Lightbridge Corporation — FY 2017 Form 10-K
Reporting period: Fiscal year ended December 31, 2017; filed March 14, 2018. This is an annual report, not a quarterly report. Lightbridge is a pre-commercial nuclear fuel technology developer that also provides nuclear consulting services.
Financial performance and position
| Metric | 2017 | 2016 |
|---|---|---|
| Revenue | $175,446 | $760,577 |
| Gross profit / margin | $68,355 / 39% | $304,012 / 40% |
| Operating loss | $6.60 million | $7.63 million |
| Net loss | $7.10 million | $6.35 million |
| Net loss attributable to common shareholders | $7.38 million | $7.01 million |
| Basic and diluted loss per share | $0.71 | $1.48 |
| Cash used in operating activities | $5.00 million | $5.98 million |
| Cash used in investing activities | $0.21 million | $0.21 million |
| Cash provided by financing activities | $6.14 million | $9.15 million |
- Revenue was entirely from consulting; nuclear fuel technology generated no revenue. Consulting revenue fell 77%, primarily from reduced UAE project work and the end of another contract.
- General and administrative expense was $4.38 million, down 16%; research and development expense was $2.28 million, down 17%. Research and development spending in 2016 was $2.75 million.
- At year-end, cash and cash equivalents were $4.52 million, working capital was approximately $3.9 million, total assets were $6.95 million, total liabilities were $1.15 million, and stockholders’ equity was $5.79 million. The company reported no debt or debt credit lines.
- Year-end common shares outstanding were 12.74 million, compared with 7.11 million a year earlier. The filing reports 22.83 million shares issued and outstanding as of March 8, 2018.
Material changes and developments
- Revenue declined from $761,000 to $175,000, while net loss increased from $6.35 million to $7.10 million. Loss per share improved year over year, largely alongside a higher weighted-average share count; common-shareholder loss remained higher.
- In January 2018, Lightbridge formed Enfission, a 50/50 joint venture with Framatome, to develop, license, manufacture, and sell fuel assemblies using Lightbridge-designed metallic fuel technology. The venture is expected to be the company’s principal route to future fuel-related income.
- After year-end, the company raised approximately $20 million net through its at-the-market offering and closed a roughly $4 million Series B preferred stock offering. Cash and cash equivalents were approximately $27 million as of March 14, 2018. These transactions materially improved near-term liquidity but involved equity issuance and potential dilution.
Outlook, risks, and unusual items
- Management expected to spend approximately $10 million to $12 million on research and development over the 12–15 months following the filing, in addition to corporate overhead estimated at $400,000 to $500,000 per month. The company anticipated needing additional capital in 2019 and beyond.
- Lightbridge expected consulting revenue to decline in 2018 because it had no consulting contracts as of the filing date. It also said substantially all anticipated future income depended on Enfission and future licensing revenues.
- The commercialization timetable is long and conditional: planned work included test fabrication and irradiation, a commercial-reactor lead test assembly targeted as soon as 2023–2024, an initial reload order as soon as 2026–2027, and commercial qualification as soon as 2028–2029. These are management expectations, not assured milestones.
- Key risks include unproven fuel performance in commercial reactors, testing-reactor availability, regulatory licensing and infrastructure changes for uranium enrichment above 5%, manufacturing scale-up, utility adoption, joint-venture deadlock, intellectual-property protection, competition, nuclear-industry sentiment, and the need for additional financing. The company reported recurring losses and negative operating cash flow; management stated that post-year-end financing was expected to cover its operating budget for 12 months from the financial-statement issuance date.
- The 2016 results included $1.67 million of non-cash warrant revaluation income; no such income was recorded in 2017. The filing also discusses a provisional $9.6 million non-cash tax remeasurement related to the 2017 tax law, offset by a valuation allowance; reported income tax expense was zero in both years.
- A former CFO’s OSHA complaint was dismissed in January 2018 without findings against the company; the former CFO had a limited period to appeal. The filing also notes a $38,000 office sublease abandonment loss in 2017.
Most important facts for investors to verify
- Progress, funding commitments, governance, and spending under the Enfission joint venture, including the approximately $3.3 million minimum R&D services commitment through December 31, 2018.
- Whether Lightbridge can secure further capital on acceptable terms without material dilution, and whether the stated cash runway and planned R&D budget remain achievable.
- Actual technical, fabrication, irradiation, licensing, and utility-host milestones versus the company’s projected commercialization schedule.
- Whether consulting contracts resume and how customer concentration affects revenue and receivables.
- The status of Series A and Series B preferred stock, accrued dividends, warrants, and share issuance; also confirm the share-count basis and any subsequent dilution.
- The audited financial statements received an unqualified opinion from BDO. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation.