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Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations | 12 Months Ended
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Dec. 31, 2024
Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations |
Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations | Note 1. Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations The Company was formed on October 6, 2006, when Thorium Power, Ltd., which was incorporated in the state of Nevada on February 2, 1999, merged with Thorium Power, Inc. (TPI), which was incorporated in the state of Delaware on January 8, 1992. On September 29, 2009, the Company changed its name from Thorium Power, Ltd. to Lightbridge Corporation and began its focus on developing and commercializing metallic nuclear fuels. The Company is a nuclear fuel technology company developing its nuclear fuel. The Company views its operations and manages its business as one business segment, which is the development and commercialization of its nuclear fuel. Basis of Consolidation These consolidated financial statements included the accounts of Lightbridge, a Nevada corporation, and the Company’s wholly-owned subsidiaries, TPI, a Delaware corporation, and Lightbridge International Holding LLC, a Delaware limited liability company. These wholly-owned subsidiaries were inactive. All intercompany transactions and balances have been eliminated in consolidation. Basis of Presentation and Use of Estimates and Assumptions The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America (GAAP), requires management to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions were periodically reviewed and the effects of revisions were reflected in the consolidated financial statements in the period they are determined to be necessary. There were no significant estimates at December 31, 2024 and 2023. Fair Value of Financial Instruments The Company determined fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between unaffiliated market participants at the measurement date. Accounting Standards Codification (ASC), Fair Value Measurement (ASC 820), established a fair value hierarchy that prioritizes the inputs used to measure fair value. Assets and liabilities measured at fair value were categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The hierarchy gives the highest priority to active markets for identical assets and liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The categorization of financial instruments within the valuation hierarchy was based on the lowest level of input that is significant to the fair value measurement. The three levels of the fair value hierarchy were as follows: Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices that were observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that were not active and inputs other than quoted prices that were observable for the asset or liability; and Level 3 - Unobservable inputs that reflect management’s assumptions. For disclosure purposes, assets and liabilities were classified in their entirety in the fair value hierarchy level based on the lowest level of input that was significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement required judgment and may have affected the placement within the fair value hierarchy levels. The Company’s financial instruments consisted principally of cash and cash equivalents, accounts payable and accrued liabilities. The carrying amounts of our financial instruments are considered to be a Level 1 measurement, because of the short-term nature of those instruments. The following table summarize the valuation of the Company’s financial instruments that fall within the fair value hierarchy (in millions) at December 31, 2024:
|  | Level I |  |  | Level II |  |  | Level III |
Cash and cash equivalents |  | $ | 40.0 |  |  | $ | — |  |  | $ | — |
Accounts payable and accrued liabilities |  | $ | 0.4 |  |  | $ | — |  |  | $ | — |
The following table summarize the valuation of the Company’s financial instruments that fall within the fair value hierarchy (in millions) at December 31, 2023:
|  | Level I |  |  | Level II |  |  | Level III |
Cash and cash equivalents |  | $ | 28.6 |  |  | $ | — |  |  | $ | — |
Accounts payable and accrued liabilities |  | $ | 0.5 |  |  | $ | — |  |  | $ | — |
Certain Risks and Uncertainties The Company will need additional funding and/or in-kind support via a combination of strategic alliances, government grants, further offerings of equity securities, or an offering of debt securities in order to support its future research and development (R&D) activities required to further enhance and complete the development and commercialization of its fuel products. There can be no assurance that the Company will be able to successfully continue to conduct its operations if there is a lack of financial resources available in the future to continue its fuel development activities, and a failure to do so would have a material adverse effect on the Company’s future R&D activities, financial position, results of operations, and cash flows. Also, the success of the Company’s operations will be subject to other numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, contingent liabilities, potential competition with other nuclear fuel developers, including those entities developing accident tolerant fuels (ATFs), changes in government regulations, risks related to the R&D of our nuclear fuel, regulatory approval of the Company’s fuel, support for nuclear power, changes in accounting and taxation standards, inability to achieve overall short-term and long-term R&D milestones toward commercialization, future impairment charges to the Company’s assets, and global or regional catastrophic events. The Company may also be subject to various additional political, economic, and other uncertainties. The Company is engaged in significant research and development (R&D) activities to advance its nuclear fuel technology at Idaho National Laboratory (INL). For the year ended December 31, 2024, R&D expenses associated with activities conducted at the INL accounted for approximately 37% of the Company’s total R&D expenditure. The Company currently relies on INL for developing, testing and evaluating its nuclear fuel. Any disruption in access to INL’s resources, including changes in government policies, facility downtime, regulatory constraints, or unforeseen operational challenges could have a material adverse effect on the Company’s current ability to advance its R&D activities. Cash and Cash Equivalents The Company may at times invest its excess cash in interest bearing accounts and U.S. treasury bills. It classified all highly liquid investments with original stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months as marketable securities. The Company held cash balances in excess of the federally insured limits of $250,000. The Company deemed this credit risk not to be significant as cash was held by two prominent financial institutions in 2024 and 2023. Contributed Services - Research and Development The Company was awarded a grant in 2021 from the United States Department of Energy (DOE), which represented contributed services to further the Company’s R&D activities. The Company concluded that its government grants were not within the scope of ASC Topic 606, Revenue Recognition, as they did not meet the definition of a contract with a customer. Additionally, the Company concluded that the grants met the definition of a contribution, as the grants were a non-reciprocal transaction. As such, the Company determined that Subtopic 958-605, Not-for-Profit-Entities-Revenue Recognition (Subtopic 958-605), applied for these contributed services, even though the Company is a business entity, as guidance in the contributions received subsections of Subtopic 958-605 applies to all entities (not-for-profits and business entities). Subtopic 958-605 required nonfinancial assets, which includes services, such as the R&D services provided under the Gateway for Accelerated Innovation in Nuclear (GAIN) vouchers, (totaled $0 and $31,000 for 2024 and 2023, respectively) be shown on a gross method at the fair value of the services contributed, with contributed services - research and development shown as other operating income and the related costs as a charge to R&D expense, rather than depicting contributed services - research and development as a reduction of R&D expense. The fair value of contributed services was determined by the cost of professional time and materials, which were charged by the subcontractor who fulfilled the services contributed under the grant award. The principal market used to arrive at fair value is the market in which the Company operates. Trademarks Costs for filing and legal fees for trademark applications were capitalized. Trademarks were considered intangible assets with an indefinite useful life and therefore were not amortized. The Company performed an impairment test in the fourth quarter or more frequently if events or circumstances indicate that an impairment loss may have been incurred. For the fourth quarter 2024 test, the Company applied the accounting guidance which allowed the company to first assess qualitative factors to determine the extent of additional quantitative analysis, if any, that may have required to test trademarks for impairment. Based on the qualitative assessments performed, the company concluded that it was more likely than not that the fair value of the Trademarks substantially exceeded its carrying value and therefore, further quantitative analysis was not required. As a result, no impairment was recorded. As of December 31, 2024 and 2023, the carrying value of trademarks was approximately $0.1 million. Leases The Company recognizes operating lease right of use assets and liabilities at commencement date based on the present value of the future minimum lease payments over the lease term. Leases with an initial term of 12 months or less were not recorded on the consolidated balance sheet in accordance with the short-term lease recognition exemption. The Company applied the practical expedient to not separate non-lease components for all leases that qualified. Lease expense was recognized on a straight-line basis over the lease term. The Company had only one lease for office rent and the lease was for a term of 12 months without renewal options. Income Taxes Income taxes were accounted for using the asset and liability method. Deferred tax assets and liabilities were recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of assets and liabilities and their respective tax bases, operating loss carryforwards, and tax credit carryforwards. Deferred tax assets and liabilities were measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences were expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates was recognized in income in the period that included the enactment date. In accordance ASC 740, Accounting for Income Taxes, the Company reflected in the financial statements the benefit of positions taken in a previously filed tax return or expected to be taken in a future tax return only when it was considered ‘more-likely-than-not’ that the position taken will be sustained on its technical merits by a taxing authority upon examination. As of December 31, 2024 and 2023, the Company had no unrecognized income tax benefits and correspondingly there was no impact on the Company’s effective income tax rate associated with these items. The Company’s policy for recording interest and penalties relating to uncertain income tax positions was to record them as a component of income tax expense in the accompanying consolidated statements of operations. As of December 31, 2024 and 2023, the Company had no such accruals. Research and Development Expenses Research and development expenses were expensed when incurred. Research and development expenses consisted primarily of wages and related payroll benefits, non-cash stock-based compensation, materials, R&D modeling computer hardware and software, testing, consulting, and other third-party research and development services, related to the development of the Company’s nuclear fuel. Advanced payments for goods or services for future research and development activities were deferred and expensed as the goods were delivered or the related services were performed. Stock-Based Compensation The stock-based compensation expense incurred by the Company for employees and directors in connection with its equity incentive plan was based on the employee model of ASC 718, Compensation—Stock Compensation, and the fair value of any stock options granted was measured at the grant date. Options or common stock granted to consultants for services performed were accounted for in the same manner as options and stock issued to employees for services. Awards with service-based vesting conditions only were expensed on a straight-line basis over the requisite service period of the award. The Company used a Black-Scholes pricing model to determine the fair value of stock options on the measurement date of the grant for service-based vesting conditions. Shares that were issued to employees upon exercise of the stock options or vesting of Restricted Stock Units (RSUs) or Restricted Stock Awards (RSAs) grants were issued net of the number of shares with a fair value equal to the amount required to satisfy applicable tax withholding requirements. As a result, the actual number of shares issued with tax withholding obligations were fewer than the actual number of shares exercised under the stock option or on the vesting dates of RSU or RSA grants. The Company granted RSAs, which was an award of common shares that have full voting rights and dividend rights (with dividends paid upon vesting of the RSA) but are restricted regarding the sale or transfer before vesting. These restrictions lapse as the award vests. The shares were forfeited and returned to the Company if they did not vest. The RSAs were included in common stock issued and outstanding and were considered contingently issuable in the calculation of weighted-average shares outstanding for purposes of calculating earnings per share. The consolidated statement of changes in stockholders’ equity showed the initial grant of RSAs as a reclassification from additional paid-in capital to common stock, with any compensation expense related to the RSAs included in stock-based compensation. The cash flow impact is reflected within financing activities in the consolidated statements of cash flows. The number of RSAs to be granted are determined by the closing stock price on the date of the RSAs grant. Under ASC 718, the Company elected to account for forfeitures as they occur and recorded compensation cost assuming all option holders have completed the requisite service period. If an employee forfeited an award because they failed to complete the requisite service period, the Company reversed compensation cost previously recognized in the period the award was forfeited. Thus, the total cumulative amount of compensation cost recognized for an award was the same regardless of whether the Company elected to estimate forfeitures or accounted for forfeitures as they occurred. Comprehensive Loss Comprehensive loss was defined as a change in equity of a business enterprise during a period resulting from transactions from non-owner sources. There have been no items qualifying as other comprehensive loss and, therefore, for all periods presented, the Company's comprehensive loss was the same as its reported net loss. Recent Adopted Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which expanded on the required disclosure of incremental segment information. The new guidance was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this ASU on January 1, 2024. This ASU resulted in additional disclosures upon adoption. In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40), which simplified the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplified the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that required entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revised the scope exception from derivative accounting in Subtopic 815-40 for freestanding financial instruments and embedded features that were both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revised the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method. ASU 2020-06 was effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption was permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Adoption was either through a modified retrospective method or a full retrospective method of transition. The Company adopted this guidance on January 1, 2024 and the adoption did not have a material impact on its results of operations, financial position, and disclosures because the Company did not have any transactions or instruments to which this standard applied. If in the future the Company issued new convertible debt, warrants or other instruments, the standard may have a material effect, but it cannot be determined at this time. Recent Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which modified the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also required entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance was effective for annual periods beginning after December 15, 2024. Early adoption was permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application was permitted. The Company does not expect this guidance to have a material impact on its consolidated financial statements and related disclosures upon adoption. In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which required disclosure of certain costs and expenses on an interim and annual basis in the notes to the consolidated financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures. The Company has evaluated other recently issued, but not yet effective, accounting standards that have been issued or proposed by the FASB or other standards-setting bodies through the filing date of these consolidated financial statements and does not believe the future adoption of any such standards will have a material impact on the consolidated financial statements and related disclosures.

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