Lightbridge Corporation — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020; filed November 5, 2020. Lightbridge is a pre-revenue nuclear-fuel technology developer seeking to develop and commercialize metallic fuel. Its unaudited interim results are not necessarily indicative of full-year results.
Key financial metrics
| Metric | Q3 2020 | Nine months 2020 | Comparison |
|---|---|---|---|
| Revenue | $0 | $0 | $0 in comparable 2019 periods |
| Operating expenses | $3.10 million | $7.57 million | Up 40% and 21%, respectively |
| Operating loss | $3.07 million | $7.54 million | Q3 loss widened 22%; nine-month loss narrowed 18% |
| Net loss | $3.06 million | $7.46 million | 2019: $2.44 million and $8.86 million |
| Net loss attributable to common stockholders | $3.25 million | $8.01 million | 2019: $2.62 million and $9.38 million |
| Basic and diluted loss per share | $0.80 | $2.22 | 2019: $0.81 and $3.07 |
| Operating cash flow | Not separately presented | $(5.57) million | 2019: $(4.12) million |
With no revenue, operating and net margins are not meaningful. Nine-month R&D expense fell 65% to $0.77 million, while general and administrative expense rose 68% to $6.80 million. The company attributed higher G&A primarily to arbitration-related legal and other professional fees, compensation and bonuses, and severance; lower R&D reflected the wind-down of Enfission work, budget constraints, and a revised development approach. Lower 2019 Enfission losses also contributed to the improvement in the nine-month net loss.
- Liquidity and balance sheet: Cash and cash equivalents were $17.41 million at September 30, versus $17.96 million at December 31, 2019. Current assets were $17.58 million, current liabilities $1.82 million, and working capital approximately $15.8 million. Total assets were $19.40 million and stockholders’ equity $17.59 million.
- Cash flows and funding: Nine-month investing cash use was $0.14 million; financing provided $5.16 million, principally from common-stock sales. Cash declined $0.55 million. The company reported no debt or credit lines. It held approximately $13 million in U.S. Treasury bills at period end.
- Preferred stock: Series A and B preferred shares carry 7% annual dividends paid in kind. Their combined liquidation preferences were approximately $7.43 million at September 30.
Material changes and developments
- Q3 G&A increased $1.37 million year over year, with approximately $1.3 million of higher professional fees, mainly for the Framatome arbitration. Q3 R&D declined $0.49 million.
- Enfission, the 50/50 Lightbridge–Framatome joint venture, remained inactive. Lightbridge had invested approximately $9.2 million, fully offset by its share of accumulated losses; it recorded no Enfission investment or related loss in 2020.
- Common shares outstanding increased from 3.25 million at December 31, 2019 to 4.42 million at September 30, 2020, primarily through ATM sales. Nine-month ATM proceeds were approximately $5.1 million net.
- After quarter end, ATM sales from October 1 through November 5 generated approximately $4.7 million net from about 1.2 million shares. The company also reported grants of 243,800 time-based RSUs and 21,200 director shares on October 28.
Outlook, risks and unusual items
- Management projected approximately $12 million of expenditures over the next 12 months, with operating cash outflow averaging about $1 million per month. It expected to invest $2–3 million in fuel development over the next 12–15 months.
- Management said available cash and cost reductions were expected to support operations for at least 12 months, but also stated that forecast uncertainty, potential budget overruns, COVID-19 effects, and possible additional legal costs raised substantial doubt about the company’s ability to continue as a going concern. It may seek additional equity or other funding and defer R&D spending; financing availability is not assured.
- Development milestones include completing the DOE GAIN/Idaho National Laboratory project, arranging manufacture of fuel samples for test-reactor irradiation, and beginning a manufacturing demonstration. The CRADA project was valued at approximately $846,000, with DOE funding three-quarters of the INL work. Commercialization timing and costs remain uncertain.
- Lightbridge terminated its R&D Services Agreement with Framatome and filed for international arbitration, seeking confirmation of valid termination and damages. Framatome disputes the claims and filed counterclaims. The company had not accrued a loss because it did not consider a loss probable and estimable; it warned that legal outcomes could materially affect results, liquidity, or financial condition.
- Enfission had $1.3 million of disputed, unpaid Framatome invoices within its liabilities. Lightbridge said it had not guaranteed Enfission obligations and did not believe it was required to fund the deficit, but resolution may involve negotiation or arbitration.
- COVID-19 reduced R&D activity and contributed to budget cuts and severance. The company said future effects on operations, financing access, and liquidity were uncertain. It did not apply for CARES Act assistance.
- A former CFO’s appeal in an OSHA proceeding continued after the company’s motion for summary decision was denied on September 30, 2020. The company said related legal fees were expected to be paid by its insurance carriers.
Investor facts to verify
- Whether cash burn, legal expenses, and financing availability support the stated 12-month liquidity outlook despite the going-concern substantial-doubt disclosure.
- Current ATM capacity, subsequent share issuance, and potential dilution, including the October RSU and director-share grants.
- Progress, cost, and funding for fuel testing and manufacturing milestones, and any impact from reduced R&D spending.
- Developments in the Framatome arbitration, including counterclaims, potential liability, and intellectual-property or R&D rights.
- Enfission’s proposed dissolution and the outcome of the disputed $1.3 million invoices.