LIGHTBRIDGE Corp 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is intended to help the reader understand Lightbridge Corporation, our operations, and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes thereto, which are contained in Part II. Item 8. Financial Statements and Supplementary Data of this report. This MD&A consists of the following sections: · Overview of Our Business and Development of Lightbridge Fuel™ - a general overview of our business and updates; · Critical Accounting Estimates - a discussion of critical judgments and estimates; · Operations Review - an analysis of our consolidated results of operations for the periods presented in our consolidated financial statements; and · Liquidity, Capital Resources, and Financial Position - an analysis of our cash flows and an overview of our financial position. As discussed in more detail under “Forward-Looking Statements” preceding this MD&A, the following discussion contains forward-looking statements that are based on our management’s current expectations, estimates, and projections, which are subject to a number of risks and uncertainties. Our actual results may differ materially from those discussed in these forward-looking statements because of the risks and uncertainties inherent in future events, including those set forth under “Forward-Looking Statements” and Part I. Item 1A. Risk Factors . 26 Table of Contents Overview of Our Business and Recent Developments Our Business Our Company’s goal is to impact in a meaningful way the world’s climate and energy problems. We are developing and plan to commercialize innovative, proprietary nuclear fuel designs, which we expect will significantly enhance the nuclear power industry’s economics due to higher power output and longer fuel cycles, and we also expect the fuel will provide improved safety margins. We are an early-stage technology company in the product development phase and are pre-revenue. Our ongoing operations are currently being financed primarily by raising new equity capital. Recent Developments FEED Study with Centrus Energy for a Lightbridge Pilot Fuel Fabrication Facility On December 5, 2023 we entered into an agreement with Centrus Energy Corp. (Centrus Energy) to conduct a front-end engineering and design (FEED) study to construct a Lightbridge Pilot Fuel Fabrication Facility (LPFFF) to manufacture Lightbridge Fuel™ using high-assay low-enriched uranium (HALEU) at the American Centrifuge Plant in Piketon, Ohio, the only HALEU production plant in the world outside of Russia. The FEED study will identify infrastructure and licensing requirements as well as the estimated cost and construction schedule for the LPFFF. Centrus Energy’s wholly-owned subsidiary, American Centrifuge Operating, LLC, will lead the study. The work is expected to be completed in 2024 at a fixed price of approximately $0.5 million. Engineering Study of Lightbridge Fuel™ for use in Canada Deuterium Uranium (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 will cover key areas including mechanical design, neutronics analysis, and thermal and thermal-hydraulic evaluations. The findings from this engineering study will play an important role in guiding future economic evaluations and navigating potential regulatory licensing-related issues for potential use of Lightbridge Fuel™ in CANDU reactors. The work is expected to be completed in 2024 at a fixed price of approximately $0.2 million. HALEU Consortium Membership To support establishment of domestic HALEU infrastructure, the DOE announced on December 7, 2022 the creation of a HALEU Consortium. According to the DOE, the purposes of the HALEU Consortium include: (i) providing the Secretary of Energy HALEU demand estimates for domestic commercial use, (ii) purchasing HALEU made available to members for commercial use under the program, (iii) carrying out demonstration projects using HALEU under the program, and (iv) identifying actionable opportunities to improve the reliability of the HALEU supply chain. On December 15, 2022, the Company submitted a formal request to the DOE to join the HALEU Consortium to mitigate HALEU supply risk. On January 12, 2023, the Company received written confirmation from the DOE of Lightbridge’s membership in the HALEU Consortium. HALEU is a key component necessary for the fabrication and operation of Lightbridge Fuel™ in light water reactors. Idaho National Laboratory Agreements In December 2022, Lightbridge entered into agreements with Battelle Energy Alliance, LLC (BEA), the DOE’s operating contractor for Idaho National Laboratory (INL), to support the development of Lightbridge Fuel™. The framework agreements use an innovative structure that consists of an “umbrella” Strategic Partnership Project Agreement (SPP) and an “umbrella” Cooperative Research and Development Agreement (CRADA), each with BEA, with an initial duration of seven years. We anticipate that the initial phase of work under the two agreements that has been released will culminate in casting and extrusion of unclad fuel material samples using enriched uranium supplied by the DOE that will subsequently be inserted for irradiation testing in the Advanced Test Reactor (ATR) at INL. 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, which will be obtained during post-irradiation examination work to be released under a future Project Task Statement, will support fuel performance modeling and regulatory licensing efforts for commercial deployment of Lightbridge Fuel™. We plan to negotiate subsequent phases of work under the two umbrella agreements that have not yet been released that may include post-irradiation examination of the irradiated fuel material coupons, loop irradiation 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. 27 Table of Contents In 2023, we worked with INL to complete and issue a Quality Implementation Plan (QIP) for our collaborative project at INL which was an essential first step to ensure all future work performed at INL on the project would meet the U.S. nuclear industry quality assurance requirements. Additionally, we worked with INL to demonstrate casting of delta-phase uranium-zirconium ingots with depleted uranium using existing INL equipment. As part of that effort, we cast several laboratory-scale ingots using depleted uranium and zirconium alloy materials. Our next step is to cast additional ingots using depleted uranium and zirconium alloy materials and conduct initial extrusions from those ingots in the next several months at INL. Nuclear Energy University Program Awards We are working with Texas A&M University (TAMU), NuScale Power, and Structural Integrity Associates on a 3-year study led by TAMU. In mid-2023, TAMU was awarded $1 million by the DOE’s Nuclear Energy University Program (NEUP) R&D Awards to conduct this study. The project entails a characterization of the performance of the Lightbridge Fuel™ Helical Cruciform advanced fuel design, which will generate sets of experimental data on friction factor, flow, and heat transfer behavior under NuScale’s small modular reactors (SMRs) simulated normal and off-normal conditions. We previously announced our ongoing NEUP project with the Massachusetts Institute of Technology (MIT). The study led by MIT and funded by DOE relates to evaluation of accident tolerant fuels in various SMRs. The project aims to simulate the fuel and safety performance of Lightbridge Fuel™ for the NuScale SMR and provide scoping analysis to improve the safety and economics of water-cooled SMRs. We do not have any performance obligations with the collaboration teams working on the above-mentioned projects and will not receive any revenue or record any benefits from these awards. Fuel Development Strategy We believe our metallic fuel can be used in different types of water-cooled commercial power reactors, such as pressurized water reactors (PWRs), boiling-water reactors (BWRs), Russian-designed water-cooled, water-moderated energetic reactors (VVERs), CANDUs, water-cooled SMRs, and water-cooled research reactors. We have obtained patent validation in key countries (in our judgement) and will continue to seek patent validation in countries that either currently operate or are expected to build and operate a large number of nuclear power reactors compatible with our fuel technology. Below is a brief description of each key fuel development step leading up to a lead test assembly (LTA) operation in a commercial reactor. a. Fuel Fabrication In the short to medium term, we expect the development of the fabrication processes for Lightbridge Fuel™ to be performed utilizing existing facilities and equipment within the DOE national laboratory complex and other facilities. Discussions are currently ongoing with the INL to perform process development activities and establish the capability to manufacture development quantities of fuel rods for irradiation testing. Fabrication of LTAs will require a dedicated pilot-scale fuel fabrication facility. We estimate the major scopes of work to establish a manufacturing capability for LTAs would take 5-8 years to complete. In December 2023, to help us identify infrastructure and regulatory licensing requirements as well as better define cost and schedule estimates for a LPFFF, we entered into a contract with Centrus Energy to conduct a FEED Study for the LPFFF. Expanding that pilot-scale fuel fabrication facility from LTA capability to batch reload quantities would require a substantial additional capital investment in the manufacturing facility and equipment. These estimates assume sufficient funding availability and that the project receives prioritization by the DOE and US Nuclear Regulatory Commission (NRC) to facilitate access to the required quantities of the HALEU material and timely regulatory licensing of such a facility. b. Nuclear Material/Coupon Sample Irradiation Test Lightbridge’s irradiation testing program includes coupon irradiation of material samples of its uranium-zirconium fuel alloy which will allow characterization of the underlying thermophysical behavior of the fuel alloy. This project is currently underway, and we expect insertion of fuel material coupons in the ATR in 2025 and completion of irradiation testing to full burnup and post-irradiation examination of the fuel material coupons in approximately four years thereafter. The data obtained from this program will be a fundamental component of Lightbridge’s accelerated fuel qualification approach described below as it will be used to inform and develop the physics-based models and simulations of the fuel rod behaviors. 28 Table of Contents c. Loop Irradiation Testing The purpose of the loop irradiation testing of Lightbridge’s metallic fuel rods is to demonstrate the performance and behavior of the fuel rods under prototypic commercial reactor operating conditions typical of PWRs at a power level and burnup accumulation higher than the fuel would experience in normal operation in a commercial power plant. This will provide a physical demonstration of the capabilities of the fuel rods in order to ensure reactor safety. Such testing is expected to provide information of sufficient detail to validate the performance of individual fuel rods such that their behavior in normal operating conditions of a NRC-regulated nuclear power plant would be sufficiently well understood to request a license amendment from the NRC for operation of a LTA. We expect execution of such a loop irradiation test to be