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Item 9A. Controls and Procedures

2023-03-30 compared with 2022-03-31 · 267 added, 309 removed, 486 unchanged (54% of the section changed)

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.

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.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022 (as such term is defined in Rule 13a-15(e) under the Exchange Act).

Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based upon this evaluation, our management concluded that, as of December 31, 2022, our disclosure controls and procedures were not effective due to the material weakness described below.

Management ’ s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

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

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

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

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

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, utilizing the criteria in the Committee of Sponsoring Organizations of the Treadway Commission’s Internal Control-Integrated Framework (2013).

Based on its assessment, our management determined that, as of December 31, 2022, the Company’s internal control over financial reporting was not effective due to the material weakness described below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

In management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, management determined that there were control deficiencies concerning the accounting procedures that support the financial reporting process related to recording accounts payable invoices that were received and approved for payment, and such control deficiencies aggregated to a material weakness.

Remediation Plan

The Company’s management, with the oversight of the Audit Committee, has evaluated the material weakness described above and designed a remediation plan to address this material weakness.

The Company intends to remediate the material weakness by (i) implementing multiple reviews of the accounting mailbox where accounts payable invoices are received from vendors, which the multiple reviews of the accounting mailbox was first established in 2022 before the identification of the control deficiency (ii) multiple reviews of the weekly accounts payable schedules and activity reports from the Company’s accounting system, and (iii) contacting vendors on a quarterly basis regarding outstanding invoices.

The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively.

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.

Except as noted above, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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Executive Compensation

Summary Compensation Table

Information required by Item 11 of Part III will be included in our Proxy Statement relating to the 2023 Annual Meeting of Stockholders and is incorporated herein by reference.

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

Security Ownership of Certain Beneficial Owners and Management and Related Shareholders

Information required by Item 12 of Part III will be included in our Proxy Statement relating to the 2023 Annual Meeting of Stockholders and is incorporated herein by reference.

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

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

Articles of Incorporation of the Company, as amended through October 27, 2022.

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

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

Description of Securities .

Description of Securities (incorporated by reference to Exhibit 4.2 to the Form 10-K filed by the Company on March 31, 2022).

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.

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333-218796, filed on June 16, 2017)

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

Amended Lightbridge Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Appendix B to the definitive proxy statement filed on August 31, 2022).

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).

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

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

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

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

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

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

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

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).

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).

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

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

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

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

Employment Agreement, dated August 8, 2018, between the Company and Andrey Mushakov (incorporated by reference to Exhibit 10.3 to the Form 10-Q filed by the Company on August 9, 2018).

Employment Agreement, dated August 8, 2018, between the Company and Larry Goldman (incorporated by reference to Exhibit 10.4 to the Form 10-Q filed by the Company on August 9, 2018).

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

Form of Restricted Stock Award Agreement under the 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.14 to the Form 10-K filed by the Company on March 31, 2022).

Strategic Partnership Project Agreement, dated September 27, 2022, between the Company and Battelle Energy Alliance, LLC.

Project Task Statement under the Strategic Partnership Project Agreement, dated December 9, 2022, between the Company and Battelle Energy Alliance, LLC.

Cooperative Research and Development Agreement, dated September 27, 2022, between the Company and Battelle Energy Alliance, LLC.

Project Task Statement under the Cooperative Research and Development Agreement, dated December 9, 2022, between the Company and Battelle Energy Alliance, LLC.

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

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** Indicates management contract or compensatory plan or arrangement.

▲ Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

The Company agrees to furnish supplementally an unredacted copy of this Exhibit to the SEC upon request.

Form 10-K Summary

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We have audited the accompanying consolidated balance sheets of Lightbridge Corporation (the “Company”) as of December 31, 2022 and 2021, 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.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

Classification of Research and Development Expenses

As described in Note 1 to the consolidated financial statements, the Company records research and development expenses as incurred, which consists of wages and related payroll benefits, non-cash stock-based compensation, materials, testing, consulting and other outside research and development services, related to the development of the Company’s nuclear fuel technology.

During the year ended December 31, 2022, the Company incurred approximately $0.7 million of research and development expenses.

We identified the classification of research and development expenses as a critical audit matter.

The principal consideration for our determination is the Company’s methodology for classifying various operating expenses as research and development expenses.

Auditing this classification was especially challenging given the significant audit effort and the extent of audit evidence required.

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.

Testing a sample of research and development expenses.

Performing inquiries of the project manager to determine the nature of expenses.

Testing management’s allocation of wages, payroll benefits, and non-cash stock-based compensation by (i) recalculating the percentage of wages, payroll benefits and non-cash stock-based compensation allocated to research and development expenses, (ii) testing the completeness and accuracy of data used in determining the allocation.

/s/ BDO USA, LLP

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Total Current Assets

Prepaid project costs

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable and accrued liabilities

Accrued legal settlement costs

Total Current Liabilities

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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)

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)

Preferred stock, $ 0.001 par value, 10,000,000 authorized shares, 0 shares issued and outstanding at December 31, 2022 and 2021

Common stock, $ 0.001 par value, 25,000,000 authorized, 11,900,217 shares and 9,759,223 shares issued and outstanding at December 31, 2022 and 2021, respectively

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Research and development

Legal settlement costs

Patent write-off and impairment loss

Total Operating Expenses

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Stock-based compensation

Patent write-off and impairment loss

Amortization of patents

Changes in operating working capital items:

Other receivable from joint venture

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Prepaid project costs

Accounts payable and accrued liabilities

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FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Preferred Stock

Balance - December 31, 2019

Balance - January 1, 2022

$ 161,772,641

$ ( 136,991,273 )

Conversion of Preferred Stock to Common Stock

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

Common stock issued for services

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

Shares issued - registered offerings - net of offering costs

Shares issued to consultant & directors for services

Stock-based compensation

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$ ( 144,489,130 )

Preferred Stock

Balance - January1, 2021

$ 146,353,232

$ ( 129,155,608 )

Exchanges of Series A & B Preferred Stock to Common Stock

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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.

Basis of Consolidation

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Actual results could differ from those estimates.

Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

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.

The most significant estimates relate to its 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.

The compensation expense related to stock options may have been a materially different amount had other reasonable assumptions been used that differed from the reasonable assumptions made by management.

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.

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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

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

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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’s financial instruments consist principally of cash and cash equivalents, accounts payable and accrued liabilities.

The carrying amounts of cash and cash equivalents, accounts payable and accrued liabilities are considered to be representative to their respective fair values because of the short-term nature of those instruments.

Cash equivalents which consists of U.S.

treasury bills are classified as Level 1 on the fair value hierarchy as there are quoted prices in active markets for identical assets.

Certain Risks and Uncertainties

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.

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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

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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.

The Company was awarded a grant in 2019 and a second grant in 2021 from the United States Department of Energy (DOE) which represented contributed services to further the Company’s R&D activities.

The Company concluded that its government grants were not within the scope of the revenue recognition standard 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 Company early adopted Accounting Standards Update 2020-07 in the fourth quarter of 2021, which amends Subtopic 958-605 and 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 Gateway for Accelerated Innovation in Nuclear (GAIN) vouchers described in Note 6, should be shown on a gross method at the fair value of the services contributed, with 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 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.

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The Company recognized contributed services - research and development of approximately $ 0.4 million for the year ended December 31, 2022 and approximately $ 0.5 million for the year ended December 31, 2021.

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.

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

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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.

The Company has only one lease for office rent and the lease is for a term of 12 months without renewal options (See Note 5.

Commitments and Contingencies).

Income taxes are accounted for using the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of assets and liabilities and their respective tax bases, operating loss carryforwards, and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In accordance with FASB ASC 740, Accounting for Income Taxes, the Company reflects in the financial statements the benefit of positions taken in a previously filed tax return or expected to be taken in a future tax return only when it is considered ‘more-likely-than-not’ that the position taken will be sustained by a taxing authority.

As of December 31, 2022 and 2021, the Company had no unrecognized income tax benefits and correspondingly there is no impact on the Company’s effective income tax rate associated with these items.

The Company’s policy for recording interest and penalties relating to uncertain income tax positions is to record them as a component of income tax expense in the accompanying consolidated statements of operations.

As of December 31, 2022 and 2021, the Company had no such accruals.

Common Stock Warrants

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

All outstanding warrants expired on May 16, 2022.

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.

Awards with service-based vesting conditions only:

Expense is 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.

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

Awards with market-based vesting conditions:

Expense is 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.

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.

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.

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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.

Shares that are issued to employees upon exercise of the stock options may be issued net of a number of shares with a fair value equal to 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 with tax withholding obligations are fewer than the actual number of shares exercised under the stock option or on the dates of vesting of Restricted Stock Unit (“RSU”) or Restricted Stock Awards (“RSAs”) grants.

The Company grants two types of RSAs.

The first type is an award of our shares that have full voting rights and dividend rights (with dividends paid upon vesting of the RSA) but are restricted with regard to sale or transfer before vesting.

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.

These restrictions lapse over the vesting period.

The shares are forfeited and returned to the Company if they do not vest.

The RSAs are included in common stock issued and outstanding and 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.

The second type of RSAs granted by the Company have only performance conditions.

These RSAs do not have voting and dividend rights until they vest as ordinary common shares and are not included in common stock issued and outstanding.

Research and Development Costs

Research and development expenses are expensed when incurred.

Research and development expenses consist primarily of wages and related payroll benefits, non-cash stock-based compensation, materials, testing, consulting and other outside research and development services, related to the development of the Company’s nuclear fuel.

Advance payments for goods or services for future research and development activities are deferred and expensed as the goods are delivered or the related services are performed.

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 November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance.

This ASU requires disclosures that are expected to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the nature of the transactions and the form in which assistance has been received, (2) the accounting policy applied, and (3) the balance sheet and income statement line items that are affected by the transactions, and the amounts applicable to each financial statement line item.

This ASU is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

The Company adopted this guidance on January 1, 2022 and it did not have a material impact on our consolidated financial statements.

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.

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

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

The Company does not currently have any transaction or instruments to which this standard applies.

If, in the future, the Company issues new convertible debt, new warrants or certain other instruments, the standard may have a material effect, but this cannot be determined at this time.

The FASB issued ASU No.

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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.

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

Immaterial Revision

An immaterial revision was made during the course of preparing the Company’s consolidated financial statements as of and for the year ended December 31, 2022, after the Company completed a preliminary Internal Revenue Code Section 382 analysis of its historical net operating loss carryforward amounts.

As a result, a portion of the prior years’ net operating loss carryforwards were limited and incorrectly presented in the deferred tax table within Note 7.

Income Taxes.

Net Loss Per Share

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RSAs outstanding

RSUs outstanding

Series A convertible preferred stock to common shares

Series B convertible preferred stock to common shares

Prepaid Project Costs

In 2022, the Company entered into agreements with Idaho National Laboratory (INL), in collaboration with the U.S.

Department of Energy (DOE), to support the development of Lightbridge Fuel™.

The Company made advanced payments for future project work totaling $ 0.4 million to Battelle Energy Alliance, LLC (“BEA”) as of December 31, 2022.

Accounts Payable and Accrued Liabilities

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Trade payables

Accrued legal and consulting expenses

Accrued directors’ fee and consulting expenses

Commitments and Contingencies

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The Company leased office space for a 12 -month term from January 1, 2023 through December 31, 2023 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.

The future minimum lease payments required under the Company’s non-cancellable operating leases for 2023 total approximately $ 0.1 million.

Total rent expense for the year ended December 31, 2022 and 2021 was approximately $ 0.1 million.

Project Task Statements (Purchase Orders)

For the year ended December 31, 2022, the Company had approximately $ 3.4 million in outstanding project task statement obligations to BEA relating to the research and development being conducted under the Strategic Partnership Project Agreement and Cooperative Research and Development Agreement at INL (see Note 6.

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.

Research and Development Costs

In 2022, Lightbridge entered into agreements with INL, in collaboration with the DOE, to support the development of Lightbridge Fuel™.

These framework agreements use an innovative structure and consist of an “umbrella” Strategic Partnership Project Agreement and an “umbrella” Cooperative Research and Development Agreement (CRADA), each with BEA, the DOE’s operating contractor for INL, with an initial duration of seven years.

Throughout the duration of these umbrella agreements, all R&D work contracted with BEA is through the issuance of project task statements.

It is anticipated that the initial phase of work under the two agreements will culminate in irradiation testing in the Advanced Test Reactor (ATR) of fuel samples using enriched uranium supplied by the DOE.

The initial phase of work aims to generate irradiation performance data for Lightbridge’s delta-phase uranium-zirconium alloy relating to various thermophysical properties.

The data will support fuel performance modeling and regulatory licensing efforts for the commercial deployment of Lightbridge Fuel.

It is anticipated that subsequent phases of work under the two umbrella agreements will include post-irradiation examination of the irradiated fuel samples, loop radiation testing in the ATR, and post-irradiation examination of one or more uranium-zirconium fuel rodlets, as well as transient experiments in the Transient Reactor Test Facility at INL.

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 this project was 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 (Battelle), Pacific Northwest Division, the operating contractor of the PNNL, in collaboration with the DOE.

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

PNNL has completed a contract extension with the Company for one month to complete the final report related to this PNNL GAIN voucher in December 2022.

The PNNL Gain voucher project was completed on January 31, 2023.

For the years ended December 31, 2022 and 2021, the Company recorded $ 0.4 million and $ 0.1 million of contributed services - research and development, respectively.

The Company recorded the corresponding amount as research and development expenses for the work that was completed by Battelle.

On December 19, 2019, the Company was awarded its first voucher from the DOE’s GAIN program to support development of Lightbridge Fuel™ in collaboration with INL.

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

On April 22, 2020, the Company entered into a CRADA with BAE, the operating contractor of INL, in collaboration with the 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.

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

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.

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.

This experiment design formed the basis of the Company’s current and future efforts with the INL.

The Company had no cash payment obligations related to the GAIN voucher, but did provide in-kind services consisting of project management, quality assurance, and technical oversight under the CRADA.

The DOE incurred payment obligations to BAE, related to the work done under the GAIN voucher.

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 had 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.

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

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

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

The R&D services provided under the GAIN vouchers were utilized by the Company in its ongoing development of its next generation nuclear fuel technology.

The Company believes that the amounts paid by the DOE to BEA and 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 R&D activity.

Revision of Previously Issued Financial Statements

The Company’s ability to utilize its net operating loss (NOL) carryforwards may be substantially limited due to ownership changes that have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions.

These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

In general, an “ownership change,” as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain stockholders or public groups.

During the course of preparing the Company’s consolidated financial statements as of and for the year ended December 31, 2022, the Company completed a preliminary assessment of the available NOL carryforwards under Section 382 of the Code.

The Company determined that it likely had undergone multiple ownership changes from 2009 to 2022 as defined under Section 382.

As a result of these identified ownership changes, the portion of NOL carryforwards attributable to the pre-ownership change periods are subject to a substantial annual limitation under Section 382 of the Code.

A conclusive Section 382 study had not been performed due to the Company’s current projections of the lack of taxable income for the foreseeable future.

The Company has adjusted its previously reported NOL carryforwards to address the impact of these 382 ownership changes.

This resulted in a reduction of available total federal and state NOL carryforwards of $ 109 million, as originally reported at December 31, 2021, to $ 47 million (post-2017 NOLs) at December 31, 2022.

The write-down of $ 62 million (pre-2018 NOLs) reduced the net operating losses line as of December 31, 2021 within gross deferred tax assets, as previously disclosed, by $ 15.9 million, with a corresponding decrease in the valuation allowance.

NOLs created in years beginning after 2017 now only offset 80% of taxable income but no longer have a 20-year expiration.

Since the limitation affected the prior period, the Company has determined that its December 31, 2021 tax footnote presentation overstated the gross deferred tax asset and corresponding valuation allowance by $ 15.9 million.

However, there was no net impact to the net deferred tax asset and tax expense as the decrease in the net operating loss was offset completely by a corresponding adjustment to the Company’s overall valuation allowance.

For comparative purposes, the Company’s prior year tax footnote has been revised to reflect the adjustment to the net operating losses and valuation allowance.

The revision had no effect on the previously reported balance sheets, statements of operations, cash flows and stockholders’ equity.

The Company’s revised deferred tax asset disclosures are below:

Deferred tax assets consisted of the following (rounded in millions):

December 31, 2021

As Previously Reported

December 31, 2021

Stock-based compensation

Patent impairment provision

Net operating loss carry-forwards

Research and development tax credits

valuation allowance

The 2022 and 2021 annual effective tax rate is estimated to be 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.

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

As of December 31, 2022 and 2021, there were no tax contingencies or unrecognized tax positions recorded.

On August 16, 2022, President Biden signed the Inflation Reduction Act (the “IRA”).

The IRA contains a number of tax related provisions including a 15% minimum corporate income tax on certain large corporations as well as an excise tax on stock repurchases.

Both provisions are effective for tax years beginning after December 31, 2022.

The Company is in the process of evaluating the IRA but does not expect it to have a material impact on the Company’s consolidated financial statements.

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.

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Deferred tax assets consisted of the following (rounded in millions):

Capitalized start-up costs

December 31, 2022

December 31, 2021

Stock-based compensation

Patent impairment provision

Accrued legal settlement

Net operating loss carry-forward

Net operating loss carry-forwards

Research and development expenses – capitalized for tax purposes

Research and development tax credits

valuation allowance

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 Company has NOL carryforwards for federal and state tax purposes of approximately $ 54 million at December 31, 2022, that is potentially available to offset future taxable income.

For financial reporting purposes, no deferred tax asset was recognized because as of December 31, 2022 and 2021, management currently estimates that it is more likely than not that substantially all of the deferred tax assets, the majority of which are NOLs, 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.

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, 2022

December 31, 2021

Tax benefit at U.S.

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Total provision for income tax benefit

Recent Change in U.S.

Prior to 2022, Internal Revenue Code Section 174 allowed taxpayers to deduct R&D expenditures in the year in which they were incurred.

The 2017 Tax Act amended Section 174, effective for amounts paid or incurred in tax years beginning after December 31, 2021, to require taxpayers to charge their R&D expenditures to a capital account.

Capitalized research and development costs are required to be amortized over five years (15 years for expenditures attributable to foreign research).

Due to the Company’s future significant R&D expenses, the impact of this tax law change will mean that a significant portion of our total operating expenses will be taken as a deduction over a 5-year period rather than being currently deductible.

The Company does not expect to pay cash taxes as a result of this change as our remaining operating expenses after excluding research and development expenses are significant and the Company expects to continue to generate losses for tax purposes.

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.

On October 27, 2022, 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 13,500,000 shares to 25,000,000 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 650,000 shares to 1,100,000 shares.

At December 31, 2022, the Company had 11,900,217 common shares outstanding (including outstanding restricted stock awards totaling 416,316 shares).

Also outstanding were stock options relating to 525,903 shares of common stock, all totaling 12,426,120 shares of common stock and all common stock equivalents, outstanding at December 31, 2022.

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

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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.

Under this agreement, the Company pays Stifel a commission equal to 4.0% of the aggregate gross proceeds of any sales of common stock under the agreement.

The offering of common stock pursuant to this agreement can be terminated with 10 days written notice by either party.

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.

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

The Company filed another prospectus supplement, dated November 9, 2022, with the SEC pursuant to which it may offer and sell shares of common stock having an aggregate offering price of up to $20.0 million from time to time, through the ATM.

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

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

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

The Company sold approximately 1.9 million shares, under the ATM for the year ended December 31, 2022 resulting in net proceeds of approximately $ 11.0 million.

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.

Preferred Stock Equity Offerings

Series A Preferred Stock - Securities Purchase Agreement

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

for $ 2.8 million or approximately $ 2.75 per share.

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

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

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

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

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

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

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

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

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

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

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

Exchange of Outstanding Series A Convertible Preferred Stock for Common Shares

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

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

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

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

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

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

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

Exchange of Outstanding Series A and Series B Convertible Preferred Stock for Common Shares

On October 29, 2021, the Company entered into an agreement with the holder of all of the outstanding Series A Preferred Stock, to exchange all of the outstanding Series A Preferred Stock and the payment-in-kind (PIK) dividends for 262,910 shares of the Company’s common stock ($ 10 per share induced conversion price), without any cash payments by either party.

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

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.

The exchange for both Series A and Series B preferred stock 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.

In accordance with ASC 470-20, the Company accounted for both exchanges 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.

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

Exchange of Outstanding Series B Convertible Preferred Stock for Common Shares

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

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

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

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

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

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

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

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

Also, the Company evaluated the fair value of the incremental 232,111 common shares issued to the Series B Preferred stockholders.

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

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

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

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

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).

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

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

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

The Company did not have any outstanding warrants as of December 31, 2022 and had 45,577 outstanding warrants as of December 31, 2021.

The 45,577 warrants that were 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, expired on May 16, 2022.

Stock-based Compensation

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Stock Options

During the year ended December 31, 2022, the Company issued 18,852 stock options to two consultants.

These options were assigned a weighted average fair value of $ 3.98 per share (total fair value of $ 75,000 ).

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 2021 options issued to the consultants of the Company were assigned a weighted average fair value of $ 2.58 per share (total fair value of $ 150,000 ).

The value was determined using the Black-Scholes pricing model.

The following assumptions were used in the Black-Scholes pricing model:

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97.58 % to 115.37 %

95.15 % to 131.85 %

Risk free interest rate

1.02 % to 3.28 %

0.06 % to 0.93 %

Dividend yield rate

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$ 5.93 to $ 6.27

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

$ 4.55 to $ 6.51

Stock options issued to the Company’s employees, directors and consultants are summarized as follows for the year ended December 31, 2022:

Weighted Average Exercise Price

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Beginning of the year - January 1, 2022

End of the year - December 31, 2021

End of the period - December 31, 2022

Options exercisable

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, 2021:

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Options exercisable

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.

A summary of the status of the Company’s non-vested options as of December 31, 2022 and December 31, 2021, and changes during the year ended December 31, 2021 and the year ended December 31, 2022, is presented below:

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Stock Options Vested

Exercise Prices

3.82 -$ 9 .00

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Common Share Issuances

For the year ended December 31, 2022, the Company issued 10,565 common shares, respectively, to its investor relations firm for services provided during the year ended December 31, 2022.

On December 15, 2022, the Board of Directors approved an equity grant of $ 200,000 in total to its five directors, which equaled to a total of 52,085 shares of common stock issued to the five directors, valued on the grant date at $ 3.84 per share and issued on January 3, 2023.

As of December 31, 2022, the Company accrued these directors’ fees of $ 200,000 under accrued directors’ fees.

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.

On November 18, 2021, the Board of Directors approved an equity grant of $ 210,000 in total to its six directors, which equaled to a total of 19,644 shares of common stock issued to the six directors, valued on the grant date at $ 10.69 per share.

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

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

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

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

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

RSUs Issued and Net Share Settlements for Payments of Withholding Taxes

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

Restricted Stock Units 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 restricted stock units (‘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.

These RSUs awards vest in three equal installments 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.

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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

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Total unvested RSUs outstanding at December 31, 2021

Restricted Stock Awards

Restricted Stock Awards Issued and Net Share Settlements for Payments of Withholding Taxes

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 Company did not meet the performance-based vesting provision.

Therefore, these RSAs awards vest in three equal installments on each of the first three annual anniversaries of the grant date, on November 18, 2022, November 18, 2023 and November 18, 2024.

There was an additional performance-based RSA grant on November 18, 2021 of approximately $ 2 million, which equaled to a total 188,588 shares, with vesting only upon the Company completing a business acquisition in 2022, with the target’s historical financials meeting certain financial performance metrics.

The Company did not meet this milestone and these 188,588 RSAs expired at December 31, 2022 and were returned back to the stock plan.

On November 18, 2022, the first tranche, or 62,862 .

of the total outstanding RSAs vested.

Regarding these 62,862 RSAs that vested, the Company withheld 21,794 common shares of the employees at the stock price on the vesting date of $ 4.80 per share, in order to make payments of withholding taxes of $ 0.1 million on these vested shares.

The Company issued a total of 41,068 shares of common stock, net of the share settlement for the taxes paid upon the vesting of these RSAs, to its employees and consultants.

On December 15, 2022, the Board of Directors approved an equity grant of approximately $ 1.4 million, which equaled to a total of 290,590 RSAs, to all of its employees and two consultants, valued at the stock price on the grant date of $ 4.71 per share.

These RSAs awards vest in three equal installments on each of the first three annual anniversaries of the grant date, on December 15, 2023, December 15, 2024 and December 15, 2025.

As of December 31, 2022 and 2021, there were 416,316 RSAs and 188,588 RSAs included in the total outstanding common shares, respectively and compensation expense recognized straight line over the three-year vesting period.

A total of $ 0.7 million and $ 0.1 million of compensation expense were recorded for the year ended December 31, 2022 and 2021, respectively.

The following summarizes the Company’s RSAs activity:

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Total RSAs vested

Total RSAs forfeited

Total performance-based RSAs expired

Total unvested RSAs outstanding at December 31, 2022

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As of December 31, 2022, there was approximately $ 2.6 million of total unrecognized compensation cost related to these unvested RSAs compensation arrangements.

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

The compensation expense will be recognized on a straight-line basis over the three-year vesting period and the total unrecognized compensation is expected to be recognized over a weighted-average period of 2.43 years.

The components of total stock-based compensation expense included in the Company’s consolidated statements of operations for the years ended December 31, 2022 and 2021 are as follows (rounded in millions):

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Total stock-based compensation expense

Related Party Transactions

On February 9, 2022, the Company entered into an agreement with We Don’t Have Time Inc.

(“WDHT”), an organization with a social media network platform dealing with the climate crisis, pursuant to which WDHT will provide a variety of climate-change related consulting services to the Company and the Company agreed to pay a monthly membership fee of $ 1,200 to WDHT through and including December 2022.

Chakraborty, a member of the Company’s Board of Directors, is also the CEO of WDHT US division.

For the year ended December 31, 2022, the Company incurred $ 14,400 , respectively, in dues paid to WDHT.

In addition, for the year ended December 31, 2022, the Company incurred $ 105,000 in fees to WDHT to attend conferences in which the Company participated with WDHT to promote the Company’s nuclear fuel.

Subsequent Events

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.

Sales under the ATM that were made from January 1, 2023 to the date of the filing of these financial statements were approximately 0.2 million common shares that totaled net proceeds of approximately $ 0.7 million.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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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.

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 the dates indicated.

/s/ Seth Grae

Chief Executive Officer, President and Director

March 30, 2023

(Principal Executive Officer)

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Chief Financial Officer, and Treasurer

March 30, 2023

Larry Goldman

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/s/ Thomas Graham, Jr.

March 30, 2023

Thomas Graham, Jr.

/s/ Victor Alessi

Victor Alessi

/s/ Sweta Chakraborty

March 30, 2023

Sweta Chakraborty

/s/ Jesse Funches

March 30, 2023

Jesse Funches

/s/ Daniel Magraw

March 30, 2023

/s/ Mark Tobin

March 30, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures