<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------
                                   FORM 10-K

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

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER 000-21319
                            ------------------------
                               LIGHTBRIDGE, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                  DELAWARE                                      04-3065140
          (State of incorporation)                   (IRS Employer Identification No.)

           67 SOUTH BEDFORD STREET                                 01803
          Burlington, Massachusetts                             (Zip Code)
</TABLE>

                                 (781) 359-4000
              (Registrant's telephone number, including area code)
                            ------------------------

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

    Securities registered pursuant to Section 12(g) of the Act: common stock,
$.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. /X/

    The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 22, 2001 was $251,600,360, based on a total of 25,640,801
shares held by nonaffiliates and on a closing price of $9.8125 as reported on
The Nasdaq Stock Market (National Market System).

    The number of shares of common stock outstanding as of March 22, 2001 was
27,641,781.

                      DOCUMENTS INCORPORATED BY REFERENCE

    The registrant intends to file a definitive proxy statement pursuant to
Regulation 14A with regard to its 2001 annual meeting of stockholders or special
meeting in lieu thereof within 120 days of the end of the fiscal year ended
December 31, 2000. Certain portions of such proxy statement are incorporated by
reference in Part III of this Form 10-K.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              PAGE
                                                                            --------
<S>           <C>                                                           <C>
PART I
Item 1.       Business....................................................      2
Item 1A.      Risk Factors................................................     13
Item 2.       Properties..................................................     24
Item 3.       Legal Proceedings...........................................     24
Item 4.       Submission of Matters to a Vote of Security Holders.........     25
PART II
Item 5.       Market for Registrant's Common Equity and Related
              Stockholder Matters.........................................     25
Item 6.       Selected Financial Data.....................................     26
Item 7.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations...................................     27
Item 7A.      Quantitative and Qualitative Market Risk Disclosures........     35
Item 8.       Financial Statements and Supplementary Data.................     36
Item 9.       Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure....................................     36
PART III
Item 10.      Directors and Executive Officers of the Registrant..........     37
Item 11.      Executive Compensation......................................     37
Item 12.      Security Ownership of Certain Beneficial Owners and
              Management..................................................     37
Item 13.      Certain Relationships and Related Transactions..............     37
PART IV
Item 14.      Exhibits, Financial Statement Schedules and Reports on Form
              8-K.........................................................     38
SIGNATURES................................................................     41
</TABLE>

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

    THIS ANNUAL REPORT ON 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. LIGHTBRIDGE UNDERTAKES NO OBLIGATIONS TO UPDATE
ANY FORWARD-LOOKING STATEMENTS IT MAKES.

                                       1
<PAGE>
                                     PART I

ITEM 1. BUSINESS

    GENERAL

    Lightbridge, Inc. ("Lightbridge") develops, markets and supports a suite of
integrated products and services that enable telecommunications carriers to
improve their customer acquisition, service provisioning, retention and fraud
management processes. Lightbridge's software-based solutions are delivered
primarily on an outsourcing and service bureau basis. Lightbridge also derives
revenues 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 and to carriers offering converged
telecommunications services positions Lightbridge to broaden its offerings to
other telecommunications service and mobile commerce 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 a variety of distribution channels, including dealers and agents, 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.

    On February 7, 2001 Lightbridge completed its merger with Corsair
Communications, Inc. ("Corsair"). Under the terms of the merger agreement,
Lightning Merger Corporation, a wholly owned subsidiary of Lightbridge, merged
with and into Corsair and Corsair became a wholly owned subsidiary of
Lightbridge. In connection with the merger, Lightbridge issued an aggregate of
approximately 10,270,000 shares of its common stock to Corsair stockholders who
received 0.5978 of a share of Lightbridge common stock in exchange for each
share of Corsair common stock held. In addition, the Company assumed the
obligation to issue, upon exercise of outstanding Corsair stock options,
approximately 1,587,094 shares of common stock.

    Corsair is a leading provider of system solutions for the global wireless
industry. Its PrePay billing system provides wireless telecommunications
carriers with a software solution designed to integrate with the upcoming
Wireless Intelligent Network standards. Its PhonePrint system provides such
carriers with a system to reduce cloning fraud.

    In this document we discuss the information of both Lightbridge and Corsair.
Unless otherwise noted, or the context otherwise requires, the information in
this filing as of dates prior to February 7, 2001, including the financial
information, is that of Lightbridge, Inc., excluding Corsair. For financial and
other information about the combined entity please refer to our Registration
Statement on Form S-4 filed on November 17, 2000 and the Pro-Forma Unaudited
financial information in Note 1 to the financial statements thereto.

                                       2
<PAGE>
    Lightbridge was incorporated in Delaware in June 1989 under the name Credit
Technologies, Inc. and in November 1994 changed its name to Lightbridge, Inc.
Lightbridge sells and markets its products and services throughout the world
both directly and through its wholly-owned subsidiaries. Unless the context
requires otherwise, references in this Annual Report on 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, CAS, CREDIT DECISION SYSTEM, CUSTOMER ACQUISITION SYSTEM, FRAUD
CENTURION, INSIGHT, POPS, RETAIL MANAGEMENT SYSTEM, RMS and TELESTO PORTAL are
trademarks of Lightbridge. PHONEPRINT is a registered trademark and PREPAY,
PREPAY OPEN and PHONEFUEL are trademarks of Corsair. All other trademarks or
trade names appearing in this Annual Report on Form 10-K are the property of
their respective owners.

BUSINESS SEGMENT DATA

    Information concerning the three distinct segments in which Lightbridge
operates is set forth in on page F-10 of "Notes to Consolidated Financial
Statements."

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 six broad
solutions groups:

<TABLE>
<CAPTION>
GROUP                                                              FUNCTIONS
-----                                                              ---------
<S>                                         <C>
LIGHTBRIDGE BASED SOLUTIONS
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 and changes in account information 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.
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>
GROUP                                                              FUNCTIONS
-----                                                              ---------
<S>                                         <C>
CONSULTING SERVICES.......................  Two distinct types of service: (i) Solution Development
                                            and Deployment consulting and (ii) 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, distribution, retention
                                            and fraud management.
CORSAIR BASED SOLUTIONS
PREPAID METERED BILLING...................  A system that expands a carrier's potential customer
                                            base by allowing it to market services to customers who
                                            prefer the use of cash over credit or who do not qualify
                                            for credit and who otherwise would be required to pay
                                            high deposits.
CLONING FRAUD.............................  A system that provides cloning fraud prevention to
                                            wireless telecommunications carriers by using
                                            proprietary radio frequency signal analysis technology
                                            to identify attempted fraudulent calls and prevent
                                            cloners from gaining access to a carrier's analog
                                            network.
</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 and validation of
identification is made based on centrally managed client-specified business
policies. If an issue is raised regarding qualification or validation of an
applicant, the system electronically routes the application to a Lightbridge or
carrier 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, in a
secure, controlled environment.

    Introduced in 1989 and enhanced over time, CAS typically enables carriers to
qualify applicants and activate service quickly 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.

                                       4
<PAGE>
    - 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.

    - AIRWAVES is a risk management score provided under agreement with
      RiskWise, L.L.C., which identifies the most profitable customers, even
      among consumers whose financial history is non-existent or "too thin" for
      traditional risk assessment tools.

    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 and account activity. 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 and data analysis tool for detection and
      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, ongoing screening of existing subscribers, and notification
       if an application is processed for a subscriber whose account has been
       previously written off by a participating carrier.

                                       5
<PAGE>
       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.

       FRAUD DETECT MODEL, a fraud scoring tool developed jointly by Lightbridge
       and Trans Union Corporation, is a neural-net scoring model that
       quantifies the probability that a subscriber will be written off.

       FRAUD ID-TECT, a multifaceted verification tool provided under agreement
       with Trans Union Corporation, verifies the subscriber data, identifies
       potential data errors, and alerts carriers to potential subscription
       fraud.

       @RISK, a repository of 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.

       FRAUDPOINT, a multifaceted fraud detection tool provided under agreement
       RiskWise, L.L.C., validates the data from the subscriber agreement to
       prevent subscription fraud and data input errors.

       FRAUDDEFENDER, a fraud scoring tool provided under agreement with
       RiskWise, L.L.C., rank orders fraud risk based on a score and helps
       manage review rates.

    - FRAUD CENTURION, a suite of back-end fraud management tools, available
      separately or together, that are designed to detect fraudulent activity by
      existing subscribers 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 Fraud Sentinel solutions are priced on a per inquiry basis.
The Company's Fraud Centurion 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

                                       6
<PAGE>
      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.

    - TELESTO PORTAL uses a component-based, thin-client architecture to provide
      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 a global telecommunications practice that
delivers full-service consulting for customer acquisition, distribution, 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: Solution Development and Deployment
consulting, and 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.

PREPAID METERED BILLING

    The PrePay system expands a carrier's potential customer base by allowing it
to market services to customers who prefer the use of cash over credit or who do
not qualify for credit and who otherwise would be required to pay high deposits.
The PrePay system is differentiated from most other competitive offerings by its
use of the Wireless Intelligent Network standards and architecture, which
enables carriers to use existing switch infrastructure equipment rather than
requiring costly additional adjunct switches and voice trunk resources. The
PrePay software architecture is designed to scale as the number of PrePay
subscribers on a system grows. Since prepaid calls are controlled by the
existing switch, there is no impact on call setup times. All calls by prepaid
subscribers are rated in real time, and an integrated interactive voice response
system automatically informs the customer when account funds are low. If prepaid
funds are depleted during a call, the call is automatically terminated and
service is suspended to avoid fraud until additional funds are deposited. The
deposit of additional funds

                                       7
<PAGE>
can be made over the air with a prepaid phone card or in cash at a replenishment
center, ensuring continuity of cellular service.

    The PrePay system, which has been commercially deployed on networks which
use Ericsson Radio Systems AB ("Ericsson") switching equipment has been enhanced
and extended to make it compatible with all wireless switch vendors through the
introduction of PrePay Open.

    PhoneFuel further extends the PrePay product line. PhoneFuel allows PrePay
customers to offer their subscribers the capability to add cash to their PrePay
balance phones directly from their bank accounts or credit cards using wireless
application protocol. PhoneFuel supports Internet connections for PrePay
subscribers enabling these subscribers to pay for services and products using
their prepaid account balance.

CLONING FRAUD

    The PhonePrint system provides cloning fraud prevention to wireless
telecommunications carriers by using proprietary radio frequency signal analysis
technology to identify attempted fraudulent calls and prevent cloners from
gaining access to a carrier's analog network. The system measures specific
characteristics of each phone's unique radio frequency waveform to develop a
radio frequency "fingerprint" that is a reliable tool to distinguish between a
legitimate phone and its clone. Just as no two human fingerprints are the same,
differences in phone designs and components as well as subtle manufacturing
differences mean that no two wireless phones generate the same waveform. The
fingerprint of one wireless phone cannot be emulated by another wireless phone,
and is therefore not subject to being compromised like electronic serial
numbers, personal identification numbers or potentially authentication codes.
The scalable design of the PhonePrint system allows carriers to deploy the
system initially in areas where fraud is most prevalent and to further deploy
the system over time in other parts of their networks. In addition, by
purchasing subscriptions to the PhonePrint Roaming Network, carriers can share
these fingerprints in real-time between PhonePrint systems in different markets
to protect against losses associated with roaming fraud.

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.

                                       8
<PAGE>
    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 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.

    PrePay allows carriers to support prepaid service offerings using their
existing Mobile Switching Center/Home Location Registry infrastructure
equipment. The PrePay server communicates with this infrastructure and other
network elements within the PrePay server and customer service clients. The new
PrePay Open product supports several air interfaces, including: CDMA, GSM, TDMA,
Analog Mobile Phone System, or AMPS, Total Access Communications System, or
TACS, and Extended Total Access Communications System, or ETACS.

    PhonePrint is an open architecture hardware and software system that is
designed to reduce cloning fraud by detecting and promptly disconnecting
fraudulent call attempts. Its key factor is its very robust RF (radio frequency)
signal analysis techniques. The system supports real-time network connectivity,
allowing PhonePrint markets to inter-operate both domestically and abroad.

    The telecommunications marketplace continues to grow rapidly and requires
quick reactions 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 80%, 77% and 66% of Lightbridge's total revenues in the years
ended December 31, 2000, 1999 and 1998, respectively. During the years ended
December 31, 2000, 1999 and 1998, two, two and three of Lightbridge's clients,
respectively, accounted for more than 10% of Lightbridge's total revenues,
representing an aggregate of 53%, 51% and 42% of total revenues in those years,
respectively. Sprint Spectrum L.P. accounted for 29%, 33% and 15% of
Lightbridge's total revenues for each of the years ended December 31, 2000, 1999
and 1998, respectively. AT&T Wireless Services, Inc. accounted for 24%, 18% and
17% of Lightbridge's total revenues for each of the years ended December 31,
2000, 1999 and 1998, respectively. Nextel Finance Company accounted for 10% of
Lightbridge's total revenues for the year ended December 31, 1998. Corsair's
three largest clients during its fiscal years

                                       9
<PAGE>
ended December 31, 2000, 1999 and 1998, accounted for approximately 76%, 52% and
32%, respectively, of Corsair's total revenues. Ericsson accounted for 68% and
43% of Corsair's total revenues in 2000 and 1999, respectively. In 1998,
BellSouth Cellular Corporation and GTE Mobilnet Service Corporation each
accounted for 10% or more of Corsair's total revenues, and collectively
accounted for over 23% of Corsair's total revenues for that year.

    Lightbridge's agreements with its clients set forth the terms on which
Lightbridge will provide products and services for its 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, Inc. and Sprint
Spectrum L.P. 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 agreement with AT&T
Wireless, Inc. was further extended through December 31, 2001. The Company is in
the final stages of negotiating a new agreement with Sprint Spectrum L.P. for
the provision of credit decision services.

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 relationship teams, Lightbridge's sales approach includes direct
sales staff with expertise in particular solutions and sales through channel
partners, particularly internationally.

    Lightbridge's software solutions typically require significant investment by
the carrier with delays frequently associated with capital expenditures 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 eighteen months, although the period may be substantially
longer in some cases and is subject to a number of risks over which the Company
has little control, including the carrier's budgetary and capital spending
constraints and the internal-decision making processes.

    PrePay is sold primarily pursuant to a non-exclusive original equipment
manufacturer agreement with Ericsson and through a direct sales force.
PhonePrint is marketed to wireless telecommunications carriers domestically and
internationally through a direct sales force and distribution partners.
PhonePrint is sold and licensed pursuant to agreements that typically provide
for hardware purchases and software licenses, customer service and support and
roaming service fees.

    Service and technical support for the Lightbridge products are provided
through both direct field service and support personnel and distributors. A high
level of continuing service and support is critical to the objective of
developing long-term relationships with clients. On-site installations and
technical assistance is also provided as part of the standard support and
service package that clients typically purchase for the length of their
respective agreements. Various training courses for distributors and clients are
also offered.

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

                                       10
<PAGE>
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 $16.3 million, $12.7 million and $9.6 million on engineering,
research and development in the years ended December 31, 2000, 1999 and 1998,
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 carrier and 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 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 carrier and subscriber
needs.

    The market for PrePay is intensely and increasingly competitive. PrePay
competes with a number of alternative prepaid billing products, including
post-call systems, handset-based systems and adjunct switch systems.

    The market for new sales of PhonePrint hardware is competitive. A relatively
small number of carriers that operate analog networks constitute the potential
customers for PhonePrint. Substantially all of the carriers that operate analog
networks have, to varying degrees, already implemented fraud solutions. We
believe there will be limited demand for PhonePrint systems in the future.

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 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 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

                                       11
<PAGE>
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.

PROPRIETARY RIGHTS

    Lightbridge's success is dependent upon proprietary technology. Lightbridge
has traditionally relied on a combination of copyrights, patents, 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 confidentiality agreements
with Lightbridge.

    Lightbridge currently has several issued U.S. and foreign patents and
applications pending in the U.S. Patent and Trademark Office and with certain
foreign regulatory bodies. 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 patents 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. 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'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 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

                                       12
<PAGE>
services in the United States or abroad. Such a judgment could have a material
adverse effect on Lightbridge. 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.

EMPLOYEES

    As of March 1, 2001, Lightbridge had a total of 927 employees, of which 779
were full-time and 148 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.

ITEM 1A. RISK FACTORS

IF WE LOSE ONE OR MORE OF OUR LARGER CLIENTS, OUR OPERATING RESULTS COULD SUFFER
DRAMATICALLY.

    Our revenues are concentrated among a few major clients. Lightbridge's 10
largest clients accounted for approximately 80%, 77% and 66% of its total
revenues in 2000, 1999 and 1998. During 2000, 1999 and 1998, two, two and three
of Lightbridge's clients, respectively, accounted for more than 10% of
Lightbridge's total revenues. These greater-than-10% clients represented a total
of 53%, 51% and 42% of Lightbridge's total revenues in those years. In
particular, Sprint Spectrum L.P. accounted for 29%, 33% and 15% of our total
revenues in 2000, 1999 and 1998, respectively, and AT&T Wireless Services, Inc.
accounted for 24%, 18% and 17% of Lightbridge's total revenues in 2000, 1999 and
1998, respectively. Nextel Finance Company accounted for 10% of Lightbridge's
total revenues for the year ended December 31, 1998.

    Corsair's three largest clients during its fiscal years ended December 31,
2000, 1999 and 1998, accounted for approximately 76%, 52% and 32%, respectively,
of Corsair's total revenues. Ericsson accounted for 68% and 43% of Corsair's
total revenues in 2000 and 1999, respectively. In 1998, BellSouth Cellular
Corporation and GTE Mobilnet Service Corporation each accounted for 10% or more
of Corsair's total revenues, and collectively accounted for over 23% of
Corsair's total revenues for that year.

    The loss of any one or more of the above clients or a reduction in orders by
them could materially reduce the revenues that would otherwise be generated by
the Company. Our revenues and earnings may fluctuate significantly from quarter
to quarter, based on the actions of a single significant client. We expect that
most of our revenues will continue to come from a relatively small number of
clients for the foreseeable future, although the companies that comprise our
largest clients in any given quarter may change from quarter to quarter.

OUR REVENUES ARE UNCERTAIN BECAUSE OUR CLIENTS MAY REDUCE THE AMOUNTS OF OUR
PRODUCTS OR SERVICES THEY PURCHASE.

    Our client contracts generally extend for terms of between one and five
years. To the extent these contracts contain minimum purchase or payment
requirements, these minimums are typically at levels significantly below actual
or historical purchase or payment levels. Therefore, our current clients may not
continue to utilize our products or services at levels similar to previous years
or at all, and may not

                                       13
<PAGE>
generate significant revenues in future periods. If any 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 of our
major clients.

OUR REVENUES ARE CONCENTRATED IN THE WIRELESS TELECOMMUNICATIONS INDUSTRY.

    We derive almost all of our revenues from 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
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;

    - the number of carriers seeking to implement prepaid billing services;

    - 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
      internationally; 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 SUCCESS IS DEPENDENT IN PART ON PREPAY, WHICH MAY NOT ACHIEVE MARKET
ACCEPTANCE.

    We anticipate that PrePay, our prepaid metered billing solution, will
account for a significant amount of our revenues in 2001. As a result, our
future operating results will depend to a significant extent on the demand for
and market acceptance of PrePay. To date, only a small number of wireless
carriers have deployed PrePay, and the rate of adoption of the PrePay system
will need to increase significantly in order to achieve our revenue targets.

    Currently our PrePay solution has only been commercially deployed on
networks which use Ericsson switching equipment and only carriers that have
deployed Ericsson's infrastructure equipment are potential customers for PrePay.
In order to expand our potential customer base, we recently introduced our
PrePay Open product making PrePay compatible with other infrastructure
equipment; however, this product has only been used under testing arrangements
and has not yet gained market acceptance.

    Our PrePay product has been sold commercially only by Ericsson. Ericsson,
from time to time, may evaluate and seek to distribute or acquire alternative
vendors' prepaid product offerings. Any change in the terms of Ericsson's
partnership or Ericsson's desire to discontinue our relationship would
drastically affect sales of PrePay. Although we plan to have our own sales force
begin to sell PrePay Open, it may not be effective and PrePay Open may never
gain market acceptance. We cannot assure you that the sale or adoption of the
PrePay system will increase or that PrePay Open will gain market acceptance. If
PrePay does not gain market acceptance our future operating results would be
adversely affected.

                                       14
<PAGE>
WE EXPECT OUR REVENUES FROM PHONEPRINT TO DECLINE.

    PhonePrint is a cloning fraud prevention system. A relatively small number
of carriers that operate analog networks constitute the potential clients for
PhonePrint. Substantially all of the carriers that operate analog networks have,
to varying degrees, already implemented cloning fraud solutions. We believe
there will be limited demand for PhonePrint systems in the future. As a result
of the limited demand for PhonePrint systems, we do not expect the product to
contribute to the growth of our business.

    All customers for PhonePrint to date have been carriers that operate analog
networks. Wireless services operating in digital mode, including PCS and ESMR in
the U.S. and GSM communications in many foreign countries (including many
European countries), use or may use authentication processes that automatically
establish the validity of a phone each time it attempts to access the wireless
telecommunications network. We are not aware of any information that suggests
that cloners have been able to break the authentication encryption technologies.
Unless the encryption technologies that form the basis for authentication are
broken by cloners, we do not believe that operators of digital networks will
purchase third party radio frequency fingerprinting solutions for cloning fraud
such as PhonePrint. In addition, authentication processes for analog networks
are also currently available and are being employed by a significant number of
carriers. Industry experts project that the number of analog phones and analog
networks will ultimately decline in favor of digital alternatives and therefore
our revenues from this product will probably continue to decline in the future.

IF WE DO NOT CONTINUE TO ENHANCE OUR EXISTING PRODUCTS AND SERVICES, AND DEVELOP
NEW ONES, WE WILL NOT BE ABLE TO COMPETE EFFECTIVELY IN OUR INDUSTRY.

    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 remain competitive and successfully address the
evolving needs of our clients, we must commit a significant portion of our
resources to:

    - 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.

                                       15
<PAGE>
    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. If we are unable to enhance and expand our products and services
quickly and efficiently, our business and operating results could be adversely
affected.

WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH.

    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. If we achieve future growth in our
business, either domestically or internationally, we 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
controls and reporting systems. We cannot assure you that we will be able to
successfully manage the growth and expansion of the business.

WE HAVE MADE AND MAY CONTINUE TO MAKE ACQUISITIONS, WHICH INVOLVE RISKS.

    We acquired Coral Systems, Inc. in November 1997 and Corsair in
February 2001. 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.

IF WE DO NOT SUCCESSFULLY INTEGRATE THE CORSAIR BUSINESS, WE MAY NOT REALIZE THE
EXPECTED BENEFITS FROM THE MERGER.

    The integration of the operations of Corsair may be difficult, time
consuming and costly. We experienced difficulties in integrating Coral
Systems, Inc. following our acquisition of that company in November 1997, and
Corsair experienced similar difficulties with respect to its acquisition of
Subscriber Computing, Inc. in June 1998. Any failure to integrate the operations
of the companies successfully could have a material adverse effect on our
business. The difficulties involved in integrating the companies, which could be
substantial, include the following:

    - management and key personnel could be distracted from the day-to-day
      business of the combined company;

    - the business cultures of the two companies could prove to be incompatible;

    - managing the combined company's geographically dispersed operations could
      be difficult and costly;

                                       16
<PAGE>
    - implementing common systems and procedures, especially information and
      accounting systems, could be costly and time consuming; and

    - key officers, technical, sales and customer support personnel may not be
      satisfied in the combined company and may elect to leave.

IF WE ARE UNABLE TO ACQUIRE COMPLEMENTARY BUSINESSES, OUR FUTURE GROWTH WILL BE
LIMITED.

    A key element of our growth strategy is to acquire businesses, technologies
or products that expand and complement our business. We believe acquisitions are
necessary for us to continue to grow at a desirable rate, and we will continue
to evaluate possible acquisition opportunities in the future. Even if we are
able to identify suitable companies or businesses to buy, we may not be able to
purchase any of these companies at favorable prices, or at all, due to any
number of reasons. If we are unable to make acquisitions, we may not be able to
meet or exceed our historical levels of growth and earnings.

OUR FUTURE REVENUES MAY BE UNCERTAIN BECAUSE OF RELIANCE ON THIRD PARTIES FOR
MARKETING AND DISTRIBUTION.

    PrePay is currently marketed primarily through a distribution agreement with
Ericsson, and sold commercially only by Ericsson. PhonePrint is currently
marketed primarily through direct sales efforts. We have entered into
distribution agreements with respect to PhonePrint with, among others,
Motorola, Inc., Ericsson and Aurora Wireless Technology. We intend to continue
to market and distribute these products through these and other relationships.
We also intend to enter into additional distributor and sales and marketing
agreements for sales of these and other products outside of the United States.
There are no minimum purchase obligations applicable to any existing distributor
or other sales and marketing partners and we do not expect to have any
guarantees of continuing orders. Failure by our existing and future distributors
or other sales and marketing partners to generate significant revenues could
have a material adverse effect on our business, operating results and financial
condition. In addition, distributors and other sales and marketing partners may
become our competitors with respect to PrePay, PhonePrint or any future product
either by developing a competitive product themselves or by distributing a
competitive offering. For example, Ericsson may evaluate and seek to distribute
or acquire alternative vendors' prepaid products that compete with PrePay.
Competitions from existing and future distributors or other sales and marketing
partners could significantly harm sales of our products.

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, and may
      affect demand for our other products and services. As a result, our
      revenues can fluctuate. 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.

                                       17
<PAGE>
    - The sales process for our products and services is lengthy, sometimes
      exceeding eighteen months. 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.

    - 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,. 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.

    - Our contracts typically do not require our clients to purchase our
      products or services at their actual or historical levels.

    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.

OUR FOREIGN SALES AND OPERATIONS SUBJECT US TO UNIQUE RISKS AND CONCERNS WHICH
COULD NEGATIVELY IMPACT OUR BUSINESS OVERALL.

    We expect our international revenues will represent a significant portion of
our total revenues. We also intend to further expand our sales efforts
internationally. In addition to the risks generally associated with sales and
operations in the U.S., sales to clients outside the U.S. and operations in
foreign countries present us with many additional risks, including the
following:

    - the imposition of financial and operational controls and regulatory
      restrictions by foreign governments;

    - the need to comply with a wide variety of complex U.S. and foreign import
      and export laws and treaties;

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

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

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

    - fluctuations in interest and currency exchange rates, which may reduce our
      earnings if we denominate arrangements with international clients in the
      currency of the country in which our products or services are provided, or
      with respect to arrangements with international clients that are U.S.
      dollar-denominated, which may make our systems less price-competitive;

                                       18
<PAGE>
    - changes in technology standards, such as interfaces between products, that
      are developed by European or other foreign groups may require additional
      development efforts on our part or may change the buying behavior of some
      of our clients;

    - reduced protection for intellectual property rights in some countries;

    - difficulties in managing a global network of distributors or
      representatives and in staffing and managing foreign subsidiary
      operations;

    - costs and risks of localizing systems in foreign countries;

    - additional complications and expenses related to supporting products
      internationally; and

    - the possibility that our purchase agreements may be governed by foreign
      laws that differ significantly from U.S. laws, which may limit our ability
      to enforce our rights under these agreements.

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 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.

OUR FUTURE SUCCESS DEPENDS ON THE CONTINUED SERVICES OF KEY EXECUTIVE OFFICERS.

    Our future success will depend to a significant degree on the skills,
experience and efforts of our executive officers, particularly Pamela D.A.
Reeve, Chief Executive Officer, and Thomas C. Meyer, President and Chief
Operating Officer. We do not have any employment contracts requiring Ms. Reeve,
Mr. Meyer 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. If we lose the services of one
or more of these persons, we may be unable to successfully implement our planned
business objectives and our future operations may be adversely affected.

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,
      HNC Software, Inc., Magnum Software Systems, and SLP Infoware;

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

                                       19
<PAGE>
    - service providers that offer customer acquisition, retention or fraud
      detection services in connection with other services, including Equifax,
      Sema plc and Amdocs;

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

    - 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, Accenture, CAP Gemini and
      Deloitte & Touche;

    - software vendors of prepaid wireless billing products, including GTE
      Telecommunications Services, Inc., Boston Communications Group, Inc. Brite
      Voice Systems, Inc., Comverse Technology, Inc., Glenayre
      Technologies, Inc., National Telemanagement Corporation, Telemac Cellular
      Corporation, HNC Software, Inc., ORGA Kartensysteme GmbH, Sema plc, Logica
      plc, Alcatel USA, Priority Call Management, Lucent Technologies, Inc.,
      Compaq (Tandem Division), Northern Telecom Limited and Sixbell;

    - vendors that provide radio frequency-based cloning fraud prevention
      systems, such as Cellular Technical Services Company; and

    - a number of alternative technologies, including profilers, personal
      identification numbers and authentication, provided by companies such as
      GTE Telecommunications Services, Authentix Network and
      HNC Software, Inc.

    Because competition can easily penetrate our market, we anticipate
additional competition from other established and new companies. In addition,
competition may intensify as competitors establish cooperative relationships
among themselves or alliances with large software companies.

    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.

A FAILURE OF OR DAMAGE TO OUR COMPUTER AND TELECOMMUNICATIONS SYSTEMS WOULD
IMPAIR OUR ABILITY TO CONDUCT TRANSACTIONS AND SUPPORT SERVICES AND HARM OUR
BUSINESS OPERATIONS.

    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.

                                       20
<PAGE>
OUR RELIANCE ON CERTAIN SUPPLIERS AND VENDORS COULD ADVERSELY AFFECT OUR ABILITY
TO PROVIDE OUR SERVICES AND PRODUCTS TO OUR CLIENTS ON A TIMELY AND
COST-EFFICIENT BASIS.

    We rely to a substantial extent on third parties to manufacture and provide
some of our equipment, software, systems and services. In some circumstances, we
rely on a single supplier or limited group of suppliers. Our reliance on outside
vendors subjects us to risks, including a potential inability to obtain an
adequate supply of required components and reduced control over quality, pricing
and timing of delivery of components. For example, in order to provide our
credit verification service, we need access to third-party credit information
databases provided to us by outside vendors. Similarly, delivery of our
activation services often require the availability and performance of
third-party billing systems which are also supplied by outside vendors. If for
any reason, we were unable to access these databases or billing systems, our
ability to process credit verification transactions could be impaired.

    In addition, our business is materially dependent on services provided by
various local and long distance telecommunications providers. A 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.

    From time to time, we must also rely upon third parties to develop and
introduce components and products to enable us, in turn, to develop new products
and product enhancements on a timely and cost-effective basis. In particular, we
must rely on the development efforts of third-party wireless infrastructure
providers in order to allow our PrePay product to integrate with both existing
and future generations of the infrastructure equipment. We may not be able to
obtain access, in a timely manner, to third-party products and development
services necessary to enable us to develop and introduce new and enhanced
products. We may not be able to obtain third-party products and development
services on commercially reasonable terms and we may not be able to replace
third-party products in the event such products become unavailable, obsolete or
incompatible with future versions of our products.

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.

OUR SUCCESS DEPENDS IN PART ON OUR ABILITY TO OBTAIN PATENTS FOR, OR OTHERWISE
PROTECT, OUR PROPRIETARY TECHNOLOGIES.

    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. We have a limited number of patents in the U.S.
and abroad, and have pending applications for additional patents, but we cannot
be certain that:

    - any additional patents will be issued on those applications;

    - the claims allowed will be sufficiently broad to protect our technology;

    - any of our patents now or hereafter acquired will protect our business
      against competitors that develop similar technology or products;

                                       21
<PAGE>
    - the rights granted under our patents will provide competitive advantages;

    - any of our patents will be held valid if subsequently challenged or
      subjected to reexamination or reissue; or

    - others will not claim rights in our patents or our proprietary
      technologies.

    Patents issued and patent applications filed relating to products used in
the wireless telecommunications industry are numerous and it may be the case
that current and potential competitors and other third parties have filed or
will file applications for, or have received or will receive, patents or obtain
additional proprietary rights relating to products used or proposed to be used
by us. We may not be aware of all patents or patent applications that may
materially affect our ability to make, use or sell any current or future
products. U.S. patent applications are confidential while pending in the U.S.
Patent and Trademark Office, and patent applications filed in foreign countries
are often first published six months or more after filing.

    The laws of some 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 clients
and restrict access to, and distribution of, our proprietary information.
Nevertheless, we may be unable to deter misappropriation of our proprietary
information or detect unauthorized use of 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.

    Much of our know-how and other proprietary technology are not covered by
patent or similar protection, and in many cases cannot be so protected. If we
cannot obtain patent or other protection for our proprietary software and other
proprietary intellectual property rights, other companies could more easily
enter our markets and compete successfully against us.

WE MAY BECOME A PARTY TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH COULD
HARM OUR BUSINESS.

    From time to time, we may be forced to respond to or prosecute intellectual
property infringement claims to protect our rights or defend a client's rights.
These claims, regardless of merit, may consume valuable management time, result
in costly litigation or cause product shipment delays, all of which could
seriously harm our business and operating results. Furthermore, parties making
such claims may be able to obtain injunctive or other equitable relief that
could effectively block our ability to make, use, sell or otherwise practice our
intellectual property, whether or not patented or described in pending patent
applications, or to further develop or commercialize our products in the U.S.
and abroad and could result in the award of substantial damages against us. We
may be required to enter into royalty or licensing agreements with third parties
claiming infringement by us of their intellectual property in order to settle
these claims. These royalty or licensing agreements, if available, may not have
terms that are acceptable to us. In addition, if we are forced to enter into a
license agreement with terms that are unfavorable to us, our operating results
would be materially harmed.

                                       22
<PAGE>
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO GOVERNMENT REGULATION AND LEGAL
UNCERTAINTIES THAT COULD HARM OUR BUSINESS.

    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.

    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. Legislation
affecting the telecommunications industry may cause changes in the wireless
telecommunications industry, including the entrance of new competitors and
industry consolidation, which could in turn increase pricing pressures on us,
decrease demand for our products, increase our cost of doing business or
otherwise have a material adverse effect on our business, operating results and
financial condition. If the recent trend toward privatization and deregulation
of the wireless telecommunications industry outside of the U.S. were to halt or
be reversed, or if currently deregulated international markets were to reinstate
comprehensive government regulation of wireless telecommunications services, our
business would suffer.

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.

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

                                       23
<PAGE>
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, its headquarters. This lease
was amended in October 1997, July 1999 and in March 2000 to include an
additional 11,000, 8,000 and 11,000 square feet, respectively, at the same
location. This lease, as amended, for the Burlington facility expires in 2005. A
majority of the Company's TeleServices group is located in a 16,000-square foot
facility leased through September 2003, in Waltham, Massachusetts. In November
of 2000, the Company entered into a five-year lease for approximately 4,000
square feet in Waltham, Massachusetts. This space is occupied by one of
Lightbridge's two data centers. In August 2000, the Company entered into a
five-year lease for approximately 29,000 square feet in Lynn, Massachusetts.
This space is occupied by a portion of Lightbridge's TeleServices group. 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.

    Lightbridge also maintains offices in Palo Alto, California. This leased
facility, totaling approximately 55,000 square feet, contains the principal
administrative, assembly, manufacturing, marketing and sales facilities related
to the Corsair business. The lease on this facility expires on May 31, 2002. The
Company also has a facility in Irvine, California related to the Corsair
business. This lease, for approximately 41,000 square feet, expires on
April 30, 2001. The Company is negotiating a new lease for approximately 21,000
square feet in Irvine, California for a term of six years commencing in May
2001.

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 bankruptcy proceeding was subsequently converted into a Chapter 7
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 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. In April 1998, the New Jersey Superior Court
dismissed the above action and in August 2000, the Bankruptcy Court of Delaware
issued an order allowing the bankruptcy trustee to abandon the property of the
NIB bankrupt estate, including litigation claims.

                                       24
<PAGE>
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, 2000.

                                    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 Stock 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 National Market System, as reported in
published financial sources:

<TABLE>
<CAPTION>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
2000
First Quarter...............................................   $28.81     $16.69
Second Quarter..............................................   $24.50     $15.25
Third Quarter...............................................   $27.50     $ 9.00
Fourth Quarter..............................................   $17.06     $ 7.56

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 22, 2001, there were 199 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.

                                       25
<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 Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                      YEARS ENDED DEC. 31,
                                                      ----------------------------------------------------
                                                        2000       1999       1998       1997       1996
                                                      --------   --------   --------   --------   --------
                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                   <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................  $121,554   $89,716    $63,351    $40,549    $29,545
Cost of revenues....................................    62,633    42,876     33,107     19,428     15,986
                                                      --------   -------    -------    -------    -------
Gross profit........................................    58,921    46,840     30,244     21,121     13,559
                                                      --------   -------    -------    -------    -------
Operating expenses:
  Development costs.................................    16,287    12,659      9,596      6,072      4,380
  Sales and marketing...............................     8,775     7,482      6,857      6,041      3,673
  General and administrative........................    12,004    10,877      8,490      4,731      2,769
  Amortization of goodwill and acquired workforce...       502     1,342      2,982        497         --
  Intangible asset impairment.......................        --        --      7,385         --         --
  Purchased in-process research and development.....        --        --         --      4,000         --
                                                      --------   -------    -------    -------    -------
Total operating expenses............................    37,568    32,360     35,310     21,341     10,822
                                                      --------   -------    -------    -------    -------
Income (loss) from operations.......................    21,353    14,480     (5,066)      (220)     2,737
Other income (expense)(1)...........................     1,529     1,233        682        949       (305)
                                                      --------   -------    -------    -------    -------
Income (loss) before income taxes...................    22,882    15,713     (4,384)       729      2,432
Provision for income taxes..........................     9,193     5,568      2,513        892        160
                                                      --------   -------    -------    -------    -------
Net income (loss)...................................    13,689    10,145     (6,897)      (163)     2,272
Accretion of preferred stock dividends..............        --        --         --         --       (137)
                                                      --------   -------    -------    -------    -------
Net income (loss) available for common stock........  $ 13,689   $10,145    $(6,897)   $  (163)   $ 2,135
                                                      ========   =======    =======    =======    =======
Basic earnings (loss) per common share..............  $   0.80   $  0.62    $ (0.44)   $ (0.01)   $  0.33
                                                      ========   =======    =======    =======    =======
Diluted earnings (loss) per common share............  $   0.74   $  0.56    $ (0.44)   $ (0.01)   $  0.17
                                                      ========   =======    =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                 ----------------------------------------------------
                                                   2000       1999       1998       1997       1996
                                                 --------   --------   --------   --------   --------
                                                                    (IN THOUSANDS)
<S>                                              <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................  $31,471    $35,478    $16,437    $15,716    $27,901
Working capital................................  $46,999    $36,771    $24,519    $21,186    $30,457
Total assets...................................  $99,001    $75,857    $57,777    $63,565    $41,766
Long-term obligations, less current portion....  $   963    $ 1,102    $ 1,181    $ 2,221    $ 2,221
Stockholders' equity...........................  $75,028    $57,292    $44,447    $50,716    $33,599
</TABLE>

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

(1) Consists principally of interest income for the years ended December 31,
    2000, 1998 and 1997. For the year ended December 31, 1999, consists
    principally of interest income and a nonrecurring gain of approximately $415
    on the sale of an investment. Consists principally of interest expense for
    the year ended December 31, 1996.

                                       26
<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. Through its acquisition
of Corsair in February 2001, the Company also provides wireless
telecommunications carriers with a software solution designed to integrate with
upcoming wireless Intelligent Network Standards and a system to reduce cloning
fraud.

    Lightbridge's total revenues increased by 312.0% to $121.6 million in 2000
from $29.5 million in fiscal 1996. 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 licensing of certain software products.
Software licensing and maintenance and consulting revenues were an aggregate of
22.1%, 29.4% and 34.2% of total revenues in fiscal 2000, 1999 and 1998,
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

                                       27
<PAGE>
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.

    During 2000, Lightbridge continued its efforts to complete development of
in-process technology obtained through the acquisition of Coral Systems, Inc.
("Coral") in 1997. Lightbridge developed a new version of FraudBuster that
contains substantial enhancements in performance, scalability and functionality
and was released in the third quarter of 2000. Lightbridge also completed the
development of Alias and @Risk, which are complementary to FraudBuster and
contain new subscription fraud detection tools.

    On February 7, 2001 Lightbridge completed its merger with Corsair. Under the
terms of the merger agreement, Lightning Merger Corporation, a wholly owned
subsidiary of Lightbridge, merged with and into Corsair and Corsair became a
wholly owned subsidiary of Lightbridge. In connection with the merger,
Lightbridge issued an aggregate of approximately 10,270,000 shares of its common
stock to Corsair stockholders who received 0.5978 of a share of Lightbridge
common stock in exchange for each share of Corsair common stock held. In
addition, the Company assumed the obligation to issue, upon exercise of
outstanding Corsair options, approximately 1,587,094 shares of common stock.

    Corsair is a leading provider of system solutions for the global wireless
industry. Its PrePay billing system provides wireless telecommunications
carriers with a software solution designed to integrate with the upcoming
Wireless Intelligent Network standards. Its PhonePrint system provides carriers
with a system to reduce cloning fraud.

    During fiscal 2000, 1999 and 1998, two, two and three of the Company's
clients, respectively, accounted for more than 10% of the Company's total
revenues. Revenues from the two clients in 2000 aggregated 24% and 29% of total
revenues. Revenues from the two clients in fiscal 1999 aggregated 18% and 33% of
total revenues. Revenues from the three clients in fiscal 1998 aggregated 17%,
15% and 10% of total revenues.

    Substantially all of the Company's revenues historically have been derived
from clients located in the United States.

                                       28
<PAGE>
RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,
                                                                  ------------------------------------
                                                                    2000          1999          1998
                                                                  --------      --------      --------
<S>                                                               <C>           <C>           <C>
Revenues:
Transaction.................................................        77.9%         70.6%         65.8%
Software licensing and maintenance..........................        11.1          14.9          18.8
Consulting services.........................................        11.0          14.5          15.4
                                                                   -----         -----         -----
                                                                   100.0         100.0         100.0
                                                                   -----         -----         -----
Cost of revenues:
Transaction.................................................        40.6          33.7          36.8
Software licensing and maintenance..........................         5.1           5.6           7.2
Consulting services.........................................         5.8           8.5           8.3
                                                                   -----         -----         -----
                                                                    51.5          47.8          52.3
                                                                   -----         -----         -----
Gross profit................................................        48.5          52.2          47.7
                                                                   -----         -----         -----
Operating expenses:
Development costs...........................................        13.4          14.1          15.1
Sales and marketing.........................................         7.2           8.3          10.8
General and administrative..................................         9.9          12.1          13.4
Amortization of goodwill and acquired workforce.............         0.4           1.5           4.7
Intangible asset impairment.................................          --            --          11.7
                                                                   -----         -----         -----
Total operating expenses....................................        30.9          36.0          55.7
                                                                   -----         -----         -----
Income (loss) from operations...............................        17.6          16.2          (8.0)
                                                                   -----         -----         -----
Other income (expense), net.................................         1.3           1.4           1.1
                                                                   -----         -----         -----
Income (loss) before income taxes...........................        18.9          17.6          (6.9)
Provision for income taxes..................................         7.6           6.2           4.0
                                                                   -----         -----         -----
Net income (loss)...........................................        11.3%         11.4%        (10.9)%
                                                                   =====         =====         =====
</TABLE>

    YEAR ENDED DECEMBER 31, 2000 COMPARED WITH YEAR ENDED DECEMBER 31, 1999

    REVENUES.  Revenues increased by 35.5% to $121.6 million in the year ended
December 31, 2000 from $89.7 million in the year ended December 31, 1999.

    Transaction revenues increased by 49.5% to $94.7 million in the year ended
December 31, 2000 from $63.3 million in the year ended December 31, 1999, while
increasing as a percentage of total revenues to 77.9% from 70.6%. The increase
in transaction revenues for the year ended December 31, 2000 was primarily due
to increased volume of qualification and activation transactions processed for
carrier clients, including new clients, and an increase in special program
efforts through Lightbridge's TeleServices Call Center, which are generally not
provided under a long-term contract.

    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.

                                       29
<PAGE>
    Software licensing and maintenance revenues increased slightly to
$13.4 million in the year ended December 31, 2000 from $13.3 million in the year
ended December 31, 1999, while decreasing as a percentage of total revenues to
11.1% from 14.9%.

    Consulting services revenues increased by 2.6% to $13.4 million in the year
ended December 31, 2000 from $13.1 million in the year ended December 31, 1999,
while decreasing as a percentage of total revenues to 11.0% from 14.5%. The
increase in consulting services revenues for the year ended December 31, 2000
was principally due to increased demand for the consulting services, principally
custom software development and systems integration offered by the Company.

    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 and maintenance
revenues and consulting services revenues.

    Transaction cost of revenues increased by 63.2% to $49.4 million in the year
ended December 31, 2000 from $30.3 million in the year ended December 31, 1999,
while increasing as a percentage of total transaction revenues to 52.2% from
47.8%. The increase in transaction cost of revenues for the year ended
December 31, 2000 resulted principally from increases in transaction volume and
costs attributable to expansion of the Company's staff and systems capacity. The
increase in transaction cost of revenues as a percentage of total transaction
revenues for the year ended December 31, 2000 principally resulted from costs
attributable to expansion of Lightbridge's staff and systems capacity,
particularly for Lightbridge's TeleServices Call Centers. Transaction cost of
revenues was also affected by an increase in the level of temporary labor used
and a shift in the mix of services provided during the year ended December 31,
2000.

    Software licensing and maintenance cost of revenues increased by 23.9% to
$6.2 million in the year ended December 31, 2000 from $5.0 million in the year
ended December 31, 1999, while increasing as a percentage of total software
licensing and maintenance revenues to 46.4% from 37.8%. The dollar increase in
software licensing and maintenance cost of revenues for the year ended
December 31, 2000 was primarily due to an increase in personnel in connection
with an increase in maintenance contracts and the deployment and beta testing of
FraudBuster 5.0. The increase in software licensing and maintenance cost of
revenues as a percentage of total software licensing and maintenance revenues
for the year ended December 31, 2000 resulted from a higher percentage of
software maintenance revenues during that period. The software maintenance
component of software licensing and maintenance revenues generally has lower
margins than the software licensing component.

    Consulting services cost of revenues decreased by 7.7% to $7.0 million in
the year ended December 31, 2000 from $7.6 million in the year ended
December 31, 1999, while decreasing as a percentage of total consulting services
revenues to 52.2% from 58.1%. The dollar decrease in consulting services cost of
revenues was attributable primarily to the assignment of consulting resources to
other areas of the Company when not being utilized on a consulting project. The
decrease in consulting services cost of revenues as a percentage of consulting
services revenue was primarily due to a higher utilization of consulting
resources during the year ended December 31, 2000 as compared to the year ended
December 31, 1999.

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

                                       30
<PAGE>
    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 28.7% to $16.3 million in the year ended
December 31, 2000 from $12.7 million in the year ended December 31, 1999, while
decreasing as a percentage of total revenues to 13.4% from 14.1%. The dollar
increase in development costs for the year ended December 31, 2000 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 Lightbridge's 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, Fraud Management and PrePay products and services, as well as
to develop new products and services.

    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 17.3% to $8.8 million in the year
ended December 31, 2000 from $7.5 million in the year ended December 31, 1999,
while decreasing as a percentage of total revenue to 7.2% from 8.3%. The
increase for the year ended December 31, 2000 was due to the continued
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.

    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 10.4% to $12.0 million in
the year ended December 31, 2000 from $10.9 million in the year ended
December 31, 1999, while decreasing as a percentage of total revenue to 9.9%
from 12.1%. The increase for the year ended December 31, 2000 was primarily due
to higher usage of external consulting for strategic reviews and recruiting fees
for additional hires.

    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 in 1997.

    Amortization of goodwill and acquired workforce expense decreased by 62.6%
to $0.5 million in the year ended December 31, 2000 from $1.3 million in the
year ended December 31, 1999 and also decreased as a percentage of total
revenues to 0.4% from 1.5%. Both the dollar decrease and the decrease as a
percentage of total revenues were due to the write-off, during the fourth
quarter of 1999, of 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.

    OTHER INCOME, NET.  Other income, net in the year ended December 31, 2000
consisted predominantly of interest income and interest expense. Other income,
net increased by 23.9% to $1.5 million in the year ended December 31, 2000 from
$1.2 million in the year ended December 31, 1999. This increase was primarily
due to a $0.7 million increase in interest income as a result of higher average
cash balances during the year ended December 31, 2000. This increase in interest
income was

                                       31
<PAGE>
offset by a decrease in other non-operating income due to a nonrecurring gain on
a sale of investments of $0.4 million during the year ended December 31, 1999.

    PROVISION FOR INCOME TAXES.  The Company's effective tax rate was 40% and
35% for the years ended December 31, 2000 and 1999, respectively. The Company
has net operating loss carryforwards for federal income tax purposes. 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.

    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.

    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.

                                       32
<PAGE>
    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.

    COST OF 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 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.

    DEVELOPMENT COSTS.  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.

    SALES AND MARKETING.  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 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.

    GENERAL AND ADMINISTRATIVE.  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,

                                       33
<PAGE>
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.

    AMORTIZATION OF GOODWILL AND ACQUIRED WORKFORCE.  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.

    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.

LIQUIDITY AND CAPITAL RESOURCES

    The Company has a $15.0 million unsecured working capital line of credit
with a bank. 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 bear interest at the bank's prime rate (9.5% at
December 31, 2000). The working capital 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 $1.25 million in the aggregate. At
December 31, 2000, there were no borrowings outstanding under the working
capital line of credit. Borrowing availability at December 31, 2000 was
$14.0 million for the working capital line of credit. The Company's agreement
with the bank contains 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 August 2001. At
December 31, 2000 the Company has an outstanding letter of credit in the amount
of $1.0 million which expires in May 2002.

    The Company's capital expenditures totaled $17.0 million and $10.4 million,
respectively, for the years ended December 31, 2000 and 1999. 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. In addition, during the year ended
December 31, 2000 capital expenditures included construction of a third call
center and new space buildouts. The Company leases

                                       34
<PAGE>
its facilities and certain equipment under non-cancelable operating lease
agreements that expire at various dates through January 2006.

    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 34.6% to
$31.6 million in the year ended December 31, 2000 from $23.5 million in the year
ended December 31, 1999. The increase for the year ended December 31, 2000
resulted primarily from an increase in operating income.

    As of December 31, 2000, the Company had cash and cash equivalents of
$31.5 million and working capital of $47.0 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.

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 ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." In June 2000, the FASB issued
SFAS No. 138, which amends certain provisions of SFAS 133 to clarify four areas
causing difficulties in the implementation. The amendment included expanding the
normal purchase and sale exemption for supply contracts, permitting the
offsetting of certain intercompany foreign currency derivatives and thus
reducing the number of third party derivatives, permitting hedge accounting for
foreign-currency denominated assets and liabilities, and redefining interest
rate risk to reduce sources of ineffectiveness. Lightbridge will adopt SFAS 133
and the corresponding amendments under SFAS 138 on January 1, 2001. SFAS 133, as
amended by SFAS 138, will not have a material impact on Lightbridge's
consolidated results of operations, financial position or cash flows.

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 significant to the Company's financial position or
results of operations during 2000. The effect of a similar hypothetical change
in interest rates on the

                                       35
<PAGE>
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 Annual Report on 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.

                                       36
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Information required by this item will be contained in the Company's Proxy
Statement for the 2001 annual meeting of stockholders or special meeting in lieu
thereof to be filed with the Securities and Exchange Commission on or before
April 30, 2001 and is incorporated by reference herein.

ITEM 11. EXECUTIVE COMPENSATION

    Information required by this item will be contained in the Company's Proxy
Statement for the 2001 annual meeting of stockholders or special meeting in lieu
thereof to be filed with the Securities and Exchange Commission on or before
April 30, 2001 and 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 required by this item will be contained in the Company's Proxy
Statement for the 2001 annual meeting of stockholders or special meeting in lieu
thereof to be filed with the Securities and Exchange Commission on or before
April 30, 2001 and is incorporated by reference herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information required by this item will be contained in the Company's Proxy
Statement for the 2001 annual meeting of stockholders or special meeting in lieu
thereof to be filed with the Securities and Exchange Commission on or before
April 30, 2001 and is incorporated by reference herein.

                                       37
<PAGE>
                                    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, 2000 and
     1999........................................................  F-2
     Consolidated Statements of Operations for the years ended
     December 31, 2000, 1999 and 1998............................  F-3
     Consolidated Statements of Stockholders' Equity for the
     years ended December 31, 2000, 1999 and 1998................  F-4
     Consolidated Statements of Cash Flows for the years ended
     December 31, 2000, 1999 and 1998............................  F-5
     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>

                                       38
<PAGE>
    (3) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO.                           DESCRIPTION
-----------   ------------------------------------------------------------
<C>           <S>
    2.1 (1)   Amended and Restated Agreement and Plan of Reorganization
              dated November 8, 2000 among the Company, Lightning Merger
              Corporation and Corsair
    3.1 (2)   Amended and Restated Certificate of Incorporation of the
              Company
    3.2 (2)   Amended and Restated By-Laws of the Company
    3.3 (3)   Amendment to Amended and Restated By-Laws of the Company,
              adopted October 29, 1998
    4.1 (2)   Specimen Certificate for Common Stock of the Company
    4.2 (4)   Rights Agreement dated as of November 14, 1997, between
              Lightbridge, Inc. and American Stock Transfer and Trust
              Company, as Rights Agent
    4.3 (4)   Form of Certificate of Designation of Series A Participating
              Cumulative Preferred Stock of Lightbridge, Inc.
    4.4 (4)   Form of Right Certificate
   10.1 (2)   1991 Registration Rights Agreement dated February 11, 1991,
              as amended, between the Company and the persons named herein
   10.2 (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 (2)   Form of Common Stock Purchase Warrants issued August 1995
   10.4 (2)   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
   10.5 (2)   1990 Incentive and Nonqualified Stock Option Plan
   10.6 (2)   1996 Employee Stock Purchase Plan
   10.7 (2)   Employment Agreement dated August 16, 1996 between the
              Company and Pamela D.A. Reeve
   10.8 (2)   Letter Agreement, dated August 26, 1996, between the Company
              and Brian E. Boyle, including form of Common Stock Purchase
              Warrant and Registration Rights Agreement
   10.9 (2)   Office Lease dated September 30, 1994, as amended, between
              the Company and Hobbs Brook Office Park
   10.10(5)   Office Lease dated March 5, 1997, between the Company and
              Sumitomo Life Realty (N.Y.), Inc.
   10.11(6)   First and Second Amendments dated July 22, 1997 and October
              6, 1997, respectively, to the Office Lease included as Item
              10.12
   10.12(7)   Office Building Lease, dated March 12, 1998, between 8900
              Grantline Road Investors and the Company
   10.13(8)   Third and Fourth Amendments dated March 15, 1999 and July
              16, 1999, respectively, to the office lease included as Item
              10.10
   10.14(8)   Office Lease dated October 4, 1999, between the Company and
              New Alliance Properties, Inc.
   10.15(8)   First Amendment dated September 20, 1999 to the Office Lease
              included as Item 10.9
   10.16(9)   Fifth and Sixth Amendments dated March 10, 2000 to the
              office lease included as Item 10.10
   10.17(10)  Employment Agreement dated May 25, 2000 between the Company
              and Harlan Plumley
   10.18(10)  Loan Agreement dated August 11, 2000 between the Company and
              Silicon Valley Bank
   10.19(10)  1996 Incentive and Non-Qualified Stock Option Plan (as
              amended)
   10.20(10)  1998 Non-Statutory Stock Option Plan (as amended)
   10.21(11)  Office lease dated August 15, 2000 between the Company and
              Arthur Pappathanasi, trustee of 330 Scangas Nominee Trust
</TABLE>

                                       39
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                           DESCRIPTION
-----------   ------------------------------------------------------------
<C>           <S>
   10.22      Amendment to 1998 Non-Statutory Stock Option Plan adopted on
              November 16, 2000
   23.1       Independent Auditors Consent--Deloitte & Touche LLP
   24.1       Power of Attorney (See signature page hereto)
</TABLE>

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

(1)   Incorporated by reference to the Company's Registration Statement on
     Form S-4 (Registration Number 333-50196), as filed with the Securities and
    Exchange Commission on November 17, 2000.

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

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

(4)   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.

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

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

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

(8)   Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 31, 1999.

(9)   Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended March 31, 2000.

(10)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 2000.

(11)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 2000.

    (b) Reports on Form 8-K filed in the fourth quarter of 2000

    On October 26, 2000, the Company filed a Current Report on Form 8-K dated
October 26, 2000 with respect to the Company's execution of the Agreement and
Plan of Reorganization among Lightbridge, Inc., Lightning Merger Corporation and
Corsair Communications, Inc.

                                       40
<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 30th day of
March, 2001.

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

                                                       By:            /s/ PAMELA D. A. REEVE
                                                            -----------------------------------------
                                                                        Pamela D. A. Reeve
                                                                     CHIEF EXECUTIVE OFFICER
</TABLE>

    Each person whose signature appears below hereby appoints Pamela D.A. Reeve
and Harlan Plumley, 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 and on
the dates indicated.

<TABLE>
<CAPTION>
                   NAME                                      TITLE                        DATE
                   ----                                      -----                        ----
<C>                                         <S>                                      <C>
            /s/ HARLAN PLUMLEY              Vice President, Finance and                March 30th,
    ---------------------------------       Administration, Chief Financial Officer       2001
              Harlan Plumley                and Treasurer (Principal Financial and
                                            Accounting Officer)

          /s/ PAMELA D.A. REEVE             Chief Executive Officer and Director       March 30th,
    ---------------------------------       (Principal Executive Officer)                 2001
            Pamela D.A. Reeve

           /s/ THOMAS C. MEYER              President, Chief Operating Officer and     March 30th,
    ---------------------------------       Director                                      2001
             Thomas C. Meyer

           /s/ ANDREW G. MILLS              Director                                   March 27th,
    ---------------------------------                                                     2001
             Andrew G. Mills

          /s/ TORRENCE C. HARDER            Director                                   March 30th,
    ---------------------------------                                                     2001
            Torrence C. Harder

          /s/ RACHELLE B. CHONG             Director                                   March 26th,
    ---------------------------------                                                     2001
            Rachelle B. Chong
</TABLE>

                                       41
<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, 2000 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, 2000. 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, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.

<TABLE>
<S>                                                    <C>
Deloitte & Touche LLP
/s/ DELOITTE & TOUCHE LLP
----------------------------

Boston, Massachusetts
</TABLE>

January 23, 2001 (February 7, 2001 as to Note 1
"Merger with Corsair Communications, Inc.")

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

                          CONSOLIDATED BALANCE SHEETS

           (AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              ---------------------
                                                                2000        1999
                                                              --------   ----------
<S>                                                           <C>        <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $31,471     $35,478
  Accounts receivable, net..................................   35,430      16,786
  Deferred tax assets, net..................................      664         843
  Other current assets......................................    2,444       1,127
                                                              -------     -------
    Total current assets....................................   70,009      54,234
Property and equipment, net.................................   25,281      17,367
Deferred tax assets, net....................................    2,233       1,720
Other assets, net...........................................    1,478       2,536
                                                              -------     -------
    Total assets............................................  $99,001     $75,857
                                                              =======     =======
            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $10,073     $ 7,392
  Accrued compensation......................................    5,066       4,228
  Other accrued liabilities.................................    4,415       2,429
  Deferred revenues.........................................    3,456       2,914
  Short-term borrowings and current portion of subordinated
    notes payable...........................................       --         500
                                                              -------     -------
    Total current liabilities...............................   23,010      17,463
Subordinated notes payable..................................       --         191
Other long-term liabilities.................................      963         911
                                                              -------     -------
    Total liabilities.......................................   23,973      18,565
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, 2000 and 1999.......................................       --          --
  Common stock, $.01 par value; 60,000,000 shares
    authorized; 18,454,205 and 17,510,661 shares issued;
    17,562,300 and 16,618,756 shares outstanding at December
    31, 2000 and 1999, respectively.........................      184         175
  Additional paid-in capital................................   62,529      58,298
  Warrants..................................................      206         399
  Retained earnings.........................................   14,853       1,164
Less treasury stock; 891,905 shares at cost at December 31,
  2000 and 1999.............................................   (2,744)     (2,744)
                                                              -------     -------
    Total stockholders' equity..............................   75,028      57,292
                                                              -------     -------
      Total liabilities and stockholders' equity............  $99,001     $75,857
                                                              =======     =======
</TABLE>

                See notes to consolidated financial statements.

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

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues:
  Transaction...............................................  $94,719    $63,341    $41,683
  Software licensing and maintenance........................   13,438     13,324     11,927
  Consulting services.......................................   13,397     13,051      9,741
                                                              -------    -------    -------
    Total revenues..........................................  121,554     89,716     63,351
                                                              -------    -------    -------
Cost of revenues:
  Transaction...............................................   49,397     30,259     23,301
  Software licensing and maintenance........................    6,240      5,038      4,583
  Consulting services.......................................    6,996      7,579      5,223
                                                              -------    -------    -------
    Total cost of revenues..................................   62,633     42,876     33,107
                                                              -------    -------    -------
Gross profit................................................   58,921     46,840     30,244
                                                              -------    -------    -------
Operating expenses:
  Development costs.........................................   16,287     12,659      9,596
  Sales and marketing.......................................    8,775      7,482      6,857
  General and administrative................................   12,004     10,877      8,490
  Amortization of goodwill and acquired workforce...........      502      1,342      2,982
  Intangible asset impairment...............................       --         --      7,385
                                                              -------    -------    -------
    Total operating expenses................................   37,568     32,360     35,310
                                                              -------    -------    -------
Income (loss) from operations...............................   21,353     14,480     (5,066)
                                                              -------    -------    -------
Other income (expense):
  Interest income...........................................    1,394        731        646
  Interest expense..........................................      (54)      (130)      (242)
  Other non-operating income................................      189        632        278
                                                              -------    -------    -------
    Total other income......................................    1,529      1,233        682
                                                              -------    -------    -------
Income (loss) before provision for income taxes.............   22,882     15,713     (4,384)
Provision for income taxes..................................    9,193      5,568      2,513
                                                              -------    -------    -------
Net income (loss)...........................................  $13,689    $10,145    $(6,897)
                                                              =======    =======    =======
  Basic earnings (loss) per share (Note 9)..................  $  0.80    $  0.62    $ (0.44)
                                                              =======    =======    =======
  Diluted earnings (loss) per share (Note 9)................  $  0.74    $  0.56    $ (0.44)
                                                              =======    =======    =======
</TABLE>

                See notes to consolidated financial statements.

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

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                 RETAINED
                                   COMMON STOCK       ADDITIONAL                 EARNINGS       TREASURY STOCK          TOTAL
                                -------------------    PAID-IN                 (ACCUMULATED   -------------------   STOCKHOLDERS'
                                 SHARES     AMOUNT     CAPITAL     WARRANTS      DEFICIT)      SHARES     AMOUNT       EQUITY
                                --------   --------   ----------   ---------   ------------   --------   --------   -------------
<S>                             <C>        <C>        <C>          <C>         <C>            <C>        <C>        <C>
Balance, January 1, 1998......   16,493      $165      $53,661       $ 599       $(2,084)       827      $(1,625)      $50,716
Issuance of common stock for
  cash........................       19        --          144          --            --         --           --           144
Exercise of common stock
  options.....................      330         4          313          --            --         --           --           317
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock
  options.....................       --        --          168          --            --         --           --           168
Net loss......................       --        --           --          --        (6,897)        --           --        (6,897)
                                 ------      ----      -------       -----       -------        ---      -------       -------
Balance, December 31, 1998....   16,842       169       54,286         599        (8,981)       827       (1,625)       44,448
Issuance of common stock for
  cash........................       39        --          181          --            --         --           --           181
Exercise of common stock
  options.....................      418         4        2,121          --            --         --           --         2,125
Exercise of common stock
  warrants....................      212         2          623        (200)           --         --           --           425
Return of escrowed shares.....       --        --           --          --            --         65       (1,119)       (1,119)
Tax benefit from disqualifying
  dispositions of incentive
  stock options and
  non-qualified stock
  options.....................       --        --        1,087          --            --         --           --         1,087
Net income....................       --        --           --          --        10,145         --           --        10,145
                                 ------      ----      -------       -----       -------        ---      -------       -------
Balance, December 31, 1999....   17,511       175       58,298         399         1,164        892       (2,744)       57,292
Issuance of common stock for
  cash........................       15        --          248          --            --         --           --           248
Exercise of common stock
  options.....................      451         4        1,797          --            --         --           --         1,801
Exercise of common stock
  warrants (Note 4)...........      477         5        1,126        (193)           --         --           --           938
Tax benefit from disqualifying
  dispositions of Incentive
  stock options and
  non-qualified Stock options        --        --        1,060          --            --         --           --         1,060
Net income....................       --        --           --          --        13,689         --           --        13,689
                                 ------      ----      -------       -----       -------        ---      -------       -------
Balance, December 31, 2000....   18,454      $184      $62,529       $ 206       $14,853        892      $(2,744)      $75,028
                                 ======      ====      =======       =====       =======        ===      =======       =======
</TABLE>

                See notes to consolidated financial statements.

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

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................  $13,689    $10,145    $(6,897)
Adjustments to reconcile net income (loss) to net cash
  provided by
  (used in) operating activities (net of effect of
  acquisition):
  Deferred income taxes.....................................     (334)    (1,776)      (266)
  Depreciation and amortization.............................   10,293      9,033     10,597
  Loss on disposal of equipment.............................       --         --         19
  Gain on sale of investment................................       --       (415)        --
  Asset impairment..........................................       --         --      7,385
Changes in assets and liabilities:
  Accounts receivable.......................................  (18,644)     2,046     (5,619)
  Other assets..............................................   (1,491)       114      1,393
  Accounts payable and accrued liabilities..................    5,504      4,769      1,998
  Other long-term liabilities...............................       52        385       (178)
  Deferred revenues.........................................      543      1,454       (198)
                                                              -------    -------    -------
    Net cash provided by operating activities...............    9,612     25,755      8,234
                                                              -------    -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.........................  (16,955)   (10,386)    (6,929)
Capitalization of software development costs................       --         --       (155)
Sales of investments........................................       --        550         --
                                                              -------    -------    -------
    Net cash used in investing activities...................  (16,955)    (9,836)    (7,084)
                                                              -------    -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable...................................       --       (403)      (930)
Payments under capital lease obligations....................       --        (44)      (295)
Proceeds from issuance of common stock......................    2,050      2,307        628
Disqualifying dispositions..................................    1,060      1,087        168
Proceeds from exercise of warrants..........................      226        175         --
                                                              -------    -------    -------
    Net cash provided by (used in) financing activities.....    3,336      3,122       (429)
                                                              -------    -------    -------
Net increase (decrease) in cash and cash equivalents........   (4,007)    19,041        721
Cash and cash equivalents, beginning of year................   35,478     16,437     15,716
                                                              -------    -------    -------
Cash and cash equivalents, end of year......................  $31,471    $35,478    $16,437
                                                              =======    =======    =======
</TABLE>

                See notes to consolidated financial statements.

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

1.  BUSINESS AND RECENT ACQUISITIONS

    BUSINESS--Lightbridge, 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.

    MERGER WITH CORSAIR COMMUNICATIONS, INC.--On February 7, 2001 Lightbridge
completed its merger with Corsair Communications, Inc. ("Corsair"). Corsair is a
leading provider of system solutions for the global wireless industry. Under the
terms of the merger agreement, Lightning Merger Corporation, a wholly owned
subsidiary of Lightbridge, merged with and into Corsair and Corsair became a
wholly owned subsidiary of Lightbridge. In connection with the merger,
Lightbridge issued an aggregate of approximately 10,270,000 shares of its common
stock to Corsair stockholders who received 0.5978 of a share of Lightbridge
common stock in exchange for each share of Corsair common stock held.

    In addition, the Company assumed the obligation to issue, upon exercise of
outstanding Corsair stock options, approximately 1,587,094 shares of common
stock. Corsair stock options were assumed by the Company with no alteration to
their original terms, other than adjustments to reflect the exchange ratio
between the stocks of the Company and Corsair.

    The merger is expected to be accounted for as a pooling-of-interests and the
Company expects to record a charge of $6,000 as of the date of combination,
reflecting the cost of professional services and fees associated with the merger
and terminations of redundant personnel. The accompanying financial statements
reflect the accounts of the Company without taking into account the effect of
the merger. Summarized information regarding the combined revenues, net income
and earnings per share of the Company and Corsair are as follows:

                               PROFORMA UNAUDITED

<TABLE>
<CAPTION>
                                                  2000       1999       1998
                                                --------   --------   --------
<S>                                             <C>        <C>        <C>
Revenues......................................  $186,644   $155,923   $128,569
                                                ========   ========   ========
Net income....................................  $ 30,512   $ 18,986   $(13,763)
                                                ========   ========   ========
Basic earnings (loss) per share...............  $   1.12   $   0.71   $  (0.51)
                                                ========   ========   ========
Diluted earnings (loss) per share.............  $   1.04   $   0.66   $  (0.51)
                                                ========   ========   ========
</TABLE>

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 in the United States of America
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

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

for bad debts, certain accrued liabilities, recognition of revenue and expenses,
and recoverability of deferred tax assets. Actual results could differ from
these estimates.

    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 also entered into license agreements that provide for either a
one-time license fee or a monthly license fee.

    The Company accounts for Software License and Maintenance revenue in
accordance with the American Institute of Certified Public Accountants Statement
of Position (SOP 97-2). "Software Revenue Recognition" and SOP 98-9
"Modification to SOP 97-2 With Respect to Certain Transactions."

    Revenue from software license sales is 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.

    Staff Accounting Bulletin No. 101 ("SAB 101") was released on December 3,
1999 and provides the SEC staff's views in applying generally accepted
accounting principles to selected revenue recognition issues. Lightbridge's
revenue recognition practices are in compliance with SAB 101 and Lightbridge's
adoption of SAB 101 has not had a material effect on its consolidated financial
position or results of operations.

    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, 2000, 1999 and 1998 was
approximately $1,017, $1,200 and $496, respectively. The Company recorded bad
debt expense of $12, $980 and $793 and had write-offs, net of recoveries
associated with accounts receivable of $194, $276 and $516 for the years ended
December 31, 2000, 1999 and 1998, respectively.

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

    Customers exceeding 10% of the Company's revenues during the years ended
December 31, 2000, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                   PERCENT OF REVENUE
                                                             ------------------------------
                                                                      YEARS ENDED
                                                                      DECEMBER 31,
                                                             ------------------------------
CUSTOMER                                                       2000       1999       1998
--------                                                     --------   --------   --------
<S>                                                          <C>        <C>        <C>
A..........................................................     24%        18%        17%
B..........................................................     29         33         15
C..........................................................      *          *         10
                                                                --         --         --
                                                                53%        51%        42%
                                                                ==         ==         ==
</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.

    EXPORT SALES--The Company had export sales to the following countries during
fiscal 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                        2000       1999       1998
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Brazil..............................................   $  509     $1,135     $  149
Canada..............................................    1,098        505         --
Chile...............................................      493        471        452
Malaysia............................................      122        123        677
Netherlands.........................................        4        522        243
Philippines.........................................       --         42        157
Bolivia.............................................       --          8         --
Sweden..............................................      124         --         --
Thailand............................................       --         49         --
Taiwan..............................................      547        129        758
United Kingdom......................................      186        206         25
                                                       ------     ------     ------
Total...............................................   $3,083     $3,190     $2,461
                                                       ======     ======     ======
</TABLE>

    ACQUIRED INTANGIBLE ASSETS--Acquired intangible assets, primarily related to
the Coral acquisition, consist of acquired existing technology and workforce and
are included with Other Assets in the accompanying balance sheet. 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 $5,709 and $4,556 at
December 31, 2000 and 1999, respectively.

    INCOME TAXES--The Company records 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.)

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

    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 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 the
specific release's estimated life, generally two years. The unamortized balance
of capitalized software development costs was approximately $0 and $69 at
December 31, 2000 and 1999, respectively. Accumulated amortization was
approximately $2,414 and $2,346 at December 31, 2000 and 1999, respectively.

<TABLE>
<CAPTION>
                                                                      YEARS ENDED DECEMBER 31,
                                                              -----------------------------------------
                                                                2000       1999            1998
SUPPLEMENTAL CASH FLOW INFORMATION                            --------   --------   -------------------
<S>                                                           <C>        <C>        <C>
The Company had the following noncash transactions:
  Reduction of goodwill due to return of shares from and
    settlement of Coral escrow arrangements.................   $   --     $1,119    $                --
                                                               ======     ======    ===================
  Application of note to exercise warrants (See Note 4).....   $  691     $  250    $                --
                                                               ======     ======    ===================
Supplemental Items:
  Cash paid for interest....................................   $   54     $  139    $               232
                                                               ======     ======    ===================
  Cash paid for income taxes................................   $6,981     $8,274    $               642
                                                               ======     ======    ===================
</TABLE>

    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 $7,385 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, 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 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

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

associated with the grant of options and other stock awards to non-employees is
determined using the fair value method.

    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,
2000, 1999 and 1998 was approximately $651, $621 and $1,566, respectively. There
are no transactions between segments.

    RECENT ACCOUNTING PRONOUNCEMENTS--In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities." In June 2000, the FASB issued SFAS No. 138, which amends certain
provisions of SFAS 133 to clarify four areas causing difficulties in the
implementation. The amendment included expanding the normal purchase and sale
exemption for supply contracts, permitting the offsetting of certain
intercompany foreign currency derivatives and thus reducing the number of third
party derivatives, permitting hedge accounting for foreign-currency denominated
assets and liabilities, and redefining interest rate risk to reduce sources of
ineffectiveness. Lightbridge will adopt SFAS 133 and the corresponding
amendments under SFAS 138 on January 1, 2001. SFAS 133, as amended by SFAS 138,
will not have a material impact on Lightbridge's consolidated results of
operations, financial position or cash flows.

    RECLASSIFICATIONS--Certain reclassifications have been made to the 1999 and
1998 consolidated financial statements to conform with the 2000 presentation.

3.  PROPERTY AND EQUIPMENT

    Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                              2000       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Furniture and fixtures....................................  $ 2,635    $ 1,806
Leasehold improvements....................................    9,504      6,869
Computer equipment........................................   29,514     19,297
Computer software.........................................    8,447      5,173
                                                            -------    -------
                                                             50,100     33,145
Less accumulated depreciation and amortization............  (24,819)   (15,778)
                                                            -------    -------
Property and equipment--net...............................  $25,281    $17,367
                                                            =======    =======
</TABLE>

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

4.  NOTES PAYABLE

    At December 31, 1999, the Company had 8% subordinated notes totaling $691
that were paid off in 2000.

    LINE OF CREDIT--The Company has a $15,000 unsecured working capital line of
credit with a bank. Borrowing availability on the working capital line is based
upon the amount of qualifying accounts receivable. Advances under the line of
credit bear interest at the bank's prime rate (9.5% at December 31, 2000). The
working capital line of credit expires in August 2001.

    The working capital line of credit also provides for issuance of letters of
credit of up to $1,250. Letters of credit reduce availability under the line. At
December 31, 2000 and 1999, there were no borrowings outstanding under the
working capital line of credit. At December 31, 2000, the Company had an
outstanding letter of credit in the amount of $1,000, which expires in
May 2002. Borrowing availability at December 31, 2000 was $14,000 for the
working capital line of credit.

    The Company's agreement with the bank contains 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 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 were
exercisable through June 30, 2001 at a price of $2 per share. During the year
ended December 31, 2000, Lightbridge called the remaining outstanding balance of
the subordinated notes in the amount of $691. Interest expense for the years
ended December 31, 2000, 1999 and 1998 included accretion related to these notes
of approximately $34, $44 and $44, respectively.

5.  COMMITMENTS AND CONTINGENCIES

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

    Future minimum payments under operating leases consisted of the following at
December 31, 2000:

<TABLE>
<CAPTION>
                                                            OPERATING
                                                             LEASES
                                                            ---------
<S>                                                         <C>
2001......................................................   $ 4,018
2002......................................................     3,954
2003......................................................     3,561
2004......................................................     1,700
Thereafter................................................       615
                                                             -------
Total minimum lease payments..............................   $13,848
                                                             =======
</TABLE>

    Rent expense for operating leases was approximately $3,430, $3,062 and
$2,773 for the years ended December 31, 2000, 1999 and 1998, 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

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

County 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 bankruptcy proceeding was subsequently converted into a Chapter 7
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 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, consolidated financial
condition, results of operations or cash flows. In April 1998, the New Jersey
Superior Court dismissed the above action and in August 2000, the Bankruptcy
Court of Delaware issued an order allowing the bankruptcy trustee to abandon the
property of the NIB bankrupt estate, including litigation claims.

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 initial public offering:

--  1996 Incentive and Nonqualified Stock Option Plan--The 1996 Incentive and
    Nonqualified Stock Option Plan provides for the issuance of options to
    purchase up to 4,350,000 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 must be greater than or equal
    to the fair market value on the date of grant, in the case of incentive
    stock options and nonqualified options.

--  1996 Employee Stock Purchase Plan--The 1996 Employee Stock Purchase Plan
    provides for the sale of up to 200,000 shares of the Company's common stock
    to employees. Employees are 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, 2000, 103,426 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 options to purchase up to 1,000,000 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.

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

    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, 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-
                                                               NUMBER    WEIGHTED-    AVERAGE
                                                                 OF       AVERAGE    FAIR VALUE
                                                              OPTIONS    EXERCISE    OF OPTIONS
                                                              (000'S)      PRICE      GRANTED
                                                              --------   ---------   ----------
<S>                                                           <C>        <C>         <C>
Outstanding at January 1, 1998..............................    1,996     $ 4.96
Granted.....................................................    2,084       9.89       $ 4.06
Exercised...................................................     (326)      8.07
Forfeited(1)................................................   (1,259)     12.18
                                                               ------
Outstanding at December 31, 1998............................    2,495       6.11
Granted.....................................................      337      10.46       $ 4.99
Exercised...................................................     (417)      5.37
Forfeited...................................................     (250)      8.28
                                                               ------
Outstanding at December 31, 1999............................    2,165       6.67
Granted.....................................................    1,007      17.64       $ 9.66
Exercised...................................................     (451)      4.00
Forfeited...................................................     (373)     11.00
                                                               ------
Outstanding at December 31, 2000............................    2,348     $11.10
                                                               ======
</TABLE>

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

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

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

    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
                                                          -----------   ---------
                                                            (000'S)
<S>                                                       <C>           <C>
December 31, 1998.......................................     1,015        $3.97
December 31, 1999.......................................     1,132        $5.11
December 31, 2000.......................................     1,191        $8.08
</TABLE>

    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,
                                                    ------------------------------------------
                                                        2000           1999           1998
                                                    ------------   ------------   ------------
<S>                                                 <C>            <C>            <C>
Risk-free interest rate...........................   5.2%-6.7%      4.6%-6.2%      4.2%-5.6%
Expected life of options grants...................   1-5 years      1-5 years      1-5 years
Expected volatility of underlying stock...........      98%            94%            90%
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, 2000:

<TABLE>
<CAPTION>
                                                                             WEIGHTED
                                                               WEIGHTED       AVERAGE
                                      NUMBER      WEIGHTED     AVERAGE       EXERCISE
NUMBER OF                            CURRENTLY    AVERAGE     REMAINING      PRICE FOR
 OPTIONS          RANGE OF          EXERCISABLE   EXERCISE   CONTRACTUAL     CURRENTLY
 (000'S)       EXERCISE PRICES        (000'S)      PRICE     LIFE (YEARS)   EXERCISABLE
---------   ---------------------   -----------   --------   ------------   -----------
<S>         <C>                     <C>           <C>        <C>            <C>
   250      $          0.09-$0.38       250        $ 0.31        2.8           $ 0.31
   265                  0.46-5.87       178          3.55        6.7             2.69
     9                  7.00-7.50         7          7.25        6.4             7.25
   256                  7.63-7.63       151          7.63        7.6             7.63
   254                  7.72-9.00       122          8.29        7.7             8.42
    99                 9.53-10.56        37          9.80        8.2            10.05
   272                10.75-10.75        27         10.75        9.8            10.75
    10                11.25-11.63         2         11.27        9.5            11.32
   320                12.13-12.13       263         12.13        7.4            12.13
   613      $        12.38-$28.25       154        $21.15        8.7           $19.82
</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-14
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

compensation, reported net income (loss) and basic and diluted earnings (loss)
per share would have been as follows:

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                   ------------------------------
                                                     2000       1999       1998
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Net income (loss)................................  $11,828     $8,622    $(10,853)
                                                   =======     ======    ========
Basic earnings (loss) per share..................  $  0.69     $ 0.53    $  (0.73)
                                                   =======     ======    ========
Diluted earnings (loss) per share................  $  0.64     $ 0.48    $  (0.73)
                                                   =======     ======    ========
</TABLE>

    COMMON STOCK WARRANTS--At December 31, 2000, outstanding warrants to
purchase shares of common stock aggregated 6,767 shares at an exercise price of
$2.00. Such shares are subject to certain anti-dilution provisions. In addition,
pursuant to the acquisition of Coral, there are 9,682 warrants that were
converted to purchase Lightbridge common stock at exercise prices ranging from
$3.44 to $34.35 at December 31, 2000.

    RESERVED SHARES--The Company has reserved 3,579,604 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 (1/100th) 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 offer
or 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-15
<PAGE>
                       LIGHTBRIDGE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

7.  INCOME TAXES

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

<TABLE>
<CAPTION>
                                                        2000       1999       1998
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Current:
Federal.............................................   $6,179     $5,153     $2,105
State...............................................    3,342      2,190        554
Deferred:
Federal.............................................     (373)    (1,389)         2
State...............................................       45       (386)      (148)
                                                       ------     ------     ------
Income tax provision................................   $9,193     $5,568     $2,513
                                                       ======     ======     ======
</TABLE>

    The tax effects of temporary differences that give rise to deferred tax
assets and liabilities at December 31 were as follows:

<TABLE>
<CAPTION>
                                                              2000       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Current Items:
Assets:
Allowance for doubtful accounts...........................  $   349    $   480
Accrued expenses..........................................      181        337
Tax credits...............................................      144         27
Liabilities:
Other liabilities.........................................      (10)        --
                                                            -------    -------
Net current deferred tax assets...........................  $   664    $   844
                                                            =======    =======
Long-Term Items:
Assets:
Depreciation and amortization.............................  $   784    $   698
Accrued expenses..........................................      579        485
Acquired loss carryforwards...............................    4,566      4,879
Valuation allowance.......................................   (2,525)    (2,702)
Liabilities:
Acquired intangible assets................................   (1,163)    (1,624)
Other.....................................................       (8)       (16)
                                                            -------    -------
Net long-term deferred tax assets.........................  $ 2,233    $ 1,720
                                                            =======    =======
</TABLE>

    The net change in the valuation allowance for the years ended December 31,
2000, 1999 and 1998 was an increase (decrease) of approximately ($177), ($986)
and $960, respectively. Pursuant to the acquisition of Coral, the Company
acquired net operating loss carryforwards for federal income tax purposes. At
December 31, 2000, the Company had $10,873 of net operating loss carryforwards
which expire, if unused, in years 2010 through 2012.

    During the year ended December 31, 2000, the Company reduced the valuation
allowance by $177. This reduction 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.

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

    The following is a reconciliation of income taxes at the federal statutory
rate to the Company's effective tax rate for the years ended December 31:

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Statutory federal income tax rate...........................     35%        35%       (34)%
Non-deductible goodwill, including goodwill written off as
  impaired..................................................     --          1         74
State taxes, net of federal benefit.........................      8          8          7
Change in valuation allowance...............................     (1)        (6)        20
Other, net..................................................     (2)        (3)       (10)
                                                                 --         --        ---
Effective tax rate..........................................     40%        35%        57%
                                                                 ==         ==        ===
</TABLE>

8.  EMPLOYEE PROFIT SHARING PLAN

    The Company has a 401(k) Employee Profit Sharing Plan (the "Plan"). Under
the Plan, the Company, is required to make matching contributions of 50% up to
the first 6% of 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. The Company's 401(k) expense was approximately $653, $382 and $235 for
the years ended December 31, 2000, 1999 and 1998, respectively.

9.  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>
                                                                2000        1999         1998
                                                              --------   -----------   --------
                                                                       (IN THOUSANDS)
<S>                                                           <C>        <C>           <C>
Shares for basic computation................................   17,071      16,235       15,834
Options and warrants (treasury stock method)................    1,370       1,756           --
                                                               ------      ------       ------
Shares for diluted computation..............................   18,441      17,991       15,834
                                                               ======      ======       ======
</TABLE>

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

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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

10. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                             Q1         Q2         Q3         Q4
                                                          --------   --------   --------   --------
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                       <C>        <C>        <C>        <C>
2000
Revenues................................................  $26,278    $28,222    $31,150    $35,904
Income from operations..................................  $ 4,422    $ 4,508    $ 5,650    $ 6,773
Net income..............................................  $ 2,841    $ 2,964    $ 3,568    $ 4,316
Basic earnings per share................................  $  0.17    $  0.18    $  0.21    $  0.25
Diluted earnings per share..............................  $  0.15    $  0.16    $  0.19    $  0.24

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-18