own compensation. During the last fiscal year, none of our executive
officers served as a member of a Board of Directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers
that served as a member of our Board of Directors or compensation committee.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of March 24, 2011, information regarding persons known by us to be the beneficial owner of
more than 5% of the outstanding shares of our common stock. Shown separately in the second table below is information regarding the beneficial ownership of our common stock by (i) each director
and nominee; (ii) each named executive officer; and (iii) all directors and executive officers together as a group.
The
number of shares beneficially owned and the percentage of shares beneficially owned are based on the 58,204,141 shares of common stock that were issued and outstanding as of
March 24, 2011. For the purposes of the information provided below, shares subject to options and warrants that are exercisable within 60 days following March 24, 2011 are deemed
to be outstanding and beneficially owned by the holder for the purpose of computing the number of shares and percentage ownership of that holder but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated or as affected by
applicable community property laws. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
Principal Stockholders
Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership(1)
Percent of Class(2)
Primary Corp
14,269,067
24.5
%
130 King Street West, Ste. 2110
Toronto, ON M5X 1B1 Canada
Kelsey Boltz
6,909,293
(3)
11.85
%
6066 N Hillside Dr.
Scottsdale, AZ 85253 U.S.
Passport Capital, LLC
4,666,666
(4)
8.02
%
30 Hotaling Place, Ste. 300
San Francisco, CA 94111 U.S.
(1)
Under
Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes
the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within
60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not
necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of the date of this prospectus. As of the date of this
prospectus, there were 58,204,141 shares issued and outstanding.
(2)
The
percent of common stock owned is calculated using the sum of (i) the number of shares of common stock beneficially owned, plus (ii) the
number of warrants and options
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of
the beneficial owner that are exercisable within sixty (60) days, as the numerator, and the sum of (a) the total number of shares of common stock of the Company outstanding, plus
(b) the number of warrants and options of the beneficial owner that are exercisable within sixty (60) days, as the denominator.
(3)
Includes
6,809,293 shares of common stock held by Kelsey L. Boltz and Barbara B. Boltz Family Revocable Trust and 100,000 shares issuable upon exercise of
stock options granted pursuant to our 2007 Plan.
(4)
Includes,
(i) 2,333,333 shares of common stock held by Passport Materials Master Fund LP, (ii) 1,253,000 shares of common stock held by
Passport Global Strategies II Ltd., and (iii) 1,080,333 shares of common stock held by Passport Global Strategies III Ltd.
Directors and Executive Officers
Name of Beneficial Owner
Amount and Nature of
Beneficial Ownership(1)
Percent of Class(2)
Kelsey Boltz,
Executive Chairman of the Board
6,909,293
(3)
11.85%
Gary C. Huber,
Chief Executive Officer, Director
1,400,000
(4)
2.36%
Edward M. Topham,
Chief Financial Officer
855,283
(5)
1.46%
Mark J. Ludwig,
V.P. Operations
250,000
(6)
*
Mike R. Neumann,
V.P. Environmental Services
485,000
(7)
*
John K. Campbell,
Director
360,000
(8)
*
Jerry Nelson,
Director
476,364
(9)
*
Henry G. Grundstedt,
Director
260,000
(10)
*
James J. Graham,
Director
300,000
(11)
*
Carolyn C. Loder,
Director
200,000
(12)
*
Richard Mallery,
Director
500,000
(13)
*
All directors and officers as a group (11 individuals)
11,995,940
19.23%
*
Less
than one percent
(1)
Under
Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes
the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within
60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person)
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by
reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power
with respect to the number of shares of common stock actually outstanding as of the date of this prospectus. As of the date of this prospectus, there were 58,204,141 shares issued and outstanding.
(2)
The
percent of common stock owned is calculated using the sum of (i) the number of shares of common stock beneficially owned, plus (ii) the
number of warrants and options of the beneficial owner that are exercisable within sixty (60) days, as the numerator, and the sum of (a) the total number of shares of common stock of the
Company outstanding, plus (b) the number of warrants and options of the beneficial owner that are exercisable within sixty (60) days, as the denominator.
(3)
Includes
6,809,293 shares of common stock held by Kelsey L. Boltz and Barbara B. Boltz Family Revocable Trust and 100,000 shares issuable upon exercise of
stock options granted pursuant to our 2007 Plan.
(4)
Includes
800,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan, and 400,000 shares issuable upon exercise of stock
options granted pursuant to our 2007 Plan.
(5)
Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan and 100,000 shares issuable upon exercise of stock options
granted pursuant to our 2007 Plan.
(6)
Includes
250,000 shares issuable upon exercise of stock options granted pursuant to our 2007 Plan.
(7)
Includes
485,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan.
(8)
Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan and 90,000 shares issuable upon exercise of stock options
granted pursuant to our 2007 Plan. Mr. John K. Campbell, a director of the Company, is a director and a shareholder of Primary Corp, a publicly held corporation traded on the Toronto Stock
Exchange.
(9)
Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2006 Plan and 90,000 shares issuable upon exercise of stock options
granted pursuant to our 2007 Plan.
(10)
Includes
260,000 shares issuable upon exercise of stock options granted pursuant to our 2007 Plan.
(11)
Includes
300,000 shares issuable upon exercise of stock options granted pursuant to our 2007 Plan.
(12)
Includes
200,000 shares issuable upon exercise of stock options granted pursuant to our 2011 Plan.
(13)
Includes
300,000 shares issuable upon exercise of stock options granted pursuant to our 2007 Plan and 200,000 shares issuable upon exercise of stock
options granted pursuant to our 2011 Plan.
Changes in Control
We are unaware of any contract, or other arrangement or provision, the operation of which may at a subsequent date result in a change
of control of our company.
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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies and Procedures for Related Person Transactions
On February 22, 2011, we adopted a written Related Person Transaction Policy, pursuant to which the Company is not permitted to
enter into any transaction required to be disclosed under Item 404(a) of Regulation S-K (a "Related-Person Transaction") without (i) reporting it to our Chief
Executive Officer or Chief Financial Officer and (ii) obtaining the prior, whenever practical, consent of our audit committee. If our Chief Executive Officer or Chief Financial Officer
determines that prior approval of a Related-Person Transaction is not practicable, our audit committee shall review and may ratify such a transaction at its next meeting. Our Chief Executive Officer
or Chief Financial Officer may also present a Related-Party Transaction to the chairperson of our audit committee, who shall review and may approve such transaction subject to ratification by our
audit committee at its next meeting. In approving or rejecting a Related-Party Transaction, our audit committee will review all relevant information available to it about the Related-Person
Transaction.
After review, our audit committee may approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines
in the good faith exercise of its discretion. In approving a Related-Person Transaction, our audit committee may, in its sole discretion, impose such conditions as it deems appropriate on the Company
or the related person. A copy of our Related Person Transaction Policy and other corporate governance documents can be viewed on our corporate website at:
www.                  .
Related Person Transactions
Each of the following related person transactions was entered into before the adoption of our Related Person Transaction Policy and
therefore was not subject to the terms and conditions of such policy.
Transactions with Richard Mallery
During 2009, we paid a law firm $239,449 in legal fees. Richard Mallery, a director of the Company since February 15, 2011, was
the attorney representing us and is a partner in that law firm.
In
May 2009, we granted Mr. Mallery stock options to purchase 300,000 shares of our common stock at an exercise price of $0.68 per share for additional strategic consulting
services. The options had an aggregate estimated fair value of $124,259 at grant date.
Transactions with Primary
In December 2009, we issued 3,519,067 shares of our common stock to Primary, a principal stockholder of the Company, in consideration
for our October 15, 2009 purchase of Primary's 34.56% interest in the Grants J.V. pursuant to the Purchase Agreement that we entered into with Primary in October 2009. The fair value of
the shares on the date of issuance was $3,519,067.
On
January 4, 2011, we entered into a financial advisory agreement with Primary Capital, an affiliate of Primary. Pursuant to the agreement Primary Capital will consult with us
with respect to (i) any merger,
amalgamation, plan of arrangement, reorganization or other business combination, or (ii) the issuance by us, or a counterparty of a business combination, of securities in connection with an
initial public offering or a private placement. Should we conclude a transaction, the financial advisory agreement requires us to pay a 1% completion fee on the transaction value, defined as the gross
proceeds received by us in a financing transaction or the aggregate unrestricted cash balances of any counterparty in connection with a business combination. Assuming the completion of this offering,
a completion fee of approximately $                  will be paid to Primary.
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Transactions with James J. Graham
We have entered into three agreements with the Consultant, the principal of which is James J. Graham, a director of the Company since
February 15, 2011. As the principal of the Consultant, Mr. Graham has a direct interest in all amounts paid to the Consultant.
On
January 14, 2010, we entered into a finder's fee agreement with the Consultant to provide introductions to certain industry contacts in connection with our financing efforts.
Should we conclude a transaction through the efforts of the Consultant, the agreement requires us to pay a 1% fee on proceeds received by us. The finder's fee agreement was non-exclusive
and terminable at any time upon 30 days notice. On February 11, 2011, we terminated the agreement, however, we remain obligated to pay the fees set forth therein should we complete a
transaction within 12 months of termination if the Consultant introduced the financing party on our behalf during the term of the agreement. As of March 24, 2011, no financing
transactions have been entered into and no payments have been made or are due and owing to the Consultant under the finder's fee agreement.
On
April 15, 2010, we entered into the Advisory Agreement with the Consultant to provide advisory services in connection with our evaluation of pursuing one or more strategic
transactions, such as off-take agreements, forward sales contracts, joint ventures and mineral property acquisitions or dispositions. Should we conclude a strategic transaction through
efforts of the Consultant, the Advisory Agreement requires us to pay a 1.5% fee on debt proceeds received by us and a 5% fee on proceeds received by us through equity financing, asset dispositions or
a joint venture earn-in. In addition, we granted the Consultant a stock option to purchase 100,000 shares of common stock exercisable within five years at an exercise price of $1.00 per
share of common stock, all of which has vested. The stock option had an estimated fair value of $66,760 at grant date. The Advisory Agreement was non-exclusive and terminable at any time
upon 30 days notice. We terminated the Advisory Agreement on February 11, 2011, however, we remain obligated to pay the fees set forth in the consulting agreement should we complete a
transaction within 12 months of termination if the Consultant contacted the financing party on our behalf during the term of the
Advisory Agreement. To date, no strategic transactions have been entered into and no payments, other than the stock option grant, have been made or are due and owing to the Consultant under the
Advisory Agreement.
On
February 11, 2011, we entered into a consulting agreement with the Consultant to provide advice and consultation to us, on a as needed basis, with respect to
(i) marketing and operational strategies, goals and objectives; (ii) implementation and execution of strategic initiatives; and (iii) evaluation of performance and results. In
consideration of Consultant's services we agreed to pay Consultant a $5,000 per month retainer to be offset by a $1,000 per day consulting fee. In addition, we granted the Consultant a stock option to
purchase 200,000 shares of common stock exercisable within ten years at an exercise price of $1.00 per share of common stock, which vests one-half six months after the agreement date and
the balance twelve months after the agreement date. The stock option had a fair value of $                  at grant date. The consulting agreement is
non-exclusive and may be terminated at
any time upon 30 days notice. As of March 29, 2011, the Company has paid $18,422, in addition to the stock option grant, to the Consultant under the consulting agreement.
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DESCRIPTION OF CAPITAL STOCK
The following is a summary of our common stock and preferred stock and is qualified in its entirety by the provisions of our Articles
of Incorporation and Bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part. Our authorized capital stock consists of 200,000,000 shares of common stock,
par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. No other class or series of capital stock is currently authorized under our Articles of Incorporation.
As of March 24, 2011, 58,204,141 shares of common stock are outstanding, 6,291,666 shares of common stock are issuable upon exercise of outstanding options and 3,051,744 shares of common stock
are issuable upon exercise of outstanding warrants. As of March 24, no shares of preferred stock are outstanding.
Common Stock
Holders of common stock are entitled to cast one vote for each share held of record on all matters submitted to a vote of the
stockholders, including the election of directors. Cumulative voting for directors is not permitted. Accordingly, the holders of a majority of the
shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they so choose. Subject to preferences that may be applicable to any then
outstanding preferred stock of the Company, holders of common stock are entitled to receive, on a pro rata basis, dividends and distributions, if any, that the Board of Directors may declare out of
legally available funds. Any dividends declared on the common stock will not be cumulative. Upon our liquidation, dissolution or winding up, holders of common stock will be entitled to share equally
and ratably in any assets remaining after the payment of all debt and other liabilities, subject to the prior rights, if any, of holders of any outstanding shares of preferred stock. In the event of a
merger or consolidation, all holders of common stock will be entitled to receive the same per share consideration.
The
holders of our common stock do not have any preemptive, cumulative voting, subscription, conversion, redemption or sinking fund rights. The absence of preemptive rights could result
in a dilution of the interest of existing stockholders should additional shares of common stock be issued. The common stock is not subject to future calls or assessments by us. Except as otherwise
required by law, holders of the common stock are not entitled to vote on any amendment or certificate of designation relating to the terms of any series of preferred stock if the holders of the
affected series are entitled to vote on such amendment or certificate of designation under our Articles of Incorporation.
As
of March 24, 2011, there is no public market for our common stock and we have 195 stockholders of record of our common stock.
Under
our Articles of Incorporation, the Board of Directors has the authority, without further action by our stockholders, and within the limits set forth in the Nevada Corporations Act,
to:
•
designate in whole or in part, the powers, preferences, limitations, and relative rights, of any class of capital stock
before the issuance of any shares of that class;
•
create one or more series within a class of capital stock, fix the number of shares of each such series, and designate, in
whole or part, the powers, preferences, limitations, and relative rights of such series, all before the issuance of any shares of that series;
•
alter or revoke the powers, preferences, limitations, and relative rights granted to or imposed upon any wholly unissued
class or series of capital stock;
•
increase or decrease the number of shares constituting any series of capital stock, the number of shares of which was
originally fixed by the Board of Directors, at any time;
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•
determine the dividend rate on the shares of any class or series of capital stock, whether dividends will be cumulative,
and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that class or series of capital stock;
•
determine whether that class or series of capital stock will have voting rights, in addition to the voting rights provided
by law, and, if so, the terms of such voting rights;
•
determine whether that class or series of capital stock will have conversion privileges and, if so, the terms and
conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines;
•
determine whether or not the shares of that class or series of capital stock will be redeemable and, if so, the terms and
conditions of such redemption, including the date or dates upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
•
determine whether that class or series of capital stock will have any sinking fund rights and, if so, the terms and amount
of such sinking fund rights;
•
determine the rights of the shares of that class or series of capital stock in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that class or series of capital stock; and
•
determine any other relative rights, preferences and limitations of that class or series.
Because
the Board of Directors has the power to establish the preferences, powers and rights of the shares of any additional series of capital stock, including preferred stock, it may
afford holders of any such capital stock preferences, powers and rights, including voting and dividend rights, senior to the rights of holders of any series of common stock, which could adversely
affect the holders of such common stock and could discourage a takeover of us even if a change of control of our company would be beneficial to the interests of our stockholders.
Preferred Stock
Under our Articles of Incorporation, the Board of Directors has the authority, without further action by our stockholders, to issue up
to 10,000,000 shares of preferred stock in one or more series and to establish the preferences, powers and rights of such series of preferred stock as described above.
Warrants
As of March 24, 2011, there are two outstanding warrants to purchase an aggregate of 3,051,744 shares of our common stock at an
exercise price of the lesser of (i) $1.75 per share, and (ii) the lowest price of any shares of common stock issued in connection with any equity capital raising undertaken by the
Company, which are held by RMBAH (the "Warrants"). The exercise period of each Warrant commenced on the date of issuance and expires four years after such date. One warrant, which represents 1,428,571
shares, expires on April 4, 2014 and the other warrant, which represents 1,623,173 shares, expires on April 11, 2014. The Company is also obligated under the Senior Debt Facility to
issue such additional warrants to purchase up to a maximum of 4,262,541 additional shares of our common stock as is necessary for RMBAH to own 5%, calculated on a partially diluted basis, of our
issued and outstanding common stock on the same terms as the Warrants (the "Additional
Warrant Obligation"). Pursuant to the Additional Warrant Obligation, we expect to issue an additional warrant to purchase approximately                  shares
of common stock (the "IPO Warrant") as a
result of this offering.
In
addition, we expect to issue warrants to the underwriters to purchase an aggregate of                  shares of common stock in connection with this offering,
which equals an
aggregate of 5% of the shares
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of
common stock sold in this offering (assuming the underwriters do not exercise the over-allotment option). The warrants will have an exercise price equal to 120% of the offering price for the shares
of common stock. The warrants are exercisable commencing                  after the effective date of the registration statement related to this offering and
will be exercisable for five years
thereafter. The warrants are not redeemable by us and are subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA. See the section of this prospectus entitled
"Underwriting—Underwriters' Warrants" for a more detailed discussion of these warrants.
Registration Rights
Pursuant to the Warrants we agreed to use our best efforts to file a registration statement on Form S-1 or
other available form to register all securities which are issuable upon exercise of the Warrants concurrently with any initial public offering of our common stock and to use our best efforts to cause
such registration statement to become effective within six months from the date on which such registration statement is filed. We must also register any such securities under any applicable securities
or "blue sky" laws of each state of the United States which RMBAH reasonably requests. The securities which are issuable upon exercise of any additional warrants issued to RMBAH pursuant to the
Additional Warrant Obligation, including the IPO Warrant, will also have the same registration rights. After these shares are registered, they will be freely tradable without restriction under the
Securities Act. We have agreed with RMBAH to file a separate Form S-1 registration statement on or about                  to register the shares
underlying the Warrants and
the IPO Warrant.
Anti-Takeover Effect of Our Charter and Bylaw Provisions and Nevada Law
Articles of Incorporation and Bylaws.
Our Articles of Incorporation and Bylaws have provisions that could discourage a takeover of us even if a change of control of the
Company would be beneficial to the interests of our stockholders. Our Articles of Incorporation allows our directors to issue preferred stock as described above that could impede the success of any
attempt to change our control. Furthermore, our stockholders do not have cumulative voting rights. As a result, our stockholders holding a majority of shares of common stock outstanding will be able
to elect all of our directors. Our Bylaws provide that only our Board of Directors, Chairman or President, or as otherwise provided by the Nevada Corporations Act, may call a special meeting of
stockholders. Section 78.310 of the Nevada Corporations Act does not currently allow stockholders to call special meetings. Our Bylaws also include advance notice provisions that require
stockholders to provide at least 120 days advance notice to nominate directors at an annual meeting and to include in any such notice certain specified information, including all information
about the director nominee required under the Exchange Act. These provisions may make it more difficult for our existing stockholders to replace our Board of Directors, as well as another party to
obtain control of us by replacing our Board of Directors. Such provisions may also have the effect of preventing changes in our management, since our Board of Directors has the power to retain and
discharge officers.
Nevada Laws.
The "acquisition of controlling interest" provisions of Sections 78.378 to 78.3793, inclusive, of the Nevada Corporations Act
provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a Nevada corporation that does business in Nevada and has 200 or more stockholders of record,
at least 100 of whom have addresses in Nevada appearing on the stock ledger of the corporation, in the secondary public or private market may be denied voting rights with respect to the acquired
shares, unless (i) a majority of the disinterested stockholders of the corporation and a majority of the disinterested stockholders of each class or series of outstanding shares that will be
adversely affected by the acquisition of controlling interest elect to restore such voting rights in whole
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or
in part, or (ii) the Articles of Incorporation or Bylaws of the corporation provide that the "acquisition of controlling interest" provisions of the Nevada Corporations Act do not apply to
the corporation. Our Articles of Incorporation provides that we are not to be governed by or subject to the "acquisition of controlling interest" provisions of the Nevada Corporations Act.
Upon
completion of this offering, we will be subject to the "Combination with Interested Shareholders" provisions of Sections 78.411 to 78.444, inclusive, of the Nevada
Corporations Act that restrict the ability
of a resident domestic corporation to engage in any combination with an interested stockholder for three years after the date the stockholder became an interested stockholder, unless the combination
or the purchase of shares by the interested stockholder that caused such stockholder to become an interested stockholder is approved by the Board of Directors of the resident domestic corporation
before the date the person became an interested stockholder. If the combination was not previously approved, the interested stockholder may effect a combination after the three-year period
only if such stockholder receives approval from a majority of the disinterested shares or the offer meets various fair price criteria. For purposes of the foregoing provisions, "resident domestic
corporation" means a Nevada corporation that has 200 or more stockholders and "interested stockholder" generally means the beneficial owner, directly or indirectly, of 10% or more of the voting power
of then outstanding shares of the resident domestic corporation.
Limitations on Liability and Indemnification
See "
Indemnification Matters and Disclosure of SEC Position on Indemnification for Securities Act
Liabilities
" on page 148.
Market Listing
We will apply to have our common stock listed on                  under the symbol
"                  ". We will also apply to have our
common stock listed on TSX under the symbol "                  ".
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UNDERWRITING AND PLAN OF DISTRIBUTION
Under the terms and subject to the conditions in the underwriting agreement,
dated                  , 2011, by and among the Company,
Roth Capital Partners, LLC, which we refer to as Roth, acting as sole book-runner and lead co-underwriter, and Cormark Securities Inc., together with its U.S.
affiliate Cormark Securities (U.S.A.) Limited, which we collectively refer to as Cormark, acting as lead co-underwriter, pursuant to which Roth and Cormark, collectively the underwriters,
have severally and not jointly agreed to purchase from us, and we have agreed to sell to the underwriters, on a firm commitment basis, the number of shares of common stock provided below opposite
their name, at the public offering price, less the underwriting discount set forth on the cover page of this prospectus.
Name
Number of Shares
Roth Capital Partners, LLC
Cormark Securities Inc.
Cormark Securities (U.S.A) Limited
Total
The
offering is being made concurrently in the United States and in various Provinces in Canada. Roth and Cormark Securities (U.S.A.) Limited will serve as the underwriters in the United
States and Cormark Securities Inc. will serve as the underwriter in Canada.
Subject to applicable law, the underwriters or their affiliates may offer the shares of
common stock for sale outside of the United States or Canada.
The
underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the
obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel
and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters
are not required to take or pay for the shares covered by the underwriters' over-allotment option described below.
The
underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to
certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the underwriter.
Over-Allotment Option
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 15%
additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option
solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. If the underwriters exercise all
or part of this option, each underwriter will purchase the number of additional shares of common stock, approximately proportionate to its initial commitment amount reflected in the above table,
covered by the option at the public offering price that appears on the cover page of this prospectus, less the underwriting discounts and commissions.
Commission and Expenses
The underwriters have advised us that they propose to offer the shares to the public at the public offering price set forth on the
cover page of this prospectus and to certain dealers at that price less a concession not in excess of $                  per share. The underwriters may allow,
and certain dealers may reallow, a
discount from the concession not in excess of $                  per share to certain brokers and
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dealers.
After this offering, the public offering price, concession and reallowance to dealers may be changed by the underwriters. No such change shall change the amount of proceeds to be received by
us as set forth on the cover page of this prospectus. The shares are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any
order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.
The
following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both
no exercise and full exercise of the underwriters' option to purchase additional shares of common stock to cover over-allotments.
Total
Per Share
No Exercise
Full Exercise
Public offering price
$
$
$
Underwriting discounts and commissions
$
$
$
Proceeds, before expenses, to us
$
$
$
The
estimated offering expenses payable by us in connection with this offering, exclusive of the underwriting discounts and commissions, are approximately
$                  . In addition,
we have agreed to reimburse the underwriters for certain out-of-pocket expenses incurred by them with respect to this offering. In the event the offering is not consummated, we
have agreed to reimburse the underwriters for certain out-of-pocket expenses incurred by them.
We
have agreed to sell the shares at the offering price less the underwriting discount set forth on the cover page of this prospectus. We cannot be sure that the offering price will
correspond to the price at which our common stock will trade following this offering.
Underwriters' Warrants
We have also agreed to issue to the underwriters warrants to purchase the number of shares of common stock equal to an aggregate of 5%
of the shares of common stock sold in this offering (including any shares sold under the over-allotment option). Assuming the underwriters do not exercise the over-allotment
option, we will issue to the underwriters warrants to purchase a total of                  shares of common stock. The total dollar value of the warrants is
$                  . The warrants will have an
exercise price equal to 120% of the offering price for the shares of common stock. The warrants are exercisable commencing                  after the effective
date of the registration statement
related to this offering, and will be exercisable for five years thereafter.
The
warrants are not redeemable by us. The warrants and the underlying shares of common stock have been deemed compensation by FINRA and are therefore subject to a 180-day
lock-up pursuant to Rule 5110(g)(1) of FINRA. The underwriters (or permitted assignees under the Rule) may not sell, transfer, assign, pledge or hypothecate the warrants or the
securities underlying the warrants, nor will they engage in any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the warrants or the
underlying securities for a period of 180 days from the date of this prospectus. The warrants may be exercised on a cashless basis. The warrants will provide for adjustment in the number and
price of such warrants (and the shares of common stock underlying such warrants) in the event of recapitalization, merger or other structural transaction to prevent mechanical dilution.
Exchange Listing
We are applying to list our common stock on                  under the trading symbol
"                  ." We are also applying to list
our common stock on TSX under the trading symbol "                  ."
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Lock-Up Agreements
We, our executive officers, directors and certain of our significant stockholders have agreed to a 180-day
"lock-up" from the date of this prospectus relating to shares of our common stock or any securities convertible into or exchangeable for our common stock. This means that, for a period of
180 days following the date of this prospectus, we and such persons may not offer, sell, purchase, pledge or otherwise transfer or dispose of, directly or indirectly, these securities without
the prior written consent of the underwriters, subject to certain exceptions. The lock-up period described in the preceding sentence will be extended if (1) during the period that
begins on the date that is 15 calendar days plus three business days before the last day of the lock-up period and ends on the last day of the lock-up period, we issue an
earnings release or material news or a material event relating to us occurs; or (2) prior to the expiration of the initial lock-up period, we announce that we will release earnings
results during the 16- day period beginning on the last day of the lock-up period, in which case the lock-up period automatically will be extended until the
expiration of the date that is 15 calendar days plus three business days after the date on which the issuance of the earnings release or the material news or material event occurs.
Stabilization
In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A
short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close
out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the
underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in
excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely
affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize
the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the
common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.
Indemnification
Pursuant to the underwriting agreement, we have agreed to indemnify the underwriters against certain liabilities, including liabilities
under the Securities Act, and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments which the underwriters or other
indemnified parties may be required to make in respect of any such liabilities.
Electronic Distribution
This prospectus may be made available in electronic format on Internet sites or through other online services maintained by the
underwriters or its affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. Other than this prospectus in electronic format, any
information on the underwriters' or their affiliates' websites and any information contained in any other website maintained by the underwriters or any affiliate of the underwriters is
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not
part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by
investors.
Pricing of the Offering
Prior to this offering, there has been no established public market for our common stock. The initial public offering price was
determined following arm's length negotiations between us and the underwriters. Among the factors considered in determining the initial public offering price in addition to prevailing market
conditions, were our future prospects and those of our industry in general, uranium mineralization on our uranium properties and market prices of securities and certain financial and operating
information of companies engaged in activities similar to ours. There can be no assurance that the initial public offering price of the common stock will correspond to the price at which the common
stock will trade in the public market subsequent to this offering or that an active public market for the common stock will develop and continue after this offering.
Financial Advisors
Pursuant to the Financial Advisory Agreement that we entered into in January 2011 with Primary, Primary will advise us with respect to
the issuance of the securities offered in this offering in exchange for a fee in the amount of 1% of the gross proceeds received by the Company upon completion of this offering.
$                  or
$                  will be payable to Primary assuming no exercise and full exercise of the underwriters' option to purchase additional shares of common stock
to cover over-allotments,
respectively. The fees payable to Primary are for financial advice as Primary is not an underwriter and is not participating in this offering.
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SHARES AVAILABLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock. As of March 24, 2011, there are approximately 195
holders of our common stock. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing
from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales
of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to
raise equity capital in the future.
Based
on the number of shares outstanding as of                  , 2011, upon the completion of this offering,
                  shares of common stock will be outstanding, assuming no
exercise of the underwriters' overallotment option, no exercise of outstanding warrants and no exercise of outstanding options. Of the outstanding shares, all of the shares sold in this offering will
be freely tradable, except that any shares held by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described
below.
The
remaining                  shares of common stock outstanding after this offering will be restricted as a result of securities laws or lock-up agreements as
described
below. Following the expiration of the lock-up period, all shares will be eligible for resale in compliance with Rule 144 or Rule 701. "Restricted securities" as defined
under Rule 144 were issued and sold by us in reliance on exemptions from the registration requirements of the Securities Act. These shares may be sold in the
public market only if registered pursuant to an exemption from registration, such as Rule 144 or Rule 701 under the Securities Act.
Rule 144
In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell
their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale and (ii) we are
subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Persons who have beneficially owned restricted shares of our common stock for at least six
months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell
within any three-month period only a number of securities that does not exceed the greater of either of the following:
•
1% of the number of shares of our common stock then outstanding, which will equal
approximately                  shares
immediately after this offering, based on the number of shares of common stock outstanding as of                  , 2011; or
•
the average weekly trading volume of our common stock on                  during the
four calendar weeks preceding the
filing of a notice on Form 144 with respect to the sale;
provided,
in each case, that we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Such sales both by affiliates and by
non-affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144.
Rule 701
Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon
Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers or directors who purchased
shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701, but all holders of Rule 701 shares are required to wait until
90 days after the date of this
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prospectus
before selling their shares. However, substantially all Rule 701 shares are subject to lock-up agreements as described below and under the section entitled
"
Underwriting
" included elsewhere in this prospectus and will become eligible for sale upon the expiration of the restrictions set forth in those
agreements.
Lock-Up Agreements
All of our directors and officers and certain of our significant stockholders have signed lock-up agreements under which
they have agreed not to sell, transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common
stock without the prior written consent of the underwriters for a period of 180 days, subject to a possible extension under certain circumstances, after the date of this prospectus. The holders
of approximately                  % of our outstanding shares of common stock have executed lock-up agreements. These agreements are described in the section of
this prospectus entitled
"
Underwriting
."
Registration Rights
The 3,051,744 shares of common stock underlying the Warrants and any shares of common stock, up to a maximum of 4,262,541, underlying
any additional warrants issued pursuant to the Additional Warrant Obligation, including the IPO Warrant, are entitled to registration when this registration statement become effective. For a
description of these registration rights, please see "
Description of Capital Stock—Registration Rights
." We have agreed to file a
Form S-1 registration statement under the Securities Act on or about                  to register the shares of our common stock underlying the Warrants
and any additional warrants
issued pursuant to
the Additional Warrant Obligation, including the IPO Warrant, and, upon such registration, such shares will be eligible for sale in the public markets without restriction under the Securities Act.
Stock Options
As of March 24, 2011, 6,291,666 shares of common stock are subject to outstanding options. All such options were issued under
our 2006 Plan, 2007 Plan or 2011 Plan. As soon as practicable after the completion of this offering, we intend to file a Form S-8 registration statement under the Securities
Act to register shares of our common stock subject to options outstanding or reserved for issuance under our 2006 Plan, 2007 Plan and 2011 Plan. This registration statement will become effective
immediately upon filing, and shares covered by this registration statement will thereupon be eligible for sale in the public markets, subject to vesting restrictions, the lock-up
agreements described above and Rule 144 limitations applicable to affiliates. For a more complete discussion of our stock plans, see the sections of this prospectus entitled
"
Executive Compensation—Equity-Based Awards
" and "
Executive Compensation—Stock Option
Plans
."
Dividends
For a discussion of the company's history of dividends and dividend policy see the section of this prospectus entitled
"
Dividend Policy
."
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Securities Authorized for Issuance Under Equity Compensation Plans
Plan Category
Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
(a)
Weighted-average exercise price
of outstanding options, warrants
and rights
(b)
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a)) as of March 24, 2011
(c)
Equity compensation plans approved by security holders
5,891,666
$
0.73
158,334
(1)
Equity compensation plans not approved by security holders
400,000
$
1.00
600,000
(2)
Total
6,291,666
$
0.75
758,334
(2)
(1)
In
addition to the options to purchase 5,891,666 shares of common stock that the Company granted under the 2006 Plan and 2007 Plan, the Company has granted
250,000 shares of common stock as unrestricted stock awards under the 2006 Plan and 2007 Plan.
(2)
This
number assumes that 1,000,000 shares of common stock are authorized under the 2011 Plan. The 2011 Plan authorizes the greater of (A) 1,000,000
shares of our common stock or (B) the number of shares of common stock, up to a maximum of 3,000,000 shares, that when added together with the number of shares authorized under the 2006 Plan
and 2007 Plan equals 10% of the total issued and outstanding shares of common stock of the Company. As of March 24, 2011, 1,000,000 shares of common stock were authorized under the 2011 Plan.
For a discussion of our equity incentive plans, see the sections of this prospectus entitled "
Executive
Compensation—Equity-Based Awards
" and "
Executive Compensation—Stock Option Plans
."
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MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS FOR NON-U.S. HOLDERS
The following is a summary of the material United States federal income tax consequences to non-U.S. holders (defined
below) of the ownership and disposition of the shares of common stock purchased in the offering.
As
used herein, "non-U.S. holders" are beneficial owners of the shares of our common stock purchased in the offering, other than partnerships, that are not U.S. holders.
"U.S. holders" are beneficial owners of the shares of our common stock purchased in the offering who, or that are, for United States federal income tax purposes, (1) individual citizens or
residents of the United States, (including alien residents who are lawful permanent residents of the United States or meet the "substantial presence" test under Section 7701(b) of the of the
Internal Revenue Code of 1986, as amended (the "Code"), (2) corporations (or other entities treated as corporations for United States federal income tax purposes), created or organized in, or
under the laws of, the United States, any state thereof or the District of Columbia, (3) estates, the income of which is subject to United States federal income taxation regardless of its
source, or (4) trusts if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and (B) one or more United States
persons have the authority to control all substantial decisions of the trust. In addition, certain
trusts in existence on August 20, 1996 and treated as United States persons prior to such date may also be treated as U.S. holders.
If
a partnership (including for this purpose any entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of the shares of our common stock
purchased in the offering, the treatment of a partner in the partnership will generally depend upon the status of the partner and upon the activities of the partnership. Holders of shares of our
common stock that are partnerships, and partners in such partnerships should consult their tax advisors about the United States federal income tax consequences of owning and disposing of our common
stock.
This
summary does not describe all of the United States federal income tax consequences that may be relevant to a holder in light of its particular circumstances. For example, it does
not deal with special classes of holders, such as banks, thrifts, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies or
tax-exempt investors. This summary also does not address the tax consequences to (i) persons that have a functional currency other than the U.S. dollar, (ii) certain U.S.
expatriates or (iii) stockholders, shareholders or beneficiaries of a holder of such shares of common stock, a "controlled foreign corporation," a "foreign personal holding company," a "passive
foreign investment company," a person who acquired shares of our common stock in a compensatory transaction, a trader in securities that has elected the mark-to-market method
of accounting for its securities, or an entity taxable as a partnership for U.S. federal income tax purposes or other pass-through entity or an owner thereof. This summary is limited to
holders that hold our common stock as a capital asset within the meaning of Section 1221 of the Code. It also does not discuss the shares of our common stock purchased in the offering held as
part of a hedge, straddle, conversion, "synthetic security" or other integrated transaction. Further, it does not include any description of any alternative minimum tax consequences or the tax laws of
any state or local government or of any foreign government that may be applicable to such shares of common stock. This summary is based upon the Code, United States Treasury Regulations, Internal
Revenue Service, and Internal Revenue Service ("IRS") rulings and pronouncements and judicial decisions in effect as of the date of this prospectus, any of which may be subsequently changed, possibly
retroactively, or interpreted differently by the IRS, so as to result in United States federal income tax consequences different from those discussed below. There can be no assurance that the IRS will
not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, any rulings from the IRS with respect to the United States federal income tax
consequences of the ownership and disposition of such shares of common stock.
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PERSONS
CONSIDERING ACQUIRING OUR COMMON STOCK SHOULD CONSULT WITH THEIR INDEPENDENT TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME, FRANCHISE, PERSONAL PROPERTY,
ESTATE, GIFT, TRANSFER AND ANY OTHER TAX CONSEQUENCES (INCLUDING ANY ASSOCIATED REPORTING REQUIREMENTS) OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR
COMMON STOCK, INCLUDING THE EFFECT OF ANY TREATIES ON THE FOREGOING OR OTHERWISE.
Our Common Stock
The rules governing United States federal income taxation of the ownership and disposition, by a non-U.S. holder of our
common stock are complex and no attempt is made herein to provide more than a summary of such rules.
Distributions
If distributions are paid on shares of our common stock, the distributions will constitute dividends for U.S. federal income tax
purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent a distribution exceeds our current or
accumulated earnings and profits, it will constitute a return of capital that is applied against and reduces, but not below zero, the adjusted tax basis of your shares in our common stock. Any
remainder will constitute gain from the sale or exchange of the common stock, the treatment of which is described below under the section entitled "
—Sale or
Exchange of Common Stock
." Dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at the rate of 30% or such lower
rate as may be specified by an applicable income tax treaty, the benefits of which may be available to a non-U.S. holder. If the dividend is effectively connected with the
non-U.S. holder's conduct of a trade or business in the United States, and, if an applicable tax treaty requires, is also attributable to a U.S. permanent establishment maintained by such
non-U.S. holder, the dividend will not be subject to any withholding tax, provided certain certification requirements are satisfied (as described below), but will be subject to U.S.
federal income tax imposed on net income on the same basis that applies to U.S. persons generally. A corporate non-U.S. holder under certain circumstances also may be subject to an
additional branch profits tax equal to 30%, or such lower rate as may be specified by an applicable income tax treaty, the benefits of which may be available to a non-U.S. holder, on a
portion of its effectively connected earnings and profits for the taxable year.
Non-U.S.
holders should consult their own tax advisors regarding the potential applicability of any income tax treaty in their particular circumstances.
To
claim the benefit of a tax treaty or to claim exemption from withholding because the income is effectively connected with the conduct of a trade or business in the United States, a
non-U.S. holder must provide a properly executed IRS Form W-8BEN for
treaty benefits or Form W-8ECI for effectively connected income, or such successor forms as the IRS designates, prior to the payment of dividends. These forms must be periodically
updated. Non-U.S. holders generally may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund.
Sale or Exchange of Common Stock
A non-U.S. holder generally will not be subject to United States federal income tax and, in certain cases, withholding tax
on the sale, exchange or other disposition of our common stock received in the offering unless (1) the gain is effectively connected with a United States trade or business of the
non-U.S. holder and, if an applicable tax treaty requires, is also attributable to a U.S. permanent establishment maintained by such non-U.S. holder, (2) in the case of
a non-U.S. holder who is an individual, such holder is present in the United States for a period or periods aggregating 183 days or
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more
during the taxable year of the disposition, and either (A) such holder has a "tax home" in the United States or (B) income from such disposition is attributable to an office or
other fixed place of business maintained by such holder in the United States, or (3) Neutron Energy is or has been a "U.S. real property holding corporation," or "USRPHC," as defined for United
States federal income tax purposes. Generally, a U.S. corporation is a USRPHC if at least 50% of the value of the real property and certain other assets consists of "U.S. real property interests." We
believe that we currently are a USRPHC and that there is a substantial likelihood that we will continue to be a USRPHC. Notwithstanding the foregoing, so long as our common stock is regularly traded
on an established securities market, and, if applicable, certain volume trading thresholds are met, as determined under applicable Treasury regulations, non-U.S. holders who have never
beneficially owned more than 5% of our common stock generally will not be subject to U.S. federal income tax on any gain realized on the sale, exchange or redemption of common stock solely because we
are or have been a USRPHC.
If
a non-U.S. holder falls under clause (1) or (3) above, such holder generally will be taxed on the net gain derived from a sale in the same manner as U.S.
persons generally, and, in the case of (3) above, such holder generally will be subject to a 10% withholding tax applied to the gross proceeds received. Any amount withheld as discussed above
may be applied as a credit against the non-U.S. holder's substantive United States federal income tax liability. If an individual-non-U.S. holder falls under
clause (2) above, such individual generally will be subject to a flat 30% tax (or such lower rate as may be specified by an applicable income tax treaty) on the gain derived from a sale, which
may be offset by certain United States capital losses (notwithstanding the fact that such individual is not considered a resident of the United States). Individual non-U.S. holders who
have spent (or expect to spend) 183 days or more in the United States in the taxable year in which they contemplate a sale of common stock are urged to consult their tax advisors as to the tax
consequences of such sale. In addition, if a corporate non-U.S. holder falls under clause (1) above, it may be subject to an additional branch
profits tax on such effectively connected income at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty).
Non-U.S.
holders should consult their own tax advisors regarding the potential applicability of any income tax treaty in their particular circumstances.
Information Reporting and Backup Withholding Tax
Information reporting and backup withholding (currently at a 28% rate) may apply to dividends paid with respect to our common stock and
to proceeds from the sale or other disposition of our common stock. In certain circumstances, non-U.S. holders may avoid information reporting and backup withholding if they certify under
penalties of perjury as to their status as non-U.S. holders or otherwise establish an exemption and certain other requirements are met. Non-U.S. holders should consult their
own tax advisors regarding the application of the information reporting and backup withholding rules to them.
Backup
withholding is not an additional tax. Amounts withheld under the backup withholding rules from a payment to a non-U.S. holder generally may be refunded or credited
against the non-U.S. holder's U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS.
Effects of Certain New Legislation
Recently enacted legislation may impose withholding taxes on certain types of payments made to "foreign financial institutions" and
certain other non-U.S. entities. Under this legislation, the failure to comply with additional certification, information reporting and other specified requirements could result in
withholding tax being imposed on payments of dividends and sales proceeds to U.S. holders that own the stock through foreign accounts or foreign intermediaries and to certain Non-U.S.
holders.
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The
legislation imposes a 30% withholding tax on dividends on, and gross proceeds from the sale or other disposition of, our common stock paid to a foreign financial institution or to a foreign
nonfinancial entity, unless (i) the foreign financial institution undertakes certain diligence and reporting obligations or (ii) the foreign non-financial entity either
certifies it does not have any
substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. In addition, if the payee is a foreign financial institution, it generally must enter into an
agreement with the U.S. Treasury Department that requires, among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report
certain information about such accounts, and withhold 30% on payments to certain other account holders. This legislation applies to payments made after December 31, 2012. Holders should consult
their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of our common stock.
THE
UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO ALL TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS, AND THE POSSIBLE EFFECTS OF ANY CHANGES THEREIN.
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LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus will be passed upon for us by Hogan Lovells US LLP,
Denver, Colorado. Certain matters regarding Canadian law will be passed upon for us by Fraser Milner Casgrain LLP. Dorsey & Whitney LLP, Salt Lake City, Utah, is acting as counsel
to the underwriters. Certain matters regarding Canadian law will be passed upon for the underwriters by Wildeboer Dellelce LLP.
EXPERTS
The consolidated financial statements of Neutron Energy, Inc. as of December 31, 2010 and 2009, and for each of the years
in the three year period ended December 31, 2010 and for the period from inception (March 25, 2005) through December 31, 2010 included herein and in the registration statement on
From S-1 have been audited by Mayer Hoffman McCann P.C., an independent registered public accounting firm, as set forth in their report appearing
elsewhere herein, and are included in reliance upon such report given on the authority of said firm as experts in accounting and auditing.
Information
related to our properties that constitute the Cibola Project, Ambrosia Lake Project and Edgemont Project in this prospectus have been derived from the following independent
technical reports, each of which were completed by Broad Oak Associates, an independent engineer, in accordance with the provisions of NI 43-101: (i) the Technical Report on
the Uranium Resources at Ambrosia Lake Uranium Project, McKinley County, New Mexico, USA, dated January 18, 2011; (ii) the Technical Report on the Uranium Resources at The Cibola
Project, Cibola, McKinley and Sandoval Counties, New Mexico, USA, dated January 14, 2011; and (iii) the Technical Report on the Uranium Resources on The Edgemont Uranium Project, Fall
River County, South Dakota, USA, dated January 18, 2011, each completed by Broad Oak Associates, an independent engineer.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Computershare.
INDEMNIFICATION MATTERS AND DISCLOSURE OF SEC POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation contain a provision which eliminates the personal monetary liability of our officers and directors to the
extent allowed under Nevada law. Under the Nevada Corporations Act, our directors or officers are not individually liable, subject to certain exceptions, to the Corporation or our stockholders or
creditors for any damages as a result of any act or failure to act in their capacity as a director or officer unless it is proven that such conduct constituted a breach of their fiduciary duties as a
director or officer and that the breach involved intentional misconduct, fraud or a knowing violation of law.
In
addition, our Articles of Incorporation and Bylaws provide that we will indemnify our directors, officers, employees and other agents to the fullest extent permitted by Nevada law,
provided the director, officer, employee or other agent acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. However, no indemnification will be made in respect of any claim, issue or matter
as to which any such person is adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought determines upon application that such person
is fairly and reasonably entitled to indemnity for such expenses.
Pursuant
to the authorization in its Bylaws, the Company purchased and maintains liability insurance on behalf of its directors and officers.
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The
Company has not entered into indemnification agreements with our directors, officers, employees and other agents, and indemnification for those individuals is limited to the
foregoing disclosure. However, we may in the future enter into agreements to indemnify our directors and executive officers, in addition to the indemnification provided for in our Articles of
Incorporation and Bylaws.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the
foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1, including exhibits, schedules and amendments filed
with the registration statement, under the Securities Act with respect to the common stock to be sold in the offering. This prospectus does not contain all of the information contained in the
registration statement. For further information about us and our common stock, we refer you to the registration statement. For additional information, you should refer to the exhibits and schedules
that have been filed with our registration statement on Form S-1. Statements in this prospectus concerning the contents of any contract or any other document are not necessarily
complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to that exhibit. Each statement in this prospectus relating to a contract or document filed
as an exhibit to the registration statement is qualified by the filed exhibit.
Upon
completion of the offering, we will become subject to the reporting and information requirements of the Securities Exchange Act and, as a result, will file periodic and current
reports, proxy statements and other information with the SEC. You may read and copy, at prescribed rates, all or any portion of the registration statement or any other information that we file with
the SEC at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information concerning the operation of the SEC's public reference room by calling the
SEC at
1-800-SEC-0330. Our SEC filings, including the registration statement, will also be available to the public on the SEC's Internet site at
http://www.sec.gov
.
Through
and including                  , 2011 (the 25th day after the date of this prospectus), U.S. federal securities laws may require all dealers that effect
transactions in our
common stock, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
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GLOSSARY OF TERMS
"
Assay
" means to test ores or minerals by chemical or other methods for the purpose of determining the amount of valuable metals contained.
"
Breccia
" means rock consisting of fragments, more or less angular, in a matrix of finer-grained material or of cementing material.
"
Carbonaceous
" means a rock rich in carbon or coaly material.
"
Clastic
" means a sedimentary rock formed from mineral particles (clasts) that were mechanically transported.
"
Conglomerate
" means a sedimentary rock that contains rounded particles greater than two millimeters in diameter.
"
Cretaceous
" means the final period of the Mesozoic era. Covers the time span of approximately 145 to 65 million years ago.
"
Deposit
" is an informal term for an accumulation of minerals.
"
Diabase
" means a fine-grained igneous rock.
"
Dike
" means a tabular body of igneous rock that was injected into a fissure.
"
EIS
" means Environmental Impact Statement.
"
Facies
" means
t
he characteristics of a rock mass that reflect its depositional environment.
"
Fault
" means a fracture in rock along which there has been displacement of the two sides parallel to the fracture.
"
Fee
" means deeded, or privately-owned, land.
"
Feldspathic
" means a sedimentary rock containing feldspar.
"
Fluvial
" means fine to coarse-grained sedimentary rocks such as sandstone or conglomerate produced by stream or river action.
"
Gamma-ray log
" means a down-hole geophysical survey used in uranium exploration and development to measure the intensity of
radioactivity and uranium mineralization within a drill hole.
"
Granite
" means a coarse-grained igneous rock containing quartz, feldspar and mica.
"
HEU
" means highly enriched uranium. Uranium enriched to an assay of 20% or more. For military application, this enrichment level may exceed 90%.
"
Humate
" means an organic compound derived from decayed plant substances.
"
Jurassic
" means the second period of the Mesozoic era. Covers the time span of approximately 200 million to 145 million years ago.
"
Lease
" means a contract between a land owner and a tenant for exploration, development and mining purposes.
"
LEU
" means low-enriched uranium. Uranium enriched to an assay of less than 20%. LEU typically has a 3% to 5% uranium assay when used as
fuel for nuclear reactors.
"
Logging
" means a down-hole geophysical survey which measures the levels of radioactivity and electrical properties of rocks within the
drill hole.
"
Mesozoic
" means one of the great divisions or eras of geologic time.
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"
Mineralization
" means the concentration of metals within a body of rock.
"
Mineralized material
" is a mineralized body which has been delineated by appropriately spaced drilling and/or underground sampling to support a
sufficient tonnage and average grade of metal(s). Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors
conclude legal and economic feasibility.
"
Mining Claim
" means a statutorily created, possessory mining interest giving its holder the right to prospect, explore for and exploit minerals within
a defined area of land.
"
NI 43-101
" refers to a Technical Report prepared in accordance with "National
Instrument 43-101—
Standards of Disclosure for Mineral Projects
of the Canadian Securities Administrators."
"
Ore
" means material containing minerals that can be economically extracted.
"
Oxidation/reduction
" means a chemical interface in sandstones where roll front uranium deposits are often formed.
"
Paleozoic
" means one of the eras of geologic time between the Precambrian and the Mesozoic eras.
"
Recovery
" means that portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage.
"
Reserves
" means that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination.
"
Roll front
" means a type of uranium deposit that is hosted in sandstone. They are arcuate bodies of uranium mineralization that were formed by the
deposition of uranium carried in ground water at an oxidation-reduction boundary.
"
Royalty
" means an amount of money paid to the owner of land or mineral rights, based upon a certain amount or a percentage of mineral production from a
property.
"
Sampling
" means selecting a fractional, but representative, part of a mineral deposit for analysis.
"
Sandstone
" means sedimentary rock comprised of sand-sized particles of quartz and/or feldspar.
"
Sediment
" means solid material settled from suspension in a liquid.
"
Separative Work Unit (SWU)
" means a measure of the effort expended in a uranium enrichment plant to separate uranium of a given U-235
content into two components, one having a higher percentage of U-235 and the other a lower concentration.
"
Syenite
" means a granular igneous rock composed of feldspar, hornblende, mica and other minerals.
"
Tailings
" means material rejected from a mill after most of the valuable minerals have been extracted.
"
Tertiary
" means the earlier of the two geologic periods that comprise the Cenozoic era.
"
TSX
" means the Toronto Stock Exchange.
"
Ton
" means a short ton (2,000 pounds) and one Ton is equal to 0.907 Tonnes.
"
Tonne
" means a metric ton (2,204.6 pounds) and one Tonne is equal to 1.1023 Tons.
"
U
3
O
8
" means triuranium octaoxide (U
3
O
8
), an oxide form of uranium that is the most common chemical form
found in nature. U
3
O
8
is the most common form that uranium is marketed.
"
Uranium
" means a heavy gray radioactive metal which, when processed, is used as fuel for nuclear power plants.
"
Waste
" means rock lacking sufficient grade and/or other characteristics of ore.
151
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Neutron Energy, Inc. and Subsidiaries
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-3
Consolidated Statements of Operations
F-4
Consolidated Statements of Cash Flows
F-5
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
F-6
Notes to Consolidated Financial Statements
F-8
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of
Neutron Energy, Inc. and Subsidiaries
We
have audited the accompanying consolidated balance sheets of Neutron Energy, Inc. and Subsidiaries (an exploration stage company) as of December 31, 2010 and 2009 and
the related consolidated statements of operations, changes in stockholders' equity (deficit), and cash flows for the years ended December 31, 2010, 2009 and 2008 and for the period from
March 25, 2005 (Inception) through December 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Neutron Energy, Inc. and Subsidiaries
as of December 31, 2010 and 2009 and the results of their operations and their cash flows for the years ended December 31, 2010, 2009 and 2008 and for the period from March 25,
2005 (Inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the consolidated financial statements, the
Company has generated cumulative net losses of $36,834,600, has not realized any significant revenues since its Inception on March 25, 2005 through December 31, 2010, and has senior debt
with a maturity date of June 30, 2011. As discussed in Note 2 to the consolidated financial statements, the Company's significant cumulative operating losses and lack of liquidity raise
substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 2. The consolidated financial statements do not
include any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to
continue as a going concern.
Mayer
Hoffman McCann P.C.
Denver, Colorado
March 8,
2011
F-2
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Consolidated Balance Sheets
December 31,
2010
2009
Current Assets
Cash and cash equivalents
$
174,416
$
1,023,932
Restricted cash and marketable securities
7,069,367
25,000
Prepaid expenses and other current assets
48,057
86,498
Deferred offering costs
—
100,325
Debt issuance costs, net
532,040
—
Mineral interest purchase option
—
142,819
Total Current Assets
7,823,880
1,378,574
Property and Equipment, at cost
Unproven mineral properties
19,607,711
7,924,068
Property and equipment
903,477
903,477
Less accumulated depreciation
(434,595
)
(273,054
)
20,076,593
8,554,491
Construction in progress
16,777
16,777
Net Property and Equipment
20,093,370
8,571,268
Other Assets
Restricted cash and marketable securities
185,300
210,300
Deferred offering costs
31,219
—
Deposits
7,300
22,300
Total Other Assets
223,819
232,600
TOTAL ASSETS
$
28,141,069
$
10,182,442
Current Liabilities
Accounts payable
$
65,149
$
67,924
Accrued expenses
175,288
191,894
Senior debt, net
24,844,874
—
Total Current Liabilities
25,085,311
259,818
Long-term Liabilities
Long-term payable, net
325,539
299,454
Warrant liability
1,339,402
—
Total Long-term Liabilities
1,664,941
299,454
TOTAL LIABILITIES
26,750,252
559,272
Commitments and Contingencies
Stockholders' Equity
Preferred stock: 10,000,000 authorized, $0.001 par value; none issued or outstanding
—
—
Common stock: 200,000,000 authorized, $0.001 par value; 58,204,141 and 58,154,141 issued and outstanding, respectively
58,204
58,154
Additional paid-in capital
38,167,213
35,495,714
Deficit accumulated during the exploration stage
(36,834,600
)
(28,405,198
)
1,390,817
7,148,670
Noncontrolling interest
—
2,474,500
Total Stockholders' Equity
1,390,817
9,623,170
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
28,141,069
$
10,182,442
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Consolidated Statements of Operations
From Inception
(March 25, 2005)
through
December 31,
2010
Years Ended December 31,
2010
2009
2008
Revenue
$
—
$
—
$
—
$
—
Operating Expenses
Mineral property maintenance
1,141,706
1,035,509
1,219,549
6,503,389
Mineral exploration
1,835,039
3,528,324
4,366,395
14,067,257
General and administrative
2,227,627
2,820,561
3,500,900
11,557,258
Total Operating Expenses
5,204,372
7,384,394
9,086,844
32,127,904
Other Income (Expense)
Interest expense
(3,549,105
)
(10,602
)
—
(7,183,105
)
Interest income
4,682
71,345
305,792
698,749
Other income (expense)
—
(4,667
)
18,634
164,559
Total Other Income (Expense)
(3,544,423
)
56,076
324,426
(6,319,797
)
Operating Loss
(8,748,795
)
(7,328,318
)
(8,762,418
)
(38,447,701
)
Provision for income taxes
—
—
—
—
Net Loss
(8,748,795
)
(7,328,318
)
(8,762,418
)
(38,447,701
)
Less: Net loss attributable to noncontrolling interest
319,393
594,910
443,022
1,613,101
Net loss attributable to Neutron Energy, Inc.
$
(8,429,402
)
$
(6,733,408
)
$
(8,319,396
)
$
(36,834,600
)
Net loss per basic and diluted share of common stock
$
(0.14
)
$
(0.12
)
$
(0.15
)
$
(0.89
)
Weighted average number of basic and diluted common shares outstanding
58,186,419
54,644,741
54,378,705
41,280,757
The
accompanying notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
Years Ended
December 31,
From Inception
(March 25, 2005)
through
December 31,
2010
2010
2009
2008
Cash Flows From Operating Activities
Net loss
$
(8,429,402
)
$
(6,733,408
)
$
(8,319,396
)
$
(36,834,600
)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for bad debts
—
—
—
30,000
Depreciation of property and equipment
161,541
164,827
103,661
446,060
Loss on disposal of equipment
—
15,873
—
16,705
Stock based compensation
197,049
577,191
859,089
3,520,210
Beneficial conversion feature recorded as interest expense
—
—
—
1,533,231
Amortization of debt issuance costs
1,338,580
—
—
1,935,992
Accretion of disount on senior debt
1,527,895
—
—
1,527,895
Unrealized gain on warrant liability
(240,235
)
—
—
(240,235
)
Deferred offering costs write-off
112,734
67,896
41,532
222,162
Mineral purchase option write-off
7,900
—
—
7,900
Warrants issued in connection with registration rights agreement
—
—
—
995,774
Interest accretion on long-term payable
26,085
10,602
—
36,687
Accrued interest on senior debt
896,615
—
—
896,615
Losses attributable to noncontrolling interest
(319,393
)
(594,910
)
(443,022
)
(1,613,101
)
Changes in assets and liabilities:
Prepaid expenses and other assets
53,441
79,782
(63,472
)
(55,357
)
Accounts payable
(2,775
)
(16,898
)
(106,804
)
62,161
Accrued expenses
(24,406
)
(47,879
)
134,853
167,488
Joint venture partners payable
—
21,518
(233,565
)
—
Net cash used in operating activities
(4,694,371
)
(6,455,406
)
(8,027,124
)
(27,344,413
)
Cash Flows From Investing Activities
Disbursements on loans receivable
—
—
—
(30,000
)
Increase in restricted cash and marketable securities
(7,019,367
)
(235,300
)
—
(7,254,667
)
Purchase of property and equipment
—
(42,738
)
(615,447
)
(945,436
)
Purchase of unproven mineral properties
(229,331
)
(275,069
)
(455,591
)
(8,382,943
)
Reimbursement received for unproven mineral properties purchased
—
—
—
315,000
Investment in mineral purchase option
(319,393
)
(142,819
)
—
(462,212
)
Equity in joint venture partner contributions
—
346,321
438,985
1,932,536
Net cash used in investing activities
(7,568,091
)
(349,605
)
(632,053
)
(14,827,722
)
Cash Flows From Financing Activities
Proceeds from convertible notes payable
—
—
—
7,330,949
Debt issuance costs
(252,280
)
—
—
(389,112
)
Proceeds from issuance of common stock
—
—
—
11,592,211
Offering costs paid in connection with issuance of common stock
—
—
—
(690,414
)
Proceeds from exercise of warrants
—
—
328,529
9,303,513
Commissions paid in connection with the exercise of warrants
—
—
—
(492,749
)
Proceeds from stock subscription receivable
—
—
—
250,000
Deferred offering costs
(35,828
)
(168,221
)
(18,913
)
(245,581
)
Principal payments on retirement of convertible debt
—
—
—
(70,380
)
Long-term payable
—
288,852
—
288,852
Proceeds from senior debt
11,381,661
—
—
11,381,661
Investment by noncontrolling interest in consolidated joint venture
319,393
613,598
704,610
4,087,601
Net cash provided by financing activities
11,412,946
734,229
1,014,226
42,346,551
Net (decrease) increase in cash and cash equivalents
(849,516
)
(6,070,782
)
(7,644,951
)
174,416
Cash and cash equivalents, beginning of period
1,023,932
7,094,714
14,739,665
—
Cash and cash equivalents, end of period
$
174,416
$
1,023,932
$
7,094,714
$
174,416
Supplemental Disclosures of Cash Flow Information
Cash paid for interest
$
—
$
—
$
—
$
496,981
Cash paid for income taxes
—
—
—
—
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Deficit
Accumulated
During the
Exploration
Stage
Common Stock
Total
Stockholders'
Equity
(Deficit)
Additonal
Paid-in
Capital
Non-
Controlling
Interest
Shares
Amount
Balance, Inception (March 25, 2005)
—
$
—
$
—
$
—
$
—
$
—
Initial capitalization issued for services at $0.01 per share
6,877,565
6,878
61,898
—
—
68,776
Common stock issued in private placement at $0.12 per share
8,600,000
8,600
991,400
—
—
1,000,000
Stock subscription receivable
—
—
250,000
—
—
250,000
Common stock issued for services at $0.12 per share
5,807,435
5,807
669,476
—
—
675,283
Net loss
—
—
—
(1,614,978
)
—
(1,614,978
)
Balance, December 31, 2005
21,285,000
21,285
1,972,774
(1,614,978
)
—
379,081
Common stock issued pursuant to stock subscription receivable
2,150,000
2,150
(2,150
)
—
—
—
Common stock issued for lease acquisition at $0.27 per share
65,000
65
16,813
—
—
16,878
Beneficial conversion feature from issuance of Series A convertible notes
—
—
221,287
—
—
221,287
Beneficial conversion feature from issuance of Series B convertible notes
—
—
1,146,161
—
—
1,146,161
Compensation expense from issuance of common stock options
—
—
186,915
—
—
186,915
Equity in capital contributions made by joint venture partner
—
—
175,156
—
—
175,156
Net loss
—
—
—
(3,957,337
)
—
(3,957,337
)
Balance, December 31, 2006
23,500,000
23,500
3,716,956
(5,572,315
)
—
(1,831,859
)
Common stock issued for services at $1.00 per share
50,000
50
49,950
—
—
50,000
Common stock issued for services at $1.50 per share
50,000
50
74,950
—
—
75,000
Compensation expense from issuance of common stock options
—
—
830,907
—
—
830,907
Beneficial conversion feature from issuance of Series C convertible notes
—
—
165,783
—
—
165,783
Warrants issued in connection with registration rights agreement
—
—
995,774
—
—
995,774
Exercise of warrants at $1.00 per share (net of commissions of $492,749)
8,854,984
8,855
8,353,380
—
—
8,362,235
Exercise of warrants at $1.60 per share
75,000
75
119,925
—
—
120,000
Conversion of Series A convertible notes at $0.22 per share
4,860,456
4,861
1,064,439
—
—
1,069,300
Conversion of Series B and C convertible notes at $0.68 per share
9,782,131
9,782
6,642,067
—
—
6,651,849
Common stock issued in private placement at $1.50 per share (net of offering costs of $690,414)
7,061,474
7,061
9,894,736
—
—
9,901,797
Investment in consolidated subsidiary by noncontrolling interest
—
—
—
—
2,450,000
2,450,000
Equity in capital contributions made by joint venture partner
—
—
972,074
—
—
972,074
Net loss
—
—
—
(7,780,079
)
(255,776
)
(8,035,855
)
Balance, December 31, 2007
54,234,045
54,234
32,880,941
(13,352,394
)
2,194,224
21,777,005
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
During the
Exploration
Stage
Common Stock
Total
Stockholders'
Equity
(Deficit)
Additonal
Paid-in
Capital
Non-
Controlling
Interest
Shares
Amount
Balance, December 31, 2007
54,234,045
54,234
32,880,941
(13,352,394
)
2,194,224
21,777,005
Compensation expense from issuance of common stock options
—
—
784,089
—
—
784,089
Common stock issued for services at $0.75 per share
100,000
100
74,900
—
—
75,000
Exercise of warrants at $1.00 per share
273,529
274
273,255
—
—
273,529
Exercise of warrants at $2.00 per share
27,500
27
54,973
—
—
55,000
Investment in consolidated subsidiary by noncontrolling interest
—
—
—
—
704,610
704,610
Equity in capital contributions made by joint venture partner
—
—
438,985
—
—
438,985
Net loss
—
—
—
(8,319,396
)
(443,022
)
(8,762,418
)
Balance, December 31, 2008
54,635,074
54,635
34,507,143
(21,671,790
)
2,455,812
15,345,800
Compensation expense from issuance of common stock options
—
—
577,191
—
—
577,191
Investment in consolidated subsidiary by noncontrolling interest
—
—
—
—
613,598
613,598
Common stock issued for joint venture partner's interest at $1.00 per share
3,519,067
3,519
65,059
—
—
68,578
Equity in capital contributions made by joint venture partner
—
—
346,321
—
—
346,321
Net loss
—
—
—
(6,733,408
)
(594,910
)
(7,328,318
)
Balance, December 31, 2009
58,154,141
58,154
35,495,714
(28,405,198
)
2,474,500
9,623,170
Common stock issued for services at $1.00 per share
50,000
50
49,950
—
—
50,000
Compensation expense from issuance of common stock options
—
—
147,049
—
—
147,049
Investment in consolidated subsidiary by noncontrolling interest
—
—
—
—
319,393
319,393
Purchase of noncontrolling interest in consolidated subsidiary
—
—
2,474,500
—
(2,474,500
)
—
Net loss
—
—
—
(8,429,402
)
(319,393
)
(8,748,795
)
Balance, December 31, 2010
58,204,141
$
58,204
$
38,167,213
$
(36,834,600
)
$
—
$
1,390,817
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Note 1 Nature of Operations
Neutron Energy, Inc. ("NEI") began operations as an unincorporated entity on March 25, 2005, was originally organized under the laws of the state of Wyoming on
March 29, 2005 and subsequently reincorporated under the laws of the state of Nevada on April 26, 2007.
From
Inception through December 31, 2010, NEI has staked or leased mineral properties in Arizona, New Mexico, South Dakota, and Wyoming. In April 2006, certain mineral
properties in New Mexico became subject to a joint-venture agreement, ("Grants J.V. Agreement"), which formed the Grants Uranium Project Joint-Venture ("Grants J.V."), with Canada-based Primary Corp.
("Primary"), an affiliate of the Company, formerly known as Trans-America Industries, Ltd. Pursuant to the Grants J.V. Agreement, Primary had the right to earn a 50% interest upon funding
$5,000,000 in property acquisition and exploration activities. In October 2009, NEI entered into a Purchase and Termination Agreement with Primary to purchase Primary's interest in Grants J.V.
As of October 16, 2009, NEI became the sole owner of Grants J.V. The terms of both the Grants J.V. Agreement and the Purchase and Termination Agreement are detailed in Note 6.
In
April 2007, other mineral properties located in New Mexico, became subject to joint ownership with Uranium Energy Corporation ("UEC") through the formation of Cibola
Resources LLC ("Cibola"). Upon formation, NEI owned 51% of Cibola and was the managing member. In November 2009, as amended in December 2009, NEI entered into an Option Agreement
with UEC to purchase UEC's
interest in Cibola, the terms of which are set forth in Note 6. In April 2010, NEI purchased UEC's 49% interest in Cibola and became the sole owner of Cibola.
Collectively,
NEI, Grants J.V. and Cibola are referred to as the "Company".
The
Company is an Exploration Stage Company. The Company's principal business is the acquisition and exploration of uranium mineral resources. The Company has not presently determined
whether its properties contain mineral reserves that are economically recoverable.
Note 2 Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in
the United States of America, and are expressed in U.S. dollars. These consolidated financial statements include the accounts of NEI and its wholly owned subsidiaries, Cibola and Grants J.V. Prior to
the purchase of the noncontrolling interests in Grants J.V. on October 15, 2009, and Cibola on April 12, 2010, the consolidated financial statements included the accounts of NEI, its
majority owned subsidiary, Cibola, and the Company's proportionate share of assets, liabilities and operations of its unincorporated joint-venture, Grants J.V. All inter-company transactions and
balances have been eliminated. The Company's fiscal year end is December 31.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles
("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring
management's estimates and assumptions are determining the fair value of transactions involving
F-8
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 2 Summary of Significant Accounting Policies (Continued)
common
stock, convertible debentures and financial instruments. Other areas requiring estimates include deferred tax balances, valuation allowances, allocations of expenditures to resource property
interests and asset impairment tests.
Plan of Operations
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material. The
continued operations of the Company and the recoverability of the carrying value of its assets are ultimately dependent upon the ability of the Company to achieve profitable operations. The Company
commenced operations on March 25, 2005, and has not realized any significant revenues since inception. As of December 31, 2010, the Company has a working capital deficit of $17,261,431
and an accumulated deficit of $36,834,600. In April 2010, the Company entered into a credit facility with a lender, which was increased and extended in an amendment of the credit facility in
December 2010, as more fully described in Note 8. Although management believes the credit facility provides sufficient cash resources through June 30, 2011, the Company must
access the capital markets through the offering of equity or debt securities or the sale of ownership interests in certain mineral properties in order to satisfy the credit facility's June 30,
2011 due date for outstanding principal and accrued interest.
The
continuation of the Company as a going concern is also dependent upon the ability of the Company to obtain necessary financing to continue operations. The Company's current operating
plan is to focus existing financial and human resources on raising additional equity capital and continuing the permitting and exploration of its core mineral properties located in New Mexico. The
Company has sold, and will continue to sell to, and joint venture with, third parties, its non-core
mineral properties. Other non-core properties not deemed to have sufficient exploration potential will be abandoned as their annual renewals become due. Additionally, the Company has
commenced the process of accessing the capital markets seeking additional financing through a strategic alliance with an industry partner, a private placement or an initial public offering of its
equity securities.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash
equivalents. The Company places its temporary cash investments with high credit quality financial institutions. At times such investments may be in excess of the Federal Deposit Insurance Corporation
("FDIC") insurance limit.
Restricted Cash
At December 31, 2010 and 2009, the Company had current restricted cash and marketable securities of $7,069,367 and $25,000,
respectively, and noncurrent pledged certificates of deposit ("CDs") and money market accounts of $185,300 and $210,300, respectively. The CDs are classified as
held-to-maturity securities and are recorded at amortized cost.
F-9
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 2 Summary of Significant Accounting Policies (Continued)
Property and Equipment
Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements,
maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided for over the estimated useful lives of the related assets using the
straight-line method for financial
statement purposes. The estimated useful lives for property and equipment which is comprised of: furniture and equipment, computer hardware and software, and other mining-related equipment, are 7, 5
and 10 years, respectively.
Revenue Recognition
The Company recognizes revenue from the sale of goods or services, and related costs of goods or services sold, where persuasive
evidence of an arrangement exists, delivery has occurred, the seller's price is fixed or determinable and collectability is reasonably assured. This generally occurs when the purchaser receives the
goods or services or at the time title passes to the purchaser. Although the Company's strategic plan is to become a production company operating uranium mines, for the period from Inception
(March 25, 2005) through December 31, 2010, the Company had no operating revenues and does not expect to have operating revenues in the foreseeable future.
Mineral Property Costs
The Company has been in the exploration stage since its inception on March 25, 2005 and has not yet realized any significant
revenues from its planned operations. It is primarily engaged in the acquisition and exploration of uranium mineral properties. Mineral property exploration costs are expensed as incurred.
Mineral
property acquisition costs are initially capitalized when incurred. In the event that mineral property acquisition costs are paid with shares of the Company's common stock, those
shares are valued at estimated fair value at the time the shares are issued or at the time the rights are obtained. The Company assesses the carrying costs of its mineral properties for impairment on
at least an annual basis. The Company will recognize impairment of a mineral property if the carrying amount of the mineral property is not recoverable and exceeds its fair value. Costs to maintain
mineral rights and leases are expensed in the period in which they occur. Mineral property exploration costs are expensed in the period in which they occur. When management has determined that
probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the
terms of property acquisition and budgeted exploration and development expenditures, the costs incurred to develop that property are capitalized. Such costs will be amortized using the
units-of-production method based on estimated recoverable proven reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged
to operations. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met.
F-10
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 2 Summary of Significant Accounting Policies (Continued)
The
Company has incurred the following mineral property maintenance and mineral property exploration costs:
From Inception
(March 25, 2005)
through
December 31,
2010
Years Ended December 31,
2010
2009
2008
Mineral property maintenance
$
1,141,706
$
1,035,509
$
1,219,549
$
6,503,389
Mineral property exploration
1,835,039
3,528,324
4,366,395
14,067,257
Total Costs
$
2,976,745
$
4,563,833
$
5,585,944
$
20,570,646
Reclassifications
Certain amounts in the prior periods presented have been reclassified to conform to the current consolidated financial statement
presentation. Such reclassifications do not represent corrections of errors; rather, they represent reclassifications made to conform to the current period's presentation.
Reclamation and Remediation
The Company's operations may become subject to standards for mine reclamation which have been established by various governmental
agencies. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of tangible
long-lived assets. A corresponding asset is also recorded and depleted over the life of the asset. After the initial measurement of the asset retirement obligation, the liability will be
adjusted at the end of each reporting period to reflect changes in the estimated discounted future cash flows based on when the spending activity will occur for the underlying obligation.
Determination of any amounts recognized is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free
interest rates. As of the date of these consolidated financial statements the Company has no mine reclamation costs.
The
Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are
based on management's estimate of amounts expected to be incurred when the remediation work is performed. As of the date of these consolidated financial statements the Company has no remediation
liabilities.
Impairment Of Long-Lived Assets
The Company reviews property and equipment and certain identifiable intangible assets, excluding goodwill, for impairment whenever
events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future
undiscounted net cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals
the amount by which the carrying value of the assets exceeds its fair value. During the periods covered by these consolidated financial statements, the Company had no material impairment of its
long-lived assets.
F-11
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 2 Summary of Significant Accounting Policies (Continued)
Debt Issuance Costs
Debt issuance costs are capitalized and amortized over the term of the notes on a straight-line basis, which approximates
the effective interest method due to the short term nature of the notes, and are included in interest expense. When debt is paid in full, any unamortized debt issuance costs are removed from the
related accounts and charged to operations. The amount of debt issuance costs charged to operations for the following periods were as follows:
Year Ended December 31, 2010
$
1,338,580
Year Ended December 31, 2009
$
—
Year Ended December 31, 2008
$
—
Period From Inception (March 25, 2005) through December 31, 2010
$
1,935,992
Deferred Offering Costs
Transaction costs incurred prior to the closing of an equity offering are capitalized until the sooner of the completion of the equity
offering or a determination is made not to proceed with the offering. The costs are charged to additional paid-in capital at the time of completion of the offering or charged to operations
at the time the determination is made not to proceed with the equity offering.
Income Taxes
Potential benefits of income tax losses are not recognized in the consolidated financial statements until realization is more likely
than not. The Company computes tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these consolidated financial
statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years and, therefore, recorded a 100% valuation
allowance against the deferred tax asset for such losses.
The
Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the date of enactment.
The
Company applies a "more likely than not" threshold to the recognition of tax positions based on the technical merits of the position. The Company recognizes interest and penalties
related to uncertain tax positions in income tax expense. As of each period presented within these consolidated financial statements, the Company made no provisions for interest and penalties related
to uncertain tax positions.
Derivatives
From time to time, the Company enters into transactions which contain conversion privileges, the settlement of which may entitle the
holder or the Company to settle obligations by issuance of
F-12
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 2 Summary of Significant Accounting Policies (Continued)
Company
securities. These transactions, the value of which may be derived from the fair value of the Company's securities, are estimated using the Black-Scholes or other appropriate pricing models.
Stock Based Compensation
The Company has a stock plan for its employees, non-employee directors and key consultants. From time to time, the Company
receives services from employees, directors or consultants in exchange for a) equity instruments of the enterprise or b) liabilities that are based on the fair value of the enterprise's
equity instruments or that may be settled by the issuance of such equity instruments. These stock-based awards are accounted for using a fair-value-based method. The Company uses the
Black-Scholes option-pricing model to determine the fair-value of stock-based awards.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share for both basic and diluted earnings per share ("EPS") in the statements of operations.
Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives
effect to all potentially dilutive common shares outstanding during the period. Diluted EPS and the weighted average number of common shares exclude all potentially dilutive shares, as the Company
reported a net loss for all periods presented, making their effect anti-dilutive.
The
following securities have been excluded in the computation of diluted net earnings per share since the effect of including these securities would have been anti-dilutive:
From Inception
(March 25, 2005)
through
December 31,
2010
December 31,
2010
2009
2008
Options to purchase common stock
5,491,666
5,335,000
4,199,000
5,491,666
Warrants to purchase common stock
3,051,744
—
2,333,332
3,051,744
Convertible subordinated notes
—
—
—
—
Total
8,543,410
5,335,000
6,532,332
8,543,410
Note 3 Recent Accounting Pronouncements
In December 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2009-16 which amends the accounting for the
transfers of financial assets. This Accounting Standards Update revises "
Transfers and Servicing (Topic 860): Accounting for Transfers of Financial
Assets,
" to improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance. In addition, the amendments
require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. Comparability and consistency in
accounting for transferred financial assets will also be improved. The new guidance is effective on a prospective basis for the annual period beginning after November 15, 2009 and interim and
annual periods thereafter. The Company adopted the provisions of this ASU on January 1, 2010 which did not have a material impact on its results of operations, financial position or liquidity.
F-13
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 3 Recent Accounting Pronouncements (Continued)
In
December 2009, the FASB issued ASU No. 2009-17, "
Consolidation (Topic 810), Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities.
" The amendments in this ASU replace the quantitative-based risks and rewards calculation for determining which reporting entity, if
any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest
entity that most significantly impact the entity's economic performance and 1) the obligation to absorb losses of the entity or 2) the right to receive benefits from the entity. The
amendments in this ASU also require additional disclosures about a reporting entity's involvement in variable interest entities and an ongoing assessment of whether a company is the primary
beneficiary. The revised guidance is effective for all variable interest entities owned on or formed after January 1, 2010. The Company adopted the provisions of this ASU on January 1,
2010, which did not have a material impact on its results of operations, financial position or liquidity.
In
January 2010, the FASB issued ASU No. 2010-06,
"Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures
about Fair Value Measurements."
The guidance requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in the
ASC. The FASB's objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, the guidance now requires 1) a reporting entity should
disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and 2) in the
reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In
addition, the guidance clarifies the requirements of the following existing disclosures for purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity
needs to use judgment in determining the appropriate classes of assets and liabilities; and a reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair
value for both recurring and nonrecurring fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning
after December 15, 2010, and for interim periods within those fiscal years. The Company adopted the provisions of this standard on January 1, 2010, which did not have a material impact
on its results of operations, financial position or liquidity.
In
February 2010, the FASB issued ASU No. 2010-09,
"Subsequent Events (Topic 855): Amendments to Certain Recognition and
Disclosure Requirements."
The amendments in the ASU remove the requirement for a Securities and Exchange Commission (SEC) filer to disclose a date through which subsequent
events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or
retrospective application of U.S. GAAP. The FASB also clarified that if the financial statements have been revised, then an entity that is not an SEC filer should disclose both the date that
the financial statements were issued or available to be issued and the date the revised financial statements were issued or available to be issued. The FASB believes these amendments remove potential
conflicts with the SEC's literature. All of the amendments in the ASU were effective upon issuance except for the use of the issued date for conduit debt obligors. The Company adopted the provisions
of this standard on January 1, 2010, which did not have a material impact on its results of operations, financial position or liquidity.
F-14
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 3 Recent Accounting Pronouncements (Continued)
Recent Accounting Guidance Not Yet Adopted
In April 2010, the FASB issued ASU No. 2010-13,
"Compensation-Stock Compensation (Topic
718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades."
The ASU addresses
the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a
share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades shall not be considered to contain a
market, performance or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in this update are
effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company plans to adopt the provisions of this standard on
January 1, 2011, and does not expect it to have a material impact on its results of operations, financial position or liquidity.
In
December 2010, the FASB issued ASU 2010-29,
"Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business
Combinations.
" The objective of this Update is to address diversity in practice about the interpretation of the proforma revenue and earnings disclosure requirements for
business combinations. The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity
as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this Update also
expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business
combination included in the reported pro forma revenue and earnings. The amendments in this Update are effective prospectively for business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company plans to adopt the provisions of this standard on January 1, 2011, and does not
expect it to have a material impact on its results of operations, financial position or liquidity.
Note 4 Significant Mineral Properties
Since March 2005, the Company has been acquiring mineral properties for the purpose of exploring for economic deposits of uranium in the states of Arizona, New Mexico, South Dakota and
Wyoming. The Company's mineral property acquisitions are comprised of: i) federal mining claims which are administrated by the Bureau of Land Management; ii) state mineral leases or
exploration permits; iii) fee mineral leases with the owners of private mineral rights; or iv) mineral leases with third parties who acquired mineral rights through i) and
ii) above.
Except
as set forth below, all federal mining claims, state and fee mineral leases are cancellable by the Company when exploration and/or development is completed or the property is
abandoned. The Company's state and fee mineral leases are subject to various royalty interests, some of which are indexed to the sale price of uranium. Federal mining claims are not subject to
royalties.
F-15
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 4 Significant Mineral Properties (Continued)
Juan Tafoya Property
In October 2006, the Company entered into a Uranium Mining and Lease Agreement ("Juan Tafoya Lease") with the Juan Tafoya Land
Corporation ("JTLC") in which the Company leased fee (deeded) surface and mineral rights owned by the JTLC. The Juan Tafoya Lease provides for a term of ten (10) years and so long thereafter as
the Company is conducting active mining operations. Additionally, the Juan Tafoya Lease provides for an initial payment to JTLC of $1,250,000, annual rental payments of $225,000 for the first five
years and $337,500 for the second five years, gross proceeds royalties of 4.65% to 6.5% based on the then current price of uranium, and an annual
payment to a community program of 1% of net profits. The Company is obligated to make the first 10 years annual rental payments notwithstanding its right to terminate the lease at any time,
unless: i) the market value of uranium drops below $25 per pound; ii) the state of New Mexico bans uranium mining; or iii) the deposit is deemed uneconomical by an independent
engineering firm.
In
2007, the Company acquired infill fee mineral leases within the boundaries of the Juan Tafoya Lease. The Company is obligated to make annual lease payments and pay production
royalties ranging from 4.65% to 6.5% based on the then current price of uranium.
In
January 2007, the Company entered into a Letter Agreement with International Nuclear, Inc. Pursuant to the Letter Agreement the Company acquired a database of information on
the Marquez Canyon deposit located on the Juan Tafoya property in consideration of a cash payment and a perpetual royalty of $0.25 per pound of uranium recovered from the Juan Tafoya property, with a
maximum payout of $1,000,000.
Note 5 Property and Equipment
Property and equipment consists of the following:
December 31,
2010
2009
Unproven mineral properties
$
19,607,711
$
7,924,068
Property and equipment
903,477
903,477
Less accumulated depreciation
(434,595
)
(273,054
)
20,076,593
8,554,491
Construction in progress
16,777
16,777
Total Property and Equipment
$
20,093,370
$
8,571,268
Years Ended December 31,
2010
2009
2008
Depreciation expense charged to operations
$
161,541
$
164,827
$
103,661
F-16
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 6 Joint-Ventures
Grants Uranium Joint-Venture
In February 2006, NEI leased unpatented lode mining claims in the eastern portion of the Ambrosia Lake mining district in New Mexico
(the "Endy Lease"). Pursuant to the terms of the Endy Lease, NEI paid $315,000 upon signing and is obligated to pay additional advance royalties each year thereafter through the term of the lease. The
Endy Lease has a primary term of ten years, but may be extended up to an additional sixty five years provided that NEI continues to make advance or production royalty payments. NEI may terminate the
lease at any time without further lease obligations. A five percent production royalty, based on the gross market value of all minerals extracted, is payable for any production from the Endy Lease
properties.
In
June 2006, NEI leased unpatented lode mining claims and one (1) state of New Mexico general mining lease, covering mineral rights in the Ambrosia Lake mining district in New
Mexico (the "Bonner Lease"). Pursuant to the terms of the Bonner Lease, NEI paid a rental payment of $180,000 and issued 65,000 shares of the Company's common stock. NEI shall pay a rental payment of
$120,000 on the fifth anniversary of the lease in 2011. On the sixth anniversary and on each anniversary thereafter during which the Bonner Lease is in force, NEI shall pay an advance royalty payment
of $240,000. In the event commercial production is achieved during the rental period, all future rental payments received after commercial production begins will be credited as minimum advance royalty
payments. The Bonner Lease has a primary term of ten years but may be extended up to an additional sixty five years provided that NEI continues to make advance or production royalty payments. NEI may
terminate the lease at any time without future lease obligations. A five percent production royalty based on the gross market value of all minerals extracted is payable for any production from the
Bonner Lease properties.
In
January 2008, the Company leased patented and unpatented lode mining claims in the eastern portion of the Ambrosia Lake mining district in New Mexico (the "Elizabeth Lease"). Pursuant
to the terms of the Elizabeth Lease, the Company paid a $315,000 signing bonus upon signing and is obligated to pay advance royalties of $75,000 in 2011 and every year thereafter so long as the lease
is in effect. The Elizabeth Lease has a primary term of ten years, but may be extended up to an additional sixty five years provided that the Company continues to make advance or production royalty
payments. The Company may terminate the lease at any time without future lease obligations. A five percent production royalty, based on the gross market value of all minerals extracted, is payable for
any production from the Elizabeth Lease properties.
In
April 2006, NEI and Primary entered into an Exploration, Development and Mine Operating Agreement ("Grants J.V. Agreement") and formed the Grants J.V. Pursuant to the Grants J.V.
Agreement, NEI contributed, to the joint-venture, the properties underlying three New Mexico leases: the Endy Lease, the Bonner Lease and the Elizabeth Lease. Also, Primary reimbursed NEI for $495,000
in connection with the Endy and the Bonner Leases during the year ended December 31, 2006, in consideration of contribution of the underlying leased properties. Pursuant to the Grants J. V.
Agreements, Primary was obligated to contribute $5,000,000 to fund the joint-venture's operations ("Initial Contribution") before February 1, 2010. In consideration of Primary's payments to NEI
and the funding of the Grants J.V., Primary was entitled to a fifty percent participating interest in the underlying properties. The Company was named the managing partner in the joint-venture. At the
time the Company entered into the Grants J.V. Agreement the Company believed the likelihood of Primary's
F-17
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 6 Joint-Ventures (Continued)
making
its full Initial Contribution increases in proportion to its aggregate Initial Contributions made to date. Accordingly, the Company accounted for Primary's participating interest as accretive
to Primary as it makes its Initial Contribution. The Company consolidated the assets, liabilities and operating results of the joint-venture in accordance with the proportionate consolidation method
until October 15, 2009, when NEI acquired Primary's interest in Grants J.V. Primary's historical contributions and accretive percentage of ownership are outlined below.
Ownership Percentages
Primary
Contributions to Date
Primary
NEI
October 15, 2009
$
2,632,771
34.56
%
65.44
%
December 31, 2008
2,101,085
29.52
%
70.48
%
December 31, 2007
1,442,696
22.33
%
77.67
%
In
October 2009, the Company entered into a Purchase and Termination Agreement ("Purchase Agreement") with Primary with respect to the Grants J.V. Pursuant to the Purchase Agreement,
Primary transferred its ownership interest in Grants J.V. to the Company on October 15, 2009. In consideration, the Company was obligated to, at its option, pay Primary $3,519,067 in Canadian
funds, or, issue Primary 3,519,067 shares of the Company's common stock. From the inception (April 28, 2006), through October 15, 2009, Primary had contributed $2,632,771 to fund the
operations of Grants J.V., in addition to the $495,000 reimbursed to NEI for lease costs for a total investment of $3,127,771.
The
Company accounted for the purchase as an equity transaction and no gain or loss was recognized on the transaction. The net equity in Grants J.V. at the date of acquisition was
$198,341, and the Company valued Primary's 34.56% proportionate share at $68,578.
On
December 30, 2009, the Company opted to issue to Primary 3,519,067 shares of its common stock, in lieu of cash, in consideration of its October 15, 2009 purchase of
Primary's interest in the Grants J.V. The Company recorded an increase in common stock and additional paid in capital and relieved the liability recorded at the date of transaction. As a result of the
transaction and issuance of shares,
Primary, an affiliate of the Company, holds 14,269,067 total shares of the Company's common stock, or 24.5% of the Company's issued and outstanding shares.
Cibola Resources LLC
In March 2007, the Company entered into a Mining Lease and Agreement with La Merced del Pueblo de Cebolleta ("Cebolleta Lease") a
privately held land grant, to lease approximately 6,717 acres of fee (deeded) surface and mineral rights ("Cebolleta Property") in New Mexico. The mineral lease agreement provides for a term of ten
(10) years and so long thereafter as the Company is conducting active mining operations. Additionally, the mineral lease agreement provides for initial payments to Cebolleta of $5,000,000,
annual advanced royalty payments of $500,000, a recoverable reserve payment equal to $1.00 multiplied by the number of pounds of recoverable uranium reserves upon completion of a feasibility study
less the $5,000,000 in initial payments and up to $1,500,000 in annual advance royalties previously paid pursuant to the Cebolleta Lease, and gross proceeds royalties from 4.50% to 8.00% based on the
then current price of uranium.
F-18
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 6 Joint-Ventures (Continued)
In
April 2007, NEI formed a joint-venture with UEC through the formation of Cibola, and the execution of a Limited Liability Company Operating Agreement and Members Agreement. Cibola was
owned 51% by NEI and 49% by UEC. Both parties funded the acquisition, exploration, and other costs of the Cebolleta Property in proportion to their ownership interests. The Company assigned the
Cebolleta Lease to Cibola. The Company was the managing member of Cibola. As the managing member, the Company received a management fee equal to 15% of exploration and other expenditures, excluding
property acquisition expenditures and legal fees. The Company consolidated the assets, liabilities and operating results of Cibola and recognized UEC's noncontrolling interest in the consolidated
balance sheets and consolidated statements of operations.
In
November 2009, the Company entered into an Option Agreement (the "Option Agreement") with UEC, in which UEC granted the Company the exclusive option to purchase and acquire UEC's 49%
ownership interest for a cash payment of $11 million. In consideration for the Option Amendment, the Company funded 49% of Cibola's operations, from August 2009 through March 2010 on behalf of
UEC. As of April 12, 2010, the Company is the sole owner of Cibola. From August 1, 2009 to April 12, 2010, Cibola recognized a total of $927,166 of operating expenses. NEI funded
100% of these costs with $858,976 in exploration expenses advanced on behalf of Cibola and an account payable to Cibola for $68,190. Of the aforementioned $927,166 contribution by NEI, Cibola
allocated $472,854, or 51%, to NEI's equity account and $454,312, or 49%, to UEC's equity account. As of April 12, 2010, the Company capitalized $454,312 as a mineral interest purchase option.
Therefore, the Company
recognized a total purchase price of $11,454,312, comprised of a cash payment of $11 million and the mineral purchase option of $454,312.
The
Company recognized no gain or loss on the acquisition of the noncontrolling interest in consolidated net income or comprehensive income. The Company estimated the fair value of its
additional interest in Cibola to be equivalent to the purchase price, or $11,454,312, and recognized an increase of $11,454,312 in unproven mineral properties. The estimated fair value was based on
significant other observable and unobservable inputs (Level 3), more specifically, comparable transactions with industry peers, accepted industry in-situ valuation techniques and
the Company's evaluation of the discounted cash flows, all adjusted for risks and uncertainty.
Pro Forma Results of Operations
The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisitions of Grants J.V. and
Cibola had occurred at the beginning of the period presented below:
Years Ended December 31,
2010
2009
Revenue
$
—
$
—
Net loss
(8,748,795
)
(7,539,290
)
Net loss per basic and diluted share
(0.15
)
(0.13
)
The
unaudited proforma net loss and net loss per share for the year ended December 31, 2010 presented above do not include the assumption of additional financing costs incurred as
a result of the acquisition of the 49% noncontrolling interest of Cibola. In April 2010, the Company financed the $11M acquisition of the noncontrolling interest in Cibola with proceeds from the RMB
Credit Facility
F-19
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 6 Joint-Ventures (Continued)
(See
Note 8). The net loss per share includes the assumed issuance of 3,519,067 shares of common stock at the beginning of 2009 in connection with the acquisition of the noncontrolling interest
of the Grants J.V.
The
unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had
the acquisitions been consummated as of that time, nor is it intended to be a projection of future results.
Note 7 Convertible Subordinated Notes
Series "A" 7.5% Convertible Subordinated Notes ("Series A")
In June 2006, the Company issued 41 Convertible Subordinated Notes due May 31, 2007. The principal balance of $1,069,300 was
convertible at $.22 per share of common stock. Interest was accrued monthly and payable on the first anniversary of the date of issue in cash or restricted common stock, valued at $.22 per share, at
the Company's discretion.
The
convertible notes contained a beneficial conversion feature in the amount of $221,287. The discount attributable to the beneficial conversion feature was credited to additional
paid-in capital and charged to interest expense on that date.
In
May 2007, the Company extended an offer to the Series A note holders to: a) extend the maturity date to September 30, 2007; b) receive payment of the note
in full on May 31, 2007; or c) convert the notes into common stock. All 41 note holders agreed to extend the maturity dates of their notes.
In
August 2007, the Company offered to prepay the Series A note holders subject to their right to convert the notes into shares of common stock at $.22 per share. The Company
converted all 41 notes with a face value of $1,069,300 into 4,860,456 shares of common stock and paid accrued interest of $98,117 in cash.
Series "B" 7.5% Convertible Subordinated Notes ("Series B")
In October and November 2006, the Company issued 118 Convertible Subordinated Notes due September 30, 2007. The principal
balance of $5,722,516 was convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock at an exercise price of $1.00. Interest was
accrued monthly and payable on the first anniversary of the date of issue in cash or restricted common stock, valued at $.68 per share, at the Company's discretion.
The
convertible notes contained a beneficial conversion feature in the amount of $1,146,161. The discount attributable to the beneficial conversion feature was credited to additional
paid-in capital and charged to interest expense on that date.
F-20
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 7 Convertible Subordinated Notes (Continued)
In
April 2007, the Company issued a waiver allowing the Series B note holders to receive and exercise their warrants prior to converting their notes. During April and May 2007,
the warrants related to $5,254,676 principal amount of the Series B notes were exercised and the Company issued 7,727,465 shares of common stock and received $7,727,465 in gross proceeds and
paid $430,006 in commissions resulting in $7,297,459 net proceeds. In connection with this offer, the Company agreed to issue to the
Series B note holders who exercised their underlying warrant an additional one-half warrant should it fail to file a registration statement with the appropriate regulatory
agencies in the United States and Canada on or before August 31, 2007. The Company was unable to file a registration statement by this date. Accordingly, the Company issued 3,863,734
Series B warrants ("Series B Warrants") dated September 1, 2007, exercisable at $1.60 per share of common stock if exercised before December 31, 2007 and at $2.00 per share
of common stock thereafter until their expiration on August 31, 2008. The Company credited additional paid-in capital and recognized a charge to interest expense of $868,981,
representing the estimated fair value of the warrants, in the year ended December 31, 2007.
The
following assumptions were used in the Binomial-Lattice Model to estimate the fair value of warrants issued in connection with the Series B holders' exercise of warrants:
2007
Expected term (in years)
1.0
Expected volatility
56.66
%
Expected dividend yield
0
%
Risk free interest rate
4.15
%
In
August 2007, the Company offered to prepay the Series B note holders subject to their right to convert the notes into shares of common stock at $.68 per share. Of the 118 note
holders, 116 chose to convert their notes into common stock. On August 24, 2007, the Company converted notes with a face value of $5,652,136 into 8,311,965 shares of common stock. In connection
with the conversion of the Series B notes, those note holders who did not elect to exercise their warrants prior to converting their notes in connection with the Company's April 2007 waiver,
were issued 588,000 Series A warrants ("Series A Warrants") pursuant to the terms of the Series B notes. Two notes with a principal balance of $70,380 were paid in cash. The
Company also paid an aggregate $364,550 in accrued interest in cash.
Series "C" 7.5% Convertible Subordinated Notes ("Series C")
Between March and April 2007, the Company issued 20 Convertible Subordinated Notes due February 28, 2008. The principal balance
of $999,713 was convertible at $.68 per unit. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock at a purchase price of $1.00. Interest was accrued
monthly and payable on the maturity date in cash or restricted common stock, valued at $.68 per share, at the Company's discretion. The Company paid $64,498 of debt issuance costs in 2007, the entire
amount was charged to interest expense in 2007.
The
convertible notes contained a beneficial conversion feature in the amount of $165,783. The discount attributable to the beneficial conversion feature was credited to additional
paid-in capital and charged to interest expense on that date.
F-21
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 7 Convertible Subordinated Notes (Continued)
In
April 2007, the Company issued a waiver allowing the Series C note holders to receive and exercise their warrants prior to converting their notes. During April and May 2007,
the warrants related to $766,713 principal amount of the Series C notes were exercised and the Company issued 1,127,519 shares common stock and received $1,127,519 in gross proceeds and paid
$62,743 in commissions resulting in $1,064,776 in net proceeds. In connection with this offer, the Company agreed to issue the Series C note holders who exercised their underlying warrant an
additional one-half warrant should it fail to file a registration statement with the appropriate regulatory agencies in the United States and Canada on or before August 31,
2007. The Company was unable to file a registration statement by this date. Accordingly, the Company issued 563,758 Series B Warrants dated September 1, 2007, exercisable at $1.60
per share of common stock if exercised before December 31, 2007 and at $2.00 per share of common stock thereafter until their expiration on August 31, 2008. The Company credited
additional paid-in capital and recognized a charge to interest expense of $126,793, representing the estimated fair value of the warrants, in the year ended December 31, 2007.
The
following assumptions were used in the Binomial-Lattice Model to estimate the fair value of warrants issued in connection with the Series C holders' exercise of warrants:
2007
Expected term (in years)
1.0
Expected volatility
56.66
%
Expected dividend yield
0
%
Risk free interest rate
4.15
%
In
August 2007, the Company offered to prepay the Series C note holders subject to their right to convert the notes into shares of common stock at $.68 per share. The Company
converted 20 notes with a face value of $999,713 into 1,470,166 shares of common stock. In connection with the conversion of the Series C notes, those note holders who did not elect to exercise
their warrants prior to converting their notes in connection with the Company's April 2007 waiver, were issued 342,647 Series A Warrants ("Series A Warrants") pursuant to the terms of
the Series C notes. The Company also paid an aggregate $34,314 in accrued interest in cash.
F-22
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 7 Convertible Subordinated Notes (Continued)
A
summary of the transactions involving the conversion of debt and issuance of the Series A Warrants is shown below:
Changes
Resulting From Conversion of Debt in August 2007
Series A Notes
Series B Notes
Series C Notes
Total
Principal
$
1,069,300
$
5,722,516
$
999,713
$
7,791,529
Conversion price
$
.22/Share
$
.68/Unit
$
.68/Unit
Underlying units
—
8,415,465
1,470,166
9,885,631
Shares underlying principal
4,860,456
8,415,465
1,470,166
14,746,087
Less shares underlying debt paid
—
(103,500
)
—
(103,500
)
Shares issued
4,860,456
8,311,965
1,470,166
14,642,587
Principal converted
$
1,069,300
$
5,652,136
$
999,713
$
7,721,149
Warrants underlying units
8,415,465
1,470,166
9,885,631
Warrants previously exercised
(7,727,465
)
(1,127,519
)
(8,854,984
)
Less warrants underlying debt paid
(100,000
)
—
(100,000
)
Series A Warrants issued
588,000
342,647
930,647
A
summary of the transactions involving the Company's April 2007 waiver and subsequent early exercise of warrants, and the Company's inability to file a registration statement by
August 31, 2007, resulting in the issuance of the Series B Warrants, is shown below:
Series B Notes
Series C Notes
Total
Shares issued in connection with early exercise
7,727,465
1,127,519
8,854,984
Series B Warrants issued
3,863,734
563,758
4,427,492
Note 8 Senior Debt Facility
Credit Facility
In April 2010, the Company entered into an arrangement of a $16 million senior secured credit facility ("Credit Facility"),
which the lender advanced in two tranches. Tranche 1 proceeds in the amount of $5 million were used for general working capital consistent with operating activities mutually agreed upon
by the Company and lender. Tranche 2 proceeds in the amount of $11 million were used to fund the Company's acquisition of UEC's 49% interest in Cibola. The Credit Facility agreement,
among other terms and conditions, provides for:
a.
The
payment of outstanding principal, together with accrued interest, on or before December 31, 2010.
b.
Interest
charged on outstanding principal balances is accrued as a part of the principal balance and calculated at a rate equal to LIBOR plus 7%.
F-23
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 8 Senior Debt Facility (Continued)
c.
Mortgage
and senior security interest in all material "real property" located in New Mexico; all "personal property" of the Company; and a pledge of the
Company's 100% ownership interest in Cibola.
In
consideration of the Credit Facility agreement, the Company:
a.
Paid
the lender an arrangement fee of $1,120,000, equal to 7% of the Credit Facility, plus $190,758 in costs and expenses incurred by lender.
b.
Issued
the lender warrants to purchase a total of 3,051,744 shares of common stock of the Company on the following terms: The exercise price is $1.75 or the
lowest price at which the Company issues shares during the exercise period, which is four years from date of issuance. The estimated fair value of these warrants on the dates of issue was $1,579,637
or $.52 per warrant, as estimated using the Black-Scholes option pricing model with an exercise price of $1.75, an expected life of 4 years, a risk free interest rate of 2.13% to 2.26%, a
dividend yield of 0%, and an expected volatility of 86.3% to 86.5%.
c.
Upon
issuance of additional shares by the Company, the Company is obligated to issue additional warrants to lender to purchase up to 1,519,684 additional
shares of common stock. The warrants will be issued so as to allow the lender to maintain a beneficial ownership up to five percent (5%), as was achieved by the issuance of the warrants in b above.
The fair value of these warrants has not been established as these warrants are not issuable at December 31, 2010.
Amended Credit Facility
On December 22, 2010, the Company entered into the First Amendment Agreement to the Credit Facility Agreement ("Amended Credit
Facility") with lender with respect to the amendment of the April 2010 Credit Facility. The Lender extended the maturity of the Credit Facility from December 31, 2010 to June 30, 2011,
and advanced $8 million in Tranche 3, which increased the Credit Facility from $16 million to $24 million. The terms of the Amended Credit Facility
are:
a.
The
Company paid the lender an arrangement fee of $320,000, equal to 4% of the increase in amount of the credit facility, an extension fee of $160,000, equal
to 1% of the original credit facility, plus, $21,233 in costs and expenses incurred by the lender.
b.
Upon
issuance of additional shares by the Company, the Company is obligated to issue additional warrants to lender to purchase up to 2,742,857 additional
shares of common stock. The warrants will be issued so as to allow the lender to maintain a beneficial ownership up to five percent (5%). The fair value of these warrants has not been established as
these warrants are not issuable at December 31, 2010.
c.
All
other terms and conditions remain the same.
Discount on Senior Debt
The Company accounted for the senior credit facility in a manner that allocated the proceeds from the senior credit facility based on
the relative fair values of the debt instrument without the warrants and of the warrants themselves at the time of issuance. The portion of the senior debt proceeds
F-24
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 8 Senior Debt Facility (Continued)
allocated
to the warrants resulted in a discount on the debt to be recognized as a part of interest expense in the Company's consolidated statements of operations. The Company recorded $1,579,637 as a
discount on senior debt on the date of issuance. As of December 31, 2010, the Company has amortized $1,527,895 as interest expense in connection with the accretion of the senior debt discount.
Warrant Liability
As a result of the downround protection feature (reset provision) of the warrants issued in connection with the senior credit facility,
the warrants are considered a derivative for financial reporting purposes. Therefore, the Company recorded the fair value allocated to the warrants as a liability on the Company's consolidated balance
sheets and is subject to ongoing fair value measurement. The Company recorded the estimated fair value of the 3,051,744 issued warrants in the amount of $1,579,637 as a warrant liability on the date
of issuance. As of December 31, 2010, the Company recognized an unrealized gain on warrant liability of $240,235, to reflect the change in estimated fair value of the warrant liability as of
that date. The amount is included as a component of interest expense within the consolidated statements of operations.
Restricted Cash—Proceeds Account
Pursuant to the Credit Facility and Amended Credit Facility, the net proceeds from Tranche 1 and Tranche 3 were deposited
in a proceeds account controlled by the lender. Working capital is transferred to the Company under the terms of the cash budget agreed upon between the Company and the lender. Accordingly, the
December 31, 2010 proceeds account balance of
$7,044,367 is classified as short-term restricted cash and is reported in restricted cash and marketable securities on the consolidated balance sheets.
Note 9 Common Stock
The table below sets forth the number of shares of common stock and other potentially dilutive securities of the Company as of each balance sheet date:
As of December 31,
2010
2009
Common stock outstanding
58,204,141
58,154,141
Dilutive securities
Warrants issued in connection with senior debt
3,051,744
—
Stock options
5,491,666
5,335,000
Dilutive securities outstanding
8,543,410
5,335,000
Diluted shares of common stock
66,747,551
63,489,141
F-25
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 9 Common Stock (Continued)
Year Ended December 31, 2005, Common Stock Transactions
During March and May 2005, as part of the initial incorporation of the Company, the Company issued 6,877,565 shares of common stock at
$.01 per share to a founding officer of the Company for services, resulting in the Company's recognition of $68,776 in non-cash compensation expense.
In
April 2005, the Company signed a letter agreement with Primary granting Primary the right to purchase 10,750,000 shares of common stock. Under the agreement Primary was to make
periodic payments totaling $1,250,000. The Company received $1,000,000 during the year ended December 31, 2005 and recorded a Stock Subscription Receivable of $250,000 as of that date.
Accordingly, for accounting purposes, 8,600,000 common shares were considered issued and outstanding as of December 31, 2005.
During
2005, the Company issued 5,807,435 shares of common stock to officers, employees and technical consultants of the Company. The shares of common stock were issued at an estimated
fair value of $.12 per share, resulting in the Company's recognition of $675,283 in non-cash compensation expense.
Year Ended December 31, 2006, Common Stock Transactions
In January 2006, the Company issued 10,750,000 common shares to Primary, of which 2,150,000 shares were considered issued to Primary in
2006 for accounting purposes, upon payment of the final $250,000 as required by the stock subscription agreement.
In
June 2006, as part of a lease agreement, the Company issued 65,000 shares of common stock, in addition to cash consideration, to the lessor. The shares of common stock were issued at
an estimated fair value of $.27 per share, resulting in the Company's capitalization of $16,878 in unproven mineral properties on a consolidated basis.
Year Ended December 31, 2007, Common Stock Transactions
In April 2007, in connection with the re-incorporation of the Company into Nevada, the number of authorized shares of the
Company's stock was increased to two hundred and ten million (210,000,000) of which 200,000,000 are common stock and 10,000,000 are preferred shares. Each share of common stock was changed from a par
value of $.01 to $.001. All share amounts have been retroactively restated to give effect to the change in par value.
In
April and May 2007, the Company issued 8,854,984 shares of common stock to Series B and Series C note holders who exercised their warrants for $1.00 per share. The
Company received gross proceeds of $8,854,984 from the warrants exercised.
In
August 2007, the Company issued 50,000 shares of common stock to an officer. The shares have an estimated fair value of $1.00 per share and a non-cash compensation expense
of $50,000 was recognized. In September 2007, the Company issued an additional 50,000 shares of common stock to an officer at an estimated fair value of $1.50 per share, and $75,000 was recognized as
non-cash compensation expense.
In
August 2007, the Company issued 14,642,587 shares of common stock to Series "A", "B", and "C" note holders by converting notes into common stock.
F-26
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 9 Common Stock (Continued)
During September through November 2007, the Company issued 7,061,474 shares of common stock in a private placement at $1.50 per share. Gross proceeds from the private placement were
$10,592,211. Offering costs for this private placement were $690,414 for net proceeds of $9,901,797.
In
December 2007, warrants were exercised to purchase 75,000 shares of common stock at an exercise price of $1.60 for total proceeds of $120,000 to the Company.
Year Ended December 31, 2008, Common Stock Transactions
In August 2008, the Company issued 100,000 shares of common stock to an officer pursuant to the Company's 2007 Omnibus Incentive Plan.
The shares had an estimated fair value of $0.75 per share and non-cash compensation expense of $75,000 was recognized.
In
August 2008, Series A Stock Purchase Warrants were exercised to purchase 273,529 shares of common stock at an exercise price of $1.00 per share of common stock, for proceeds of
$273,529 to the Company.
In
August 2008, Series B Stock Purchase Warrants were exercised to purchase 27,500 shares of common stock at an exercise price of $2.00 per share of common stock, for proceeds of
$55,000 to the Company.
Year Ended December 31, 2009, Common Stock Transactions
In December 2009, the Company issued 3,519,067 shares of common stock to Primary Corp. in consideration for its October 15, 2009
purchase of Primary's 34.56% interest in Grants J.V. Details of the transaction are discussed in Note 6.
Year Ended December 31, 2010, Common Stock Transactions
In May 2010, the Company issued 50,000 shares of common stock to a director of the Company in consideration of a short-term
standby letter of credit. The shares were valued at $1.00 per share and $50,000 was recognized as non-cash compensation expense.
Note 10 Stock Option Plan
Stock Option Plans
In February 2006, the Board of Directors adopted the 2006 Stock Option and Restricted Stock Plan (the "2006 Plan"). Shareholders
approved the 2006 Plan in February 2006. The 2006 Plan authorizes the Company to issue 3,500,000 shares of common stock upon exercise of options and grants of restricted and unrestricted stock awards.
The Plan authorizes the Company to grant i) to the key employees incentive stock options to purchase shares of common stock and non-qualified stock options to purchase shares of
common stock and restricted and unrestricted stock awards and ii) to non-employee directors and consultants' non-qualified stock options and restricted and unrestricted
stock awards. At December 31, 2010, the Company had granted 3,397,000 stock options and 100,000 shares of common stock as stock awards under the 2006 Plan.
In
December 2007 the Board of Directors adopted the 2007 Omnibus Incentive Plan (the "2007 Plan"). Shareholders approved the 2007 Plan in September 2008. The 2007 Plan authorizes the
F-27
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 10 Stock Option Plan (Continued)
Company
to issue 2,800,000 shares of common stock upon exercise of options and grant of restricted and unrestricted stock awards. The 2007 Plan authorizes the Company to grant i) incentive
stock options and non-qualified stock options, ii) stock appreciation rights, iii) restricted stock and stock units awards and iv) unrestricted stock awards. At
December 31, 2010, the Company had granted 2,094,666 stock options and 150,000 shares of common stock as stock awards under the 2007 Plan.
Stock Options Issued
In November 2006, the Company granted 1,220,000 stock options under the 2006 Plan with an exercise price of $.68 as follows: 770,000 to
officers; 50,000 to an employee; and 400,000 to directors. The term of these options is ten years with vesting periods ranging from immediate vesting to 30 months. The weighted average fair
value of these options at the date of grant was $.374 per option, for a total of $456,072, estimated using the Black-Scholes options pricing model.
In
the year ended December 31, 2007, the Company granted a total of 2,159,000 stock options under the 2006 Plan as follows: 921,000 to officers, 1,188,000 to employees, and 50,000
to consultants. Of those options, 1,099,000 were issued at an exercise price of $.68; 1,010,000 were issued at an exercise price of $1.00 and 50,000 were issued at an exercise price of $1.50 for a
weighted average exercise price of $.85 per share. The term of these options ranges from five to ten years with vesting periods ranging from immediate vesting to 36 months. The weighted average
fair value was $.45 per option at the respective grant dates for a total of $967,756, which was estimated using the Black-Scholes options pricing model.
In
the year ended December 31, 2008, the Company granted a total of 870,000 stock options under the 2007 Plan as follows: 400,000 to officers, 140,000 to employees, 260,000 to
independent directors and 70,000 to consultants, all at an exercise price of $1.50 per share. The contracted term of these options ranges from fifty-four months to ten years with vesting
periods ranging from immediate vesting to 24 months. The weighted average fair value was $.67 per option at the respective grant dates for a total of $587,099, which was estimated using the
Black-Scholes options pricing model.
In
February 2009, the Company sought, and received, an indefinite voluntary reduction in salaried compensation paid to its six executive officers and four highest compensated employees.
The reduction in salaried compensation ranged from 7% to 20% for executive officers and from 5% to 12% for employees. In addition, the Company's Board of Directors reduced its quarterly compensation
by 50%. In connection with this reduction in compensation, the Company agreed to modify the terms of 1,200,000 stock options issued to two executive officers, 120,000 stock options issued to an
employee and 260,000 stock options issued to three directors of the Company. The Company modified the terms of the stock options by reducing the exercise price from $1.00 to $.68 per share on 800,000
stock options and from $1.50 to $.68 per share on 780,000 stock options. The Company treats a modification of terms of a stock option as an exchange of the original stock options for new stock options
and the incremental share-based compensation is measured and recognized as the excess, if any, of the fair value of the modified stock options over the fair value of the original stock options
measured immediately before the terms are modified. Accordingly, the Company recognized incremental share-based compensation of $1,752 and $80,586 in the years ended December 31, 2010 and 2009,
respectively.
F-28
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 10 Stock Option Plan (Continued)
In
February 2009, also in connection with the reduction in compensation, the Company's Board of Directors authorized, and the Company subsequently issued, the following stock
options:
a)
The
Company granted 538,000 stock options to six executive officers, 88,000 under the 2006 Plan and the remainder under the 2007 Plan, at an exercise price
of $.68 per share, which vest upon issuance and have a term of 10 years;
b)
The
Company granted 228,000 stock options to four employees under the 2007 Plan at an exercise price of $.68 per share, which vest upon issuance and have a
term of 10 years; and
c)
The
Company granted 90,000 stock options to three directors under the 2007 Plan at an exercise price of $.68 per share, which vest upon issuance and have a
term of 10 years.
The
estimated fair value of these stock options was $271,196, or $.32 per stock option.
In
May 2009, the Company granted 350,000 stock options under the 2007 Plan as follows: 50,000 to an employee and 300,000 to a consultant, all at an exercise price of $.68 per share with
a term of ten years with vesting periods ranging from immediate vesting to 20 months. The weighted average fair value was $.40 per option at the respective grant dates for a total of $140,643,
which was estimated using the Black-Scholes options pricing model.
In
May 2010, in accordance with its compensation plan, the Company's Board authorized, and the Company subsequently granted 100,000 stock options to a strategic outside consultant at an
exercise price of $1.00 per share, one-half vested upon issuance and the balance vested in October 2010, and has a five year term. The estimated fair value of these options was $66,760, or
$.67 per share.
In
May 2010, in accordance with its compensation plan, the Company's Board authorized, and the Company subsequently granted 90,000 stock options to three non-executive
directors at an exercise price of $1.00 per share, which vest upon issuance and have a ten year term. The estimated fair value of these options was $75,997, or $.84 per share.
The
following table sets forth the recognized compensation expense for the following periods:
Years Ended December 31,
From Inception
(March 25, 2005)
through
December 31, 2010
2010
2009
2008
Recognized compensation expense—stock options
$
147,049
$
577,191
$
784,089
$
2,526,151
Recognized compensation expense—stock awards
50,000
—
75,000
994,059
Total
$
197,049
$
577,191
$
859,089
$
3,520,210
As
of December 31, 2010, the Company has no unrecognized share-based compensation.
F-29
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 10 Stock Option Plan (Continued)
The
grants of stock options for the years ended December 2010, 2009, and 2008 are detailed in the table below:
Stock Options
Options
Weighted
Average Exercise
Price
Balance, December 31, 2007
3,379,000
$
0.77
Granted
870,000
$
1.50
Cancelled/Expired
(50,000
)
$
1.50
Balance, December 31, 2008
4,199,000
$
0.93
Granted
2,786,000
$
0.68
Cancelled/Expired
(1,580,000
)
$
1.25
Forfeited
(70,000
)
$
1.00
Balance, December 31, 2009
5,335,000
$
0.70
Granted
190,000
$
1.00
Forfeited
(33,334
)
$
0.68
Balance, December 31, 2010
5,491,666
$
0.71
The
following table summarizes certain additional information about the Company's total and exercisable stock options outstanding as of December 31, 2010:
Number
Outstanding
Weighted
Average
Remaining
Contractual Life
Weighted
Average
Exercise Price
Intrinsic Value
Total stock options
5,491,666
6.92
$
0.71
$
1,622,933
Exercisable stock options
5,491,666
6.92
0.71
1,622,933
The
estimated fair value of the Company's common stock on December 31, 2010 was $1.00 per share.
F-30
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 10 Stock Option Plan (Continued)
The
following table summarizes the activity in nonvested stock options for the years ended December 31, 2010, 2009, and 2008. As of December 31, 2010, no options have been
exercised and 153,334 options have been forfeited.
Nonvested
Stock Options
Options
Weighted Average
Grant Date
Fair Value
Nonvested, December 31, 2007
1,847,000
$
0.46
Granted
870,000
$
0.67
Vested
(1,429,333
)
$
0.56
Forfeited
(50,000
)
$
0.81
Nonvested, December 31, 2008
1,237,667
$
0.44
Granted
2,786,000
$
0.32
Vested
(3,097,000
)
$
0.33
Cancelled/Expired
(706,667
)
$
0.51
Forfeited
(70,000
)
$
0.29
Nonvested, December 31, 2009
150,000
$
0.32
Granted
190,000
$
0.75
Vested
(306,666
)
$
0.58
Cancelled/Expired
—
$
—
Forfeited
(33,334
)
$
0.33
Nonvested, December 31, 2010
—
$
—
The
value of each option award is estimated at the date of grant using the Black-Scholes options pricing model that utilizes the assumptions included in the table below. Since the
Company has no historical exercise data, the expected term assumption was computed using the simplified method. In addition, because of this limited data, the Company has determined the volatility
assumption by using the volatility of similar public companies in its peer group. The risk free interest rate reflects the U.S. Treasury yield curve for a similar expected life instrument in effect at
the time of grant. The assumptions utilized for the years ended December 31, 2010, 2009, and 2008 are as follows:
2010
2009
2008
Expected term (in years)
5.00 - 10.0
5.00 - 10.0
4.6 - 10.0
Expected forfeiture rate
0%
0%
0% - 75%
Expected volatility
83.24% - 83.99%
83.36% - 86.17%
64.0% - 86.9%
Expected dividend yield
0%
0%
0%
Risk free interest rate
2.26% - 3.26%
1.68% - 3.22%
2.28% - 3.45%
F-31
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 11 Stock Purchase Warrants
Series A and B Warrants
In 2007, the Company issued 9,785,631 Series A Warrants in conjunction with the April and May 2007 issuance and exercise and the
August 2007 conversion of the Series B and Series C notes. Of those, 273,529 and 8,854,984 warrants were exercised at $1.00 per share in 2008 and 2007, respectively. The remaining
657,118 warrants expired unexercised.
In
2007, the Company issued 4,427,492 Series B Warrants to those Series B and Series C note holders who elected to April and May 2007 early issuance and exercise of
their warrants underlying their Series B and Series C notes, as a penalty for not filing an initial public offering prior to August 2007. Of these, 75,000 warrants were exercised at
$1.60 per share in 2007 and 27,500 warrants were exercised at $2.00 per share in 2008. The remaining 4,324,992 warrants expired unexercised.
Performance Based Warrants
In August 2008, the Company entered into an agreement ("Agreement") with an institutional stockholder to make an introduction and
arrange a meeting between the Company and a utility company that owns and/or operates a nuclear generating facility. In consideration of the Agreement, the Company issued the Institution a warrant to
purchase 2,333,332 shares of common stock of the Company at $2.25 per share on or before November 7, 2009. The contingencies were not met, therefore the warrants expired unexercised.
Note 12 Income Taxes
The following summarizes the components of the Company's deferred tax assets and liabilities:
December 31,
2010
2009
Deferred tax assets:
Exploration expenditures
$
2,680,000
$
2,612,000
Stock option compensation
321,000
244,000
Leasehold acquisition costs
37,000
24,000
Cibola joint venture
801,000
409,000
Net operating losses
7,817,000
4,503,000
Accrued liabilities
17,000
22,000
Total deferred tax assets
11,673,000
7,814,000
Deferred tax liabilities
Property and equipment
(9,000
)
(20,000
)
Prepaid expenses
(32,000
)
(25,000
)
Total deferred tax liabilities
(41,000
)
(45,000
)
Less: Valuation allowance
(11,632,000
)
(7,769,000
)
Net deferred tax assets
$
—
$
—
F-32
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 12 Income Taxes (Continued)
In order to establish when it is more likely than not that all or a portion of the deferred tax assets will not be realized, the Company reviewed all available positive and negative
evidence, including the Company's performance, the market environment in which the Company operates, forecasts of future profitability, the utilization of past tax credits, length of carry forward
periods and similar factors. It is difficult to conclude that a valuation allowance is not needed when there is negative evidence such as cumulative losses in recent years. Therefore, cumulative
losses weigh heavily in the overall assessment.
The tax years 2007-2010 remain open to examination by the Internal Revenue Service of the United States.
As
of December 31, 2010, the Company has generated net operating loss carry forwards for federal and state income tax purposes of approximately $19.6 and $22.2 million
respectively, which expire from 2011 to 2030. The Company expects to continue to record a full valuation allowance on any future tax benefits until it has achieved several quarters of consecutive
profitable results coupled with an expectation of continued profitability. As of December 2010 and 2009, the valuation allowance totaled $11.6 million and $7.8 million, respectively.
The
income tax benefit differs from the amount computed by applying the statutory U.S. federal income tax rate of 34% to losses from continuing operations before income taxes as follows:
Year ended December 31,
From Inception
(March 25, 2005)
through
December 31, 2010
2010
2009
2008
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Federal income tax benefit at statuatory rate
$
(2,975,000
)
34
%
$
(2,289,000
)
34
%
$
(2,828,000
)
34
%
$
(12,633,000
)
34
%
State taxes, net of federal benefit
(702,000
)
6
%
(424,000
)
6
%
(319,000
)
4
%
(1,701,000
)
5
%
Changes in valuation allowance
3,865,000
-34
%
2,288,000
-34
%
2,716,000
-33
%
11,633,000
-32
%
Other, net
(188,000
)
-6
%
425,000
-6
%
431,000
-5
%
2,701,000
-7
%
Benefit from income taxes
$
—
—
%
$
—
—
%
$
—
—
%
$
—
—
%
Note 13 Related Party Transactions
In April 2005, the Company entered into an agreement with Primary to issue 10,750,000 shares of the Company's common stock in exchange for cash subscriptions to the Company totaling
$1,250,000. On
January 17, 2006, the final payment was received and shares were issued. In January 2006, Primary's president was appointed as a member of the Company's Board of Directors.
In
April 2006, the Company made an expense advance payment of $12,000 to an officer, which was paid in full in 2007.
In
April 2006, the Company entered into a joint-venture agreement with Primary, a principal shareholder of the Company, to establish the Grants J.V. Primary's then president was a member
of the Company's Board of Directors, and continues to serve as a board member of Primary.
F-33
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 13 Related Party Transactions (Continued)
In
December 2009, the Company issued 3,519,067 shares of common stock to Primary in consideration for its October 15, 2009 purchase of Primary's 34.56% interest in Grants J.V.
In
2010 and 2009, the Company paid a law firm $1,128 and $239,449, respectively, in legal fees. The attorney representing the Company was a partner in that law firm. In May 2009, the
Company granted the attorney 300,000 stock options in consideration of non-legal strategic consulting services. The options had an estimated fair value of $124,259 at the grant date. In
February 2011, the attorney was appointed to the Company's Board of Directors.
In
January 2010, the Company entered into the first of three agreements with a consultant, who subsequently became a member of the Board of Directors. The three agreements were:
i) a finder's fee agreement in January 2010, which would pay the consultant a 1% contingent fee on introductions leading to financing of the Company, which was terminated in February 2011;
ii) a consulting agreement in April 2010, which provided for a grant of 100,000 stock options with an estimated fair value of $66,760 plus contingent fees, which was terminated in February
2011; and iii) a subsequent consulting agreement in February 2011, which provided for a grant of 200,000 stock options and a monthly retainer of $5,000. In February 2011, the consultant was
appointed to the Company's Board of Directors. Further details of agreements i) and ii) are presented in Note 14. Details of agreement iii) and the addition of new board
members are presented in Note 18.
In
May 2010, a member of the Board of Directors was issued 50,000 shares of common stock, with an estimated fair value of $50,000, in consideration of a standby credit facility issued to
the Company. The standby letter of credit was not used and was subsequently terminated.
In
January 2011, the Company entered into a financial advisory agreement with Primary, as detailed in Note 18.
Note 14 Commitments and Contingencies
401(k) Retirement Plan
In June 2007, the Company adopted a non-contributory 401(k) Plan for its full-time employees and employees who
work at least 1,000 hours per year. Effective January 1, 2008, the Company elected to implement non-elective contributions equal to 3% of eligible compensation for employees
meeting certain eligibility requirements. The contributions meet the tax deferral "safe harbor" requirements provided for in the Internal Revenue Code. Contributions are accrued monthly and paid after
the close of the fiscal year. The Company accrued 401(k) expenses of $52,720, $67,450 and $60,772 for the years ended December 31, 2010, 2009 and 2008, respectively.
Mineral Leases
The Company entered into a ten year Lease Agreement with JTLC in October 2006 as detailed in Note 4. Pursuant to the terms of
the lease, the Company is obligated to make annual payments for the next five years of $337,500 for the main lease. Additional in-fill property leases obligate the Company to annual
payments of up to $9,500 for the next six years.
All
other land leases are cancellable by the Company when exploration and/or development is completed or the property is abandoned.
F-34
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 14 Commitments and Contingencies (Continued)
Office Leases
The Company entered into leases for office space in Englewood, Colorado; Albuquerque, New Mexico; and Grants, New Mexico. The Englewood
lease is for a period of 38 months ending October 2011. The Albuquerque lease, initially a three-year term, has been extended through March 2011. The remaining lease is a on a
month-to-month basis. During the years ended December 31, 2010, 2009, and 2008, and the period from inception (March 25, 2005) through December 31, 2010,
the Company incurred $194,037, $203,257, $161,581, and $673,177, respectively, in rental expense that was charged to operations.
Future
minimum lease commitments for Mineral and office leases at December 31, 2010 are as follows:
Years Ending
December 31,
Office Leases
Mineral Leases
Total
Commitments
2011
$
129,804
$
343,807
$
473,611
2012
—
347,017
347,017
2013
—
347,017
347,017
2014
—
347,017
347,017
2015
—
347,017
347,017
Thereafter
—
9,517
9,517
Total
$
129,804
$
1,741,392
$
1,871,196
Credit Agreement with Arizona Business Bank
In April 2008, Arizona Business Bank issued the Company an Irrevocable Standby Letter of Credit in favor of the Landlord as a security
deposit on the lease of the corporate headquarters in Englewood, Colorado. The credit facility is collateralized by a certificate of deposit which pays 2.8% interest. As of December 31, 2010,
the certificate of deposit in the amount of $25,000 is reported as a component of short-term restricted cash and marketable securities on the consolidated balance sheets, as it is to be
released in October 2011.
As
of December 31, 2010, Arizona Business Bank has issued the Company four Irrevocable Standby Letters of Credit in favor of the New Mexico Energy, Minerals and Natural Resources
Department to satisfy the bond requirements for completion of surface and subsurface reclamation pursuant to the permits issued by the state of New Mexico. Each credit facility is collateralized by a
certificate of deposit equal to the value of the Letter of Credit which pays 2.8% interest. The total amount of the four certificates of deposit is $185,300. As of December 31, 2010, the
certificates of deposit are reported as components of restricted cash and marketable securities on the consolidated balance sheets.
Long-term Payable
In August 2009, the Company entered into an agreement with a former lessor and operator of certain lands now leased by the Company to
acquire historical data related to the Cebolleta project. The former lessor delivered the data at the time of the agreement. In consideration, the Company
F-35
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 14 Commitments and Contingencies (Continued)
made
payments to date of $50,000 with a final payment of $400,000 due in August 2013, which is recorded on the balance sheet as a long-term liability discounted at 8%, the borrowing rate
of the Company. Interest is amortized over the life of the contract. As of December 31, 2010 and 2009, the long-term account payable is recorded at $325,539 and $299,454,
respectively.
Employment Contracts and Termination and Change of Control Obligations
The Company has entered into employment agreements with five executive officers and one employee that provide that, in the event the
employee is terminated for other than for cause, death or disability, or the employee terminates for good reason, the Company will pay the employee the amount of his base salary for a specific number
of months, which varies from six to twenty-four months, provided that the salary continuation period falls within the period that compensation would have been paid had the termination not
occurred.
Agreements Containing Contingent Fees
In January 2010, the Company entered into a finder's fee agreement with a consultant, who subsequently became a director of the
Company, to provide introductions in connection with the Company's financing efforts. Should the Company conclude a transaction through the efforts on the consultant, the agreement requires the
Company to pay a 1% fee on proceeds received from the transaction. In February 2011, the Company terminated the agreement, however, the Company remains obligated to pay the fees set forth therein
should the Company complete a transaction within 12 months of termination if the consultant introduced the financing party during the term of the agreement.
In
May 2010, the Company entered into a strategic consulting and advisory agreement with a consultant, who subsequently became a director of the Company, to provide advisory services in
connection with the Company's evaluation of pursuing one or more strategic transactions, such as off-take agreements, forward sales contracts, joint ventures and mineral property
acquisitions or dispositions. Should the Company conclude a strategic transaction through efforts of the consultant, the consulting agreement requires the Company to pay a 1.5% fee on debt proceeds
received by the Company and a 5% fee on proceeds received by the Company through equity financing, asset dispositions or a joint venture earn-in. In addition, the Company granted the
consultant 100,000 stock options exercisable within five years at an exercise price of $1.00 per share of common stock, which vested one-half upon issuance and the balance on
October 15, 2010. The agreement was terminated in February 2011, however, the Company remains obligated to pay the fees set forth in the agreement should the Company complete a transaction
within 12 months of termination if the consultant contacted the financing party on behalf of the Company during the term of the agreement.
Officer Indemnification
Under the Company's organizational documents, the Company's officers, employees and directors are indemnified against certain
liabilities arising out of the performance of their duties. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company
that have not yet occurred. However, based on experience, the Company expects any risk of loss to be remote. The Company also has an insurance policy for its directors and
F-36
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 14 Commitments and Contingencies (Continued)
officers
to insure them against liabilities arising from their performance in their positions with the Company or its subsidiaries.
Note 15 Fair Value of Financial Instruments
Disclosures about fair value of the Company's financial instruments are presented in the table below. These calculations are subjective in nature and involve uncertainties and
significant matters of judgment and do not include income tax considerations. Therefore, the results cannot be determined with precision and cannot be substantiated by comparison to independent market
values and may not be realized in actual sale or settlement of the instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used could
significantly affect the results.
The
following table presents a summary of the Company's financial instruments:
Fair Value Measurements at Reporting Date Using
Description
Carrying Amount
as of
December 31, 2010
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Current Assets
Cash and cash equivalents
$
174,416
$
174,416
$
—
$
—
Restricted cash and marketable securities
7,069,367
7,069,367
—
—
Other Assets
Restricted cash and marketable securities
185,300
185,300
—
—
Current Liabilities
Senior debt
24,844,874
—
24,844,874
—
Long-term liabilities
Long-term payable
325,539
—
—
253,685
Warrant liability
1,339,402
—
1,339,402
—
The
carrying amounts for cash and cash equivalents, restricted cash and marketable securities, accounts payable, and accrued expenses approximate fair value because of the short
maturities of these financial instruments. As of December 31, 2010, the carrying amount of the senior debt approximated fair value due to the fact that there were no changes to the terms and
the short term nature thereof. The fair value of the warrant liability was determined using the Black-Scholes model, which is detailed in Note 8. The estimated fair value of the Company's
long-term payable was determined by discounting the related cash flows over the underlying contractual period using the Company's credit risk adjusted cost of debt. The credit risk
adjusted cost of debt utilized was based on the most recent capital transaction consummated by the Company which was the Amended Credit Facility in December 2010 and was estimated at 17.37%.
Note 16 Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and marketable securities. The Company
places its
F-37
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 16 Concentrations of Credit Risk (Continued)
cash
and cash equivalents with high quality financial institutions and limits its credit exposure with any one financial institution. At times, the Company's bank account balances may exceed federally
insured limits.
Note 17 Non-Cash Investing and Financing Activities
Supplemental disclosure of non-cash investing and financing activities:
Year Ended December 31,
From Inception
(March 25, 2005)
through
December 31, 2010
2010
2009
2008
Activities:
Common stock issued upon conversion of convertible notes payable
$
—
$
—
$
—
$
7,721,149
Common stock issued for acquisition of unproven mineral properties
—
—
—
16,878
Common stock issued upon receipt of stock subscription receivable
—
—
—
2,150
Debt issuance costs financed by convertible notes payable
—
—
—
460,580
Common stock issued for acquisition of Primary's 34.56% interest in Grants J.V.
—
68,578
—
68,578
Purchase of equipment financed by accounts payable
—
—
2,988
—
Purchase of unproven mineral properties financed by senior debt and capitalized investment in mineral purchase option
11,454,312
—
—
11,454,312
Debt issuance costs financed by senior debt
1,618,340
—
—
1,618,340
Deferred offering costs financed by accrued expenses
7,800
—
—
7,800
Estimated fair value of warrant liability recognized in connection with warrants issued in senior debt transaction
1,579,637
—
—
1,579,637
Noncontrolling interest reclassified to additional paid-in- capital upon purchase of Cibola
2,474,500
—
—
2,474,500
Note 18 Subsequent Events
Agreements Containing Contingent Fees
In January 2011, the Company entered into a financial advisory agreement with a related party. Pursuant to the agreement the financial
advisor will consult with the Company with respect to a) any merger, amalgamation, plan of arrangement, reorganization or other business combination, b) the issuance by the Company, or a
counterparty of a business combination, of securities in connection with an initial public offering or a private placement. Should the Company conclude a transaction, the financial advisory agreement
requires the Company to pay a 1% completion fee on the transaction
F-38
Table of Contents
Neutron Energy, Inc. and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Continued)
Note 18 Subsequent Events (Continued)
value,
defined as the gross proceeds received in a financing and the aggregate unrestricted cash balances of any counterparty in connection with a business combination.
Standby Letters of Credit
In January 2011, Arizona Business Bank issued the Company two additional Irrevocable Standby Letters of Credit in favor of the New
Mexico Energy, Minerals and Natural Resources Department to satisfy the bond requirements for completion of surface and subsurface reclamation pursuant to the permits issued by the state of New
Mexico. Each credit facility
is collateralized by a certificate of deposit equal to the value of the Letter of Credit which pays 2.8% interest. The total amount of the two certificates of deposit is $88,605.
Increase in Size of Board of Directors
In February 2011, the Company increased the size of the Board of Directors from five to eight members. The three new board members were
appointed and each granted 200,000 stock options at an exercise price of $1.00 per share of common stock. The options have a term of ten years and vest immediately.
Consulting Agreement
In February 2011, the Company entered into a consulting agreement with one of the newly appointed directors to provide advice and
consultation to the Company, on an as needed basis, with respect to: i) marketing and operational strategies, goals and objectives; ii) implementation and execution of strategic
initiatives; and iii) evaluation of performance and results. In consideration, the Company agreed to pay a month retainer to be offset by a daily consulting fee. In addition, the Company
granted the consultant 200,000 stock options exercisable within ten years at an exercise price of $1.00 per share of common stock and vests one-half six months after the agreement date and
the balance twelve months after the agreement date. The consulting agreement is non-exclusive and may be terminated at any time upon 30 days notice.
2011 Equity Incentive Plan
In February 2011, the Board of Directors unanimously approved the 2011 Equity Incentive Plan, ("2011 Plan"). The 2011 Plan authorizes
the Company to issue a maximum of between 1,000,000 and 3,000,000 shares of common stock depending on the total number of issued and outstanding shares of common stock of the Company. The 2011 Plan is
subject to the approval of the Company's shareholders within a period of one year. The 2011 Plan authorized, among other things, the Company to grant i) incentive stock options and
non-qualified stock options, ii) stock appreciation rights, iii) restricted stock and stock unit awards, and iv) unrestricted stock awards. The Company has granted
400,000 non-qualified stock options as of the date of issuance of these consolidated financial statements.
F-39
Table of Contents
Shares
Common Stock
PROSPECTUS
, 2011
Roth Capital
Partners                                        
                                          
                     Cormark Securities (U.S.A.) Limited
Through and including                  , 2011, all dealers that buy, sell
or trade our common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
Table of Contents
PART II
Information Not Required in Prospectus
Item 13.    Other Expenses of Issuance and Distribution
The following table sets forth the various fees and expenses payable by Neutron Energy, Inc. in connection with the sale of the
common stock being registered hereby. All amounts shown are estimates except for the SEC registration fee, the FINRA fee,                  fee and TSX fee.
Neutron Energy will pay all of the expenses
shown below.
Amount
SEC registration fee
$
7,077
FINRA filing fee
6,595
filing fee
*
TSX filing fee
*
Accounting fees and expenses
*
Legal fees and expenses
*
Printing expenses
*
Transfer agent and registrar fees and expenses
*
Director and officer liability insurance premiums
*
Miscellaneous expenses
*
Total
$
*
*
To
be provided by amendment.
Item 14.    Indemnification of Directors and Officers
Our Articles of Incorporation contain a provision which eliminates the personal monetary liability of our officers and directors to the
extent allowed under Nevada law. Under the Nevada Revised Statutes, our directors or officers are not individually liable, subject to certain exceptions, to the Corporation or our stockholders or
creditors for any damages as a result of any act or failure to act in their capacity as a director or officer unless it is proven that such conduct constituted a breach of their fiduciary duties as a
director or officer and that the breach involved intentional misconduct, fraud or a knowing violation of law.
In
addition, our Articles of Incorporation and Bylaws provide that we will indemnify our directors, officers, employees and other agents to the fullest extent permitted by Nevada law,
provided the director, officer, employee or other agent acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. However, no indemnification will be made in respect of any claim, issue or matter
as to which any such person is adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought determines upon application that such person
is fairly and reasonably entitled to indemnity for such expenses.
Pursuant
to the authorization in its Bylaws, the Company purchased and maintains liability insurance on behalf of its directors and officers.
The
Company has not entered into indemnification agreements with our directors, officers, employees and other agents, and indemnification for those individuals is limited to the
foregoing disclosure. However, we may in the future enter into agreements to indemnify our directors and executive officers, in addition to the indemnification provided for in our Articles of
Incorporation and Bylaws.
II-1
Table of Contents
Item 15.    Recent Sales of Unregistered Securities
The information presented below describes our sales and issuances of unregistered securities for the past three years. Unless otherwise
indicated, the consideration for all such sales and issuances, other than issuances of stock options, was cash. The information presented below regarding the aggregate consideration received by us is
provided before deduction of offering and other related expenses.
Common Stock Issuances
On May 10, 2010, we issued 50,000 shares of common stock to a director of the Company in consideration of a $500,000
short-term standby credit facility. The fair value of the shares on the date of issuance was $1.00 per share.
On
December 30, 2009, we issued 3,519,067 shares of our common stock to Primary Corp. ("Primary"), formerly known as Trans America Industries Ltd., in exchange for
Primary's 34.56% ownership interest in the Grants Uranium Project Joint Venture (the "Grants J.V.") between Primary and the Company pursuant to a Purchase and Termination Agreement dated
October 15, 2009. The value of Primary's ownership interest in the Grants J.V. was determined to be $3,519,067, or $1.00 per share of common stock issued by us in connection with its
acquisition and the fair value of the shares on the date of issuance was $3,519,067.
On
August 31, 2008 we issued 273,529 shares of common stock in connection with the exercise of warrants at an exercise price of $1.00 per share. These warrants were part of a
group of warrants ("Series A Warrants") that were issued in connection with the issuance convertible notes in 2006 and 2007.
On
August 31, 2008, we issued 27,500 shares of common stock in connection with the exercise of warrants ("Series B Warrants") at an exercise price of $2.00 per share. The
Series B Warrants were issued to holders who exercised their Series A Warrants as a penalty for not conducting an initial public offering prior to August 2007.
On
August 1, 2008, we issued 100,000 shares of common stock to an officer of the Company pursuant to the Company's 2007 Omnibus Incentive Plan in consideration for services
provided to the Company. The shares had an estimated fair value of $0.75 per share on the date of issuance.
Warrant Issuances
On August 22, 2008, we issued a contingent warrant to each of Passport Material Master Fund, LP and Passport Global
Master Fund SPC Ltd for and on behalf of Portfolio A—Global Strategy to purchase 1,166,666 shares of our common stock at $2.25 per share in connection with an agreement for Passport
Management, LLC to arrange a meeting between the Company and a utility company that owns and/or operates a nuclear generating facility. However, the contingencies set forth in the warrant were
never satisfied and the warrants expired unvested and unexercised on November 7, 2009.
On
April 4, 2010 and April 12, 2010, we issued two warrants to RMB Australia Holdings Limited ("RMBAH") to purchase an aggregate of 3,051,744 shares of our common stock at
an exercise price of the lesser of (i) $1.75 per share, and (ii) the lowest price of any shares of common stock issued in connection with any equity capital raising undertaken by the
Company, in connection with the execution of our Credit Facility Agreement with RMB Resources, Inc, an agent of RMBAH. The exercise periods of the warrants commence on the date of issuance of the
warrant and terminates 48 months thereafter. The warrants also have piggy-back registration rights. In addition, the Company obligated itself to issue such additional warrants to
purchase up to a maximum of 1,519,684 additional shares of common stock as is necessary for RMBAH to own 5%, calculated on a partially diluted basis,
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of
our issued and outstanding common stock on the same terms as the issued warrants. These warrants were issued as partial consideration for financing provided by RMBAH.
On
December 22, 2010, we agreed in connection with an amendment to an existing loan agreement to issue to RMBAH such additional warrants to purchase up to a maximum of 2,742,857
shares, in addition to the warrants already issued or obligated to be issued, as is necessary for RMBAH to own
5%, calculated on a partially diluted basis, of our issued and outstanding common stock on the same terms as the issued warrants.
Option Award Issuances
Since March 1, 2008, we have issued to directors, officers and employees options to purchase approximately 3,066,000 shares of
our common stock at exercise prices from $0.68 to $1.50 per share under our 2006 Stock Option and Restricted Stock Plan, 2007 Omnibus Incentive Plan and 2011 Equity Incentive Plan.
The
issuances of securities in the foregoing transactions were effected without registration under the Securities Act in reliance on Section 4(2) or Section 3(a)(9)
thereof, Regulation D thereunder or Rule 701 thereunder. None of such transactions was effected using any form of general advertising or general solicitation as such terms are used in
Regulation D under the Securities Act. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or
for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates or other instruments issued in such transactions. All such recipients either
received adequate information about Neutron Energy or had access, through employment or other relationships with Neutron Energy, to such information.
Item 16.    Exhibits and Financial Statement Schedules
(a)
Exhibits
The
exhibits to this registration statement are listed on the exhibit index, which appears elsewhere herein and is incorporated by reference.
(b)
Financial Statement Schedules
There
are no schedules to the consolidated financial statements.
Item 17.    Undertakings
The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment us of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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The
undersigned registrant hereby undertakes that:
(1)   For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared effective.
(2)   For
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Denver, Sate of Colorado, on March 30, 2011.
NEUTRON ENERGY, INC.
By:
/s/ GARY C. HUBER
Name: Gary C. Huber
Title:
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Gary C. Huber and Edward M. Topham, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, from such person and in each person's name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement or any Registration Statement relating to this Registration Statement
under Rule 462 and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Name
Title
Date
/s/ KELSEY L. BOLTZ
Kelsey L. Boltz
Executive Chairman of the Board of Directors
March 30, 2011
/s/ GARY C. HUBER
Gary C. Huber
President, Chief Executive Officer and Director
(Principal Executive Officer)
March 30, 2011
/s/ EDWARD M. TOPHAM
Edward M. Topham
Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Principal Accounting Officer)
March 30, 2011
/s/ JOHN K. CAMPBELL
John K. Campbell
Director
March 30, 2011
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Name
Title
Date
/s/ JAMES J. GRAHAM
James J. Graham
Director
March 30, 2011
/s/ HENRY G. GRUNDSTEDT
Henry G. Grundstedt
Director
March 30, 2011
/s/ CAROLYN C. LODER
Carolyn C. Loder
Director
March 30, 2011
/s/ RICHARD MALLERY
Richard Mallery
Director
March 30, 2011
/s/ JERRY NELSON
Jerry Nelson
Director
March 30, 2011
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EXHIBIT INDEX
**1.1
Underwriting Agreement
**3.1
Articles of Incorporation of the Company
**3.2
Bylaws of the Company
**4.1
Form of certificate representing the common stock, $0.001 par value per share, of the Company
**4.2
Warrant Certificate No. W-1, dated April 5, 2010, from the Company to RMB Australia Holdings Limited.
**4.3
Warrant Certificate No. W-2, dated April 12, 2010, from the Company to RMB Australia Holdings Limited.
**5.1
Opinion of Hogan Lovells US LLP regarding the validity of the common stock
**10.1
2006 Stock Option and Restricted Stock Plan
**10.2
Form of Nonqualified Stock Option Award Agreement under the 2006 Stock Option and Restricted Stock Plan
**10.3
Form of Stock Award Agreement under the 2006 Stock Option and Restricted Stock Plan
**10.4
2007 Omnibus Incentive Plan
**10.5
Form of Nonqualified Stock Option Award Agreement under the 2007 Omnibus Incentive Plan
**10.6
Form of Stock Award Agreement under the 2007 Omnibus Incentive Plan
**10.7
Form of Incentive Stock Option Award Agreement under the 2007 Omnibus Incentive Plan
**10.8
2011 Equity Incentive Plan
**10.9
Form of Nonqualified Stock Option Award Agreement under the 2011 Equity Incentive Plan
**10.10
Form of Stock Award Agreement under the 2011 Equity Incentive Plan
**10.11
Employment Agreement between the Company and Kelsey L. Boltz dated October 29, 2009
**10.12
Letter of Understanding and Agreement dated October 1, 2010 between the Company and Kelsey L. Boltz.
**10.13
Employment Agreement between the Company and Gary C. Huber dated October 29, 2009.
**10.14
Letter of Understanding and Agreement dated October 1, 2010 between the Company and Gary C. Huber.
**10.15
Employment Agreement between the Company and Mark J. Ludwig dated October 1, 2010.
**10.16
Letter of Understanding and Agreement dated October 1, 2010 between the Company and Mark J. Ludwig.
**10.17
Employment Agreement between the Company and Michael R. Neumann dated October 1, 2010.
**10.18
Letter of Understanding and Agreement dated October 1, 2010 between the Company and Michael R. Neumann.
**10.19
Employment Agreement between the Company and Edward M. Topham dated October 1, 2010.
**10.20
Letter of Understanding and Agreement dated October 1, 2010 between the Company and Edward M. Topham.
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**10.21
Facility Agreement, dated April 12, 2010, between the Company, RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.22
First Amendment Agreement to Facility Agreement, dated December 2010, between the Company, Cibola, RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.23
Security Agreement, dated April 5, 2010, between the Company, RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.24
Security Agreement, dated April 12, 2010, between Cibola, RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.25
Pledge Agreement, dated April 12, 2010, between the Company, RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.26
Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, effective April 12, 2010, from the Company and Cibola to RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.27
Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, effective April 5, 2010, from the Company to RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.28
Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, effective April 5, 2010, from the Company to RMB Resources, Inc. and RMB Australia Holdings Limited.
**10.29
Letter Agreement, dated January 4, 2011, between the Company and Primary Capital
**10.30
Letter Agreement, dated August 3, 2010, between the Company and RMB Resources Inc.
**10.31
Consulting Agreement, dated February 11, 2011, between the Company and Nuclear Fuel Cycle Consulting, LLC.
**10.32
Finder's Fee Agreement, dated January 14, 2010, between the Company and Nuclear Fuel Cycle Consulting, LLC.
**10.33
Termination of Finder's Fee Agreement, dated February 11, 2011, between the Company and Nuclear Fuel Cycle Consulting, LLC.
**10.34
Strategic Consulting and Advisory Agreement, dated April 15, 2010, between the Company and Nuclear Fuel Cycle Consulting, LLC.
**10.35
Termination of Strategic Consulting and Advisory Agreement, dated February 11, 2011, between the Company and Nuclear Fuel Cycle Consulting, LLC.
**10.36
Uranium Mining Lease and Agreement, dated October 12, 2006, between Juan Tafoya Land Corporation and the Company.
**10.37
Mining Lease and Agreement, dated March 11, 2007, between La Merced del Pueblo de Cebolleta and the Company.
**10.38
Mineral Lease Agreement, dated January 4, 2008, between Enerdyne Endy Claims LLC and the Company.
**10.39
Mineral Lease Agreement, dated February 1, 2006, between Enerdyne Endy Claims LLC and the Company.
**10.40
Mineral Lease Agreement, dated June 1, 2006, between James A. Bonner, Julianne K. Bonner and the Company.
**10.41
Data Purchase Agreement, dated August 18, 2009, between United Nuclear Corporation and the Company.
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**10.42
Letter Agreement, dated January 25, 2007, between International Nuclear, Inc. and the Company.
**10.43
Exploration, Development and Mine Operating Agreement, dated April 28, 2006, between the Company and Trans America Industries Ltd. (k/n/a Primary Corp.), as amended by Amendment No. 1 on July 21,
2008.
**10.44
Purchase and Termination Agreement, dated October 15, 2009, between Primary Corp. and the Company as amended by the First Amendment of Purchase and Termination Agreement, dated December 15, 2009.
**10.45
Option Agreement, dated November 5, 2009, between Uranium Energy Corp and the Company as amended by the First Amendment to Option Agreement, dated December 29, 2009.
**10.46
Lease Agreement, dated April 15, 2008, between Cognac Highland Court LLC and the Company
*21.1
List of Subsidiaries
*23.1
Consent of Mayer Hoffman McCann P.C.
**23.2
Consent of Hogan Lovells US LLP (included in Exhibit 5.1)
*23.3
Consent of Broad Oak Associates
*24.1
Power of Attorney (included on signature page)
*
Filed
herewith.
**
To
be filed by amendment.