Investment in Joint Venture (Investee Losses in Excess of Investment)
|12 Months Ended|
Dec. 31, 2019
|Investment in Joint Venture (Investee Losses in Excess of Investment)|
|Note 3. Investment in Joint Venture (Investee Losses in Excess of Investment)||
Current Status of the Joint Venture
Pursuant to the Enfission operating agreement, both partners agreed that Enfission would serve as an exclusive vehicle to develop, license, and sell nuclear fuel assemblies based on Company-designed metallic fuel technology and other advanced nuclear fuel intellectual property licensed to Enfission by the Company and Framatome or their affiliates. The joint venture built upon the joint fuel development and regulatory licensing work under previously signed agreements initiated in March 2016.
On November 18, 2019, the Company delivered a notice of termination of the R&D Services Agreement to the Board of Directors of Enfission, dated November 14, 2017, by and among Framatome, Enfission and our Company (as amended by Amendment Number One, dated January 25, 2018, and Amendment Number Two, dated June 20, 2018, the “RDSA”), which, among other things, defined the terms and conditions for joint research and development activities among Framatome, Enfission, and our Company, thereby terminating the RDSA, effective immediately. On November 23, 2019, in connection with the termination of the RDSA, the Board of Directors and the management of Lightbridge determined that it is advisable and in the best interest of the Company and its shareholders to take the necessary steps to dissolve Enfission. Various corporate and operational matters relating to Enfission are governed pursuant to the Enfission Operating Agreement. The Company intends to take the necessary steps to dissolve the joint venture. Enfission is not conducting R&D services at December 31, 2019 and as of the date of this filing. Enfission’s Board of Directors has not approved a formal dissolution plan at December 31, 2019 or as of the date of this filing (see Note 11. Subsequent Events).
The Enfission operating agreement provided that Lightbridge and Framatome each hold 50% of the total issued Class A voting membership units of the joint venture.
The Company’s equity in losses in excess of its investment are accounted for under the equity method consisted of the following as of December 31, 2019 and 2018 (rounded in millions):
The Company invested approximately $9.2 million in Enfission and Framatome invested approximately $2.9 million of equity for the period from January 24, 2018 (date of inception of Enfission) to December 31, 2019. The cash balance in Enfission at December 31, 2019 was approximately $1.0 million. During the year ended December 31, 2019, Enfission incurred a loss of approximately $5.5 million, and accordingly, the Company recorded its share of the loss in investment in Enfission, in accordance with the provisions in the joint venture operating agreement, of approximately $3.3 million.
As of December 31, 2019, the Company’s total equity share of the joint venture accumulated losses is limited to the total equity contributions Lightbridge made since January 24, 2018 according to the Enfission joint-venture operating agreement. It stated that at no time during the term of the company or upon dissolution or liquidation of the company shall a member with a deficit balance in its capital account have any obligation to Enfission or to the other members of Enfission to restore such deficit capital balance, to the fullest extent permitted by applicable law and to the provisions of the joint venture operating agreement. The Company had not separately guaranteed any obligations of Enfission. The Company does not expect to provide additional equity contributions in 2020 nor for the foreseeable future until Enfission is dissolved.
Summarized balance sheet information for the Company’s equity method investee, Enfission, as of December 31, 2019 and 2018 is presented in the following table (rounded in millions):
Summarized statement of operations information for the Company’s equity method investee, Enfission, is presented in the following table for the year ended December 31, 2019 and for the period from January 24, 2018 (Date of Inception) to December 31, 2018 (rounded in millions):
As of December 31, 2019 and 2018, the total receivable due from Enfission was approximately $0.4 million and $0.1 million, respectively, which represents management and administrative services, consulting fees and reimbursable expenses Lightbridge charged to Enfission (see Note 10. Related Party Transactions). In January 2020, the Company received payment of the total receivable due from Enfission of $0.4 million.
Disputed Framatome Invoices
Included in the total liabilities of Enfission of $2.1 million above, are certain invoices for research and development work submitted by Framatome in 2019, totaling approximately $1.3 million at December 31, 2019. These invoices have been disputed and remain unpaid as of the date of this filing. There are various disagreements between Framatome and Lightbridge regarding these disputed Framatome invoices. It is expected that these disputes will be resolved through either further negotiations by the joint venture partners or in arbitration (see Note 11. Subsequent Events). The Company had not separately guaranteed any obligations of Enfission at December 31, 2019 and is not obligated under the joint venture operating agreement to fund its deficit capital account balance in Enfission.
The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef