Lightbridge Corporation — Q1 2017 Form 10-Q
Reporting period: Three months ended March 31, 2017; filed May 9, 2017. Lightbridge develops nuclear fuel technology and provides nuclear-industry consulting. All Q1 revenue came from consulting; fuel technology generated no revenue.
Financial results and position
| Metric | Q1 2017 | Q1 2016 |
|---|---|---|
| Revenue | $135,485 | $166,546 |
| Gross profit / margin | $50,122 / 37% | $98,321 / 59% |
| Operating loss | $1,622,524 | $1,584,038 |
| Net loss | $1,745,308 | $334,705 |
| Net loss attributable to common stockholders | $1,794,308 | $334,705 |
| Loss per common share | $0.20 | $0.09 |
| Cash used in operating activities | $1,140,089 | $1,314,873 |
At March 31, cash and cash equivalents were $5.22 million, with an additional $114,036 of restricted cash; working capital was approximately $4.9 million. Total assets were $8.14 million and total liabilities $1.16 million. The balance sheet reports no debt outstanding. Cash increased $1.63 million during the quarter, principally from $2.81 million of net common-stock issuance, offset by operating and investing cash use.
Changes and notable items
- Revenue fell 19%, primarily due to less work on the FANR project. Consulting costs rose 25%, contributing to the gross-margin decline.
- Operating expenses were approximately $1.67 million, down slightly overall: G&A increased 10% to $1.21 million, while R&D decreased 21% to $464,343.
- Net loss widened substantially partly because Q1 2016 included a $1.25 million noncash warrant-revaluation gain; Q1 2017 had no such gain and included $122,804 of financing-cost amortization.
- Common shares outstanding increased from 7.11 million at year-end to 9.72 million at March 31, primarily reflecting ATM sales. Average shares outstanding also rose, from 3.93 million to 9.14 million.
Outlook, liquidity, and risks
- Management disclosed substantial doubt about the company’s ability to continue as a going concern. It projects a cash-flow shortfall averaging approximately $0.5–$0.6 million monthly over the next 12 months and expects to seek additional financing.
- Lightbridge expects to spend $3–$5 million on fuel-technology R&D over the next 12–15 months, contingent on raising additional equity; spending could increase if a potential AREVA NP joint venture proceeds. Management says it can defer some expenses if needed, but failure to obtain adequate funding could force cutbacks or cessation of operations.
- The company had raised the full $5.8 million registered under its ATM by the filing date; its ability to use the existing shelf was limited. Further Aspire Capital equity access also depended on registration and share-issuance constraints. Subsequent to quarter-end, it reported approximately $0.2 million of additional gross ATM proceeds through May 9.
- Management’s development schedule anticipates analytical models in 2017–2018, lead-test-assembly operations as soon as 2023–2024, and commercial reload orders potentially in 2026–2027. These are forward-looking targets, subject to funding, partner arrangements, testing, and regulatory approvals; the filing gives no earnings or revenue guidance.
- Risks include commercialization and regulatory execution, financing availability, customer demand, competition, and reliance on partners. A former CFO’s OSHA retaliation complaint remains described in the notes; the company disputes the claims and intends to defend itself. The filing separately states it is not involved in material legal proceedings.
Investor verification priorities
- Confirm available financing, ATM/shelf capacity, Aspire registration and share limits, and cash runway against the disclosed monthly shortfall.
- Track whether the AREVA NP joint venture or another commercial arrangement is executed and funded, and whether planned R&D spending is achievable.
- Monitor consulting revenue, gross margin, operating cash use, and dilution from equity issuance and outstanding options and warrants.
- Assess progress against fuel-development, testing, licensing, and commercialization milestones, along with the status and potential exposure of the former CFO complaint.