Q3 2020 Lightbridge Corp Earnings Call
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Thank you for standing by and welcome to the Lightbridge Corporation business update and third quarter 2020 Conference call. Please note that today's call is being recorded it is now my pleasure to introduce Matthew had been Andy there.
Director of Investor Relations for Lightbridge Corporation, Sir you may begin.
Thank you John and thanks to all of you for joining US today. The company's earnings press release was distributed after the market closed yesterday and can be viewed on the investor Relations page of the Lightbridge website at Www Dot L.T. bridge Dot com.
Joining us on the call today is Seth Gray Chief Executive Officer, along with Larry Goldman Chief Financial Officer Sherry.
Sherri Hollaway accounting manager.
The top executive Vice President for nuclear operations, and Jim Fornoff, Vice President for nuclear program management.
I would like to remind our listeners that any statements on this call that are not historical facts are forward looking statements.
Today's presentation includes forward looking statements about the company's competitive position and product and service offerings.
During today's call words, such as expect anticipate believe and intend will be used in our discussion of goals or events in the future. This presentation is based on current expectations and involve certain risks and uncertainties.
That may cause actual results to differ significantly from such estimates these and other risks are set forth in more detail in lightbridges filings with the Securities and Exchange Commission.
Lightbridge does not assume any obligation to update or revise any such forward looking statements, whether as a result of new developments or otherwise.
That I would like to turn over the call to our first speaker, Seth Gray Chief Executive officer of Lightbridge below Seth.
Hello, Matt and thank you all for joining us.
Lightbridge continues to make progress on its fuel development initiatives and we are pleased with the ongoing efforts at Idaho National Lab or are you now performing under our funding voucher from the U.S. Department of Energys Gateway for accelerated innovation in nuclear or game program.
As a brief reminder, we are designing an experiment for testing our fuel samples in the advanced test reactor at all you know.
Receiving this gain voucher has served as a tremendous validation for us as it is the first government funding for our metallic fuel technology in fact, when the deal. We awards this kind of funding in an amount over $500000 as in this case it is formally consider.
Third by idea, we as quote a case with a clear need and involving a truly exceptional technology or innovation unquote.
Lightbridge is well aligned with the support the U.S. government is providing to develop advanced nuclear technologies that can help the existing large reactors and new smaller plants.
You as government support has grown in importance as the United States is amid a global race for advanced nuclear technology, particularly against China and Russia.
This race itself can be characterized as two races, one strategic and the other relating to climate change.
Strategically the U.S., China, and Russia are each putting tremendous resources and priorities into competing internationally in nuclear power development.
In fact, the gain program with India. We that we are benefiting from is certainly part of these resources and priorities.
This is a strategic race for the United States, because reactor deployments strengthened the strategic relationship between the buyer and seller countries reactor orders establish about a 100 year relationship from first signing the contract decommissioning the last planned from the initial contract.
Of course, it also means large numbers of jobs and revenue and commerce for the country to get sale.
As we lose out to China, or Russia in deploying nuclear power plants to countries that are important to the U.S. the changes the strategic dynamic.
We see our technology and all its economic and operational benefits further helping to position the United States to compete and win.
Regarding the climate.
There is also a race to avoid increasing average global temperatures by 2050, while having the additional capacity to handle the worlds energy demands while emitting less C. O. Two then is emitted today.
This means that nuclear must be a growing part of the power generation mix.
Which presents a business opportunity for us companies versus opportunities for companies from other countries translating to more manufacturing jobs in the U.S.
Which is also an important bipartisan issue.
In fact in our home state of Virginia.
Governor route North them last week issued a proclamation relating to nuclear science week.
Recognizing the nuclear power industry in Virginia in his statement last month, the Governor cited Virginia's roll it nuclear innovation referencing quote nuclear generation fuel technology unquote.
Makes the state a global leader in nuclear R&D and also recognize that quote nuclear energy will play a vital role in achieving Virginia is the goal to be carbon free by 2050 unquote.
Turning to our strong patent portfolio during the third quarter, we received a notification of patent grant from the Korean intellectual property office for a divisional patent application relating to a co extrusion method of manufacturing lightbridges for low heel likley twisted in Mattel.
Fuel rods.
There are currently 24 reactors in South Korea that provide one third of the country's electricity, making this an attractive potential market for our fuel patent thing the technology that we develop helps assure that our shareholders will fully benefit from commercialization of our technology.
And with that I will turn the call over to Andrey Mushakov executive VP for nuclear operations, who will review, our near term research and development opportunities Andrei.
Thank you Seth as Seth mentioned collaboration with vital National Laboratory.
The gain Roger project design, and the reduced some test lightbridge uranium zirconium fuel outlook.
Viewing is gained Roger program provides commercial support and access to world class Noecker expertise as well as stay until they are facilities some capabilities available across the dealer you complex.
These expertise in facilities Indispensible to U.S. company essential glad bridge developed a new immigrants Nokia technologies.
As part of the game project reflects the benefits from new U.S. government support foot rents nuclear technology.
Together with IMO exploring the application of I'm else. He is an accelerated Sega state thats kind of fast methodology. So this experiment as a means of producing the time and cost to achieve high burn up and the fuel material.
Although the COVID-19 pandemic has disrupted the normal ramp for them are mainly American companies.
Bijan I now maintain frequent communication to minimize the adverse impact on our project.
We anticipate some delay in the completion of the experiment design, but good though not expected to land the insertion and the radiation based on all the samples.
We believe demonstrate and success from this initial project that will position us well.
Further new funds an opportunity to add additional government support which can further accelerate the development of our lands fuel technology.
In parallel without efforts some of the gain Roger we expect to produce samples simple coupons for the UN reactor experiments.
Our goal is to have the sample coupons available for insertion and the advance test reactor as soon as the 20 to 22.
This blend maintenance outage was completed.
The actual experiments searson basis subject to the final duration of that outage, the reliability of basin positions and the reactor.
Announced prior commitments with face them.
Once the required fuel burn up as a cheer them very actor glimpse of the four important additions in the nation of the coupons. This.
Israel provide data on the appropriateness of the fuel material.
As we look ahead Julie on the rest National Labs has demonstrated significant progress in that area accelerates in fuel qualification, including developing methods. The former adjacent best more quickly than ever before and them the development them useful advanced modeling and simulation capabilities.
And they both class the liquidation of advanced fuel technologies we.
We believe both areas can be beneficial to accelerate some of the demonstration of Lightbridges fuel technologists, and we'll continue to work toward that began back for you. So.
Well well. Thank you Andre now I'll turn the call over to Larry Goldman Chief Financial Officer to summarize the Companys financial results.
Thank you Seth and good afternoon, everyone for further information regarding our third quarter 2020 financial results and disclosures. Please refer to our earnings release that we filed at the close of market yesterday, and our form 10-Q that we filed with the FCC later today.
Regarding our Q3 financial.
[laughter] Thirtyth 2020.
Yes.
Point 4 million of cash and cash equivalents compared to 18 million of cash and cash equivalents at December 31, 2019, we have no debt financing and working capital of 15.8 million at September Thirtyth 2020, as compared to $18.1 million.
Working capital at December 31, 2019.
Total assets were 19.4 million and total liabilities were $1.8 million at September Thirtyth 2020.
Total cash used in operating activities increase.
Approximately 1.5 million for the nine months and.
Already in 2020 compared to the nine months ended September Thirtyth 2019.
Primarily due to an increase in gionee expenses relating to our arbitration.
Offset by a decrease in R&D expenses as a result of ending our R&D activities and the joint venture in 2019, and transitioning our R&D work to us National Labs and 2020.
Cash used in investing activities decreased by approximately $3.6 million for the nine months ended September Thirtyth 2020.
Compared to the nine months ended September Thirtyth 2019.
The last terminating our equity contributions to the joint venture and late 2019.
Cash provided by financing activities increased by approximately $1.4 million for the nine months ended September Thirtyth 2020, compared to the nine months ended September Thirtyth 2019.
This increase was due to an increase in the net proceeds from the issuance of common stock in 2020, which was 5.2 million for the nine months ended September Thirtyth 2020, as compared to 3.8 million of net proceeds for the nine months ended September Thirtyth 2019.
Due to the cold 19 pandemic, we have taken the necessary steps earlier this year to be.
Juice or expenses.
And we anticipate preserving our cash runway to the end of calendar year 2021.
Continue to strive to obtain additional deal we funding in the future.
Either from their game program.
Or other funding opportunities made available within the deal we.
The primary goal of furthering our fuel development and the most cost efficient manner for our shareholders to support our future financing requirements.
With respect to our fuel development.
I will now turn the call over to Sherri Hollaway, our accounting manager, who will go over our PML financial information.
Third quarter of 2020.
Thank you Larry medley.
Net loss for the three months ended September Thirtyth, 2020 was $3.1 million compared to 2.4 million for the three months ended September Thirtyth 2019 pardon.
Primarily due to these factors.
Total R&D expenses were 261000 in the third quarter, a 2020 compared to 751000 for the third quarter of 2019. This.
This decrease was primarily due to transitioning our R&D work from our joint venture to developing our new field development strategy by now working with the U.S. National Labs.
R&D expenses consist primarily of employee compensation and related fringe benefits and other allocable costs related to the research and development of our fuel.
Good day expenses for the third quarter 2020 were 2.8 million compared to 1.4 million for the third quarter of 2019.
Primarily due to an increase in professional fees of approximately $1.3 million due to the legal fees incurred related to the arbitration in a net increase in employee compensation and employee benefits of approximately $8.1 million.
Net other operating loss was $0 for the third quarter or 2020, compared 2.3 million for the third quarter of 2019.
This decrease of 5.3 million was the result of the in active status.
The incision joint venture for the three months and nine months ended September Thirtyth 2020, and at December 31st 2019.
Now over to you Seth.
Thank you Sheri and with that we will go to the question and answer session. Thank you to everyone who has submitted questions Matt.
Thank you Seth a first question.
With the presidential election decisions still up in the air how do you think lightbridge will fare along with the nuclear industry as a whole with a trump or bite and when and how will that change to a bite in administration affect internal timelines for the game voucher Praj.
Jack to proceed.
Well.
If there's a change in administration I don't see a change in deal we support for Lightbridge.
I think there would likely be.
Even wear out of who wins the the presidential race, a focus in federal spending on a big stimulus package.
And that would likely be budget cuts to other areas of the federal budget and that could reduce projected de are we spending on some of the expensive big new reactor projects, but I don't see deal, we reducing spending in the much less expense.
Sensitive areas of nuclear technology development like Lightbridge fuel development.
And these are areas with very strong bipartisan support.
And I think that we're just very well positioned for continuing and growing deal, we support regardless of who wins the election.
I don't see much of a change in.
Administration support regardless of who wins for nuclear in general I think where the federal government has been supporting nuclear has been with bipartisan support certainly coming out of a democratically controlled house Republican controlled Senate and having a Republican.
Administration led by the President.
As for the part of the question on.
Whether a biden administration would affect internal timelines on on gain about share.
No I really don't think so what we do is not political.
And I think that clean energy and advanced nuclear technology have bipartisan support.
We've already had the gain program come into existence and fund to us and others.
With a Congress that's divided one one part of Congress the house democratically controlled the other the Senate Republican controlled so.
I really don't see that that changing and I see both.
You know president Trump and former Vice President Biden in their position supporting advanced nuclear energy technologies. So I don't see a change there Matt.
Thanks, Our next question it seems that institutional investors in the U.S. are starting to catch up to their peers in.
The EU in terms of E G and impact investing.
These investors view nuclear as a clean technology and can we expect lightbridge to pursue these opportunities.
Well, we'll start with E.S.G. impact.
Impacting investing within that so he SNG environmental social and governance, our corporate governance.
On environmental we're not a company with our own smokestacks or something like that needs to be cleaned up.
But what we are doing is developing a nuclear fuel technology, which I think can be among the most important and in fact necessary components.
Meeting broad environmental goals I think that growth in nuclear power is required for the world to meet clean energy and climate goals and that our technology will be part of that that its consequential for meeting environmental goals. So.
So I think investors looking for impact investing in the environmental area should look at Lightbridge as.
As for the social.
We're a small company we do have.
Internally and projecting externally some some social statements and activities. We have a very important company statement on policy against racism were part of the gender champions in nuclear policy, particularly focusing on.
Women.
Participating in growing and important roles in nuclear and technology leadership positions and we're a part of a corporate effort fighting fighting opioid addiction.
Addiction.
On governance on corporate governance, the last part of the SG.
I'd say that we're very clean where we're a NASDAQ listed company we have.
Very top shelf financial auditor.
That that helps guaranteed.
That that everything we say is accurate we have just as high level and high quality a nuclear quality assurance program. So so we're very clean, but all of those areas for where.
Investors are looking to move the needle in the U.S. and globally on E.S.G. I think it is in the environmental area and what our fuel can do on the other part of the question you asked about.
Should nuclear be viewed by investors as a as a clean technology and will lightbridge pursue these opportunities and the answer is yes nuclear should be viewed as a clean technology, particularly when we're talking about clean energy and climate goals in fact, as I mentioned I think nuclear.
As necessary to meet energy and climate goals, and I think lightbridge fuel will be part of that Matt.
Thank you.
Our next question do you think China, and Russia is ongoing pursuit of advanced nuclear technologies will actually present benefits to Lightbridge and are.
Are you concerned with potential IP theft from these pursuits.
Well I don't think China, and Russia will do anything to benefit Lightbridge.
In the immediate term, they're certainly not deliberately trying to do that but.
As those reactors are built by China, and Russia around the world those reactors can in time menus our fuel.
Opening expanding markets for us we're already seeing some reactors around the world changing their fuel providers. So new reactors anywhere they can use our fuel could could become potential market opportunities for us.
I'd say, China is in Russia is aggressive moves to deploy reactors in countries.
Particularly countries of strategic importance to the U.S.
Is part of whats barring the U.S. to support advanced nuclear technologies. So U.S. companies can compete and win against China, and Russia, particularly in countries that are important to the U.S. So they don't fall more into Chinese and Russian spheres of influence such as China, Russia controlling the.
Her GE supply of those countries.
And in.
In addition to the technology support like the gain voucher that Lightbridge has we're seeing a lot of movement in financing the export import bank of the United States to support nuclear exports.
Very recently, the new end of the nuclear financing prohibition by the U.S. International Development Finance Corporation, the Dfc to help pay for building reactors overseas and pay for nuclear export So finance them like fuel from the U.S. and we do expect that light.
Bridge will benefit.
Ultimately from from all these programs, where the U.S. is supporting nuclear partly in reaction to not wanting to see the field to China, and Russia, and I think thats really helping lightbridge and will help us more.
On your part of the question about whether we're concerned about intellectual property theft from.
China and Russia.
We are very strongly protect our intellectual property with worldwide patenting incur.
Including our patents that have already been granted in China and in Russia, as well as our patents that have been granted in countries, where they are building reactors or want to build reactors and were very good about protecting ourselves in countries where.
They might deploy reactors.
And.
From from what we've heard and what we understand and.
Communications and meetings with with the U.S. government the U.S. government.
He is a very strong ally of U.S. companies that deployed nuclear technology overseas.
And.
Would act to protect nuclear companies if their nuclear technology.
Patents or other intellectual property rights are infringed on overseas I'd say two of the reasons for this in addition to some the obvious reason.
To that relate to us and other nuclear technology companies is one that we work very closely with the U.S. government the national Nuclear Security administration and other parts of the government.
On where our technology can can be accessed overseas and habit authorized for transfer overseas and we and others in the industry are very careful and work very closely with the U.S. government, which wants to control the U.S. nuclear technology overseas and not lose that intellectual property theft and the government takes that.
Extremely seriously and I want to be on the receiving end in another country, if the U.S. government pretty.
Protecting that and the second part is that Lightbridge and other nuclear companies that could help us compete overseas, particularly against China, and Russia are increasingly being funded by the U.S. government for the purpose of the us winning those exports getting those jobs and getting that strategic.
Benefit.
And the U.S. government doesn't want to to see that so some add I would just say that.
As I mentioned on other calls I think we have a big friend in the U.S. government that would protect the patents that we so carefully file them and maintained.
Thanks Seth.
All the questions we have.
Well, okay well.
Well, thank you, Matt and thank you everyone. Thanks, everyone for calling in and participating on today's call. We look forward to providing additional updates in the near future.
In the meantime, we can be reached at IR at LT Bridge Dot com stay safe and well goodbye.
This concludes today's conference call. Thank you all for participating you may now disconnect.
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