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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                            ------------------------

                                   FORM 10-K

                 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
          SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

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   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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                                       OR

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<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
                        FOR THE TRANSITION PERIOD FROM TO
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                       COMMISSION FILE NUMBER: 000-21319
                            ------------------------
                               LIGHTBRIDGE, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S>                                            <C>
               DELAWARE                                     04-3065140
     (STATE OR OTHER JURISDICTION                        (I.R.S EMPLOYER
   OF INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NUMBER)

        67 SOUTH BEDFORD STREET                               01803
       BURLINGTON, MASSACHUSETTS                            (ZIP CODE)
    (ADDRESS OF PRINCIPAL EXECUTIVE
               OFFICES)
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       Registrant's telephone number, including area code: (781) 359-4000
                            ------------------------

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

    Securities registered pursuant to Section 12(g) of the Act: Common stock,
$.01 par value per share

    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 the 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. / /

    The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 15, 2000 was $322,022,814, based on a total of 14,551,415
shares held by nonaffiliates and on a closing price of $22.13 as reported on the
Nasdaq National Market.

    The number of shares of Common Stock outstanding as of March 15, 2000 was
16,661,984.

                      DOCUMENTS INCORPORATED BY REFERENCE

    The registrant intends to file a definitive proxy statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended December 31,
1999. Certain portions of such proxy statement are incorporated by reference in
Part III of this Form 10-K.
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                               TABLE OF CONTENTS

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                                                                          PAGE
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PART I
Item 1.   Business....................................................     3
Item 1A.  Risk Factors................................................    12
Item 2.   Properties..................................................    18
Item 3.   Legal Proceedings...........................................    18
Item 4.   Submission of Matters to a Vote of Security Holders.........    19
Item 4A.  Executive Officers..........................................    19

PART II
Item 5.   Market for the Registrant's Common Equity and Related
            Stockholder Matters.......................................    21
Item 6.   Selected Financial Data.....................................    22
Item 7.   Management's Discussion and Analysis of Financial Condition
            and Results of Operations.................................    23
Item 7A.  Quantitative and Qualitative Market Risk Disclosures........    32
Item 8.   Financial Statements and Supplementary Data.................    32
Item 9.   Changes In and Disagreements With Accountants on Accounting
            and Financial Disclosure..................................    32

PART III
Item 10.  Directors and Executive Officers of the Registrant..........    33
Item 11.  Executive Compensation......................................    33
Item 12.  Security Ownership of Certain Beneficial Owners and
            Management................................................    33
Item 13.  Certain Relationships and Related Transactions..............    33

PART IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
            8-K.......................................................    33

SIGNATURES............................................................    36
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                            ------------------------

    THIS FORM 10-K CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. ANY STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THE
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS, INCLUDING THE FACTORS SET FORTH BELOW IN "ITEM 1A. RISK FACTORS,"
THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS OF
LIGHTBRIDGE, INC. TO DIFFER MATERIALLY FROM THOSE INDICATED BY THE
FORWARD-LOOKING STATEMENTS.

                                       2
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                                     PART I

ITEM 1. BUSINESS

    Lightbridge, Inc. ("Lightbridge") develops, markets and supports a network
of integrated products and services that enable telecommunications carriers to
improve their customer acquisition, service provisioning, retention and fraud
management processes. Historically, Lightbridge's software-based solutions have
been delivered primarily on an outsourcing and service bureau basis, but with
the acquisition of Coral Systems, Inc. ("Coral") in November 1997 and the
development of Lightbridge Consulting Services, a significant portion of
Lightbridge's revenues are now derived from software licensing transactions and
consulting services. Lightbridge's transaction-based solutions combine the
advantages of distributed access and workflow management, centrally managed
client-specified business policies, and links to carrier and third-party
systems. While its solutions historically have been delivered primarily to
wireless carriers, Lightbridge began providing service to its first wireline
client, a competitive local exchange carrier ("CLEC") in 1998. The open
architecture underlying Lightbridge's software applications supports the
development of flexible, integrated solutions, regardless of the type of
wireless or wireline service provided by a client and independent of the
client's computing environment. Lightbridge's depth of experience as a provider
of these solutions to wireless telecommunications carriers historically, and
more recently to carriers offering converged telecommunications services,
positions Lightbridge to broaden its offerings to other telecommunications
service providers.

    Lightbridge offers on-line, real-time transaction processing and call center
services to aid telecommunications carriers in qualifying and activating
applicants for service, as well as software-based point-of-sale support services
for traditional distribution channels, such as dealers and agents, and emerging
distribution channels, such as mass market retail stores and Internet commerce.
Lightbridge develops and implements interfaces that integrate its acquisition
system with carrier and third-party systems, such as those for billing,
point-of-sale, activation and order fulfillment. Lightbridge also maintains and
has access to databases used to pre-screen applicants for fraud and provides
software used to monitor subscriber call activity for fraud. In addition,
Lightbridge has a global telecommunications consulting practice that provides
clients with two distinct types of services: solution development and deployment
consulting and business advisory services.

    Lightbridge was incorporated in Delaware in June 1989 under the name Credit
Technologies, Inc. and in November 1994 changed its name to Lightbridge, Inc. In
September 1996, Lightbridge organized a wholly owned subsidiary, Lightbridge
Security Corporation, as a Massachusetts securities corporation to buy, hold and
sell securities. In November 1997, Lightbridge acquired all of the outstanding
capital stock of Coral, a Delaware corporation based in Colorado. In
February 1998, Lightbridge organized Lightbridge Technologies Limited in England
to serve clients in Europe, the Middle East and Africa. During 1999, Lightbridge
organized Lightbridge Tecnologia Ltda. in Brazil to serve clients in South
America. During 1999, Lightbridge also maintained an office in Malaysia to serve
clients in the Asia Pacific region. Unless the context requires otherwise,
references in this Form 10-K to "Lightbridge," the "Company," "We," "Us" and
similar terms refer to Lightbridge, Inc. and its subsidiaries.

    ALIAS, FRAUDBUSTER, FRAUD SENTINEL, LIGHTBRIDGE, the Lightbridge logo,
PROFILE, and TELESTO are registered trademarks of Lightbridge, and @RISK,
ALLEGRO, CUSTOMER ACQUISITION SYSTEM, CREDIT DECISION SYSTEM, FRAUD CENTURION,
INSIGHT, POPS, and RETAIL MANAGEMENT SYSTEM are trademarks of Lightbridge. All
other trademarks or trade names appearing in this Form 10-K are the property of
their respective owners.

BUSINESS SEGMENT DATA

    Information concerning the three distinct segments that we operate in is set
forth in "Item 8. Financial Statements and Supplementary Data" on page F-10 of
"Notes to Consolidated Financial Statements."

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PRODUCTS AND SERVICES

    Telesto, Lightbridge's network of software-based acquisition, retention and
fraud solutions permits a telecommunications carrier to select applications and
functions to create an integrated, customized solution addressing the carrier's
particular needs. Lightbridge's products and services are provided in four broad
solutions areas:

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GROUP                                                           FUNCTIONS
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CUSTOMER ACQUISITION SERVICES........  On-line, real-time transaction processing services to aid
                                       carriers in qualifying and activating applicants for
                                       service, as well as call center support services to assist
                                       carriers in acquiring and activating applicants for service.
                                       Transaction processing services include proprietary
                                       databases and processing modules to evaluate existing
                                       subscribers and detect potential subscription fraud. Call
                                       center support services include qualification and
                                       activation, analyst reviews, telemarketing to existing and
                                       new subscribers, back-up and disaster recovery for
                                       acquisition and activation services, and customer care.

FRAUD MANAGEMENT.....................  On-line, real-time inquiries into proprietary and industry
                                       databases and processing modules to pre-screen applicants
                                       for potential fraud, as well as software products for
                                       on-going monitoring of subscriber call activity from the
                                       carrier's switch to determine likely fraudulent use.

CHANNEL SOLUTIONS....................  Software products and services to support a variety of
                                       distribution channels, including software applications for
                                       in-store use, call centers and Internet commerce.

CONSULTING SERVICES..................  Two distinct types of service: 1) Solution Development and
                                       Deployment consulting and 2) Business Advisory Services.
                                       Solution Development and Deployment consulting provides
                                       systems integration, custom software development, project
                                       management and training services. Business Advisory Services
                                       provide pure management consulting services. These services
                                       are provided in the fields of customer acquisition,
                                       retention and fraud management.
</TABLE>

CUSTOMER ACQUISITION SYSTEM

    Lightbridge's Customer Acquisition System ("CAS") includes on-line,
real-time transaction processing services for the qualification and activation
of applicants for telecommunications service.

    CAS accepts applicant information on-line from a variety of carrier
distribution points, such as retail stores. Upon receipt of information, the
system begins a series of steps required to determine the applicant's
qualification for the carrier's service through inquiry into Lightbridge
proprietary databases, such as ProFile, and external sources, such as credit
bureaus. The complete applicant file is evaluated by the system and a
determination regarding the applicant's creditworthiness is made based on
centrally managed client-specified business policies. If an issue is raised
regarding qualification of an applicant, the system electronically routes the
application to a Lightbridge or carrier credit analyst for review and action.
The point-of-sale is then notified when a determination is made. If service is
to be activated at that time, the system receives, verifies and translates the
information necessary to establish the billing account and activate service,
transmitting data to the carrier's billing and activation systems. Throughout
the process, Lightbridge's system manages the routing of the application and the
flow of information, both within the system and, as necessary, to appropriate
individuals for their involvement, all in a secure, controlled environment.

                                       4
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    Introduced in 1989 and enhanced over time, CAS typically enables carriers to
qualify applicants and activate service in five to ten minutes while screening
for subscriber fraud, thereby assisting the carriers to close sales at the time
when the customer is ready to purchase. Although CAS typically requires no human
intervention beyond the initial data entry, it permits a carrier to implement
policies requiring analyst intervention in carrier-specified situations. When
intervention is required, CAS facilitates the on-line handling of exceptions by,
among other things, queuing exceptions to manage workflow. CAS includes the
following modules, all of which are fully integrated:

    - CREDIT DECISION SYSTEM ("CDS") is an integrated qualification system for
      carriers to acquire qualified applicants rapidly. Using redundant,
      high-speed data lines to five major credit bureaus, CDS typically provides
      consumer and business credit decisions in under 10 seconds, based on
      automated analysis of credit information using a credit policy specified
      by the carrier. CDS can be integrated with a carrier's existing customer
      acquisition and billing systems and can be modified quickly to reflect
      changes in a carrier's credit policies.

    - INSIGHT is a proprietary database containing information about a carrier's
      existing accounts and previous applicants. InSight evaluates existing
      subscribers who apply for additional services on the basis of their
      payment histories. InSight can decrease costs for carriers by reducing the
      number of credit bureau inquiries and the number of applications requiring
      manual review.

    - WORKSTATION offerings present data electronically to the appropriate
      person for decision or action and then automatically route data to the
      next step in the process. Workstation offerings are as follows:

       CREDIT WORKSTATION allows a carrier's credit analyst to enter information
       or to evaluate applications that were entered at a remote location.

       ACTIVATION WORKSTATION allows the user to review, correct or reprocess
       activation requests returned from the billing system due to an error.

       FULFILLMENT WORKSTATION provides the information necessary to fulfill
       orders for wireless handsets and accessories at a remote or third-party
       fulfillment operation.

    Lightbridge's TeleServices Group provides a range of call center support
solutions for the subscriber acquisition and activation process. TeleServices
offerings include a call center solution for credit decisions and activations,
and also analyst reviews, telemarketing to existing and new subscribers, back-up
and disaster recovery for acquisition and activation services, and customer
care. TeleServices solutions can be provided using CAS or a carrier's own
customer acquisition system. Lightbridge's clients typically utilize
TeleServices solutions as part of an overall sales and distribution strategy to
expand or engage in special projects without incurring the overhead associated
with building and maintaining a call center.

    Pricing of CAS is on a per qualification or activation basis and varies
substantially with the term of the contract under which services are provided,
the volume of transactions, and the other products and services selected and
integrated with the services. Pricing of TeleServices solutions is on a per
transaction or per minute basis and varies with the term of the contract under
which services are provided, the volume of transactions processed and the other
products and services selected and integrated with the services.

FRAUD MANAGEMENT

    Lightbridge's fraud solutions include real-time on-line access to
proprietary and exclusive databases for pre-activation screening and software
for on-going monitoring of subscriber call activity from the switch.
Lightbridge's fraud solutions include:

    - FRAUD SENTINEL, a suite of subscription fraud management tools, available
      separately or together. Lightbridge believes that Fraud Sentinel is the
      most complete pre-screening tool for detection and

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      prevention of subscription fraud available in the telecommunications
      industry today. The components of Fraud Sentinel are as follows:

       PROFILE, a proprietary intercarrier database of accounts receivable
       write-offs and service shut-offs, provides on-line pre-screening of
       applicants, on-going screening of existing subscribers, and notification
       if an application is processed for a subscriber whose account has been
       previously written off by a carrier.

       FRAUD DETECT, a multifaceted fraud detection tool provided under
       agreement with Trans Union Corporation, analyzes data such as an
       applicant's Social Security Number, date of birth, address, telephone
       number and driver's license information and identifies any discrepancies.

       @RISK, a repository for suspect information, enables carriers to access
       suspect information, discovered from prior fraud investigations, during
       their pre-screening process.

       INSTANTID, a multifaceted verification tool provided under agreement with
       RiskWise, L.L.C., highlights verified information and potential data
       input errors, and alerts carriers to conditions that are often associated
       with identity theft.

    - FRAUD CENTURION, a suite of back-end fraud management tools, available
      separately or together, that are designed to detect fraudulent activity on
      provider networks. The components of Fraud Centurion are:

       FRAUDBUSTER, a fraud management profiling software product. FraudBuster
       is designed to identify most commonly known types of fraud, such as
       cloning, subscription, tumbling and cellular theft. FraudBuster collects
       subscriber account information and analyzes call usage data from
       telecommunication switches and other commonly accepted data sources to
       identify fraudulent activity.

       ALIAS, the industry's first subscription fraud profiler that detects
       suspect account activity. Alias, when used with @Risk in a pre-screening
       mode, represents the industry's only integrated front-end to back-end
       solution for combating subscription fraud. When Alias detects a change to
       the account information or matches against suspect information, an event
       is generated. Once an event is generated, an evaluation is done to
       determine whether a fraud investigator should take action. The
       statistically based scoring logic reduces the number of cases an
       investigator needs to work.

    Lightbridge's pre-screening fraud solutions are priced on a per inquiry
basis. Monitoring solutions are priced on a licensed or outsourced basis, with
annual maintenance and additional charges per subscriber. Additional fees may
also be charged for consulting, implementation and support requirements of
specific clients.

CHANNEL SOLUTIONS

    Lightbridge's Channel Solutions consist of products and services that
support a growing range of distribution channels. The components of Channel
Solutions include:

    - POPS, a browser-based application typically used in carrier-owned or
      dealer/agent store locations, features a graphical user interface for
      Internet or intranet environments that allows even inexperienced sales
      staff to conduct qualification and activation transactions quickly via a
      dial-up or network connection to CAS. POPS_XPRESS is a version of POPS
      requiring no customizations that can be installed quickly in a variety of
      sales locations.

    - RETAIL MANAGEMENT SYSTEM ("RMS") is a point-of-sale client/server
      application designed to help telecommunications retailers manage the sale
      of telecommunications products more efficiently. RMS handles credit
      screening, transaction and payment processing, service activation, cash
      drawer management, inventory and purchasing management and management
      reporting.

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    - TELESTO PORTAL, a component-based, thin-client architecture that provides
      a set of building blocks that can be incorporated into standard browser
      architecture or third-party applications in order to allow Web-based
      storefronts to perform credit qualification, fraud screening, and
      activation functions over an intranet or extranet. In intra-company
      installations, Telesto Portal aids in solving data sharing issues among
      various applications and physical locations. The thin-client and open
      architecture allows sharing and distribution of information more broadly
      throughout provider organizations. This allows optimizing workflows
      without additional systems development.

    POPS, RMS and Telesto Portal are licensed to clients and require
customization and integration with other products and systems to varying
degrees. Pricing of these software products varies with the configurations
selected, the number of locations licensed and the degree of customization
required.

CONSULTING SERVICES

    Lightbridge Consulting Services is the only global telecommunications
practice that delivers full-service consulting for customer acquisition, fraud
management and retention. It leverages Lightbridge's in-market expertise and
focus in telecommunications to help carriers bring new services to market
quickly, expedite the process of obtaining and retaining low-risk subscribers
and enhance customer loyalty. Carriers can utilize Lightbridge Consulting
Services to supplement their staff with both domain expertise and project-based
resources. The worldwide practice supports Lightbridge clients in the Asia
Pacific region, Europe, Latin America and North America.

    Lightbridge Consulting Services capitalizes on Lightbridge's existing
expertise with multiple carriers, across multiple geographic regions to provide
clients with two distinct types of service: 1) Solution Development and
Deployment consulting, and 2) Business Advisory Services. Solution Development
and Deployment consulting provides systems integration, custom software
development, project management and training services. Business Advisory
Services provide pure management consulting services that leverage best
practices in telecommunications and allied industries.

    Lightbridge charges for consulting services on a per diem basis and also
undertakes smaller consulting projects on a fixed-fee basis.

TECHNOLOGY

    Lightbridge's development efforts have created a proprietary multi-layered
software architecture that facilitates the development of application products.
This design conforms to the three standard tiers of presentation (front-ends),
business logic and database services, each independent of the others. The
architecture supports the development of Lightbridge's core products and
provides a discrete platform that enables the rapid creation of client-specific
requirements. In addition, the architecture is open in terms of its ability to
interface with third-party systems, as well as with Lightbridge and third-party
Web-based front-ends. Lightbridge can therefore offer its clients the ability to
use and enhance legacy systems and third-party systems (such as billing systems)
while implementing the market-oriented products offered by Lightbridge.

    At the most fundamental layer of its architecture, Lightbridge has written a
common, independent library of code that provides a foundation for reusability
and, equally important, independence from hardware platforms and operating
systems. The common library currently supports Windows NT, Unix and OpenVMS. The
Lightbridge products are portable and able to run on the most suitable hardware
platform for the computing needs.

    A critical element of Lightbridge's development has been the creation and
enhancement of Allegro, a proprietary peer-to-peer, client/server, transaction
management system. Allegro encapsulates a sequence of independent, application
servers into a complete transaction, customized for the client's customer
acquisition requirements. The solutions may include front-end data capture,
customer qualification, fulfillment of physical distribution and connectivity to
back office systems such as billing. To an individual

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user, however, Lightbridge products offer the front-end appearance of a "single
virtual machine." Allegro features include data validation, exception handling,
process queues, manual review queues and transaction monitors.

    Lightbridge servers each perform only a single function, without knowledge
of the other steps in the transaction processes or their computing environment.
Third-party software products are encapsulated so that they are integrated
seamlessly into the Allegro system. As a result, the Allegro network is scalable
and includes software redundancy.

    The core technology for FraudBuster allows new applications to be built
using applets and services that were developed for previous releases of other
applications, and includes encapsulation of many of the external links of its
core technology, thus supporting easier porting, rapid development and
scalability.

    The telecommunications marketplace continues to grow rapidly and requires
quick reaction to evolving market conditions. To meet this requirement,
Lightbridge has incorporated a set of software and tools and a development
methodology with which its trained staff can provide the rapid customization of
front-ends, business rules, system interfaces and reporting. The customization
is independent of the core products, so that Lightbridge can provide
client-specific enhancements while continuing to develop regular releases of
major product enhancements.

CLIENTS

    Lightbridge historically has provided its products and services to wireless
carriers in the United States. In 1998, Lightbridge began to market its products
and services to a broader range of telecommunications carriers operating around
the world.

    Revenues attributable to Lightbridge's 10 largest clients accounted for
approximately 66%, 66% and 77% of Lightbridge's total revenues in the years
ended December 31, 1997, 1998 and 1999, respectively. During the years ended
December 31, 1997, 1998 and 1999, one, three and two of Lightbridge's clients
accounted for more than 10% of Lightbridge's total revenues, representing an
aggregate of 29%, 42% and 51% of total revenues in those years, respectively.
AT&T Wireless Services, Inc. accounted for 29%, 17% and 18% of Lightbridge's
total revenues for each of the years ended December 31, 1997, 1998 and 1999,
respectively. Sprint Spectrum L.P. accounted for 15% and 33% of Lightbridge's
total revenues for each of the years ended December 31, 1998 and 1999,
respectively. Nextel Finance Company accounted for 10% of Lightbridge's total
revenues for the year ended December 31, 1998.

    Lightbridge's agreements with its clients set forth the terms on which
Lightbridge will provide products and services for the clients, but do not
always require the clients to purchase any particular type or quantity of
Lightbridge's products or services or to pay any minimum amount for products or
services. Lightbridge has agreements with AT&T Wireless and Sprint Spectrum for
the provision of credit decision services. The initial terms of these agreements
expired on December 31, 1999, and each agreement was extended for an additional
one-year term. The agreements with AT&T Wireless and Sprint Spectrum do not
require the purchase of any particular type or quantity of Lightbridge's
products or services, although they do contain provisions requiring payment of
minimum amounts.

SALES AND MARKETING

    Lightbridge's sales strategy is to establish, maintain and foster long-term
relationships with its clients. Lightbridge's sales and client services
activities are led by "relationship teams," each of which includes a senior
management team sponsor. Lightbridge employs a team approach to selling in order
to develop a consultative relationship with existing and prospective clients. In
addition to the relationship teams, Lightbridge's sales approach includes direct
sales staff with expertise in particular solutions and sales through channel
partners, particularly internationally. Lightbridge has expanded its sales and
marketing group by hiring additional staff experienced in the telecommunications
industry.

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    Lightbridge's software solutions typically require significant investment by
the carrier and involve multilevel testing, integration, implementation and
support requirements. Product managers, as well as other technical, operational
and consulting personnel, are frequently involved in the business development
and sales process. The teams conduct needs assessments and, working with the
client, develop a customized solution to meet the client's particular needs.

    The sales cycle for Lightbridge's software products and services is
typically six to twelve months, although the period may be substantially longer
in some cases.

ENGINEERING, RESEARCH AND DEVELOPMENT

    Lightbridge believes that its future success will depend in part on its
ability to continue to enhance its existing product and service offerings and to
develop new products and services to allow carriers to respond to changing
market requirements. Lightbridge's research and development activities consist
of both long-term efforts to develop and enhance products and services and
short-term projects to make modifications to respond to immediate client needs.
In addition to internal research and development efforts, Lightbridge intends to
continue its strategy of gaining access to new technology through strategic
relationships and acquisitions where appropriate. Lightbridge spent
approximately $6.1 million, $9.6 million and $12.7 million on engineering,
research and development in the years ended December 31, 1997, 1998 and 1999,
respectively.

COMPETITION

    The market for services to wireless and other telecommunications carriers is
highly competitive and subject to rapid change. The market is fragmented, and a
number of companies currently offer one or more services competitive with those
offered by Lightbridge. In addition, many telecommunications carriers are
providing or can provide, internally, products and services competitive with
those Lightbridge offers. Trends in the telecommunications industry, including
greater consolidation and technological or other developments that make it
simpler or more cost-effective for telecommunications carriers to provide
certain services themselves, could affect demand for Lightbridge's services and
could make it more difficult for Lightbridge to offer a cost-effective
alternative to a telecommunications carrier's own capabilities. In addition,
Lightbridge anticipates continued growth in the telecommunications carrier
services industry and, consequently, the entrance of new competitors in the
future.

    Lightbridge believes that the principal competitive factors in the
telecommunications carrier services industry include the ability to identify and
respond to subscriber needs, timeliness, quality and breadth of service
offerings, price and technical expertise. Lightbridge believes that its ability
to compete also depends in part on a number of competitive factors outside its
control, including the ability to hire and retain employees, the development by
others of products and services that are competitive with Lightbridge's products
and services, the price at which others offer comparable products and services
and the extent of its competitors' responsiveness to subscriber needs. See "Item
1A. Risk Factors--We Face Competition from a Broad and Increasing Range of
Vendors."

GOVERNMENT REGULATION

    The FCC, under the terms of the Communications Act of 1934, regulates
interstate communications and use of the radio spectrum. Although Lightbridge is
not required to and does not hold any licenses or other authorizations issued by
the FCC, the telecommunications carriers that constitute Lightbridge's clients
are regulated at both the federal and state levels. Federal and state regulation
may decrease the growth of the telecommunications industry, affect the
development of the PCS or other wireless markets, limit the number of potential
clients for Lightbridge's services, impede Lightbridge's ability to offer
competitive services to the telecommunications market, or otherwise have a
material adverse effect on Lightbridge's business, financial condition, results
of operations and cash flows. The Telecommunications Act of 1996, which in large
measure deregulated the telecommunications industry, has caused, and is likely

                                       9
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to continue to cause, significant changes in the industry, including the
entrance of new competitors, consolidation of industry participants and the
introduction of bundled wireless and wireline services. Those changes could in
turn subject Lightbridge to increased pricing pressures, decrease the demand for
Lightbridge's products and services, increase Lightbridge's cost of doing
business or otherwise have a material adverse effect on Lightbridge's business,
financial condition, results of operations and cash flows. The
telecommunications industry outside the United States is also subject to
government regulation which could have an increasing impact on Lightbridge if it
is successful in increasing its penetration of international markets. See "Item
1A. Risk Factors--The Telecommunications Industry is Subject To Government
Regulation and Legal Uncertainties."

PROPRIETARY RIGHTS

    Lightbridge's success is dependent upon proprietary technology. Lightbridge
has traditionally relied on a combination of copyrights, the law of trademarks,
trade secrets and employee and third-party non-disclosure agreements to
establish and protect its rights in its software products and proprietary
technology. Lightbridge protects the source code versions of its products as
trade secrets and as unpublished copyrighted works, and has internal policies
and systems designed to limit access to and require the confidential treatment
of its trade secrets. Lightbridge operates its CDS software on an outsourcing
basis for its clients. In the case of its Channel Solutions and Fraud Management
products, Lightbridge provides the software either on an outsourcing basis or
under license agreements that grant clients the right to use, but contain
various provisions intended to protect Lightbridge's ownership of and the
confidentiality of the underlying copyrights and technology. Lightbridge
requires its employees and other parties with access to its confidential
information to execute agreements prohibiting unauthorized use or disclosure of
Lightbridge's technology. In addition, all of Lightbridge's employees are
required as a condition of employment to enter into non-competition and
confidentiality agreements with Lightbridge.

    Lightbridge currently has three issued U.S. patents and two applications
pending in the U.S. Patent and Trademark Office, two issued foreign patents and
eight applications pending for foreign patents. There can be no assurance that
any of such pending patent applications will result in the issuance of any
patents, or that Lightbridge's current patent or any future patents will provide
meaningful protection to Lightbridge.

    There can be no assurance that the steps taken by Lightbridge to protect its
proprietary rights will be adequate to prevent misappropriation of its
technology or independent development by others of similar technology. It may be
possible for unauthorized parties to copy certain portions of Lightbridge's
products or reverse engineer or obtain and use information that Lightbridge
regards as proprietary. Existing copyright and trade secret laws and patents
issued to Lightbridge offer only limited protection. Lightbridge's
non-competition agreements with its employees may be enforceable only to a
limited extent, if at all. In addition, the laws of some foreign countries do
not protect Lightbridge's proprietary rights to the same extent as do the laws
of the United States. Lightbridge has been and may be required from time to time
to enter into source code escrow agreements with certain clients and
distributors, providing for release of source code in the event Lightbridge
breaches its support and maintenance obligations, files for bankruptcy or ceases
to continue doing business.

    Lightbridge's competitive position may be affected by limitations on its
ability to protect its proprietary information. However, Lightbridge believes
that patent, trademark, copyright, trade secret and other legal protections are
less significant to Lightbridge's success than other factors, such as the
knowledge, ability and experience of Lightbridge's personnel, new product and
service development, frequent product enhancements, customer service and ongoing
product support.

    Certain technologies used in Lightbridge's products and services are
licensed from third parties. Lightbridge generally pays license fees on these
technologies and believes that if the license for any such third-party
technology were terminated, it would be able to develop such technology
internally or license

                                       10
<PAGE>
equivalent technology from another vendor, although no assurance can be given
that such development or licensing can be effected without significant delay or
expense.

    Although Lightbridge believes that its products and technology do not
infringe on any existing proprietary rights of others, there can be no assurance
that third parties will not assert such claims against Lightbridge in the future
or that such future claims will not be successful. Lightbridge could incur
substantial costs and diversion of management resources with respect to the
defense of any claims relating to proprietary rights, which could have a
material adverse effect on Lightbridge's business, financial condition, results
of operations and cash flows. Furthermore, parties making such claims could
secure a judgment awarding substantial damages, as well as injunctive or other
equitable relief, which could effectively block Lightbridge's ability to make,
use, sell, distribute or market its products and services in the United States
or abroad. Such a judgment could have a material adverse effect on Lightbridge's
business, financial condition, results of operations and cash flows. In the
event a claim relating to proprietary technology or information is asserted
against Lightbridge, Lightbridge may seek licenses to such intellectual
property. There can be no assurance, however, that such a license could be
obtained on commercially reasonable terms, if at all, or that the terms of any
offered licenses will be acceptable to Lightbridge. The failure to obtain the
necessary licenses or other rights could preclude the sale, manufacture or
distribution of Lightbridge's products and, therefore, could have a material
adverse effect on Lightbridge's business, financial condition, results of
operations or cash flows. The cost of responding to any such claim may be
material, whether or not the assertion of such claim is valid. See "Item 1A.
Risk Factors--Our Proprietary Technology Is Subject to Limited Protection."

EMPLOYEES

    As of March 22, 2000, Lightbridge had a total of 530 employees, of which 459
were full-time and 71 were part-time or seasonal. The number of personnel
employed by Lightbridge varies seasonally. None of Lightbridge's employees is
represented by a labor union, and Lightbridge believes that its employee
relations are good.

    The future success of Lightbridge will depend in large part upon its
continued ability to attract and retain highly skilled and qualified personnel.
Competition for such personnel is intense, particularly for sales and marketing
personnel, software developers and service consultants.

                                       11
<PAGE>
ITEM 1A. RISK FACTORS

OUR BUSINESS DEPENDS ON A LIMITED NUMBER OF CLIENTS

    Because we derive most of our revenues from a limited number of clients, our
business could be harmed if our relationship with any significant client
terminates or changes. Our 10 largest clients accounted for approximately 66%,
66% and 77% of our total revenues in 1997, 1998 and 1999. During 1997, 1998 and
1999, one, three and two of our clients, respectively, accounted for more than
10% of our total revenues. These greater-than-10% clients represented a total of
29%, 42% and 51% of our total revenues in those years. In particular, AT&T
Wireless Services, Inc. accounted for 29%, 17% and 18% of our total revenues in
1997, 1998 and 1999, respectively, and Sprint Spectrum L.P. accounted for 15%
and 33% of our total revenues in 1998 and 1999, respectively. Nextel Finance
Company accounted for 10% of Lightbridge's total revenues for the year ended
December 31, 1998.

    Because our revenues are concentrated, our revenues and earnings may
fluctuate significantly from quarter to quarter, based on the volume of
qualification and activation transactions our significant clients generate.
Moreover, our revenues may become more concentrated as a result of consolidation
among wireless telecommunications companies, which has been occurring at a rapid
pace in recent years. We expect that most of our revenues will continue to come
from a relatively small number of clients for the foreseeable future. Our client
contracts generally extend for terms of one or more years and do not typically
require our clients to purchase any particular type or quantity of our products
or services or to pay any minimum amount for products or services. Therefore,
our clients, including our significant clients, may not continue to utilize our
services at levels similar to previous years or at all. If one of our major
clients terminates or significantly reduces its purchases from us for any
reason, our business could be seriously damaged. Our business could also be
harmed if we are unable to collect, or experience delays in collecting, payments
from any major client.

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE

    Our operating results are difficult to predict and may fluctuate
significantly from quarter to quarter. If our operating results fall below the
expectations of investors or public market analysts, the price of our common
stock could fall dramatically. Our common stock price could also fall
dramatically if investors or public market analysts reduce their estimates of
our future quarterly operating results, whether as a result of information we
disclose, industry trends or other factors.

    Our revenues are difficult to forecast for a number of reasons:

    - Seasonal and retail trends affect our transaction services revenues, which
      historically have represented the majority of our total revenues. For
      example, our revenues generally have been highest in the fourth quarter of
      each calendar year, particularly in the holiday shopping season between
      Thanksgiving and Christmas. In addition, marketing initiatives undertaken
      by our clients or their competitors may significantly affect the number of
      transactions we process.

    - The sales process for our products and services is lengthy, sometimes
      exceeding a year. The length of the sales process makes our revenues
      difficult to predict. The delay of one or more large orders, particularly
      orders for software, which typically result in a substantial amount of
      non-recurring revenue, could cause our quarterly revenues to fall
      substantially below expectations.

    - We ship our software products within a short period after receipt of an
      order, and we usually do not have a material backlog of unfilled orders of
      software products. Consequently, our revenues from software licenses in
      any quarter depend substantially on the orders booked and shipped in that
      quarter. As a result, a delay in the consummation of a license agreement
      may cause our revenues to fall below expectations for that quarter.

                                       12
<PAGE>
    - Our consulting services revenues can fluctuate based on the timing of
      projects we perform for our clients. Many of our consulting engagements
      are of a limited duration, so it can be difficult for us to forecast
      consulting services revenues accurately more than a few months in advance.

    - We are in the process of developing a number of new products and services,
      including products based on technology acquired from Coral. If we do not
      complete our development efforts on schedule, or if we are not able to
      market our new products and services successfully, our revenues could fall
      substantially below expectations.

    Most of our expenses, particularly employee compensation, are relatively
fixed. As a result, even relatively small variations in the timing of our
revenues may cause significant variations in our quarterly operating results and
may result in quarterly losses.

    As a result of these factors, we believe that quarter-to-quarter comparisons
of our results of operations are not necessarily meaningful. You should not rely
on our quarterly results of operations to predict our future performance.

WE NEED TO ENHANCE OUR EXISTING PRODUCTS AND SERVICES AND DEVELOP NEW ONES

    The telecommunications industry has been changing rapidly as a result of
increasing competition, technological advances and evolving industry practices
and standards, and we expect these changes will continue. Carriers in the
telecommunications market have also been changing quickly, as the result of
consolidation among existing carriers and the rapid entrance of new carriers
into the market. In order to be successful, we must:

    - identify and anticipate emerging technological and market trends;

    - enhance our current products and services;

    - develop new products and services that address changing client needs,
      business practices and technical requirements;

    - integrate our current and future products; and

    - create and maintain interfaces to changing third party systems.

    In addition, we must achieve these goals in a timely and cost-effective
manner and successfully market our new and enhanced products and services to
clients. In the past, we have experienced delays in developing new products and
enhancing existing products, and on occasion we have postponed scheduled
delivery dates for products. In order to be successful, we must meet our
clients' expectations with respect to product development, enhancement and
integration and our software and services must adequately address the needs of
our clients.

WE MUST RESPOND TO CHANGING BUSINESS REQUIREMENTS

    Our operations have expanded rapidly in recent years. This expansion has
created significant demands on our executive, operational, development and
financial personnel and other resources. Future growth in our business, if
achieved either domestically or internationally, may further strain our
management, financial and other resources. Our future operating results will
depend on the ability of our officers and key employees to manage changing
business conditions and to continue to improve our operational and financial
control and reporting systems.

WE FACE SIGNIFICANT COMPETITION FOR A LIMITED SUPPLY OF QUALIFIED SOFTWARE
  ENGINEERS AND CONSULTANTS

    Our business depends on the services of skilled software engineers who can
develop, maintain and enhance our products and consultants who can undertake
complex client projects. In general, only highly

                                       13
<PAGE>
qualified, highly educated personnel have the training and skills necessary to
perform these tasks successfully. In order to maintain the competitiveness of
our products and to meet client requirements, we need to attract, motivate and
retain a significant number of software engineers and consultants. Qualified
personnel such as these are in short supply and we face significant competition
for these employees, from not only our competitors but also clients and other
enterprises. Other employers may offer software engineers and consultants
significantly greater compensation and benefits or more attractive career paths
or geographic locations than we are able to offer. Any failure on our part to
hire, train and retain a sufficient number of qualified personnel would
seriously damage our business.

WE DEPEND ON THE SERVICES OF OUR CHIEF EXECUTIVE OFFICER

    Our future success depends to a significant degree on the skills, experience
and efforts of our executive officers, particularly Pamela D.A. Reeve, our
President and Chief Executive Officer. Ms. Reeve has led us since our
incorporation in 1989. We do not have any employment contract requiring
Ms. Reeve or any of our other executive officers to continue their employment
for any period of time, and we do not maintain key-person life insurance on any
of our executive officers other than Ms. Reeve.

OUR REVENUES ARE CONCENTRATED IN THE DOMESTIC WIRELESS TELECOMMUNICATIONS
  INDUSTRY

    We derive almost all of our revenues from United States-based companies in
the wireless telecommunications industry, principally cellular and PCS carriers.
While we are seeking to expand our client base to other types of
telecommunications providers, both domestically and internationally, we expect
that U.S. wireless telecommunications companies will continue to account for a
substantial majority of our revenues for the foreseeable future. Although the
wireless industry has experienced significant growth in recent years, we believe
that the growth rate of the domestic wireless industry may begin to slow as the
industry matures. As a result, our success depends on a number of factors:

    - continued demand for our products and services by domestic companies in
      the wireless telecommunications industry;

    - continued growth of the domestic cellular and PCS markets;

    - our ability to develop and market new products and services to new and
      existing clients;

    - our ability to increase sales of our products and services overseas; and

    - our ability to increase sales of our products and services to CLECs and
      other new classes of clients.

    Recently some of our clients have completed or announced mergers with other
of our clients. We currently are unable to predict the effect, if any, that
these consolidations will have on the nature and quantity of products and
services we provide to these clients.

OUR BUSINESS COULD REQUIRE ADDITIONAL FINANCING

    It is possible that we will not maintain profitability on either a quarterly
or annual basis in the future or that we will need to raise funds through public
or private financings. Further expansion of our business, including the
acquisition of additional computer and network equipment, the development of new
or enhanced products and services and the international expansion of our
business will require us to make significant capital expenditures. If our
available cash resources prove to be insufficient, due to unanticipated
expenses, revenue shortfalls or otherwise, we may need to seek additional
financing or curtail our expansion activities. If we obtain equity financing or
finance an acquisition with equity securities, our existing stockholders may
experience dilution in their investments. It is possible that, if we need
additional financing, we will not be able to obtain it on acceptable terms, or
at all.

                                       14
<PAGE>
WE FACE COMPETITION FROM A BROAD AND INCREASING RANGE OF VENDORS

    The market for products and services provided to telecommunications carriers
is highly competitive and subject to rapid change. The market is fragmented, and
a number of companies currently offer one or more products or services
competitive with ours. We anticipate continued growth and the formation of new
alliances in the telecommunications carrier services industry, which will result
in the entrance of new competitors in the future. We face potential competition
from several primary sources:

    - software vendors that provide one or more customer acquisition, retention
      or fraud detection solutions, including GTE Corporation's TSI division,
      Systems/Link, Magnum Software Systems, Onyx Software and SLP Infoware;

    - telecommunications equipment vendors that market software-based solutions
      to complement their hardware offerings, such as Compaq, Ericsson and
      Northern Telecom;

    - service providers that offer customer acquisition, retention or fraud
      detection services in connection with other services, including Equifax,
      LHS Group and Amdocs;

    - information technology departments within larger carriers that have the
      ability to provide products and services that are competitive with those
      we offer; and

    - consulting firms that may offer competitive services or the ability to
      develop customized solutions for customer acquisition, retention or fraud
      detection, such as American Management, Andersen Consulting, CAP Gemini
      and Deloitte & Touche.

    Many of our current and potential competitors have significantly greater
financial, marketing, technical and other competitive resources than we do. As a
result, these competitors may be able to adapt more quickly to new or emerging
technologies and changes in client requirements, or may be able to devote
greater resources to the promotion and sale of their products and services.

    In addition, in order to meet client requirements, we must often work
cooperatively with companies that are, in other circumstances, competitors. The
need for us to work cooperatively with such companies may limit our ability to
compete aggressively with them in other circumstances.

WE DEPEND ON OUR SYSTEMS TO PROVIDE TRANSACTION SERVICES AND SUPPORT SERVICES

    We provide transaction services and support services using complex computer
and telecommunications systems. Our business could be significantly harmed if
these systems fail or suffer damage from fire, natural disaster, power loss,
telecommunications failure or similar events. Most of our computer and
telecommunications equipment is located at our sites in Burlington and Waltham,
Massachusetts, and, as a result, may be vulnerable to a natural disaster. In
addition, the growth of our client base, a significant increase in transaction
volume or an expansion of our facilities may strain the capacity of our
computers and telecommunications systems and lead to degradations in performance
or system failure. Many of our agreements with carriers contain level of service
commitments which we might be unable to fulfill in the event of a natural
disaster or a major system failure. Our property and business interruption
insurance might not be adequate to compensate us for any losses that may occur
in the event of a natural disaster or system failure. It is also possible that
such insurance might cease to be available to us on commercially reasonable
terms, or at all.

    In addition to our own systems, we rely on certain equipment, software,
systems and services from third parties that are also subject to risks,
including risks of system failure or inadequacy. For example, in order to
provide our credit verification service, we need access to third-party credit
information databases. Similarly, delivery of our activation services often
requires the availability and performance of third-party billing systems. If,
for any reason, we were unable to access any such databases or billing systems,
our ability to process credit verification transactions could be impaired. In
addition, our business is materially dependent on service provided by various
local and long distance telecommunications providers. A

                                       15
<PAGE>
significant increase in the cost of telecommunications services that we cannot
recover through an increase in the price of our services, or any significant
interruption in telecommunications services, could seriously harm our business.

OUR SOFTWARE MAY CONTAIN DEFECTS

    The software we develop and use in providing our products and services may
contain errors. Although we test software extensively before it is used to
provide services to clients, we cannot be certain that errors will not be found
in software after we put it into use. Any such error may harm our business in
several ways, including the following:

    - we may suffer a loss of revenue if we are unable to provide services to
      our clients;

    - we may incur additional unexpected expenses to fund further product
      development or to add programming personnel to complete a development
      project; and

    - our clients may terminate their agreements with us.

WE MAY MAKE ACQUISITIONS, WHICH INVOLVE RISKS

    We acquired Coral in November 1997. Although we have no current arrangements
to make additional acquisitions in the future, we may do so if we identify
companies, technologies or assets that appear to complement our business.
Acquisitions involve risks that could cause our actual growth to differ from our
expectations. For example:

    - In future acquisitions, we may issue equity securities that could be
      dilutive to our shareholders. In those acquisitions, we also may incur
      additional debt and amortization expense related to goodwill and other
      intangible assets. This additional debt and amortization expense may
      materially and adversely affect our business and operating results.

    - We may be unable to integrate acquired businesses successfully and to
      realize anticipated economic, operational and other benefits in a timely
      manner. Integration of an acquired business is especially difficult when
      we acquire a business in a market in which we have limited or no expertise
      or a business with a corporate culture different from ours. If we are
      unable to successfully integrate acquired businesses, we may incur
      substantial costs and delays or other operational, technical or financial
      problems.

    - Acquisitions may divert management's attention from our existing business
      and may damage our relationships with our key clients and employees.

THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO GOVERNMENT REGULATION AND LEGAL
  UNCERTAINTIES

    Our telecommunications carrier clients are regulated at both the federal and
state levels, and our international clients are subject to regulation by their
own countries. Government regulation could harm our business in several ways,
for example by:

    - decreasing the rate of growth of the wireless industry or other segments
      of the telecommunications market;

    - affecting the development of emerging telecommunications markets;

    - limiting the number of potential clients for our products and services;

    - introducing new requirements that would force us to modify our products or
      services; or

    - increasing competition in the industry, which could subject us to
      increased pricing pressures.

                                       16
<PAGE>
    In making credit evaluations of consumers, our clients are subject to
detailed state and federal requirements, including the Fair Credit Reporting Act
and the Equal Credit Opportunity Act. Although most of our products and
services, other than our ProFile product, are not directly subject to these
requirements, we must take these requirements into account in order to meet our
clients' needs. If we fail to reflect these requirements in a timely or accurate
manner, we could incur liability or suffer a loss of business.

OUR PROPRIETARY TECHNOLOGY IS SUBJECT TO LIMITED PROTECTION

    Our business could be materially and adversely affected if we are not able
to protect adequately our proprietary software and other proprietary
intellectual property rights. We rely on a combination of copyright, patent,
trademark and trade secret laws, license and confidentiality agreements, and
software security measures to protect our proprietary rights. Although we
currently hold U.S. and foreign registered trademarks and U.S. patents on
certain of our proprietary technology, we may be unable to obtain similar
protection for our other intellectual property. In addition, the laws of certain
countries in which our products are licensed do not protect our products and
intellectual property rights to the same extent as U.S. laws. We generally enter
into non-disclosure agreements with our employees and customers and restrict
access to, and distribution of, our proprietary information. Nevertheless, we
may be unable to deter misappropriation of our proprietary information, detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights. Our competitors also may independently develop technologies that are
substantially equivalent or superior to our technology.

    Although we believe that our services and products do not infringe on the
intellectual property rights of others, we cannot prevent someone else from
asserting a claim against us in the future for violating their technology
rights. Even if such a claim is not successful on its merits, we could be
required to incur significant costs in defending the claim. If a claim of this
type is successful, we could be required to pay substantial damages, and we
could also be prevented from selling one or more of our products and services.

OUR INTERNATIONAL EXPANSION STRATEGY INVOLVES RISKS

    As part of our business strategy, we are seeking opportunities to expand our
offerings into international markets. As the United States wireless market
matures, we believe that expansion into international markets is important to
our ability to continue to grow and to market our products and services. We have
opened offices in England, Brazil and Malaysia, but to date we have limited
experience in marketing and distributing our products and services
internationally. Expanding our sales efforts outside the United States will
require significant management attention and financial resources. In addition,
our international expansion strategy is subject to risks, including:

    - fluctuations in exchange rates may reduce our earnings, particularly if we
      denominate arrangements with international clients in the currency of the
      country in which our products or services are provided;

    - we may experience longer payment cycles and increased difficulties in
      collecting accounts receivable;

    - tariffs and other barriers may reduce our ability to sell our solutions or
      may reduce the profitability of those solutions;

    - political and economic instability, such as the economic downturn in Asia
      in 1998, may lead to reduced demand for our solutions;

    - changes in technology standards, such as interfaces between products, that
      are developed by European or other foreign groups may require additional
      development efforts by us or may change the buying behavior of some of our
      clients;

                                       17
<PAGE>
    - we may experience difficulties in managing a global network of
      distributors or representatives and in staffing and managing foreign
      subsidiary operations;

    - we may encounter difficulties or delays in translating products and
      product documentation into foreign languages;

    - we may suffer potentially adverse tax consequences from operations abroad;
      and

    - the adoption and use of the euro, the single European currency introduced
      in January 1999, may adversely affect our business in ways we cannot
      currently predict.

OUR ANTI-TAKEOVER PROVISIONS MAY DISCOURAGE POTENTIAL TAKEOVER ATTEMPTS

    Certain provisions of our certificate of incorporation and Delaware law
could be used by our incumbent management to make it more difficult for a third
party to acquire control of us, even if the change in control might be
beneficial to our stockholders. This could discourage potential takeover
attempts and could adversely affect the market price of our common stock.

    In particular, we may issue preferred stock in the future without
stockholder approval, upon terms determined by our board of directors. The
rights of holders of our common stock would be subject to, and may be adversely
affected by, the rights of holders of any preferred stock issued in the future.
The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of our outstanding stock.
We have adopted a stockholder rights plan that may deter or delay attempts to
acquire us or to accumulate shares of common stock. Except for the stockholder
rights plan, we have no present plans to designate or issue any shares of
preferred stock.

ITEM 2. PROPERTIES

    In March 1997, the Company entered into a seven-year lease for approximately
46,000 square feet in Burlington, Massachusetts. This lease was amended in
October 1997 and in July 1999 to include an additional 11,000 and 8,000 square
feet, respectively, at the same location. This lease, as amended, for the
Burlington facility expires in 2004. In August 1997, the Company relocated its
headquarters from Waltham, Massachusetts to the Burlington facility, and it
currently subleases a portion of its 39,000-square foot facility in Waltham. The
Company's teleservices group is located in a 16,000-square foot leased facility,
also in Waltham, Massachusetts. The leases for both Waltham facilities expire
between 2001 and 2003. In addition, Lightbridge's Colorado operations are
located in a 30,000 square foot leased facility in Broomfield, Colorado. The
lease on the Broomfield premises will expire in 2003. In October 1999, the
Company entered into a five year lease for approximately 16,000 square feet of
additional space in Broomfield, Colorado. This additional space is occupied by a
portion of the TeleServices Group located in Colorado.

ITEM 3. LEGAL PROCEEDINGS

    During 1997, an action was brought against the Company and another
defendant, United States Cellular Corp., in the Superior Court of New Jersey,
Law Division, Mercer County (Docket No. MER-L-003436-97) on September 10, 1997
by National Information Bureau Ltd. ("NIB"), a Delaware corporation based in New
Jersey. In January 1998, NIB filed for Chapter 11 bankruptcy protection in
Delaware, and requested that the New Jersey court stay the litigation pending a
determination during the bankruptcy proceedings of whether NIB would pursue the
case. The complaint asserts counts against the Company alleging misappropriation
of trade secrets, interference with contractual relations, civil conspiracy, and
breach of contract. Three other counts of the complaint assert claims only
against United States Cellular Corp. In the complaint, NIB seeks damages,
attorneys' fees, costs, and unspecified other

                                       18
<PAGE>
relief. The complaint does not identify or specify the amount, if any, of
damages NIB claims to have incurred as a result of any alleged conduct by the
Company. The Company believes that the claims asserted against it by NIB are
without merit. The Company intends to defend the action vigorously, and does not
believe that this claim will have a material adverse effect on the Company's
business, financial condition, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    No matter was submitted to a vote of security holders during the quarter
ended December 31, 1999.

ITEM 4A. EXECUTIVE OFFICERS

    The executive officers and directors of the Company and their ages as of
March 15, 2000 are as follows:

<TABLE>
<CAPTION>
NAME                                        AGE                   POSITION
----                                        ---  ------------------------------------------
<S>                                         <C>  <C>
Pamela D.A. Reeve.........................  50   President, Chief Executive Officer and
                                                 Director
Brian P. Connolly.........................  50   Senior Vice President, Sales and Marketing
Michael A. Perfit.........................  44   Senior Vice President of Technology
Richard H. Antell.........................  51   Vice President, Software Development
Douglas E. Blackwell......................  43   Vice President, Service Delivery
Carla J. Marcinowski......................  42   Vice President, Consulting Services
Torrence C. Harder(1).....................  56   Director
D. Quinn Mills(2).........................  58   Director
Debora Wilson(1)(2).......................  42   Director
</TABLE>

------------------------

(1) Member of the Compensation Committee

(2) Member of the Audit Committee

    Pamela D.A. Reeve has served as the President of the Company since
November 1989, as Chief Executive Officer of the Company since September 1993
and as a director of the Company since November 1989. From November 1989 to
September 1993, Ms. Reeve also served as Chief Operating Officer of the Company.
Prior to joining the Company, Ms. Reeve was employed by The Boston Consulting
Group. Ms. Reeve served as President of the Massachusetts Software Council from
January 1996 to January 1998. She currently serves as a director of WebLink
Wireless, Inc., a provider of wireless messaging services, and Natural
MicroSystems Corp., a provider of hardware and software technology for
developers of high-value telecommunications solutions.

    Brian P. Connolly has been Lightbridge's Senior Vice President, Sales and
Marketing since May 1998. Prior to joining Lightbridge, Mr. Connolly was
employed by Computer Sciences Corporation's Intellicom Division, most recently
as its Vice President and Chief Operating Officer.

    Michael A. Perfit, a founder of the Company, has served as Senior Vice
President of Technology of the Company since June 1991. From June 1989 to
May 1991, Mr. Perfit served as Vice President of Engineering of the Company.
Prior to joining the Company, Mr. Perfit was Vice President of Appex, Inc. and
held engineering and technical support positions at Interactive Management
Systems.

    Richard H. Antell has served as Vice President, Software Development of the
Company since February 1996. From June 1991 to January 1996, Mr. Antell was Vice
President of Engineering of the Company. Prior to joining the Company,
Mr. Antell served as Vice President of Application Development of Applied Expert
Systems, Inc. and Project Leader of Index Systems, Inc.

                                       19
<PAGE>
    Douglas E. Blackwell has served as Vice President, Service Delivery of the
Company since November 1995. From October 1994 to October 1995, Mr. Blackwell
served as Vice President of Operations of the Company. From February 1991 to
September 1994, Mr. Blackwell was employed as Vice President of Operations of
Thomson Financial Services, Inc., an on-line financial transaction and
information services firm. Prior to February 1991, Mr. Blackwell was employed at
Nolan, Norton and Co., an affiliate of KPMG/Peat Marwick.

    Carla J. Marcinowski has been Lightbridge's Vice President, Consulting
Services since February 1998. Prior to joining Lightbridge as an employee,
Ms. Marcinowski provided services to Lightbridge as an independent consultant,
from October 1997 to January 1998. Ms. Marcinowski was a founder and Vice
President, Business Development of The Net Collaborative from July 1996 to
August 1997, and prior to March 1996 was employed by Lotus Development
Corporation in various positions, including International Managing Director,
Consulting Services, Managing Director, Worldwide Services Group and Services
Lead, Lotus/IBM Transition Team.

    Torrence C. Harder, a founder of the Company, has served as a director of
the Company since June 1989. Mr. Harder has been the President and a director of
Harder Management Company, a registered investment advisory firm, since its
establishment in 1971. He has also been the President and a director of
Entrepreneurial Ventures, Inc., a venture capital investment firm, since 1987
and currently serves as a director of MicroFinancial, Inc., a microticket
leasing firm.

    D. Quinn Mills has served as a director of the Company since June 1990.
Since 1976, Dr. Mills has served as the Albert J. Weatherhead, Jr. Professor of
Business Administration at the Harvard Business School.

    Debora J. Wilson has served as a director of Lightbridge since May 1998.
Ms. Wilson is currently President and Chief Executive Officer of weather.com, a
position she has held since September 1999. From August 1994 to September 1999,
Ms. Wilson held senior level positions at The Weather Channel, including Senior
Vice President--New Media, Executive Vice President and General Manager and
President--U.S. Products and Distribution. Prior to August 1994, Ms. Wilson was
employed at Bell Atlantic, and held various Product Development, Marketing and
Operations positions.

    The Board of Directors is divided into three classes. One class of directors
is elected each year at the annual meeting of stockholders for a term of office
expiring after three years. Ms. Wilson serves in the class whose term expires in
2000; Dr. Mills serves in the class whose term expires in 2001; and Mr. Harder
and Ms. Reeve serve in the class whose term expires in 2002. Each director will
serve until the expiration of his or her term and thereafter until his or her
successor is duly elected and qualified.

    The Board of Directors has appointed a Compensation Committee, which
provides recommendations concerning salaries and incentive compensation for
employees of and consultants to the Company, and an Audit Committee, which
reviews the scope and results of the audit and other services provided by the
Company's independent auditors.

    Non-employee directors of the Company receive cash compensation for their
services. Under the Company's 1998 Non-Qualified Stock Option Plan, non-employee
directors of the Company are eligible to receive automatic formula grants of
nonqualified options.

    Executive officers of the Company are elected annually by the Board of
Directors and serve at its discretion or until their successors are duly elected
and qualified.

                                       20
<PAGE>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Shares of the Company's Common Stock, $.01 par value per share, are quoted
on the Nasdaq National Market under the symbol "LTBG." The following table sets
forth, for the calendar quarters indicated, the high and low sales prices per
share of the Common Stock on the Nasdaq National Market, as reported in
published financial sources:

<TABLE>
<CAPTION>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>

1998
First Quarter...............................................   $20.25     $10.00
Second Quarter..............................................   $19.25     $ 8.41
Third Quarter...............................................   $ 9.25     $ 3.38
Fourth Quarter..............................................   $ 6.22     $ 3.13

1999
First Quarter...............................................   $ 7.25     $ 4.63
Second Quarter..............................................   $12.56     $ 4.75
Third Quarter...............................................   $19.88     $11.88
Fourth Quarter..............................................   $33.25     $15.38
</TABLE>

    As of March 15, 2000, there were 198 holders of record of common stock
(which number does not include the number of stockholders whose shares are held
of record by a broker or clearing agency but does include each such brokerage
house or clearing agency as one record holder).

    The Company has never declared or paid any cash dividends on its common
stock. The Company currently anticipates that it will retain future earnings, if
any, to fund the development and growth of its business and therefore does not
expect to pay any cash dividends in the foreseeable future. Furthermore, the
terms of the Company's existing borrowing arrangements and bank lines of credit
prohibit the Company from declaring or paying cash dividends on its common
stock.

                                       21
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

    The following selected financial data have been derived from the Company's
audited historical financial statements, certain of which are included elsewhere
in this Form 10-K. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Item 8. Financial Statements
and Supplementary Data."

<TABLE>
<CAPTION>
                                                            THREE
                                                 YEAR       MONTHS
                                                ENDED       ENDED               YEARS ENDED DEC. 31,
                                              SEPT. 30,    DEC. 31,   -----------------------------------------
                                                 1995        1995     1996(1)      1997       1998       1999
                                              ----------   --------   --------   --------   --------   --------
<S>                                           <C>          <C>        <C>        <C>        <C>        <C>
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Revenues...................................     $19,350     $6,512    $29,545    $40,549    $63,352    $89,716
Cost of revenues...........................      12,607      3,484     15,986     19,428     33,108     42,876
                                                -------     ------    -------    -------    -------    -------
Gross profit...............................       6,743      3,028     13,559     21,121     30,244     46,840
                                                -------     ------    -------    -------    -------    -------
Operating expenses:
  Development costs........................       3,864      1,145      4,380      6,072      9,596     12,659
  Sales and marketing......................       1,902        795      3,673      6,041      6,857      7,481
  General and administrative...............       2,584        701      2,769      4,731      8,490     10,878
  Amortization of goodwill and acquired
    workforce..............................          --         --         --        497      2,982      1,342
  Intangible asset impairment..............          --         --         --         --      7,385         --
  Purchased in-process research and
    development............................          --         --         --      4,000         --         --
                                                -------     ------    -------    -------    -------    -------
Total operating expenses...................       8,350      2,641     10,822     21,341     35,310     32,360
                                                -------     ------    -------    -------    -------    -------
Income (loss) from operations..............      (1,607)       387      2,737       (220)    (5,066)    14,480
Other income (expense)(2)..................        (826)      (313)      (305)       949        682      1,233
                                                -------     ------    -------    -------    -------    -------
Income (loss) before income taxes..........      (2,433)        74      2,432        729     (4,384)    15,713
Provision for income taxes.................          --          2        160        892      2,513      5,568
                                                -------     ------    -------    -------    -------    -------
Net income (loss)..........................      (2,433)        72      2,272    $  (163)   $(6,897)   $10,145
                                                                                 =======    =======    =======
Accretion of preferred stock dividends.....        (182)       (46)      (137)
                                                -------     ------    -------
Net income (loss) available for common
  stock....................................     $(2,615)    $   26    $ 2,135
                                                =======     ======    =======
Basic earnings (loss) per common share.....     $ (0.40)    $ 0.00    $  0.33    $ (0.01)   $ (0.44)   $  0.62
                                                =======     ======    =======    =======    =======    =======
Diluted earnings (loss) per common share...     $ (0.40)    $ 0.00    $  0.17    $ (0.01)   $ (0.44)   $  0.56
                                                =======     ======    =======    =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                         SEPTEMBER 30,    ----------------------------------------------------
                                              1995          1995       1996       1997       1998       1999
                                         --------------   --------   --------   --------   --------   --------
<S>                                      <C>              <C>        <C>        <C>        <C>        <C>
                                                                    (IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents..............     $    539      $     58   $27,901    $15,716    $16,437    $ 35,478
Working capital (deficiency)...........     $ (3,280)     $ (1,967)  $30,457    $21,186    $24,519    $ 36,771
Total assets...........................     $ 10,214      $ 11,055   $41,766    $63,565    $57,777    $ 75,857
Long-term obligations, less current
  portion..............................     $  3,796      $  4,515   $ 2,221    $ 2,221    $ 1,181    $  1,102
Redeemable convertible preferred
  stock................................     $  3,131      $  3,177   $    --    $    --    $    --    $     --
Stockholders' equity (deficit).........     $ (3,564)     $ (3,522)  $33,599    $50,716    $44,447    $ 57,292
</TABLE>

------------------------

(1) Lightbridge changed its fiscal year end from September 30 to December 31,
    effective with the fiscal years ending December 31, 1996.

(2) Consists principally of interest expense for the years ended September 30,
    1995 and December 31, 1996 and for the three months ended December 31, 1995.
    Consists principally of interest income for the years ended December 31,
    1997 and 1998. For the year ended December 31, 1999, consists principally of
    interest income and a nonrecurring gain of approximately $415,000 on the
    sale of an investment.

                                       22
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

OVERVIEW

    Lightbridge develops, markets and supports a network of integrated products
and services that enable telecommunications carriers to improve their customer
acquisition, retention and fraud prevention processes.

    Lightbridge's total revenues increased by 363.6% from $19.4 million in
fiscal 1995 to $89.7 million in fiscal 1999. This revenue increase was driven
primarily by increases in volume of wireless customer qualification and
activation transactions processed for wireless carrier clients and in the
utilization of the Company's products and services by carriers. The Company's
revenues consist of transaction revenues, software licensing and maintenance,
and consulting revenues. Transaction revenues account for a majority of the
Company's revenues. Software licensing and maintenance revenues and consulting
revenues have increased during recent periods, primarily as a result of
increased consulting services associated with linking wireless carrier legacy
and third-party systems to the Company's systems and the initial licensing of
certain software products. Software licensing and maintenance and consulting
revenues, which together represented no more than 6.0% of total revenues in
fiscal 1995, increased to an aggregate of 7.0%, 25.0%, 33.7% 34.2% and 29.4% of
total revenues in the three months ended December 31, 1995 and fiscal 1996,
1997, 1998 and 1999, respectively. There can be no assurance that the Company's
software products or its consulting services will achieve market acceptance or
that the mix of the Company's revenues will remain constant.

    Lightbridge's transaction services revenues are derived primarily from the
processing of applications for qualification of subscribers for
telecommunications services and the activation of service for those subscribers.
Over time, the Company has expanded its offerings from credit evaluation
services to include screening for subscriber fraud, evaluating carriers'
existing accounts, interfacing with carrier and third-party systems and
providing call center services. These services are provided pursuant to
contracts with carriers which specify the services to be utilized and the
markets to be served. The Company's clients are charged for these services on a
per transaction basis. Pricing varies depending primarily on the volume of
transactions, the type and number of other products and services selected for
integration with the services and the term of the contract under which services
are provided. The volume of processed transactions varies depending on seasonal
and retail trends, the success of the carriers utilizing the Company's services
in attracting subscribers and the markets served by the Company's clients.
Transaction services revenues are recognized in the period in which the services
are performed.

    The Company's software licensing and maintenance revenues consist of
revenues attributable to the licensing of the Company's Channel Solutions and
Fraud Management software. Lightbridge's Channel Solutions products are designed
to assist customers in interfacing with the Company's transaction processing
systems as well as to perform other point-of-sale and channel functionality. The
Company's Fraud Management products are designed to assist carriers in
monitoring subscriber accounts to identify activity that may indicate fraud.
While the Company's software products are licensed as packaged software
products, each of these products generally requires insignificant customization
and integration with other products and systems to varying degrees. Software
licensing revenues are recognized when persuasive evidence of an arrangement
exists, delivery of the product has been made, and a fixed fee and
collectibility has been determined. Revenues from software maintenance contracts
are recognized ratably over the term of the maintenance agreement.

    The Company's consulting services revenues historically have been derived
principally from providing consulting for customer acquisition and retention.
During the second quarter of 1998, the Company launched Lightbridge Consulting
Services, which provides Solution Development and Deployment consulting and
Business Advisory Services in the areas of customer acquisition, retention and
fraud management. Revenues from consulting services are generally recognized as
the services are performed, using the percentage-of-completion method, measured
by labor hours.

                                       23
<PAGE>
    In November 1997, the Company acquired all of the outstanding stock of Coral
in exchange for 892,053 shares of the Company's common stock. The Company also
assumed the obligations under Coral's outstanding stock options and warrants.
The acquisition was accounted for as a purchase and, accordingly, the results of
Coral are included with those of the Company from the date of acquisition.

    During 1999, Lightbridge continued its efforts to complete development of
in-process technology obtained through the acquisition of Coral. Lightbridge is
continuing to develop a new version of FraudBuster that is expected to contain
substantial enhancements in performance, scalability and functionality and is
currently scheduled to be released in the second quarter of 2000. Lightbridge is
also continuing to develop Alias and @Risk, which will be complimentary to
FraudBuster and will contain new subscription fraud detection tools. These
products are being deployed in a phased introduction that began in the third
quarter of 1999 and is expected to continue through the second quarter of 2000.
If the Company is unsuccessful in completing these projects, the Company's
business, financial condition, results of operations and cash flows could be
materially adversely affected.

    During fiscal 1997, 1998 and 1999, one, three and two of the Company's
clients, respectively, accounted for more than 10% of the Company's total
revenues. Revenues from the one client in fiscal 1997 aggregated 29% of total
revenues. Revenues from the three clients in fiscal 1998 aggregated 17%, 15% and
10% of total revenues. Revenues from the two clients in fiscal 1999 aggregated
18% and 33% of total revenues. See "Item 1A. Risk Factors--Our Business Depends
on a Limited Number of Clients."

    Substantially all of the Company's revenues historically have been derived
from clients located in the United States, and the Company expects that domestic
sales will continue to account for a substantial portion of its revenues in
2000.

                                       24
<PAGE>
RESULTS OF OPERATIONS

    The following table sets forth, for the periods indicated, certain financial
data as a percentage of total revenues:

<TABLE>
<CAPTION>
                                                              YEAR           YEAR           YEAR
                                                             ENDED          ENDED          ENDED
                                                          DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                              1997           1998           1999
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
Revenues:
  Transaction...........................................       66.3%          65.8%          70.6%
  Software licensing and maintenance....................       15.6           18.8           14.9
  Consulting services...................................       18.1           15.4           14.5
                                                              -----          -----          -----
                                                              100.0          100.0          100.0
                                                              -----          -----          -----
Cost of revenues:
  Transaction...........................................       38.3           36.8           33.7
  Software licensing and maintenance....................        5.0            7.2            5.6
  Consulting services...................................        4.6            8.3            8.5
                                                              -----          -----          -----
                                                               47.9           52.3           47.8
                                                              -----          -----          -----
Gross profit............................................       52.1           47.7           52.2
                                                              -----          -----          -----
Operating expenses:
  Development costs.....................................       15.0           15.1           14.1
  Sales and marketing...................................       14.9           10.8            8.3
  General and administrative............................       11.7           13.4           12.1
  Amortization of goodwill and acquired workforce.......        1.2            4.7            1.5
  Intangible asset impairment...........................         --           11.7             --
  Purchased in-process research and development.........        9.8             --             --
                                                              -----          -----          -----
    Total operating expenses............................       52.6           55.7           36.0
                                                              -----          -----          -----
Income (loss) from operations...........................       (0.5)          (8.0)          16.2
Other income (expense), net.............................        2.3            1.1            1.4
                                                              -----          -----          -----
Income (loss) before income taxes.......................        1.8           (6.9)          17.6
Provision for income taxes..............................        2.2            4.0            6.2
                                                              -----          -----          -----
Net income (loss).......................................       (0.4)%        (10.9)%         11.4%
                                                              =====          =====          =====
</TABLE>

                                       25
<PAGE>
    YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

    REVENUES.  Revenues increased by 41.6% to $89.7 million in the year ended
December 31, 1999 from $63.4 million in the year ended December 31, 1998.

    Transaction revenues increased by 52.0% to $63.3 million in the year ended
December 31, 1999 from $41.7 million in the year ended December 31, 1998, while
increasing as a percentage of total revenues to 70.6% from 65.8%. The increase
in transaction revenues for the year ended December 31, 1999 was primarily due
to increased volume of qualification and activation transactions processed for
carrier clients.

    The Company believes that its transaction revenues in 2000 will not increase
at the same rate as they did in 1999. The Company's transaction revenues will
continue to reflect in large part the industry's rate of growth of new
subscribers as well as the rate of switching among carriers by subscribers
(subscriber churn). Lightbridge believes, based in part on reports of wireless
telecommunication industry analysts, that the rate of subscriber growth will
slow in upcoming years and that the rate of subscriber churn will remain fairly
constant.

    Software licensing and maintenance revenues increased by 11.7% to $13.3
 million in the year ended December 31, 1999 from $11.9 million in the year
ended December 31, 1998, while decreasing as a percentage of total revenues to
14.9% from 18.8%. The increase in software licensing and maintenance revenues
for the year ended December 31, 1999 was principally a result of the increase in
revenues attributable to Lightbridge's Retail Management System product.

    The Company currently anticipates that its software licensing and
maintenance revenues in 2000 will increase modestly over those in 1999, as the
Company continues to integrate its Fraud Management products with its other
offerings and to build its international sales capability. Actual results for
2000 will, however, be subject to a number of uncertainties, some of which are
not within the Company's control. In particular, the Company believes that
software licensing revenues at least through 2000 will be subject to fluctuation
and will be more difficult to anticipate than the Company's other types of
revenues, principally due to the relatively long sales cycles and relatively
large dollar size of its software licenses. The sales cycles for domestic
software licenses generally extend from three to six months and may extend as
long as twelve months; sales cycles for software licenses sold to international
clients often are longer. The predictability of software licensing revenues is
further impeded because the Company's licensed software is a discretionary
purchase for most customers. As a result of the foregoing, a small number of
licensing transactions may have a significant effect on the Company's software
licensing revenues in a quarter.

    Consulting services revenues increased by 34.0% to $13.1 million in the year
ended December 31, 1999 from $9.7 million in the year ended December 31, 1998,
while decreasing as a percentage of total revenues to 14.5% from 15.4%. The
increase in consulting services revenues for the year ended December 31, 1999
was principally due to increased demand for the consulting services, principally
custom software development and systems integration offered by the Company. The
consulting business was less concentrated in 1999 than 1998, with consulting
work being performed for fifty-eight clients during the year ended December 31,
1999. Lightbridge currently anticipates that its consulting services revenue
will grow modestly in 2000 over 1999 levels as Lightbridge continues to
standardize its consulting services offerings and to build its consulting
capabilities.

    COST OF REVENUES.  Cost of revenues consists primarily of personnel costs,
costs of purchasing and maintaining systems and networks used in processing
qualification and activation transactions (including depreciation and
amortization of systems and networks) and amortization of capitalized software
and acquired technology. Cost of revenues may vary as a percentage of total
revenues in the future as a result of a number of factors, including changes in
the volume of transactions processed, in the mix of transaction revenues between
revenues from on-line transaction processing and revenues from processing
transactions through the Company's TeleServices Group and changes in the mix of
total revenues among transaction revenues, software licensing revenues and
consulting services revenues.

    Transaction cost of revenues increased by 29.9% to $30.3 million in the year
ended December 31, 1999 from $23.3 million in the year ended December 31, 1998,
while decreasing as a percentage of total

                                       26
<PAGE>
transaction revenues to 47.8% from 55.9%. The increase in transaction cost of
revenues for the year ended December 31, 1999 resulted principally from
increases in transaction volume and costs attributable to expansion of the
Company's staff and systems capacity. The decrease in transaction cost of
revenues as a percentage of total transaction revenues for the year ended
December 31, 1999 principally resulted from an increase in the number of
transactions processed and a change in the mix of transaction services processed
compared to the same period of the prior year.

    Software licensing and maintenance cost of revenues increased by 9.9% to
$5.0 million in the year ended December 31, 1999 from $4.6 million in the year
ended December 31, 1998, while decreasing as a percentage of total software
licensing and maintenance revenues to 37.8% from 38.4%. The dollar increase in
software licensing and maintenance cost of revenues for the year ended
December 31, 1999 was primarily due to the additional costs associated with the
increase in software licensing and maintenance revenues during the year. The
decrease in software licensing and maintenance cost of revenues as a percentage
of total software licensing and maintenance cost of revenues for the year ended
December 31, 1999 principally resulted from a decrease in amortization expense
of acquired technology offset in part by the increase in costs associated with
the increase in software licensing revenues during the year. The software
licensing component of software licensing and maintenance revenues generally has
higher margins than the software maintenance component.

    Consulting services cost of revenues increased by 45.1% to $7.6 million in
the year ended December 31, 1999 from $5.2 million in the year ended
December 31, 1998, while increasing as a percentage of total consulting services
revenues to 58.1% from 53.6%. The dollar increase in consulting services cost of
revenues was attributable primarily to the increase in consulting staff due to
the expansion of the consulting services group. The increase in consulting
services cost of revenues as a percentage of total consulting revenues for the
year ended December 31, 1999 was principally due to the lower utilization of
consulting resources as compared to the prior year.

    The Company expects fluctuations in gross profit may occur primarily due to
fluctuations in revenue generated from the Company's three revenue components,
particularly revenues from software licensing and consulting services.

    DEVELOPMENT COSTS.  Development expenses include software development costs
consisting primarily of personnel and outside technical services costs related
to developing new products and services, enhancing existing products and
services, and implementing and maintaining new and existing products and
services.

    Development expenses increased by 31.9% to $12.7 million in the year ended
December 31, 1999 from $9.6 million in the year ended December 31, 1998, while
decreasing as a percentage of total revenues to 14.1% from 15.1%. The increase
in costs for the year ended December 31, 1999 resulted primarily from the
addition of engineering personnel necessary to support Lightbridge's product
development plans. Included in these development efforts were the development of
an enhanced version of its Fraud Management software product, FraudBuster, the
continued enhancement of its Customer Acquisition System and Retail Management
System and development of its Fraud Management software products, Alias and
@Risk. Lightbridge expects to continue to increase the dollar amount of its
engineering and development efforts in order to continue enhancing its existing
products and services, including its Channel Solutions and Fraud Management
products and services, as well as to develop new products and services. As a
result, Lightbridge expects that its development expenses, as a percentage of
total revenues, for 2000 will be higher than in 1999.

    SALES AND MARKETING.  Sales and marketing expenses consist primarily of
salaries, commissions and travel expenses of direct sales and marketing
personnel, as well as costs associated with advertising, trade shows and
conferences.

    Sales and marketing expenses increased by 9.1% to $7.5 million in the year
ended December 31, 1999 from $6.9 million in the year ended December 31, 1998,
while decreasing as a percentage of total revenue to 8.3% from 10.8%. The
increase for the year ended December 31, 1999 was due to the continued

                                       27
<PAGE>
investment in sales and marketing efforts, both domestically and
internationally, in order to increase penetration of existing accounts and to
add new clients and markets. The Company expects to continue to invest in sales
and marketing efforts, both domestically and internationally, in order to
increase its penetration of existing accounts and to add new clients and
markets.

    GENERAL AND ADMINISTRATIVE.  General and administrative expenses consist
principally of salaries of executive, finance, human resources and
administrative personnel and fees for certain outside professional services.

    General and administrative expenses increased by 28.1% to $10.9 million in
the year ended December 31, 1999 from $8.5 million in the year ended
December 31, 1998, while decreasing as a percentage of total revenue to 12.1%
from 13.4%. The increase for the year ended December 31, 1999 was primarily due
to increases in general and administrative personnel and fees for professional
services. The Company expects that its general and administrative costs will not
materially change during the year ending December 31, 2000.

    AMORTIZATION OF GOODWILL AND ACQUIRED WORKFORCE.  Amortization of goodwill
and acquired workforce consists of amortization expense of certain acquired
intangible assets from the acquisition of Coral.

    Amortization of goodwill and acquired workforce expense decreased by 55.0%
to $1.3 million in the year ended December 31, 1999 from $3.0 million in the
year ended December 31, 1998 and also decreased as a percentage of total
revenues to 1.5% from 4.7%. Both the dollar decrease and the decrease as a
percentage of total revenues were the result of the goodwill impairment charge
recorded in the fourth quarter of 1998. During the fourth quarter of 1999,
Lightbridge wrote off the remainder of the net goodwill balance and a portion of
the acquired workforce asset to reflect the return of a portion of the shares
escrowed at the time of the Coral acquisition in November 1997 in settlement of
claims made by Lightbridge. As a result, Lightbridge expects that acquired
workforce amortization expense will be approximately $0.6 million in 2000.

    INTANGIBLE ASSET IMPAIRMENT.  During the year ended December 31, 1998,
Lightbridge expensed approximately $7.4 million of intangible assets recorded in
connection with the acquisition of Coral. No such impairment charge to earnings
was recorded in the year ended December 31, 1999.

    OTHER INCOME, NET.  Other income, net for the year ended December 31, 1999
consisted predominantly of interest income and expense and a nonrecurring gain
on sale of investments of approximately $0.4 million. Interest expense consists
of interest, commitment fees and other similar fees payable with respect to the
Company's bank lines of credit, subordinated notes and capital leases. Interest
expense decreased to $0.1 million in the year ended December 31, 1999 from
$0.2 million in the year ended December 31, 1998 due to lower outstanding debt
balances during the year ended December 31, 1999. Interest income increased to
$0.7 million in the year ended December 31, 1999 from $0.6 million in the year
ended December 31, 1998 as a result of higher average cash balances during the
year.

    PROVISION FOR INCOME TAXES.  The Company's effective tax rate was 35.4% and
57.3% for the years ended December 31, 1999 and 1998, respectively. The
relatively high effective tax rate for 1998 resulted from the amortization of
goodwill related to the Company's acquisition of Coral, which is recognized as
an expense for accounting purposes, but is not deductible for tax purposes.
Lightbridge anticipates that its effective tax rate will be lower in the future
and estimates that its effective tax rate for the year ending December 31, 2000
will be approximately 40%. The actual effective tax rate for 2000 may vary
significantly from the Company's estimates as the result of a number of factors,
including any and all factors that cause the Company's actual pretax book income
for those years to vary from the Company's internal estimates. The Company has
net operating loss carryforwards for federal income tax purposes which were
acquired with Coral. These net operating loss carryforwards are limited in use
and therefore a valuation allowance was established against a portion of the
deferred tax assets as their full realization is not assured.

                                       28
<PAGE>
    YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

    REVENUES.  Revenues increased by 56.2% to $63.4 million in the year ended
December 31, 1998 from $40.5 million in the year ended December 31, 1997.

    Transaction revenues increased by 55.1% to $41.7 million in the year ended
December 31, 1998 from $26.9 million in the year ended December 31, 1997, while
decreasing as a percentage of total revenues to 65.8% from 66.3%. The dollar
increase in transaction revenues for the year ended December 31, 1998 was
primarily due to increased volume of qualification and activation transactions
processed for carrier clients. The decrease in transaction revenues as a
percentage of total revenues for the year ended December 31, 1998 principally
resulted from a greater increase in software licensing and maintenance revenues
than transaction revenues for the same period.

    Software licensing and maintenance revenues increased by 88.4% to
$11.9 million in the year ended December 31, 1998 from $6.3 million in the year
ended December 31, 1997, while increasing as a percentage of total revenues to
18.8% from 15.6%. Both the dollar increase and the increase as a percentage of
total revenues in software licensing and maintenance revenues for the year ended
December 31, 1998 were principally a result of the increase in revenues
attributable to the Company's Channel Solutions and Fraud Management products
and services.

    Consulting services revenues increased by 32.8% to $9.7 million in the year
ended December 31, 1998 from $7.3 million in the year ended December 31, 1997,
while decreasing as a percentage of total revenues to 15.4% from 18.1%. The
dollar increase in consulting services revenues for the year ended December 31,
1998 was principally due to increased demand for the consulting services offered
by the Company. The decrease in consulting services revenue as a percentage of
total revenues for the year ended December 31, 1998 principally resulted from a
greater increase in software licensing and maintenance revenues than consulting
services revenues for the same period. Lightbridge's consulting business became
less concentrated in 1998, with consulting work being performed for more than 35
clients during the year ended December 31, 1998.

    COST OF REVENUES.  Cost of revenues consists primarily of personnel costs,
costs of maintaining systems and networks used in processing qualification and
activation transactions (including depreciation and amortization of systems and
networks) and amortization of capitalized software and acquired technology. Cost
of revenues may vary as a percentage of total revenues in the future as a result
of a number of factors, including changes in the mix of transaction revenues
between revenues from on-line transaction processing and revenues from
processing transactions through the Company's TeleServices Group and changes in
the mix of total revenues among transaction revenues, software licensing and
maintenance revenues and consulting services revenues.

    Transaction cost of revenues increased by 50.0% to $23.3 million in the year
ended December 31, 1998 from $15.5 million in the year ended December 31, 1997,
while decreasing as a percentage of total revenues to 36.8% from 38.3%. The
increase in transaction cost of revenues for the year ended December 31, 1998
resulted principally from increases in transaction volume and costs attributable
to expansion of the Company's staff and systems capacity. The decrease in
transaction cost of revenues as a percentage of total revenues for the year
ended December 31, 1998 principally resulted from an increase in the number of
transactions processed compared to the same period of the prior year.

    Software licensing and maintenance cost of revenues increased by 125.3% to
$4.6 million in the year ended December 31, 1998 from $2.0 million in the year
ended December 31, 1997, while increasing as a percentage of total revenues to
7.2% from 5.0%. Both the dollar increase and the increase as a percentage of
total revenues in software licensing and maintenance cost of revenues for the
year ended December 31, 1998 were primarily due to the increased cost of
revenues for Fraud Management products.

    Consulting services cost of revenues increased by 181.1% to $5.2 million in
the year ended December 31, 1998 from $1.9 million in the year ended
December 31, 1997, while increasing as a percentage of total revenues to 8.3%
from 4.6%. Both the dollar increase and the increase as a percentage of total
revenues in consulting services cost of revenues were attributable primarily to
the increase in

                                       29
<PAGE>
consulting staff due to the expansion of the consulting services group,
including both newly hired personnel and personnel reallocated from other areas
of the Company's operations, including sales and marketing, as part of the
establishment of Lightbridge Consulting Services.

    DEVELOPMENT COSTS.  Development expenses increased by 58.0% to $9.6 million
in the year ended December 31, 1998 from $6.1 million in the year ended
December 31, 1997. The increase in costs for the year ended December 31, 1998
resulted primarily from the addition of engineering personnel necessary to
support the Company's product development plans in connection with the
development and deployment of enhanced versions of its Fraud Management software
product, FraudBuster.

    SALES AND MARKETING.  Sales and marketing expenses increased by 13.5% to
$6.9 million in the year ended December 31, 1998 from $6.0 million in the year
ended December 31, 1997. The increase for the year ended December 31, 1998 was
due principally to the addition of direct sales and product marketing personnel,
increased commissions resulting from the higher level of revenues and an
increase in marketing programs. This increase was offset in part by the
reallocation of certain personnel to Lightbridge Consulting Services as well as
the allocation of certain related expenses to consulting services cost of
revenues.

    GENERAL AND ADMINISTRATIVE.  General and administrative expenses increased
by 119.4% to $11.5 million in the year ended December 31, 1998 from
$5.2 million in the year ended December 31, 1997. The increase reflected the
amortization of $3.0 million of goodwill and certain acquired intangible assets
attributable to the Company's acquisition of Coral and an increase in the number
of personnel.

    INTANGIBLE ASSET IMPAIRMENT.  During the year ended December 31, 1998,
Lightbridge expensed approximately $7.4 million of intangible assets recorded in
connection with the acquisition of Coral. The write-off included approximately
$2.6 million from the abandonment of the ChurnAlert product and an additional
$4.8 million of goodwill, based on a determination that the net book value of
this asset was impaired at December 31, 1998. This determination was based on a
comparison of the undiscounted cash flows associated with the Coral business,
excluding ChurnAlert with the net book value of the related assets. That
comparison indicated that the remaining net book value would not be recovered
through normal operations, and accordingly, a charge was taken to state the
assets at estimated fair value, determined as the net present value of the
estimated cash flows, discounted at a rate of 13%.

    OTHER INCOME, NET.  Other income, net in the year ended December 31, 1998
consisted predominantly of interest income and expense. Interest expense
decreased to $0.2 million in the year ended December 31, 1998 from $0.4 million
in the year ended December 31, 1997 as a result of lower outstanding debt
balances. Interest income decreased to $0.6 million in the year ended
December 31, 1998 from $1.2 million in the year ended December 31, 1997 as a
result of lower average cash balances during the year.

    PROVISION FOR INCOME TAXES.  The Company's effective tax rate was 57.3% and
122.4% for the years ended December 31, 1998 and 1997, respectively. The
relatively high effective tax rate for 1998 and 1997 resulted from goodwill
attributable to the Company's acquisition of Coral, which is recognized as an
expense for accounting purposes, but is not deductible for tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

    Prior to its initial public offering, the Company funded its operations
primarily through private placements of equity and debt securities, cash
generated from operations, bank borrowings and equipment financings. In
October 1996, the Company consummated an initial public offering in which the
proceeds to the Company, net of underwriters' discount and associated costs,
were approximately $27.1 million. These proceeds were used to repay certain debt
obligations of the Company, to repurchase certain shares of the common stock of
the Company and to fund working capital and other general corporate purposes.
During 1999, the Company funded its operations primarily through cash flows from
operations.

                                       30
<PAGE>
    The Company has a $5.0 million working capital line of credit and a
$3.0 million equipment line of credit with a bank. The lines of credit are
secured by all of the Company's assets. Borrowing availability on the working
capital line of credit is based on the amount of qualifying accounts receivable.
Advances under the working capital line of credit and equipment line of credit
bear interest at the bank's prime rate (8.5% at December 31, 1999). The working
line of credit also provides for the issuance of letters of credit, which reduce
the amount that may be borrowed under the line of credit and are limited to
$1,250,000 in the aggregate. At December 31, 1999, there were no borrowings
outstanding under the working capital line of credit or the equipment line of
credit. Borrowing availability at December 31, 1999 was $4.0 million and
$3.0 million for the working capital line of credit and equipment line of
credit, respectively. The Company's agreements with the bank contain covenants
that, among other things, prohibit the declaration or payment of dividends and
require the Company to maintain certain financial ratios which the Company
believes are not restrictive to its business operations. The working capital
line of credit expires in June 2000 and the equipment line of credit expires in
June 2001.

    The Company's capital expenditures totaled $10.4 million and $6.9 million,
respectively, for the years ended December 31, 1999 and 1998. The capital
expenditures during these periods consisted of purchases of fixed assets,
principally for the Company's services delivery infrastructure and computer
equipment for development activities. Capital expenditures during the year ended
December 31, 1998 also included leasehold improvements and other costs
attributable to the relocation of Coral's facilities to Broomfield, Colorado.
The Company currently estimates that its capital expenditures for 2000 will
total approximately $12.0 million to $14.0 million, although the actual amount
of those expenditures may vary significantly, depending upon, among other
things, the extent to which the Company determines to update the capacity of its
data center and to acquire additional computer equipment. The Company leases its
facilities and certain equipment under non-cancelable operating lease agreements
that expire at various dates through December 2005.

    Lightbridge considers earnings before interest, taxes, depreciation, and
amortization ("EBITDA") to be meaningful given the impact on operating income
from non-cash expenses such as depreciation of property and equipment and the
amortization of intangible assets. EBITDA and after-tax cash flow should not be
considered in isolation from, or as a substitute for, operating income, net
income or cash flow and other consolidated income or cash flow statement data
computed in accordance with generally accepted accounting principles or as a
measure of Lightbridge's profitability or liquidity. Although these measures of
performance are not calculated in accordance with generally accepted accounting
principles, Lightbridge believes they are widely used in the telecommunications
industry as a measure of a company's operating performance because they assist
in comparing companies on a more consistent basis without regard to depreciation
and amortization which can vary significantly depending on accounting methods
(particularly when acquisitions are involved). EBITDA increased by 83.0% to
$24.1 million in the year ended December 31, 1999 from $13.2 million in the year
ended December 31, 1998. The increase for the year ended December 31, 1999
resulted primarily from an increase in operating income.

    As of December 31, 1999, the Company had cash and cash equivalents of
$35.5 million and working capital of $36.8 million. The Company believes that
the current cash balances and funds available under existing lines of credit
will be sufficient to finance the Company's operations and capital expenditures
for at least the next twelve months.

YEAR 2000 IMPACT ON INFORMATION TECHNOLOGY COSTS

    Lightbridge has designed its software to be Year 2000 compliant, and to date
Lightbridge has experienced only minor Year 2000 problems related to these
products. The majority of the computer software and hardware Lightbridge
currently uses in its own internal operations did not require replacement or
modification as a result of any Year 2000 problems experienced.

    Lightbridge believes that its significant vendors and service providers are
Year 2000 compliant and has not, to date, been made aware that any of its
significant vendors or service providers have suffered Year 2000 disruptions in
their systems.

                                       31
<PAGE>
    Accordingly, Lightbridge does not anticipate incurring material expenses or
experiencing any material operational disruptions as a result of any Year 2000
problems. Lightbridge spent approximately $0.6 million on Year 2000 testing and
compliance during the year ended December 31, 1999.

INFLATION

    Although certain of the Company's expenses increase with general inflation
in the economy, inflation has not had a material impact on the Company's
financial results to date.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS No. 133 establishes standards
applicable to the manner in which Lightbridge accounts for derivative
instruments in its annual financial statements commencing with the quarter
beginning after June 15, 2000. The Company has not yet determined the effect
that adoption will have on its consolidated financial statements.

    In December 1998, the AICPA released Statement of Position No. 98-9,
("SOP 98-9") "Modification of SOP 97-2, "Software Revenue Recognition, "with
Respect to Certain Transactions." SOP 98-9 amends SOP 97-2 to require that an
entity recognize revenue for multiple elements arrangements by means of the
"residual method" when (1) there is vendor-specific objective evidence ("VSOE")
of fair values of all the undelivered elements that are not accounted for by
means of long-term contract accounting, (2) VSOE of fair value does not exist
for one or more of the delivered elements, and (3) all revenue recognition
criteria of SOP 97-2 (other than the requirement for VSOE of the fair value of
each delivered element) are satisfied. The provisions of SOP 98-9 that extend
the deferral of certain paragraphs of SOP 97-2 became effective December 15,
1998. These paragraphs of SOP 97-2 and SOP 98-9 will be effective for
transactions that are entered into in fiscal years beginning after March 15,
1999. Retroactive application is prohibited. The Company has not yet determined
the effect that adoption will have on its consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES

    The market risk exposure inherent in the Company's financial instruments and
consolidated financial position represents the potential losses arising from
adverse changes in interest rates. The Company is exposed to such interest rate
risk primarily in its significant investment in cash and cash equivalents and
the use of fixed and variable rate debt to fund its acquisition of property and
equipment in past years.

    Market risk for cash and cash equivalents and fixed-rate borrowings is
estimated as the potential change in the fair value of the assets or obligations
resulting from a hypothetical ten percent adverse change in interest rates,
which would not have been signifcant to the Company's financial position or
results of operations during 1999. The effect of a similar hypothetical change
in interest rates on the Company's variable-rate debt also would have been
insignificant due to the immaterial amounts of borrowings outstanding under the
Company's credit arrangements.

    For additional information about the Company's financial instruments and
debt obligations, see Notes to Consolidated Financial Statements in the
accompanying consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The financial statements of the Company are listed in the index included in
Item 14(a)(1) of this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    The information called for by this Item is not applicable.

                                       32
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

    Certain of the information concerning the Directors of the Company required
under this item is contained in "Item 4A. Executive Officers," and the remainder
of such information is incorporated herein by reference to the information under
the heading "Election of Directors" in the Company's Proxy Statement for the
2000 Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or before April 29, 2000.

EXECUTIVE OFFICERS

    Certain of the information concerning the executive officers of the Company
required under this item is contained in "Item 4A. Executive Officers," and the
remainder of such information is incorporated herein by reference to the
information under the heading "Election of Directors" in the Company's Proxy
Statement for the 2000 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or before April 29, 2000.

ITEM 11. EXECUTIVE COMPENSATION

    Information under the heading "Election of Directors" and "Executive
Compensation" in the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission on or
before April 29, 2000 is incorporated by reference herein. Such incorporation by
reference shall not be deemed to specifically incorporate by reference the
information referred to in Item 402(a)(8) of Regulation S-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information under the heading "Share Ownership of Principal Stockholders and
Management" in the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission on or
before April 29, 2000 is incorporated by reference herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information under the heading "Certain Relationships and Other Transactions"
in the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission on or before April 29, 2000
is incorporated by reference herein.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report

<TABLE>
<S>  <C>                                                           <C>
(1)  Financial Statements
     Independent Auditors' Report................................  F-1
     Consolidated Balance Sheets as of December 31, 1998 and       F-2
       1999......................................................
     Consolidated Statements of Operations for the years ended     F-3
       December 31, 1997, 1998 and 1999..........................
     Consolidated Statements of Stockholders' Equity for the       F-4
       years ended December 31, 1997, 1998 and 1999..............
     Consolidated Statements of Cash Flows for the years ended     F-5
       December 31, 1997, 1998 and 1999..........................
     Notes to Consolidated Financial Statements..................  F-6
(2)  Consolidated financial statement schedules
     All schedules have been omitted because the required
       information either is not applicable or is shown in the
       financial statements or notes thereto.
</TABLE>

                                       33
<PAGE>
    (3) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO.                                     DESCRIPTION
-----------             ------------------------------------------------------------
<C>                     <S>
      3.1*              Amended and Restated Certificate of Incorporation of the
                        Company

      3.2*              Amended and Restated By-Laws of the Company

      3.3+++            Amendment to Amended and Restated By-Laws of the Company,
                        adopted October 29, 1998

      4.1*              Specimen Certificate for Common Stock of the Company

      4.2**             Rights Agreement dated as of November 14, 1997, between
                        Lightbridge, Inc. and American Stock Transfer and Trust
                        Company, as Rights Agent

      4.3**             Form of Certificate of Designation of Series A Participating
                        Cumulative Preferred Stock of Lightbridge, Inc.

      4.4**             Form of Right Certificate

     10.1*              1991 Registration Rights Agreement dated February 11, 1991,
                        as amended, between the Company and the persons named herein

     10.2*              Subordinated Note and Warrant Purchase Agreement dated as of
                        August 29, 1994 between the Company and the Purchasers named
                        therein, including form of Subordinated 14% Promissory Notes
                        and form of Common Stock Purchase Warrants

     10.3*              Form of Common Stock Purchase Warrants issued August 1995

     10.4*              Amended and Restated Credit Agreement dated as of June 18,
                        1996, between the Company and Silicon Valley Bank

     10.5++             Loan Modification Agreements, dated from August 19, 1996 to
                        June 26, 1998, each amending the Amended and Restated Credit
                        Agreement included as Item 10.4

     10.6*              Settlement Agreement dated February 2, 1996 between the
                        Company, BEB, Inc., BEB Limited Partnership I, BEB Limited
                        Partnership II, BEB Limited Partnership III, BEB Limited
                        Partnership IV, certain related parties and Brian Boyle

     10.7*              1990 Incentive and Nonqualified Stock Option Plan

     10.8*              1996 Incentive and Non-Qualified Stock Option Plan

     10.9*              1996 Employee Stock Purchase Plan

     10.10*             Employment Agreement dated August 16, 1996 between the
                        Company and Pamela D.A. Reeve

     10.11*             Letter Agreement, dated August 26, 1996, between the Company
                        and Brian E. Boyle, including form of Common Stock Purchase
                        Warrant and Registration Rights Agreement

     10.12*             Office Lease dated September 30, 1994, as amended, between
                        the Company and Hobbs Brook Office Park

     10.13***           Office Lease dated March 5, 1997, between the Company and
                        Sumitomo Life Realty (N.Y.), Inc.

     10.14****          First and Second Amendments dated July 22, 1997 and October
                        6, 1997, respectively, to the Office Lease included as Item
                        10.15

     10.15+             Office Building Lease, dated March 12, 1998, between 8900
                        Grantline Road Investors and the Company
</TABLE>

                                       34
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                                     DESCRIPTION
-----------             ------------------------------------------------------------
<C>                     <S>
     10.16++++          1998 Non-Statutory Stock Option Plan

     10.17^             Loan Modification Agreement dated June 28, 1999; amending
                        the Amended and Restated Credit Agreement included as Item
                        10.4

     10.18              Third and Fourth Amendments dated March 15, 1999 and July
                        16, 1999, respectively, to the office lease included as Item
                        10.13

     10.19              Office Lease dated October 4, 1999, between the Company and
                        New Alliance Properties, Inc.

     10.20              First Amendment dated September 20, 1999 to the Office Lease
                        included as Item 10.12

     23.1               Independent Auditors' Consent--Deloitte & Touche LLP

     27.1               Financial Data Schedule for fiscal year ended December 31,
                        1999
</TABLE>

------------------------

*    Incorporated by reference to the Company's Registration Statement on
     Form S-1, as amended (File No. 333-6589)

**   Incorporated by reference to the Company's Registration Statement on
     Form 8-A, as filed with the Securities and Exchange Commission on
     November 21, 1997

***  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 31, 1996

**** Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 31, 1997

+    Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended March 31, 1998

++   Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 1998

+++  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 1998

++++ Incorporated by reference to the Company's Registration Statement on Form
     S-8, as filed with the Securities and Exchange Commission on November 25,
     1998

^  Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
    the quarter ended June 30, 1999.

(b) Reports on Form 8-K filed in the fourth quarter of 1999

    No Current Reports on Form 8-K were filed by the Company during the fourth
quarter of 1999.

                                       35
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the twenty-third
day of March, 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                       LIGHTBRIDGE, INC.

                                                       By:            /s/ PAMELA D.A. REEVE
                                                            -----------------------------------------
                                                              President and Chief Executive Officer
</TABLE>

    Each person whose signature appears below hereby appoints Pamela D.A. Reeve
and Joseph A. Pignato, and each of them severally, acting alone and without the
other, his or her true and lawful attorney-in-fact with the authority to execute
in the name of each such person, and to file with the Securities and Exchange
Commission, together with any exhibits thereto and other documents therewith,
any and all amendments to this Annual Report on Form 10-K necessary or advisable
to enable Lightbridge, Inc., to comply with the rules, regulations, and
requirements of the Securities Act of 1934, as amended, in respect thereof,
which amendments may make such other changes in the Annual Report on Form 10-K
as the aforesaid attorney-in-fact executing the same deems appropriate.

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities
indicated on the twenty-third day of March, 2000.

<TABLE>
<CAPTION>

<C>                                                    <S>                               <C>
                                                       President, Chief Executive
                                                         Officer and Director
                /s/ PAMELA D.A. REEVE                    (Principal Executive,
     -------------------------------------------         Financial and Accounting
                                                         Officer)

               /s/ TORRENCE C. HARDER                  Director
     -------------------------------------------

                 /s/ D. QUINN MILLS                    Director
     -------------------------------------------

                /s/ DEBORA J. WILSON                   Director
     -------------------------------------------
</TABLE>

                                       36
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Lightbridge, Inc.
Burlington, Massachusetts

    We have audited the accompanying consolidated balance sheets of
Lightbridge, Inc. and subsidiaries as of December 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Lightbridge, Inc. and
subsidiaries at December 31, 1998 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
January 25, 2000

                                      F-1
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 1998          1999
                                                              -----------   -----------
<S>                                                           <C>           <C>
                                        ASSETS
Current assets:
  Cash and cash equivalents.................................  $16,436,995   $35,477,909
  Accounts receivable, net..................................   18,803,230    16,785,873
  Accounts receivable from related parties..................       28,732            --
  Deferred tax assets, net..................................      335,348       843,582
  Other current assets......................................    1,063,848     1,126,811
                                                              -----------   -----------
    Total current assets....................................   36,668,153    54,234,175
Property and equipment, net.................................   13,454,070    17,367,173
Notes receivable from related parties.......................       67,113        20,329
Deferred tax assets, net....................................      453,038     1,719,885
Other assets, net...........................................      425,542        99,524
Goodwill, net...............................................    2,145,313            --
Acquired intangible assets, net.............................    4,024,811     2,347,217
Other intangible assets, net................................      539,239        68,427
                                                              -----------   -----------
        Total assets........................................  $57,777,279   $75,856,730
                                                              ===========   ===========
                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term borrowings and current portion of subordinated
    notes payable...........................................  $   652,770   $   500,000
  Current portion of obligations under capital leases.......       44,440            --
  Accounts payable..........................................    5,774,975     7,392,201
  Accrued compensation......................................    1,648,459     4,227,637
  Other accrued liabilities.................................    2,401,414     2,262,495
  Deferred revenues.........................................    1,460,636     2,914,155
  Other current liabilities.................................      166,876       166,876
                                                              -----------   -----------
    Total current liabilities...............................   12,149,570    17,463,364
Subordinated notes payable..................................      655,484       191,109
Other long-term liabilities.................................      525,124       910,463
                                                              -----------   -----------
    Total liabilities.......................................   13,330,178    18,564,936
                                                              -----------   -----------
Commitments and contingencies (Note 5)
Stockholders' equity:
  Preferred stock; $0.01 par value, 5,000,000 shares
    authorized; no shares issued or outstanding at December
    31, 1998 and 1999.......................................           --            --
  Common stock, $.01 par value; 60,000,000 shares
    authorized; 16,841,823 and 17,510,661 shares issued;
    16,014,531 and 16,618,756 shares outstanding at December
    31, 1998 and 1999, respectively.........................      168,417       175,105
  Additional paid-in capital................................   54,285,766    58,297,842
  Warrants..................................................      598,875       398,875
  Retained earnings (accumulated deficit)...................   (8,980,994)    1,164,355
                                                              -----------   -----------
    Total...................................................   46,072,064    60,036,177
  Less treasury stock; 827,292 and 891,905 shares at cost at
    December 31, 1998 and 1999, respectively................   (1,624,963)   (2,744,383)
                                                              -----------   -----------
    Total stockholders' equity..............................   44,447,101    57,291,794
                                                              -----------   -----------
        Total liabilities and stockholders' equity..........  $57,777,279   $75,856,730
                                                              ===========   ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-2
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                           1997          1998          1999
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Revenues:
  Transaction.........................................  $26,881,516   $41,683,290   $63,340,868
  Software licensing and maintenance..................    6,331,769    11,927,082    13,323,659
  Consulting services.................................    7,336,037     9,741,124    13,051,620
                                                        -----------   -----------   -----------
    Total revenues....................................   40,549,322    63,351,496    89,716,147
                                                        -----------   -----------   -----------
Cost of revenues:
  Transaction.........................................   15,535,143    23,300,910    30,259,147
  Software licensing and maintenance..................    2,034,453     4,583,494     5,038,489
  Consulting services.................................    1,858,039     5,223,259     7,578,744
                                                        -----------   -----------   -----------
Total cost of revenues................................   19,427,635    33,107,663    42,876,380
                                                        -----------   -----------   -----------
Gross profit..........................................   21,121,687    30,243,833    46,839,767
                                                        -----------   -----------   -----------
Operating expenses:
  Development costs...................................    6,072,468     9,596,423    12,659,258
  Sales and marketing.................................    6,040,846     6,856,522     7,481,415
  General and administrative..........................    4,731,763     8,489,862    10,877,131
  Amortization of goodwill and acquired workforce.....      497,038     2,982,228     1,342,080
  Intangible asset impairment.........................           --     7,384,506            --
  Purchased in-process research and development.......    4,000,000            --            --
                                                        -----------   -----------   -----------
Total operating expenses..............................   21,342,115    35,309,541    32,359,884
                                                        -----------   -----------   -----------
Income (loss) from operations.........................     (220,428)   (5,065,708)   14,479,883
                                                        -----------   -----------   -----------
Other income (expense):
  Interest income:
    Related parties...................................       18,675         6,945         2,763
    Other.............................................    1,163,775       638,834       728,150
  Interest expense:
    Related parties...................................      (18,984)           --            --
    Other.............................................     (351,763)     (241,594)     (129,588)
  Other non-operating income (expense)................      137,756       277,573       632,141
                                                        -----------   -----------   -----------
Total other income (expense)..........................      949,459       681,758     1,233,466
                                                        -----------   -----------   -----------
Income (loss) before provision for income taxes.......      729,031    (4,383,950)   15,713,349
Provision for income taxes............................      892,000     2,513,000     5,568,000
                                                        -----------   -----------   -----------
Net income (loss).....................................  $  (162,969)  $(6,896,950)  $10,145,349
                                                        ===========   ===========   ===========
  Basic earnings (loss) per share (Note 10)...........  $     (0.01)  $     (0.44)  $      0.62
                                                        ===========   ===========   ===========
  Diluted earnings (loss) per share (Note 10).........  $     (0.01)  $     (0.44)  $      0.56
                                                        ===========   ===========   ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-3
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                         RETAINED
                                      COMMON STOCK                                       EARNINGS         TREASURY STOCK
                                  ---------------------     ADDITIONAL                 (ACCUMULATED   ----------------------
                                    SHARES      AMOUNT    PAID-IN CAPITAL   WARRANTS     DEFICIT)      SHARES      AMOUNT
                                  ----------   --------   ---------------   --------   ------------   --------   -----------
<S>                               <C>          <C>        <C>               <C>        <C>            <C>        <C>
Balance, January 1, 1997........  15,369,697   $153,698     $36,296,969     $605,125   $(1,921,075)   801,148    $(1,536,074)
Issuance of common stock for
  cash..........................     193,704      1,935         266,904           --            --         --             --
Issuance of common stock for
  technology acquisition........      25,000        250         312,250           --            --         --             --
Repurchase of common stock from
  related parties...............          --         --              --           --            --     26,144        (88,889)
Exercise of common stock
  warrants......................      12,500        125          31,125       (6,250)           --         --             --
Issuance of common stock for
  acquisition...................     892,053      8,921      16,511,057           --            --         --             --
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock options...          --         --         242,686           --            --         --             --
Net loss........................          --         --              --           --      (162,969)        --             --
                                  ----------   --------     -----------     --------   -----------    -------    -----------
Balance, December 31, 1997......  16,492,954    164,929      53,660,991      598,875    (2,084,044)   827,292     (1,624,963)
Issuance of common stock for
  cash..........................      18,573        185         143,872           --            --         --             --
Exercise of common stock
  options.......................     330,296      3,303         312,903           --            --         --             --
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock options...          --         --         168,000           --            --         --             --
Net loss........................          --         --              --           --    (6,896,950)        --             --
                                  ----------   --------     -----------     --------   -----------    -------    -----------
Balance, December 31, 1998......  16,841,823    168,417      54,285,766      598,875    (8,980,994)   827,292     (1,624,963)
Issuance of common stock for
  cash..........................      38,886        388         181,309           --            --         --             --
Exercise of common stock
  options.......................     417,452      4,175       2,120,996           --            --         --             --
Exercise of common stock
  warrants (Note 4).............     212,500      2,125         622,771     (200,000)           --         --             --
Return of escrowed shares.......          --         --              --           --            --     64,613     (1,119,420)
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock options...          --         --       1,087,000           --            --         --             --
Net income......................          --         --              --           --    10,145,349         --             --
                                  ----------   --------     -----------     --------   -----------    -------    -----------
Balance, December 31, 1999......  17,510,661   $175,105     $58,297,842     $398,875   $ 1,164,355    891,905    $(2,744,383)
                                  ==========   ========     ===========     ========   ===========    =======    ===========

<CAPTION>

                                      TOTAL
                                  STOCKHOLDERS'
                                     EQUITY
                                  -------------
<S>                               <C>
Balance, January 1, 1997........   $33,598,643
Issuance of common stock for
  cash..........................       268,839
Issuance of common stock for
  technology acquisition........       312,500
Repurchase of common stock from
  related parties...............       (88,889)
Exercise of common stock
  warrants......................        25,000
Issuance of common stock for
  acquisition...................    16,519,978
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock options...       242,686
Net loss........................      (162,969)
                                   -----------
Balance, December 31, 1997......    50,715,788
Issuance of common stock for
  cash..........................       144,057
Exercise of common stock
  options.......................       316,206
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock options...       168,000
Net loss........................    (6,896,950)
                                   -----------
Balance, December 31, 1998......    44,447,101
Issuance of common stock for
  cash..........................       181,697
Exercise of common stock
  options.......................     2,125,171
Exercise of common stock
  warrants (Note 4).............       424,896
Return of escrowed shares.......    (1,119,420)
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock options...     1,087,000
Net income......................    10,145,349
                                   -----------
Balance, December 31, 1999......   $57,291,794
                                   ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-4
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                              ---------------------------------------
                                                                 1997          1998          1999
                                                              -----------   -----------   -----------
<S>                                                           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................  $  (162,969)  $(6,896,950)  $10,145,349
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities (net of effect
  of acquisition):
  Purchased in-process research and development.............    4,000,000            --            --
  Asset impairment..........................................           --     7,384,506            --
  Deferred income taxes.....................................     (695,000)     (266,390)   (1,775,537)
  Depreciation and amortization.............................    5,595,151    10,597,194     9,033,071
  (Gain) loss on disposal of equipment......................      (43,007)       18,978            --
  Gain on sale of investment................................           --            --      (414,725)
Changes in assets and liabilities:
  Accounts receivable.......................................   (4,727,562)   (5,618,910)    2,046,089
  Other assets..............................................     (751,258)    1,331,809        88,620
  Accounts payable and accrued liabilities..................       99,814     1,998,165     4,767,942
  Other liabilities.........................................       79,452      (177,833)      385,339
  Deferred revenues.........................................   (1,545,582)     (197,770)    1,453,519
                                                              -----------   -----------   -----------
    Net cash provided by operating activities...............    1,849,039     8,172,799    25,729,667
                                                              -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.........................  (10,388,992)   (6,928,692)  (10,386,118)
Capitalization of software development costs................     (963,499)     (155,092)           --
Proceeds from sale of equipment.............................      245,996            --            --
Sales of investments........................................    2,069,323            --       550,378
Purchase of investments.....................................   (2,069,323)           --            --
Notes receivable--to related parties........................      (87,000)           --            --
Repayments of notes receivable--related parties.............       14,083        61,014        25,328
Cost associated with the acquisition of Coral, net of cash
  received of $332,750......................................     (443,504)           --            --
                                                              -----------   -----------   -----------
    Net cash used in investing activities...................  (11,622,916)   (7,022,770)   (9,810,412)
                                                              -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reimbursement of leasehold improvements.....................      254,410            --            --
Payments on notes payable...................................   (1,270,028)     (930,205)     (402,769)
Payments under capital lease obligations....................   (1,578,107)     (294,818)      (44,440)
Proceeds from issuance of common stock......................      268,839       628,263     2,306,868
Disqualifying dispositions..................................      242,686       168,000     1,087,000
Stock issuance expenditures.................................     (353,999)           --            --
Proceeds from exercise of warrants..........................       25,000            --       175,000
                                                              -----------   -----------   -----------
    Net cash provided by (used in) financing activities.....   (2,411,199)     (428,760)    3,121,659
                                                              -----------   -----------   -----------
Net increase (decrease) in cash and cash equivalents........  (12,185,076)      721,269    19,040,914
Cash and cash equivalents, beginning of year................   27,900,802    15,715,726    16,436,995
                                                              -----------   -----------   -----------
Cash and cash equivalents, end of year......................  $15,715,726   $16,436,995   $35,477,909
                                                              ===========   ===========   ===========
Cash paid for interest......................................  $   353,990   $   232,239   $   138,943
                                                              ===========   ===========   ===========
Cash paid for income taxes..................................  $ 1,778,026   $   641,703   $ 8,273,670
                                                              ===========   ===========   ===========
</TABLE>

                See notes to consolidated financial statements.

                                      F-5
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND RECENT ACQUISITIONS

    BUSINESS--Lightbridge, Inc. (formerly Credit Technologies, Inc.) (the
"Company") was incorporated in June 1989 under the laws of the state of
Delaware. Effective November 1, 1994, the Company changed its name to
Lightbridge, Inc. The Company develops, markets and supports a network of
integrated products and services that enable telecommunications carriers to
improve their customer acquisition, retention and fraud prevention processes.

    ACQUISITION OF CORAL SYSTEMS, INC.--In November 1997, the Company acquired
Coral Systems, Inc. ("Coral"), a Delaware corporation, through the issuance of
892,053 shares of common stock for all of the outstanding shares of Coral's
common stock. In addition, all of Coral's outstanding options were converted
into options to acquire stock of the Company, adjusted only for the exchange
ratio between the stocks of Coral and the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION--These consolidated
financial statements include the accounts of the Company and its subsidiaries.
All intercompany accounts and transactions have been eliminated in
consolidation.

    SIGNIFICANT ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at each reporting date and the amount of revenue and expense
reported each period. These estimates include provisions for bad debts, certain
accrued liabilities, recognition of revenue and expenses, and recoverability of
deferred tax assets. Actual results could differ from these estimates. The
Company does not expect any changes in the near term that would have a
significant impact on its consolidated financial statements.

    CASH AND CASH EQUIVALENTS--Cash and cash equivalents include short-term,
highly liquid instruments, which consist primarily of money market accounts,
purchased with remaining maturities of three months or less.

    PROPERTY AND EQUIPMENT--Property and equipment is recorded at cost.
Depreciation is provided using the straight-line method over the estimated
useful lives of three to seven years. Leasehold improvements are amortized over
the term of the lease or the lives of the assets, whichever is shorter.

    REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK--The Company generates
revenue from the processing of qualification and activation transactions;
granting of software licenses; services (including maintenance, installation and
training); development and consulting contracts; and certain hardware sold in
conjunction with certain software licenses. Revenues from processing of
qualification and activation transactions for wireless telecommunications
carriers are recognized in the period when services are performed. The Company's
software license agreements have typically provided for an initial license fee
and annual maintenance based on a defined number of subscribers, as well as
additional license and maintenance fees for net subscriber additions. The
Company has entered into license agreements that provide for either a one-time
license fee or a monthly license fee with no additional fees based on
incremental subscriber growth.

    Prior to 1998, revenue from software license sales was recognized upon
shipment of the product. To the extent that insignificant obligations remained
after delivery, costs associated with those obligations were accrued at the time
that revenue was recognized. Effective January 1, 1998, the Company adopted the
provisions of Statement of Position No. 97-2, "Software Revenue Recognition"
("SOP 97-2"). Since that

                                      F-6
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
date, revenue from software license sales continued to be recognized when
persuasive evidence of an arrangement exists, delivery of the product has been
made, and a fixed fee and collectibility has been determined; to the extent that
obligations exist for other services, the Company allocates revenue between the
license and the services based upon their relative fair value. Revenue from
customer maintenance support agreements is deferred and recognized ratably over
the term of the agreements. Revenue from consulting and training services is
recognized as those services are rendered. Hardware is sold in conjunction with
software licenses only when required by the customer and such revenue is
deferred until the related license revenue is recognized.

    Substantially all of the Company's customers are providers of wireless
telecommunications service and are generally granted credit without collateral.
The Company's revenues vary throughout the year with the period of highest
revenue generally occurring during the period October 1 through December 31. The
allowance for doubtful accounts at December 31, 1997, 1998 and 1999 was
approximately $219,000, $496,000 and $1,200,000, respectively. The Company
recorded bad debt expense of $151,000, $793,000 and $980,000 and had write-offs,
net of recoveries associated with accounts receivable of $0, $516,000 and
$276,000 for the years ended December 31, 1997, 1998 and 1999, respectively.

    Customers exceeding 10% of the Company's revenues during the years ended
December 31, 1997, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                   PERCENT OF REVENUE
                                                             ------------------------------
<S>                                                          <C>        <C>        <C>
                                                                YEARS ENDED DECEMBER 31,
                                                             ------------------------------
CUSTOMER                                                     1997       1998       1999
-----------------------------------------------------------  --------   --------   --------
A..........................................................     29%        17%        18%
B..........................................................      *         15         33
C..........................................................      *         10          *
                                                                --         --         --
                                                                29%        42%        51%
                                                                ==         ==         ==
</TABLE>

------------------------

*   For years in which a customer represented less than 10% of revenues, such
    customer's percent of revenue for that year is not presented.

                                      F-7
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    EXPORT SALES--The Company had export sales to the following countries during
fiscal 1997, 1998 and 1999:

<TABLE>
<CAPTION>
                                              1997         1998         1999
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>
Brazil...................................  $       --   $  149,200   $1,135,400
Canada...................................   1,301,000           --      505,100
Chile....................................      30,000      452,100      471,500
Malaysia.................................          --      676,900      123,200
Netherlands..............................      84,900      243,100      522,600
Philippines..............................          --      156,600       42,000
Bolivia..................................          --           --        7,700
Thailand.................................          --           --       49,000
Taiwan...................................     257,000      757,500      129,000
United Kingdom...........................     410,000       25,300      205,700
                                           ----------   ----------   ----------
Total....................................  $2,082,900   $2,460,700   $3,191,200
                                           ==========   ==========   ==========
</TABLE>

    ACQUIRED INTANGIBLE ASSETS--Acquired intangible assets, primarily related to
the Coral acquisition, consist of acquired existing technology and workforce.
These assets are being amortized on a straight-line basis over their estimated
useful lives, ranging from five months to five years. Acquired intangible assets
are recorded net of accumulated amortization of approximately $3,088,000 and
$4,556,000 at December 31, 1998 and 1999, respectively.

    GOODWILL--Goodwill, representing the excess of the purchase price of the
acquisition of Coral over the fair value of the net assets acquired, was being
amortized on a straight-line basis over five years. Goodwill is recorded net of
accumulated amortization of $2,507,000 and $3,033,000 at December 31, 1998 and
1999, respectively. During the fourth quarter of 1999, Lightbridge wrote off the
remainder of the net goodwill balance and a portion of the acquired workforce
asset to reflect the return of a portion of the shares escrowed at the time of
the Coral acquisition in November 1997. As a result, Lightbridge expects that
acquired workforce amortization expense will be approximately $600,000 in 2000.

    INCOME TAXES--The Company provides deferred tax assets and liabilities for
the expected future tax consequences of temporary differences between the
financial reporting and tax bases of existing assets and liabilities. Deferred
income tax assets are principally the result of net operating loss
carryforwards, income tax credits and differences in depreciation and
amortization and accrued expenses and reserves for financial purposes and income
tax purposes, and are recognized to the extent realization of such benefits is
more likely than not. (See Note 7.)

    DEVELOPMENT COSTS--Development costs, which consist of research and
development of new products and services, are expensed as incurred, except for
software development costs. Software development costs are capitalized after
establishment of technological feasibility which the Company defines as the
point that a "working model" of the software application has achieved all design
specifications and is available for "beta testing."

    During the year ended December 31, 1998, the Company capitalized
approximately $155,000 of software development costs associated with the
development of three new products, including the costs of purchasing certain
technology. Amortization is provided proportionately to anticipated revenues or
over

                                      F-8
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the specific release's estimated life, generally two years. The unamortized
balance of capitalized software development costs was approximately $540,000 and
$69,000 at December 31, 1998 and 1999, respectively. Accumulated amortization
was approximately $1,875,000 and $2,346,000 at December 31, 1998 and 1999,
respectively.

    SUPPLEMENTAL CASH FLOW INFORMATION--The Company entered into the following
noncash transactions:

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                              -----------------------------------
<S>                                                           <C>           <C>        <C>
                                                                 1997        1998         1999
                                                              -----------    ------    ----------
Stock issued for the acquisition of the technology for a
  point-of-sale software product............................  $   312,500    $   --    $       --
                                                              ===========    ======    ==========
Reduction of goodwill due to return of shares from and
  settlement of Coral escrow arrangements...................  $        --    $   --    $1,119,420
                                                              ===========    ======    ==========
Stock issued and options and warrants assumed in connection
  with the acquisition of Coral Systems, Inc. (1)...........  $16,873,977    $   --    $       --
                                                              ===========    ======    ==========
Application of note to exercise warrants (See Note 4).......  $        --    $   --    $  250,000
                                                              ===========    ======    ==========
</TABLE>

------------------------

(1) Stock issued and options and warrants assumed in connection with the
    acquisition of Coral Systems, Inc. exclude stock issuance costs of
    approximately $354,000 recorded as reduction of stockholders' equity.

    IMPAIRMENT OF LONG-LIVED ASSETS--The Company periodically assesses the
recoverability of its long-lived assets by comparing the undiscounted cash flows
expected to be generated by those assets to their carrying value. If the sum of
the undiscounted cash flows is less than the carrying value of the assets, an
impairment charge is recognized.

    In December 1998, the Company recorded $7,384,506 of expense related to
impairment of certain intangible assets acquired in the Coral acquisition in
1997. In December 1998, the Company decided to abandon sales and development
efforts related to the ChurnAlert product. As a result of this abandonment,
unamortized amounts included in other acquired intangible assets associated with
ChurnAlert, together with an allocation of remaining unamortized goodwill in the
amount of $2,552,000, were charged to expense. Because of factors that indicated
possible impairment of the remaining assets acquired from Coral, the Company
then compared the remaining unamortized long-lived assets and goodwill to the
undiscounted cash flows expected to be generated by the remaining Coral products
and services. Since the undiscounted cash flows were less than the carrying
value of the related assets, a goodwill impairment charge of $4,833,000 was
recorded. In calculating the goodwill impairment charge, the fair value of the
assets related to the remaining Coral products and services was determined using
the present value of the cash flows to be generated by such products and
services discounted using a 13% cost of capital.

    STOCK-BASED COMPENSATION--Compensation cost associated with the grant of
options and other stock awards to employees is determined using the intrinsic
value method. Compensation cost associated with the grant of options and other
stock awards to non-employees is determined using the fair value method.

                                      F-9
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    COMPREHENSIVE INCOME--The Company currently has no items of comprehensive
income other than net income (loss).

    DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION--Based
upon the way management and the Board of Directors monitor the operations, the
Company operates in three distinct segments including the transaction business,
the software license and maintenance business, and the consulting business.
Within these three segments, performance is measured based on gross profit
realized from each segment. Information about costs and expenses other than
costs of revenues and assets and cash flows is not reported by segment.
Information about revenues and cost of revenues of each segment is shown
separately on the statement of operations. Amortization expense of acquired
intangible assets related to the Coral acquisition recorded in software
licensing and maintenance cost of revenues for the years ended December 31,
1997, 1998 and 1999 was approximately $550,000, $1,566,000 and $621,000,
respectively. There are no transactions between segments.

    RECENT ACCOUNTING PRONOUNCEMENTS--In June 1998, the Financial Accounting
Standards Board released Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS
No. 133"). SFAS No. 133 establishes standards applicable to the manner in which
the Company accounts for derivative instruments in its annual financial
statements commencing with the quarter beginning after June 15, 2000. The
Company has not yet determined the effect that adoption will have on its
consolidated financial statements.

    The Company has adopted Statement of Position No. 98-9 ("SOP 98-9")
"Modification of SOP 97-2," Software Revenue Recognition," with Respect to
Certain Transactions". SOP 98-9 amends SOP 97-2 to require that an entity
recognize revenue for multiple element arrangements by means of the "residual
method" when (1) there is vendor-specific objective evidence (VSOE) of the fair
values of all the undelivered elements that are not accounted for my means of
long-term contract accounting, (d) VSOE of fair value does not exist for one or
more of the delivered elements, and (3) all revenue recognition criteria of SOP
97-2 (other than the requirement for VSOE of the fair value of each delivered
element) are satisfied. The provisions of SOP 98-9 that extend the deferral of
certain paragraphs of SOP 97-2 and SOP 98-9 will be effective for transactions
that are entered into in fiscal years beginning after March 15,1999. Retroactive
application is prohibited. The Company does not expect the adoption of SOP 98-9
to have a material effect on the consolidated financial position or results of
operations.

    RECLASSIFICATIONS--Certain reclassifications have been made to the 1997 and
1998 consolidated financial statements to conform with the 1999 presentation.

                                      F-10
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY AND EQUIPMENT

    Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                 1998           1999
                                                              -----------   ------------
<S>                                                           <C>           <C>
Furniture and fixtures......................................  $ 1,327,251   $  1,806,314
Leasehold improvements......................................    5,466,177      6,868,756
Computer equipment..........................................   12,187,777     19,296,817
Computer software and equipment and furniture and fixtures
  under capital leases......................................      310,575             --
Computer software...........................................    3,467,298      5,173,306
                                                              -----------   ------------
                                                               22,759,078     33,145,193
Less accumulated depreciation and amortization..............   (9,305,008)   (15,778,020)
                                                              -----------   ------------
Property and equipment--net.................................  $13,454,070   $ 17,367,173
                                                              ===========   ============
</TABLE>

    Accumulated amortization of computer software and equipment and furniture
and fixtures under capital leases was $265,454 at December 31, 1998.

4. NOTES PAYABLE

    Notes payable consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                 1998           1999
                                                              -----------   ------------
<S>                                                           <C>           <C>
        Equipment line borrowings...........................  $   152,770   $         --
        8% subordinated notes...............................    1,155,484        691,109
                                                              -----------   ------------
        Total...............................................    1,308,254        691,109
        Less current portion................................     (652,770)      (500,000)
                                                              -----------   ------------
        Long-term portion...................................  $   655,484   $    191,109
                                                              ===========   ============
</TABLE>

    LINES OF CREDIT--The Company has a $5,000,000 working capital line of credit
and a $3,000,000 equipment line of credit with a bank. The lines of credit are
collateralized by all of the Company's assets. Borrowing availability on the
working capital line is based upon the amount of qualifying accounts receivable.
Advances under the lines of credit bear interest at the bank's prime rate (8.5%
at December 31, 1999). The working capital line of credit expires in June 2000
and the equipment line of credit expires in June 2001.

    The working capital line of credit also provides for issuance of letters of
credit of up to $1,250,000. Letters of credit reduce availability under the
line. At December 31, 1998 and 1999, there were no borrowings outstanding under
the working capital line of credit and approximately $153,000 and $0,
respectively, of loans were outstanding under the equipment line of credit. The
entire amount outstanding under the equipment line of credit at December 31,
1998 was paid in 1999. At December 31, 1999, the Company had an outstanding
letter of credit in the amount of $1,000,000 which expires in March 2000.
Borrowing availability at December 31, 1999 was $4,000,000 and $3,000,000 for
the working capital line of credit and equipment line of credit, respectively.

                                      F-11
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. NOTES PAYABLE (CONTINUED)
    The Company's agreements with the bank contain covenants that, among other
things, prohibit the declaration of payments of dividends and require the
Company to maintain certain financial ratios, principally related to tangible
net worth and leverage.

    8% SUBORDINATED NOTES--In August 1994, the Company issued $2,100,000 of
subordinated notes to certain holders of the Company's common and mandatory
redeemable preferred stock, with immediately exercisable warrants for the
purchase of 525,000 shares of the Company's common stock. The warrants are
exercisable through June 30, 2001 at a price of $2 per share and were appraised
and recorded at an aggregate market value of $262,500. The related discount on
the subordinated notes ($262,500 at time of issuance) is being accreted over the
term of the notes. Interest expense for the years ended December 31, 1997, 1998
and 1999 included accretion related to these notes of approximately $43,700,
$43,700 and $35,600, respectively. During 1997, the Company repaid one of the
two notes in the amount of $100,000. Interest on the remaining note is payable
quarterly at an annual rate of 8%. Principal became payable in quarterly
installments of $125,000 on September 30, 1997 through maturity (2001) on the
remaining note. The remaining note is redeemable at the Company's option at par
plus declining premiums at various dates. During the year ended December 31,
1999, the holder of the remaining note elected to apply two principal payments
due of $125,000 each to partially exercise warrants associated with the note.

5. COMMITMENTS AND CONTINGENCIES

    LEASES--The Company has noncancelable operating lease agreements for office
space and certain equipment.

    Future minimum payments under operating leases and subrental income relating
to certain operating leases consisted of the following at December 31, 1999:

<TABLE>
<CAPTION>
                                                               OPERATING    SUBRENTAL
                                                                LEASES        INCOME
                                                              -----------   ----------
<S>                                                           <C>           <C>
2000........................................................  $ 3,756,400   $1,174,000
2001........................................................    3,560,300      298,100
2002........................................................    2,723,400           --
2003........................................................    2,338,300           --
2004........................................................      843,900           --
Thereafter..................................................       26,700           --
                                                              -----------   ----------
Total minimum lease payments................................  $13,249,000   $1,472,100
                                                              ===========   ==========
</TABLE>

    Rent expense for operating leases was approximately $2,291,000, $2,773,000
and $3,062,000 for the years ended December 31, 1997, 1998 and 1999,
respectively.

    LITIGATION--On September 10, 1997, an action was brought against the Company
and another defendant, United States Cellular Corp., in the Superior Court of
New Jersey, Law Division, Mercer County by National Information Bureau Ltd.
("NIB"), a Delaware corporation based in New Jersey. The complaint asserts
counts against the Company alleging misappropriation of trade secrets,
interference with contractual relations, civil conspiracy and breach of
contract. Three other counts of the complaint assert claims only against United
States Cellular Corp. In the complaint, NIB seeks damages, attorneys' fees,
costs and unspecified other relief. The complaint does not identify or specify
the amount, if any, of

                                      F-12
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
damages NIB claims to have incurred as a result of any alleged conduct by the
Company. The Company believes that the claims asserted against it by NIB are
without merit. The Company intends to defend the action vigorously, and does not
believe that this claim will have a material adverse effect on the Company's
business, consolidated financial condition, results of operations or cash flows.

6. COMMON STOCK OPTION PLANS, WARRANTS, STOCKHOLDER RIGHTS PLAN

    1990 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN--Under the Company's 1990
Incentive and Nonqualified Stock Option Plan, the Company could grant either
incentive or nonqualified stock options to officers, directors, employees or
consultants for the purchase of up to 2,400,000 shares of common stock. Options
were granted with an exercise price equal to the common stock's market value at
the date of grant, as determined by the Board of Directors of the Company (the
"Board"), and expire ten years later. No further grants will be made under the
1990 Incentive and Nonqualified Stock Option Plan.

    1996 EMPLOYEE STOCK PLANS--On June 14, 1996, the Board authorized and the
stockholders approved the adoption of the 1996 Incentive and Nonqualified Stock
Option Plan and the 1996 Employee Stock Purchase Plan for the issuance of
options or sale of shares to employees. Both plans became effective immediately
after the closing of the Company's IPO:

    --1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN--The 1996 Incentive and
    Nonqualified Stock Option Plan provides for the issuance of up to 1,000,000
    options to purchase shares of the Company's common stock. Options may be
    either qualified incentive stock options or nonqualified stock options at
    the discretion of the Board. Exercise prices will be either fair market
    value on the date of grant, in the case of incentive stock options, or set
    by the Board at the date of grant, in the case of nonqualified options.

    --1996 EMPLOYEE STOCK PURCHASE PLAN--The 1996 Employee Stock Purchase Plan
    provides for the sale of up to 100,000 shares of the Company's common stock
    to employees. Employees will be allowed to purchase shares at a discount
    from the lower of fair value at the beginning or end of the purchase periods
    through payroll deductions. At December 31, 1999, 18,904 shares were
    available for purchase under the 1996 Stock Purchase Plan.

    1998 NON-STATUTORY STOCK OPTION PLAN--The 1998 Non-Statutory Stock Option
Plan provides for the issuance of up to 1,000,000 options to purchase shares of
the Company's common stock. Options are granted with an exercise price no less
than the common stock's market value at the date of the grant, as determined by
the Board.

    On July 31, 1998, the Board determined that, because certain stock options
held by employees of the Company had exercise prices significantly higher than
the fair market value of the Company's common stock, those stock options were
not providing the desired incentive to employees. Accordingly the Board provided
employees with an opportunity to receive new options in replacement of any
existing options that had exercise prices of more than $7.63 per share (the fair
market value of the Company's common stock at the close of the market on
July 31, 1998). All of the Company's executive officers except the chief
executive officer were eligible to participate in the stock option repricing.
The new options are exercisable for the same number of shares as the options
they replace, but they have exercise prices of $7.63 per share and vesting
schedules commencing as of July 31, 1998. As a result of this stock option
repricing, new options were granted to purchase 843,100 shares of common stock
and the average exercise price of such options was reduced from $12.44 per share
to $7.63 per share. During the execution of the stock option repricing,

                                      F-13
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. COMMON STOCK OPTION PLANS, WARRANTS, STOCKHOLDER RIGHTS PLAN (CONTINUED)
the fair market value of the Company's common stock fell below $7.63 per share
and therefore no compensation charge was recorded as a result of the repricing.

    The following table presents activity under all stock option plans:

<TABLE>
<CAPTION>
                                                            WEIGHTED-   WEIGHTED-
                                                 NUMBER      AVERAGE     AVERAGE
                                                   OF       EXERCISE    GRANT DATE
                                                OPTIONS       PRICE     FAIR VALUE
                                               ----------   ---------   ----------
<S>                                            <C>          <C>         <C>
Outstanding at January 1, 1997...............   1,731,300    $ 2.74
  Granted....................................     447,000     12.10       $ 3.94
  Assumed....................................      58,576      6.72
  Exercised..................................    (176,775)     1,20
  Forfeited..................................     (63,780)     2.46
                                               ----------
Outstanding at December 31, 1997.............   1,996,321      4.96
  Granted....................................   2,084,349      9.89       $ 4.06
  Exercised..................................    (325,908)     8.07
  Forfeited(1)...............................  (1,259,413)    12.18
                                               ----------
Outstanding at December 31, 1998.............   2,495,349      6.11
  Granted....................................     337,450     10.46       $10.46
  Exercised..................................    (417,452)     5.37
  Forfeited..................................    (250,171)     8.28
                                               ----------
Outstanding at December 31, 1999.............   2,165,176      6.67
                                               ==========
</TABLE>

(1) Includes options cancelled and regranted in connection with the repricing
    described above.

    The number of options exercisable at the dates presented below and their
weighted average exercise price were as follows:

<TABLE>
<CAPTION>
                                                                        WEIGHTED-
                                                                         AVERAGE
                                                            OPTIONS     EXERCISE
                                                          EXERCISABLE     PRICE
                                                          -----------   ---------
<S>                                                       <C>           <C>
December 31, 1997.......................................     941,975       2.69
December 31, 1998.......................................   1,014,703       3.97
December 31, 1999.......................................   1,132,368       5.11
</TABLE>

                                      F-14
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. COMMON STOCK OPTION PLANS, WARRANTS, STOCKHOLDER RIGHTS PLAN (CONTINUED)
    The fair value of options on their grant date was measured using the
Black-Scholes Option Pricing Model. Key assumptions used to apply this pricing
model are as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED
                                                                DECEMBER 31,
                                                    -------------------------------------
                                                       1997         1998         1999
                                                    -----------  -----------  -----------
<S>                                                 <C>          <C>          <C>
Risk-free interest rate...........................  5.80%-6.76%  4.18%-5.63%  4.60%-6.19%
Expected life of options grants...................   1-6 years    1-5 years    1-5 years
Expected volatility of underlying stock...........      82%          90%          94%
Expected dividend payment rate, as a percentage of
  the stock price on the date of grant............      --           --           --
</TABLE>

    It should be noted that the option pricing model used was designed to value
readily tradable stock options with relatively short lives. The options granted
to employees are not tradable and have contractual lives of up to ten years.
However, management believes that the assumptions used to value the options and
the model applied yield a reasonable estimate of the fair value of the grants
made under the circumstances.

    The following table sets forth information regarding options outstanding at
December 31, 1999:

<TABLE>
<CAPTION>
                                                                    WEIGHTED      WEIGHTED
                                                                     AVERAGE       AVERAGE
                                                        WEIGHTED    REMAINING     EXERCISE
                                            NUMBER      AVERAGE    CONTRACTUAL    PRICE FOR
      NUMBER OF            RANGE OF        CURRENTLY    EXERCISE      LIFE        CURRENTLY
       OPTIONS          EXERCISE PRICES   EXERCISABLE    PRICE       (YEARS)     EXERCISABLE
      ---------         ---------------   -----------   --------   -----------   -----------
<S>                     <C>               <C>           <C>        <C>           <C>
       313,092            $.05-$0.38        313,092      $ 0.25        3.46         $ 0.25
       331,133            $0.46-$2.00       230,670      $ 1.45        6.03         $ 1.40
       218,958            $3.44-$7.50        32,231      $ 5.18        8.94         $ 5.01
       574,125               $7.63          216,967      $ 7.63        8.58         $ 7.63
       236,278           $7.75-$9.813       116,322      $ 8.70         7.6         $ 8.47
        16,262          $10.25-$11.625       12,204      $10.49        8.31         $10.51
       320,000              $12.13          156,666      $12.13        8.39         $12.13
       136,725          $12.375-$17.875      51,198      $14.65         8.8         $13.09
         2,853              $25.76            1,443      $25.76        7.85         $25.76
        15,750              $28.13            1,575      $28.13        9.96         $28.13
</TABLE>

    The Company uses the intrinsic value method to measure compensation expense
associated with grants of stock options to employees. Had the Company used the
fair value method to measure such

                                      F-15
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. COMMON STOCK OPTION PLANS, WARRANTS, STOCKHOLDER RIGHTS PLAN (CONTINUED)
compensation, reported net income (loss) and basic and diluted earnings (loss)
per share would have been as follows:

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31
                                                       -----------------------------------------
<S>                                                    <C>            <C>            <C>
                                                           1997           1998          1999
                                                       ------------   ------------   -----------
Income (loss) before provision for income taxes......  $    (83,555)  $(10,378,058)  $13,264,486
Provision for income taxes...........................         7,000        475,000     4,642,570
                                                       ------------   ------------   -----------
Net income (loss)....................................  $    (90,555)  $(10,853,058)  $ 8,621,916
                                                       ============   ============   ===========
Basic earnings (loss) per share......................  $      (0.01)  $      (0.73)  $      0.53
                                                       ============   ============   ===========
Diluted earnings (loss) per share....................  $      (0.01)  $      (0.73)  $      0.48
                                                       ============   ============   ===========
</TABLE>

    COMMON STOCK WARRANTS--The Company has issued warrants to purchase 1,270,038
shares of the Company's common stock at exercise prices ranging from $0.793 to
$2.00 per share. At December 31, 1999, outstanding warrants to purchase shares
of common stock aggregated 622,016 (522,016 shares at an exercise price of $2.00
and 100,000 shares at an exercise price of $10.00). Such shares are subject to
certain antidilution provisions. Pursuant to the acquisition of Coral, all
warrants to purchase shares of Coral's common stock became exercisable, when
vested, to purchase shares of Lightbridge common stock. Warrants converted to
purchase Lightbridge common stock aggregated 38,373 at exercise prices ranging
from $0.05 to $34.35 at December 31, 1999.

    RESERVED SHARES--The Company has reserved 3,577,016 shares of common stock
for issuance for the stock purchase plan and the exercise of stock options and
warrants.

    STOCKHOLDER RIGHTS PLAN--In November 1997, the Board of Directors of
Lightbridge declared a dividend of one right (each a "Right" and collectively
the "Rights") for each outstanding share of common stock. The Rights will be
issued to the holders of record of common stock outstanding on November 14,
1997, and with respect to common stock issued thereafter until the Distribution
Date (as defined below) and, in certain circumstances, with respect to shares of
common stock issued after the Distribution Date. Each Right, when it becomes
exercisable will entitle the registered holder to purchase from Lightbridge one
one-hundredth (1/100(th)) of a share of Series A participating cumulative
preferred stock, par value $0.01 per share, of Lightbridge at a price of $75.00.
The Rights will be issued upon the earlier of the date which Lightbridge learns
that a person or group acquired, or obtained the right to acquire, beneficial
ownership of fifteen percent or more of the outstanding shares of common stock
or such date designated by the Board following the commencement of, or first
public disclosure of an intent to commence, a tender or exchange offer for
outstanding shares of the Company's common stock that could result in the
offeror becoming the beneficial owner of fifteen percent or more of the
outstanding shares of the Company's common stock (the earlier of such dates
being called the "Distribution Date").

                                      F-16
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES

    The income tax provision for the years ended December 31 consisted of the
following:

<TABLE>
<CAPTION>
                                                       DECEMBER 31
                                          --------------------------------------
<S>                                       <C>           <C>          <C>
                                             1997          1998         1999
                                          -----------   ----------   -----------
Current:
  Federal...............................  $ 1,333,000   $2,105,000   $ 5,153,000
  State.................................      254,000      554,000     2,190,000
Deferred:
  Federal...............................     (530,000)       2,000    (1,389,000)
  State.................................     (165,000)    (148,000)     (386,000)
                                          -----------   ----------   -----------
  Income tax provision..................  $   892,000   $2,513,000   $ 5,568,000
                                          ===========   ==========   ===========
</TABLE>

    The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities were as follows:

<TABLE>
<CAPTION>
                                                            DECEMBER 31
                                                     -------------------------
<S>                                                  <C>           <C>
                                                        1998          1999
                                                     -----------   -----------
Current Items:
Assets:
  Allowance for doubtful accounts..................  $   198,400   $   480,000
  Accrued expenses.................................      115,478       337,163
  Tax credits......................................      200,970        26,876
  Valuation allowance..............................     (179,500)           --
Liabilities:
  Accrued expenses.................................           --          (457)
                                                     -----------   -----------
Net current deferred tax assets....................  $   335,348   $   843,582
                                                     ===========   ===========
Long-Term Items:
Assets:
  Depreciation and amortization....................  $   202,932   $   697,797
  Accrued expenses.................................      267,439       484,906
  Acquired loss carryforwards......................    5,555,431     4,878,481
  Valuation allowance..............................   (3,508,466)   (2,702,113)
Liabilities:
  Acquired intangible assets.......................   (2,046,965)   (1,623,594)
  Other............................................      (17,333)      (15,592)
                                                     -----------   -----------
Net long-term deferred tax assets..................  $   453,038   $ 1,719,885
                                                     ===========   ===========
</TABLE>

    The net change in the valuation allowance for the years ended December 31,
1997, 1998 and 1999 was an increase (decrease) of approximately $2,002,000,
$960,000 and ($986,000), respectively. Pursuant to the acquisition of Coral, the
Company acquired net operating loss carryforwards for federal income tax
purposes. At December 31, 1999, the Company had $11,800,000 of net operating
loss carryforwards which expire, if unused, in years 2010 through 2012.

                                      F-17
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (Continued)
    During the year ended December 31, 1999, the Company reduced the valuation
allowance related to acquired net operating loss carryforwards as it was
determined to be more likely than not that the credits could be utilized due to
improved profitability and a change in the tax law relating to the usage of
acquired net operating loss carryforwards. The amount of the valuation allowance
reversed was $986,000.

    The following is a reconciliation of income taxes at the federal statutory
rate to the Company's effective tax rate:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                           --------------------------------------
<S>                                                        <C>            <C>            <C>
                                                           1997           1998           1999
                                                             ---            ---             --
Statutory federal income tax rate...................         (34)%          (34)%           35%
In-process research and development.................         186             --             --
Non-deductible goodwill, including goodwill written
  off as impaired...................................          --             74              1
State taxes, net of federal benefit.................          36              7              8
Change in valuation allowance.......................         (37)            20             (6)
Other, net..........................................         (29)           (10)            (3)
                                                             ---            ---             --
Effective tax rate..................................         122%            57%            35%
                                                             ===            ===             ==
</TABLE>

8. EMPLOYEE PROFIT SHARING PLAN

    The Company has a 401(k) Employee Profit Sharing Plan (the "Plan"). Under
the Plan, the Company, at its discretion, may make contributions to match
employee contributions. All employees of the Company are eligible to
participate, subject to employment eligibility requirements. Vesting of employer
contributions occurs at the end of each year over a three-year period. Employer
contributions amounted to approximately $129,000, $142,000 and $175,000 for the
years ended December 31, 1997, 1998 and 1999, respectively.

    The Company's 401(k) expense was approximately $133,000, $235,000 and
$382,000 for the years ended December 31, 1997, 1998 and 1999, respectively.

    During October 1999, the Company's Board of Directors voted to approve
enhancements to the Company's 401(k) plan. The enhancements included making the
Company's matching payments non-discretionary and increasing the amounts to be
paid by the Company to participating employees from 25% of the first 6% of
contributions to 50% of the first 6% of contributions.

9. RELATED-PARTY TRANSACTIONS

    Under an agreement dated February 28, 1990, the Company granted an exclusive
license to RentGrow, Inc. ("RentGrow"), a company having certain common
investors with the Company, to use the Company's Credit Decision System in the
rental real estate market. Under the terms of the agreement, the Company was to
receive $250,000, comprised of five installments in varying amounts through
August 1996. The final payment was not made in August 1996. In 1997, the Company
received from RentGrow a three-year 11.25% promissory note in the principal
amount of $75,584, representing the final payment and other amounts owed to the
Company. In addition, this agreement provides for the Company to maintain the

                                      F-18
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. RELATED-PARTY TRANSACTIONS (CONTINUED)
licensed software, at RentGrow's option, at an annual amount equal to 15% of the
license amount, which the Company believes exceeds the cost of providing such
maintenance.

    During 1997, the Company entered into notes receivable agreements with two
officers totaling $87,000. Interest on the notes accrues monthly at the prime
rate. One of the notes which aggregated $12,000 was repaid during 1997. The
second note which aggregated $75,000 was repaid during 1999.

10. EARNINGS PER SHARE

    Basic EPS is computed by dividing income available to common stockholders by
the weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock.

    A reconciliation of the items used to compute basic income (loss) per share
to those used for diluted income (loss) per share is as follows for the years
ended December 31:

<TABLE>
<CAPTION>
                                                              1997         1998         1999
                                                           ----------   ----------   ----------
<S>                                                        <C>          <C>          <C>
Shares for basic computation.............................  14,802,012   15,833,635   16,234,822
Options and warrants (treasury stock method).............          --           --    1,756,298
                                                           ----------   ----------   ----------
Shares for diluted computation...........................  14,802,012   15,833,635   17,991,120
                                                           ==========   ==========   ==========
</TABLE>

    Stock options and warrants convertible into common stock have been excluded
from the diluted computation, in 1997 and 1998 as they are anti-dilutive. Had
such shares been included, shares for diluted computation would have increased
by approximately 1,900,000 and 1,632,000 for the years ended December 31, 1997
and 1998, respectively.

11. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                           FIRST      SECOND     THIRD      FOURTH
                                                          QUARTER    QUARTER    QUARTER    QUARTER
                                                          --------   --------   --------   --------
<S>                                                       <C>        <C>        <C>        <C>
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)
1998
Revenues................................................  $13,303    $15,145    $15,604    $19,299
Income (loss) from operations...........................  $  (867)   $  (108)   $   769    $(4,859)
Net income (loss).......................................  $  (722)   $  (159)   $   264    $(6,279)
Basic earnings (loss) per share.........................  $ (0.05)   $ (0.01)   $  0.02    $ (0.39)
Diluted earnings (loss) per share.......................  $ (0.05)   $ (0.01)   $  0.02    $ (0.39)
1999
Revenues................................................  $19,343    $22,240    $23,816    $24,317
Income from operations..................................  $ 2,682    $ 3,011    $ 4,374    $ 4,413
Net income..............................................  $ 1,429    $ 1,838    $ 2,327    $ 4,552
Basic earnings per share................................  $  0.09    $  0.11    $  0.14    $  0.28
Diluted earnings per share..............................  $  0.08    $  0.10    $  0.13    $  0.24
</TABLE>

                                      F-19