Lightbridge Corporation — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019. Lightbridge is a development-stage nuclear-fuel technology company focused on developing and commercializing metallic fuel; it reported no revenue. Its fuel-development activities are conducted principally through Enfission, a 50/50 joint venture with Framatome, accounted for under the equity method.
Financial results and position
- Revenue: $0 in both Q1 2019 and Q1 2018.
- Operating expenses: $2.28 million, down 27% from $3.13 million. General and administrative expense declined 39% to $1.36 million; research and development was approximately $0.92 million, essentially unchanged.
- Loss: Net loss was $3.11 million, versus $4.72 million a year earlier. Net loss attributable to common stockholders was $3.28 million, or $0.09 per share, compared with $7.49 million, or $0.39 per share. The prior-year common-stockholder loss included a $2.62 million deemed dividend on Series B preferred stock.
- Joint venture: Lightbridge recorded $1.30 million of equity-method losses, up from $1.03 million, reflecting higher Enfission R&D costs. It also recorded $0.36 million of income for services billed to Enfission.
- Cash flow: Operating activities used $1.55 million; investing activities used $1.55 million, including $1.44 million invested in Enfission and $0.11 million in patent costs. Financing provided $1.99 million from common-stock sales. Cash declined $1.11 million to $23.53 million.
- Liquidity and debt: Current assets were $24.08 million and current liabilities $0.69 million, for working capital of approximately $23.39 million. The company reported no debt or debt credit lines. Cash included $10 million in U.S. Treasury bills; substantially all remaining bank deposits were held at one financial institution.
- Equity and dilution: Common shares outstanding rose to 36.15 million from 32.86 million at year-end, primarily through ATM sales. At March 31, common-stock equivalents, including options, warrants and preferred shares and accrued dividends, totaled approximately 46.21 million shares.
Changes versus Q1 2018
- Net loss improved by $1.61 million. Lower G&A expense, including reduced stock-based compensation and professional fees, contributed to the improvement.
- Other income and expense improved by approximately $1.07 million, mainly because Q1 2018 included a $0.98 million write-off of deferred financing costs; Q1 2019 also had higher interest income.
- Enfission-related equity losses increased by $0.27 million. R&D expense remained approximately level.
- Operating cash use improved to $1.55 million from $1.85 million, while investing cash use fell to $1.55 million from $5.31 million. Financing proceeds were substantially lower than the prior-year $24.62 million.
Outlook, risks and unusual items
- Management estimated approximately $16 million of cash outlays over the next 12 months: $9.3 million for G&A and corporate R&D and approximately $6 million for Enfission and third-party R&D and equipment. It also expected to invest $12 million to $15 million in fuel development over the next 12 to 15 months. Management said available resources were sufficient for the current 12-month operating budget, but stated that additional capital would be needed in 2019 for operations in 2020 and beyond.
- The company expects continued negative cash flows and losses. Potential funding sources include equity, strategic investment, and Department of Energy grants; availability and terms are not assured. Management said it could delay certain expenses if needed.
- Enfission incurred an approximately $2.0 million loss in Q1. Lightbridge contributed approximately $1.44 million during the quarter and had contributed approximately $7.0 million cumulatively by March 31, 2019. Its share of Enfission losses exceeded its investment by approximately $73,000, recorded as a current liability. Lightbridge expects further contributions.
- Management’s anticipated development timeline included fabrication demonstrations and other milestones in 2019, lead-test-rod operation in a commercial U.S. reactor in 2022–2024, and initial reload-batch orders as soon as 2028–2030. Commercial deployment was projected as soon as 2030–2032; these expectations depend on financing, testing, regulatory progress and other factors.
- Nasdaq notified the company of a minimum-bid-price deficiency. It did not regain compliance by May 6, 2019; on May 7 it received an additional 180-day compliance period and said it could implement a reverse stock split if necessary. Failure to regain compliance could result in delisting.
- A former CFO’s OSHA complaint had been dismissed in January 2018; an appeal was filed in March 2018, which the company said it would defend. The filing states there were no material legal proceedings. No material changes to previously disclosed risk factors were reported.
Important facts for investors to verify
- Whether cash, future equity issuance, DOE funding or strategic contributions can support the planned R&D program and Enfission commitments.
- Progress against technical, fabrication, irradiation and regulatory milestones, and any changes to the projected commercialization timetable.
- Enfission’s funding needs, loss allocation, and the extent of Lightbridge’s continuing contributions and related-party service billings.
- Potential dilution from ATM or other equity sales, preferred-stock dividends and conversions, options and warrants; confirm subsequent share counts and preferred-stock terms.
- Nasdaq bid-price compliance status and any resulting listing or reverse-split actions.