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Item 9A. Controls and Procedures

2021-03-25 compared with 2020-03-18 · 796 added, 319 removed, 509 unchanged (69% of the section changed)

CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (a) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (b) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating such controls and procedures, the Company recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2019.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our internal control over financial reporting is a process designed 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 in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019.

Based on this assessment, management, with the participation of our Chief Executive Officer and Chief Financial Officer, determined that as of December 31, 2019, the Company’s internal control over financial reporting was effective.

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by the Company’s independent public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

Remediation of Previously Identified Material Weakness

Management has concluded that the material weakness in internal control over financial reporting described in Part I, Item 4, Control and Procedures in our Quarterly Report on Form 10-Q for the period ended September 30, 2019 has been remediated as of December 31, 2019.

As described in the Form 10-Q, management enhanced our existing control process that entails a detailed review of the allocation of our proportionate share of the equity loss reported in our investee's (Enfission) financial statements to the financial statement balances of our investee.

Management has evaluated these enhanced controls and has concluded they are designed and operating effectively.

As of the end of the period covered by this report, the Company’s management, with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act).

Based upon that evaluation, the then CEO and CFO concluded as of the end of the period covered by this report, our disclosure controls and procedures are not effective, because of a material weakness in our internal control over financial reporting related to the accounting for capitalized patent costs as described below.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

All internal control systems, no matter how well designed, have inherent limitations including the possibility of human error and the circumvention or overriding of controls.

Further, because of changes in conditions, the effectiveness of internal controls may vary over time.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Accordingly, even those systems determined to be effective can provide us only with reasonable assurance with respect to financial statement preparation and presentation.

Our internal control system was designed to provide reasonable assurance to our management and Board regarding the preparation and fair presentation of published financial statements.

Management evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control — Integrated Framework in 2013.

Management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2020 and concluded that it was not effective, due to the existence of a material weakness, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

The revision of the Company’s consolidated financial statements for the year ended December 31, 2019 relating to the amortization of our capitalized patent costs referenced in Note 2, Revision and Correction of an Immaterial Error in Previously Issued Financial Statements.

Based on this assessment, management has identified a material weakness in the Company’s internal control over financial reporting related to the identification of the proper accounting policy (ASC Topic 350) regarding recording the amortization of our patents.

As a result, our CEO and CFO concluded that our internal control over financial reporting was not effective as of December 31, 2020 as a result of this material weakness.

Remediation Plan

Management is in the process of evaluating changes that are necessary to its control environment in order to remediate this material weakness.

We plan to devote significant effort and resources to the remediation and improvement of our internal control over financial reporting.

While we have processes to identify and intelligently apply developments in accounting, we plan to enhance these processes to better evaluate our research and understanding of the nuances of increasingly complex accounting standards.

Our initial plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding accounting applications.

The elements of our remediation plan can only be accomplished over time and we can offer no assurance that these initiatives will ultimately have the intended effects.

Changes in Internal Control over Financial Reporting

Other than the changes resulting from the remediation activities described above, there were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

There were no changes in internal control over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

Directors and Executive Officers of the Registrant

The information required by Item 10 of Part III will be included in our Proxy Statement relating to the 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Directors and Executive Officers

Set forth below are the names of our current directors, all of whom are standing for reelection, and our executive officers, their ages, all positions and offices that they hold with us, the period during which they have served as such, and their business experience during at least the last five years.

Position with Lightbridge

Director Since

President and CEO

Thomas Graham, Jr.

Kathleen Kennedy Townsend

Larry Goldman

Chief Financial Officer and Corporate Secretary

Andrey Mushakov

Executive Vice President, Nuclear Operations

Position with Lightbridge and Principal Occupations

Grae was named the President and Chief Executive Officer of the Company on March 17, 2006 and, effective April 2, 2006, became a director of the Company.

Grae has led Lightbridge’s business efforts to develop and deploy advanced nuclear fuel technologies and to provide comprehensive advisory services based on safety, non-proliferation, and transparency for emerging commercial nuclear power programs.

Grae is a member of the Civil Nuclear Energy Advisory Committee to the U.S.

Secretary of Commerce and the board of directors of the Nuclear Energy Institute and the Virginia Nuclear Energy Consortium.

He is a member of the Nuclear Security Working Group, the Nuclear Energy and National Security Coalition, the Working Group on Climate, Nuclear, and Security Affairs of the Council on Strategic Risks, and is a member the Dean’s Advisory Council at the Washington College of Law at American University.

Grae has served as Vice Chair of the Governing Board of the Bulletin of the Atomic Scientists, as Co-Chair of the American Bar Association’s Arms Control and Disarmament Committee, and as a member of the Board of Directors of the Lawyers Alliance for World Security.

He earned a B.A.

(cum laude) from Brandeis University;

and an L.L.M.

in international law (with honors) from Georgetown University;

from American University.

Thomas Graham, Jr.

Ambassador Graham became a director of the Company on April 2, 2006, was made Executive Chairman of the Board and Corporate Secretary on April 4, 2006 and is now Chairman of the Board effective May 1, 2020.

Ambassador Graham served as a member of the board of directors of Thorium Power, Inc., from 1997 until the merger with the Company.

He is one of the world’s leading experts on nuclear non-proliferation and has served as a senior U.S.

diplomat involved in the negotiation of every major international arms control and non-proliferation agreement involving the United States during the period from 1970 to 1997, including the Strategic Arms Limitations Talks (the Interim Agreement on Strategic Offensive Arms and the Anti-Ballistic Missile Treaty and the SALT II Treaty), the Strategic Arms Reduction Talks (START Treaty), the Intermediate Nuclear Forces Treaty, the Nuclear Non-Proliferation Treaty Extension, the Conventional Armed Forces in Europe Treaty, and the Comprehensive Test Ban Treaty.

In 1993, Ambassador Graham served as the Acting Director of the U.S.

Arms Control and Disarmament Agency (“ACDA”), and for seven months in 1994 served as the Acting Deputy Director.

From 1994 through 1997, he served as the Special Representative of the President of the United States for Arms Control, Non-Proliferation and Disarmament with the rank of Ambassador, and in this capacity successfully led U.S.

government efforts to achieve the permanent extension of the Nuclear Non-Proliferation Treaty in 1995.

He also served for 15 years as the general counsel of ACDA.

Ambassador Graham worked on the negotiation of the Chemical Weapons Convention and the Biological Weapons Convention.

He drafted the implementing legislation for the Biological Weapons Convention and managed the Senate approval of the ratification of the Geneva Protocol banning the use in war of chemical and biological weapons.

Graham served as a member of the International Advisory Board for the nuclear program of the United Arab Emirates from 2009 through its termination in October 2017.

He is also Chairman of the Board of CanAlaska Uranium Ltd.

of Vancouver, Canada (TSX:

CVV), a uranium exploration company.

In 2019, he was selected as Co-chair of the Nuclear Energy and National Security Coalition, a subsidiary of the Atlantic Council and was elected to the Editorial Board of the Marine Corps University Press.

Ambassador Graham received an A.B.

in 1955 from Princeton University and a J.D.

in 1961 from Harvard Law School.

He is a member of the Kentucky, the District of Columbia, and the New York Bar Associations and is a member of the Council on Foreign Relations.

He chaired the Committee on Arms Control and Disarmament of the American Bar Association from 1986-1994.

Ambassador Graham received the Trainor Award for Distinction in Diplomacy from Georgetown University in 1995 and the World Order Under Law award from the International Law Section of the American Bar Association in 2007.

He has taught at a number of universities as an adjunct professor including the University of Virginia Law School, Georgetown University Law Center, Georgetown University School of Foreign Service, the University of Washington, the University of Tennessee, Stanford University, and Oregon State University.

He has published twelve books including non-fiction books, such as Disarmament Sketches in 2002 , Spy Satellites in 2007 , The Alternate Route:

Nuclear Weapon Free Zones and Seeing the Light, the Case for Nuclear Power in the 21st Century in 2017, and Unending Crisis in 2012, as well as two novels, Sapphire, A Tale of the Cold War in 2014 and On Tyranny and Crisis in 2020.

Alessi became a director of the Company on August 23, 2006.

Alessi, who holds a Ph.D.

in nuclear physics, is President Emeritus of the United States Industry Coalition (“USIC”), an organization dedicated to facilitating the commercialization of technologies of the New Independent States (“NIS”) of the former Soviet Union through cooperation with its members.

He has held such position since August 1, 2006.

Prior to becoming President Emeritus, Dr.

Alessi held the positions of CEO and President of USIC since 1999.

Previously, he was President of DynMeridian, a subsidiary of DynCorp, specializing in arms control, non-proliferation, and international security affairs.

Before joining DynMeridian in early 1996, Dr.

Alessi was the Executive Assistant to the Director, U.S.

Arms Control and Disarmament Agency (“ACDA”).

At ACDA he resolved inter-bureau disputes and advised the director on all arms control and non-proliferation issues.

Alessi served as Director of the Office of Arms Control and Nonproliferation in the Department of Energy (“DOE”) prior to his work at ACDA, overseeing all DOE arms control and non-proliferation activities.

As a senior DOE representative, Dr.

Alessi participated in U.S.

efforts that led to the successful conclusion of the Intermediate Nuclear Forces (“INF”), Conventional Forces in Europe, Threshold Test Ban, Peaceful Nuclear Explosions, Open Skies, Strategic Arms Reductions Talks Treaties, and the Chemical Weapons Convention.

In this role, he was instrumental in implementing the U.S.

unilateral nuclear initiative in 1991 and was a member of the U.S.

delegation discussing nuclear disarmament with Russia and other states of the former Soviet Union.

He was in charge of DOE’s support to the U.N.

Special Commission on Iraq, to the Nunn-Lugar Initiative, and represented DOE in discussions on the Comprehensive Test Ban (“CTB”) with the other nuclear weapons states before the CTB negotiations began in Geneva in 1994.

Alessi served as the U.S.

board member to the International Science and Technology Center in Moscow since its founding in 1992 until 2011, and as a member of the Board of Directors of Valley Forge Composite Technologies, Inc.

from 2008 until 2013.

He is also the former U.S.

board member to the Science and Technology Center in Ukraine.

Alessi is a 1963 graduate of Fordham University, where he also earned a licentiate in Philosophy (“Ph.L.”) in 1964.

He studied nuclear physics at Georgetown University, receiving his M.S.

in 1968 and Ph.D.

Magraw became a director of the Company on October 23, 2006.

Magraw is a leading expert on international environmental law and policy, as well as on international human rights.

Magraw is a Senior Fellow and Professorial Lecturer at the Foreign Policy Institute at Johns Hopkins School of Advanced International Studies and President Emeritus of the Center for International Environmental Law (“CIEL”).

He is also a member of the Advisory Committee to the Law Library of Congress and serves as a consultant to the United Nations.

Magraw was the President and CEO of CIEL from 2002-2010.

From 1992-2001, he was Director of the International Environmental Law Office of the U.S.

Environmental Protection Agency, during which time he also served at the White House (2000-2001) and as Acting Assistant Administrator of the EPA’s Office of International Activities.

He was a member of the Trade and Environment Policy Advisory Committee to the Office of the U.S.

Trade Representative (“TEPAC”) from 2002-2010, chaired the American Bar Association (“ABA”) Section of International Law’s Task Force on Carta de Foresta, was a member of the U.S.

Department of State Study Group on International Business Transactions, and was chair of the 15,000-member Section of International Law and Practice of the ABA.

He practiced international law, constitutional law, and bankruptcy law at Covington & Burling in Washington, DC from 1978-1983.

Magraw is a widely published author in the field of international law and has received many awards.

He graduated from Harvard University with High Honors in Economics, where he was student body president, and from the University of California, Berkeley Law School, where he was editor-in-chief of the law review.

While working as an economist for the Peace Corps in India from 1968 to 1972, Mr.

Magraw helped develop and managed the largest and most successful cooperative of its type (wholesale, retail, furniture manufacturing, and food processing) in India.

Magraw became a member of the Board of Directors of Thorium Power, Inc., which is now a wholly-owned subsidiary of the Company.

Kathleen Kennedy Townsend

Townsend became a director of the Company in October 2013.

Townsend has a long history of accomplishment in the public arena, and for the last decade in the private sector.

She has been a Managing Director at the Rock Creek Group, an investment management company and is now Senior Advisor.

Townsend is also the Director of Retirement Security, Retirement Security for All, and serves on the Board of Directors for the Pension Rights Center (a nonprofit consumer advocacy organization), CanAlaska Uranium Ltd.

CVV) (a Canadian uranium exploration company), and Lakson Investments Ltd.

As the State of Maryland’s first woman Lt.

Governor, Ms.

Townsend was in charge of a multimillion-dollar budget and had oversight of major cabinet departments, including Economic Development and Transportation, State Police, Public Safety, and Correction and Juvenile Justice.

Prior to being elected Lt.

Governor, Ms.

Townsend served as Deputy Assistant Attorney General of the United States.

In that role, she led the planning to put 100,000 police officers into the community and began the Police Corps, a program to give college scholarships to young people who pledge to work as police officers for four years after graduation.

Prior to serving at the Department of Justice, Ms.

Townsend spent seven years as the founder and director of the Maryland Student Service Alliance, where she led the fight to make Maryland the first-and only-state to make service a graduation requirement.

She has been appointed Special Advisor at the Department of State, and a Research Professor at the McCourt School of Public Policy at Georgetown University, where she focuses on retirement security.

She is a Woodrow Wilson Fellow.

She taught foreign policy at the University of Pennsylvania and the University of Maryland, Baltimore County and has been a visiting Fellow at the Kennedy School of Government at Harvard.

In the mid-1980s, she founded the Robert F.

Kennedy Human Rights Award.

She chaired the Center for Popular Democracy, which builds the strength and capacity of democratic organizations.

Townsend is also a member of the Council of Foreign Relations and the Inter-American Dialogue.

For the last eight years she has been Vice-Chair of the Future of Science conference held in Venice Italy and for the last four years Vice-Chair of Science for Peace held in Milan.

Townsend has chaired the Institute of Human Virology founded by Dr.

Robert Gallo, which treats over 700,000 patients in Africa as part of the PEPFAR program, has chaired the Robert Kennedy Memorial and has been on the Board of Directors of the John F.

Kennedy Library Foundation.

