What changed in this filing

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Item 1. Financial Statements

2021-08-11 compared with 2021-05-12 · 138 added, 120 removed, 280 unchanged (48% of the section changed)

14 unchanged sentences

Restricted cash

Other long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

21 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Operating Expenses:

6 unchanged sentences

Non-Operating Income/(Expenses):

Unrealized gain on equity securities

Unrealized investment gain

Other income (expense)

3 unchanged sentences

BASIC AND DILUTED LOSS PER SHARE

LOSS PER SHARE FROM CONTINUING OPERATIONS

LOSS PER SHARE FROM DISCONTINUED OPERATIONS

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

3 unchanged sentences

(expressed in thousands of dollars)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Operating Activities:

Reconciliation of net loss to cash used in operations:

Non-cash lease expense

Accretion of asset retirement obligations

3 unchanged sentences

Unrealized (gain) on equity securities

Gain on disposal of fixed assets

Effect of changes in operating working capital items:

(Increase) in prepaids and other assets

Increase in payables and accrued liabilities

(Decrease)/Increase in payables and accrued liabilities

Net Cash Used In Operating Activities

1 unchanged sentence

Proceeds from PPP loan escrow

Building deposit

Capital expenditures

Net Cash Provided By Investing Activities

Cash Flows From Financing Activities:

Proceeds from note payable

Issuance of common stock, net

1 unchanged sentence

Net Cash Provided By Financing Activities

Net increase/(decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, Cash Equivalents and Restricted Cash, Beginning of Period

4 unchanged sentences

(expressed in thousands of dollars, except share amounts)

Balances, December 31, 2020

Six months ended June 30, 2021

Balances, January 1, 2021

Common stock issued, net of issuance costs

1 unchanged sentence

Minimum withholding taxes on net share settlements of equity awards

Balances, June 30, 2021

Three months ended June 30, 2021

Balances, March 31, 2021

Balances, December 31, 2019

Common stock issued, net of issuance costs

Stock compensation expense and related share issuances, net of shares withheld for payment of taxes

Balances, June 30, 2021

Six months ended June 30, 2020

Balances, January 1, 2020

Common stock issued, net of issuance costs

Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes

Balances, June 30, 2020

Three months ended June 30, 2020

Balances, March 31, 2020

Common stock issued, net of issuance costs

Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes

Balances, June 30, 2020

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

9 unchanged sentences

In the opinion of management, all adjustments (which are of a normal, recurring nature) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for any other period including the full year ending December 31, 2021.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for any other period including the full year ending December 31, 2021.

Significant Accounting Policies

Our significant accounting policies are detailed in Note 1, Summary of Significant Accounting Policies , in the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2020.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)” which is intended to simplify various aspects related to accounting for income taxes.

1 unchanged sentence

ASU 2019-12 became effective for interim and annual periods beginning after December 15, 2020.

The adoption of ASU 2019-12 did not result in a material impact to our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”.

10 unchanged sentences

ASU 2018-19 will be effective for interim and annual periods beginning after December 15, 2022.

The Company is currently evaluating ASU 2016-13 and ASU 2018-19 for the potential impact of adopting this guidance on its financial reporting.Cash, Cash Equivalents and Restricted Cash

The Company is currently evaluating ASU 2016-13 and ASU 2018-19 for the potential impact of adopting this guidance on its financial reporting.

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the Condensed Consolidated Balance Sheet that sum to the total of the same such amounts shown in the statement of cash flows.

As of March 31,

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the statement of cash flows.

As of June 30,

(thousands of dollars)

2 unchanged sentences

Cash, cash equivalents and restricted cash shown in the statement of cash flows

The Company’s restricted cash consisted of funds held in money market accounts and used as collateral for performance obligation bonds.

The funds were not available for the payment of general corporate expenses and were excluded from cash and cash equivalents.

The Company’s restricted cash on June 30, 2020, consisted of funds held in money market accounts and used as collateral for performance obligation bonds related to the future restoration and reclamation of the Company’s South Texas uranium properties.

The performance obligation bonds were required for future restoration and reclamation obligations for the Company’s South Texas uranium properties.

With the divestiture of the Company’s uranium subsidiaries, all performance obligations and related restricted cash was transferred to enCore Energy as of December 31, 2020.

With the divestiture of the Company’s uranium subsidiaries, all performance obligations and related restricted cash was transferred to enCore Energy Corp.

(“enCore”) as of December 31, 2020.

The funds were not available for the payment of general corporate expenses and were excluded from cash and cash equivalents as of June 30, 2020.

The Company last recorded revenues from operations in 2009.

3 unchanged sentences

In 2016, the Company began to expand its business plan into acquisition and development of energy-related materials.

Between 2016 and 2020 the Company obtained lithium mineral leases in Nevada and Utah and acquired Alabama Graphite Corp.

and its Coosa Graphite Project in Alabama in 2018 for the purpose of developing and mining a commercial sized graphite mineral deposit and processing the flake graphite into advanced graphite products for use in batteries.

In the third quarter of 2020, the Company executed the strategic decision to focus most of its resources on its graphite business, discontinuing its investment in its lithium mineral properties and announced a proposed transaction to sell its uranium business enCore Energy Corp.

First, in 2016 the Company obtained lithium mineral leases in Nevada and Utah as an exploration opportunity.

Then, in 2018 the Company acquired Alabama Graphite Corp.

and its Coosa Graphite Project in Alabama for the purpose of developing a commercial sized graphite mineral deposit and processing the flake graphite into advanced graphite products for use in batteries.

In the third quarter of 2020, the Company executed the strategic decision to focus its resources on the graphite business in Alabama, discontinuing its investment in its lithium mineral properties and selling its uranium business, located in Texas and New Mexico, to enCore.

As discussed in Note 3, the sale to enCore closed on December 31, 2020, and included the elimination of a $ 9.3 million bonding liability, the elimination of $ 5.2 million in asset retirement obligations, and the elimination of more than $ 4.0 million in annual expenditures related to reclamation and compliance costs.

The Company received approximately $ 1.8 million of enCore common stock and retained royalty interests on the New Mexico uranium properties as consideration for the sale.

The Company retained its uranium interests in Turkey, which are subject to ongoing international arbitration proceeding.

During the first quarter of 2021, the Company primarily focused on graphite process development activities including operation of pilot programs for processing flake graphite into battery-grade graphite products and the kickoff of a Definitive Feasibility Study (“DFS”) on the Coosa Graphite Project.

The data generated and experience gained from operating the pilot programs is being used to inform the DFS and will also inform the requirements and specifications for building a commercial graphite processing facility.

On March 31, 2021, the Company’s cash balance was approximately $118 million.

During the quarter ended March 31, 2021, the Company sold 9.3 million shares of common stock for net proceeds of $47.3 million pursuant to its Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co.

(“Cantor”) and 3.8 million shares of common stock for net proceeds of $24.9 million pursuant to the December 2020 PA (as defined below) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 7).

As of March 31, 2021, the Company has no shares of common stock registered for sale under the ATM Offering Agreement and has sold approximately 19.9% of the outstanding shares of common stock as of the date of the Lincoln Park December 2020 PA.

The Company also retained its uranium interests in Turkey, which are subject to ongoing international arbitration proceedings, in which the Company is seeking damages.

During the first six months of 2021, the Company focused on graphite process development activities including operation of a pilot program for processing flake graphite into battery-grade graphite products and the initiation of a Definitive Feasibility Study (“DFS”) on the Coosa Graphite Project.

The data generated and experience gained from operating the pilot program are being used to inform the DFS and will also inform the requirements and specifications for building a commercial graphite processing facility.

On June 30, 2021, the Company’s cash balance was approximately $ 119.1 million.

During the six months ended June 30, 2021, the Company sold 9.3 million shares of common stock for net proceeds of $ 47.3 million pursuant to its Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co.

(“Cantor”) and 5.0 million shares of common stock for net proceeds of $ 30.6 million pursuant to the December 2020 Purchase Agreement (“PA”) (as defined below) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 7).

As of June 30, 2021, the Company has no shares of

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

common stock registered for sale under the ATM Offering Agreement and has 10,800,000 of common stock available for future sales pursuant to the Lincoln Park December 2020 PA.

Management believes the Company’s current cash balance is sufficient to fund its planned non-discretionary expenditures through 2022.

In addition to pursuing project financing, the Company is evaluating the continued use of the Cantor and Lincoln Park financing facilities for use in funding any required contributions by the Company to support construction of the commercial graphite processing facility.

While the Company has been successful in the past in raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available to it in amounts sufficient to meet its needs, or on terms acceptable to the Company.

Stock price volatility and uncertain economic conditions caused by the COVID-19 pandemic could significantly impact the Company’s ability to raise funds through equity financing.

In the event funds are not available for project financing to complete construction of the commercial graphite processing facility in 2022, the Company will be able to fund its non-discretionary expenditures, however, the Company may be required to change its planned business development strategies.

The Company is evaluating the continued use of the Cantor and Lincoln Park financing facilities to support construction of the commercial graphite processing facility.

While the Company has been successful in the past in raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available in amounts sufficient to meet its needs, or on terms acceptable to the Company.

Stock price volatility and uncertain economic conditions caused by the COVID-19 pandemic and the recent emergence of variant strains of the virus could significantly impact the Company’s ability to raise funds through equity financing.

Market conditions, including but not limited to, inflation, labor shortages and supply change disruptions could adversely impact the planned cost of the Company’s commercial graphite processing facility.

Along with evaluating the continued use of the Cantor and Lincoln Park financing facilities, the Company may consider project financing to fund the construction of the commercial graphite processing facility.

In the event funds are not available for project financing to complete construction of the commercial graphite processing facility in 2022, the Company expects to be able to fund its non-discretionary expenditures, however, the Company may be required to change its planned business development strategies.

ACQUISITIONS AND DISPOSALS

Sale of Uranium Business to enCore Energy

On December 31, 2020, Westwater, its wholly owned subsidiary URI Neutron Holdings II, Inc.

(“Neutron Holdings”), and enCore entered into a securities purchase agreement (the “Purchase Agreement”) to sell their subsidiaries engaged in the uranium business in Texas and New Mexico (the “Uranium Subsidiaries”) to enCore.

On December 31, 2020, Westwater, and its wholly owned subsidiary URI Neutron Holdings II, Inc.

(“Neutron Holdings”), entered into a securities purchase agreement with enCore (the “Purchase Agreement”) to sell their subsidiaries engaged in the uranium business in Texas and New Mexico (the “Uranium Subsidiaries”) to enCore.

The transaction closed December 31, 2020.

At the closing of the transaction, enCore delivered $742,642 in cash and issued $1,795,000 worth of its common shares to Westwater and Westwater and Neutron Holdings transferred all of the equity interests in the Uranium Subsidiaries to enCore along with a copy of a database relating to the Grants Mineral Belt located in New Mexico.

At the closing of the transaction, enCore delivered $ 0.7 million in cash and issued $ 1.8 million worth of its common shares to Westwater, and Westwater and Neutron Holdings transferred all of the equity interests in the Uranium Subsidiaries to enCore along with a database relating to the Grants Mineral Belt located in New Mexico.

In addition, enCore delivered to Westwater a 2 % net smelter return royalty (“NSR Royalty”) on production from the uranium properties held by Uranco, Inc.

in New Mexico, and a 2.5 % net profits interest (“NPI”) in the profits from operations of Neutron Energy, Inc.’s Juan Tafoya and Cebolleta Projects.

Pursuant to the terms of the Purchase Agreement, enCore has also agreed to replace the indemnification obligations of Westwater for certain reclamation surety bonds held in the name of URI, Inc., and Westwater transferred to enCore all rights to $3,796,788 in cash collateral held to secure such indemnity obligations.

Also, at closing, in accordance with the terms of the Side Letter executed by the parties to the Purchase Agreement, Westwater delivered $333,120 in cash to enCore, which amount was to be delivered in escrow upon the request of the lender, Celtic Bank, under the loan made to URI, Inc.

Pursuant to the terms of the Purchase Agreement, enCore has also agreed to replace the indemnification obligations of Westwater for certain reclamation surety bonds held in the name of URI, Inc., and Westwater transferred to enCore all rights to $ 3.8 million in cash collateral held to secure such indemnity obligations.

Also, at closing, in accordance with the terms of the Side Letter executed by the parties to the Purchase Agreement, Westwater delivered $ 0.3 million in cash to enCore, which amount was to be delivered in escrow upon the request of the lender, Celtic Bank, under the loan made to URI, Inc.

in May 2020 pursuant to the Small Business Administration (“SBA”) Paycheck Protection Program (the “PPP Loan”).

3 unchanged sentences

The divestiture of the uranium business was accounted for as an asset disposal and the non-cash consideration received from enCore was recorded at fair value.

In accordance with the terms of the purchase agreement, non-cash consideration included the receipt of shares of enCore common stock in the amount of $1,795,000.

In accordance with the terms of the Purchase Agreement, non-cash consideration included the receipt of shares of enCore common stock valued in the amount of $ 1.8 million.

The number of shares issued at closing was 2,571,598 .

The number of shares was determined by a pricing formula based on the volume weighted average price (“VWAP”) of enCore’s common shares for the ten trading days ending on and including December 30, 2020.

The VWAP formula resulted in a price of $0.698.

For purposes of determining the fair value of the enCore shares at December 31, 2020, the Company used the closing price for enCore shares on December 31, 2020 which was $0.736, resulting in a value of approximately $1,895,000.

The Company then determined that a discount for lack of marketability should be considered because (1) the shares were not eligible for sale by Westwater until May 1, 2021, and (2) after May 1, 2021, the terms of the purchase agreement require WWR to offer enCore a first right to buy the shares if the amount to be sold in a single transaction is greater than 250,000 shares.

Utilizing a precedent comparable transaction and Black-Scholes valuation methodology for fair value

The number of shares was determined by a pricing formula based on the volume

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

evaluation, the Company determined that a discount of 21%, or $375,000, should be applied to the shares.

Accordingly, the carrying value of the shares has been adjusted to reflect a fair value of $1,520,000, and the discount was charged to loss on sale of uranium assets on the Consolidated Statement of Operations for the year ended 12/31/2020.

weighted average price (“VWAP”) of enCore’s common shares for the ten trading days ending on and including December 30, 2020.

The VWAP formula resulted in a price of $ 0.698 per share of enCore common stock.

Finally, due to the high degree of uncertainties surrounding future mine development and uranium prices, as well as limited marketability, the Company determined the fair value of the NSR Royalty and NPI to be of nil value.

At December 31, 2020, the following fair value amounts were recorded as purchase consideration:

(thousands of dollars)

Transaction costs

Contingent consideration for PPP Loan escrow

enCore common stock

Total consideration received

At December 31, 2020, the Company recorded the following loss on disposal of uranium properties within its Consolidated Statement of Operations:

(thousands of dollars)

Total consideration received

Carrying value of uranium property, plant and equipment

Restricted Cash

Asset retirement obligation

Note Payable (PPP loan)

Other liabilities

Loss on disposal of uranium entities

The loss was primarily related to resolution of transaction issues and final negotiations in the fourth quarter leading up to the transaction closing on December 31, 2020.

FINANCIAL INSTRUMENTS

2 unchanged sentences

● Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

● Level 3 includes unobservable inputs that reflect management’s assessment about what factors market participants would use in pricing the asset or liability.

1 unchanged sentence

The Company believes that the fair value of its assets and liabilities approximates their reported carrying amounts.

The following table presents information about assets that were recorded at fair value on a recurring and non-recurring basis as of March 31, 2021 and December 31, 2020 and indicates the fair value hierarchy.

March 31, 2021

The following table presents information about assets that were recorded at fair value on a recurring and non-recurring basis as of June 30, 2021, and December 31, 2020, and indicates the fair value hierarchy.

June 30, 2021

(thousands of dollars)

11 unchanged sentences

Assets that are measured on a recurring basis include the Company’s marketable securities and restricted cash.

Equity securities on the balance sheet at December 31, 2020 and March 31, 2021 consist solely of shares of common stock received as partial consideration for the sale of uranium assets to enCore (see Note 3).

A $0.2 million increase in the fair value of the equity securities was recognized in net income for the three month period ended March 31, 2021.

Equity securities on the balance sheet at December 31, 2020, and June 30, 2021, consist solely of shares of common stock received as partial consideration for the sale of uranium assets to enCore (see Note 3).

Further, the sale of the enCore shares was restricted and resulted in the Company applying a discount for the lack of marketability prior to May 1, 2021.

As of June 30, 2021, the restrictions on the sale of enCore stock have expired and the shares are currently available for

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the securities now reflects the unadjusted market price of enCore shares as of June 30, 2021.

With the lifting of restrictions and no anticipated lack of marketability, the measurement in equity securities is now considered a Level 1 input.

The Company recognized a $ 1.4 million increase in the fair value of the equity securities in net income for the six-month period ended June 30, 2021.

PROPERTY, PLANT AND EQUIPMENT

Net Book Value of Property, Plant and Equipment at March 31, 2021

Net Book Value of Property, Plant and Equipment at June 30, 2021

(thousands of dollars)

7 unchanged sentences

The Company reviews and evaluates its long-lived assets for impairment on an annual basis or more frequently when events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

For the three

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

months ended March 31, 2021 no events or changes in circumstance are believed to have impacted recoverability of the Company’s long-lived assets.

For the six months ended June 30, 2021, no events or changes in circumstance are believed to have impacted recoverability of the Company’s long-lived assets.

Accordingly, it was determined that no interim impairment was necessary.

DISCONTINUED OPERATIONS

In the third quarter of 2020, the Company executed the strategic decision to focus its resources on its graphite business, as further discussed below, and discontinue its investment in its lithium business.

On December 31, 2020 the Company entered into a securities purchase agreement pursuant to which it agreed to sell its subsidiaries engaged in the uranium business in Texas and New Mexico to enCore.

In the third quarter of 2020, the Company executed the strategic decision to focus its resources on its graphite business, as further discussed above, and discontinue its investment in its lithium business.

On December 31, 2020, the Company entered into a Purchase Agreement pursuant to which it agreed to sell its subsidiaries engaged in the Uranium Subsidiaries to enCore.

The transaction closed on December 31, 2020.

1 unchanged sentence

The Company elected not to renew the annual lease rentals on the mineral properties, which also voids the water rights.

In accordance with ASC 205-20 – “Discontinued Operations,” the enCore transaction represented a major strategic shift for Westwater and resulted in the reclassification of the Company’s uranium activities as discontinued operations and disclosure of the associated profit/loss of the Company’s uranium business as a separate line-item on the Company’s Condensed Consolidated Statement of Operations for three months ended March 31, 2020.

The results of the Company’s uranium and lithium business segments included in discontinued operations for the three months ended March 31, 2020 were as follows:

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The results of the Company’s uranium and lithium business segments included in discontinued operations for the three and six months ended June 30, 2020, were as follows:

For the Three Months Ended

For the Six Months Ended

(thousands of dollars)

March 31, 2020

June 30, 2020

Mineral property expenses

4 unchanged sentences

Net Loss from Discontinued Operations

Our cash flow information for the three months ended March 31, 2020 included the following activities related to discontinued operations:

For the Three Months Ended

Our cash flow information for the six months ended June 30, 2020, included the following activities related to discontinued operations:

For the Six Months Ended

(thousands of dollars)

June 20, 2020

Depreciation and amortization

Capital Expenditures

Accretion of asset retirement obligations

3 unchanged sentences

The Company controls the timing and amount of any sales to Lincoln Park, and Lincoln Park is obligated to make purchases in accordance with the December 2020 PA.

Any common stock that is sold to Lincoln Park will occur at a purchase price that is based on an agreed upon fixed discount to the Company's

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

prevailing market prices at the time of each sale and with no upper limits to the price Lincoln Park may pay to purchase common stock.

Any common stock that is sold to Lincoln Park will occur at a purchase price that is based on an agreed upon fixed discount to the Company's prevailing market prices at the time of each sale and with no upper limits to the price Lincoln Park may pay to purchase common stock.

The agreement may be terminated by the Company at any time, in its sole discretion, without any additional cost or penalty.

The December 2020 PA specifically provides that the Company may not issue or sell any shares of its common stock under the agreement if such issuance or sale would breach any applicable rules of the NYSE American Stock Exchange (“NYSE American”).

In particular, NYSE American General Rule 713(a) provides that the Company may not issue or sell more than 19.99% of the number of shares of the Company’s common stock that were outstanding immediately prior to the execution of the December 2020 PA unless (i) shareholder approval is obtained or (ii) the average price of all applicable sales of common stock to Lincoln Park under the December 2020 PA, equals of exceeds $6.15.

The Company has scheduled its Annual Shareholders Meeting for May 21, 2021 and has included a proposal in its Proxy Statement which seeks shareholder approval for the issuance of more than 19.99% of the shares of the Company’s common stock outstanding on December 4, 2020.

In particular, NYSE American General Rule 713(a) provides that the Company may not issue or sell more than 19.99 % of the number of shares of the Company’s common stock that were outstanding immediately prior to the execution of the December 2020 PA unless (i) shareholder approval is obtained or (ii) the average price of all applicable sales of common stock to Lincoln Park under the December 2020 PA, equals or exceeds $ 6.15 .

The Company held its 2021 Annual Shareholders Meeting on May 21, 2021 and obtained shareholder approval for the issuance of more than 19.99 % of the shares of the Company’s common stock outstanding.

Lincoln Park has no right to require the Company to sell any shares of common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to certain conditions.

In all instances, the Company may not sell shares of its common stock to Lincoln Park under the December 2020 PA if it would result in Lincoln Park beneficially owning more than 9.99% of its common stock.

During the three months ended March 31, 2021, the Company sold 3.8 million shares of common stock for net proceeds of $24.9 million pursuant to the December 2020 PA with Lincoln Park.

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three and six months ended June 30, 2021, pursuant to the December 2020 PA with Lincoln Park, the Company sold 1.2 million and 5.0 million shares of common stock respectively, for net proceeds of $ 5.7 million and $ 30.6 million, respectively.

These shares were sold pursuant to a Form S-3 registration statement filed pursuant to Rule 424(b)(3) and declared effective by the Securities and Exchange Commission on December 4, 2020.

As of March 31, 2021, the Company has sold approximately 19.9% of the outstanding shares of common stock as of the date of the December 2020 PA.

ATM Offering Agreement with Cantor

2 unchanged sentences

The Company pays Cantor a commission of up to 2.5 % of the gross proceeds from the sale of any shares pursuant to the ATM Offering Agreement.

During the three months ended March 31, 2021, the Company sold 9.3 million shares of common stock for net proceeds of $47.3 million pursuant to the ATM Offering Agreement with Cantor.

During the six months ended June 30, 2021, the Company sold 9.3 million shares of common stock for net proceeds of $ 47.3 million pursuant to the ATM Offering Agreement with Cantor.

These shares were sold pursuant to a prospectus supplement filed on December 4, 2020, pursuant to Rule 424(b)(5) as a takedown off the Company’s shelf registration statement which had been declared effective by the Securities and Exchange Commission on December 1, 2020.

As of March 31, 2021, the Company has no shares of common stock registered for sale under the ATM Offering Agreement.

The following table summarizes warrants outstanding and changes for the three-month periods ending March 31, 2021 and 2020:

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March 31, 2021

March 31, 2020

The Company did no t sell any shares of common stock pursuant to the ATM Offering Agreement for the three months ended June 30, 2021.

As of June 30, 2021, the Company has no shares of common stock registered for sale under the ATM Offering Agreement.

The following table summarizes warrants outstanding and changes for the six-month periods ending June 30, 2021, and 2020:

June 30, 2021

June 30, 2020

Warrants outstanding at beginning of period

Warrants outstanding at end of period

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On October 6, 2020, a warrant holder of 182,515 warrants provided notice of exercise.

5 unchanged sentences

Upon approval of the 2013 Plan by the Company’s stockholders on June 4, 2013, the Company’s authority to grant new awards under all plans other than the 2013 Plan was terminated.

On July 18, 2017, April 18, 2019 and April 28, 2020, the Company’s stockholders approved amendments to the 2013 Plan to increase the authorized number of shares of common stock available and reserved for issuance under the 2013 Plan by 20,000 shares, 66,000 and 350,000 shares, respectively and in 2017 re-approved the material terms of the performance goals under the plan.

On July 18, 2017, April 18, 2019, April 28, 2020, and May 21, 2021, the Company’s stockholders approved amendments to the 2013 Plan to increase the authorized number of shares of common stock available and reserved for issuance under the 2013 Plan by 20,000 shares, 66,000 , 350,000 , and 1,500,000 shares, respectively, and in 2017 re-approved the material terms of the performance goals under the plan.

Under the 2013 Plan, the Company may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards and cash bonus awards to eligible persons.

The maximum number of the Company’s common stock that may be reserved for issuance under the 2013 Plan is currently 416,278 shares of common stock, plus unissued shares under the prior plans.

Equity awards under the 2013 Plan are granted from time to time at the discretion of the Compensation Committee of the Board (the “Committee”), with vesting periods and other terms as determined by the Committee with a maximum term of 10 years.

Equity awards under the 2013 Plan are granted from time to time at the discretion of the Compensation Committee of the Board (the “Committee”), with vesting periods and other

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

terms as determined by the Committee with a maximum term of 10 years .

The 2013 Plan is administered by the Committee, which can delegate the administration to the Board, other Committees or to such other officers and employees of the Company as designated by the Committee and permitted by the 2013 Plan.

As of March 31, 2021, 58,586 shares were available for future issuances under the 2013 Plan.

For the three months ending March 31, 2021 and 2020, the Company recorded stock-based compensation expense of $91,000 and $0, respectively.

As of June 30, 2021, 1,279,774 shares were available for future issuances under the 2013 Plan.

For the three and six months ended June 30, 2021, the Company recorded stock-based compensation expense of $ 0.2 million and $ 0.3 million, respectively.

Stock compensation expense is recorded in general and administrative expenses.

In addition to the plans above, upon closing of the Company’s acquisition of Alabama Graphite in April 2018, the Company issued 50,168 replacement options and warrants to the option and warrant holders of Alabama Graphite.

The number of replacement options and warrants shares was determined using the arrangement exchange rate of 0.0016.

The number of replacement options and warrants was determined using the arrangement exchange rate of 0.0016 .

The exercise prices for the option and warrant shares were first converted for the exchange rate of 0.0016 and then converted to USD using the exchange rate on December 13, 2017, of 0.77809 (CAD to USD).

The options and warrant shares were issued with the same terms and conditions as were applicable prior to the acquisition of Alabama Graphite.

As of March 31, 2021, there were 1,200 replacement options outstanding but all replacement warrants have expired.

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2021, all replacement options and warrants had expired.

Stock Options

The following tables summarize stock options outstanding and changes for the three month periods ending March 31, 2021 and 2020:

March 31, 2021

March 31, 2020

The following tables summarize stock options outstanding and changes for the six-month periods ending June 30, 2021, and 2020:

June 30, 2021

June 30, 2020

Stock options outstanding at beginning of period

Canceled or forfeited

Stock options outstanding at end of period

Stock options exercisable at end of period

The following table summarizes stock options outstanding and exercisable by stock option plan at March 31, 2021:

The following table summarizes stock options outstanding and exercisable by stock option plan at June 30, 2021:

Outstanding Stock Options

6 unchanged sentences

2004 Directors’ Plan

Replacement Options-Alabama Graphite

Restricted Stock Units

1 unchanged sentence

The final number of shares issued under performance-based RSUs is generally based on the Company’s prior year performance as determined by the Compensation Committee of the Board of Directors at each vesting date, and the valuation of such awards assumes full satisfaction of all performance criteria.

The following tables summarizes RSU activity for the three month periods ended March 31, 2021 and 2020:

Unvested RSUs at beginning of period

Unvested RSUs at end of period

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarizes RSU activity for the six-month periods ended June 30, 2021, and 2020:

Unvested RSUs at beginning of period

Unvested RSUs at end of period

EARNINGS PER SHARE

Basic and diluted loss per common share have been calculated based on the weighted-average shares outstanding during the period.

Additionally, potentially dilutive shares of 341,856 were excluded from the calculation of earnings per share because the effect on the basic income per share would be anti-dilutive for the three months ended March 31, 2021.

Additionally, potentially dilutive shares of 619,468 were excluded from the calculation of earnings per share because the effect on the basic income per share would be anti-dilutive for the six months ended June 30, 2021.

COMMITMENTS AND CONTINGENCIES

9 unchanged sentences

The Company is party to several leases that are for under one year in length.

These include such leases as those for land used in exploration and mining activities, office equipment, machinery, office space, storage and other.

These include leases for land used in exploration and mining activities, office equipment, machinery, office space, storage and other.

The Company has elected the short-term lease exemptions allowed under the new leasing standards, whereby leases with initial terms of one year or less are not capitalized and instead expensed on a straight-line basis over the lease term.

In addition, the Company holds numerous leases related to mineral exploration and production to which it has not applied the new leasing standard.

In addition, the Company holds several leases related to mineral exploration and production to which it has not applied the new leasing standard.

Leases to explore or use minerals and similar nonregenerative resources are specifically excluded by ASC 842-10.

The right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Right-of-use assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term using a discount rate of 9.5%.

This rate is the Company’s current estimated incremental borrowing rate.

Right-of-use assets and lease liabilities were

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

recognized at the commencement date of the lease based on the present value of lease payments over the lease term using a discount rate of 9.5 %.

This rate is the Company’s estimated incremental borrowing rate at the lease commencement date.

The components of lease expense are as follows:

For the Three Months Ended

For the Six Months Ended

(thousands of dollars)

Operating lease cost

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information related to the Company’s operating leases is as follows:

For the Three Months Ended

For the Six Months Ended

(thousands of dollars)

14 unchanged sentences

Discount Rate

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Maturities of lease liabilities for the Company’s operating leases are as follows:

4 unchanged sentences

Less imputed interest

As of March 31, 2021, the Company has $0.3 million in right-of-use assets and $0.3 million in related lease liabilities ($0.2 million of which is current).

As of June 30, 2021, the Company has $ 0.3 million in right-of-use assets and $ 0.3 million in related lease liabilities ($ 0.2 million of which is current).

The most significant operating lease is for the Company’s corporate office in Centennial, Colorado, with $ 0.3 million remaining in undiscounted cash payments through the end of the lease term in 2023.

The total undiscounted cash payments remaining on operating leases through the end of their respective terms is $ 0.3 million.

SUBSEQUENT EVENTS

On July 23, 2021, Alabama Graphite Products, LLC (“AGP”), a wholly-owned subsidiary of Westwater, entered into a land lease with the Lake Martin Area Industrial Development Authority, providing AGP access to approximately 70 acres to construct its commercial graphite processing facility in Coosa County, Alabama.

The lease has a term of 10-years , a nominal lease payment, and transfer of title to AGP at the end of the lease term.

Further, the lease provides AGP the option to purchase the land for a nominal amount during the term of the lease.

As of the lease inception, the fair value of the land, utilizing fair value methods acceptable under US GAAP, is estimated at approximately $ 1.4 million.

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-Q

Item 1. Financial Statements