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UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: December 31, 2010

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___ to ___

Commission File Number: 000-28543

LIGHTBRIDGE CORPORATION(Exact
Name of Registrant As Specified in Its Charter)

|Nevada                          | 91-1975651            
|------------------------------- | ----------------------
|(State or Other Jurisdiction of | (I.R.S. Employer      
|Incorporation or Organization)  | Identification Number)

1600 Tysons Boulevard, Suite 550McLean, Virginia
22102(Address of Principal Executive Office and Zip Code)

(571) 730-1200(Registrants Telephone Number,
Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [  ]  No [X]

Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [  ] No [X]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]  No [  ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of large accelerated filer, accelerated filer, and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer [  ] | Accelerated filer [X] | Non-accelerated filer [  ] | Smaller reporting company [X]
|---------------------------- | --------------------- | -------------------------- | -----------------------------

Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Act).

Yes [  ]  No [X]

As of June 30, 2010, the aggregate market value of the shares
of the Registrants common stock held by non-affiliates (based upon the closing
price of such shares as reported on the NASDAQ Stock Market on such date) was
approximately $78.4 million. Shares of the Registrants common stock held by
each executive officer and director have been excluded in that such persons may
be deemed to be affiliates of the Registrant. This determination of affiliate
status is not necessarily a conclusive determination for other purposes As of
February 18, 2011 there were 12,346,645 shares of the Registrants common stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrants Definitive Proxy Statement for its
2011 Annual Meeting of Shareholders to be filed with the Commission within 120
days after the close of the Registrants fiscal year are incorporated by
reference into Part III of this Annual Report on Form 10-K.

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LIGHTBRIDGE CORPORATION

FORM 10-K For the Fiscal Year Ended December 31,
2010

TABLE OF CONTENTS

|         |                                                                                                                    | **Page**
|-------- | ------------------------------------------------------------------------------------------------------------------ | --------
|         | PART I                                                                                                             |         
|Item 1.  | Business                                                                                                           | 1       
|Item 1A. | Risk Factors                                                                                                       | 8       
|Item 1B. | Unresolved Staff Comments                                                                                          | 14      
|Item 2.  | Properties                                                                                                         | 14      
|Item 3.  | Legal Proceedings                                                                                                  | 14      
|Item 4.  | Submission of Matters to a Vote
      of Security Holders                                                          | 14      
|         | PART II                                                                                                            |         
|Item 5   | Market for Registrants Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 14      
|Item 6.  | Selected Financial Data                                                                                            | 16      
|Item 7.  | Managements Discussion and Analysis of
      Financial Condition and Results of Operations                        | 16      
|Item 7A. | Quantitative and Qualitative
      Disclosures About Market Risk                                                   | 26      
|Item 8.  | Financial Statements and Supplementary Data                                                                        | 26      
|Item 9.  | Changes in and Disagreements
      with Accountants on Accounting and Financial Disclosure                         | 26      
|Item 9A. | Controls and Procedures                                                                                            | 26      
|Item 9B. | Other Information                                                                                                  | 27      
|         | PART III                                                                                                           |         
|Item 10. | Directors, Executive Officers
      and Corporate Governance                                                       | 27      
|Item 11. | Executive Compensation                                                                                             | 28      
|Item 12. | Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder Matters               | 28      
|Item 13. | Certain Relationships and
      Related Transactions                                                               | 28      
|Item 14. | Principal Accountant Fees and Services                                                                             | 28      
|         | PART IV                                                                                                            | 28      
|Item 15. | Exhibits, Financial Statement Schedules                                                                            |         

(i)

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FORWARD-LOOKING STATEMENTS

In addition to historical information, this report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. 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, as well as (6) 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 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,
- 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.

All statements other than statements of historical fact are
statements that could be deemed forward-looking statements. The Company assumes
no obligation and does not intend to update these forward-looking statements,
except as required by law. When used in this report, the terms Lightbridge,
Company, we, our, and us refer to Lightbridge Corporation and its
wholly-owned subsidiaries Thorium Power, Inc. (a Delaware corporation) and
Lightbridge International Holding, LLC (a Delaware limited liability company).

(ii)

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PART I

Item 1. Description of Business.

General Overview of Our Business Segments

We are a leading nuclear fuel technology company, and
participate in the nuclear power industry in the U.S. and internationally. Our
business operations can be categorized into two segments: (1) we are a developer
of next generation nuclear fuel technology that has the potential to
significantly up-rate the power output of reactors, reducing the
per-megawatt-hour cost of generating nuclear energy and reducing nuclear waste
and proliferation, and (2) we are a provider of nuclear power consulting and
strategic advisory services to commercial and governmental entities worldwide.

Our Nuclear Fuel Technology Business Segment

The Nature of Our Proprietary Technology Development
Activities

We are developing innovative, proprietary nuclear fuel
designs which we expect will significantly enhance the nuclear power industrys
economics and increase power output by: (1) Extending the fuel cycle length to
24 months or longer while simultaneously increasing the power output by up to
17% in existing pressurized water reactors (including Westinghouse 4-loop
reactors, which are currently limited to an 18-month fuel cycle); (2) Enabling
increased reactor power output (up to 30% increase) without changing the core
size in new-build PWRs; and (3) Addressing concerns relating to the back-end of
the fuel cycle including the volume of used fuel per kilowatt-hour as well as
proliferation of weapons-usable materials. Significant technological synergies
exist among our primary fuel products due to utilization of the proprietary
metallic fuel rod technology that is at the core of each of these products. As a
result, once completed, full-scale demonstration and qualification of the
metallic fuel rod technology will simultaneously advance all of our product
families currently under development. We currently anticipate that we will be
able to complete demonstration of full-scale metallic fuel rod fabrication
process by the end of 2012 and begin lead test assembly (LTA) operation in a
full-size commercial light water reactor, which involves testing a limited
number of our full-scale fuel assemblies in the core over three 18-month cycles,
by the end of 2016. Accordingly, based on our current estimated schedule, final
qualification of our fuel for 10-17% power uprates in a commercial reactor is
expected in 2021 (at the end of three 18-month cycles of LTA operation).

The fuel in a nuclear reactor generates heat energy. That
heat is then converted into electricity that is sold. Burnup is the total amount
of electricity generated per unit mass of nuclear fuel. Burnup is largely a
function of the power density of a nuclear fuel. Power density is the amount of
heat power generated per unit volume of nuclear fuel. Conventional oxide fuel
used in existing commercial reactors is approaching the limits of its burnup and
power density capability. As a result, further optimization to increase power
output from the same core size and improve the economics of nuclear power
generation using conventional oxide fuel technologies may be limited. As the
industry prepares to meet the increasing global demand for electricity
production, longer operating cycles and higher reactor power outputs will become
a much sought-after solution for the current and future reactor fleet.

In response to the challenges associated with conventional
oxide fuels, we are developing an innovative, proprietary metallic fuel
technology, that is capable of significantly higher burnup and power density
compared to conventional oxide fuels, which we believe will allow current and
new-build nuclear reactors to safely increase power production and reduce the
initial capital investment as well as operations and maintenance costs on a per
kilowatt-hour basis. As a result, in addition to the projected electricity
production cost savings, we believe that our technology can result in utilities
or countries needing to deploy fewer new reactors to generate the same amount of
electricity. For utilities or countries that already have operating reactors,
our technology could be utilized to increase the power output of those reactors
instead of building new reactors. Further, we believe that the fuel fabrication,
or manufacturing process for this new fuel design is simpler, which we expect
could lower fuel fabrication costs.

Various industry efforts currently underway to meet the
growing demand for more electric power output from the same reactor core size,
and to create a more efficient fuel cycle, with improved safety, reliability and
extended fuel cycle length, are largely focused on stretching the limits of
conventional oxide fuels. While this strategy has worked well in the past, now
almost all of the available fuel performance margins with conventional oxide
fuels have been utilized. However, due to the risk-averse nature of the major
industry players and a significant capital investment made in existing
infrastructure supporting conventional oxide fuels, major fuel vendors are
reluctant to take on early risks associated with fuel development programs on
next generation nuclear fuel designs. As a result, as discussed in the section
below titled "Competition in the Nuclear Fuel Design and Fabrication Area,"
we believe that we are well positioned to take advantage of this market
opportunity by developing next generation fuel designs that can meet the needs
of the power generator.

1

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Nuclear Fuel Development

Since the founding of our company in 1992, we have been
engaged in the design and development of proprietary innovative nuclear fuels.
This effort has led us to the development of a metallic fuel rod design that is
at the heart of each of our nuclear fuel products.

We are currently focusing our development efforts on three
primary fuel product lines: (1) all-uranium seed and blanket fuel for existing
plants, (2) all-metal fuel (i.e., non-oxide fuel) for new build reactors, and
(3) thorium-based seed and blanket fuel for both existing and new build
reactors. Each of the fuel designs utilizes our metallic fuel rod technology. In
addition, each of the fuel designs also advances our mission to improve the
safety, proliferation resistance, performance, and cost competitiveness of
nuclear power generation.

Development of Three Nuclear Fuel Product Lines

The first nuclear fuel product line includes an all-uranium
seed and blanket fuel that is particularly suitable for existing PWRs, though
can also be utilized in new build PWRs. We are developing two variants of this
fuel technology for PWR reactors: (1) an all-uranium seed-and-blanket fuel for
power uprate up to 10% and a 24-month fuel cycle, and (2) an all-uranium
seed-and-blanket fuel for a power uprate up to 17% and a 24-month fuel cycle. A
power uprate, coupled with a 24-month fuel cycle, can be a particularly
attractive option for existing Westinghouse-type 4-loop PWRs that are currently
limited to an 18-month fuel cycle due to fuel performance constraints attributed
to conventional uranium oxide fuels. To accommodate up to a 17% power uprate, a
number of reactor design modifications would be required, including upgrades to
the primary and secondary systems. For uprates up to 10%, only relatively minor
reactor system modifications would be required.

The second nuclear fuel product line includes our all-metal
fuel, which we expect will be able to provide up to a 30% increase in power
output of new build PWRs, such as Westinghouse (U.S.)-designed AP-1000, AREVA
(French)-designed EPR, Mitsubishi (Japanese)-designed APWR, KEPCO
(Korean)-designed APR-1400 and others. Also, we believe that this fuel
technology can be used to extend the fuel cycle length up to 24 months in
addition to the 30% uprate. To accommodate up to a 30% power uprate, a number of
reactor design modifications would be required, including upgrades to the
primary and secondary systems, as well as potential modifications to the reactor
containment structure.

The third nuclear fuel product line includes our thorium-based
seed-and-blanket fuel, which we believe has several major benefits, including:
(1) enhanced proliferation resistance, (2) significantly reduced volume (up to
40% reduction) and weight (up to 90% reduction) of spent fuel, and (3) reduced
natural uranium requirements (up to 10% reduction) in a once-through fuel cycle.
These benefits can be particularly appealing to those markets that either have
significant domestic thorium reserves but lack natural uranium resources or are
concerned with the cost of long-term storage as a used fuel management option.
Further, the economics of our thorium-based fuel can become more attractive as
the price of natural uranium increases due to the projected reduction in natural
uranium requirements per megawatt-day. Finally, the enhanced proliferation
resistance aspects of the fuel can appeal to markets that put key emphasis on
non-proliferation.

The development of our power uprate product lines provides
diversity to our fuel offerings and synergistically advances the development of
our thorium-based fuel product line.

Competition in the Nuclear Fuel Design and Fabrication
Area

There are several major companies that collectively fabricate
a large majority of the fuel used in the worlds commercial nuclear power
plants, including both Western-type PWRs and BWRs, as well as Russian-type VVERs.
To the extent that these companies currently own and may in the future develop
new nuclear fuel designs that can be used in the same types of reactors as those
targeted by us, they can be viewed as potential competitors. However, our
commercialization strategy is not to compete with these major fuel fabricators,
but rather to partner with one or more of these companies through a technology
license arrangements. For this reason, we consider these companies as our
potential partners or licensees as opposed to our competitors.

2

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We are pursuing a commercialization strategy aimed at
generating interest in our nuclear fuel designs from one or more major nuclear
fuel fabricators that could lead to a technology licensing or other teaming
arrangement over the next three years to further conduct research and
development activities. Our commercialization efforts are based on a multi-prong
approach that we believe will increase the probability of success:

| | 1. | Approach major fuel fabricators (push marketing
      strategy)                  
| | -- | ---------------------------------------------------------------------------------
| |    |                                                                                  
| | 2. | Reach out early to nuclear power plants (pull marketing
      strategy)          
| |    |                                                                                  
| | 3. | Generate public, industry and government awareness in our
      fuel technologies

We are putting a significant amount of effort in reaching out
to major fuel fabricators. Our ultimate commercial success depends on how soon
and what kind of a commercial arrangement we are able to negotiate with one or
more of these potential partners. As a result, building relationships with these
potential partners and keeping them up-to-date on our fuel technology progress
through ongoing dialogue are the essential elements of our commercialization
strategy.

We recognize that a successful commercialization strategy is
highly dependent upon the interest in our nuclear fuel designs from nuclear
power plants which are the ultimate fuel product user. If we are successful in
generating sufficient interest from one or more nuclear power plants in
evaluating our fuel technology for potential use, we believe it would make it
easier to find a major fuel fabricator that would be willing to partner with us
in order to offer that fuel product to the nuclear power generator.

Finally, it is also important to generate public, industry and
government awareness of our nuclear fuel technology that could help build
confidence in our technology and increase credibility among fuel fabricators and
nuclear power plants. As a result, we are pursuing a public outreach effort by
seeking publication of technical papers highlighting progress on our fuel
designs in peer-reviewed technical journals and presentations at major
international nuclear conferences.

Competition with respect to the design of commercially viable
fuel products is limited to conventional uranium oxide fuels, which, as
discussed above, are reaching the limits in terms of their capability to provide
increased power output or longer fuel cycles. We believe that the industry needs
fuel products that can provide these benefits. To our knowledge, our nuclear
fuel development project is the only commercially viable program that could
achieve these goals. Due to the long-term product development timelines,
significant nuclear regulatory requirements, and our comprehensive patent
portfolio, we believe that the barriers to entry prevent a viable competitor in
the foreseeable future.

Future Licensing Revenue from Our Fuel
Technology

We see our fuel technology development business as an
intellectual property licensing business and we do not plan to become a fuel
fabricator. Instead, we intend to license our intellectual property rights in
our nuclear fuel designs to existing major nuclear fuel fabricators that own and
operate fuel fabrication facilities and have long-term fuel supply contracts
with nuclear power plants. We believe that this partnering strategy would also
allow us to take advantage of the existing customer base of such major fuel
fabricators, thus enabling our fuel products to achieve high market penetration
rates in a relatively short period of time. We are currently pursuing a research
and development strategy aimed at generating sufficient interest and confidence
in our fuel technology among major fuel fabricators with a view of entering into
a commercial arrangement with one or more of them within the next 2-3 years.

We anticipate that the following factors will play a key role
in structuring a technology license agreement with a major fuel supplier:

- Sharing of future fuel development costs;
- An upfront technology access fee payable to us;
- Ongoing royalty fees from future fuel product sales payable to us based on
  the cost sharing formula; and
- Potential training and consulting payments payable to us.

In addition to the fuel design license agreement, we believe
that there may be a manufacturing technology license or manufacturing support
fees that we may be able to receive from the fuel fabricator.

3

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Sources and Availability of Raw Materials

As previously stated, our fuel technology development
business is a licensing business since we intend to license our fuel technology
to fuel fabricators. Accordingly, we do not plan to utilize any raw materials in
the conduct of our operations. However, the fuel fabricators which will
ultimately fabricate our fuel products will need zirconium, uranium and/or
thorium, and additional raw materials that are required for the production of
nuclear fuel assemblies that go into the reactor core.

Uranium and zirconium are available to the fuel fabricators
from various suppliers at market driven prices. The current demand for thorium
is very low. Thorium is sometimes used in government flares, camping lantern
wicks and in other products in small quantities. If thorium-based fuels become
commercially accepted in the nuclear power industry, there would be a
significant increase in the demand for thorium. According to the International
Atomic Energy Agency, or IAEA, thorium is over three times more naturally
abundant than uranium and is found in large quantities in monazite sands in many
countries, including, Australia, India, the United States of America, and China.

In certain countries, such as the U.S., nuclear fuel provision
works as a tolling operation. Rather than ordering assembled nuclear fuel,
reactor operators separately source (1) uranium, (2) services to convert the
uranium into uranium hexafluoride gas that is capable of being enriched, (3)
uranium enrichment services, and then (4) pay a nuclear fuel fabricating company
to fabricate the enriched uranium into nuclear fuel. In other countries, such as
Russia, reactor operators purchase the finished nuclear fuel assemblies directly
from the fuel fabricator without separately procuring natural uranium material
and conversion or enrichment services.

Our Nuclear Energy Consulting and Strategic Advisory
Services Business Segment

The Nature of Our Consulting Services

We are primarily engaged in the business of assisting
commercial and governmental entities globally with developing and expanding
their nuclear industry capabilities and infrastructure. We provide integrated
strategic advice across a range of expertise areas including, for example,
regulatory development, nuclear reactor site selection, procurement and
deployment, reactor and fuel technology, international relations and regulatory
affairs.

Due to the relatively limited growth in the nuclear energy
industry during the 1980s and 1990s, and corresponding limited recruitment
into the industry, the cadre of engineers, managers and other nuclear energy
industry experts is aging. In any nuclear renaissance, we believe that the
industry will be challenged in acquiring and retaining sufficient qualified
expertise. Moreover, in countries studying new nuclear energy programs, the
number of qualified nuclear energy personnel is limited, and we believe that
those countries will need to rely on significant support from non-domestic
service providers and experts to ensure success in those programs.

Our emergence in the field of nuclear energy consulting is in
direct response to the need for independent assessments and highly qualified
technical consulting services from countries looking to establish nuclear energy
programs, by providing a blueprint for safe, secure, efficient and
cost-effective nuclear power. We offer full-scope strategic planning and
advisory services for new and growing existing markets. Furthermore, we only
engage with commercial entities and governments that are dedicated to
non-proliferative and transparent nuclear programs.

Our consulting services are expert and relationship based,
with particular emphasis on key decision makers in senior positions within
governments or companies, as well as focus on overall management of nuclear
energy programs. To date, substantially all of our revenues are derived from our
consulting and strategic advisory services business segment, which primarily
provides nuclear consulting services to entities within the United Arab
Emirates, our first significant consulting and strategic advisory client. In
April 2010 and December 2010 we began to provide consulting services in
additional countries, including the member states of the Gulf Cooperation
Council. We have also provided nuclear safety consulting advice to U.S. nuclear
utilities. We plan to continue and potentially expand this nuclear safety
consulting work in the U.S.

4

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Competition in Nuclear Industry Consulting

In general, the market for nuclear industry consulting services
is competitive, fragmented and subject to rapid change. The market includes a
large number of participants with a variety of skills and industry expertise,
including local, regional, national and international firms that specialize in
political assessment, nuclear technology or program implementation. Some of
these companies are global in scope and have greater personnel, financial,
technical, and marketing resources than we do. The larger companies offering
similar services as we do typically are also active in the delivery of nuclear
power plant equipment and/or provision of engineering design services. However,
we believe that our independence, experience, expertise, reputation and segment
focus, enable us to compete effectively in this marketplace.

Overview of the Nuclear Power Industry

Potential Market

Presently, nuclear power provides approximately 7% of the
worlds energy, including approximately 17% of the worlds electricity.
According to the International Atomic Energy Agency, there are over 440 nuclear
power plants in operation today, mostly light water reactors, with the most
dominant types being pressurized water reactors, or PWRs, boiling water
reactors, or BWRs, and VVER reactors (a Russian equivalent of PWRs).

A majority of currently operating reactors around the world
were built over 20 year ago. Many of these reactors have a licensed operating
life of 40 years. Unless there is a significant increase in new-build activity
over the next two decades, it is possible that the majority of reactors in
operation in 2030 are already in use today.

Due to substantial project risks and the significant upfront
capital commitment associated with new-build, many nuclear utilities in
deregulated markets choose to optimize their existing generating capacity
through increasing their capacity utilization factor, power uprates and plant
life extensions. We expect that this trend will continue, particularly in the
mature nuclear markets with significant existing nuclear capacity, whereas most
of the new-build activity would likely occur in emerging nuclear markets.

Of the worlds existing reactors currently in operation, PWRs
account for more than half of the net operating capacity, with BWRs being second
accounting for another 20%.

Of the nuclear reactors currently under construction, over 80%
are either PWRs or VVERs with a rated power output of 1,000 MW or greater.

Utilities have utilized power uprates since the 1970s as a way
to increase the power output of their nuclear plants. Typically more highly
enriched uranium fuel and/or more fresh fuel is needed to increase power output.
This enables the reactor to produce more thermal energy and therefore more steam
to drive the turbine generator and produce electricity. In order to accomplish
this, components such as pipes, valves, pumps, heat exchangers, electrical
transformers and generators, must be able to accommodate the conditions that
would exist at the higher power level. For example, a higher power level usually
involves higher steam and water flow through the systems used to convert thermal
power into electric power. These systems must be capable of accommodating the
higher flows.

In some instances, utilities will modify and/or replace
components in order to accommodate a higher power level. Technical analyses must
demonstrate that the proposed plant configuration remains safe and that measures
to protect the health and safety of the public continue to be effective. These
analyses, which span many technical disciplines, are reviewed and approved by
the regulator before a power uprate can be performed.

In addition to the technical analyses, the utility will conduct
an economic analysis to evaluate the potential financial benefits of the
proposed uprate. Typically, power uprates enable utilities to increase their
generating capability at a cost significantly less than the cost of building a
new plant. Power uprates can be completed in months as opposed to the several
years required for new-build, thus the invested dollars begin producing revenue
shortly after they are spent. Power uprates, therefore, represent an efficient
use of capital.

Utilities have embraced power uprates as a cost effective way
to increase their generation capacity. While the efforts thus far have occurred
mostly in the United States, there is a large, untapped worldwide market for
power uprates. There are about 150 PWRs operating outside the United States. If
all of these plants had their power increased by 10% the generating capacity
would increase by about 14,500 MW. This is equivalent to about 12 new 1,200 MW
reactors. We believe that the incentive to proceed with power uprates at the 10%
level is significant since there are few changes required to implement the power
uprate and the changes are relatively inexpensive. The limiting factor at the moment is the fuel. We
believe that our metallic fuel rod technology enables the 10% increase in power
along with extending the fuel cycle to 24 months, and can be used to support
even greater power increases up to 30%.

5

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Most nuclear power plants originally had a licensed lifetime of
25 to 40 years, but engineering assessments have established that many can
operate much longer. In the U.S. approximately 60 reactors have been granted
license renewals which extend their operating lives by 50% to 60 years. Most of
the plants that have not already requested a license extension are expected to
apply in the near future. A license extension at about the 30-year mark
justifies additional capital expenditure for the replacement of worn equipment
and outdated control systems.

The technical and economic feasibility of replacing major
reactor components, such as steam generators in PWRs, has been demonstrated. The
increased revenue generated from extending the lifetime of existing plants is
attractive to utilities, especially in view of the difficulties in obtaining
public acceptance of constructing replacement nuclear capacity.

The loss of generating capacity by old plants being retired is
balanced by new plants coming on line. There are no firm projections for
retirements over the next two decades, however the World Nuclear Association, or
WNA, estimates that at least 60 of those now operating will close by 2030, most
being small plants. Using conservative assumptions about license renewal, the
2009 WNA Market Report anticipates that 143 reactors will be decommissioned by
2030.

According to the WNA, over 150 power reactors, with a total net
capacity of almost 170,000 MW, are planned and over 340 more plants are
proposed. Rising gas prices and greenhouse constraints on coal, coupled with
energy security concerns, have combined to put nuclear power back on the agenda
for projected new capacity in both Europe and North America.

Almost all of the new build reactor designs are either
Generation III or Generation III+ type reactors. The primary difference from
second-generation designs is that many incorporate passive or inherent safety
features which require no active controls or operational intervention to avoid
accidents in the event of malfunction. Many of these passive systems rely on
gravity, natural convection or resistance to high temperatures.

Our Target Market

Presently, we are targeting Western-type PWR reactors with a
net capacity of 900 MW or more that will be under 40 years of age by 2021. These
reactors represent the largest market segment, both in terms of operating
reactors and new-build units under construction or planned. Our technology is
applicable to many more reactors than those included in our target market. The
current target market was selected as we believe that it represents the largest
commercial market segment with the highest potential for return on investment in
the near-term.

Based on the WNAs reactor database, we estimate that the
current size of our target market is approximately 148 gigawatts, or GW, of net
generating capacity that is expected to grow to 184 GW by 2020 if all of the
reactor units currently under construction are completed. Further, the projected
size of the target market is expected to expand to 222 GW by 2020 and 269 GW by
2030 if all of the currently planned new-build and half of the proposed reactor
units are completed.

Within the identified potential target market, France, China,
United States, Korea and Japan represent the largest market segment, accounting
for over 80% of the total projected target market size in 2030. As a result, we
believe that it is important for us, through technology license arrangements
with major fuel vendors, to ultimately secure a footing in one or more of these
countries to be able to achieve meaningful market penetration rates.

Our Intellectual Property

Our nuclear fuel technologies are protected by multiple U.S.
and international patents. Our current patent portfolio is comprised of the
following patents:

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Issued Patents

U.S. patents:

- Patent No. 6,026,136, a seed-blanket unit fuel assembly for a nuclear
  reactor
- Patent No. 5,949,837, a nuclear reactor having a core including a
  plurality of seed-blanket units
- Patent No. 5,864,593, a method for operating a nuclear reactor core
  comprised of at least first and second groups of seed-blanket units
- Patent No. 5,737,375, a nuclear reactor having a core including a
  plurality of seed-blanket units

The U.S. patents expire August 16, 2014.

International patents:

- Russia  Patent No. 2,176,826  Expires August 16, 2014
- Russia  Patent No. 2,222,837  Expires August 16, 2014
- South Korea  Patent No. 301,339  Expires August 16, 2014
- South Korea  Patent No. 336,214  Expires August 16, 2014
- China  Patent No. ZL 96196267.4  Expires August 16, 2014

Pending Patents

- PCT patent application NO. PCT/RU2008/000801 filed on December 25, 2008
  entitled A Light Water Reactor Fuel Assembly (Alternatives), A Light Water
  Reactor and A Fuel Assembly Fuel Element.
- Euroasian patent application NO. 200802041, Priority claimed based on
  PCT/RU 200732.
- U.S. provisional patent application NO. 61/116,730 filed on November 21,
  2008 entitled Nuclear Reactor (Alternatives), Fuel Assembly of Seed-Blanket
  Subassemblies for Nuclear Reactor (Alternatives), and Fuel Element for Fuel
  Assembly.
- U.S. utility patent application No. 12340833 filed on December 22, 2008.
  Priority claimed on PCT/RU 2007/000732 and U.S. provisional patent application
  No. 61/116,730.
- European Patent Application No. EP08172834.7 filed on December 23, 2008
  entitled A Fuel Element, A Fuel Assembly and a Method of Using a Fuel
  Assembly. Priority claimed on PCT/RU 2007/000732 and A U.S. provisional
  patent application No. 61/116,730.
- Japan  Patent No. JP2010-540611  Expires December 26, 2027
- Australia 
  Patent No. 2007 363 064  Expires December 26, 2027
- South Korea  Patent No.
  10-2010-7016627  Expires December 26, 2027
- Canada  Patent No. 2,710,432 
  Expires December 26, 2027
- China  Patent No. CN 20078102099.4  Expires
  December 26, 2027
- India  Patent No. 5244/DELNP/2010  Expires December 26,
  2027

We have recently filed trademark applications in the United
States, European Union and Russia for the following trademarks:

- Lightbridge corporate name
- Lightbridge corporate logo
- Thorium Power corporate name

We are continually executing a strategy aimed at further
expanding our intellectual property portfolio.

Regulation

No safety regulatory approval is required to design nuclear
fuels, although certain technology transfers may be subject to national and
international export controls. However, the testing, fabrication and use of
nuclear fuels by our future partners, licensees and nuclear power generators,
are heavily regulated. The test facilities and other locations where our fuel
designs may be tested before commercial use require governmental approvals from
the host countrys nuclear regulatory authority. The responsibility for
obtaining necessary regulatory approvals will lie with our research and development
contractors that conduct such tests and experiments. Nuclear fuel fabricators,
which will ultimately fabricate fuel using our technology under licenses from
us, are similarly regulated. Nuclear power plants that may utilize the fuel
produced by these fuel fabricators require specific licenses relating to
possession and use of nuclear materials as well as numerous other governmental
approvals for the ownership and operation of nuclear power plants.

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Employees

As of December 31, 2010, we had 20 employees, 16 of whom were
full-time employees. We believe that our relationship with our employees is
satisfactory.

Our business model is to limit full-time employees and to rely
on consultants, outside agencies and technical facilities with specific skills
to assist with various business functions including: corporate governance,
research and development, and government relations. This model limits costly
overhead and allows us to draw upon resources that are specifically tailored to
our internal and external (client) needs.

History and Corporate Structure

We were incorporated under the laws of the State of Nevada on
February 2, 1999. During the period from inception until October 6, 2006, we
were engaged in businesses other than our current business. On October 6, 2006,
we acquired our wholly-owned subsidiary Thorium Power, Inc. in a merger
transaction and changed our name to Thorium Power, Ltd. Thorium Power, Inc. was
incorporated on January 8, 1992. The merger was accounted for as a reverse
merger and Thorium Power, Inc. was treated as the accounting acquirer. In 2008
we formed Lightbridge International Holding, LLC (a Delaware limited liability
company). We formed a branch office in England in 2008 called Lightbridge
Advisors Limited, a branch office in Moscow, Russia in July 2009 and a branch
office in the United Arab Emirates in January 2010. On September 21, 2009, we
changed our name from Thorium Power Ltd. to Lightbridge Corporation to
more accurately reflect the varied nature of our business operations. Thorium
Power, Inc. remains a wholly-owned subsidiary of Lightbridge Corporation.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, including exhibits, and amendments to those reports
filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, are
available free of charge on our website at www.ltbridge.com as soon as
reasonably practicable after such reports are electronically filed with, or
furnished to, the Securities and Exchange Commission. Copies of these reports
may also be obtained free of charge by sending written requests to Investor
Relations, Lightbridge Corporation, 1600 Tysons Blvd, Suite 550 Mclean, VA 22102
USA. The information posted on our web site is not incorporated into this Annual
Report.

Item 1A. Risk Factors.

General Business Risks

If the price of non-nuclear energy sources falls, there
could be an adverse impact on new-build nuclear reactor activities in certain
markets, which would have a material adverse effect on our operations.

In certain markets with a diversified energy base, decisions on
new-build power plants are largely affected by the economics of various energy
sources. If prices of non-nuclear energy sources fall, it could limit the
deployment of new-build nuclear power plants in such markets. As a result, this
could reduce the size of the potential markets for both our fuel technology and
our consulting services.

We may be adversely affected by uncertainty in the global
financial markets and worldwide economic downturn.

Our future results may be impacted by the worldwide economic
downturn, continued volatility or further deterioration in the debt and equity
capital markets, inflation, deflation, or other adverse economic conditions that
may negatively affect us. The cost of raising money in the debt and equity
capital markets has increased substantially during the current financial crisis
while the availability of funds from those markets has diminished significantly.
Even with the net proceeds of our July 2010 financing, we may require additional
capital in the future. However, due to the above listed factors, we cannot be
certain that additional funding will be available on terms that are acceptable
to us, or at all.

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Our limited operating history makes it difficult to judge
our prospects.

Prior to 2008 we were a development stage company. We have only
recently commenced the provision of nuclear consulting services and currently
have only a limited number of clients in this area of our business. Similarly,
our fuel design patents and technology have not been commercially used and we
have not received any royalty or sales revenue from this area of our business.
We are subject to the risks, expenses and problems frequently encountered by
companies in the early stages of development.

We rely upon certain members of our senior management,
including Seth Grae, and the loss of Mr. Grae or any of our senior management
would have an adverse effect on the Company.

Our success depends upon certain members of our senior
management, including Seth Grae, Chief Executive Officer of the Company. Mr.
Graes knowledge of the nuclear power industry, his network of key contacts
within that industry and in governments and, in particular, his expertise in the
potential markets for the Companys technologies, is critical to the
implementation of our business model. Mr. Grae is likely to be a significant
factor in our future growth and success. The loss of the service of Mr. Grae
would likely have a material adverse effect on our Company.

Competition for highly skilled professionals could have a
material adverse effect on our success.

We rely heavily on our contractor staff and management team.
Our success depends, in large part, on our ability to hire, retain, develop and
motivate highly skilled professionals. Competition for these skilled
professionals is intense and our inability to hire, retain and motivate adequate
numbers of consultants and managers could have a serious effect on our ability
to meet client needs and to continue the development of our fuel designs. A loss
of a significant number of our employees could have a serious negative effect on
us. In addition, any significant volatility or sustained decline in the market
price of our common stock could impair our ability to use equity-based
compensation to attract, retain and motivate key employees and consultants.

Public opposition to nuclear power could increase, resulting
in a slow down in new construction of nuclear power plants and an early shut
down of existing power plants and the narrowing of our potential target market.

Successful execution of our business model is dependent upon
public support for nuclear power in the United States and other countries.
Nuclear power faces strong opposition from certain competitive energy sources,
individuals and organizations. The occurrence of another major, Chernobyl-like
nuclear accident could have a significant adverse effect on public opinion about
nuclear power and the favorable regulatory climate needed to introduce new
nuclear technologies. Strong public opposition could hinder the construction of
new nuclear power plants and lead to early shut-down of the existing nuclear
power plants. Furthermore, nuclear fuel fabrication and the use of new nuclear
fuels in reactors must be licensed by the U.S. Nuclear Regulatory Commission and
equivalent governmental authorities around the world. In many countries, the
licensing process includes public hearings in which opponents of the use of
nuclear power might be able to cause the issuance of required licenses to be
delayed or denied.

We may not be able to receive or retain authorizations
that may be required for us to sell our services, or license our technology
internationally.

The sales and marketing of our services and technology
internationally may be subject to U.S. export control regulations and the export
control laws of other countries. Governmental authorizations may be required
before we can export our services or technology. If authorizations are required
and not granted, our international business plans could be materially affected.
Furthermore, the export authorization process is often time consuming. Violation
of export control regulations could subject us to fines and other penalties,
such as losing the ability to export for a period of years, which would limit
our revenue growth opportunities and significantly hinder our attempts to expand
our business internationally.

Risks Associated with our Fuel Technology Business

Our fuel designs have never been tested in an existing
commercial reactor and actual fuel performance, as well as the willingness of
commercial reactor operators and fuel fabricators to adopt a new design, is
uncertain.

Nuclear power research and development entails significant
technological risk. New designs must be fabricated, tested and licensed before
they can be offered for sale in commercial markets. Our fuel designs are still
in the research and development stage and while certain testing on our fuel
technologies has been completed, further testing and experiments will be required in test facilities.
Furthermore, the fuel technology has yet to be demonstrated in an existing
commercial reactor. Until we are able to successfully demonstrate operation of
our fuel designs in an actual commercial reactor, we will not be certain about
the ability of the fuel we design to perform as expected. In addition, there is
also a risk that suitable testing facilities may not be available to us on a
timely basis, which could cause limited development program schedule delays.

9

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We will also have to enter into a commercial arrangement with a
fuel fabricator to actually produce fuel using our designs. If our fuel designs
do not perform as anticipated in commercial use, we will not realize revenues
from licensing or other use of our fuel designs.

We serve the nuclear power industry, which is highly
regulated. Our fuel designs differ from fuels currently licensed and used by
commercial nuclear power plants. As a result, the regulatory licensing and
approval process for our fuels may be delayed and made more costly, and industry
acceptance of our fuels may be hampered.

The nuclear power industry is a highly regulated industry.
All entities that operate nuclear facilities and transport nuclear materials are
subject to the jurisdiction of the U.S. Nuclear Regulatory Commission, or its
counterparts around the world.

Our fuel designs differ significantly in some aspects from
the fuel licensed and used today by commercial nuclear power plants. These
differences will likely result in more prolonged and extensive review by the
U.S. Nuclear Regulatory Commission or its counterparts around the world that
could cause development program schedule delays. Also, entities within the
nuclear industry may be hesitant to be the first to use our fuel, which has
little or no history of successful commercial use. Furthermore, our research and
development program schedule relies on the transferability and applicability of
the operating experience of the Russian icebreakers with metallic fuels for
regulatory licensing purposes outside of Russia. There is a risk that if this
fuel performance operating experience is found by the regulatory authority not
to be transferable, more extensive experiments will be required which could
cause program schedule delays and require more research and development funding.

Existing commercial nuclear infrastructure in many countries
is limited to uranium material enrichments up to 5%. Our metallic fuel is
enriched to higher levels which would require modifications to existing
commercial nuclear infrastructure and could impede commercialization of our
technology.

Existing commercial nuclear infrastructure, including
conversion facilities, enrichment facilities, fabrication facilities, fuel
storage facilities, fuel handling procedures and fuel operation at reactor
sites, used fuel storage facilities and shipping containers, was designed and is
currently licensed to handle uranium enrichment up to 5%. Our fuel designs are
expected to have enrichment levels up to 19.7% and would therefore require
certain modifications to existing commercial nuclear infrastructure to enable
commercial nuclear facilities to handle our fuels. In addition, those nuclear
facilities will need to go through a regulatory licensing process and obtain
regulatory approvals to be able to handle uranium with enrichment levels up to
19.7% and operate commercial reactors using our fuel. There is a risk that some
relevant entities within the nuclear power industry may be slow in making any
required facility infrastructure modifications or obtaining required licenses or
approvals to handle our fuel or operate commercial reactors using our fuel.

In addition, our nuclear fuel designs rely on fabrication
technologies that in certain material ways are different from the fabrication
techniques presently utilized by existing commercial fuel fabricators. In
particular, our metallic fuel rods must be produced using a co-extrusion
fabrication process. Presently, most commercial nuclear fuel is produced using a
pellet fabrication technology, whereby uranium oxide is packed into small
pellets that are stacked and sealed inside metallic tubes. The co-extrusion
fabrication technology involves extrusion of a single-piece solid fuel rod from
a metallic matrix containing uranium and zirconium alloy. Fabrication of full-length (approximately 3.5 to 4.5 meters)
metallic fuel rods has yet to be demonstrated. There is a risk that the fuel
fabrication process required to produce one meter long metallic fuel rods may
not be adaptable to the fabrication of full-length metallic fuel rods used in
commercial reactors.

Our plans to develop our fuel designs depend on us
acquiring rights to the designs, data, processes and methodologies that are used
or may be used in our business in the future. If we are unable to obtain such
rights on reasonable terms in the future, our ability to exploit our
intellectual property may be limited.

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We are currently conducting fuel assembly design and testing
work in Russia through our Moscow office personnel as well as Russian research
institutes and other nuclear entities that are owned or are closely affiliated
with the government of the Russian Federation. We do not currently have all of
the necessary licensing or other rights to acquire or utilize certain designs,
data, methodologies or processes required for the fabrication of our fuel
assemblies. If we, or a fuel fabricator to whom we license our fuel technology,
desire to utilize such processes or methodologies in the future, a license or
other right to use such technologies from the Russian entities that previously
developed and own such technologies would be required. Furthermore, nuclear
operators typically seek diversity of fuel supply and may be hesitant to use a
fuel product that is only available from a single supplier. If we are unable to
obtain a license or other right to acquire or utilize certain know-how required
for the fabrication of our fuel assemblies on terms that the Russian entities
deem to be reasonable, or there is only a single supplier of our fuel
assemblies, then we may not be able to fully exploit our intellectual property
and may be hindered in the sale of our fuel products and services.

Our research operations are conducted primarily in
Russia, making them subject to political uncertainties relating to Russia and
U.S.-Russian relations.

Much of our present research activities are being conducted in Russia. Our
research operations conducted in Russia are subject to various political risks
and uncertainties inherent in the country of Russia. If U.S.-Russia relations
deteriorate, the Russian government may decide to scale back or even cease
completely its cooperation with the United States on various international
projects, including nuclear power technology development programs. If this
should happen, our research and development program in Russia could be scaled
back or shut down, which could cause development program schedule delays and may
require additional funding to access alternative testing facilities outside of
Russia. Furthermore, the Russian institutes or nuclear entities engaged in our
project are highly regulated and, in many instances, are controlled by the
Russian government. The Russian government could decide that the nuclear
scientists engaged in our project in Russia or testing facilities employed in
our project should be redirected to other high priority national projects in the
nuclear sector which could lead to development program schedule delays. Finally,
certain future research and development activities to be performed by Russian
entities under contract with us will require formal authorization from the
Russian State Atomic Energy Corporation, Rosatom, which owns those entities
and is the main Russian government agency that oversees Russias civil nuclear
power industry.

Applicable Russian intellectual property law may be
inadequate to protect our intellectual property, which could have a
material adverse effect on our business.

Intellectual property rights are evolving in Russia, trending
towards international norms, but are by no means fully developed. While we are
continuing to diversify our research and development activities with associated
intellectual property, historically, we have worked closely with our Russian
branch office employees and other Russian contractors and entities to develop a
significant portion of our material intellectual property. Our rights in this
intellectual property, therefore, derive, or are affected by, Russian
intellectual property laws. If the application of these laws to our intellectual
property rights proves inadequate, then we may not be able to fully avail
ourselves of our intellectual property and our business model may fail or be
significantly impeded.

If the Department of Energy, or DOE, were to successfully
assert that an invention claimed within our 2007 or 2008 Patent Cooperation
Treaty, or PCT, patent applications was first conceived or actually reduced to
practice under a contract with the DOE, then our intellectual property rights in
that invention would become compromised and our business model could fail or
become significantly impeded.

Work on finite aspects and/or testing of some subject matter
disclosed in our 2007 and 2008 Russian PCT patent applications was done under a
government contract with the DOE. If the DOE asserted that an invention claimed
in the 2007 and/or 2008 Russian PCT applications was first conceived or actually
reduced to practice under such a contract, and a U.S. court agreed, the DOE
might gain an ownership interest in such an invention outside of the Russian
Federation and our intellectual property rights in that claimed invention would
become compromised and our business model may then fail or be significantly
impeded.

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If we are unable to obtain or maintain intellectual
property rights relating to our technology, the commercial value of our
technology may be adversely affected, which could in turn adversely affect our
business, financial condition and results of operations.

Our success and ability to compete depends in part upon our
ability to obtain protection in the United States and other countries for our
nuclear fuel designs by establishing and maintaining intellectual property
rights relating to or incorporated into our fuel technologies and products. We
own a variety of patents and patent applications in the United States, as well
as corresponding patents and patent applications in several other jurisdictions.
However, we have not obtained patent protection in each market in which we plan
to compete. In addition, we do not know how successful we would be should we
choose to assert our patents against suspected infringers. Our pending and
future patent applications may not issue as patents or, if issued, may not issue
in a form that will be advantageous to us. Even if issued, patents may be
challenged, narrowed, invalidated or circumvented, which could limit our ability
to stop competitors from marketing similar products or limit the length of term
of patent protection we may have for our products. Changes in either patent laws
or in interpretations of patent laws in the United States and other countries
may diminish the value of our intellectual property or narrow the scope of our
patent protection, which could in turn adversely affect our business, financial
condition and results of operations.

If we infringe or are alleged to infringe intellectual
property rights of third parties, our business, financial condition and results
of operations could be adversely affected.

Our nuclear fuel designs may infringe, or be claimed to
infringe, patents or patent applications under which we do not hold licenses or
other rights. Third parties may own or control these patents and patent
applications in the United States and elsewhere. Third parties could bring
claims against us that would cause us to incur substantial expenses and, if
successfully asserted against us, could cause us to pay substantial damages.
Further, if a patent infringement suit were brought against us, we could be
forced to stop or delay commercialization of the fuel design or a component
thereof that is the subject of the suit. As a result of patent infringement
claims, or in order to avoid potential claims, we may choose or be required to
seek a license from the third party and be required to pay license fees,
royalties or both. These licenses may not be available on acceptable terms, or
at all. Even if we were able to obtain a license, the rights may be
nonexclusive, which could result in our competitors gaining access to the same
intellectual property. Ultimately, we could be forced to cease some aspect of
our business operations if, as a result of actual or threatened patent
infringement claims, we are unable to enter into licenses on acceptable terms.
This could significantly and adversely affect our business, financial condition
and results of operations. In addition to infringement claims against us, we may
become a party to other types of patent litigation and other proceedings,
including interference proceedings declared by the United States Patent and
Trademark Office regarding intellectual property rights with respect to our
nuclear fuel designs. The cost to us of any patent litigation or other
proceeding, even if resolved in our favor, could be substantial. Some of our
competitors may be able to sustain the costs of such litigation or proceedings
more effectively than we can because of their greater financial resources.
Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace. Patent litigation and other proceedings
may also absorb significant management time.

Our nuclear fuel process is dependent on outside suppliers of
nuclear and other materials and any difficulty by a fuel fabricator in obtaining
these materials could be detrimental to our ability to eventually market our
fuel through a fuel fabricator.

Production of fuel assemblies using our nuclear fuel designs is
dependent on the ability of fuel fabricators to obtain supplies of nuclear
material utilized in our fuel assembly design. Fabricators will also need to
obtain metal for components, particularly zirconium or its alloys. These
materials are regulated and can be difficult to obtain or may have unfavorable
pricing terms. Any difficulties in obtaining these materials by fuel fabricators
could have a material adverse effect on their ability to market fuel based on
our technology.

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Risks Associated With Our Consulting Activities.

Our inability to attract business from new clients or the
loss of any of our existing clients could have a material adverse effect on
us.

We expect that many of our future client engagement agreements
will be terminable by our clients with little or no notice and without penalty.
Some of our work will involve multiple engagements or stages. In those
engagements, there is a risk that a client may choose not to retain us for
additional stages of an engagement or that a client will cancel or delay
additional planned engagements. In addition, a small number of existing clients
account for a majority of our consulting revenues, the loss of any one of which
would have a material adverse effect on our results of operations.

Our future profitability will suffer if we are not able
to maintain current pricing and utilization rates.

Our revenue, and  our profitability, will be largely
based on the billing rates charged to clients and the number of hours our
professionals will work on client engagements, which we define as the
utilization of our professionals. Accordingly, if we are not able to maintain
the pricing for our services or an appropriate utilization rate for our
professionals, revenues, project profit margins and our future profitability
will suffer. Bill rates and utilization rates are affected by a number of
factors, including:

- our ability to predict future demand for services and maintain the
  appropriate headcount and minimize the number of underutilized personnel;
- our clients perceptions of our ability to add value through our services;
- our competitors pricing for similar services;
- the market demand for our services; and
- our ability to manage significantly larger and more diverse workforces as
  we increase the number of our professionals and execute our growth strategies.

Unsuccessful future client engagements could result in
damage to our professional reputation or legal liability, which could have a
material adverse effect on us.

Our professional reputation and that of our personnel is
critical to our ability to successfully compete for new client engagements and
attract or retain professionals. Any factors that damage our professional
reputation could have a material adverse effect on our business.

In addition, any client engagements that we obtain will be
subject to the risk of legal liability. Any public assertion or litigation
alleging that our services were negligent or that we breached any of our
obligations to a client could expose us to significant legal liabilities, could
distract our management and could damage our reputation. We carry professional
liability insurance, but our insurance may not cover every type of claim or
liability that could potentially arise from our engagements. In addition, the
limits of our insurance coverage may not be enough to cover a particular claim
or a group of claims, and the costs of defense.

Our results of operations could be adversely affected by
disruptions in the marketplace caused by economic and political
conditions.

Global economic and political conditions affect our clients
businesses and the markets they serve. A severe and/or prolonged economic
downturn or a negative or uncertain political climate could adversely affect our
clients financial condition and the levels of business activity engaged in by
our clients and the industries we serve. Clients could determine that
discretionary projects are no longer viable or that new projects are not
advisable. This may reduce demand for our services, depress pricing for our
services or render certain services obsolete, all of which could have a material
adverse effect on our results of operations. Changes in global economic
conditions or the regulatory or legislative landscape could also shift demand to
services for which we do not have competitive advantages, and this could
negatively affect the amount of business that we are able to obtain. Although we
have implemented cost management measures, if we are unable to appropriately
manage costs or if we are unable to successfully anticipate changing economic
and political conditions, we may be unable to effectively plan for and respond
to those changes, and our business could be negatively affected.

Risks Relating to the Ownership of Our Securities

There may be volatility in our stock price, which could
negatively affect investments, and stockholders may not be able to resell their
shares at or above the value they originally purchased such shares.

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The market price of our common stock may fluctuate
significantly in response to a number of factors, some of which are beyond its
control, including:

- quarterly variations in operating results,
- changes in financial estimates by securities analysts,
- changes in market valuations of other similar companies,
- announcements by us or our competitors of new products or of significant
  technical innovations, contracts, receipt of (or failure to obtain) government
  funding or support, acquisitions, strategic partnerships or joint ventures,
- additions or departures of key personnel,
- any deviations in net sales or in losses from levels expected by
  securities analysts, or any reduction in political support from levels
  expected by securities analysts,
- future sales of common stock, and
- results of analyses of mining and resources assets.

In addition, the stock market may experience extreme volatility
that is often unrelated to the performance of particular companies. These market
fluctuations may cause our stock price to fall regardless of its performance.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Description of Property.

We are obligated to pay approximately $43,000 per month for
office rent and approximately another $2,000 per month for other fees for the
rented office space located at 1600 Tysons Boulevard, Suite 550, McLean,
Virginia 22102. The space is used by our executives, employees and contractors
for administrative purposes. The term of the lease for our offices expires on
December 31, 2013 and is renewable for additional one-year terms.

We are obligated to pay approximately US$9,000 per month for
office rent and approximately another US$1,500 per month for other fees for the
rented office space located at Zemlyanoi Val, 9, Moscow, Russia, 105064. The
space is used by our Moscow staff for administrative purposes. The term of the
lease for our offices expires on April 30, 2011 and is renewable for additional
one-year terms.

Our branch offices in London and Abu Dhabi are maintained via
corporate agents, and fees that we pay our agents include rental expense. The
address for our branch in London is Lightbridge Advisors Limited, High Street
Partners, 83 Victoria Street, London, SW1H OHW. The address for our branch in
Abu Dhabi is Fotouh Al Khair Center (Marks & Spencer) Tower No. 3, 0
floor, next to Etisalat Head office, PO Box 44183, Abu Dhabi.

Item 3. Legal Proceedings.

From time to time, we may become involved in various lawsuits
and legal proceedings which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results.

Item 4. [Removed and Reserved.]

PART II

Item 5. Market for Common Equity, Related Stockholder
Matters and Small Business Issuer Purchases of Equity Securities.

Market Information

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Our common stock is quoted on the NASDAQ Capital Market under
the symbol LTBR.

The following table sets forth, for the periods indicated, the
high and low sales prices of our common stock. These prices reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.

The quotations for all periods prior to and including September
30, 2009 have been adjusted to account for our 30-for-1 reverse stock split
which was effective as of September 21, 2009.

|Fiscal Year |  | Quarter Ending |  |   | High  |  |   | Low  | 
|----------- |  | -------------- |  | - | ----- |  | - | ---- | 
|            |  |                |  |   |       |  |   |      | 
|2010        |  | December 31    |  | $ | 6.23  |  | $ | 5.00 | 
|            |  | September 30   |  | $ | 8.31  |  | $ | 5.31 | 
|            |  | June 30        |  | $ | 11.15 |  | $ | 5.26 | 
|            |  | March 31       |  | $ | 9.00  |  | $ | 5.99 | 
|2009        |  | December 31    |  | $ | 12.05 |  | $ | 5.03 | 
|            |  | September 30   |  | $ | 10.95 |  | $ | 5.46 | 
|            |  | June 30        |  | $ | 7.35  |  | $ | 5.40 | 
|            |  | March 31       |  | $ | 8.40  |  | $ | 4.08 | 

In addition, our common stock is included in the World Nuclear
Associations Nuclear Energy Index, which tracks the overall performance of
globally traded companies that are engaged in the nuclear energy industry.

Holders

As of February 18, 2011, our common stock was held by 168
stockholders of record. This number excludes the shares of our common stock
owned by stockholders holding stock under nominee security position listings.

Reports to Stockholders

We plan to furnish our stockholders with an annual report for
each fiscal year ending December 31, containing financial statements audited by
our independent certified public accountants. Additionally, we may in our sole
discretion, issue unaudited quarterly or other interim reports to our
stockholders as we deem appropriate. We intend to maintain compliance with the
periodic reporting requirements of the Exchange Act.

Dividends

We have never paid dividends. While any future dividends will
be determined by our directors after consideration of the earnings, financial
condition, and other relevant factors, it is currently expected that available
cash resources will be utilized in connection with our ongoing operations.

Transfer Agent

Our transfer agent and registrar for our common stock is
Computershare Trust Company, 350 Indiana Street, Suite 800, Golden, Colorado,
80401. Its telephone number is 800.962.4284 and facsimile is 303.262.0604.

Recent Sales of Unregistered Securities

Except for sales previously disclosed in quarterly reports on
Form 10-Q or in a current report on Form 8-K filed by us with the Securities and
Exchange Commission, we have not sold any securities without registration under
the Securities Act of 1933.

Securities Authorized for Issuance Under Equity Compensation
Plans

The information under the heading Equity Compensation Plan
Information in our definitive proxy statement for the annual meeting of
shareholders to be filed with the SEC is incorporated herein by reference.

15

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Item 6. Selected Financial Information.

Not applicable

Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations. Overview

The following Managements Discussion and Analysis of Financial
Condition and Results of Operations, or MD&A, is intended to help the reader
understand Lightbridge Corporation, our operations and our present business
environment. MD&A is provided as a supplement to, and should be read in
conjunction with, our consolidated financial statements and the accompanying
notes thereto contained in Item 8. Financial Statements and Supplementary Data
of this report. This overview summarizes the MD&A, which includes the
following sections:

- Our Business a general overview of our two business segments, the
  material opportunities and challenges of our business;
- Critical Accounting Policies and Estimates a discussion of
  accounting policies that require critical judgments and estimates;
- Operations Review an analysis of our Companys consolidated
  results of operations for the two years presented in our consolidated
  financial statements. Except to the extent that differences among our
  operating segments are material to an understanding of our business as a
  whole, we present the discussion in the MD&A on a consolidated basis; and
- Liquidity, Capital Resources and Financial Position an analysis
  of cash flows; an overview of financial position.

As discussed in more detail at the beginning of this Annual
Report, the following discussion contains forward-looking statements that
involve risks, uncertainties, and assumptions such as statements of our plans,
objectives, expectations, and intentions. Our actual results may differ
materially from those discussed in these forward-looking statements because of
the risks and uncertainties inherent in future events.

Our Business

General Overview

We are a leading nuclear fuel technology company, and
participate in the nuclear power industry in the U.S. and internationally. Our
business operations can be categorized into two segments: (i) we are a developer
of next generation nuclear fuel technology that has the potential to
significantly uprate the power output of reactors, reducing the
per-megawatt-hour cost of generating nuclear energy, and reduce nuclear waste
and proliferation, and (ii) we are a provider of nuclear power consulting and
strategic advisory services to commercial and governmental entities worldwide.

Our Nuclear Fuel Technology Business Segment

The Nature of Our Proprietary Technology Development
Activities

We are developing innovative, proprietary nuclear fuel
designs which we expect will significantly enhance the nuclear power industrys
economics and increase power output by: (1) Extending the fuel cycle length to
24 months or longer while simultaneously increasing the power output by up to
17% in existing pressurized water reactors (including Westinghouse 4-loop
reactors, which are currently limited to an 18-month fuel cycle); (2) Enabling
increased reactor power output (up to 30% increase) without changing the core
size in new-build PWRs; and (3) Addressing concerns relating to the back-end of
the fuel cycle including the volume of used fuel per kilowatt-hour as well as
proliferation of weapons-usable materials. Significant technological synergies
exist among our primary fuel products due to utilization of the proprietary
metallic fuel rod technology that is at the core of each of these products. As a
result, once completed, full-scale demonstration and qualification of the
metallic fuel rod technology will simultaneously advance all of our product
families currently under development.

In response to the challenges associated with conventional
oxide fuels, we are developing an innovative, proprietary metallic fuel
technology, that is capable of significantly higher burnup and power density
compared to conventional oxide fuels, which we believe will allow current and
new-build nuclear reactors to safely increase power production and reduce the
initial capital investment as well as operations and maintenance costs on a per
kilowatt-hour basis. As a result, in addition to the projected electricity
production cost savings, we believe that our technology can result in utilities
or countries needing to deploy fewer new reactors to generate the same amount of electricity. For utilities or countries that
already have operating reactors, our technology could be utilized to increase
the power output of those reactors instead of to building new reactors. Further,
we believe that the fuel fabrication, or manufacturing process for this new fuel
design is simpler, which we expect could lower fuel fabrication costs.

16

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We intend to license our intellectual property for our nuclear
fuel designs to existing major nuclear fuel fabricators that own and operate
fuel fabrication facilities and have long-term fuel supply contracts with
nuclear power plants. We believe that this partnering strategy would also allow
us to take advantage of the existing customer base of such major fuel
fabricators, thus enabling our fuel products to achieve high market penetration
rates in a relatively short period of time. We are currently pursuing a research
and development strategy aimed at generating sufficient interest and confidence
in our fuel technology among major fuel fabricators with a view of entering into
a commercial arrangement with one or more of them within the next 2-3 years. In
addition to a fuel design license agreement, we believe that there may be
manufacturing technology licenses or manufacturing support fees that we may be
able to receive from the fuel fabricator.

Consulting and Strategic Advisory Services Business
Segment

We are primarily engaged in the business of assisting
commercial and governmental entities with developing and expanding their nuclear
industry capabilities and infrastructure. We provide integrated strategic advice
across a range of expertise areas including, for example, regulatory
development, nuclear reactor site selection, procurement and deployment, reactor
and fuel technology, international relations and regulatory affairs.

Due to the relatively limited growth in the nuclear energy
industry during the 1980s and 1990s, and corresponding limited recruitment
into the industry, the cadre of engineers, managers and other nuclear energy
industry experts is aging. In any nuclear renaissance, we believe that the
industry will be challenged in acquiring and retaining sufficient qualified
expertise. Moreover, in countries studying new nuclear energy programs, the
number of qualified nuclear energy personnel is limited, and we believe that
those countries will need to rely on significant support from non-domestic
service providers and experts to ensure success in those programs.

Our emergence in the field of nuclear energy consulting is in
direct response to the need for independent assessments and highly qualified
technical consulting services from countries looking to establish nuclear energy
programs, by providing a blueprint for safe, secure, efficient and
cost-effective nuclear power. We offer full-scope strategic planning and
advisory services for new and growing existing markets. Furthermore, we only
engage with commercial entities and governments that are dedicated to
non-proliferative and transparent nuclear programs.

Our consulting services are expert and relationship based, with
particular emphasis on key decision makers in senior positions within
governments or companies, as well as focus on overall management of nuclear
energy programs. To date, substantially all of our revenues are derived from our
consulting and strategic advisory services business segment, which primarily
provides nuclear consulting services to entities within the United Arab
Emirates, our first significant consulting and strategic advisory client. In
April 2010 and December 2010, we began to provide consulting services in
additional countries, including the member states of the Gulf Cooperation
Council. We have also provided nuclear safety consulting advice to U.S. nuclear
utilities. We plan to continue and potentially expand this nuclear safety
consulting work in the U.S.

Factors Affecting Our Financial Performance

Proprietary Nuclear Fuel Technology Development

We believe that a major opportunity for us is the possibility
that our advanced nuclear fuel designs, which are currently in the research and
development stage, will be used in many existing and new light water nuclear
reactors. Light water reactors are the dominant reactor types currently used in
the world, and fuels for such reactors constitute the majority of the commercial
market for nuclear fuel.

Various industry efforts currently underway to meet the growing
demand for more electric power output from the same reactor core size, and to
create a more efficient fuel cycle, with improved safety, reliability and
extended fuel cycle length, are largely focused on stretching the limits of
conventional oxide fuels. While this strategy has worked well in the past, now
almost all of the available fuel performance margins with conventional oxide
fuels have been utilized. However, due to the risk-averse nature of the major
industry players and a significant capital investment made in existing
infrastructure supporting conventional oxide fuels, major fuel vendors are reluctant to take on early risks associated
with fuel development programs on next generation nuclear fuel designs. As a
result, we are well positioned to take advantage of this market opportunity by
developing next generation fuel designs that can meet the needs of the power
generator.

17

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Our commercialization strategy is not to compete with the major
fuel fabricators that collectively fabricate a large majority of the fuel used
in the worlds nuclear power plants. Instead, we are pursuing a
commercialization strategy aimed at generating interest in our nuclear fuel
designs from one or more of these major nuclear fuel fabricators that could lead
to a technology licensing or other teaming arrangement over the next three
years. Our ultimate commercial success depends on how soon and what kind of a
commercial arrangement we are able to negotiate with one or more of these
potential partner companies.

In addition, we recognize that a successful commercialization
strategy is highly dependent upon the interest in our nuclear fuel designs from
nuclear power plants which are the ultimate fuel product user. If we are
successful in generating sufficient interest from one or more nuclear power
plants n evaluating our fuel technology for potential use, we believe it would
make it easier to find a major fuel fabricator that would be willing to partner
with us in order to offer that fuel product to the nuclear power generator.

It is also important to generate public, industry and
government awareness of our nuclear fuel technology that could help build
technology confidence and increase credibility among fuel fabricators and
nuclear power plants. As a result, we are pursuing a public outreach effort by
seeking publication of technical papers highlighting progress on our fuel
designs in peer-reviewed technical journals and presentations at major
international nuclear conferences.

Competition with respect to the design of commercially viable
fuel products is limited to conventional uranium oxide fuels, which, as
discussed above, are reaching the limits in terms of their capability to provide
increased power output or longer fuel cycles. We believe that the industry needs
fuel products that can provide these benefits. To our knowledge, our nuclear
fuel development project is the only commercially viable program that could
achieve these goals. Due to the long-term product development timelines,
significant nuclear regulatory requirements, and our comprehensive patent
portfolio, we believe that the barriers to entry prevent a viable competitor in
the foreseeable future.

In addition, in certain markets with a diversified energy base,
decisions on new-build power plants are largely affected by the economics of
various energy sources. If prices of non-nuclear energy sources fall, it could
limit the deployment of new-build nuclear power plants in such markets. As a
result, this could reduce the size of the potential markets for our fuel
technology. However, if prices or production costs of non-nuclear energy
increase, there may be increased demand for the deployment of new-build nuclear
power plants.

Consulting and Strategic Advisory Services

Our emergence in the field of nuclear energy consulting is in
direct response to the need for independent assessments and highly qualified and
integrated strategic advisory services for countries looking to establish
nuclear energy programs, while still providing a blueprint for safe, secure,
efficient and cost-effective non-proliferative nuclear power. We offer
full-scope planning and strategic advisory services for new and existing markets
and offer such services without a bias towards or against any reactor vendor or
fuel technology. We believe that there are significant opportunities available
to provide services to governments that are dedicated to non-proliferative,
safe, and transparent nuclear programs.

Our major challenge in pursuing our business is that the
decision making process for nuclear power programs typically involves careful
consideration by many parties and therefore requires significant time. Also,
many of the potential clients that could benefit from our services are in
regions of the world where tensions surrounding nuclear energy are high, or in
countries where public opinion plays an important role. Domestic and
international political pressure may hinder our efforts to provide nuclear
energy services, regardless of our focus on non-proliferative nuclear power.

See also Item 1A. Risk Factors in Part I of this report for
additional information about risks and uncertainties facing our Company.

Critical Accounting Policies

Critical Accounting Policies and Estimates

18

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The SEC issued Financial Reporting Release No. 60,
Cautionary Advice Regarding Disclosure About Critical Accounting
Policies suggesting that companies provide additional disclosure and
commentary on their most critical accounting policies. In Financial Reporting
Release No. 60, the SEC has defined the most critical accounting policies as the
ones that are most important to the portrayal of a companys financial condition
and operating results, and require management to make its most difficult and
subjective judgments, often as a result of the need to make estimates of matters
that are inherently uncertain. Based on this definition, we have identified the
following significant policies as critical to the understanding of our financial
statements.

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make a variety
of estimates and assumptions that affect (i) the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and (ii) the reported amounts of revenues and
expenses during the reporting periods covered by the financial statements.

Our management expects to make judgments and estimates about
the effect of matters that are inherently uncertain. As the number of variables
and assumptions affecting the future resolution of the uncertainties increase,
these judgments become even more subjective and complex. Although we believe
that our estimates and assumptions are reasonable, actual results may differ
significantly from these estimates. Changes in estimates and assumptions based
upon actual results may have a material impact on our results of operation
and/or financial condition. We have identified certain accounting policies that
we believe are most important to the portrayal of our current financial
condition and results of operations.

Accounting for Stock Based Compensation, Stock Options
and Warrants Granted to Employees and Non-employees

We adopted the requirements for stock-based compensation, where
all forms of share-based payments to employees or non-employees, including stock
options and stock purchase plans, are treated the same as any other form of
compensation by recognizing the related cost in the statement of income.

Under these requirements, stock-based compensation expense for
employees is measured at the grant date based on the fair value of the award,
and the expense is recognized ratably over the awards vesting period.

The stock-based compensation expense incurred by Lightbridge in
connection with its employees is based on the employee model of ASC 718. Under
ASC 718 employee is defined as An individual over whom the grantor of a
share-based compensation award exercises or has the right to exercise sufficient
control to establish an employer-employee relationship based on common law as
illustrated in case law and currently under U.S. tax regulations. Our advisory
board members and consultants do not meet the employer-employee relationship as
defined by the IRS and therefore are accounted for under ASC 505-50. Under these
requirements, stock-based compensation expense for non-employees is based on the
fair value of the award on the measurement date which is the earlier of the date
at which a commitment for performance by the counterparty to earn the equity
instruments is reached (a performance commitment), or the date at which the
counterpartys performance is complete. For all grants made, we recognize
compensation cost under the straight-line method.

We measure the fair value of stock options on the date of grant
using a Black-Scholes option-pricing model which requires the use of several
estimates, including:

- the volatility of our stock price;
- the expected life of the option;
- risk free interest rates; and
- expected dividend yield.

Prior to the completion of our merger in October 2006, we had
limited historical information on the price of our stock as well as employees
stock option exercise behavior for stock options issued prior to the merger. As
a result, we could not rely on historical experience alone to develop
assumptions for stock price volatility and the expected life of options. As
such, our stock price volatility was estimated with reference to our historical
stock price for the time period before the merger, from the date the
announcement of the merger was made. We utilized the closing prices of our
publicly-traded stock from the announcement date in January 2006 to determine
our volatility and we have continued to use our historical stock price closing
prices to determine our volatility.

19

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The expected life of options is based on internal studies of
historical experience and projected exercise behavior. We estimate expected
forfeitures of stock-based awards at the grant date and recognize compensation
cost only for those awards expected to vest. The forfeiture assumption is
ultimately adjusted to the actual forfeiture rate. Estimated forfeitures are
reassessed in subsequent periods and may change based on new facts and
circumstances. We utilize a risk-free interest rate, which is based on the yield
of U.S. treasury securities with a maturity equal to the expected life of the
options. We have not and do not expect to pay dividends on our common shares.

Income Taxes

We account for income taxes using the liability method in
accordance with the accounting pronouncement Accounting for Income
Taxes, which requires the recognition of deferred tax assets or liabilities
for the tax-effected temporary differences between the financial reporting and
tax bases of our assets and liabilities, and for net operating loss and tax
credit carry forwards. The tax expense or benefit for unusual items, prior year
tax exposure items, or certain adjustments to valuation allowances are treated
as discrete items in the interim period in which the events occur.

On January 1, 2007, we adopted Accounting Interpretation
Accounting for Uncertainty in Income Taxes, which addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under this requirement,
we may recognize the tax benefit from an uncertain tax position only if it is
more likely than not that the tax position will be sustained on examination by
the taxing authorities, based on the technical merits of the position. As a
result of the implementation of this standard, we did not recognize any current
tax liability for unrecognized tax benefits. We do not believe that there are
any unrecognized tax positions that would have a material effect on the net
operating losses disclosed.

Revenue Recognition from Consulting Contracts

We believe one of our critical accounting policies is revenue
recognition from our consulting contracts. We are currently primarily deriving
our revenue from fees by offering consulting and strategic advisory services to
commercial and government owned entities outside the U.S. planning to create or
expand electricity generation capabilities, using nuclear power plants. Our fee
type and structure for each client engagement depend on a number of variables,
including the size of the client, the complexity, the level of the opportunity
for us to improve the clients electricity generation capabilities using nuclear
power plants, and other factors.

The two consulting agreements that we entered into in August
2008 were fixed-fee service contracts but were subsequently changed to time and
expense contracts. We recognize revenue associated with these contracts in
accordance with the time and expense billed to our customer, which is subject to
their review and approval. When a loss is anticipated on a contract, the full
amount of the anticipated loss is recognized immediately. Our management uses
its judgment concerning the chargeable number of hours to bill under each
contract considering a number of factors, including the experience of the
personnel that are performing the services, the value of the services provided
and the overall complexity of the project. Should changes in managements
estimates be required, due to business conditions that cause the actual
financial results to differ significantly from managements present estimates,
revenue recognized in future periods could be adversely affected.

The revenue recognition from two other governments contracts
entered into April 2010 and December 2010 will be based on the completion and
acceptance of contractual milestones.

We recognize revenue in accordance with SEC Staff Accounting
Bulletin or SAB, No. 104, Revenue Recognition. We recognize revenue
when all of the following conditions are met:

| | (1) | There is persuasive evidence of an arrangement;                              
| | --- | -----------------------------------------------------------------------------
| | (2) | The service has been provided to the customer;                               
| | (3) | The collection of the fees is reasonably assured;
    and                    
| | (4) | The amount of fees to be paid by the customer is fixed or
      determinable.

In situations where contracts include client acceptance
provisions, we do not recognize revenue until such time as the client has
confirmed its acceptance.

20

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Intangibles

As presented on the accompanying balance sheet, we had patents
with a net book value of approximately $377,000 as of December 31, 2010. There
are many assumptions and estimates that may directly impact the results of
impairment testing, including an estimate of future expected revenues, earnings
and cash flows, and discount rates applied to such expected cash flows in order
to estimate fair value. We have the ability to influence the outcome and
ultimate results based on the assumptions and estimates we choose for testing.
To mitigate undue influence, we set criteria that are reviewed and approved by
various levels of management. The determination of whether or not intangible
assets have become impaired involves a significant level of judgment in the
assumptions. Changes in our strategy or market conditions could significantly
impact these judgments and require adjustments to recorded amounts of intangible
assets.

Contingencies

Management assesses the probability of loss for certain
contingencies and accrues a liability and/or discloses the relevant
circumstances, as appropriate. Management believes that any liability to the
Company that may arise as a result of having to pay out additional expenses that
may have a material adverse effect on the financial condition of the Company
taken as a whole should be disclosed. Refer to Note 9 of Notes to Consolidated
Financial Statements.

Recent Accounting Standards and Pronouncements

Refer to Note 1 of Notes to Consolidated Financial Statements
for a discussion of recent accounting standards and pronouncements.

Business Segments and Periods Presented

We have provided a discussion of our results of operations on a
consolidated basis and have also provided certain detailed segment information
for each of our business segments below for the years ended December 31, 2010
and 2009, in order to provide a meaningful discussion of our business segments.
We have organized our operations into two principal segments: Consulting and
Strategic Advisory Services and Fuel Technology. We present our segment
information along the same lines that our chief executives review our operating
results in assessing performance and allocating resources.

Corporate and
    
    
    TotalConsulting
    
    
    **Technology**
    
    
    **Eliminations**
    
    
    **12
      Months**December 31, 2010Revenue
    
    7,244,158
    
    
    342,550
    
    
    
    
    
    7,586,708Segment Profit (Loss)  Before Tax
    
    1,703,301
    
    
    (1,522,275
    )
    
    (7,744,508
    )
    
    (7,563,481
    )Total Assets
    
    990,563
    
    
    329,640
    
    
    13,990,609
    
    
    15,310,812Property Additions
    
    
    
    
    
    
    
    1,620
    
    
    1,620Interest Expense
    
    
    
    
    
    
    
    
    
    
    Depreciation
    
    
    
    
    786
    
    
    26,214
    
    
    27,000December 31, 2009Revenue
    
    10,257,306
    
    
    259,072
    
    
    
    
    
    10,516,378Segment Profit (Loss)  Before Tax
    
    3,771,974
    
    
    (1,597,699
    )
    
    (9,407,586
    )
    
    (7,233,312
    )Total Assets
    
    2,297,070
    
    
    309,274
    
    
    4,529,694
    
    
    7,136,038Property Additions
    
    
    
    
    
    
    
    14,920
    
    
    14,920Interest Expense
    
    
    
    
    
    
    
    
    
    
    Depreciation
    
    
    
    
    206
    
    
    25,276
    
    
    25,482


Technology Business

Over the next 12 to 15 months we expect to incur approximately
$5 million in research and development expenses related to the development of
our proprietary nuclear fuel designs. We spent approximately $1.6 million for
research and development during year ended December 31, 2010.

21

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Over the next several years, we expect that our research and
development activities will increase and will be primarily focused on testing
and demonstration of our all-metal fuel technology for Western-type pressurized
water reactors. The main objective of this research and development phase is to
prepare for full-scale demonstration of our fuel technology in an operating
commercial PWR. As discussed above, we believe the testing and demonstration
work on our all-metal fuel technology will also benefit and advance our
thorium-based seed-and-blanket fuel assembly design due to the similarities and
synergies between the all-metal fuel rods and the metallic seed fuel rods
utilized in the seed-and-blanket fuel assembly design.

On August 3, 2009, we entered into a consulting agreement with
AREVA for $550,000. For the year ended December 31, 2010, our total revenue from
AREVA under this agreement was approximately $342,550, including billings for
expense reimbursements. We have completed the scope of work under the initial
phase of the consulting agreement.

Consulting and Strategic Advisory Services
Business

At the present time, substantially all of our revenue for the
year ended December 31, 2010, from our consulting and strategic advisory
services business segment is derived by offering services to governments outside
the U.S. planning to create or expand electricity generation capabilities using
nuclear power plants. The fee type and structure that we offer for each client
engagement is dependent on a number of variables, including the complexity of
the services, the level of the opportunity for us to improve the clients
electricity generation capabilities using nuclear power plants, and other
factors. Our revenues totaling approximately $7.2 million and $10.3 million for
the years ended December 31, 2010 and 2009, respectively, have been derived
primarily from our continuing work under the August 1, 2008 agreements, and
follow-on agreements in 2009, with the Executive Affairs Authority (EAA), of
Abu Dhabi, and with the Emirates Nuclear Energy Corporation (ENEC), and the
Federal Authority for Nuclear Regulation (FANR), from our April 2010 contract
with another non-U.S. government, and from our December 2010 contract with the
Gulf Cooperation Council, as described in Item 1, Part 1, Financial Statements
 Note 1 - Nature of Operations and Basis of Presentation. We entered into next
phase follow-on agreements in March 2009 and July 2009 to continue our
consulting services under the ENEC and FANR agreements for 2009. Revenue was
recognized on a time and expense basis for the year ended December 31, 2010 for
the ENEC and FANR contracts. For the April 2010 contract, as well as our
December 2010 contract with the Gulf Cooperation Council, revenue is recognized
upon the achievement of contractual milestones and the acceptance by our
customer of our work.

Consolidated Results of Operations

The following table presents our historical operating results
as a percentage of revenues for the periods indicated:

|                                        |  | Year Ended December 31, |    
|--------------------------------------- |  | ----------------------- | ---
|                                        |  | 2010                    |    
|                                        |  |                         |    
|Consolidated Statements of Income Data: |  |                         |    
|Revenues                                |  | 100 %                   |    
|Costs and expenses:                     |  |                         |    
|Cost of revenues                        |  | 65                      |    
|Gross Profit                            |  | 35                      |    
|Research and
      development          |  | 21                      |    
|General and administrative              |  | 114                     |    
|                                        |  |                         |    
|Total costs and expenses                |  | 135                     |    
|                                        |  |                         |    
|Loss from operations                    |  | (100                    | )  
|Interest income and other, net          |  | 1                       |    
|                                        |  |                         |    
|Loss before income taxes                |  | (99                     | )  
|Provision for income taxes              |  | 0                       |    
|                                        |  |                         |    
|Net loss                                |  | (99                     | ) %

22

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Revenue

The following table presents our revenues, by business segment,
for the periods presented (in millions):

|                            |   | Year Ended December 31, | 
|--------------------------- | - | ----------------------- | 
|                            |   | 2010                    | 
|                            |   |                         | 
|Consulting Segment Revenues |   |                         | 
|ENEC and FANR(UAE)          | $ | 6.4                     | 
|Other (other countries)     |   | 0.8                     | 
|                            |   |                         | 
|Total                       |   | 7.2                     | 
|Technology Segment Revenues |   | 0.4                     | 
|                            |   |                         | 
|Total Revenues              | $ | 7.6                     | 

The decrease in our revenues from 2009 to 2010 resulted from
the decrease in the work performed for our ENEC and FANR projects. Our
consulting projects with ENEC and FANR are being performed pursuant to ongoing
requests to work on specific projects on a time and expense basis as needed. The
future revenue to be earned and recognized under both the ENEC and FANR
agreements will depend upon agreed upon work plans which can differ from the
revenue amounts initially planned to be earned under these agreements.

We believe that in 2011 we will obtain contracts from other
governments interested in deploying nuclear power in their countries, based on
our commitment to providing consulting services that are relevant and objective
in exploring the use of nuclear power, which in turn we expect will increase our
future consulting revenue.

See Note 1 and Note 3 of the Notes to our Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K for
additional information about our revenue.

Costs and Expenses

The following table presents our cost of services provided, by
business segment, for the periods presented (in millions):

|           |   | Year Ended December 31, | 
|---------- | - | ----------------------- | 
|           |   | 2010                    | 
|           |   |                         | 
|Consulting | $ | 4.7                     | 
|Technology |   | 0.3                     | 
|Total      | $ | 5.0                     | 

Cost of Services Provided

These expenses related to the consulting, professional,
administrative and other support costs allocated to our technology and
consulting projects, which were incurred to perform and support the work done
for our consulting projects with ENEC, FANR and another government and our AREVA
contract. The billing rates to us from our consultants who provide services
under our consulting contracts predominantly remained the same in 2010 and 2009.
The decrease in the consulting costs was a result in the decrease of work
performed under the ENEC and FANR contracts.

See Note 1 and Note 3 of the Notes to our Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K for
additional information about our cost of services provided.

If consulting revenues increase in 2011, we expect cost of
services provided will increase in dollar amount and may increase as a
percentage of revenues in 2011 and in future periods.

23

---

Research and Development

The following table presents our research and development
expenses, (in millions):

|                                  |   | Year Ended   | 
|--------------------------------- | - | ------------ | 
|                                  |   | December 31, | 
|                                  |   | 2010         | 
|                                  |   |              | 
|Research and development expenses | $ | 1.6          | 

Research and development expenses consist primarily of
compensation and related costs for personnel responsible for the research and
development of our fuel. Almost all of our research and development activities
are conducted in Russia. We expense research and development costs as they are
incurred.

Research and development expenses remained the same from 2009
to 2010. Research and development expenses will increase in dollar amount and
may increase as a percentage of revenues in 2011 and future periods because we
expect to continue to invest in the development of our nuclear fuel products.

See Note 10 of the Notes to our Consolidated Financial
Statements included in Item 8 of this Annual Report Form 10-K for additional
information about our research and development costs.

General and Administrative Expenses

The following table presents our general and administrative
expenses, (dollars in millions):

|                                    |   | Year Ended   | 
|----------------------------------- | - | ------------ | 
|                                    |   | December 31, | 
|                                    |   | 2010         | 
|                                    |   |              | 
|General and administrative expenses | $ | 8.7          | 

General and administrative expenses consist primarily of
compensation and related costs for personnel and facilities, stock-based
compensation, finance, human resources, information technology, and fees for
consulting and other professional services. Professional services are
principally comprised of outside legal, audit, strategic advisory services and
outsourcing services.

General and administrative expenses decreased $1.2 million from
2009 to 2010. This decrease was primarily related to the decrease in stock-based
compensation expense of $2.1 million as a result of a significant amount of
equity awards which fully vested in 2009. This decrease was offset by an
increase in consulting expenses and professional fees of $0.2 million and a
decrease in 2010 from 2009 in the support costs allocated from general and
administrative expenses to cost of services provided, which increased the total
general and administrative expenses reported by $0.7 million. We expect our
general and administrative expenses may increase in future periods due to the
expansion of our technology and consulting and strategic advisory services
business segments and the hiring of new officers, employees and consultants to
help further develop and support our technology and consulting and strategic
advisory services segments.

See Note 11 of the Notes to our Consolidated Financial
Statements included in this Annual Report on Form 10-K for information regarding
our stock-based compensation.

Interest Income and Other, Net

Interest income and other, net increased $0.1 million from 2009
to 2010. This increase was primarily driven by an increase in interest income of
$0.2 million due to our higher cash and marketable securities balances resulting
from our July 2010 fundraise.

Provision for Income Taxes

The following table presents our provision for income taxes.
Our effective tax rate for the periods presented is 40%.

24

---

|                           |   | Year Ended   | 
|-------------------------- | - | ------------ | 
|                           |   | December 31, | 
|                           |   | 2009         | 
|                           |   |              | 
|Provision for income taxes | $ | 0.0          | 

We incurred a net loss for both 2009 and 2010 and took a 100%
valuation allowance against all deferred tax assets. Therefore we did not have a
provision for taxes for both 2010 and 2009.

See Note 8 of the Notes to our Consolidated Financial
Statements included in this Annual Report on Form 10-K for information regarding
our Income Taxes.

Liquidity and Capital Resources

As of December 31, 2010, we had total cash and cash equivalents
of approximately $2.4 million and marketable securities of $10.5 million. The
following table provides detailed information about our net cash flow for all
financial statements periods presented in this Report.

Cash Flow

|                                                          |   | December 31, |  
|--------------------------------------------------------- | - | ------------ | -
|                                                          |   | 2010         |  
|                                                          |   |              |  
|Net cash provided by (used in) operating
      activities | $ | (2,361,138   | )
|Net cash provided by (used in) investing activities       | $ | (10,714,881  | )
|Net cash provided by (used in) financing
      activities | $ | 12,420,649   |  
|Net cash inflow (outflow)                                 | $ | (655,370     | )

Operating Activities

Net cash used in our operating activities decreased by
approximately $0.2 million for the year ended December 31, 2010 as compared to
2009. This decrease in cash used was primarily due to the decrease in cash
payments made toward accounts payable of $4.3 million. The decrease was
primarily offset by a decrease in cash collected from our accounts receivable
due to our lower revenue in 2010, of approximately $4.1 million, which increased
our cash used in operations.

Investing Activities

Net cash used in our investing activities for the year ended
December 31, 2010 as compared to 2009, increased by approximately $10.7 million,
which was due to the purchase of marketable securities in September 2010 of
approximately $10.6 million, and an increase in patent costs in 2010 compared to
2009 for the filing of patent applications of $0.1 million. These patent
applications are filed for the new developments resulting from our research and
development activities in our technology business segment. We anticipate these
patent costs to increase in the future periods due to the research and
development work we plan to perform on our all-metal fuel design.

Financing Activities

There was an increase in net cash provided by our financing
activities for the year ended December 31, 2010 as compared to the same period
in 2009 of approximately $12.4 million. This increase is primarily due to the
securities offering that we completed on July 28, 2010 for which we received net
proceeds of approximately $12.6 million. The increase is also due to the return
to us of restricted cash held by our credit card vendor of approximately $0.1
million. These increases were offset by the redemption of stock from the
exercise of stock options by an officer of approximately $0.3 million. See Note
11 of the Notes to our Consolidated Financial Statements included in this Annual
Report on Form 10-K for information regarding our securities offering.

We anticipate entering into other consulting and technology
agreements with our existing and new potential clients that will generate
additional revenues for us in 2011 and beyond. If we do not enter into any new agreements, we anticipate that our cash position will meet our
anticipated working capital needs until later in the year 2012.

25

---

In support of our long-term business plan with respect to our
fuel technology business, we endeavor to create strategic alliances with major
fuel vendors, fuel fabricators and/or other strategic parties during the next
three years, to support the remaining research and development activities
required to further enhance and complete the development of our fuel products to
a commercial stage. We may be unable to form such strategic alliances on terms
acceptable to us or at all. Our total current average operating expenses,
excluding the approximate $5 million of outside consulting research and
development expenses we expect to incur over the next 12-15 months, is
approximately $0.8 million per month.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity or capital expenditures or capital resources that is
material to an investor in our securities.

Seasonality

Our business has not been subject to any material seasonal
variations in operations, although this may change in the future.

Inflation

Our business, revenues and operating results have not been
affected in any material way by inflation.

Item 7A. Quantitative and Qualitative Disclosure About
Market Risk.

Not applicable.

Item 8. Financial Statements.

The full text of our audited consolidated financial statements
as of December 31, 2010 and 2009 begins on page F-1 of this Report.

Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.

There have been no disagreements regarding accounting and
financial disclosure matters with our independent certified public accountants.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act) that are designed to ensure that
information that would be required to be disclosed in Exchange Act reports is
recorded, processed, summarized and reported within the time period specified in
the SECs rules and forms, and that such information is accumulated and
communicated to our management, including to our Chief Executive Officer and
Chief Operating Officer/Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our
management, including our Chief Executive Officer and Chief Operating
Officer/Chief Financial Officer, evaluated the effectiveness of the design and
operation of our disclosure controls and procedures as of December 31, 2010.
Based on that evaluation, our Chief Executive Officer and Chief Operating
Officer/Chief Financial Officer concluded that as of December 31, 2010, our
disclosure controls and procedures were effective to satisfy the objectives for
which they are intended.

(b) Managements annual report on internal control over
financial reporting

26

---

The management of the Company is responsible for establishing
and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Exchange Act defines
internal control over financial reporting as a process designed by, or under the
supervision of, the Companys principal executive and principal financial
officers and effected by the Companys board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately
  and fairly reflect the transactions and dispositions of the assets of the
  Company;
- Provide reasonable assurance that transactions are recorded as necessary
  to permit preparation of financial statements in accordance with accounting
  principles generally accepted in the United States of America, and that
  receipts and expenditures of the Company are being made only in accordance
  with authorizations of management and directors of the Company; and
- Provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use or disposition of the Companys assets that
  could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2010. In making this assessment,
management used the framework set forth in the report entitled Internal Control
- Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission, or COSO. The COSO framework summarizes each of the
components of a companys internal control system, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information
and communication, and (v) monitoring. Based on our assessment we determined
that, as of December 31, 2010, the Companys internal control over financial
reporting is effective based on those criteria.

Child, Van Wagoner & Bradshaw, PLLC, Certified Public
Accountants (CVB), our independent registered public accounting firm, has
performed an audit of the effectiveness of the Companys internal control over
financial reporting as of December 31, 2010, and, as part of its audit, has
issued its attestation report on the effectiveness of the Companys internal
controls over financial reporting herein as of December 31, 2010. CVBs
attestation report is included in this Annual Report on Form 10-K on page F-2.
This audit is required to be performed in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our independent
auditors were given unrestricted access to all financial records and related
data.

(c) Changes in internal control over financial reporting

During the fourth quarter of 2010, there were no changes in our
internal control over financial reporting identified in connection with the
evaluation performed during the fiscal year covered by this report that has
materially affected, or is reasonably likely to materially affect our internal
control over financial reporting.

Item 9B. Other Information.

None.

PART III

Item 10. Directors and Executive Officers of the
Registrant.

The information required by Item 10 of Part III is included in
our Proxy Statement relating to the 2011 Annual Meeting of Stockholders and is
incorporated herein by reference.

27

---

Item 11. Executive Compensation.

The information required by Item 11 of Part III is included in
our Proxy Statement relating to the 2011 Annual Meeting of Stockholders and is
incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Shareholders.

The information required by Item 12 of Part III is included in
our Proxy Statement relating to the 2011 Annual Meeting of Stockholders and is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and
Director Independence.

Information required by Item 13 of Part III is included in our
Proxy Statement relating to the 2011 Annual Meeting of Stockholders and is
incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

Information required by Item 14 of Part III is included in our
Proxy Statement relating to the 2011 Annual Meeting of Stockholders and is
incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

The following exhibits are filed with this report, except those
indicated as having previously been filed with the Securities and Exchange
Commission and are incorporated by reference to another report, registration
statement or form. As to any shareholder of record requesting a copy of this
report, we will furnish any exhibit indicated in the list below as filed with
this report upon payment to us of our expenses in furnishing the information.

|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.1     |  | Articles of Incorporation of the registrant as filed
  with the Secretary of State of Nevada. (Incorporated by reference to Exhibit
  3.1 to the Registrants registration statement on Form SB-2 filed on December
  11, 2001 in commission file number 333-74914)                                                                                                                                                                                                                                                                                                                                             
|3.2     |  | Certificate of Amendment to Articles of
  Incorporation. (Incorporated by reference to Exhibit 3.1 to the Registrants
  current report on 8-K filed on February 13, 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.3     |  | Certificate of Amendment to Articles of
  Incorporation. (Incorporated by reference to appendix A to the Registrants
  definitive information statement on Schedule 14C filed on July 31, 2006)                                                                                                                                                                                                                                                                                                                                                                                                                
|3.4     |  | Certificate of Amendment to Articles of
  Incorporation. (Incorporated by reference to Exhibit 3.1 to the Registrants
  current report on 8-K filed on September 25, 2009)                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3.5     |  | Amended and Restated Bylaws of the Registrant.
    (Incorporated by reference to Exhibit 3.2 to the Registrants current report
    on 8-K filed on July 9, 2007)                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4.1     |  | 2005 Compensation Plan for
      Outside Consultants of Custom Brand Networks, Inc. dated March 1, 2005
      (incorporated by reference from the Companys Registration Statement on
      Form S-8 filed on March 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                  
|4.2     |  | 2005 Augmented Compensation Plan for Outside
      Consultants of the Company dated August 15, 2005 (incorporated by
      reference from the Companys Registration Statement on Form S-8 filed on
      August 19, 2005).                                                                                                                                                                                                                                                                                                                                                                                     
|4.3     |  | 2006 Stock Plan (incorporated
      by reference to Exhibit 10.1 of the current report of the Company on Form
      8-K filed February 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.1    |  | Employment Agreement, dated as of February 14,
      2006, between the Company and Seth Grae (incorporated by reference to
      Exhibit 10.2 of the current report of the Company on Form 8-K filed
      February 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                  
|10.2    |  | Teaming Agreement dated
      February 22, 2006 between The University of Texas System, The University
      of Texas of the Permian Basin, The University of Texas at Austin, The
      University of Texas at Arlington, The University of Texas at Dallas, The
      University of Texas at El Paso, The City of Andrews, Texas, Andrews
      County, Texas, the Midland Development Corporation, the Odessa Development
      Corporation, Thorium Power and General Atomics (incorporated by reference
      from Exhibit 10. the Companys Registration Statement on Form S-4 filed
      June 14, 2006).
|10.3    |  | Employment Agreement, dated July 27, 2006,
      between the Company and Andrey Mushakov (incorporated by reference to
      Exhibit 10.1 of the current report of the Company on Form 8-K filed August
      4, 2006).                                                                                                                                                                                                                                                                                                                                                                                         
|10.4    |  | Independent Director Contract,
      dated August 21, 2006, between the Company and Victor Alessi (incorporated
      by reference to Exhibit 10.1 of the current report of the Company on Form
      8-K filed August 25, 2006).                                                                                                                                                                                                                                                                                                                                                                               
|10.5    |  | Independent Director Contract, dated October
      23, 2006, between the Company and Jack D. Ladd (incorporated by reference
      to Exhibit 10.1 to the Companys Current Report on Form 8-K, filed on October 23, 2006).                                                                                                                                                                                                                                                                                                                                                                                     

28

---

|10.6  |  | Independent Director Contract,
      dated October 23, 2006, between the Company and Daniel B. Magraw
      (incorporated by reference to Exhibit 10.2 to the Companys Current Report
      on Form 8-K, filed on October 23, 2006).                                                                   
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7  |  | Employment Agreement, dated February 1, 2007,
      between James Guerra and the Company (incorporated by reference to Exhibit
      10.1 to the Companys Current Report on Form 8-K, filed on October 23,
      2007).                                                                                
|10.8  |  | Agreement for Ampoule
      Irradiation Testing in 2006  2007, dated December 28, 2007, between
      Thorium Power, Inc. and Russian Research Centre Kurchatov Institute
      (incorporated by reference to Exhibit 10.9 to the Companys Annual Report
      on Form 10-K, filed on March 26, 2009).
|10.9  |  | Restricted Stock Grant Agreement, dated July
      14, 2009, between Seth Grae and the Company (incorporated by reference to
      Exhibit 10.1 to the Companys Current Report on Form 8-K, filed on July
      20, 2009).                                                                             
|10.10 |  | Stock Option Agreement, dated
      July 14, 2009, between Seth Grae and the Company (incorporated by
      reference to Exhibit 10.1 to the Companys Current Report on Form 8-K,
      filed on July 20, 2009).                                                                                       
|10.11 |  | Restricted Stock Grant Agreement, dated July
      14, 2009, between James Guerra and the Company (incorporated by reference
      to Exhibit 10.1 to the Companys Current Report on Form 8-K, filed on July
      20, 2009).                                                                          
|10.12 |  | Stock Option Agreement, dated
      July 14, 2009, between James Guerra and the Company (incorporated by
      reference to Exhibit 10.1 to the Companys Current Report on Form 8-K,
      filed on July 20, 2009).                                                                                    
|10.13 |  | Initial Collaborative Agreement, dated July 23,
      2009, between the Company and AREVA (incorporated by reference to Exhibit
      10.1 to the Companys Current Report on Form 8-K, filed on July 23, 2009).                                                                                        
|10.14 |  | Agreement for Consulting
      Services, dated August 3, 2009, between the Company and AREVA
      (incorporated by reference to Exhibit 10.1 to the Companys Current Report
      on Form 8-K, filed on August 4, 2009).                                                                              
|10.15 |  | Collaboration Framework Agreement, dated August
      3, 2009, between the Company and AREVA (incorporated by reference to
      Exhibit 10.1 to the Companys Current Report on Form 8-K, filed on August
      6, 2009).                                                                              
|10.16 |  | Agreement for Ampoule
      Irradiation Testing, effective as of August 21, 2009, between Thorium
      Power, Inc. and Russian Research Centre Kurchatov Institute (incorporated
      by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K,
      filed on August 25, 2009).      
|14.1  |  | Code of Ethics (incorporated by reference from
      the Companys Annual Report on Form 10-KSB filed on November 25, 2005).                                                                                                                                                                            
|31.1* |  | Rule 13a-14(a)/15d-14(a)
      Certification  Principal Executive Officer.                                                                                                                                                                                                                             
|31.2* |  | Rule 13a-14(a)/15d-14(a) Certification 
      Principal Accounting Officer.                                                                                                                                                                                                                            
|32*   |  | Section 1350 Certifications.                                                                                                                                                                                                                                                                            

* Filed herewith

29

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AUDITED FINANCIAL STATEMENTS

LIGHTBRIDGE CORPORATION

December 31, 2010 and 2009

TABLE OF CONTENTS

|                                                                 | Page     
|---------------------------------------------------------------- | ---------
|Report of Independent Registered Public
      Accounting Firm    | F-2      
|Consolidated Balance Sheets                                      | F-3      
|Consolidated Statements of Operations                            | F-4      
|Consolidated Statements of Cash Flows                            | F-5      
|Consolidated Statements of Changes in
      Stockholders Equity | F-6      
|Notes to Consolidated Financial Statements                       | F-7- F-22

F-1

---

| | REPORT OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM
      
      To the Board of Directors and
      Stockholders of Lightbridge Corporation
      
      We have audited the accompanying consolidated balance
      sheets of Lightbridge Corporation as of December 31, 2010 and 2009, and
      the related consolidated statements of operations, changes in
      stockholders equity, and cash flows for each of the years then ended. We
      also have audited Lightbridge Corporations internal control over
      financial reporting as of December 31, 2010 and 2009, based on criteria
      established in Internal ControlIntegrated Frameworkissued by the
      Committee of Sponsoring Organizations of the Treadway Commission (COSO).
      Lightbridge Corporations management is responsible for these financial
      statements, for maintaining effective internal control over financial
      reporting, and for its assessment of the effectiveness of internal control
      over financial reporting, included in the accompanying Managements Report
      on Internal Control over Financial Reporting. Our responsibility is to
      express an opinion on these financial statements and an opinion on the
      companys internal control over financial reporting based on our audits.
      
      We conducted our audits in accordance with the standards
      of the Public Company Accounting Oversight Board (United States). Those
      standards require that we plan and perform the audits to obtain reasonable
      assurance about whether the financial statements are free of material
      misstatement and whether effective internal control over financial
      reporting was maintained in all material respects. Our audits of the
      consolidated financial statements included examining, on a test basis,
      evidence supporting the amounts and disclosures in the consolidated
      financial statements, assessing the accounting principles used and
      significant estimates made by management, and evaluating the overall
      financial statement presentation. Our audit of internal control over
      financial reporting included obtaining an understanding of internal
      control over financial reporting, assessing the risk that a material
      weakness exists, and testing and evaluating the design and operating
      effectiveness of internal control based on the assessed risk. Our audits
      also included performing such other procedures as we considered necessary
      in the circumstances. We believe that our audits provide a reasonable
      basis for our opinions.
      
      A companys internal control over financial reporting is
      a process designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial
      statements for external purposes in accordance with generally accepted
      accounting principles. A companys internal control over financial
      reporting includes those policies and procedures that (1) pertain to the
      maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company;
      (2) provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, and that receipts and
      expenditures of the company are being made only in accordance with
      authorizations of management and directors of the company; and (3) provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of the companys assets that
      could have a material effect on the financial statements.
      
      Because of its inherent limitations, internal control
      over financial reporting may not prevent or detect misstatements. Also,
      projections of any evaluation of effectiveness to future periods are
      subject to the risk that controls may become inadequate because of changes
      in conditions, or that the degree of compliance with the policies or
      procedures may deteriorate.
      
      In our opinion, the consolidated financial statements
      referred to above present fairly, in all material respects, the financial
      position of Lightbridge Corporation as of December 31, 2010 and 2009, and
      the results of its operations and its cash flows for the years then ended,
      in conformity with accounting principles generally accepted in the United
      States of America. Also in our opinion, Lightbridge Corporation
      maintained, in all material respects, effective internal control over
      financial reporting as of December 31, 2010 and 2009, based on criteria
      established in Internal ControlIntegrated Framework issued by the
      Committee of Sponsoring Organizations of the Treadway Commission (COSO).
      
      
      /s/ Child, Van Wagoner & Bradshaw, PLLC
      Salt Lake City, Utah
      February 15, 2011
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-2

---

LIGHTBRIDGE CORPORATIONCONSOLIDATED BALANCE
SHEETS

|                                                                                                                                                                                                                        |   | December 31, |   |   | December 31,  |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                                                                                                                                                                                        |   | 2010         |   |   | 2009          |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|ASSETS                                                                                                                                                                                                                  |   |              |   |   |               |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Current Assets                                                                                                                                                                                                          |   |              |   |   |               |  
|Cash and cash equivalents                                                                                                                                                                                               | $ | 2,373,421    |   | $ | 3,028,791     |  
|Marketable
      securities                                                                                                                                                                                             |   | 10,461,357   |   |   | -             |  
|Restricted cash                                                                                                                                                                                                         |   | 550,283      |   |   | 652,174       |  
|Accounts
      receivable - project revenue and reimbursable project costs                                                                                                                                              |   | 990,563      |   |   | 2,421,088     |  
|Prepaid expenses & other
      current assets                                                                                                                                                                           |   | 365,261      |   |   | 574,095       |  
|Total
      Current Assets                                                                                                                                                                                              |   | 14,740,885   |   |   | 6,676,148     |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Property, Plant and Equipment
      -net                                                                                                                                                                                |   | 72,179       |   |   | 97,559        |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Other Assets                                                                                                                                                                                                            |   |              |   |   |               |  
|Patent costs - net                                                                                                                                                                                                      |   | 377,262      |   |   | 241,845       |  
|Security
      deposits                                                                                                                                                                                                 |   | 120,486      |   |   | 120,486       |  
|Total Other
      Assets                                                                                                                                                                                                |   | 497,748      |   |   | 362,331       |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Total Assets                                                                                                                                                                                                            | $ | 15,310,812   |   | $ | **7,136,038** |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                     |   |              |   |   |               |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Current Liabilities                                                                                                                                                                                                     |   |              |   |   |               |  
|Accounts payable
      and accrued liabilities                                                                                                                                                                          | $ | 2,088,362    |   | $ | 2,162,221     |  
|Deferred revenue                                                                                                                                                                                                        |   | 98,110       |   |   | -             |  
|Total Liabilities                                                                                                                                                                                                       |   | 2,186,472    |   |   | 2,162,221     |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Commitments and contingencies                                                                                                                                                                                           |   |              |   |   |               |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Stockholders' Equity                                                                                                                                                                                                    |   |              |   |   |               |  
|Preferred stock, $0.001 par value, 50,000,000
      authorized shares, no shares issued and outstanding                                                                                                                 |   | -            |   |   | -             |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Common stock, $0.001par value, 500,000,000
      authorized, 12,430,058 shares issued, 12,345,840 shares outstanding at
      December 31, 2010 and 10,168,412 shares issued and outstanding at December
      31, 2009 |   | 12,346       |   |   | 10,168        |  
|Additional paid-in capital -
      stock and stock equivalents                                                                                                                                                          |   | 69,370,261   |   |   | 53,652,185    |  
|Accumulated deficit                                                                                                                                                                                                     |   | (56,286,767  | ) |   | (48,723,286   | )
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Common stock reserved for issuance, 6,451
      shares and 5,721 shares at December 31, 2010 and December 31, 2009,
      respectively                                                                                  |   | 28,500       |   |   | 34,750        |  
|Total Stockholders'
      Equity                                                                                                                                                                                        |   | 13,124,340   |   |   | 4,973,817     |  
|                                                                                                                                                                                                                        |   |              |   |   |               |  
|Total Liabilities and
      Stockholders' Equity                                                                                                                                                                        | $ | 15,310,812   |   | $ | **7,136,038** |  

The accompanying notes are an integral part of these
consolidated financial statements

F-3

---

LIGHTBRIDGE CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                         |   | Years Ended  |  
|-------------------------------------------------------- | - | ------------ | -
|                                                         |   | December 31, |  
|                                                         |   | 2010         |  
|                                                         |   |              |  
|Revenue:                                                 |   |              |  
|Revenue                                                  | $ | 7,586,708    |  
|Cost of Services Provided                                |   | 4,941,030    |  
|Gross Margin                                             |   | 2,645,678    |  
|Operating Expenses                                       |   |              |  
|General and
      administrative                         |   | 8,677,504    |  
|Research and development expenses                        |   | 1,607,886    |  
|Total Operating Expenses                                 |   | 10,285,390   |  
|Operating loss                                           |   | (7,639,712   | )
|Other Income and (Expenses)                              |   |              |  
|Interest income                                          |   | 193,208      |  
|Unrealized
      loss on marketable securities and other |   | (116,977     | )
|Total Other Income and
      Expenses                    |   | 76,231       |  
|Net loss before income taxes                             |   | (7,563,481   | )
|Income taxes                                             |   | -            |  
|Net loss                                                 | $ | (7,563,481   | )
|                                                         |   |              |  
|Net Loss Per Common Share, Basic and diluted             | $ | (0.68        | )
|Weighted Average Number of
      shares outstanding      |   | 11,133,927   |  

The accompanying notes are an integral part of these
consolidated financial statements

F-4

---

LIGHTBRIDGE CORPORATIONCONSOLIDATED STATEMENTS OF
CASH FLOWS

|                                                                                                  |   | Years Ended  |  
|------------------------------------------------------------------------------------------------- | - | ------------ | -
|                                                                                                  |   | December 31, |  
|                                                                                                  |   | 2010         |  
|                                                                                                  |   |              |  
|Operating Activities:                                                                             |   |              |  
|Net Loss                                                                                          | $ | (7,563,481   | )
|Adjustments to reconcile net
      loss from operations to net cash used in operating activities: |   |              |  
|Stock-based compensation                                                                          |   | 2,691,509    |  
|Depreciation                                                                                      |   | 27,000       |  
|Unrealized loss on marketable securities                                                          |   | 116,487      |  
|Changes in non-cash operating
      working capital items:                                        |   |              |  
|Accounts
      receivable - fees and reimbursable project costs                                   |   | 1,430,525    |  
|Prepaid expenses and other assets                                                                 |   | 208,834      |  
|Security deposits                                                                                 |   | -            |  
|Accounts payable, accrued liabilities and other current liabilities                               |   | 629,878      |  
|Deferred revenue                                                                                  |   | 98,110       |  
|Net Cash Used In Operating
      Activities                                                       |   | (2,361,138   | )
|                                                                                                  |   |              |  
|Investing Activities:                                                                             |   |              |  
|Marketable securities                                                                             |   | (10,577,844  | )
|Property, plant and equipment                                                                     |   | (1,620       | )
|Patent costs                                                                                      |   | (135,417     | )
|Net Cash Used In Investing
      Activities                                                       |   | (10,714,881  | )
|                                                                                                  |   |              |  
|Financing Activities:                                                                             |   |              |  
|Proceeds from the issuance of common stock -
      net of offering costs                          |   | 12,562,310   |  
|Redemption of common stock
      into treasury stock                                              |   | (243,552     | )
|Restricted cash                                                                                   |   | 101,891      |  
|Net Cash Provided by
      Financing Activities                                                   |   | 12,420,649   |  
|                                                                                                  |   |              |  
|Net Decrease In Cash and Cash
      Equivalents                                                   |   | (655,370     | )
|                                                                                                  |   |              |  
|Cash and Cash Equivalents,
      Beginning of Year                                                |   | 3,028,791    |  
|                                                                                                  |   |              |  
|Cash and Cash Equivalents,
      End of Year                                                      | $ | 2,373,421    |  
|                                                                                                  |   |              |  
|Supplemental Disclosure of
      Cash Flow Information                                            |   |              |  
|Cash paid during the year:                                                                        |   |              |  
|Interest paid                                                                                     | $ | -            |  
|Income taxes paid                                                                                 | $ | -            |  
|                                                                                                  |   |              |  
|Non-Cash Financing Activity                                                                       |   |              |  
|Retirement of Treasury Stock                                                                      | $ | 243,552      |  
|Grant of Common Stock for Payment of Accrued
      Liabilities                                    | $ | 703,737      |  

The accompanying notes are an integral part of these
consolidated financial statements

F-5

---

LIGHTBRIDGE CORPORATIONCONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS EQUITY

|                                                                                          |  |              |  |   |            |  |   |            |   |   |             |   |   | Stock    |   |   |              |   |   |               |  
|----------------------------------------------------------------------------------------- |  | ------------ |  | - | ---------- |  | - | ---------- | - | - | ----------- | - | - | -------- | - | - | ------------ | - | - | ------------- | -
|                                                                                          |  | Common Stock |  |   | Additional |  |   |            |   |   | Committed   |   |   | Deferred |   |   |              |  
|                                                                                          |  |              |  |   |            |  |   | Paid-in    |   |   | Accumulated |   |   | Future   |   |   | Stock-Based  |   |   | Stockholders |  
|                                                                                          |  | Shares       |  |   | Amount     |  |   | Capital    |   |   | Deficit     |   |   | Issuance |   |   | Compensation |   |   | Equity        |  
|                                                                                          |  |              |  |   |            |  |   |            |   |   |             |   |   |          |   |   |              |   |   |               |  
|Balance - December 31, 2008                                                               |  | 10,049,769   |  | $ | 10,050     |  | $ | 48,898,894 |   | $ | (41,489,974 | ) | $ | 114,787  |   | $ | (225,959     | ) | $ | 7,307,798     |  
|Stock-based compensation                                                                  |  | -            |  |   | -          |  |   | 4,483,735  |   |   | -           |   |   | 139,000  |   |   | 226,252      |   |   | 4,848,987     |  
|Net loss for the year                                                                     |  | -            |  |   | -          |  |   | -          |   |   | (7,233,312  | ) |   | -        |   |   | -            |   |   | (7,233,312    | )
|Shares issued - non cash                                                                  |  | 108,026      |  |   | 108        |  |   | 675,722    |   |   | -           |   |   | (219,037 | ) |   | (456,793     | ) |   | -             |  
|Shares issued - cash (options
      exercised)                                            |  | 10,617       |  |   | 10         |  |   | 50,334     |   |   | -           |   |   | -        |   |   | -            |   |   | 50,344        |  
|Balance - December 31, 2009 - originally
      reported                                   |  | 10,168,412   |  |   | 10,168     |  |   | 54,108,685 |   |   | (48,723,286 | ) |   | 34,750   |   |   | (456,500     | ) |   | 4,973,817     |  
|Reclassification of deferred
      stock-based compensation to additional paid-in capital |  | -            |  |   | -          |  |   | (456,500   | ) |   | -           |   |   | -        |   |   | 456,500      |   |   | -             |  
|Balance - December 31, 2009  reclassified                                                |  | 10,168,412   |  |   | 10,168     |  |   | 53,652,185 |   |   | (48,723,286 | ) |   | 34,750   |   |   | -            |   |   | 4,973,817     |  
|                                                                                          |  |              |  |   |            |  |   |            |   |   |             |   |   |          |   |   |              |   |   |               |  
|Stock-based compensation                                                                  |  | 77,102       |  |   | 78         |  |   | 2,697,681  |   |   | -           |   |   | (6,250   | ) |   | -            |   |   | 2,691,509     |  
|Shares issued - options
      exercised and stock redeemed and retired                    |  | 30,334       |  |   | 30         |  |   | 460,155    |   |   | -           |   |   | -        |   |   | -            |   |   | 460,185       |  
|Net loss for the year                                                                     |  | -            |  |   | -          |  |   | -          |   |   | (7,563,481  | ) |   | -        |   |   | -            |   |   | (7,563,481    | )
|Shares issued - registered
      direct offering - net of offering costs                  |  | 2,069,992    |  |   | 2,070      |  |   | 12,560,240 |   |   | -           |   |   | -        |   |   | -            |   |   | 12,562,310    |  
|Balance - December 31, 2010                                                               |  | 12,345,840   |  | $ | 12,346     |  | $ | 69,370,261 |   | $ | (56,286,767 | ) | $ | 28,500   |   | $ | -            |   | $ | 13,124,340    |  

The accompanying notes are an integral part of these
consolidated financial statements

F-6

---

LIGHTBRIDGE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Lightbridge Corporation and Summary of Significant
Accounting Policies Nature Of Operations

We were incorporated in the state of Delaware on January 8,
1992, and changed our name to Thorium Power, Inc. (TPI) in April 2001. On
February 14, 2006, Novastar Resources Ltd. (Novastar), entered into an
Agreement and merged on October 6, 2006 with TPI. After the merger, we were
known as Thorium Power, Ltd. and TPI became our wholly-owned subsidiary. On
September 29, 2009 we changed our name from Thorium Power, Ltd. to Lightbridge
Corporation (Lightbridge or the Company) and we effected a 1-for-30 reverse
stock split of the Companys common stock, effective on September 29, 2009. We
are now engaged in two operating business segments, our Technology Business
Segment and our Consulting Business Segment (see Note 12-Business Segment
Results).

Technology Business Segment

We are working on the development, promotion and marketing of
our patented nuclear fuel designs for new and existing pressurized water
reactors. Currently, we have two primary fuel products in the development stage:
(1) All-metal fuel technology based on a uranium-zirconium alloy that has a
potential to increase power output in a new reactor by up to 30%, reduce initial
capital cost per megawatt and annual operating costs per kilowatt-hour, and may
reduce the volume of spent fuel per kilowatt-hour compared to reactors operating
on conventional uranium oxide fuel, and (2) Thorium-based fuel technology based
on a seed-and-blanket fuel assembly configuration that provides enhanced
proliferation resistance, reduced volume and long-term radio-toxicity of spent
fuel, and other benefits.

Within the all-metal fuel product family, most of our research
and development work to-date has been focused on Western-type Pressurized Water
Reactors (PWRs). However, while we have not yet studied in sufficient detail
its application to other reactor types, we expect that the all-metal fuels
benefits seen in PWRs could also potentially apply to boiling water reactors
(BWRs) as well as small modular reactors. We also believe that the all-metal
fuel technology can be synergistic with future fast reactor fuel designs
currently under development.

Within the thorium-based fuel product family, we currently have
three types, or variants, of fuel designs in various stages of development. All
three of these fuel variants are expected to have additional benefits, including
reduced volume and reduced long-term radio-toxicity of spent fuel for the same
amount of electricity generated, as compared with the uranium fuels that are
currently used in light water reactors. Our focus in the future will be on the
all-metal fuel product mentioned above.

Consulting Business Segment

Our business model expanded with a consulting business segment
being established in 2007, providing consulting and strategic advisory services
to companies and governments planning to create or expand electricity generation
capabilities using nuclear power plants. We had secured four contracts with
successively larger values for consulting and strategic advisory services in the
United Arab Emirates (UAE). On August 1, 2008, we signed separate consulting
services agreements with two government entities Emirates Nuclear Energy
Corporation (ENEC) and Federal Authority for Nuclear Regulation(FANR) formed
by Abu Dhabi, one of the member Emirates of the UAE. Under these two agreements,
we are to provide consulting and strategic advisory services over a contract
term of five years starting from June 23, 2008, with automatic renewals of these
contracts for one year periods.

In April 2010 and December 2010 we entered into agreements with
two other governments to evaluate the feasibility of developing and deploying a
civil nuclear power program as one element of a strategy to meet future
electricity generation needs.

We have also provided nuclear safety consulting advice to U.S.
nuclear utilities. We plan to continue and potentially expand this nuclear
safety consulting work in the United States.

F-7

---

Accounting Policies and Pronouncements

Basis of Consolidation

These financial statements include the accounts of Lightbridge,
a Nevada corporation, and our wholly-owned subsidiaries, TPI, a Delaware
corporation, Lightbridge International Holding, LLC, a Delaware limited
liability company and our foreign branch offices.

All significant intercompany transactions and balances have
been eliminated in consolidation. We formed a branch office in the United
Kingdom in 2008 called Lightbridge Advisors Limited, which is wholly-owned by
Lightbridge International Holding, LLC. We also established a branch office in
Moscow, Russia, established in July 2009 and a branch office in the UAE in
January 2010, which are also both wholly-owned by Lightbridge International
Holding, LLC.

Use of Estimates and Assumptions

The preparation of financial statements, in conformity with
accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect 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
revenue and expenses during the reporting period. Actual results could differ
from those estimates.

Significant Estimates

These accompanying consolidated financial statements include
some amounts that are based on management's best estimates and judgments. The
most significant estimates relate to valuation of stock grants and stock
options, the valuation allowance on deferred tax assets and various contingent
liabilities. It is reasonably possible that these above-mentioned estimates and
others may be adjusted as more current information becomes available, and any
adjustment could be significant in future reporting periods.

F-8

---

Certain Risks, Uncertainties and Concentrations

Our future operations and earnings currently depend on the
results of the Companys operations outside the United States. There can be no
assurance that the Company will be able to successfully continue to conduct such
operations, and a failure to do so would have a material adverse effect on the
Companys research and development 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, competition, changes in regulations, changes in accounting and
taxation standards, inability to achieve our overall long-term goals, future
impairment charges and global or regional catastrophic events. Because the
Company is dependent on its international operations for almost all its revenue,
particularly in one country right now, the Company may be subject to various
additional political, economic, and other uncertainties.

We are currently finalizing our strategic plan for 2011 and are
working on determining our future cash needs. Management anticipates, based on
its current working capital and projected working capital requirements, that it
will have enough working capital funds to sustain its current operations at its
current operating level until sometime later in the year of 2012 or 2013. In
support of our business plan regarding its research and development activities
for developing its fuel, we will need to raise additional capital by way of an
offering of equity securities, an offering of debt securities, a financing
through a bank, or a strategic alliance with another entity. We may also need to
raise additional capital sooner to support its overhead operation if the
consulting business segment becomes non-sustaining. Currently, we are working on
revenue opportunities with the overall goal of increasing our profitability and
cash flow.

We participate in a government regulated industry. Our
operation results are affected by a wide variety of factors including decreases
in the use or public favor of nuclear power, the ability of our technology, the
ability to safeguard the production of nuclear power and safeguarding our
patents and intellectual property from competitors. Due to these factors, we may
experience substantial period-to-period fluctuations in our future operating
results. Potentially, a loss of a key officer, key management, and other
personnel could impair our ability to successfully execute our business
strategy, particularly when these individuals have acquired specialized
knowledge and skills with respect to nuclear power and our operations.

Financial instruments that potentially subject us to
concentrations of credit risk consist principally of cash equivalents,
marketable securities and accounts receivable. Cash equivalents and marketable
securities consist primarily of money market funds and mutual bond funds held
with one major financial institution with a high credit standing. The underlying
fixed-income investments of the money market and bond mutual funds are either
United States Treasury securities or represent a diversified portfolio of
investments. Accounts receivable are typically unsecured and are derived from
revenues earned from customers located around the world. In 2010 and 2009, we
generated approximately all of our revenues from customers based outside the
U.S., with the majority of customers in the UAE and France. We perform ongoing
evaluations to determine customer credit and we limit the amount of credit we
extend, but generally we do not require collateral from our customers. We
maintain reserves for estimated credit losses however no reserve has been set up
for 2010 and 2009 as we have not incurred any credit losses from our customers,
to date. Our consulting revenues from the ENEC and FANR contracts are 84% and
96% of our total revenue for 2010 and 2009, respectively.

Reclassifications

Certain prior period amounts have been reclassified to the
current presentation. Such reclassifications had no impact on previously
reported Net Income, Cash Used in Operations, Net decrease in Cash and Cash
Equivalents or total Stockholders Equity. The deferred stock compensation
amount of $456,500 that was presented on the Companys balance sheet at January
1, 2009 and December 31, 2009 represented the unamortized balance of non-vested
stock grants and was a contra-equity offset to the value of the stock issued
under the balance sheet captions Common Stock or Common stock reserved for
issuance until vesting occurs. In accordance with ASC 718-10-25-2, these costs
are not to be shown as deferred stock compensation but recognized as expense as
services are provided. We have reclassified the deferred stock based
compensation by eliminating this balance sheet caption, Deferred stock
compensation and recording a corresponding adjustment (reduction) to Additional
paid in capital  stock and stock equivalents in the amount of $456,500. Total
Stockholders Equity reported on the accompanying consolidated balance sheet
remains the same after this reclassification for 2009, as shown on the
accompanying consolidated statement of changes in shareholders equity.

Revenue Recognition

The following table presents our revenues by business segment:

F-9

---

|           |   | 2010      |  |   | 2009       | 
|---------- | - | --------- |  | - | ---------- | 
|Revenues:  |   |           |  |   |            | 
|Consulting |   | 7,244,158 |  |   | 10,257,306 | 
|Technology |   | 342,550   |  |   | 259,072    | 
|           |   |           |  |   |            | 
|Total      | $ | 7,586,708 |  | $ | 10,516,378 | 

Consulting Business Segment

At the present time we are deriving
substantially all of our revenue from our consulting and strategic advisory
services business segment, by offering consulting services to governments
outside the United States planning to create or expand electricity generation
capabilities using nuclear power plants. Our fee structure for each client
engagement is dependent on a number of variables, including the size of the
client, the complexity, the level of the opportunity for us to improve the
clients electrical generation capabilities using nuclear power plants, and
other factors. The accounting policy we use to recognize revenue depends on the
terms and conditions of the specific contract.

Substantially all of our consulting
contracts in 2010 and 2009 are with the Executive Affairs Authority (EAA) of
Abu Dhabi, one of the member Emirates of the UAE, and the related entities, ENEC
and FANR. Revenues recognized from these contracts for 2010 and 2009 were
recognized on a time and expense basis.

The revenue recognition from two other
government contracts we entered into in April 2010 and December 2010 will be
based on the completion and acceptance of defined contractual milestones. Total
revenue recognized under one of the new agreements with one foreign government
in 2010 was $711,000. Total deferred revenue as reported on the accompanying
consolidated balance sheets from these two contracts at December 31, 2010 was
$98,110, representing deposits for consulting work to be performed in 2011.

Certain customer arrangements require
evaluation of the criteria outlined in the accounting standards for reporting
revenue Gross as a Principal Versus Net as an Agent in determining
whether it is appropriate to record the gross amount of revenue and related
costs, or the net amount earned as agent fees. Generally, when we are primarily
obligated in a transaction, revenue is recorded on a gross basis. Other factors
that we consider in determining whether to recognize revenue on a gross versus
net basis include our assumption of credit risk, latitude in establishing
prices, our determination of service specifications and our involvement in the
provision of services. We have determined, based on the credit risk that we bear
for collecting consulting fees, travel costs and other reimbursable costs from
our customers, that in 2010 and 2009 we acted as a principal, and therefore we
are recognizing as revenue all travel costs and other reimbursable costs billed
to our customers.

Cost of revenues also includes the
expenses associated with the operation of our consulting services including
labor, travel expenses and other related consulting costs. All costs directly
related to producing work under certain consulting agreements where revenue is
recognized upon acceptance of certain contractual milestones by our customer,
are first capitalized as deferred project costs (reported as under the caption
prepaid expenses and other current assets on the accompanying consolidated
balance sheets). Deferred project costs are then recognized or amortized to an
expense captioned cost of consulting services provided on the accompanying
consolidated statement of operations, when the revenue is to be recognized upon
delivery and acceptance of the defined contractual milestones or deliverables.

Technology Business Segment

We recognized revenue from our
technology agreement with AREVA upon the completion of certain defined contract
deliverables that were accepted by AREVA.

Once our nuclear fuel designs have
advanced to a commercially usable stage by either a fuel fabricator or nuclear
plant owner/operator, we will seek to license our technology to them or to major
government contractors working for the U.S. or other governments. We expect that
our revenue from these license fees will be recognized on a straight-line basis
over the expected period of the related license term.

F-10

---

Stock-Based Compensation

The stock-based compensation expense incurred by Lightbridge
for employees and directors in connection with its stock option plan is based on
the employee model of ASC 718, and the fair market value of the options is
measured at the grant date. Under ASC 718 employee is defined as An individual
over whom the grantor of a share-based compensation award exercises or has the
right to exercise sufficient control to establish an employer-employee
relationship based on common law as illustrated in case law and currently under
U.S. tax regulations. Our advisory board members and consultants do not meet the
employer-employee relationship as defined by the IRS and therefore are accounted
for under ASC 505-50.

ASC 505-50-30-11 (previously EITF 96-18) further provides that
an issuer shall measure the fair value of the equity instruments in these
transactions using the stock price and other measurement assumptions as of the
earlier of the following dates, referred to as the measurement date:

| | i.  | The date at which a commitment for performance by the
      counterparty to earn the equity instruments is reached (a performance
      commitment); and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                         
| | ii. | The date at which the counterpartys performance is
      complete.                                                                                     

We have elected to use the Black-Scholes-Merton pricing model
to determine the fair value of stock options on the dates of grant. Restricted
stock units are measured based on the fair market values of the underlying stock
on the dates of grant. Shares that are issued to officers on the exercise dates
of their stock options may be issued net of the statutory withholding
requirements to be paid by us on behalf of our employees. As a result, the
actual number of shares issued will be fewer than the actual number of shares
exercised under the stock option. Also, we recognize stock-based compensation
using the straight-line method.

In the years ended December 31, 2010 and 2009, we recognized
stock-based compensation of $2.7 million and $4.8 million, respectively. Related
income tax benefits were not recognized, as we incurred a tax loss for both
years.

Fair Value of Financial Instruments

The carrying amounts of our financial instruments, including
cash and cash equivalents, accounts receivable, accounts payable, and accrued
liabilities, approximate fair value because of their generally short maturities.
We carry marketable securities at fair value.

Cash and Cash Equivalents, Restricted Cash and Marketable
Securities

We invest our excess cash primarily in money market mutual
funds, and four mutual bond funds. We classify all highly liquid investments
with 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. We hold cash balances in excess of
the federally insured limits of $250,000 with two prominent financial
institutions. We deem this credit risk not to be significant. Total cash held in
checking accounts and a money market core cash account, as reported on the
accompanying consolidated balance sheets, totaled approximately $2.4 million and
$3.0 million at December 31, 2010 and 2009, respectively.

Restricted cash represents cash being held by one prominent
financial institution that is being used as collateral for our corporate credit
cards and our letters of credit issued to some of our customers. The total
balance of restricted cash at December 31, 2010 and December 31, 2009 was
approximately $550,000 and $652,000, respectively

We determine the appropriate classification of our investments
in marketable securities at the time of purchase and reevaluate such designation
at each balance sheet date. We have classified and accounted for our marketable
securities as available-for-sale, however we carry these securities at fair
value (see below election made to value these financial instruments at fair
market value). The fair value of substantially all securities is determined by
quoted market prices.

All marketable securities (consisting of four Vanguard mutual
bond funds and one Fidelity mutual money market fund) were purchased in August
2010, were classified as available-for-sale securities and were reported at
their fair value (level 1). A level 1 measurement under the FASB pronouncements
is the first tier of a three tier hierarchy for fair value measurements used in
valuation methodologies. This valuation level allows for fair value measurements
where the inputs are the quoted prices for the assets in the active markets. All
of our marketable securities have quoted market prices.

F-11

---

The total quoted fair value of our marketable securities at
December 31, 2010 was approximately $10.5 million. This amount was held in the
following mutual funds, Vanguard mutual money market fund - $0.4 million;
Vanguard mutual bond funds - $10.1 million. We did not have any marketable
securities at December 31, 2009.

The amount recorded as unrealized loss, capital gain or loss,
interest and dividends received, as reported to us from the financial
institutions in which they were reinvested, and that we reported under the
caption of other income in the accompanying consolidated statement of
operations, totaled approximately $77,000 for the year ended December 31, 2010.
We elected the fair value option permitted under FASB ASC 825 to report the
unrealized gains and losses from our marketable securities in our accompanying
consolidated statement of operations instead of other comprehensive income and
loss. The amount recorded as unrealized loss for the year ended December 31,
2010 totaled approximately $0.1 million. The total cost basis of our marketable
securities was approximately $10.6 million at December 31, 2010. The difference
between the cost and fair market value of our marketable securities is the
unrealized loss reported.

Trade Accounts Receivable

We record accounts receivable at the invoiced amount and we do
not charge interest. We review the accounts receivable by amounts due from
customers which are past due, to identify specific customers with known disputes
or collectability issues. In determining the amount of the reserve, we make
judgments about the creditworthiness of significant customers based on ongoing
credit evaluations. We also maintain a sales allowance to reserve for potential
credits issued to customers. We determine the amount of the reserve based on
historical credits issued.

There was no provision for doubtful accounts recorded at
December 31, 2010 and 2009 as we have not experienced any bad debt write-offs
from any of our customers. Substantially all accounts receivable at December 31,
2010 and 2009are from the FANR and ENEC contracts (see Note 3-Accounts
Receivable  Project Revenue and Project Costs).

Property, Plant and Equipment

Property, plant and equipment is comprised of furniture,
computers and office equipment and is stated at cost less accumulated
depreciation. Depreciation of furniture, computers and office equipment is
recognized over the estimated useful life of the asset, generally five years
utilizing the straight line balance methodology. Upon disposition of assets, the
related cost and accumulated depreciation are eliminated and any gain or loss is
included in the statement of income. Expenditures for major improvements are
capitalized. Expenses related to maintenance and repairs are recognized as the
costs are incurred.

Income Taxes

Income taxes are accounted for under the asset and liability
method in accordance with the United States generally accepted accounting
principles Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial carrying amounts
of existing assets and liabilities and their respective tax bases as well as
operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Deferred tax assets are reduced by a valuation allowance to the
extent that the recoverability of the asset is unlikely to be recognized. We did
not provide any current or deferred income tax provision or benefit for any
periods presented to date because we have continued to experience a net
operating loss since inception (see Note 8Income Taxes).

The Company adopted the ASC accounting pronouncement
Accounting for Uncertainty in Income taxes. This pronouncement provides
guidance for recognizing and measuring uncertain tax positions, as defined in
the FASB accounting pronouncement Accounting for Income Taxes. This
pronouncement prescribes a threshold condition that a tax position must meet for
any of the benefits of the uncertain tax position to be recognized in the
financial statements. This pronouncement also provides accounting guidance on
derecognizing, classification and disclosure of these uncertain tax positions.

F-12

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Foreign Currency

The functional currency of our international subsidiaries is
the local currency. We translate the financial statements of these subsidiaries
to U.S. dollars using month-end rates of exchange for assets and liabilities,
and average rates of exchange for revenues, costs, and expenses. The translation
gains/losses were not significant for the years ended December 31, 2010 and
2009.

Patents and Legal Costs

Patents are stated on the accompanying consolidated balance
sheets at cost less accumulated amortization. The costs of the patents, once
placed in service, will be amortized on a straight-line basis over their
estimated useful lives. The amortization periods for our patents range between
17 and 20 years. Our patents have not been placed in service for the years ended
December 31, 2010 and 2009.

Legal costs are expensed as incurred except for legal costs to
file for patent protection, which are capitalized and reported as patents on the
accompanying consolidated balance sheets.

Research, Development and Related Expenses

These costs from our Technology business segment are charged to
operations in the year incurred and are shown on a separate line on the
accompanying Consolidated Statement of Operations. Research and development and
related expenses totaled approximately $1.6 million for each of the years ended
December 31, 2010 and 2009.

Segment Reporting

We use the management approach in determining reportable
operating segments. The management approach considers the internal organization
and reporting used by our chief operating decision makers for making operating
decisions and assessing performance, as the source for determining our
reportable segments. We have determined that we have two operating segments as
mentioned above and defined by the FASB accounting pronouncement, Disclosures
about Segments of an Enterprise and Related Information. The two reporting
business segments are our technology business and our consulting services
business.

Subsequent Events

In May 2009, the FASB issued a new accounting standard which
established general accounting standards and disclosure for subsequent events.
In accordance with this standard, we evaluated subsequent events through the
date we filed this Annual Report on Form 10-K with the Securities and Exchange
Commission (SEC) and no subsequent events occurred that required disclosure in
the accompanying consolidated financial statements.

Commitments and Contingencies

Liabilities for loss contingencies arising from various claims,
assessments, litigation, fines and penalties and other sources are recorded when
it is probable that a liability has been incurred and the amount of the
assessment can be reasonably estimated.

Retirement 401K Plan

We have a 401(k) savings plan that was set up in 2006 covering
substantially all of our employees. Eligible employees may contribute through
payroll deductions. There were no Company matching contributions made to the
401(k) savings plan in 2010 and 2009.

Recent Accounting Pronouncements

In June 2009, the FASB issued a standard that established the
FASB Accounting Standards Codification (ASC) and amended the hierarchy of
generally accepted accounting principles (GAAP) such that the ASC became the
single source of authoritative nongovernmental U.S. GAAP. The ASC did not change
current U.S. GAAP, but was intended to simplify user access to all authoritative
U.S. GAAP by providing all the authoritative literature related to a particular
topic in one place. All previously existing accounting standard documents were
superseded and all other accounting literature not included in the ASC is
considered non-authoritative. New accounting standards issued subsequent to June
30, 2009 are communicated by the FASB through Accounting Standards Updates. For
our Company, the ASC was effective July 1, 2009. This standard did not have an
impact on our consolidated results of operations or financial condition. However,
throughout the notes to the accompanying consolidated financial statements
references that were previously made to various former authoritative U.S. GAAP
pronouncements have been changed to coincide with the appropriate section of the
ASC.

F-13

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In April 2009, the FASB issued a pronouncement regarding
Interim Disclosures about Fair Value of Financial Instruments
Disclosures to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements. This new guidance requires these disclosures in all interim
financial statements. This guidance is effective for interim and annual periods
ending after June 15, 2009, with early application permitted. The fair value of
all cash, receivables and payables are equal to the carrying amounts.

As of December 31, 2010, there were no other recently issued
accounting standards not yet adopted which would have had a material effect on
the Companys financial statements.

In October 2009, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update (ASU) No. 2009-13,
Multiple-Deliverable Revenue Arrangements, or ASU 2009-13. ASU 2009-13
establishes the accounting and reporting guidance for arrangements that include
multiple revenue-generating activities, and provides amendments to the criteria
for separating deliverables, and measuring and allocating arrangement
consideration to one or more units of accounting. The amendments in ASU 2009-13
also establish a hierarchy for determining the selling price of a deliverable.
Enhanced disclosures are also required to provide information about a vendors
multiple-deliverable revenue arrangements, including information about the
nature and terms of the arrangement, significant deliverables, and the vendors
performance within arrangements. The amendments also require providing
information about the significant judgments made and changes to those judgments
and about how the application of the relative selling-price method affects the
timing or amount of revenue recognition. The amendments in ASU 2009-13 are
effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010, or January 1, 2011
for us. Early application is permitted. The adoption of ASU 2009-13 will not
have a material impact on our financial position or results of operations.

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
years ended December 31, 2010 and 2009 and the effect of including these
potential common shares in the diluted earnings per share calculations would be
anti-dilutive and are therefore not included in the calculations.

The following table sets forth the computation of the basic and
diluted loss per share:

|                                           |   | 2010       |   |   | 2009       |  
|------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                           |   |            |   |   |            |  
|Numerator:                                 |   |            |   |   |            |  
|Net loss                                   | $ | (7,563,481 | ) | $ | (7,233,312 | )
|                                           |   |            |   |   |            |  
|Denominator:                               |   |            |   |   |            |  
|Weighted-average common shares outstanding |   | 11,133,927 |   |   | 10,021,429 |  
|                                           |   |            |   |   |            |  
|Basic and diluted net loss per share       | $ | (0.68      | ) | $ | (0.72      | )

F-14

---

Note 3. Accounts Receivable  Project Revenue and Project
Costs

ENEC and FANR Projects

The revenue earned in 2010 and 2009 from these two consulting
contracts entered into in August 2008 with ENEC and FANR, was approximately $6.4
million for the year ended December 31, 2010 and was approximately $10.1 million
for the year ended December 31, 2009. The variation in revenue reflects the
uneven nature of the services we provide under these consulting projects. The
total accounts receivable from the ENEC and FANR was approximately $820,000 at
December 31, 2010, and approximately $2.4 million at December 31, 2009. These
amounts represent 83 percent and 100 percent of the total accounts receivable
reported of approximately $991,000 and $2.4 million at December 31, 2010 and
2009, respectively.

We expect to continue to provide strategic advisory services to
Abu Dhabi during the five-year term of these consulting agreements and also
expect the variation of revenue from these contracts to continue. Under these
agreements, revenue will be recognized on a time and expense basis. We
periodically discuss our consulting work with ENEC and FANR, who will review the
work we perform, and our reimbursable travel expenses, and accept our monthly
invoicing for services and reimbursable expenses.

Travel costs and other reimbursable costs under these contracts
are reported in the accompanying statement of operations as both revenue and
cost of consulting services provided, and totaled approximately $802,000 and
$917,000 for the years ended December 31, 2010 and 2009, respectively. The total
travel and other reimbursable expenses that have not been reimbursed are being
presented on the accompanying consolidated balance sheets and included in total
accounts receivable in the amount of approximately$67,000 and $159,000 at
December 31, 2010 and 2009, respectively.

The remaining accounts receivable reported at December 31, 2010
and December 31, 2009 from other contracts was approximately $171,000 and $0 at
December 31, 2010 and 2009, respectively. Total unbilled accounts receivable
reported on the accompanying consolidated balance sheets of approximately
$456,000 and $610,000 are for the months of December 2010 and 2009 respectively,
for work that was billed to our clients in January 2011 and January 2010,
respectively. Foreign currency exchange losses were approximately $1,000 and
$16,000 for the years ended December 31, 2010 and 2009, respectively, which is
reported in the caption other income and expense on the accompanying
consolidated statement of operations.

Note 4. Prepaid Expenses other Current Assets

Prepaid Expenses consists primarily of prepayments made for
various insurance policies, deferred project costs relating to our consulting
contracts and accounting software licensing costs. Total prepaid expenses and
other current assets reported on the accompanying consolidated balance sheets at
December 31, 2010 and 2009 were approximately $365,000 and $574,000,
respectively.

Note 5. Property, Plant and Equipment, net

The following represents the detail of our property, plant and
equipment, net at December 31, 2010 and 2009:

|                                          |   | 2010    |   |   | 2009    |  
|----------------------------------------- | - | ------- | - | - | ------- | -
|                                          |   |         |   |   |         |  
|Furniture, computers and office equipment | $ | 136,621 |   | $ | 135,001 |  
|Accumulated Depreciation                  |   | (64,442 | ) |   | (37,442 | )
|                                          |   |         |   |   |         |  
|Net Book Value                            | $ | 72,179  |   | $ | 97,559  |  

Depreciation expense for the years ended December 31, 2010 and
2009 was approximately $27,000 and $25,000, respectively. Asset lives are five
years and the depreciation method is straight line for all of the above assets.
There was no gain or loss on disposition of assets in 2010 and 2009.

F-15

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Note 6. Patents and Other Assets

Patents represent legal fees and filing costs that are
capitalized and amortized over their estimated useful lives of 17 to 20 years,
after they are placed in service. There were no patents placed in service for
the years ended December 31, 2010 and 2009. In 2009 we capitalized approximately
$24,000 for patents filing costs, for a total investment in patents of
approximately $242,000 as of December 31, 2009. In 2010 we capitalized
approximately $135,000 for patent filing costs, for a total investment in
patents of approximately $377,000 at December 31, 2010.

No amortization expense of patents was recorded in either of
the years ended December 31, 2010 and 2009. These patents were not placed in
service for the years ended December 31, 2010 and 2009 or in prior years.

Security deposits at December 31, 2010 and 2009 of $120,486
represent the security deposit placed on the Mclean Virginia corporate offices.

Note 7. Accounts Payable and Accrued Liabilities

Accounts payable and accrued expenses consisted of the
following:

|                            |   | 2010      |  |   | 2009      | 
|--------------------------- | - | --------- |  | - | --------- | 
|                            |   |           |  |   |           | 
|Trade payables -            | $ | 361,344   |  | $ | 296,120   | 
|Accrued expenses and other  |   | 694,531   |  |   | 928,054   | 
|Accrued payroll liabilities |   | 1,032,487 |  |   | 938,047   | 
|                            |   |           |  |   |           | 
|Total                       | $ | 2,088,362 |  | $ | 2,162,221 | 

Note 8. Income Taxes

Our tax provision is determined using an estimate of our annual
effective tax rate adjusted for discrete items, if any, that are taken into
account in the relevant period. The 2010 and 2009 annual effective tax rate is
estimated to be at a combined 40% for the U.S. federal and states statutory tax
rate.

As of December 31, 2010 and 2009, there were no tax
contingencies recorded.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities recognized
for financial reporting, and the amounts recognized for income tax purposes. The
significant components of deferred tax assets (at a 40% effective tax rate) as
of December 31, 2010 and 2009 respectively, are as follows:

|Deferred Tax Assets             |   | Total Amount |   |   | Deferred Tax Asset Amount |  
|------------------------------- | - | ------------ | - | - | ------------------------- | -
|                                |   | 2010         |   |   | 2009                      |  
|                                |   |              |   |   |                           |  
|Capitalized start-up costs      | $ | 6,101,739    |   | $ | 6,613,773                 |  
|Stock-based compensation        |   | 20,073,918   |   |   | 18,958,076                |  
|Net operating loss carryforward |   | 24,992,683   |   |   | 17,756,315                |  
|Less: valuation allowance       |   | (51,168,340  | ) |   | (43,328,164               | )
|                                |   |              |   |   |                           |  
|                                | $ | -            |   | $ | -                         |  

We have a net operating loss carry-forward for federal and
state tax purposes of approximately $25 million at December 31, 2010 that is
available to offset future taxable income, that will begin to expire in the year
2021. For financial reporting purposes, no deferred tax asset was recognized
because at December 31, 2010 and 2009, substantially all of the net operating
losses are presently expected to expire unused. As a result, the amount of the
deferred tax assets considered realizable was reduced 100% by a valuation
allowance. The change in the valuation allowance was approximately $3,136,000
and $2,893,000 for the years ended December 31, 2010 and 2009, respectively. Many of the Companys operating
expenses in its 2007 and 2006 tax years were classified under the Internal
Revenue Code as capitalized Start-up Costs which were not deductible for tax
purposes until 2008.

F-16

---

The Company files a consolidated tax return with its
subsidiaries.

In 2009, we prepaid our federal and state income taxes in the
amount of $266,000, for estimates for 2008 corporate income taxes that was
refunded to the Company in 2009, as no corporate taxes were due in 2008.

Note 9. Commitments and Contingencies

Employment Agreements

We have employment agreements with our executive officers and
some consultants, the terms of which expire at various times. Such agreements
provide for minimum compensation levels, as well as incentive bonuses that are
payable if specified management goals are attained. Under each of the
agreements, in the event the officer's employment is terminated (other than
voluntarily by the officer or by us for cause, or upon the death of the
officer), if all provisions of the employment agreements are met, we are
committed to pay certain benefits, including specified monthly severance.

Operating Leases

We entered into an agreement to lease new office space under
the terms of a sublease with a term of 65 months commencing August 1, 2008.
Under the terms of the sublease, the lease payments are inclusive of
pass-through costs, which include real estate taxes and standard operating
expenses. We paid the security deposit related to this sublease agreement in the
amount of $120,486. We pay monthly rental fees in the amount of approximately
$43,000 in accordance with the sublease agreement plus parking fees, and
payments increase by a factor of 4% each year thereafter. The monthly
straight-line rental expense from August 1, 2008 to December 1, 2013 is $45,189.
As a result of the straight-line rent calculation generated by the one free rent
period and rent escalation, we have recorded in the accrued liabilities a
deferred rent credit of $98,110 at December 31, 2010.

Future estimated rental payments under our operating leases are
as follows:

|                                |   | Total     | 
|------------------------------- | - | --------- | 
|                                |   |           | 
|Year ending - December 31, 2011 | $ | 564,109   | 
|Year ending - December 31, 2012 |   | 586,136   | 
|Year ending - December 31, 2013 |   | 609,016   | 
|Total minimum lease payments    | $ | 1,759,261 | 

Letters of Credit

At December 31, 2010 we had outstanding letters of credit of
approximately $166,000 associated with our consulting contracts that we entered
into in 2010 with two new governments (see Note1-Revenue Recognition).

Note 10. Research and Development Costs

Research Costs

Research and development costs, included in the accompanying
consolidated statement of operations amounted to approximately $1.6 million for
each of the years ended December 31, 2010 and 2009. Total cumulative research
and development expenses amounted to approximately $9.5 million from January 8,
1992 (date of inception of Lightbridge) to December 31, 2010.

F-17

---

Research Agreements

Effective on August 21, 2009, TPI entered into an agreement for
ampoule irradiation testing, or the AIT Agreement, with Russian Research Centre
Kurchatov Institute (Kurchatov). Under the AIT Agreement, TPI agreed to
compensate Kurchatov for irradiation testing of TPIs proprietary nuclear fuel
designs conducted in 2008 and part of 2009. Pursuant to the AIT Agreement, TPI
is obligated to pay to Kurchatov a total of $400,000, and Kurchatov is obligated
to transfer to TPI the worldwide rights in all of the test data generated in the
course of the irradiation testing of TPIs proprietary nuclear fuel designs in
2008 and part of 2009, and Kurchatov agrees not to use, in any manner, the work
product associated with such testing or exercise any rights associated therewith
without the written consent of TPI. Further, Kurchatov is obligated to provide
to TPI and its affiliates specified information and documentation for audit
purposes and to obtain any and all permits from Russian governmental entities
which may be required in order for Kurchatov to perform under the AIT Agreement.
As of the date hereof, all of the deliverables have been submitted and the
entire amount due to Kurchatov Institute under the TPI has been paid.

In October 2009 we entered into an umbrella agreement, or the
SOSNY Agreement, with Russian Limited Liability Research and Development
Company, or SOSNY. SOSNY will serve as our prime contractor in Russia to manage
the research and development activities related to the lead test assembly, or
LTA, program for Russian designed VVER-1000 reactors. SOSNY is a leading Russian
commercial nuclear entity specializing in front-end and back-end nuclear fuel
cycle management and logistics services. Specific work will be carried out under
individual task orders to be issued under the SOSNY Agreement. The scope,
deliverables, and costs are to be agreed to between the parties for each
individual task order. On June 17, 2010, TPI entered into Task Order No. 1 with
SOSNY whereby TPI is obligated to pay to SOSNY a total of $234,161 for certain
R&D work to be completed and all deliverables to be submitted to TPI by
December 31, 2010. As of December 31, 2010, a total of 2,832,000 Rubles
(approximately $94,000 at the September 30, 2010 exchange rate) worth of work
was completed by SOSNY and its subcontractors and paid. The remaining portion
will be paid upon completion of the remaining milestones stipulated in the Task
Order No. 1.

In addition to the above agreements, there are consulting
agreements with several consultants working on various projects for us, which
total approximately $10,000 per month.

Note 11. Stockholders Equity

At December 31, 2010 there are 500,000,000 shares of authorized
common stock. Total common stock outstanding at December 31, 2010 and December
31, 2009 was 12,345,840 and 10,168,412, respectively. At December 31, 2010,
there were 6,451 shares reserved for future issuance, 1,034,996 stock warrants
and 1,772,348 stock options outstanding, all totaling 15,159,635 of total stock
and stock equivalents outstanding at December 31, 2010.

Registered Direct Offering

On July 22, 2010 we completed an offering (the Offering) with
certain institutional investors on the sale of 2,069,992 shares of its common
stock and warrants to purchase a total of 1,034,996 shares of its common stock
for aggregate gross proceeds, before deducting fees to the Placement Agent and
other estimated offering expenses payable by us, of approximately $13.7 million.
The common stock and warrants were sold in fixed combinations, with each
combination consisting of one share of common stock and a warrant to purchase
0.5 shares of common stock. The purchase price was $6.60 per fixed combination.
The warrants will become exercisable six months and one day following the
closing date (July 28, 2010) of the Offering and will remain exercisable for
seven years from the date of issuance at an exercise price of $9.00 per share.
The exercise price of the warrants is subject to adjustment in the case of stock
splits, stock dividends, combinations of shares and similar recapitalization
transactions. The exercisability of some of the warrants may be limited if, upon
exercise, the holder or any of its affiliates would beneficially own more than
4.99% of our common stock. This limit may be increased to up to 9.99% upon no
fewer than 60 days' notice.

We received net proceeds of approximately $12.6 million after
payment of certain fees and expenses related to the Offering. These fees and
expenses related to this Offering totaled approximately $1.1 million. Of the
total fees and expenses paid, approximately $820,000 plus reimbursable expenses
was paid to William Blair & Company, L.L.C., who served as the placement
agent for the Offering. The total fees and expenses of approximating $1.1
million were charged to additional paid-in capital. The allocation of the
proceeds from the offering, based on the relative fair value of the common stock
and the warrants resulted in the allocation of approximately $9.0 million to the
common stock and approximately $3.6 million to the warrants which was recorded
to additional paid-in capital.

F-18

---

The value of the warrants issued was calculated by using the
Black Scholes Valuation Model using the following assumptions: volatility 99%;
risk-free interest rate of 2.38%; dividend yield of 0%, and expected term of 7
years. The volatility of the Companys common stock was estimated by management
based on the historical volatility of the trading history of the Companys
common stock. The risk-free interest rate was based on the Treasury Constant
Maturity Rates published by the U.S. Federal Reserve for periods applicable to
the expected life of the warrants. The expected dividend yield was based on the
Companys current and expected dividend policy and the expected term is equal to
the contractual life of the warrants.

The Offering was effected as a takedown off the Company's shelf
registration statement on Form S-3 (File No. 333-162671), which became effective
on November 24, 2009 pursuant to a prospectus supplement to be filed with the
SEC.

Stock-based Compensation  Stock Options and Restricted
Stock

Stock Plan

We have a stock-based compensation plan to reward for services
rendered by officers, directors, employees and consultants. On July 17, 2006, we
amended this stock plan. We have reserved 2,500,000 shares of common stock of
our unissued share capital for the stock plan. Other limitations are as follows:

|(i)   | No more than an aggregate of 1,250,000 shares can be
      granted for the purchase of restricted common shares during the term of
      the stock plan;                         
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                  
|(ii)  | The maximum number of shares of common stock with respect
      to which options may be granted to any one person during any fiscal year
      may not exceed 266,667 shares; and
|      |                                                                                                                                                                                  
|(iii) | The maximum number of restricted shares that may be
      granted to any one person during any fiscal year may not exceed 166,667
      common shares.                           

Total stock options outstanding at December 31, 2010 were
1,772,348 of which 1,332,646 of these options were vested at December 31, 2010.
Stock option expense was approximately $2.1 million and approximately $4.5
million for the years ended December 31, 2010 and 2009, respectively.

Stock option transactions to the employees, directors, advisory
board members and consultants are summarized as follows for the years ended
December 31, 2010 and 2009 were as follows:

|                      |  | 2011      |  
|--------------------- |  | --------- | -
|                      |  |           |  
|Beginning of the year |  | 1,785,204 |  
|Granted               |  | 147,318   |  
|Exercised             |  | (128,139  | )
|Forfeited             |  | -         |  
|Expired               |  | (32,035   | )
|                      |  |           |  
|End of year           |  | 1,772,348 |  
|                      |  |           |  
|Options exercisable   |  | 1,332,646 |  

The above table includes options issued as of December 31, 2010
as follows:

|i).  | A total of 566,874 non-qualified 5-10 year options have
      been issued, and are outstanding, to advisory board members at exercise
      prices of $4.50 to $14.40 per share.                                                                                                                                                                                                                                                                                                     
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|ii). | A total of 1,076,849 non-qualified 5-10 year options have
      been issued, and are outstanding, to our directors, officers and employees
      at exercise prices of $5.70 to $23.85 per share. From this total, 622,484
      options are outstanding to the Chief Executive Officer who is also a
      director, with remaining contractual lives of 4.9- 9.2 years. All other
      options issued have a remaining contractual life ranging from 0.8 years to
      9.8 years.

|      |                                                                                                                                                                          
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|iii). | A total of 128,625 non-qualified 5-10 year options have
      been issued, and are outstanding, to our consultants at exercise prices of
      $6.30 to $19.20 per share.

F-19

---

The following table provides certain information with respect
to the above-referenced stock options that are outstanding and exercisable at
December 31, 2010:

|                    |  | Stock Options Outstanding |  |  | Stock Options Vested | 
|------------------- |  | ------------------------- |  |  | -------------------- | 
|                    |  | Weighted                  |  |  |                      | 
|                    |  | Average                   |  |  |                      | 
|                    |  | Remaining                 |  |  |                      | 
|                    |  | Contractual Life          |  |  | Number of            | 
|                    |  | - Years                   |  |  | Awards               | 
|**Exercise Prices** |  |                           |  |  |                      | 
|$4.50 - $8.70       |  | 7.83                      |  |  | 786,141              | 
|$9.00 - $12.90      |  | 5.13                      |  |  | 185,674              | 
|$13.20-$18.90       |  | 3.82                      |  |  | 493,865              | 
|$19.20-$23.85       |  | 4.65                      |  |  | 306,668              | 
|                    |  |                           |  |  |                      | 
|Total               |  | 5.88                      |  |  | 1,772,348            | 

The aggregate intrinsic value of stock options outstanding at
December 31, 2010 was $157,670 all of which related to vested awards. Intrinsic
value is calculated based on the difference between the exercise price of the
underlying awards and the quoted price of our common stock as of the reporting
date ($5.36 per share as of the close on December 31, 2010).

In July 2010, two officers of the Company exercised stock
option agreements. One agreement was exercised under a broker assisted cashless
exercise at a strike price of $4.68 that resulted in a net purchase of 13,752
shares. One agreement was exercised that allowed the sale of 28,710 shares
received by the officer from the stock option exercise, back to the Company to
cover the income tax obligations resulting from the stock option exercise. As a
result of this option exercise, 28,710 shares were issued to the officer and
28,710 shares were purchased from the officer at the fair value of the stock at
the date of the option exercise, which was $243,552. This stock purchase was
recorded by the Company as treasury stock, which was immediately retired upon
purchase.

Restricted Stock Award Activity

The following summarizes our restricted stock unit activity:

|                                                    |  |                 |   |   | Weighted  | 
|--------------------------------------------------- |  | --------------- | - | - | --------- | 
|                                                    |  |                 |   |   | Average   | 
|                                                    |  |                 |   |   | Grant     | 
|                                                    |  |                 |   |   | Date Fair | 
|                                                    |  | Number of Units |   |   | Value     | 
|                                                    |  |                 |   |   |           | 
|Total awards outstanding at December 31,
      2009 |  | 95,658          |   | $ | 6.13      | 
|Units granted                                       |  | 44,253          |   | $ | 8.50      | 
|                                                    |  |                 |   |   |           | 
|Units Exercised/Released                            |  | (56,000         | ) | $ | 6.38      | 
|Total awards outstanding at December 31,
      2010 |  | 83,911          |   | $ | 7.19      | 
|                                                    |  |                 |   |   |           | 
|Total units vested                                  |  | -               |   |   |           | 
|Total units non-vested                              |  | 83,911          |   | $ | 7.19      | 
|Total shares outstanding at December 31,
      2010 |  | 83,911          |   | $ | 7.19      | 

F-20

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Scheduled vesting for outstanding restricted stock units at
December 31, 2010 is as follows:

Year Ended December 31,2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalScheduled vestingrestricted stock units
    
    36,608
    
    
    35,081
    
    
    12,222
    
    
    --
    
    
    --
    
    
    83,911


As of December 31, 2010, there was $0.46 million of net
unrecognized compensation cost related to unvested restricted stock-based
compensation arrangements. This compensation is recognized on a straight line
basis resulting in approximately $0.25 million of the compensation expected to
be expensed in the next twelve months, and the total unrecognized has a weighted
average recognition period of 2.12 years.

We use the historical volatility of our stock price since
January 5, 2006, the date we announced that we were becoming a public company,
to estimate the future volatility of our stock. At this time we do not believe
that there is a better objective method to predict the future volatility of our
stock. We estimate the term of our option awards based on the full term of the
award. To date we have had very few exercises of our options, and those
exercises have occurred just before the expiration date of the awards. Since the
strike price of most of our outstanding awards is greater than the price of our
stock, generally awards have expired at the end of the term. We estimate the
effect of future forfeitures of our grants based on an analysis of historical
forfeitures of unvested grants, as we have no better objective basis for that
estimate. The expense that we have recognized related to our grants of options
and restricted stock includes the estimate for future pre-vest forfeitures. We
will adjust the actual expense recognized as future pre-vest forfeitures occur.
We have estimated that 1.8% and 4.9% of our option and restricted stock grants
respectively, will be forfeited prior to vesting.

Assumptions used in the Black Scholes option-pricing model for
the year ended December 31 2010 and 2009 were as follows:

|                                |  | Year ended | 
|------------------------------- |  | ---------- | 
|                                |  | 12/31/2010 | 
|                                |  |            | 
|Average risk-free interest rate |  | 3.53%      | 
|Average expected life- years    |  | 10         | 
|Expected volatility             |  | 99.08%     | 
|Expected dividends              |  | 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. We record stock-based compensation
expenses in the caption with all of our other general and administrative
expenses. Grants of stock options and restricted stock are awarded to our
employees, directors, consultants and board members, and we recognize the fair
market 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.

During the years ended December 31, 2010 and 2009,
approximately $2.7 million and $4.8 million respectively, were recorded as total
stock-based compensation. Stock-based compensation expense is recorded under the
caption general and administrative expenses in the accompanying consolidated
statement of operations.

Common Stock reserved for Future Issuance

Common stock reserved for future issuance consists of:

|                         |  | **Shares of** |  |   |        | 
|------------------------ |  | ------------- |  | - | ------ | 
|                         |  | **Common**    |  |   |        | 
|                         |  | S**tock**     |  |   | Amount | 
|                         |  |               |  |   |        | 
|Stock-based compensation |  | 6,451         |  | $ | 28,500 | 

F-21

---

Note 12. Business Segment Results

We have two principal business segments, which are (1)
technology and (2) consulting services. 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, Chief Operating Officer/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.

The Company evaluates performance based on several factors, of
which the primary financial measure is business segment income before taxes. The
following tables show the operations of the Companys reportable business
segments for the years ended December 31, 2010 and 2009.

Corporate andConsulting
    
    
    Technology
    
    
    Eliminations
    
    
    Total2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue
    
    7,244,158
    
    
    10,257,306
    
    
    342,550
    
    
    259,072
    
    
    0
    
    
    0
    
    
    7,586,708
    
    
    10,516,378Segment Profit 
      Pre Tax
    
    1,703,301
    
    
    3,771,974
    
    
    (1,522,275
    )
    
    (1,597,699
    )
    
    (7,744,507
    )
    
    (9,407,587
    )
    
    (7,563,481
    )
    
    (7,233,312
    )Total Assets
    
    990,563
    
    
    2,297,070
    
    
    329,640
    
    
    309,274
    
    
    13,990,609
    
    
    4,529,694
    
    
    15,310,812
    
    
    7,136,038Property
      Additions
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    1,620
    
    
    14,920
    
    
    1,620
    
    
    14,920Interest
      Expense
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    0Depreciation
    
    0
    
    
    0
    
    
    786
    
    
    206
    
    
    26,214
    
    
    25,276
    
    
    27,000
    
    
    25,482


Note 13. Subsequent Events

Effective this quarter, the Company implemented a new FASB
accounting pronouncement, Subsequent Events. This standard establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued. The adoption of
this accounting pronouncement did not impact our financial position or results
of operations. The Company evaluated all events or transactions that occurred
after December 31, 2010 up through the date these financial statements were
issued. During this period the Company did not have any material recognizable
subsequent events.

F-22

---

SIGNATURES

In accordance with section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this Report on Form 10-K to be
signed on its behalf by the undersigned, thereto duly authorized individual.

|                        | LIGHTBRIDGE CORPORATION       
|----------------------- | ------------------------------
|                        |                               
|Date: February 22, 2011 | By: /s/ Seth
      Grae       
|                        | Seth Grae                     
|                        | Chief
      Executive Officer,
|                        | President
      and Director  

In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on February 22, 2011.

| | Signature                 |  | Title                                                                | 
| | ------------------------- |  | -------------------------------------------------------------------- | 
| |                           |  |                                                                      | 
| | /s/ Seth Grae             |  | Chief Executive Officer,
      President and Director                | 
| | Seth Grae                 |  | (Principal Executive
      Officer)                                  | 
| |                           |  |                                                                      | 
| | /s/ James Guerra          |  | Chief Financial Officer,
      Chief Operating Officer and Treasurer | 
| | James Guerra              |  | (Principal Financial
      Officer)                                  | 
| |                           |  |                                                                      | 
| | /s/ Thomas Graham, Jr.    |  | Director                                                             | 
| | Thomas Graham, Jr.        |  |                                                                      | 
| |                           |  |                                                                      | 
| | /s/ Victor Alessi         |  | Director                                                             | 
| | Victor Alessi             |  |                                                                      | 
| |                           |  |                                                                      | 
| | /s/ Jack Ladd             |  | Director                                                             | 
| | Jack Ladd                 |  |                                                                      | 
| |                           |  |                                                                      | 
| | /s/ Daniel B. Magraw, Jr. |  | Director                                                             | 
| | Dan Magraw                |  |                                                                      | 

---

EXHIBIT INDEX

|Exhibit |  |                                                                             
|------- |  | ----------------------------------------------------------------------------
|Number  |  | Description                                                                 
|        |  |                                                                             
|31.1    |  | Rule 13a-14(a)/15d-14(a) Certification 
      Principal Executive Officer. 
|31.2    |  | Rule 13a-14(a)/15d-14(a)
      Certification  Principal Accounting Officer.
|32      |  | Section 1350 Certifications.                                                

---