What changed in this filing

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Item 9A. Controls and Procedures

2022-03-31 compared with 2021-03-25 · 420 added, 930 removed, 375 unchanged (78% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

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.

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (also our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures are effective.

Management’s Annual Report on Internal Control over Financial Reporting

3 unchanged sentences

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.

Therefore, 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.

Management evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations 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, 2021 and concluded that it was effective, in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Changes in Internal Control over Financial Reporting

1 unchanged sentence

OTHER INFORMATION

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Not applicable.

Directors and Executive Officers of the Registrant

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.

The information required by Item 10 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

Executive Compensation

Summary Compensation Table

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.

Information required by Item 11 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

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

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.

Information required by Item 12 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

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.

Information required by Item 13 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

Principal Accountant Fees and Services

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.

Information required by Item 14 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

Exhibits and Financial Statement Schedules

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All schedules have been omitted because they are not required, not applicable or the information is otherwise included.

(3) Exhibits.

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).

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on August 29, 2016).

Certificate of Designation of Non-Voting Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on August 3, 2016).

Certificate of Amendment to the Certificate of Designation of Non-Voting Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on January 30, 2018).

Certificate of Designation of Non-Voting Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on January 30, 2018).

Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Form 8-K filed by the Company on October 22, 2013).

At-the-Market Equity Offering Sales Agreement, dated May 28, 2019, by and between Lightbridge Corporation 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).

Amendment No.

1 to the At-the-Market Equity Offering Sales Agreement, dated May 28, 2019, by and between Lightbridge Corporation and Stifel, Nicolaus & Company, Incorporated (incorporated by reference to Exhibit 1.1 to the Form 8-K filed by the Company on April 9, 2021).

Articles of Incorporation of the Company, as amended through July 26, 2021 (incorporated by reference to Exhibit 3.1 to the Form 10-Q filed by the Company on August 9, 2021).

Amended and Restated Bylaws of the Company as amended through November 4, 2021 (incorporated by reference to Exhibit 3.1 to the Form 10-Q filed by the Company on November 8, 2021).

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

Description of Securities .

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.

(incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on August 3, 2016).

Investors Rights Agreement, dated January 30, 2018, between the Company and investors identified therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on January 30, 2018).

Lightbridge Corporation 2006 Stock Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on February 21, 2006).

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333-218796, filed on June 16, 2017)

Form of Performance Share Unit Agreement under the 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.5 to the Company’s Registration Statement on Form S-8, File No.

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

Form of Restricted Stock Award Agreement for Employees under the 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.6 to the Company’s Registration Statement on Form S-8, File No.

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

Form of Restricted Stock Award Agreement for Non-Employee Directors under the 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.7 to the Company’s Registration Statement on Form S-8, File No.

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).

Amended Lightbridge Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Appendix A to the definitive proxy statement filed on April 7, 2021).

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

(incorporated by referenced to Exhibit 10.12 to the Form 10-K filed by the Company on March 25, 2021).

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

(incorporated by referenced to Exhibit 10.13 to the Form 10-K filed by the Company on March 25, 2021).

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).

Independent Director Contract, dated August 21, 2006, between the Company and Victor Alessi (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on August 25, 2006).

Independent Director Contract, dated October 10, 2013, between the Company and Kathleen Kennedy Townsend (incorporated by referenced to Exhibit 10.5 to the Form 10-K filed by the Company on March 27, 2014).

Independent Director Contract, dated October 23, 2006, between the Company and Daniel B.

Magraw (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by the Company on October 23, 2006).

(incorporated by referenced to Exhibit 10.14 to the Form 10-K filed by the Company on March 25, 2021).

Employment Agreement, dated August 8, 2018, between the Company and Seth Grae (incorporated by referenced to Exhibit 10.2 to the Form 10-Q filed by the Company on August 9, 2018).

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Form of Indemnification Agreement (August 2018) (incorporated by referenced to Exhibit 10.5 to the Form 10-Q filed by the Company on August 9, 2018).

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

Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Form 10-K filed by the Company on March 15, 2016).

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Section 1350 Certifications.

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):

The following materials from Lightbridge Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline eXtensible Business Reporting Language (XBRL):

(i) the Consolidated Balance Sheets;

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and (v) Notes to Consolidated Financial Statements

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Labels Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

________________

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** Indicates management contract or compensatory plan or arrangement.

‡ Certain portions of this exhibit have been omitted be redacting a portion of text (indicated by asterisks in the text).

Form 10-K Summary

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DECEMBER 31, 2021 and 2020

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( BDO USA, LLP ;

Philadelphia, PA :

PCAOB ID# 243 )

Consolidated Balance Sheets

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Consolidated Statements of Cash Flows

Consolidated Statement of Changes in Stockholders’ Equity

Consolidated Statements of Changes in Stockholders’ Equity

Notes to Consolidated Financial Statements

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Opinion on the Consolidated Financial Statements

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.

We have audited the accompanying consolidated balance sheets of Lightbridge Corporation (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in 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, 2021 and 2020, and the results of its operations and its cash flows for 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, 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.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations since its inception, has negative cash flows from operations, has an accumulated deficit of approximately $137 million as of December 31, 2021 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.

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(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 communication of critical audit matters 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 separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Contributed Services – Research and Development

As described in Notes 1 and 5 to the consolidated financial statements, the Company was awarded two vouchers from the U.S.

Department of Energy’s Gateway for Accelerated Innovation in Nuclear (GAIN) program to support the development of the Company’s metallic nuclear fuels.

During the year ended December 31, 2021, the Company recorded approximately $0.5 million of contributed services.

The contributed research and administrative services received under these GAIN vouchers were evaluated for proper financial statement presentation and it was determined that the fair value of these contributed services should be presented as other operating income with an offsetting charge to research and development expenses on the consolidated statement of operations, rather than presenting contributed services as a reduction of research and development expenses.

We identified the accounting and presentation of contributed services as a critical audit matter.

Our principal considerations included the existence of subjective judgments related to certain provisions of the GAIN voucher agreements in connection with the determination of the accounting and presentation.

Auditing the Company’s accounting and presentation of the contributed services was challenging given the significant audit effort to evaluate the application of the appropriate accounting guidance and the methods used by the Company in applying that guidance.

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.

Reading the GAIN voucher agreements along with management’s technical accounting memo to understand the facts and circumstances within the GAIN voucher agreements.

Evaluating the appropriateness of management’s interpretation on how to apply the relevant accounting guidance for presenting contributed services received under the GAIN vouchers.

Evaluating the appropriateness of management’s accounting policy for contributed services.

/s/ BDO USA, LLP

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Cash and cash equivalents

Other receivable from joint venture

Prepaid expenses and other current assets

Total Current Assets

Patents and trademarks, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Preferred stock, $ 0.001 par value, 10,000,000 authorized shares

Convertible Series A preferred shares, 699,878 shares and 757,770 shares issued and outstanding at December 31, 2020 and 2019, respectively (liquidation preference $2,613,025 and $2,636,764 at December 31, 2020 and 2019, respectively)

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)

Convertible Series A preferred shares, 0 and 699,878 shares issued and outstanding at December 31, 2021 and 2020, respectively (liquidation preference $ 0 and $ 2,613,025 at December 31, 2021 and 2020, respectively)

Convertible Series B preferred shares, 0 and 2,666,667 shares issued and outstanding at December 31, 2021 and 2020 (liquidation preference $ 0 and $ 4,897,517 at December 31, 2021 and 2020, respectively)

Common stock, $ 0.001 par value, 13,500,000 authorized, 9,759,223 shares and 6,567,110 shares issued and outstanding at December 31, 2021 and 2020, respectively

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Total Operating Expenses

Other Operating Income and (Loss)

Other income from joint venture

Equity in loss from joint venture

Total Other Operating Income and (Loss)

Other Operating Income

Distribution from joint venture

Contributed services – research and development

Total Other Operating Income

Total Operating Loss

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Interest income

Foreign currency transaction gain

Total Other Income

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Accumulated Preferred Stock Dividend

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

Additional deemed dividend on preferred stock due to the beneficial conversion feature

Deemed dividend upon induced conversions of Series A and Series B Preferred Stock to common stock

( 3,509,328 )

Net Loss Attributable to Common Shareholders

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

Common stock issued for services and stock-based compensation

Common stock issued for services

Stock-based compensation

Patent write-off and impairment loss

Amortization of patents

Equity in loss from joint venture

Changes in operating working capital items:

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Accrued legal settlement costs

( 4,200,000 )

Net Cash Used in Operating Activities

( 11,036,089 )

( 8,570,421 )

Investing Activities

Investment in joint venture

Patents and trademarks

Net Cash Used in Investing Activities

Financing Activities

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

Net proceeds from the issuances of common stock

Net proceeds from the exercise of stock options

Payments for taxes related to net share settlement of equity awards

Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash and Cash Equivalents

Net Increase in Cash and Cash Equivalents

Cash and Cash Equivalents, Beginning of Year

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Accumulated preferred stock dividend

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

Common stock issued for services

Exchanges of preferred stock Series A and B to common stock

Payment of accrued liabilities with common stock

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

LIGHTBRIDGE CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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Preferred Stock

Balance - December 31, 2018 – revised

Balance - December 31, 2019

$ 133,932,615

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Conversion of Preferred Stock to Common Stock

Common stock issued - registered offerings - net of offering costs

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

Common stock issued for services

Stock-based compensation

Net loss - revised

( 14,417,266 )

Balance - December 31, 2019 – revised

Balance - December 31, 2020

$ 146,353,232

$ ( 129,155,608 )

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

Exchanges of Series A & B Preferred Stock to Common Stock

( 2,666,667 )

Shares issued, net of share settlement for withholding taxes paid upon vesting of restricted stock units

Common stock issued pursuant to restricted stock awards

Common stock issued - registered ATM offerings - net of offering costs

Common stock issued through the exercise of options

Common stock issued to directors and consultants for services

Stock-based compensation

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to Lightbridge Corporation and began its focus on developing and commercializing metallic nuclear fuels.

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

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

Basis of presentation

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.

The Company’s available working capital at December 31, 2021 and as of the date of this filing, does exceed its currently anticipated expenditures through the first quarter of 2022.

However, there are inherent uncertainties in forecasting future expenditures, especially forecasting for uncertainties such as future research and development (R&D) costs and other cash outflows, as well as how the COVID-19 outbreak, including the emergence and spread of variant strains of the virus 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.

These uncertainties include the projected fuel development timeline of 15-20 years to fuel commercialization, the operational costs required to keep the fuel development project on schedule and the various risks of developing and commercializing its nuclear fuel.

These uncertainties combined, 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 R&D expenses, until sufficient capital becomes available.

At December 31, 2021, the Company had approximately $ 24.7 million in cash and had a working capital surplus of approximately $ 24.7 million.

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 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:

The Company’s net cash used in operating activities for the year ended December 31, 2021 was approximately $11.0 million, and current projections indicate that the Company will have continued negative cash flows from operations for the foreseeable future.

Net losses incurred for the year ended December 31, 2021 and 2020 amounted to approximately $7.8 million and $14.4 million, respectively.

As of December 31, 2021, the Company had an accumulated deficit of approximately $ 137.0 million, representative of recurring losses since inception.

The Company will continue to incur losses because it is in the early research and development stage of developing its nuclear fuel.

The Company’s plans to fund future operations include:

(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 future registration statements.

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 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 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.

The Company evaluates on a quarterly basis whether our investment accounted for under the equity method of accounting has an other than temporary impairment (“OTTI”).

An OTTI occurs when the estimated fair value of an investment is below the carrying value and the difference is determined not likely to be recoverable.

This evaluation requires significant judgment regarding, but not limited to, the severity and duration of the impairment;

the ability and intent to hold the security until recovery;

financial condition, liquidity, and near-term prospects of the issuer;

specific events;

and other factors.

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.

(2) additional funding through new relationships to help fund future R&D costs;

and (3) seeking other sources of capital, including grants from the federal government.

The Company’s current shelf registration statement on Form S-3 was filed with the SEC on March 25, 2021, registering the sale of up to $75 million of the Company’s securities and declared effective on April 5, 2021.

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

of Form S-3 and the market valuation of our current public float, we may be limited on the amount of funding available under this Form S-3 shelf registration statement in the future.

There can be no assurance as to the future availability of equity capital or the acceptability of the terms upon which financing and capital might become available.

The Company’s future liquidity needs to develop its nuclear fuel are long-term, and the ability to address those needs and 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.

Basis of Consolidation

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All significant intercompany transactions and balances have been eliminated in consolidation.

The Company owns a 50% interest in Enfission;

accounted for using the equity method of accounting (see Note 4.

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

Enfission is deemed to be a variable interest entity (“VIE”) under the VIE model of consolidation because it does not have sufficient funds to finance its operations.

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.

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

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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.

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

Use of Estimates and Assumptions

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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.

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 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.

It is also reasonably possible that the actual grant date value of the stock options vested might have been materially different than the estimated value.

Fair Value of Financial Instruments

The Company’s consolidated financial instruments consist principally of cash and cash equivalents, accounts receivable, and accounts payable.

The Company’s consolidated financial instruments consist principally of cash and cash equivalents, and accounts payable.

The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants.

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The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

In accordance with the provisions of ASC 820, “Fair Value Measurements,” the Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company generally applies the income approach to determine fair value.

This method uses valuation techniques to convert future amounts to a single present amount.

The measurement is based on the value indicated by current market expectations with respect to the future amounts.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value.

The hierarchy gives the highest priority to active markets for identical assets and liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The Company classifies fair value balances based on the observability of those inputs.

The three levels of the fair value hierarchy are as follows:

Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted prices for similar assets or liabilities in active markets, quoted prices for

identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability

Level 3 - Unobservable inputs that reflect management’s assumptions

For disclosure purposes, assets and liabilities are classified in their entirety in the fair value hierarchy level based on the lowest level of input that is significant to the overall fair value measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels.

Quoted market prices were applied to determine the fair value of U.S.

Treasury Bill investments, therefore they were categorized as Level 1 on the fair value hierarchy.

The Company buys and holds short-term U.S.

Treasury Bills to maturity.

Certain Risks, Uncertainties and Concentrations

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.

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.

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 R&D activities required to further enhance and complete the development of its fuel products to a proof-of-concept stage and a commercial stage thereafter.

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 available in the future to continue its fuel development activities, and a failure to do so would have a material adverse effect on the Company’s future R&D 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, 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.

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 short-term and long-term research and development milestones toward commercialization, 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.

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 spread globally beyond its point of origin.

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

The current spread of COVID-19, including the emergence and spread of variant strains of the virus, that is impacting global economic activity and market conditions could lead to adverse changes in the Company’s ability to conduct R&D activities with the United States national labs and others.

The COVID-19 outbreak had impacted our business operations and results of operations for the years ended December 31, 2021 and 2020, which resulted in a delay of our R&D work and reduction of R&D expenses and an increase in general and administrative expenses due to severance payments to former employees.

However, the effects of the pandemic are fluid and changing rapidly, including with respect to vaccine and treatment developments and deployment and potential mutations of COVID-19.

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 future 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, the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” was signed into law.

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.

The CARES Act did not have an impact on the Company’s results of operations, financial condition, and liquidity.

Cash and Cash Equivalents

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

The Company may at times invest its excess cash in interest bearing accounts and U.S.

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.

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It deems this credit risk not to be significant as cash is held by two prominent financial institutions in 2021 and 2020.

The Company buys and holds short-term US Treasury Bills from Treasury Direct to maturity.

US Treasury Bills totaled approximately $13.0 million and $9.0 million at December 31, 2020 and 2019, respectively.

The remaining $8.5 million and $9.0 million at December 31, 2020 and 2019, respectively, are on deposit with one notable financial institution.

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.

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.

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.

The Company buys and holds short-term U.S.

Treasury Bills to maturity.

Treasury Bills totaled approximately $ 9 .0 million and $ 13 .0 million at December 31, 2021 and 2020, respectively.

The remaining $ 15.7 million and $ 8.5 million at December 31, 2021 and 2020, respectively, are on deposit with two notable financial institutions.

Contributed services – research and development

The Company was awarded a grant from the United States Department of Energy which represented contributed services to further the Company’s research and development activities.

The Company concluded that its government grants were not within the scope of ASC Topic 606 as they did not meet the definition of a contract with a customer.

Additionally, the Company concluded that the grants met the definition of a contribution, as the grants were a non-reciprocal transaction.

As such, the Company determined that Subtopic 958-605, Not-for-Profit-Entities-Revenue Recognition applies for these contributed services, even though the Company is a business entity, as guidance in the contributions received subsections of Subtopic 958-605 applies to all entities (NFPs and business entities).

The Company has early adopted Accounting Standards Update 2020-07 in the fourth quarter of 2021, which amends Subtopic 958-605 which further clarifies the presentation and disclosure about contributions.

Subtopic 958-605 requires that nonfinancial assets, which includes services, such as the research and development services provided under the GAIN vouchers described in Note 5, should be shown on a gross method at the fair value of the services contributed, with the contributed services – research and development shown as other operating income and the related costs as a charge to research and development expense, rather than depicting the contributed services – research and development as a reduction of research and development expense.

The fair value of contributed services was determined by the cost of professional time and materials which were charged by the subcontractor who fulfilled the services contributed under the grant award.

The principal market used to arrive at fair value is the market in which the Company operates.

The Company recognized contributed services – research and development of approximately $ 0.5 million for the year ended December 31, 2021 and approximately $ 0.1 million for the year ended December 31, 2020.

Through September 30, 2020, patents were stated on the consolidated balance sheets at cost.

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

These costs were 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 were expensed.

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

During the years ended December 31, 2021 and 2020, 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.

We identified impairment indicators for our patents in the fourth quarter of 2020.

We performed a recoverability test of the capitalized patents costs using an undiscounted cash flow method.

The Company, after performing the recoverability test showing total negative cash flows, then determined the fair value of the patent costs using both the income approach and the cost approach methods.

The fair value of our patent costs, under both these valuation methods, was zero.

As a result, the Company recognized a total impairment charge of $ 1.1 million for the year ending December 31, 2020.

Beginning January 1, 2021, patent filing fees with patent granting agencies and legal fees directly relating to those filings, incurred to file patent applications were expensed as the Company believes that there is not a high likelihood that there will be a future economic benefit associated with the patents, due to the uncertainties in the current fuel development timelines and the patents being commercialized.

The Company continues to expense 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.

Therefore, as of December 31, 2021, and December 31, 2020 the carrying value of the patents on the balance sheets was zero.

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.

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

The Company performed an impairment test in the fourth quarter of 2021 and 2020 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 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.

The Company recognizes operating lease right of use assets and liabilities at commencement date based on the present value of the future minimum lease payments over the lease term.

As of December 31, 2021 and December 31, 2020, the carrying value of trademarks was approximately $0.1 million.

In accordance with ASU 2016-02, Leases (Topic 842) , which requires recognition of most lease arrangements on the balance sheet, the Company recognizes operating lease right of use assets and liabilities at commencement date based on the present value of the future minimum lease payments over the lease term.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet in accordance with the short-term lease recognition exemption.

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See Note 4 for additional information.

Beneficial Conversion Feature of Convertible Preferred Stock

The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with ASC 470-20, Debt with Conversion and Other Options.

The Beneficial Conversion Feature (“BCF”) of convertible preferred stock is normally characterized as the convertible portion or feature that provides a rate of conversion that is below market value or in-the-money when issued.

The Company records a BCF related to the issuance of convertible preferred stock when issued.

Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved.

To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price.

If the convertible instrument is issued in a basket transaction (i.e.

issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket.

The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument.

The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible.

The effective conversion price is then compared to the per share fair value of the underlying common shares on the commitment date.

The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock.

This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date.

The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over a period specified in the guidance.

In the case of both the Series A and Series B preferred shares, the holders of the shares had the right to convert beginning at the date of issuance with the result that the accretion of the related BCF was recognized immediately at issuance.

When the Company’s preferred stock has dividends that are paid-in-kind (“PIK”) (i.e.

the holder is paid in additional shares or liquidation/dividend rights), and either (1) neither the Company nor the holder has the option for the dividend to be paid in cash, or (2) the PIK amounts do not accrue to the holder if the instrument is converted prior to the PIK amount otherwise being accrued or due, additional BCF is recognized as dividends accrue to the extent that the per share fair value of the underlying common shares at the commitment date exceeds the conversion price.

Common Stock Warrants

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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

The Company follows Subtopic 450-20 of the FASB ASC to report accounting for contingencies.

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.

The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.

If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

The Company’s legal costs associated with contingent liabilities are recorded to expense as incurred.

Stock-Based Compensation

The stock-based compensation expense incurred by Lightbridge for employees and directors in connection with its equity incentive plan is based on the employee model of ASC 718, and the fair value of the options is measured at the grant date.

Under ASC 718 employee is defined as, “An individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S.

Tax Regulations.” Our consultants do not meet the employer employee relationship as defined by the IRS and therefore were accounted for under ASC 505-50.

On July 1, 2018, the Company adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting.

Beginning with the adoption of ASU 2018-07 options granted to our consultants are accounted for in the same manner as options issued to employees.

In accordance with ASU 2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting , options granted to our consultants are accounted for in the same manner as options issued to employees.

Awards with service-based vesting conditions only - Expense recognized on a straight-line basis over the requisite service period of the award.

Awards with performance-based vesting conditions - Expense is not recognized until it is determined that it is probable the performance-based conditions will be met.

When achievement of a performance-based condition is probable, a catch-up of expense will be recorded as if the award had been vesting on a straight-line basis from the award date.

When achievement of a performance-based condition is probable, a catch-up of expense is recorded as if the award had been vesting on a straight-line basis from the award date.

The award will continue to be expensed on a straight-line over the requisite service period basis until a higher performance-based condition is met, if applicable.

Awards with market-based vesting conditions - Expense recognized on a straight-line basis over the requisite service period, which is the lesser of the derived service period or the explicit service period if one is present.

However, if the market condition is satisfied prior to the end of the requisite service period, the Company will accelerate all remaining expense to be recognized.

