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 Abenante, 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.ltbridge.com.

Joining us on the call today is Seth Grae, Chief Executive Officer, along with Larry Goldman, Chief Financial Officer; Sherrie Holloway, Accounting Manager; Andrey Mushakov, Executive Vice President for Nuclear Operations; and Jim Fornof, 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 Lightbridge's 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.

And with that, I would like to turn over the call to our first speaker, Seth Grae, Chief Executive Officer of Lightbridge.

Hello, 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 INL, performing under our funding voucher from the U.S. Department of Energy's gateway for accelerated innovation in nuclear, or GAIN, program.

As a brief reminder, we are designing an experiment for testing our fuel samples in the advanced test reactor at INL. 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 DOE awards this kind of funding in an amount over $500,000, as in this case, it is formally considered by DOE as "a case with a clear need and involving a truly exceptional technology or innovation." 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. U.S. 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 2 races, 1 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 within DOE 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 strengthen the strategic relationship between the buyer and seller countries.

Reactor orders establish about a 100-year relationship from first signing the contract to decommissioning the last plant from the initial contract. Of course, it also means large numbers of jobs and revenue and commerce for the country that gets the sale.

As we lose out to China or Russia in deploying nuclear power plants to countries that are important to the U.S., it 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's also a race to avoid increasing average global temperatures by 2050, while having the additional capacity to handle the world's energy demands while emitting less CO2 than is emitted today. This means that nuclear must be a growing part of the power generation mix, which presents a business opportunity for U.S.

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 Ralph Northam, 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 role in nuclear innovation, referencing "nuclear generation fuel technology" that makes the state a global leader in nuclear R&D and also recognize that "nuclear energy will play a vital role in achieving Virginia's goal to be carbon-free by 2050." 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 Lightbridge's 4 low helically twisted metallic fuel rods.

There are currently 24 reactors in South Korea that provide 1/3 of the country's electricity, making this an attractive potential market for our fuel, patenting 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.

Andrey?.

Thank you, Seth. As Seth mentioned, we are collaborating with Idaho National Laboratory on the GAIN Voucher project, the design and radiation test of the Lightbridge uranium zirconium fuel alloy.

DOE's GAIN Voucher program provides commercial support and access the world-class nuclear expertise as well as state-of-the-art facilities and capabilities available across the DOE complex. These expertise and facilities are indispensable to U.S. companies such as Lightbridge, developing new and advanced nuclear technologies.

As part of the GAIN project, we plan to benefit from new U.S. government support for advanced nuclear technology. Together with INL, we are exploring the application of INL's Fission Accelerated Steady-state Testing, or FAST, methodology to this experiment as a means of reducing the time and cost to achieve high burn-up in the fuel material.

Although the COVID-19 pandemic has disrupted the normal way of working for many American companies, Lightbridge and INL have maintained frequent communication to minimize the adverse impact on our project.

We anticipate some delay in the completion of the experiment design, but we do not expect to delay in the insertion and the radiation testing of the samples.

We believe demonstrating success in this initial project will position us well to seek further DOE funding opportunities and additional government support, which can further accelerate the development of our advanced fuel technology.

In parallel with our efforts under the GAIN Voucher, we expect to produce samples - sample coupons for the in-reactor experiment. Our goal is to have the sample coupons available for insertion in the advanced test reactor as soon as in 2022, after its planned maintenance outage is completed.

The actual experiment insertion date is subject to the final duration of the outage, the availability of testing positions in the reactor and INL's prior commitments for testing.

Once the required fuel burn-up is achieved in the reactor, we plan to perform postradiation examination of the coupons, which will provide data on the properties of the fuel material. As we look ahead, DOE and U.S.

National Labs have demonstrated significant progress in the area of accelerating fuel qualification, including developing methods to perform irrigation tests more quickly than ever before and then the development and use of advanced modeling and simulation capabilities, which enable faster validation of advanced fuel technologies.

We believe both areas can be beneficial to accelerating the demonstration of Lightbridge's fuel technologies, and will continue to work toward that end. Back to you, sir..

Well, thank you, Andrey. Now I'll turn the call over to Larry Goldman, Chief Financial Officer, to summarize the company's 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 will file with the SEC later today.

Regarding our Q3 financial as of September 30, 2020, we had $17.4 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 30, 2020, as compared to $18.1 million of working capital at December 31, 2019.

Total assets were $19.4 million and total liabilities were $1.8 million at September 30, 2020.

Total cash used in operating activities increased by approximately $1.5 million for the 9 months ended September 30, 2020, compared to the 9 months ended September 30, 2019, primarily due to an increase in G&A expenses relating to our arbitration, offset by a decrease in R&D expenses as a result of ending our R&D activities in the joint venture in 2019, and transitioning our R&D work to U.S.

National Labs in 2020. Cash used in investing activities decreased by approximately $3.6 million for the 9 months ended September 30, 2020, compared to the 9 months ended September 30, 2019, due to us terminating our equity contributions into the joint venture in late 2019.

Cash provided by financing activities increased by approximately $1.4 million for the 9 months ended September 30, 2020, compared to the 9 months ended September 30, 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 9 months ended September 30, 2020, as compared to $3.8 million of net proceeds for the 9 months ended September 30, 2019.

Due to the COVID-19 pandemic, we have taken the necessary steps earlier this year to reduce our expenses. And we anticipate preserving our cash runway to the end of calendar year 2021.

We will continue to strive to obtain additional DOE funding in the future either from their GAIN program or other funding opportunities made available within the DOE, with the primary goal of furthering our fuel development in 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 Sherrie Holloway, our Accounting Manager, who'll go over our P&L financial information for the third quarter of 2020..

Thank you, Larry. Net loss for the 3 months ended September 30, 2020, was $3.1 million compared to $2.4 million for the 3 months ended September 30, 2019, primarily due to these factors. Total R&D expenses were $261,000 in the third quarter of 2020 compared to $751,000 for the third quarter of 2019.

This decrease was primarily due to transitioning our R&D work from our joint venture to developing our new fuel 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.

G&A 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 and a net increase in employee compensation and employee benefits of approximately $0.1 million.

Net other operating loss was $0 for the third quarter of 2020 compared to $0.3 million for the third quarter of 2019. This decrease of $0.3 million was a result of the inactive status of the Enfission joint venture for the 3 months and 9 months ended September 30, 2020, and at December 31, 2019. Now over to you, Seth..

Thank you, Sherrie. And with that, we will go to the question-and-answer session. Thank you to everyone who has submitted questions.

Matt?.

Operator:.

Thank you, Seth. Our 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 Biden win? And how will the change to a Biden administration affect internal time lines for the GAIN Voucher project to proceed?.

Well, if there's a change in administration, I don't see a change in DOE support for Lightbridge.

I think there would likely be - even no matter of who wins the presidential race, a focus in federal spending on a big stimulus package and there would likely be budget cuts to other areas of the federal budget, and that could reduce projected DOE spending on some of the expensive, big new reactor projects.

But I don't see DOE reducing spending in the much less expensive 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 DOE 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 or 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 time lines on GAIN Voucher. No. I really don't think so. What we do is not political. And I think the clean energy and advanced nuclear technology have bipartisan support.

We've already had the GAIN program come into existence and fund us and others with a Congress that's divided, one part of Congress, the House, Democratically controlled, the other, the Senate Republican-controlled.

So I really don't see that changing, and I see both President Trump and former Vice President, Biden, in their position, supporting advanced nuclear energy technology. 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 ESG and impact investing.

Should these investors view nuclear as a clean technology? And can we expect Lightbridge to pursue these opportunities?.

Well, we'll start with ESG impacting investing within that. So ESG, environmental, social and governance, or corporate governance. On environmental, we're not a company with our own smoke stacks or something that needs to be cleaned up.

But what we are doing is developing the nuclear fuel technology, which I think can be among the most important and, in fact, necessary components of 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 it's consequential for meeting environmental goals. So I think investors looking for impact investing in the environmental area should look at Lightbridge. As for the social, we're a small company.

We do have internally and projecting externally some social statements and activities, we have a very important company statement and policy against racism. We're part of the gender champions in nuclear policy, particularly focusing on women participating and growing and important roles in nuclear and in technology and leadership positions.

And we're part of a corporate effort fighting opioid addiction. On governance, on corporate governance, the last part of ESG, I'd say that we're very clean. We're a NASDAQ-listed company. We have a very top-shelf financial auditor that helps guarantee that everything we say is accurate.

We have just as high level and high quality, a nuclear quality assurance program. So we're very clean. But of those areas for where investors are looking to move the needle in the U.S. and globally on ESG, 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 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 is 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's ongoing pursuit of advanced nuclear technologies will actually present benefits to Lightbridge? And 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, then use our fuel, opening, expanding markets for us.

We're already seeing some reactors around the world changing their fuel providers. So new reactors anywhere that could use our fuel could become potential market opportunities for us. I'd say China's and Russia's aggressive moves to deploy reactors in countries, particularly countries of strategic importance to the U.S.

is part of what's spurring 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 or Russia controlling the energy supply of those countries.

And in addition to the technology support, like the GAIN Voucher that Lightbridge has, we're seeing a lot of movement in financing at 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 exports, finance them like fuel from the U.S. And we do expect that Lightbridge will benefit ultimately 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 that's 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 very strongly protect our intellectual property with worldwide patenting, 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 we're very good about protecting ourselves in countries where they might deploy reactors. And from what we've heard and what we understand in communications and meetings with the U.S. government. The U.S. government is a very strong ally of U.S.

companies that deploy 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 of the obvious reasons, two 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 be accessed overseas and have it authorized for transfer overseas. And we and others in the industry are very careful and working 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 wouldn't want to be on the receiving end in another country of the U.S. government protecting that. And the second part is that Lightbridge and other nuclear companies that could help the U.S.

compete overseas, particularly against China and Russia, are increasingly being funded by the U.S. government for the purpose of the U.S. winning those exports and getting those jobs and getting that strategic benefit. And the U.S. government doesn't want to see that.

So Matt, I would just say that, as I mentioned on another call, I think we have a big friend in the U.S. government that would protect the patents that we've so carefully filed and maintained..

Thanks, Seth. That's all the questions we have..

Well, okay. 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@ltbridge.com. Stay safe and well. Goodbye..

This concludes today's conference call. Thank you all for participating. You may now disconnect..