At December 31, 2020, the Company had 6,567,110 common shares outstanding. Also outstanding were warrants relating to 70,361 shares of common stock, stock options relating to 515,847 shares of common stock, 243,800 restricted shares units of common stock, 699,878 shares of Series A convertible preferred stock convertible into 58,323 shares of common stock (plus dividends of $691,120 relating to an additional 20,980 common shares), and 2,666,667 shares of Series B convertible preferred stock convertible into 222,222 shares of common stock (plus accrued dividends of $897,518, relating to an additional 49,862 common shares), all totaling 7,748,505 shares of common stock and all common stock equivalents, including accrued preferred stock dividends, outstanding at December 31, 2020.

 

At December 31, 2019, the Company had 3,252,371 common shares outstanding. Also outstanding were warrants relating to 70,361 shares of common stock, stock options relating to 518,551 shares of common stock, 757,770 shares of Series A convertible preferred stock convertible into 63,148 shares of common stock (plus dividends of $556,390 relating to an additional 16,890 common shares), and 2,666,667 shares of Series B convertible preferred stock convertible into 222,222 shares of common stock (plus accrued dividends of $569,181, relating to an additional 31,621 common shares), all totaling 4,175,164 shares of common stock and all common stock equivalents, including accrued preferred stock dividends, outstanding at December 31, 2019.

 

Common Stock Equity Offerings

 

ATM Offerings

 

On May 28, 2019, the Company entered into an at-the-market equity offering sales agreement (“ ATM”) with Stifel, Nicolaus & Company, Incorporated (“Stifel”), pursuant to which the Company may issue and sell shares of its common stock from time to time through Stifel as the Company’s sales agent. Sales of the Company’s common stock through Stifel, if any, will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-223674) filed on March 15, 2018 and declared effective March 23, 2018. Due to the offering limitations currently applicable to the Company under General Instruction I.B.6. of Form S-3 and the Company’s public float as of May 28, 2019, and in accordance with the terms of the sales agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $13,500,000. On October 9, 2020, the Company updated the aggregate amount that may be issued and sold under the 2019 ATM from $13.5 million to approximately $14.7 million by filing a prospectus supplement pursuant to which the Company registered an additional approximate $1.2 million of shares of common stock. All the 2019 ATM available proceeds were sold during the year ended December 31, 2020.

 

The Company sold 3.3 million shares under the ATM for the year ended December 31, 2020. Net proceeds received from the ATM sales during the year ended December 31, 2020 were approximately $12.3 million. The Company records its ATM sales on a settlement date basis.

      

The Company sold 0.5 million shares (post-split) under the ATM for the year ended December 31, 2019. Net proceeds received from the ATM sales during the year ended December 31, 2019 were approximately $3.8 million. The Company records its ATM sales on a settlement date basis.

 

Preferred Stock Equity Offerings

 

Series B Preferred Stock - Securities Purchase Agreement

 

On January 30, 2018, the Company issued 2,666,667 shares of newly created Non-Voting Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and associated warrants to purchase up to 55,555 shares of the Company’s common stock to the several purchasers for approximately $4.0 million or approximately $1.50 per share of Series B Preferred Stock and associated warrant. Dividends accrue on the Series B Preferred Stock at the rate of 7% per year and will be paid in-kind through an increase in the liquidation preference per share. The liquidation preference, initially $1.50 per share of Series B Preferred Stock, is the base that is also used to determine the number of common shares into which the Series B Preferred Stock will convert as well as the calculation of the 7% dividend. Each share of Series B Preferred Stock is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the liquidation preference divided by the conversion price of $18 per share subject to adjustments in the case of stock splits and stock dividends.

 

Holders of the Series B Preferred Stock are also entitled to participating dividends whenever dividends in cash securities (other than shares of the Company’s common stock paid on shares of common stock) or property are paid on common shares or shares of Series A Preferred Stock. The amount of the dividends will equal the amount to which the holder would be entitled if all shares of Series B Preferred Stock had been converted to common stock immediately prior to the record date.

 

The warrants had a per share of common stock exercise price of $22.50. The warrants were exercisable upon issuance and expired six months after issuance on July 30, 2018. Warrants were also issued to the investment bank who introduced these investors, which were subsequently transferred to the principal of the investment bank, entitling the holder to purchase 11,119 common shares in the Company at an exercise price of $18 per share, up to and including January 30, 2021. On February 6, 2017, the Company entered into an agreement with this investment bank. The agreement calls for monthly retainer payments of $15,000, which are credited against any transaction introductory fee earned by the investment bank. This agreement calls for a 7% transaction introductory fee and warrants equal to 5% of the total transaction amount, at a strike price equal to the offering price for a three-year term.

 

The holders of the Series B Preferred Stock have no voting rights. In addition, as long as the shares of Series A Preferred Stock are outstanding, the Company may not take certain actions without first having obtained the affirmative vote or waiver of the holders of a majority of the outstanding shares of Series B Preferred Stock. The Company has the option at any time after August 2, 2019 to redeem some or all of the outstanding Series B Preferred Stock for an amount in cash equal to the liquidation preference plus the amount of any accrued but unpaid dividends of the Series B Preferred Stock being redeemed. The holders of the Series B Preferred Stock do not have the ability to require the Company to redeem the Series B Preferred Stock. The Company has not redeemed any of the outstanding Series B Preferred Stock during the years ended December 31, 2020 and 2019.

 

The Company has the option of forcing the conversion of all or part of the Series B Preferred Stock if at any time the average closing price of the Company’s common stock for a thirty-trading day period is greater than $65.88 prior to August 2, 2019 or greater than $98.82 at any time. The Company can exercise this option only if it also requires the conversion of the Series A Preferred Stock in the same proportion as it is requiring of the Series B Preferred Stock. The Company did not force the conversion of any of the outstanding Series B Preferred Stock during the years ended December 31, 2020 and 2019.

 

Of the $4.0 million proceeds, approximately $0.3 million was allocated to the warrants with the remaining $3.7 million allocated to the Series B Preferred Stock. The Series B Preferred Stock was initially convertible into 2,666,667 shares of common stock (now convertible into 222,222 shares of common stock when adjusted for the one-for-twelve reverse stock split on October 21, 2019). The average of the high and low market prices of the common stock on January 30, 2018, the date of the closing of the sale of the preferred stock, was approximately $28.08 per share. At $28.08 per share the common stock into which the Series B Preferred Stock was initially convertible was valued at approximately $6.2 million. This amount was compared to the $3.7 million (rounded) of proceeds allocated to the Series B Preferred Stock to indicate that a BCF of approximately $2.6 million existed at the date of issuance, which was immediately accreted as a deemed dividend because the conversion rights were immediately effective.

 

Additionally, comparison of the original $1.50 conversion price prior to the one-for-twelve reverse stock split on October 21, 2019 of the PIK dividends to the $2.34 commitment date fair value per share on January 30, 2018 indicates that each PIK dividend will accrete $0.84 of BCF as an additional deemed dividend for every $1.50 of PIK dividend accrued. Total deemed dividends for this PIK dividend for the years ended December 31, 2020 and 2019 were approximately $0.2 million.

 

The accumulated PIK dividends (unpaid) at December 31, 2020 and 2019 was approximately $0.9 million and $0.6 million, respectively. The Series B Preferred Shares outstanding as of December 31, 2020 and 2019 was 2,666,667 shares with an aggregate liquidation preference of approximately $4.9 million and $4.6 million, including the accumulated dividends at December 31, 2020 and 2019, respectively.

 

Series A Preferred Stock - Securities Purchase Agreement

 

On August 2, 2016, the Company issued 1,020,000 shares of newly created Non-Voting Series A Convertible Preferred Stock (the “Series A Preferred Stock”) to General International Holdings, Inc. for $2.8 million or approximately $2.75 per share. Dividends accrue on the Series A Preferred Stock at the rate of 7% per year and will be paid in-kind through an increase in the liquidation preference per share. The liquidation preference, initially $2.7451 per share of Series A Preferred Stock, is the base that is also used to determine the number of common shares into which the Series A Preferred Stock will convert as well as the calculation of the 7% dividend. Each share of Series A Preferred Stock is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the liquidation preference divided by the conversion price of $32.94 per share subject to adjustments in the case of stock splits and stock dividends.

 

Holders of the Series A Preferred Stock are also entitled to participating dividends whenever dividends in cash securities (other than shares of the Company’s common stock) or property are paid on common shares. The amount of the dividends is the amount to which the holder would be entitled if all shares of Series A Preferred Stock had been converted to common stock immediately prior to the record date.

 

The Company has the option of forcing the conversion of the Series A Preferred Stock if the trading price for the Company’s common stock is more than two times the applicable conversion price (approximately $32.94 per share) before August 2, 2019, or if the trading price is more than three times the applicable conversion price. The Company has not redeemed any of the outstanding Series A Preferred Stock during the years ended December 31, 2020 and 2019 and from the date of issuance.

 

The Series A Preferred Stock was initially convertible into 1,020,000 shares of common stock (now convertible into 85,000 common shares when adjusted for the one-for-twelve reverse stock split on October 21, 2019). The average of the high and low market prices of the common stock on August 6, 2016, the date of the closing of the sale of the Series A Preferred Stock, was approximately $39.78 per share. At $39.78 per share the common stock into which the Series A Preferred Stock was initially convertible was valued at approximately $3.4 million. This amount was compared to the $2.8 million of proceeds of the Series A Preferred Stock to indicate that a BCF of approximately $0.6 million existed at the date of issuance in 2016, which was immediately accreted as a deemed dividend because the conversion rights were immediately effective.

 

Additionally, comparison of the $2.7451, original conversion price of the PIK dividends prior to the one-for-twelve reverse stock split on October 21, 2019, to the $3.315 commitment date fair value per share indicates that each PIK dividend will accrete $0.5699 of BCF as an additional deemed dividend for every $2.7451 of PIK dividend accrued. Total deemed dividends for this PIK dividend for the years ended December 31, 2020 and 2019 were approximately $38,000.

 

The holders of the Series A Preferred Stock have no voting rights. In addition, as long as 255,000 shares of Series A Preferred Stock are outstanding, the Company may not take certain actions without first having obtained the affirmative vote or waiver of the holders of a majority of the outstanding shares of Series A Preferred Stock. The Company has the option at any time after August 2, 2019 to redeem some or all of the outstanding Series A Preferred Stock for an amount in cash equal to the liquidation preference plus the amount of any accrued but unpaid dividends of the Series A Preferred Stock being redeemed. The holders of the Series A Preferred Stock do not have the ability to require the Company to redeem the Series A Preferred Stock.

 

During the years ended December 31, 2020 and 2019, the Company had the following conversions of the Series A Preferred Stock to common shares:

 

Dates of conversion		Preferred Shares				Common Shares
April 16, 2019			27,747				2,782
October 8, 2019			28,107				2,922
February 10, 2020			11,875				1,254
May 15, 2020			17,080				1,848
August 31, 2020			16,689				1,846
November 30, 2020			12,248				1,379

 

The accumulated PIK dividends at December 31, 2020 and 2019 was approximately $0.7 million and $0.6 million, respectively. The Series A Preferred Shares outstanding as of December 31, 2020 and 2019 were 699,878 shares and 757,770 shares, respectively, with an aggregate liquidation preference of approximately $2.6 million, including accumulated dividends.

 

Warrants

 

The Company’s outstanding warrants at December 31, 2020 and 2019 are below. These warrants are classified within equity on the consolidated balance sheets.

 

		December 31,				December 31,
Outstanding Warrants		2020				2019
Issued to Investors on October 25, 2013, entitling the holders to purchase 20,833 common shares in the Company at an exercise price of $138.00 per common share up to and including April 24, 2021. In 2016, 4,954 of these warrants were exchanged for common stock, and all remaining warrant holders agreed to new warrant terms, which excluded any potential net cash settlement provisions in exchange for a reduced exercise price of $75.00 per share.			13,665				13,665
Issued to Investors on November 17, 2014, entitling the holders to purchase 45,577 common shares in the Company at an exercise price of $138.60 per common share up to and including May 16, 2022. On June 30, 2016, the warrant holders agreed to new warrant terms, which excluded any potential net cash settlement provisions in order to classify them as equity in exchange for a reduced exercise price of $75.00 per share.			45,577				45,577
Issued to an investment bank and subsequently transferred to a principal of the investment bank regarding the Series B Preferred Stock investment on January 30, 2018, entitling the holder to purchase 11,119 common shares in the Company at an exercise price of $18.00 per share, up to and including January 30, 2021 (warrants expired subsequent to December 31, 2020).			11,119				11,119
Total			70,361				70,361

 

Stock-based Compensation – Stock Options

 

Adoption of 2020 Stock Plan

 

On March 9, 2020, the Board of Directors adopted the Company’s 2020 Omnibus Incentive Plan (the “2020 Plan”). On September 3, 2020, the shareholders approved the 2020 Plan to authorize grants of the following types of awards (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock and Restricted Stock Units (“RSUs”), and (d) Other Stock-Based and Cash-Based Awards. The shares available for award under the 2020 plan authorized a total of 350,000 shares to be available for grant.

 

On October 28, 2020, the Compensation Committee of the Board granted from the 2020 Plan time-based RSUs to certain of the Company's executive officers, employees, and consultants. Each RSU represents a contingent right to receive, upon vesting, one share of the Company's Common Stock. The number of RSUs granted to executive officers, employees and consultants totaled 243,800 shares. These RSU awards granted vest in three equal installments on each of the first three anniversaries of the grant date, on October 28, 2021, October 28, 2022 and October 28, 2023. These RSU awards were valued at approximately $656,000, based on the opening price of the Company’s stock on October 28, 2020 at $2.69 per share. During the year ended December 31, 2020, the Company recorded approximately $39,000 of stock-based compensation expense in connection with the foregoing equity awards in general and administrative expenses.

 

On October 28, 2020, the Compensation Committee of the Board approved a grant of a total of 21,200 shares of common stock to the Company’s four directors. All of these common shares will be issued and will vest immediately upon issuance, upon the filing of the Form S-8 with the SEC, to register the underlying shares of the 2020 Stock Plan. These awards were valued on October 28, 2020 and approximately $57,000 was charged to director’s compensation for the year ended December 31, 2020

  

2015 Equity Incentive Plan

 

On March 25, 2015, the Compensation Committee and Board of Directors approved the Lightbridge Corporation 2015 Equity Incentive Plan (the “2015 Plan”) to authorize grants of (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards to the employees, consultants, and directors of the Company. The shares available for award under the 2015 plan are subject to equitable adjustment for the October 21, 2019 reverse stock split described in Note 1. The 2015 Plan initially authorized a total of 50,000 shares to be available for grant under the 2015 Plan, of which the amount was increased to 116,667 shares in May 2016, 241,667 shares in May 2017, and 525,000 shares in May 2018. Lightbridge’s policy is to utilize stock reserved for issuance under the 2015 Plan for issuing shares upon share option exercise.

