What changed in this filing

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Item 1A. Risk Factors

2024-03-04 compared with 2023-03-30 · 52 added, 52 removed, 286 unchanged (27% of the section changed)

13 unchanged sentences

We will need to raise significant additional capital (up to several hundred million dollars) in order to continue our R&D activities and fund our operations through the commercialization of our nuclear fuel.

Our current plan is to maximize external funding from third party sources, including the DOE, to support the remaining development, testing and demonstration activities relating to our metallic nuclear fuel technology.

Our current plan is to maximize external funding from third-party sources, including potentially the DOE, to support the remaining development, testing and demonstration activities relating to our metallic nuclear fuel technology.

When we elect to raise additional funds or additional funds are required, we may raise such funds from time to time through public or private equity offerings, debt financings or other financing alternatives.

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We are dependent upon significant U.S.

government funding and political support for nuclear power in order to complete our fuel development efforts and commercialize our nuclear fuel technology.

Our projected fuel development timeline is dependent upon significant funding from the U.S.

government to not only support our ongoing R&D efforts, but to provide confidence to our investors and reduce the need to raise funds through the issuance of additional dilutive equity securities.

government funding and/or in-kind contributions and political support for nuclear power in order to complete our fuel development efforts and commercialize our nuclear fuel technology.

Our projected fuel development timeline is dependent upon receiving significant funding and/or in-kind contributions from the U.S.

government to not only support our ongoing R&D efforts, but to also provide confidence to our investors and reduce the need to raise funds through the issuance of additional dilutive equity securities.

Government funding of R&D is subject to the political process, which is inherently unpredictable and highly competitive.

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national laboratories that are parties to these agreements and/or the DOE could impair or impede our ability to successfully implement these agreements, which could adversely affect our R&D activities.

Also, a COVID-19 outbreak, including the emergence and spread of variant strains of the virus or other pathogens, may affect future operations of the U.S.

national laboratories.

The amount of time and funding needed to bring our nuclear fuel to market may greatly exceed our projections.

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Additionally, we believe our metallic fuel can be used in CANDU heavy water reactors.

However, we have yet to conduct a feasibility study to confirm our fuel’s suitability for those types of reactors.

However, we have yet to complete our feasibility study to confirm our fuel’s suitability for those types of reactors.

As a result, we do not yet have an economic model for CANDU-type reactors and are uncertain at this time as to potential economic benefits, if any, our metallic fuel could provide in those types of reactors.

A failure of our current and future economic models, or a failure to find a strategic alternative, such as a potential business combination partner, would adversely affect our business, financial condition, and results of operations and may result in the failure of the Company.

We may not achieve the expected benefits from our collaboration agreement with Centrus Energy Corp.

On December 7, 2023, we announced the Company's entry into a collaboration agreement with Centrus Energy Corp.

to engage in a front-end engineering and design (FEED) study to add a dedicated Lightbridge Pilot Fuel Fabrication Facility (LPFFF) at the American Centrifuge site in Piketon, Ohio.

The FEED study is intended to identify infrastructure and licensing requirements as well as the estimated cost and deployment schedule for the LPFFF.

Centrus Energy’s wholly-owned subsidiary, American Centrifuge Operating, LLC, will lead the study, which is expected to be completed in 2024.

The American Centrifuge Plant is currently the only place in the world to produce HALEU in UF6 form outside of Russia.

There can be no guarantee that the FEED study will return results that confirm the feasibility of a LPFFF and may indicate that the infrastructure and licensing requirements or the estimated cost or timelines to deploy the LPFFF would be overly onerous, too lengthy or prohibitively expensive to proceed with the deployment of the LPFFF.

If the FEED study indicates that the LPFFF cannot be completed at the American Centrifuge Plant on terms acceptable to us, it may delay our anticipated timeline for the commercialization of our fuel, which would adversely affect our business, financial condition, and results of operations.

Development of our nuclear fuel technology is dependent upon the availability of a test reactor.

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However, the Halden research reactor, which became operational in 1958, was shut down in June 2018 and will not reopen.

The Company has identified alternative options to generate the irradiation data we need to support regulatory licensing of our LTA operation in a commercial reactor but pursuing such alternatives to the Halden research reactor may significantly delay further testing of our fuel designs.

The Company has identified alternative options to generate the irradiation data we need to support regulatory licensing of our LTA operation in a commercial reactor, such as the ATR at INL, but pursuing such alternatives to the Halden research reactor may significantly delay further testing of our fuel designs.

We may not be able to contractually secure another reactor in which to test our fuel designs.

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While the ATR may have enough space for additional flow loops where fuel rods can be irradiated, the reactor currently has only one such loop available, limiting how much fuel rod material that can be inserted into the reactor as well as its duration in the reactor.

If new loops are not added to the ATR, loop irradiation testing in the ATR may not provide sufficient data to justify regulatory approval for LTA testing in a large commercial PWR in a commercially feasible timeframe.

This would likely necessitate an extra fuel development step of LTR testing in a large commercial PWR in addition to the ATR loop testing before LTA testing could commence.

If sufficient capacity within the ATR is not available, we may not be able to obtain sufficient data to justify regulatory approval for LTA demonstration in a large commercial PWR in a commercially feasible timeframe.

This would likely necessitate additional loop irradiation testing in another test reactor or LTR demonstration in a large commercial PWR in addition to the ATR loop testing before LTA demonstration could commence.

Funding for any improvement of capabilities or continued operations of these reactors is subject to the priorities of the U.S.

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There is also a risk that fuel fabricators that manufacture and supply commercial nuclear fuel assemblies to nuclear utility customers may not enter into a commercial arrangement with us relating to our metallic nuclear fuel designs.

A failure to enter into a commercial arrangement with one or more of existing nuclear fuel fabricators could adversely affect our business, financial condition, and results of operations and may result in the failure of the Company.

A failure to enter into a commercial arrangement with one or more existing nuclear fuel fabricators could adversely affect our business, financial condition, and results of operations and may result in the failure of the Company.

If our fuel designs do not perform as anticipated in commercial reactor conditions, we will not realize revenues from licensing or other use of our fuel designs.

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In many countries, the licensing process includes public hearings in which opponents of the use of nuclear power might be able to cause the issuance of required licenses to be delayed or denied.

Upon commercialization, a reduction or elimination of customer contracts or future customer contracts resulting from lower public support, less raw materials, lower demand, increased regulation, and increased costs could adversely affect our business model and future prospects.

Our nuclear fuel fabrication process is dependent on outside suppliers of nuclear and other materials and any difficulty by a fuel fabricator in obtaining these materials could be detrimental to our ability to eventually market our nuclear fuel through a fuel fabricator.

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Any difficulties in obtaining these materials by fuel fabricators could have a material adverse effect on their ability to market fuel based on our technology.

We rely on a limited number of suppliers for HALEU or other key source materials and/or key components and/or key equipment necessary for the development and fabrication of our nuclear fuel, which could, under certain circumstances, adversely delay our research and development activities.

If the supply of a single-sourced or limited-sourced material and/or key component and/or key equipment is delayed or ceases, we may not be able to produce the related test fuel rod, which could adversely delay our research and development activities.

In addition, a single-source or limited-source supplier of a key component or a key piece of equipment could potentially exert significant bargaining power over price, quality, or other terms relating to these materials or equipment, which could have a material adverse effect on our financial condition, results of operations and cash flows.

Labor shortages and supply chain disruptions could prevent us from meeting our R&D timelines and have a negative impact on our financial results.

Shipping delays exist worldwide, as there is much greater demand for shipping and reduced capacity.

Additionally, certain material and equipment prices are expected to remain at historically high levels in 2023 due to inflationary cost pressures and global transportation complexities.

Additionally, certain material and equipment prices are expected to remain at high levels due to inflationary cost pressures and global transportation complexities.

We may experience supply chain disruptions related to third-party vendors negatively impacted by the availability of qualified labor, restrictions on employees’ ability to work, facility closures, disruptions to ports and other shipping infrastructure, border closures and other travel or health-related restrictions.

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Additionally, the availability of subsidies and other incentives from utilities or government agencies to install alternative renewable energy sources may negatively impact our potential customers’ desire to purchase our products and services, or may be utilized by our existing or new competitors to develop a competing business model or products or services that may be potentially more attractive to customers than ours, any of which could have a material adverse effect on our results of operations or financial condition.

We rely upon our senior management and other highly skilled personnel, and if we are not successful in retaining or attracting highly qualified personnel, we may not be able to successfully implement our business strategy.

Our success depends, in significant part, upon our senior management, including Seth Grae, our Chief Executive Officer, Andrey Mushakov, our Executive Vice President - Nuclear Operations, and Larry Goldman, our Chief Financial Officer.

Grae’s and Dr.

Mushakov’s knowledge of the nuclear power industry, their networks of key contacts within that industry and in governments and, in particular, their expertise in the potential markets for our technologies, are critical to the implementation of our business strategy.

Mushakov, and Mr.

Goldman are likely to be significant factors in our future growth and success.

Our success also depends on our ability to attract, motivate, develop, and retain a sufficient number of other highly skilled personnel, including consultants, managers, and nuclear engineers.

Competition for employees and consultants in the nuclear industry is intense, partially as a result of a recent resurgence in the nuclear industry after decades of relative decline, and we may not be successful in attracting and retaining such personnel.

For example, a senior nuclear engineer recently resigned from the Company and became a consultant to the Company.

The Company may be unsuccessful in finding a replacement for this senior nuclear engineer on comparable terms.

In addition, while we intend to partner with other entities in developing and commercializing our nuclear fuel technology, such other entities may also have difficulty in attracting and retaining nuclear engineers and other personnel and may not have adequate resources to dedicate to our joint projects.

The loss of services by any of Mr.

Mushakov, or Mr.

Goldman, or the inability of us or our partners to retain or attract highly skilled personnel, could delay or suspend development and commercialization of our nuclear fuel technology, adversely affect our ability to meet customer needs, or increase our expenses, any of which could have a material adverse effect on our business, results of operations or financial condition.

Competition for highly qualified technical personnel is intense in our industry.

Our future success depends in part on our ability to contract with, hire, integrate, and retain engineers and scientists, and other qualified personnel with a focus in our nuclear fuel technology and products.

Competition for these skilled professionals is intense.

If we are unable to adequately anticipate our needs for certain key competencies and implement human resource solutions to recruit or improve these competencies, our business, results of operations and financial condition would suffer.

In addition, a loss of the service of any of our existing skilled employees or contractors could have a significant negative effect on our ability to operate.

We are dependent on management and key personnel for our success, and the loss of which could have a material adverse effect on our business.

Our business depends upon the recruitment and continued service of our highly skilled, educated, and trained employees, and the loss of, or the inability to attract and retain, qualified personnel could have a material adverse effect on our business.

Our ability to attract, motivate, compensate, and retain highly qualified and diverse employees is necessary to support and achieve business objectives.

Competition for skilled and diverse employees in our industry can be intense, and any uncertainty surrounding future employment opportunities, organizational and reporting structures and related concerns may impair our ability to attract and retain qualified employees.

The loss of the services of qualified employees and any inability to recruit effective replacements or to otherwise attract, motivate, train, or retain highly qualified and diverse employees could have a material adverse effect on our business, financial condition, and results of operations.

Also, any significant leadership change and accompanying senior management transition involves inherent risk, and any failure to ensure a smooth transition could hinder our strategic planning, execution, and future performance.

While we strive to mitigate the negative impact associated with changes to our senior management team, such changes may cause uncertainty among investors, employees, and others concerning our future direction and performance.

If we fail to effectively manage any leadership changes, including organizational and strategic changes, such failure could have a material adverse effect on our ability to successfully attract, motivate and retain highly qualified employees, as well as our business, financial condition, and results of operations.

We may not be able to receive or retain authorizations that may be required for us to sell or license our technology internationally.

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Third-parties could bring claims against us that would cause us to incur substantial expenses and, if successfully asserted against us, could cause us to pay substantial damages.

If a patent infringement suit were brought against us, we could be forced to stop or delay commercialization of the fuel design or a component thereof that is the subject of the suit.

If a patent infringement suit were brought against us, we could be forced to stop or delay commercialization of our fuel design or a component thereof that is the subject of the suit.

As a result of patent infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license from the third-party and be required to pay license fees, royalties, or both.

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While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased costs and other consequences, including those described below.

Disruptions from cybersecurity events may jeopardize the security of information stored in and transmitted through our systems or the systems of outsourcing parties.

The third-parties with which we outsource certain of our IT functions utilize a variety of systems and cybersecurity capabilities, and such third-parties may not be successful in preventing a breach that exploits a weakness in their cybersecurity systems.

In some cases, we may not be aware of cyber incidents immediately as we rely on such third-parties to inform us of a cyber incident that could affect our information contained in their systems.

Disruptions from cybersecurity events may jeopardize the security of information, trade secrets, or confidential data stored in and transmitted through our systems or the systems of outsourcing parties.

An increasing number of websites, including those owned by several other large internet and offline companies, have disclosed breaches of their security, some of which have involved sophisticated and highly targeted attacks on portions of their websites or infrastructure.

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Certain efforts may be state sponsored and supported by significant financial and technological resources and therefore may be even more difficult to detect.

We may not anticipate these techniques or implement adequate preventive measures.

We, or the third-parties with whom we contract, may not anticipate these techniques or implement adequate preventive measures.

We currently expend and may be required to expend significant additional capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches.

Our insurance coverage may be inadequate to compensate us for any related losses we incur.

Our insurance coverage may be inadequate to compensate us for any related losses we incur and, in some cases, our insurance coverage may not cover the cyber incident at all.

These issues are likely to become more difficult as we expand our operations.

Any breach of our security measures, or even a perceived breach of our security measures, could cause us to lose potential customers and governmental approvals;

Any breach of our security measures, or even a perceived breach of our security measures, could cause us to lose potential customers, government contracts and governmental approvals;

suffer material harm to our business, financial condition, operating results, and reputation;

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We have not obtained patent protection in each market in which we plan to compete.

We do not know how successful we would be should we choose to assert our patents against suspected infringers.

Furthermore, our patents, trade secrets, information and intellectual property may be the subject of infringement by third-parties.

We do not know how successful we would be should we choose to assert our patents or other intellectual property rights against suspected infringers.

Our pending and future patent applications may not issue as patents or, if issued, may not issue in a form that will be advantageous to us.

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Changes in patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection, which could in turn adversely affect our business, financial condition, and results of operations.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally.

Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third-parties to assert claims against us.

We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.

Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Additionally, sanctions or other restrictions on payments made to Russia imposed by the United States government in response to Russia’s invasion of Ukraine may make it more difficult for us to maintain patent protection in certain foreign jurisdictions.

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Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products and technologies.

In addition, in general the patent positions of energy technology companies are highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.

Also, our portfolio of patents evolves as new patents are issued and older patents expire and the expiration of patents could have a negative effect on our ability to prevent competitors from duplicating certain or all of our products.

In general, the patent positions of energy technology companies are highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.

As a result, the validity and enforceability of our patents cannot be predicted with certainty.

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We have identified a material weakness in our internal control over financial reporting.

Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 and concluded that we did not maintain effective internal control over financial reporting.

Specifically, management identified a material weakness relating to recording accounts payable invoices.

Management, including our Chief Executive Officer and our Chief Financial Officer (CFO), assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 and concluded that we did not maintain effective internal control over financial reporting.

Specifically, management identified a material weakness related to the design of our controls over logical access and segregation of duties, at the application control level, in certain information technology environments.

We previously identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

Item 9A., Controls and Procedures, below for additional information about the material weakness.

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The interests of the holders of the preferred stock may as a consequence be different from the interests of the holders of our common stock, including in certain fundamental transactions in which the preferred stockholders would receive distributions before any distributions may be made to our common stockholders.

In addition, such preferred stock may contain provisions allowing it to be converted into shares of common stock, which could dilute the value of our common stock to then current stockholders and could adversely affect the market price of our common stock.

In addition, such preferred stock may contain provisions allowing it to be converted into shares of common stock, which could dilute the value of our common stock to the then current stockholders and could adversely affect the market price of our common stock.

There may be volatility in our stock price, which could negatively affect investments, and our stockholders may not be able to resell their shares at or above the value they originally purchased such shares.

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These market fluctuations may cause our stock price to fall regardless of the Company’s performance.

If we are unable to comply with the listing requirements of the Nasdaq Capital Market, it would result in our common stock being delisted, which could affect its market price and liquidity and reduce our ability to raise capital.

If we fail to maintain compliance with, or otherwise fail to comply with, all applicable continued requirements, Nasdaq may determine to delist our common stock, which could substantially decrease trading in our common stock and adversely affect the market liquidity of our common stock and cause the market price of our common stock to decline.

In addition, our ability to raise additional capital, including through future at-the-market offerings and other offerings utilizing short-form registration statements on Form S-3, would be substantially impaired.

The issuance of additional stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise will dilute all other stockholders.

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Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.

Our ability to utilize our net operating loss carryforwards to offset future taxable income will be limited.

Our ability to utilize our net operating loss carryforwards to offset future taxable income will be limited and may also expire.

Our ability to fully utilize our existing net operating losses (NOLs) generated after the tax year 2017 will be limited and the use of our NOLs generated prior to the 2018 tax year are severely limited, due to ownership changes in prior years as defined under Section 382 of the Internal Revenue Code.

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We did not perform a complete Section 382 study to determine the limitation on prior year NOLs, due to the long timeline for developing our nuclear fuel to commercialization to generate taxable income.

Further, based on the results of our phase I Section 382 study, it’s likely our NOLs generated prior to the 2018 tax year will expire unused given the 20-year carry forward period for these NOLs.

Further, based on the results of our phase I Section 382 study in 2022, it’s likely our NOLs generated prior to the 2018 tax year will expire unused given the 20-year carry forward period for these NOLs.

Future ownership changes, some of which may be beyond our control, as well as differences and fluctuations in the value of our equity securities may adversely affect our ability to utilize our current and future NOLs and could reduce our flexibility to raise capital in future equity financings or other transactions, or we may decide to pursue transactions even if they would result in an ownership change and impair our ability to use our NOLs.

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Our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks, and uncertainties of any shareholder activism.

UNRESOLVED STAFF COMMENTS

Not applicable.

Our office space is located at 11710 Plaza America Drive, Suite 2000 Reston, VA 20190 USA.

The term of the lease extends through December 31, 2023.

We are obligated to pay approximately $8,000 per month for office rent.

This space is used by our executives, employees, and contractors for administrative purposes, consulting work, and research and development activities.

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-K

Item 1A. Risk Factors