Annual report pursuant to Section 13 and 15(d)

Research and Development Costs

Research and Development Costs
12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
Note 8. Research and Development Costs

Research and development costs, included in the accompanying consolidated statement of operations amounted to approximately $2.3 million and $2.7 million for each of the years ended December 31, 2017 and 2016, respectively.


On November 14, 2017, we entered three binding agreements with Framatome: The Research and Development Services Agreement (“RDSA”), the Co-Ownership Agreement (“COA”), and the Intellectual Property Annex (“IP Annex”). These agreements govern the joint research and development activities relating to the Lightbridge-designed metallic nuclear fuel and treatment of all related existing and future intellectual property, and these agreements form the foundation for, and are an integral part of, the joint venture arrangement (the “JV”) between the Company and Framatome. The JV was formed on January 24, 2018 (Note 13 - Subsequent Events) and is called Enfission LLC. The JV is party to the RDSA and the COA.


Pursuant to the RDSA, a steering committee consisting of an equal number of members appointed by Lightbridge and by Framatome (not fewer than three each) will guide the first joint project between Framatome and Lightbridge: a 17x17 fuel assembly. Lightbridge will first appoint the project manager, who will be replaced by the project member appointed by JV. Each party grants the other party the rights to use its “background” and “foreground” information (each as defined in the RSDA), which includes intellectual property rights, needed to perform the research and development activities. The term of the RDSA is (i) five years and an automatic renewal for an additional five-year term or (ii) February 28, 2018, if the JV has not been formed prior to such date.


In connection with the RDSA, the Company is committed, at December 31, 2017, to purchase minimum amounts of R&D services from Framatome of approximately $3.3 million for the period up through December 31, 2018.


Pursuant to the COA, Lightbridge and Framatome will co-own (on a 50-50 basis) the foreground information generated by the parties within the “domain”, acting through the parties or third-party contractors. The “domain” consists of the technology, manufacturing processes and IP relating to the new fuel developed by the JV for the following types of commercial light water reactors and research reactors: (i) pressurized water reactors, excluding water-water energetic reactor (VVER) reactors types, (ii) boiling water reactors, (iii) light water-cooled small and medium size reactors, and (iv) research reactors. The Domain expressly excludes maritime, naval and military applications. The joint owners have granted the JV an exclusive license to the jointly owned foreground information and a non-exclusive license to their respective background information for commercial use of nuclear fuel assemblies or fuel components specifically designed for and exclusively applicable to Lightbridge-designed fuel rod based on background information contributed by both joint owners. Such exclusive and non-exclusive licenses to the JV will be granted under royalty-bearing conditions and other conditions to be agreed in separate license agreements. An advisory IP committee to the joint owners comprised of an equal number of representatives from Lightbridge and ANP will make recommendations regarding all matters relating to the co-ownership management of such foreground information. The term of the COA is for thirty years and will be automatically renewed for additional five-year terms.


Lightbridge and Framatome are also a party to the IP Annex, which summarizes the parties’ understanding regarding IP matters based on detailed terms and conditions contained in the RDSA and COA. The IP Annex is a standalone document and will remain in force only during the life of the JV.


We have consulting agreements with several outside consultants working on various projects for us, which total approximately $20,000 per month.