Previously, she served on a number of boards including the Export-Import Bank, Johns Hopkins School of Advanced International Studies, the Wilderness Society, the Points of Light Foundation, the National Catholic Reporter and the Institute for Women’s Policy Research, and the Baltimore Urban League.

An honors graduate of Harvard University, Ms.

Townsend received her law degree from the University of New Mexico, where she was a member of the law review.

She has received fourteen honorary degrees.

A member of the bar in Maryland, Connecticut, and Massachusetts, she is also a certified broker-dealer.

Townsend’s book, Failing America’s Faithful:

How Today’s Churches Mixed God with Politics and Lost Their Way was published by Warner Books in March 2007.

Larry Goldman

Goldman, a certified public accountant, was appointed the Chief Financial Officer of the Company on September 1, 2018 and was made Corporate Secretary on May 1, 2020.

Prior to his appointment, Mr.

Goldman had been working with Lightbridge as a consultant since 2006 and served as the Company’s Chief Accounting Officer since 2015.

From 1985 to 2004, Mr.

Goldman was an Audit Assurance Partner for Livingston Wachtell & Co., LLP, a New York City CPA firm, with over 20 years’ experience in assurance, tax and advisory services.

Since September 2004, Mr.

Goldman had also provided consulting services to numerous public companies on various financial projects and has government contracting accounting experience.

Goldman has an M.S.

degree in Taxation from Pace University and Bachelor’s degree in Business Administration with a concentration in Accounting.

Goldman is a member of the New York State Society of CPAs and the American Institute of Certified Public Accountants, where he had served on the SEC Practice Committee and a Management Consulting Committee.

He has also been published in the New York CPA Journal.

Andrey Mushakov

Mushakov oversees the nuclear fuel technology division of Lightbridge Corporation and is an expert in cost modeling and the economics of the nuclear fuel cycle.

He has been with Lightbridge since 2000, and in 2018 was named executive vice president for nuclear operations.

Mushakov led Lightbridge’s efforts to establish its Russian Branch Office in Moscow and oversaw its successful operation from 2009 to 2014 when Lightbridge made a decision to move its critical path fuel development and demonstration activities out of Russia due to increased political risk.

In 2014-2015, Dr.

Mushakov spearheaded an effort within Lightbridge to establish cooperation agreements with Canadian Nuclear Laboratories in Canada, BWXT in the United States, and the Institute for Energy Technology in Norway.

More recently, he oversaw a successful effort that resulted in a voucher award from the U.S.

Department of Energy’s (DOE) Gateway for Accelerated Innovation in Nuclear (GAIN) program to support development of Lightbridge fuel in collaboration with Idaho National Laboratory (INL).

The scope of the project includes experiment design for irradiation of Lightbridge metallic fuel material samples in the Advanced Test Reactor (ATR) at INL.

Mushakov has been a featured speaker at international conferences and panels on nuclear fuel technology, including the Wharton Energy Conference and the World Nuclear Fuel Cycle Conference.

He earned a Ph.D.

in economics from St.

Petersburg State University of Economics and Finance, an M.S.

degree in management from Hult International Business School, and a B.S.

degree in banking and finance from the Financial University under the Government of the Russian Federation.

Corporate Governance

Our current corporate governance practices and policies are designed to promote stockholder value.

We are committed to the highest standards of corporate ethics and diligent compliance with financial accounting and reporting rules.

Our Board provides independent leadership in the exercise of its responsibilities.

Our management oversees a system of internal controls and compliance with corporate policies and applicable laws and regulations, and our employees operate in a climate of responsibility, candor, and integrity.

Corporate Governance Guidelines

We and our Board are committed to high standards of corporate governance as an important component in building and maintaining stockholder value.

To this end, we regularly review our corporate governance policies and practices to ensure that they are consistent with the high standards of other companies.

We also closely monitor guidance issued or proposed by the SEC, as well as the emerging best practices of other companies.

The current corporate governance guidelines are available on the Company’s website www.ltbridge.com .

Printed copies of our corporate governance guidelines may be obtained, without charge, by contacting the Corporate Secretary, Lightbridge Corporation, 11710 Plaza America Drive, Suite 2000, Reston, VA 20190 USA.

The Board and Committees of the Board

The Company is governed by the Board that currently consists of five members:

Seth Grae, Thomas Graham, Victor Alessi, Kathleen Kennedy Townsend and Daniel Magraw.

The Board has established four Committees:

the Audit Committee, the Compensation Committee, the Governance and Nominating Committee and the Executive Committee.

Each of the Audit Committee, Compensation Committee and Governance and Nominating Committee are comprised entirely of independent directors.

From time to time, the Board may establish other committees.

The Board met five times in 2020.

The Board has adopted a written charter for each of its committees which are available on the Company’s website www.ltbridge.com .

Printed copies of these charters may be obtained, without charge, by contacting the Corporate Secretary, Lightbridge Corporation, 11710 Plaza America Drive, Suite 2000, Reston, VA 20190 USA.

Each director attended at least 75% of all meetings of the Board of Directors and each committee on which he or she served during 2020.

Pursuant to the Company’s corporate governance guidelines, directors are encouraged to attend annual meeting of stockholders, and two directors attended the Company’s 2020 annual meeting.

Governance Structure

The Company has chosen to separate the roles of the Chairman of the Board and the Chief Executive Officer.

We have chosen to implement such a governance structure to allow our Chief Executive Officer the ability to focus the majority of his time and efforts on the day-to-day operations of the Company.

We believe that this governance structure has served the Company’s stockholders well over the years.

The Board’s Role in Risk Oversight

The Board oversees that the assets of the Company are properly safeguarded, that the appropriate financial and other controls are maintained, and that the Company’s business is conducted wisely and in compliance with applicable laws and regulations and proper governance.

Included in these responsibilities is the Board’s oversight of the various risks facing the Company.

In this regard, the Board seeks to understand and oversee critical business risks.

The Board does not view risk in isolation.

Risks are considered in virtually every business decision and as part of the Company’s business strategy.

The Board recognizes that it is neither possible nor prudent to eliminate all risk.

Indeed, purposeful and appropriate risk-taking is essential for the Company to be competitive on a global basis and to achieve its objectives.

While the Board oversees risk management, Company management is charged with managing risk.

The Company has robust internal processes and a strong internal control environment to identify and manage risks and to communicate with the Board.

The Board and the Audit Committee monitor and evaluate the effectiveness of the internal controls and the risk management program at least annually.

Management communicates routinely with the Board, Board committees and individual directors on the significant risks identified and how they are being managed.

Directors are free to, and indeed often do, communicate directly with senior management.

The Board implements its risk oversight function both as a whole and through committees.

Much of the work is delegated to various committees, which meet regularly and report back to the full Board.

All committees play significant roles in carrying out the risk oversight function.

In particular:

The Audit Committee oversees risks related to the Company’s financial statements, the financial reporting process, accounting and legal matters.

The Audit Committee oversees the internal audit function and the Company’s ethics programs, including the Code of Business Conduct and Ethics.

The Audit Committee members meet separately with representatives of the independent auditing firm.

The Compensation Committee evaluates the risks and rewards associated with the Company’s compensation philosophy and programs.

The Compensation Committee reviews and approves compensation programs with features that mitigate risk without diminishing the incentive nature of the compensation.

Management discusses with the Compensation Committee the procedures that have been put in place to identify and mitigate potential risks in compensation.

Audit Committee

Our Audit Committee consists of Mr.

Magraw and Ms.

Townsend, each of whom is “independent” as that term is defined under the Nasdaq listing standards.

The Audit Committee oversees our accounting and financial reporting processes and the audits of the financial statements of the Company.

Townsend is chair of the Audit Committee and an audit committee financial expert as that term is defined by the applicable SEC rules.

The Audit Committee is responsible for, among other things:

selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors;

reviewing with our independent auditors any audit problems or difficulties and management’s response;

reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K;

discussing the annual audited financial statements with management and our independent auditors;

reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of significant internal control deficiencies;

annually reviewing and reassessing the adequacy of our Audit Committee charter;

meeting separately and periodically with management and our internal and independent auditors;

reporting regularly to the full Board;

such other matters that are specifically delegated to our Audit Committee by our Board from time to time.

The Audit Committee met five times during 2020.

Compensation Committee

Our Compensation Committee consists of Mr.

Magraw and Ms.

Townsend, each of whom is “independent” as that term is defined under the Nasdaq listing standards.

Our Compensation Committee assists the Board in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers.

The Compensation Committee is responsible for, among other things:

approving and overseeing the compensation package for our executive officers;

reviewing and making recommendations to the Board with respect to the compensation of our directors;

reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating the performance of our Chief Executive Officer in light of those goals and objectives, and setting the compensation level of our Chief Executive Officer based on this evaluation;

reviewing periodically and making recommendations to the Board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

Under its charter, the Compensation Committee has sole authority to retain and terminate outside counsel, compensation consultants retained to assist the Compensation Committee in determining the compensation of the Chief Executive Officer or senior executive officers, or other experts or consultants, as it deems appropriate, including sole authority to approve the firms’ fees and other retention terms.

The Compensation Committee may also form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Compensation Committee.

The Compensation Committee may from time to time seek recommendations from the executive officers of the Company regarding matters under the purview of the Compensation Committee, though the authority to act on such recommendations rests solely with the Compensation Committee.

The Compensation Committee met five times during 2020.

Governance and Nominating Committee

Our Governance and Nominating Committee consists of Mr.

Magraw and Ms.

Townsend, each of whom is “independent” as that term is defined under the Nasdaq listing standards.

The Governance and Nominating Committee assists the Board of Directors in identifying individuals qualified to become our directors and in determining the composition of the Board and its committees.

The Governance and Nominating Committee is responsible for, among other things:

identifying and recommending to the Board nominees for election or re-election to the Board, or for appointment to fill any vacancy;

reviewing annually with the Board the current composition of the Board in light of the characteristics of independence, age, skills, diversity, experience and availability of service to us;

identifying and recommending to the Board the directors to serve as members of the Board’s committees;

monitoring compliance with our Code of Business Conduct and Ethics.

Our Governance and Nominating Committee does not have a specific policy with regard to the consideration of candidates recommended by stockholders;

however, any nominees proposed by our stockholders will be considered on the same basis as nominees proposed by the Board.

If you or another stockholder want to submit a candidate for consideration to the Board, you may submit your proposal to our Corporate Secretary:

by sending a written request by mail to:

Lightbridge Corporation

11710 Plaza America Drive, Suite 2000

Reston, VA 20190

Corporate Secretary

by calling our Corporate Secretary at 571-730-1200.

The Governance and Nominating Committee met five times during 2020.

Executive Committee

Our Executive Committee consists of Messrs.

Alessi, Grae and Graham.

The Executive Committee of the Company exercises the power of the Board between regular meetings of the Board and when timing is critical.

The Executive Committee also assists the Board in fulfilling its oversight responsibility with respect to management-level staff, outside service providers, third-party vendors and sensitive information potentially subject to export controls.

The Executive Committee did not meet during 2020.

Code of Ethics

The Board has adopted a Code of Business Conduct and Ethics that applies to the Company’s directors, officers and employees.

A copy of this policy is available via our website at https://www.ltbridge.com/investors/corporate-governance/governance-documents.

Printed copies of our Code of Business Conduct and Ethics may be obtained, without charge, by contacting the Corporate Secretary, Lightbridge Corporation, 11710 Plaza America Drive, Suite 2000, Reston, VA 20190 USA.

During the fiscal year ended December 31, 2020, there were no waivers of our Code of Business Conduct and Ethics.

Stockholder Communication with the Board of Directors

Stockholders may communicate with the Board, including non-management directors, by sending a letter to our Board, c/o Corporate Secretary, Lightbridge Corporation, 11710 Plaza America Drive, Suite 2000, Reston, VA 20190 USA, for submission to the Board or committee or to any specific director to whom the correspondence is directed.

Stockholders communicating through this means should include with the correspondence evidence, such as documentation from a brokerage firm, that the sender is a current record or beneficial stockholder of the Company.

All communications received as set forth above will be opened by the Corporate Secretary or his designee for the sole purpose of determining whether the contents contain a message to one or more of our directors.

Any contents that are not advertising materials, promotions of a product or service, patently offensive materials or matters deemed, using reasonable judgment, inappropriate for the Board will be forwarded promptly to the chairman of the Board, the appropriate committee, or the specific director, as applicable.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and greater-than-10% stockholders to file forms with the SEC to report their ownership of Lightbridge shares and any changes in ownership.

We have reviewed all forms filed electronically with the SEC.

Based on that review and on written information given to us by our executive officers and directors, we believe that all of our directors and executive officers filed the required reports on a timely basis under Section 16(a) during 2020, except for Seth Grae, Andrey Mushakov and Larry Goldman, who on December 10, 2020 filed Forms 4 addressing restricted stock unit grants for which Forms 4 were due October 30, 2020.

Executive Compensation

2020 Summary Compensation Table

Information required by Item 11 of Part III will be included in our Proxy Statement relating to the 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our NEOs for services rendered in all capacities during the noted periods.

Compensation (3)

CEO, President and Director

Andrey Mushakov

Executive Vice President, Nuclear Operations

Larry Goldman

CFO and Corporate Secretary

(1) For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the stock option awards, please see Note 10 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

(2) Restricted stock units vest ratably over three years.

(3) Consists of the Company’s 401(k) matching contributions.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth all outstanding equity awards to our named executive officers as of December 31, 2020.

Option Awards

Underlying Unexercised

Unexercisable

Expiration Date

Shares, Units

Equity incentive

Shares, Units or

Andrey Mushakov

Larry Goldman

(1) Vest on August 8th of 2021.

(2) Vest ratably on October 28, 2021, October 28, 2022 and October 28, 2023.

Potential Payments upon Termination or Change in Control

Employment Agreements

Please see above under “—Employment Agreements” for a description of potential payments to each of Mr.

Mushakov and Mr.

Goldman pursuant to their employment agreements.

Mushakov, and Mr.

Goldman will also be entitled to continued benefits under the Company’s medical, dental and vision plans for a period of up to twelve months upon termination outside of a change of control and for a period of up to eighteen months upon termination within 24 months following a change of control.

Equity Incentive Plans

Under the Company’s 2006 Stock Plan, 2015 Equity Incentive Plan, each as amended, and the 2020 Omnibus Incentive Plan the Board or the Compensation Committee may accelerate the vesting of awards outstanding thereunder upon a change in control of the Company.

The Board or the Compensation Committee may also provide for the payment of the cash value of the awards in connection with a change in control under circumstances specified in the Plans.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth certain information about the securities authorized for issuance under our 2020 Omnibus Incentive Plan, 2015 Equity Incentive Plan, as amended, and 2006 Stock Plan, as amended, as of December 31, 2020.

securities to

upon exercise of outstanding

options, warrants

average exercise

options, warrants

and rights (1)

available for future issuance under

equity compensation plans (excluding

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

(1) The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding stock options and does not reflect shares that will be issued upon the vesting of outstanding restricted stock units.

Director Compensation

The following table sets forth certain information concerning the compensation paid to our directors for services rendered to us during fiscal 2020.

Grae was not compensated for his service as a director in 2020.

Townsend is paid $50,000, and Mr.

Alessi and Mr.

Magraw are each paid $45,000 annually, and Mr.

Graham, who serves as Chairman of the Board, is paid $60,000 annually.

Directors are reimbursed for out-of-pocket expenses incurred as a result of their participation on our Board.

In addition, the directors were awarded 5,300 shares of stock each in October 2020, which shares are expected to be issued in March 2021.

Fees Earned or

All Other Compensation

Victor Alessi

Thomas Graham, Jr.

Daniel Magraw

Kathleen Kennedy Townsend

As of December 31, 2020, the Company’s directors other than Mr.

Grae held the following stock options:

For each of Messrs.

Alessi, Graham and Magraw, stock options to purchase 11,388 shares of common stock.

Townsend, stock options to purchase 11,875 shares of common stock.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholders The information required by

Information required by Item 12 of Part III will be included in our Proxy Statement relating to the 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

The following tables set forth information known to us with respect to the beneficial ownership of our common stock as of March 15, 2021 for:

(i) each person known by us to beneficially own more than 5% of our voting securities, (ii) each named executive officer, (iii) each of our directors and nominees, and (iv) all of our current executive officers and directors as a group.

The address of each executive officer, director and nominee is care of Lightbridge Corporation, 11710 Plaza America Drive, Suite 2000, Reston, VA 20190 USA.

Except as explained in the footnotes to the following table, each person listed, and the members of the group, had sole voting power and sole investment power with respect to the shares shown.

None of the shares are subject to pledge.

Held Directly

Larry Goldman

Andrey Mushakov

Victor Alessi

Thomas Graham, Jr.

Daniel Magraw

Kathleen Kennedy Townsend

Current Directors and Executive Officers as a Group (seven people)

* Denotes less than 1% of the outstanding shares of common stock.

(1) Consists of shares that may be acquired under stock options that are currently exercisable or will become exercisable within 60 days of March 15, 2021.

(2) Includes 4,167 shares of common stock held by Mr.

Grae’s spouse.

(3) Includes 334 shares of common stock held by Mr.

Graham’s spouse.

Certain Relationships and Related Transactions, and Director Independence

Information required by Item 13 of Part III will be included in our Proxy Statement relating to the 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Transactions with Related Persons

None of our directors, director nominees, executive officers, 5% stockholders, or immediate family members of such persons has been involved in any transactions with us which are required to be disclosed pursuant to Item 404 of Regulation S-K.

Independent Directors

In considering and making decisions as to the independence of each of the directors of the Company, the Board considered transactions and relationships between the Company (and its subsidiaries) and each director (and each member of such director’s immediate family and any entity with which the director or family member has an affiliation such that the director or family member may have a material indirect interest in a transaction or relationship with such entity).

The Board has determined that Mr.

Magraw and Ms.

Townsend are independent as defined in applicable SEC and Nasdaq rules and regulations, and that each constitutes an “Independent Director” as defined in Nasdaq Listing Rule 5605.

Such members constitute a majority of the entire Board.

Principal Accountant Fees and Services

Information required by Item 14 of Part III will be included in our Proxy Statement relating to the 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Independent Registered Public Accounting Firm’s Fees

The following table sets forth the fees billed to us by BDO during the fiscal years ended December 31, 2020 and 2019.

Audit Related Fees

All Other Fees

Audit Fees consist of the aggregate fees billed for professional services rendered for the audit of our annual financial statements and the reviews of the financial statements included in our Forms 10-Q and for any other services that were normally provided by BDO in connection with our statutory and regulatory filings or engagements.

Audit Related Fees consist of the aggregate fees billed for professional services rendered for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and were not otherwise included in Audit Fees.

Tax Fees consist of the aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning.

Included in such Tax Fees are fees for preparation of our tax returns and consultancy and advice on other tax planning matters.

All Other Fees consist of the aggregate fees billed for products and services provided by BDO and not otherwise included in Audit Fees, Audit Related Fees or Tax Fees.

Included in such Other Fees are fees for services rendered in connection with any private and public offerings conducted during such periods.

Our Audit Committee has considered whether the provision of the non-audit services described above is compatible with maintaining auditor independence and determined that such services are appropriate.

Before auditors are engaged to provide us audit or non-audit services, such engagement is (without exception, required to be) approved by the Audit Committee of our Board.

Pre-Approval Policies and Procedures

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our auditors must be approved in advance by our Board to assure that such services do not impair the auditors’ independence from us.

In accordance with its policies and procedures, our Board pre-approved the service performed by the Company’s independent registered public account firm, BDO, for our consolidated financial statements as of and for the year ended December 31, 2020.

Exhibits and Financial Statement Schedules

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(3) Exhibits.

At-the-Market Equity Offering Sales Agreement, dated May 28, 2019, by and between the Company and Stifel, Nicolaus & Company, Incorporated (incorporated by reference to Exhibit 1.1 to the Form 8-K filed by the Company on May 28, 2019).

Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Form 10-Q filed by the Company on November 5, 2019).

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Form of Common Stock Purchase Warrant, as amended (incorporated by reference to Exhibit 4.1 to the Form 8-K filed by the Company on July 7, 2016).

Description of Securities

R&D Services Agreement between the Company and Framatome Inc.

(as successor to AREVA NP SAS), dated November 14, 2017 (incorporated by reference to Exhibit 10.1 to the Form 8-K/A filed by the Company on March 5, 2018).

Amendment Number One to the R&D Services Agreement, deemed effective January 25, 2018, among the Company, Framatome SAS, and Enfission, LLC (incorporated by referenced to Exhibit 10.1 to the Form 10-Q filed by the Company on November 9, 2018).

Amendment Number Two to the R&D Services Agreement, deemed effective June 20, 2018, among the Company, Framatome SAS, and Enfission, LLC (incorporated by referenced to Exhibit 10.2 to the Form 10-Q filed by the Company on November 9, 2018).

Co-ownership Agreement between the Company and Framatome Inc.

(as successor to AREVA NP SAS), dated November 14, 2017 (incorporated by reference to Exhibit 10.2 to the Form 8-K/A filed by the Company on March 5, 2018).

Intellectual Property Annex between the Company and Framatome Inc.

(as successor to AREVA NP SAS), dated November 14, 2017 (incorporated by reference to Exhibit 10.3 to the Form 8-K/A filed by the Company on March 5, 2018).

Operating Agreement of Enfission, LLC, dated January 25, 2018 (incorporated by reference to Exhibit 10.1 to the Form 8-K/A filed by the Company on March 5, 2018).

Amendment Number One to the Operating Agreement of Enfission, LLC, deemed effective May 7, 2018, between the Company and Framatome Inc.

(incorporated by referenced to Exhibit 10.3 to the Form 10-Q filed by the Company on November 9, 2018).

Amendment Number Two to the Operating Agreement of Enfission, LLC, deemed effective January 25, 2018, between the Company and Framatome Inc.

(incorporated by referenced to Exhibit 10.4 to the Form 10-Q filed by the Company on November 9, 2018).

Description of Securities (incorporated by reference to Exhibit 4.3 to the Form 10-K filed by the Company on March 18, 2020).

Specimen Certificate for Company’s Common Stock (incorporated by reference to Exhibit 4.1 to the Company’s registration statement on Form S-3 filed on April 1, 2013, File No.

Investors Rights Agreement, dated August 2, 2016, between the Company and General International Holdings, Inc.

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333-218796, filed on June 16, 2017).

Lightbridge Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Appendix A to the definitive proxy statement filed on July 27, 2020).

Form of Non-Statutory Stock Option Agreement for Employees under the 2020 Omnibus Incentive Plan

Form of Restricted Stock Unit Award Agreement for Employees under the 2020 Omnibus Incentive Plan.

Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the 2020 Omnibus Incentive Plan.

Stock Option Agreement, dated July 14, 2009, between the Company and Seth Grae (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on July 20, 2009).

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Consent of BDO USA, LLP.

Consent of BDO USA, LLP, regarding report in Exhibit 99.1.

Power of Attorney (Included on the signature page hereto).

Rule 13a-14(a)/15d-14(a) Certification — Principal Executive Officer.

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Section 1350 Certifications.

Audited Financial Statements of Enfission, LLC for 2019 and for the Period from Inception (January 24, 2018) to December 31, 2018, with Report of Independent Auditor.

The following materials from Lightbridge Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in eXtensible Business Reporting Language (XBRL):

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and (v) Notes to Consolidated Financial Statements.

________________

* Filed or furnished herewith

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Lightbridge Corporation and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Lightbridge Corporation (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, negative cash flows from operations and has an accumulated deficit that raises substantial doubt about its ability to continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, negative cash flows from operations, has an accumulated deficit of approximately $129.2 million as of December 31, 2020 and the Company expects to incur further net losses in the development of its business.

These conditions raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Capitalized Patent Costs Impairment Assessment

As described in Notes 1 and 5 to the consolidated financial statements, the Company tests the recoverability of the capitalized patent costs whenever events or changes in circumstances indicate that the amounts may not be recoverable.

During the year ended December 31, 2020, the Company identified impairment indicators, which resulted in the Company recording an impairment charge of approximately $1.1 million related to its capitalized patent costs.

Significant management judgment is involved in determining if impairment indicators exist, assessing recoverability and measuring fair value of capitalized patent costs.

We identified the impairment assessment of capitalized patent costs as a critical audit matter because of the significant estimates and assumptions used to estimate future expected revenues, earnings, operating expenses, research and development expenses, timing of commercialization, and discount rates applied in order to determine fair value.

Auditing these elements required especially challenging auditor judgment and significant audit effort, including the need for specialized knowledge and skill.

The primary procedures we performed to address this critical audit matter included:

Evaluating management’s assessment of potential impairment indicators, including changes in research and development activities and timing of commercialization.

Evaluating management’s assumptions, including future revenues, operating expenses, research and development expenses, timing of commercialization used in performing the recoverability test.

Utilizing personnel with specialized knowledge and skills in valuation to perform testing of management’s discounted cash flow methodology, including reviewing the internally projected results to ensure the selected costs of capital adequately captures the conditions present in the projections and assessing other complex assumptions incorporated into the valuation models.

/s/ BDO USA, LLP

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Total Current Assets

Total Other Assets

Patents and trademarks, net

LIABILITIES AND STOCKHOLDERS' EQUITY

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Accounts payable and accrued liabilities

Investee losses in excess of investment

Accrued legal settlement costs

Total Current Liabilities

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Convertible Series B preferred shares, 2,666,667 shares issued and outstanding at December 31, 2020 and 2019 (liquidation preference $4,897,517 and $4,569,180 at December 31, 2020 and 2019, respectively)

Common stock, $0.001 par value, 8,333,333 authorized, 3,252,371 shares and 2,738,508 shares issued and outstanding as of December 31, 2019 and 2018, respectively

Common stock, $0.001 par value, 8,333,333 authorized, 6,567,110 shares and 3,252,371 shares issued and outstanding at December 31, 2020 and 2019, respectively

Additional paid-in capital

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General and administrative

Research and development expenses

Research and development

Legal settlement costs

Patent write-off and impairment loss

Total Operating Expenses

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$ (11,069,859 )

Other Income and (Expenses)

Interest income

Financing costs

Total Other Income and (Expenses)

Total Other Income

Net Loss Before Income Taxes

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Deemed additional dividend on preferred stock dividend due to the beneficial conversion feature

Deemed dividend on issuance on Series B convertible preferred stock due to the beneficial conversion feature

Net Loss Attributable to Common Shareholders

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Adjustments to reconcile net loss from operations to net cash used in operating activities:

Stock-based compensation

Write off of deferred financing costs

Common stock issued for services and stock-based compensation

Patent write-off and impairment loss

Amortization of patents

Equity in loss from joint venture

Changes in operating working capital items

Accounts receivable - fees and reimbursable project costs

Other receivable from joint venture

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Accounts payable and accrued liabilities

Accrued legal settlement costs

Net Cash Used in Operating Activities

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Investment in joint venture

Patents and trademarks

Net Cash Used in Investing Activities

Financing Activities

Net proceeds from the issuance of common stock

Net proceeds from the issuance of preferred stock

Net proceeds from the issuance of common stock and exercise of stock options

Net Cash Provided by Financing Activities

Net (Decrease) Increase in Cash and Cash Equivalents

Net Increase (Decrease) in Cash and Cash Equivalents

Cash and Cash Equivalents, Beginning of Year

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Non-Cash Financing Activities:

Deemed dividend on issuance Series B convertible preferred stock due to beneficial conversion feature

Accumulated preferred stock dividend

Conversion of Series A convertible preferred stock to common stock and payment of paid-in-kind dividends to Series A preferred stockholder

Conversion of Series A convertible preferred stock and payment of paid-in-kind dividends to common stock

Common stock issued for services

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

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Preferred Stock

Balance - December 31, 2017

Balance - December 31, 2018 – revised

$ 129,359,799

Conversion of Preferred Shares to Common Shares

Shares issued payment of Series A PS dividend

Issuance of Preferred stock

Cashless exercise of stock warrants

Shares issued – equity line

Shares issued - registered ATM offering - net of offering costs

$ (104,061,595 )

Conversion of Preferred Stock to Common Stock

Common stock issued - registered offerings - net of offering costs

Stock-based compensation

Net loss - revised

(10,676,747 )

Balance - December 31, 2018

Balance - December 31, 2019 – revised

$ 133,932,615

$ (114,738,342 )

Conversion of Preferred Shares to Common Shares

Shares issued - registered offerings - net of offering costs

Conversion of Preferred Stock to Common Stock

Common stock issued - registered offerings - net of offering costs and exercise of options

Common stock issued for services

Stock-based compensation

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Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations

The Company was formed on October 6, 2006, when Thorium Power, Ltd., which was incorporated in the state of Nevada on February 2, 1999, merged with Thorium Power, Inc., (“TPI”), which was incorporated in the state of Delaware on January 8, 1992 (subsequently and collectively referred to as “we” or the “Company”).

The Company was formed on October 6, 2006, when Thorium Power, Ltd., which was incorporated in the state of Nevada on February 2, 1999, merged with Thorium Power, Inc.

(“TPI”), which was incorporated in the state of Delaware on January 8, 1992 (subsequently and collectively referred to as “we” or the “Company”).

On September 29, 2009, the Company changed its name from Thorium Power, Ltd.

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The Company is a nuclear fuel technology company developing and commercializing next generation nuclear fuel technology.

Reverse Stock Split

Effective October 21, 2019, the Company conducted a one-for-twelve reverse stock split of our issued and outstanding common stock and have retroactively adjusted our common shares outstanding, stock options, warrants amounts outstanding and per share information contained in these consolidated financial statements.

The one-for-twelve reverse stock split automatically converted every twelve shares of the Company’s outstanding common stock prior to the effectiveness of the reverse stock split into one share of common stock.

As a result, the number of common shares issued and outstanding at December 31, 2018 decreased from 32,862,090 shares to 2,738,508 shares.

Our authorized capital of 100,000,000 shares of common stock with a par value of $0.001, was decreased to 8,333,333 shares of common stock authorized with a par value of $0.001.

Accordingly, stockholders’ equity reflects the reverse stock split by reclassifying from common stock to additional paid-in capital in an amount equal to the par value of the decreased shares resulting from the reverse stock split.

The par value per share was not adjusted as a result of the one-for-twelve reverse stock split.

No fractional shares were issued in the reverse stock split.

Stockholders who would have otherwise held fractional shares received a whole share in respect of such fractional shares.

The reverse stock split did not impact any stockholder’s percentage ownership of the Company, subject to the treatment of fractional shares.

The reverse stock split was undertaken to increase the market price per share of the Company’s common stock to allow the Company to regain compliance with the Nasdaq continued listing standards relating to minimum closing bid price per share requirements.

Basis of presentation

Going Concern and Liquidity

These consolidated financial statements have been prepared on the assumption that the Company is a going concern, which contemplates the realization of its assets and the settlement of its liabilities in the normal course of operations.

Going Concern, Liquidity and Management’s Plan

While the Company’s cash at December 31, 2020 exceeds its currently budgeted expenditures through the first quarter of 2022, there are inherent uncertainties in forecasting future expenditures, especially forecasting for uncertainties such as future R&D costs and how COVID-19 may affect future costs and operations.

Also, the cash requirements of the Company’s future planned operations to commercialize its nuclear fuel, including any additional expenditures that may result from unexpected developments, requires it to raise significant additional capital including receiving government support.

The Company will need to seek its shareholders’ approval in 2021 to increase the number of its authorized common shares for future equity financings, in order for the Company to continue to fund its future operations.

Taking into account these uncertainties as well as the updated projected fuel development timeline of 15-20 years to commercialization, projected operational costs to keep the fuel development project on schedule and the various risks of developing and commercializing its nuclear fuel, these factors raise substantial doubt about the Company’s ability to continue as a going concern for the 12 months following the date of this filing.

To the extent any uncertainties reduce the Company’s liquidity for the next 12 months, the Company will consider, if available, additional debt or equity raises and delaying certain expenditures, including delaying research and development expenses, until sufficient capital becomes available.

At December 31, 2020, the Company had approximately $21.5 million in cash and had a working capital surplus of approximately $17.1 million.

The Company’s net cash used in operating activities during the year ended December 31, 2019 was approximately $6.7 million, and current projections indicate that the Company will have continued negative cash flows until the commercialization of its nuclear fuel.

The Company’s net cash used in operating activities for the year ended December 31, 2020 was approximately $8.6 million, and current projections indicate that the Company will have continued negative cash flows from operations until the commercialization of its nuclear fuel.

Net losses incurred for the years ended December 31, 2020 and 2019 amounted to approximately $(14.4) million, $(10.7) million, respectively.

As of December 31, 2020, the Company has an accumulated deficit of approximately $129.2 million, representative of recurring losses since inception.

The Company has incurred recurring losses since inception because it is a development stage nuclear fuel development company.

The Company expects to continue to incur losses due to future costs and expenses related to the Company’s research and development expenses and general and administrative expenses.

While the Company’s cash at December 31, 2019 exceeds its budgeted expenditures by approximately $4.0 million through the first quarter of 2021, there is only a small margin for miscalculations in meeting the Company’s budget estimates 12 months from the issuance of these financial statements.

Accordingly, budget variances in the projection of the Company’s planned operations, plus any additional expenditures that may result from potential additional legal costs and other unexpected fees and outcomes relating to arbitration with its joint venture partner (see Note 11.

Subsequent Events), raise substantial doubt about the Company’s ability to continue as a going concern.

The amount of cash and cash equivalents on the balance sheet as of the date of this filing is approximately $16.5 million.

The Company also may consider other plans to fund operations including:

(1) raising additional capital through equity issuances, debt financings;

The Company has incurred recurring losses since inception and it will continue to incur losses because it is in the early development stage of commercializing its nuclear fuel.

The Company’s plans to fund future operations including:

(1) raising additional capital through future equity issuances or convertible debt financings;

(2) additional funding through new relationships to help fund future research and development costs;

and (3) other sources of capital.

The Company may issue securities, including common stock, preferred stock, and stock purchase contracts through private placement transactions or registered public offerings, pursuant to its registration statement on Form S-3 filed with the SEC on March 15, 2018 and declared effective on March 23, 2018.

There can be no assurance as to the availability or terms upon which financing and capital might be available.

The Company’s future liquidity needs, and ability to address those needs, will largely be determined by the success of the development of its nuclear fuel, key nuclear development and regulatory events, and its business decisions in the future.

These consolidated financial statements do not include any adjustments related to the carrying values and classifications of assets and liabilities that would be necessary, should the Company be unable to continue as a going concern.

Equity Method Investment – Enfission, LLC - Joint Venture with Framatome Inc.

In January 2018, Lightbridge and Framatome Inc., a subsidiary of Framatome SAS (formerly part of AREVA SAS), finalized and launched Enfission, LLC (“Enfission”), a 50-50 joint venture company, to develop, license, and sell nuclear fuel assemblies based on Lightbridge-designed metallic fuel technology and other advanced nuclear fuel intellectual property.

Framatome SAS and Framatome Inc.

(collectively “Framatome”) is a global leader in designing, building, servicing, and fueling reactor fleet and advancing nuclear energy and is majority owned by Électricité de France, the world’s largest owner and operator of nuclear power plants.

The current Form S-3 was filed with the SEC on March 15, 2018 and declared effective on March 23, 2018, and will expire on March 23, 2021.

There can be no assurance as to the future availability of filing a Form S-3 or raising future equity capital or terms upon which financing and capital might become available.

If the Company is unable to raise additional capital on terms acceptable to the Company and on a timely basis, the Company will be required to wind-down its operations.

To the extent additional capital is raised through the sale of equity or convertible debt securities, such securities may be sold at a discount from the market price of the Company's common stock.

The issuance of these securities could also result in significant dilution to the Company's stockholders, depending on the terms of the transaction.

The Company’s future liquidity needs to develop its nuclear fuel are long-term, and the ability to address those needs, and the ability to raise capital will largely be determined by the success of the development of its nuclear fuel, key nuclear development and government regulatory events, and its business decisions in the future.

Equity Method Investment – Enfission, LLC

In January 2018, Lightbridge and Framatome Inc., a subsidiary of Framatome SAS (formerly part of AREVA SAS) (collectively “Framatome”), finalized and launched Enfission, LLC (“Enfission”), a 50-50 joint venture company, to develop, license, and sell nuclear fuel assemblies based on Lightbridge-designed metallic fuel technology and other advanced nuclear fuel intellectual property.

Lightbridge and Framatome began joint fuel development and regulatory licensing work under previously signed agreements initiated in March 2016.

The joint venture, Enfission, is a Delaware-based limited liability company that was formed on January 24, 2018.

Management has determined that its investment in Enfission should be accounted for under the equity method of accounting.

Management determined that its investment in Enfission be accounted for under the equity method of accounting.

Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s consolidated balance sheets and consolidated statements of operations;

however, the Company’s share of the losses of the investee company is reported in the “Equity in loss from joint venture” line item in the consolidated statements of operations, and the Company’s carrying value in an equity method investee company is reported in the “Investment in joint venture” or “Investee losses in excess of investment” line item in the consolidated balance sheets.

The Company allocates income or loss utilizing the hypothetical liquidation book value (“HLBV”) method, based on the change in each JV member’s claim on the net assets of the JV’s operating agreement at period end after adjusting for any distributions or contributions made during such period.

The Company allocates income or loss utilizing the hypothetical liquidation book value (“HLBV”) method, based on the change in each JV member’s claim on the net assets of the JV under the JV’s operating agreement at period end after adjusting for any distributions or contributions made during such period.

The Company uses this method because of the difference between the distribution rights and priorities set forth in the Enfission operating agreement and what is reflected by the underlying percentage ownership interests of the joint venture.

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and other factors.

Accounting Policies and Pronouncements

Enfission was inactive for the year ended December 31, 2020 and at December 31, 2019.

No amounts related to the equity method investment in Enfission have been recorded on the consolidated balance sheets or the consolidated statements of operations for the year ended December 31, 2020 and a $3.3 million loss on this equity method investment was recorded on the consolidated statements of operations for the year ended December 31, 2019.

Basis of Consolidation

These consolidated financial statements include the accounts of Lightbridge, a Nevada corporation, and our wholly-owned subsidiaries, TPI, a Delaware corporation, and Lightbridge International Holding LLC, a Delaware limited liability company.

These consolidated financial statements include the accounts of Lightbridge, a Nevada corporation, and the Company’s wholly-owned subsidiaries, TPI, a Delaware corporation, and Lightbridge International Holding LLC, a Delaware limited liability company.

These wholly-owned subsidiaries are inactive.

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The Company has determined that it is not the primary beneficiary of the VIE since it does not have the power to direct the activities that most significantly impact the VIE’s performance.

In determining whether the Company is the primary beneficiary and whether it has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all its economic interests in the entity, regardless of form.

This evaluation considers all relevant factors of the entity’s structure including the entity’s capital structure, contractual rights to earnings (losses) as well as other contractual arrangements that have potential to be economically significant.

The Company is not the primary beneficiary since the major decision making for all significant economic activities require the approval of both the Company and Framatome.

The significant economic activities identified were financing activities, research and development activities, licensing activities, manufacturing of fuel assembly product activities, and marketing and sales activities.

The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests and control is a matter that requires the exercise of management judgment.

Enfission’s operations was inactive for the year ended December 31, 2020 and at December 31, 2019.

Enfission was dissolved on March 23, 2021.

The Company will withdraw its petition for judicial dissolution of Enfission on file with the Court of Chancery of the State of Delaware.

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting.

The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance.

We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources considering our core data which is managed centrally on a company-wide basis, and evaluates our financial results.

Because we have a single reportable segment, all required financial segment information can be found directly in the Consolidated Financial Statements.

We evaluate the performance of our reporting segment based on operating expenses and will evaluate additional segment disclosure requirements as it expands its operation.

Use of Estimates and Assumptions

The preparation of these consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, 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 financial statements, and the reported amounts of revenue and expenses during the reporting period.

The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, 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 financial statements, and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

Significant Estimates

These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and judgments.

The most significant estimates relate to valuation of stock grants and stock options, impairment evaluation of the equity method investment, the valuation allowance on deferred tax assets, and contingent liabilities.

These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and assumptions.

The most significant estimates relate to its patent impairment evaluation and undiscounted and discounted cash flow projections used for the impairment testing of its patents, valuation of stock grants and stock options, the valuation allowance on deferred tax assets, and contingent liabilities.

It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods.

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Certain Risks, Uncertainties and Concentrations

The Company is an early stage company and will need additional funding by way of strategic alliances, government grants, further offerings of equity securities, an offering of debt securities, or a financing through a bank in order to support the remaining research and development activities required to further enhance and complete the development of its fuel products to a commercial stage.

The Company will need additional funding by way of a combination of strategic alliances, government grants, further offerings of equity securities, or an offering of debt securities in order to support its future research and development activities required to further enhance and complete the development of its fuel products to a proof of concept and a commercial stage.

The Company participates in a government-regulated industry.

Our operating results are affected by a wide variety of factors including decreases in the use or public favor of nuclear power, the ability of our technology to safeguard the production of nuclear power, the ability to receive the required approval from the nuclear regulatory commission for utilities to use our fuel and our ability to safeguard our patents and intellectual property from competitors.

Due to these factors, the Company may experience substantial period-to-period fluctuations in our future operating results.

Potentially, a loss of a key officer, key management, and other personnel could impair our ability to successfully execute our business strategy, particularly when these individuals have acquired specialized knowledge and skills with respect to nuclear power and our operations.

Our future operations and earnings may depend on the results of the Company’s operations outside the United States, including some of its research and development activities.

There can be no assurance that the Company will be able to successfully continue to conduct such operations, and a failure to do so would have a material adverse effect on the Company’s research and development activities, financial position, results of operations, and cash flows.

The operating results are affected by a wide variety of factors including decreases in the use or public favor of nuclear power, the ability of the Company’s technology to safeguard the production of nuclear power, the ability to receive the required approval from the nuclear regulatory commission for utilities to use its fuel and the ability to safeguard the Company’s patents and intellectual property from competitors.

Due to these factors, the Company may experience substantial period-to-period fluctuations in its future operating results.

Potentially, a loss of key officer, key management, and other personnel could impair its ability to successfully execute its business strategy, particularly when these individuals have acquired specialized knowledge and skills with respect to nuclear power and how it relates to the Company’s nuclear fuel.

There can be no assurance that the Company will be able to successfully continue to conduct its operations if there is a lack of financial resources in the future to continue its fuel development, and a failure to do so would have a material adverse effect on the Company’s future research and development activities, financial position, results of operations, and cash flows.

Also, the success of the Company’s operations will be subject to other numerous contingencies, some of which are beyond management’s control.

These contingencies include general and regional economic conditions, competition, changes in government regulations and support for nuclear power, changes in accounting and taxation standards, inability to achieve overall long-term goals, future impairment charges, and global or regional catastrophic events.

The Company may be subject to various additional political, economic, and other uncertainties.

These contingencies include general and regional economic conditions, contingent liabilities, potential competition with other nuclear fuel developers, including those entities developing accident tolerant fuels, changes in government regulations, support for nuclear power, changes in accounting and taxation standards, inability to achieve overall long-term goals, future impairment charges to its assets, and global or regional catastrophic events.

The Company may also be subject to various additional political, economic, and other uncertainties.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risk to the international community as the virus spreads globally beyond its point of origin.

In March 2020, the WHO classified the COVID-19 outbreak a pandemic, based on increase in exposure globally.

The current spread of COVID-19 that is impacting global economic activity and market conditions could lead to adverse changes in the Company’s ability to conduct research and development activities with the United States national labs and others.

The COVID-19 pandemic has impacted business operations and results of operations for 2020, resulting in the reduction of research and development expenses and increase in general and administrative expenses due to severance payments to former employees.

While the Company continues to monitor the impact of COVID-19 on its business, the Company is unable to accurately predict the ultimate impact on the results of operations, financial condition and liquidity that COVID-19 will have due to various uncertainties, including the geographic spread of the virus, the severity of the disease, the duration of the outbreak, and actions that may be taken by governmental authorities and other third-parties.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payment, net operating loss carryback period, alternative minimum tax credit refund, modification to the net interest deduction limitation, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation method for qualified improvement property.

It also appropriated funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19.

Management decided not to apply for these funds.

The CARES Act did not have an impact on our results of operations, financial condition and liquidity.

Cash and Cash Equivalents

The Company may at times invest its excess cash in savings accounts and US Treasury Bills.

It classifies all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months as marketable securities.

The Company may at times invest its excess cash in interest bearing accounts and US Treasury Bills.

It classifies all highly liquid investments with original stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months as marketable securities.

The Company holds cash balances in excess of the federally insured limits of $250,000.

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Total cash and cash equivalents held, as reported on the accompanying consolidated balance sheets, totaled approximately $21.5 million and $18.0 million at December 31, 2020 and 2019, respectively.

Other Receivable from Joint Venture

The Company records its receivable from Enfission, LLC at the invoiced amount.

The Company determined that no bad debt reserve needed to be recorded at December 31, 2019 and 2018.

Patents and Legal Costs

The Company has concluded that its government grant is not within the scope of ASC Topic 606 as it does not meet the definition of a contract with a customer.

Additionally, the Company has concluded that the grant meets the definition of a contribution and are non-reciprocal transactions, and has also determined that Subtopic 958-605, Not-for-Profit-Entities-Revenue Recognition does not apply, as the Company is a business entity and the grant is with governmental agencies.

In the absence of applicable guidance under US GAAP, the Company management has developed a policy to recognize grant income at the time the related costs are incurred and the right to payment is realized.

The Company believes this policy is consistent with the overarching premise in ASC Topic 606, to ensure that revenue recognition reflects the transfer of promised goods or services to customers in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods or services, even though there is no exchange as defined in ASC Topic 606.

Additionally, the Company has determined that the recognition of grant income as costs are incurred and amounts become realizable is analogous to the concept of transfer of control of a service over time under ASC Topic 606.

Further, the Company believes that showing grant income on a gross method, with the grant income shown as other operating income and the related costs as a charge to research and development expense, rather than depicting the grant income as a reduction of research and development expense, is a more meaningful presentation.

The Company recognized grant income of approximately $0.1 million for the year ended December 31, 2020.

There was no grant income recognized in 2019.

Patents and Trademarks Costs

Patents are stated on the accompanying consolidated balance sheets at cost.

Patent costs consist primarily of legal fees and application costs for filing and pursuing patent applications.

The costs of the patents, once placed in service, will be amortized on a straight-line basis over their estimated useful lives or the remaining legal lives of the patents, whichever is shorter.

The amortization periods for our patents can range between 17 and 20 years if placed into service at the beginning of their legal lives.

Our patents have not been placed in service for the years ended December 31, 2019 and 2018.

Legal costs are expensed as incurred except for legal costs to file for patent protection, which are capitalized and reported as patents on the accompanying consolidated balance sheets.

Impairment of long-lived assets

Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable.

The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset.

The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

The Company did not consider it necessary to record any impairment charges for the years ended December 31, 2019 and 2018.

Costs, such as filing fees with patent granting agencies and legal fees directly relating to those filings, incurred to file patent applications are capitalized when the Company believes that there is a high likelihood that the patent will be issued and there will be future economic benefit associated with the patent.

These costs are amortized from the date of the patent application on a straight-line basis over the estimated useful life of 20 years, which is the legal life of the patent.

All costs associated with abandoned patent applications are expensed.

The Company expenses patent annuity fees as these fees are maintenance fees required by the patent office at certain points in time after a patent is granted in order to keep the patent legal rights in force.

During the years ended December 31, 2020 and 2019, these patent annuity fees were insignificant.

As of December 31, 2020, and 2019, the carrying value of the patents was $0 and approximately $1.0 million, respectively.

Amortization expense for the years ended December 31, 2020 and 2019, was approximately $0.1 million, respectively.

The Company anticipates future patent costs to be expensed in future periods, which is due to the uncertainties in the current fuel development timelines and the patents being commercialized.

Costs for filing and legal fees for trademark applications are capitalized.

Trademarks are considered intangible assets with an indefinite useful life and therefore should not be amortized.

The Company performed an impairment test in the fourth quarter of 2020 and 2019 and no impairment of the trademarks was identified.

As of December 31, 2020 and 2019, the carrying value of trademarks was approximately $0.1 million.

Impairment of long-lived assets - Patents

The Company reviews the carrying value of its capitalized patent costs for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.

Undiscounted cash flows are compared to the carrying value of the asset to determine if the assets are recoverable.

If the asset fails the recoverability test, the Company determines the fair value of the asset using discounted cash flows to measure any impairment loss.

The determination of anticipated undiscounted cash flows is inherently subjective, requiring significant management assumptions and estimates related to future revenues, operating expense, research and development expenses and timing of commercialization.

During the years ended December 31, 2020 and 2019, the Company has recorded an impairment loss on its patents of approximately $1.1 million and $0, respectively.

See Note 5, for additional information about impairment charges recorded for the year ended December 31, 2020.

Research, Development and Related Expenses

These costs are charged to operations in the period incurred and are shown on a separate line on the accompanying consolidated statements of operations.

Government grants received in the future that are paid directly to a government entity performing the research and development work, are credited to the amounts due to that government entity during the period in which the expenditure to which they relate is incurred and are not recorded as grant income.

These costs are charged to operations in the years incurred and are shown on a separate line on the accompanying consolidated statements of operations.

In 2019, the Company adopted ASU 2016-02, Leases (Topic 842), which requires recognition of most lease arrangements on the balance sheet.

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The Company has only one lease for office rent and the lease is for a term of 12 months without renewal options.

See Note 7 for additional information.

Beneficial Conversion Feature of Convertible Preferred Stock

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Common stock warrants are accounted for as a derivative in accordance with ASC 815, Derivatives and Hedging if the stock warrants contain terms that could potentially require “net cash settlement” and therefore, do not meet the scope exception for treatment as a derivative.

Warrant instruments that could potentially require “net cash settlement” in the absence of express language precluding such settlement are initially classified as derivative liabilities at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash.

Warrant instruments that could potentially require “net cash settlement” in the absence of explicit language precluding such settlement are initially classified as derivative liabilities at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash.

Commitments and Contingencies

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Recently Adopted Accounting Pronouncements

ASU 2018-09, Codification Improvements — This ASU represents changes in various Subtopics to clarify, correct errors, or make minor improvements.

The amendments are not expected to have a significant effect on current accounting practice.

Subtopics impacted by this ASU that are relevant to the Company include Subtopic 220-10 Income Statement — Reporting Comprehensive Income-Overall, Subtopic 718-740 Compensation — Stock Compensation-Income Taxes, Subtopic 805-740 Business Combinations — Income Taxes , and Subtopic 820-10 Fair Value Measurement-Overall .

Many of the amendments within this ASU do not require transition and are effective upon issuance.

However, some were not effective until fiscal years beginning after December 15, 2018.

The amendments within this ASU did not have a material impact on the Company’s consolidated financial statements or related footnote disclosures.

In June 2018, the FASB issued ASU 2018-07, C ompensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”).

ASU 2018-07 expands the guidance in Topic 718 to include share-based payments for goods and services to non-employees and generally aligns it with the guidance for share-based payments to employees.

The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, which was adopted by the Company on July 1, 2018.

The adoption of this ASU did not have a significant impact upon on the Company’s consolidated financial statements or related footnote disclosures.

Leases — In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).

ASU 2016-02 amends existing lease accounting guidance and requires recognition of most lease arrangements on the balance sheet.

The adoption of this standard did not result in the Company recognizing a right-of-use asset representing its rights to use the underlying asset for the lease term with an offsetting lease liability.

ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted.

The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.

Recent Accounting Pronouncements – To Be Adopted

ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement — This ASU modifies the disclosure requirements on fair value measurements in Topic 820, including the removal, modification to, and addition of certain disclosure requirements.

This ASU will be effective for fiscal years beginning after December 15, 2019 with early adoption permitted.

This ASU is effective for fiscal years beginning after December 15, 2019 with early adoption permitted.

The majority of the disclosure changes are to be applied on a prospective basis.

The Company does not expect this ASU to have a significant impact on the Company’s fair value disclosures and no future impact is expected to the Company’s consolidated financial statements.

Intangibles, Goodwill and Other — In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment .

To simplify the subsequent measurement of goodwill, ASU 2017-04 eliminates Step 2 from the goodwill impairment test.

In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination.

Instead, ASU 2017-04 requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

Therefore, the same impairment assessment applies to all reporting units.

An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets.

An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

ASU 2017-04 is effective for fiscal years beginning after December 15, 2019.

The Company will adopt ASU 2017-04 commencing in the first quarter of fiscal 2020.

The Company does not believe this standard will have a material impact on its consolidated financial statements or related footnote disclosures.

The Company does not believe that other standards, which have been issued but are not yet effective, will have a significant impact on its consolidated financial statements.

The Company adopted ASU 2018-13 commencing in the first quarter of fiscal 2020 and this ASU did not have a material impact on the Company’s fair value disclosures in the Company’s consolidated financial statements.

Recent Accounting Pronouncements – To Be Adopted

In August 2020, the FASB issued ASU No.

2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital.

ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.

ASU 2020-06 will be effective July 1, 2024, for the Company.

Early adoption is permitted, but no earlier than July 1, 2021, including interim periods within that year.

Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements and footnote disclosures.

ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The ASU also clarifies and amends existing guidance to improve consistent application.

For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted.

The amendments in the ASU have various transition requirements Management is currently evaluating the effect of the adoption of ASU 2019-12 on its consolidated financial statements and footnote disclosures.

Revision and Correction of an Immaterial Error in Previously Issued Financial Statements

During the year ended December 31, 2020, we identified an error related to the amortization of our capitalized patent costs.

In our prior financial statements through September 30, 2020, we did not record any amortization expense relating to our capitalized patent costs since we deemed them as not being placed in service.

Subsequently, we concluded that the patents have provided us with an economic benefit (i.e.

legal protection rights) and accordingly should have amortized our capitalized patents costs starting from the patents’ application dates, over a 20-year period, which is generally the legal life of each new patent filing.

This revision in accounting policy results in an amortization of the capitalized patent costs, as shown below for the year ended December 31, 2019.

In accordance with ASC 250, Accounting Changes and Error Corrections , we evaluated the materiality of the errors from quantitative and qualitative perspectives and concluded that this error was immaterial to the Company’s prior interim unaudited financial statements and annual audited financial statements.

Since this error correction to record the amortization of patent costs was deemed immaterial, no amendments to previously filed interim periodic financial reports or annual financial reports are required.

Consequently, the Company corrected this error by revising the December 31, 2019 consolidated financial statements included herein and shown below.

This misstatement had no net impact on the Company’s consolidated statements of cash flows.

The effect of this correction of this error on our previously filed audited consolidated financial statements prior to 2019 was to adjust the beginning accumulated deficit balance, as of January 1, 2019, by approximately $0.6 million and to adjust the annual audited financial statements as of and for the year ended December 31, 2019 is as follows:

Year Ended December 31, 2019

As Previously

Consolidated Statement of Operations Data:

General and Administrative – Patent Amortization

Total Operating Expenses

Loss from operations before income taxes

(10,587,124 )

(10,676,747 )

(10,587,124 )

(10,676,747 )

Net loss attributable to common shareholders

(11,286,939 )

(11,376,562 )

Net loss per share, basic and diluted

Number of weighted shares

As of December 31, 2019

As Previously

Consolidated Balance Sheet Data:

Patents and trademarks, net

Accumulated deficit

(114,084,746 )

(114,738,342 )

Total stockholders’ equity

Year Ended December 31, 2019

As Previously

Consolidated Cash Flows Operating Activities Data:

$ (10,587,124 )

$ (10,676,747 )

Amortization of Patents

The correction of these immaterial errors totaled approximately $61,000 and $90,000 for the nine months ended September 30, 2020 and for the year-ended December 31, 2019, respectively.

The effect of this correction on the Company’s prior interim quarterly unaudited financial statements for 2020 and 2019 was immaterial.

Net Loss Per Share

Basic net loss per share is computed using the weighted-average number of common shares outstanding during the year except that it does not include unvested common shares subject to repurchase or cancellation.

Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the year.

Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, warrants, and unvested common shares subject to repurchase or cancellation.

The dilutive effect of outstanding stock options, and warrants is not reflected in diluted earnings per share because the Company incurred net losses for the years ended December 31, 2019 and 2018, and the effect of including these potential common shares in the net loss per share calculations would be anti-dilutive, therefore not included in the calculations.

Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period except that it does not include unvested common shares subject to repurchase or cancellation.

Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, warrants and convertible preferred shares (see Note 10.

Stockholders’ Equity and Stock-Based Compensation).

The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants, would be used to purchase common shares at the average market price for the period, unless including the effects of these potentially dilutive securities would be anti-dilutive.

The following table sets forth the computation of the basic and diluted loss per share (rounded in millions except shares outstanding and per share amounts):

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Weighted-average common shares outstanding

Basic and diluted net loss per share

Basic net loss per share

Net loss attributable to common stockholders, basic

Effect of dilutive securities

Net loss, diluted

Weighted average common shares outstanding - basic

Potential common share issuances:

Incremental dilutive shares from equity instruments (treasury stock method)

Weighted-average common shares outstanding

Diluted net loss per share

The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the periods noted below, as they would have been anti-dilutive due to the Company’s losses for the years ended December 31, 2020 and 2019:

Warrants outstanding

Stock options outstanding

RSUs outstanding

Series A convertible preferred stock to common shares

Series B convertible preferred stock to common shares

Investment in Joint Venture (Investee Losses in Excess of Investment)

Current Status of the Joint Venture

Pursuant to the Enfission operating agreement, both partners agreed that Enfission would serve as an exclusive vehicle to develop, license, and sell nuclear fuel assemblies based on Company-designed metallic fuel technology and other advanced nuclear fuel intellectual property licensed to Enfission by the Company and Framatome or their affiliates.

Pursuant to the Enfission operating agreement, both partners agreed that Enfission would serve as the vehicle to develop, license, and sell nuclear fuel assemblies based on Company-designed metallic fuel technology and other advanced nuclear fuel intellectual property licensed to Enfission by both the Company and Framatome or their affiliates.

The joint venture built upon the joint fuel development and regulatory licensing work under previously signed agreements initiated in March 2016.

On November 18, 2019, the Company delivered a notice of termination of the R&D Services Agreement to the Board of Directors of Enfission, dated November 14, 2017, by and among Framatome, Enfission and our Company (as amended by Amendment Number One, dated January 25, 2018, and Amendment Number Two, dated June 20, 2018, the “RDSA”), which, among other things, defined the terms and conditions for joint research and development activities among Framatome, Enfission, and our Company, thereby terminating the RDSA, effective immediately.

On November 23, 2019, in connection with the termination of the RDSA, the Board of Directors and the management of Lightbridge determined that it is advisable and in the best interest of the Company and its shareholders to take the necessary steps to dissolve Enfission.

Various corporate and operational matters relating to Enfission are governed pursuant to the Enfission Operating Agreement.

The Company intends to take the necessary steps to dissolve the joint venture.

Enfission is not conducting R&D services at December 31, 2019 and as of the date of this filing.

Enfission’s Board of Directors has not approved a formal dissolution plan at December 31, 2019 or as of the date of this filing (see Note 11.

Subsequent Events).

On November 18, 2019, the Company delivered to the Board of Directors of Enfission a notice of termination of the R&D Services Agreement, dated November 14, 2017, by and among Framatome, Enfission and the Company (as amended by Amendment Number One, dated January 25, 2018, and Amendment Number Two, dated June 20, 2018, the “RDSA”), which, among other things, defined the terms and conditions for joint research and development activities among Framatome, Enfission, and the Company.

The notice terminated the RDSA, effective immediately.

On November 23, 2019, in connection with the termination of the RDSA, the Board of Directors and the management of Lightbridge determined that it was advisable and in the best interest of the Company and its shareholders to take the necessary steps to dissolve Enfission.

On February 11, 2021, Lightbridge and Framatome reached a settlement agreement.

(See Note 12.

Subsequent Events for settlement agreement with Framatome.) Enfission was inactive as of December 31, 2019 and for the year ended December 31, 2020 and was dissolved on March 23, 2021.

The Enfission operating agreement provided that Lightbridge and Framatome each hold 50% of the total issued Class A voting membership units of the joint venture.

The Company’s equity in losses in excess of its investment are accounted for under the equity method consisted of the following as of December 31, 2019 and 2018 (rounded in millions):

The Company’s equity in losses is accounted for under the equity method consisted of the following as of December 31, 2020 and 2019 (rounded in millions):

Enfission, LLC

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Carrying Amount

Total contributions

Total cumulative contributions

Share of the loss in investment in Enfission

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The Company invested approximately $9.2 million in Enfission and Framatome invested approximately $2.9 million of equity for the period from January 24, 2018 (date of inception of Enfission) to December 31, 2020.

The cash balance in Enfission at December 31, 2019 was approximately $1.0 million.

During the year ended December 31, 2019, Enfission incurred a loss of approximately $5.5 million, and accordingly, the Company recorded its share of the loss in investment in Enfission, in accordance with the provisions in the joint venture operating agreement, of approximately $3.3 million.

In accordance with the provisions in the joint venture operating agreement, the Company did not record its share of the loss in investment in Enfission for the year ended December 31, 2020.

As of December 31, 2020, the Company’s total equity share of the joint venture accumulated losses is limited to the total equity contributions Lightbridge made since January 24, 2018 according to the Enfission joint venture operating agreement.

It stated that at no time during the term of the company or upon dissolution or liquidation of the company shall a member with a deficit balance in its capital account have any obligation to Enfission or to the other members of Enfission to restore such deficit capital balance, to the fullest extent permitted by applicable law and to the provisions of the joint venture operating agreement.

The joint venture operating agreement stated that at no time during the term of the company or upon dissolution or liquidation of the company shall a member with a deficit balance in its capital account have any obligation to Enfission or to the other members of Enfission to restore such deficit capital balance, to the fullest extent permitted by applicable law and to the provisions of the joint venture operating agreement.

The Company had not separately guaranteed any obligations of Enfission.

The Company does not expect to provide additional equity contributions in 2021 nor for the foreseeable future until Enfission is dissolved.

Summarized balance sheet information for the Company’s equity method investee, Enfission, as of December 31, 2019 and 2018 is presented in the following table (rounded in millions):

Other current assets

Enfission was inactive and not significant for 2020 and, therefore, no summarized balance sheet and summarized income statement information is required to be presented.

Summarized balance sheet information for the Company’s equity method investee, Enfission, as of December 31, 2019 is presented in the following table (rounded in millions):

Liabilities and equity

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Total liabilities and equity

Summarized statement of operations information for the Company’s equity method investee, Enfission, is presented in the following table for the year ended December 31, 2019 and for the period from January 24, 2018 (Date of Inception) to December 31, 2018 (rounded in millions):

For the period from January 24, 2018 (Date of Inception) to December 31,

Summarized statement of operations information for the Company’s equity method investee, Enfission, for the year ended December 31, 2019 is presented in the following table (rounded in millions):

Research and development expenses

Administrative expenses

General and administrative expenses

Total Operating Loss

Loss from operations

As of December 31, 2019 and 2018, the total receivable due from Enfission was approximately $0.4 million and $0.1 million, respectively, which represents management and administrative services, consulting fees and reimbursable expenses Lightbridge charged to Enfission (see Note 10.

As of December 31, 2020 and 2019, the total receivable due from Enfission was $0 and approximately $0.4 million, respectively, which represents management and administrative services, consulting fees and reimbursable expenses Lightbridge charged to Enfission in 2019 (see Note 11.

Related Party Transactions).

In January 2020, the Company received payment of the total receivable due from Enfission of $0.4 million.

Lightbridge did not bill any management and administrative services, consulting fees or other services to Enfission for the year ended December 31, 2020, as Enfission’s operations were inactive during this reporting period.

Disputed Framatome Invoices

Included in the total liabilities of Enfission of $2.1 million above, are certain invoices for research and development work submitted by Framatome in 2019, totaling approximately $1.3 million at December 31, 2019.

These invoices have been disputed and remain unpaid as of the date of this filing.

There are various disagreements between Framatome and Lightbridge regarding these disputed Framatome invoices.

It is expected that these disputes will be resolved through either further negotiations by the joint venture partners or in arbitration (see Note 11.

Subsequent Events).

The Company had not separately guaranteed any obligations of Enfission at December 31, 2019 and is not obligated under the joint venture operating agreement to fund its deficit capital account balance in Enfission.

Patents represent legal fees and filing costs that are capitalized and will be amortized over their estimated useful lives of 17 to 20 years or their remaining legal lives, whichever is shorter, after they are placed in service.

For the years ended December 31, 2019 and 2018, the Company capitalized approximately $0.2 million each year, for patent filing costs.

The total investment in patents was approximately $1.8 million and $1.6 million as of December 31, 2019 and 2018, respectively.

No amortization expense of patents was recorded in either of the years ended December 31, 2019 and 2018.

These patents were not placed in service for the years ended December 31, 2019 and 2018, or in prior years.

Included in the total liabilities of Enfission of $2.1 million at December 31, 2019, are disputed invoices totaling $1.3 million for research and development work submitted by Framatome in 2019.

No amounts related to the equity method investment in Enfission have been recorded on the consolidated statements of operations for the year ended December 31, 2020.

On February 11, 2021, Lightbridge and Framatome reached a settlement agreement in which the Company agreed to pay approximately $4.2 million primarily for these past-due disputed invoices and other related costs.

The Settlement Agreement resolved all disputes between the companies and terminated all agreements pertaining to the joint venture.

Subsequent Events for the settlement agreement terms and payment to Framatome and the dissolution of Enfission.

Patents and Trademarks, net

Patents and Trademarks, net, net consisted of the following (rounded in millions):

Accumulated amortization

The Company revised the patent amortization expense by recording a cumulative adjustment to accumulated amortization of $0.6 million as of January 1, 2019 (see Note 2.

Revision and Correction of an Immaterial Error in Previously Issued Financial Statements).

For the years ended December 31, 2020 and 2019, the Company capitalized approximately $0.2 million each year, for patent filing costs and related legal fees.

Amortization expense was approximately $0.1 million for the years ended December 31, 2020 and 2019, respectively.

The Company considered the fourth quarter 2019 deterioration of the Company’s relationship with Framatome, its joint venture partner in Enfission, (See Notes 1, 4, 7 and 12) to be a triggering event for the assessment of possible impairment of its patent assets.

The Company performed an impairment test in the fourth quarter of 2019 and no impairment of the patent assets was identified.

During 2020, as discussed in Note 8, the Company began a program to support the development of its fuel in collaboration with Idaho National Laboratory (INL) with funding in the form of a voucher from the U.S.

Department of Energy (DOE) Gateway for Accelerated Innovation in Nuclear (GAIN) program.

In the fourth quarter of 2020, the Company received information that cutbacks in government funding for certain types of nuclear research is expected and the INL research facilities will only be available on a limited basis.

The INL notified the Company that the advanced test reactor would not be available to conduct critical experiments and that the INL laboratories now have limited research capabilities which extended fuel development timelines to 15-20 years, which is beyond the remaining legal lives of the patents.

These recent developments regarding future potential DOE funding and INL research facility limitations have caused significant delays in the projected timelines for development and commercialization of the Company’s fuel, which constitutes impairment indicators of the Company’s patent costs.

The extended timelines for the development and commercialization of the Company’s fuel results in the reduced prospects of the existing patents providing the necessary legal protection from competitors over the remaining average legal lives of the patent portfolio, as well as the utilization of the Company’s patents in obtaining substantial research grant funding.

The Company performed an impairment analysis and determined that the carrying value of the patents were not recoverable.

Using both the income approach and the cost approach, the patent costs were determined to have a fair value of $0 as of December 31, 2020.

As a result, the Company recognized a total impairment charge of $1.1 million in the fourth quarter of 2020, which is included in operating expenses in the accompanying consolidated statement of operations.

Accounts Payable and Accrued Liabilities

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The Company leases office space for a 12-month term with a monthly payment of approximately $10,000 per month for office rent.

The term of the lease was renewed on January 1, 2020 and extends through December 31, 2020.

The future minimum lease payments required under the non-cancellable operating leases for 2020 total approximately $180,000.

The Company entered into a new lease on January 1, 2021 through December 31, 2021.

The future minimum lease payments required under the non-cancellable operating leases for 2021 total approximately $0.1 million.

Total rent expense for the years ended December 31, 2020 and 2019 was $0.1 million.

A former Chief Financial Officer of the Company filed a complaint against the Company with the US Occupational Safety and Health Administration (“OSHA”) on March 9, 2015.

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On September 6, 2019, the Company filed a motion for summary decision seeking a decision in its favor as a matter of law.

There has been no decision on this motion as of the date of these consolidated financial statements.

The motion for summary judgement was denied on September 30, 2020.

As of December 31, 2020 and 2019, legal fees of approximately $13,000 and $6,000 were owed, respectively, and are expected to be paid in full by the Company’s insurance carriers.

Filing of Arbitration

On November 18, 2019, the Company delivered a notice of termination of the RDSA to Framatome, thereby terminating the RDSA, based on the Company’s assertion that Framatome materially breached certain material terms of the RDSA, relating to its invoicing obligations, as well as a failure of the escalation process under the RDSA to agree to a budget commitment for 2019-2020.

Framatome had contested the Company’s right to terminate the RDSA, raised questions as to the Company’s rights relating to their co-owned intellectual property and the Company’s right to conduct certain research and development activities, and reserved its right to seek compensation from the Company.

On this basis and based on the Company’s assertion that the conduct of Framatome prevented Enfission from functioning and progressing towards its goals, on February 7, 2020, the Company had filed a request for arbitration (the “Arbitration Request”) in the International Court of Arbitration of the International Chamber of Commerce against Framatome.

The Company undertook this action in order to obtain, inter alia, a declaration that the RDSA was validly terminated and was no longer in force, and to obtain compensation for the damages incurred.

Following the termination of the RDSA and the subsequent filing of the Arbitration Request, Lightbridge had reduced its research and development activities as it is no longer conducting research and development activities with Framatome and Enfission.

On April 3, 2020, Framatome submitted its answer to the Arbitration Request, disputing the Company’s claims, setting out its own counterclaims against the Company and its request for relief sought from the International Court of Arbitration.

On January 17, 2021, the Company filed a petition for judicial dissolution of Enfission in the Court of Chancery of the State of Delaware, requesting that the Court enter an order dissolving Enfission and directing that the business and affairs of Enfission be wound up, among other things.

The Company’s Board of Directors and management determined in November 2019 that it was advisable and in the best interest of the Company and its shareholders to take the necessary steps to dissolve Enfission.

Enfission has been inactive for over a year and was dissolved on March 23, 2021.

The Company will withdraw its petition for judicial dissolution of Enfission on file with the Court of Chancery of the State of Delaware.

On February 11, 2021, Lightbridge and Framatome reached a settlement agreement.

Subsequent Events, regarding the settlement of these disputes and accrued legal settlement costs.

Research and Development Costs

Lightbridge total corporate research and development costs, included in the caption research and development expenses in the accompanying consolidated statement of operations amounted to approximately $2.7 million and $3.5 million for the years ended December 31, 2019 and 2018, respectively.

