LIGHTBRIDGE Corp

Previous wording

On December 5, 2023, we entered into an agreement with Centrus Energy Corp. (Centrus Energy) to conduct a front-end engineering and design (FEED) study for a Lightbridge Pilot Fuel Fabrication Facility (LPFFF) to manufacture Lightbridge Fuel™ using high-assay low-enriched uranium (HALEU) at the American Centrifuge Plant in Piketon, Ohio. The FEED study’s objective is to identify infrastructure and licensing requirements as well as the estimated cost and construction schedule for the LPFFF. Centrus Energy’s wholly-owned subsidiary, American Centrifuge Operating, LLC, is leading the study. As of the date hereof, Centrus Energy has completed the initial phase of the FEED study and issued a preliminary report. The Company has expensed approximately $0.2 million in connection with the work that has been completed by Centrus Energy. After reviewing the preliminary report, we will decide whether to proceed to the final phase of the FEED study. If we decide to move forward with the final phase of the FEED study, the remaining work is expected to be completed in 2024 at an additional fixed price cost of approximately $0.3 million.

Current wording

On December 5, 2023, we entered into an agreement with Centrus Energy Corp. (Centrus Energy) to conduct a front-end engineering and design (FEED) study for a Lightbridge Pilot Fuel Fabrication Facility (LPFFF) to manufacture Lightbridge Fuel™ using high-assay low-enriched uranium (HALEU) at the American Centrifuge Plant in Piketon, Ohio. The FEED study’s objective is to identify infrastructure and licensing requirements as well as the estimated cost and construction schedule for the LPFFF. Centrus Energy’s wholly-owned subsidiary, American Centrifuge Operating, LLC, is leading the study. As of the date hereof, Centrus Energy has completed the initial phase of the FEED study and issued a preliminary report. The Company has expensed approximately $0.2 million in connection with the work that has been completed by Centrus Energy.

Previous wording

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 covers 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. The remaining work is expected to be completed in 2024 at an additional fixed price of approximately $0.1 million.

Current wording

On October 16, 2023, we engaged Institutul de Cercetări Nucleare Pitești, a subsidiary of Regia Autonoma Tehnologii pentru Energia Nucleara (RATEN ICN) in Romania to perform an engineering study to assess the compatibility and suitability of Lightbridge Fuel™ for use in CANDU reactors. This assessment covers 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. On July 2, 2024, we issued a change order adding a new task to the remaining scope of this engineering study. Following the change order, the Company will be obligated to pay a total fee of approximately $0.2 million for this engineering study, which is expected to be completed in 2024.

Previous wording

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 (ATR) 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. The data will support fuel performance modeling and regulatory licensing efforts for commercial deployment of Lightbridge Fuel™.

Current wording

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 (ATR) 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. The data will support fuel performance modeling and regulatory licensing efforts for commercial deployment of Lightbridge Fuel™. We are using a rolling wave planning approach for project management purposes on the released scopes of work. It is an iterative planning technique in which the work to be accomplished in the near term is planned in detail, while work further in the future is planned at a higher level. As such, periodic revisions to the scope and/or cost estimates are anticipated.

Previous wording

In 2023, we worked with INL to complete and issue a Quality Implementation Plan (QIP) for our collaborative project at INL which was an essential first step to ensure all future work performed at INL on the project would meet the U.S. nuclear industry quality assurance requirements. Additionally, we worked with INL to demonstrate casting of delta-phase uranium-zirconium ingots with depleted uranium using existing INL equipment. As part of that effort, we cast several laboratory-scale ingots using depleted uranium and zirconium alloy materials.

Current wording

In 2023, we worked with INL to complete and issue a Quality Implementation Plan for our collaborative project at INL which was an essential first step to ensure all future work performed at INL on the project would meet the U.S. nuclear industry quality assurance requirements. Additionally, we worked with INL to demonstrate casting of delta-phase uranium-zirconium ingots with depleted uranium using existing INL equipment. As part of that effort, we cast several laboratory-scale ingots using depleted uranium and zirconium alloy materials.

Previous wording

On March 18, 2024, we announced a successful extrusion demonstration at INL of a billet into an unclad cylindrical rod, made of depleted uranium and zirconium alloy using the same composition of uranium and zirconium elements in the alloy as what is planned to be ultimately used in Lightbridge Fuel™. We will work with INL to analyze the extruded rod to confirm the extrusion process parameters prior to producing future fuel samples using enriched uranium for irradiation testing in the ATR.

Current wording

On March 18, 2024, we announced a successful extrusion demonstration at INL of a billet into an unclad cylindrical rod, made of depleted uranium and zirconium alloy using the same composition of uranium and zirconium elements in the alloy as what is planned to be ultimately used in Lightbridge Fuel™. We are working with INL on analyzing the extruded rod to confirm the extrusion process parameters prior to producing future fuel samples using enriched uranium for irradiation testing in the ATR.

Previous wording

After Modification No. 2, total cash payments from the Company to BEA under both agreements were estimated at approximately $4.3 million (excluding project contingencies) on a cost reimbursable basis over the performance periods under the initial releases. As of March 31, 2024, the Company had approximately $3.1 million in outstanding PTS commitments to BEA.

Current wording

After Modification No. 2, total cash payments from the Company to BEA under both agreements were estimated at approximately $4.3 million (excluding project contingencies) on a cost reimbursable basis over the performance periods under the initial releases. As of June 30, 2024, the Company had approximately $2.8 million in outstanding PTS to BEA.

Previous wording

The long-term milestones towards development and commercialization of nuclear fuel assemblies include, among other things, irradiating nuclear material samples and prototype fuel rods with enriched uranium in test reactors, conducting post-irradiation examination of irradiated material samples and/or prototype fuel rods, performing thermal-hydraulic experiments, performing seismic and other out-of-reactor experiments, performing advanced computer modeling and simulations to support fuel qualification, designing a lead test assembly (LTA), entering into a lead test rod/assembly agreement(s) with a host reactor(s), demonstrating the production of lead test rods and/or lead test assemblies at a pilot-scale fuel fabrication facility and demonstrating the operation of lead test rods and/or lead test assemblies in commercial reactors.

Current wording

The long-term milestones towards development and commercialization of nuclear fuel assemblies include, among other things, irradiating nuclear material samples and prototype fuel rods with enriched uranium in test reactors, conducting post-irradiation examination of irradiated material samples and/or prototype fuel rods, performing thermal-hydraulic experiments, performing seismic and other out-of-reactor experiments, performing advanced computer modeling and simulations to support fuel qualification, designing a lead test assembly (LTA), entering into a lead test rod/assembly agreement(s) with a host reactor(s), demonstrating the production process of lead test rods and/or lead test assemblies at a pilot-scale fuel fabrication facility and demonstrating the operation of lead test rods and/or lead test assemblies in commercial reactors.

Previous wording

There are inherent uncertainties in the cost and outcomes of the many steps needed for successful deployment of our fuel in commercial nuclear reactors, which makes it difficult to accurately predict the timing of the commercialization of our nuclear fuel technology. However, based on our best estimate and assuming adequate R&D funding levels, we expect to begin demonstration of lead test rods (LTRs) and/or possibly LTAs with our metallic fuel in commercial reactors in the 2030s and begin receiving purchase orders for initial fuel reload batches from utilities 15-20 years from now, with deployment of our nuclear fuel in the first reload batch in a commercial reactor taking place approximately two years thereafter. We are exploring ways of shortening this timeframe that may include securing access to expanded irradiation test loop capacity in existing or new research reactor facilities.

Current wording

There are inherent uncertainties in the cost and outcomes of the many steps needed for successful deployment of our fuel in commercial nuclear reactors, which makes it difficult to accurately predict the timing of the commercialization of our nuclear fuel technology. However, based on our best estimate and assuming adequate R&D funding levels, we expect to begin demonstration of lead test rods and/or possibly LTAs with our metallic fuel in commercial reactors in the 2030s and begin receiving purchase orders for initial fuel reload batches from utilities 15-20 years from now, with deployment of our nuclear fuel in the first reload batch in a commercial reactor taking place approximately two years thereafter. We are exploring ways of shortening this timeframe that may include securing access to expanded irradiation test loop capacity in existing or new research reactor facilities.

Previous wording

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 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, 2023, filed with the SEC on March 4, 2024. There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2024.

Current wording

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 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, 2023, filed with the SEC on March 4, 2024. There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2024.

Previous wording

R&D expenses consist primarily of costs associated with our CRADA and SPPA with INL for the R&D of our fuel, employee compensation and related fringe benefits including stock-based compensation and related allocable overhead costs for the R&D of our fuel.

Current wording

R&D expenses consist primarily of costs associated with our CRADA and SPPA with INL, employee compensation and related fringe benefits including stock-based compensation and related allocable overhead costs for the R&D of our fuel.

Previous wording

Total R&D expenses increased by $0.6 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023 due to the increase in R&D activities related to the development of our fuel. This increase primarily consisted of an increase in INL project labor costs and outside R&D expenses of $0.5 million, and an increase in allocated employee compensation and employee benefits of $0.1 million.

Current wording

Total R&D expenses increased by $0.5 million for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 due to the increase in R&D activities related to the development of our fuel. This increase primarily consisted of an increase in INL project labor costs and outside R&D expenses of $0.2 million, and an increase in allocated employee compensation and employee benefits of $0.3 million due to an increase in R&D employees.

Previous wording

We currently project investing approximately $8 million to $9 million in the R&D of our nuclear fuel over the next 12 to 15 months.

Current wording

We currently project investing approximately $8.3 million in the R&D of our nuclear fuel over the next 12 to 15 months.

Previous wording

Total general and administrative expenses increased by $0.3 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase of $0.3 million was primarily due to an increase in employee compensation and employee benefits and directors’ fee of $0.1 million, due to increases in compensation, an increase in postage and recruitment expenses of $0.1 million due to our SEC proxy mailings to shareholders and recruitment fees for new R&D employees and an increase in stock-based compensation of $0.1 million, due to the stock-based compensation amortization of RSAs issued in November 2023.

Current wording

General and administrative expenses increased by $0.6 million for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The increase of $0.6 million was primarily due to an increase in employee compensation and employee benefits and directors’ fee of $0.1 million, due to increases in compensation, an increase in recruitment and travel expenses of $0.2 million due to recruitment fees and travel expenses for newly hired R&D employees, an increase in stock-based compensation of $0.2 million, due to the stock-based compensation amortization of RSAs issued in November 2023, and an increase in professional fee of $0.1 million,

Previous wording

Total stock-based compensation included in general and administrative expenses was $0.4 million and $0.3 million for three months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

Total stock-based compensation included in general and administrative expenses was $0.7 million and $0.5 million for six months ended June 30, 2024 and June 30, 2023, respectively.

Previous wording

There was an increase in other income of $0.1 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, 2024, as compared to the three months ended March 31, 2023.

Current wording

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 six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Previous wording

At March 31, 2024, we had cash and cash equivalents of $27.9 million, as compared to $28.6 million at December 31, 2023, a decrease of $0.7 million. We raised net proceeds of $1.2 million from the sale of approximately 0.4 million shares of common stock during the three months ended March 31, 2024. Our net cash used in operating activities for the three months ended March 31, 2024 was $1.9 million and our cash flow projections indicate that we will have continued negative cash flows for the foreseeable future. We currently do not anticipate any incoming cash flows, other than the sale of common stock through our ATM offering. We are not profitable, and we cannot provide any assurance that we will become profitable in the future. We will continue to incur losses because we are in the early development stage of commercializing our nuclear fuel.

Current wording

At June 30, 2024, we had cash and cash equivalents of $27.1 million, as compared to $28.6 million at December 31, 2023, a decrease of $1.5 million. We raised net proceeds of $2.2 million from the sale of approximately 0.8 million shares of common stock during the six months ended June 30, 2024. Our net cash used in operating activities for the six months ended June 30, 2024 was $3.7 million and our cash flow projections indicate that we will have continued negative cash flows for the foreseeable future. We currently do not anticipate any incoming cash flows, other than the sale of common stock through our at-the-market (ATM) offering. We are not profitable, and we cannot provide any assurance that we will become profitable in the future. We will continue to incur losses because we are in the early development stage of commercializing our nuclear fuel.

Previous wording

We have approximately $27.6 million of working capital as of the date of this filing. 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 $16.2 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, 2024 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 R&D and other expenditures that will be required in the future. Once other anticipated agreements are finalized or other future R&D agreements are entered into and the future R&D expenses are known, we expect to incur a significantly higher level of future required R&D expenses and higher negative monthly cash flows from operations.

Current wording

We have approximately $26.1 million of working capital as of the date of this filing. 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 $14.3 million for the next 12 months. Our R&D expenses are expected to increase over the next 12-15 months. Our cash balance at June 30, 2024 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 R&D and other expenditures that will be required in the future. We may also be unsuccessful in raising the capital necessary in the future to continue the R&D development of our fuel. Once other anticipated agreements are finalized or other future R&D agreements are entered into and the future R&D expenses are known, we expect to incur a significantly higher level of future required R&D expenses and higher negative monthly cash flows from operations.

Previous wording

Our current 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 equity offering sales agreement, as amended, with Stifel, Nicolaus & Company, Incorporated. The Company previously had 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 which was 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 filed a new shelf registration statement on Form S-3 on March 29, 2024 and that became effective on April 19, 2024. We filed a prospectus supplement, dated May 10, 2024, with the SEC pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $6.6 million from time to time, through the ATM.

Current wording

Our current 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 equity offering sales agreement, as amended, with Stifel, Nicolaus & Company, Incorporated. We filed a shelf registration statement on Form S-3 on March 29, 2024, registering the sale of up to $75 million of the Company’s securities that became effective on April 19, 2024. On May 10, 2024, we filed a prospectus supplement, which was further supplemented on July 19, 2024, pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $12.5 million from time to time, through the ATM.

Previous wording

The following table provides detailed information about our net cash flows for the three months ended March 31, 2024 and 2023 (rounded in millions):

Current wording

The following table provides detailed information about our net cash flows for the six months ended June 30, 2024 and 2023 (rounded in millions):

Previous wording

Our net cash used in operating activities increased by $0.4 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This increase was primarily due to increased spending on R&D and general and administrative expenses.

Current wording

Our net cash used in operating activities increased by $0.7 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. This increase was primarily due to increased spending on R&D, and general and administrative expenses and changes in working capital.

Previous wording

Our net cash provided by financing activities increased by $0.5 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This increase was due to an increase in the net proceeds received from the issuance of common stock under our at-the-market (ATM) facility.

Current wording

Our net cash provided by financing activities decreased by $0.1 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. This decrease was due to a decrease in the net proceeds received from the issuance of common stock under our ATM facility.

Previous wording

Cash provided by our ATM facility was $1.2 million (sale of approximately 0.4 million common shares) and $0.7 million (sale of approximately 0.2 million common shares) for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Cash provided by our ATM facility was $2.2 million (sale of approximately 0.8 million common shares) and $2.3 million (sale of approximately 0.5 million common shares) for the six months ended June 30, 2024 and 2023, respectively.