SEC Company Response from LIGHTBRIDGE Corp (LTBR) (CIK 0001084554) (LTBR) — Jul 13, 2007
LIGHTBRIDGE Corp (LTBR) (CIK 0001084554)
Date: July 13, 2007 · CIK: 0001084554 · Accession: 0001144204-07-036500
AI Filing Summary & Sentiment
File numbers found in text: 000-28543, 333-135437
Referenced dates: June 15, 2007
Letter
Division of Corporation Finance File March 20, 2007 Commission File No. 000-28543 Form 10-QSB for the Fiscal Quarter Ended March 31, Commission File No. 000-28543
Dear Ms. Levy:
On behalf of Thorium Power, Ltd. (“Thorium Power” or the “Company”), we hereby submit Thorium Power’s responses to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter, dated June 15, 2007, providing the Staff’s comments with respect to the above referenced Post-Effective Amendment to a Registration Statement on Form SB-2 (the “Registration Statement”), Annual Report on Form 10-KSB (the “10-KSB”) and the Quarterly Report on Form 10-QSB (the “10-QSB”).
For the convenience of the Staff, each of the Staff’s comments is included and is followed by the corresponding response of the Company. Unless the context indicates otherwise, references in this letter to “we”, “us” and “our” refer to the Company on a consolidated basis.
Post-Effective Amendment on Form SB-2
General
1.
Please note that if a revision or additional disclosure in connection with our current review of your Form 10-KSB and Form 10-QSB is required, we would also expect a concurrent change be made in Post-Effective Amendment on Form SB-2, to the extent applicable. In addition, please be advised that you must clear all comments to the Forms 10-KSB and 10-QSB prior to acceleration of effectiveness on the Post-Effective Amendment.
COMPANY RESPONSE:
To the extent that revisions or additional disclosure were required in connection with the Staff’s review of our Exchange Act reports, we have made concurrent changes to the Registration Statement. We acknowledge that we must clear all comments on the reviewed Exchange Act reports prior to requesting acceleration for the Registration Statement.
Undertakings, page l
2.
Please provide the undertaking required by Item 512(g)(2) of Regulation S-B.
COMPANY RESPONSE:
We have provided the information required by Item 512(g)(2) of Regulation S-B in Post-Effective Amendment No. 2 to the SB-2.
Signature Page
3.
Form SB-2 must be signed by your Controller or Principal Accounting Officer. Please provide the proper signatures in your next amendment.
COMPANY RESPONSE:
Our Acting Chief Financial Officer has signed Post-Effective Amendment No. 2 to the SB-2.
Form 10-KSB for the Fiscal Year Ended December 31, 2006
Description of Business, page 3
4.
We note your disclosures of several statements, including the following:
• page 5, sixth paragraph: “. . .these companies will be our competitors... however they will also be potential licensees of our fuel designs and may fabricate nuclear fuels using our fuel design technology”
• page 6, second paragraph: “We expect that our thorium/reactor grade plutonium disposing fuel will be less expensive compared to MOX or conventional uranium fuel, assuming that the separated reactor-grade plutonium is available to us at no cost”
• page F-10 third paragraph: “Our nuclear fuel process is dependent on the ability of suppliers of the mineral thorium, to provide it to our future customers on a timely basis and also on favorable terms”
Please expand your disclosures to discuss your basis for making these and similar statements appearing elsewhere in the filing, specifically as they pertain to your expectations about who will be your customers and competitors, and assumptions about contractual terms and the costs of obtaining materials.
The extent of your progress in negotiating these arrangements and elevating your competitive stature to the level suggested in the disclosure should be clear.
COMPANY RESPONSE:
We have expanded our disclosure in accordance with the Staff’s comments. We have indicated throughout the new disclosure that the assertions are based upon our belief and understanding of the industry in which we operate. More specifically:
(1)
We have revised the section located on page 5 of the 10-KSB to clarify that we do not intend to directly compete with the entities identified, which are the four primary entities that account for the fabrication of a majority of the world’s nuclear fuel, in terms of fabrication of nuclear fuels. We plan to partner with one or more of these entities and license our nuclear fuel designs so that the entities may fabricate and sell our thorium-based nuclear fuel designs. At the same time, however, these same entities may be competitors if that they design and fabricate their own uranium-based nuclear fuel designs for use in the same reactors for which our thorium-based fuel designs would be used.
(2)
We have revised the section located on page 6 of the 10-KSB to explain our basis for believing that the fabrication of thorium/reactor grade plutonium disposing fuel will be less expensive than MOX conventional uranium fuel.
(3)
We have removed the third paragraph on page F-10 of the financial statements contained in the 10-KSB. It is unnecessary for this statement to be included in the financial statements. Instead we have moved this discussion to the section “Sources and Availability of Raw Materials” on page 8 of the 10-KSB, and revised it to clearly explain the contracting process for obtaining materials for the fabrication of nuclear fuels.
Financial Statements
Report of Independent Registered Public Accounting Firm, page F-2
5.
We note that language in the report issued by your current auditors, Child, Van Wagoner & Bradshaw, PLLC indicates that they audited your financial statements for the period from January 1, 2002 to December 31, 2006. However, you have not presented financial statements for this period alone. We see that your auditors also state that they did not audit your financial statements covering the period from January 8, 1992 (date of inception) to December 31, 2001 as those statements were audited by other auditors.
If your current auditors are to make reference to the report of the other auditors, to indicate a division of responsibility, they would opine on your financial statements for the entire period, from January 8, 1992 (date of inception) to December 31, 2006, with an expression of reliance on the work of the other auditors in the introductory, scope and opinion, paragraphs, while also indicating the magnitude of the portion of the financial statements audited by the other auditor, following the guidance in AU Sections 543.06 through 543.09.
COMPANY RESPONSE:
The current auditors will revise their audit report to only include the periods ending December 31, 2006 and 2005. All columns in the financial statements, showing cumulative amounts from January 8, 1992 (Inception) from December 31, 2006, including the periods January 8, 1992 (Inception) from December 31, 2004 shown in the restated statement of stockholders deficiency will be marked unaudited.
6.
Please include the audit report from your prior auditors in the body of your financial statements, immediately following the audit report from your current auditors, instead of as an exhibit to your filing.
If you include the audit report of your prior auditors in your filing, confirm for us that you have obtained permission and a reissuance of the report from your prior auditors. If you are unable to obtain permission and reissuance, other arrangements will need to be made; please advise us of any difficulties you have in this regard. Your prior auditors can refer to AU Sections 508.70 through 508.73 for further guidance on report reissuance.
COMPANY RESPONSE:
As discussed with the Staff, due to the fact that the prior periods audited by the prior auditor, were for periods dating back to 2001, it is now difficult to obtain this consent. It has been mentioned to us by the Staff that instead of obtaining this consent from the prior auditor, the company is granted permission and will now designate all cumulative amounts shown from January 8, 1992 (Inception) from December 31, 2006 as unaudited in the restated financial statements.
Consolidated Statements of Cash Flows page F-S
7.
Ordinarily share issue costs are recorded as an adjustment to offset offering proceeds, in equity, except when associated with shares issued in a reverse merger recapitalization, in which case the costs recorded against equity should be limited to the amount of cash received. Tell us why you report the item labeled “capitalization of share issue costs” as an adjustment to your fiscal year 2006 net loss, suggesting this item impacted your results of operations for the period, and why your $441,553 adjustment was added to, instead of subtracted from your net loss. Please include details about the share issuance and nature of costs incurred (e.g. transaction dates, number of shares, proceeds, and the amounts and form of consideration representing share issuance costs).
COMPANY RESPONSE:
We have reviewed the Staff’s comment and have found that, in error, we had classified the costs incurred to issue stock in the reverse merger as an operating activity in the statement of cash flows, instead as reporting the $441,553 as a separate line item, “disbursements - share issue costs” reported as a financing activity in accordance with FAS#95, Paragraph 19(a). We have reclassified that $441,553 use of funds from operating activities section of the cash flows and reported that amount in the financing activities section of the cash flows. This changed the total cash that was reported as cash used in operating activities for the year ended December 31, 2006 from $3,746,188 to $3,304,635 and effected a corresponding decrease in the cash reported as provided by financing activities from $14,691,305 to 14,249,752. Changes were made to the cumulative column in the statement of Cash Flows as well for these sections of the cash flows as well.
The cash received in the reverse merger was $12,742,408, which is in excess of the cash paid for the stock issue costs in the reverse merger recapitalization of $441,553. The $441,553 stock issue costs represented legal fees from two law firms that were engaged to prepare the S-4 registration statements and the SB-2 registration statements, both registration statements filed in connection with the reverse merger of Thorium Power Ltd. and Thorium Power Inc. that occurred on October 6, 2006. The transaction dates, number of shares and proceeds were reported to the SEC in those respective Registration Statements relating to the merger.
Consolidated Statements of Chan in Stockholders’ Deficiency pa F-6
8.
Please revise your statements to show the effects of exchanging shares in your reverse merger on a retroactive basis. Share activity of the accounting acquirer in a reverse merger should be recast using the ratio of shares issued by the legal acquirer in the reverse merger over shares of the accounting acquirer that were outstanding immediately prior to the exchange, similar to a stock split
This should render the duplicative common share columns that you include unnecessary. After recasting, all share activity immediately before the transaction should sum to equal the number of shares issued by the accounting target. This should be followed by an entry showing the number of shares of the accounting target that were outstanding immediately before the event, along with the net assets or liabilities of that entity received by the accounting acquirer. Revise your disclosures on page F-11 as necessary to clarify how the share counts, ownership percentage and exchange ratio are represented in your presentation.
You may refer to the guidance in Section 1.F of Division of Corporation Finance:
Frequently Requested Accounting and Financial Reporting Interpretations and Guidance, located on our website at the following address.
http://www.sec. tzov/divisi.ons/corDfin/szuidance/cfactfap.htm#P1 62 22074
Please note the reference on our website to guidance issued by the Emerging Issues Committee of the Canadian Institute of Chartered Accountants, which we believe is compatible with U.S. GAAP in this area, and is available in EIC 10.
COMPANY RESPONS
Show Raw Text
CORRESP
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filename1.htm
THORIUM
POWER, LTD.
8300
Greensboro Drive, Suite 800
McLean,
VA 22102
(800)
685-8082
July
13,
2007
Donna
Levy
Division
of Corporation Finance
U.S.
Securities and Exchange Commission
100
F
Street, NE
Washington,
DC 20549
Re:
Thorium
Power, Ltd.
Post-Effective Amendment to Registration
Statement on Form SB-2
Filed May 30,
2007
Commission
File No. 333-135437
Form
10-KSB for the Fiscal Year Ended December 31,
2006
File
March 20, 2007
Commission
File No. 000-28543
Form
10-QSB for the Fiscal Quarter Ended March 31,
2007
Commission
File No. 000-28543
Dear
Ms.
Levy:
On
behalf
of Thorium Power, Ltd. (“Thorium
Power”
or
the
“Company”),
we
hereby submit Thorium Power’s responses to the comments of the staff (the
“Staff”)
of the
Securities and Exchange Commission (the “Commission”)
set
forth in the Staff’s letter, dated June 15, 2007, providing the Staff’s comments
with respect to the above referenced Post-Effective Amendment to a Registration
Statement on Form SB-2 (the “Registration
Statement”),
Annual Report on Form 10-KSB (the “10-KSB”)
and
the Quarterly Report on Form 10-QSB (the “10-QSB”).
For
the
convenience of the Staff, each of the Staff’s comments is included and is
followed by the corresponding response of the Company. Unless the context
indicates otherwise, references in this letter to “we”, “us” and “our” refer to
the Company on a consolidated basis.
Post-Effective
Amendment on Form SB-2
General
1.
Please
note that if a revision or additional disclosure in connection with
our
current review of your Form 10-KSB and Form 10-QSB is required, we
would
also expect a concurrent change be made in Post-Effective Amendment
on
Form SB-2, to the extent applicable. In addition, please be advised
that
you must clear all comments to the Forms 10-KSB and 10-QSB prior
to
acceleration of effectiveness on the Post-Effective
Amendment.
COMPANY
RESPONSE:
To
the extent that revisions or additional disclosure were required in connection
with the Staff’s review of our Exchange Act reports, we have made concurrent
changes to the Registration Statement. We acknowledge that we must clear all
comments on the reviewed Exchange Act reports prior to requesting acceleration
for the Registration Statement.
Undertakings,
page l
2.
Please
provide the undertaking required by Item 512(g)(2) of Regulation
S-B.
COMPANY
RESPONSE:
We
have provided the information required by Item 512(g)(2) of Regulation S-B
in
Post-Effective Amendment No. 2 to the SB-2.
Signature
Page
3.
Form
SB-2 must be signed by your Controller or Principal Accounting Officer.
Please provide the proper signatures in your next
amendment.
COMPANY
RESPONSE:
Our
Acting Chief Financial Officer has signed Post-Effective Amendment No. 2 to
the
SB-2.
Form
10-KSB for the Fiscal Year Ended December 31, 2006
Description
of Business, page 3
4.
We
note your disclosures of several statements, including the
following:
•
page
5,
sixth paragraph: “. . .these companies will be our competitors... however they
will also be potential licensees of our fuel designs and may fabricate nuclear
fuels using our fuel design technology”
•
page
6,
second paragraph: “We expect that our thorium/reactor grade plutonium disposing
fuel will be less expensive compared to MOX or conventional uranium fuel,
assuming that the separated reactor-grade plutonium is available to us at no
cost”
2
•
page
F-10 third paragraph: “Our nuclear fuel process is dependent on the ability of
suppliers of the mineral thorium, to provide it to our future customers on
a
timely basis and also on favorable terms”
Please
expand your disclosures to discuss your basis for making these and similar
statements appearing elsewhere in the filing, specifically as they pertain
to
your expectations about who will be your customers and competitors, and
assumptions about contractual terms and the costs of obtaining
materials.
The
extent of your progress in negotiating these arrangements and elevating your
competitive stature to the level suggested in the disclosure should be
clear.
COMPANY
RESPONSE:
We
have expanded our disclosure in accordance with the Staff’s comments. We have
indicated throughout the new disclosure that the assertions are based upon
our
belief and understanding of the industry in which we operate. More
specifically:
(1)
We
have revised the section located on page 5 of the 10-KSB to clarify
that
we do not intend to directly compete with the entities identified,
which
are the four primary entities that account for the fabrication of a
majority of the world’s nuclear fuel, in terms of fabrication of nuclear
fuels. We plan to partner with one or more of these entities and license
our nuclear fuel designs so that the entities may fabricate and sell
our
thorium-based nuclear fuel designs. At the same time, however, these
same
entities may be competitors if that they design and fabricate their
own
uranium-based nuclear fuel designs for use in the same reactors for
which
our thorium-based fuel designs would be
used.
(2)
We
have revised the section located on page 6 of the 10-KSB to explain
our
basis for believing that the fabrication of thorium/reactor grade
plutonium disposing fuel will be less expensive than MOX conventional
uranium fuel.
(3)
We
have removed the third paragraph on page F-10 of the financial statements
contained in the 10-KSB. It is unnecessary for this statement to be
included in the financial statements. Instead we have moved this
discussion to the section “Sources and Availability of Raw Materials” on
page 8 of the 10-KSB, and revised it to clearly explain the contracting
process for obtaining materials for the fabrication of nuclear
fuels.
Financial
Statements
Report
of Independent Registered Public Accounting Firm, page F-2
5.
We
note that language in the report issued by your current auditors,
Child,
Van Wagoner & Bradshaw, PLLC indicates that they audited your
financial statements for the period from January 1, 2002 to December
31,
2006. However, you have not presented financial statements for this
period
alone. We see that your auditors also state that they did not audit
your
financial statements covering the period from January 8, 1992 (date
of
inception) to December 31, 2001 as those statements were audited
by other
auditors.
3
If your current auditors are
to make
reference to the report of the other auditors, to indicate a division
of
responsibility, they would opine on your financial statements for
the
entire period, from January 8, 1992 (date of inception) to December
31,
2006, with an expression of reliance on the work of the other auditors
in
the introductory, scope and opinion, paragraphs, while also indicating
the
magnitude of the portion of the financial statements audited by the
other
auditor, following the guidance in AU Sections 543.06 through
543.09.
COMPANY
RESPONSE:
The
current auditors will revise their audit report to only include the periods
ending December 31, 2006 and 2005. All columns in the financial statements,
showing cumulative amounts from January 8, 1992 (Inception) from December 31,
2006, including the periods January 8, 1992 (Inception) from December 31, 2004
shown in the restated statement of stockholders deficiency will be marked
unaudited.
6.
Please
include the audit report from your prior auditors in the body of
your
financial statements, immediately following the audit report from
your
current auditors, instead of as an exhibit to your
filing.
If
you
include the audit report of your prior auditors in your filing, confirm for
us
that you have obtained permission and a reissuance of the report from your
prior
auditors. If you are unable to obtain permission and reissuance, other
arrangements will need to be made; please advise us of any difficulties you
have
in this regard. Your prior auditors can refer to AU Sections 508.70 through
508.73 for further guidance on report reissuance.
COMPANY
RESPONSE:
As
discussed with the Staff, due to the fact that the prior periods audited by
the
prior auditor, were for periods dating back to 2001, it is now difficult to
obtain this consent. It has been mentioned to us by the Staff that instead
of
obtaining this consent from the prior auditor, the company is granted permission
and will now designate all cumulative amounts shown from January 8, 1992
(Inception) from December 31, 2006 as unaudited in the restated financial
statements.
Consolidated
Statements of Cash Flows page F-S
7.
Ordinarily
share issue costs are recorded as an adjustment to offset offering
proceeds, in equity, except when associated with shares issued in
a
reverse merger recapitalization, in which case the costs recorded
against
equity should be limited to the amount of cash received. Tell us
why you
report the item labeled “capitalization of share issue costs” as an
adjustment to your fiscal year 2006 net loss, suggesting this item
impacted your results of operations for the period, and why your
$441,553
adjustment was added to, instead of subtracted from your net loss.
Please
include details about the share issuance and nature of costs incurred
(e.g. transaction dates, number of shares, proceeds, and the amounts
and
form of consideration representing share issuance
costs).
4
COMPANY
RESPONSE:
We
have reviewed the Staff’s comment and have found that, in error, we had
classified the costs incurred to issue stock in the reverse merger as an
operating activity in the statement of cash flows, instead as reporting the
$441,553 as a separate line item, “disbursements - share issue costs” reported
as a financing activity in accordance with FAS#95, Paragraph 19(a). We have
reclassified that $441,553 use of funds from operating activities section of
the
cash flows and reported that amount in the financing activities section of
the
cash flows. This changed the total cash that was reported as cash used in
operating activities for the year ended December 31, 2006 from $3,746,188 to
$3,304,635 and effected a corresponding decrease in the cash reported as
provided by financing activities from $14,691,305 to 14,249,752. Changes were
made to the cumulative column in the statement of Cash Flows as well for these
sections of the cash flows as well.
The
cash received in the reverse merger was $12,742,408, which is in excess of
the
cash paid for the stock issue costs in the reverse merger recapitalization
of
$441,553. The $441,553 stock issue costs represented legal fees from two law
firms that were engaged to prepare the S-4 registration statements and the
SB-2
registration statements, both registration statements filed in connection with
the reverse merger of Thorium Power Ltd. and Thorium Power Inc. that occurred
on
October 6, 2006. The transaction dates, number of shares and proceeds were
reported to the SEC in those respective Registration Statements relating to
the
merger.
Consolidated
Statements of Chan in Stockholders’ Deficiency pa F-6
8.
Please
revise your statements to show the effects of exchanging shares in
your
reverse merger on a retroactive basis. Share activity of the accounting
acquirer in a reverse merger should be recast using the ratio of shares
issued by the legal acquirer in the reverse merger over shares of the
accounting acquirer that were outstanding immediately prior to the
exchange, similar to a stock split
This
should render the duplicative common share columns that you include unnecessary.
After recasting, all share activity immediately before the transaction should
sum to equal the number of shares issued by the accounting target. This should
be followed by an entry showing the number of shares of the accounting target
that were outstanding immediately before the event, along with the net assets
or
liabilities of that entity received by the accounting acquirer. Revise your
disclosures on page F-11 as necessary to clarify how the share counts, ownership
percentage and exchange ratio are represented in your presentation.
5
You
may
refer to the guidance in Section 1.F of Division of Corporation
Finance:
Frequently
Requested Accounting and Financial Reporting Interpretations and Guidance,
located on our website at the following address.
http://www.sec.
tzov/divisi.ons/corDfin/szuidance/cfactfap.htm#P1 62 22074
Please
note the reference on our website to guidance issued by the Emerging Issues
Committee of the Canadian Institute of Chartered Accountants, which we believe
is compatible with U.S. GAAP in this area, and is available in EIC
10.
COMPANY
RESPONS