Lightbridge Corporation — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; unaudited. Lightbridge is a development-stage nuclear fuel technology company pursuing development and commercialization of metallic nuclear fuel. It reported no revenue.
Financial performance and position
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $2.33 million | $2.28 million, up 2% |
| Operating loss | $2.33 million | $3.22 million |
| Net loss | $2.26 million | $3.11 million |
| Net loss attributable to common stockholders | $2.44 million; $0.74 per share | $3.28 million; $1.14 per share |
| Cash used in operating activities | $2.02 million | $1.55 million |
| Cash and cash equivalents, March 31 | $16.33 million | $23.53 million at March 31, 2019 |
At March 31, 2020, total assets were $18.48 million, current liabilities $0.49 million, and stockholders’ equity $18.00 million. Working capital was approximately $16.2 million. The company reported no debt or debt credit lines. Profit margins are not meaningful because there was no revenue and the company incurred losses.
Changes and notable items
- Net loss improved by $0.85 million year over year, principally reflecting the absence of the prior-year $1.30 million equity-method loss from Enfission and lower R&D spending. General and administrative costs rose $0.58 million, including higher arbitration-related professional fees and approximately $0.2 million in severance.
- R&D expense fell 58% to $0.39 million; management attributed the decrease to reduced Enfission work, a revised development strategy, and COVID-19-related constraints. General and administrative expense rose 43% to $1.94 million.
- Cash declined $1.62 million from year-end. Operating cash use of $2.02 million and patent costs were partly offset by $0.40 million of net proceeds from ATM share sales. Common shares outstanding increased to 3,363,679 from 3,252,371 at year-end.
- Enfission, the 50%-owned joint venture with Framatome, remained inactive. Lightbridge had invested approximately $9.2 million historically; its recorded investment had been reduced to zero by allocated losses. The company said it did not expect to contribute further funds while Enfission remained inactive.
Outlook, risks and contingencies
- Management estimated operating cash outflows averaging approximately $0.7 million monthly and total expenditures of $8.0–$8.5 million over the next 12–15 months. It said March 31 cash exceeded revised budgeted expenditures through Q2 2021, but forecasting uncertainty and possible unexpected costs—including arbitration costs—raised substantial doubt about the company’s ability to continue as a going concern for the 12 months following the filing. Management also stated that cash and cost reductions may be sufficient for obligations over that period.
- In March, the company reduced discretionary spending, revised R&D plans, reduced payroll, laid off employees, and converted some employees to consultants. It may further defer R&D or seek equity, debt, or strategic funding; there is no assurance financing will be available. Cash and cash equivalents were approximately $15.4 million as of the filing date, versus $16.3 million at quarter-end.
- Lightbridge filed for arbitration against Framatome on February 7, 2020, seeking confirmation that the R&D Services Agreement was validly terminated and damages. Framatome disputed the claims and filed counterclaims on April 3. The dispute concerns, among other matters, invoicing, budget commitments, and rights involving jointly owned intellectual property. The outcome and potential costs are uncertain.
- COVID-19 disrupted operations and reduced R&D activity; its future effects on research, financing access, liquidity, and results were uncertain. The company did not apply for CARES Act assistance.
- A DOE GAIN voucher project with Idaho National Laboratory was formalized by a CRADA on April 22, after quarter-end. The approximately $846,000 project was expected to begin in Q2 2020, with DOE funding three-quarters of the project value for INL’s work and Lightbridge contributing the balance in-kind.
- Management anticipated investing $1.0–$1.5 million in fuel development over the next 12–15 months. It estimated initial utility purchase orders in about 8–10 years, with first commercial reload-batch qualification approximately two years later; timing and cost remain uncertain.
- Other contingencies include disputed Framatome invoices within Enfission’s $1.3 million liabilities and a former CFO’s OSHA appeal, which the company said it would defend. The company reported no guarantee of Enfission obligations.
Important facts for investors to verify
- Whether cost reductions and available cash support the operating plan, and how actual cash burn compares with the $8.0–$8.5 million forecast.
- Developments and potential financial or intellectual-property consequences in the Framatome arbitration and Enfission’s proposed dissolution.
- Availability and terms of future financing, including remaining ATM or shelf capacity, given the going-concern disclosure and possible share dilution.
- Progress, funding, and milestones under the INL/DOE project, and the feasibility and cost of the long-term fuel testing and commercialization schedule.
- Potential further effects of COVID-19 on research activities, expenses, financing access, and liquidity.