-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HHKu15m5wSX+vGnyQ11Pyc2jC6GoVtVcK5r+W4WrVspAKWj95ae/T4qledrXPx3k qBTSCiP6N8gg9giv4/q22w== 0001047469-99-013026.txt : 19990402 0001047469-99-013026.hdr.sgml : 19990402 ACCESSION NUMBER: 0001047469-99-013026 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19990331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIGHTBRIDGE INC CENTRAL INDEX KEY: 0001017172 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 043065140 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-21319 FILM NUMBER: 99583202 BUSINESS ADDRESS: STREET 1: 67 S BEDFORD ST CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 6173594000 MAIL ADDRESS: STREET 1: 67 SOUTH BEDFORD STREET CITY: BURLINGTON STATE: MA ZIP: 01803 10-Q/A 1 10-Q/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM 10-Q/A (MARK ONE) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________ COMMISSION FILE NUMBER: 000-21319 ------------------------ LIGHTBRIDGE, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-3065140 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 67 SOUTH BEDFORD STREET BURLINGTON, MASSACHUSETTS 01803 (Address of principal executive offices, including Zip Code) (781) 359-4000 (Registrant's telephone number, including area code) ------------------------ 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 / / As of August 6, 1998, there were 15,871,347 shares of the registrant's common stock, $.01 par value, outstanding. On February 24, 1999, the registrant announced that it had restated its financial statements for the year ended December 31, 1997 and the quarters ended March 31, June 30, and September 30, 1998 to correct the accounting relating to the acquisition of Coral Systems in November 1997. This amended Quarterly Report on Form 10-Q contains restated financial information and disclosures for the quarter ended June 30, 1998 reflecting the restatement and certain other matters. (See Note 3 to the unaudited condensed consolidated financial statements). Unless otherwise stated, information in the originally filed Form 10-Q for the quarter ended June 30, 1998 is presented as of the original filing date, and has not been updated in this amended filing. Financial statement information and related disclosures included in this amended filing reflect, where appropriate, changes as a result of the restatement. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LIGHTBRIDGE, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998 TABLE OF CONTENTS
PAGE NO. ------------- PART I. FINANCIAL INFORMATION Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Balance Sheets as of December 31, 1997 and June 30, 1998 (Restated)....... 3 Statements of Operations for the three months ended June 30, 1997 and June 30, 1998 (Restated)..................................................... 4 Statements of Operations for the six months ended June 30, 1997 and June 30, 1998 (Restated)..................................................... 5 Statements of Cash Flows for the six months ended June 30, 1997 and June 30, 1998 (Restated)..................................................... 6 Notes to Unaudited Condensed Consolidated Financial Statements............ 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................. 9 PART II. OTHER INFORMATION SIGNATURE................................................................. 20
INTRODUCTORY NOTE This Amendment on Form 10-Q/A amends the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1998, as filed by the Registrant on August 14, 1998, and is being filed to reflect the restatement of the Registrant's condensed consolidated financial statements (the "Restatement"). The Restatement reflects the revaluation of acquired in-process research and development in connection with the acquisition of Coral Systems in November 1997. 2 PART I. FINANCIAL INFORMATION ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS LIGHTBRIDGE, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, JUNE 30, 1997 1998 ------------- ------------- (RESTATED, SEE NOTE 3) ASSETS Current assets: Cash and cash equivalents........................................................ $ 15,715,726 $ 13,381,604 Accounts receivable--net......................................................... 13,213,052 14,733,672 Other current assets............................................................. 2,885,583 2,950,379 ------------- ------------- Total current assets......................................................... 31,814,361 31,065,655 Property and equipment--net........................................................ 11,763,013 11,459,062 Goodwill--net...................................................................... 10,383,581 9,311,665 Acquired intangible assets--net.................................................... 7,716,545 6,228,378 Other assets--net.................................................................. 1,887,676 2,529,416 ------------- ------------- Total assets................................................................. $ 63,565,176 $ 60,594,176 ------------- ------------- ------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities......................................... $ 8,164,817 $ 5,743,441 Short-term borrowings and current portion of notes payable....................... 805,205 805,205 Deferred revenues................................................................ 1,658,406 1,948,811 ------------- ------------- Total current liabilities.................................................... 10,628,428 8,497,457 Other long-term liabilities........................................................ 823,346 1,057,367 Notes payable...................................................................... 1,397,614 888,823 ------------- ------------- Total liabilities............................................................ 12,849,388 10,443,647 ------------- ------------- Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares issued or outstanding at December 31, 1997 and June 30, 1998, respectively............... -- -- Common stock, $.01 par value; 60,000,000 shares authorized; 16,492,954 and 16,665,166 shares issued and 15,665,662 and 15,837,874 shares outstanding at December 31, 1997 and June 30, 1998, respectively.............................. 164,929 166,651 Additional paid-in capital....................................................... 53,660,991 53,975,646 Warrants......................................................................... 598,875 598,875 Accumulated deficit.............................................................. (2,084,044) (2,965,680) ------------- ------------- Total........................................................................ 52,340,751 51,775,492 Less: treasury stock, at cost...................................................... (1,624,963) (1,624,963) ------------- ------------- Total stockholders' equity................................................... 50,715,788 50,150,529 ------------- ------------- Total liabilities and stockholders' equity................................... $ 63,565,176 $ 60,594,176 ------------- ------------- ------------- -------------
See notes to unaudited condensed consolidated financial statements. 3 LIGHTBRIDGE, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, --------------------------- 1997 1998 ------------ ------------- (RESTATED, SEE NOTE 3) Revenues: Transaction services............................................................... $ 5,972,765 $ 9,125,612 Software licensing................................................................. 975,916 3,410,130 Consulting services................................................................ 2,059,168 2,609,740 ------------ ------------- Total revenues................................................................... 9,007,849 15,145,482 ------------ ------------- Cost of revenues: Transaction services............................................................... 3,434,131 5,122,507 Software licensing................................................................. 295,257 1,143,057 Consulting services................................................................ 422,146 1,684,528 ------------ ------------- Total cost of revenues........................................................... 4,151,534 7,950,092 ------------ ------------- Gross profit......................................................................... 4,856,315 7,195,390 ------------ ------------- Operating expenses: Development........................................................................ 1,350,474 2,429,574 Sales and marketing................................................................ 1,348,837 1,715,305 General and administrative......................................................... 976,991 3,158,656 ------------ ------------- Total operating expenses......................................................... 3,676,302 7,303,535 ------------ ------------- Income (loss) from operations........................................................ 1,180,013 (108,145) Other income (expense): Interest income.................................................................... 327,425 170,214 Interest expense................................................................... (83,687) (33,772) Other non-operating income......................................................... 24,803 84,311 ------------ ------------- Income before provision for income taxes............................................. 1,448,554 112,608 Provision for income taxes........................................................... 550,430 272,100 ------------ ------------- Net income (loss).................................................................... $ 898,124 $ (159,492) ------------ ------------- ------------ ------------- Basic and diluted earnings (loss) per common share................................... $ 0.06 $ (0.01) ------------ ------------- ------------ -------------
See notes to unaudited condensed consolidated financial statements. 4 LIGHTBRIDGE, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, ---------------------------- 1997 1998 ------------- ------------- (RESTATED, SEE NOTE 3) Revenues: Transaction services............................................................. $ 12,001,921 $ 16,985,333 Software licensing............................................................... 1,745,265 7,521,062 Consulting services.............................................................. 4,083,502 3,941,903 ------------- ------------- Total revenues............................................................... 17,830,688 28,448,298 ------------- ------------- Cost of revenues: Transaction services............................................................. 6,920,862 10,119,916 Software licensing............................................................... 425,935 2,503,813 Consulting services.............................................................. 973,294 2,450,422 ------------- ------------- Total cost of revenues....................................................... 8,320,091 15,074,151 ------------- ------------- Gross profit....................................................................... 9,510,597 13,374,147 ------------- ------------- Operating expenses: Development...................................................................... 2,682,213 4,721,671 Sales and marketing.............................................................. 2,604,549 3,671,242 General and administrative....................................................... 2,122,617 5,956,772 ------------- ------------- Total operating expenses..................................................... 7,409,379 14,349,685 ------------- ------------- Income (loss) from operations...................................................... 2,101,218 (975,538) Other income (expense): Interest income.................................................................. 647,241 399,181 Interest expense................................................................. (191,542) (99,612) Other non-operating income....................................................... 15,524 123,333 ------------- ------------- Income (loss) before provision for (benefit from) income taxes..................... 2,572,441 (552,636) Provision for (benefit from) income taxes.......................................... (93,509) 329,000 ------------- ------------- Net income (loss).................................................................. $ 2,665,950 $ (881,636) ------------- ------------- ------------- ------------- Basic earnings (loss) per common share............................................. $ 0.18 $ (0.06) ------------- ------------- ------------- ------------- Diluted earnings (loss) per common share........................................... $ (0.16) $ (0.06) ------------- ------------- ------------- -------------
See notes to unaudited condensed consolidated financial statements. 5 LIGHTBRIDGE, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, ---------------------------- 1997 1998 ------------- ------------- (RESTATED, SEE NOTE 3) Cash Flows From Operating Activities: Net income (loss)................................................................ $ 2,665,950 $ (881,636) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation and amortization.................................................. 1,696,167 5,204,577 Amortization of discount on notes.............................................. 9,484 18,812 Deferred taxes................................................................. (863,406) -- Changes in assets and liabilities: Accounts receivable and other current assets................................. (1,632,744) (1,605,417) Other assets................................................................. 93,006 (1,048,621) Accounts payable and accrued liabilities..................................... (1,032,424) (2,421,376) Deferred revenues............................................................ 83,528 290,405 Other liabilities............................................................ -- 408,436 ------------- ------------- Net cash provided by (used in) operating activities............................ 1,019,561 (34,820) ------------- ------------- Cash Flows From Investing Activities: Principal payment received for note from officer............................... -- 20,000 Purchases of property and equipment............................................ (3,494,550) (1,933,661) Purchase of investments........................................................ (2,069,323) -- Redemption of investments...................................................... 1,031,133 -- ------------- ------------- Net cash used in investing activities.............................................. (4,532,740) (1,913,661) ------------- ------------- Cash Flows From Financing Activities: Payments on notes payable...................................................... (252,437) (527,603) Principal payments under capital lease obligations............................. (883,029) (174,415) Proceeds from issuance of common stock......................................... 46,747 316,377 ------------- ------------- Net cash used in financing activities............................................ (1,088,719) (385,641) ------------- ------------- Net decrease in cash and cash equivalents.......................................... (4,601,898) (2,334,122) Cash and cash equivalents, beginning of period..................................... 27,900,802 15,715,726 ------------- ------------- Cash and cash equivalents, end of period........................................... $ 23,298,904 $ 13,381,604 ------------- ------------- ------------- -------------
See notes to unaudited condensed consolidated financial statements. 6 LIGHTBRIDGE, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION: The accompanying unaudited condensed consolidated financial statements include the accounts of Lightbridge, Inc. and its subsidiaries (the "Company"). The Company believes that the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Company's financial position, results of operations and cash flows at the dates and for the periods indicated. Although certain information and disclosures normally included in the Company's annual financial statements have been omitted, the Company believes that the disclosures are adequate to make the information presented not misleading. Results of interim periods may not be indicative of results for the full year or any future periods. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 1997. 2. SIGNIFICANT ACCOUNTING POLICIES SOFTWARE REVENUE RECOGNITION Effective January 1, 1998, the Company adopted the provisions of Statement of Position 97-2, "Software Revenue Recognition"("SOP 97-2"), which provides guidance on recognizing revenue on software transactions. The Company's revenue recognition practices were substantially in compliance with SOP 97-2 at the time of adoption. EARNINGS PER SHARE Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share 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 denominators of the basic and diluted earnings per share computations for income (loss) from continuing operations is shown below:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------- -------------------------- 1997 1998 1997 1998 ------------ ------------ ------------ ------------ Shares for basic earnings per share...................... 14,629,937 15,798,486 14,620,421 15,752,223 Effect of options and warrants........................... 1,675,038 -- 1,720,780 -- ------------ ------------ ------------ ------------ Shares for diluted earnings per share.................... 16,304,975 15,798,486 16,341,201 15,752,223 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Stock options and warrants convertible into common stock have been excluded from the diluted computation for the three and six months ended June 30, 1998 as they are anti-dilutive. Had such shares been included, shares for the dilutive computation would have increased by approximately 1,800,000 and 2,000,000 shares for the three and six months ended June 30, 1998, respectively. No adjustments have been made to net income in computing diluted income per share. COMPREHENSIVE INCOME Effective January 1, 1998, the Company adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." No items, other than net income, 7 are currently considered elements of comprehensive income, and accordingly net income and comprehensive income are the same for all periods presented. RECLASSIFICATIONS Certain reclassifications have been made to the 1997 financial statements to conform with the 1998 presentation. 3. RESTATEMENT The Company has restated its previously filed condensed consolidated financial statements as of and for the three and six months ended June 30, 1998 to adjust the allocation of purchase price related to the acquisition of Coral Systems, Inc. ("Coral") in November, 1997, and the resulting amortization of goodwill and intangible assets. The Securities and Exchange Commission ("SEC") issued new guidance in September 1998 on its views regarding the valuation methodologies used to determine the allocation of purchase price to acquired in-process research and development ("IPRD") and intangible assets in a purchase business combination. Generally accepted accounting principles require that amounts allocated to IPRD be expenses upon consummation of an acquisition. Following discussions between the Company and the staff of the SEC regarding the application of this guidance, the Company has modified the methods used to value IPRD and other intangible assets acquired in connection with the acquisition of Coral. The revised valuation is based on management's best estimates at the date of acquisition of the net cash flows expected to be generated by Coral on a going-forward basis and gives explicit consideration to the SEC's views on IPRD as set forth in guidance issued in its September 1998 letter to the American Institute of Certified Public Accountants. As a result of this revised valuation, the amount of purchase price allocated to IPRD at the date of acquisition decreased from $16 million to $4 million, and the amount ascribed to goodwill and acquired intangible assets increased by $4.0 million and $8.0 million, respectively. The effects of this restatement on the Company's consolidated financial statements are as follows: CONSOLIDATED BALANCE SHEETS:
JUNE 30, 1998 ---------------------------- AS PREVIOUSLY REPORTED AS RESTATED ------------- ------------- Goodwill--net.................................................. $ 5,179,557 $ 9,311,665 Acquired intangible assets--net................................ -- $ 6,228,378 Total assets................................................... 50,233,690 60,594,176 Total stockholders' equity..................................... 39,790,043 50,150,529
CONSOLIDATED STATEMENT OF OPERATIONS:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, 1998 JUNE 30, 1998 -------------------------- ---------------------------- AS PREVIOUSLY AS PREVIOUSLY REPORTED AS RESTATED REPORTED AS RESTATED ------------ ------------ ------------- ------------- Cost of revenues...................................... $7,702,942 $ 7,950,092 $ 14,002,651 $ 15,074,151 Total operating expenses.............................. 7,112,930 7,303,535 14,168,476 14,349,685 Net income (loss)..................................... 278,263 (159,492) 371,073 (881,636) Basic and diluted (loss) per common share............. $ 0.02 $ (0.01) $ 0.02 $ (0.06)
8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE DISCUSSION IN THIS FORM 10-Q/A 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. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS CONTEMPLATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF FACTORS, INCLUDING (A) THE UNPREDICTABILITY OF FUTURE REVENUES AND POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS, (B) CONTINUING RAPID CHANGE IN THE TELECOMMUNICATIONS INDUSTRY THAT MAY AFFECT BOTH LIGHTBRIDGE, INC. AND ITS CUSTOMERS, (C) CUSTOMER CONCENTRATION, (D) UNCERTAINTIES ASSOCIATED WITH THE ABILITY OF LIGHTBRIDGE, INC. TO DEVELOP NEW PRODUCTS AND TECHNOLOGIES, (E) MARKET ACCEPTANCE OF NEW PRODUCTS OF LIGHTBRIDGE, INC. AND CONTINUING DEMAND FOR PRODUCTS OF LIGHTBRIDGE, INC. BY TELECOMMUNICATIONS COMPANIES, (F) THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING ON BOTH LIGHTBRIDGE, INC. AND ITS CUSTOMERS AND (G) THE OTHER FACTORS SET FORTH UNDER "ITEM 1A. RISK FACTORS" IN THE ANNUAL REPORT ON FORM 10-K/A OF LIGHTBRIDGE, INC. FOR THE YEAR ENDED DECEMBER 31, 1997. Information set forth under the heading "Item 1A. Risk Factors" in the Annual Report on Form 10-K/A of Lightbridge, Inc. for the year ended December 31, 1997 is incorporated as an exhibit to this Form 10-Q/A. Unless the context otherwise requires, "Lightbridge" and the "Company" refer collectively to Lightbridge and its subsidiaries. CHURNALERT and FRAUDBUSTER are registered trademarks of the Company, and CUSTOMER ACQUISITION SYSTEM, LIGHTBRIDGE and POPS are trademarks of the Company. All other trademarks or trade names referred to in this Form 10-Q/A are the property of their respective owners. RESTATEMENT The Company has restated its previously filed condensed consolidated financial statements for the three and six months ended June 30, 1998 to adjust the allocation of purchase price related to the acquisition of Coral Systems, Inc. ("Coral") in November, 1997 and the resulting amortization of goodwill and intangible assets. The Securities and Exchange Commission ("SEC") issued new guidance in September 1998 on its views regarding the valuation methodologies used to determine the allocation of purchase price to acquired in-process research and development ("IPRD") and intangible assets in a purchase business combination. Generally accepted accounting principles require that amounts allocated to IPRD be expensed upon consummation of an acquisition. Following discussions between the Company and the staff of the SEC regarding the application of this guidance, the Company has modified the methods used to value IPRD and other intangible assets acquired in connection with the acquisition of Coral. The revised valuation is based on management's best estimates at the date of acquisition of the net cash flows expected to be generated by Coral on a going-forward basis and gives explicit consideration to the SEC's views on IPRD as set forth in its September 1998 letter to the American Institute of Certified Public Accountants. As a result of this revised valuation, the amount of purchase price allocated to IPRD at the date of acquisition decreased from $16 million to $4 million, and the amount ascribed to goodwill and acquired intangible assets increased by $4.0 million and $8.0 million, respectively. OVERVIEW Lightbridge develops, markets and supports a network of integrated products and services that enable telecommunications carriers to improve their customer acquisition and retention processes. In November 1997, the Company acquired all of the outstanding stock of Coral pursuant to an Agreement and Plan of Reorganization dated as of September 9, 1997 (the "Reorganization Agreement"). The acquisition was effected through a reverse triangular merger (the "Merger") in which a newly formed subsidiary of Lightbridge was merged with and into Coral and the surviving corporation became a wholly owned subsidiary of the Company. Pursuant to the Merger, each of the 9 outstanding shares of Coral's stock was converted into a fraction of a share of Lightbridge's common stock, determined as set forth in the Reorganization Agreement. In addition, as a result of the Merger, all options and warrants to purchase shares of Coral's stock became exercisable, when vested, to purchase shares of Lightbridge's common stock. As a result of the Merger, Lightbridge issued 892,073 shares of its common stock for all of the outstanding shares of Coral's common stock and reserved 114,399 shares of its common stock for Coral's options and warrants. The Merger has been accounted for using the purchase method, which combines the results of Coral from the date of acquisition with those of the Company. As a result, the Company's results of operations include Coral's results for the three and six months ended June 30, 1998, but not for the three and six months ended June 30, 1997. During the three months ended June 30, 1998, the Company incurred expenses in connection with moving Coral's facilities from Longmont, Colorado to 320 Interlocken Parkway, Broomfield, Colorado; the move is expected to be completed in August 1998. The Company historically has reported its software licensing and consulting services revenues as a single line item in its income statements. Because software licensing and consulting services revenues have become more significant, the Company is, commencing with this Form 10-Q, reporting revenues and costs of revenues in three components: transaction services, software licensing and consulting services. See "--Revenues and Costs of Revenues for Three Months Ended September 30, 1997 and December 31, 1997" below for a table of revenues and costs of revenues for the last two quarters of the year ended December 31, 1997 presented on the basis of these three components. Lightbridge's transaction services revenues are derived primarily from the processing of applications for qualification of subscribers for wireless 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 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 for its clients. Revenues are recognized in the period when the services are performed. The Company's software licensing revenues consist of revenues attributable to the licensing of Company's Channel Solutions, Customer Management and Fraud Management software. The Company began licensing its Channel Solutions software with the introduction of its POPS product in fiscal 1995. Lightbridge's Channel Solutions products are designed to assist customers in interfacing with the Company's systems as well as to perform other point-of-sale and channel functionality. The Company's Customer Management products are designed to help carriers analyze their marketplace to improve their business operations. While the Company's software products are licensed as packaged software products, each of these products requires customization and integration with other products and systems to varying degrees. When a product requires significant customization and/or integration, the entire arrangement is accounted for in conformity with Accounting Research Bulletin No. 45, using relevant guidance in SOP 97-2 and in SOP 81-1, ACCOUNTING FOR PERFORMANCE OF CONSTRUCTION-TYPE AND CERTAIN PRODUCTION-TYPE CONTRACTS. If no significant customization or integration exists for a product, then revenues are recognized when delivery has occurred, persuasive evidence of an arrangement exists, the fee is fixed or determinable and collectibility is probable. In either event, revenue is not recognized until the product is accepted by the client if the arrangement specifies acceptance. Revenues from software maintenance contracts are recognized ratably over the term of the maintenance agreement and are included in software licensing revenue. 10 The Company's consulting services revenues have been derived principally from providing consulting for customer acquisition and retention. During the three months ended June 30, 1998, the Company launched Lightbridge Consulting Services, which provides business advisory, customization and integration, deployment, and optimization services in the areas of customer acquisition and retention, fraud prevention and distribution management. Revenues from consulting services are generally recognized as the services are performed, using the percentage-of-completion method, measured by labor hours. During the second quarter of 1998, the Company continued its efforts to complete development of in-process technology acquired from Coral. In June 1998, the Company released FraudBuster 4.2.5, a new version of FraudBuster that provides certain performance and functional enhancements. As of June 30, 1998, the Company was continuing to develop two new versions of FraudBuster, one of which is expected to contain additional performance and functional enhancements and is currently scheduled to be released in the fourth quarter of 1998, and the other of which is expected to contain substantial enhancements in performance, scalability and functionality and is currently scheduled to be released in 1999. The Company was also continuing to develop a product that is expected to be complementary to FraudBuster and to contain new subscription fraud detection tools. This product is currently scheduled to be available in the first quarter of 1999. Finally, the Company continued its development efforts with respect to two versions of ChurnAlert, which are currently scheduled to be released in the third quarter of 1998 and in 1999. Although the completion dates for these projects have been delayed, as of the date this report was originally filed, the Company had not changed its original estimate of the total costs it expected to incur to complete these projects because of changes in projected development staffing levels. If the Company is unsuccessful in completing these projects, the Company's business, financial condition, results of operations and cash flows could be materially adversely affected. During the three months ended June 30, 1998, Lightbridge hired a senior vice president of worldwide sales and marketing, consolidated its consulting services group and named a vice president to head the newly formed group, and hired a new senior vice president and chief financial officer who has responsibility for matters such as the Company's financial reporting systems, business measures and analyses, and relationships with public market analysts and investors. 11 RESULTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------- -------------------- 1997 1998 1997 1998 --------- --------- --------- --------- (1) (1) Revenues: Transaction services.......................................................... 66.3% 60.3% 67.3% 59.7% Software licensing............................................................ 10.8 22.5 9.8 26.4 Consulting services........................................................... 22.9 17.2 22.9 13.9 --------- --------- --------- --------- Total revenues................................................................ 100.0 100.0 100.0 100.0 --------- --------- --------- --------- Cost of revenues:............................................................... Transaction services.......................................................... 38.1 33.8 38.8 35.6 Software licensing............................................................ 3.3 7.5 2.4 8.8 Consulting services........................................................... 4.7 11.2 5.5 8.6 --------- --------- --------- --------- Total cost of revenues........................................................ 46.1 52.5 46.7 53.0 --------- --------- --------- --------- Gross profit.................................................................... 53.9 47.5 53.3 47.0 --------- --------- --------- --------- Operating expenses: Development................................................................... 15.0 16.0 15.0 16.6 Sales and marketing........................................................... 15.0 11.3 14.6 12.9 General and administrative.................................................... 10.8 20.9 11.9 20.9 --------- --------- --------- --------- Total operating expenses...................................................... 40.8 48.2 41.5 50.4 --------- --------- --------- --------- Income (loss) from operations................................................... 13.1 (0.7) 11.8 (3.4) Other income, net............................................................... 3.0 1.4 2.6 1.5 --------- --------- --------- --------- Income (loss) before provision for (benefit from) income taxes.................. 16.1 0.7 14.4 (1.9) Provision for (benefit from) income taxes....................................... 6.1 1.8 (0.6) 1.2 --------- --------- --------- --------- Net income (loss)............................................................... 10.0% (1.1)% 15.0% (3.1)% --------- --------- --------- --------- --------- --------- --------- ---------
- ------------------------ (1) As restated. See Note 3 of Notes to the Unaudited Condensed Consolidated Financial Statements. THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1997 REVENUES. Revenues increased by 68.1% to $15.1 million in the three months ended June 30, 1998 from $9.0 million in the three months ended June 30, 1997. Transaction services revenues increased by 52.8% to $9.1 million in the three months ended June 30, 1998 from $6.0 million in the three months ended June 30, 1997, while decreasing as a percentage of total revenues to 60.3% from 66.3%. The dollar increase in transaction services revenues for the three months ended June 30, 1998 was primarily due to increased volume of qualification and activation transactions processed for carrier clients. The decrease in transaction services revenues as a percentage of total revenues for the three month period ended June 30, 1998 principally resulted from a greater increase in software licensing revenues than transaction services revenues for the same period. Software licensing revenues increased by 249.4% to $3.4 million in the three months ended June 30, 1998 from $1.0 million in the three months ended June 30, 1997, while increasing as a percentage of total revenues to 22.5% from 10.8%. Both the dollar increase and the increase as a percentage of total revenues in software licensing revenues for the three months ended June 30, 1998 was principally a result of the increase in revenues attributable to the Company's Channel Solutions 12 and Fraud Management products and services. The Company's software licensing revenues during the three months ended June 30, 1998 included revenues from its Fraud Management software that was installed for a new international client but had not been fully accepted by the client as of March 31, 1998 and therefore, as described in Item 2 of the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 1998, was not recognizable during the three months ended March 31, 1998. The Company believes that software licensing revenues for the next several fiscal quarters will be subject to fluctuation and more difficult to anticipate than the Company's other types of revenues, principally due to the relatively large dollar costs and relatively lengthy sales cycles of the software licenses. The sales cycles for domestic software licenses generally extend from three to six months and may extend as long as twelve months; sales cycles for software licenses sold to international clients typically are longer. The predictability of software licensing revenue is further impeded because the Company's licensed software is a discretionary purchase for most customers. As a result of the foregoing, a small number of licensing transactions may have a significant effect on the Company's software licensing revenues for a fiscal quarter. Consulting services revenues increased by 26.8% to $2.6 million in the three months ended June 30, 1998 from $2.1 million in the three months ended June 30, 1997, while decreasing as a percentage of total revenues to 17.2% from 22.9%. The dollar increase in consulting services revenues for the three months ended June 30, 1998 was principally due to increased demand for the consulting services offered by the Company. The decrease in consulting services revenue as a percentage of total revenues for the three months ended June 30, 1998 principally resulted from a greater increase in software licensing revenues than consulting services revenues for the same period. In the year ended December 31, 1997, one customer accounted for 29% of the Company's total revenues. While Lightbridge believes that its relationship with this customer is good, the Company currently expects that the percentage of the Company's total revenues for the year ended December 31, 1998 will be significantly less than for the preceding year, as a result of growth in the Company's total revenues, the Company's efforts to diversify its customer base and a decrease in the consulting services utilized by the customer. COST OF REVENUES. Cost of revenues consists primarily of personnel costs, costs of maintaining systems and networks used in processing qualification and activation transactions (including depreciation and amortization of systems and networks) and amortization of capitalized software and certain acquired intangible assets. Cost of revenues may vary as a percentage of total revenues in the future as a result of a number of factors, including changes in the mix of transaction services revenues between revenues from on-line transaction processing and revenues from processing transactions services through the Company's Teleservices Group and changes in the mix of total revenues between transaction services revenues, software licensing revenues and consulting services revenues. Transaction services cost of revenues increased by 49.2% to $5.1 million in the three months ended June 30, 1998 from $3.4 million in the three months ended June 30, 1997, while decreasing as a percentage of total revenues to 33.8% from 38.1%. The increase in transaction services cost of revenues for the three months ended June 30, 1998 resulted principally from increases in transaction volume and costs attributable to expansion of the Company's staff and systems capacity. The decrease in transaction services cost of revenues as a percentage of total revenues for the three months ended June 30, 1998 principally resulted from an increase in the number of transactions processed through on-line processing as opposed to through the teleservices group. Software licensing cost of revenues increased by 287.1% to $1.1 million in the three months ended June 30, 1998 from $0.3 million in the three months ended June 30, 1997, while increasing as a percentage of total revenues to 7.5% from 3.3%. Both the dollar increase and the increase as a percentage of total revenues in software licensing cost of revenues for the three months ended June 30, 13 1998 was primarily due to the increased cost of revenues for Fraud Management products and amortization expense for certain acquired intangible assets. Consulting services cost of revenues increased by 299.0% to $1.7 million in the three months ended June 30, 1998 from $0.4 million in the three months ended June 30, 1997, while increasing as a percentage of total revenues to 11.2% from 4.7%. Both the dollar increase and the increase as a percentage of total revenues in consulting services cost of revenues was primarily due to the increase in consulting staff due to the expansion of the consulting services group, including both newly hired personnel and personnel reallocated from other areas of the Company's operations, including sales and marketing, as part of the establishment of Lightbridge Consulting Services. The Company expects to continue hiring consulting staff during the three months ending September 30, 1998 and, to a lesser extent, the three months ending December 31, 1998. The Company expects fluctuations in gross profit may occur primarily due to fluctuations in revenue generated from the Company's three revenue components, particularly revenues from software licensing which have historically generated higher gross profit margins. DEVELOPMENT. Development expenses include all internal software development costs and consist 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 80.0% to $2.4 million in the three months ended June 30, 1998 from $1.4 million in the three months ended June 30, 1997. The increase in costs for the three months ended June 30, 1998 resulted primarily from the addition of engineering personnel necessary to support the Company's product development plans in connection with the development and deployment of its fraud management software product, FraudBuster. The Company expects to continue to increase its engineering and development efforts in order to continue enhancing its existing products and services, including its Channel Solutions, Churn and Fraud Management 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 27.1% to $1.7 million in the three months ended June 30, 1998 from $1.3 million in the three months ended June 30, 1997. The increase for the three months ended June 30, 1998 was due to the addition of direct sales and product marketing personnel, increased commissions resulting from the higher level of revenues and increased use of marketing programs. This increase was offset in part by the reallocation of certain personnel to Lightbridge Consulting Services as well as the allocation of certain related expenses to consulting services cost of revenues. The Company expects to continue to invest in sales and marketing efforts in order to increase its penetration of existing accounts and to add new clients and markets. The Company currently estimates that sales and marketing expenses will account for approximately 11% to 12% of the Company's total revenues during the latter half of 1998, although the actual percentage may vary significantly as the result of unanticipated fluctuations in the Company's revenues during the period. GENERAL AND ADMINISTRATIVE. General and administrative expenses consist principally of salaries of administrative, executive, finance and human resources personnel, fees for outside professional services, and amortization of goodwill incurred pursuant to the acquisition of Coral. General and administrative expenses increased by 223.3% to $3.2 million in the three months ended June 30, 1998 from $1.0 million in the three months ended June 30, 1997. The increase reflected the amortization of $0.7 million of goodwill and certain acquired intangible assets attributable to the Company's acquisition of Coral, certain costs associated with the integration of Coral and the addition of finance personnel. 14 The increase also reflected a one-time write-off during the three months ended June 30, 1998 of approximately $0.1 million relating to fixed assets, including leasehold improvements and telephone systems, used at Coral's existing facilities in Longmont, Colorado, that will not deployed at its new facilities in Broomfield, Colorado, as well as approximately $0.3 million of accruals relating to various matters, including sales taxes, the allowance for doubtful accounts and costs attributable to the establishment of foreign subsidiaries in Asia and the United Kingdom. The Company expects that its general and administrative costs will decrease on a quarterly basis during the latter half of 1998 due to the nonrecurring nature of certain of the expenses recorded by the Company during the three months ended June 30, 1998. OTHER INCOME, NET. Other income, net in the three months ended June 30, 1998 consisted predominantly of interest income and expense. 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 remained the same at $0.1 million in the three months ended June 30, 1998 and 1997. Interest income decreased to $0.2 million in the three months ended June 30, 1998 from $0.3 million in the three months ended June 30, 1997 as a result of lower cash balances. The interest income for the three months ended June 30, 1998 reflected an average rate of return of approximately 5.6%. PROVISION FOR (BENEFIT FROM) INCOME TAXES. The Company's effective tax rate was 27.2% and 38.0% for the three months ended June 30, 1998 and 1997, respectively. The relatively high effective tax rate for 1998 results in part from goodwill attributable to the Company's acquisition of Coral; the amortization of this goodwill is recognized as an expense for accounting purposes, but is not deductible for tax purposes. Since the goodwill attributable to the Coral acquisition will continue to be amortized through the three months ending December 31, 2001, the Company anticipates that its effective tax rate will continue to be relatively high during that amortization period and, in particular, estimates that its effective tax rate for the year ending December 31, 1999 will be between 40% and 42%. The actual effective tax rate for 1998 and 1999 may vary significantly from the Company's estimates as the result of a number of factors, including any and all factors that cause the Company's actual revenues for those years to vary from the Company's internal estimates. SIX MONTHS ENDED JUNE 30, 1998 AND 1997 REVENUES. Revenues increased by 59.5% to $28.4 million in the six months ended June 30, 1998 from $17.8 million in the six months ended June 30, 1997. Transaction services revenues increased by 41.5% to $17.0 million in the six months ended June 30, 1998 from $12.0 million in the six months ended June 30, 1997. The increase in transaction services revenues for the six months ended June 30, 1998 was primarily due to increased volume of qualification and activation transactions processed for carrier clients. Software licensing revenues increased by 331.0% to $7.5 million in the six months ended June 30, 1998 from $1.7 million in the six months ended June 30, 1997. The increase in software licensing revenues for the six months ended June 30, 1998 was principally a result of the increase in revenues attributable to the Company's Channel Solutions and Fraud Management products and services. Consulting services revenues decreased by 3.5% to $3.9 million in the six months ended June 30, 1998 from $4.1 million in the six months ended June 30, 1997. The decrease in consulting services revenues for the six months ended June 30, 1998 was principally due to a decrease in the consulting services utilized by the Company's largest client partially offset by an increased demand for the consulting services provided to other clients of the Company. 15 COST OF REVENUES. Transaction services cost of revenues increased by 46.2% to $10.1 million in the six months ended June 30, 1998 from $6.9 million in the six months ended June 30, 1997. The increase in transaction services cost of revenues for the six months ended June 30, 1998 resulted principally from increases in transaction volume and costs attributable to expansion of the Company's staff and systems capacity. Software licensing cost of revenues increased by 487.8% to $2.5 million in the six months ended June 30, 1998 from $0.4 million in the six months ended June 30, 1997. The increase in software licensing cost of revenues for the six months ended June 30, 1998 was primarily due to the increased costs of revenues for Fraud Management products and amortization expense for certain acquired intangible assets. Consulting services cost of revenues increased by 151.8% to $2.5 million in the six months ended June 30, 1998 from $1.0 million in the six months ended June 30, 1997. The increase in consulting services cost of revenues was primarily due to the increase in consulting staff due to the expansion of the consulting services group, including both newly hired personnel and personnel reallocated from other areas of the Company's operations as part of the establishment of Lightbridge Consulting Services. DEVELOPMENT. Development expenses increased by 76.1% to $4.7 million in the six months ended June 30, 1998 from $2.7 million in the six months ended June 30, 1997. The increase in costs for the six months ended June 30, 1998 resulted primarily from the addition of engineering personnel necessary to support the Company's product development plans. SALES AND MARKETING. Sales and marketing expenses increased by 41.0% to $3.7 million in the six months ended June 30, 1998 from $2.6 million in the six months ended June 30, 1997. The increase for the six months ended June 30, 1998 was due to the addition of direct sales and product marketing personnel, increased commissions resulting from the higher level of revenues and increased use of marketing programs, including trade shows. This increase was offset in part by the reallocation during the three months ended June 30, 1998 of certain personnel to Lightbridge Consulting Services as well as the allocation of certain related expenses for those three months to consulting services cost of revenues. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased by 172.1% to $6.0 million in the six months ended June 30, 1998 from $2.1 million in the six months ended June 30, 1997. The increase reflected the amortization of $1.5 million of goodwill and certain acquired intangible assets attributable to the Company's acquisition of Coral, certain costs associated with the integration of Coral and the addition of finance personnel. The increase also reflected (i) a one-time write-off during the six months ended June 30, 1998 of approximately $0.1 million relating to fixed assets, including leasehold improvements and telephone systems, used at Coral's existing facilities in Longmont, Colorado, that will not be deployed at its new facilities in Broomfield, Colorado, (ii) write-offs of approximately $0.3 million for bad debts attributable principally to contracts of Coral that predated the Company's acquisition of Coral and (iii) accruals of approximately $0.3 million for various matters, including sales taxes, the Company's allowance for doubtful accounts and costs attributable to the Company's establishment of foreign subsidiaries in Asia and the United Kingdom. OTHER INCOME, NET. Other income, net in the six months ended June 30, 1998 consisted predominantly of interest income and expense. Interest expense decreased to $0.1 million in the six months ended June 30, 1998 from $0.2 million in the six months ended June 30, 1997. Interest income decreased to $0.4 million in the six months ended June 30, 1998 from $0.6 million in the six months ended June 30, 1997 as a result of lower cash balances due to the investment made in the service delivery infrastructure and computer equipment for development activities of the business during 1997. 16 PROVISION FOR (BENEFIT FROM) INCOME TAXES. During the six months ended June 30, 1998 and 1997, the Company's effective tax rate was 59.5% and (3.6)%, respectively. The Company's effective tax rate in 1997 was affected by the reversal of its deferred tax valuation allowance and the utilization of certain tax credits in the quarter ended March 31, 1997. LIQUIDITY AND CAPITAL RESOURCES Prior to its initial public offering, the Company funded its operations primarily through private placements of equity and debt securities, cash generated from operations, bank borrowings and equipment financings. In October 1996, the Company consummated an initial public offering in which 4,370,000 shares of the Company's common stock, $.01 par value, were sold at an initial public offering price of $10.00 per share. The total shares consisted of 3,021,868 shares sold by the Company and 1,348,132 shares sold by selling shareholders. Proceeds to the Company, net of underwriters' discount and associated costs, were approximately $27.1 million. These proceeds were used to repay certain debt obligations of the Company, to repurchase certain shares of the common stock of the Company and to fund working capital and other general corporate purposes. The Company has a $4.0 million working capital line of credit and a $3.0 million equipment line of credit with a bank. The working capital line of credit is secured by a pledge of the Company's accounts receivable, equipment and intangible assets, and borrowing availability is based on the amount of qualifying accounts receivable. Advances under the working capital line of credit and equipment line of credit bear interest at the bank's prime rate (8.5% at June 30, 1998). The working line of credit also provides for the issuance of letters of credit, which reduce the amount that may be borrowed under the line of credit and are limited to $1,250,000 in the aggregate. At June 30, 1998, there were no borrowings outstanding under the working capital line of credit and borrowings of $0.3 million were outstanding under the equipment line of credit. The Company's agreements with the bank contain covenants that, among other things, prohibit the declaration or payment of dividends and require the Company to maintain certain financial ratios which the Company believes are not restrictive to its business operations. The working capital line of credit expires in June 1999, and the equipment line of credit expires in June 2001. The Company's capital expenditures in the totalled $0.7 million and $1.9 million, respectively, for the three and six months ended June 30, 1998 and $2.3 million and $3.5 million, respectively, for the three and six months ended June 30, 1997. The capital expenditures during these periods consisted of purchases of fixed assets, principally for the Company's services delivery infrastructure and computer equipment for development activities. Capital expenditures during the three months ended June 30, 1998 included leasehold improvements and other costs attributable to the relocation of Coral's facilities to Broomfield, Colorado. The Company expects capital expenditures for the remainder of 1998 to total approximately $2.3 million, including additional capital expenditures related to the relocation of Coral's Colorado facilities. The Company leases its facilities and certain equipment under non-cancelable capital and operating lease agreements that expire at various dates through December 2002. During the three months ended June 30, 1998, the Company completed development of version 1.19 of the Customer Acquisition System ("CAS"), the Company's transaction processing system. Version 1.19 completed Year 2000 compliance for the core CAS and its front-end access points. The Company expects that version 1.20 of CAS, which currently is scheduled for release during the three months ending December 31, 1998, will include Year 2000 support for third-party interfaces to CAS, such as interfaces with credit bureaus and billing systems. The Company also continued its testing and modification efforts relating to its other software products. The Company may be required to make significant expenditures in connection with the on-going design and testing of its software-based services and products and interfaces to third-party systems for Year 2000 compatibility, and any related modifications or other development work that may be required to cause those services and products to be Year 2000 compatible. The Company currently estimates that it will spend approximately 17 $0.3 million on Year 2000 testing and compliance during the latter half of 1998, although the actual amount of these expenditures may vary significantly, depending upon the timing and results of testing and integration activities, including those that require the involvement and cooperation of third parties. The Company currently is unable to estimate accurately the amount of expenditures for Year 2000 compliance that may be required in fiscal 1999 and thereafter, although it currently believes the amount of these expenditures will not be material. As of June 30, 1998, the Company had cash and cash equivalents of $13.4 million and working capital of $22.6 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 Effective January 1, 1998, the Company adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" and AICPA Statement of Position No. 97-2, "Software Revenue Recognition." Adoption of these pronouncements has not had a material effect on reported results of operations or financial position. However, the future effects of AICPA Statement of Position No. 97-2 on the Company's results of operations will depend on the nature and terms of the individual software agreements entered into in future periods. In June 1997, the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131 establishes standards applicable to the manner in which the Company reports information about operating segments in its annual financial statements commencing with the Company's fiscal year ending December 31, 1998 and will require that the Company report selected information about operating segments in subsequent interim financial reports issued to stockholders. REVENUES AND COSTS OF REVENUES FOR THREE MONTHS ENDED SEPTEMBER 30, 1997 AND DECEMBER 31, 1997 As discussed under "--Overview" above, prior to the filing of this Form 10-Q, the Company has reported its software licensing and consulting services revenues as a single line item in its income statements. The following table presents the Company's revenues and costs of revenues for the last two quarters of the year ended December 31, 1997 on the basis of three components-- transaction services, 18 software licensing and consulting services--consistent with the presentation in the income statements included in this Form 10-Q.
THREE MONTHS ENDED ------------------------------------ SEPTEMBER 30, 1997 DECEMBER 31, 1997 ----------------- ----------------- Revenues: Transaction services...................................................... $ 6,749,506 $ 8,130,089 Software licensing........................................................ 862,843 3,723,661 Consulting services....................................................... 1,844,933 1,407,602 ----------------- ----------------- Total revenues........................................................ $ 9,457,282 $ 13,261,352 ----------------- ----------------- ----------------- ----------------- Cost of revenues: Transaction services...................................................... $ 3,754,795 $ 4,859,486 Software licensing........................................................ 232,358 1,376,160 Consulting services....................................................... 397,949 486,796 ----------------- ----------------- Total cost of revenues................................................ $ 4,385,102 $ 6,722,442 ----------------- ----------------- ----------------- -----------------
19 SIGNATURE Pursuant to the requirements 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. LIGHTBRIDGE, INC. Date: March 31, 1999 *BY: /S/ JOSEPH S. TIBBETTS, JR. ------------------------------------------------ Joseph S. Tibbetts, Jr. SENIOR VICE PRESIDENT, FINANCE AND ADMINISTRATION AND CHIEF FINANCIAL OFFICER (AUTHORIZED OFFICER AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
20 EX-27.1 2 EXHIBIT 27.1
5 3-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 13,381,604 0 15,017,530 283,858 2,950,379 31,065,655 23,508,381 12,049,319 60,594,176 8,497,457 0 0 0 166,651 49,983,841 60,594,176 15,145,482 15,145,482 7,950,092 7,303,535 0 0 33,772 112,608 272,100 (159,492) 0 0 0 (159,492) (0.01) (0.01)
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