Lightbridge(LTBR) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents Lightbridge Corporation's unaudited condensed consolidated financial statements and management's analysis for the period ended June 30, 2021 Item 1. Financial Statements (unaudited) This section presents Lightbridge Corporation's unaudited condensed consolidated financial statements and related notes for the period ended June 30, 2021 Unaudited Condensed Consolidated Balance Sheets This statement provides a snapshot of Lightbridge Corporation's financial position as of June 30, 2021 | Metric | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $13,855,982 | $21,531,665 | | Total Current Assets | $15,030,443 | $21,704,125 | | Total Assets | $15,130,660 | $21,789,687 | | Total Current Liabilities | $1,214,095 | $4,582,130 | | Total Stockholders' Equity | $13,916,565 | $17,207,557 | Unaudited Condensed Consolidated Statements of Operations This statement details Lightbridge Corporation's revenues, expenses, and net loss for the periods ended June 30, 2021 | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $— | $— | $— | $— | | Total Operating Expenses | $1,789,213 | $2,144,443 | $3,941,523 | $4,471,021 | | Total Other Operating Income | $177,794 | $— | $281,113 | $— | | Operating Loss | $(1,611,419) | $(2,144,443) | $(3,660,410) | $(4,471,021) | | Net Loss | $(1,610,097) | $(2,132,106) | $(3,622,085) | $(4,396,192) | | Net Loss Per Common Share (Basic and Diluted) | $(0.27) | $(0.66) | $(0.61) | $(1.40) | Unaudited Condensed Consolidated Statements of Cash Flows This statement outlines Lightbridge Corporation's cash flows from operating, investing, and financing activities for the six months ended June 30, 2021 | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Used in Operating Activities | $(7,661,028) | $(3,535,814) | | Net Cash Used in Investing Activities | $(14,655) | $(69,872) | | Net Cash Provided by Financing Activities | $— | $2,703,010 | | Net Decrease in Cash and Cash Equivalents | $(7,675,683) | $(902,676) | | Cash and Cash Equivalents, End of Period | $13,855,982 | $17,056,313 | Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity This statement tracks changes in Lightbridge Corporation's stockholders' equity for the period ended June 30, 2021 - Total Stockholders' Equity decreased from $17,207,557 at January 1, 2021, to $13,916,565 at June 30, 2021, primarily due to a net loss of $(3,622,085) for the six months ended June 30, 2021, partially offset by stock-based compensation and shares issued for services[14][15] - Common stock shares outstanding increased from 6,567,110 at January 1, 2021, to 6,595,503 at June 30, 2021, driven by shares issued to consultants and directors for services and conversion of preferred shares[14][15] Notes to Condensed Consolidated Financial Statements (unaudited) These notes provide detailed explanations of Lightbridge Corporation's accounting policies, estimates, and financial disclosures Note 1. Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations This note describes the basis of financial statement presentation, key accounting policies, and going concern considerations - The Company's available working capital at June 30, 2021, does not exceed its anticipated expenditures through Q2 2022, raising substantial doubt about its ability to continue as a going concern for the next 12 months. Management plans to raise additional capital through equity issuances, convertible debt, new funding relationships, and government support[20][21][22] - Grant income of approximately $0.1 million and $0.2 million was recognized for the three and six months ended June 30, 2021, respectively, with no grant income in the prior year periods. This income is recognized as related costs are incurred[32][33] - Beginning January 1, 2021, patent filing and legal fees are expensed due to uncertainties in fuel development timelines and commercialization, whereas previously they were capitalized. The carrying value of patents on the balance sheet is $0 as of June 30, 2021[34][35] Note 2. Net Loss Per Share This note details the calculation of basic and diluted net loss per common share, including anti-dilutive securities | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(1,801,818) | $(2,315,638) | $(4,002,729) | $(4,759,952) | | Weighted-average common shares outstanding | 6,595,483 | 3,486,566 | 6,592,454 | 3,390,782 | | Basic and Diluted Net Loss Per Share | $(0.27) | $(0.66) | $(0.61) | $(1.40) | - Outstanding securities totaling 1,215,036 (warrants, stock options, RSUs, convertible preferred stock) for the three and six months ended June 30, 2021, were excluded from diluted EPS computation as they were anti-dilutive due to the Company's losses[48] Note 3. Accounts Payable and Accrued Liabilities This note provides a breakdown of Lightbridge Corporation's accounts payable and various accrued liabilities | Category | June 30, 2021 | December 31, 2020 | | :------------------------------ | :------------ | :---------------- | | Trade payables | $65,000 | $233,000 | | Accrued bonuses | $340,000 | $— | | Accrued legal and consulting expenses | $128,000 | $146,000 | | Accrued expenses | $6,000 | $3,000 | | Total | $539,000 | $382,000 | Note 4. Commitments and Contingencies This note outlines Lightbridge Corporation's significant commitments and contingent liabilities, including legal settlements - The Company settled arbitration with Framatome SAS and Framatome Inc. on February 11, 2021, dissolving their joint venture, Enfission, LLC. Lightbridge paid approximately $4.2 million for outstanding invoices and expects a $110,000 distribution from the dissolution[52] - A mediation settlement was reached on May 13, 2021, with a former CFO for approximately $675,000, which will be reimbursed by the Company's insurers. The settlement was approved by the OALJ on July 22, 2021[53] Note 5. Research and Development Costs This note details Lightbridge Corporation's research and development expenditures and grant income for fuel development - The Company was awarded a GAIN voucher from the DOE in 2019 for Lightbridge Fuel™ development with Idaho National Laboratory (INL), with work completed by INL totaling approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2021, respectively, recorded as grant income[55][56] - A second GAIN voucher was awarded on March 25, 2021, for Lightbridge Fuel™ casting process demonstration with Pacific Northwest National Laboratory (PNNL), with a total project value of approximately $663,000, three-quarters funded by DOE[57] Note 6. Stockholders' Equity and Stock-Based Compensation This note provides information on changes in stockholders' equity, outstanding securities, and stock-based compensation - Shareholders approved increasing authorized common stock to 13,500,000 shares and shares available under the 2020 Omnibus Incentive Plan to 650,000 shares on June 28, 2021[58] | Security Type | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------ | :---------------- | | Common shares outstanding | 6,595,503 | 6,567,110 | | Warrants outstanding | 45,577 | 70,361 | | Stock options outstanding | 563,734 | 515,847 | | Restricted stock units (RSUs) outstanding | 243,800 | 243,800 | | Series A convertible preferred stock (common share equivalent) | 80,235 | 79,303 | | Series B convertible preferred stock (common share equivalent) | 281,690 | 272,084 | | Total Common Stock and Equivalents | 7,810,539 | 7,748,505 | - No ATM sales occurred during the six months ended June 30, 2021, compared to approximately 0.5 million shares sold for $2.7 million in the prior year period[62] - Total stock-based compensation expense increased significantly to $186,335 for the three months ended June 30, 2021, from $6,085 in the prior year, and to $246,403 for the six months ended June 30, 2021, from $12,170 in the prior year[86] Note 7 – Subsequent Events This note discloses significant events after the balance sheet date, including legal settlements and new research agreements - A mediation settlement was finalized on July 13, 2021, and approved by the OALJ on July 22, 2021, for approximately $675,000, to be reimbursed by insurers[93] - A Cooperative Research and Development Agreement (CRADA) with PNNL was executed on July 14, 2021, for a project valued at approximately $663,000, with three-quarters funded by DOE, anticipated to commence in Q3 2021[94] Forward - Looking Statements This section highlights inherent uncertainties and risks associated with forward-looking statements regarding future performance - The report contains forward-looking statements regarding market growth, demand for nuclear fuel technology, financial projections, management plans, future financings, and liquidity, which are subject to risks and uncertainties[96][99] - Key risks include the ability to commercialize nuclear fuel, dependence on strategic partners, funding R&D costs, demand for nuclear reactors, competition, availability of test reactors, increased metallization costs, impact of COVID-19, public perception of nuclear energy, and changes in regulations[99] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Lightbridge's financial condition and operational results, including liquidity challenges OVERVIEW OF OUR BUSINESS This section provides an overview of Lightbridge's core business, focusing on next-generation nuclear fuel development - Lightbridge is developing next-generation metallic nuclear fuel to improve economics, safety, and proliferation resistance in existing and new nuclear reactors, including Small Modular Reactors (SMRs), with potential for hydrogen production[103][104][105] - Recent developments include successful demonstration of manufacturing three-lobe, six-foot rods using surrogate materials, two GAIN vouchers from DOE for fuel development with INL and PNNL, and expansion of the patent portfolio with three new patents in 2021[112] - The COVID-19 pandemic has reduced R&D expenses but increased general and administrative expenses due to severance payments. The ultimate impact on future operations, financial condition, and liquidity remains uncertain[110][111][113] - The lack of sufficient PWR water test loops in the Advanced Test Reactor (ATR) at INL could extend fuel development timelines to 15-20 years and substantially increase costs, making it unfeasible for Lightbridge to fund independently[117][118] CRITICAL ACCOUNTING POLICIES AND ESTIMATES This section discusses the company's critical accounting policies and estimates, noting no significant changes - There have been no significant changes in the Company's critical accounting policies and estimates during the six months ended June 30, 2021[120] OPERATIONS REVIEW This section reviews Lightbridge Corporation's consolidated operational results, analyzing key expense categories for the reporting periods Condensed Consolidated Results of Operations – Three Months Ended June 30, 2021 and 2020 This section presents a comparative analysis of Lightbridge Corporation's operating results for the three months ended June 30, 2021 and 2020 | Metric | June 30, 2021 | June 30, 2020 | Change $ | Change % | | :-------------------------------- | :------------ | :------------ | :--------- | :------- | | General and administrative expenses | $1,515,899 | $2,028,667 | $(512,768) | (25)% | | Research and development expenses | $273,314 | $115,776 | $157,538 | 136% | | Total Operating Expenses | $1,789,213 | $2,144,443 | $(355,230) | (17)% | | Distribution from joint venture | $110,000 | $— | $110,000 | —% | | Grant income | $67,794 | $— | $67,794 | —% | | Total Operating Loss | $(1,611,419) | $(2,144,443) | $(533,024) | (25)% | | Net Loss | $(1,610,097) | $(2,132,106) | $(522,009) | (24)% | - General and administrative expenses decreased by $0.5 million (25%) due to lower professional fees (Framatome arbitration), reduced patent expense, and decreased employee compensation, partially offset by higher insurance and consulting fees[126] - Research and development expenses increased by $0.2 million (136%) due to increased outside R&D work with DOE's National Laboratories related to the GAIN voucher[128] Condensed Consolidated Results of Operations – Six Months Ended June 30, 2021 and 2020 This section presents a comparative analysis of Lightbridge Corporation's operating results for the six months ended June 30, 2021 and 2020 | Metric | June 30, 2021 | June 30, 2020 | Change $ | Change % | | :-------------------------------- | :------------ | :------------ | :--------- | :------- | | General and administrative expenses | $3,298,759 | $3,965,421 | $(666,662) | (17)% | | Research and development expenses | $642,764 | $505,600 | $137,164 | 27% | | Total Operating Expenses | $3,941,523 | $4,471,021 | $(529,498) | (12)% | | Distribution from joint venture | $110,000 | $— | $110,000 | —% | | Grant income | $171,113 | $— | $171,113 | —% | | Total Operating Loss | $(3,660,410) | $(4,471,021) | $(810,611) | (18)% | | Net Loss | $(3,622,085) | $(4,396,192) | $(774,107) | (18)% | - General and administrative expenses decreased by $0.7 million (17%) due to lower professional fees (Framatome arbitration), reduced patent expense, and decreased employee compensation (severance payments in 2020), partially offset by higher insurance and consulting fees[133] - Research and development expenses increased by $0.1 million (27%) due to increased outside R&D work with DOE's National Laboratories related to the GAIN voucher and higher patent expense, partially offset by decreased employee compensation[134] LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION This section assesses Lightbridge Corporation's cash position, capital resources, and financial outlook, including going concern - Cash and cash equivalents decreased by approximately $7.7 million to $13.8 million at June 30, 2021, from $21.5 million at December 31, 2020. Net cash used in operating activities for the six months ended June 30, 2021, was approximately $7.7 million[140] - The Company projects continued negative operating cash flows, averaging approximately $0.8 million per month, for total expected expenditures of $9 million to $10 million over the next 12 to 15 months, exceeding current available working capital[141] - Substantial doubt exists about the Company's ability to continue as a going concern for the next 12 months due to insufficient financial resources for current and long-term fuel development costs and corporate overhead[145] - Primary liquidity sources include potential equity issuances (including ATM financing under an effective Form S-3 for up to $75 million, subject to limitations), U.S. government support, and strategic alliances. The ability to raise capital is subject to market conditions and other factors like COVID-19[146][147] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item states that quantitative and qualitative disclosures about market risk are not required for the Company - Quantitative and Qualitative Disclosures About Market Risk are not required for Lightbridge Corporation[150] Item 4. Controls and Procedures Management concluded that the Company's disclosure controls were effective and reported no material changes in internal control - The Company's disclosure controls and procedures were effective as of June 30, 2021, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[151] - There were no material changes in the Company's internal control over financial reporting during the second quarter of 2021[154] PART II – OTHER INFORMATION This section provides additional information not covered in financial statements, including legal proceedings and corporate governance Item 1. Legal Proceedings The Company may be involved in various lawsuits and legal proceedings in the ordinary course of business - The Company is subject to various lawsuits and legal proceedings that arise in the ordinary course of business, with further details available in Note 4, Commitments and Contingencies[156] Item 1A. Risk Factors There have been no new material changes to the Company's risk factors since those disclosed in the 2020 Annual Report - No material changes to the Company's risk factors have occurred since those disclosed in the 2020 Annual Report on Form 10-K[157] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds to report[158] Item 3. Defaults Upon Senior Securities This item is not applicable to the Company for the reporting period - This item is not applicable[158] Item 4. Mine Safety Disclosures This item is not applicable to the Company for the reporting period - This item is not applicable[158] Item 5. Other Information Ms. Kathleen Kennedy Townsend resigned from the Company's Board of Directors, effective August 30, 2021 - Ms. Kathleen Kennedy Townsend resigned as a director from the Company's Board of Directors, effective August 30, 2021, with no disagreement cited[158] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including amendments and certifications - The exhibits include amendments to the Articles of Incorporation, the 2020 Omnibus Incentive Plan, Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certifications, and XBRL interactive data files[159][160] SIGNATURES The report is duly signed on behalf of Lightbridge Corporation by its President, CEO, and CFO - The report was signed by Seth Grae, President, CEO, and Director, and Larry Goldman, CFO, on August 9, 2021[165]