Lightbridge Corporation — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021; unaudited. Filed August 9, 2021.
Business context
Lightbridge is a pre-revenue nuclear-fuel technology developer working to commercialize metallic fuel for existing reactors and small modular reactors (SMRs). Its research and development is conducted with U.S. Department of Energy (DOE) national laboratories. The company expects first SMRs that could use its fuel to begin operations in 2029, while noting that a longer development path could delay commercial fuel orders substantially.
Financial results and liquidity
- Revenue: $0 in Q2 and the first half of 2021, unchanged from 2020. There is no revenue-based margin to assess.
- Q2 results: Operating expenses were $1.79 million, down 17% year over year. Operating loss was $1.61 million versus $2.14 million; net loss was $1.61 million versus $2.13 million. Net loss attributable to common stockholders was $1.80 million, or $0.27 per share, versus $2.32 million, or $0.66 per share.
- First-half results: Operating expenses were $3.94 million, down 12%. Operating loss was $3.66 million versus $4.47 million; net loss was $3.62 million versus $4.40 million. Net loss attributable to common stockholders was $4.00 million, or $0.61 per share, versus $4.76 million, or $1.40 per share.
- Expense movements: First-half general and administrative costs fell 17% to $3.30 million, largely as Framatome-related legal costs and prior-year severance declined. R&D rose 27% to $643,000, including increased national-laboratory work.
- Cash flow: First-half operating cash use was $7.66 million, versus $3.54 million in 2020. The 2021 amount included a $3.525 million cash-flow reduction from paying down accrued legal settlement costs. Investing cash use was $15,000; there was no financing cash inflow.
- Balance sheet: Cash and cash equivalents were $13.86 million, down from $21.53 million at December 31, 2020. Current liabilities were $1.21 million; the company reported no debt or credit lines. Stockholders’ equity was $13.92 million, and accumulated deficit was $132.78 million.
- Liquidity: Management estimated cash outflow averaging about $0.8 million per month and projected $9–$10 million of expenditures over the next 12–15 months. The filing gives working capital as approximately $13.8 million in one section and approximately $13.5 million in MD&A.
Material changes and unusual items
- Lightbridge paid Framatome approximately $4.2 million in March under a settlement resolving disputes concerning the inactive Enfission joint venture; the joint venture was dissolved. The company recognized a $110,000 expected final distribution as other operating income and a receivable, not as cash received.
- A former CFO’s claim was settled for approximately $675,000. The amount was accrued and recorded as a receivable from insurers at June 30; the settlement was approved in July, after quarter-end. The company said insurers would reimburse the payment.
- DOE grant income was $68,000 in Q2 and $171,000 in the first half, with corresponding amounts charged to R&D. Approximately $400,000 of grant income remained subject to future milestones.
- Common shares outstanding increased from 6.57 million at year-end to 6.60 million at June 30. Preferred-stock dividends accrue in kind; preferred-stock dividends and related deemed dividends increase the loss attributable to common stockholders.
Outlook, risks, and contingencies
- Going concern: Management stated that substantial doubt exists about the company’s ability to continue as a going concern for the 12 months following the filing. Available working capital was not expected to cover anticipated expenditures through Q2 2022. The company expects continuing negative cash flows and needs significant additional capital, including government support.
- Potential funding sources include equity or convertible-debt financing, strategic partners, and government support. An effective Form S-3 registered up to $75 million of securities, but current offering limitations restricted the ATM capacity described in the filing to up to $9 million. No ATM sales occurred in the first half of 2021. Financing is not assured and could dilute shareholders.
- Management said fuel development could take 15–20 years to commercialization if additional ATR test-loop capacity is not secured; the extra development steps could increase costs and extend timelines. The company says it cannot fund the additional loops itself.
- INL project work was delayed by laboratory staffing issues related to COVID-19 restrictions and export-control matters; completion was expected by Q3 2021. A second DOE voucher supports fuel-casting work with PNNL, anticipated to begin in Q3 2021.
- Other significant risks include technical and regulatory hurdles, access to test reactors, funding availability, reliance on partners and government support, competition, and COVID-19-related disruption. No formal financial guidance was provided.
Important facts for investors to verify
- Cash runway assumptions and whether additional financing or government funding is secured, including applicable Form S-3 and ATM sale limits.
- Actual monthly cash burn and R&D commitments as laboratory agreements and project costs are finalized.
- Progress, cost, and timing of INL and PNNL work, ATR test-loop availability, and any resulting changes to the 15–20-year development scenario.
- Receipt of the $110,000 Enfission distribution and insurer reimbursement of the $675,000 settlement payment.
- The working-capital estimate discrepancy: approximately $13.8 million in the notes versus approximately $13.5 million in MD&A.