What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-10-31 compared with 2022-07-28 · 34 added, 39 removed, 138 unchanged (35% of the section changed)

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We have built a significant portfolio of patents reflecting years of R&D, and we anticipate testing our nuclear fuel through third party vendors and others, including the United States Department of Energy’s (DOE) national laboratories.

Currently, we are performing the majority of our R&D activities with DOE’s national laboratories and are working on additional contracts with them for future scopes of R&D work.

Currently, we are performing the majority of our R&D activities with DOE’s national laboratories.

Development of Lightbridge Fuel™

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Among other objectives, the project will simulate the fuel and safety performance of Lightbridge Fuel™ in an SMR designed by industry leader NuScale Power and provide a scoping analysis of longer-term advanced fuel forms to improve the safety and economics of SMRs.

The DOE’s Nuclear Energy University Program awarded approximately $800,000 to MIT with the goal of bringing collaborative teams together to solve complex problems to advance nuclear technology and understanding.

The DOE’s Nuclear Energy University Program awarded $800,000 to MIT with the goal of bringing collaborative teams together to solve complex problems to advance nuclear technology and understanding.

DOE awarded us a second voucher from the Gateway for Accelerated Innovation in Nuclear (GAIN) program to support development of Lightbridge Fuel™ in collaboration with Pacific Northwest National Laboratory (PNNL).

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The project commenced in the third quarter of 2021 and is expected to be completed in 2022.

The total project value is approximately $0.7 million, with three-quarters of this amount provided by DOE for the scope performed by PNNL.

The total project value is $0.7 million, with three-quarters of this amount provided by DOE for the scope performed by PNNL.

Under this GAIN Voucher, we have been working with PNNL to develop a reliable and repeatable casting process utilizing its existing equipment.

To date, several castings have been performed and the cast ingots analyzed.

In an iterative process, the casting methodology is modified based on the characterization results as we approach an optimized process to achieve the desired results.

This work is expected to culminate in a process suitable to produce fuel samples for our upcoming irradiation tests.

Growing Importance of Energy Security

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Increasingly, policymakers view nuclear energy as critical to a secure energy future.

Impact of COVID-19 to our Business

The recent COVID-19 pandemic has continued to impact our business operations for the six months ended June 30, 2022 and 2021.

The future impacts of the COVID-19 pandemic on our financial position, results of operations and future liquidity and capital resources availability is unknown and uncertain.

In an effort to protect the health and safety of our employees, we took proactive, aggressive action from the earliest signs of the outbreak in China, including working from home and curtailing employee travel.

In an effort to contain COVID-19 or slow its spread, governments around the world have also enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities.

We will continue to actively monitor the COVID-19 pandemic and may take further actions altering our business operations that we determine are in the best interests of our employees and stakeholders, or as required by federal, state, or local authorities.

It is not clear what the potential effects any such alterations or modifications may have on our financial position, results of operations or liquidity, including the effects on our employees and future prospects, including our R&D activities for the fiscal year 2022 and beyond.

Future Potential Collaborations and Other Opportunities

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For a discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our financial statements, please see “Critical Accounting Policies and Estimates” under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022.

There have been no significant changes in our critical accounting policies and estimates during the three and six months ended June 30, 2022.

There have been no significant changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2022.

Our management expects to make judgments and estimates about the effect of matters that are inherently uncertain.

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Financial information is included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Condensed Consolidated Results of Operations – Three Months Ended June 30, 2022 and 2021

Condensed Consolidated Results of Operations - Three Months Ended September 30, 2022 and 2021

The following table presents our historical operating results and the increase (decrease) in amounts for the periods indicated (dollars in millions):

Three Months Ended

September 30,

Operating Expenses

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Other Operating Income

Distribution from joint venture

Contributed services - research and development

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Professional services are principally comprised of legal, audit, strategic advisory services, and outsourcing services.

Total general and administrative expenses decreased by approximately $0.1 million for the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

This decrease was primarily due to a decrease in consulting fees of approximately $0.1 million and a decrease in professional fees of approximately $0.1 million relating to fees incurred in connection with the arbitration matter that was settled in 2021 that were not repeated during the three months ended June 30, 2022.

These decreases were offset by the increases in directors’ fees and stock-based compensation expenses of approximately $0.1 million.

Total general and administrative expenses increased by $0.2 million for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021.

There was an increase in stock-based compensation expenses of $0.1 million and an increase in director fees, employee compensation and employee benefits of $0.1 million.

Research and Development

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We are working with the U.S.

National Laboratories for research and development activities and are negotiating new contracts for additional future scopes of work in 2022 and beyond.

Total R&D expenses decreased by approximately $0.1 million for the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

This decrease was primarily due to a decrease in consulting and outside R&D expenses of approximately $0.1 million.

National Laboratories regarding our research and development activities.

Total R&D expenses decreased by $0.2 million for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021 due to a decrease in consulting and outside R&D expenses.

Due to the nature of our R&D expenditures, cost and schedule, estimates are inherently uncertain and can vary significantly as new information and the outcome of these R&D activities become available.

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Other Operating Income

There was a decrease of $0.1 million in the distribution from joint venture due to the final cash distribution from the dissolved Enfission joint venture that occurred in 2021.

There was contributed services - research and development from the GAIN program of approximately $0.1 million, for the three months ended June 30, 2022 and June 30, 2021, with a charge to R&D expenses and a corresponding amount recorded to contributed services - research and development.

Condensed Consolidated Results of Operations – Six Months Ended June 30, 2022 and 2021

There was $0.1 million and $0.3 million recorded in contributed services - research and development from the GAIN program for the three months ended September 30, 2022 and September 30, 2021, respectively, with a charge to R&D expenses and a corresponding amount recorded to contributed services - research and development.

Condensed Consolidated Results of Operations - Nine Months Ended September 30, 2022 and 2021

The following table presents our historical operating results and the increase (decrease) in amounts for the periods indicated (dollars in millions):

Six months Ended

Nine Months Ended

September 30,

Operating Expenses

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Professional services are principally comprised of legal, audit, strategic advisory services, and outsourcing services.

Total general and administrative expenses increased by approximately $0.1 million for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021.

This increase was primarily due to an increase in stock-based compensation of approximately $0.2 million due to the amortization of restricted stock awards issued in 2021, an increase in employee compensation and employee benefits of approximately $0.1 million, an increase in directors’ fees of approximately $0.1 million due to the increase of the number of board members, an increase in dues and subscriptions of approximately $0.1 million and an increase in sponsorship fees and promotion fees of approximately $0.1 million due to increased promotion activities.

These increases were offset by a decrease in professional fees of approximately $0.5 million relating to fees incurred in connection with the arbitration matter that was settled in 2021 that were not repeated during the six months ended June 30, 2022.

Total general and administrative expenses increased by $0.3 million for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021.

This increase was primarily due to an increase in stock-based compensation expenses of $0.3 million due to the amortization of restricted stock awards issued in 2021, an increase in directors’ fees of $0.2 million due to the increase of the number of board members, an increase in dues and subscriptions of $0.1 million and an increase in insurance expense, promotion, and travel expenses of $0.2 million.

These increases were offset by a decrease in professional fees of $0.5 million relating to fees incurred in connection with the arbitration matter that was settled in 2021 that were not repeated during the nine months ended September 30, 2022.

Research and Development

Research and development expenses consist primarily of compensation and related fringe benefits including stock-based compensation and related allocable overhead costs for the research and development of our fuel and contributed services - research and development for the R&D work performed under the GAIN vouchers.

Total R&D expenses decreased by approximately $0.2 million for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021.

This decrease was primarily due to a decrease in consulting and outside R&D expenses and patents expenses of approximately $0.1 million and a decrease in employee compensation and employee benefits of approximately $0.1 million.

Total R&D expenses decreased by $0.5 million for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021.

This decrease was primarily due to a decrease in consulting and outside R&D expenses of $0.3 million, a decrease in patents expenses of $0.1 million and a decrease in employee compensation and employee benefits of $0.1 million.

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There was a decrease of $0.1 million in the distribution from joint venture due to the final cash distribution from the dissolved Enfission joint venture that occurred in 2021.

There was contributed services - research and development from the GAIN program of approximately $0.2 million for the six months ended June 30, 2022 and June 30, 2021, with a charge to R&D expenses and a corresponding amount recorded to contributed services - research and development.

There was contributed services - research and development from the GAIN program of $0.3 million and $0.5 million for the nine months ended September 30, 2022 and September 30, 2021, respectively, with a charge to R&D expenses and a corresponding amount recorded to contributed services - research and development.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION

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Our cash requirements are currently projected to be an average of $10 million of outside R&D expenditures per year over the next 10-15 years.

At June 30, 2022, we had cash and cash equivalents of approximately $29.3 million, as compared to approximately $24.7 million at December 31, 2021, an increase of approximately $4.6 million.

The Company raised approximately $7.6 million from the sale of approximately 1.2 million shares of common stock during the six months ended June 30, 2022.

The Company’s net cash used in operating activities for the six months ended June 30, 2022 was approximately $3.1 million and our cash flow projections indicate that we will have continued negative cash flows for the foreseeable future.

At September 30, 2022, we had cash and cash equivalents of $31.3 million, as compared to $24.7 million at December 31, 2021, an increase of $6.6 million.

The Company raised $10.6 million from the sale of approximately 1.8 million shares of common stock during the nine months ended September 30, 2022.

The Company’s net cash used in operating activities for the nine months ended September 30, 2022 was $4.1 million and our cash flow projections indicate that we will have continued negative cash flows for the foreseeable future.

We are not profitable, and we cannot provide any assurance that we will become profitable in the future.

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We have approximately $30.0 million of working capital as of the date of this filing.

We currently project a negative cash flow from our current operations averaging approximately $1.0 to $1.2 million per month for our general and administrative and R&D expenses, for total expected expenditures of approximately $12 million to $18 million for the next 12 to 15 months.

Our cash balance at June 30, 2022 and as of the date of this filing exceeds our anticipated cash requirements for the next 12 months or through the second quarter of 2023.

We believe, however, that our actual expenditures may exceed our current available working capital through the second quarter of 2023.

There are inherent uncertainties in forecasting future required R&D or other expenditures, as we are currently negotiating fuel development agreements with the DOE’s national laboratories and other agreements in the future.

We currently project a negative cash flow from our operations averaging $1.0 to $1.2 million per month for our general and administrative and R&D expenses, for total expected expenditures of $12 million to $18 million for the next 12 to 15 months.

Our cash balance at September 30, 2022 and as of the date of this filing exceeds our anticipated cash requirements for the next 12 months or through the third quarter of 2023.

We believe, however, that our actual expenditures may exceed our current available working capital through the third quarter of 2023.

There are inherent uncertainties in forecasting future required R&D or other expenditures in the future.

Once many of these anticipated agreements are finalized or other future R&D agreements are entered into and the future R&D costs are known, we expect to forecast a significantly higher level of future required R&D expenses and higher negative monthly cash flows from operations in the future.

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There can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all.

While our available working capital at June 30, 2022 and as of the date of this filing, exceeds our currently anticipated expenditures through the second quarter of 2023, considering the above-mentioned uncertainties and lack of financial resources to fund our long-term fuel development costs, corporate overhead expenses, and future potential collaborations and other opportunities, substantial doubt exists about the Company’s ability to continue as a going concern for the 12 months following the date of this filing.

While our available working capital at September 30, 2022 and as of the date of this filing exceeds our currently anticipated expenditures through the third quarter of 2023, considering the above-mentioned uncertainties and lack of financial resources to fund our long-term fuel development costs, corporate overhead expenses, and future potential collaborations and other opportunities, substantial doubt exists about the Company’s ability to continue as a going concern for the 12 months following the date of this filing.

We have the ability to delay or reduce certain operating expenses, including R&D expenses in the next 12 to 15 months, which could reduce our cash flow shortfall.

However, this delay would also extend our projected fuel development timeline discussed above.

However, any such delay or reduction in operating expenses would also extend our projected fuel development timeline discussed above.

The primary source of cash available to us for the next 12 months, in addition to cash on hand, is the potential funding from equity issuances from our at-the-market (ATM) equity offering sales agreement, as amended, with Stifel, Nicolaus & Company, Incorporated.

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government funding to support the remaining R&D activities required to continue the development of our fuel products and move them to a commercial stage.

In support of our long-term business with respect to our fuel technology business, we endeavor to create strategic alliances with other parties during the next three years, to support the remaining R&D activities that is required to further enhance and complete the development of our fuel products to a commercial stage.

In support of our long-term business with respect to our fuel technology business, we endeavor to create strategic alliances with other parties during the next three years, to support the remaining R&D activities that are required to further enhance and complete the development of our fuel products to a commercial stage.

We may be unable to form such strategic alliances on terms acceptable to us or at all.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis