WESTWATER RESOURCES INC

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(expressed in thousands of dollars, except share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(expressed in thousands of dollars, except share and per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(expressed in thousands of dollars)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(expressed in thousands of dollars, except share amounts)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements (the “Interim Financial Statements”) for Westwater Resources, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying Interim Financial Statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report. The Interim Financial Statements are unaudited. 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, 2024, are not necessarily indicative of the results that may be expected for any other period including the full year ending December 31, 2024.

Significant Accounting Policies

Other receivables

A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Receivables are classified as other receivables when they do not arise from an entity’s ongoing major or central operations. Other receivables are carried on a gross basis, with no discounting, less an allowance for credit losses, if applicable. Allowance for credit losses reflects our best estimate of potentially uncollectible receivables and is based on both specific and general reserves, as appropriate. General reserves will be maintained on a collective basis, as necessary, after considering factors such as historical experience, creditworthiness, the age of the receivable balances, current economic conditions and a reasonable and supportable forecast of future economic conditions. As of June 30, 2024, other receivables are within “Prepaid and other current assets” on the Condensed Consolidated Balance Sheets, and we estimate that no allowance for credit loss is necessary.

Westwater does not offer extended payment terms and typically receives payment within one month of invoicing. We consider receivables past due if full payment is not received by the contractual due date. Interest income related to past due accounts receivable, if applicable, is recognized at the time full payment is received or collectability is assured. Past due accounts are written off against the allowance for credit losses if, and only after, all collection attempts have been exhausted. We do not have a material amount of aged receivables past 30 days at June 30, 2024.

Additional significant accounting policies are detailed inNote 1, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements within our Annual Report.

Recently Issued Accounting Pronouncements

In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on its Interim Financial Statements.

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance and expects minimal impact on its Interim Financial Statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures," (“ASU 2023-09”) which is intended to enhance transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments require that on an annual basis, entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments require that entities disclose additional information about income taxes paid as well as additional disclosures of pretax income and income tax expense, and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant. ASU 2023-09 will be effective for annual periods beginning after December 15, 2025. This update will be effective beginning January 1, 2026, with early adoption permitted, and the Company is currently evaluating the potential impact of adopting this guidance on its Interim Financial Statements.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," (“ASU 2023-07”) which is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. ASU 2023-07 will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. This update will be effective for the annual period beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted, and the Company is currently evaluating the potential impact of adopting this guidance on its Interim Financial Statements.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” (“ASU 2023-06”). The new guidance clarifies or improves disclosure and presentation requirements on a variety of topics in the codification. The amendments will align the requirements in the FASB Accounting Standard Codification with the SEC’s regulations. The amendments are effective prospectively on the date each individual amendment is effectively removed from Regulation S-X or Regulation S-K. The Company is currently evaluating the potential impact of adopting this guidance on its Interim Financial Statements.

2. LIQUIDITY AND GOING CONCERN

The Interim Financial Statements of the Company have been prepared on a “going concern” basis, which means that the continuation of the Company is presumed even though events and conditions exist that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern because it is possible that the Company will be required to adversely change its current business plan or may be unable to meet its obligations as they become due within one year after the date that these Interim Financial Statements were issued. The Company last recorded revenue from operations in 2009, and as such, Westwater is subject to all the risks associated with a development stage company.

Management considered the following events and conditions in its going concern analysis. As of June 30, 2024, current liabilities exceeded current assets. Further, the Company last recorded revenues from operations in 2009. The Company expects to continue to incur cash losses as a result of construction activity at the Kellyton Graphite Plant and general and administrative expenses until operations commence at the Kellyton Graphite Plant. If financing is not available to fund the construction of Phase I of the Kellyton Graphite Plant through the equity capital markets or alternative financing sources, the Company may be required to reduce or severely curtail operations, change its planned business development

strategies related to the Coosa Graphite Deposit and Phase I of the Kellyton Graphite Plant, alter the construction and commissioning timeline of Phase I of the Kellyton Graphite Plant, or put the construction of Phase I of the Kellyton Graphite Plant on hold until additional funding is obtained. If the Company is required to abandon construction and development or alter its intended long-term plans related to the Kellyton Graphite Plant, the Company could be required to evaluate the recoverability of its long-lived assets.

Since 2009, the Company has relied on equity and debt financings and asset sales to fund its operations. During the quarter ended June 30, 2024, and through the date that these Interim Financial Statements were issued, the Company continued construction activities related to the Kellyton Graphite Plant. However, while the Company has continued certain construction activities related to Phase I of the Kellyton Graphite Plant, those activities have been significantly reduced from anticipated levels until the additional funding needed to complete Phase I of the Kellyton Graphite Plant is in place. The Company’s construction-related contracts include termination provisions at the Company’s election that do not obligate the Company to make payments beyond what is incurred by the third-party service provider through the date of such termination. In its going concern analysis, the Company considered construction activity and related costs through the date that the Interim Financial Statements were issued. Based on this analysis and excluding potential external funding opportunities and the Company’s current equity facility, the Company’s planned non-discretionary expenditures for one year past the issue date of these Interim Financial Statements exceed the cash on hand as of the date of these Interim Financial Statements.

On June 30, 2024, the Company’s cash balance was approximately $3.2 million. During the six months ended June 30, 2024, the Company sold 1.8 million shares of common stock for net proceeds of $0.8 million pursuant to the ATM Offering Agreement. As of June 30, 2024, the Company has $7.0 million remaining available for future sales under the ATM Offering Agreement. SeeNote 6 for further details.

While the Company has advanced its business plan and has been successful in the past 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. Recent volatility in the equity and debt capital markets, rising interest rates, inflation, electric vehicle production and adoption rates, generally uncertain economic conditions and regulatory policy and enforcement, and unstable geopolitical conditions could significantly impact the Company’s ability to access the necessary funding to advance its business plan. On March 13, 2023, the Company filed a prospectus supplement to its existing shelf registration statement on Form S-3 (the “Existing Registration Statement”) and as a result, the Company’s access to the available capacity under the Existing Registration Statement, is subject to General Instruction I.B.6 of Form S-3, which limits the amount that the Company may sell under the Existing Registration Statement. As of June 30, 2024, after giving effect to these limitations and the public float of our common stock as of the date of the Annual Report, and after giving effect to the terms of the ATM Offering Agreement, we currently may offer and sell shares of our common stock having an aggregate offering price of up to approximately $7.0 million under the ATM Offering Agreement, which amount is in addition to the shares of common stock that we have sold to date in accordance with the ATM Offering Agreement under the Existing Registration Statement and prospectus supplements thereto. The Company’s ability to raise additional funds under the ATM Offering Agreement may be further limited by the Company’s market capitalization, share price and trading volume. On July 3, 2024, the Company filed a new Registration Statement on Form S-3 (the “Registration Statement”), which has not yet been declared effective by the SEC. The Existing Registration Statement expired on July 8, 2024, however, pursuant to Rule 415 of the Securities Act, the Company is permitted to continue making offers and sales of securities covered by the Existing Registration Statement and prospectus supplements thereto until the earlier of the effective date of the Registration Statement or 180 days after July 8, 2024.

When considering the above events and conditions in the aggregate, the Company believes such events and conditions raise substantial doubt about its ability to continue as a going concern within one year after the date that these Interim Financial Statements were issued.

3. PREPAID AND OTHER CURRENT ASSETS

On June 30, 2024 and December 31, 2023, the Company had the following components within “Prepaid and other current assets”.

As of June 30, 2024, inventory represents raw material inventory that is under contract to be sold subsequent to the balance sheet date but within the next twelve months. Refer toNote 5 for further details.

As of June 30, 2024, the other receivable balance includes $0.9 million of other receivables for sales of the Company’s raw material inventory as further described inNote 8and $0.8 million of other receivables for the sale of an asset as further described in*Note 4.*Neither receivable was present at December 31, 2023.

4. PROPERTY, PLANT AND EQUIPMENT

Construction in Progress

Construction in progress represents assets that are not ready for service or are in the construction stage. Assets are depreciated based on the estimated useful life of the asset once it is placed in service.

As part of Westwater’s design optimization of the Kellyton Graphite Plant, the Company determined a component of the asset group could be sold. The cash proceeds received during the second quarter totaled $0.8 million and is included within the Investing Activities section of the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024. As this asset was a component of the larger asset group, the Company did not recognize a triggering event for impairment.

Impairment of Property, Plant and Equipment

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, 2024, no events or changes in circumstance are believed to have impacted recoverability of the

Company’s long-lived assets. Accordingly, it was determined thatno interim impairment was necessary. As discussed inNote 2, if the Company is required to abandon construction and development or alter its intended long-term plans related to the Kellyton Graphite Plant, the Company could be required to evaluate the recoverability of its long-lived assets.

5. INVENTORY

Inventory consisted of raw material of natural flake graphite concentrate provided by a third-party vendor totaling $3.1 million and $4.8 million as of June 30, 2024 and December 31, 2023, respectively. At June 30, 2024, $2.4 million of raw material inventory is under contract to be sold within the next twelve months and included in the “Prepaid and other current assets” line item on the Condensed Consolidated Balance Sheets.

As of June 30, 2024, $0.7 million of raw material of natural flake graphite concentrate is included within the “Other long-term assets” line item on the Condensed Consolidated Balance Sheets. At December 31, 2023, the entire inventory balance was within the “Other long-term assets” line item on the Condensed Consolidated Balance Sheets.

The Company values the natural flake graphite concentrate at the lower of cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term graphite prices, less the estimated costs to complete production and bring the product to sale. For sales of raw material inventory that will not be processed, the net realizable value is the contracted sales price. Write-downs of the natural flake graphite concentrate to net realizable value are reported as a component of costs applicable to sales or as a component of other (expense) income if related to the sale of raw material inventory. The Company reviews and evaluates the net realizable value and obsolescence on an annual basis or more frequently when events or changes in circumstances indicate that the related net realizable amounts may be lower than cost. For the three and six months ended June 30, 2024, the Company recognized a $0.7 million write-down of inventory based on the net realizable value of future committed sales of raw material inventory. The Company estimates a net realizable value of secured sales contracts less selling cost to be approximately $2.4 million. For the three and six months ended June 30, 2023, there wereno write-downs of the Company’s inventory.

6. COMMON STOCK

Common Stock Issued, Net of Issuance Costs

Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

On April 14, 2017, the Company entered into the ATM Offering Agreement with Cantor acting as the sales agent. Under the ATM Offering Agreement, the Company may from time to time sell shares of its common stock in “at-the-market” offerings. 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 and six months ended June 30, 2024, the Company sold 0.5 million and 1.8 million shares of common stock for net proceeds of $0.2 million and $0.8 million, respectively, pursuant to the ATM Offering Agreement. The Company sold 0.8 million and 2.3 million shares of common stock for net proceeds of $0.7 million and $2.2 million, respectively, pursuant to the ATM Offering Agreement for the three and six months ended June 30, 2023.

Sales made under the ATM Offering Agreement are made pursuant to the prospectus supplement filed March 13, 2023 which amends and supplements the prospectus supplement filed pursuant to Rule 424(b)(5), which registered for sale up to a total of $50.0 million of the Company’s common stock, which was filed on August 20, 2021 as a takedown off the Existing Registration Statement, which was declared effective by the SEC on July 8, 2021. The Company is subject to General Instruction I.B.6 of Form S-3, which limits the amount that we may sell under the Existing Registration Statement. As of June 30, 2024, after giving effect to these limitations and the public float of our common stock as of the date of our Annual Report, and after giving effect to the terms of the ATM Offering Agreement, we currently may offer and sell shares of our common stock having an aggregate offering price of up to approximately $7.0 million under the ATM Offering Agreement, which amount is in addition to the shares of common stock that we have sold to date in accordance with the ATM Offering Agreement under the Existing Registration Statement and prospectus supplements thereto. As noted above, on July 3, 2024, the Company filed the Registration Statement, which has not yet been declared

effective by the SEC. The Existing Registration Statement expired on July 8, 2024, however, pursuant to Rule 415 of the Securities Act, the Company is permitted to continue making offers and sales of securities covered by the Existing Registration Statement and prospectus supplements thereto until the earlier of the effective date of the Registration Statement or 180 days after July 8, 2024.

December 2020 Purchase Agreement with Lincoln Park Capital, LLC

On December 4, 2020, the Company entered into the 2020 Lincoln Park PA with Lincoln Park to place up to $100.0 million or 16.0 million shares 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 2020 Lincoln Park PA expired by its terms in December 2023 and therefore, no shares were sold during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023, the Company sold 0.9 million shares of common stock for net proceeds of $0.8 million pursuant to the 2020 Lincoln Park PA.

7. 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 Plan and the Inducement Plan.

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 1,500,000 shares on May 10, 2023, and an additional 3,000,000 shares on May 30, 2024.

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 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, 2024,100,003 shares were available for future issuances under the 2013 Plan.

The Inducement Plan provides for the grant of equity-based awards, including restricted stock units, restricted stock, performance shares and performance units. Under the Inducement Plan, the Company may grant equity awards for the sole purpose of recruiting and hiring new employees. As of June 30, 2024,114,429 shares were available for future issuances under the Inducement Plan.

The Company has elected to account for forfeitures as they occur rather than estimating forfeitures. Expense associated with an award that is forfeited prior to vesting will be reversed accordingly. For the three and six months ended June 30, 2024, the Company recorded stock-based compensation expense of $0.3 million and $0.5 million, respectively. For the three and six months ended June 30, 2023, the Company recorded stock-based compensation expense of $0.3 million and $0.1 million, respectively. Stock compensation expense is recorded in general and administrative expenses.

Stock Options

Stock options are valued using the Black-Scholes option pricing model on the date of grant. The Company accounts for forfeitures upon occurrence.

The following table summarizes stock options outstanding and changes for the six months ended June 30, 2024:

All options outstanding for the six months ended June 30, 2024, were issued under the 2013 Plan. The weighted average remaining term for stock options outstanding as of June 30, 2024, is approximately 8.2 years.

As of June 30, 2024, the Company had less than $0.1 million of unrecognized compensation costs related to non-vested stock options that will be recognized over a period of approximately 11 months.

Restricted Stock Units

RSUs are granted with vesting conditions determined by the Compensation Committee of the Board. Vesting conditions may include criteria such as time-based, performance-based, and/or a total shareholder return market condition. RSUs are valued at the fair value of the award on the date of grant, which is typically based on 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 at each vesting date, and the valuation of such awards assumes full satisfaction of applicable vesting criteria. The Company accounts for forfeitures upon occurrence.

The following table summarizes RSU activity for the six months ended June 30, 2024 and 2023:

As of June 30, 2024, the Company had$1.5 million of unrecognized compensation costs related to non-vested restricted stock units that will be recognized over a period of approximately 2.5 years.

8. OTHER (EXPENSE) INCOME, NET

For the three and six months ended June 30, 2024 and 2023, the Company had the following components within “Other (expense) income, net”.

As part of Westwater’s design optimization of the Kellyton Graphite Plant, the Company determined that while it can utilize its current raw material graphite flake in inventory, a different size of natural graphite flake results in a better yield of CSPG, is more cost effective, and does not negatively impact finished product performance. As a result, the Company has entered into agreements to sell a portion of its raw material inventory. Sales of raw material inventory are recognized upon shipment. Because the Kellyton Graphite Plant is not currently operational and these agreements are not entered into in the Company’s ordinary course of business activities, the Company does not recognize these agreements as revenue under ASC 606. For the three and six months ended June 30, 2024, the Company recognized sales of raw material inventory of$1.0 million and$1.1 million, respectively, and related offsetting expenses of$1.3 million and$1.5 million, respectively.

For each of the three and six months ended June 30, 2024, the Company recognized a write-down of inventory of $0.7 million to recognize the lower of cost or net realizable value related to raw material inventory that is under contract to be sold subsequent to June 30, 2024. Refer toNote 5 for further details.

For the three and six months ended June 30, 2024, the Company recognized interest income of $0.1 million and $0.2 million, respectively, in our investment account. For the three and six months ended June 30, 2023, the Company recognized interest income of $0.4 million and $1.0 million, respectively, in our investment account.

9. EARNINGS PER SHARE

Basic and diluted loss per common share have been calculated based on the weighted-average shares outstanding during the period. Additionally,4,766,533 potentially dilutive shares, comprised of unvested RSUs and outstanding stock options at the end of the period, were excluded from the calculation of earnings per 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 six months ended June 30, 2024.

10. COMMITMENTS AND CONTINGENCIES

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. The Company believes its operations are materially compliant with current, applicable environmental regulations.

At any given time, the Company may enter into negotiations to settle outstanding legal proceedings and any resulting accruals will be estimated based on the relevant facts and circumstances applicable at that time. We do not expect that such settlements will, individually or in the aggregate, have a material effect on our financial position, results of operations or cash flows.

As of June 30, 2024, the Company has entered into certain leases that have not yet commenced. Each of the leases relate to equipment to be used at the Kellyton Graphite Plant with lease terms of 5 years, which we expect to commence later in 2024 when we take possession of the equipment. The net present value of such leases is approximately $1.1 million.