Lightbridge Corporation — Q2 2013 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2013; unaudited. Lightbridge develops nuclear-fuel technology and provides nuclear consulting. All reported revenue came from consulting; fuel technology generated no revenue.
Financial performance and position
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | 2013: $658,859; 2012: $981,016 | 2013: $1,174,809; 2012: $2,238,537 |
| Gross margin | 2013: 44%; 2012: 38% | 2013: 45%; 2012: 38% |
| Operating loss | 2013: $(994,210); 2012: $(1,391,357) | 2013: $(2,287,648); 2012: $(2,345,591) |
| Net loss | 2013: $(1,023,844); 2012: $(1,314,936) | 2013: $(2,302,766); 2012: $(2,111,470) |
| Basic and diluted loss per share | 2013: $(0.08); 2012: $(0.11) | 2013: $(0.18); 2012: $(0.17) |
- Six-month R&D expense was $1.26 million, up from $1.02 million; general and administrative expense was $1.55 million, down from $2.19 million.
- Operating cash used was $2.00 million in the first half of 2013, versus $2.96 million in the first half of 2012. Investing activities provided $394,000; financing used $770. Cash and cash equivalents fell by $1.61 million to $586,016.
- At June 30, cash and cash equivalents were $586,016, marketable securities $1.09 million, and restricted cash $554,452. Working capital was approximately $3.0 million. Current liabilities were $422,942; the filing reports no debt or interest expense.
- Total assets were $4.09 million and stockholders’ equity $3.67 million. The company had 12,556,400 common shares outstanding on June 30.
Changes versus the prior comparable period
- Revenue declined 33% in Q2 and 48% for the first half, mainly because less work was performed under the ENEC and FANR consulting projects in the UAE.
- Gross margin improved, which management attributed partly to reduced use of outside consultants. Lower Q2 and first-half G&A partly offset increased R&D spending.
- First-half net loss widened by approximately $191,000 despite a smaller operating loss, primarily reflecting lower investment income: investment income and other items were a net expense of $15,000 in first-half 2013, compared with net income of $234,000 in 2012.
- Cash and marketable securities were materially lower than at December 31, 2012. Cash, cash equivalents and marketable securities together totaled approximately $1.67 million at June 30, excluding restricted cash.
Outlook, risks and contingencies
- Management estimated a current monthly operating cash-flow shortfall of $200,000–$250,000. It stated that available working capital could support operations at the current level for the next 12 months, while also saying it would seek new financing or other capital sources in the next six months and that additional capital might be needed within 6–12 months. These runway statements are estimates and depend on operating assumptions and access to funds.
- Management planned $3–$4 million of nuclear-fuel R&D over the following 12–15 months, contingent on new agreements with outside contractors. It was pursuing new consulting work and strategic or commercial arrangements with fuel vendors and fabricators; proposals and negotiations were pending, with no awards or financing assured.
- ENEC and FANR contracts were extended to December 31, 2013 and December 31, 2014, respectively. Future revenue depends on agreed work plans and may vary. Substantially all consulting revenue and nearly all receivables were concentrated in these UAE relationships.
- The fuel designs remain under development and have not been demonstrated in a commercial reactor. Key risks include testing and licensing delays, fabrication and infrastructure requirements, reliance on Russian research and intellectual property, export authorization, political and regulatory uncertainty, and the need to secure capital and commercial partners.
- The company reported no material legal proceedings known to management, no material recognizable subsequent events, and no material off-balance-sheet arrangements. Disclosure controls were deemed effective; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether Lightbridge secured new consulting contracts, financing, or fuel-industry strategic agreements after the filing date, and on what terms.
- Whether the stated cash runway and planned R&D spending remained feasible given the reported burn rate, declining liquid resources, and restricted cash.
- The timing, scope, and expected revenue contribution of ENEC and FANR work, and the company’s continuing customer concentration.
- Progress on commercial-scale fuel testing, regulatory and export approvals, Russian collaboration agreements, and protection or access rights for relevant intellectual property.
- The filing’s liquidity presentation: it cites approximately $2.2 million of cash, restricted cash, and marketable securities combined, while unrestricted cash, cash equivalents, and marketable securities totaled approximately $1.67 million.