What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-07-31 compared with 2023-05-11 · 52 added, 21 removed, 120 unchanged (38% of the section changed)

15 unchanged sentences

We project that the world’s energy and climate needs can only be met if nuclear power’s share of the energy-generating mix grows substantially in the coming decades.

We believe Lightbridge can benefit from a growing nuclear power industry, and we believe our nuclear fuel to help enable that growth to happen.

We believe Lightbridge can benefit from a growing nuclear power industry, and we believe our nuclear fuel can help enable that growth to happen.

We believe our metallic fuel will offer significant economic and safety benefits over traditional nuclear fuel, primarily because of the superior heat transfer properties and the resulting lower operating temperature of all-metal fuel.

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Development of Lightbridge Fuel™

We believe our metallic fuel can be used in different types of water-cooled commercial power reactors, such as pressurized water reactors, boiling-water reactors, Russian-designed water-cooled, water-moderated energetic reactors, Canadian Deuterium Uranium (CANDUs), water-cooled SMRs, and water-cooled research reactors.

We believe our metallic fuel can be used in different types of water-cooled commercial power reactors, such as pressurized water reactors (PWRs), boiling-water reactors (BWRs), Russian-designed water-cooled, water-moderated energetic reactors (VVERs), Canadian Deuterium Uranium (CANDUs), water-cooled SMRs, and water-cooled research reactors.

We have obtained patent validation in key countries (in our judgement) and will continue to seek patent validation in countries that either currently operate or are expected to build and operate a large number of nuclear power reactors compatible with our fuel technology.

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According to the DOE, the purposes of the HALEU Consortium include:

(i) Provide the Secretary of Energy HALEU demand estimates for domestic commercial use, (ii) Purchase HALEU made available to members for commercial use under the Program, (iii) Carry out demonstration projects using HALEU under the Program, and (iv) Identify actionable opportunities to improve the reliability of the HALEU supply chain.

(i) providing the Secretary of Energy HALEU demand estimates for domestic commercial use, (ii) purchasing HALEU made available to members for commercial use under the program, (iii) carrying out demonstration projects using HALEU under the program, and (iv) identifying actionable opportunities to improve the reliability of the HALEU supply chain.

On December 15, 2022, the Company submitted a formal request to the DOE to join the HALEU Consortium to mitigate HALEU supply risk.

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In the second half of 2022, Lightbridge entered into agreements with Idaho National Laboratory (INL), in collaboration with the DOE, to support the development of Lightbridge Fuel™.

The framework agreements use an innovative structure and consist of an “umbrella” Strategic Partnership Project Agreement (SPP) and an “umbrella” Cooperative Research and Development Agreement (CRADA), each with Battelle Energy Alliance, LLC, the DOE’s operating contractor for INL, with an initial duration of seven years.

The framework agreements use an innovative structure that consists of an “umbrella” Strategic Partnership Project Agreement (SPP) and an “umbrella” Cooperative Research and Development Agreement (CRADA), each with Battelle Energy Alliance, LLC, the DOE’s operating contractor for INL, with an initial duration of seven years.

We anticipate that the initial phase of work under the two agreements that has been released will culminate in irradiation testing in the Advanced Test Reactor (ATR) of our fuel material samples, known as fuel material coupons, using enriched uranium supplied by the DOE.

2 unchanged sentences

We anticipate that subsequent phases of work under the two umbrella agreements that have not yet been released may include post-irradiation examination of the irradiated fuel material coupons, loop irradiation testing in the ATR, and post-irradiation examination of one or more uranium-zirconium fuel rodlets, as well as transient experiments in the Transient Reactor Test Facility at INL.

During the first quarter of 2023, we worked with INL to complete and issue a Quality Implementation Plan (QIP) for our collaborative project at the lab.

During the first quarter of 2023, we worked with INL to complete and issue a Quality Implementation Plan (QIP) for our collaborative project at INL.

The QIP was an essential first step to ensure all future work performed at INL on the project would be conducted in accordance with nuclear quality assurance requirements of the U.S.

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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, 2022, filed with the SEC on March 30, 2023.

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2023.

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2023.

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 March 31, 2023 and 2022

Condensed Consolidated Results of Operations - Three Months Ended June 30, 2023 and 2022

The following table presents our historical operating results and the change in amounts for the periods indicated (rounded to millions):

13 unchanged sentences

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

Total general and administrative expenses remained consistent for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

There was an increase in stock-based compensation of $0.1 million, offset by a decrease in employee compensation and employee benefits of $0.1 million.

Total general and administrative expenses increased by $0.2 million for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

There was an increase in stock-based compensation of $0.1 million, and an increase in professional fees of $0.1 million.

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 increased by $0.1 million for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

Total R&D expenses increased by $0.2 million for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

This increase was primarily due to an increase in project labor costs incurred from the U.S.

National Laboratories of $0.2 million, offset by a net decrease in other R&D costs of $0.1 million.

National Laboratories of $0.1 million, and an increase in payroll of $0.1 million, and an increase in consulting fees of $0.1 million, and offset by a decrease in other R&D costs of $0.1 million.

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.

1 unchanged sentence

Other Operating Income

There was a decrease in other operating income of $0.1 million due to a decrease in contributed services - research and development of $0.1 million for the three months ended March 31, 2022.

There was a decrease in other operating income of $0.1 million due to a decrease in contributed services – research and development of $0.1 million for the three months ended June 30, 2022 due to the GAIN voucher project that was completed in the first quarter of 2023.

There are no outstanding GAIN vouchers.

Contributed services – research and development are recorded with a charge to R&D expenses and a corresponding amount recorded to contributed services – research and development.

There was an increase in other income of $0.2 million due to rising interest rates over the past year which resulted in an increase in interest income earned from the purchase of treasury bills and from our bank savings account for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

There was an increase in other income of $0.3 million due to rising treasury bill interest rates over the past year, which resulted in an increase in interest income earned from the purchase of treasury bills and from our bank savings account for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

Condensed Consolidated Results of Operations – Six Months Ended June 30, 2023 and 2022

The following table presents our historical operating results and the change in amounts for the periods indicated (rounded to millions):

Six Months Ended

Operating Expenses

General and administrative

Research and development

Total Operating Expenses

Other Operating Income

Contributed services – research and development

Total Other Operating Income

Total Operating Loss

Net loss before Income Taxes

Operating Expenses

General and Administrative Expenses

General and administrative expenses consist mostly of compensation and related costs for personnel and facilities, stock-based compensation, finance, human resources, information technology, and fees for consulting and other professional services.

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

Total general and administrative expenses remained consistent for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

There was an increase in stock-based compensation of $0.2 million and an increase in professional fees of $0.1 million, offset by a decrease in employee compensation and employee benefits of $0.1 million and a decrease in insurance, promotion, and other general and administrative expenses of $0.2 million.

Research and Development

Total R&D expenses increased by $0.4 million for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

This increase was primarily due to an increase in project labor costs incurred from the U.S.

National Laboratories of $0.3 million, an increase in consulting expense of $0.1 million, and an increase in employee compensation and employee benefits of $0.1 million, offset by a net decrease in other R&D costs of $0.1 million.

We may have budgetary constraints due primarily to the uncertainty of future liquidity and capital resources available to us to conduct our future R&D activities.

Other Operating Income

There was a decrease in other operating income of $0.2 million related to a decrease in contributed services – research and development for the six months ended June 30, 2022 due to the GAIN voucher project that was completed in the first quarter 2023.

There are no outstanding GAIN vouchers.

Contributed services – research and development are recorded with a charge to R&D expenses and a corresponding amount recorded to contributed services – research and development.

There was an increase in other income of $0.5 million due to rising treasury bill interest rates over the past year which resulted in an increase in interest income earned from the purchase of treasury bills and from our bank savings account for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION

4 unchanged sentences

These long- term cash requirements for future planned operations to develop and commercialize our nuclear fuel, including any additional expenditures that may result from unexpected developments, will require us to receive government support in the future.

At March 31, 2023, we had cash and cash equivalents of $28.1 million, as compared to $28.9 million at December 31, 2022, a decrease of $0.8 million.

We raised net proceeds of $0.7 million from the sale of approximately 0.2 million shares of common stock during the three months ended March 31, 2023.

Our net cash used in operating activities for the three months ended March 31, 2023 was $1.5 million and our cash flow projections indicate that we will have continued negative cash flows for the foreseeable future.

At June 30, 2023, we had cash and cash equivalents of $28.2 million, as compared to $28.9 million at December 31, 2022, a decrease of $0.7 million.

We raised net proceeds of $2.3 million from the sale of approximately 0.5 million shares of common stock during the six months ended June 30, 2023.

Our net cash used in operating activities for the six months ended June 30, 2023 was $3.0 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.

1 unchanged sentence

We have approximately $28.2 million of working capital as of the date of this filing.

We currently project a negative cash flow from our operations averaging approximately $1.1 million per month for both our general and administrative and R&D expenses, for total expected expenditures of approximately $13.1 million for the next 12 months.

We currently project a negative cash flow from our operations for both our general and administrative and R&D expenses, resulting in total expected expenditures of approximately $12.7 million for the next 12 months.

Our R&D expenses are expected to increase over the next 12-15 months.

Our cash balance at March 31, 2023 and as of the date of this filing exceeds our anticipated cash requirements for the next 12 months.

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

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

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

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

The Company has an effective shelf registration statement on Form S-3 that was filed with the Securities and Exchange Commission, or SEC, on March 25, 2021, registering the sale of up to $75 million of the Company’s securities and declared effective on April 5, 2021.

We filed a prospectus supplement, dated April 4, 2023, with the SEC pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $17.9 million from time to time, through the ATM.

As of the date of this filing, our calculated public float is below $75.0 million and we are subject to the limitations set forth in General Instruction I.B.6 of Form S-3, which limits the dollar amount of securities that we may offer and sell under the Form S-3 shelf registration statement to one-third of our non-affiliate public float over any 12 calendar month period (the above $17.9 million fundraising limit).

We may file another prospectus supplement with the SEC after we have sold $17.9 million of our common stock under this prospectus supplement.

We have no debt or lines of credit and we have financed our operations to date through the sale of our preferred stock and common stock.

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Short-Term and Long-Term Liquidity Sources

As discussed above, we will seek new financing bringing us additional sources of capital, depending on the capital market conditions of our common stock.

As discussed above, we will seek new financing in order to bring us additional sources of capital, depending on the capital market conditions of our common stock.

There can be no assurance that these additional sources of capital will be made available to us.

11 unchanged sentences

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