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Stockholders Equity and StockBased Compensation | 9 Months Ended
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Sep. 30, 2021
Stockholders Equity and StockBased Compensation |
Note 6. Stockholders' Equity and Stock-Based Compensation | Note 6. Stockholders’ Equity and Stock-Based Compensation On June 28, 2021, at our annual shareholder meeting, the shareholders’ approved an amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of common stock from 8,333,333 shares to 13,500,000 shares and an amendment to the Lightbridge Corporation 2020 Omnibus Incentive Plan to increase the number of shares of common stock available for issuance under this Incentive Plan from 350,000 shares to 650,000 shares. At September 30, 2021, the Company had 7,208,739 common shares outstanding. Also outstanding were warrants relating to 45,577 shares of common stock, stock options relating to 568,995 shares of common stock, 235,850 restricted shares units of common stock, 663,767 shares of Series A convertible preferred stock convertible into 55,314 shares of common stock (plus accrued dividends of an additional 23,965 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 an additional 64,398 common shares), all totalling 8,425,060 shares of common stock and all common stock equivalents, including the accrued preferred stock dividends, outstanding at September 30, 2021. 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 accrued 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 totalling 7,748,505 shares of common stock and all common stock equivalents, including accrued preferred stock dividends, outstanding at December 31, 2020. Common Stock Equity Offerings ATM Offerings On May 28, 2019, the Company entered into an at-the-market (“ATM”) equity offering sales agreement (“ATM Sales Agreement”) with Stifel, Nicolaus & Company, Incorporated (“Stifel”), which was amended on April 9, 2021, 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. On March 25, 2021, the Company filed a new shelf registration statement on Form S-3, registering the sale of up to $75 million of the Company’s securities, which registration statement was declared effective on April 5, 2021. The Company records its ATM sales on a settlement date basis. The Company sold approximately 0.6 million shares under the ATM for the three and nine months ended September 30, 2021 resulting in net proceeds of approximately $3.4 million. For the three and nine months ended September 30, 2020, the Company sold approximately 0.6 million shares and 1.1 million shares under the ATM, respectively, resulting in net proceeds of approximately $2.5 million and $5.1 million, respectively. Preferred Stock Equity Offerings 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 forced the conversion of any of the outstanding Series A Preferred Stock during the nine months ended September 30, 2021 and 2020 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 beneficial conversion feature (“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 three months ended September 30, 2021 and 2020 were approximately $10,000 and $10,000, respectively and for each of the nine months ended September 30, 2021 and 2020 were approximately $29,000 and $28,000, respectively. 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. The Company has not redeemed any of the outstanding Series A Preferred Stock during the nine months ended September 30, 2021 and 2020 and from the date of issuance. On April 8, 2021, the holder of the Series A Preferred Shares converted 16,026 preferred shares into 1,846 common shares. On August 31, 2021, the holder of the Series A Preferred Shares converted 20,085 preferred shares into 2,382 common shares. During the year ended December 31, 2020, the holder of the Series A Preferred Shares converted a total of 57,892 preferred shares into 6,327 common shares. The accumulated PIK dividends at September 30, 2021 and December 31, 2020 was approximately $0.8 million and $0.7 million, respectively. The Series A Preferred Shares outstanding as of September 30, 2021 and December 31, 2020 were 663,767 shares and 699,878 shares, respectively, with an aggregate liquidation preference of approximately $2.6 million and $2.6 million, including the accumulated dividends at September 30, 2021 and December 31, 2020, respectively. 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 (as defined below). 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 holders of the Series B Preferred Stock have no voting rights. In addition, as long as the shares of Series B 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 three and nine months ended September 30, 2021 and 2020 and from the date of issuance. 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 nine months ended September 30, 2021 and 2020. 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 three months ended September 30, 2021 and 2020 were approximately $50,000 and $46,000, respectively and for the nine months ended September 30, 2021 and 2020 were approximately $147,000 and $137,000, respectively. The accumulated PIK dividends (unpaid) at September 30, 2021 and December 31, 2020 were approximately $1.2 million and $0.9 million, respectively. The Series B Preferred Shares outstanding as of September 30, 2021 and December 31, 2020 was 2,666,667 shares with an aggregate liquidation preference of approximately $5.2 million and $4.9 million, including the accumulated dividends at September 30, 2021 and December 31, 2020, respectively. Warrants The Company’s outstanding warrants at September 30, 2021 and December 31, 2020 are below. These warrants are classified within equity on the unaudited condensed consolidated balance sheets.
|  | September 30, |  |  | December 31, |
Outstanding Warrants |  | 2021 |  |  | 2020 |
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 (warrants expired). |  |  | - |  |  |  | 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). |  |  | - |  |  |  | 11,119 |
Total |  |  | 45,577 |  |  |  | 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. On June 28, 2021, the Company’s shareholders voted to amend the 2020 Plan to increase the number of shares available for award under the 2020 Plan to 650,000 shares available for grant from 350,000 shares. 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 totalled 243,800 shares. These RSU awards vest in three equal instalments on each of the first three annual 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. 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. The Company filed a Form S-8 with the SEC, to register the underlying shares of the 2020 Plan on March 25, 2021. All of these common shares were issued on March 31, 2021 and vested immediately upon issuance. During the nine months ended September 30, 2021, the Company issued 58,164 stock options to consultants and 7,382 common shares were issued to our investor relations consultant. The 2021 options issued for the consultants of the Company were assigned a fair value ranging from $2.08 per share to $4.75 per share (total fair value of $150,000). The value was determined using Black-Scholes pricing model. The following assumptions were used in the Black-Scholes pricing model:
Expected volatility |  |  | 95.15% to 131.85 | %
Risk free interest rate |  |  | 0.06% to 0.93% |
Dividend yield rate |  |  | 0 |
Weighted average years |  |  | 1-6 years |
Closing price per share – common stock |  | $ | $4.55 to $6.51 |
The components of stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of operations for the three months and nine months ended September 30, 2021 and 2020 are as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
General and administrative expenses |  | $ | 54,000 |  |  | $ | (4,000 | ) |  | $ | 301,000 |  |  | $ | 8,000 |
Total stock-based compensation expense |  | $ | 54,000 |  |  | $ | (4,000 | ) |  | $ | 301,000 |  |  | $ | 8,000 |
Stock option transactions to the employees, directors and consultants are summarized as follows for the nine months ended September 30, 2021:
|  | Options Outstanding |  |  | Weighted Average Exercise Price |  |  | Weighted Average Grant Date Fair Value |
Beginning of the period – January 1, 2021 |  |  | 515,847 |  |  | $ | 20.23 |  |  | $ | 14.51 |
Granted |  |  | 58,164 |  |  |  | 6.72 |  |  |  | 2.58 |
Exercised |  |  | - |  |  |  | - |  |  |  | - |
Forfeited |  |  | (3,997 | ) |  |  | 62.52 |  |  |  | 43.63 |
Expired |  |  | (1,019 | ) |  |  | 329.81 |  |  |  | 291.73 |
End of the period – September 30, 2021 |  |  | 568,995 |  |  | $ | 18.00 |  |  | $ | 12.59 |
Options exercisable |  |  | 557,229 |  |  | $ | 18.26 |  |  | $ | 12.77 |
A summary of the status of the Company’s non-vested options as of September 30, 2021 and December 31, 2020, and changes during the year ended December 31, 2020 and the nine months ended September 30, 2021, is presented below:
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Fair Value Grant Date |
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 |
Granted |  |  | 58,164 |  |  |  | 6.72 |  |  |  | 2.58 |
Vested |  |  | (96,124 | ) |  |  | 8.40 |  |  |  | 4.89 |
Forfeited |  |  | - |  |  |  | - |  |  |  | - |
Non-vested – September 30, 2021 |  |  | 11,766 |  |  |  | 5.71 |  |  |  | 4.25 |
The above tables include options issued and outstanding as of September 30, 2021 as follows: i. A total of 362,908 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 $75.60 per share. From this total, 127,299 options are held by the Chief Executive Officer, who is also a director, with remaining contractual lives of 3.5 years to 8.2 years. All other options issued to directors, officers, and employees have a remaining contractual life ranging from 3.5 years to 8.2 years. ii. A total of 206,087 non-qualified 1 to 10-year options have been issued, and are outstanding, to consultants at exercise prices of $3.82 to $75.60 per share and have a remaining contractual life ranging from 0.5 years to 9.9 years. As of September 30, 2021, there was approximately $48,000 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 2.26 years. For stock options outstanding at September 30, 2021 and December 31, 2020, the intrinsic value was approximately $88,000 and $33,000, respectively. For those vested stock options at September 30, 2021 and December 31, 2020, the intrinsic value was approximately $88,000 and $33,000, respectively. The following table provides certain information with respect to the above-referenced stock options that were outstanding and exercisable at September 30, 2021:
|  | 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-$9.00 |  |  | 5.59 |  |  |  | 150,479 |  |  | $ | 5.10 |  |  |  | 5.28 |  |  |  | 138,713 |  |  | $ | 5.05 |
$ 9.01-$12.48 |  |  | 6.85 |  |  |  | 132,864 |  |  | $ | 10.80 |  |  |  | 6.85 |  |  |  | 132,864 |  |  | $ | 10.80 |
$ 12.49-$24.00 |  |  | 5.38 |  |  |  | 199,790 |  |  | $ | 14.19 |  |  |  | 5.38 |  |  |  | 199,790 |  |  | $ | 14.19 |
$ 24.01-$72.00 |  |  | 3.97 |  |  |  | 62,771 |  |  | $ | 55.07 |  |  |  | 3.97 |  |  |  | 62,771 |  |  | $ | 55.07 |
$ 72.01-$75.60 |  |  | 3.40 |  |  |  | 23,091 |  |  | $ | 75.59 |  |  |  | 3.40 |  |  |  | 23,091 |  |  | $ | 75.59 |
Total |  |  | 5.55 |  |  |  | 568,995 |  |  | $ | 18.00 |  |  |  | 5.47 |  |  |  | 557,229 |  |  | $ | 18.26 |
Restricted Stock Awards Outstanding The following summarizes our RSUs activity:
|  |  |  |  | Weighted |
|  | Number |  |  | Average |
|  | of |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Total awards outstanding at January 1, 2021 |  |  | 243,800 |  |  | $ | 2.69 |
Total shares granted |  |  | — |  |  | $ | — |
Total shares vested |  |  | — |  |  | $ | — |
Total shares forfeited |  |  | (7,950 | ) |  | $ | 2.69 |
Total unvested shares outstanding at September 30, 2021 |  |  | 235,850 |  |  | $ | 2.69 |
Scheduled vesting for outstanding RSUs awards at September 30, 2021 is as follows:
|  | Year Ending December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |  |  | Total |
Scheduled vesting |  |  | 78,617 |  |  |  | 78,616 |  |  |  | 78,617 |  |  |  | 235,850 |
At September 30, 2021, there was approximately $439,000 of net unrecognized compensation cost related to unvested RSUs compensation arrangements. This compensation is recognized on a straight-line basis resulting in approximately $212,000 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 2.07 years.

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