Current Status of the Joint Venture - Inactive

Pursuant to the Enfission operating agreement, both partners agreed that Enfission would serve as an exclusive vehicle to develop, license, and sell nuclear fuel assemblies based on Company-designed metallic fuel technology and other advanced nuclear fuel intellectual property licensed to Enfission by the Company and Framatome or their affiliates. The joint venture built upon the joint fuel development and regulatory licensing work under previously signed agreements initiated in March 2016.

On November 18, 2019, the Company delivered a notice of termination of the R&D Services Agreement to the Board of Directors of Enfission, dated November 14, 2017, by and among Framatome, Enfission and our Company (as amended by Amendment Number One, dated January 25, 2018, and Amendment Number Two, dated June 20, 2018, the “RDSA”), which, among other things, defined the terms and conditions for joint research and development activities among Framatome, Enfission, and our Company, thereby terminating the RDSA, effective immediately. On November 23, 2019, in connection with the termination of the RDSA, the Board of Directors and the management of Lightbridge determined that it is advisable and in the best interest of the Company and its shareholders to take the necessary steps to dissolve Enfission. Various corporate and operational matters relating to Enfission are governed pursuant to the Enfission Operating Agreement. Although Enfission’s Board of Directors has not approved a formal dissolution plan as of the date of this filing, Enfission remained inactive as of December 31, 2019 and during the three months ended March 31, 2020 and through the date of this filing.

Filing of Arbitration - Framatome

On November 18, 2019, the Company delivered a notice of termination of the RDSA to Framatome, thereby terminating the RDSA, based on the Company’s assertion that Framatome materially breached certain material terms of the RDSA, relating to its invoicing obligations, as well as a failure of the escalation process under the RDSA to agree to a budget commitment for 2019-2020. Framatome has contested the Company’s right to terminate the RDSA, raised questions as to the Company’s rights relating to their co-owned intellectual property and the Company’s right to conduct certain research and development activities, and reserved its right to seek compensation from the Company. On this basis and based on the Company’s assertion that the conduct of Framatome prevented Enfission from functioning and progressing towards its goals, on February 7, 2020, the Company has filed a request for arbitration (the “Arbitration Request”) in the International Court of Arbitration of the International Chamber of Commerce against Framatome. The Company has undertaken this action in order to obtain, inter alia, a declaration that the RDSA was validly terminated and is no longer in force, and to obtain compensation for the damages incurred. Following the termination of the RDSA and the subsequent filing of the Arbitration Request, Lightbridge has reduced its research and development activities as it is no longer conducting research and development activities with Framatome and Enfission.

Equity method

The Enfission operating agreement provided that Lightbridge and Framatome each hold 50% of the total issued Class A voting membership units of the joint venture. The Company’s equity in losses in excess of its investment are accounted for under the equity method consisted of the following as of March 31, 2020 and December 31, 2019 (rounded in millions):

The Company invested approximately $9.2 million in Enfission and Framatome invested approximately $2.9 million of equity for the period from January 24, 2018 (date of inception of Enfission) to March 31, 2020. There were no contributions made to Enfission, LLC for the three months ended March 31, 2020. The cash balance in Enfission at March 31, 2020 was approximately $0.2 million. During the three months ended March 31, 2020, Enfission incurred a loss of approximately $0.1 million, and accordingly, the Company did not record its share of the loss in investment in Enfission, in accordance with the provisions in the joint venture operating agreement, for the three months ended March 31, 2020.

As of March 31, 2020 and December 31, 2019, the Company’s total equity share of the joint venture accumulated losses is limited to the total equity contributions Lightbridge made since January 24, 2018 according to the Enfission joint-venture operating agreement. The joint-venture operating agreement states that at no time during the term of the company or upon dissolution or liquidation of the company shall a member with a deficit balance in its capital account have any obligation to Enfission or to the other members of Enfission to restore such deficit capital balance, to the fullest extent permitted by applicable law and to the provisions of the joint venture operating agreement. The Company had not separately guaranteed any obligations of Enfission. The Company does not expect to provide additional equity contributions in 2020 nor for the foreseeable future until Enfission is dissolved.

Summarized balance sheet information for the Company’s equity method investee Enfission as of March 31, 2020 and December 31, 2019 is presented in the following table (rounded in millions):

Summarized income statement information for the Company’s equity method investee Enfission is presented in the following table for the three months ended March 31, 2020 and 2019 (rounded in millions):

As of March 31, 2020 and December 31, 2019, the total receivable due from Enfission was approximately $0 and $0.4 million, respectively, which represents management and administrative services, consulting fees and reimbursable expenses Lightbridge charged to Enfission in 2019 (see Note 8. Related Party Transactions). Lightbridge did not bill any management and administrative services, consulting fees or other services to Enfission for the three months ended March 31, 2020 as Enfission was inactive during this period.

Disputed Framatome Invoices

Included in the total liabilities of Enfission of $1.3 million at March 31, 2020 and December 31, 2019, are disputed invoices for research and development work submitted by Framatome in 2019. These invoices have been disputed and remain unpaid as of the date of this filing. There are various disagreements between Framatome and Lightbridge regarding these disputed Framatome invoices. It is expected that these disputes will be resolved through either further negotiation by the joint venture partners or in arbitration. The Company had not separately guaranteed any obligations of Enfission at March 31, 2020 or December 31, 2019 and is not obligated under the joint venture operating agreement to fund its deficit capital account balance to pay any current or future liabilities incurred by Enfission.