 

Short-Term Non-Qualified Option Grants

 

On December 2, 2019, the Compensation Committee of the Board granted 86,982 short-term incentive stock options and non-qualified stock options under the 2015 Equity Incentive Plan to employees, consultants, and directors of the Company. All of these stock options vested immediately, with a strike price of $3.82, which was the closing price of the Company’s stock on December 2, 2019. These options have a 10-year contractual term, with a fair market value of approximately $2.59 per option with an expected term of 5 years. During the years ended December 31, 2020 and 2019, the Company granted 7,634 and 4,247 stock options, respectively to one consultant. The current year stock-based compensation expense for these equity grants were not significant.

 

The 2019 options issued for the employees, directors, and consultants of the Company were assigned a fair value of $2.59 per share (total fair value of $0.2 million). The value was determined using Black-Scholes pricing model. The following assumptions were used in the Black-Scholes pricing model:

 

Expected volatility			86	%
Risk free interest rate			1.65	%
Dividend yield rate			0	%
Weighted average years		5 years
Closing price per share – common stock		$	3.82

 

Total stock options outstanding at December 31, 2020 and 2019 under the 2006 Stock Plan and 2015 Plan were 515,847 and 518,551, of which 466,121 and 433,678 of these options were vested at December 31, 2020 and 2019, respectively.

 

The components of stock-based compensation expense included in the Company’s consolidated statements of operations for the years ended December 31, 2020 and 2019 are as follows (rounded to the nearest thousand):

 

		Year ended December 31,
		2020				2019
Research and development expenses		$	2,000			$	398,000
General and administrative expenses			51,000				425,000
Total stock-based compensation expense		$	53,000			$	823,000

       

Stock option transactions with employees, directors and consultants are summarized as follows for the year ended December 31, 2020:

 

		Options Outstanding				Weighted Average Exercise Price				Weighted Average Grant Date Fair Value
Beginning of the year			518,551			$	21.99			$	15.89
Granted			7,634				4.45				3.28
Exercised			(6,548	)			3.82				2.59
Forfeited			(1,844	)			10.80				8.33
Expired			(1,946	)			491.10				384.02
End of the year			515,847			$	20.23			$	14.51
Options exercisable			466,121			$	21.35			$	15.27

 

Stock option transactions with employees, directors and consultants are summarized as follows for the year ended December 31, 2019:

 

		Options Outstanding				Weighted Average Exercise Price				Weighted Average Grant Date Fair Value
Beginning of the year			467,013			$	32.64			$	23.52
Fraction option shares to options holders due to the one-for-twelve reverse stock split on October 21, 2019			99				32.64				23.52
Adjusted beginning of the year			467,112				32.64				23.52
Granted			91,229				4.03				2.74
Exercised			—				—				—
Forfeited			(18,180	)			34.34				25.56
Expired			(21,610	)			167.52				116.81
End of the year			518,551			$	21.99			$	15.89
Options exercisable			433,678			$	24.19			$	17.39

     

A summary of the status of the Company’s non-vested options as of December 31, 2020 and 2019, and changes during the years ended December 31, 2020 and 2019, is presented below:

 

		Shares				Weighted Average Exercise Price				Weighted Average Fair Value Grant Date
Non-vested – December 31, 2018			139,085			$	10.92			$	6.48
Fraction option shares to non-vested options holders due to the one-for-twelve reverse stock split on October 21, 2019			8				10.92				6.48
Adjusted non-vested – December 31, 2018			139,093				10.92				6.48
Granted			91,229				4.03				2.74
Vested			(145,449	)			6.65				4.91
Forfeited			—				—				—
Non-vested – December 31, 2019			84,873				10.73				5.15
Granted			7,634				4.45				3.28
Vested			(41,552	)			10.80				8.29
Forfeited			(1,229	)			10.80				8.33
Non-vested – December 31, 2020			49,726				9.71				7.44

 

The above tables include options issued and outstanding as of December 31, 2020 as follows:

 

	i.	A total of 393,130 incentive stock options and non-qualified 10-year options have been issued, and are outstanding, to the directors, officers, and employees at exercise prices of $3.82 to $331.80 per share. From this total, 128,010 options are outstanding to the Chief Executive Officer, who is also a director, with remaining contractual lives of 0.2 years to 8.9 years. All other options issued to directors, officers, and employees have a remaining contractual life ranging from 0.2 years to 8.9 years.
	ii.	A total of 122,717 non-qualified 10-year options have been issued, and are outstanding, to consultants at exercise prices of $3.82 to $325.20 per share.

   

As of December 31, 2020, there was approximately $42,000 of total unrecognized compensation cost related to non-vested stock options granted under the plans. That cost is expected to be recognized over a weighted-average period of approximately 2.06 years. For stock options outstanding at December 31, 2020, the intrinsic value was $32,978. For stock options outstanding at December 31, 2019, the intrinsic value was $59,148.

      

The following table provides certain information with respect to the above-referenced stock options that were outstanding and exercisable at December 31, 2020:

 

			Stock Options Outstanding												Stock Options Vested
			Weighted												Weighted
			Average												Average
			Remaining								Weighted				Remaining								Weighted
			Contractual				Number				Average				Contractual				Number				Average
			Life				of				Exercise				Life				of				Exercise
	Exercise Prices		-Years				Awards				Price				-Years				Awards				Price
$	3.82-$12.48			8.16				225,179			$	8.04				8.21				176,332			$	7.60
$	12.49-$24.00			6.57				199,790			$	14.19				6.56				198,911			$	14.20
$	24.01-$72.00			4.89				65,333			$	55.07				4.89				65,333			$	55.07
$	72.01-$240.00			4.32				24,526			$	75.59				4.32				24,526			$	75.59
$	240.01-$331.80			0.23				1,019			$	329.81				0.23				1,019			$	329.81
Total				6.93				515,847			$	20.23				6.82				466,121			$	21.35

 

The following table provides certain information with respect to the above-referenced stock options that were outstanding and exercisable at December 31, 2019:

 

			Stock Options Outstanding												Stock Options Vested
			Weighted												Weighted
			Average												Average
			Remaining								Weighted				Remaining								Weighted
			Contractual				Number				Average				Contractual				Number				Average
			Life				of				Exercise				Life				of				Exercise
Exercise Prices			-Years				Awards				Price				-Years				Awards				Price
$	3.82-$12.48			9.22				225,937			$	8.07				9.40				143,696			$	6.57
$	12.49-$24.00			7.57				199,790			$	14.19				7.56				197,158			$	14.21
$	24.01-$72.00			5.89				65,333			$	55.07				5.89				65,333			$	55.07
$	72.01-$240.00			5.32				24,526			$	75.59				5.32				24,526			$	75.59
$	240.01-$519.00			0.63				2,965			$	435.67				0.63				2,965			$	435.67
Total				7.93				518,551			$	21.99				7.74				433,678			$	24.19

       

Restricted Stock Awards Outstanding

 

The following summarizes our RSUs activity:

 

						Weighted
						Average
		Number of				Grant Date
		Shares				Fair Value
Total awards outstanding at December 31, 2019			—			$	—
Total shares granted			243,800			$	2.69
Total shares vested			—			$	—
Total shares forfeited			—			$	—
Total unvested shares outstanding at December 31, 2020			243,800			$	2.69

 

Scheduled vesting for outstanding RSUs awards at December 31, 2020 is as follows:

 

		Year Ending December 31,
		2021				2022				2023				Total
Scheduled vesting			81,268				81,267				81,265				243,800

 

At December 31, 2020, there was approximately $617,000 of net unrecognized compensation cost related to unvested RSUs compensation arrangements. This compensation is recognized on a straight-line basis resulting in approximately $219,000 of compensation expected to be expensed over the next twelve months, and the total unrecognized stock-based compensation expense having a weighted average recognition period of 2.82 years.