Lightbridge Corporation — FY2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; comparisons are with FY2018. Lightbridge is a pre-commercial nuclear fuel technology developer focused on metallic fuel for existing and new reactors. It reported no revenue in either year.
Financial performance and position
| Metric | FY2019 / December 31, 2019 | FY2018 / December 31, 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $8.37 million | $10.17 million |
| Operating loss | $10.98 million | $14.95 million |
| Net loss | $10.59 million | $15.68 million |
| Net loss attributable to common shareholders | $11.29 million; $3.63 per share | $18.95 million; $8.54 per share |
| Cash used in operating activities | $6.67 million | $7.42 million |
| Cash and cash equivalents | $17.96 million | $24.64 million |
| Total assets | $20.20 million | $26.34 million |
| Current liabilities | $0.35 million | $0.48 million |
| Working capital | Surplus of approximately $18.1 million | Not clearly stated in the filing text |
Gross margin and operating margin are not meaningful because the company had no revenue. Lightbridge reported no debt or credit lines. Net cash used in investing activities was $3.76 million, primarily for Enfission investment and patent costs; financing provided $3.75 million, mainly from common-stock sales. Accumulated deficit was $114.1 million. Cash included approximately $9.0 million of U.S. Treasury bills.
Material changes versus FY2018
- Net loss improved by approximately $5.1 million, while operating expenses declined 18% to $8.37 million. Lower stock-based compensation was a principal driver of the expense reductions.
- Research and development expense decreased 23% to $2.68 million. Management attributed the decrease in Enfission-related loss partly to the absence of an agreed 2019 R&D budget.
- Operating cash use declined by about $0.75 million, but cash fell $6.68 million, compared with a $20.12 million increase in FY2018. FY2018 financing proceeds were substantially higher.
- The company completed a one-for-twelve reverse stock split in October 2019 and regained Nasdaq minimum-bid-price compliance in November.
Outlook, risks and unusual items
- Going concern: The auditor’s report and management identify substantial doubt about Lightbridge’s ability to continue as a going concern. The company has recurring losses, negative operating cash flow and dependence on additional financing. Management cited approximately $16.5 million cash at the filing date and a narrow cushion against budget estimates.
- Cash needs and spending: Management projected operating cash outflow averaging about $0.8 million per month and third-party R&D outlays of $1.5–$2.0 million over the next 12–15 months. It expected a significant decrease in R&D activity in 2020 because of budget constraints and said expenses could be reduced or delayed.
- Development timetable: Near-term plans included work with Idaho National Laboratory on irradiation experiment design, arranging sample manufacture and beginning a demonstration using depleted or natural uranium. Management estimated initial utility reload-batch purchase orders in about 8–10 years, with commercial-reactor qualification roughly two years later; timing and costs remain uncertain.
- DOE support: A GAIN voucher supports work with Idaho National Laboratory. Project value is approximately $846,000, with DOE funding three-quarters of the INL-performed scope; work was anticipated to start in the first half of 2020.
- Framatome/Enfission dispute: Lightbridge terminated its R&D Services Agreement with Framatome in November 2019 and intends to dissolve the 50/50 Enfission joint venture. Framatome contests the termination and raised questions about jointly owned intellectual property and Lightbridge’s R&D rights. Lightbridge filed for arbitration in February 2020 and anticipated higher 2020 general and administrative costs. Enfission had approximately $1.3 million in disputed, unpaid Framatome invoices; Lightbridge said it had not guaranteed Enfission’s obligations.
- Commercialization risks: The fuel has not been demonstrated in a commercial reactor. Testing, regulatory approvals, specialized manufacturing, and infrastructure for metallic uranium enriched up to 19.75% are still required. The filing also highlights dependence on financing, test-reactor access, supply chains, public acceptance of nuclear power, and protection of intellectual property.
- Funding and dilution: Equity offerings, including the ATM arrangement, are a principal potential funding source. Further share issuance could dilute existing holders. Series A and B preferred stock carry 7% annual paid-in-kind dividends and senior liquidation preferences.
Important facts for investors to verify
- Current cash, cash burn, ATM capacity and actual financing availability relative to the going-concern warning.
- Progress and costs for INL irradiation planning, fuel sample manufacture, testing and regulatory milestones.
- Status and outcome of the Framatome arbitration, Enfission dissolution, disputed invoices and rights to jointly owned intellectual property.
- Whether external suppliers and facilities can support HALEU metallic fuel production, transport, storage and commercial licensing.
- Outstanding common shares and potential dilution from preferred-stock conversion, accrued dividends, options, warrants and future equity sales.