performed in the ATR at INL. The ATR currently has limited irradiation loop test facilities; however, installation of the new so-called “I-loops” will increase the loop irradiation capacity of ATR for performing tests on Lightbridge Fuel™ in the desired test conditions. We expect the performance of the irradiation test to take three years of in-reactor time plus an additional one year for post-irradiation examination, wherein analysis of the fuel rod performance and behavior is performed, from the time when the additional test loop becomes available. d. Preparation for Lead Test Assembly Operation Insertion of an LTA with Lightbridge’s fuel rods in a nuclear power plant requires the power plant owner to obtain approval from the NRC based on a safety evaluation and justification that the LTA will not be detrimental to the plant’s licensed operations. This justification must address numerous technical areas (e.g., neutronics design, mechanical design, thermal hydraulic design, materials science, reactor operations, etc.) and include considerations of the performance of the LTA itself as well as its interaction with other fuel assemblies in the reactor core which may be impacted by the presence of the LTA. The safety evaluation must result in confirmation that the plant’s ability to ensure plant worker and public safety is not compromised due to the operation of the LTA. This safety justification will require cooperation between Lightbridge, the fuel manufacturer, and the power plant owner. With historical approaches, the development and qualification of a nuclear fuel system can take 20-30 years as the approach has been driven largely by a cycle of physical testing and design changes based on the results of those physical tests. Computer modeling and simulation has increasingly been used in support of fuel qualification efforts, but the cyclical approach continues to be the default methodology. Advanced nuclear fuel developers are now taking an approach that leverages significant improvements in computational capability in a methodology referred to as Accelerated Fuel Qualification (AFQ). The AFQ approach combines physics-informed modeling and simulation coupled with targeted physical testing such that the overall fuel qualification effort could be significantly reduced in terms of cost and time. Lightbridge intends to leverage the AFQ methodologies to qualify its advanced fuels. Along with leveraging the AFQ approach, uranium-zirconium fuel technology has the benefits of being previously demonstrated in operating icebreaker reactors and several aspects of the performance of the fuel have been demonstrated. This enables Lightbridge to begin designing an LTA and developing the necessary computer models of the fuel behavior, prior to obtaining the results of the loop irradiation testing of the fuel rod. Along with the irradiation testing and computer simulations, some physical testing of the fuel assembly design will be required. Lightbridge anticipates that such ‘out-of-pile’ testing to justify the LTA performance will take approximately four years. We expect that the LTA design effort, development of computer modeling and simulation capabilities, and performance of the LTA safety justification will take eight years. The NRC’s review and approval of the license amendment for LTA insertion is expected to require two years after the license amendment is submitted. Based on these activities and time estimates, Lightbridge expects to have LTAs of its fuel ready for insertion in a commercial reactor in the 2030s. 29 Table of Contents The above fuel development strategy is based on the following key assumptions: · A large portion of our project funding requirements is met with direct or indirect cash and/or in-kind contributions from government and/or strategic partner and/or other third-party sources; · our expected time estimates for loop availability in the ATR can be achieved by the national laboratory complex; · partnership with nuclear power plant and fuel manufacturer for LTA demonstration purposes is achieved in a timely manner and does not delay the assumed start of work; · potential accelerated fuel qualification methodology (AFQ) that we currently plan to develop for Lightbridge Fuel™ is accepted by the NRC as sufficient for the safety justification of the LTAs; · execution of out-of-reactor fuel development activities can be performed in parallel with LTA design; · facilities and personnel for completion of the fuel development work are available when necessary and do not delay the execution of our research and development activities; · by implementation of accelerated burn-up techniques, the irradiation loop at ATR is capable of 50% reduction in irradiation time compared to operating commercial reactor fuel cycle; and · the pilot-scale fuel fabrication facility will be capable of manufacturing LTA quantities of metallic fuel rods to the desired rod length and specification. Operations Review Consolidated Results of Operations The following table presents our operating results for the years indicated (rounded to millions): Year Ended Increase Increase December 31, (Decrease) (Decrease) 2023 2022 Change $ Change % Operating Expenses General and administrative $ 7.1 $ 7.5 $ (0.4 ) (5 )% Research and development 1.9 0.7 1.2 171 % Total Operating Expenses 9.0 8.2 0.8 10 % Other Operating Income Contributed services - research and development — 0.4 (0.4 ) (100 )% Total Other Operating Income — 0.4 (0.4 ) (100 )% Total Operating Loss (9.0 ) (7.8 ) 1.2 15 % Other Income 1.1 0.3 0.8 267 % Net loss before Income Taxes (7.9 ) (7.5 ) 0.4 5 % Income tax expense — — — — Net Loss $ (7.9 ) $ (7.5 ) $ 0.4 5 % Operating Expenses General and Administrative General and administrative expenses consist mostly of compensation and related costs for personnel and facilities, stock-based compensation, finance, human resources, information technology, and fees for consulting and other professional services. Professional services are principally comprised of legal, audit, strategic advisory services, and outsourcing services. Total general and administrative expenses decreased by $0.4 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022. The decrease of $0.4 million was primarily due to a decrease in employee compensation and employee benefits of $0.4 million, due to the increase in the time allocation percentage of G&A labor costs to research and development expenses, a decrease in consulting expenses of $0.1 million, a decrease in insurance expense of $0.1 million, a decrease in dues and subscriptions of $0.1 million, and a decrease in promotion expenses of $0.1 million, offset by an increase in stock-based compensation of $0.4 million, which was due to the partial vesting of restricted stock awards granted in 2022. 30 Table of Contents Total stock-based compensation included in general and administrative expenses was $1.1 million for the years ended December 31, 2023 and 2022. Research and Development (R&D) R&D expenses consist primarily of costs associated with our CRADA and SPP agreements with INL for the research and development of our fuel, employee compensation and related fringe benefits including stock-based compensation and related allocable overhead costs for the research and development of our fuel and contributed services - research and development for the work performed under the Gateway for Accelerated Innovation in Nuclear (GAIN) vouchers. Total R&D expenses increased by $1.2 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022 due to the increase in R&D activities related to the development of our fuel. This increase primarily consisted an increase in INL project labor costs of $0.8 million, an increase in allocated employee compensation and employee benefits of $0.4 million, an increase in consulting expenses of $0.1 million, an increase in travel expenses of $0.1 million and an increase in stock-based compensation expenses of $0.1 million. This increase was offset by a decrease of $0.3 million primarily related to the GAIN voucher work recorded as research and development expenses in 2022 that was completed in the first quarter of 2023. We currently anticipate investing approximately $6 million to $8 million in the R&D of our nuclear fuel over the next 12 to 15 months. Due to the nature of our R&D expenditures, cost and schedule estimates are inherently uncertain and can vary significantly as new information and the outcome of these R&D activities become available. Our future business operations are dependent on budgetary constraints due primarily to market conditions and the uncertainty of future liquidity and capital resources available to us to conduct our future R&D activities. Other Operating Income There was a decrease in other operating income of $0.4 million related to a decrease in contributed services - research and development for the year ended December 31, 2023 due to the GAIN voucher project that was completed in the first quarter of 2023. There are no outstanding GAIN vouchers. Contributed services - research and development are recorded with a charge to R&D expenses and a corresponding amount recorded to contributed services - research and development. Other Income There was an increase in other income of $0.8 million due to rising treasury bill interest rates over the past year which resulted in an increase in interest income earned from the purchase of treasury bills and from our bank savings account for the year ended December 31, 2023, as compared to the year ended December 31, 2022. Provision for Income Taxes We incurred a pre-tax net loss for both 2023 and 2022. We reviewed all sources of income for the purpose of recognizing the deferred tax assets and concluded a full valuation allowance for 2023 and 2022 was necessary. Therefore, we did not have a provision for taxes for both years ended December 31, 2023 and 2022. Prior period ownership changes, coupled with the Company’s projections of no taxable income for the foreseeable future, will substantially limit any future benefit to be derived from our NOLs. See Note 7. Income Taxes of the Notes to our Consolidated Financial Statements included in Part II. Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for information regarding our income taxes and the limitations on the utilization and amount of our net operating loss carry-forwards. Liquidity, Capital Resources and Financial Position Liquidity Outlook We measure liquidity in terms of our ability to fund the cash requirements of our R&D activities and our general and administrative expenses, including our contractual obligations and other commitments. We believe that based on our current level of operating expenses and currently available cash resources, we will have sufficient funds available to cover our business activities and operating cash needs for the next 12 months. Our long-term cash requirements are currently estimated to be an average of $10.0 million of outside or third-party R&D expenditures per year over the next 10-15 years. In order to meet these long-term cash requirements for future planned operations to develop and commercialize our nuclear fuel, including any additional expenditures that may result from unexpected developments, it will be necessary for our project to receive direct or indirect funding and/or in-kind support from government and/or strategic partners and/or other third-party sources. 31 Table of Contents At December 31, 2023, we had cash and cash equivalents of $28.6 million, as compared to $28.9 million at December 31, 2022, a decrease of $0.3 million. We raised net proceeds of $6.4 million from the sale of approximately 1.5 million shares of common stock during the year ended December 31, 2023. Our net cash used in operating activities for the year ended December 31, 2023 was $6.5 million and our cash flow projections indicate that we will have continued negative cash flows for the foreseeable future. We currently do not anticipate any incoming cash flows, other than the sale of common stock through our ATM offering. Therefore, we are not profitable, and we cannot provide any assurance that we will become profitable in the future. We will continue to incur losses because we are in the early development stage of commercializing our nuclear fuel. We have approximately $28.2 million of working capital as of the date of this filing. We currently project a negative cash flow from our operations for both our general and administrative and R&D expenses, resulting in total expected expenditures of approximately $13.8 million for the next 12 months. Our R&D expenses are expected to increase over the next 12-15 months. Our cash balance at December 31, 2023 and as of the date of this filing exceeds our anticipated cash requirements for the next 12 months. There are inherent uncertainties in forecasting the future required R&D or other expenditures in the future. Once other anticipated agreements are finalized or other future R&D agreements are entered into and the future R&D expenses are known, we expect to incur a significantly higher level of future required R&D expenses and higher negative monthly cash flows from operations in the future. If sufficient funding becomes available to us, our R&D activities may significantly increase in the future. This funding is needed to continue our nuclear fuel development project and to achieve our future R&D milestones. The actual amount of cash we will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of the R&D work at the DOE’s national laboratories for our fuel along with the cost to commercialize our nuclear fuel. Accordingly, there is high potential for budget variances in the current cost projections and fuel development timelines of our current planned operations over the fuel development period. We will continue to utilize our ATM to finance our future R&D and corporate activities. We will need to receive substantial funding and in-kind support from government and/or strategic partners and/or other third-party sources throughout our nuclear fuel R&D development period in order to fund our ongoing R&D efforts in the future. If we are unable to obtain such funding and/or in-kind support that meets our future R&D cash requirements, we will need to seek other funding, which may include the issuance of additional shares of the Company’s common stock, if available. This will result in dilution to our existing stockholders. If we can raise additional funds through the issuance of preferred stock, other equity or convertible securities, these securities could have rights or preferences senior to those of our common stock and could contain covenants that restrict our operations in the future. There can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all. Our current source of cash available to us for the next 12 months, in addition to cash and cash equivalents on hand, is the potential funding from equity issuances pursuant to the ATM equity offering sales agreement, as amended, with Stifel, Nicolaus & Company, Incorporated. The Company has an effective shelf registration statement on Form S-3 that was filed with the Securities and Exchange Commission, or SEC, on March 25, 2021, registering the sale of up to $75 million of the Company’s securities which was declared effective on April 5, 2021. We filed a prospectus supplement, dated April 4, 2023, with the SEC pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $17.9 million from time to time, through the ATM. We will file another prospectus supplement with the SEC after we have either sold $17.9 million of our common stock under this prospectus supplement or are required to file a new prospectus supplement when our current S-3 shelf registration expires in April 2024. Under current SEC regulations set forth under General Instruction I.B.6. of Form S-3, if at any time our public float is less than $75.0 million, and for so long as our public float remains less than $75.0 million, the amount we can raise through primary public offerings of securities in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of our public float, which is referred to as the baby shelf rules. As of the date of this filing, we are subject to the baby shelf rules for any offerings conducted on our current shelf registration statement, and therefore may be limited on the amount of funding available under this Form S-3 shelf registration statement in the future. Although we expect this ATM facility to continue to be a source of working capital for the Company in 2024, there is no assurance that an ATM financing arrangement will be available to us in the future. See Note 8. Stockholders’ Equity and Stock-Based Compensation of the Notes to the Consolidated Financial Statements included in Part II. Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for information regarding our ATM financing. We have no debt or lines of credit and we have financed our operations to date through the sale of our preferred stock and common stock. Management believes that public or private equity investments may be available in the future; however adverse market conditions, in our common stock price and trading volume, as well as other factors could substantially impair our ability to raise capital in the future and continue developing our nuclear fuel. 32 Table of Contents Short-Term and Long-Term Liquidity Sources Our current source of liquidity is cash raised from our ATM facility. As discussed above, we will seek new financing in order to bring us additional sources of capital, depending on the capital market conditions of our common stock. There can be no assurance that these additional sources of capital will be made available on terms acceptable to us, or at all. The primary potential sources of cash that may be available to us are as follows: · equity or debt investment from third-party investors in Lightbridge; · collaboration with potential industry partners; and · strategic investment and/or government funding to support the remaining R&D activities required to continue the development of our fuel products and move them to a commercial stage. In support of our long-term business with respect to our fuel technology business, we endeavor to create strategic alliances with other parties to support the remaining R&D activities that are required to further enhance and complete the development of our fuel products to a commercial stage. We may be unable to form such strategic alliances on terms acceptable to us or at all. The following table provides detailed information about our net cash flows for the years ended December 31, 2023 and 2022 (rounded in millions): Cash Flow Year Ended December 31, 2023 2022 Net Cash Used in Operating Activities $ (6.5 ) $ (6.7 ) Net Cash Used in Investing Activities — — Net Cash Provided by Financing Activities 6.2 10.9 Net Cash (Outflow) Inflow $ (0.3 ) $ 4.2 Operating Activities Cash used in operating activities decreased by $0.2 million in 2023 as compared to 2022. The decrease was primarily due to changes in net operating assets and liabilities, which were driven by an increase in prepaid assets of $0.2 million, offset by an increase in accounts payable and accrued liabilities of $0.4 million. Investing Activities Net cash used in our investing activities was insignificant for the years ended December 31, 2023 and 2022. Financing Activities Cash provided by financing activities decreased by $4.7 million. This decrease was due to a decrease in the net proceeds received from the issuance of common stock under our at-the-market (ATM) facility in fiscal year 2023 of $4.6 million and an increase in net share settlement of equity awards for the payment of withholding taxes of $0.1 million. Cash provided by our ATM facility was $6.4 million (sale of approximately 1.5 million common shares) and $11.0 million (sale of approximately 1.9 million common shares) for the years 2023 and 2022, respectively. Cash used during the years 2023 and 2022 related to the payment of withholding taxes on the net share settlement of equity awards was $0.2 million and $0.1 million, respectively. 33 Table of Contents Contractual Obligations and Commitments On December 9, 2022, we entered into an initial project task statements with BEA, the operating contractor of INL, in collaboration with the DOE, which statements set forth the initial scopes of work and funding commitments under the umbrella agreements, each dated September 27, 2022, between the Company and BEA. At December 31, 2023, we had approximately $2.9 million in outstanding project task statement obligations to BEA relating to the research and development being conducted under the SPP and CRADA at INL. 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 SPP and a sixty-day written notice under the CRADA, 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. Engineering Study of Lightbridge Fuel™ for use in CANDU reactors On October 16, 2023, the Company engaged RATEN ICN in Romania to perform an engineering study to assess the compatibility and suitability of Lightbridge Fuel™ for use in CANDU reactors. As of December 31, 2023, the Company had approximately $0.2 million in outstanding project commitments to RATEN ICN. FEED Study with Centrus Energy for a Lightbridge Pilot Fuel Fabrication Facility On December 5, 2023, we entered into an agreement with Centrus Energy to conduct a FEED study to add a dedicated LPFF at the American Centrifuge Plant in Piketon, Ohio. The work is expected to be completed in 2024 at a cost and with a remaining contractual obligation of approximately $0.5 million at December 31, 2023. Operating Leases The Company leased office space for a 12-month term from January 1, 2024 through December 31, 2024 with a monthly payment of approximately $8,000. The future minimum lease payments required under the non-cancellable operating leases for 2024 total approximately $0.1 million. Critical Accounting Estimates The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting period. 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. Our significant accounting policies are more fully described in Note 1. Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations, in the Notes to the Consolidated Financial Statements included in Part II. Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. There were no critical accounting estimates at December 31, 2023 and 2022. Recent Accounting Standards and Pronouncements Refer to Note 1. Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations of the Notes to our Consolidated Financial Statements in Part II. Item 8. Financial Statements and Supplementary Data of this Form 10-K for a discussion of recent accounting standards and pronouncements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The full text of our audited consolidated financial statements as of and for the years ended December 31, 2023 and 2022 begins on page 41 of this Report. 34 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None