Related Party Transactions regarding consulting fees charged to Enfission for research and development expenses incurred by Lightbridge on behalf of Enfission.

Lightbridge’s total corporate research and development costs, included in the caption research and development expenses in the accompanying consolidated statement of operations, amounted to approximately $0.9 million and $2.7 million for the years ended December 31, 2020 and 2019, respectively.

Related Party Transactions, regarding consulting fees charged to Enfission for research and development expenses incurred by Lightbridge on behalf of Enfission in 2019.

On December 19, 2019, the Company was awarded a voucher from the U.S.

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The scope of the project includes experiment design for irradiation of Lightbridge metallic fuel material samples in the Advanced Test Reactor (ATR) at INL.

The project is anticipated to commence in the first half of 2020.

The total project value is approximately $846,000, with three-quarters of this amount funded by DOE for the scope performed by INL.

No payments related to the voucher were received by INL for the year ended December 31,2019.

On December 22, 2017, the US enacted the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed US tax law.

The Act lowered the Company’s US statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income.

The Tax Act also created a new minimum tax on certain future foreign earnings.

The Tax Act will impact the Company’s income tax expense (benefit) from continuing operations in future periods (approximate 26% effective combined federal and state corporate tax rate).

The Company has recorded a full valuation allowance on its net deferred tax assets, therefore any impact on the value of the Company’s deferred tax assets will be offset by a change in the valuation allowance.

On April 22, 2020, the Company entered into a Cooperative Research and Development Agreement (CRADA) with Battelle Energy Alliance, LLC, the operating contractor of INL, in collaboration with DOE.

Signing the CRADA was the last step in the contracting process to formalize a voucher award from the GAIN program.

The project has commenced in the second quarter of 2020.

The total project value is approximately $846,000, with three-quarters of this amount funded by DOE for the scope performed by INL and the remaining amount funded by Lightbridge, by providing in-kind services to the project.

For the year ended December 31, 2020, approximately $73,000 of work was completed by INL that caused the DOE to incur payment obligations related to the GAIN voucher.

This amount was recorded as grant income in Other Operating Income (Loss) line item of the consolidated statement of operations and the corresponding amount as research and development expenses.

No work was completed by INL for the year ended December 31, 2019.

The Company completed a contract extension for the INL GAIN voucher in January 2021.

The period of performance now runs through September 30, 2021.

The 2020 and 2019 annual effective tax rate is estimated to be a combined 25% for the combined US federal and state statutory tax rates.

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The significant components of deferred tax assets (at an approximate 25% effective tax rate) as of December 31, 2020 and 2019, respectively, are as follows.

Deferred Tax Assets (rounded in millions)

Deferred Tax Assets consisted of the following (rounded in millions):

Capitalized start-up costs

Stock-based compensation

Patent impairment provision

Accrued legal settlement

Partnership basis differences

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The Company has a net operating loss carry-forward for federal and state tax purposes of approximately $96.0 million at December 31, 2020, that is potentially available to offset future taxable income.

The TaxAct changes the rules on NOL carryforwards.

The Tax Cuts and Jobs Act (the “Tax Act”) changes the rules on NOL carryforwards.

The 20-year limitation was eliminated for losses incurred after January 1, 2018, giving the taxpayer the ability to carry forward losses indefinitely.

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The $96.0 million available at December 31, 2020 includes $33.7 million of post 2017 NOLs without expiration dates and $62.3 million of pre-2018 NOLs expiring from 2024 to 2037.

The NOL’s expiring in the next 5 years total approximately $0.4 million.

For financial reporting purposes, no deferred tax asset was recognized because at December 31, 2019 and 2018, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused.

The NOLs expiring in the next 5 years total approximately $12.0 million.

For financial reporting purposes, no deferred tax asset was recognized because as of December 31, 2020 and 2019, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible.

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Upon review of the ownership shifts, there has not been an ownership change as defined under Section 382.

The reconciliation between income taxes (benefit) at the US and State statutory tax rates of approximately 26% and the amount recorded in the accompanying consolidated financial statements is as follows (rounded in millions):

The reconciliation between income taxes (benefit) at the US and State statutory combined tax rates of approximately 25% and the amount recorded in the accompanying consolidated financial statements is as follows (rounded in millions):

Tax benefit at US federal statutory rates

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Tax benefit from federal and state R&D tax credits

Increase (decrease) in valuation allowance

Increase in valuation allowance

Total provision for income tax benefit

Stockholders’ Equity and Stock-Based Compensation

At December 31, 2019, the Company had 3,252,371 common shares outstanding, also outstanding were warrants relating to 70,361 shares of common stock, stock options relating to 518,551 shares of common stock, 757,770 shares of Series A convertible preferred stock convertible into 63,148 shares of common stock (plus accrued dividends of $556,390 relating to an additional 16,890 common shares), and 2,666,667 shares of Series B convertible preferred stock convertible into 222,222 shares of common stock (plus accrued dividends of $569,181, relating to an additional 31,621 common shares), all totaling, 4,175,164 shares of common stock and all common stock equivalents, including accrued preferred stock dividends, outstanding at December 31, 2019.

At December 31, 2018, there were 2,738,508 common shares outstanding, and there were also outstanding warrants relating to 70,361 shares of common stock, stock options relating to 467,013 shares of common stock, 813,624 shares of Series A convertible preferred stock convertible into 67,802 shares of common stock (plus accrued dividends of $407,382 relating to an additional 12,367 common shares), and 2,666,667 shares of Series B convertible preferred stock convertible into 222,222 shares of common stock (plus accrued dividends of $262,856, relating to an additional 14,603 common shares), all totaling 3,592,876 shares of common stock and all common stock equivalents, including accrued preferred stock dividends, outstanding at December 31, 2018.

At December 31, 2020, the Company had 6,567,110 common shares outstanding.

Also outstanding were warrants relating to 70,361 shares of common stock, stock options relating to 515,847 shares of common stock, 243,800 restricted shares units of common stock, 699,878 shares of Series A convertible preferred stock convertible into 58,323 shares of common stock (plus dividends of $691,120 relating to an additional 20,980 common shares), and 2,666,667 shares of Series B convertible preferred stock convertible into 222,222 shares of common stock (plus accrued dividends of $897,518, relating to an additional 49,862 common shares), all totaling 7,748,505 shares of common stock and all common stock equivalents, including accrued preferred stock dividends, outstanding at December 31, 2020.

At December 31, 2019, the Company had 3,252,371 common shares outstanding.

Also outstanding were warrants relating to 70,361 shares of common stock, stock options relating to 518,551 shares of common stock, 757,770 shares of Series A convertible preferred stock convertible into 63,148 shares of common stock (plus dividends of $556,390 relating to an additional 16,890 common shares), and 2,666,667 shares of Series B convertible preferred stock convertible into 222,222 shares of common stock (plus accrued dividends of $569,181, relating to an additional 31,621 common shares), all totaling 4,175,164 shares of common stock and all common stock equivalents, including accrued preferred stock dividends, outstanding at December 31, 2019.

Common Stock Equity Offerings

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Due to the offering limitations currently applicable to the Company under General Instruction I.B.6.

of Form S-3 and the Company’s public float as of May 28, 2019, and in accordance with the terms of the sales agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $13,500,000 through this prospectus supplement.

On March 30, 2018, the Company entered into an at-the-market issuance sales agreement with B.

Riley FBR, Inc.

Riley”) that superseded the prior at-the market agreement with B.

Riley (collectively “2018 ATM”), pursuant to which the Company could issue and sell shares of its common stock from time to time through B.

Riley as the Company’s sales agent.

Effective March 29, 2019, the Company and B.

Riley terminated this 2018 ATM agreement.

Sales under the 2019 ATM and under the 2018 ATM for the year ended December 31, 2019 were 508,063 shares (pre-split:

approximately 6.1 million shares).

Net proceeds received from the ATM sales during the year ended December 31, 2019 were $3.8 million.

On October 9, 2020, the Company updated the aggregate amount that may be issued and sold under the 2019 ATM from $13.5 million to approximately $14.7 million by filing a prospectus supplement pursuant to which the Company registered an additional approximate $1.2 million of shares of common stock.

All the 2019 ATM available proceeds were sold during the year ended December 31, 2020.

The Company sold 3.3 million shares under the ATM for the year ended December 31, 2020.

Net proceeds received from the ATM sales during the year ended December 31, 2020 were approximately $12.3 million.

The Company records its ATM sales on a settlement date basis.

Sales under the 2018 ATM for the year ended December 31, 2018 were 1,567,637 shares (pre-split:

approximately 18.8 million shares).

Net proceeds received from the ATM sales during the year ended December 31, 2018 were $28.8 million.

The Company sold 0.5 million shares (post-split) under the ATM for the year ended December 31, 2019.

Net proceeds received from the ATM sales during the year ended December 31, 2019 were approximately $3.8 million.

The Company records its ATM sales on a settlement date basis.

Preferred Stock Equity Offerings

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The holders of the Series B Preferred Stock do not have the ability to require the Company to redeem the Series B Preferred Stock.

The Company has not redeemed any of the outstanding Series B Preferred Stock during the year ended December 31, 2019.

The Company has not redeemed any of the outstanding Series B Preferred Stock during the years ended December 31, 2020 and 2019.

The Company has the option of forcing the conversion of all or part of the Series B Preferred Stock if at any time the average closing price of the Company’s common stock for a thirty-trading day period is greater than $65.88 prior to August 2, 2019 or greater than $98.82 at any time.

The Company can exercise this option only if it also requires the conversion of the Series A Preferred Stock in the same proportion as it is requiring of the Series B Preferred Stock.

The Company did not force the conversion of any of the outstanding Series B Preferred Stock during the year ended December 31, 2019.

The Company did not force the conversion of any of the outstanding Series B Preferred Stock during the years ended December 31, 2020 and 2019.

Of the $4.0 million proceeds, approximately $0.3 million was allocated to the warrants with the remaining $3.7 million allocated to the Series B Preferred Stock.

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At $28.08 per share the common stock into which the Series B Preferred Stock was initially convertible was valued at approximately $6.2 million.

This amount was compared to the $3.6 million of proceeds allocated to the Series B Preferred Stock to indicate that a BCF of approximately $2.6 million existed at the date of issuance, which was immediately accreted as a deemed dividend because the conversion rights were immediately effective.

This deemed dividend is included on the statement of operations for the year ended December 31, 2018.

This amount was compared to the $3.7 million (rounded) of proceeds allocated to the Series B Preferred Stock to indicate that a BCF of approximately $2.6 million existed at the date of issuance, which was immediately accreted as a deemed dividend because the conversion rights were immediately effective.

Additionally, comparison of the original $1.50 conversion price prior to the one-for-twelve reverse stock split on October 21, 2019 of the PIK dividends to the $2.34 commitment date fair value per share on January 30, 2018 indicates that each PIK dividend will accrete $0.84 of BCF as an additional deemed dividend for every $1.50 of PIK dividend accrued.

Total deemed dividends for this PIK dividend for the years ended December 31, 2019 and 2018 were approximately $0.2 million and $0.1 million, respectively.

The accumulated dividend (unpaid) at December 31, 2019 and 2018 was approximately $0.6 million and $0.3 million, respectively.

The Series B Preferred Shares outstanding as of December 31, 2019 was 2,666,667 shares with an aggregate liquidation preference of approximately $4.6 million, including accumulated dividends, while the Series B Preferred Shares outstanding as of December 31, 2018 was 2,666,667 shares with an aggregate liquidation preference of approximately $4.3 million, including accumulated dividends.

Total deemed dividends for this PIK dividend for the years ended December 31, 2020 and 2019 were approximately $0.2 million.

The accumulated PIK dividends (unpaid) at December 31, 2020 and 2019 was approximately $0.9 million and $0.6 million, respectively.

The Series B Preferred Shares outstanding as of December 31, 2020 and 2019 was 2,666,667 shares with an aggregate liquidation preference of approximately $4.9 million and $4.6 million, including the accumulated dividends at December 31, 2020 and 2019, respectively.

Series A Preferred Stock - Securities Purchase Agreement

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The Company has the option of forcing the conversion of the Series A Preferred Stock if the trading price for the Company’s common stock is more than two times the applicable conversion price (approximately $32.94 per share) before August 2, 2019, or if the trading price is more than three times the applicable conversion price.

The Company has not redeemed any of the outstanding Series A Preferred Stock during the year ended December 31, 2019.

The Company has not redeemed any of the outstanding Series A Preferred Stock during the years ended December 31, 2020 and 2019 and from the date of issuance.

The Series A Preferred Stock was initially convertible into 1,020,000 shares of common stock (now convertible into 85,000 common shares when adjusted for the one-for-twelve reverse stock split on October 21, 2019).

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Additionally, comparison of the $2.7451, original conversion price of the PIK dividends prior to the one-for-twelve reverse stock split on October 21, 2019, to the $3.315 commitment date fair value per share indicates that each PIK dividend will accrete $0.5699 of BCF as an additional deemed dividend for every $2.7451 of PIK dividend accrued.

Total deemed dividends for this PIK dividend for the years ended December 31, 2019 and 2018 were approximately $38,000 and $41,000, respectively.

Total deemed dividends for this PIK dividend for the years ended December 31, 2020 and 2019 were approximately $38,000.

The holders of the Series A Preferred Stock have no voting rights.

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The holders of the Series A Preferred Stock do not have the ability to require the Company to redeem the Series A Preferred Stock.

On April 30, 2018, the holder of the Series A Preferred Shares converted 111,260 preferred shares into 10,407 common shares.

On September 30, 2018, the holder of the Series A Preferred Shares were issued 61 common shares in payment of the dividend for the month of April 2018.

On the same date, the holder of the Series A Preferred Shares converted 95,116 preferred shares into 9,211 common shares.

On April 16, 2019, the holder of the Series A Preferred Shares converted 27,747 preferred shares into the 2,782 common shares.

On October 8, 2019, the holder of the Series A Preferred Shares converted 28,107 preferred shares into the 2,922 common shares.

The accumulated dividend (unpaid) at December 31, 2019 and 2018 was approximately $0.6 million and $0.4 million, respectively.

The Series A Preferred Shares outstanding as of December 31, 2019 was 757,770 shares with an aggregate liquidation preference of approximately $2.6 million, including accumulated dividends, while the Series A Preferred Shares outstanding as of December 31, 2018 was 813,624 shares with an aggregate liquidation preference of approximately $2.6 million, including accumulated dividends.

During the years ended December 31, 2020 and 2019, the Company had the following conversions of the Series A Preferred Stock to common shares:

Dates of conversion

April 16, 2019

October 8, 2019

February 10, 2020

August 31, 2020

November 30, 2020

The accumulated PIK dividends at December 31, 2020 and 2019 was approximately $0.7 million and $0.6 million, respectively.

The Series A Preferred Shares outstanding as of December 31, 2020 and 2019 were 699,878 shares and 757,770 shares, respectively, with an aggregate liquidation preference of approximately $2.6 million, including accumulated dividends.

The Company’s outstanding warrants at December 31, 2020 and 2019 are below.

These warrants are classified within equity on the consolidated balance sheets.

Outstanding Warrants

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On June 30, 2016, the warrant holders agreed to new warrant terms, which excluded any potential net cash settlement provisions in order to classify them as equity in exchange for a reduced exercise price of $75.00 per share.

Issued to an investment bank and subsequently transferred to a principal of the investment bank regarding the Series B Preferred Stock investment on January 30, 2018, entitling the holder to purchase 11,119 common shares in the Company at an exercise price of $18.00 per share, up to and including January 30, 2021.

Stock-based Compensation – Stock Options

Adoption of 2020 Stock Plan

On March 9, 2020, the Board of Directors adopted the Company’s 2020 Omnibus Incentive Plan (the “2020 Plan”).

On September 3, 2020, the shareholders approved the 2020 Plan to authorize grants of the following types of awards (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock and Restricted Stock Units (“RSUs”), and (d) Other Stock-Based and Cash-Based Awards.

The shares available for award under the 2020 plan authorized a total of 350,000 shares to be available for grant.

On October 28, 2020, the Compensation Committee of the Board granted from the 2020 Plan time-based RSUs to certain of the Company's executive officers, employees, and consultants.

Each RSU represents a contingent right to receive, upon vesting, one share of the Company's Common Stock.

The number of RSUs granted to executive officers, employees and consultants totaled 243,800 shares.

These RSU awards granted vest in three equal installments on each of the first three anniversaries of the grant date, on October 28, 2021, October 28, 2022 and October 28, 2023.

These RSU awards were valued at approximately $656,000, based on the opening price of the Company’s stock on October 28, 2020 at $2.69 per share.

During the year ended December 31, 2020, the Company recorded approximately $39,000 of stock-based compensation expense in connection with the foregoing equity awards in general and administrative expenses.

On October 28, 2020, the Compensation Committee of the Board approved a grant of a total of 21,200 shares of common stock to the Company’s four directors.

All of these common shares will be issued and will vest immediately upon issuance, upon the filing of the Form S-8 with the SEC, to register the underlying shares of the 2020 Stock Plan.

These awards were valued on October 28, 2020 and approximately $57,000 was charged to director’s compensation for the year ended December 31, 2020

2015 Equity Incentive Plan

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These options have a 10-year contractual term, with a fair market value of approximately $2.59 per option with an expected term of 5 years.

During the year ended December 31, 2019, the Company issued 4,247 stock options to a consultant.

Long-Term Non-Qualified Option Grants

In August 2018, the Compensation Committee of the Board of Directors granted long-term non-qualified stock options relating to 146,066 shares to employees, consultants, and directors of the Company.

These stock options have a strike price of $10.80.

Out of this total, approximately 128,355 stock options were issued to employees and consultants.

These non-qualified stock options contain service, performance, and market conditions of which one must be achieved in order for the options to vest.

The service condition vests one-third annually over a 3-year period with accelerated vesting of these options occurring upon applicable performance or market conditions being satisfied by certain milestone dates.

Accelerated vesting of these option grants to employees and consultants would occur upon achievement of either of the following performance and market-based milestones:

The Company’s closing stock price is above $36 per share for 10 consecutive trading days by December 31, 2019.

The Company secures at least $5 million of funding from the Department of Energy by June 30, 2019.

The remaining approximately 17,711 stock options were service based options issued to the directors of the Company that vest over a one-year period on the anniversary date of the grant.

All options granted have a 10-year contractual term.

During the year ended December 31, 2018, the Company also issued 2,638 stock options to a consultant.

During the years ended December 31, 2020 and 2019, the Company granted 7,634 and 4,247 stock options, respectively to one consultant.

The current year stock-based compensation expense for these equity grants were not significant.

The 2019 options issued for the employees, directors, and consultants of the Company were assigned a fair value of $2.59 per share (total fair value of $0.2 million).

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Closing price per share – common stock

In accordance with ASC 718, the 2018 stock option awards with service, market and performance conditions for the employees and consultants were assigned a fair value of $8.28 per share and the awards with service conditions for the directors of the Company were assigned a fair value of $8.40 per share (total fair value of $1.2 million).

The value was determined using a Monte Carlo simulation.

The following assumptions were used in the Monte Carlo simulation model:

Expected volatility

Risk free interest rate

Dividend yield rate

Weighted average years

Closing price per share – common stock

The weighted average years remaining of expected life was itself calculated based on a Monte Carlo simulation under which it was assumed that the options would be exercised, if vested, when the stock reached a price of $54, otherwise they would be exercised at expiration, if in the money.

The Company determined that it was not probable that the outcome of the above performance-based milestone (i.e., DOE funding) would be met prior to the annual vesting dates.

In accordance with ASC 718-10-55-104 the Company then based the amortization period for the compensation expense on the shorter of the explicit service periods or the “derived service period” based solely on the market condition.

Total stock options outstanding at December 31, 2020 and 2019 under the 2006 Stock Plan and 2015 Plan were 515,847 and 518,551, of which 466,121 and 433,678 of these options were vested at December 31, 2020 and 2019, respectively.

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Total stock-based compensation expense

Stock option transactions to the employees, directors and consultants are summarized as follows for the year ended December 31, 2019:

Stock option transactions with employees, directors and consultants are summarized as follows for the year ended December 31, 2020:

Beginning of the year

Fraction option shares to options holders due to the one-for-twelve reverse stock split on October 21, 2019

Adjusted beginning of the year

End of the year

Options exercisable

Stock option transactions of the employees, directors, and consultants are summarized as follows for the year ended December 31, 2018:

Stock option transactions with employees, directors and consultants are summarized as follows for the year ended December 31, 2019:

Beginning of the year

Fraction option shares to options holders due to the one-for-twelve reverse stock split on October 21, 2019

Adjusted beginning of the year

End of the year

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A summary of the status of the Company’s non-vested options as of December 31, 2020 and 2019, and changes during the years ended December 31, 2020 and 2019, is presented below:

Exercise Price

Non-vested – December 31, 2018

Fraction option shares to non-vested options holders due to the one-for-twelve reverse stock split on October 21, 2019

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Non-vested – December 31, 2019

Non-vested – December 31, 2020

The above tables include options issued and outstanding as of December 31, 2020 as follows:

A total of 9,638 non-qualified 10-year options have been issued, and are outstanding, to advisory board members at exercise prices of $8.28 to $336.60 per share.

A total of 393,130 incentive stock options and non-qualified 10-year options have been issued, and are outstanding, to the directors, officers, and employees at exercise prices of $3.82 to $331.80 per share.

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A total of 122,717 non-qualified 10-year options have been issued, and are outstanding, to consultants at exercise prices of $3.82 to $325.20 per share.

As of December 31, 2019, there was approximately $41,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans.

As of December 31, 2020, there was approximately $42,000 of total unrecognized compensation cost related to non-vested stock options granted under the plans.

That cost is expected to be recognized over a weighted-average period of approximately 2.06 years.

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240.01-$519.00

Restricted Stock Awards Outstanding

The following summarizes our RSUs activity:

Total awards outstanding at December 31, 2019

Total shares granted

Total shares vested

Total shares forfeited

Total unvested shares outstanding at December 31, 2020

Scheduled vesting for outstanding RSUs awards at December 31, 2020 is as follows:

Year Ending December 31,

Scheduled vesting

At December 31, 2020, there was approximately $617,000 of net unrecognized compensation cost related to unvested RSUs compensation arrangements.

This compensation is recognized on a straight-line basis resulting in approximately $219,000 of compensation expected to be expensed over the next twelve months, and the total unrecognized stock-based compensation expense having a weighted average recognition period of 2.82 years.

Related Party Transactions

The Company invested approximately $3.5 million in Enfission during the year ended December 31, 2019 and invested approximately $5.6 million in Enfission from Enfission’s date of inception of January 24, 2018 to December 31, 2018.

The Company entered into a management and administrative services agreement with Enfission on January 25, 2018 whereby the Company provided four of its personnel to Enfission, at a rate of $100,000 per person per year, for a total charge to Enfission of $400,000 in 2018.

This $400,000 amount charged to Enfission was recorded as a $200,000 reduction of general and administrative expenses and a $200,000 reduction of research and development expenses for each of the years ended December 31, 2019 and 2018.

The Company also provided research and development consulting services and management services to Enfission.

The total consulting services was $0.7 million and $1.1 million for the years ended December 31, 2019 and 2018, respectively, recorded under the caption “Other income from joint venture” in the accompanying consolidated statement of operations.

Enfission was inactive for the year ended December 31, 2020 and at December 31, 2019.

The Company did not invest in Enfission during the year ended December 31, 2020 and invested approximately $9.2 million in Enfission from Enfission’s date of inception of January 24, 2018 to December 31, 2019.

The Company did not charge Enfission an administrative and management services fee for the year ended December 31, 2020.

The total administrative consulting services was $400,000 for the year ended December 31, 2019.

The Company did not provide Enfission with any research and development consulting services for the year ended December 31, 2020.

The Company provided research and development consulting services and management services to Enfission in 2019.

The total consulting services income was $0.7 million for the year ended December 31, 2019, recorded under “Other income from joint venture” in the accompanying consolidated statement of operations.

At December 31, 2020, there was no receivable due from Enfission.

At December 31, 2019, the total receivable due from Enfission was approximately $0.4 million, which represented management and administrative services Lightbridge charged to Enfission for the year ended December 31, 2019.

Subsequent Events

The Company has evaluated subsequent events from December 31, 2019 to the date the financial statements were issued and has determined the following items to disclose.

Conversion of Series A Preferred Shares to Common Shares

On February 10, 2020, the holder of the Series A Preferred Shares converted 11,875 preferred shares into 1,254 common shares.

Filing of Arbitration - Framatome

On February 7, 2020, the Company has filed a request for arbitration (the “Arbitration Request”) in the International Court of Arbitration of the International Chamber of Commerce against Framatome.

The Company has undertaken this action in order to obtain, inter alia, a declaration that the RDSA dated November 14, 2017, by and among Framatome, Enfission and the Company (as amended by Amendment Number One, dated January 25, 2018, and Amendment Number Two, dated June 20, 2018, the RDSA was validly terminated and is no longer in force, and to obtain compensation for the damages incurred.

As disclosed at Note 3.

Investment in Joint Venture (Investee Losses in Excess of Investment), on November 18, 2019, the Company delivered a notice of termination of the RDSA to Framatome, thereby terminating the RDSA, based on the Company’s assertion that Framatome materially breached certain material terms of the RDSA, relating to its invoicing obligations, as well as a failure of the escalation process under the RDSA to agree to a budget commitment for 2019-2020.

Framatome has contested the Company’s right to terminate the RDSA, raised questions as to the Company’s rights relating to their co-owned intellectual property and the Company’s right to conduct certain research and development activities, and reserved its right to seek compensation from the Company.

On this basis and based on the Company’s assertion that the conduct of Framatome prevented Enfission from functioning and progressing towards its goals, the Company filed a request for arbitration against Framatome on February 7, 2020.

Lightbridge has reduced its research and development activities as it presently focuses on research and development outside the scope of operations of Enfission.

The Company is currently evaluating various research and development options.

Adoption of 2020 Stock Plan

On March 9, 2020, the Board of Directors adopted the Company’s 2020 Equity Incentive Plan (the “2020 Plan”).

The 2020 Plan will become effective upon adoption of the 2020 Plan by the Shareholders at the Annual Shareholder Meeting in 2020.

Sales under the 2019 ATM that were made from February 24, 2020 to March 13, 2020 were approximately 0.1 million shares that totaled net proceeds of approximately $0.4 million.

Settlement of Arbitration and Delaware Action - Accrued Legal Settlement Costs

These legal actions are fully described in Note 7.

On February 11, 2021, the Company entered into a settlement agreement with Framatome SAS and Framatome Inc., resolving the pending claims and counterclaims between the parties in arbitration and judicial proceedings related to the parties’ inactive joint venture, Enfission, LLC.

Under the terms of the Settlement Agreement, all joint venture agreements will be terminated and the joint venture will be dissolved and wound-up following satisfaction of the conditions set forth in the Agreement.

Lightbridge will pay Framatome approximately $4.2 million (USD $1.8 million and €2 million) for outstanding invoices for work performed by Framatome and other expenses incurred by Framatome.

Framatome will destroy all documents and content related to Lightbridge’s intellectual property.

Lightbridge has an obligation to destroy all documents and content related to Framatome’s intellectual property.

Both parties have agreed to destroy all of the Foreground Information, as defined, generated on behalf of Enfission.

The Settlement Agreement secures the parties’ pre-existing intellectual property rights.

There will be no restrictions on Lightbridge’s ability to engage in research and development activities or commercial discussions with other entities going forward.

The settlement amount of $4.2 million was recorded to accrued legal settlement costs on the consolidated balance sheet as of December 31, 2020 and was reflected in other operating income/loss on the consolidated statement of operations for the year ended December 31, 2020.

All the terms in the Settlement Agreement were met by both parties and the settlement payment was made on March 15, 2021.

Enfission was dissolved on March 23, 2021.

The Company will withdraw its petition for judicial dissolution of Enfission on file with the Court of Chancery of the State of Delaware.

Awarded Second Funding Voucher Award from the DOE from the GAIN Program

On March 25, 2021, the Company was awarded a voucher from the DOE’s GAIN program to support development of Lightbridge Fuel™ in collaboration with the PNNL.

The scope of the project is to demonstrate Lightbridge’s nuclear fuel casting process using depleted uranium, a key step in the manufacture of Lightbridge Fuel™.

The project is anticipated to commence in the first half of 2021.

The total project value is approximately $664,000, with three-quarters of this amount funded by DOE for the scope performed by PNNL.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures