What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-11 · 137 added, 112 removed, 306 unchanged (45% of the section changed)

3 unchanged sentences

(expressed in thousands of dollars, except share amounts)

September 30,

Current Assets:

17 unchanged sentences

Operating lease liability, net of current

Other long-term liabilities

Total Liabilities

Commitments and Contingencies

Commitments and Contingencies (see note 10)

Stockholders’ Equity:

12 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Operating Expenses:

3 unchanged sentences

Arbitration costs

Mineral property expenses

Depreciation and amortization

12 unchanged sentences

WESTWATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL CASH FLOW INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(expressed in thousands of dollars)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Operating Activities:

6 unchanged sentences

Unrealized (gain) on equity securities

Gain on disposal of fixed assets

Impairment of uranium properties

Effect of changes in operating working capital items:

(Increase) in prepaids and other assets

(Decrease)/Increase in payables and accrued liabilities

Decrease/(Increase) in prepaids and other assets

Increase/(Decrease) in payables and accrued liabilities

Net Cash Used In Operating Activities

3 unchanged sentences

Capital expenditures

Net Cash Provided By Investing Activities

Net Cash Used In Investing Activities

Cash Flows From Financing Activities:

10 unchanged sentences

(expressed in thousands of dollars, except share amounts)

Six months ended June 30, 2021

Nine months ended September 30, 2021

Balances, January 1, 2021

2 unchanged sentences

Minimum withholding taxes on net share settlements of equity awards

Balances, September 30, 2021

Three months ended September 30, 2021

Balances, June 30, 2021

Three months ended June 30, 2021

Balances, March 31, 2021

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, September 30, 2021

Nine months ended September 30, 2020

Balances, January 1, 2020

1 unchanged sentence

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

Balances, September 30, 2020

Three months ended September 30, 2020

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

Balances, September 30, 2020

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

7 unchanged sentences

GAAP for complete financial statements.

The accompanying statements should be read in conjunction with the audited financial statements included in Westwater Resources, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020.

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 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.

Operating results for the three and nine months ended September 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.

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.

Recently Adopted Accounting Pronouncements

21 unchanged sentences

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,

As of September 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 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.

The Company’s restricted cash on September 30, 2020, consisted of funds held in money market accounts and used as collateral for performance obligation bonds related to the restoration and reclamation of 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 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 funds were not available for the payment of general corporate expenses and were excluded from cash and cash equivalents as of September 30, 2020.

The Company last recorded revenues from operations in 2009.

Since 2009, the Company has relied on equity financings, debt financings and asset sales to fund its operations.

The Company expects to rely on debt and equity financing to fund its operations for the foreseeable future.

The Company will also continue its cost reduction initiatives to identify ways to reduce its cash expenditures.

The Company expects to rely on debt and equity financings to fund its operations for the foreseeable future.

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

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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

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

The data generated and experience gained from the pilot program was used to inform the Phase I DFS that was completed in October 2021 and will also inform the requirements and specifications for building a commercial graphite processing facility.

On September 30, 2021, the Company’s cash balance was approximately $ 119.0 million.

During the nine months ended September 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 6.1 million shares of common stock for net proceeds of $ 34.6 million pursuant to the December 2020 Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 7).

As of September 30, 2021, the Company has $ 50.0 million available for future sales under the ATM Offering and has 9,700,252 of common stock available for future sales pursuant to the Lincoln Park December 2020 PA (as defined in Note 7).

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.

Subsequent to September 30, 2021, and through the date of this release, the Company has sold 637,200 common shares for net proceeds of $ 2.3 million pursuant to its financing facility with Cantor Fitzgerald & Co., and liquidated its holdings of enCore common stock for net cash proceeds of $ 3.6 million.

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

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

The Company anticipates 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.

Market conditions, including but not limited to, inflation, labor shortages and supply chain 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.

4 unchanged sentences

(“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.

The transaction closed on December 31, 2020.

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.

2 unchanged sentences

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.

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 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”).

11 unchanged sentences

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.

FINANCIAL INSTRUMENTS

FAIR VALUE MEASUREMENTS

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair-value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

4 unchanged sentences

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 June 30, 2021, and December 31, 2020, and indicates the fair value hierarchy.

June 30, 2021

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

September 30, 2021

(thousands of dollars)

10 unchanged sentences

Total non-current assets recorded at fair value

Recurring Fair Value Measurements

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 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

Equity securities on the balance sheet at December 31, 2020 and September 30, 2021 consist solely of shares of common

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.

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 the restrictions on the sale of enCore stock have expired and the shares are currently available for sale, the fair value of the securities now reflects the unadjusted market price of enCore shares as of September 30, 2021.

With the lifting of restrictions and no anticipated lack of marketability, the measurement in equity securities is now considered Level 1 in the fair-value hierarchy.

For the three and nine months ended September 30, 2021, the Company recognized unrealized gains of $ 0.5 million and $ 1.9 million, respectively, related to the increased fair value of the enCore shares.

Non-recurring Fair Value Measurements

As discussed in Note 5, on July 23, 2021, the Company received a land grant from local municipalities related to its planned graphite processing plant in Coosa County, Alabama.

At inception, the Company estimated the fair value of the land to be approximately $ 1.4 million.

The fair value was determined using Level 3 inputs using the market approach, by considering comparable sales in the area, adjusted for property specific items;

such as lot size, location and access to major highways and distribution channels.

The Company began amortization of the obligation over the 10-year lease term.

PROPERTY, PLANT AND EQUIPMENT

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

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

(thousands of dollars)

1 unchanged sentence

Other property, plant and equipment

Construction in progress

Net Book Value of Property Plant and Equipment at December 31, 2020

4 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 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.

For the nine months ended September 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.

Land Addition

On June 22, 2021, Alabama Graphite Products, LLC (“AGP”), a wholly-owned subsidiary of Westwater entered into incentive agreements with the State of Alabama and local municipalities for the siting of the Company’s planned graphite processing plant in Coosa County, Alabama.

The incentive agreements provide certain tax credits and incentives under the Alabama Jobs Act in connection with the construction of the processing facility.

Additionally, in connection to, and in contemplation of the incentive agreements, on July 23, 2021, AGP entered into a land lease with the Lake Martin Area Industrial Development Authority.

The lease provides AGP rights to approximately 70 acres to construct and operate its commercial graphite processing facility in Coosa County, Alabama.

The lease has a term of

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The incentive agreements and the lease are accounted for by the company as a government grant;

whereby the Company realized the fair value of the land, subject to the lease, at inception with a corresponding obligation on the consolidated balance sheet.

The land is included in property, plant, and equipment, and represents a non-depreciable asset on the Company’s consolidated balance sheet.

The corresponding obligation is recorded in other long-term liabilities on the consolidated balance sheet.

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 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.

In the third quarter of 2020, the Company executed the strategic decision to focus its resources on its graphite business, and discontinued its investment in its lithium and uranium businesses.

The Company’s lithium business included mineral leases and water rights in Nevada and Utah.

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 the three and six months ended June 30, 2021.

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:

On December 31, 2020, the Company sold its subsidiaries engaged in its uranium business to enCore (see Note 3).

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

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

(thousands of dollars)

June 30, 2020

September 30, 2020

Mineral property expenses

2 unchanged sentences

Depreciation and amortization

Impairment of uranium properties

Other income (expense)

Net Loss from Discontinued Operations

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

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

For the Nine Months Ended

(thousands of dollars)

June 20, 2020

September 30, 2020

Depreciation and amortization

1 unchanged sentence

Accretion of asset retirement obligations

Impairment of uranium properties

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Common Stock Issued, Net of Issuance Costs

December 2020 Purchase Agreement with Lincoln Park Capital Fund, LLC

On December 4, 2020, the Company entered into a Purchase Agreement with Lincoln Park (the “December 2020 PA”) to place up to $ 100.0 million in the aggregate of the Company's common stock on an ongoing basis when required by the Company over a term of 36 months .

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.

6 unchanged sentences

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 at any one point in time.

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.

During the three and nine months ended September 30, 2021, pursuant to the December 2020 PA with Lincoln Park, the Company sold 1.1 million and 6.1 million shares of common stock for net proceeds of $ 4.0 million and $ 34.6 million, respectively.

These shares were sold pursuant to a prospectus supplement filed on December 4, 2020, and in accordance with 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 (the “Commission”) on December 1, 2020.

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 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.

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

During the nine months ended September 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.

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

As of September 30, 2021, the Company has $ 50 million available for sale under the ATM Offering Agreement, pursuant to a prospectus supplement filed on August 20, 2021, and in accordance with Rule 424(b)(5) as a takedown off the Company’s shelf registration statement on Form S-3, which was declared effective by the Commission on July 8, 2021.

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes warrants outstanding and changes for the nine months ended September 30, 2021 and 2020:

September 30, 2021

September 30, 2020

Warrants outstanding at beginning of period

4 unchanged sentences

STOCK-BASED COMPENSATION

Stock-based compensation awards consist of stock options, restricted stock units and bonus shares issued under the Company’s equity incentive plans which include:

the 2013 Omnibus Incentive Plan (the “2013 Plan”) and the Amended and Restated 2004 Directors’ Stock Option and Restricted Stock Plan (the “2004 Directors’ Plan”).

Stock-based compensation awards consist of stock options, restricted stock units and bonus shares issued under the Company’s equity incentive plans which include the 2013 Omnibus Incentive Plan (the “2013 Plan”) and the Amended and Restated 2004 Directors’ Stock Option and Restricted Stock Plan (the “2004 Directors’ Plan”).

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, 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.

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 , 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.

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 .

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 .

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 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.

As of September 30, 2021, 1,223,939 shares were available for future issuances under the 2013 Plan.

For the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense of $ 0.3 million and $ 0.6 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 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 June 30, 2021, all replacement options and warrants had expired.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

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

The following tables summarize stock options outstanding and changes for the nine months ended September 30, 2021 and 2020:

September 30, 2021

September 30, 2020

Stock options outstanding at beginning of period

1 unchanged sentence

Stock options exercisable at end of period

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

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

Outstanding Stock Options

8 unchanged sentences

Time-based and performance-based RSUs are valued using the closing share price of the Company’s common stock on the date of grant.

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.

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:

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

The following table summarizes RSU activity for the nine months ended September 30, 2021 and 2020:

September 30,

Unvested RSUs at beginning of period

2 unchanged sentences

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 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.

Additionally, potentially dilutive shares of 675,303 were excluded from the calculation of earnings per

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

share because the effect on the basic income per share would be anti-dilutive, as the Company had a net loss for the three and nine months ended September 30, 2021.

COMMITMENTS AND CONTINGENCIES

Future operations on the Company’s properties are subject to federal and state regulations for the protection of the environment, including water quality.

Future operations on the Company’s properties are subject to federal and state regulations for the protection of the environment, including air and water quality.

The Company evaluates the status of current environmental laws and their potential impact on current operating costs and accrual for future costs.

6 unchanged sentences

Because these amounts are variable from year to year and not specifically set in the lease terms, they are not included in the measurement of the right-of-use asset and related lease liability, but rather expensed in the period incurred.

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

The Company is party to several leases that have terms that are less than a year in length.

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.

The Company has elected the short-term lease exemption 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 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.

Leases to explore or use minerals and similar nonregenerative resources are specifically excluded by ASC 842, “Leases.”

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 were

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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 %.

Right-of-use assets and lease liabilities were 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 Six Months Ended

For the Nine Months Ended

September 30,

(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 Six Months Ended

For the Nine Months Ended

September 30,

(thousands of dollars)

4 unchanged sentences

Supplemental balance sheet information related to the Company’s operating leases is as follows:

September 30,

(thousands of dollars, except lease term and discount rate)

6 unchanged sentences

For the Three Months Ended

September 30,

Weighted Average Remaining Lease Term (in years)

Discount Rate

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Lease payments by year

September 30,

(in thousands)

2 unchanged sentences

Less imputed interest

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).

As of September 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.

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

On October 13, 2021, Alabama Graphite Products, LLC (“AGP”), a wholly-owned subsidiary of Westwater, completed the purchase of two buildings that total 90,000 sq.

for approximately $ 3.1 million.

The purchase of the two buildings supports the development of AGP’s Coosa Graphite Project, as both buildings are adjacent to the future site of the planned processing plant, and will be used for administrative offices, laboratory, and warehousing space.

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