The accompanying notes are an integral part of these condensed consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial statements
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation, Summary of Significant Accounting Policies and Nature of Operations
Basis of presentation
The accompanying unaudited condensed consolidated financial statements of Lightbridge Corporation and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America, including a summary of the Company’s significant accounting policies, have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2016, included in our Annual Report on Form 10-K for the year ended December 31, 2016.
In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three month period have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms "Company,” "we,” "us" or "our" mean Lightbridge Corporation and all entities included in our consolidated financial statements.
The Company was formed on October 6, 2006, when Thorium Power, Ltd. merged with Thorium Power, Inc., (“TPI”), which had been formed in the State of Delaware on January 8, 1992. On September 29, 2009, we changed our name from Thorium Power, Ltd. to Lightbridge Corporation (subsequently referred to as “we” or the “Company”). We are engaged in two operating business segments: our Technology Business Segment and our Consulting Business Segment (see Note 7-Business Segment Results).
Going Concern and Liquidity
We have incurred recurring losses since inception and expect to continue to incur losses as a result of costs and expenses related to our research and continued development of our nuclear fuel and our corporate general and administrative expenses. At March 31, 2017, we had $5.3 million in cash and restricted cash. We have expended substantial funds on the research and development of our fuel technology and expect to increase our spending on research and development expenditures if we are able to execute on a potential joint venture with AREVA NP. Our net losses incurred for the three months ended March 31, 2017 amounted to $(1.7) million and working capital was approximately $4.9 million at March 31, 2017. As a result, there is substantial doubt about our ability to continue as a going concern. In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company expects to seek to obtain additional funding through future equity issuances. There can be no assurance as to the availability or terms upon which such financing and capital might be available.
On June 11, 2015, the Company entered into an at-the-market issuance (“ATM”) sales agreement with MLV & Co. LLC ("MLV") (see Note 6), pursuant to which the Company may issue and sell shares of its common stock from time to time through MLV as the Company's sales agent. On September 1, 2015, MLV was acquired by FBR & Co. We raised approximately $2.8 million, net of financing costs, from our ATM with MLV for the three months ended March 31, 2017. The Company registered the sale of up to $5.8 million of common stock under this ATM sales agreement and has raised the entire $5.8 million amount of common stock registered as of the date of this filing. As the Company’s public float was less than $75.0 million as of March 31, 2017, the Company’s usage of its S-3 shelf registration statement is limited. The Company still maintains the ability to raise funds through other means, such as through the filing of a registration statement on Form S-1 or in private placements. The rules and regulations of the SEC or any other regulatory agencies may restrict the Company’s ability to conduct certain types of financing activities, or may affect the timing of and amounts it can raise by undertaking such activities.
Reverse Stock Split
Effective July 20, 2016, we conducted a one for five reverse stock-split of our issued and outstanding common stock and have retroactively adjusted our common shares outstanding, options and warrants amounts outstanding. We have presented our share data for and as of all periods presented on this basis. Our authorized capital of 500,000,000 shares of common stock and 50,000,000 shares of preferred stock, each with a par value of $0.001, was changed to 100,000,000 shares of common stock authorized and 10,000,000 shares of preferred stock authorized with a par value of $0.001. The par value was not adjusted as a result of the one for five reverse stock split.
Technology Business Segment
Our primary business segment, based on future revenue potential, is to develop and commercialize innovative, proprietary nuclear fuel designs which we expect will significantly enhance the nuclear power industry’s economics due to higher power output and improve safety margins.
We are currently focusing our development efforts primarily on the metallic fuel with a power uprate of up to 10% and a 24-month operating cycle in existing Westinghouse-type four-loop pressurized water reactors. Those reactors represent the largest segment of our global target market. Our metallic fuel could also be adapted for use in other types of water-cooled commercial power reactors, such as boiling water reactors, CANDU heavy water reactors, as well as water-cooled small and modular reactors.
Lightbridge will seek patent validation in key countries that either currently operate or are expected to build and operate a large number of suitable nuclear power reactors.
Consulting Business Segment
The purpose of our Consulting Business Segment is to generate a positive profit margin that can provide internal cash resources to help defray a portion of the costs associated with our research and development activities and corporate overhead. Through our Consulting Business, we provide consulting and strategic advisory services to companies and governments planning to create or expand electricity generation capabilities using nuclear power plants. We opportunistically seek new consulting work that can generate acceptable profit margins.
Recently Adopted Accounting Pronouncements
Going Concern
— In August 2014, FASB issued guidance that requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The updated accounting guidance was effective for the Company on December 31, 2016 and we have implemented this new accounting standard and updated our liquidity disclosures as necessary.
Deferred Taxes –
During November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified on a net basis as non-current in a statement of financial position. Early adoption of this ASU did not have an effect on our deferred tax assets and deferred tax liabilities in our consolidated balance sheets.
Debt Issuance Costs
- In April 2015, the FASB issued ASU 2015-03, “
Simplifying the Presentation of Debt Issuance Costs
”. The new standard will more closely align the presentation of debt issuance costs under U.S. generally accepted accounting principles with the presentation under comparable IFRS standards. Debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. Under current U.S. generally accepted accounting principles, debt issuance costs are reported on the balance sheet as assets and amortized as interest expense. The costs will continue to be amortized to interest expense using the effective interest method. Subsequent to the issuance of ASU 2015-03 the Securities and Exchange Commission staff made an announcement regarding the presentation of debt issuance costs associated with line-of-credit arrangements, which was codified by the FASB in ASU 2015-15. This guidance, which clarifies the exclusion of line-of-credit arrangements from the scope of ASU 2015-03, is effective upon adoption of ASU 2015-03. ASU 2015-03 is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The implementation of this standard did not have a material impact on the Company’s consolidated financial statements.
Stock Compensation -
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting,
which will simplify the income tax consequences, accounting for forfeitures and classification on the Statement of Consolidated Cash Flows. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. This new pronouncement has been adopted on January 1, 2017 and did not have a material effect on the Company’s financial position, results of operations or cash flows.
Recent Accounting Pronouncements
Statement of Cash Flows
- In 2016 the FASB issued ASU 2016-15, “
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”
and ASU 2016-18, “
Statement of Cash Flows (Topic 230): Restricted Cash”.
ASU 2016-15 addresses the presentation and classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-18 is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the cash flows statement. The statement requires that restricted cash and restricted cash equivalents to be included as components of total cash and cash equivalents as presented on the statement of cash flows. These pronouncements go into effect for periods beginning after December 15, 2017. The Company does not believe the adoption of these pronouncements will have a material effect on the Company’s consolidated financial statements.
Leases
– In February 2016, the FASB issued ASU 2016-02 which amends existing lease accounting guidance, and requires recognition of most lease arrangements on the balance sheet. The adoption of this standard will result in the Company recognizing a right-of-use asset representing its rights to use the underlying asset for the lease term with an offsetting lease liability. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the potential impact of the adoption of this accounting pronouncement to its consolidated financial statements. This new pronouncement is not expected to have a material effect on the Company’s financial position, results of operations or cash flows.
Revenue Recognition
— In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In March 2016, the FASB issued ASU 2016-08, “
Revenue from Contracts with Customers: Principal versus Agent Considerations
”. ASU 2016-08 clarifies implementation guidance on principal versus agent considerations in ASU 2014-09. ASU 2016-10 was issued to clarify ASC Topic 606 related to (i) identifying performance obligations; and (ii) the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, “
Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients
”, to clarify certain narrow aspects of Topic 606 such as assessing the collectability criterion, presentation of sales taxes and other similar taxes collected from customers, noncash consideration, contract modifications at transition, completed contracts at transition, and technical correction. The guidance is effective for the interim and annual periods beginning on or after December 15, 2017 (early adoption is permitted but not sooner than the annual reporting periods beginning after December 15, 2016). The guidance permits the use of either a retrospective or cumulative effect transition method. The Company is in the initial stages of evaluating its various contracts subject to these updates but has not completed its assessment and therefore has not yet concluded on whether the adoption of this pronouncement will have a material effect on its consolidated financial statements and related disclosures.
Note 2. Net Loss Per Share
Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period except that it does not include unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, warrants, restricted shares, and unvested common shares subject to repurchase or cancellation. The dilutive effect of outstanding stock options, restricted shares, restricted stock units, and warrants is not reflected in diluted earnings per share because we incurred net losses for the three months ended March 31, 2017 and 2016, and the effect of including these potential common shares in the net loss per share calculations would be anti-dilutive and are therefore not included in the calculations.
Loss per-share amounts for all periods have been retroactively adjusted to reflect the Company’s 1-for-5 reverse stock split, which was effective July 20, 2016.
Note 3. Accounts Payable and Accrued Liabilities
Accounts payable and accrued expenses (rounded in millions) consisted of the following:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Trade payables
|
|
$
|
0.1
|
|
|
$
|
0.3
|
|
Accrued expenses and other
|
|
|
0.4
|
|
|
|
0.4
|
|
Accrued bonuses
|
|
|
0.7
|
|
|
|
0.5
|
|
Total
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
Note 4. Commitments and Contingencies
Litigation
A former Chief Financial Officer of the Company filed a complaint against the Company with the U.S. Occupational Safety and Health Administration (the “OSHA Complaint”) on March 9, 2015.
The OSHA Complaint alleges that the Company unlawfully retaliated against the former Chief Financial Officer for challenging allegedly improper actions of the Company by making allegedly defamatory statements and terminating him from his employment with the Company. The former Chief Financial Officer’s demand for damages is for back pay, front pay, and special damages.
The Company believes that all of the above claims by the former Chief Financial Officer are without merit and intends to vigorously defend itself.
Note 5. Research and Development Costs
Research and development costs, included in the accompanying condensed consolidated statement of operations amounted to approximately $0.5 million and $0.6 million for the three months ended March 31, 2017 and 2016, respectively.
We have consulting agreements with several consultants working on various projects for us, which total approximately $20,000 per month.
Note 6. Stockholders’ Equity
All common shares, warrants and stock option amounts and per share amounts for all periods reported below has been retroactively adjusted to reflect the Company’s 1-for-5 reverse stock split, which was effective July 20, 2016.
At March 31, 2017, there were 9,716,004 common shares, 1,713,172 common stock warrants and 2,172,247 stock options outstanding, all totaling 13,601,423 of total common stock and common stock equivalents outstanding at March 31, 2017. At December 31, 2016, there were 7,112,143 common shares, 1,713,172 common stock warrants and 2,172,581 stock options outstanding, all totaling 10,997,896 of total stock and stock equivalents outstanding at December 31, 2016.
Securities Purchase Agreement – General International Holdings, Inc.
On August 2, 2016, we issued 1,020,000 shares of the Company’s newly created Non-Voting Series A Convertible Preferred Stock (the “Series A Preferred Stock”) to General International Holdings, Inc. for $2.8 million or approximately $2.75 per share. Dividends accrue on the Series A Preferred Stock at the rate of 7% per year and will be paid in-kind. The accumulated dividend (unpaid) at March 31, 2017 was approximately $0.1 million dollars.
Series A Preferred Stock
On July 29, 2016, in anticipation of the closing of the GIH Offering discussed above, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Non-Voting Series A Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Nevada. Pursuant to the Certificate of Designation, the Company’s Board of Directors designated a new series of the Company’s preferred stock, the Non-Voting Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”). The Certificate of Designation authorized the Company to issue 1,020,000 shares of Series A Preferred Stock. Each share of Series A Preferred Stock has a liquidation preference of $2.75 per share. The holders of the Series A Preferred Stock have no voting rights. In addition, as long as 255,000 shares of Series A Preferred Stock are outstanding, the Company may not take certain actions without first having obtained the affirmative vote or waiver of the holders of a majority of the outstanding shares of Series A Preferred Stock. The Company has the option at any time after August 2, 2019 to redeem some or all of the outstanding Series A Preferred Stock for an amount in cash equal to the liquidation preference plus the amount of any accrued but unpaid dividends of the Series A Preferred Stock being redeemed. The holders of the Series A Preferred Stock do not have the ability to require the Company to redeem the Series A Preferred Stock.
Aspire Option Agreement
On August 10, 2016 the Company entered into an option agreement with Aspire Capital whereby the Company has the right, at any time prior to December 31, 2019, to require Aspire Capital to enter into with the Company, up to two common stock purchase agreements each with a three year term, with an aggregate amount under both purchase agreements combined not to exceed $20,000,000. A notice to Aspire exercising the option may be revoked by the Company at any time prior to the parties entering into a purchase agreement without effecting or limiting the Company’s future rights to give a subsequent option notice to Aspire Capital, under the terms and conditions of the option agreement.
The Company issued 500,000 common stock purchase warrants with a strike price of $0.01 per share to Aspire Capital as the commitment fee for entering into this option agreement. The commitment fee of approximately $1.7 million was recorded as deferred financing costs and additional paid-in capital and this asset will be amortized over the life of the option agreement. The amortized amount of $0.1 million was expensed to financing costs during the three months ended March 31, 2017. The total short-term and long-term unamortized portion is carried on the balance sheet as deferred financing costs. The short-term portion was approximately $0.5 million and the long-term portion was approximately $0.9 million, at March 31, 2017. The short-term portion was approximately $0.5 million and long-term portion was approximately $1.0 million, at December 31, 2016.
The assumptions used in the Black Scholes option-pricing model for the year ended December 31, 2016, was as follows:
Closing price per share of common stock
|
|
$
|
3.34
|
|
Average risk-free interest rate
|
|
|
0.83
|
%
|
Average expected life- years
|
|
|
3.38
|
|
Expected volatility
|
|
|
92.61
|
%
|
Expected dividends
|
|
|
0
|
%
|
The future amortization of deferred financing costs is as follows (in millions):
2017
|
|
$
|
0.4
|
|
2018
|
|
$
|
0.5
|
|
2019
|
|
$
|
0.5
|
|
Equity Purchase Agreement – Equity Line
On September 4, 2015, we entered into a common stock purchase agreement with Aspire Capital, which provides that Aspire Capital is committed to purchase up to an aggregate of $10.0 million of shares of our common stock over a two-year term, subject to certain limitations. There were no sales made for the three months ended March 31, 2017. We presently do not have an effective Form S-1 registration statement on file with the Securities and Exchange Commission as of the date of this filing, to sell common shares under this equity purchase agreement.
For the three months ended March 31, 2016 we sold 2.2 million common shares for total gross proceeds of approximately $1.4 million through the equity line financing arrangement with Aspire Capital that we have in place.
ATM Offering
On June 11, 2015, the Company entered into an at-the-market issuance (“ATM”) sales agreement with MLV & Co. LLC ("MLV"), pursuant to which the Company may issue and sell shares of its common stock from time to time through MLV as the Company's sales agent. On September 1, 2015, MLV was acquired by FBR & Co. The issuance and sale of shares by the Company under the sales agreement are registered shares under the Company's shelf registration statement on Form S-3, as filed with the Securities and Exchange Commission on June 11, 2015 and declared effective by the Securities and Exchange Commission. The Company registered the sale of up to $5.8 million of common stock under the ATM sales agreement. There have been approximately 2.5 million shares sold for total gross proceeds of approximately $2.8 million through the ATM for the three month period ended March 31, 2017. There have been approximately 1.9 million shares sold for total gross proceeds of approximately $2.6 million through the ATM for the twelve month period ended December 31, 2016.
Outstanding Warrants
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Issued to Investors on July 28, 2010, entitling the holders to purchase 207,000 common shares in the Company at an exercise price of $45.00 per common share up to and including July 27, 2017. At March 31, 2017 and December 31, 2016, the fair market value of these warrants was not significant.
|
|
|
207,000
|
|
|
|
207,000
|
|
|
|
|
|
|
|
|
|
|
Issued to Investors on October 25, 2013, entitling the holders to purchase 250,000 common shares in the Company at an exercise price of $11.50 per common share up to and including April 24, 2021. In 2016, 59,450 of these warrants were exchanged for common stock, and all remaining warrant holders agreed to new warrant terms in exchange for a reduced exercise price of $6.25 per share.
|
|
|
163,986
|
|
|
|
163,986
|
|
|
|
|
|
|
|
|
|
|
Issued to Investors on November 17, 2014, entitling the holders to purchase 546,919 common shares in the Company at an exercise price of $11.55 per common share up to and including May 16, 2022. On June 30, 2016, the warrant holders agreed to new warrant terms in exchange for a reduced exercise price of $6.25 per share.
|
|
|
546,919
|
|
|
|
546,919
|
|
|
|
|
|
|
|
|
|
|
Issued to an Investor on June 28, 2016, entitling the holders to purchase 295,267 common shares in the Company at an exercise price of $0.05 per common share (pre-funded) up to and including June 27, 2021.
|
|
|
295,267
|
|
|
|
295,267
|
|
|
|
|
|
|
|
|
|
|
Issued to an investor on August 10, 2016, entitling the holders to purchase 500,000 common shares in the Company at an exercise price of price of $0.01 per share, up to and including December 31, 2019.
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,713,172
|
|
|
|
1,713,172
|
|
These outstanding warrants were reported in the equity section of our balance sheet.
Stock-based Compensation – Stock Options and Restricted Stock
Stock Plan
The Company held its Annual Meeting on May 12, 2016 and the stockholders voted on the approval of an amendment to the 2015 Equity Incentive Plan to increase the number of shares authorized for issuance thereunder by 800,000 shares to 1,400,000 shares.
On March 25, 2015, the Compensation Committee and Board of Directors approved the 2015 Equity Incentive Plan (the “Plan”) to authorize grants of (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards to the employees, consultants, and directors of the Company. The Plan authorizes a total of 1,400,000 shares to be available for grant under the Plan. The Plan became effective upon ratification by the shareholders of the Company at the shareholders’ annual meeting on July 14, 2015.
Total stock options outstanding at March 31, 2017 and December 31, 2016, under the 2006 Stock Plan and 2015 Equity Incentive Plan were 2,172,247 and 2,172,581 of which 1,721,771 and 1,722,105 of these options were vested at March 31, 2017 and December 31, 2016, respectively. Stock based compensation was approximately $0.2 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively.
2016 Non-Qualified Option Grants
On November 9, 2016, the Board of Directors granted non-qualified stock options relating to approximately 670,000 shares under the 2015 Equity Incentive Plan to employees and consultants of the Company. These stock options were granted by the Board of Directors upon recommendation by the Compensation Committee and vested immediately, with a strike price of $1.54, which was the closing price of the Company’s stock on November 9, 2016. These options have a 10 year contractual term, with a fair value of $1.05 per option and an expected term of 5 years. Approximately 52% of these stock options are contingent upon the Company receiving shareholder approval at the 2017 Shareholders’ Annual Meeting, to increase the number of underlying shares available to be issued under the 2015 Equity Incentive Plan.
Stock option transactions to the employees, directors and consultants are summarized as follows for the three months ended March 31, 2017:
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
|
Options
|
|
|
Exercise
|
|
|
Grant Date
|
|
|
|
Outstanding
|
|
|
Price
|
|
|
Fair Value
|
|
Beginning of the period
|
|
|
2,172,581
|
|
|
$
|
6.70
|
|
|
$
|
4.83
|
|
Granted
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
Exercised
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
Forfeited
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
Expired
|
|
|
(334
|
)
|
|
|
49.50
|
|
|
|
34.80
|
|
End of the period
|
|
|
2,172,247
|
|
|
$
|
6.69
|
|
|
$
|
4.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable
|
|
|
1,721,771
|
|
|
$
|
7.03
|
|
|
$
|
5.15
|
|
A summary of the status of the Company’s non-vested shares as of March 31, 2017 and December 31, 2016, and changes during the three months ended March 31, 2017 and the year ended December 31, 2016, is presented below:
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Average Fair
|
|
|
Weighted
|
|
|
|
|
|
|
Value
|
|
|
Average
|
|
|
|
Shares
|
|
|
Grant Date
|
|
|
Exercise Price
|
|
Non-vested Shares
|
|
|
|
|
|
|
|
|
|
Non-vested - December 31, 2015
|
|
|
359,001
|
|
|
$
|
4.55
|
|
|
$
|
6.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,210,467
|
|
|
$
|
1.71
|
|
|
$
|
3.02
|
|
Vested
|
|
|
(1,118,992
|
)
|
|
|
1.81
|
|
|
|
3.19
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non-vested - December 31, 2016
|
|
|
450,476
|
|
|
$
|
3.60
|
|
|
$
|
5.40
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Vested
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non-vested - March 31, 2017
|
|
|
450,476
|
|
|
$
|
3.60
|
|
|
$
|
5.40
|
|
As of March 31, 2017, there was approximately $1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a weighted-average period of 1.50 years. There was substantially no intrinsic value for the stock options outstanding at March 31, 2017 and December 31, 2016.
The above tables include options issued and outstanding as of March 31, 2017 and December 31, 2016, as follows:
i)
|
A total of 51,051 non-qualified 10 year options have been issued, and are outstanding, to advisory board members at exercise prices of $22.50 to $72.00 per share.
|
|
|
ii)
|
A total of 1,782,329 non-qualified 5-10 year options have been issued, and are outstanding, to our directors, officers, and employees at exercise prices of $1.14 to $52.50 per share. From this total, 595,146 options are outstanding to the Chief Executive Officer who is also a director, with remaining contractual lives of 0.7 years to 9.6 years. All other options issued to directors, officers, and employees have a remaining contractual life ranging from 0.3 years to 9.8 years.
|
|
|
iii)
|
A total of 338,867 non-qualified 3-10 year options have been issued, and are outstanding, to our consultants at exercise prices of $1.54 to $52.50 per share.
|
No stock options have been awarded in 2017. Weighted average assumptions used in the Black Scholes option-pricing model for the year ended December 31, 2016, were as follows:
|
|
Year ended
|
|
|
|
December 31,
|
|
|
|
2016
|
|
|
|
|
|
Average risk-free interest rate
|
|
|
1.57
|
%
|
Average expected life- years
|
|
|
5.05
|
|
Expected volatility
|
|
|
87.74
|
%
|
Expected dividends
|
|
|
0.0
|
|
Stock-based compensation expense includes the expense related to (1) grants of stock options, (2) grants of restricted stock, (3) stock issued as consideration for some of the services provided by our directors and strategic advisory council members, and (4) stock issued in lieu of cash to pay bonuses to our employees and contractors. Grants of stock options and restricted stock are awarded to our employees, directors, consultants, and board members and we recognize the fair value of these awards ratably as they are earned. The expense related to payments in stock for services is recognized as the services are provided.
Stock-based compensation expense is recorded under the financial statement captions cost of services provided, general and administrative expenses and research and development expenses in the accompanying consolidated statements of operations. Related income tax benefits were not recognized, as we incurred a tax loss for both periods.
Note 7. Business Segment Results
We have two principal business segments, which are (1) our technology business and (2) our consulting services business. These business segments were determined based on the nature of the operations and the services offered. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief decision-makers, in deciding how to allocate resources and in assessing performance. Our Chief Executive Officer and Chief Financial Officer have been identified as the chief operating decision makers. Our chief operating decision makers direct the allocation of resources to operating segments based on the profitability, the cash flows, and the business plans of each respective segment.
BUSINESS SEGMENT RESULTS - THREE MONTHS ENDED MARCH 31, 2017 AND 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
Technology
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
$
|
135,485
|
|
|
$
|
166,546
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
135,485
|
|
|
$
|
166,546
|
|
Segment Profit - Pre Tax
|
|
$
|
(68,361
|
)
|
|
$
|
(47,608
|
)
|
|
$
|
(464,343
|
)
|
|
$
|
(586,250
|
)
|
|
$
|
(1,212,604
|
)
|
|
$
|
299,153
|
|
|
$
|
(1,745,308
|
)
|
|
$
|
(334,705
|
)
|
Total Assets
|
|
$
|
87,614
|
|
|
$
|
153,619
|
|
|
$
|
1,203,354
|
|
|
$
|
1,012,193
|
|
|
$
|
6,844,988
|
|
|
$
|
1,553,564
|
|
|
$
|
8,135,956
|
|
|
$
|
2,719,376
|
|
Note 8. Subsequent Events
Equity Transactions
From April 1, 2017 to May 9, 2017, we received additional gross proceeds of approximately $0.2 million under the ATM agreement with MLV from the sale of approximately 0.2 million shares of our common stock.
FORWARD-LOOKING STATEMENTS
In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. We use words such as “believe”, “expect”, “anticipate”, “project”, “target”, “plan”, “optimistic”, “intend”, “aim”, “will”, or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, (1) those concerning market and business segment growth, demand and acceptance of our nuclear energy consulting services and nuclear fuel technology business, (2) any projections of sales, earnings, revenue, margins or other financial items, (3) any statements of the plans, strategies and objectives of management for future operations, (4) any statements regarding future economic conditions or performance, (5) uncertainties related to conducting business in foreign countries, (6) any statements about future financings and liquidity, as well as (7) all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions that if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties, among others, include:
|
·
|
our ability to commercialize our nuclear fuel technology,
|
|
·
|
our ability to attract new customers,
|
|
·
|
our ability to employ and retain qualified employees and consultants that have experience in the nuclear industry,
|
|
·
|
competition and competitive factors in the markets in which we compete,
|
|
·
|
public perception of nuclear energy generally,
|
|
·
|
general economic and business conditions in the local economies in which we regularly conduct business, which can affect demand for the Company’s services,
|
|
·
|
changes in laws, rules and regulations governing our business,
|
|
·
|
development and utilization of our intellectual property,
|
|
·
|
potential and contingent liabilities, and
|
|
·
|
the risks identified in Item 1A. “Risk Factors” included herein and in our Form 10-K filing.
|
Most of these factors are beyond our ability to predict or control. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Forward-looking statements speak only as of the date on which they are made. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.