Lightbridge(LTBR) - 2020 Q1 - Quarterly Report

PART I Financial Statements (unaudited) The unaudited financial statements for Q1 2020 show a reduced net loss, decreased assets, and ongoing going concern uncertainties Unaudited Condensed Consolidated Balance Sheets Total assets decreased to $18.5 million by March 31, 2020, primarily due to reduced cash, while equity also declined Condensed Consolidated Balance Sheet Data (in thousands) | | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $16,334 | $17,959 | | Total Current Assets | $16,679 | $18,406 | | Total Assets | $18,482 | $20,205 | | Liabilities & Stockholders' Equity | | | | Total Current Liabilities | $486 | $350 | | Total Stockholders' Equity | $17,996 | $19,855 | | Total Liabilities and Stockholders' Equity | $18,482 | $20,205 | Unaudited Condensed Consolidated Statements of Operations The company reported no revenue and a reduced net loss of $2.3 million for Q1 2020, primarily due to lower R&D expenses Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | General and administrative | $1,937 | $1,358 | | Research and development | $390 | $922 | | Total Operating Expenses | $2,327 | $2,280 | | Equity in loss from joint venture | $0 | ($1,295) | | Operating Loss | ($2,327) | ($3,220) | | Net Loss | ($2,264) | ($3,111) | | Net Loss Attributable to Common Stockholders | ($2,444) | ($3,283) | | Net Loss Per Common Share, Basic and Diluted | ($0.74) | ($1.14) | Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $2.0 million in Q1 2020, leading to a $1.6 million decrease in cash Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($2,020) | ($1,547) | | Net Cash Used In Investing Activities | ($4) | ($1,549) | | Net Cash Provided by Financing Activities | $400 | $1,986 | | Net Decrease In Cash and Cash Equivalents | ($1,625) | ($1,109) | | Cash and Cash Equivalents, End of Period | $16,334 | $23,528 | Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity Stockholders' equity decreased by $1.9 million in Q1 2020, primarily due to net loss, partially offset by stock issuance - Total stockholders' equity decreased by approximately $1.9 million during the first quarter of 2020, from $19,854,545 to $17,996,219[16] - The decrease was mainly due to a net loss of $2,264,086, offset by $399,675 in net proceeds from the issuance of common stock[16] Notes to Condensed Consolidated Financial Statements (unaudited) Notes highlight going concern uncertainty, inactive Enfission JV with ongoing arbitration, a DOE voucher award, and COVID-19 related cost cuts - Management believes cash on hand at March 31, 2020, may be sufficient for at least 12 months, but forecasting uncertainties and recurring losses raise substantial doubt about the Company's ability to continue as a going concern[24][26] - The Enfission joint venture with Framatome is inactive. On February 7, 2020, Lightbridge filed a request for arbitration against Framatome, asserting material breach of the R&D Services Agreement (RDSA) and seeking to confirm the agreement's termination[35][52][53] - The company was awarded a voucher from the U.S. Department of Energy's (DOE) GAIN program to support the development of Lightbridge Fuel™ in collaboration with Idaho National Laboratory (INL). The project, valued at approximately $846,000, is anticipated to commence in Q2 2020[67] - In March 2020, due to the COVID-19 pandemic and to maximize liquidity, the company reduced discretionary spending and payroll costs through layoffs, resulting in approximately $0.2 million in one-time accrued severance benefits[61] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses nuclear fuel development, CRADA with INL, Framatome arbitration, reduced Q1 2020 net loss, and ongoing going concern issues Overview of Our Business Lightbridge focuses on commercializing advanced nuclear fuel, collaborating with INL, and is in arbitration with Framatome - The company's goal is to develop and commercialize next-generation nuclear fuel to improve the economics, safety, and proliferation resistance of nuclear reactors[118] - On April 22, 2020, the company entered into a Cooperative Research and Development Agreement (CRADA) with Battelle Energy Alliance, LLC (operator of INL) to formalize a DOE GAIN voucher award for designing an irradiation experiment for Lightbridge fuel materials[128] - On February 7, 2020, the company filed for arbitration against Framatome to confirm the valid termination of their R&D Services Agreement and to seek compensation for damages[134] - The COVID-19 pandemic has impacted business operations, leading to reduced R&D expenses and increased G&A expenses from severance payments in Q1 2020[131] Operations Review Q1 2020 operating loss decreased to $2.3 million due to lower R&D, despite increased G&A from legal and severance costs Comparison of Operating Results (in thousands) | | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $1,937 | $1,358 | $579 | 43% | | Research and development | $390 | $922 | ($532) | -58% | | Total Operating Expenses | $2,327 | $2,280 | $47 | 2% | | Total Other Operating Income (Loss) | $0 | ($940) | $940 | 100% | | Total Operating Loss | ($2,327) | ($3,220) | ($893) | -28% | | Net Loss | ($2,264) | ($3,111) | ($846) | -27% | - General and administrative expenses increased by approximately $0.6 million, primarily due to a $0.4 million increase in professional fees (legal, accounting) and $0.2 million in severance payments[146] - Research and development expenses decreased by approximately $0.5 million due to the cessation of work for the Enfission joint venture[150] Liquidity, Capital Resources, and Financial Position Cash was $16.3 million at Q1 2020, with projected negative cash flow, raising substantial doubt about going concern without future equity financing - Cash and cash equivalents were approximately $16.3 million at March 31, 2020, compared to $17.9 million at December 31, 2019[159] - The company projects a negative cash flow from operations averaging approximately $0.7 million per month for the next 12 to 15 months[160] - Despite cost-cutting measures, uncertainties in forecasting future expenditures and potential unexpected costs raise substantial doubt about the Company's ability to continue as a going concern for the next 12 months[160] - Primary potential sources of future cash are equity investments, including an existing ATM financing arrangement, though the amount available may be limited by public float valuation[162] Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required for smaller reporting companies - Disclosure is not required[167] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2020, with no material changes in Q1 - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2020[168] - There were no material changes in the Company's internal control over financial reporting during the first quarter of 2020[169] PART II – OTHER INFORMATION Legal Proceedings The company initiated arbitration against Framatome regarding R&D Services Agreement termination and is defending an OSHA complaint appeal - On February 7, 2020, the company filed a request for arbitration against Framatome to declare the R&D Services Agreement (RDSA) terminated and to obtain compensation for damages[175] - On April 3, 2020, Framatome submitted its answer, disputing the claims and setting out its own counterclaims[176] - A former CFO's 2015 OSHA complaint, which was dismissed in 2018, is currently under appeal. The company is vigorously defending the appeal[65] Risk Factors The primary new risk factor is the potential adverse impact of the COVID-19 outbreak on business and financing - The COVID-19 outbreak could adversely affect the company's business, financial position, results of operations, and liquidity, including research and development activities and the ability to obtain financing[177] - There have been no other material changes to risk factors from those disclosed in the 2019 Annual Report on Form 10-K[178] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the period - None[179] Exhibits The report includes required certifications by executive and financial officers, along with XBRL Interactive Data Files Exhibit Index | Exhibit Number | Description | | :--- | :--- | | 31.1 | Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer | | 31.2 | Rule 13a-14(a)/15d-14(a) Certification - Principal Financial Accounting Officer | | 32 | Section 1350 Certifications | | 101.INS | XBRL Instance Document |