Current Status of the Joint Venture - Inactive

Pursuant to the Enfission operating agreement, both partners agreed that Enfission would serve as the 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 both 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 to the Board of Directors of Enfission a notice of termination of the R&D Services Agreement, dated November 14, 2017, by and among Framatome, Enfission and the 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 the Company. The notice terminated 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 was inactive as of December 31, 2019 and during the nine months ended September 30, 2020 and through the date of this filing.

 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 are accounted for under the equity method consisted of the following as of September 30, 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 September 30, 2020. There were no contributions made to Enfission for the nine months ended September 30, 2020. The cash balance in Enfission at September 30, 2020 was approximately $0.2 million. During the nine months ended September 30, 2020, Enfission incurred a loss of approximately $0.1 million, and in accordance with the provisions in the joint venture operating agreement, the Company did not record its share of the loss in investment in Enfission for the three and nine months ended September 30, 2020.

As of September 30, 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 September 30, 2020 and December 31, 2019 is presented in the following table (rounded in millions):

Summarized statement of operations information for the Company’s equity method investee Enfission is presented in the following table for the nine months ended September 30, 2020 and 2019 (rounded in millions):

As of September 30, 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 and nine months ended September 30, 2020, as Enfission was inactive during these reporting periods.

Disputed Invoices

Included in the total liabilities of Enfission of $1.3 million at September 30, 2020 and $2.1 million at December 31, 2019, are disputed invoices totalling $1.3 million for research and development work submitted by Framatome in 2019. These invoices have been disputed by the Company 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 September 30, 2020 and December 31, 2019 and does not believe that it is obligated under the joint venture operating agreement to fund its deficit capital account balance to pay any current or future liabilities incurred and owed by Enfission.