What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-10-31 compared with 2023-07-31 · 54 added, 40 removed, 132 unchanged (42% of the section changed)

4 unchanged sentences

Overview of Our Business and Development of Lightbridge Fuel™- a general overview of our business and updates;

Critical Accounting Policies and Estimates - a discussion of accounting policies that require critical judgments and estimates;

Critical Accounting Estimates - a discussion of accounting policies that require critical judgments and estimates;

Operations Review - an analysis of our condensed consolidated results of operations for the periods presented in our condensed consolidated financial statements;

5 unchanged sentences

Lightbridge’s principal executive offices are located at 11710 Plaza America Drive, Suite 2000, Reston, Virginia 20190 USA.

At Lightbridge we are developing the next generation of nuclear fuel to impact, in a meaningful way, the world’s climate and energy security problems.

At Lightbridge we are developing next generation nuclear fuel for water-cooled reactors to impact, in a meaningful way, the world’s climate and energy security problems.

Our nuclear fuel could significantly improve the economics and safety of existing and new nuclear power plants, large and small, enhance proliferation resistance of spent nuclear fuel, and have a meaningful impact on addressing climate change and air pollution, all while benefiting national security.

4 unchanged sentences

Emerging nuclear technologies that many in the nuclear power industry believe have the potential to help drive growth in nuclear power include small modular reactors (SMRs), which are now in the development and licensing phases.

We expect that Lightbridge Fuel™ can provide SMRs with all the same benefits our technology brings to large reactors, with such benefits being even more meaningful to the economic case for deployment of SMRs, including potential load following capability when included on a low-carbon electric grid with renewable energy sources.

We expect Lightbridge Fuel™ to generate more power in SMRs than traditional nuclear fuels, which will help decarbonize sectors that are now powered by fossil fuels.

We expect that Lightbridge Fuel™ can provide water-cooled SMRs with all the same benefits our technology brings to large reactors, with such benefits being even more meaningful to the economic case for deployment of SMRs, including potential load following capability when included on a virtually zero-carbon electric grid with renewable energy sources.

We expect Lightbridge Fuel™ to generate more power in SMRs than traditional nuclear fuels.

We expect that our ongoing research and development (R&D) initiatives will lead to Lightbridge Fuel™ powering SMRs for multiple purposes.

3 unchanged sentences

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 (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.

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

We have obtained patent validation in a number of countries 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.

Recent Developments

Engineering Study of Lightbridge Fuel™ for use in CANDU reactors

On October 16, 2023, we engaged Institutul de Cercetări Nucleare Pitești, a subsidiary of Regia Autonoma Tehnologii pentru Energia Nucleara in Romania to perform an engineering study to assess the compatibility and suitability of Lightbridge Fuel™ for use in CANDU reactors.

This assessment will cover key areas including mechanical design, neutronics analysis, and thermal and thermal-hydraulic evaluations.

The findings from this engineering study will play an important role in guiding future economic evaluations and navigating potential regulatory licensing-related issues for potential use of Lightbridge Fuel™ in CANDU reactors.

HALEU Consortium Membership

4 unchanged sentences

On January 12, 2023, the Company received written confirmation from the DOE of Lightbridge’s membership in the HALEU Consortium.

HALEU is a key component necessary for the fabrication and operation of Lightbridge Fuel™ in light water reactors.

Idaho National Laboratory Agreements

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 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.

In December 2022, Lightbridge entered into agreements with Battelle Energy Alliance, LLC (BEA), the DOE’s operating contractor for Idaho National Laboratory (INL), to support the development of Lightbridge Fuel™.

We anticipate that the initial phase of work under the two agreements that has been released will culminate in casting and extrusion of unclad fuel material samples using enriched uranium supplied by the DOE that will subsequently be inserted for irradiation testing in the Advanced Test Reactor at INL.

The initial phase of work aims to generate irradiation performance data for Lightbridge’s delta-phase uranium-zirconium alloy relating to various thermophysical properties.

2 unchanged sentences

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.

Nuclear Regulatory Commission.

The QIP was an essential first step to ensure all future work performed at INL on the project would meet the U.S.

Nuclear Regulatory Commission’s quality assurance requirements.

We are currently working with INL to demonstrate casting of delta-phase uranium-zirconium ingots with depleted uranium using existing INL equipment.

As part of that effort, we have recently been able to cast initial ingots using depleted uranium and zirconium alloy materials that are currently undergoing characterization.

Our next step is to scale up the ingot size to make it suitable for extrusion and then conduct initial extrusions from the scaled-up ingots.

Nuclear Energy University Program Awards

We are working with Texas A&M University, NuScale Power, and Structural Integrity Associates on a $1 million study funded by the DOE’s Nuclear Energy University Program (NEUP) R&D Awards.

The project entails a comprehensive characterization of the performance of the Lightbridge Fuel™ Helical Cruciform advanced fuel design, which will generate unique sets of experimental data of friction factor, flow, and heat transfer behavior under NuScale’s SMR simulated normal and off-normal conditions.

We previously announced our ongoing NEUP project with the Massachusetts Institute of Technology (MIT).

The ongoing study led by MIT relates to evaluation of accident tolerant fuels in various SMRs.

The project aims to simulate the fuel and safety performance of Lightbridge Fuel™ for the NuScale SMR and provide scoping analysis to improve the safety and economics of water-cooled SMRs.

Future Steps Toward Our Fuel Development and Timeline For The Commercialization of Our Nuclear Fuel Assemblies

We anticipate fuel development milestones for Lightbridge Fuel™ over the next 2-3 years will consist of the following:

continue to execute SPP/CRADA work at INL leading to irradiation testing in the ATR of our fuel material coupons using enriched uranium supplied by INL.

continue to execute SPP/CRADA work at INL leading to casting and extrusion of unclad fuel material samples using enriched uranium and their subsequent insertion for irradiation testing in the ATR.

conduct a feasibility study for the use of our nuclear fuel in CANDU heavy water reactors.

conduct a front-end engineering and design study for a Lightbridge pilot-scale fuel fabrication facility.

demonstrate extrusion with our uranium-zirconium fuel alloy and produce fuel material coupons for irradiation testing.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

conduct a Front-End Engineering and Design (FEED) study for a Lightbridge pilot-scale fuel fabrication facility.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements.

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 six months ended June 30, 2023.

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 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 estimates during the nine months ended September 30, 2023.

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

4 unchanged sentences

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, 2023 and 2022

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

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

Three Months Ended

September 30,

Operating Expenses

11 unchanged sentences

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

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.

Total general and administrative expenses decreased by $0.4 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

This decrease was primarily due to a decrease in employee compensation and employee benefits of $0.5 million, and a decrease in insurance expense of $0.1 million, offset by 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 $0.2 million for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

Total R&D expenses increased by $0.3 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

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

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.

National Laboratories of $0.2 million, and an increase in employee compensation and employee benefits and stock-based compensation of $0.2 million, offset by a decrease in outside R&D 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 June 30, 2022 due to the GAIN voucher project that was completed in the first quarter of 2023.

There was a decrease in other operating income of $0.1 million related to a decrease in contributed services - research and development for the three months ended September 30, 2023 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 $0.3 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

There was an increase in other income of $0.2 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 September 30, 2023, as compared to the three months ended September 30, 2022.

Condensed Consolidated Results of Operations - Nine Months Ended September 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

Nine Months Ended

September 30,

Operating Expenses

11 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 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.

Total general and administrative expenses decreased by $0.3 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

This decrease was primarily due to a decrease in employee compensation and employee benefits of $0.6 million and a decrease in insurance, promotion, and other general and administrative expenses of $0.2 million, offset by an increase in stock-based compensation of $0.3 million, and an increase in professional fees 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.

Total R&D expenses increased by $0.7 million for the nine months ended September 30, 2023, as compared to the nine months ended September 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.

National Laboratories of $0.5 million, an increase in employee compensation and employee benefits of $0.3 million, and an increase in stock-based compensation of $0.1 million, offset by a decrease in other R&D costs of $0.2 million.

1 unchanged sentence

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 was a decrease in other operating income of $0.3 million related to a decrease in contributed services - research and development for the nine months ended September 30, 2023 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.

There was an increase in other income of $0.8 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 nine months ended September 30, 2023, as compared to the nine months ended September 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 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.

At September 30, 2023, we had cash and cash equivalents of $29.2 million, as compared to $28.9 million at December 31, 2022, an increase of $0.3 million.

We raised net proceeds of $4.5 million from the sale of approximately 0.9 million shares of common stock during the nine months ended September 30, 2023.

Our net cash used in operating activities for the nine months ended September 30, 2023 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.

3 unchanged sentences

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

Our cash balance at September 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.

2 unchanged sentences

This funding is needed to continue our nuclear fuel development project and to achieve our future R&D milestones.

The actual amount of cash we will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of the R&D work at the DOE’s national laboratories for our fuel along with cost to commercialize our nuclear fuel.

Accordingly, there is high potential for budget variances in the current cost projections and fuel development timelines of our current planned operations over the fuel development period.

8 unchanged sentences

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 $75.0 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.

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

4 unchanged sentences

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.

There can be no assurance that these additional sources of capital will be made available on terms acceptable to us, or at all.

The primary potential sources of cash that may be available to us are as follows:

6 unchanged sentences

Stockholders’ Equity and Stock-Based Compensation of the Notes to our condensed consolidated financial statements included in Part I.

Financial Statements, of this Quarterly Report on Form 10-Q for information regarding our prior equity financings.

Financial Statements, of this Quarterly Report on Form 10-Q for information regarding our prior equity financing.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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