UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________ to _________________________

Commission file number: 001-32974

URANERZ ENERGY CORPORATION
(Exact name of registrant as specified in its charter)

(307) 265-8900
(Registrant’s telephone number, including area code)

_____________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]      No [   ]

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes [   ]       No[X]

Number of shares of issuer’s common stock outstanding at May 8, 2015: 95,912,806

INDEX

Item 1. Financial Statements (unaudited)

Uranerz Energy Corporation

March 31, 2015

Uranerz Energy Corporation
Consolidated Balance Sheets
(Expressed in US dollars)

(The accompanying notes are an integral part of these consolidated financial statements)

F-1

Uranerz Energy Corporation
Consolidated Statements of Comprehensive Loss
(Expressed in US dollars)
(Unaudited)

(The accompanying notes are an integral part of these consolidated financial statements)

F-2

Uranerz Energy Corporation
Consolidated Statements of Cash Flows
(Expressed in US dollars)
(Unaudited)

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

Uranerz Energy Corporation
Consolidated Statements of Changes in Equity (Deficit)
For the Three Months Ended March 31, 2015
(Expressed in US dollars)

(The accompanying notes are an integral part of these consolidated financial statements)

F-4

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-5

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-6

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

As at March 31, 2015 and December 31, 2014, cash is the Company's only financial instrument that is measured at fair value on a recurring basis within Level 1 of the fair value hierarchy. The Company does not have any Level 2 or Level 3 financial instruments measured at fair value on a recurring basis.

F-7

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-8

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-9

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-10

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-11

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

The current portion of reclamation and remediation liabilities of $39,000 and $39,000 at March 31, 2015 and December 31, 2014, respectively, are included in accrued liabilities (see Note 7(b)).

In 2008 the Company provided a bond in the amount of $622,500 to the State of Wyoming, Department of Environmental Quality or the Secretary of the Interior, United States Government. The bond is in lieu of depositing cash to guarantee reclamation of exploration drill holes in the Arkose Mining Venture and surety was provided by an insurance company. The bond applies to 250 drill holes on a revolving basis.

In December 2010, the Company provided a $1,700,000 cash security to support a bond in the amount of $6,800,000 to the State of Wyoming, Department of Environmental Quality or the Secretary of the Interior, United States Government. The bond is in lieu of depositing cash to guarantee mine reclamation and surety was provided by an insurance company. The bond applies to the operation of the Company’s Nichols Ranch ISR Uranium Project and estimates are reviewed annually. This amount together with other surety deposits of $381,196 have been classified as mineral property reclamation surety deposits.

F-12

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

During the three months ended March 31, 2015, the Company modified the terms of 330,500 outstanding vested options held by two former employees of the Company. The options were set to expire and the Company extended the expiration date of the vested options to December 31, 2015. The weighted average grant date fair value of the modified stock options was $0.17 and the Company recognized an additional $55,422 stock-based compensation expense which is included in general and administrative expense related to the modification of these options.

During the three months ended March 31, 2015, the Company recorded stock-based compensation for the vesting of options of $619,649 as general and administrative expense, $61,117 as mineral property expenditures and $210,222 as production costs. During the three months ended March 31, 2014, the Company recorded stock-based compensation for the vesting of stock options of $223,153 as general and administrative expense and $63,518 as mineral property expenditures.

At March 31, 2015, the Company had 17,736,328 shares of common stock available to be issued under the Stock Option Plan.

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2015 and 2014, was $0.97, and $1.32 per share, respectively. The total intrinsic value of stock options exercised during the three months ended March 31, 2015 and 2014 was $1,925, and $60,952, respectively.

The fair value of stock options granted was calculated using the Black-Scholes option-pricing model based on the following assumptions:

Risk-Free Interest Rate: Based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the options being valued.

Dividend Yield: Based on the projection of future stock prices and dividends expected to be paid.

Expected Term: Represents the period of time that stock options are expected to be outstanding based on historic exercise behavior.

Expected Volatility: Based on the Company's historical stock prices for a period of time equal to the expected term of the award.

The weighted average assumptions used for each of the three months ended March 31, are as follows:

F-13

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

A summary of the changes of the Company’s non-vested stock options is presented below:

As at March 31, 2015, there was $737,891 of unrecognized compensation cost related to non-vested stock option agreements. This cost is expected to be recognized over a weighted average period of 0.34 years.

As at March 31, 2015, the following stock options were outstanding and exercisable:

F-14

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

As at March 31, 2015, the following common share purchase warrants were outstanding and exercisable:

F-15

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-16

Uranerz Energy Corporation
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2015 and 2014
(Expressed in US dollars)

F-17

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking-statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and, if warranted, development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “believes”, “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results : “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

• risks related to our proposed merger with Energy Fuels Inc.;
• risks related to litigation commenced in connection with the Energy Fuels Inc. merger;
• risks related to our limited working capital and current negative cash flow from operations;
• risks related to the market price of uranium;
• risks related to our limited operating history;
• risks related to the probability that our properties contain reserves;
• risks related to our past losses and expected losses in the near future;
• risks related to our need for qualified personnel for exploration and operating a mine;
• risks related to our lack of known reserves;
• risks related to the fluctuation of uranium prices;
• risks related to demand for uranium;
• risks related to environmental laws and regulations and environmental risks;
• risks related to using our in-situ recovery mining process;
• risks related to exploration and, if warranted, development of our properties;
• risks related to our ability to acquire necessary mining licenses or permits;
• risks related to our ability to make property payment obligations;
• risks related to our ability to obtain financing when required;
• risks related to the competitive nature of the mining industry;
• risks related to our dependence on key personnel;
• risks related to requirements for new personnel;
• risks related to securities regulations;
• risks related to stock price and volume volatility;
• risks related to dilution;
• risks related to our lack of dividends;
• risks related to our ability to access capital markets;
• risks related to security of our cash and investments;
• risks related to our issuance of additional shares of common stock;
• risks related to acquisition and integration issues;
• risks related to defects in title to our mineral properties; and
• risks related to our outstanding notes.

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section titled “Risk Factors” contained in our annual report on Form 10-K for the year ended December 31, 2014 and filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2015 and as described below in this Quarterly Report under the heading “Quantitative and Qualitative Disclosures About Market Risk”. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

General

We are a U.S.-based uranium company focused on exploration and in-situ recovery (“ISR”) of uranium. ISR is a mining process that uses a “leaching solution” to dissolve uranium from sandstone uranium deposits; it is the generally accepted extraction technology used in the Powder River Basin area of Wyoming. We control a large strategic land position in the central Powder River Basin. Our management team has specialized expertise in the ISR uranium mining method, and has a record of licensing, constructing, and operating ISR uranium projects. In 2014 we commenced extracting uranium from properties without proven reserves, and made our first sales of U₃O₈, at the Nichols Ranch Unit of our Nichols Ranch ISR Uranium Project. The project’s processing facility will serve as a platform to advance our other Powder River Basin properties with potential enhanced economics for adjacent and satellite projects.

On January 4, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger”) with Energy Fuels Inc. (“Energy Fuels”), an Ontario corporation, and EFR Nevada Corp., a Nevada corporation and indirectly wholly-owned subsidiary of Energy Fuels (the “Merger Agreement”). The Merger Agreement provides for a business combination whereby EFR Nevada Corp. will merge with and into the Company and as a result the Company will continue as the surviving operating corporation and as an indirectly wholly-owned subsidiary of Energy Fuels. Each issued and outstanding share of common stock of the Company will be canceled and extinguished and automatically converted into the right to receive 0.255 common shares of Energy Fuels. An amendment to the Merger Agreement was entered into on May 8, 2015.

The completion of the Merger will be subject to customary closing conditions and the approval of the shareholders of Energy Fuels and at least a majority of the holders of the outstanding common shares of the Company, as well as at least a majority of the votes cast by the Company’s shareholders, excluding directors and officers of the Company, at a special meeting to be called to consider the Merger. The transaction will become effective when all conditions are met and a Statement of Transaction is filed with the State of Nevada, or at a later date and time specified in the Statement of Transaction. The Merger, as amended, provides that, upon consummation of the Merger, Energy Fuels shall cause two nominees of the Company to be appointed to the Board of Directors of Energy Fuels.

Our Powder River Basin properties include:

• our 100% owned properties that totaled 19,801 acres as of March 31, 2015; and
• our 81% interest in Arkose Mining Venture properties that totaled 52,818 acres as of March 31, 2015.

Ownership Interests

Our ownership interests in the properties within the Powder River Basin are summarized as follows:

100% Owned Properties

Our 100% owned properties are comprised of unpatented lode mining claims, state leases and fee (private) mineral leases, as summarized as follows:

(1) Subject to royalties.

These 100% owned properties in the Powder River Basin include the following core property units:

* included in the Nichols Ranch ISR Uranium Project

Our 100% owned property interests were acquired through staking, leasing and purchase over a seven year period. The costs, exploratory in nature, were expensed as incurred as mineral property expenditures. We continue to look for more prospective lands in the Powder River Basin and as a result may locate, purchase or lease additional unpatented lode mining claims; and/or purchase or lease additional fee mineral (private) lands during the next twelve months, however there is no assurance any additional properties will be acquired.

Arkose Mining Venture

The Arkose Mining Venture properties (also called the “Arkose Property”) are comprised of unpatented lode mining claims, state leases and fee (private) mineral leases, as summarized as follows:

(1) Subject to royalties.

Through a combination of claim staking, purchasing and leasing, we have also acquired interests in projects that lie within the Powder River Basin but outside of the project areas discussed above. These additional properties include the Verna Ann, Niles Ranch and Reno Creek projects. However, due to our focus on other activities, we have not yet made any development decisions on these projects. None of our projects has proven or probable reserves as defined in the SEC’s Industry Guide 7 and our operations on our projects and properties are, therefore, deemed exploratory in nature under Industry Guide 7 standards.

Information regarding the location of and access to our Wyoming properties, together with the history of operations, present condition and geology of each of our significant properties, is presented in Item 2 of our Annual Report on Form 10-K for the year ended December 31, 2014 under the heading “Description of Properties”, previously filed with the SEC on March 16, 2015.

During this quarter we continued to extract uranium through four header houses in our first wellfield at our Nichols Ranch ISR Uranium Project in the Powder River Basin. The timing of our plans to expand the number of producing wells has been lengthened by deferring drilling to reduce costs; an action deemed prudent in light of our pending merger and failure of the market price of uranium to improve. This deferral of mine expansion will limit our short term production plans to amounts necessary to meet our contracted deliveries of uranium which are at prices in excess of the current spot market. Overall production will be dependent upon the extraction efficiency at our wellfield, funds available for development and market factors. Our proposed merger, when effected, may change our short term strategy as other market opportunities may result.

Concurrently, we are proceeding with the environmental permit and license applications for the Jane Dough Unit, which is adjacent to the operating Nichols Ranch Unit and will share its infrastructure. Our applications have been submitted and are being evaluated by the relevant regulators. When approved, we will have the option to revise our plan of operations to bring our Jane Dough Unit into recovery operations before the Hank Unit of our Nichols Ranch Mine; Jane Dough fluids can be delivered to our Nichols Ranch Mine processing facility by pipeline, thus eliminating the need to build a satellite processing facility. Jane Dough includes the Doughstick, South Doughstick and North Jane properties. Additional units may be added as we assess our geological data. Other strategies are also being considered for Hank, possibly in concert with other properties. We may continue the exploration and, if warranted, the potential future development and strategic planning of our other Wyoming Powder River Basin properties.

During the first quarter of 2015 we:

• produced 55,000 pounds of uranium oxide and sold 50,000 pounds to meet contracted deliveries;
• added injection and recovery wells in Nichols Ranch Production Area #1;
• drilled delineation and pilot holes for expanded production wells;
• successfully completed a NRC in-production inspection;
• continued processing our permit applications for the Jane Dough Unit; and
• entered into an Agreement and Plan of Merger with Energy Fuels Inc.

Financial Position

The Company's overall financial position is disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 16, 2015 and the unaudited consolidated Financial Statements at March 31, 2015 as provided herein under the section heading “Financial Statements” above.

Liquidity and Capital Resources

We are carrying out a limited exploration, environmental and uranium recovery program in 2015 as reported in our Annual Report. This plan anticipated continuation of uranium extraction and expansion of our wellfields at our Nichols Ranch Unit. The plan is proceeding with lower than projected production and market prices, and the proposed merger with Energy Fuels has incurred substantial non-operational expenses for due diligence, legal and transactional activities. This has reduced cash available for operations and, in conjunction with low spot prices, has resulted in the decision to curtail certain non-essential activities, e.g. wellfield and production expansion beyond that required to meet uranium delivery commitments. Accordingly, wellfield development plans are being scaled back with a corresponding reduction in planned production, sales and revenue.

We commenced uranium extraction activities in mid-2014 and, accordingly, our results to date reflect a start-up mode of operation and are not reasonably comparable to prior periods, nor are current results indicative of the future. Our mining operation extracted approximately 55,000 pounds of U₃O₈ in the three months ended March 31, 2015; of which 50,000 pounds was sold. Inventory of approximately 55,000 pounds at March 31, 2015 includes 19,000 pounds in process.

During the three months ended March 31, 2015 all operational expenditures incurred, excluding inventory costs, were $5,549,046. These expenditures include construction costs incurred for the Nichols Ranch project totaling $2,270,680, all of which have been expensed.

On March 31, 2015 we had cash of $4,771,849 and working capital of $6,095,881, as compared to cash of $6,017,594 and working capital of $9,914,608 as of December 31, 2014. Our cash is invested in bank savings accounts and is available on demand.

Net cash used in operating activities was $555,125 for the three months ended March 31, 2015, compared to $5,431,571 for the corresponding period in 2014. Net cash used to purchase property and equipment was $104,230 for the three months ended March 31, 2015, compared to $132,198 used in the corresponding period in 2014.

Net cash used for financing activities amounted to $586,390 for the three months ended March 31, 2015, primarily reducing notes payable, compared to $463,678 provided in the corresponding period in 2014, primarily from issuance of common stock.

During the twelve-month period following the date of this quarterly report we anticipate that, although we will generate a modest amount of revenue, we will continue to be cash flow negative. The Nichols Ranch ISR Uranium Project is not currently providing sufficient cash flow to maintain desirable expenditures for wellfield expansion and corporate general and administrative costs in 2015. We anticipate that these expenditures will be paid for from cash on hand, operations and/or debt or equity financing. We currently have sufficient working capital to fund limited activities for the next twelve months. If the proposed merger does not become effective and/or uranium markets do not improve in 2015 we may have to restrain operations until alternate funding is obtained.

To date, our primary source of funds has been equity financings and a loan from the State of Wyoming, and this method is expected to continue together with gross profits from recovery operations. Our operational and exploration plans will be continually evaluated and modified as markets, exploration and environmental results become available. General and administrative expenses, planning and environmental expenses are incurred throughout the year; most of our exploration expenditures are incurred during the drilling period of March through November. Modifications to our plans will be based on many factors including results of operations, exploration, assessment of data, weather conditions, exploration costs, the market for uranium, and available capital.

Should the proposed merger with Energy Fuels not be effected, we anticipate that any additional financing may be in the form of equity financing from the sale of our common stock and the exercise of share purchase options and/or debt, depending on capital markets. We cannot provide assurance that additional financing will be available to us in amounts sufficient to meet our needs or on terms acceptable to us, if at all. In 2014 we filed a new Form S-3 “shelf registration statement”, in the amount of $100 million which was drawn upon, in part, during our July 2014 equity issuance.

Our cash has not been devalued by the current stock market disruptions as it is held in low risk savings accounts in a Canadian Chartered Bank. Rates of return, however, are at historic lows. Management and the board of directors periodically meet to review the status of our investments and determine investment strategies, taking into account current market conditions and the short and long term capital needs of the Company.

Results of Operations

Three-month period ended March 31, 2015 compared to three-month period ended March 31, 2014

Revenue and Operating Expenses

We earned $3,400,000 from sales to a utility in this quarter and we anticipate that we will generate additional revenues from the sale of uranium concentrates during the twelve-month period following the date of this quarterly report. Gross profit was $1,489,221 compared to Nil for the comparable three-month period in 2014.

We incurred total operating expenses of approximately $5,549,046 for the three-month period ended March 31, 2015, as compared to $4,707,371 for the corresponding period in 2014. The increase of operating expenses in the amount of $841,675 was primarily attributable to a $1,384,644 increase in general and administrative expenses offset by a $578,199 decrease in mineral property expenses, reflecting reduced development expenditures related to the Nichols Ranch ISR Uranium Project. The increase in general and administrative expenses includes a $396,496 increase in stock based compensation and $791,939 of one-time merger related expenses.

Our financing expense for the three-month period ended March 31, 2015 was $301,612, as compared to $307,728 for the corresponding period in 2014. Our interest income was $4,092 for the three-month period ended March 31, 2015 compared to $7,472 in 2014 when cash balances were higher. The financing expense is related to our Note payable, issued in December 2013.

Net loss for the three-month period ended March 31, 2015 was approximately $4,254,809, as compared to approximately $4,909,277 for the corresponding period in 2014. The $654,466 decrease in net loss was primarily attributable to the gross profit from operations of $1,489,221 and a $578,199 decrease in mineral property expenditures as we conducted extraction activities, offset by the $1,384,644 increase in general and administrative expenses.

Off-Balance Sheet Arrangements

We have no significant 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 stockholders except as disclosed in the unaudited Financial Statements at March 31, 2015. The Company has had no material changes to its off-balance sheet arrangements as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 16, 2015 and the unaudited Financial Statements at March 31, 2015 as provided herein under the section heading “Financial Statements” above.

Critical Accounting Policies

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. We regularly evaluate our estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Revenue Recognition

Revenue is recognized from a sale when persuasive evidence of an arrangement exists, the price is determinable, the title has been transferred to the customer and collection of the sales price is reasonably assured. The Company delivers its uranium concentrates to a uranium storage facility and once the product is confirmed to meet the required specifications, the Company receives credit for a specified quantity measured in pounds. Future sales of uranium concentrates are expected to generally occur under uranium supply agreements or through the uranium spot market. Once a sale of uranium concentrates is negotiated, the Company will notify the uranium storage facility with instructions for a title transfer to the customer. Revenue is recognized once a title transfer of the uranium concentrates is confirmed by the uranium storage facility.

Mineral Property Costs

The Company is primarily engaged in the acquisition, exploration and exploitation of mineral properties with the objective of extracting minerals from these properties.

Mineral property exploration and evaluation costs are expensed as incurred. Development costs are expensed as incurred until proven and probable reserves are established. Subsequent development costs are capitalized. Costs for acquired mineral properties and mineral rights are initially capitalized when incurred, then assessed quarterly for impairment under ASC 360, Property, Plant and Equipment. The Company has not established proven or probable reserves on any of its mineral projects.

Inventory

Inventories of uranium concentrates are recorded in-process (solutions) and finished goods. The Company values its concentrates at the lower of cost or net realizable value at the end of each reporting period. Costs include direct labor, materials and other mining and processing costs and depreciation related to extraction of uranium concentrate. Inventories are charged to cost of sales using the average costing method.

Asset Retirement Obligations

United States regulatory authorities require the Company to restore and reclaim its mine area after mining is completed. Pursuant to ASC 410, Asset Retirement and Environmental Obligations, the fair value of asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. Upon initial recognition of a liability, the fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. Future reclamation and remediation costs are accrued based on management's best estimate at the end of each period of the costs expected to be incurred at each project.

Estimations and assumptions involved in using the expected present value technique to determine fair values are reviewed periodically.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviours. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

Options granted to consultants are valued based at the fair value of the service received by the Company unless the amount is not readily determinable, in which case they are valued using the Black-Scholes model.

Contractual Obligations

The Company has had no material changes to its contractual obligations as disclosed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015 and the unaudited Financial Statements at March 31, 2015 as provided herein under the section heading “Financial Statements” above.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is 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 market value of uranium. Interest rate risk results from our debt and equity instruments that we issue to provide financing and liquidity for our business. Credit risk arises from the extension of credit throughout all aspects of our business. Industry-wide risks can also affect our general ability to finance exploration, and development of exploitable resources; such effects are not predictable or quantifiable.

Commodity Price Risk

The Company is subject to market risk related to the market price of U₃O₈. Our supply contracts with favorable pricing above current spot and long term prices cover only a portion of our planned extraction. Revenue beyond our current contracts will be affected by both spot and long-term U₃O₈ price fluctuations which are beyond our control, and are not predictable. The Company is restraining its mine development as it monitors the market.

Interest Rate Risk

The Company is exposed to interest rate risk on its cash equivalents, deposits, and debt. Our interest earned is not material; thus not subject to significant risk. Our Note Payable has a fixed interest rate over its seven year life, removing variability. Changes in market interest rates could affect future debt issues, if any.

Credit Risk

The Company’s primary customers are large North American utilities and commodity trading enterprises with high quality credit ratings.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Company's management, including its Chief Executive Officer (“CEO”), Glenn Catchpole, and Chief Financial Officer (“CFO”), Benjamin Leboe, of the effectiveness of the design and operations of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms; and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During our most recently completed fiscal quarter ended March 31, 2015, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Since the announcement of our Merger on January 5, 2015, a number of putative shareholder class action complaints have been filed against the Company, the Company’s Board of Directors, Energy Fuels, Inc. and EFR Nevada Corp. in the District Court, Clark County, Nevada and one in the District Court, Washoe County, Nevada, by purported Uranerz shareholders challenging the Merger. All of the cases in Clark County have been consolidated. The plaintiffs seek, among other things, damages, attorneys' and experts' fees and injunctive relief concerning the alleged breaches of fiduciary duty and to prohibit the defendants from consummating the Merger. The Company believes the claims asserted in the complaints have no merit, and it and all of the members of the Board of Directors intend to defend vigorously against them. The future impact on the Company’s consolidated financial statements is not determinable at this time.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 16, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States, and that is subject to regulation by the Federal Mine Safety and Health Administration under the Mine Safety and Health Act of 1977 (“Mine Safety Act”), are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended March 31, 2015, the Company’s mineral properties were not subject to regulation by the Federal Mine Safety and Health Administration under the Mine Safety Act.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are attached to this Quarterly Report on Form 10-Q:

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

URANERZ ENERGY CORPORATION