LIGHTBRIDGE Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures 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. 44 Table of Contents Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). All internal control systems, no matter how well designed, have inherent limitations including the possibility of human error and the circumvention or overriding of controls. Further, because of changes in conditions, the effectiveness of internal controls may vary over time. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 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 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. GAAP. Changes in Internal Control over Financial Reporting There were no changes in internal control over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not applicable. 45 Table of Contents PART III Item 10. Directors and Executive Officers of the Registrant The information required by Item 10 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. Item 11. Executive Compensation Summary Compensation Table 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. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholders The information required by Information required by Item 12 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence Information required by Item 13 of Part III will be included in our Proxy Statement relating to the 2022 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services 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. 46 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) Documents filed as part of this report. (1) The following financial statements of Lightbridge Corporation, supplemental information and report of independent registered public accounting firm are included in this Form 10-K: · Consolidated Balance Sheets at December 31, 2021 and 2020 · Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020 · Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 · Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 2020 · Notes to Consolidated Financial Statements · Report of BDO USA, LLP dated March 31, 2022 on the Company’s financial statements filed as a part hereof for the fiscal years ended December 31, 2021 and 2020. The independent registered public accounting firm’s consent with respect to this report appears in Exhibit 23 of this Annual Report on Form 10-K. (2) All schedules have been omitted because they are not required, not applicable or the information is otherwise included. (3) Exhibits. Exhibit Number Description 1.1 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). 1.2 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). 3.1 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). 3.2 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). 4.1 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). 4.2* Description of Securities . 4.3 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. 333-187659). 10.1** 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). 10.2** Lightbridge Corporation 2015 Equity Incentive Plan, as amended (incorporated by reference to Appendix A to the definitive proxy statement filed on March 29, 2018, File No. 001-34487). 47 Table of Contents 10.3** Form of Incentive Stock Option Agreement for Employees under the 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8, File No. 333-218796, filed on June 16, 2017). 10.4** Form of Non-Qualified Stock Option Agreement for Employees under the 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8, File No. 333-218796, filed on June 16, 2017). 10.5** Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.4 to the Company’s Registration Statement on Form S-8, File No. 333-218796, filed on June 16, 2017) 10.6** Amended Lightbridge Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Appendix A to the definitive proxy statement filed on April 7, 2021). 10.7** 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). 10.8** 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). 10.9** Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the 2020 Omnibus Incentive Plan. (incorporated by referenced to Exhibit 10.14 to the Form 10-K filed by the Company on March 25, 2021). 10.10** 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). 10.11** Employment Agreement, dated August 8, 2018, between the Company and Andrey Mushakov (incorporated by referenced to Exhibit 10.3 to the Form 10-Q filed by the Company on August 9, 2018). 10.12** Employment Agreement, dated August 8, 2018, between the Company and Larry Goldman (incorporated by referenced to Exhibit 10.4 to the Form 10-Q filed by the Company on August 9, 2018). 10.13** 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). 10.14 * Form of Restricted Stock Award Agreement under the 2020 Omnibus Incentive Plan. 21.1 Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Form 10-K filed by the Company on March 15, 2016). 23.1* Consent of BDO USA, LLP. 24.1* Power of Attorney (Included on the signature page hereto). 31.1* Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer. 31.2* Rule 13a-14(a)/15d-14(a) Certification - Principal Financial Officer and Principal Accounting Officer. 32* Section 1350 Certifications. 101 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; (ii) Consolidated Statement of Operations; (iii) Consolidated Statement of Cash Flows; (iv) Consolidated Statement of Changes in Stockholders’ Equity; and (v) Notes to Consolidated Financial Statements 101.INS 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). 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ________________ * Filed or furnished herewith ** Indicates management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary None. 48 Table of Contents LIGHTBRIDGE CORPORATION DECEMBER 31, 2021 and 2020 TABLE OF CONTENTS Page Report of Independent Registered Public Accounting Firm ( BDO USA, LLP ; Philadelphia, PA : PCAOB ID# 243 ) 50 Consolidated Balance Sheets 51 Consolidated Statements of Operations 52 Consolidated Statements of Cash Flows 53 Consolidated Statements of Changes in Stockholders’ Equity 54 Notes to Consolidated Financial Statements 55 49 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Lightbridge Corporation Reston, Virginia Opinion on the Consolidated Financial Statements 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 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. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of 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: • 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 We have served as the Company's auditor since 2015. Philadelphia, Pennsylvania March 31, 2022 50 Table of Contents LIGHTBRIDGE CORPORATION CONSOLIDATED BALANCE SHEETS December 31, December 31, 2021 2020 ASSETS Current Assets Cash and cash equivalents $ 24,747,613 $ 21,531,665 Prepaid expenses and other current assets 113,452 172,460 Total Current Assets 24,861,065 21,704,125 Other Assets Trademarks 101,583 85,562 Total Assets $ 24,962,648 $ 21,789,687 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued liabilities $ 171,521 $ 382,130 Accrued legal settlement costs — 4,200,000 Total Current Liabilities 171,521 4,582,130 Commitments and contingencies - Note 4 Stockholders’ Equity Preferred stock, $ 0.001 par value, 10,000,000 authorized shares 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) — 699 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) — 2,667 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 9,759 6,567 Additional paid-in capital 161,772,641 146,353,232 Accumulated deficit ( 136,991,273 ) ( 129,155,608 ) Total Stockholders’ Equity 24,791,127 17,207,557 Total Liabilities and Stockholders’ Equity $ 24,962,648 $ 21,789,687 The accompanying notes are an integral part of these consolidated financial statements. 51 Table of Contents LIGHTBRIDGE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2021 2020 Revenue $ — $ — Operating Expenses General and administrative 7,133,618 8,312,583 Research and development 1,366,496 891,626 Legal settlement costs 24,940 4,200,000 Patent write-off and impairment loss — 1,169,644 Total Operating Expenses 8,525,054 14,573,853 Other Operating Income Distribution from joint venture 119,641 — Contributed services – research and development 527,927 72,709 Total Other Operating Income 647,568 72,709 Total Operating Loss $ ( 7,877,486 ) $ ( 14,501,144 ) Other Income Interest income 8,127 83,878 Foreign currency transaction gain 33,694 — Total Other Income 41,821 83,878 Net Loss Before Income Taxes ( 7,835,665 ) ( 14,417,266 ) Income taxes — — Net Loss $ ( 7,835,665 ) $ ( 14,417,266 ) Accumulated Preferred Stock Dividend ( 477,991 ) ( 512,953 ) Additional deemed dividend on preferred stock due to the beneficial conversion feature ( 213,720 ) ( 222,196 ) 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 $ ( 12,036,704 ) $ ( 15,152,415 ) Net Loss Per Common Share Basic and diluted $ ( 1.71 ) $ ( 3.59 ) Weighted Average Number of Common Shares Outstanding 7,035,510 4,216,568 The accompanying notes are an integral part of these consolidated financial statements. 52 Table of Contents LIGHTBRIDGE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2021 2020 Operating Activities Net Loss $ ( 7,835,665 ) $ ( 14,417,266 ) Adjustments to reconcile net loss from operations to net cash used in operating activities: Common stock issued for services 254,994 17,000 Stock-based compensation 826,493 53,341 Patent write-off and impairment loss — 1,169,645 Amortization of patents — 100,117 Changes in operating working capital items: Other receivable from joint venture — 400,000 Prepaid expenses and other current assets 59,008 ( 125,089 ) Accounts payable and accrued liabilities ( 140,919 ) 31,831 Accrued legal settlement costs ( 4,200,000 ) 4,200,000 Net Cash Used in Operating Activities ( 11,036,089 ) ( 8,570,421 ) Investing Activities Trademarks ( 16,021 ) ( 210,436 ) Net Cash Used in Investing Activities ( 16,021 ) ( 210,436 ) Financing Activities Net proceeds from the issuances of common stock 14,821,354 12,328,520 Net proceeds from the exercise of stock options 270,857 25,013 Payments for taxes related to net share settlement of equity awards ( 824,153 ) — Net Cash Provided by Financing Activities 14,268,058 12,353,533 Net Increase in Cash and Cash Equivalents 3,215,948 3,572,676 Cash and Cash Equivalents, Beginning of Year 21,531,665 17,958,989 Cash and Cash Equivalents, End of Year $ 24,747,613 $ 21,531,665 Supplemental Disclosure of Cash Flow Information Cash paid during the year: Interest paid $ — $ — Income taxes paid $ — $ — Non-Cash Financing Activities: Accumulated preferred stock dividend $ 691,711 $ 735,149 Exchanges of preferred stock Series A and B to common stock $ 3,366 $ — Payment of accrued liabilities with common stock $ 69,690 $ 17,000 The accompanying notes are an integral part of these consolidated financial statements. 53 Table of Contents LIGHTBRIDGE CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 Series A Series B Additional Preferred Stock Preferred Stock Common Stock Paid-in Accumulated Total Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balance - December 31, 2019 757,770 $ 757 2,666,667 $ 2,667 3,252,371 $ 3,252 $ 133,932,615 $ ( 114,738,342 ) $ 19,200,949 Conversion of Preferred Stock to Common Stock ( 57,892 ) ( 58 ) — — 6,327 6 52 — — Common stock issued - registered offerings - net of offering costs and exercise of options — — — — 3,304,412 3,305 12,350,228 — 12,353,533 Common stock issued for services — — — — 4,000 4 16,996 — 17,000 Stock-based compensation — — — — — — 53,341 53,341 Net loss — — — — — — — ( 14,417,266 ) ( 14,417,266 ) Balance - December 31, 2020 699,878 $ 699 2,666,667 $ 2,667 6,567,110 $ 6,567 $ 146,353,232 $ ( 129,155,608 ) $ 17,207,557 Exchanges of Series A & B Preferred Stock to Common Stock ( 699,878 ) ( 699 ) ( 2,666,667 ) ( 2,667 ) 789,382 790 2,576 — — Shares issued, net of share settlement for withholding taxes paid upon vesting of restricted stock units — — — — 130,281 130 ( 824,283 ) — ( 824,153 ) Common stock issued pursuant to restricted stock awards — — — — 188,588 188 ( 188 ) — — Common stock issued - registered ATM offerings - net of offering costs — — — — 2,008,822 2,010 14,819,344 — 14,821,354 Common stock issued through the exercise of options — — — — 30,282 30 270,827 — 270,857 Common stock issued to directors and consultants for services — — — — 44,758 44 324,640 — 324,684 Stock-based compensation — — — — — — 826,493 — 826,493 Net loss — — — — — — — ( 7,835,665 ) ( 7,835,665 ) Balance - December 31, 2021 — $ — — $ — 9,759,223 $ 9,759 $ 161,772,641 $ ( 136,991,273 ) $ 24,791,127 The accompanying notes are an integral part of these consolidated financial statements. 54 Table of Contents LIGHTBRIDGE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations The Company was formed on October 6, 2006, when Thorium Power, Ltd., which was incorporated in the state of Nevada on February 2, 1999, merged with Thorium Power, Inc. (TPI), which was incorporated in the state of Delaware on January 8, 1992 (subsequently and collectively referred to as “we” or the “Company”). On September 29, 2009, the Company changed its name from Thorium Power, Ltd. to Lightbridge Corporation and began its focus on developing and commercializing metallic nuclear fuels. 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 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. 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, 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 R&D costs; and (3) seeking other sources of capital, including grants from the federal government. The Company may issue securities, including common stock, preferred stock, and stock purchase contracts through private placement transactions or registered public offerings, pursuant to current and future registration statements. 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. 55 Table of Contents Basis of Consolidation These consolidated financial statements include the accounts of Lightbridge, a Nevada corporation, and the Company’s wholly-owned subsidiaries, TPI, a Delaware corporation, and Lightbridge International Holding LLC, a Delaware limited liability company. These wholly-owned subsidiaries are inactive. All significant intercompany transactions and balances have been eliminated in consolidation. Segment Reporting ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources considering our core data which is managed centrally on a company-wide basis, and evaluates our financial results. Because we have a single reportable segment, all required financial segment information can be found directly in the Consolidated Financial Statements. We evaluate the performance of our reporting segment based on operating expenses and will evaluate additional segment disclosure requirements if and when the Company expands its operation. Use of Estimates and Assumptions The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant Estimates These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and 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 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. 56 Table of Contents Fair Value of Financial Instruments 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. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. 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 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. 57 Table of Contents 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 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 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 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 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. The Company holds cash balances in excess of the federally insured limits of $ 250,000 . 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 U.S. Treasury Bills to maturity. U.S. 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. 58 Table of Contents 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. Patents 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. 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. 59 Table of Contents Trademarks Costs for filing and legal fees for trademark applications are capitalized. 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, 2021 and December 31, 2020, the carrying value of trademarks was approximately $0.1 million. Leases 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. The Company applies the practical expedient to non-separate and non-lease components for all leases that qualify. Lease expense is recognized on a straight-line basis over the lease term. The Company has only one lease for office rent and the lease is for a term of 12 months without renewal options. See Note 4 for additional information. Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Common stock warrants are accounted for as a derivative in accordance with ASC 815, Derivatives and Hedging, if the stock warrants contain terms that could potentially require “net cash settlement” and therefore, do not meet the scope exception for treatment as a derivative. Warrant instruments that could potentially require “net cash settlement” in the absence of 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. 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. 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 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 accelerates all remaining expense to be recognized. 60 Table of Contents 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 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. 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. 61 Table of Contents 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. Note 2. Net Loss Per Share Basic net loss per share is computed using the weighted-average number of common shares outstanding during the year except that it does not include unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, warrants and convertible preferred shares (see Note 7. 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. 62 Table of Contents The following table sets forth the computation of the basic and diluted loss per share (dollars in millions, except share data): Years Ended December 31, 2021 2020 Basic Numerator: Net loss attributable to common stockholders $ ( 12.0 ) $ ( 15.2 ) Denominator: Weighted-average common shares outstanding 7,035,510 4,216,568 Basic net loss per share $ ( 1.71 ) $ ( 3.59 ) Diluted Numerator: Net loss attributable to common stockholders, basic $ ( 12.0 ) $ ( 15.2 ) Effect of dilutive securities — — Net loss, diluted $ ( 12.0 ) $ ( 15.2 ) Denominator: Weighted average common shares outstanding - basic 7,035,510 4,216,568 Potential common share issuances: Incremental dilutive shares from equity instruments (treasury stock method) — — Weighted-average common shares outstanding 7,035,510 4,216,568 Diluted net loss per share $ ( 1.71 ) $ ( 3.59 ) 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. Years Ended December 31, 2021 2020 Warrants outstanding 45,577 70,361 Stock options outstanding 538,713 515,847 RSAs outstanding 188,588 — RSUs outstanding — 243,800 Series A convertible preferred stock to common shares — 79,304 Series B convertible preferred stock to common shares — 272,084 Total 772,878 1,181,396 Note 3. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following (rounded in millions): December 31, December 31, 2021 2020 Trade payables $ 0.1 $ 0.2 Accrued legal and consulting expenses 0.1 0.2 Total $ 0.2 $ 0.4 63 Table of Contents Note 4. Commitments and Contingencies Commitments Operating Leases 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 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. 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. 64 Table of Contents Note 5. Research and Development Costs 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 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 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. 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. 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. 65 Table of Contents Note 6. Income Taxes 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. As of December 31, 2021 and 2020, there were no tax contingencies or unrecognized tax positions recorded. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets (at an approximate 25 % effective tax rate) as of December 31, 2021 and 2020, respectively, are as follows. Deferred tax assets consisted of the following (rounded in millions): 2021 2020 Capitalized start-up costs $ — $ 0.1 Stock-based compensation 3.1 3.3 Patent impairment provision 0.3 0.3 Accrued legal settlement — 1.1 Net operating loss carry-forward 27.6 24.3 Research and development tax credits 0.3 0.3 Less: valuation allowance ( 31.3 ) ( 29.4 ) Total $ — $ — 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 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. However, NOL carry forward arising after January 1, 2018, will now be limited to 80% of taxable income. 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. 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. 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. 66 Table of Contents 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): December 31, December 31, 2021 2020 Tax benefit at U.S. federal statutory rates $ ( 1.7 ) $ ( 3.0 ) Tax benefit at state statutory rates ( 0.2 ) ( 0.6 ) Tax benefit from federal and state R&D tax credits — ( 0.1 ) Increase in valuation allowance 1.9 3.7 Total provision for income tax benefit $ — $ — Note 7. Stockholders’ Equity and Stock-Based Compensation 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 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 (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. 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. 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. 67 Table of Contents 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. 68 Table of Contents 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 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 (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. At $28.08 per share the common stock into which the Series B Preferred Stock was initially convertible was valued at approximately $6.2 million. This amount was compared to the $ 3.7 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. 69 Table of Contents 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. 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 exchange. 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. 70 Table of Contents Warrants The Company’s outstanding warrants at December 31, 2021 and 2020 are below. These warrants are classified within equity on the consolidated balance sheets. December 31, December 31, 2021 2020 Outstanding Warrants 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 (warrants expired). — 13,665 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. 45,577 45,577 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). — 11,119 Total 45,577 70,361 Stock-based Compensation 2020 Equity Incentive 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, and (d) Other Stock-Based and Cash-Based Awards. 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. The following assumptions were used in the Black-Scholes pricing model: Expected volatility 95.15 % to 131.85 % Risk free interest rate 0.06 % to 0.93 % Dividend yield rate 0 Weighted average years 1 - 6 years Closing price per share - common stock $ 4.55 to $ 6.51 71 Table of Contents Stock option transactions to the employees, directors and consultants are summarized as follows for the year ended December 31, 2021: Options Outstanding Weighted Average Exercise Price Weighted Average Grant Date Fair Value Beginning of the year - January 1, 2021 515,847 $ 20.23 $ 14.51 Granted 58,164 6.72 2.58 Exercised ( 30,282 ) 8.94 6.77 Forfeited ( 3,997 ) 62.52 43.63 Expired ( 1,019 ) 329.81 291.73 End of the year - December 31, 2021 538,713 $ 18.51 $ 12.92 Options exercisable 526,947 $ 18.79 $ 13.11 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: Options Outstanding Weighted Average Exercise Price Weighted Average Grant Date Fair Value Beginning of the year - January 1, 2020 518,551 $ 21.99 $ 15.89 Granted 7,634 4.45 3.28 Exercised ( 6,548 ) 3.82 2.59 Forfeited ( 1,844 ) 10.80 8.33 Expired ( 1,946 ) 491.10 384.02 End of the year - December 31, 2020 515,847 $ 20.23 $ 14.51 Options exercisable 466,121 $ 21.35 $ 15.27 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: Shares Weighted Average Exercise Price Weighted Average Fair Value Grant Date Non-vested – December 31, 2019 84,873 $ 10.73 $ 5.15 Granted 7,634 4.45 3.28 Vested ( 41,552 ) 10.80 8.29 Forfeited ( 1,229 ) 10.80 8.33 Non-vested – December 31, 2020 49,726 $ 9.71 $ 7.44 Granted 58,164 6.72 2.58 Vested ( 96,124 ) 8.40 4.89 Forfeited — — — Non-vested – December 31, 2021 11,766 $ 5.71 $ 4.25 The above tables include stock options issued and outstanding as of December 31, 2021 as follows: i. 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, 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. ii. 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, 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: Stock Options Outstanding Stock Options Vested Weighted Weighted Average Average Remaining Weighted Remaining Weighted Contractual Number Average Contractual Number Average Life of Exercise Life of Exercise Exercise Prices -Years Awards Price -Years Awards Price $ 3.82 -$ 9.00 5.32 141,217 $ 5.18 4.99 129,451 $ 5.14 $ 9.01 -$ 12.48 6.60 116,544 $ 10.80 6.60 116,544 $ 10.80 $ 12.49 -$ 24.00 5.12 195,090 $ 14.23 5.12 195,090 $ 14.23 $ 24.01 -$ 72.00 3.72 62,771 $ 55.07 3.72 62,771 $ 55.07 $ 72.01 -$ 75.60 3.15 23,091 $ 75.59 3.15 23,091 $ 75.59 Total 5.24 538,713 $ 18.51 5.16 526,947 $ 18.79 Common Share Issuances 2021 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 . 72 Table of Contents 2020 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: Weighted Number Average of Grant Date Shares Fair Value Total RSUs outstanding at January 1, 2021 243,800 $ 2.69 Total RSUs granted — $ — Total RSUs vested (including accelerated vesting) ( 235,850 ) $ 2.69 Total RSUs forfeited ( 7,950 ) $ 2.69 Total unvested RSUs outstanding at December 31, 2021 — $ — 73 Table of Contents 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: Weighted Number Average of Grant Date Shares Fair Value Total RSAs outstanding at January 1, 2021 — $ — Total RSAs granted 377,176 $ 10.69 Total RSAs vested — $ — Total RSAs forfeited — $ — Total unvested RSAs outstanding at December 31, 2021 377,176 $ 10.69 Scheduled vesting for outstanding RSAs with service conditions at December 31, 2021 is as follows: Year Ending December 31, 2022 2023 2024 Total Scheduled vesting 62,862 62,864 62,862 188,588 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. 74 Table of Contents 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): Years Ended December 31, 2021 2020 Research and development expenses $ — $ — General and administrative expenses 0.8 0.1 Total stock-based compensation expense $ 0.8 $ 0.1 Note 8. Subsequent Events ATM Sales 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. 75 Table of Contents SIGNATURES 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. LIGHTBRIDGE CORPORATION Date: March 31, 2022 By: /s/ Seth Grae Seth Grae Chief Executive Officer, President and Director 76 Table of Contents POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Seth Grae and Larry Goldman, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof. In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on March 31, 2022. Signature Title /s/ Seth Grae Chief Executive Officer, President and Director Seth Grae (Principal Executive Officer) /s/ Larry Goldman Chief Financial Officer, and Treasurer Larry Goldman (Principal Financial and Accounting Officer) /s/ Thomas Graham, Jr. Director Thomas Graham, Jr. /s/ Victor Alessi Director Victor Alessi /s/ Sweta Chakraborty Director Sweta Chakraborty /s/ Jesse Funches Director Jesse Funches /s/ Daniel Magraw Director Daniel B. Magraw /s/ Mark Tobin Director Mark Tobin 77