However, if the market condition is satisfied prior to the end of the requisite service period, the Company accelerates all remaining expense to be recognized.

Awards with both performance-based and market-based vesting conditions - If an award vesting or exercisability is conditional upon the achievement of either a market condition or performance or service conditions, the requisite service period is generally the shortest of the explicit, implicit, and derived service period.

The Company has elected to use the Black-Scholes pricing model to determine the fair value of stock options on the measurement date of the grant for service-based vesting conditions and the Monte-Carlo valuation method for performance-based or market-based vesting conditions.

Shares that are issued to officers on the exercise dates of their stock options may be issued net of the minimum statutory withholding requirements to be paid by us on behalf of our employees.

As a result, the actual number of shares issued will be fewer than the actual number of shares exercised under the stock option.

Recently Adopted Accounting Pronouncements

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 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 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.

The Company elected to use the Black-Scholes pricing model to determine the fair value of stock options on the measurement date of the grant for service-based vesting conditions and the Monte-Carlo valuation method for performance-based or market-based vesting conditions for stock options.

The Company estimates forfeitures at the time of grant and revises the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The forfeiture rate estimate used for all equity awards was zero, based on the experience of the Company having an insignificant historical forfeiture rate.

Shares that are issued to employees on the exercise dates of the stock options may be issued net of the required tax withholding requirements to be paid by the Company regarding its tax withholding obligations.

As a result, the actual number of shares issued are fewer than the actual number of shares exercised under the stock option or on the dates of vesting of Restricted Stock Unit (RSU) grants.

A Restricted Stock Award (“RSA”) is an award of our shares that when they can vest based on service conditions, have full voting rights and dividend rights, but are restricted with regard to sale or transfer.

As such, they are shown as shares issued and outstanding.

These restrictions lapse over the vesting period, but the shares are forfeited and returned to the Company if they do not vest.

The RSAs are included in common stock issued and outstanding, are considered contingently issuable in the calculation of weighted-average shares outstanding for purposes of calculating earnings per share.

The consolidated statement of changes in stockholders’ equity shows the initial grant of RSAs as a reclassification from additional paid-in capital to common stock, with any compensation expense related to the RSAs included in stock-based compensation.

Other RSAs have only performance conditions.

These RSAs to not have voting and dividend rights until they vest as ordinary common shares.

Recent Accounting Pronouncements

In September 2020, the FASB issued ASU 2020-07, Not-for-Profit Entities (Topic 958) which is intended to update improve financial reporting by providing new presentation and disclosure requirements about contributed nonfinancial assets, including services, and includes additional disclosure requirements for recognized contributed services.

The ASU is intended principally for Not-for-Profit entities, but do encompass these types of contributions received by business entities, such as Lightbridge.

The amendments did not change the recognition and measurement requirements in Subtopic 958-605 and therefore did not change the Company’s recognition and presentation of the contributed services – research and development.

ASU 2020-07 is effective for fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after June 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.

As discussed above, the Company has elected to early adopt this standard in the fourth quarter of 2021, as disclosed.

In August 2020, the FASB issued ASU 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) , which simplifies the complexity associated with applying U.S.

GAAP for certain financial instruments with characteristics of liabilities and equity.

This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt:

Debt with Conversion and Other Options , that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock;

(2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification;

and (3) revises the guidance in ASC 260, Earnings Per Share , to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

Adoption is either through a modified retrospective method or a full retrospective method of transition.

The adoption of this standard will not materially impact the Company’s consolidated financial statements in 2022.

The FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326) .

This standard requires a financial asset to be presented at the net amount expected to be collected.

The financial assets of the Company in scope of ASU 2016-13 will primarily be accounts receivable.

The Company will estimate an allowance for expected credit losses on accounts receivable that result from the inability of customers to make required payments.

In estimating the allowance for expected credit losses, consideration will be given to the current aging of receivables, historical experience, and a review for potential bad debts.

The Company will adopt this guidance in the first quarter of fiscal 2023 and does not expect the adoption to have an impact on its results of operations, financial position, and disclosures.

In January 2017, the FASB issued ASU No.

2017-04, Simplifying the Test for Goodwill Impairment, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test.

The ASU permits an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and to 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.

This ASU was effective beginning the first day of the 2021 fiscal year.

The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

Net Loss Per Share

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.

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 period.

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Stockholders’ Equity and Stock-Based Compensation).

The common stock equivalents of performance-based milestone compensation arrangements are included as potentially dilutive shares only if the performance condition has been met as of the end of the reporting period.

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):

The following table sets forth the computation of the basic and diluted loss per share (dollars in millions, except share data):

Net loss attributable to common stockholders

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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:

The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the years noted below, as they would have been anti-dilutive due to the Company’s losses at December 31, 2021 and 2020 and also because the exercise price of certain of these outstanding securities was greater than the average closing price of the Company’s common stock.

Warrants outstanding

Stock options outstanding

RSAs outstanding

RSUs outstanding

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

Enfission, LLC

Ownership Interest

Carrying Amount

Total cumulative contributions

Share of the loss in investment in Enfission

Equity losses in excess of investment

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.

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.

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.

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

Total liabilities

Total liabilities and equity

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

General and administrative expenses

Total Operating Loss

Loss from operations

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).

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 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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Trade payables

Accrued expenses

Accrued legal and consulting expenses

Commitments and Contingencies

Operating Leases

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

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.

The Company leased office space for a 12 -month term from January 1, 2022 through December 31, 2022 with a monthly payment of approximately $ 8,000 .

The future minimum lease payments required under the Company’s non-cancellable operating leases for 2022 total approximately $ 96,000 .

Total rent expense for the year ended December 31, 2021 and 2020 was approximately $ 0.1 million for both years.

Contingency Settlements

Settlement of Arbitration and Dissolution of Enfission LLC

On February 11, 2021, the Company entered into a settlement agreement (the “Settlement Agreement”) with Framatome SAS and Framatome Inc.

(together, “Framatome”), 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 were terminated, and the joint venture was dissolved on March 23, 2021.

The Company accrued $ 4.2 million related to the Settlement Agreement at December 31, 2020.

The Company paid Framatome approximately $ 4.2 million for outstanding invoices for work performed by Framatome and other expenses incurred by Framatome on March 15, 2021.

Additionally, the Company recorded an approximate $ 34,000 foreign currency transaction gain related to the settlement payment for the year ended December 31, 2021.

The Company received approximately $ 120,000 as the final cash distribution relating to the dissolution and wind-down of Enfission in December 2021.

Mediation Settlement

A former Chief Financial Officer of the Company filed a complaint against the Company with the U.S.

Occupational Safety and Health Administration (OSHA) on March 9, 2015.

This complaint was dismissed by OSHA in January 2018 without any findings against the Company.

On March 14, 2018, an appeal was filed.

The Company has and will continue to vigorously defend this appeal and believes that this appeal hearing will not result in any findings against the Company.

On March 14, 2018, an appeal was filed with the U.S Department of Labor Office of Administrative Law Judges (OALJ).

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

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.

The complaint was mediated on May 13, 2021 and the parties subsequently reached an agreement to resolve all claims for the total monetary sum of approximately $ 675,000 in exchange for a dismissal of the pending litigation, full release of all claims against the Company, and other conditions.

On July 13, 2021, the settlement agreement was finalized by both parties and the Company applied for court approval by the OALJ assigned to this matter.

The settlement was approved by the OALJ on July 22, 2021.

The Company made the settlement payment and related costs of $ 695,000 and the insurers reimbursed the Company for the settlement payment of $ 663,000 .

The Company bore the costs of $ 32,000 .

The case was final and conclusive.

As of December 31, 2021, legal fees owed in connection with the mediation were paid in full by the Company’s insurance carriers.

As of December 31, 2020, legal fees of approximately $ 13,000 were owed in connection with the mediation and paid by the insurance carriers.

Research and Development Costs

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.

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.

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

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.

The voucher award can only be used to conduct the experiment defined in the CRADA.

The initial total project value was estimated at approximately $ 0.8 million, with three-quarters of this amount expected to be provided by DOE for the scope performed and the remaining amount funded by Lightbridge, by providing in-kind services with no cash obligations to the project.

Because of project staffing issues at INL related to the laboratory’s COVID-19 restrictions and U.S.

export control matters, the Company completed a contract extension for this INL GAIN voucher in January 2021.

The period of performance was extended to September 30, 2021.

All work was completed on this GAIN voucher in the third quarter of 2021.

This experiment design formed the basis of the current and future efforts with the Idaho National Laboratory.

The total final project amount recorded as contributed services – research and development was approximately $ 0.5 million, less than the projected project value amount of $0.8 million.

The primary reasons for this reduction were due to the repurposing of some of its previously completed safety analysis work for other company’s projects that were similar to the conditions of our Company’s project, and was able to use some of their current drop-in capsule design work as the basis for the Company’s sample capsule design work.

For the year ended December 31, 2021, the Company recorded approximately $ 0.4 million of contributed services – research and development for work that was completed that caused the DOE to incur payment obligations related to the GAIN voucher.

The Company has no payment obligations related to the GAIN voucher.

This amount was recorded as contributed services – research and development in the Other Operating Income section of the consolidated statement of operations and the corresponding amount was recorded as research and development expenses.

On March 25, 2021, the Company was awarded a second voucher from the DOE’s GAIN program to support development of Lightbridge Fuel™ in collaboration with the Pacific Northwest National Laboratory (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™.

On July 14, 2021, the Company executed a CRADA with the Battelle Memorial Institute, Pacific Northwest Division, the operating contractor of the PNNL, in collaboration with the DOE.

The total project value is approximately $ 0.7 million, with three-quarters of this amount expected to be provided by DOE for the scope performed and the remaining amount funded by Lightbridge, by providing in-kind services to the project.

The project commenced in the third quarter of 2021 and is expected to be completed by the third quarter of 2022.

For the year ended December 31, 2021, the Company recorded approximately $ 0.1 million of contributed services – research and development, for work that was completed that caused the DOE to incur payment obligations related to the GAIN voucher.

The research and development services provided under the GAIN vouchers are utilized by the Company in its ongoing development of our next generation nuclear fuel technology.

The Company believes that the dollars paid by the DOE to Battelle for the service provided does not differ materially from what the Company would have paid had it directly contracted for these services for its research and development activity.

The 2021 and 2020 annual effective tax rate is estimated to be a combined 25 % for the combined U.S.

federal and state statutory tax rates.

The Company reviews tax uncertainties in light of changing facts and circumstances and adjust them accordingly.

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Accrued legal settlement

Partnership basis differences

Net operating loss carry-forward

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The Company has a net operating loss carry-forward for federal and state tax purposes of approximately $ 109.2 million at December 31, 2021, that is potentially available to offset future taxable income.

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

The Tax Cuts and Jobs Act (the “Tax Act”) changes the rules on net operating loss (NOL) carry-forwards.

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 $109.2 million available at December 31, 2021 includes $46.9 million of post 2017 NOLs without expiration dates and $62.3 million of pre-2018 NOLs expiring from 2024 to 2037.

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.

The timing and manner in which the Company can utilize our net operating loss carryforward and future income tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding the change in ownership of corporations.

Such limitation may have an impact on the ultimate realization of our carryforwards and future tax deductions.

Given the Company’s projections of taxable income for the years between 2024 and 2037, it’s likely these NOLs will expire unused .

For financial reporting purposes, no deferred tax asset was recognized because as of December 31, 2021 and 2020, management currently estimates that it is more likely than not that substantially all of the deferred tax assets, the majority of which are net operating losses that we project currently will be unused.

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

The timing and manner in which the Company can utilize our net operating loss carry-forward and future income tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding the change in ownership of corporations.

Such limitation may have an impact on the ultimate realization of our carry-forwards and future tax deductions.

Section 382 of the Internal Revenue Code (Section 382) imposes limitations on a corporation’s ability to utilize net operating losses if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period.

Any unused annual limitation may be carried over to later years, and the amount of the limitation may under certain circumstances be increased by the built-in gains in assets held by us at the time of the change that are recognized in the five-year period after the change.

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 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

Prior period ownership changes, coupled with the Company’s projections of the lack of taxable income for the foreseeable future, would substantially limit any future benefit to be derived from our NOLs, especially those generated in pre-2018 tax years.

The reconciliation between income taxes (benefit) at the U.S.

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 U.S.

federal statutory rates

Tax benefit at state statutory rates

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Stockholders’ Equity and Stock-Based Compensation

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.

On June 28, 2021, at the Company’s annual shareholder meeting, the shareholders’ approved an amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of common stock from 8,333,333 shares to 13,500,000 shares and an amendment to the Lightbridge Corporation 2020 Omnibus Incentive Plan to increase the number of shares of common stock available for issuance under this Incentive Plan from 350,000 shares to 650,000 shares.

At December 31, 2021, the Company had 9,759,223 common shares outstanding (including outstanding restricted stock awards totaling 188,588 shares).

Also outstanding were warrants relating to 45,577 shares of common stock, stock options relating to 538,713 shares of common stock and performance-based RSA awards of 188,588 shares, all totaling 10,532,101 shares of common stock and all common stock equivalents, outstanding at December 31, 2021.

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 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.

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 accrued 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.

Common Stock Equity Offerings

ATM Offerings

On May 28, 2019, the Company entered into an at-the-market equity offering sales agreement (“ ATM”) with Stifel, Nicolaus & Company, Incorporated (“Stifel”), pursuant to which the Company may issue and sell shares of its common stock from time to time through Stifel as the Company’s sales agent.

Sales of the Company’s common stock through Stifel, if any, will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, pursuant to the Company’s effective shelf registration statement on Form S-3 (File No.

333-223674) filed on March 15, 2018 and declared effective March 23, 2018.

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.

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.

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.

On May 28, 2019, the Company entered into an at-the-market (ATM) equity offering sales agreement with Stifel, Nicolaus & Company, Incorporated (Stifel), which was amended on April 9, 2021, pursuant to which the Company may issue and sell shares of its common stock from time to time through Stifel as the Company’s sales agent.

On March 25, 2021, the Company filed a new shelf registration statement on Form S-3, registering the sale of up to $ 75 million of the Company’s securities, which registration statement was declared effective on April 5, 2021.

The Company filed a prospectus supplement, dated April 9, 2021, with the Securities and Exchange Commission pursuant to which the Company offered and sold shares of common stock having an aggregate offering price of up to $ 9.0 million through its ATM.

The Company, after this offering was completed, filed a second prospectus supplement, dated November 19, 2021, with the Securities and Exchange Commission pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to up to $ 20.0 million from time to time under this prospectus supplement, through its ATM.

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

The Company sold approximately 2.0 million shares under the ATM for the year ended December 31, 2021 resulting in net proceeds of approximately $ 14.8 million under the two above-mentioned prospectus supplements filed.

For the year ended December 31, 2020, the Company sold approximately 3.3 million shares under the ATM, respectively, resulting in net proceeds of approximately $ 12.3 million.

Preferred Stock Equity Offerings

Series A Preferred Stock - Securities Purchase Agreement

On August 2, 2016, the Company issued 1,020,000 shares of newly created Non-Voting Series A Convertible Preferred Stock (the “Series A Preferred Stock”) to General International Holdings, Inc.

for $ 2.8 million or approximately $ 2.75 per share.

Dividends accrued on the Series A Preferred Stock at the rate of 7 % per year and was paid in-kind through an increase in the liquidation preference per share.

The liquidation preference, initially $ 2.7451 per share of Series A Preferred Stock, was the base that was also used to determine the number of common shares into which the Series A Preferred Stock would have converted as well as the calculation of the 7% dividend.

Each share of Series A Preferred Stock was convertible at the option of the holder into such number of shares of the Company’s common stock equal to the liquidation preference divided by the conversion price of $ 32.94 per share subject to adjustments in the case of stock splits and stock dividends.

The holder of the Series A Preferred Stock was also entitled to participating dividends whenever dividends in cash, securities (other than shares of the Company’s common stock) or property were paid on common shares.

The amount of the dividends was the amount to which the holder would have been entitled if all shares of Series A Preferred Stock had been converted to common stock immediately prior to the record date.

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

The average of the high and low market prices of the common stock on August 6, 2016, the date of the closing of the sale of the Series A Preferred Stock, was approximately $ 39.78 per share.

At $ 39.78 per share the common stock into which the Series A Preferred Stock was initially convertible was valued at approximately $ 3.4 million.

This amount was compared to the $ 2.8 million of proceeds of the Series A Preferred Stock to indicate that a beneficial conversion feature (BCF) of approximately $ 0.6 million existed at the date of issuance in 2016, which was immediately accreted as a deemed dividend because the conversion rights were immediately effective.

Additionally, comparison of the $ 2.7451 original conversion price of the payment-in-kind (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 indicated that each PIK dividend would accrete $ 0.5699 of BCF as an additional deemed dividend for every $ 2.7451 of PIK dividend accrued.

On April 8, 2021 and August 31, 2021, the holder of the Series A Preferred Shares converted 36,111 preferred shares into 4,228 common shares in total for the payment of PIK dividends.

Exchange of Outstanding Series A Convertible Preferred Stock for Common Shares

On October 29, 2021, the Company entered into an exchange agreement with General International Holdings, Inc., the holder of all of the outstanding Series A Preferred Stock, pursuant to which General International Holdings, Inc.

delivered to the Company all of the outstanding Series A Preferred Stock in exchange for 262,910 shares of the Company’s common stock ($ 10 per share induced conversion price), without any cash payments by either party.

The exchange was effected without registration under the Securities Act of 1933, as amended, pursuant to the exemption from registration set forth in Section 3(a)(9) of the Securities Act.

The liquidation value of this preferred stock on the date of exchange to common shares was $ 2.6 million (including the accrued dividend of $ 0.8 million).

To induce this exchange, the Company offered to exchange shares of common stock at a rate of $10 per share, compared to a conversion rate of $ 32.94 per share of common stock pursuant to the terms of the Series A Preferred Stock.

This resulted in the total issuance of 262,910 shares of common stock upon the exchange, which included an additional 183,098 shares of common stock compared to the number of shares that would have been issuable upon conversion of all of the outstanding Series A Preferred Stock.

In accordance with ASC 470-20, the Company accounted for the exchange as an induced conversion based on the short period of time the exchange offer was open and that all equity securities pursuant to the original terms were exchanged.

Pursuant to this accounting guidance, the Company evaluated the fair value of the incremental 183,098 common shares issued to the Series A Preferred Stockholders.

Based on the $ 9.57 closing stock price on October 29, 2021, the Company recorded to additional paid-in capital a deemed dividend of $ 1.8 million at the date of the exchange.

This amount was presented in the accompanying consolidated statement of operations under the caption deemed dividend upon exchange of Series A and Series B Preferred Stock to common stock and shown as an adjustment to net loss, to arrive at net loss attributable to common stockholders.

Series B Preferred Stock - Securities Purchase Agreement

On January 30, 2018, the Company issued 2,666,667 shares of newly created Non-Voting Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and associated warrants to purchase up to 55,555 shares of the Company’s common stock to the several purchasers for approximately $4.0 million or approximately $ 1.50 per share of Series B Preferred Stock and associated warrant.

Dividends accrue on the Series B Preferred Stock at the rate of 7% per year and will be paid in-kind through an increase in the liquidation preference per share.

The liquidation preference, initially $1.50 per share of Series B Preferred Stock, is the base that is also used to determine the number of common shares into which the Series B Preferred Stock will convert as well as the calculation of the 7% dividend.

Each share of Series B Preferred Stock is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the liquidation preference divided by the conversion price of $18 per share subject to adjustments in the case of stock splits and stock dividends.

Holders of the Series B Preferred Stock are also entitled to participating dividends whenever dividends in cash securities (other than shares of the Company’s common stock paid on shares of common stock) or property are paid on common shares or shares of Series A Preferred Stock.

The amount of the dividends will equal the amount to which the holder would be entitled if all shares of Series B Preferred Stock had been converted to common stock immediately prior to the record date.

The warrants had a per share of common stock exercise price of $22.50.

The warrants were exercisable upon issuance and expired six months after issuance on July 30, 2018.

Warrants were also issued to the investment bank who introduced these investors, which were subsequently transferred to the principal of the investment bank, entitling the holder to purchase 11,119 common shares in the Company at an exercise price of $18 per share, up to and including January 30, 2021.

On February 6, 2017, the Company entered into an agreement with this investment bank.

The agreement calls for monthly retainer payments of $15,000, which are credited against any transaction introductory fee earned by the investment bank.

This agreement calls for a 7% transaction introductory fee and warrants equal to 5% of the total transaction amount, at a strike price equal to the offering price for a three-year term.

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

In addition, as long as the shares of Series A Preferred Stock are outstanding, the Company may not take certain actions without first having obtained the affirmative vote or waiver of the holders of a majority of the outstanding shares of Series B Preferred Stock.

The Company has the option at any time after August 2, 2019 to redeem some or all of the outstanding Series B Preferred Stock for an amount in cash equal to the liquidation preference plus the amount of any accrued but unpaid dividends of the Series B Preferred Stock being redeemed.

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 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 years ended December 31, 2020 and 2019.

Dividends accrued on the Series B Preferred Stock at the rate of 7 % per year and would be paid in-kind through an increase in the liquidation preference per share.

The liquidation preference, initially $ 1.50 per share of Series B Preferred Stock, was the base that was also used to determine the number of common shares into which the Series B Preferred Stock would convert as well as the calculation of the 7 % dividend.

Each share of Series B Preferred Stock was convertible at the option of the holder into such number of shares of the Company’s common stock equal to the liquidation preference divided by the conversion price of $18 per share subject to adjustments in the case of stock splits and stock dividends.

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.

The Series B Preferred Stock was initially convertible into 2,666,667 shares of common stock (now convertible into 222,222 shares of common stock when adjusted for the one-for-twelve reverse stock split on October 21, 2019).

The Series B Preferred Stock was initially convertible into 2,666,667 shares of common stock (convertible into 222,222 shares of common stock when adjusted for the one-for-twelve reverse stock split on October 21, 2019) .

The average of the high and low market prices of the common stock on January 30, 2018, the date of the closing of the sale of the preferred stock, was approximately $ 28.08 per share.

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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, 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

On August 2, 2016, the Company issued 1,020,000 shares of newly created Non-Voting Series A Convertible Preferred Stock (the “Series A Preferred Stock”) to General International Holdings, Inc.

for $2.8 million or approximately $2.75 per share.

Dividends accrue on the Series A Preferred Stock at the rate of 7% per year and will be paid in-kind through an increase in the liquidation preference per share.

The liquidation preference, initially $2.7451 per share of Series A Preferred Stock, is the base that is also used to determine the number of common shares into which the Series A Preferred Stock will convert as well as the calculation of the 7% dividend.

Each share of Series A Preferred Stock is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the liquidation preference divided by the conversion price of $32.94 per share subject to adjustments in the case of stock splits and stock dividends.

Holders of the Series A Preferred Stock are also entitled to participating dividends whenever dividends in cash securities (other than shares of the Company’s common stock) or property are paid on common shares.

The amount of the dividends is the amount to which the holder would be entitled if all shares of Series A Preferred Stock had been converted to common stock immediately prior to the record date.

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 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).

The average of the high and low market prices of the common stock on August 6, 2016, the date of the closing of the sale of the Series A Preferred Stock, was approximately $39.78 per share.

At $39.78 per share the common stock into which the Series A Preferred Stock was initially convertible was valued at approximately $3.4 million.

This amount was compared to the $2.8 million of proceeds of the Series A Preferred Stock to indicate that a BCF of approximately $0.6 million existed at the date of issuance in 2016, which was immediately accreted as a deemed dividend because the conversion rights were immediately effective.

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, 2020 and 2019 were approximately $38,000.

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

In addition, as long as 255,000 shares of Series A Preferred Stock are outstanding, the Company may not take certain actions without first having obtained the affirmative vote or waiver of the holders of a majority of the outstanding shares of Series A Preferred Stock.

The Company has the option at any time after August 2, 2019 to redeem some or all of the outstanding Series A Preferred Stock for an amount in cash equal to the liquidation preference plus the amount of any accrued but unpaid dividends of the Series A Preferred Stock being redeemed.

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

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.

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 indicated that each PIK dividend would accrete 0.84 of BCF as an additional deemed dividend for every $1.50 of PIK dividend accrued.

Exchange of Outstanding Series B Convertible Preferred Stock for Common Shares

On December 3, 2021, the Company entered into a series of Exchange Agreements with all of the holders of the Company’s Series B convertible preferred stock.

Pursuant to the Exchange Agreements, the holders exchanged all outstanding Series B Preferred Stock for shares of the Company’s common stock at an exchange rate equal to the sum of the liquidation preference of the Series B Preferred Stock and the accrued and unpaid dividends thereon, divided by $10.00 per share (the “Exchange”).

Upon the closing of the Exchange, the Company issued an aggregate of 522,244 shares of common stock to the holders in exchange for all 2,666,667 issued and outstanding Series B Preferred Stock.

This Exchange was effected without registration under the Securities Act of 1933, as amended, pursuant to the exemption from registration set forth in Section 3(a)(9) of the Securities Act.

The liquidation value of this Series B Preferred Stock on the date of exchange to common shares was $ 5.2 million (including the accrued dividend of $ 1.2 million).

To induce this exchange, the Company offered to exchange shares of common stock at a rate of the greater of $10 per share or 85% of the most recent closing price for the common stock on the Nasdaq Capital Market, compared to a conversion rate of $ 18 per share of common stock pursuant to the terms of the Series B Preferred Stock.

This resulted in the total issuance of 522,244 shares of common stock upon conversion, which included an additional 232,111 shares of common stock compared to the number of shares that would have been issuable upon conversion of all of the outstanding Series B Preferred Stock.

Pursuant to this accounting guidance, the Company evaluated the fair value of the incremental 232,111 common shares issued to the Series B Preferred Stockholders.

Based on the $ 7.57 closing stock price on December 3, 2021, the Company recorded to additional paid-in capital a deemed dividend of $ 1.8 million at the date of the exchange.

The deemed dividend was presented in the accompanying consolidated statement of operations under the caption deemed dividend upon exchange of Series A and Series B Preferred Stock to common stock and shown as an adjustment to net loss, to arrive at net loss attributable to common stockholders.

The Company’s outstanding warrants at December 31, 2021 and 2020 are below.

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Issued to Investors on October 25, 2013, entitling the holders to purchase 20,833 common shares in the Company at an exercise price of $138.00 per common share up to and including April 24, 2021.

In 2016, 4,954 of these warrants were exchanged for common stock, and all remaining warrant holders agreed to new warrant terms, which excluded any potential net cash settlement provisions in exchange for a reduced exercise price of $75.00 per share.

Issued to Investors on November 17, 2014, entitling the holders to purchase 45,577 common shares in the Company at an exercise price of $138.60 per common share up to and including May 16, 2022.

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 (warrants expired subsequent to December 31, 2020).

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

Stock-based Compensation

2020 Equity Incentive Plan

On March 25, 2015, the Compensation Committee and Board of Directors approved the Lightbridge Corporation 2015 Equity Incentive Plan (the “2015 Plan”) to authorize grants of (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards to the employees, consultants, and directors of the Company.

The shares available for award under the 2015 plan are subject to equitable adjustment for the October 21, 2019 reverse stock split described in Note 1.

The 2015 Plan initially authorized a total of 50,000 shares to be available for grant under the 2015 Plan, of which the amount was increased to 116,667 shares in May 2016, 241,667 shares in May 2017, and 525,000 shares in May 2018.

Lightbridge’s policy is to utilize stock reserved for issuance under the 2015 Plan for issuing shares upon share option exercise.

Short-Term Non-Qualified Option Grants

On December 2, 2019, the Compensation Committee of the Board granted 86,982 short-term incentive stock options and non-qualified stock options under the 2015 Equity Incentive Plan to employees, consultants, and directors of the Company.

All of these stock options vested immediately, with a strike price of $3.82, which was the closing price of the Company’s stock on December 2, 2019.

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 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).

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

Stock Options

During the year ended December 31, 2021, the Company issued 58,164 stock options to consultants.

The 2021 options issued to the consultants of the Company were assigned fair values ranging from $ 2.08 per share to $ 4.75 per share (total fair value of $ 150,000 ).

The value was determined using Black-Scholes pricing model.

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Expected volatility

95.15 % to 131.85 %

Risk free interest rate

0.06 % to 0.93 %

Dividend yield rate

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Closing price per share - common stock

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.

The components of stock-based compensation expense included in the Company’s consolidated statements of operations for the years ended December 31, 2020 and 2019 are as follows (rounded to the nearest thousand):

Research and development expenses

General and administrative expenses

Total stock-based compensation expense

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

Beginning of the year

End of the year

$ 4.55 to $ 6.51

Stock option transactions to the employees, directors and consultants are summarized as follows for the year ended December 31, 2021:

Weighted Average Exercise Price

Weighted Average Grant Date

Beginning of the year - January 1, 2021

End of the year - December 31, 2021

Options exercisable

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

During the year ended December 31, 2021, the Company received approximately $ 0.3 million of net proceeds from the exercise of 30,282 stock options.

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

Weighted Average Exercise Price

Weighted Average Grant Date

Beginning of the year - January 1, 2020

End of the year - December 31, 2020

Options exercisable

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:

A summary of the status of the Company’s non-vested options as of December 31, 2021 and December 31, 2020, and changes during the year ended December 31, 2020 and the year ended December 31, 2021, is presented below:

Weighted Average Exercise Price

Weighted Average Fair Value

Non-vested – December 31, 2019

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

Adjusted non-vested – December 31, 2018

Non-vested – December 31, 2020

Non-vested – December 31, 2021

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

The above tables include stock options issued and outstanding as of December 31, 2021 as follows:

A total of 339,855 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 $ 75.60 per share.

From this total, 128,010 options are outstanding to the Chief Executive Officer, who is also a director, with remaining contractual lives of 0.2 years to 8.9 years.

From this total, 127,299 options are held by the Chief Executive Officer, who is also a director, with remaining contractual lives of 3.3 years to 7.9 years.

All other options issued to directors, officers, and employees have a remaining contractual life ranging from 3.3 years to 7.9 years.

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.

A total of 198,858 non-qualified 1 to 10 -year options have been issued, and are outstanding, to consultants at exercise prices of $ 3.82 to $ 75.60 per share and have a remaining contractual life ranging from 0.2 years to 9.7 years.

As of December 31, 2021, 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.

For stock options outstanding at December 31, 2020, the intrinsic value was $32,978.

For stock options outstanding at December 31, 2019, the intrinsic value was $59,148.

For stock options outstanding at December 31, 2021 and 2020, the intrinsic value was approximately $ 238,000 and $ 33,000 , respectively.

For those vested stock options at December 31, 2021 and 2020, the intrinsic value was approximately $ 225,000 and $ 33,000 , respectively.

The following table provides certain information with respect to the above-referenced stock options that were outstanding and exercisable at December 31, 2021:

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12.49 -$ 24.00

The following table provides certain information with respect to the above-referenced stock options that were outstanding and exercisable at December 31, 2019:

Stock Options Outstanding

Stock Options Vested

Exercise Prices

24.01 -$ 72.00

72.01 -$ 75.60

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:

Common Share Issuances

For the year ended December 31, 2021, the Company issued 10,462 common shares to its investor relations firm for services provided during the year ended December 31, 2021.

On November 18, 2021, the Board of Directors approved an equity grant of $ 35,000 to each director, which equaled to a total of 19,644 shares of common stock issued to the six directors, valued on the grant date at $ 10.69 per share.

There were 13,096 common shares issued to four directors that vested immediately upon issuance and the remaining 6,548 shares of common shares were issued to the two remaining directors that vested on January 1, 2022 .

During the year ended December 31, 2020, the Company issued 4,000 common shares to its investor relations firm.

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

The Company filed a Form S-8 with the SEC, to register the underlying shares of the 2020 Plan on March 25, 2021.

All of these common shares were issued on March 31, 2021 and vested immediately upon issuance.

RSUs Issued and Net Share Settlements for Payments of Withholding Taxes

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 RSUs awards vest in three equal instalments on each of the first three annual anniversaries of the grant date, on October 28, 2021, October 28, 2022 and October 28, 2023.

On October 28, 2021, the first tranche of 78,617 of total outstanding RSUs vested.

Regarding these 78,617 RSUs that vested, the Company withheld 35,304 common shares of the employees at the stock price on the vesting date of $ 9.93 per share, in order to make payments of withholding taxes of $ 0.3 million on these vested shares.

The Company issued a total of 43,313 shares of common stock, net of the share settlement for the taxes paid upon the vesting of these RSUs, to its employees and one consultant.

On November 4, 2021, the Compensation Committee of the Board of Directors approved the accelerated vesting of the remaining 157,233 RSUs outstanding, and all these remaining 157,233 RSUs vested on December 15, 2021.

Regarding these 157,233 RSUs vested on December 15, 2021, the Company withheld 70,265 common shares to be issued to the employees, at the stock price on the vesting date 6.74 per share in order to make the payments for withholding taxes of $ 0.5 million on these vested shares.

The Company issued a total of 86,968 shares of common stock, net of share settlement for the taxes paid upon vesting of RSUs, to its employees and one consultant.

Total payments for withholding taxes on the net share settlements of vested RSU equity awards for the year ended December 31, 2021 was $0.8 million.

For the remaining 157,233 RSUs where the vesting was accelerated on December 15, 2021, the remaining unamortized compensation expense amount of $ 0.4 million was expensed on this date.

Restricted Stock Units Outstanding

The following summarizes the Company’s RSUs activity:

Total RSUs outstanding at January 1, 2021

Total RSUs granted

Total RSUs vested (including accelerated vesting)

Total RSUs forfeited

Total unvested RSUs outstanding at December 31, 2021

Restricted Stock Awards

On November 18, 2021, the Board of Directors approved an equity grant of approximately $ 2 million, which equaled to a total of 188,588 RSAs, to all of its employees and two consultants, valued at the stock price on the grant date of $ 10.69 per share.

These RSAs awards contained a performance-based accelerated vesting provision and a service-based vesting provision, with the service-based vesting provision being one-third vesting on each of the first three anniversaries of the date of grant.

As of December 31, 2021, the Company had deemed it not probable that the performance-based vesting provision would be met.

Therefore these 188,588 shares were included in the total outstanding common shares at December 31, 2021 and compensation expense recognized straight line over the three-year vesting period.

A total of $0.1 million of compensation expense was recorded for the year ended December 31, 2021.

There was an additional performance-based RSA grant of approximately $ 2 million, which equaled a total 188,588 shares, with immediate vesting upon the Company completing a business acquisition in 2022, with the target’s historical financials meeting certain financial performance metrics.

This RSA grant, based on managements’ probability assessment of meeting this milestone at December 31, 2021, was not probable of being met and no expense was recorded as stock-based compensation for the year ended December 31, 2021.

These 188,588 common shares were not included in the total outstanding common shares at December 31, 2021, on the accompanying balance sheet and statement of stockholders’ equity.

The Company will reassess the probability of achieving this performance condition at each reporting period in 2022 and record the approximately $2 million as an expense as well as include these performance-based RSA shares in the total outstanding common shares, if there is a change to its assessment that it is probable that this performance-condition will be met .

The following summarizes the Company’s RSAs activity:

Total RSAs outstanding at January 1, 2021

Total RSAs granted

Total RSAs vested

Total RSAs forfeited

Total unvested RSAs outstanding at December 31, 2021

Scheduled vesting for outstanding RSAs with service conditions at December 31, 2021 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

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.

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 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.

As of December 31, 2021, there was approximately $ 1.9 million of total unrecognized compensation cost related to these unvested RSAs compensation arrangements.

The compensation expense will be recognized on a straight-line basis over the three-year vesting period.

The components of total stock-based compensation expense included in the Company’s consolidated statements of operations for the years ended December 31, 2021 and 2020 are as follows (rounded in millions):

Research and development expenses

General and administrative expenses

Total stock-based compensation expense

Subsequent Events

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.

Sales under the ATM that were made from January 1, 2022 to February 4, 2022 were approximately 0.8 million common shares that totaled net proceeds of approximately $ 5.4 million.

There were no ATM transactions after February 4, 2022 to the date of the filing of these financial statements.

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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Victor Alessi

/s/ Kathleen Kennedy Townsend

Kathleen Kennedy Townsend

/s/ Sweta Chakraborty

Sweta Chakraborty

/s/ Jesse Funches

Jesse Funches

/s/ Daniel Magraw

/s/ Mark Tobin

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