LIGHTBRIDGE Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS LIGHTBRIDGE CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2023 2022 ASSETS Current Assets Cash and cash equivalents $ 29,235,892 $ 28,899,997 Prepaid expenses and other current assets 252,403 115,264 Total Current Assets 29,488,295 29,015,261 Other Assets Prepaid project costs and other long-term assets 486,375 345,000 Trademarks 108,865 108,225 Total Assets $ 30,083,535 $ 29,468,486 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued liabilities $ 875,639 $ 350,331 Total Current Liabilities 875,639 350,331 Commitments and contingencies - Note 5 Stockholders’ Equity Preferred stock, $ 0.001 par value, 10,000,000 authorized shares, 0 shares issued and outstanding at September 30, 2023 and December 31, 2022 — — Common stock, $ 0.001 par value, 25,000,000 authorized, 12,934,226 shares and 11,900,217 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 12,934 11,900 Additional paid-in capital 179,222,724 173,595,385 Accumulated deficit ( 150,027,762 ) ( 144,489,130 ) Total Stockholders’ Equity 29,207,896 29,118,155 Total Liabilities and Stockholders’ Equity $ 30,083,535 $ 29,468,486 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents LIGHTBRIDGE CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenue $ — $ — $ — $ — Operating Expenses General and administrative 1,609,142 2,023,937 5,071,889 5,377,185 Research and development 552,751 172,871 1,367,650 601,170 Total Operating Expenses 2,161,893 2,196,808 6,439,539 5,978,355 Other Operating Income Contributed services - research and development — 71,335 31,028 278,189 Total Other Operating Income — 71,335 31,028 278,189 Operating Loss ( 2,161,893 ) ( 2,125,473 ) ( 6,408,511 ) ( 5,700,166 ) Other Income Interest income 322,065 87,943 869,879 110,465 Total Other Income 322,065 87,943 869,879 110,465 Net Loss Before Income Taxes ( 1,839,828 ) ( 2,037,530 ) ( 5,538,632 ) ( 5,589,701 ) Income taxes — — — — Net Loss $ ( 1,839,828 ) $ ( 2,037,530 ) $ ( 5,538,632 ) $ ( 5,589,701 ) Net Loss Per Common Share Basic and Diluted $ ( 0.15 ) $ ( 0.18 ) $ ( 0.47 ) $ ( 0.53 ) Weighted Average Number of Common Shares Outstanding Basic and Diluted 12,252,342 11,085,657 11,902,010 10,633,664 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents LIGHTBRIDGE CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 Additional Total Common Stock Paid-in Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance - January 1, 2023 11,900,217 $ 11,900 $ 173,595,385 $ ( 144,489,130 ) $ 29,118,155 Shares issued - registered offerings - net of offering costs 169,978 170 730,882 — 731,052 Shares issued to consultant and directors for services 55,835 56 214,944 — 215,000 Stock-based compensation — — 284,360 — 284,360 Net loss for the three months ended March 31, 2023 — — — ( 2,026,580 ) ( 2,026,580 ) Balance - March 31, 2023 12,126,030 $ 12,126 $ 174,825,571 $ ( 146,515,710 ) $ 28,321,987 Shares issued - registered offerings - net of offering costs 320,023 320 1,583,010 — 1,583,330 Shares issued pursuant to restricted stock awards 35,088 35 ( 35 ) — Shares issued to consultant for services 3,658 4 14,996 — 15,000 Stock-based compensation — — 316,798 — 316,798 Net loss for the three months ended June 30, 2023 — — — ( 1,672,224 ) ( 1,672,224 ) Balance - June 30, 2023 12,484,799 $ 12,485 $ 176,740,340 $ ( 148,187,934 ) $ 28,564,891 Shares issued - registered offerings - net of offering costs 446,850 447 2,166,657 — 2,167,104 Shares issued to consultant for services 2,577 2 14,998 — 15,000 Stock-based compensation — — 300,729 — 300,729 Net loss for the three months ended September 30, 2023 — — — ( 1,839,828 ) ( 1,839,828 ) Balance - September 30, 2023 12,934,226 $ 12,934 $ 179,222,724 $ ( 150,027,762 ) $ 29,207,896 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents LIGHTBRIDGE CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (Continued) Additional Total Common Stock Paid-in Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance - January 1, 2022 9,759,223 $ 9,759 $ 161,772,641 $ ( 136,991,273 ) $ 24,791,127 Shares issued - registered offerings - net of offering costs 820,641 822 5,412,041 — 5,412,863 Shares issued to consultant and directors for services 8,810 8 14,992 — 15,000 Stock-based compensation — — 264,936 — 264,936 Net loss for the three months ended March 31, 2022 — — — ( 2,049,529 ) ( 2,049,529 ) Balance - March 31, 2022 10,588,674 $ 10,589 $ 167,464,610 $ ( 139,040,802 ) $ 28,434,397 Shares issued - registered offerings - net of offering costs 418,530 418 2,181,564 — 2,181,982 Shares issued to consultant for services 1,796 2 14,998 — 15,000 Stock-based compensation — — 173,772 — 173,772 Net loss for the three months ended June 30, 2022 — — — ( 1,502,642 ) ( 1,502,642 ) Balance - June 30, 2022 11,009,000 $ 11,009 $ 169,834,944 $ ( 140,543,444 ) $ 29,302,509 Shares issued - registered offerings - net of offering costs 527,714 528 3,051,625 — 3,052,153 Shares issued to consultant for services 3,218 3 14,997 — 15,000 Stock-based compensation — — 175,659 — 175,659 Net loss for the three months ended September 30, 2022 — — — ( 2,037,530 ) ( 2,037,530 ) Balance - September 30, 2022 11,539,932 $ 11,540 $ 173,077,225 $ ( 142,580,974 ) $ 30,507,791 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents LIGHTBRIDGE CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 2023 2022 Operating Activities Net Loss $ ( 5,538,632 ) $ ( 5,589,701 ) Adjustments to reconcile net loss from operations to net cash used in operating activities: Common stock issued for services 30,000 30,000 Stock-based compensation 901,887 614,367 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 137,139 ) ( 192,467 ) Prepaid project costs and other long-term assets ( 141,375 ) — Accounts payable and accrued liabilities 740,308 1,033,865 Net Cash Used in Operating Activities ( 4,144,951 ) ( 4,103,936 ) Investing Activities Trademarks ( 640 ) ( 6,174 ) Net Cash Used in Investing Activities ( 640 ) ( 6,174 ) Financing Activities Net proceeds from the issuance of common stock 4,481,486 10,646,998 Net Cash Provided by Financing Activities 4,481,486 10,646,998 Net Increase in Cash and Cash Equivalents 335,895 6,536,888 Cash and Cash Equivalents, Beginning of Period 28,899,997 24,747,613 Cash and Cash Equivalents, End of Period $ 29,235,892 $ 31,284,501 Supplemental Disclosure of Cash Flow Information Cash paid during the period: Interest paid $ — $ — Income taxes paid $ — $ — Non-Cash Financing Activities: Payment of accrued liabilities with common stock $ 215,000 $ 15,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 Table of Contents LIGHTBRIDGE CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Lightbridge Corporation and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America, including a summary of the Company’s significant accounting policies, have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive condensed consolidated financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with the SEC on March 30, 2023. In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms “Lightbridge,” “Company,” “we,” “us” or “our” mean Lightbridge Corporation and all entities included in our condensed consolidated financial statements. The Company was formed on October 6, 2006, when Thorium Power, Ltd., which was incorporated in the state of Nevada on February 2, 1999, merged with Thorium Power, Inc. (TPI), which was incorporated in the state of Delaware on January 8, 1992. On September 29, 2009, the Company changed its name from Thorium Power, Ltd. to Lightbridge Corporation and began its focus on developing and commercializing metallic nuclear fuels. The Company is a nuclear fuel technology company developing its next generation nuclear fuel technology. Basis of Consolidation These condensed consolidated financial statements include the accounts of Lightbridge, a Nevada corporation, and the Company’s wholly-owned subsidiaries, TPI, a Delaware corporation, and Lightbridge International Holding LLC, a Delaware limited liability company. These wholly-owned subsidiaries are inactive. All significant intercompany transactions and balances have been eliminated in consolidation. Fair Value of Financial Instruments In accordance with the provisions of Accounting Standards Codification (ASC) 820, Fair Value Measurements the Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between unaffiliated market participants at the measurement date. The Company generally applies the income approach to determine fair value. This method uses valuation techniques to convert future amounts to a single present amount. The measurement is based on the value indicated by current market expectations with respect to the future amounts. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The hierarchy gives the highest priority to active markets for identical assets and liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows: Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability; and Level 3 - Unobservable inputs that reflect management’s assumptions. 8 Table of Contents For disclosure purposes, assets and liabilities are classified in their entirety in the fair value hierarchy level based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels. 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 (which includes U.S. treasury bills), accounts payable and accrued liabilities are considered to be a Level 1 measurement, representative of their respective fair values because of the short-term nature of those instruments. 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 research and development (R&D) activities required to further enhance and complete the development of its fuel products to a proof-of-concept stage and a commercial stage thereafter. There can be no assurance that the Company will be able to successfully continue to conduct its operations if there is a lack of financial resources available in the future to continue its fuel development activities, and a failure to do so would have a material adverse effect on the Company’s future R&D activities, financial position, results of operations, and cash flows. Also, the success of the Company’s operations will be subject to other numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, contingent liabilities, potential competition with other nuclear fuel developers, including those entities developing accident tolerant fuels, changes in government regulations, support for nuclear power, changes in accounting and taxation standards, inability to achieve overall short-term and long-term research and development milestones toward commercialization, future impairment charges to its assets, and global or regional catastrophic events. The Company may also be subject to various additional political, economic, and other uncertainties. Cash and Cash Equivalents The Company may at times invest its excess cash in interest bearing accounts and U.S. treasury bills. It classifies all highly liquid investments with original stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months as marketable securities. The Company holds cash balances in excess of the federally insured limits of $ 250,000 . It deems this credit risk not to be significant as cash is held by two prominent financial institutions in 2023 and 2022. The Company buys and holds short-term U.S. treasury bills to maturity. U.S. treasury bills totaled $ 19.9 million as of September 30, 2023 and December 31, 2022. The remaining $ 9.3 million and $ 9.0 million at September 30, 2023 and December 31, 2022, respectively, are on deposit with two prominent financial institutions. Contributed Services - Research and Development 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 (not-for-profits and business entities). Subtopic 958-605 requires that nonfinancial assets, which includes services, such as the R&D services provided under the Gateway for Accelerated Innovation in Nuclear (GAIN) vouchers described in Note 6, 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 R&D expense, rather than depicting contributed services - research and development as a reduction of R&D expense. The fair value of contributed services was determined by the cost of professional time and materials which were charged by the subcontractor who fulfilled the services contributed under the grant award. The principal market used to arrive at fair value is the market in which the Company operates. 9 Table of Contents 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 any stock options granted is measured at the grant date. In accordance with Accounting Standards Update (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 is recognized on a straight-line basis over the requisite service period of the award. Awards with both service-based or performance-based and market-based vesting conditions: If an award vesting or exercisability is conditional upon the achievement of either a market condition or performance or service conditions, the requisite service period is generally the shortest of the explicit, implicit, and derived service period. The Company elected to use the Black-Scholes pricing model to determine the fair value of stock options on the measurement date of the grant for service-based vesting conditions and the Monte-Carlo valuation method for performance-based or market-based vesting conditions for stock options. The Company estimates forfeitures at the time of grant and revises the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rate estimate used for all equity awards was zero, based on the experience of the Company having an insignificant historical forfeiture rate. Shares that are issued to employees upon exercise of the stock options or vesting of Restricted Stock Units (RSUs) or Restricted Stock Awards (RSAs) grants may be issued net of a number of shares with a fair value equal to the amount required to satisfy applicable tax withholding requirements. 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 RSU or RSA 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. These restrictions lapse as the award vests. 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 condensed 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. The second type of RSAs that can be granted by the Company can 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. Recent Accounting Pronouncement In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Adoption is either through a modified retrospective method or a full retrospective method of transition. The Company does not currently have any transactions or instruments to which this standard applies. If in the future, the Company issues new convertible debt, warrants or other instruments, the standard may have a material effect, but it cannot be determined at this time. 10 Table of Contents Recently Adopted Accounting Pronouncement The FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires a financial asset to be presented at the net amount expected to be collected. The financial assets of the Company in scope of ASU 2016-13 will primarily be accounts receivable. The Company will estimate an allowance for expected credit losses on accounts receivable that result from the inability of customers to make the required payments. In estimating the allowance for expected credit losses, consideration will be given to the current aging of receivables, historical experience, and a review for potential bad debts. The Company does not expect to have revenue or substantial receivables for the foreseeable future. The Company adopted this guidance on January 1, 2023 and it did not have a material impact since the Company had no outstanding accounts receivable on which to apply this new standard. Note 2. Net Loss Per Share Basic net loss per share is computed using the weighted-average number of common shares outstanding during the reporting period, except that it does not include unvested common shares subject to repurchase or cancellation. Diluted net loss per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (see Note 7. Stockholders’ Equity and Stock-Based Compensation). The treasury stock method is used in calculating diluted net loss per share for potentially dilutive stock options, which assumes that any proceeds received from the exercise of in-the-money stock options would be used to purchase common shares at the average market price for the period, unless including the effects of these potentially dilutive securities would be anti-dilutive. The following table sets forth the computation of the basic and diluted loss per share (dollars in millions, except share data): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Basic Numerator: Net loss attributable to common stockholders $ ( 1.8 ) $ ( 2.0 ) $ ( 5.5 ) $ ( 5.6 ) Denominator: Weighted-average common shares outstanding 12,252,342 11,085,657 11,902,010 10,633,664 Basic net loss per share $ ( 0.15 ) $ ( 0.18 ) $ ( 0.47 ) $ ( 0.53 ) Diluted Numerator: Net loss attributable to common stockholders, basic $ ( 1.8 ) $ ( 2.0 ) $ ( 5.5 ) $ ( 5.6 ) Effect of dilutive securities — — — — Net loss, diluted $ ( 1.8 ) $ ( 2.0 ) $ ( 5.5 ) $ ( 5.6 ) Denominator: Weighted average common shares outstanding - basic 12,252,342 11,085,657 11,902,010 10,633,664 Potential common share issuances: Weighted-average common shares outstanding 12,252,342 11,085,657 11,902,010 10,633,664 Diluted net loss per share $ ( 0.15 ) $ ( 0.18 ) $ ( 0.47 ) $ ( 0.53 ) 11 Table of Contents The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the periods noted below, as they would have been anti-dilutive due to the Company’s losses for the three and nine months ended September 30, 2023 and 2022 and also because the exercise price of certain of these outstanding securities was greater than the average closing price of the Company’s common stock. Three and Nine Months Ended September 30, 2023 2022 Stock options outstanding 503,843 525,903 RSAs outstanding 451,404 188,588 Total 955,247 714,491 Note 3. Prepaid Expenses - Current and Long-term Assets In 2022, the Company entered into agreements with Idaho National Laboratory (INL), in collaboration with the DOE, to support the development of Lightbridge Fuel™. At the time of signing, the Company made advanced payments for future project work totaling $ 0.4 million to Battelle Energy Alliance, LLC (BEA), DOE’s operating contractor for INL. In May 2023, the Company and INL modified the agreements to extend the contract term to May 2029, aligning it with the duration of the irradiation testing and increasing the advanced payments by $ 0.1 million. The prepaid project costs and other long-term assets were $ 0.5 million as of September 30, 2023 and $ 0.4 million as of December 31, 2022. Note 4. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following (rounded in millions): September 30, December 31, 2023 2022 Trade payables $ 0.1 $ 0.2 Accrued legal and consulting expenses 0.1 0.2 Accrued bonus 0.7 — Total $ 0.9 $ 0.4 Note 5. Commitments and Contingencies Commitments Operating Leases 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 non-cancellable operating leases for 2023 totaled $ 23,000 . Total rent expense for the three and nine months ended September 30, 2023 was approximately $ 23,000 and $ 70,000 , respectively. Total rent expense for the three and nine months ended September 30, 2022 was approximately $ 23,000 and $ 70,000 , respectively. Project Task Statements (Purchase Orders) The Company has approximately $ 3.1 million in outstanding project task statement (PTS) commitments to BEA relating to the R&D work being conducted under the Strategic Partnership Project Agreement and Cooperative Research and Development Agreement at INL (see Note 6. Research and Development Costs). Performance of work under these agreements may be terminated at any time by either party, without any liability, after the effective date of termination, upon giving a thirty-day written notice under the Strategic Partnership Project Agreement and a sixty-day written notice under the Cooperative Research and Development Agreement, to the other party. In the event of termination, the Company shall be responsible for BEA’s costs (including the closeout costs), through the effective date of termination, but in no event shall the Company’s cost responsibility exceed the total estimated cost stated in each PTS and any subsequent modification to the PTS. Note 6. Research and Development Costs In 2022, Lightbridge entered into agreements with BEA, to support the development of Lightbridge Fuel™. These framework agreements use an innovative structure that consists of an “umbrella” Strategic Partnership Project Agreement and an “umbrella” Cooperative Research and Development Agreement, 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 PTSs. For the three and nine months ended September 30, 2023 the Company recorded $ 0.2 million and $ 0.5 million, respectively, in research and development costs associated with INL. 12 Table of Contents 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™. 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. The PNNL GAIN voucher project was completed on January 31, 2023. During the three and nine months ended September 30, 2023, the Company recorded zero dollars and $ 31,000 of contributed services - research and development, respectively. During the three and nine months ended September 30, 2022, the Company recorded $ 0.1 million and $ 0.3 million of contributed services - research and development, respectively, for work that was completed that caused the DOE to incur payment obligations to its contractor related to the GAIN voucher. The Company recorded the corresponding amount as R&D expenses for the work that was completed by the DOE contractor. 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 its contractor for the services provided do not differ materially from what the Company would have paid had it directly contracted for these services for its R&D activity. Note 7. Stockholders’ Equity and Stock-Based Compensation At September 30, 2023, the Company had 12,934,226 common shares outstanding (including outstanding RSAs totaling 451,404 shares). Also outstanding were stock options relating to 503,843 shares of common stock ( 491,233 stock options were vested), all totaling 13,438,069 shares of common stock and all common stock equivalents, outstanding at September 30, 2023. At December 31, 2022, the Company had 11,900,217 common shares outstanding (including outstanding RSAs totaling 416,316 shares). Also outstanding were stock options relating to 525,903 shares of common stock ( 514,513 stock options were vested), all totaling 12,426,120 shares of common stock and all common stock equivalents, outstanding at December 31, 2022. Common Stock Equity Offerings At-the-Market (ATM) Offerings On November 9, 2022, the Company filed a prospectus supplement with the SEC pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to $ 20.0 million from time to time through its ATM. On April 4, 2023, the Company filed an additional prospectus supplement revising the amount available to a total of $ 17.9 million with $ 13.9 million available for future share issuances as of September 30, 2023. The Company records its ATM sales on a settlement date basis. The Company sold approximately 0.9 million shares under the ATM for the nine months ended September 30, 2023 resulting in net proceeds of $ 4.5 million (stock issuance costs were $ 0.2 million). The Company sold approximately 1.8 million shares under the ATM for the nine months ended September 30, 2022 resulting in net proceeds of $ 10.6 million (stock issuance costs were $ 0.5 million). Stock-based Compensation 2020 Equity Incentive Plan On March 9, 2020, the Board of Directors adopted the Company’s 2020 Omnibus Incentive Plan (the 2020 Plan). On September 3, 2020, the shareholders approved the 2020 Plan to authorize grants of the following types of awards (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock and Restricted Stock Units, and (d) Other Stock-Based and Cash-Based Awards. The number of shares of common stock available for issuance under the 2020 Plan is 1,800,000 shares. 13 Table of Contents Stock Options During the nine months ended September 30, 2023, the Company issued 28,538 stock options to two consultants. These options were assigned a fair value of $ 1.68 per share (total fair value of $ 47,830 ). During the nine months ended September 30, 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 $ 75,002 ). The value was determined using the Black-Scholes pricing model. The following assumptions for these option grants were used in the Black-Scholes pricing model: September 30, 2023 2022 Expected volatility 68.13 %- 95.7 % 97.58 %- 115.37 % Risk free interest rate 4.21 %- 4.88 % 1.02 %- 3.275 % Dividend yield rate — — Weighted average years 1 – 6 years 2 - 6 years Closing price per share - common stock 4.31 - 4.35 $ 5.93 - $ 6.27 Common Share Issuances For the nine months ended September 30, 2023 and 2022, the Company issued 9,985 shares and 7,276 shares of common stock, respectively, to its investor relations firm for services provided during the period. On December 15, 2022, the Board of Directors approved an equity grant valued at $ 200,000 in total to its five independent directors, which resulted in the issuance of a total of 52,085 shares of common stock to the five independent directors, valued on the grant date at $ 3.84 per share and issued on January 3, 2023. On November 18, 2021, the Board of Directors approved an equity grant valued at $ 210,000 in total to its six independent directors, which resulted in the issuance of a total of 19,644 shares of common stock to the six independent directors, valued on the grant date at $ 10.69 per share. There were 13,096 common shares issued to four independent directors on November 18, 2021 and the remaining 6,548 shares of common stock were issued to the two remaining independent directors on January 1, 2022. Restricted Stock Awards Issued On May 3, 2023, the Board of Directors approved an RSA equity grant valued at $ 120,000 to one new officer of the Company, which resulted in the issuance of a total of 35,088 shares of common stock to the new employee, valued on the grant date at $ 3.42 per share and issued on May 3, 2023. These RSAs vest annually in equal installments over 3 years. These 35,088 shares were included in the total outstanding common shares at September 30, 2023 and compensation expense will be recognized straight line over the three-year vesting period. As of September 30, 2023 and December 31, 2022, there were 451,404 and 416,316 RSAs included in the total issued and outstanding common stock, respectively. Compensation expense is recognized straight line over the three-year vesting period. A total of $ 0.9 million and $ 0.4 million of compensation expense was recorded for the nine months ended September 30, 2023 and September 30, 2022, respectively, for the RSAs. As of September 30, 2023, there was $ 1.9 million of total unrecognized compensation cost related to these unvested RSAs. 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 1.79 years. The components of total stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 are as follows (rounded in millions): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2023 2022 2023 2022 General and administrative expenses $ 0.3 $ 0.2 $ 0.8 $ 0.6 Research and development expenses — — 0.1 — Total stock-based compensation expense $ 0.3 $ 0.2 $ 0.9 $ 0.6 14 Table of Contents Note 8. 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 provides a variety of climate-change related consulting services to the Company and the Company pays a monthly membership fee of $ 1,200 to WDHT. Dr. Chakraborty, a member of the Company’s Board of Directors, is also the CEO of WDHT’s US division. For the three months ended September 30, 2023 and 2022, the Company incurred $ 3,600 , in dues paid to WDHT. For the nine months ended September 30, 2023 and 2022, the Company incurred $ 10,800 , in dues paid to WDHT. In addition, for the three months and nine months ended September 30, 2022, the Company incurred $ 0 and $ 85,000 , respectively, in fees to WDHT to attend two conferences in which the Company participated with WDHT to promote the Company’s nuclear fuel. Note 9. Subsequent Events ATM Sales Sales of common stock under the Company’s ATM from October 1, 2023 to October 31, 2023 amounted to approximately 25,000 shares, which resulted in total net proceeds of approximately $ 111,000 . Engineering Study of Lightbridge Fuel for use in CANDU reactors On October 16, 2023, we engaged Institutul de Cercetări Nucleare Pitești, a subsidiary of Regia Autonoma Tehnologii pentru Energia Nucleara in Romania to perform an engineering study to assess the compatibility and suitability of Lightbridge Fuel for use in CANDU reactors. This assessment, to be completed by the end of 2024, will cover key areas including mechanical design, neutronics analysis, and thermal and thermal-hydraulic evaluations. The total fixed price to be paid by the Company for this study is $186,300, with $55,890 due within 15 calendar days of signing this agreement and the remaining balance, consisting of two payments of $70,349 and $60,061, due upon the meeting and acceptance of certain task milestones . 15 Table of Contents FORWARD-LOOKING STATEMENTS In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. We use words such as “believe”, “expect”, “anticipate”, “project”, “target”, “plan”, “optimistic”, “intend”, “aim”, “will”, or similar expressions, which are intended to identify forward-looking statements. Such statements include, among others: · those concerning market and business segment growth, demand, and acceptance of our nuclear fuel technology and other steps to commercialization of Lightbridge Fuel™; · any projections of sales, earnings, revenue, margins, or other financial items; · any statements of the plans, strategies, and objectives of management for future operations and the timing and outcome of the development of our nuclear fuel technology; · any statements regarding future economic conditions or performance; · any statements about future financings and liquidity; · the Company’s anticipated financial resources and position; and · all assumptions, expectations, predictions, intentions, or beliefs about future events and other statements that are not historical facts. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions that if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties, among others, include: · our ability to commercialize our nuclear fuel technology, including risks related to the design and testing of nuclear fuel incorporating our technology and the degree of market adoption of the Company’s product and service offerings; · dependence on strategic partners; · any adverse changes to our agreements or relationship with the U.S. government and its national laboratories; · our ability to fund our future operations, including general corporate overhead and outside research and development costs, and continue as a going concern; · the demand for our fuel for nuclear reactors and our ability to attract customers; · our ability to manage the business effectively in a rapidly evolving market; · our ability to employ and retain qualified employees and consultants that have experience in the nuclear industry; · competition and competitive factors in the markets in which we compete, including from accident tolerant fuels; · the availability of nuclear test reactors and the risks associated with unexpected changes in our nuclear fuel development timeline; · the increased costs associated with metallization of our nuclear fuel; · uncertainties related to conducting business in foreign countries; · public perception of nuclear energy generally; · changes in laws, rules, and regulations governing our business; · changes in the political environment; · development and utilization of, and challenges to, our intellectual property domestically and abroad; · the trading price of our securities is likely to be volatile, and purchasers of our securities could incur substantial losses; and · the other risks and uncertainties identified in Item 1A. Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2022. Most of these factors are beyond our ability to predict or control and you should not put undue reliance on any forward-looking statement. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Forward-looking statements speak only as of the date on which they are made. The Company assumes no obligation and does not intend to update these forward-looking statements for any reason after the date of the filing of this report, to conform these statements to actual results or to changes in our expectations, except as required by law. 16 Table of Contents