Lightbridge Corporation — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020; filed August 11, 2020. Lightbridge is a development-stage nuclear-fuel technology company with no reported revenue.
Financial performance and position
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $2.14 million | $1.78 million | $4.47 million | $4.06 million |
| Net loss | $2.13 million | $3.31 million | $4.40 million | $6.42 million |
| Net loss per common share | $0.66 | $1.14 | $1.40 | $2.27 |
| Cash used in operating activities | Not separately stated | Not separately stated | $3.54 million | $2.91 million |
At June 30, cash and cash equivalents were $17.06 million, total assets $19.07 million, working capital approximately $16.4 million, and stockholders’ equity $18.17 million. Current liabilities were $0.89 million; the filing reports no debt or debt credit lines. With no revenue, conventional gross or operating margins are not meaningful. Six-month cash declined $0.90 million after $2.70 million of net proceeds from common-stock sales, operating cash use, and patent costs.
Changes versus comparable periods
- Q2 net loss narrowed by $1.17 million year over year; six-month net loss narrowed by $2.02 million.
- The improvement largely reflects the absence of Enfission equity-method losses recorded in 2019: $1.96 million in Q2 and $3.26 million for the first half. Enfission was inactive in 2020.
- Q2 general and administrative expense rose 65% to $2.03 million, primarily reflecting compensation and higher legal/professional costs, including Framatome arbitration expenses. Six-month G&A increased 53% to $3.97 million.
- R&D expense declined 79% in Q2 to $0.12 million and 66% for the first half to $0.51 million, as the company moved away from Enfission-related work and constrained spending.
- Common shares issued and outstanding increased to 3,809,415 at June 30 from 3,252,371 at year-end 2019. The company sold approximately 0.5 million shares through its ATM in the first half, receiving approximately $2.7 million net.
Outlook, risks and notable items
- Management says reduced budgets and cash on hand are expected to fund operations for at least 12 months after filing. However, the filing states that forecast uncertainty, COVID-19 effects, and possible additional arbitration costs raise substantial doubt about the company’s ability to continue as a going concern. It reports expected operating expenditures of approximately $10–11 million over the next 12 months and average operating cash outflow of about $0.8 million per month.
- Management may pursue additional equity or other financing and may defer R&D spending if needed. It also cautions that future capital may not be available on acceptable terms. For the remainder of 2020, it expected lower discretionary, consulting, payroll, and R&D costs, while legal expenses could remain elevated.
- Lightbridge terminated its R&D Services Agreement with Framatome in November 2019 and filed for ICC arbitration in February 2020. Framatome disputed the claims and filed counterclaims in April. The company seeks a declaration that termination was valid and damages; no loss was considered probable and reasonably estimable at filing. The parties also dispute $1.3 million of Framatome invoices to Enfission. Lightbridge says it has not guaranteed Enfission obligations.
- Enfission, the 50/50 joint venture with Framatome, remained inactive; formal dissolution had not been approved. Lightbridge’s investment carrying value was zero, and the company said it did not expect to contribute additional equity until dissolution.
- A DOE-supported GAIN project with Idaho National Laboratory commenced in Q2. Its total value is approximately $846,000, with DOE funding three-quarters of the INL scope and Lightbridge contributing in-kind services. No INL work had yet triggered DOE payment obligations through June 30.
- The company said it expects to invest $1.0–$1.5 million in fuel development over the next 12–15 months. It estimated initial utility reload-batch purchase orders could be 8–10 years away, with commercial-reactor qualification approximately two years thereafter. Development, testing, licensing, financing, regulatory approval, intellectual-property, COVID-19, and nuclear-industry risks remain substantial.
- Subsequent to quarter-end, ATM sales from July 1–21 generated approximately $0.6 million net proceeds from about 0.1 million shares.
Important facts for investors to verify
- Whether cash forecasts, spending reductions, and financing capacity are sufficient to address the disclosed going-concern uncertainty.
- Progress, cost, timing, and potential outcome of the Framatome arbitration, including its counterclaims and disputed invoices.
- Whether Enfission will be formally dissolved and what consequences this may have for Lightbridge’s R&D plans and intellectual property rights.
- Execution and funding of the INL/DOE work, fuel testing milestones, and the long commercialization timeline.
- Further ATM issuance, dilution, preferred-stock dividends and conversion features, and the company’s ability to raise capital within shelf-registration limits.