LIGHTBRIDGE INC, S-1/A, 1996-08-09

LIGHTBRIDGE INC
S-1/A, 1996-08-09
RADIOTELEPHONE COMMUNICATIONS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 9, 1996

REGISTRATION NO. 333-6589
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
LIGHTBRIDGE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 4812 04-3065140
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)

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281 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
(617) 890-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
PAMELA D.A. REEVE
LIGHTBRIDGE, INC.
281 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
(617) 890-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
JOHN D. PATTERSON, JR., ESQ. MARK H. BURNETT, ESQ.
MARK L. JOHNSON, ESQ. TESTA, HURWITZ & THIBEAULT, LLP
FOLEY, HOAG & ELIOT LLP HIGH STREET TOWER
ONE POST OFFICE SQUARE BOSTON, 125 HIGH STREET
MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
(617) 832-1000 (617) 248-7000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
---------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] -----
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [X]
---------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)

Dated August 9, 1996

3,200,000 Shares

[LIGHTBRIDGE LOGO APPEARS HERE]

Common Stock

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Of the 3,200,000 shares of Common Stock offered hereby, 3,025,000 shares are
being sold by Lightbridge, Inc. ("Lightbridge" or the "Company") and 175,000
shares are being sold by certain selling stockholders (the "Selling
Stockholders"). The Company will not receive any of the proceeds from the sale
of shares by the Selling Stockholders. See "Principal and Selling
Stockholders."

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering
price will be between $8.00 and $10.00 per share. See "Underwriting" for
information relating to the factors to be considered in determining the initial
public offering price. Application has been made to have the Common Stock
approved for quotation on the Nasdaq National Market under the symbol "LTBG."

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THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS," BEGINNING ON
PAGE 6 OF THIS PROSPECTUS.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Stockholders
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<S> <C> <C> <C> <C>
Per Share...................... $ $ $ $
Total(3)....................... $ $ $ $
</TABLE>
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(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $850,000.
(3) Certain of the Selling Stockholders have granted the Underwriters an
option, exercisable within 30 days of the date hereof, to purchase an
aggregate of up to 480,000 additional shares of Common Stock at the Price
to Public less Underwriting Discounts and Commissions to cover over-
allotments, if any. If all such shares are purchased, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to Selling
Stockholders will be $ , $ and $ , respectively. See "Underwriting"
and "Principal and Selling Stockholders."

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The Common Stock is offered by the several Underwriters named herein when, as
and if received and accepted by them, and subject to their right to reject
orders in whole or in part and subject to certain other conditions. It is
expected that delivery of certificates for such shares will be made at the
offices of Cowen & Company, New York, New York, on or about , 1996.

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COWEN & COMPANY
MONTGOMERY SECURITIES
PRUDENTIAL SECURITIES INCORPORATED

, 1996
<PAGE>

[IMAGE OF LIGHTBRIDGE LOGO SUPERIMPOSED ON IMAGES OF
WIRELESS TELECOMMUNICATIONS EQUIPMENT AND NOMENCLATURE,
FOLLOWED BY CAPTION "LIGHTBRIDGE'S OBJECTIVE IS TO BE THE
LEADING PROVIDER OF INNOVATIVE, SOFTWARE-BASED SOLUTIONS
FOR COST-EFFECTIVE CUSTOMER ACQUISITION AND RETENTION FOR
THE WIRELESS TELECOMMUNICATIONS INDUSTRY."]

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

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by its independent accountants and
quarterly reports containing unaudited financial information for the first
three quarters of each fiscal year.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>

LIGHTBRIDGE SOLUTIONS FOR CUSTOMER ACQUISITION AND RETENTION

LIGHTBRIDGE REMOTE ACCESS

<TABLE>
<CAPTION>
SAMS(TM) IRIS(TM) POPS(TM) TELESERVICES
-------- -------- -------- ------------
<S> <C> <C> <C>
The "virtual office" Self-service Windows-based qualifi- Call center for a va-
for multimedia education, cation and activation riety of qualifica-
the mobile wireless sales, activation and processing at the re- tion, activation and
sales professional. vending system for the tail point-of-sale for subscriber care serv-
wireless industry. the wireless industry. ices.
[image of laptop com- [image of vending ki- [image of retail [image of call center]
puter] osk] transaction]
</TABLE>

LIGHTBRIDGE'S SERVICES LIGHTBRIDGE'S CAS INTERFACES TO:
APPLICANT SCREENING .Validation Credit Bureaus
.InSight .Security Credit Card Network
.Postalpro .Queuing Third Party Systems
.Fraud Detect .Notification .Billing Systems
.ProFile .Routing .Fulfillment
.Store & Forward Processes
(CDS) CREDIT DECISION .Exception Handling .Telemarketing
SYSTEM .Data Management Systems
.Customizable .Negative File Check
.Multiple Policies THIRD PARTY
Point Of Sale Client Systems
.Billing Systems
DECISION NOTIFICATION .Carrier Credit &
.Screen Activations Dept.
.Faxes .Additional Client
.Pager Systems
.Printer

(WIN) WIRELESS
INTELLIGENCE
.Churn Prophet
.Channel Wizard
<PAGE>

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Financial Statements and Notes thereto appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information in this Prospectus
(i) gives effect to a 2-for-1 stock split effected on July 15, 1996, (ii)
except in the Financial Statements and Notes thereto, reflects the conversion
of all outstanding shares of the Company's Redeemable Convertible Preferred
Stock (collectively, the "Convertible Preferred Stock") into 5,247,324 shares
of Common Stock and the issuance of 407,565 shares of Common Stock upon
exercise of certain warrants, all upon the closing of this offering, (iii)
gives effect to the filing of an Amended and Restated Certificate of
Incorporation immediately after the closing of this offering to, among other
things, create a new class of undesignated preferred stock and (iv) assumes no
exercise of the Underwriters' over-allotment option. See "Description of
Capital Stock" and "Underwriting."

THE COMPANY

Lightbridge, Inc. ("Lightbridge" or the "Company") develops, markets and
supports a suite of integrated products and services that enable wireless
telecommunications carriers to improve their customer acquisition and retention
processes. The Company's software-based services are delivered primarily on an
outsourcing and service bureau basis, which allows wireless carriers to focus
internal resources on their core business activities. The Company offers on-
line, real-time transaction processing and call center support solutions to aid
carriers in qualifying and activating applicants for wireless service, as well
as software-based sales support services for traditional distribution channels,
such as dealers, agents and direct mobile sales forces, and emerging
distribution channels, such as mass market retail stores, home shopping and
stand-alone kiosks. The Company develops and implements interfaces that fully
integrate its acquisition system with carrier and third-party systems, such as
those for billing, point-of-sale, activation and order fulfillment. The Company
recently introduced software-based decision support tools and services that
enable carriers to reduce subscriber churn and to make more informed business
decisions about their customers, markets and distribution channels.

Over the past 10 years, the number of U.S. cellular subscribers has increased
58% on a compounded annual basis, as the market for cellular phones has evolved
from serving early adopters to serving mass market consumers. While cellular
service historically has represented the largest sector of the U.S. wireless
telecommunications industry, other wireless services, such as personal
communication services ("PCS") and enhanced specialized mobile radio ("ESMR"),
are emerging as competitive alternatives to cellular services. In the midst of
strong subscriber growth and increasing competition, wireless carriers are
encountering high costs of acquisition, declining revenues per subscriber,
escalating losses from subscription fraud and lost revenues from churn in
subscriber bases.

Lightbridge's objective is to be the leading provider of innovative,
software-based solutions for cost-effective customer acquisition and retention
for the wireless telecommunications industry. By focusing on the wireless
telecommunications industry, the Company has developed significant expertise
and experience that it intends to employ to address the changing needs of
wireless carriers in both existing and emerging markets. The Company's strategy
is to provide a suite of complementary software-based products and services
that permit a wireless carrier to select applications and functions to create
an integrated, customized solution addressing its particular needs. The open
architecture underlying the Company's software applications supports the
development of flexible, integrated solutions, regardless of the type of
wireless service provided by a client and independent of the client's computing
environment.

The Company develops long-term consultative relationships with leading
wireless carriers that assist it in identifying evolving industry needs and
marketing additional products and services to its existing client base.
Lightbridge also establishes relationships with strategic partners in order to
increase the functionality of its products, reduce the time to market for its
new products and services, and access its partners' marketing and

3
<PAGE>

development resources. The Company intends to leverage these consultative and
partnering relationships to expand the Company's presence in the United States,
including in the emerging PCS market, and to facilitate and expedite the
Company's entry into the rapidly expanding international wireless market.

The Company sells its products and services through a direct sales force. The
Company's current client base consists of 39 wireless telecommunication
clients, including 8 of the 12 largest domestic cellular carriers (based on
total population coverage) and the only 3 domestic carriers currently
delivering PCS service. In the year ended September 30, 1995, approximately 94%
of the Company's revenues was attributable to carriers that were also clients
in the preceding fiscal year.

Lightbridge was incorporated in Delaware in June 1989 under the name Credit
Technologies, Inc. and changed its name to Lightbridge, Inc. in November 1994.
The Company's principal executive offices are located at 281 Winter Street,
Waltham, Massachusetts 02154, and its telephone number is (617) 890-2000.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered:
By the Company................. 3,025,000 shares
By the Selling Stockholders.... 175,000 shares
Common Stock to be outstanding
after the offering.............. 14,536,009 shares(1)
Use of Proceeds.................. For repayment of indebtedness, for payment of
the exercise price of repurchase options to
acquire 400,000 shares of Common Stock, and
for working capital and other general
corporate purposes, including potential
acquisitions
Proposed Nasdaq National Market
symbol.......................... LTBG
</TABLE>
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(1) Excludes, as of June 30, 1996, (i) 1,615,800 shares of Common Stock
issuable upon the exercise of outstanding options at a weighted average
exercise price of $1.80 per share, (ii) 1,000,000 shares of Common Stock
reserved for future option grants under the Company's 1996 Incentive and
Nonqualified Stock Option Plan, (iii) 100,000 shares of Common Stock
reserved for issuance under the Company's 1996 Employee Stock Purchase Plan
and (iv) 747,750 shares of Common Stock issuable upon the exercise of
warrants at an exercise price of $2.00 per share. See "Management--Benefit
Plans" and Notes 7 and 12 to Notes to Financial Statements. Assumes the
surrender of 52,223 shares of Common Stock in payment of the exercise price
of certain warrants that will expire upon the closing of the offering,
based on an assumed initial public offering price of $9.00 per share. To
the extent the initial public offering price differs, the number of shares
will vary. See "Description of Capital Stock--Warrants." Also gives effect
to the repurchase of 400,000 shares of Common Stock by the Company using a
portion of the net proceeds of the offering. See "Use of Proceeds" and
"Certain Transactions--Settlement Agreement and Related Matters."

4
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SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
TWELVE THREE MONTHS SIX MONTHS
MONTHS ENDED ENDED
YEARS ENDED SEPTEMBER 30, ENDED DECEMBER 31, JUNE 30,
---------------------------------------- DEC. 31, ------------- ---------------
1991 1992 1993 1994 1995 1995(1) 1994 1995 1995 1996
------- ------ ------ ------- ------- -------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $ 1,174 $2,988 $6,986 $13,398 $19,350 $20,347 $5,515 $6,512 $9,003 $13,263
Income (loss) from
operations............ (1,125) (623) 130 1,207 (1,607) (1,806) 586 387 (1,331) 692
Net income (loss)...... (1,202) (753) (125) 950 (2,433) (2,773) 412 72 (1,736) 303
Pro forma net income
(loss) per common
share(2).............. $ (0.19) $ 0.01 $ 0.02
Pro forma weighted
average number of
common and common
equivalent shares
outstanding(2)........ 12,682 13,182 13,814
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------
AS
ACTUAL ADJUSTED(2)(3)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 3,532 $25,450
Working capital.................................... 2,420 25,951
Total assets....................................... 14,555 36,472
Long-term obligations, less current portion........ 2,694 2,581
Redeemable preferred stock......................... 9,226 --
Stockholders' equity (deficiency).................. (4,153) 28,717
</TABLE>
- --------
(1) The Company changed its fiscal year from September 30 to December 31,
effective with the fiscal year ending December 31, 1996. All references to
fiscal years are to years ended September 30.

(2) Adjusted to give effect to the conversion of all outstanding shares of
Convertible Preferred Stock into 5,247,324 shares of Common Stock. The
Company has never declared or paid any cash dividends on its Common Stock.

(3) Adjusted to reflect the sale of 3,025,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $9.00 per
share, after deducting estimated underwriting discounts and commissions and
offering expenses, and the application of the net proceeds thereof. See
"Use of Proceeds" and "Capitalization."

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

This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

PROFILE is a registered trademark of the Company, and ALLEGRO, CAS_COMM,
CHANNEL WIZARD, CHURN PROPHET, CREDIT DECISION SYSTEM, CUSTOMER ACQUISITION
SYSTEM, 800-FOR-CREDIT, FRAUD SENTINEL, INSIGHT, IRIS, LIGHTBRIDGE, POPS,
POSTALPRO, SAMS and WIRELESS INTELLIGENCE are trademarks of the Company. All
other trademarks or trade names referred to in this Prospectus are the property
of their respective owners.

5
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. This Prospectus contains certain forward-looking statements.
Actual results could differ materially from those projected in the forward-
looking statements as a result of certain of the risk factors set forth below
and elsewhere in this Prospectus. In addition to the other information in this
Prospectus, prospective investors should carefully consider the following risk
factors in evaluating an investment in the Company and its business before
purchasing any shares of Common Stock offered hereby.

Dependence on Limited Number of Clients. A limited number of clients
historically have accounted for a substantial portion of the Company's
revenues in each fiscal year. Revenues attributable to the Company's 10
largest clients accounted for approximately 85%, 90% and 90% of the Company's
total revenues in the years ended September 30, 1993, 1994 and 1995,
respectively. Four clients each accounted for greater than 10% of the
Company's total revenues in the years ended September 30, 1994 and 1995. One
of these clients, which uses the call center support solutions provided by the
Company's Teleservices Group and accounted for 10% of the Company's revenues
in the year ended September 30, 1995, has notified the Company of its intent
to terminate its agreements with the Company, effective in the fourth calendar
quarter of 1996. During 1996, another of these clients, which accounted for
31% of the Company's revenues in the fiscal year ended September 30, 1995, is
changing the way it accesses the Company's Customer Acquisition System, from
using the call center support solutions provided by the Teleservices Group to
using on-line access. As a result, the Company expects the revenues from this
client to decrease significantly during 1996 and 1997. The Company believes
that the termination of these agreements by one client, and the change in the
services used by another client, will not have a material adverse effect on
its business, financial condition, results of operations or cash flow. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Overview." The concentration of the Company's revenues can cause
the Company's revenues and earnings to fluctuate significantly from quarter to
quarter, based on the volume of qualification and activation transactions
generated through its significant clients. Moreover, recent consolidation
among established participants in the wireless telecommunications industry may
result in further concentration of the Company's revenues from a limited
number of clients. The Company expects that revenues attributable to a
relatively small number of clients will continue to represent a significant
percentage of its total revenues for the foreseeable future. The Company's
contracts with its clients generally extend for terms of one or more years and
do not typically require the clients to purchase any particular type or
quantity of the Company's products or services or to pay any minimum amount
for products or services. Therefore, there can be no assurance that any of the
Company's clients, including its significant clients, will continue to utilize
the Company's services at levels similar to previous years or at all. The loss
of, or a significant curtailment of purchases by, one or more of the Company's
significant clients, including a loss or curtailment due to factors outside of
the Company's control, could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow. In
addition, delays in collection or uncollectability of accounts receivable from
any of the Company's significant clients could have a material adverse effect
on the Company's liquidity and working capital position. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Clients."

Fluctuations in Quarterly Performance May Adversely Affect Market Price of
Common Stock. The Company has experienced fluctuations in its quarterly
operating results and anticipates that such fluctuations will continue and
could intensify. The Company's quarterly operating results may vary
significantly depending on a number of factors, including the timing of the
introduction or acceptance of new products and services offered by the Company
or its competitors, changes in the mix of products and services provided by
the Company, the nature and timing of changes in the Company's clients or
their use of the Company's products and services, consolidation among
participants and other changes in the wireless telecommunications industry,
changes in the client markets served by the Company, changes in regulations
affecting the wireless industry, changes in the Company's operating expenses,
changes in personnel and changes in general economic conditions. Historically,
the Company's quarterly revenues have been highest in the fourth quarter of
each calendar year and have been particularly concentrated in the holiday
shopping season between Thanksgiving and Christmas. The Company's

6
<PAGE>

transaction revenues, which historically have represented substantially all of
the Company's total revenues, are affected by the volume of use of the
Company's services, which is influenced by 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. Software
and other revenues, which include software license revenues and related
consulting revenues, have recently represented an increasing proportion of the
Company's total revenues. Software license revenues are principally recognized
at the time of delivery of the licensed products and therefore may result in
further fluctuations in the Company's quarterly operating results. Consulting
revenues may be influenced by the requirements of one or more of the Company's
significant clients, including engagement of the Company for implementing or
assisting in implementing special projects of limited duration. During the
three months ended June 30, 1996, the Company's revenues from customized
software integration services resulted primarily from projects undertaken for
one client, which projects the Company currently expects will continue at
least through the end of 1996. There can be no assurance that the Company will
be able to achieve or maintain profitability in the future or that its levels
of profitability will not vary significantly among quarterly periods.
Fluctuations in operating results may result in volatility in the price of the
Company's Common Stock.

Although the Company's existing clients typically provide forecasts of
future activity levels, these forecasts have not always proved accurate. In
addition, the sales cycles for the Company's services are typically lengthy
and subject to a number of significant risks over which the Company has little
or no control, including clients' budget constraints and internal
authorization reviews. As a result, the Company may not be able to make
accurate estimates of future sales levels. A significant portion of the
Company's expenses are fixed and difficult to reduce in the event revenues do
not meet the Company's expectations, thus magnifying the adverse effect of any
revenue shortfall. Furthermore, announcements by the Company or its
competitors of new products, services or technologies could cause clients to
defer or cancel purchases of the Company's products and services; any such
deferral or cancellation could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow.
Accordingly, revenue shortfalls can cause significant variations in operating
results from quarter to quarter and could have a material adverse effect on
the Company's results of operations. If demand for the Company's services
significantly exceeds the Company's estimates at a time when its systems are
used at or near capacity, however, the Company may be unable to meet
contractually required service levels. The Company's failure to meet such
service levels could permit clients to terminate their agreements with the
Company or give rise to liability for damages or penalties, either of which
could have a material adverse effect on the Company's business, financial
condition, results of operations and cash flow. In addition, the Company has
hired a significant number of employees since January 1995 and expects to
continue hiring additional sales, customer service, management, software
development and technical support employees during the remainder of 1996 as it
continues to develop and expand its operations. This significant increase in
its workforce may negatively impact the Company's operating margins in the
future, particularly if the Company's commercial introduction of new products
and services is not as successful as planned.

Due to all of the foregoing factors, it is possible that in some future
quarter the Company's results of operations will be below prior results or the
expectations of market analysts and investors. In such an event, the price of
the Company's Common Stock would likely be materially adversely affected.

History of Losses; Capital Requirements. The Company was founded in 1989 and
has incurred net losses in each of its fiscal years other than the year ended
September 30, 1994. As of June 30, 1996, the Company had an accumulated
deficit of approximately $4.0 million. No assurance can be given that the
Company will be profitable on either a quarterly or annual basis in the future
or that the Company will not need to raise additional funds through public or
private financings. Expansion of the Company's business, including the
acquisition of additional computer and network equipment and the expansion of
its teleservices call center capacity, will require the Company to make
significant capital expenditures. The Company believes that its net proceeds
of this offering, together with existing 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. In
the event that the Company's plans change or if the proceeds of this offering
or available cash resources otherwise prove to be insufficient (due to
unanticipated expenses or otherwise), the Company may be required to seek
additional financing or curtail its expansion activities. The Company may
determine, depending upon the opportunities available to it, to seek
additional debt or equity financing to fund the cost of continuing expansion.
To the extent

7
<PAGE>

that the Company obtains equity financing or finances an acquisition with
equity securities, any such issuance of equity securities could result in
dilution to the interests of the Company's stockholders. There can be no
assurance that additional financing will be available to the Company on
acceptable terms, or at all. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Rapid Industry Change Requires Ongoing Product Development Efforts. The
wireless telecommunications industry has been changing rapidly as a result of
increasing competition, technological advances and evolving industry practices
and standards, and the Company expects these changes to continue. Carriers in
the wireless market have also been changing quickly, as the result of
consolidation among established carriers and the rapid entrance of new
carriers into the market. The Company's future success will depend on the
continued use of its
existing products and services, market acceptance of its new products and
services and the Company's ability to develop and market new offerings or
adapt existing offerings to keep pace with changes in the wireless
telecommunications industry. A rapid shift away from the use of cellular in
favor of other telecommunications services, such as PCS, could affect demand
for the Company's product and service offerings, since different business
practices might evolve with respect to the offering and sale of new
telecommunications services and could require the Company to develop modified
or alternate offerings addressing the particular needs of providers of the new
telecommunications services. In addition, as the cost of wireless
communication services declines and the number of subscribers increases,
carriers may elect to forego credit verification of new customers, and it is
unclear what means of customer screening, if any, carriers will employ if they
do not use credit verification.

Due to rapid changes in the wireless telecommunications industry, the
Company intends to continue to devote substantial financial, managerial and
personnel resources to product development efforts for the foreseeable future.
The development of the Company's product and service offerings is based on a
complex process requiring high levels of innovation and the accurate
anticipation of technological and market trends. There can be no assurance
that the Company will be successful in developing or marketing its existing or
future product and service offerings in a timely manner, or at all. If the
Company is unable, due to resource, technical or other constraints to
anticipate or respond adequately to changing market, client or technological
requirements, the Company's business, financial condition, results of
operations and cash flow will be materially adversely affected. There can be
no assurance that products or services developed by others will not render the
Company's products or services non-competitive or obsolete. See "Business--
Industry Overview" and "--Competition."

Risks Associated with Managing a Changing Business. The Company has expanded
its operations rapidly, and this expansion has created significant demands on
the Company's executive, operational, development and financial personnel and
other resources. Additional expansion by the Company, including geographic
expansion, may further strain the Company's management, financial and other
resources. There can be no assurance that the Company's systems, procedures,
controls and existing space will be adequate to support expansion of the
Company's operations. The Company's future operating results will depend on
the ability of its officers and key employees to manage changing business
conditions and to continue to improve its operational and financial control
and reporting systems. If the Company's management is unable to manage growth
effectively, its business, financial condition, results of operations and cash
flow could be materially and adversely affected. See "Business--Employees" and
"Management."

The success of the Company's business depends in part upon the Company's
ability to attract, train and retain a sufficient number of qualified
personnel to meet its needs. The Company's teleservices call center is labor
intensive; consequently, an increase in the turnover rate among the Company's
teleservices employees would increase the Company's recruiting and training
costs, and if the Company were unable to recruit and retain a sufficient
number of these employees, it could be forced to limit its growth or possibly
curtail its operations. There can be no assurance that the Company will be
successful in attracting, training and retaining the required number of
employees to support the Company's business in the future. See "Business--
Products and Services."

Dependence on Key Personnel. The Company's success to date has depended to a
significant extent on Pamela D.A. Reeve, its President and Chief Executive
Officer, and a number of other key personnel. Neither Ms. Reeve nor any of the
Company's other personnel is a party to an employment agreement with the
Company. The loss of the services of Ms. Reeve or any of the Company's other
key personnel could have a material adverse

8
<PAGE>

effect on the Company's business, financial condition, results of operations
and cash flow. The Company believes that its future success will depend in
large part on its ability to attract and retain highly qualified management,
engineering, research and development, sales and operational personnel. In
particular, the Company will need to hire additional software developers in
order to support and increase its software licensing activities. Competition
for all of these personnel is intense and there can be no assurance that the
Company will be successful in attracting and retaining key personnel. The
failure of the Company to hire and retain qualified personnel could have a
material adverse effect upon the Company's business, financial condition,
results of operations and cash flow. After the closing of this offering, the
Company will not maintain key person life insurance policies on any of its
employees other than Ms. Reeve. See "Business--Employees" and "Management."

Dependence on Cellular Market and Emerging Wireless Markets. The Company
historically has provided its products and services predominantly to cellular
carriers. Although the cellular market has experienced significant growth in
recent years, there can be no assurance that such growth will continue at
similar rates, or at all, or that cellular carriers will continue to use the
Company's products and services. Further growth in the Company's revenues from
use of the Company's Customer Acquisition System by cellular carriers is more
likely to result from expansion into additional geographic markets for its
existing clients and from general growth of the cellular market, if any, than
from the addition of new cellular carrier clients. Declines in demand for the
Company's products and services, whether as a result of competition,
technological change, industry change, general economic conditions or other
factors, could have a material adverse effect on the Company's business,
financial condition, results of operations and cash flow.

The Company's future operating results will depend in part on the emergence
of the PCS market and other wireless telecommunications markets and the use of
the Company's products and services by PCS and other wireless carriers. The
PCS market is in its initial stages of development. If the growth of the PCS
market or other new wireless markets does not meet expectations or is
significantly delayed for any reason, or if carriers in these markets do not
use the Company's products and services, the Company's business, financial
condition, results of operations and cash flow could be materially and
adversely affected. See "Business--Industry Overview" and "--Products and
Services."

Highly Competitive Industry. The market for products and services provided
to wireless 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 those offered by the Company. In
addition, many wireless carriers are providing or can provide, internally,
products and services competitive with those the Company offers. Trends in the
wireless telecommunications industry, including greater consolidation and
technological or other developments that make it simpler or more cost-
effective for wireless carriers to provide certain services themselves, could
affect demand for the Company's services and could make it more difficult for
the Company to offer a cost-effective alternative to a wireless carrier's own
capabilities. In addition, the Company anticipates continued growth in the
wireless carrier services industry and, consequently, the entrance of new
competitors in the future.

The Company believes that the principal competitive factors in the wireless
carrier services industry include the ability to identify and respond to
subscriber needs, quality and breadth of service offerings, price and
technical expertise. The Company believes that its ability to compete also
depends in part on a number of competitive factors outside its control,
including the ability to hire and retain employees, the development by others
of products and services that are competitive with the Company's products and
services, the price at which others offer comparable products and services and
the extent of its competitors' responsiveness to customer needs.

Many of the Company's current and potential competitors have significantly
greater financial, marketing, technical and other competitive resources than
the Company. As a result, the Company's competitors may be able to adapt more
quickly to new or emerging technologies and changes in customer requirements
or may be able to devote greater resources to the promotion and sale of their
products and services. There can be no assurance that the Company will be able
to compete successfully with its existing competitors or with new competitors.
In addition, competition could increase if new companies enter the market or
if existing competitors expand their service offerings. An increase in
competition could result in price reductions or the loss of market

9
<PAGE>

share by the Company and could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow.

To remain competitive in the wireless carrier services industry, the Company
will need to continue to invest in engineering, research and development and
sales and marketing. There can be no assurance that the Company will have
sufficient resources to make such investments or that the Company will be able
to make the technological advances necessary to remain competitive. In
addition, current and potential competitors have established or may in the
future establish collaborative relationships among themselves or with third
parties, including third parties with whom the Company has a relationship, to
increase the visibility and utility of their products and services.
Accordingly, it is possible that new competitors or alliances may emerge and
rapidly acquire a significant market share. If this were to occur, the
Company's business, financial condition, results of operations and cash flow
could be materially and adversely affected. See "Business--Competition."

Risk of System Failure. The Company's operations are dependent upon its
ability to maintain its computer and telecommunications equipment and systems
in effective working order and to protect its systems against damage from
fire, natural disaster, power loss, telecommunications failure or similar
events. All of the Company's computer and telecommunications equipment is
located at its two sites in Waltham, Massachusetts, and, as a result, may be
vulnerable to a natural disaster. The Company has taken precautions to protect
itself and its clients from events that could interrupt delivery of the
Company's services. These precautions include physical security systems, back-
up and off site data storage, back-up telephone lines, service arrangements
with multiple long-distance telephone carriers and an on-site power generator.
Notwithstanding such precautions, there can be no assurance that a fire,
natural disaster, power loss, telecommunications failure or similar event
would not result in an interruption of the Company's services. From time to
time, the Company has experienced delays in the delivery of services to some
clients as a result of failures of certain of the Company's systems. In
addition, the growth of the Company's client base, a significant increase in
transaction volume or an expansion of the Company's facilities may strain the
capacity of its computers and telecommunications systems and lead to
degradations in performance or system failure. Many of the Company's
agreements with carriers contain level of service commitments which the
Company might be unable to fulfill in the event of a natural disaster or major
system failure. Any damage, failure or delay that causes interruptions in the
Company's operations could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow. Further,
any future addition or expansion of the Company's facilities to increase
capacity could increase the Company's exposure to damage from fire, natural
disaster, power loss, telecommunications failure or similar events. There can
be no assurance that the Company's property and business interruption
insurance will be adequate to compensate the Company for any losses that may
occur in the event of a system failure or that such insurance will continue to
be available to the Company at all or, if available, that it will be available
on commercially reasonable terms. See "Business--Products and Services."

In addition to its own systems, the Company relies on certain equipment,
systems and services from third parties that are also subject to risks,
including risks of system failure or inadequacy. For example, in providing its
credit verification service, the Company is dependent on access to various
credit information data bases. Similarly, delivery of the Company's activation
services is often dependent on the availability and performance of third-party
billing systems. If, for any reason, the Company were unable to access any
such data bases or third-party billing systems, the Company's ability to
process credit verification transactions could be impaired. In addition, the
Company's business is materially dependent on service provided by various
local and long distance telephone companies. A significant increase in the
cost of telephone services that is not recoverable through an increase in the
price of the Company's services, or any significant interruption in telephone
services, could have a material adverse effect on the Company's business,
financial condition, results of operations and cash flow.

Risk of Software Defects; Dependence on Third-Party Software. The software
developed and utilized by the Company in providing its products and services
may contain errors. Although the Company engages in extensive testing of its
software before it is used to provide services to clients, there can be no
assurance that errors will not be found in software after commencement of the
use of such software. Any such error may result

10
<PAGE>

in the Company's partial or total inability to provide services to its
clients, additional and unexpected expenses to fund further product
development or to add programming personnel to complete a development project,
or loss of revenue because of the inability of clients to use the Company's
products or services or the termination by clients of their arrangements with
the Company. Any of these results could have a material adverse effect on the
Company's business, financial condition, results of operations and cash flow.

Certain software used in the Company's software products and to support the
Company's qualification and activation services is licensed by the Company
from third parties. The Company licenses software from Pilot Software, Inc.
under a license agreement that will expire in December 2000 and licenses
software from Trans Union Corporation under a one-year renewable agreement.
There can be no assurance that these suppliers will continue to license this
software to the Company or, if any supplier terminates its agreement with the
Company, that the Company will be able to develop or otherwise procure
software from another supplier on a timely basis or on commercially reasonable
terms. Even if the Company succeeds in developing or procuring such software
in such circumstances, there can be no assurance that the Company will be able
to do so in a timely fashion. See "Business--Proprietary Rights."

Risks Associated with Potential Acquisitions. The Company may in the future
pursue acquisitions of companies, technologies or assets that complement the
Company's business. Future acquisitions may result in the potentially dilutive
issuance of equity securities, the incurrence of additional debt, the write-
off of in-process research and development or software acquisition and
development costs and the amortization of expenses related to goodwill and
other intangible assets, any of which could have a material adverse effect on
the Company's business, financial condition, results of operations and cash
flow. Future acquisitions would involve numerous additional risks, including
difficulties in the assimilation of the operations, services, products and
personnel of the acquired company, the diversion of management's attention
from other business concerns, entering markets in which the Company has little
or no direct prior experience and the potential loss of key employees of the
acquired company. The Company currently has no agreements or understandings
with regard to any acquisition.

Government Regulation and Legal Uncertainties. The wireless carriers that
constitute the Company's clients are regulated at both the federal and state
levels. Federal and state regulation may decrease the growth of the wireless
telecommunications industry, affect the development of the PCS or other
wireless markets, limit the number of potential clients for the Company's
services, impede the Company's ability to offer competitive services to the
wireless telecommunications market, or otherwise have a material adverse
effect on the Company's business, financial condition, results of operations
and cash flow. 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 the Company to increased pricing pressures, decrease the demand
for the Company's products and services, increase the Company's cost of doing
business or otherwise have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow.

As the result of offering its ProFile product, the Company is subject to the
requirements of the Fair Credit Reporting Act and certain state laws. Although
the Company's business activities are not otherwise within the scope of
federal or state regulations applicable to credit bureaus and financial
institutions, the Company must take into account such regulations in order to
provide products and services that help its clients comply with such
regulations. The Company monitors regulatory changes and implements changes to
its products and services as appropriate. Although the Company attempts to
protect itself by written agreements with its clients, failure to reflect the
provisions of such regulations in a timely or accurate manner could possibly
subject the Company to liabilities that could have a material adverse effect
on the Company's business, financial condition, results of operations and cash
flow. See "Business--Government Regulation."

Limited Protection of Proprietary Technology; Risk of Third Party
Claims. The Company's success is dependent upon proprietary technology. The
Company currently has no patents and protects its property rights in its
technology primarily through copyrights, the law of trademarks, trade secrets
and employee and third-party

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<PAGE>

non-disclosure agreements. There can be no assurance that the steps taken by
the Company to protect its proprietary rights will be adequate to prevent
misappropriation of its technology or independent development by others of
similar technology. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. There can be no assurance that these protections will be
adequate.

Although the Company 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 the Company
in the future or that such future claims will not be successful. The Company
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 the Company's business, financial
condition, results of operations and cash flow. Furthermore, parties making
such claims could secure a judgment awarding substantial damages, as well as
injunctive or other equitable relief, which could effectively block the
Company's ability to make, use, sell, distribute or market its products and
services in the United States or abroad. Such a judgment could have a material
adverse effect on the Company's business, financial condition, results of
operations and cash flow. In the event a claim relating to proprietary
technology or information is asserted against the Company, the Company 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 the Company. The failure to obtain the necessary licenses or other rights
could preclude the sale, manufacture or distribution of the Company's products
and, therefore, could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow. The cost
of responding to any such claim may be material, whether or not the assertion
of such claim is valid. See "Business--Proprietary Rights."

Risks Associated with International Expansion. As part of its business
strategy, the Company may seek opportunities to expand its offerings into
international markets. The Company does not currently derive any revenues from
international markets. The Company believes that such expansion is important
to the Company's ability to continue to grow and to market its products and
services. In particular, some domestic wireless carriers expanding into
international markets may seek single, global solutions from the Company and
its competitors, and as a result, the inability of the Company to offer its
products and services internationally may have an adverse effect on the
Company's ability to market its products and services to those carriers for
use in the United States. In marketing its products and services
internationally, however, the Company will face new competitors, some of whom
may have established strong relationships with carriers. There can be no
assurance that the Company will be successful in marketing or distributing its
services abroad or that, if the Company is successful, its international
revenues will be adequate to offset the expense of establishing and
maintaining international operations. To date, the Company has no experience
in marketing and distributing its services internationally. In addition to the
uncertainty as to the Company's ability to establish an international
presence, there are certain difficulties and risks inherent in doing business
on an international level, such as compliance with regulatory requirements and
changes in these requirements, export restrictions, export controls relating
to technology, tariffs and other trade barriers, difficulties in staffing and
managing international operations, longer payment cycles, problems in
collecting accounts receivable, political instability, fluctuations in
currency exchange rates, seasonal reductions in business activity during the
summer months in Europe and certain other parts of the world and potentially
adverse tax consequences. There can be no assurance that one or more of such
factors will not have a material adverse effect on any international
operations established by the Company and, consequently, on the Company's
business, financial condition, results of operations and cash flow. See
"Business--Strategy."

Absence of Public Market; Possible Volatility of Stock Price. Prior to this
offering, there has been no public market for the Common Stock, and there can
be no assurance that an active trading market will develop or be sustained
after the offering. The initial public offering price of the Common Stock will
be determined through negotiations between the Company and the Representatives
of the Underwriters and may not be indicative of the market price for the
Common Stock after the offering. For a description of the factors to be
considered in determining the public offering price, see "Underwriting."
Factors such as announcements of technological innovations or new products by
the Company, its competitors and other third parties, as well as

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<PAGE>

quarterly variations in the Company's results of operations and market
conditions in the industry, may cause the market price of the Common Stock to
fluctuate significantly. In addition, the stock market in general has
experienced substantial price and volume fluctuations, which have particularly
affected the market prices of many technology companies and which have often
been unrelated to the operating performance of such companies. These broad
market fluctuations may adversely affect the market price of the Common Stock.

Control by Existing Stockholders May Discourage Change of Control. After the
sale of the shares of Common Stock offered hereby and the application of the
net proceeds thereof, the Company's executive officers, directors and 5%
stockholders will own beneficially an aggregate of 10,766,620 shares or
approximately 68.4% of the outstanding shares of Common Stock. As a result,
these stockholders, if acting together, would be able to control matters
requiring the approval of stockholders of the Company, including the election
of directors. This concentration of ownership by existing stockholders may
also have the effect of delaying or preventing a change in control of the
Company. See "Principal and Selling Stockholders."

Shares Eligible for Future Sale; Possible Adverse Effect on Market
Price. Sales of a substantial number of shares of Common Stock into the public
market following this offering could adversely affect the prevailing market
price of the Common Stock and the Company's ability to raise capital in the
future. Upon completion of this offering, the Company will have a total of
14,936,009 shares of Common Stock outstanding, of which the 3,200,000 shares
offered hereby will be freely tradable without restriction under the
Securities Act of 1933, as amended (the "Securities Act") by persons other
than "affiliates" of the Company, as defined under the Securities Act. The
remaining 11,736,009 shares of Common Stock outstanding are "restricted
securities" as that term is defined by Rule 144 and Rule 701 as promulgated
under the Securities Act (the "Restricted Shares"). Of the 11,736,009
Restricted Shares, 9,578,119 shares may be sold under Rule 144, subject in
some cases to certain volume restrictions and other conditions imposed
thereby. An additional 95,390 shares will become eligible for sale 90 days
after completion of the offering pursuant to Rules 144 and 701. The remaining
2,062,500 shares will be eligible for sale upon the expiration of their
respective two-year holding periods subject to the conditions of Rule 144,
such holding periods to expire on April 3, 1998 for 2,000,000 shares and on
June 30, 1998 for 62,500 shares. The Commission has proposed certain
amendments to Rule 144 that would reduce by one year the holding periods
required for shares subject to Rule 144 to become eligible for resale in the
public market. This proposal, if adopted, would permit earlier resale of
shares of Common Stock currently subject to holding periods under Rule 144. No
assurance can be given concerning whether or when the proposal will be adopted
by the Commission. Furthermore, of those 11,736,009 Restricted Shares, an
aggregate of 9,472,812 shares are subject to lock-up agreements expiring 180
days following the date of this Prospectus. Such agreements provide that Cowen
& Company may, in its sole discretion and at any time without notice, release
all or a portion of the shares subject to these lock-up agreements. The
2,263,197 shares not subject to lock-up agreements may be sold under Rule 144
subject in some cases to certain volume restrictions and other conditions
imposed thereby. Upon the expiration of the lock-up agreements, 9,673,509 of
the 11,736,009 Restricted Shares may be sold pursuant to Rules 144 or 701,
subject in some cases to certain volume restrictions imposed thereby. Certain
existing stockholders have rights to include shares of Common Stock owned by
them in future registrations by the Company for the sale of Common Stock or to
request that the Company register their shares under the Securities Act. See
"Shares Eligible for Future Sale--Registration Rights." Following the date of
this Prospectus, the Company intends to register on one or more registration
statements on Form S-8 approximately 2,615,800 shares of Common Stock issuable
under its stock option plans and 100,000 shares of Common Stock issuable under
its employee stock purchase plan. Of the shares issuable under its option
plan, 1,615,800 shares were subject to outstanding options as of June 20,
1996, of which 561,180 options were exercisable within 180 days following the
date of this Prospectus. Shares covered by such registration statements will
be eligible for sale in the public market after the effective date of such
registration. See "Management--Benefit Plans" and "Shares Eligible for Future
Sale."

Management's Discretion as to Use of Unallocated Net Proceeds. The principal
purposes of this offering are to increase the Company's equity capital, to
create a public market for the Common Stock, to facilitate future access by
the Company to public equity markets and to provide liquidity for the
Company's existing

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<PAGE>

stockholders. As of the date of this Prospectus, the Company has no specific
plans for the use of a substantial portion of the net proceeds of this
offering. The Company expects to use such unallocated proceeds for working
capital and other general corporate purposes, including potential
acquisitions. Consequently, the Board of Directors and management of the
Company will have significant flexibility in applying the net proceeds of this
offering. See "Use of Proceeds."

Benefits of the Offering to Current Stockholders. The completion of the
offering made by this Prospectus will provide significant benefits to the
current stockholders of the Company, including certain of its directors and
officers. The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholders. In addition, the Company intends to use
approximately $1,065,00 of the net proceeds of this offering to repurchase
shares of Common Stock from, and repay indebtedness outstanding under a
promissory note held by, a greater-than-5% stockholder of the Company. See
"Use of Proceeds" and "Certain Transactions." The completion of this offering
will also create a public market for the Common Stock and thereby is expected
to increase the market value of the investment by current stockholders in the
Company. Upon the closing of this offering, assuming an initial public
offering price of $10.00 per share (which represents the highest price in the
range of initial public offering prices set forth on the front cover of this
Prospectus), the difference between the aggregate purchase price paid or
payable by the Company's current securityholders for shares of Common Stock
held by them or subject to options or warrants held by them and the aggregate
market value of such shares will be approximately $127 million. See
"Dilution."

Anti-Takeover Effect of Charter Provisions, By-Laws and Delaware Law. The
Company's Amended and Restated Certificate of Incorporation (the "Restated
Charter") and Amended and Restated By-Laws (the "Restated By-Laws") will
contain provisions that could discourage a proxy contest or make more
difficult the acquisition of a substantial block of the Company's Common
Stock. The Restated Charter requires that any action required or permitted to
be taken by stockholders of the Company must be effected at a duly called
annual or special meeting of stockholders and may not be effected by any
consent in writing. The Restated By-Laws require specified advance notice by a
stockholder of a proposal or director nomination which such stockholder
desires to present at any annual or special meeting of stockholders. Special
meetings of stockholders may be called only by the President or a majority of
the Board of Directors. The Restated By-Laws provide for a classified Board of
Directors, and members of the Board of Directors may be removed only for cause
upon the affirmative vote of holders of at least two-thirds of the shares of
capital stock of the Company issued and outstanding and entitled to vote. The
affirmative vote of the holders of at least 75% of the shares of capital stock
of the Company issued and outstanding and entitled to vote is required to
amend or repeal these provisions. In addition, the Board of Directors is
authorized to issue shares of Common Stock and Preferred Stock which, if
issued, could dilute and adversely affect various rights of the holders of
Common Stock and, in addition, could be used to discourage an unsolicited
attempt to acquire control of the Company.

Following this offering, the Company will become subject to the anti-
takeover provisions of Section 203 of the Delaware General Corporation Law,
which will prohibit the Company from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 may limit the ability of stockholders to approve a transaction
that they deem to be in their best interests. The foregoing and other
provisions of the Restated Charter and the Restated By-Laws and the
application of Section 203 of the Delaware General Corporation Law could have
the effect of deterring certain takeovers or delaying or preventing certain
changes in control or management of the Company, including transactions in
which stockholders might otherwise receive a premium for their shares over
then current market prices. See "Description of Capital Stock--Preferred
Stock" and "--Anti-Takeover Effects of Provisions of the Restated Charter and
By-Laws and of Delaware Law."

Immediate and Future Dilution. Purchasers in the offering will experience
immediate and substantial dilution in the net tangible book value per share of
the Common Stock from the initial public offering price. Additional dilution
will occur upon the exercise of outstanding stock options and warrants. See
"Dilution" and "Management--Benefit Plans."

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<PAGE>

USE OF PROCEEDS

The net proceeds to the Company of the sale of the 3,025,000 shares of
Common Stock offered by the Company hereby at an assumed initial public
offering price of $9.00 per share are estimated to be $24,469,250, after
deducting the estimated underwriting discounts and commissions and offering
expenses payable by the Company. The Company estimates that it will receive
approximately $5,000 in additional funds from the exercise of certain warrants
by one of the Selling Stockholders to acquire certain of the shares of Common
Stock being offered by such Selling Stockholder hereby. The principal purposes
of this offering are to increase the Company's equity capital, to create a
public market for the Common Stock, to facilitate future access by the Company
to public equity markets and to provide liquidity for the Company's existing
stockholders.

The Company intends to use a portion of the net proceeds of this offering to
repay all of the indebtedness outstanding under its working capital bank line
of credit at the time this offering is completed (approximately $1,500,000 was
outstanding at June 20, 1996). The Company's working capital line of credit,
which provides for borrowings up to $4,000,000, bears interest at the lending
bank's prime rate plus .25% (8.5% at June 20, 1996). The working capital line
of credit is secured by a pledge of the accounts receivable, equipment and
intangible assets of the Company and terminates in June 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

The Company also intends to use $830,000 of the net proceeds of this
offering to repurchase an aggregate of 400,000 shares of Common Stock pursuant
to options granted to the Company in connection with the settlement of certain
litigation. In addition, the Company intends to use approximately $227,000 of
the net proceeds of this offering to repay indebtedness outstanding under an
8% promissory note, which was issued in April 1996 in partial payment of the
exercise price of an option to acquire 200,000 shares of Common Stock. The
promissory note matures in two equal installments in April 1997 and 1998. See
"Certain Transactions."

The Company intends to use the remainder of the net proceeds of this
offering for working capital and other general corporate purposes. In
addition, the Company may use a portion of the net proceeds of this offering
to acquire or invest in companies, technologies or assets that complement the
Company's business. While from time to time the Company may evaluate potential
acquisitions or investments, the Company is not currently involved in
negotiations with respect to, and has no agreement or understanding regarding,
any such acquisition or investment. Pending such uses, the Company intends to
invest the net proceeds in short-term, investment-grade, interest-bearing
securities. See "Risk Factors--Management's Discretion as to Use of
Unallocated Net Proceeds" and "--Risks Associated with Potential
Acquisitions."

The Company will not receive any proceeds from the sale of shares of Common
Stock offered by the Selling Stockholders hereby. See "Principal and Selling
Stockholders."

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its capital
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. The terms of
the Company's existing borrowing arrangements and bank lines of credit
prohibit the Company from declaring or paying cash dividends on the Common
Stock. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation--Liquidity and Capital Resources."

15
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1996 (i) on an actual basis and (ii) as adjusted to reflect the issuance
and sale by the Company of 3,025,000 shares of Common Stock offered hereby (at
an assumed initial offering price of $9.00 per share, after deducting the
estimated underwriting discounts and commissions and expenses payable by the
Company), the application of the estimated net proceeds thereof, the
conversion of all outstanding shares of Convertible Preferred Stock into
Common Stock and the filing of the Restated Charter. The following table
should be read in conjunction with the Financial Statements and Notes thereto
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------
AS
ACTUAL ADJUSTED
---------- --------
(IN
THOUSANDS)
<S> <C> <C>
Total long-term obligations, less current portion.......... $ 2,694 $ 2,581
------- -------
Redeemable convertible preferred stock and stockholders'
equity:
Redeemable convertible preferred stock, $.01 par value;
2,475,516 shares authorized, 2,451,305 shares issued and
outstanding, actual; no shares authorized, issued and
outstanding, as adjusted................................. 9,226 --
Preferred stock, $.01 par value; no shares authorized,
issued or outstanding, actual; 5,000,000 shares
authorized, no shares issued and outstanding, as
adjusted................................................. -- --
Common stock, $.01 par value; 20,000,000 shares authorized
and 6,256,120 shares outstanding, actual; 60,000,000
shares authorized and 14,536,009 shares outstanding, as
adjusted(1).............................................. 67 153
Additional paid-in capital................................. 75 33,689
Warrants................................................... 375 375
Notes receivable, stockholders............................. (13) (13)
Accumulated deficit........................................ (3,951) (3,951)
Less treasury stock, at cost; 401,148 shares, actual;
801,148 shares, as adjusted............................... (706) (1,536)
------- -------
Total redeemable convertible preferred stock and
stockholders' equity..................................... 5,073 28,717
------- -------
Total capitalization.................................... $ 7,767 $31,298
======= =======
</TABLE>
- --------

(1) Excludes (i) 1,615,800 shares of Common Stock issuable upon exercise of
stock options outstanding as of June 30, 1996, (ii) 1,000,000 shares of
Common Stock reserved for future option grants under the Company's 1996
Incentive and Nonqualified Stock Option Plan, (iii) 100,000 shares of
Common Stock for issuance under the Company's 1996 Employee Stock Purchase
Plan and (iv) 747,750 shares of Common Stock issuable upon exercise of
warrants outstanding as of June 30, 1996. See "Management--Benefit Plans"
and Notes 7 and 12 to Notes to Financial Statements.

16
<PAGE>

DILUTION

The pro forma net tangible book value of the Company as of June 30, 1996 was
$4,344,000, or $0.38 per share of Common Stock. Pro forma net tangible book
value per share represents the amount of the Company's tangible assets less
total liabilities, divided by the number of shares of Common Stock outstanding
after giving effect to the conversion of all outstanding shares of Convertible
Preferred Stock into Common Stock (which will occur upon the closing of this
offering). After giving effect to the sale of 3,025,000 shares of Common Stock
offered hereby by the Company at an assumed initial public offering price of
$10.00 per share (which represents the highest price in the range of initial
public offering prices set forth on the front cover of this Prospectus) and
the Company's repurchase of 400,000 shares of Common Stock for an aggregate
purchase price of $830,000, and after deducting the estimated underwriting
discounts and commissions and offering expenses payable by the Company, the
Company's pro forma as adjusted net tangible book value at June 30, 1996 would
have been $30,802,000, or $2.12 per share. This represents an immediate
increase in pro forma net tangible book value of $1.74 per share to existing
stockholders and an immediate dilution of $7.88 per share to investors
purchasing shares of Common Stock in this offering. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $10.00
Pro forma net tangible book value per share at June 30, 1996... $0.38
Increase per share attributable to new investors............... 1.74
-----
Pro forma as adjusted net tangible book value per share after
offering...................................................... 2.12
------
Dilution per share to new investors............................ $ 7.88
======
</TABLE>

The following table summarizes, on a pro forma as adjusted basis as of June
30, 1996, the number of shares of Common Stock purchased from the Company
(after giving effect to the conversion of all outstanding shares of
Convertible Preferred Stock into Common Stock), the total consideration paid,
and the average price per share paid by existing stockholders and to be paid
by the new investors, at an assumed initial public offering price of $10.00
per share (which represents the highest price in the range of initial public
offering prices set forth on the front cover of this Prospectus), before
deducting the estimated underwriting discounts and commissions and offering
expenses payable by the Company:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)... 11,904,592 79.7% $ 9,346,000 23.6% $ 0.79
New investors(1)........... 3,025,000 20.3 30,250,000 76.4 10.00
---------- ----- ----------- -----
Total.................... 14,929,592 100.0% $39,596,000 100.0%
========== ===== =========== =====
</TABLE>
- --------

(1) Sales by the Selling Stockholders in this offering will reduce the number
of shares held by existing stockholders to 11,729,592 or approximately
78.6% (11,249,592 shares or approximately 75.4% if the Underwriters' over-
allotment option is exercised in full) and will increase the number of
shares held by new investors to 3,200,000 or approximately 21.4%
(3,680,000 shares or approximately 24.6% if the Underwriters' over-
allotment option is exercised in full) of the total number of shares of
Common Stock outstanding after this offering. See "Principal and Selling
Stockholders."

The foregoing table does not reflect exercises of options or warrants since
June 30, 1996 and assumes no exercise of any currently outstanding options or
warrants. As of June 30, 1996, there were outstanding options to purchase
1,615,800 shares of Common Stock at a weighted average exercise price of $1.80
per share and outstanding warrants to purchase 747,750 shares of Common Stock
at an exercise price of $2.00 (excluding certain warrants to be exercised as
of the closing of this offering). To the extent that such options and warrants
are exercised in the future, there will be further dilution to new investors.
See "Management--Benefit Plans," "Description of Capital Stock" and Notes 7
and 12 to Notes to Financial Statements.

17
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data for the five years ended September 30,
1995 and the three months ended December 31, 1995 have been derived from the
Company's audited historical financial statements, certain of which are
included in this Prospectus. Selected financial data for the twelve months
ended December 31, 1995 are unaudited. Selected financial data for the three
months ended December 31, 1994, and six months ended June 30, 1995 and June
30, 1996 have been derived from the unaudited financial statements of the
Company. In the opinion of management, the unaudited financial information
presented reflects all adjustments, consisting only of normal, recurring
adjustments, necessary for a fair presentation of the financial information
for each such period. Operating results for the six months ended June 30, 1996
are not necessarily indicative of the results that may be expected for any
other interim period or for the year ending December 31, 1996. This data
should be read in conjunction with the Financial Statements and Notes thereto
and the other financial information included elsewhere in this Prospectus. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
TWELVE THREE MONTHS SIX MONTHS
MONTHS ENDED ENDED
YEARS ENDED SEPTEMBER 30, ENDED DEC. 31, JUNE 30,
----------------------------------------- DEC. 31, -------------- ----------------
1991 1992 1993 1994 1995 1995(1) 1994 1995 1995 1996
------- ------ ------ ------- ------- -------- ------ ------ ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 1,174 $2,988 $6,986 $13,398 $19,350 $20,347 $5,515 $6,512 $9,003 $13,263
Cost of revenues........ 824 1,703 3,554 7,415 12,607 13,075 3,016 3,484 6,232 7,511
------- ------ ------ ------- ------- ------- ------ ------ ------- -------
Gross profit............ 350 1,285 3,432 5,983 6,743 7,272 2,499 3,028 2,771 5,752
------- ------ ------ ------- ------- ------- ------ ------ ------- -------
Operating expenses:
Development............ 614 790 1,164 2,317 3,864 4,159 850 1,145 1,863 1,971
Sales and marketing.... 214 241 829 815 1,902 2,264 433 795 938 1,917
General and administra-
tive.................. 647 877 1,309 1,644 2,584 2,655 630 701 1,301 1,172
------- ------ ------ ------- ------- ------- ------ ------ ------- -------
Total operating ex-
penses................. 1,475 1,908 3,302 4,776 8,350 9,078 1,913 2,641 4,102 5,060
------- ------ ------ ------- ------- ------- ------ ------ ------- -------
Income (loss) from oper-
ations................. (1,125) (623) 130 1,207 (1,607) (1,806) 586 387 (1,331) 692
Other income (ex-
pense)(2).............. (77) (130) (255) (234) (826) (965) (174) (313) (405) (370)
------- ------ ------ ------- ------- ------- ------ ------ ------- -------
Income (loss) before in-
come taxes............. (1,202) (753) (125) 973 (2,433) (2,771) 412 74 (1,736) 322
Provision for income
taxes.................. -- -- -- (23) -- (2) -- (2) -- (19)
------- ------ ------ ------- ------- ------- ------ ------ ------- -------
Net income (loss)....... $(1,202) $ (753) $ (125) $ 950 $(2,433) $(2,773) $ 412 $ 72 $(1,736) $ 303
======= ====== ====== ======= ======= ======= ====== ====== ======= =======
Pro forma net income
(loss) per common
share(3)............... $ (0.19) $ 0.01 $ 0.02
Pro forma weighted aver-
age number of common
and common equivalent
shares outstanding(3).. 12,682 13,182 13,814
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------------------------- DEC. 31, JUNE 30,
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equiva-
lents.................. $ 44 $ 182 $ 192 $ 1,832 $ 539 $ 58 $ 3,532
Working capital (defi-
ciency)................ (818) (1,030) (292) 1,715 (3,280) (1,967) 2,420
Total assets............ 1,095 2,390 3,396 9,181 10,214 11,041 14,555
Long-term obligations,
less current portion... 172 624 554 4,197 3,796 4,515 2,694
Redeemable convertible
preferred stock........ 1,009 2,198 2,933 2,948 3,131 3,177 9,226
Stockholders' deficien-
cy..................... (1,420) (2,292) (2,132) (1,093) (3,564) (3,535) (4,153)
</TABLE>
- -------
(1) The Company changed its fiscal year end from September 30 to December 31,
effective with the fiscal year ending December 31, 1996.
(2) Consists principally of interest expense.

(3) Gives effect to the conversion of all outstanding shares of Convertible
Preferred Stock into 5,247,324 shares of Common Stock upon the closing of
this offering. The Company has never declared or paid any cash dividends
on its Common Stock.

18
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the Company's Financial Statements and Notes
thereto included elsewhere in this Prospectus. The discussion in this
Prospectus contains forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. This Company's actual results could
differ materially from those discussed herein. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors" as
well as those discussed elsewhere herein.

OVERVIEW

Lightbridge develops, markets and supports a suite of integrated products
and services that enable wireless telecommunications carriers to improve their
customer acquisition and retention processes. The Company changed its fiscal
year end from September 30 to December 31, effective with the fiscal year
ending December 31, 1996. The financial statements for the period ended
December 31, 1995 reflect the Company's results of operations for the three
months then ended. References to fiscal years are to years ended September 30.

Lightbridge's total revenues increased from $7.0 million in fiscal 1993 to
$19.4 million in fiscal 1995. This revenue increase has been 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 and software and other revenues. Historically,
transaction revenues have accounted for substantially all of the Company's
revenues, although software and other revenues have increased during recent
periods primarily as a result of the initial licensing of certain software
products. Software and other revenues, which represented no more than 6.0% of
total revenues in each of fiscal 1993, 1994 and 1995, increased to 7.0% and
19.7% of total revenues in the three months ended December 31, 1995 and the
six months ended June 30, 1996, respectively. There can be no assurance that
the Company's software products will achieve market acceptance or that the mix
of the Company's revenues will remain constant.

Lightbridge's transaction revenues are derived primarily from the processing
of applications 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 teleservices 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.
Generally, the Company's clients are charged on a per transaction or, to a
lesser extent, on a per minute 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 and other revenues have been derived primarily from
developing customized software and providing Business Integration consulting
services. The Company also began licensing its Channel Solutions software with
the introduction of its POPS and Iris products in fiscal 1995 and its SAMS
software in 1996. Lightbridge's Channel Solutions products and services are
designed to assist clients in interfacing with the Company's systems and are
being marketed primarily to wireless telecommunications carriers that utilize
the Company's transaction processing services. The Company's Wireless
Intelligence products are being designed to help carriers analyze their
marketplace to improve their business operations. While its Channel Solutions
products are, and its Wireless Intelligence products are currently expected to
be, licensed as packaged software

19
<PAGE>

products, each of these products requires customization and integration with
other products and systems to varying degrees. Revenues derived from
consulting and other projects are recognized throughout the performance period
of the contracts. Revenues from licensing software are recognized at the later
of delivery of the licensed product or satisfaction of acceptance criteria.
Lightbridge's software and other revenues depend primarily on the continuing
need for integration of diverse systems and acceptance of the Company's
software products by the Company's existing and new clients.

During fiscal 1994 and 1995 and the three months ended December 31, 1995,
each of the Company's four largest clients, and for the six months ended June
30, 1996, each of the Company's three largest clients, accounted for more than
10% of the Company's total revenues, representing an aggregate of 64%, 63%,
61% and 50% of total revenues in those periods, respectively. During fiscal
1993, the Company's two largest clients each accounted for more than 10% of
the Company's total revenues, representing an aggregate of 34% of total
revenues. One of the Company's clients, which accounted for 10% and 11% of the
Company's revenues in the year ended September 30, 1995 and the six months
ended June 30, 1996, respectively, has notified the Company of its intent to
terminate its agreements with the Company, effective in the fourth calendar
quarter of 1996. During 1996, another of these clients, which accounted for
31% and 19% of the Company's revenues in the fiscal year ended September 30,
1995 and the six months ended June 30, 1996, respectively, is changing the way
it accesses the Company's Customer Acquisition System. Both of these clients
historically used the call center support solutions provided by the Company's
Teleservices Group. The continuing customer is switching to on-line access to
the Customer Acquisition System. As a result, the Company expects the revenues
from this client to decrease significantly during 1996 and 1997. The Company
currently believes that the loss of revenues from these clients will be
mitigated by increased revenues from existing clients and revenues from new
clients. Further, the cost of processing transactions through the Teleservices
Group typically involves personnel costs associated with staffing the
Company's call center, which are not required for on-line transaction
processing. Thus, the Company currently expects that its variable cost of
revenues associated with processing transactions will decrease as a result of
the termination of the agreements with one client and the change in services
used by the other client. As a result, the Company currently believes that the
termination of these agreements by one client, and the change in services used
by the other client, will not have a material adverse effect on its business,
financial condition, results of operations or cash flow. See "Risk Factors--
Dependence on Limited Number of Clients." The Company's revenues have been
derived exclusively from sales of products and services in the United States.

Beginning in fiscal 1995, Lightbridge has increased its sales and marketing
efforts to renew contracts with existing cellular carrier clients and to add
new wireless telecommunications carrier clients, including PCS service
providers. In addition, beginning in fiscal 1995, the Company has increased
its development efforts to continue to enhance its existing software and to
develop and acquire new software products and services, including its Channel
Solutions and Wireless Intelligence software products and services. The
Company currently intends to continue to increase its development, sales and
marketing efforts in pursuit of these goals.

Prior to fiscal 1995, the Company's development activities were focused on
creating software for its outsourcing and service bureau operations. All
development costs related to these activities were expensed when incurred. In
fiscal 1995, Lightbridge began developing certain software products to be
licensed as separate products. In connection with these development efforts,
the Company acquired rights to certain pen-based technology for $400,000,
which has been incorporated in the Company's SAMS product, and certain
multimedia software technology, which has been incorporated in the Company's
Iris product. The multimedia technology was purchased for $45,000 in cash plus
an obligation to pay certain royalties. Royalties totalling $6,000 were paid
as of June 30, 1996. In fiscal 1995, the Company capitalized approximately
$980,000 of software development costs for internally developed products and
for the purchase of such technology. Commencing with the availability of the
SAMS and Iris products for general release in fiscal 1995, capitalized
software development costs are being amortized using the straight-line method
over a two-year period.

20
<PAGE>

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- -------------------
YEAR ENDED SEPTEMBER 30, DECEMBER 31, JUNE 30,
----------------------------- -------------------- -------------------
1993 1994 1995 1994 1995 1995 1996
-------- -------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Transaction........... 94.0% 96.3% 95.1% 96.6% 93.0% 96% 80.3%
Software and other.... 6.0 3.7 4.9 3.4 7.0 4.0 19.7
-------- -------- -------- --------- --------- -------- --------
100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenues........ 50.9 55.3 65.2 54.7 53.5 69.2 56.6
-------- -------- -------- --------- --------- -------- --------
Gross profit............ 49.1 44.7 34.8 45.3 46.5 30.8 43.4
-------- -------- -------- --------- --------- -------- --------
Operating expenses:
Development........... 16.7 17.3 20.0 15.4 17.6 20.7 14.9
Sales and marketing... 11.9 6.1 9.8 7.9 12.2 10.4 14.5
General and adminis-
trative.............. 18.7 12.3 13.3 11.4 10.8 14.5 8.8
-------- -------- -------- --------- --------- -------- --------
Total operating ex-
penses............. 47.3 35.7 43.1 34.7 40.6 45.6 38.2
-------- -------- -------- --------- --------- -------- --------
Income (loss) from oper-
ations................. 1.8 9.0 (8.3) 10.6 5.9 (14.8) 5.2
Other income (expense),
net.................... (3.6) (1.7) (4.3) (3.1) (4.8) (4.5) (2.8)
-------- -------- -------- --------- --------- -------- --------
Income (loss) before in-
come taxes............. (1.8) 7.3 (12.6) 7.5 1.1 (19.3) 2.4
Provision for income
taxes.................. -- (0.2) -- -- -- -- (0.1)
-------- -------- -------- --------- --------- -------- --------
Net income (loss)....... (1.8)% 7.1% (12.6)% 7.5% 1.1% (19.3)% 2.3%
======== ======== ======== ========= ========= ======== ========
</TABLE>

Six Months Ended June 30, 1996 Compared with Six Months Ended June 30, 1995

Revenues. Total revenues increased by 47% to $13.3 million in the six months
ended June 30, 1996 from $9.0 million in the six months ended June 30, 1995.
Transaction revenues increased by 23% to $10.7 million in the six months ended
June 30, 1996 from $8.6 million in the six months ended June 30, 1995,
primarily due to increased volume of wireless customer qualification and
activation transactions processed for existing carrier clients and, to a
lesser extent, new carrier clients. Software and other revenues increased by
621% to $2.6 million in the six months ended June 30, 1996 from $0.4 million
in the six months ended June 30, 1995 principally as a result of the increase
in revenues attributable to customized software integration services provided
to both existing and new clients and inclusion in the 1996 period of revenues
from the Company's Channel Solutions products and services. The increase in
revenues from customized software integration services in the 1996 period
resulted primarily from projects undertaken for one client, which projects the
Company currently expects will continue at least through the end of 1996.

Cost of Revenues. Cost of revenues consists primarily of personnel costs,
costs of maintaining systems and networks used in processing subscriber
qualification and activation transactions (including depreciation and
amortization of those systems and networks) and amortization of capitalized
software. 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 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 between transaction revenues and
software and other revenues. Cost of revenues increased by 21% to $7.5 million
in the six months ended June 30, 1996 from $6.2 million in the six months
ended June 30, 1995, while decreasing as a percentage of total revenues to 57%
from 69%. The dollar increase in costs resulted principally from increases in
transaction volume, costs attributable to expansion of the Company's staff and
systems capacity and amortization of capitalized software. The decrease in
cost of revenues as a percentage of total revenues primarily
reflected a higher percentage of transaction revenues from on-line processing
than teleservices operations, a

21
<PAGE>

higher percentage of revenues from customized software integration services
and software licenses and increased utilization of the Company's operating and
networking systems.

Development. Development expenses 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 also include software
development costs incurred prior to the establishment of technological
feasibility. Development expenses increased by 5.8% to $2.0 million in the six
months ended June 30, 1996 from $1.9 million in the six months ended June 30,
1995, while decreasing as a percentage of total revenues to 15% from 21%. The
increase in costs resulted principally from the hiring of additional personnel
to support the continued enhancement of products and services and the
development of new products and services including customized software
integration services, as well as the initial two modules in the Wireless
Intelligence suite. The decrease in development expenses as a percentage of
total revenues reflected the significant growth in the Company's total
revenues. The Company did not capitalize any software development costs during
the six months ended June 30, 1996 and capitalized $524,000 of internally
developed software development costs during the six months ended June 30,
1995.

The Company expects to increase its engineering and development efforts in
order to continue enhancing its existing products and services, including its
CAS, Wireless Intelligence, Business Integration and Channel Solutions
products, 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 104% to $1.9 million in
the six months ended June 30, 1996 from $0.9 million in the six months ended
June 30, 1995, and increased as a percentage of total revenues to 14% from
10%. The increase in costs was due to the addition of direct sales personnel,
increased commissions resulting from the higher level of revenues and
increased use of marketing programs, including trade shows. The Company
continues to invest in sales and marketing efforts in order to increase its
penetration of existing accounts and to add new clients and markets.

General and Administrative. General and administrative expenses consist
principally of salaries of administrative, executive, finance and human
resources personnel, as well as outside professional fees. General and
administrative expenses decreased by 10% to $1.2 million in the six months
ended June 30, 1996 from $1.3 million in the six months ended June 30, 1995,
and decreased as a percentage of total revenues to 9% from 14%. The decrease
in general and administrative expenses was due principally to a decrease in
legal costs associated with litigation (see "Certain Transactions--Settlement
Agreement and Related Matters") as well as reduced general and administrative
headcount.

Other Income (Expense) Net. Other income (expense) decreased by 9% to
$370,000 in the six months ended June 30, 1996 from $405,000 in the six months
ended June 30, 1995. Other income (expense) has consisted predominantly of
interest 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 decreased by 1% to
$416,000 in the six months ended June 30, 1996 from $421,000 in the six months
ended June 30, 1995. Interest income, which historically had not been
significant, increased to $44,000 in the six months ended June 30, 1996 from
$15,000 in the six months ended June 30, 1995 as a result of the investment of
the proceeds from the issuance of Series D Convertible Preferred Stock in
April 1996.

Provision for Income Taxes. Due to the application of net operating loss
carryforwards from previous years, no significant provision for or benefit
from income taxes was recorded in the six months ended June 30, 1996. The
Company incurred a net loss for the three months ended June 30, 1995 and did
not record a benefit for income tax for the period.

22
<PAGE>

Three Months Ended December 31, 1995 Compared with Three Months Ended
December 31, 1994

Revenues. Total revenues increased by 18% to $6.5 million in the three
months ended December 31, 1995 from $5.5 million in the three months ended
December 31, 1994. Transaction revenues increased by 14% to $6.1 million in
the three months ended December 31, 1995 from $5.3 million in the three months
ended December 31, 1994, principally from increased volume of wireless
customer qualification and activation transactions processed for existing
carrier clients and, to a lesser extent, new carrier clients. Software and
other revenues increased by 142% to $458,000 in the three months ended
December 31, 1995 from $189,000 in the three months ended December 31, 1994,
primarily as a result of the inclusion in the three months ended December 31,
1995 of revenues attributable to the Company's Channel Solutions products and
services.

Cost of Revenues. Cost of revenues increased by 16% to $3.5 million in the
three months ended December 31, 1995 from $3.0 million in the three months
ended December 31, 1994, while decreasing as a percentage of total revenues to
54% from 55%. The dollar increase in costs resulted primarily from increases
in transaction volume, increases in personnel costs attributable to the
Company's TeleServices Group and the inclusion of amortization of capitalized
software. The decrease in cost of revenues as a percentage of total revenues
was primarily the result of a higher percentage of software license revenues,
offset in part by increased costs associated with the Company's infrastructure
investments.

Development. Development expenses increased by 35% to $1.1 million in the
three months ended December 31, 1995 from $0.9 million in the three months
ended December 31, 1994, while increasing as a percentage of total revenues to
18% from 15%. The increase in costs resulted primarily from the hiring of
additional personnel to support the continued enhancement of the Company's
existing products and services and the development of new products and
services, including Channel Solutions, Wireless Intelligence and Business
Integration products and services. The Company did not capitalize any software
development costs during the three months ended December 31, 1995 and
capitalized $62,000 of internally developed software development costs during
the three months ended December 31, 1994.

Sales and Marketing. Sales and marketing expenses increased by 84% to
$795,000 in the three months ended December 31, 1995 from $433,000 in the
three months ended December 31, 1994, and increased as a percentage of total
revenues to 12% from 8%. The increase in costs was due primarily to the
addition of direct sales personnel and increased commissions resulting from
the higher level of revenues.

General and Administrative. General and administrative expenses increased by
11% to $701,000 in the three months ended December 31, 1995 from $630,000 in
the three months ended December 31, 1994. The increase in costs reflects
increases in administrative and finance personnel and, to a lesser extent,
legal costs associated with litigation against a former officer of the
Company.

Other Income (Expense), Net. Interest expense increased by 66% to $307,000
in the three months ended December 31, 1995 from $185,000 in the three months
ended December 31, 1994. This increase principally reflected a higher level of
borrowings for working capital purposes under the Company's bank line of
credit, as well as the inclusion of interest attributable to the issuance of
subordinated notes in August 1995. In addition, interest on capital leases
increased as the result of significant investments in the Company's
infrastructure, which were financed primarily through the leasing of equipment
accounted for as capital leases.

Provision for Income Taxes. Due to the application of net operating loss
carryforwards from previous years, no significant provision for or benefit
from income taxes was recorded in the three months ended December 31, 1995 and
1994. At December 31, 1995, the Company had net operating loss carryforwards
for federal income tax purposes of $2.1 million, expiring at various dates
through 2010.

Fiscal Year Ended September 30, 1995 Compared with Fiscal Year Ended
September 30, 1994

Revenues. Total revenues increased by 44% to $19.4 million in fiscal 1995
from $13.4 million in fiscal j1994. Transaction revenues increased by 43% to
$18.4 million in fiscal 1995 from $12.9 million in fiscal 1994, principally
from increased volume of wireless customer qualification and activation
transactions processed for

23
<PAGE>

existing carrier clients. Software and other revenues increased by 92% to
$948,000 in fiscal 1995 from $495,000 in fiscal 1994, primarily due to an
increase in customized software development for existing clients.

Cost of Revenues. Cost of revenues increased by 70% to $12.6 million in
fiscal 1995 from $7.4 million in fiscal 1994, and increased as a percentage of
total revenues to 65% from 55%. The increase in costs resulted primarily from
increases in transaction volume and increases in personnel costs attributable
to the Company's TeleServices Group and other business operations. In fiscal
1995, the Company relocated its TeleServices Group to a larger facility,
resulting in increased facilities costs. The Company made significant
investments in fiscal 1995 in its computing platform, as well as in increased
networking and systems capacity. The increase in cost of revenues as a
percentage of total revenues reflected continued investment in the Company's
service delivery infrastructure.

Development. Development expenses increased by 67% to $3.9 million in fiscal
1995 from $2.3 million in fiscal 1994, and increased as a percentage of total
revenues to 20% from 17%. The increase in costs was principally attributable
to the hiring of additional personnel to support the continued enhancement of
the Company's existing products and services and the development of new
products and services, including Channel Solutions and Wireless Intelligence
products and services. This increase was offset in part by the capitalization
of $980,000 of software development costs for internally developed products
and for certain purchased technology. The Company did not capitalize any
software development costs in fiscal 1994.

Sales and Marketing. Sales and marketing expenses increased by 133% to $1.9
million in fiscal 1995 from $0.8 million in fiscal 1994, and increased as a
percentage of total revenues to 10% from 6%. The increase in costs was due
principally to increased commissions resulting from the higher level of
transaction revenues, an increase in sales and marketing personnel and an
increase in recruiting, training and other expenses related to the expansion
of the Company's sales and marketing organization. The increase was also
attributable to the Company's increased participation in trade shows and
conferences and additional advertising in trade publications.

General and Administrative. General and administrative expenses increased by
57% to $2.6 million in fiscal 1995 from $1.6 million in fiscal 1994, and
increased as a percentage of total revenues to 13% from 12%. The increase in
costs was principally due to hiring of additional personnel to support the
Company's growth and, to a lesser extent, legal costs associated with
litigation against a former officer of the Company.

Other Income (Expense), Net. Interest expense increased by 252% to $864,000
in fiscal 1995 from $246,000 in fiscal 1994. This increase principally
consisted of interest attributable to the issuance of subordinated notes in
August 1995, as well as a higher level of borrowings for working capital
purposes under the Company's bank line of credit. In addition, interest on
capital leases increased as the result of significant investments in the
Company's infrastructure, which were financed primarily through the leasing of
equipment accounted for as capital leases.

Provision for Income Taxes. The Company recorded a net loss in fiscal 1995
and did not record a provision for or benefit from income taxes. As a result
of the Company's net operating loss carryforwards from previous years, the
provision for income taxes in fiscal 1994 consisted of alternative minimum
taxes.

Fiscal Year Ended September 30, 1994 Compared with Fiscal Year Ended
September 30, 1993

Revenues. Total revenues increased by 92% to $13.4 million in fiscal 1994
from $7.0 million in fiscal 1993. Transaction revenues increased by 97% to
$12.9 million in fiscal 1994 from $6.6 million in fiscal 1993, principally
from increased volume of wireless customer qualification and activation
transactions processed for existing carrier clients (including expansion into
new geographic markets) and new carrier clients. Software and other revenues
increased by 18% to $495,000 in fiscal 1994 from $420,000 in fiscal 1993, due
principally to a change in the Company's pricing practices for custom
development services.

Cost of Revenues. Cost of revenues increased by 109% to $7.4 million in
fiscal 1994 from $3.6 million in fiscal 1993, and increased as a percentage of
total revenues to 55% from 51%. The increase in costs resulted from the
Company's increased transaction volume and continued investments in its
service delivery infrastructure.

24
<PAGE>

Development. Development expenses increased by 99% to $2.3 million in fiscal
1994 from $1.2 million in fiscal 1993, while remaining relatively unchanged as
a percentage of total revenues at approximately 17%. The increase in costs
resulted from an increase in the number of engineering personnel in order to
expand the modules offered as a part of CAS and to further the development of
ProFile and system interfaces. The Company did not capitalize any software
development costs during fiscal 1994 or 1993.

Sales and Marketing. Sales and marketing expenses decreased by 2% to
$815,000 in fiscal 1994 from $829,000 in fiscal 1993, and decreased as a
percentage of total revenues to 6% from 12%. The lower level of sales and
marketing expenses as a percentage of revenues in fiscal 1994 reflected the
significant revenue increase in fiscal 1994, as the Company benefited from the
addition of sales and marketing personnel during fiscal 1993.

General and Administrative. General and administrative expenses increased by
26% to $1.6 million in fiscal 1994 from $1.3 million in fiscal 1993, while
decreasing as a percentage of total revenues to 12% from 19%. The increase in
costs was principally due to hiring of additional personnel to support the
Company's growth.

Other Income (Expense), Net. Interest expense decreased by 2% to $246,000 in
fiscal 1994 from $250,000 in fiscal 1993. This decrease principally reflected
lower interest rates in fiscal 1994.

Provision for Income Taxes. As a result of the Company's net operating loss
carryforwards from previous years, the provision for income taxes in fiscal
1994 consisted of alternative minimum taxes. No provision for or benefit from
income taxes was recorded in fiscal 1993.

QUARTERLY RESULTS OF OPERATIONS

The following tables set forth certain quarterly financial data for the
eight quarters ended June 30, 1996. The quarterly information is unaudited but
has been prepared on the same basis as the audited financial statements
included elsewhere in this Prospectus. In the opinion of management, all
necessary adjustments (consisting only of normal recurring adjustments) have
been included to present fairly the unaudited quarterly results when read in
conjunction with the Financial Statements and Notes thereto included elsewhere
in this Prospectus. The results of operations for any quarter are not
necessarily indicative of the results of any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------
SEPT. 30 DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1995 1995 1995 1995 1996 1996
-------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Revenues:
Transaction........... $3,815 $5,326 $4,215 $4,426 $ 4,435 $6,054 $5,284 $5,369
Software and other.... 164 189 237 125 397 458 1,030 1,580
------ ------ ------ ------ ------- ------ ------ ------
3,979 5,515 4,452 4,551 4,832 6,512 6,314 6,949
Cost of revenues........ 2,589 3,016 3,125 3,107 3,360 3,484 3,634 3,877
------ ------ ------ ------ ------- ------ ------ ------
Gross profit............ 1,390 2,499 1,327 1,444 1,472 3,028 2,680 3,072
------ ------ ------ ------ ------- ------ ------ ------
Operating expenses:
Development........... 756 850 929 934 1,151 1,145 953 1,018
Sales and marketing... 212 433 477 462 530 795 896 1,021
General and adminis-
trative.............. 340 630 566 735 653 701 549 623
------ ------ ------ ------ ------- ------ ------ ------
Total operating ex-
penses............. 1,308 1,913 1,972 2,131 2,334 2,641 2,398 2,662
------ ------ ------ ------ ------- ------ ------ ------
Income (loss) from oper-
ations................. 82 586 (645) (687) (862) 387 282 410
Other income (expense),
net.................... (99) (174) (202) (203) (247) (313) (250) (120)
------ ------ ------ ------ ------- ------ ------ ------
Income (loss) before in-
come taxes............. (17) 412 (847) (890) (1,109) 74 32 290
Provision for income
taxes.................. -- -- -- -- -- (2) (9) (10)
------ ------ ------ ------ ------- ------ ------ ------
Net income (loss)....... $ (17) $ 412 $ (847) $ (890) $(1,109) $ 72 $ 23 $ 280
====== ====== ====== ====== ======= ====== ====== ======
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1995 1995 1995 1995 1996 1996
--------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AS A PERCENTAGE OF TOTAL
REVENUES
Revenues:
Transaction........... 95.9% 96.6% 94.7% 97.3% 91.8% 93.0% 83.7% 77.3%
Software and other.... 4.1 3.4 5.3 2.7 8.2 7.0 16.3 22.7
----- ----- ----- ----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenues........ 65.1 54.7 70.2 68.2 69.5 53.5 57.5 55.8
----- ----- ----- ----- ----- ----- ----- -----
Gross profit............ 34.9 45.3 29.8 31.8 30.5 46.5 42.5 44.2
----- ----- ----- ----- ----- ----- ----- -----
Operating expenses:
Development........... 19.0 15.4 20.9 20.5 23.8 17.6 15.1 14.6
Sales and marketing... 5.3 7.9 10.7 10.2 11.0 12.2 14.2 14.7
General and adminis-
trative.............. 8.5 11.4 12.7 16.2 13.5 10.8 8.7 9.0
----- ----- ----- ----- ----- ----- ----- -----
Total operating ex-
penses............. 32.8 34.7 44.3 46.9 48.3 40.6 38.0 38.3
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from oper-
ations................. 2.1 10.6 (14.5) (15.1) (17.8) 5.9 4.5 5.9
Other income (expense),
net.................... (2.5) (3.1) (4.5) (4.4) (5.1) (4.8) (4.0) (1.8)
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before in-
come taxes............. (0.4) 7.5 (19.0) (19.5) (22.9) 1.1 0.5 4.1
Provision for income
taxes.................. -- -- -- -- -- -- (0.1) (0.1)
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss)....... (0.4)% 7.5% (19.0)% (19.5)% (22.9)% 1.1% 0.4% 4.0%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

The Company has experienced fluctuations in its quarterly operating results
and anticipates that such fluctuations will continue and could intensify. The
Company's quarterly operating results may vary significantly depending on a
number of factors, including the timing of the introduction or acceptance of
new products and services offered by the Company or its competitors, changes
in the mix of products and services provided by the Company, the nature and
timing of changes in the Company's clients or their use of the Company's
products and services, consolidation among participants and other changes in
the wireless telecommunications industry, changes in the client markets served
by the Company, changes in regulations affecting the wireless industry,
changes in the Company's operating expenses, changes in personnel and changes
in general economic conditions. One of the Company's clients, which uses the
call center support solutions provided by the Company's Teleservices Group and
accounted for 10% of the Company's revenues in the year ended September 30,
1995, has notified the Company of its intent to terminate its agreements with
the Company, effective in the fourth calendar quarter of 1996. During 1996,
another of these clients, which accounted for 31% of the Company's revenues in
the fiscal year ended September 30, 1995, is changing the way it accesses the
Customer Acquisition System from using the call center support solutions
provided by the Teleservices Group to on-line access. As a result, the Company
expects the revenues from this client to decrease significantly during 1996
and 1997. See "--Overview." Historically, the Company's quarterly revenues
have been highest in the fourth quarter of each calendar year, and have been
particularly concentrated in the holiday shopping season between Thanksgiving
and Christmas. The Company's transaction revenues, which historically have
represented substantially all of the Company's total revenues, are affected by
the volume of use of the Company's services, which is influenced by 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. Software and other revenues, which include software license
revenues and consulting revenues, have recently represented an increasing
proportion of the Company's total revenues. Software license revenues are
principally recognized at the time of delivery of licensed products and
therefore may result in further fluctuations in the Company's quarterly
operating results. Consulting revenues may be influenced by the requirements
of one or more of the Company's significant clients, including engagement of
the Company for implementing or assisting in implementing special projects of
limited duration. During the three months ended June 30, 1996, the Company's
revenues from customized software integration services resulted primarily from
projects undertaken for one client, which projects the Company currently
expects will continue at least through the end of 1996. There can be no
assurance that the Company will be able to achieve or maintain profitability
in the future or that its levels of profitability will not vary significantly
among quarterly periods. Fluctuations in operating results may result in
volatility in the price of the Company's Common Stock. See "Risk Factors--
Potential Fluctuations in Quarterly Performance."

26
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations to date primarily through private
placements of equity and debt securities, cash generated from operations, bank
borrowings and equipment financings.

The Company has financed its operations in part with the proceeds of four
offerings of Convertible Preferred Stock and two offerings of subordinated
debt. The Company sold shares of its Series A Redeemable Convertible Preferred
Stock in February 1991 for an aggregate purchase price of $1.0 million, shares
of its Series B Redeemable Convertible Preferred Stock in December 1991 for an
aggregate purchase price of $1.1 million and shares of its Series C Redeemable
Convertible Preferred Stock in June, July and August of 1993 for an aggregate
purchase price of $0.6 million. In August 1994, the Company sold $2.1 million
in principal amount of its 8% subordinated notes, together with warrants
exercisable to purchase up to 525,000 shares of Common Stock. In August 1995,
the Company sold $1.2 million in principal amount of its 16% subordinated
notes, together with warrants exercisable to purchase up to 287,750 shares of
Common Stock. The Company sold shares of its Series D Preferred Stock in April
1996 for an aggregate purchase price of $6.0 million. A portion of the
proceeds of the Series D Preferred Stock was applied to repay the 16%
subordinated notes.

Net cash provided by (used in) operating activities in the years ended
September 30, 1993, 1994 and 1995, the three months ended December 31, 1995
and the six months ended June 30, 1996 was $0.4 million, $0.5 million, $1.1
million, $(0.3) million and $0.8 million, respectively.

The Company's capital expenditures in the years ended September 30, 1993,
1994 and 1995, the three months ended December 31, 1995 and the six months
ended June 30, 1996 aggregated $1.0 million, $3.6 million, $3.7 million, $0.3
million and $1.0 million, respectively. The capital expenditures consisted of
purchases of fixed assets, principally for the Company's services delivery
infrastructure and teleservices call center. The Company leases its facilities
and certain equipment under non-cancelable capital and operating lease
agreements that expire at various dates through December 2000. The Company
anticipates that its capital expenditures in the fiscal year ending December
31, 1996 will be made primarily to acquire, through purchases or capital lease
arrangements, additional computer equipment for development activities. The
Company currently expects that its capital expenditures, including equipment
acquired with capital leases, for the last six months of 1996 will be
approximately $2.0 million.

The Company has a $4.0 million working capital line of credit and a $2.0
million equipment line of credit with Silicon Valley Bank (the "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 bear interest at the Bank's
prime rate plus .25% (8.50% at June 30, 1996) and advances under the equipment
line of credit bear interest at the Bank's prime rate plus .75% (9.0% at June
30, 1996). At June 30, 1996, borrowings of $1.5 million were outstanding under
the working capital line of credit and no borrowings were outstanding under
the equipment line of credit. The Company has agreed to comply with covenants
that, among other things, prohibit the declaration or payment of dividends and
require the Company to maintain certain financial ratios. After giving effect
to an amendment to the bank agreement dated August 8, 1996, the Company was in
compliance with the required financial covenants and ratios as of June 30,
1996. Further, the Company believes that the August 8, 1996 amendment will
permit the Company to remain in compliance with the required financial
covenants and ratios throughout the term of the bank agreement. The working
capital line of credit expires in June 1997, and the equipment line of credit
expires in June 1999.

As of June 30, 1996, an aggregate of $2.1 million in principal amount was
outstanding under unsecured subordinated notes issued by the Company to a
greater-than-5% stockholder and a director, acting as custodian for a minor
child. See "Certain Transactions--Other." The principal of these notes is due
in quarterly installments from September 30, 1997 through June 30, 2001.
Prepayment of the notes is subject to a premium, currently 6% of the principal
amount prepaid. The notes accrue interest at an annual rate of 8% which is
payable quarterly. The Company's agreement with the holders of the notes
includes certain covenants that, among other things, prohibit the declaration
or payment of dividends and require the Company to maintain certain financial
ratios.

27
<PAGE>

As of June 30, 1996, the Company had cash and cash equivalents of $3.5
million and working capital of $2.4 million. The Company believes that the net
proceeds of this offering, together with existing 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.

In the normal course of business, the Company evaluates acquisitions or
investments in companies, technologies or assets that complement the Company's
business. The Company is not currently involved in negotiations with respect
to, and has no agreement or understanding regarding, any such acquisition or
investment.

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 March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." SFAS No. 121 addresses the accounting for the impairment
of long-lived assets, certain identifiable intangibles and goodwill when
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The adoption of SFAS No. 121 in 1996 did not
have a material impact on the Company's results of operations, financial
position or cash flows.

In November 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS No. 123 addresses the
financial accounting and reporting standards for stock-based employee
compensation plans. SFAS No. 123 permits an entity to either record the
effects of stock-based employee compensation plans in its financial statements
or present pro forma disclosures in the notes to the financial statements. In
connection with the adoption of SFAS No. 123 during 1996, the Company will
elect to provide the appropriate disclosures in the notes to its financial
statements. Since the Company does not expect to make significant equity
awards to outsiders, adoption of SFAS No. 123 is not expected to have a
material impact on the Company's results of operations, financial position or
cash flows.

28
<PAGE>

BUSINESS

The Company offers on-line, real-time transaction processing and call center
support solutions to aid carriers in qualifying and activating applicants for
wireless service, as well as software-based sales support services for
traditional distribution channels, such as dealers, agents and direct mobile
sales forces, and emerging distribution channels, such as mass market retail
stores, home shopping and stand-alone kiosks. The Company develops and
implements interfaces that fully integrate its acquisition system with carrier
and third-party systems, such as those for billing, point-of-sale, acquisition
and order fulfillment. The Company recently introduced software-based decision
support tools and services that enable carriers to reduce subscriber churn and
to make more informed business decisions about their subscribers, markets and
distribution channels.

The Company's current client base consists of 39 wireless telecommunication
clients, including 8 of the 12 largest domestic cellular carriers (based on
total population coverage) and the only 3 domestic carriers currently
delivering personal communications systems ("PCS") service. In the year ended
September 30, 1995, approximately 94% of the Company's revenues was
attributable to carriers that were also clients in the preceding fiscal year.

INDUSTRY OVERVIEW

Wireless telecommunications services have been one of the fastest growing
areas of the U.S. telecommunications industry over the last 10 years. Cellular
service has represented the largest component of the wireless
telecommunications industry to date and has continued to grow rapidly in the
1990s as the market for cellular phones has evolved from serving early
adopters to serving mass market consumers. The Cellular Telecommunications
Industry Association (the "CTIA") estimates that the number of cellular
subscribers in the United States increased from 340,000 in December 1985 to
33.7 million in December 1995, representing a compounded annual growth rate of
58%. The CTIA also estimates that the market penetration of cellular service,
as measured by the percentage of the population that subscribes to a cellular
service, was approximately 13% as of December 1995.

Other wireless telecommunications technologies, services and markets are
emerging. In the last year, the Federal Communications Commission (the "FCC")
has sold licenses for PCS, a digital technology with the potential to provide
enhanced communication quality and security, to more than 60 purchasers.
Certain of these purchasers are currently building the infrastructure required
to support PCS service, which is expected to compete with cellular service on
a nationwide basis. In addition, enhanced specialized mobile radio ("ESMR"), a
digital service typically found in fleet dispatch environments, is evolving as
another potential competitor of cellular service. Additional wireless
technologies and services are expected to continue to develop over the next 10
years, and industry sources estimate that by 2005 approximately 125 million
customers will subscribe to wireless telecommunications services in the United
States, representing a market penetration of 35% to 45%. The market for
wireless telecommunications services outside the United States has also grown
significantly in recent years and is expected to continue to do so through at
least the end of the decade. One industry analyst estimates that wireless
subscribers in Europe, for example, will increase from 18 million in 1995 to
78 million by the end of the year 2000, resulting in a market penetration of
approximately 20%.

In addition to this rapid growth, a number of recent and anticipated events
are causing fundamental changes in the wireless telecommunications industry.
The industry continues to experience significant consolidation as cellular
carriers are seeking to achieve greater market coverage and economies of scale
in operations, marketing, customer service and support. While the number of
cellular service subscribers in the United States has grown

29
<PAGE>

substantially in recent years, the average revenue per subscriber has declined
and is expected to decrease further. The CTIA has reported that revenue per
subscriber declined 47% from 1987 to 1995. Carriers are anticipating increased
price competition in the wireless telecommunications industry as providers of
PCS and other services enter the geographic markets previously served only by
cellular carriers. Moreover, as a result of the Telecommunications Act of
1996, carriers are beginning to offer wireless services bundled with wireline
services. These changes are causing carriers to seek new ways to reduce their
costs and interact more effectively with their subscribers.

The process by which a wireless carrier acquires a subscriber is costly and
complex. The Company estimates, based on its market research, that acquisition
costs typically range from $350 to $500 per subscriber, with the largest
portion of those costs consisting of commissions and promotional items, such
as subsidies on telephones. Carriers typically offer a variety of rate plans,
features and special promotions that change on a regular basis, often making
the customer acquisition process complicated for both sales representatives
and applicants for service. The complexity of the customer acquisition process
has been exacerbated by the recent consolidation of participants in the
wireless industry, which has resulted in many carriers employing a number of
different legacy systems for credit verification, activation and billing that
are not integrated or even compatible. These problems are expected to be
magnified for carriers seeking to offer bundled wireless and wireline
services. Carriers are therefore seeking ways to reduce the costs and simplify
the process of customer acquisition.

Acquiring a wireless subscriber is a time-consuming process. The Company's
market research has indicated that, while the entire acquisition process
typically takes between 15 and 30 minutes, it is not unusual for the process
to take up to an hour. Carriers' employees or agents are often required to
make duplicate data entries into separate computer systems in order to
complete the acquisition process. If a carrier is unable to complete the
process of acquiring a potential customer in a single transaction, the
customer may decide to become a subscriber of another carrier or not to
subscribe to the service at all. Therefore, carriers that are able to provide
a more simplified, expedited sales process have a competitive advantage.

Distribution channels for wireless telecommunications services are also
changing. In the 1980s, substantially all wireless subscriber acquisitions
were made through channels such as dealers, agents and direct mobile sales
forces. Today carriers also reach potential subscribers through home shopping,
telemarketing and a variety of other retail distribution methods and may begin
marketing on the Internet. These new distribution channels require that
carriers implement new processes for marketing, qualifying and activating new
subscribers.

Because of declining revenue per subscriber, carriers must retain
subscribers for a longer period in order to recover their acquisition costs.
Carriers therefore need to reduce their "churn" rates, which measure the
extent to which subscribers switch to another carrier's services or otherwise
cease to use a carrier's services. Churn has historically been a problem for
wireless carriers, which have had an average annual subscriber turnover rate
between 25% and 30%. The Company believes that churn may, in part, be
attributed to frustration on the part of subscribers resulting from confusion
about the broad and changing variety of available service options and the
complexity of billing practices, as well as dissatisfaction with the scope and
quality of service. In the face of increased competition and growth in the
subscriber base, churn is expected to become an increasingly costly problem
for carriers.

In order to reduce costs and remain competitive, carriers are also seeking
to address subscriber fraud. Fraud in the wireless telecommunications industry
is generally divided into two categories: technical fraud, which often
involves copying or manipulating a cellular telephone's mobile identification
number or electronic serial number; and subscription fraud, in which
individuals obtain service using false information. Technical fraud can be
addressed by changing the ways in which calls are processed. Subscription
fraud, however, is most effectively addressed in the customer acquisition
process. One industry source estimates that in 1995 subscription fraud
generated losses to the industry of over one percent of total industry
revenues, or approximately $180 million, and could grow to $500 million by the
year 2000 if it is not controlled.

30
<PAGE>

The development of new wireless services, carriers and technologies, the
emergence of the mass market for wireless services and increased competition
have created an environment in which successful carriers must be able to
better utilize data and statistical tools to manage their businesses. Carriers
are beginning to recognize the need to utilize "data warehouses," repositories
of business data organized for analysis, and to acquire the tools necessary
for business managers to access and analyze the data.

The Company believes that established wireless carriers increasingly are
considering outsourcing qualification and activation services as a means by
which they can improve flexibility and efficiency while focusing internal
resources on their core business activities. Further, the Company believes
that many new entrants to the wireless market, such as PCS providers, are
considering outsourcing portions of their customer acquisition requirements as
an attractive means of expediting their introduction of new services.

THE LIGHTBRIDGE SOLUTION

Lightbridge's suite of complementary software-based products and services
permits a wireless carrier to select applications and functions to create an
integrated, customized solution addressing its particular needs. The Company's
solutions include:

. The Customer Acquisition System ("CAS") provides on-line, real-time
transaction processing services that utilize and interface with
proprietary and third-party databases to expedite the qualification and
activation of applicants for wireless service on a cost-effective basis.

. TeleServices consists of call center services that assist wireless
carriers in acquiring and activating applicants, using either
Lightbridge's CAS or the carrier's own customer acquisition systems.
Lightbridge's TeleServices Group also offers telemarketing and customer
care activities that assist carriers in acquiring subscribers through
new distribution channels and retaining existing subscribers.

. Channel Solutions consist of software-based products and services
designed to simplify and expedite the customer acquisition process
through both existing and emerging distribution channels and to provide
wireless carriers with flexibility to capitalize on emerging
distribution channels.

. Wireless Intelligence solutions are software-based decision support
tools and services designed to enable carriers to make more informed
business decisions about their subscribers, markets and distribution
channels.

. Business Integration solutions include consulting services, software and
tools to link the Company's acquisition systems with carrier and third-
party systems, such as those for billing, point-of-sale, activation and
order fulfillment.

The Company's services are delivered primarily on an outsourcing and service
bureau basis, which allows carriers to focus internal resources on their core
business activities. Lightbridge's solutions combine the advantages of
distributed access and workflow management, centrally managed client-specified
business policies, and links to carrier and third-party systems. The open
architecture underlying the Company's software applications supports the
development of flexible, integrated solutions, regardless of the type of
wireless service provided by a client and independent of the client's
computing environment.

STRATEGY

The Company's objective is to be the leading provider of innovative,
software-based solutions for cost-effective customer acquisition and retention
for the wireless telecommunications industry. The Company's strategy is based
on the following key elements:

Continue to Focus on Wireless Telecommunications Industry

The Company believes that the wireless industry will continue to grow
rapidly and will be characterized by both increased competition and heightened
subscriber expectations. As a result, the Company believes there will

31
<PAGE>

be significant opportunities to provide carriers with products and services
that enable carriers to focus their internal resources on building and
managing their telecommunications networks, while outsourcing certain
administrative and other functions. By focusing on the wireless
telecommunications industry, the Company has developed significant expertise
and experience that it intends to employ in providing innovative, flexible
solutions to address the changing needs of wireless carriers in both existing
and emerging markets.

Provide Complete Solutions to Clients

Based on its expertise in the wireless industry, Lightbridge seeks to offer
complete solutions to wireless carriers, particularly in addressing issues of
customer acquisition, fraud and retention. Lightbridge's suite of software-
based products and services permits a wireless carrier to select applications
and functions to create an integrated, customized solution addressing its
particular needs. The Company's services are delivered primarily on an
outsourcing and service bureau basis, which allow carriers to focus internal
resources on their core business activities. The Company supports its product
and service offerings with consulting in related areas such as workflow
analysis, requirements definition, credit policy, fraud prevention, channel
management and churn control.

Continue Commitment to Technological Leadership

Lightbridge's products and services are based on its proprietary software
technology, which is enhanced regularly to address the evolving needs of
wireless carriers. The Company has designed, developed and implemented an open
application programming interface and related software specifically to enable
the Company to provide flexible, fully integrated solutions to clients with
differing needs. The Company has developed and implemented interfaces to more
than 30 disparate systems, including carrier legacy systems and third-party
systems, such as billing, point-of-sale, activation and order fulfillment.
Drawing on its industry and technological expertise, the Company has developed
products that enable carriers to access the Company's services through a
variety of emerging distribution channels, as well as software-based decision
support tools that assist carriers in analyzing their distribution channel
performance and churn experience. The Company intends to leverage and expand
this capability to offer solutions to wireless carriers, regardless of the
type of wireless service (cellular, PCS, ESMR or other) being offered by a
client and independent of the client's computing environment.

Foster Long-Term Client Relationships

The Company's strategy is to use its reputation and experience in servicing
leading wireless carriers to market additional products and services to those
clients and to attract new clients. In the year ended September 30, 1995,
approximately 97% of the Company's total revenues was derived from carriers
who were also clients in the preceding fiscal year. Lightbridge has developed
long-term consultative relationships with many of the leading wireless
carriers in the United States. The experience and expertise gained in these
relationships will assist the Company in identifying emerging client needs and
developing solutions to address those needs.

Leverage and Expand Strategic Relationships

An important part of Lightbridge's strategy is to establish strong working
relationships with other suppliers to the wireless industry. The Company
enters into these relationships to increase the functionality of its products
and services and to reduce the time to market for its new products and
services. The Company believes these relationships also provide the Company
with access to the marketing resources and credibility of larger, more
established participants in the wireless industry. Lightbridge's relationships
with Pilot Software, Inc. (a subsidiary of Dun & Bradstreet), Trans Union
Corporation and XcelleNet, Inc., for example, have provided the Company with
access to technology and joint development and marketing efforts that have
enabled the Company to offer more fully featured products and services in a
shorter period of time. The Company intends to explore ways to expand such
relationships and seek out opportunities to develop new strategic
relationships.

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<PAGE>

Expand into International Wireless Telecommunications Markets

While the Company has offered its products and services only in the United
States to date, it believes the significant growth in international wireless
telecommunications markets will require carriers in those markets to address
many of the same issues currently confronting domestic wireless carriers. The
Company intends to leverage its long-term client relationships and strategic
partnerships to facilitate and expedite the Company's entry into rapidly
expanding international wireless markets.

PRODUCTS AND SERVICES

Lightbridge's suite of software-based products and services permits a
wireless carrier to select applications and functions to create an integrated,
customized solution addressing its particular needs. Lightbridge's products
and services are provided by five solutions groups:

GROUP FUNCTIONS

On-line, real-time transaction processing
Customer Acquisition Services services to aid wireless carriers in
qualifying and activating applicants for
wireless service, including proprietary
databases and processing modules to
evaluate existing subscribers and detect
potential subscription fraud.

TeleServices Call center support services to assist
wireless carriers in acquiring and
activating applicants for wireless
service, including qualification and
activation, analyst reviews,
telemarketing to existing and new
subscribers, back-up and disaster
recovery for acquisition and activation
services, and customer care.

Software products and services to support
Channel Solutions a variety of distribution channels,
including software applications for in-
store use, laptop applications for mobile
sales professionals and an interactive
multimedia kiosk.

Wireless Intelligence Software-based decision support tools and
related consulting services to allow
wireless carriers to access data and
analyze the marketplace in order to make
more informed business decisions about
their customers, markets and distribution
channels.

Business Integration Consulting services, software and tools
to link wireless carrier legacy systems
and third-party systems to the Company's
systems, as well as other consulting
services to help wireless carriers
improve business processes.

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<PAGE>

Customer Acquisition System

CAS includes on-line, real-time transaction processing services for the
qualification and activation of applicants for wireless service. The following
chart illustrates the utilization of CAS:

[Image of boxes representing sequence of events as follows:

Box 1: Customer indicates intent to purchase phone. Agent enters information
into POPS terminal

Box 2: CAS validates application for completeness & format

Box 3: Application transmitted to Lightbridge via dial-up, leased line or
network connection

Box 4: Lightbridge checks InSight and Fraud Sentinel and retrieves credit
bureau report to evaluate application

IF HIGH RISK [arrow points to alternate box]

Box 4A: Confirmation sent to agent indicating security deposit required

Box 5: CAS transmits information to billing system; phone activated in
switch

Box 6: Confirmation sent to agent with customer name, mobile number &
account number

Box 7: Customer leaves store with activated phone]

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 Company
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 is made based on
centrally managed client-specified business policies. If an issue is raised
regarding qualification of an applicant, the system routes the application to
a Company or carrier credit 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 client/server 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, all in a secure, controlled
environment.

Introduced in 1989 and enhanced over time, CAS had processed over 12 million
applications for wireless service through June 1996. CAS typically enables
carriers to qualify applicants and activate service in five to ten minutes
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 20 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.

. Fraud Sentinel is a suite of fraud management tools, available
separately or together. The Company believes that Fraud Sentinel is the
only pre-screening tool for detection and prevention of subscription
fraud available in the wireless industry today. The components of Fraud
Sentinel are:

<PAGE>

ProFile, a proprietary intercarrier database of accounts receivable
write-offs and service shut-offs, provides on-line pre-screening of
applicants, on-going screening of existing subscribers, and
notification if an application is processed for a subscriber whose
account has been previously written off by a carrier.

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 became commercially available through
Lightbridge in the second quarter of 1996.

Postalpro, a tool to validate addresses, will enable a carrier to
detect false addresses, incorrect ZIP codes and contradictions between
addresses and ZIP codes before a potential subscriber's service is
activated. Postalpro is currently expected to become commercially
available by the first quarter of 1997.

. InSight is a proprietary database containing information about existing
accounts and previous applicants. InSight also 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:

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.

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.

TeleServices

The Company's TeleServices Group provides a range of call center support
solutions for the subscriber acquisition and activation process. The Company
first offered a TeleServices call center solution to the wireless marketplace
in 1990 with its 800-FOR-CREDIT service. Since that time, the Company's
TeleServices offerings have expanded to include not only credit decisions and
activations, but 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. The Company'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.
As of June 30, 1996, the TeleServices Group included a total of 185 full-time
and part-time employees, which number fluctuates with the number of
transactions processed. 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.

Channel Solutions

The Company's Channel Solutions consist of products and services that
support a growing range of distribution channels. The components of Channel
Solutions include:

. POPS, a Windows-based application typically used in carrier-owned or
dealer/agent store locations, features a graphical user interface that
allows even inexperienced sales staff to conduct qualification

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<PAGE>

and activation transactions quickly via a dial-up or network connection
to CAS. Two of the Company's clients have licensed POPS for more than
500 installed locations. POPS is being marketed both as a new solution
and as a replacement to the Company's DOS-based application, which is
currently licensed for more than 800 locations.

. SAMS, a laptop application, provides a "virtual office" for carriers'
mobile sales professionals. The SAMS suite contains a number of tools
needed by sales staff, such as coverage maps and product catalogs, as
well as the ability to handle qualification and activation transactions
via landline, cellular or wireless data connection to CAS. Third-party
modules can be integrated into SAMS to provide additional functionality.
One of the Company's clients has licensed SAMS for approximately 600
users.

. Iris, an interactive multimedia kiosk, uses touch screen technology to
provide potential subscribers with educational information ranging from
the basic operation of a cellular telephone to the form of monthly
bills, display the carrier's coverage area and provide information about
available services and telephone models. Iris incorporates a credit card
reader for payments and allows a customer to purchase a telephone and
complete an application for service, which can then be processed
automatically. Iris can dispense a telephone itself or can provide for
delivery or in-store pick-up. Iris became commercially available in
December 1995.

POPS, SAMS and Iris are licensed to clients and require customization and
integration with other products and systems to varying degrees. Pricing of
POPS, SAMS and Iris varies with the configurations selected, the number of
locations licensed and the degree of customization required.

Wireless Intelligence

The Company's Wireless Intelligence Group provides software-based decision
support tools to help carriers analyze their marketplace to improve business
operations. As carriers encounter increasing competition and a growing and
changing market, the Company believes that the ability to gather, analyze and
interpret business data and then take appropriate actions will be essential to
their success. Wireless Intelligence is currently comprised of the following
two modules:

. Channel Wizard allows a carrier to analyze its distribution channel
performance by market, subscriber type or other factors, to assist the
carrier in making decisions designed to reduce customer acquisition
costs and improve channel performance. Channel Wizard is designed to
provide up-to-date information in a format that is easy for users
without statistical training to operate. Channel Wizard became
commercially available in the second quarter of 1996.

. Churn Prophet is an analytical tool designed to help carriers reduce
churn and increase customer retention. Churn Prophet uses predictive
modeling technology to identify characteristics of subscribers who have
canceled service in the past and to develop predictions as to which
subscribers are likely to cancel service in the future. Customer
retention efforts can then be targeted more cost effectively to the
subscribers most likely to cancel service. Churn Prophet is currently
expected to become commercially available in late 1996.

Channel Wizard and Churn Prophet are licensed to clients and require
customization and integration with other products and systems to varying
degrees. Pricing of Channel Wizard and Churn Prophet varies with the number of
users and the degree of customization required.

Business Integration

The Company's Business Integration Group provides consulting, software and
tools to link carrier and third-party systems to the Company's systems. To
facilitate the development of these interfaces, Lightbridge developed
CAS_COMM, a library of software functions for the remote host that enables
third-party systems to connect to CAS. CAS_COMM is an application layer
protocol that gives CAS the appearance of a local process

36
<PAGE>

to the third-party system. CAS_COMM runs on DEC VMS, Microsoft Windows NT and
certain Unix platforms and supports both TCP/IP and DECnet. To date, the
Business Integration Group has implemented more than 35 such interfaces, of
which 13 use CAS_COMM.

The Business Integration Group also provides a range of other consulting
services to wireless carriers, employing the Company's expertise and
experience in the wireless telecommunications industry. For example, the
Business Integration Group helps carriers develop solutions for work flow
optimization, management of bad debt, distribution channel analysis, sales
automation, churn analysis and data warehouse design. The Company generally
charges for consulting services on a per diem basis, but occasionally
undertakes smaller consulting projects on a fixed-fee basis.

TECHNOLOGY

The Company'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 (1) presentation
(front-ends), (2) business logic and (3) 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 the
Company's Windows-based products. 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
the Company.

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 importantly, independence from hardware platforms and operating
systems. The common library currently supports Unix and OpenVMS. The
Lightbridge products are, therefore, portable and able to run on the most
suitable hardware platform for the computing needs.

A critical element of the Company's development has been the creation and
enhancement of Allegro, a 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 wireless marketplace continues to grow rapidly and requires quick
reaction to evolving market conditions. To meet this requirement, the Company
has incorporated a set of software and tools 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.

37
<PAGE>

CLIENTS

The Company provides its products and services to wireless carriers across
the United States. The Company's current client base consists of 39 wireless
telecommunication clients, including 8 of the 12 largest domestic cellular
carriers (based on total population coverage) and the only 3 domestic carriers
currently delivering PCS service. In the year ended September 30, 1995,
approximately 94% of the Company's revenues was attributable to carriers that
were also clients in the preceding fiscal year. Lightbridge's clients include:

<TABLE>
<CAPTION>
CELLULAR CARRIERS PCS CARRIERS
- ----------------- ------------
<S> <C>
AT&T Wireless Services, Inc. American Personal Communications
CommNet Cellular Inc. (an affiliate of Sprint Spectrum L.P.)
Comcast Cellular Communications, Inc. BellSouth Mobility DCS, Inc.
Century Cellunet, Inc. Powertel, Inc.
GTE Mobile Communications Service Cor- Sprint Spectrum L.P.
poration
Palmer Wireless, Inc. Western Wireless Corporation
Southwestern Bell Mobile Systems, Inc.
</TABLE>

Revenues attributable to the Company's 10 largest clients accounted for
approximately 85%, 90% and 90% of the Company's revenues in the years ended
September 30, 1993, 1994 and 1995, respectively. Four clients each accounted
for greater than 10% of the Company's revenues in the years ended September
30, 1994 and 1995. GTE Mobile Communications Service Corporation ("GTE
Mobile") accounted for 31% of the Company's revenues for the year ended
September 30, 1995, and each of AT&T Wireless Services, Inc. ("AT&T
Wireless"), Comcast Cellular Communications, Inc. ("Comcast") and Ameritech
Mobile Communications, Inc. d/b/a Ameritech Cellular Services ("Ameritech")
accounted for greater than 10% of the Company's revenues for that fiscal year.
During 1996, GTE Mobile is changing the way it accesses the Company's Customer
Acquisition System from using the call center support solutions provided by
the Teleservices Group to using on-line access. As a result, the Company
expects the revenues from GTE Mobile to decrease significantly during 1996 and
1997. Ameritech has notified the Company of its intent to terminate its
agreements with the Company, effective in the fourth calendar quarter of 1996.
See "Risk Factors--Dependence on Certain Clients," "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Overview" and
Note 2 of Notes to Financial Statements.

The Company's agreements with its clients set forth the terms on which the
Company will provide products and services for the client, but do not
typically require the clients to purchase any particular type or quantity of
the Company's products or services or to pay any minimum amount for products
or services. The Company's agreement with GTE Mobile and certain of its
subsidiaries provides that the contract may be terminated by GTE Mobile as of
June 30 of any year upon 60 days' prior notice. In addition, if the Company
fails to meet certain performance criteria, GTE Mobile may, among other
things, terminate the agreement upon 30 days' prior written notice. The
Company has an agreement with AT&T Wireless for the provision of credit
decision services. The agreement will expire on December 31, 1996 unless it is
terminated earlier, upon not less than 60 days' prior written notice. The
Company's agreement with Comcast provides that it may be terminated upon 90
days' written notice following December 31, 1996, upon failure of either party
to comply with the terms of the agreement within 30 days after written notice
of such failure or upon bankruptcy or insolvency. The Company has agreements
with Ameritech and certain of its affiliates that may be terminated upon 90
days' prior written notice by either party thereto or upon 30 days' written
notice in the event of failure by the other party to comply with the terms of
the agreement. None of the foregoing agreements requires that the client
either purchase any particular type or quantity of the Company's products or
services or pay any minimum amount for products or services.

Because the PCS industry is in its initial stages of development, clients in
the PCS market have not generated significant revenues for the Company to
date. The Company supplies service to American Personal Communications (an
affiliate of Sprint Spectrum L.P.) in Washington, D.C., Western Wireless
Corporation in Hawaii and certain Western states and BellSouth Mobility DCS,
Inc. in certain Southeastern states. These three corporations are the only
three carriers currently providing PCS service. There can be no assurance that
the PCS market will develop as expected. See "Risk Factors--Dependence on
Cellular Market and Emerging Wireless Markets."

38
<PAGE>

SALES AND MARKETING

The Company's sales strategy is to establish, maintain and foster long-term
relationships with its clients. The Company's sales and client services
activities are led by "relationship teams," each of which includes a senior
management team sponsor. The Company's sales force currently consists of 8
relationship managers who report to a senior sales and marketing executive.
The Company employs a team approach to selling in order to develop a
consultative relationship with existing and prospective clients. Directors of
solutions groups and product managers, as well as other executive, 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 the Company's products and services is
typically 6 to 12 months. See "Risk Factors--Potential Fluctuations in
Quarterly Performance."

The Company plans to expand its sales and marketing group during 1996 by
hiring additional staff experienced in the wireless telecommunications
industry. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview" and "--Results of Operations--Six Months
Ended June 30, 1996 Compared with Six Months Ended June 30, 1995."

The Company's marketing activities include advertising, participation in
industry trade shows and panels, substantive articles in trade journals and
targeted direct mail.

ENGINEERING, RESEARCH AND DEVELOPMENT

Lightbridge considers its on-going efforts in engineering, research and
development to be a key component of its strategy. The Company 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. The
Company's research and development activities consist of 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, the Company
intends to continue its strategy of gaining access to new technology through
strategic relationships and acquisitions where appropriate.

The Company spent approximately $1.1 million, $2.3 million and $3.9 million
on engineering, research and development in the years ended September 30,
1993, 1994 and 1995, respectively. As of June 30, 1996, Lightbridge had 48
employees engaged in engineering, research and development.

COMPETITION

The market for services to wireless 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 the
Company. In addition, many wireless carriers are providing or can provide,
internally, products and services competitive with those the Company offers.
Trends in the wireless telecommunications industry, including greater
consolidation and technological or other developments that make it simpler or
more cost-effective for wireless carriers to provide certain services
themselves, could affect demand for the Company's services and could make it
more difficult for the Company to offer a cost-effective alternative to a
wireless carrier's own capabilities. In addition, the Company anticipates
continued growth in the wireless carrier services industry and, consequently,
the entrance of new competitors in the future.

39
<PAGE>

Many of the Company's current and potential competitors have significantly
greater financial, marketing, technical and other competitive resources than
the Company. As a result, the Company's competitors may be able to adapt more
quickly to new or emerging technologies and changes in subscriber requirements
or may be able to devote greater resources to the promotion and sale of their
products and services. There can be no assurance that the Company will be able
to compete successfully with its existing competitors or with new competitors.
In addition, competition could increase if new companies enter the market or
if existing competitors expand their service offerings. An increase in
competition could result in price reductions or the loss of market share by
the Company and could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow.

To remain competitive in the wireless carrier services industry, the Company
will need to continue to invest in engineering, research and development, and
sales and marketing. There can be no assurance that the Company will have
sufficient resources to make such investments or that the Company will be able
to make the technological advances necessary to remain competitive. In addition,
current and potential competitors have established or may in the future
establish collaborative relationships among themselves or with third parties,
including third parties with whom the Company has a relationship, to increase
the visibility and utility of their products and services. Accordingly, it is
possible that new competitors or alliances may emerge and rapidly acquire a
significant market share. If this were to occur, the Company's business,
financial condition, results of operations and cash flow could be materially and
adversely affected.

GOVERNMENT REGULATION

The FCC, under the terms of the Communications Act of 1934, as amended,
regulates interstate communications and use of the radio spectrum. Although
the Company is not required to and does not hold any licenses or other
authorizations issued by the FCC, the wireless carriers that constitute the
Company's clients are regulated at both the federal and state levels. Federal
and state regulation may decrease the growth of the wireless
telecommunications industry, affect the development of the PCS or other
wireless markets, limit the number of potential clients for the Company's
services, impede the Company's ability to offer competitive services to the
wireless telecommunications market, or otherwise have a material adverse
effect on the Company's business, financial condition, results of operations
and cash flow. 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 the Company to increased pricing pressures, decrease the demand
for the Company's products and services, increase the Company's cost of doing
business or otherwise have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow.

As a result of offering its ProFile product, the Company is subject to the
requirements of the Fair Credit Reporting Act. Although the Company's business
activities are not otherwise within the scope of federal or state regulations
applicable to credit bureaus and financial institutions, the Company must take
into account such regulations in order to provide products and services that
help its clients comply with such regulations. The Company monitors regulatory
changes and implements changes to its products and services as appropriate.
Although the Company attempts to protect itself by written agreements with its
clients, failure to reflect the provisions of such regulations in a timely or
accurate manner could possibly subject the Company to liabilities that could
have a material adverse effect on the Company's business, financial condition,
results of operations and cash flow.

PROPRIETARY RIGHTS

The Company's success is dependent upon proprietary technology. The Company
relies on a combination of copyrights, 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. The
Company protects the source code versions of its products as trade secrets and
as unpublished copyrighted works, and has internal

40
<PAGE>

policies and systems designed to limit access to and require the confidential
treatment of its trade secrets. The Company generally operates its Credit
Decision System software on an outsourcing basis for its clients. In the case
of its Channel Solutions and Wireless Intelligence products, the Company
provides the software under license agreements which grant clients the right
to use, but contain various provisions intended to protect the Company's
ownership of and the confidentiality of the underlying copyrights and
technology. The Company requires its employees and other parties with access
to its confidential information to execute agreements prohibiting unauthorized
use or disclosure of the Company's technology. In addition, all of the
Company's employees have entered into non-competition agreements with the
Company.

There can be no assurance that the steps taken by the Company 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 the Company's
products or reverse engineer or obtain and use information that the Company
regards as proprietary. The Company has no patents and existing copyright and
trade secret laws offer only limited protection. The Company's non-competition
agreements with its employees may be enforceable only to a limited extent, if at
all. In addition, the laws of some foreign countries do not protect the
Company's proprietary rights to the same extent as do the laws of the United
States. The Company has been and may be required from time to time to enter into
source code escrow agreements with certain clients and distributors, providing
for release of source code in the event the Company breaches its support and
maintenance obligations, files for bankruptcy or ceases to continue doing
business.

The Company's competitive position may be affected by limitations on its
ability to protect its proprietary information. However, the Company believes
that patent, trademark, copyright, trade secret and other legal protections
are less significant to the Company's success than other factors, such as the
knowledge, ability and experience of the Company's personnel, new product and
service development, frequent product enhancements, customer service and
ongoing product support.

The Company's agreement with Trans Union Corporation provides Lightbridge
with an exclusive right to market the Fraud Detect product to named accounts.
The Company's agreement with Pilot Software, Inc. provides a non-exclusive
license to use certain software and documentation. Certain other technologies
used in the Company's products and services are licensed from third parties.
The Company 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 the Company 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 the Company
in the future or that such future claims will not be successful. The Company
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 the Company's business, financial
condition, results of operations and cash flow. Furthermore, parties making
such claims could secure a judgment awarding substantial damages, as well as
injunctive or other equitable relief, which could effectively block the
Company's ability to make, use, sell, distribute or market its products and
services in the United States or abroad. Such a judgment could have a material
adverse effect on the Company's business, financial condition, results of
operations and cash flow. In the event a claim relating to proprietary
technology or information is asserted against the Company, the Company 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 the Company. The failure to obtain the necessary licenses or other rights
could preclude the sale, manufacture or distribution of the Company's products
and, therefore, could have a material adverse effect on the Company's
business, financial condition, results of operations or cash flow. The cost of
responding to any such claim may be material, whether or not the assertion of
such claim is valid.

41
<PAGE>

EMPLOYEES

As of June 30, 1996, the Company had a total of 315 full-time and part-time
employees. Of these employees, 48 were employed in software and product
development, 46 in sales and marketing, client services and account
management, 14 in operations, 22 in finance and administration and 185 in
teleservices. The number of personnel employed by the Company varies
seasonally. See "Risk Factors--Potential Fluctuations in Quarterly
Performance." None of the Company's employees is represented by a labor union,
and the Company believes that its employee relations are good.

The future success of the Company 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. See
"Risk Factors--Ability to Manage Change" and "--Dependence on Key Personnel."

PROPERTIES

The Company's headquarters are located in a 39,000 square foot leased
facility, and the teleservices group is located in a 27,000 square foot leased
facility, both in Waltham, Massachusetts. The leases of these facilities
expire between 1999 and 2001. The Company believes its existing facilities are
adequate for its current needs and that suitable additional or substitute
space will be available as needed on commercially reasonable terms.

LEGAL PROCEEDINGS

The Company is not currently party to any legal proceedings of a material
nature.

42
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages as of
June 30, 1996 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------- --- ---------------------------------------
<S> <C> <C>
Pamela D.A. Reeve President, Chief Executive Officer and
46 Director
William G. Brown 36 Chief Financial Officer, Vice President
of Finance and Administration and
Treasurer
Michael A. Perfit 40 Senior Vice President of Technology
Richard H. Antell 48 Vice President of Software Development
Douglas E. Blackwell 40 Vice President of Service Delivery
Andrew I. Fillat(1) 48 Director
Torrence C. Harder(1) 52 Director
Douglas A. Kingsley(2) 34 Director
D. Quinn Mills(2) 54 Director
</TABLE>
- --------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee

PAMELA D.A. REEVE has served as the President of the Company since November
1989, as Chief Executive Officer of the Company since September 1993 and as a
director of the Company since November 1989. From November 1989 to September
1993, Ms. Reeve served as Chief Operating Officer of the Company. Prior to
joining the Company, Ms. Reeve was employed by The Boston Consulting Group.
Ms. Reeve is President of the Massachusetts Software Council and also serves
as a director of PageMart Wireless, Inc., a provider of wireless messaging
services.

WILLIAM G. BROWN has served as Chief Financial Officer, Vice President of
Finance and Administration and Treasurer of the Company since June 1989. Prior
to joining the Company, Mr. Brown was Manager of Financial Reporting and
Analysis for Bolt, Beranek and Newman, Inc. and was employed at Deloitte,
Haskins and Sells.

MICHAEL A. PERFIT, a founder of the Company, has served as Senior Vice
President of Technology of the Company since June 1991. From June 1989 to May
1991, Mr. Perfit served as Vice President of Engineering of the Company. Prior
to joining the Company, Mr. Perfit was Vice President of Appex, Inc. and held
engineering and technical support positions at Interactive Management Systems.

RICHARD H. ANTELL has served as Vice President of Software Development of
the Company since February 1996. From June 1991 to January 1996, Mr. Antell
was Vice President of Engineering of the Company. Prior to joining the
Company, Mr. Antell served as Vice President of Application Development of
Applied Expert Systems, Inc. and Project Leader of Index Systems, Inc.

DOUGLAS E. BLACKWELL has served as Vice President of Service Delivery of the
Company since November 1995. From October 1994 to October 1995, Mr. Blackwell
served as Vice President of Operations of the Company. From February 1991 to
September 1994, Mr. Blackwell was employed as Vice President of Operations of
Thomson Financial Services, Inc., an on-line financial transaction and
information services firm. Prior to February 1991, Mr. Blackwell was employed
at Nolan, Norton and Co., an affiliate of KPMG/Peat Marwick.

ANDREW I. FILLAT has served as a director of the Company since April 1996.
Since July 1995, Mr. Fillat has served as Senior Vice President of Advent
International Corporation, a venture capital investment firm. From April 1989
to June 1995, Mr. Fillat served as Vice President of Advent International
Corporation.

43
<PAGE>

TORRENCE C. HARDER, a founder of the Company, has served as a director of
the Company since June 1989. Mr. Harder has been the President and a director
of Harder Management Company, a registered investment advisory firm, since its
establishment in 1971. He has also been the President and a director of
Entrepreneurial Ventures, Inc., Entrepreneurial Inc., and Entrepreneurial
Investment Corp., venture capital investment firms, since their foundings in
1987, 1990 and 1995, respectively.

DOUGLAS A. KINGSLEY has served as a director of the Company since April
1996. Since January 1996, Mr. Kingsley has been Vice President of Advent
International Corporation, a venture capital investment firm. From September
1990 to December 1995, Mr. Kingsley was an investment manager at Advent
International Corporation. Mr. Kingsley is a director of LeCroy Corporation, a
manufacturer of electronic instrumentation.

D. QUINN MILLS has served as a director of the Company since June 1990.
Since 1976, Dr. Mills has served as the Albert J. Weatherhead, Jr. Professor
of Economics at the Harvard Business School.

Upon the closing of this offering, the Board of Directors will be divided
into three classes. One class of directors will be elected each year at the
annual meeting of stockholders for a term of office expiring after three
years. Mr. Kingsley will serve in the class whose term expires in 1997; Mr.
Fillat and Dr. Mills will serve in the class whose term expires in 1998; and
Mr. Harder and Ms. Reeve will serve in the class whose term expires in 1999.
Each director will serve until the expiration of his or her term and
thereafter until his or her successor is duly elected and qualified.

The Board of Directors has appointed a Compensation Committee, which
provides recommendations concerning salaries and incentive compensation for
employees of and consultants to the Company, and an Audit Committee, which
reviews the results and scope of the audit and other services provided by the
Company's independent auditors.

Directors of the Company serve without compensation. Under the Company's
1996 Incentive and Non-Qualified Stock Option Plan, non-employee directors of
the Company will be eligible to receive automatic formula grants of
nonqualified options. See "--Stock Option Plans."

Executive officers of the Company are elected annually by the Board of
Directors and serve at its discretion or until their successors are duly
elected and qualified.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Board of Directors has established a Compensation Committee,
which currently consists of Messrs. Fillat and Harder. Decisions as to
executive compensation are made by the Board of Directors, primarily upon the
recommendation of the Compensation Committee. During the year ended September
30, 1995, none of the executive officers of the Company served on the board of
directors or the compensation committee of any other entity. There are no
family relationships among executive officers or directors of the Company.
Messrs. Harder, Mills and Perfit have been parties to certain transactions
with the Company. See "Certain Transactions."

44
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the
compensation earned by the Company's current chief executive officer and the
other four most highly paid executive officers of the Company (collectively,
the "Named Executive Officers") for services rendered in all capacities to the
Company for the year ended September 30, 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS(S) SALARY($) BONUS($) OPTIONS(#) COMPENSATION(1)
- ------------------------------- ---------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
Pamela D.A. Reeve,......... $165,000 $55,700 -- $1,696
President and Chief
Executive Officer
Richard H. Antell,......... 99,000 37,000 -- --
Vice President of Software
Development
William G. Brown,.......... 90,000 36,400 -- 891
Chief Financial Officer,
Vice President of Finance
and Administration and
Treasurer
Douglas E. Blackwell,...... 102,000 15,000 40,000 --
Vice President of Service
Delivery
Michael A. Perfit,......... 92,700 18,300 -- 695
Senior Vice President of
Technology
</TABLE>
- --------
(1) Represents matching contributions made by the Company to the Lightbridge,
Inc. 401(k) savings plan.

BENEFIT PLANS

Option Grants Table

The following table sets forth certain information with respect to the grant
of a stock option by the Company to the only Named Executive Officer to whom
stock options were granted during fiscal 1995:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(4)
----------------------------------------------------------- -----------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING OPTIONS TO EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SHARE)(3) DATE 5%($) 10%($)
---- ------------------ ---------------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Douglas E. Blackwell.... 40,000 12.4% $.50 11-08-04 $12,578 $31,875
</TABLE>
- --------
(1) The option granted is an incentive stock option that becomes exercisable
as to 20% of the shares subject thereto on the first anniversary of the
date of grant and an additional 5% at the end of each three-month period
thereafter.
(2) Based on an aggregate of 321,700 shares subject to options granted to
employees during fiscal 1995.
(3) The exercise price per share equaled the fair market value of the Common
Stock on the date of grant, as determined by the Board of Directors.

45
<PAGE>

(4) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date and are not presented to forecast possible future
appreciation, if any, in the price of the Common Stock. The gains shown
are net of the option exercise price, but do not include deductions for
taxes or other expenses associated with the exercise of the options or the
sale of the underlying shares. The actual gains, if any, on the stock
option exercises will depend on the future performance of the Common
Stock, the optionee's continued employment through applicable vesting
periods and the date on which the options are exercised and the underlying
shares are sold.

On various dates from November 10, 1995 to June 14, 1996, the Company
granted options to certain Named Executive Officers as follows: Mr. Antell
received options to purchase 100,000 shares of Common Stock at $.75 per share,
20,000 shares of Common Stock at $2.00 per share and 70,000 shares of Common
Stock at $8.50 per share; Mr. Blackwell received options to purchase 30,000
shares of Common Stock at $.75 per share, 70,000 shares of Common Stock at
$2.00 per share and 20,000 shares of Common Stock at $8.50 per share; and Mr.
Brown received options to acquire 100,000 shares of Common Stock at $.75 per
share and 70,000 shares of Common Stock at $8.50 per share. Neither Ms. Reeve
nor Mr. Perfit received any grants of options to buy shares of Common Stock
since September 30, 1995.

Option Exercises and Year-End Value Table

The following table sets forth certain information with respect to the
number and value of unexercised options held by the Named Executive Officers
on September 30, 1995. None of the Named Executive Officers exercised stock
options in fiscal 1995.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END(#) AT FISCAL YEAR-END(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
Pamela D.A. Reeve........... 274,500/195,500 $2,710,020/$1,897,180
Richard H. Antell........... 42,500/7,500 $ 421,600/$ 74,400
William G. Brown............ 69,500/10,500 $ 691,245/$ 104,055
Douglas E. Blackwell........ --/40,000 $ --/$ 380,000
Michael A. Perfit........... --/-- $ --/$ --
</TABLE>
- --------
(1) There was no public trading market for the Common Stock on September 30,
1995. Accordingly, solely for purposes of this table, the values in these
columns have been calculated on the basis of an assumed initial public
offering price of $10.00 per share (rather than a determination of the
fair market value of the Common Stock on September 30, 1995), less the
aggregate exercise price of the options.

Stock Option Plans

The Company's 1990 Incentive and Nonqualified Stock Option Plan (the "1990
Plan") was adopted by the Board of Directors and approved by the stockholders
of the Company in July 1990. The Company's stockholders have since amended the
1990 Plan from time to time to increase the number of shares of Common Stock
issuable thereunder, most recently to 2,400,000. In June 1996, the Board of
Directors adopted the Company's 1996 Incentive and Non-Qualified Stock Option
Plan (the "1996 Plan"), which was approved by the Company's stockholders in
July 1996. A total of 1,000,000 shares of Common Stock are issuable under the
1996 Plan. The 1996 Plan will become effective upon the closing of this
offering, and the Company's authority to grant additional options under the
1990 Plan will then terminate. As of June 20, 1996, options to purchase an
aggregate of 1,615,800 shares of Common Stock having a weighted average
exercise price of $1.80 per share were outstanding under the 1990 Plan and
options for 777,986 shares had been exercised under the 1990 Plan.

46
<PAGE>

The 1996 Plan is administered by a committee of the Board of Directors (the
"Committee") consisting of the non-employee directors who are members of the
Compensation Committee. All members of the Committee are intended to be
"disinterested persons" as that term is defined under rules promulgated by the
Securities and Exchange Commission (the "Commission"). The Committee selects
the individuals to whom options will be granted and determines the option
exercise price and other terms of each option, subject to the provisions of
the 1996 Plan.

The 1996 Plan authorizes the grant of options to purchase Common Stock
intended to qualify as incentive stock options ("Incentive Options"), as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, and
the grant of options that do not so qualify ("Non-Qualified Options"). Under
the 1996 Plan, Incentive Options may be granted to employees and officers of
the Company or a subsidiary, including members of the Board of Directors who
are also employees of the Company or a subsidiary. Non-Qualified Options may
be granted to officers or other employees of the Company or a subsidiary, to
members of the Board of Directors or the board of directors of a subsidiary,
whether or not employees of the Company or a subsidiary, and to consultants
and other individuals providing services to the Company or a subsidiary.

The 1996 Stock Option Plan also provides for automatic formula grants of
Non-Qualified Options to non-employee directors of the Company ("Outside
Directors"). Each Outside Director (i) who is in office immediately after the
closing of this offering who holds no outstanding stock option granted to him
in his capacity as a director (a "Prior Option") or (ii) who is elected to the
Board after the closing of this offering will automatically be granted,
immediately after the closing of this offering or upon his or her initial
election, as the case may be, a Non-Qualified Option (an "Initial Option") to
purchase 20,000 shares of Common Stock of the Company, vesting in equal
installments on the first three anniversaries of the date of grant (provided
that the optionee then remains a director of the Company). In addition,
immediately following each annual meeting of stockholders of the Company or
special meeting in lieu thereof, there will automatically be granted to each
Outside Director reelected at or remaining in office after such meeting a
fully-vested Non-Qualified Option to purchase 4,000 shares of Common Stock
("Additional Option"), provided that no such Additional Option will be granted
to any Outside Director who at the time of the meeting holds any outstanding
Initial Option or Prior Option that is not fully vested, unless at least two
annual meetings of stockholders of the Company or special meetings in lieu
thereof have intervened between the closing of the Company's initial public
offering (or, if later, the date of the initial election of such Outside
Director) and the meeting following which such automatic grant would occur.
Each Non-Qualified Option granted to an Outside Director pursuant to this
provision of the 1996 Stock Option Plan will expire on the tenth anniversary
of the date of grant. The exercise price of each such Non-Qualified Option
will be equal to the fair market value of the Common Stock on the date the
Non-Qualified Option is granted.

Stock Purchase Plan

In June 1996, the Board of Directors adopted the Company's 1996 Employee
Stock Purchase Plan (the "Stock Purchase Plan"), under which up to 100,000
shares of Common Stock may be purchased by employees of the Company. The Stock
Purchase Plan, which was approved by the Company's stockholders in July 1996,
will become effective upon the closing of this offering.

During each six-month offering period under the Stock Purchase Plan,
participating employees will be entitled to purchase shares through payroll
deductions. The maximum number of shares that may be purchased will be
determined on the first day of the offering period pursuant to the following
formula: (i) up to 6% (as determined by the employee) of the employee's base
pay on such date divided by 85% of the market value of one share of Common
Stock on the first day of the offering period multiplied by (ii) two. During
each offering period, the price at which the employee will be able to purchase
shares of Common Stock will be 85% (subject to change by the Committee) of the
last reported sale price of the Common Stock on the Nasdaq National Market on
the date that the offering period commences or the date the offering period
concludes, whichever is lower.

47
<PAGE>

The Stock Purchase Plan will be administered by the Committee. The Company
expects that all employees who meet certain minimum criteria based on hours
worked per week and length of tenure with the Company will be eligible to
participate in the Stock Purchase Plan and that no employee will be able to
purchase shares pursuant to the Stock Purchase Plan if after such purchase
such employee would own more than a specific percentage of the total combined
voting power or value of the stock of the Company.

CERTAIN TRANSACTIONS

SETTLEMENT AGREEMENT AND RELATED MATTERS

On February 2, 1996, Entrepreneurial Limited Partnership I, Entrepreneurial
Limited Partnership II, Entrepreneurial Limited Partnership III,
Entrepreneurial Limited Partnership IV (collectively, the "Entrepreneurial
Partnerships"), Torrence C. Harder, the Company and certain other partnerships
and corporations entered into a settlement agreement (the "Settlement
Agreement") with Brian E. Boyle relating to litigation between the Company,
the Entrepreneurial Partnerships and one corporation, on the one hand, and Mr.
Boyle, the Company's former Chief Executive Officer and Chairman of the Board,
on the other hand. In the litigation, each of the Company and Mr. Boyle
alleged, among other things, that the other had violated certain provisions of
contracts between them. On February 2, 1996, after giving effect to the
Settlement Agreement, Mr. Boyle was the beneficial owner of 2,258,132 shares
of Common Stock, the Entrepreneurial Partnerships were the record owners of an
aggregate of 3,639,524 shares of Common Stock and Mr. Harder, a director of
the Company, was the beneficial owner of 4,582,384 shares of Common Stock. Mr.
Harder serves as a general partner of certain of the Entrepreneurial
Partnerships. Mr. Harder is also president and a director and stockholder of
the other corporations that were parties to the Settlement Agreement and that
also serve as general partners of certain of the Entrepreneurial Partnerships.
In addition, D. Quinn Mills, a director of the Company, holds a limited
partnership interest in two of the Entrepreneurial Partnerships.

Pursuant to the Settlement Agreement, Mr. Boyle granted to the Company
options to purchase an aggregate of 600,000 shares of Common Stock owned by
him, and granted to the Entrepreneurial Partnerships options to purchase an
aggregate of 600,000 shares of Common Stock owned by him. The exercise prices
of the options range from $1.70 to $2.20 per share. The options expire between
April 1, 1996 and February 3, 1997, and each option may be extended for an
additional 45-day period upon payment of a specified per-share amount. The
Settlement Agreement also provided for the Company and the Entrepreneurial
Partnerships to receive the right to acquire certain interests in the
Entrepreneurial Partnerships owned by Mr. Boyle. The Entrepreneurial
Partnerships, which had shared the costs of the litigation with the Company,
have agreed to cooperate with the Company in order to permit the Company to
receive as proceeds of the settlement of the litigation, to the extent
practical, shares of Common Stock, rather than interests in the
Entrepreneurial Partnerships.

On April 1, 1996, the Company and the Entrepreneurial Partnership exercised
the options granted by Mr. Boyle that were to expire on that day. Pursuant to
such options, the Company repurchased 200,000 shares of Common Stock and the
Entrepreneurial Partnerships purchased an aggregate of 200,000 shares of
Common Stock, at a price of $1.70 per share. The Company paid $113,000 of the
exercise price of its option in cash, and paid the remaining $227,000 by
delivering an 8% promissory note payable to Mr. Boyle. In connection with the
exercise of the options by the Entrepreneurial Partnerships, the Company
loaned an aggregate of $113,000 to the Entrepreneurial Partnerships at an
interest rate of 16% per annum, which loan was repaid in May 1996. In May
1996, the Company repurchased an aggregate of 200,000 shares of Common Stock
from the Entrepreneurial Partnerships at a price of $1.70 per share. At the
same time, in consideration of the agreement of the Entrepreneurial
Partnerships described above regarding the form of the proceeds to be received
by the Company from the settlement of the litigation against Mr. Boyle, the
Company reimbursed the Entrepreneurial Partnerships for a poriton of the legal
fees and expenses incurred by them in connection with the litigation in an
aggregate amount of $260,000.

48
<PAGE>

OTHER

On February 23, 1993, the Company entered into license and maintenance
agreements with RentGrow, Inc. ("RentGrow") pursuant to which the Company
granted to RentGrow license to use and develop the Company's Credit Decision
System software in the real estate rental, real estate broker and real estate
mortgage brokers markets in exchange for certain payments by RentGrow. The
license is exclusive for the first four years and seven months of the
agreement and nonexclusive thereafter. Mr. Harder is a director of RentGrow
and through the Entrepreneurial Partnerships and another related limited
partnership, owned, as of December 31, 1995, approximately 54% (on a fully
diluted basis) of the outstanding capital stock of RentGrow. The last payments
under the license and maintenance agreements are due in August 1996. The
Company believes that the terms of the license and maintenance agreements were
no less favorable than those available to it from unaffiliated third parties.
The Company has also provided RentGrow with certain administrative and
facilities support under a facilities service agreement dated August 1, 1992.
The facilities service agreement was of no further effect after July 1995.
Total payments under the license, maintenance and facilities service
agreements totalled $84,736, $104,278 and $59,107 in the years ended September
30, 1993, 1994 and 1995, respectively.

In August 1994, Massachusetts Capital Resource Company, which at that time
owned an aggregate of 977,156 shares of Common Stock, and Dr. Mills, acting as
custodian for a minor child, made subordinated loans to the Company in the
amounts of $2,000,000 and $100,000, respectively, and received warrants to
purchase 500,000 shares and 25,000 shares, respectively, of Common Stock at
$2.00 per share. The subordinated loans bear interest at the rate of 8% per
annum and are payable in installments between September 1997 and June 2001.
The warrants, all of which remain outstanding on the date of this Prospectus,
expire in June 2001. See "Principal and Selling Stockholders" and "Description
of Capital Stock--Warrants."

In August 1995, certain accredited investors made subordinated bridge loans
to the Company in the aggregate amount of $1,151,000 and received warrants to
purchase an aggregate of 287,750 shares of Common Stock at $2.00 per share.
The bridge loans carried interest at the rate of 16% per annum and were repaid
in full in April 1996. As part of such bridge loans, one of the
Entrepreneurial Partnerships loaned $50,000 to the Company and received a
warrant to purchase 12,500 shares of Common Stock. In addition, Michael A.
Perfit holds interests in two trusts and a 401(k) plan that loaned an
aggregate of $26,000 to the Company and received warrants to purchase an
aggregate of 6,500 shares of Common Stock. Mr. Perfit is the Company's Senior
Vice President of Technology.

49
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of June 20, 1996, and as
adjusted to reflect the sale by the Company and the Selling Stockholders of
the shares of Common Stock offered by this Prospectus, by (i) each person (or
group of affiliated persons) known by the Company to own beneficially more
than five percent of the outstanding shares of Common Stock, (ii) each of the
Selling Stockholders, (iii) each of the directors of the Company, (iv) each of
the Named Executive Officers and (v) all directors and executive officers of
the Company as a group:

<TABLE>
<CAPTION>
SHARES SHARES TO BE
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING(1) NUMBER OF AFTER OFFERING(1)
----------------------- SHARES BEING ---------------------
NAME AND ADDRESS(2) NUMBER PERCENT OFFERED NUMBER PERCENT
------------------- ------------ ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Torrence C. Harder(3)... 4,582,384 40.0% 105,192 4,477,192 30.1%
Entrepreneurial Limited
Partnership I
Entrepreneurial Limited
Partnership II
Entrepreneurial Limited
Partnership III
Entrepreneurial Limited 3,439,524 30.0 105,192 3,334,332 22.4
Partnership IV(4)......
c/o The Harder Group
281 Winter Street
Waltham, Massachusetts
02154
Advent International
Investors II Limited
Partnership
Advent Partners Limited
Partnership
Global Private Equity II 2,000,000 17.5 -- 2,000,000 13.4
Limited Partnership(5).
101 Federal Street
Boston, Massachusetts
02110
Brian E. Boyle(6)....... 1,858,132 16.2 -- 1,858,132 12.5
31 Hallett Hill Road
Weston, Massachusetts
02193
Massachusetts Capital 1,477,156 12.4 51,333 1,425,823 9.3
Resource Company(7)....
420 Boylston Street
Boston, Massachusetts
02116
Pamela D.A. Reeve(8).... 748,614 6.4 -- 748,614 4.9
D. Quinn Mills(9)....... 581,640 5.1 18,475 563,165 3.8
Michael A. Perfit(10)... 337,694 3.0 -- 337,694 2.3
William G. Brown(11).... 74,000 * -- 74,000 *
Richard H. Antell(12)... 54,000 * -- 54,000 *
Douglas E.
Blackwell(13).......... 28,000 * -- 28,000 *
Andrew I. Fillat(14).... 5,500 * -- 5,500 *
Douglas A. Kingsley(15). 5,500 * -- 5,500 *
All directors and
executive officers as a
group
(9 persons)(16)........ 6,417,332 52.0 123,667 6,293,665 40.0
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to such shares, subject to
community property laws where applicable. Shares not outstanding but
deemed beneficially owned by virtue of the right of a person or group to
acquire them within 60 days of

50
<PAGE>

June 20, 1996 are treated as outstanding only for purposes of determining
the amount and percent owned by such person or group. The number of shares
of Common Stock deemed outstanding prior to this offering consists of (i)
6,193,620 shares of Common Stock outstanding as of June 20, 1996 and (ii)
5,247,324 shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock. The number of shares of Common Stock deemed
outstanding after this offering includes an additional 3,025,000 shares of
Common Stock being offered for sale by the Company in this offering and
407,565 shares of Common Stock expected to be issued in connection with the
exercise of certain warrants to purchase shares of the Common Stock. See
"Description of Capital Stock--Warrants." Assumes no exercise of the
Underwriters' over-allotment option.
(2) The address of all persons who are executive officers or directors of the
Company is in care of the Company, 281 Winter Street, Waltham,
Massachusetts 02154.
(3) Consists of 280,000 shares beneficially owned by Mr. Harder's children,
862,860 shares owned by a trust of which Mr. Harder is the trustee and
beneficiary and the shares described in Note 4. Mr. Harder is the general
partner of, or the majority stockholder of the corporate general partner
of, Entrepreneurial Limited Partnership I, Entrepreneurial Limited
Partnership II, Entrepreneurial Limited Partnership III and
Entrepreneurial Limited Partnership IV (together, the "Partnerships"). Mr.
Harder is a director of the Company. Number of Shares Being Offered
consists of the shares described in Note 4.

(4) Consists of 1,420,240 shares held by Entrepreneurial Limited Partnership
I, 798,356 shares held by Entrepreneurial Limited Partnership II, 12,500
shares purchasable upon exercise of a warrant held by Entrepreneurial
Limited Partnership III, 808,428 shares held by Entrepreneurial Limited
Partnership IV and 400,000 shares purchasable upon exercise of call
options held by the Partnerships. The general partner of Entrepreneurial
Limited Partnership I is Entrepreneurial Ventures, Inc., of which Mr.
Harder is the majority stockholder, president and a director. The general
partners of Entrepreneurial Limited Partnerhip II and Entrepreneurial
Limited Partnership III are Mr. Harder and Entrepreneurial Ventures, Inc.
The general partners of Entrepreneurial Limited Partnership IV are Mr.
Harder and Entrepreneurial, Inc., of which Mr. Harder is the majority
stockholder, president and a director. As a result of the foregoing
relationships, Mr. Harder may be deemed to be the beneficial owner of the
shares held by the Partnerships. Number of Shares Being Offered consists
of 19,126 shares being offered by Entrepreneurial Limited Partnership I,
28,689 shares being offered by Entrepreneurial Limited Partnership II,
23,907 shares being offered by Entrepreneurial Limited Partnership III and
33,470 shares being offered by Entrepreneurial Limited Partnership IV. The
23,907 shares to be offered by Entrepreneurial Limited Partnership III
will be purchased upon the exercise of a stock option granted by a third
party. If the underwriters' over-allotment option is exercised in full,
the Partnerships will sell an additional 288,528 shares of Common Stock
and the shares to be sold and number and percent of shares to be owned
beneficially after the offering by the Partnerships will be 393,720,
3,045,804, and 20.5%, respectively.

(5) Consists of 1,668 shares held by Advent International Investors II Limited
Partnership, 93,332 shares held by Advent Partners Limited Partnership and
1,905,000 shares held by Global Private Equity II Limited Partnership.
Advent International Corporation is the general partner of Advent
International Investors II Limited Partnership, Advent Partners Limited
Partnership and Advent International Limited Partnership, which the
general partner of Global Private Equity II Limited Partnership. Because
Advent International Corporation is controlled by a group of 4 persons,
none of whom may act independently and a majority of whom must act in
concert to exercise voting or intestment power over the holdings of such
entity, individually, no individual in this group is deemed to share such
voting or investment power.

(6) Includes 50,000 shares held directly and indirectly by the spouse of Mr.
Boyle and 280,000 shares owned by a trust for the benefit of Mr. Boyle's
children. Also includes an aggregate of 800,000 shares of Common Stock
owned by Mr. Boyle subject to call options held by the Company and certain
of its stockholders. See Note 4, "Use of Proceeds" and "Certain
Transactions."

(7) Includes 500,000 shares currently purchasable upon exercise of a warrant.
William J. Torpey, Jr. is the president, and Joan C. McArdle is the vice
president, of Massachusetts Capital Resource Company, and as a result of
these relationships Mr. Torpey and Ms. McArdle may be deemed to be the
beneficial owners of the shares held by Massachusetts Capital Resource
Company. If the underwriters' over-allotment option is exercised in full,
Massachusetts Capital Resource Company will sell an additional 140,798
shares of

51
<PAGE>

Common Stock and the shares to be sold and the number and percent of
shares to be owned beneficially after the offering by MCRC will be
192,131, 1,285,025 and 8.4%, respectively.

(8) Includes 346,000 shares subject to stock options exercisable within 60
days of June 20, 1996. Ms. Reeve is the President and Chief Executive
Officer and a director of the Company.

(9) Includes 120,000 shares held by the children of Dr. Mills and 25,000
shares purchasable upon exercise of a warrant held by a child of Dr.
Mills. Dr. Mills is a director of the Company. Number of Shares Being
Offered consists of 12,192 shares being offered by the D. Quinn Mills,
Inc. Profit Sharing Plan, 1,261 shares being offered by Deborah Mills
Folk, 1,261 shares being offered by Joyce Mills, 1,261 shares being
offered by Lisa Mills and 2,500 shares being offered by S.E. Mills. The
2,500 shares to be sold by S.E. Mills will be purchased upon the exercise
of a warrant in connection with the closing of this offering. If the
underwriters' over-allotment option is exercised in full, Dr. Mills will
sell an additional 50,674 shares of Common Stock and the shares to be
sold and the number and percent of shares to be owned beneficially after
the offering by Dr. Mills will be 69,149, 512,491 and 3.4%, respectively.

(10) Consists of 331,194 shares held by various trusts and a pension plan for
the benefit of Mr. Perfit and 6,500 shares purchasable upon exercise of a
warrant held by various trusts and a pension plan for the benefit of Mr.
Perfit. Mr. Perfit is the Senior Vice President of Technology of the
Company.

(11) Includes 24,000 shares subject to stock options exercisable within 60
days of June 20, 1996. Mr. Brown is the Chief Financial Officer, Vice
President of Finance and Administration and Treasurer of the Company.

(12) Consists of 54,000 shares subject to stock options exercisable within 60
days of June 20, 1996. Mr. Antell is the Vice President of Software
Development of the Company.

(13) Consists of 28,000 shares subject to stock options exercisable within 60
days of June 20, 1996. Mr. Blackwell is the Vice President of Service
Delivery of the Company.

(14) Consists of shares held by Advent Partners Limited Partnership. Mr.
Fillat holds a limited partnership interest in Advent Partners Limited
Partnership representing beneficial ownership of the shares listed in the
table. Mr. Fillat is a director of the Company.

(15) Consists of shares held by Advent Partners Limited Partnership. Mr.
Kingsley holds a limited partnership interest in Advent Partners Limited
Partnership representing beneficial ownership of the shares listed in the
table. Mr. Kingsley is a director of the Company.

(16) Represents shares described in Notes 3, 8, 9, 10, 11, 12, 13, 14, and 15.

52
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock, $.01 par value, 630,516 shares of Series A Redeemable
Convertible Preferred Stock, $.01 par value (the "Series A Preferred Stock"),
620,000 shares of Series B Redeemable Convertible Preferred Stock, $.01 par
value (the "Series B Preferred Stock"), 225,000 shares of Series C Redeemable
Convertible Preferred Stock, $.01 par value (the "Series C Preferred Stock")
and 1,000,000 shares of Series D Preferred Stock. As of June 20, 1996 there
were outstanding 6,193,620 shares of Common Stock held by 23 holders of
record, 630,516 shares of Series A Preferred Stock held by two holders of
record, 620,000 shares of Series B Preferred Stock held by 11 holders of
record, 200,789 shares of Series C Preferred Stock held by 14 holders of
record and 1,000,000 shares of Series D Preferred Stock held by 3 holders of
record. Effective upon the closing of this offering, the outstanding shares of
Series A Preferred Stock will convert into 1,261,032 shares of Common Stock,
the outstanding shares of Series B Preferred Stock will convert into 1,504,412
shares of Common Stock, the outstanding shares of Series C Preferred Stock
will convert into 481,880 shares of Common Stock and the outstanding shares of
Series D Preferred Stock will convert into 2,000,000 shares of Common Stock.

Based on securities outstanding as of June 20, 1996, it is currently
expected that, immediately after the closing of this offering, 14,873,509
shares of Common Stock will be outstanding, together with options to acquire
1,615,800 additional shares and warrants to purchase 810,250 additional
shares. The Restated Charter, which will eliminate references to the
Convertible Preferred Stock, will be filed immediately after the closing of
this offering, and the Restated By-Laws will become effective upon the closing
of this offering. Upon the effectiveness of the Restated Charter, the
authorized capital stock of the Company will consist of 60,000,000 shares of
Common Stock, $.01 par value per share, and 5,000,000 shares of Preferred
Stock, $.01 par value per share. The description set forth below gives effect
to the filing of the Restated Charter and the adoption of the Restated By-
Laws.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share for each share
held of record on all matters submitted to a vote of stockholders. Holders of
the Common Stock do not have cumulative voting rights, and therefore the
holders of a majority of the shares of Common Stock voting for the election of
directors may elect all of the Company's directors standing for election.
Subject to preferences that may be applicable to the holders of outstanding
shares of Preferred Stock, if any, the holders of Common Stock are entitled to
receive such lawful dividends as may be declared by the Board of Directors. In
the event of a liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, and subject to the rights of the
holders of outstanding shares of Preferred Stock, if any, the holders of
shares of Common Stock shall be entitled to receive pro rata all of the
remaining assets of the Company available for distribution to its
stockholders. The Common Stock has no preemptive, redemption, conversion or
subscription rights. All outstanding shares of Common Stock are, and the
shares of Common Stock to be issued pursuant to this offering will be, fully
paid and non-assessable. The issuance of Common Stock or of rights to purchase
Common Stock could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
a majority of the outstanding voting stock of the Company.

PREFERRED STOCK

The Board is authorized, subject to any limitations prescribed by Delaware
law, to provide for the issuance of Preferred Stock in one or more series, to
establish from time to time the number of shares to be included in each such
series, to fix the powers, designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations
or restrictions thereof, of the shares of each such series and to increase
(but not above the total number of authorized shares of Preferred Stock) or
decrease (but not below the number of shares of such series then outstanding)
the number of shares of any such series without further vote or action by the
stockholders. The Board is authorized to issue Preferred Stock with voting,
conversion and other rights and preferences that could adversely affect the
voting power or other rights of the holders of Common Stock.

53
<PAGE>

Although the Company has no current plans to issue such shares, the issuance
of Preferred Stock or of rights to purchase Preferred Stock could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, a majority of the
outstanding voting stock of the Company.

WARRANTS

The Company has issued warrants to purchase an aggregate of 457,288 shares
of Common Stock, subject to certain antidilution adjustments, at varying
exercise prices. Such warrants will expire by their terms on the closing of
this offering. It is currently anticipated that the holders of such warrants
will, in accordance with the terms thereof, surrender a portion of the
warrants in lieu of payment of the cash exercise price, with the warrants to
be valued at the initial public offering price of the Common Stock offered
hereby.

In addition, the Company has issued warrants (the "Warrants") to purchase an
aggregate of 812,750 shares of Common Stock, subject to certain antidilution
adjustments, having an exercise price of $2.00 per share. All of the Warrants
are exercisable in full. The Warrants expire on dates between August 2000 and
July 2001. The holders of the Warrants are entitled to certain registration
rights in respect of the shares of Common Stock issuable upon exercise of the
Warrants. See "Shares Eligible for Future Sale--Registration Rights."

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE RESTATED CHARTER AND BY-LAWS AND OF
DELAWARE LAW

Restated Charter and By-Laws

The Restated Charter and the Restated By-Laws contain certain provisions
that could discourage potential takeover attempts and make more difficult
attempts by stockholders to change the Company's management. The Restated
Charter authorizes the directors to issue, without stockholder approval,
shares of Preferred Stock in one or more series and to fix the voting powers,
preferences and rights and the qualifications, limitations and restrictions
thereof. The Restated By-Laws provide for the division of the Board of
Directors into three classes as nearly equal in size as possible with
staggered three-year terms. See "Management." The classification of the Board
of Directors could make it more difficult for a third party to acquire, or
discourage a third party from acquiring, control of the Company. The Restated
Charter provides that stockholders may act only at meetings of stockholders
and not by written consent in lieu of a stockholders' meeting. The Restated
By-Laws provide that nominations for directors may not be made by stockholders
at any annual or special meeting thereof unless the stockholder intending to
make a nomination notifies the Company of its intentions a specified number of
days in advance of the meeting and furnishes to the Company certain
information regarding itself and the intended nominee. These provisions could
delay any stockholder actions that are favored by the holders of a majority of
the outstanding stock of the Company until the next stockholders' meeting.
These provisions may also discourage another person or entity from making a
tender offer for the Company's Common Stock, because such person or entity,
even if it acquired a majority of the outstanding stock of the Company could
only take action at a duly called stockholders meeting and not by written
consent. The Restated By-Laws also provide that special meetings of the
Company's stockholders may be called only by the President or a majority of
the directors and require advance notice of business to be brought by a
stockholder before any annual or special meeting of stockholders and the
provision of certain information to the Company regarding such stockholder and
others known to be supporting such proposal and any material interest they may
have in the proposed business.

Delaware Anti-Takeover Statute

The Company is subject to Section 203 of the Delaware General Corporation
Law which, subject to certain exceptions, prohibits a Delaware corporation
from engaging in any business combination with any interested stockholder for
a period of three years following the date that such stockholder became an
interested stockholder, unless (i) prior to such date, the board of directors
of the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder; (ii)
upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction

54
<PAGE>

commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors
and authorized at an annual or special meeting of stockholders, and not by
written consent, by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the interested stockholder.

Section 203 defines "business combination" to include (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii)
any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation; (iii) subject to
certain exceptions, any transaction which results in the issuance or transfer
by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation which has the
effect of increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested stockholder; or
(v) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation. In general, Section 203 defines an "interested
stockholder" as any entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation and any entity or person
associated with, affiliated with or controlling or controlled by such entity
or person.

LIMITATION OF LIABILITY

The Restated Charter provides that no director of the Company shall be
personally liable to the Company or to any stockholder for monetary damages
arising out of such director's breach of fiduciary duty, except to the extent
that the elimination or limitation of liability is not permitted by the
Delaware General Corporation Law. The Delaware General Corporation Law, as
currently in effect, permits charter provisions eliminating the liability of
directors for breach of fiduciary duty, except that directors remain liable
for (i) any breach of the director's duty of loyalty to a company or its
stockholders, (ii) any acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) any payment of a
dividend or approval of a stock purchase that is illegal under Section 174 of
the Delaware General Corporation Law or (iv) any transaction from which the
director derived an improper personal benefit. A principal effect of this
provision of the Restated Charter is to limit or eliminate the potential
liability of the Company's directors for monetary damages arising from
breaches of their duty of care, unless the breach involves one of the four
exceptions described in (i) through (iv) above. The provision does not prevent
stockholders from obtaining injunctive or other equitable relief against
directors, nor does it shield directors from liability under federal or state
securities laws.

The Restated Charter and the Restated By-Laws further provide for the
indemnification of the Company's directors and officer to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, including
circumstances in which indemnification is otherwise discretionary.

STOCK TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.

55
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 14,936,009 shares of
Common Stock outstanding (including 5,247,324 shares of Common Stock issuable
upon conversion of all outstanding shares of Preferred Stock and assuming no
exercise of options or warrants outstanding as of the date of this Prospectus,
other than a warrant to be automatically exercised for 405,065 shares and a
warrant to purchase 2,500 shares of Common Stock being offered by one of the
Selling Stockholders). Of these shares, the 3,200,000 shares to be sold in
this offering will be freely tradable in the public market without restriction
under the Securities Act, unless they are purchased by an "affiliate" of the
Company, as that term is defined in Rule 144 promulgated under the Securities
Act.

SALES OF RESTRICTED SHARES

The remaining 11,736,009 shares are "restricted securities" as defined by
Rules 144 or 701 (the "Restricted Shares"). Restricted securities may be sold
in the public market only if they are registered under the Securities Act or
if they qualify for an exemption from registration under Rules 144, 144(k) or
701 under the Securities Act. In addition, certain of these shares are "locked
up," or subject to the lock-up agreements described below. Subject to Rules
144, 144(k) and 701 and to the lock-up agreements, additional shares will be
available for sale in the public market as follows: (i) 9,578,119 shares will
be eligible for resale in the public market immediately following the
completion of this offering, subject in some cases to certain volume
restrictions and other conditions pursuant to Rules 144 and 144(k), with
7,314,922 of these shares locked up; (ii) 95,390 shares will become eligible
for sale during the 90 days following the date of this Prospectus pursuant to
Rules 144 and 701, with all 95,390 shares locked up; and (iii) 2,062,500
shares will be eligible for sale upon expiration of their respective two-year
holding periods, subject to the restrictions and conditions of Rule 144, such
holding periods to expire on April 3, 1998 for 2,000,000 shares and on June
30, 1998 for 62,500 shares. All of the 2,062,500 shares are locked up.

In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated), who has beneficially owned restricted securities
for at least two years is entitled to sell, within any three-month period, a
number of such securities that does not exceed the greater of 1% of the then
outstanding shares of the Common Stock (approximately 149,360 shares, based on
the number of shares to be outstanding after this offering) or the average
weekly trading volume in the public market during the four calendar weeks
preceding the filing of the seller's Form 144, provided certain requirements
concerning availability of public information concerning the Company, manner
of sale and notice of sale are satisfied. A person who is not an affiliate,
has not been an affiliate within three months prior to the sale and has
beneficially owned the restricted securities for at least three years is
entitled to sell such shares under Rule 144(k) without regard to any of the
limitations described above. Rule 144 also provides that affiliates who are
selling shares that are not restricted securities must nonetheless comply with
the same restrictions applicable to restricted securities with the exception
of the holding period requirement. The two- and three-year holding periods
described above do not begin to run until the full purchase price or other
consideration is paid by the person acquiring the restricted securities from
the issuer or an affiliate of the issuer and may include the holding period of
a prior owner who is not an affiliate of the issuer. The Commission has
proposed certain amendments to Rule 144 that would reduce by one year the
holding periods required for shares subject to Rule 144 to become eligible for
resale in the public market. This proposal, if adopted, would increase the
number of shares of Common Stock eligible for immediate resale following
expiration of the lock-up agreements described below. No assurance can be
given concerning whether or when the proposal will be adopted by the
Commission.

Securities issued in reliance on Rule 701 (such as shares of Common Stock
issued before the closing of this offering upon the exercise of options
granted under the 1990 Plan) are also Restricted Shares and, beginning
approximately 90 days after the date of this Prospectus, may be resold by
persons other than affiliates of the Company subject only to the manner of
sale provisions of Rule 144 and may be resold by affiliates under Rule 144
without compliance with its two-year holding period requirement. Outstanding
options to purchase 561,180 shares of Common Stock were fully vested as of
June 20, 1996, all of which are subject to 180-day lock-up agreements.

56
<PAGE>

The Company intends to file one or more registration statements on Form S-8
under the Securities Act to register all shares of Common Stock issued or
issuable under the 1990 Plan, 1996 Plan and the Stock Purchase Plan. See
"Management--Benefit Plans." The registration statements are expected to be
filed as soon as practicable after the date of this Prospectus and will become
effective immediately upon filing. Shares covered by the registration
statements will be eligible for resale in the public market after the
effective date of the registration statements, subject to the lock-up
agreements described below, if applicable.

As of the consummation of this offering and after giving effect to the sale
of the shares of Common Stock offered by the Selling Stockholders hereby,
holders of 6,613,131 shares of Common Stock will have rights to require the
Company in certain circumstances to register such shares for sale under the
Securities Act. See "--Registration Rights."

Prior to this offering there has been no public market for the Common Stock
of the Company and no prediction can be made as to the effect, if any, that
market sales or the availability for sale of such shares will have on the
market price of the Common Stock prevailing from time to time. Nevertheless,
sales of substantial numbers of shares in the public market could adversely
affect the market price of the Common Stock and could impair the Company's
ability to raise capital through a sale of its equity securities. See "Risk
Factors--Absence of Public Market; Possible Volatility of Stock Price."

LOCK-UP AGREEMENTS

The executive officers and directors of the Company, the Selling
Stockholders and certain others, who, upon the closing of this offering, will
beneficially own an aggregate of 8,050,465 shares of Common Stock, options to
purchase 2,140,000 shares of Common Stock and warrants to purchase 41,500
shares of Common Stock, have agreed that they will not, without the prior
written consent of Cowen & Company, sell, offer, contract to sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exchangeable for any shares of Common Stock for a period of 180 days after the
date of this Prospectus.

REGISTRATION RIGHTS

Pursuant to a Registration Rights Agreement dated February 11, 1991, as
amended, the Company has granted registration rights to certain of its
stockholders with respect to certain shares ("Registrable Shares") consisting
of (i) 5,247,324 shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock, (ii) 525,000 shares of Common Stock issuable upon
exercise of two outstanding warrants and (iii) 910,615 shares of Common Stock
initially held by two specified stockholders.

Holders may request registration of Registrable Shares under the Securities
Act as follows. First, holders of 25% of the Registrable Shares then
outstanding may, at any time, require the Company to use its best efforts to
register all or any portion of their Registrable Shares if the shares to be
registered (a) represent all of the Registrable Shares then held by such
holders, (b) represent at least 20% of the Registrable Shares originally
issued if such holders request the registration of less than all of the
Registrable Shares held by them or (c) are reasonably anticipated to be
offered at an aggregate price to the public that exceeds $2,000,000. Second,
at any time when the Company qualifies to register securities on Form S-3
under the Securities Act, holders of Registrable Shares may request the
Company file a registration statement on Form S-3 for a public offering of all
or any portion of the Registrable Shares, provided that the reasonably
anticipated aggregate price to the public is at least $500,000. Third, each
holder of Registrable Shares has incidental ("piggyback") registration rights
with respect to registrations of the Company's securities, pursuant to which
the holder may request that all or any portion of its Registrable Shares be
included in a registration statement (other than a registration statement of
Form S-4 or S-8 or certain other forms) being filed by the Company for its own
account or otherwise. The Company will pay certain expenses incurred by the
holders of Registrable Shares in exercising the foregoing registration rights.

57
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholders have agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Cowen &
Company, Montgomery Securities and Prudential Securities Incorporated are
acting as Representatives (the "Representatives"), has severally agreed to
purchase from the Company and the Selling Stockholders, the respective number
of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- ----------- ------------
<S> <C>
Cowen & Company....................................................
Montgomery Securities..............................................
Prudential Securities Incorporated.................................
---------
Total.......................................................... 3,200,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
closing certificates, opinions and letters from the Company and its counsel
and independent auditors. The nature of the Underwriters' obligations is such
that they are committed to purchase all of the shares of Common Stock being
offered hereby (other than those covered by the over-allotment option
described below) if any of such shares are purchased.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain dealers at such price
less a concession not in excess of $ per share. The Underwriters may allow,
and such dealers may re-allow, a concession not in excess of $ per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the Representatives.

Certain of the Selling Stockholders have granted the Underwriters an option
exercisable for up to 30 days after the date of this Prospectus to purchase up
to an aggregate of 480,000 additional shares of Common Stock to cover over-
allotments, if any. If the Underwriters exercise their over-allotment option,
the Underwriters have severally agreed, subject to certain conditions, to
purchase approximately the same percentage thereof that the number of shares
to be purchased by each of them as shown in the foregoing table bears to the
3,200,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the Common Stock offered hereby.

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act and to contribute to payments the Underwriters may be
required to make in respect thereof.

58
<PAGE>

The Company, the Company's executive officers and directors, all Selling
Stockholders and certain other stockholders and option holders of the Company
have agreed that they will not, without the prior written consent of Cowen &
Company, sell, offer, contract to sell, or otherwise dispose of any shares of
Common Stock or any securities convertible into or exchangeable for any shares
of Common Stock for a period of 180 days after the date of this Prospectus.
See "Shares Eligible for Future Sale--Lock-up Agreements."

The Representatives have advised the Company and the Selling Stockholders
that the Underwriters do not intend to confirm sales of the shares offered
hereby to any account over which they exercise discretionary authority.

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price will be determined by
negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors to be considered in such negotiations are
the prevailing market conditions, the market prices of securities of publicly
traded companies engaged in activities similar to those of the Company, the
Company's financial and operating history and condition, estimates of the
business potential of the Company, the present state of the Company's
development, and other factors deemed relevant. The estimated initial public
offering price range set forth on the cover hereof is subject to change as a
result of market conditions and other factors.

LEGAL MATTERS

The validity of the shares offered hereby and certain other legal matters
will be passed upon for the Company and the Selling Stockholders by Foley,
Hoag & Eliot llp, Boston, Massachusetts. Certain legal matters will be passed
upon for the Underwriters by Testa, Hurwitz & Thibeault, llp, Boston,
Massachusetts.

EXPERTS

The Financial Statements of the Company at September 30, 1994 and 1995 and
December 31, 1995, and for each of the three years in the period ended
September 30, 1995 and for the three-month period ended December 31, 1995,
appearing in this Prospectus have been audited by Deloitte & Touche llp,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock, reference is
made to such Registration Statement and the exhibits and schedules filed as a
part thereof. Statements contained in this Prospectus as to the contents of
any contract or any other document referred to are not necessarily complete,
and, in each instance, if such contract or document is filed as an exhibit,
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference to such exhibit. The Registration Statement,
including exhibits and schedules thereto, may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the Commission at Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661 and 7 World Trade Center, Thirteenth Floor, New York,
New York 10048. Copies also may be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549, at prescribed rates.

59
<PAGE>

LIGHTBRIDGE, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Balance Sheets as of September 30, 1994 and 1995, December 31, 1995 and
June 30, 1996 (Unaudited)................................................ F-3
Statements of Operations for the Years Ended September 30, 1993, 1994 and
1995, the Three Months Ended December 31, 1994 (Unaudited), December 31,
1995, and the Six Months Ended June 30, 1995 (Unaudited) and June 30,
1996 (Unaudited)......................................................... F-4
Statements of Stockholders' Deficiency for the Years Ended September 30,
1993, 1994 and 1995, the Three Months Ended December 31, 1995, and the
Six Months Ended June 30, 1996 (Unaudited)............................... F-5
Statements of Cash Flows for the Years Ended September 30, 1993, 1994 and
1995, the Three Months Ended December 31, 1994 (Unaudited), December 31,
1995, and the Six Months Ended June 30, 1995 (Unaudited) and June 30,
1996 (Unaudited)......................................................... F-6
Notes to Financial Statements............................................. F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors Lightbridge, Inc. Waltham, Massachusetts

We have audited the accompanying balance sheets of Lightbridge, Inc. as of
September 30, 1994 and 1995 and December 31, 1995, and the related statements
of operations, stockholders' deficiency, and cash flows for the years ended
September 30, 1993, 1994 and 1995 and the three months ended December 31,
1995. 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 generally accepted auditing
standards. 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 financial statements present fairly, in all material
respects, the financial position of the Company at September 30, 1994 and 1995
and December 31, 1995, and the results of its operations and its cash flows
for the years ended September 30, 1993, 1994 and 1995 and the three months
ended December 31, 1995 in conformity with generally accepted accounting
principles.

Deloitte & Touche LLP

Boston, Massachusetts
April 22, 1996 (Except for Notes 4 and 11 as to which
the dates are August 8, 1996 and July 15, 1996, respectively)

F-2
<PAGE>

LIGHTBRIDGE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, PRO FORMA
------------------------ DECEMBER 31, 1996 JUNE 30, 1996
1994 1995 1995 (UNAUDITED) (UNAUDITED)
----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents........... $ 1,831,916 $ 539,025 $ 58,064 $ 3,532,294
Accounts receivable.... 2,676,451 2,753,758 4,578,143 5,270,830
Accounts receivable
from related parties.. 107,231 121,100 136,809 93,877
Other current assets... 223,885 158,571 144,294 310,956
----------- ----------- ----------- -----------
Total current
assets............. 4,839,483 3,572,454 4,917,310 9,207,957
Noncurrent receivable
from related party..... 45,638 -- -- --
Fixed assets--net....... 4,101,292 5,319,832 4,881,655 4,089,622
Capitalized software
development costs--net. -- 896,141 762,084 574,810
Deposits................ 167,963 206,620 225,807 229,024
Other assets............ 26,241 219,236 254,625 453,245
----------- ----------- ----------- -----------
Total assets........ $ 9,180,617 $10,214,283 $11,041,481 $14,554,658
=========== =========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIENCY)
Current liabilities:
Accounts payable and
accrued expenses...... $ 1,305,254 $ 2,304,595 $ 3,025,038 $ 2,178,554
Short-term borrowings
and current portion of
subordinated notes
payable............... 250,000 1,976,992 1,500,000 1,500,000
Current portion of
obligations under
capital leases........ 1,181,581 2,066,748 2,073,895 2,017,970
Deferred revenues...... 58,333 228,650 74,800 808,781
Dividends payable on
preferred stock....... 166,876 166,876 166,876 166,876
Related parties:
Accounts payable...... 784 -- -- --
Subordinated notes
payable.............. -- 69,071 -- 113,333
Interest payable...... 99,670 39,035 44,096 2,000
Current portion of
obligations under
capital leases....... 61,952 -- -- --
----------- ----------- ----------- -----------
Total current
liabilities........ 3,124,450 6,851,967 6,884,705 6,787,514
Deferred revenues--
related parties........ 2,781 -- -- --
Obligations under
capital leases......... 2,355,733 1,916,609 1,502,128 683,069
Notes payable:
Unaffiliated parties... 1,754,018 1,789,643 2,848,837 1,807,156
Related parties........ 87,701 89,576 164,298 203,848
----------- ----------- ----------- -----------
Total liabilities... 7,324,683 10,647,795 11,399,968 9,481,587
----------- ----------- ----------- -----------
Commitments and
contingencies (Note 5)
Redeemable convertible
preferred stock at
redemption value
(liquidation preference
of $3,115,315,
$3,297,859, $3,343,494
and $9,393,164 at
September 30, 1994 and
1995 and December 31,
1995 and June 30, 1996,
respectively).......... 2,948,439 3,130,983 3,176,618 9,226,288 $ --
----------- ----------- ----------- ----------- -----------
Stockholders' equity
(deficiency):
Common stock, $.01 par
value; 20,000,000
shares authorized;
6,498,232, 6,500,748,
6,575,098 and
6,657,268 shares
issued; 6,657,268,
6,499,600, 6,573,950
and 6,256,120 shares
outstanding at
September 30, 1994 and
1995, December 31,
1995 and June 30,
1996, respectively.... 64,982 65,007 65,751 66,573 123,121
Additional paid-in
capital............... 100,003 -- -- 75,316 9,250,056
Warrants............... 262,500 406,375 406,375 375,125 375,125
Note receivable,
stockholder........... (13,085) (13,085) (13,085) (13,085) (13,085)
Accumulated deficit.... (1,506,905) (4,022,218) (3,993,572) (3,951,072) (3,951,072)
----------- ----------- ----------- ----------- -----------
Total............... (1,092,505) (3,563,921) (3,534,531) (3,447,143) 5,784,145
Less treasury stock, at
cost.................. -- (574) (574) (706,074) (1,536,074)
----------- ----------- ----------- ----------- -----------
Total stockholders'
equity
(deficiency)....... (1,092,505) (3,564,495) (3,535,105) (4,153,217) $ 4,248,071
----------- ----------- ----------- ----------- -----------
Total liabilities
and stockholders'
equity
(deficiency)....... $ 9,180,617 $10,214,283 $11,041,481 $14,554,658
=========== =========== =========== ===========
</TABLE>

See notes to financial statements.

F-3
<PAGE>

LIGHTBRIDGE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31, JUNE 30,
------------------------------------ ----------------------- ------------------------
1993 1994 1995 1994 1995 1995 1996
---------- ----------- ----------- ----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues (Includes sales
to a related party of
$84,736, $104,278,
$59,017, $21,075,
$10,644, $29,240 and
$3,125, respectively).. $6,985,912 $13,397,863 $19,350,467 $5,514,643 $6,512,050 $ 9,003,012 $13,263,057
Cost of revenues 3,553,577 7,415,356 12,607,879 3,015,687 3,484,175 6,231,663 7,511,529
---------- ----------- ----------- ---------- ---------- ----------- -----------
Gross profit............ 3,432,335 5,982,507 6,742,588 2,498,956 3,027,875 2,771,349 5,751,528
---------- ----------- ----------- ---------- ---------- ----------- -----------
Operating expenses:
Development............ 1,164,469 2,317,454 3,864,000 849,705 1,144,973 1,862,712 1,970,735
Sales and marketing.... 829,004 814,891 1,901,716 433,509 794,687 937,869 1,916,694
General and
administrative........ 1,309,049 1,643,496 2,583,912 629,841 700,640 1,301,226 1,172,095
---------- ----------- ----------- ---------- ---------- ----------- -----------
Total operating
expenses............ 3,302,522 4,775,841 8,349,628 1,913,055 2,640,300 4,101,807 5,059,524
---------- ----------- ----------- ---------- ---------- ----------- -----------
Income (loss) from
operations............. 129,813 1,206,666 (1,607,040) 585,901 387,575 (1,330,458) 692,004
Other income (expense):
Interest income:
Related parties........ 11,788 12,604 8,688 2,633 1,551 4,937 3,182
Other.................. 4,328 9,384 29,006 9,120 510 10,362 41,071
Interest expense:
Related parties........ (125,600) (20,753) (3,908) (53,201) (60,586) (102,750) (166,172)
Other.................. (124,704) (224,927) (859,660) (131,800) (246,525) (317,933) (249,371)
Other nonoperating
expense............... (21,048) (9,802) -- (930) (7,920) -- 1,286
---------- ----------- ----------- ---------- ---------- ----------- -----------
Income (loss) before
provision for income
taxes.................. (125,423) 973,172 (2,432,914) 411,723 74,605 (1,735,842) 322,000
Provision for income
taxes.................. -- 22,900 -- -- 2,400 -- 19,500
---------- ----------- ----------- ---------- ---------- ----------- -----------
Net income (loss)....... $ (125,423) $ 950,272 $(2,432,914) $ 411,723 $ 72,205 $(1,735,842) $ 302,500
========== =========== =========== ========== ========== =========== ===========
Pro forma net income
(loss) per common
share.................. $ (0.19) $ 0.01 $ 0.02
=========== ========== ===========
Pro forma weighted
average number of
common and common
equivalent shares
outstanding............ 12,681,915 13,182,018 13,814,249
=========== ========== ===========
</TABLE>

See notes to financial statements.

F-4
<PAGE>

LIGHTBRIDGE, INC.

STATEMENTS OF STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK ADDITIONAL NOTE TOTAL
----------------- ----------------- PAID-IN RECEIVABLE, ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL WARRANTS STOCKHOLDER DEFICIT DEFICIENCY
--------- ------- ------- --------- ---------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, October 1,
1992.................. 5,274,938 $52,749 -- $ -- $ -- $ -- $(13,085) $(2,331,754) $(2,292,090)
Issuance of common
stock for:
Cash.................. 619,416 6,194 -- -- 19,286 -- -- -- 25,480
Convertible notes and
interest payable..... 517,778 5,178 -- -- 405,419 -- -- -- 410,597
Dividends on redeemable
convertible preferred
stock................. -- -- -- -- (150,421) -- -- -- (150,421)
Net loss............... -- -- -- -- -- -- -- (125,423) (125,423)
--------- ------- ------- --------- --------- -------- -------- ----------- -----------
Balance, September 30,
1993.................. 6,412,132 64,121 -- -- 274,284 -- (13,085) (2,457,177) (2,131,857)
Issuance of common
stock for cash........ 86,100 861 -- -- 8,263 -- -- -- 9,124
Issuance of stock
purchase warrants..... -- -- -- -- -- 262,500 -- -- 262,500
Dividends on redeemable
convertible preferred
stock................. -- -- -- -- (182,544) -- -- -- (182,544)
Net income............. -- -- -- -- -- -- -- 950,272 950,272
--------- ------- ------- --------- --------- -------- -------- ----------- -----------
Balance, September 30,
1994.................. 6,498,232 64,982 -- -- 100,003 262,500 (13,085) (1,506,905) (1,092,505)
Issuance of common
stock for cash........ 2,516 25 -- -- 142 -- -- -- 167
Issuance of stock
purchase warrants..... -- -- -- -- -- 143,875 -- -- 143,875
Dividends on redeemable
convertible preferred
stock................. -- -- -- -- (100,145) -- -- (82,399) (182,544)
Repurchase of common
stock for cash........ -- -- 1,148 (574) -- -- -- -- (574)
Net loss............... -- -- -- -- -- -- -- (2,432,914) (2,432,914)
--------- ------- ------- --------- --------- -------- -------- ----------- -----------
Balance, September 30,
1995.................. 6,500,748 65,007 1,148 (574) -- 406,375 (13,085) (4,022,218) (3,564,495)
Issuance of common
stock for cash........ 74,350 744 -- -- 2,076 -- -- -- 2,820
Dividends on redeemable
convertible preferred
stock................. -- -- -- -- (2,076) -- -- (43,559) (45,635)
Net income............. -- -- -- -- -- -- -- 72,205 72,205
--------- ------- ------- --------- --------- -------- -------- ----------- -----------
Balance, December 31,
1995.................. 6,575,098 65,751 1,148 (574) -- 406,375 (13,085) (3,993,572) (3,535,105)
Unaudited:
Issuance of common
stock for cash....... 82,170 822 -- -- 135,336 -- -- -- 136,158
Exercise of common
stock warrant........ -- -- -- -- 31,250 (31,250) -- -- --
Repurchase of common
stock for cash....... -- -- 400,000 (705,500) -- -- -- -- (705,500)
Dividends on
redeemable
convertible preferred
stock................ -- -- -- -- (91,270) -- -- -- (91,270)
Expenses paid on
behalf of
stockholder.......... -- -- -- -- -- -- -- (260,000) (260,000)
Net income............ -- -- -- -- -- -- -- 302,500 302,500
--------- ------- ------- --------- --------- -------- -------- ----------- -----------
Balance, June 30, 1996
(unaudited)........... 6,657,268 $66,573 401,148 $(706,074) $ 75,316 $375,125 $(13,085) $(3,951,072) $(4,153,217)
========= ======= ======= ========= ========= ======== ======== =========== ===========
</TABLE>

See notes to financial statements.

F-5
<PAGE>

LIGHTBRIDGE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
YEARS ENDED ENDED ENDED
SEPTEMBER 30, DECEMBER 31, JUNE 30,
----------------------------------- ------------------------ -----------------------
1993 1994 1995 1994 1995 1995 1996
--------- ----------- ----------- ----------- ----------- ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net income (loss)...... $(125,423) $ 950,272 $(2,432,914) $ 411,723 $ 72,205 $(1,735,842) $ 302,500
Adjustments to
reconcile net income
(loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization.......... 868,965 1,000,057 2,567,767 555,966 864,192 1,447,268 1,665,679
Amortization of
discount on notes..... -- 4,219 76,500 9,375 87,853 18,750 35,534
Changes in assets and
liabilities:
Accounts receivable... (847,786) (1,278,988) (77,307) (1,474,071) (1,840,094) 1,556,256 (649,755)
Other assets.......... (54,475) (269,299) (173,594) (227,752) (30,014) (59,240) (388,860)
Accounts payable and
accrued liabilities.. 274,697 341,878 935,172 610,339 725,504 (40,187) (888,580)
Deferred revenues..... 297,752 (254,721) 167,536 655,094 (153,850) (246,567) 733,981
--------- ----------- ----------- ----------- ----------- ----------- ----------
Net cash provided by
(used in) operating
activities......... 413,730 493,418 1,063,160 540,674 (274,204) 940,438 810,499
--------- ----------- ----------- ----------- ----------- ----------- ----------
Cash flows used in
investing activities:
Purchases of fixed
assets................ (309,868) (339,223) (1,391,679) (359,874) (184,186) (960,360) (463,646)
Capitalization of
software costs........ -- -- (980,453) (310,652) -- (523,983) --
--------- ----------- ----------- ----------- ----------- ----------- ----------
Net cash used in
investing
activities......... (309,868) (339,223) (2,372,132) (670,526) (184,186) (1,484,343) (463,646)
--------- ----------- ----------- ----------- ----------- ----------- ----------
Cash flows from
financing activities:
Proceeds from notes
payable and warrants.. 210,000 2,350,000 1,901,000 -- 500,000 750,000 --
Payments on notes
payable............... (501,000) (50,000) -- -- -- -- (1,151,000)
Payments under capital
lease obligations..... (412,988) (823,085) (1,884,512) (410,045) (525,391) (965,366) (1,077,348)
Proceeds from issuance
of common stock....... 25,480 9,124 167 -- 2,820 167 136,158
Payments toward the
purchase of treasury
stock................. -- -- (574) -- -- (574) (478,833)
Expenses paid on behalf
of stockholder........ -- -- -- -- -- -- (260,000)
Proceeds from issuance
of mandatory
redeemable convertible
preferred stock, net.. 584,228 -- -- -- -- -- 5,958,400
--------- ----------- ----------- ----------- ----------- ----------- ----------
Net cash provided by
(used in) financing
activities......... (94,280) 1,486,039 16,081 (410,045) (22,571) (215,773) 3,127,377
--------- ----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease)
in cash and cash
equivalents............ 9,582 1,640,234 (1,292,891) (539,897) (480,961) (759,678) 3,474,230
Cash and cash
equivalents, beginning
of period.............. 182,100 191,682 1,831,916 1,831,916 539,025 1,292,019 58,064
--------- ----------- ----------- ----------- ----------- ----------- ----------
Cash and cash
equivalents, end of
period................. $ 191,682 $ 1,831,916 $ 539,025 $ 1,292,019 $ 58,064 $ 532,341 $3,532,294
========= =========== =========== =========== =========== =========== ==========
Cash paid for interest.. $ 152,292 $ 283,272 $ 904,605 $ 251,372 $ 176,271 $ 418,730 $ 495,875
========= =========== =========== =========== =========== =========== ==========
Cash paid for income
taxes.................. $ -- $ 5,300 $ 25,000 $ 25,000 $ 15,700 $ 9,650 $ 31,100
========= =========== =========== =========== =========== =========== ==========
</TABLE>

See notes to financial statements.

F-6
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED DECEMBER 31, 1994, AND THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED.)

1. BUSINESS AND TECHNOLOGY ACQUISITIONS

Business--Lightbridge, Inc. (formerly Credit Technologies, Inc.) (the
"Company") was incorporated in June 1989 under the laws of the state of
Delaware. The Company develops and markets customer acquisition solutions for
the wireless communications industry. Effective November 1, 1994, the Company
changed its name and reincorporated as Lightbridge, Inc. During 1995, the
Board of Directors passed a resolution to change the fiscal year end to
December 31.

Technology Acquisitions--During the year ended September 30, 1995, the
Company completed the following technology acquisitions:

. In November 1994, the Company purchased the technology for a pen-based
software product for $400,000.

. In February 1995, the Company purchased the software technology for a
multimedia kiosk for $45,000. The Company is also obligated to make
royalty payments to the former owners based on future sales of the
product.

The costs associated with these acquisitions was recorded as capitalized
software costs, since such products had reached technological feasibility at
the date of acquisition.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation--As discussed in Note 6, the redeemable convertible
preferred stock will be automatically converted upon the closing of the public
offering contemplated by this prospectus. The accompanying pro forma balance
sheet gives effect to this conversion as if it had occurred on June 30, 1996.
In addition, the pro forma balance sheet gives effect as of June 30, 1996 to
the exercise of (i) warrants to purchase 457,288 shares of common stock (to be
accomplished through the surrender of 52,223 shares of common stock), (ii) a
warrant to purchase 2,500 shares of common stock at $2.00 per share and (iii)
the Company's option to repurchase 400,000 shares of common stock, as
described in Note 5.

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.

Fixed Assets--Fixed assets are recorded at cost. Depreciation is provided
using the straight-line method over the estimated useful lives of the
respective assets ranging from three to five 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--Revenue from
processing of qualification and activation transactions for wireless
telecommunications carriers is recognized in the period when services are
performed. Revenues derived from software implementation projects are
recognized throughout the performance period of the contracts. Revenues
arising from the prepayment of fees or from licensing agreements where the
Company has continuing vendor obligations are deferred. Software-related
revenues are less than 10% of total revenue for all periods presented with the
exception of the six months ended June 30, 1996 during which these items
comprised approximately 20% of total revenue.

Substantially all of the Company's customers are providers of cellular
telephone 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.

F-7
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Customers exceeding 10% of the Company's revenue during the years ended
September 30, 1993, 1994 and 1995, the three months ended December 31, 1994
and 1995, and the six months ended June 30, 1995 and 1996 are as follows:

<TABLE>
<CAPTION>
PERCENT OF REVENUE
---------------------------------------------------
THREE SIX
MONTHS ENDED MONTHS ENDED
YEARS ENDED --------------- ---------------
SEPTEMBER 30, DECEMBER 31, JUNE 30,
---------------- --------------- ---------------
CUSTOMER 1993 1994 1995 1994 1995 1995 1996
-------- ---- ---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
A....................... 20% 32% 31% 32% 22% 33% 19%
B....................... 14 12 11 -- 18 12 20
C....................... -- 10 -- -- -- -- --
D....................... -- 10 11 12 10 10 --
E....................... -- -- 10 11 11 11 11
--- --- --- ------ ------ ------ ------
34% 64% 63% 55% 61% 66% 50%
=== === === ====== ====== ====== ======
</TABLE>

For periods in which a customer represented less than 10% of revenues, such
customer's percent of revenue for that period is not presented.

Income Taxes--The Company has adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes." SFAS No. 109 requires the recognition of 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 and differences in depreciation and amortization
for financial statement purposes and income tax purposes, and are recognized
to the extent realization of such benefits is more likely than not.

Software Development Costs--Software development costs are capitalized after
establishment of technological feasibility as provided for under SFAS No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed."

During the year ended September 30, 1995, the Company capitalized
approximately $980,400 of software development costs associated with the
development of two new products, including the costs of purchasing certain
technology (see Note 1). Capitalized software development costs are being
amortized to cost of revenues using the straight-line method over 24 months
which results in the highest levels of amortization. Accumulated amortization
was approximately $84,000, $218,000 and $406,000 at September 30, 1995,
December 31, 1995 and June 30, 1996, respectively. There were no amounts
capitalized prior to the year ended September 30, 1995.

Development Costs--Development costs, which consist of research into and
development of new products and services, are expensed as incurred, except
costs which may be subject to capitalization under the provisions of SFAS No.
86.

Supplemental Cash Flow Information--The Company entered into the following
noncash transactions:

In April 1996, the Company reacquired 200,000 shares of its common stock
from a former director. This repurchase was partially financed through the
issuance of an 8% note payable in the amount of $226,667.

F-8
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Pro Forma Income (Loss) Per Common Share--Pro forma income (loss) per common
share is based on the weighted average number of common and dilutive common
equivalent shares (common stock options and warrants) outstanding. The pro
forma weighted average number of common shares assumes that all series of
redeemable convertible preferred stock had been converted to common stock as
of the original issuance date. Common equivalent shares are not included in
the per share calculations where the effect of their inclusion would be anti-
dilutive, except in accordance with the requirements of Securities and
Exchange Commission Staff Accounting Bulletin No. 83. That Bulletin requires
all common shares issued and options or warrants to purchase common stock
granted by the Company during the twelve-month period prior to the filing of a
proposed initial public offering be included in the calculation as if they
were outstanding for all periods. Shares of Series D redeemable convertible
preferred stock have been treated as outstanding in all periods for pro forma
income (loss) per common share pursuant to the Bulletin.

Historical income (loss) per share, which excludes the assumed conversion of
the redeemable convertible preferred stock, was as follows (in thousands):

Fair Value of Financial Instruments--In the opinion of management, the
estimated fair value of the Company's financial instruments, which include
cash equivalents, accounts receivable and long-term debt, approximates their
carrying value.

New Accounting Pronouncements--

Impairment of Long-Lived Assets--In March 1995, the FASB issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." SFAS No. 121 addresses the accounting for the
impairment of long-lived assets, certain identifiable intangibles and
goodwill when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The adoption of SFAS No. 121 in
1996 did not have a material impact on the Company's results of operations,
financial position or cash flows.

Stock-Based Compensation--In November 1995, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation." SFAS No. 123 addresses the
financial accounting and reporting standards for stock-based employee
compensation plans. SFAS No. 123 permits an entity to either record the
effects of stock-based employee compensation plans in its financial
statements or present pro forma disclosures in the notes to the financial
statements. In connection with the adoption of SFAS No. 123 during 1996,
the Company will elect to provide the appropriate disclosures in the notes
to the financial statements. Since the Company does not expect to make
significant equity awards to outsiders, adoption of SFAS No. 123 will not
significantly impact the Company's results of operations, financial
position or cash flows.

F-9
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Significant Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles necessarily requires management
to make estimates. These estimates include provisions for bad debts, certain
accrued liabilities, recognition of revenue and expenses, and recoverability
of deferred tax assets. These estimates could change; however, the Company
does not expect any changes in the near term that would have a significant
impact on the financial statements.

Interim Information--The results of operations and cash flows for the three-
month periods ended December 31, 1994 and 1995, and the six-month periods
ended June 30, 1995 and 1996 are not necessarily indicative of results which
would be expected for a full year. In the opinion of management, the financial
statements for the unaudited periods presented include all adjustments
necessary for a fair presentation in accordance with generally accepted
accounting principles, consisting solely of normal recurring accruals and
adjustments.

3. FIXED ASSETS

Fixed assets consisted of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------ DECEMBER 31, JUNE 30,
1994 1995 1995 1996
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Furniture and fixtures.. $ 18,704 $ 118,408 $ 117,876 $ 129,567
Leasehold improvements.. 319,828 877,778 867,726 876,321
Computer equipment...... 528,784 1,115,014 1,161,052 1,453,901
Computer equipment under
capital leases......... 4,858,573 6,942,977 6,972,938 7,133,488
Computer software....... 353,550 685,546 829,436 978,339
----------- ----------- ----------- -----------
6,079,439 9,739,723 9,949,028 10,571,616
Less accumulated depre-
ciation
and amortization....... (1,978,147) (4,419,891) (5,067,373) (6,481,994)
----------- ----------- ----------- -----------
Fixed assets--net....... $ 4,101,292 $ 5,319,832 $ 4,881,655 $ 4,089,622
=========== =========== =========== ===========
</TABLE>

Accumulated amortization of equipment under capital leases was $1,242,725,
$3,155,114, $3,606,915 and $4,659,098 at September 30, 1994 and 1995, December
31, 1995 and June 30 , 1996, respectively.

4. NOTES PAYABLE

The carrying value of notes payable consisted of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1994 SEPTEMBER 30, 1995 DECEMBER 31, 1995 JUNE 30, 1996
-------------------- --------------------- --------------------- ---------------------
HELD BY HELD BY HELD BY HELD BY HELD BY HELD BY HELD BY HELD BY
RELATED UNAFFILIATED RELATED UNAFFILIATED RELATED UNAFFILIATED RELATED UNAFFILIATED
PARTIES PARTIES PARTIES PARTIES PARTIES PARTIES PARTIES PARTIES
------- ------------ -------- ------------ -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Line-of-credit/demand
note borrowings........ $ -- $ 250,000 $ -- $1,000,000 $ -- $1,500,000 $ -- $1,500,000
8% subordinated notes... 87,701 1,754,018 89,576 1,789,643 90,045 1,798,549 90,514 1,807,156
16% subordinated notes.. -- -- 69,071 976,992 74,253 1,050,288 -- --
8% note payable-
settlement shares...... -- -- -- -- -- -- 226,667 --
------- ---------- -------- ---------- -------- ---------- -------- ----------
Total................... 87,701 2,004,018 158,647 3,766,635 164,298 4,348,837 317,181 3,307,156
Less current portion.... -- 250,000 69,071 1,976,992 -- 1,500,000 113,333 1,500,000
------- ---------- -------- ---------- -------- ---------- -------- ----------
Long-term portion....... $87,701 $1,754,018 $ 89,576 $1,789,643 $164,298 $2,848,837 $203,848 $1,807,156
======= ========== ======== ========== ======== ========== ======== ==========
</TABLE>

F-10
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

During 1994 and 1995, the Company had a line of credit agreement with a bank
(the "Bank Agreement") which permitted the Company to borrow up to $2,000,000
($1,000,000 during 1994) subject to certain borrowing formulas established by
the bank. Interest based on prime plus .5% was charged on any outstanding
borrowings. In December 1995, the Bank Agreement was amended to reduce the
amount of permitted borrowings to $1,500,000 and the outstanding borrowings
under the Bank Agreement, $1,500,000, were converted to a demand note due in
March 1996. At December 31, 1995 and March 31, 1995, the Company was not in
compliance with certain covenants contained in the Bank Agreement including
covenants related to liquidity, tangible net worth, profitability and debt to
tangible net worth, as defined. The Company obtained agreements from the bank
for these violations, in which the bank agreed to forebear from exercising its
remedies for default, including the right to require payment on demand prior
to March 1996 and June 1996, respectively. The demand note was collateralized
by the Company's accounts receivable, equipment and intangible assets. The
weighted average interest rate for borrowings under the Bank Agreement during
the years ended September 30, 1994 and 1995 and the three months ended
December 31, 1995 approximated 9.75%, 9.9% and 9.5%, respectively.

Subsequent to December 31, 1995, the Bank Agreement was amended (the
"Amended Bank Agreement") to replace the demand note with a line-of-credit
feature and certain other provisions were modified to increase the maximum
borrowing limit to $4,000,000, decrease the interest rate to prime plus .25%
and extend the agreement to June 1997. The Amended Bank Agreement contains
certain restrictions which, among others, limits the Company's ability to pay
cash dividends and requires the Company to achieve defined levels of quarterly
earnings and tangible net worth, as well as meeting defined ratios of senior
liabilities to net worth and quick assets. Borrowings under the Amended Bank
Agreement are collateralized by the Company's accounts receivable, equipment
and intangible assets. After giving effect to an amendment to the Amended Bank
Agreement dated August 8, 1996, the Company was in compliance with the
required financial covenants and ratios as of June 30, 1996. Further, the
Company believes that the August 8, 1996 amendment will permit the Company to
remain in compliance with the required financial covenants and ratios
throughout the term of the Amended Bank Agreement.

The Company has a $500,000 line of credit to be used for equipment purchases
(the "Equipment Line"). Borrowings under the Equipment Line are payable in 36-
monthly installments of principal and interest commencing April 5, 1995 and
ending March 5, 1998. Interest on the Equipment Line is payable at prime plus
1%. Subsequent to December 31, 1995, certain provisions of the Equipment Line
were modified whereby the interest rate was reduced to prime plus .75%, the
maximum borrowing amount was increased to $2,000,000 and expiration date was
changed to June 1999. At December 31, 1995, there were no borrowings
outstanding on the Equipment Line.

8% Subordinated Notes--In August 1994, the Company issued $2,100,000 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 are
exercisable through June 30, 2001 at a price of $2 per share and have been
appraised and recorded at an aggregate market value of $262,500. The related
discount on the subordinated notes ($262,500 at time of issuance) is being
accreted over the term of the notes. Interest expense for the years ended
September 30, 1994 and 1995 and for the three months ended December 31, 1995,
includes accretion related to these notes of approximately $4,200, $37,500 and
$9,375, respectively. Interest on the notes is payable quarterly at an annual
rate of 8%. Principal is payable in quarterly installments of $131,250
beginning on September 30, 1997 through maturity (2001). The notes are
redeemable at the Company's option at par plus declining premiums at various
dates.

16% Subordinated Notes--In August 1995, the Company issued $1,151,000 of 16%
subordinated notes to certain holders of the Company's redeemable preferred
stock, with immediately exercisable warrants for the purchase of 287,750
shares of the Company's common stock. Interest on the notes was accrued
monthly, and

F-11
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

principal and accrued interest were payable at January 31, 1996. Such
repayment obligations were extended by the note holders until such time as the
Company completed the placement of its Series D Preferred Stock, which
occurred on April 4, 1996. The warrants are exercisable through June 30, 2001
at a price of $2 per share and have been appraised and recorded at an
aggregate market value of $143,875. The related discount on the subordinated
note ($143,875 at time of issuance) is being accreted over the originally
scheduled term of the notes. Interest expense for the year ended September 30,
1995 and for the three months ended December 31, 1995 includes approximately
$38,900 and $78,500 of accretion, respectively. The Company repaid principal
and interest related to these notes in full upon the sale of its Series D
Preferred Stock. The amount outstanding related to these notes has been
classified as long term at December 31, 1995, reflecting the Company's
refinancing of this obligation through the issuance of Series D Preferred
Stock.

5. COMMITMENTS AND CONTINGENCIES

Leases--The Company leases computer and other equipment under various,
noncancelable leases which have been capitalized for financial reporting
purposes. The Company has noncancelable operating lease agreements for office
space and certain equipment. Future minimum payments under capital and
operating leases consist of the following at December 31, 1995:

<TABLE>
<CAPTION>
YEAR ENDING OPERATING
DECEMBER 31 CAPITAL LEASES LEASES
----------- -------------- ----------
<S> <C> <C>
1996............................................. $ 2,373,156 $1,243,125
1997............................................. 1,530,940 1,231,090
1998............................................. 53,499 1,059,725
1999............................................. -- 1,028,706
2000............................................. -- 887,684
Thereafter....................................... -- 431,657
----------- ----------
Total minimum lease payments..................... 3,957,595 $5,881,987
==========
Less amount representing interest................ (381,572)
-----------
Present value of future minimum lease payments... 3,576,023
Less current portion............................. (2,073,895)
-----------
Long-term portion................................ $ 1,502,128
===========
</TABLE>

During the year ended September 30, 1994, certain payments due under capital
lease agreements with related parties were not made at the request of the
lessor. Such deferred payments aggregated $784, $0 and $0 at September 30,
1994 and 1995 and December 31, 1995, respectively, and are included in
accounts payable--related parties. No interest was accrued on these amounts
subsequent to their original due date.

Rent expense for operating leases was $271,982, $453,687, $1,502,745,
$405,302, $814,910 and $741,747 for the years ended September 30, 1993, 1994
and 1995, for the three months ended December 31, 1995, and for the six months
ended June 30, 1995 and 1996, respectively.

Litigation--Subsequent to December 31, 1995, the Company and certain
affiliates (the "Entrepreneurial Partnerships") (collectively, the
"Plaintiffs") reached an agreement to settle various lawsuits between the
Plaintiffs and a former director of the Company. In addition to settling all
claims and disputes, the former director agreed, in exchange for payments of
$25,500, to grant the Company and the Entrepreneurial Partnerships' various
options to purchase the Company's common stock from the former director (the
"Settlement Shares"). The Company's purchase option permits the Company to
purchase Settlement Shares in 200,000 share allotments during three specified
periods of time through February 1997 at purchase prices of $1.70, $1.95 and
$2.20 per

F-12
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

share during the first, second and final share allotments, respectively. In
the event that the Company chooses not to immediately pay for the Settlement
Shares, a portion of the purchase price (66 2/3%) may be financed by issuing
the former director an 8% two-year note.

On April 1, 1996, the Company exercised its option to purchase 200,000
Settlement Shares at a price of $1.70 per share for cash consideration of
$113,333 deposited with the selling shareholder on March 28, 1996 and an 8%
two-year note for $226,667. In connection with the exercise of the options by
the Entrepreneurial Partnerships, on March 28, 1996 the Company loaned an
aggregate of $113,333 to the Entrepreneurial Partnerships at an interest rate
of 16%. Such amount was repaid in June 1996. In May 1996, the Company
repurchased for cash consideration an additional 200,000 shares of its common
stock from certain Entrepreneurial Partnerships at a price of $1.70 per share
and reimbursed the Entrepreneurial Partnerships, by means of a distribution,
certain legal fees and expenses incurred by them in connection with the
litigation against the former director in an aggregate amount of $260,000.

6. REDEEMABLE CONVERTIBLE PREFERRED STOCK

Redeemable convertible preferred stock, par value of $.01, consists of the
following at September 30, 1994 and 1995 and December 31, 1995:

. Series A; 630,516 shares authorized, issued and outstanding

. Series B; 620,000 shares authorized, issued and outstanding

. Series C; 225,000 shares authorized, 200,789 shares issued and
outstanding

In April 1996, 1,000,000 shares of Series D Preferred Stock were issued, of
which all remained outstanding at June 30, 1996. There were no changes in the
number of outstanding shares of Series A, B and C Preferred Stock during the
six-month period ended June 30, 1996.

Changes in redeemable convertible preferred stock were as follows:

<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C SERIES D TOTAL
---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances, October 1, 1993. $1,130,475 $1,204,729 $597,567 $ -- $2,932,771
Dividends accreted........ 15,668 -- -- 15,668
---------- ---------- -------- ---------- ----------
Balances, September 30,
1994..................... 1,146,143 1,204,729 597,567 -- 2,948,439
Dividends accreted........ 60,978 76,104 45,462 -- 182,544
---------- ---------- -------- ---------- ----------
Balances, September 30,
1995..................... 1,207,121 1,280,833 643,029 -- 3,130,983
Dividends accreted........ 15,244 19,026 11,365 -- 45,635
---------- ---------- -------- ---------- ----------
Balances, December 31,
1995..................... 1,222,365 1,299,859 654,394 -- 3,176,618
Stock issued, net of issu-
ance costs of $41,600 ... -- -- -- 5,958,400 5,958,400
Dividends accreted........ 30,488 38,052 22,730 -- 91,270
---------- ---------- -------- ---------- ----------
Balances, June 30, 1996... $1,252,853 $1,337,911 $677,124 $5,958,400 $9,226,288
========== ========== ======== ========== ==========
</TABLE>

In February 1991, the Company issued 630,516 shares of redeemable
convertible preferred stock ("Series A Preferred Stock") for an aggregate
purchase price of $1,000,000, of which 315,258 shares were issued to a third-
party investor and 315,258 shares were issued to certain Entrepreneurial
Partnerships which are related parties.

In December 1991, the Company issued 620,000 shares of redeemable
convertible preferred stock ("Series B Preferred Stock") for an aggregate
purchase price of $1,085,000.

In June 1993, the Company issued 200,789 shares of redeemable convertible
preferred stock ("Series C Preferred Stock") for an aggregate purchase price
of $602,367.

In April 1996, the Company issued 1,000,000 shares of redeemable convertible
preferred stock ("Series D Preferred Stock") for an aggregate purchase price
of $6,000,000.

F-13
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Conversion--Each share of Series A and Series D Preferred Stock is
convertible into two shares of common stock. Each share of Series B and Series
C Preferred Stock is convertible into approximately 2.42 and 2.40 shares of
common stock, respectively. The Series A, Series B, Series C and Series D
Preferred Stock ("Serial Preferred Stock") is convertible upon a sale of the
Company's stock or net assets for an amount in excess of $7,500,000, with a
minimum price per share of $5.25.

Dividends--On October 1, 1992, the Series A and Series B Preferred Stock
began accruing dividends at the rate of 8% per annum. The Series C Preferred
Stock began accruing dividends at the rate of 8% per annum beginning on
October 1, 1993. The Series D Preferred Stock began accruing dividends at the
rate of 8% per annum beginning on April 2, 1996. Prior to the issuance of the
Series D Preferred Stock, the Series A, Series B and Series C Preferred Stock
dividends were payable in cash for fiscal years in which the Company has net
income in excess of $500,000 and would accrue in all other years. Accrued
dividends outstanding for any year were payable in cash in subsequent years to
the extent net income exceeded the required minimum of $500,000 by an
additional $500,000. No dividends have been paid in the years ended September
30, 1994 and 1995 and the three months ended December 31, 1995. Since the
issuance of the Series D Preferred Stock, the Series A, Series B and Series C
Preferred Stock dividends are payable in cash or by subordinated promissory
note for fiscal years in which the Company has net income of $1,000,000 or
more, to the extent of the lesser of 20% of net income in excess of $1,000,000
or all dividends then payable. For financial reporting purposes, the dividends
are being accreted ratably over the period the Serial Preferred Stock is
expected to be outstanding to the extent not required to be paid. Dividends
payable for all periods presented consisted of $80,076 and $86,800 required to
be paid on the Series A and Series B Preferred Stock, respectively, as a
result of the Company's 1994 net income.

Liquidation Preference--In the event of a liquidation, merger,
consolidation, or sale of the Company's assets, the holders of the various
classes of Serial Preferred Stock will be entitled to receive a liquidation
preference equal to their aggregate purchase price plus accreted and unpaid
dividends outstanding prior to any distributions to holders of common stock of
the Company.

Redemption--Prior to the issuance of the Series D Preferred Stock, the
Series A and Series B Preferred Stock had a mandatory redemption date of
December 31, 1997 and the Series C Preferred Stock had a mandatory redemption
date of December 31, 1999. Since the issuance of the Series D Preferred Stock,
holders of two-thirds of all shares of Serial Preferred Stock may, commencing
on April 1, 2000 and on the same date in each following year, require the
Company to redeem 1/3 of their shares. The redemption amount equals the higher
of the fair market value of the preferred stock as of the fiscal year end
closest to the redemption date or an amount equal to the aggregate purchase
price plus accrued dividends outstanding.

Voting Rights--Each share of Serial Preferred Stock entitles the holder to
the number of votes per share equivalent to the number of common shares into
which each share of preferred stock is then convertible.

Equity Financing--The Company secured a round of equity financing, which
consisted of the issuance of the Series D Preferred Stock on April 4, 1996.
The total proceeds from the financing were $6,000,000 and were used, in part,
to retire the 16% subordinated notes.

7. COMMON STOCK, OPTIONS AND WARRANTS (SEE NOTE 11)

Increase in Authorized Shares--On March 29, 1996, the Company's Board of
Directors increased the number of authorized shares of $.01 par value common
stock from 14,000,000 to 20,000,000 shares, of which 2,000,000 of such shares
was reserved for the conversion of the Company's Series D Preferred Stock.

Stock Option Plan--Under the Company's stock option plan, the Company may
grant either incentive or nonqualified stock options to officers, directors,
employees or consultants for the purchase of up to 1,800,000 shares of common
stock. Options will be 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, and will expire ten years later. On March 29, 1996, the Board of
Directors increased the number of options available for grant to 2,400,000.

F-14
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Stock option activity was as follows:

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
------------ -----------
YEARS ENDED
SEPTEMBER 30,
--------------------- DECEMBER 31, JUNE 30,
1994 1995 1995 1996
--------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Outstanding, beginning of
period....................... 991,184 716,100 1,013,700 1,072,700
Granted:
Options................... 200,000 321,700 233,500 625,800
Range of exercise prices
in dollars per share..... $ 0.375 $ .50-.75 $ 0.75 $ 0.75-8.50
Exercised................... (86,100) (2,516) (74,350) (19,670)
Cancelled................... (388,984) (21,584) (100,150) (63,030)
--------- ---------- ---------- -----------
Outstanding, end of period.... 716,100 1,013,700 1,072,700 1,615,800
========= ========== ========== ===========
Options exercisable........... 426,832 561,915
========== ===========
Aggregate option price........ $ 55,724 $ 238,024
========== ===========
</TABLE>

Common Stock Warrants--The Company has issued warrants to purchase 1,270,038
shares of the Company's common stock at exercise prices ranging from $0.793 to
$2.00 per share. Warrants issued prior to August 1994 were assigned nominal
value based upon management's estimate of their fair market value. Warrants
issued in connection with the Company's issuance of subordinated notes (see
Note 4) have been ascribed an aggregate value of $406,375.

Reserved Shares--The Company has reserved 4,920,020 shares of common stock
for issuance upon the conversion of the Serial Preferred Stock and for the
exercise of stock options and warrants.

Note Receivable, Stockholder--The Company holds a note receivable from a
stockholder for the purchase of common stock of the Company. The note, which
totals $13,085, is collateralized by the common stock held by the noteholder,
is due on demand and bears interest at 12%.

8. INCOME TAXES

In October 1993, the Company implemented the provisions of SFAS No. 109. The
cumulative effect of this change did not have a material effect on the
Company's results of operations, financial position or cash flows as a result
of the valuation allowance established at the time of adoption.

The income tax (benefit) provision for the years ended September 30, and for
the three months ended December 31, consisted of the following:

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED
--------------------------- DECEMBER 31,
1993 1994 1995 1995
------------------- ------ ------------
<S> <C> <C> <C> <C>
Current:
Federal.......................... $ -- $ 299,341 $ -- $2,400
State............................ -- 89,156 -- --
Deferred:
Federal.......................... -- (278,341) -- --
State............................ -- (87,256) -- --
------- ----------- ------- ------
Income tax provision............... $ -- $ 22,900 $ -- $2,400
======= =========== ======= ======
</TABLE>

F-15
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------ DECEMBER 31,
1994 1995 1995
----------- ----------- ------------
<S> <C> <C> <C>
Deferred tax assets:
Depreciation and amortization...... $ 962,278 $ 1,894,190 $ 2,167,010
Interest on capital leases......... 237,740 451,069 495,678
Accrued expenses and reserves...... 102,453 227,787 239,212
Net operating loss carryforwards... 282,962 946,098 842,847
Deferred tax liabilities:
Equipment leases capitalized....... (1,038,500) (2,012,418) (2,292,090)
Other.............................. (7,582) (10,985) (12,127)
Valuation allowance.................. (539,351) (1,495,741) (1,440,530)
----------- ----------- -----------
Net deferred tax asset............... $ -- $ -- $ --
=========== =========== ===========
</TABLE>

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

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------- DECEMBER 31,
1993 1994 1995 1995
----- ---- ----- ------------
<S> <C> <C> <C> <C>
Statutory federal income tax rate....... (34)% 34 % (34)% 34%
Loss producing no tax benefit........... 34 -- 34 --
Alternative minimum tax asset, not
assured of realization................. -- 2 -- 3
Net operating loss carryforwards........ -- (34) -- (34)
----- ---- ----- ----
Effective tax rate...................... -- % 2 % -- % 3 %
===== ==== ===== ====
</TABLE>

The net change in the valuation allowance for the years ended September 30,
1994 and 1995, and the three month period ended December 31, 1995 was an
increase (decrease) of ($409,258), $956,390 and $(55,211), respectively. At
December 31, 1995, the Company had net operating loss carryforwards for
federal income tax purposes of $2.1 million, expiring at various dates through
2010.

9. EMPLOYEE PROFIT SHARING PLAN

The Company has a 401(k) Employee Profit Sharing Plan (the "Plan"). Under
the Plan, the Company, at its discretion, may make contributions to match
employee contributions. All employees of the Company are eligible to
participate, subject to employment eligibility requirements. Vesting of
employer contributions occurs ratably over a five-year period. Employer
contributions amounted to approximately $14,000, $27,500, $43,000 $20,000 and
$31,000 for the years ended September 30, 1993, 1994 and 1995, the three
months ended December 31, 1995, and the six months ended June 30, 1996,
respectively.

10. RELATED-PARTY TRANSACTIONS

Under an agreement dated February 28, 1990, the Company granted an exclusive
license to Rent Grow, Inc. ("Rent Grow"), a company having certain common
investors with the Company, to use the Company's Credit Decision System in the
rental real estate market. Under the terms of the agreement, the Company is to
receive $250,000, comprised of five installments in varying amounts through
August 1996. For financial

F-16
<PAGE>

LIGHTBRIDGE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

reporting purposes, the remaining receivable has been recorded at its net
present value, estimated to be approximately $87,000, $46,000 and $46,000 at
September 30, 1994 and 1995 and December 31, 1995, respectively. In addition,
this agreement provides for the Company to maintain the licensed software, at
Rent Grow's option, at an annual amount equal to 15% of the license amount,
which the Company believes exceeds the cost of providing such maintenance.

The Company has received advances from various Entrepreneurial Partnerships
and their general partners and has issued preferred stock to various
Entrepreneurial Partnerships. The Company leased computer equipment from
various Entrepreneurial Partnerships. The general partners of these
partnerships are also stockholders of the Company. In 1992, the Company sold
and leased back equipment from an Entrepreneurial Partnership resulting in a
gain of $12,518, which was deferred and amortized over the capital lease term.
The amount deferred was $2,781, $0 and $0 as of September 30, 1994 and 1995
and December 31, 1995, respectively.

11. SUBSEQUENT EVENTS

Stock Split--On June 14, 1996, the Board of Directors authorized a two for
one stock split effective on July 15, 1996. All shares and per share
information included in the financial statements has been restated to reflect
this stock split. In addition, the number of shares of authorized common stock
was increased to 20,000,000. The Board also voted to increase the number of
authorized shares of common stock to 60,000,000, effective immediately after
closing of the Company's initial public offering.

Employee Stock Plans--On June 14, 1996, the Board of Directors authorized
and the stockholders approved the adoption of the following plans for the
issuance of options or sale of shares to employees, all to be 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 up to 1,000,000
options to purchase shares of common stock. Options may be either qualified
incentive stock options or nonqualified stock options at the discretion of
the Board of Directors. Exercise prices will be either fair market value on
the date of grant, in the case of incentive stock options, or set by the
Board of Directors at the date of grant, in the case of nonqualified
options.

1996 Stock Purchase Plan--The 1996 Stock Purchase Plan provides for the
sale of up to 100,000 shares of common stock to employees every six months
through payroll deductions. Employees will be allowed to purchase shares at
a 15% discount from the lower of fair value at the beginning or end of the
purchase periods.

* * * * * *

F-17
<PAGE>

[IMAGE OF LIGHTBRIDGE, INC. LOGO]

<PAGE>

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

No dealer, salesperson or other person has been authorized to give any infor-
mation or to make any representations other than those contained in this Pro-
spectus in connection with the offering covered by this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company, the Selling Stockholders or the Under-
writers. This Prospectus does not constitute an offer to sell, or a solicita-
tion of an offer to buy, the Common Stock in any jurisdiction where, or to any
person to whom, it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any cir-
cumstances, create an implication that there has not been any change in the
facts set forth in this Prospectus or in the affairs of the Company since the
date hereof.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 15
Dividend Policy........................................................... 15
Capitalization............................................................ 16
Dilution.................................................................. 17
Selected Financial Data................................................... 18
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 19
Business.................................................................. 29
Management................................................................ 43
Certain Transactions...................................................... 48
Principal and Selling Stockholders........................................ 50
Description of Capital Stock.............................................. 53
Shares Eligible for Future Sale........................................... 56
Underwriting.............................................................. 58
Legal Matters............................................................. 59
Experts................................................................... 59
Additional Information.................................................... 59
Index to Financial Statements............................................. F-1
</TABLE>

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

Until , 1996 (25 days after the date of this Prospectus), all dealers ef-
fecting transactions in the Common Stock offered hereby, whether or not par-
ticipating in this distribution, may be required to deliver a Prospectus. This
is in addition to the obligation of dealers to deliver a Prospectus when act-
ing as underwriters and with respect to their unsold allotments or
subscriptions.

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

3,200,000 Shares

[LIGHTBRIDGE LOGO APPEARS HERE]

Common Stock

-------------------
PROSPECTUS
-------------------

COWEN & COMPANY

MONTGOMERY SECURITIES

PRUDENTIAL SECURITIES INCORPORATED

, 1996

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses to be paid by the
Company in connection with the issuance and distribution of the securities
being registered, other than underwriting discounts and commissions. All
amounts shown are estimates except for amounts of filing and listing fees. The
Company will pay all expenses in connection with the issuance and distribution
of any securities sold by the Selling Stockholders, except for underwriting
discounts and commissions and for any fees of counsel selected by any
particular Selling Stockholder to act in addition to or in lieu of the counsel
for the Selling Stockholders appointed by the Company.

<TABLE>
<S> <C>
Filing fee of Securities and Exchange Commission.................. $ 16,140
Filing fee of National Association of Securities Dealers, Inc..... 4,180
Listing fee of Nasdaq Stock Market, Inc........................... 50,000
Premium for directors' and officers' insurance.................... *
Accounting fees and expenses...................................... *
Blue sky fees and expenses (including related legal fees)......... 25,000
Legal fees and expenses........................................... *
Printing and engraving expenses................................... *
Transfer agent fees............................................... *
Miscellaneous..................................................... *
--------
Total......................................................... $850,000
========
</TABLE>
- --------
* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law affords a Delaware
corporation the power to indemnify its present and former directors and
officers under certain conditions. Article SEVENTH of the Restated Charter
provides that the Company shall indemnify each person who at any time is, or
shall have been, a director or officer of the Company, and is threatened to be
or is made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is, or was, a director or officer of the Company,
or served at the request of the Company as a director, officer, employee,
trustee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement incurred in connection with any such
action, suit or proceeding to the maximum extent permitted by the Delaware
General Corporation Law.

Section 102(b)(7) of the Delaware General Corporation Law gives a Delaware
corporation the power to adopt a charter provision eliminating or limiting the
personal liability of directors to the corporation or its stockholders for
breach of fiduciary duty as directors, provided that such provision may not
eliminate or limit the liability of directors for (i) any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) any
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) any payment of a dividend or approval of a
stock purchase that is illegal under Section 174 of the Delaware Corporation
Law or (iv) any transaction from which the director derived an improper
personal benefit. Article NINTH of the Restated Charter provides that to the
maximum extent permitted by the General Corporation Law of the State of
Delaware, no director of the Company shall be personally liable to the Company
or to any of its stockholders for monetary damages arising out of such
director's breach of fiduciary duty as a director of the Company. No amendment
to or repeal of the provisions of Article NINTH shall apply to or have any
effect of the liability or the alleged liability of any director of the
Corporation with respect to any act or failure to act of such director
occurring prior to such amendment or repeal. A principal effect of such
Article

II-1
<PAGE>

NINTH is to limit or eliminate the potential liability of the Company's
directors for monetary damages arising from breaches of their duty of care,
unless the breach involves one of the four exceptions described in (i) through
(iv) above. Article NINTH does not prevent stockholders from obtaining
injunctive or other equitable relief against directors, nor does it shield
directors from liability under federal or state securities laws.

Section 145 of the Delaware General Corporation Law also affords a Delaware
corporation the power to obtain insurance on behalf of its directors and
officers against liabilities incurred by them in those capacities. The Company
is procuring a directors' and officers' liability and company reimbursement
liability insurance policy that (a) insures directors and officers of the
Company against losses (above a deductible amount) arising from certain claims
made against them by reason of certain acts done or attempted by such
directors or officers and (b) insures the Company against losses (above a
deductible amount) arising from any such claims, but only if the Company is
required or permitted to indemnify such directors or officers for such losses
under statutory or common law or under provisions of the Restated Charter or
the Restated By-Laws.

Reference is also made to Section 6 of the Underwriting Agreement between
the Company, the Selling Stockholders and the Underwriters, filed as Exhibit
1.1 of this Registration Statement, for a description of indemnification
arrangements between the Company, the Selling Stockholders and the
Underwriters.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following information is furnished with regard to all securities sold by
the Company within the past three years which were not registered under the
Securities Act.

(a) On the dates set forth below the Company issued and sold the number
of shares of its Common Stock indicated upon exercise of stock options held
by certain of its employees.

<TABLE>
<CAPTION>
NUMBER OF
DATE OF SALE SHARES ISSUED EXERCISE PRICE
------------ ------------- --------------
<S> <C> <C>
June 30, 1993................................ 500,000 $20,000.00
September 1, 1993............................ 2,000 180.00
September 30, 1993........................... 50,000 2,000.00
December 30, 1993............................ 50,000 2,000.00
April 1, 1994................................ 1,100 88.00
June 1, 1994................................. 750 60.00
September 30, 1994........................... 27,500 1,100.00
February 1, 1995............................. 1,046 69.84
April 27, 1995............................... 1,470 99.60
December 1, 1995............................. 51,850 2,108.00
December 28, 1995............................ 22,500 900.00
January 29, 1996............................. 400 200.00
January 31, 1996............................. 100 50.00
March 1, 1996................................ 1,900 112.00
March 15, 1996............................... 5,150 1,807.50
April 30, 1996............................... 12,000 9,000.00
June 1, 1996................................. 120 18.00
</TABLE>

(b) On June 30, 1996, the Company issued and sold 62,500 shares of its
Common Stock upon exercise of a warrant held by an accredited investor.

(c) On April 3, 1996, the Company issued and sold 1,000,000 shares of its
Series D Redeemable Convertible Preferred Stock to accredited investors for
an aggregate price of $6,000,000.

II-2
<PAGE>

(d) On the dates set forth below the Company issued and sold to
accredited investors, including certain of its existing stockholders, 16%
subordinated promissory notes in the principal amounts indicated and
warrants to purchase the number of shares of Common Stock indicated. The
aggregate price paid by each purchaser for the note and warrants was equal
to the principal amount of the note purchased.

<TABLE>
<CAPTION>
NUMBER OF SHARES
PRINCIPAL AMOUNT OF COMMON STOCK
DATE OF SALE OF NOTES UNDERLYING WARRANTS
------------ ---------------- -------------------
<S> <C> <C>
August 24, 1995...................... $151,000 37,750
August 17, 1995...................... 300,000 75,000
August 16, 1995...................... 50,000 12,500
August 15, 1995...................... 100,000 25,000
August 14, 1995...................... 100,000 25,000
August 11, 1995...................... 200,000 50,000
August 4, 1995...................... 250,000 62,500
</TABLE>

(e) On August 29, 1994, the Company issued and sold to accredited
investors 8% subordinated promissory notes in the aggregate principal
amount of $2,100,000 and warrants to purchase 525,000 shares (subject to
certain adjustments) of Common Stock for a price of $2,100,000.

(f) On August 10, 1993, the Company issued and sold 8,333 shares of
Series C Redeemable Convertible Preferred Stock to an accredited investor
for an aggregate price of $24,999.

The issuances described in Item 15(a) were made in reliance upon the
exemptions from registration set forth in Rule 701 under the Securities Act.
The other issuances described in this Item 15 were made in reliance upon the
exemption from registration set forth in Section 4(2) of the Securities Act
relating to sales by an issuer not involving any public offering. None of the
foregoing transactions involved a distribution or public offering. No
underwriters were engaged in connection with the foregoing issuances of
securities, and no underwriting commissions or discounts were paid.

ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES

(A) EXHIBITS

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.5* 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
10.6 1990 Incentive and Nonqualified Stock Option Plan
10.7 1996 Incentive and Non-Qualified Stock Option Plan
10.8 1996 Employee Stock Purchase Plan
10.9** Office Lease dated September 21, 1993, as amended, between the Company
and L&E Investment of Massachusetts One, Inc.
10.10** Office Lease dated September 30, 1994, as amended, between the Company
and Hobbs Brook Office Park
11.1 Statement re computation of per share earnings
23.1 Consent of Deloitte & Touche llp
23.2* Consent of Foley, Hoag & Eliot llp (included in Exhibit 5.1)
24.1** Power of Attorney (contained on the signature page of this
Registration Statement)
27 Financial Data Schedules for year ended September 30, 1995 and three
months ended December 31, 1995 and six months ended June 30, 1996.
</TABLE>
- --------

* To be filed by amendment.

** Previously filed.

(B) FINANCIAL STATEMENT SCHEDULES. Financial statement schedules have been
omitted because they are inapplicable or the required information is shown in
the Financial Statements and the Notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WALTHAM, THE
COMMONWEALTH OF MASSACHUSETTS, ON AUGUST 9, 1996.

Lightbridge, Inc.

/s/ Pamela D. A. Reeve
By: __________________________________
PAMELA D. A. REEVE
PRESIDENT AND CHIEF EXECUTIVE
OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.

SIGNATURE TITLE DATE

/s/ Pamela D. A. Reeve President, Chief
- ------------------------------------ Executive Officer August 9, 1996
PAMELA D. A. REEVE and Director
(Principal
Executive Officer)

Chief Financial
* Officer, Vice August 9, 1996
- ------------------------------------ President of
WILLIAM G. BROWN Finance and
Administration and
Treasurer
(Principal
Financial and
Accounting
Officer)

Director
* August 9, 1996
- ------------------------------------
ANDREW I. FILLAT

Director
* August 9, 1996
- ------------------------------------
TORRENCE C. HARDER

Director
* August 9, 1996
- ------------------------------------
DOUGLAS A. KINGSLEY

Director
* August 9, 1996
- ------------------------------------
D. QUINN MILLS

/s/ Pamela D.A. Reeve
*By: __________________________
PAMELA D.A. REEVE
ATTORNEY-IN-FACT

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1** Underwriting Agreement
3.1* Certificate of Incorporation of the Company, as amended
3.2** Proposed form of Amended and Restated Certificate of Incorporation of
the Company to become effective immediately following the offering
3.3** By-Laws of the Company
3.4** Proposed form of Amended and Restated By-Laws
4.1* Specimen certificate for the Common Stock of the Company
5.1* Opinion of Foley, Hoag & Eliot LLP
10.1* 1991 Registration Rights Agreement dated February 11, 1991, as
amended, between the Company and the persons named therein
10.2* 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 Form of Common Stock Purchase Warrants issued in August 1995
10.4* Amended and Restated Credit Agreement dated as of June 18, 1996,
between the Company and Silicon Valley Bank
10.5* 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
10.6 1990 Incentive and Nonqualified Stock Option Plan
10.7 1996 Incentive and Non-Qualified Stock Option Plan
10.8 1996 Employee Stock Purchase Plan
10.9** Office Lease dated September 21, 1993, as amended, between the Company
and L&E Investment of Massachusetts One, Inc.
10.10** Office Lease dated September 30, 1994, as amended, between the Company
and Hobbs Brook Office Park
11.1 Statement re computation of per share earnings
23.1 Consent of Deloitte & Touche llp
23.2* Consent of Foley, Hoag & Eliot llp (included in Exhibit 5.1)
24.1** Power of Attorney (contained on the signature page of this
Registration Statement)
27 Financial Data Schedules for year ended September 30, 1995 and three
months ended December 31, 1995 and March 31, 1996
</TABLE>
- --------

* To be filed by amendment.

** Previously filed.

<PAGE>

THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN
AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED
DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT
AND SUCH STATE SECURITIES LAWS IN CONNECTION WITH SUCH DISPOSITION.

LIGHTBRIDGE, INC.

COMMON STOCK PURCHASE WARRANT
-----------------------------

Original Issue Date: __________, 1995

Void After: __________, 2000

This Warrant is Issued to

SPECIMEN
----------------------------

(hereinafter called the "Registered Holder," which term shall include its
successors and assigns) by Lightbridge, Inc., a Delaware corporation
(hereinafter referred to as the "Company"). This Warrant may be transferred by
the Registered Holder only in accordance with the provisions of Sections 1.04
and 5 hereof.

1. The Warrant.
-----------

1.01 For value received and subject to the terms and conditions
hereinafter set forth, the Registered Holder is entitled, upon surrender of this
Warrant at any time on or prior to ____________, 2000 (with the subscription
form annexed hereto duly executed) at the office of the Company at 281 Winter
Street, Waltham, Massachusetts 02154, or such other office in the United States
of which the Company shall notify the Registered Holder hereof in writing, to
purchase from the Company, at the purchase price hereinafter specified (the
"Exercise Price"), ________ shares of the Common Stock, $.01 par value per
share, of the Company ("Common Stock"). This Warrant has been issued by the
Company in connection with its issuance to the original Registered Holder of the
Company's Subordinated Promissory Note, dated as of August __, 1995 in the
original principal amount of $___________ (the "Note"). The initial Exercise
Price shall be $4.00 per share.
<PAGE>

As promptly as practicable after surrender of this Warrant and receipt of
payment of the Exercise Price, the Company shall issue and deliver to the
Registered Holder a certificate or certificates for the shares purchased
hereunder, in certificates of such denominations and in such names as the
Registered Holder may specify, together with any other stock, securities or
property which such Registered Holder may be entitled to receive pursuant to
Section 1.05 hereof. Payment of the Exercise Price shall be made in by check
made payable to the order of the Company or wire transfer of funds to a bank
account designated by the Company. In the case of the purchase of less than all
the shares purchasable under this Warrant, the Company shall cancel this Warrant
upon the surrender hereof and shall execute and deliver a substitute Warrant of
like tenor and date for the balance of the shares purchasable hereunder.

1.02 During the period within which the rights represented by this Warrant
may be exercised, the Company shall at all times have authorized and reserved
for the purpose of issue upon exercise of the rights evidenced hereby, a
sufficient number of shares of the class of securities issuable upon exercise of
this Warrant to provide for the exercise of such rights. Upon surrender for
exercise, this Warrant shall be cancelled and shall not be reissued; provided,
however, that upon the partial exercise hereof a substitute Warrant representing
the rights to subscribe for and purchase any such unexercised portion hereof
shall be issued.

1.03 This Warrant may be subdivided into one or more Warrants entitling
the Registered Holder to purchase shares of the class of securities issuable
upon exercise of this Warrant in multiples of one or more whole shares, upon
surrender of this Warrant by the Registered Holder for such purpose at the
office of the Company.

1.04 The Company shall maintain at its office (or at such other office or
agency of the Company as it may from time to time designate in writing to the
Registered Holder hereof), a register containing the name and address of the
Registered Holder of this Warrant. The Registered Holder of this Warrant shall
be the person in whose name this Warrant is originally issued and registered,
unless a subsequent holder shall have presented to the Company this Warrant,
duly assigned to such holder, for inspection and a written notice of his
acquisition of this Warrant and designating in writing the address of such
subsequent holder, in which case such subsequent holder of this Warrant shall
become the subsequent Registered Holder. Any Registered Holder of this Warrant
may change his address as shown on such register by written notice to the
Company requesting such change. Any written notice required or permitted to be
given to the Registered Holder of this Warrant shall be mailed by registered or
certified mail, or sent by reputable overnight courier service, to the
Registered Holder at the address as shown on such register.

1.05 The rights of the Registered Holder shall be subject to the following
terms and conditions:

(A) Adjustment to Exercise Price Upon Financing. If and only if (i)
-------------------------------------------
all principal and interest under the Note is paid in full on or before January
31, 1996 and (ii) the price per share paid by investors in the Financing (as
hereinafter defined) exceeds the Exercise

-2-
<PAGE>

Price, then the Exercise Price shall be adjusted to be equal to such price per
share, effective upon the closing of the Financing. As used herein, the
"Financing" shall mean the next equity security financing for the account of the
Company in which the aggregate gross proceeds received by the Company equal or
exceed $1,500,000.

(B) Adjustment to Exercise Price for Subdivision or Combination. If the
-----------------------------------------------------------
Company at any time or from time to time after the issuance of this Warrant
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
the outstanding shares of the class of securities issuable upon exercise hereof
into a greater number of shares, the Exercise Price in effect immediately before
that subdivision shall be proportionately decreased. If the Company at any time
or from time to time after the issuance of this Warrant combines (by reverse
stock split or otherwise) the outstanding shares of the class of securities
issuable upon exercise hereof, the Exercise Price in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.

(C) Adjustment in the Number of Shares for Subdivisions or Combinations.
-------------------------------------------------------------------
Whenever the Exercise Price is adjusted pursuant to Sections 1.05(A) or 1.05(B),
the number of shares of the class of securities issuable upon exercise hereof
also shall be adjusted by multiplying the number of shares subject to this
Warrant immediately prior to the adjustment of the Exercise Price by a fraction
(x) the numerator of which is the Exercise Price immediately prior to the
adjustment and (y) the denominator of which is the adjusted Exercise Price.

(D) Adjustments for Certain Dividends and Distributions. In the event
---------------------------------------------------
that at any time or from time to time after the Original Issue Date the Company
shall make or issue, or fix a record date for the determination of holders of
the class of securities issuable upon exercise hereof who are entitled to
receive a dividend or other distribution payable in securities of the Company,
then and in each such event, unless such dividend or distribution results in an
adjustment of the Exercise Price pursuant to Section 1.05(B), provision shall be
made so that the Registered Holder of this Warrant shall receive upon exercise
hereof in addition to the securities receivable hereupon, the amount of
securities of the Company that he would have received had this Warrant been
exercised on the date of such event and had he thereafter, during the period
from the date of such event to and including the exercise date, retained such
securities receivable by him as aforesaid during such period, giving application
during such period to all adjustments called for herein.

(E) Adjustment for Reclassification, Exchange, or Substitution. In the
----------------------------------------------------------
event that at any time or from time to time after the Original Issue Date, the
class of securities issuable upon the exercise of this Warrant shall be changed
into the same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend provided for above, or a
merger, consolidation, or sale of assets provided for below), then and in each
such event the Registered Holder of this Warrant shall have the right thereafter
to exercise this Warrant for the kind and amount of shares of stock and other
securities and property receivable upon such

-3-
<PAGE>

reorganization, reclassification, or other change, by holders of the number of
shares of the class of securities into which such Warrant might have been
exercisable for immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein.

(F) Adjustment for Merger, Consolidation or Sale of Assets. Subject to
------------------------------------------------------
Section 1.05(G) below, in the event that at any time or from time to time after
the Original Issue Date, the Company shall merge or consolidate with or into
another entity or sell all or substantially all of its assets, this Warrant
shall thereafter be exercisable for the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of the
class of securities of the Company deliverable upon exercise of this Warrant
would have been entitled upon such consolidation, merger or sale; and, in such
case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 1.05 with respect to the rights and interest thereafter of the
Registered Holder of this Warrant, to the end that the provisions set forth in
this Section 1.05 (including provisions with respect to changes in and other
adjustments of the Exercise Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the exercise of this Warrant.

(G) Effect of Certain Transactions. If the Company is a party to a merger
------------------------------
or reorganization with one or more other corporations or if the Company
consolidates with or into one or more other corporations, and as a result of the
consolidation, merger or reorganization, the stockholders of the Company hold
less than 50% of the equity in the surviving or resulting company, or if the
Company is liquidated or sells or otherwise disposes of substantially all its
assets to another corporation, or in the event of a sale of all or substantially
all of its capital stock (each hereinafter referred to as a "Transaction"), in
any case while this Warrant remains outstanding, this Warrant may be cancelled
by the Board of Directors as of the effective date of such Transaction, provided
that notice of such cancellation shall be given to the registered holder and the
registered holder shall have the right to exercise this Warrant during the
thirty (30) day period preceding the effective date of such Transaction. In the
event that this Warrant is not cancelled by the Board of Directors as set forth
above, after the effective date of such Transaction, this Warrant shall remain
outstanding and shall be exercisable pursuant to the terms of this Warrant.

(H) No Impairment. The Company shall not, by amendment of its Charter or
-------------
By-Laws or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company but shall at all times in good
faith assist in the carrying out of all the provisions of this Section 1.05 and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Registered Holder of this Warrant against impairment.

(I) Notice of Adjustment of Number of Shares. Upon any adjustment,
----------------------------------------
readjustment or other change relating to the number of shares purchasable upon
exercise of this Warrant or to the Exercise Price, then, and in each such case,
the Company at its expense shall

-4-
<PAGE>

give written notice thereof, in hand or by first class mail, postage prepaid,
addressed to the Registered Holder at the address of such Registered Holder as
shown on the books of the Company, which notice shall state the Exercise Price
resulting from such adjustment and the increase or decrease in the number of
shares (or other denominations of securities) purchasable at the Exercise Price
upon the exercise of this Warrant setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based.

(J) Notice. In case at any time: (1) the Company shall pay any dividend
------
or make any distribution (other than regular cash dividends from earnings or
earned surplus paid at an established rate) to the holders of the class of
securities issuable upon exercise of this Warrant; (2) the Company shall offer
for subscription pro rata to the holders of the class of securities issuable
upon exercise of this Warrant any additional shares of stock of any class or
other rights; (3) there shall be any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with or sale of all or substantially all of its assets to another corporation;
or (4) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company; then, in any one or more of such cases, the Company
shall give written notice, in hand or by first class mail, postage prepaid,
addressed to the Registered Holder at the address of such Registered Holder as
shown on the books of the Company of the date on which (a) the books of the
Company shall close or a record date shall be fixed for determining the
shareholders entitled to such dividend, distribution or subscription rights, or
(b) such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may be.
Such notice shall also provide reasonable details of the proposed transaction
and specify the date as of which the holders of record of the class of
securities issuable upon exercise of this Warrant shall participate in such
dividend, distribution or subscription rights, or shall be entitled to exchange
their securities for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
given at least 20 days prior to the action in question and not less than 20 days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereto.

(K) Voting Rights. This Warrant shall not entitle the Registered Holder
-------------
to any voting rights or any other rights as a stockholder of the Company but
upon presentation of this Warrant with the subscription form annexed duly
executed and the tender of payment of the Exercise Price at the office of the
Company pursuant to the provisions of this Warrant the Registered Holder shall
forthwith be deemed a stockholder of the Company in respect of the securities
for which the Registered Holder has so subscribed and paid.

(L) No Change Necessary. The form of this Warrant need not be changed
-------------------
because of any adjustment in the Exercise Price or in the number of shares
issuable upon its exercise. A Warrant issued after any adjustment on any
partial exercise or upon replacement may continue to express the same Exercise
Price and the same number of shares (appropriately reduced in the case of
partial exercise) as are stated on this Warrant as initially issued, and that
Exercise Price and that number of shares shall be considered to have been so
changed as of the close of business on the date of adjustment.

-5-
<PAGE>

2. Covenant of the Company. All securities which may be issued upon the
-----------------------
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof.

3. Fractional Shares. No fractional shares or scrip representing fractional
-----------------
shares shall be issued upon exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Registered Holder would be entitled to received a
fractional share, then the Company shall pay in cash to such Registered Holder
an amount equal to such fractional share multiplied by the fair market value of
one share of the class of securities issuable upon exercise of this Warrant (as
determined by the Board of Directors of the Company) on the date of such
exercise.

4. Substitution. In the case this Warrant shall be mutilated, lost, stolen or
------------
destroyed, the Company will issue a new Warrant of like tenor and denomination
and deliver the same (a) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (b) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence satisfactory to the Company of the
loss, theft, or destruction of such Warrant (including a reasonably detailed
affidavit with respect to the circumstances of any loss, theft or destruction),
and of indemnity (or, in the case of the initial Registered Holder or any other
institutional holder, an indemnity agreement) satisfactory to the Company.

5. Transfer Restrictions. This Warrant shall not be sold, transferred, pledged
---------------------
or hypothecated unless the proposed disposition is the subject of a currently
effective registration statement under the Securities Act of 1933, as amended,
or unless the Company has received an opinion of counsel reasonably satisfactory
in form and scope to the Company that such registration is not required.

6. Remedies. The Company stipulates that the remedies at law of the Registered
--------
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for that specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

7. Taxes. The Company shall pay any taxes or other charges that may be imposed
-----
in respect of the issuance and delivery of the Warrant or any securities or
other property upon exercise hereof.

8. Governing Law. This Warrant and its provisions and the rights and
-------------
obligations of the parties hereunder shall be governed by, and construed and
enforced in accordance with, the substantive laws of The Commonwealth of
Massachusetts, without regard to its principles of conflicts of laws.

-6-
<PAGE>

9. Miscellaneous. This Warrant and any term hereof may be changed, waived,
-------------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
President thereunto duly authorized under seal this ______ day of _________,
1995.

ATTEST: LIGHTBRIDGE, INC.

By:
- --------------------------------------- -----------------------------
Assistant Secretary Its President

-7-

<PAGE>

EXHIBIT 10.6

CREDIT TECHNOLOGIES, INC.

1990 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
<PAGE>

_______________________

1990 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
-------------------------------------------------

TABLE OF CONTENTS
-----------------

<TABLE>
<S> <C>
1. Purpose of the Plan..................................................... 1
2. Administration.......................................................... 1
3. Option Shares........................................................... 1
4. Authority to Grant Option............................................... 1
5. Limitation on Amount of Options Which may be Granted.................... 1
6. Eligibility............................................................. 2
7. Option Price............................................................ 2
8. Duration of Options..................................................... 2
9. Amount Exercisable; Right of First Refusal.............................. 2
10. Exercise of Options.................................................... 3
11. Transferability of Options............................................. 3
12. Termination of Employment or Services or
Death of Optionee...................................................... 3
a. Temporary Leave...................................................
b. Death or Disability...............................................
c. Retirement........................................................
13. Employment Relationship; Consultant Relationship....................... 4
14. Requirements of Law.................................................... 4
15. No Rights as Stockholder............................................... 4
16. Employment Obligation.................................................. 4
17. Changes in the Company's Capital Structure............................. 5
a. Rights of the Company..............................................
b. Recapitalization, Etc..............................................
c. Merger-no Change of Control........................................
d. Sale of the Company................................................
e. No Adjustment or Changes...........................................
18. Amendment or Termination of Plan....................................... 6
19. Written Agreement...................................................... 6
20. Effective Date and Duration of Plan.................................... 6
21. Lockup Agreement....................................................... 6
</TABLE>
<PAGE>

CREDIT TECHNOLOGIES, INC.
-------------------------

1990 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
-------------------------------------------------

1. Purpose of the Plan. This l990 Incentive and Nonqualified Stock Option Plan
-------------------
(the "Plan") of Credit Technologies, Inc., a Delaware corporation (the
"Company"), is designed to provide additional incentive to present and future
executives, key employees and consultants of the Company (which shall include
its subsidiaries as defined in Section 425 of the Internal Revenue Code of 1986,
(the "Code"). The Company intends that this purpose will be effected by the
granting of incentive stock options ("Incentive Stock Options") as defined in
Section 422(b) of the Code and nonqualified stock options ("Nonqualified
Options") under the Plan which afford such executives, key employees and
consultants an opportunity to acquire or increase their proprietary interest in
the Company through the acquisition of shares of its Common Stock. By
encouraging stock ownership by such executives, salaried employees and
consultants, the Company seeks to attract and retain on a continuing basis the
services of persons of exceptional competence and seeks to furnish an added
incentive for them to increase their efforts on behalf of the Company.

2. Administration. The Plan shall be administered by the Board of Directors.
--------------
All questions of interpretation and application of the Plan, of Incentive Stock
Options and Nonqualified Options granted hereunder (collectively, the "Options",
and individually, an "Option"), and of the value of shares of Common Stock
subject to an Option, shall be subject to the determination of the Board of
Directors, which determination shall be final and binding.

3. Option Shares. The stock subject to the Options and other provisions of the
-------------
Plan shall be shares of the Company's Common Stock, $ 0.01 par value (the
"Common Stock"). The total amount of the Common Stock with respect to which
Options may be granted shall not exceed in the aggregate 1,200,000 shares;
provided, however, that the class and aggregate number of shares which may be
subject to Options granted hereunder shall be subject to adjustment in
accordance with the provisions of Paragraph 16 hereof. Such shares may be
treasury shares or authorized but unissued shares.

In the event that any outstanding Option for any reason shall expire or
terminate prior to exercise, the shares of Common Stock allocable to the
unexercised portion of such Option may again be subject to an Option under the
Plan.

4. Authority to Grant Options. The Board of Directors may grant Options from
--------------------------
time to time to such eligible employees and consultants of the Company as it
shall determine. Subject to any applicable limitations set forth in the Plan
or established from time to time by the Board of Directors, the number of shares
of Common Stock to be covered by any Option shall be as determined by the Board
of Directors.

5. Limitation on Amount of Options Which may be Granted. The aggregate fair
----------------------------------------------------
market value (determined as of the date of grant of the Option) of the shares of
Common Stock as to which any Incentive Stock Option granted under the Plan shall
first become exercisable (i.e., shall "vest") in any calendar year shall not
exceed $100,000. To the extent that the shares of Common Stock as to which any
Option granted under the Plan shall vest in any calendar year shall have a fair
market value (determined as of the date of grant of the Option) in excess of
$100,000, such Option shall be deemed to be a Nonqualified Option with respect
to such excess.

<PAGE>

6. Eligibility. Incentive Options may be granted only to officers and
-----------
other employees of the Company or its Subsidiaries, including members of the
Board who are also employees of the Company or a Subsidiary. Non-Statutory
Options may be granted to officers or other employees of the Company or its
Subsidiaries, to members of the Board or the board of directors of any
Subsidiary whether or not employees of the Company or such Subsidiary, and to
certain other individuals providing services to the Company or its Subsidiaries.

No Incentive Stock Option shall be granted to an individual who, at the time
said Option is granted, owns (including ownership attributed pursuant to Section
425 of the Code) more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any subsidiary or parent (a "greater-
than-ten-percent-stockholder"); notwithstanding the above, a greater-than-ten-
percent-stockholder may be granted an Incentive Stock Option provided that the
purchase price per share shall not be less than one hundred and ten percent
(110%) of the fair market value of the stock at the time such Option is
granted, and further provided that no such Option shall be exercisable to any
extent after the expiration of five (5) years from the date it is granted.

Except as otherwise provided, for all purposes of the Plan the term
"subsidiary corporation" shall mean any corporation of which 50% or more of its
outstanding voting stock is at the time owned by the Company or by one or more
subsidiaries or by the Company and one or more subsidiaries.

7. Option Price. The price at which shares may be purchased pursuant to
------------
Options shall be specified by the Board of Directors at the time the Option is
granted; provided, however, that the option price of any Incentive Stock Option
shall not be less than one hundred percent (100%) (one hundred and ten percent
(110%) in the case of a greater-than-ten percent-stockholder) of the fair market
value of the shares of Common Stock on the date such Option is granted, such
fair market value to be determined in accordance with procedures to be
established by the Board of Directors.

8. Duration of Options. The Board of Directors in its discretion may provide
-------------------
that an Option shall be exercisable during any specified period of time from the
date such Option is granted; provided, however, that no Incentive Stock Option
shall be exercisable after the expiration of ten (10) years (five years in the
case of a greater-than ten percent stockholder) from the date such Option is
granted.

9. Amount Exercisable; Right of First Refusal. Each Option may be exercised,
------------------------------------------
so long as it is valid and outstanding, from time to time in part or as a whole,
subject to any limitations with respect to the number of shares for which the
Option may be exercised at a particular time and to such other conditions as the
Board of Directors in its discretion may specify upon granting the Option.

The Board of Directors may also, or alternatively, specify upon granting an
Option that prior to the effective date of a registration statement under the
Securities Act of 1933 covering any shares of Common Stock, all or a portion of
the shares purchasable upon exercise of such Option shall be subject to a right
of first refusal in favor of the Company in the event that the optionee wishes
to sell, assign, transfer, exchange, encumber or otherwise dispose of any of
such shares issued pursuant to exercise of such Option or any interest in such
shares. If such restriction is imposed, the Option shall contain appropriate
provisions, and the shares issued upon exercise shall bear an appropriate
legend, disclosing the Company's right of first refusal.

-2-
<PAGE>

10. Exercise of Options. Subject to the provisions of Paragraph 14 hereof,
-------------------
Options shall be exercised by the delivery of written notice to the Company
setting forth the number of shares with respect to which the Option is to be
exercised, together with (a) cash, certified check, bank draft or postal or
express money order payable to the order of the Company for an amount equal to
the option price of such shares, or (b) with the consent of the Company, shares
of Common Stock of the Company having a fair market value equal to the option
price of such shares, or (c) with the consent of the Company, a combination of
(a) and (b), and specifying the address to which the certificates for such
shares are to be mailed. For the purpose of the preceding sentence, the fair
market value of the shares of Common Stock so delivered to the Company shall be
determined in accordance with procedures adopted by the Board of Directors. As
promptly as practicable after receipt of such written notification and payment,
the Company shall deliver to the optionee certificates for the number of shares
with respect to which such Option has been so exercised, issued in the
optionee's name; provided, however, that such delivery shall be deemed effected
for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
optionee, at the address specified pursuant to this Paragraph 10.

11. Transferability of Options. Options shall not be transferable by the
--------------------------
Optionee otherwise than by will or under the laws of descent and distribution,
and shall be exercisable, during his lifetime, only by him.

12. Termination of Employment or Services or Death of Optionee. Except as may
----------------------------------------------------------
be otherwise expressly provided herein, Options may not be exercised after the
earlier of:

(i) the date of expiration thereof; or

(ii) the date of termination of the optionee's employment with or services
to the Company if the termination is by the Company for cause (as determined by
the Company), or if voluntarily by the optionee; or

(iii) Thirty (30) days after termination of the optionee's employment with or
services to the Company be it without cause.

(a) Temporary Leave. Whether authorized temporary leave of absence,
---------------
or absence on military or government service, shall constitute termination of
the employment or consultant relationship between the Company and the optionee
shall be determined by the Board of Directors at the time thereof.

(b) Death or Disability. In the event the Optionee's employment
-------------------
with or service to the Company is terminated while the optionee is an employee
or consultant in good standing for reasons of permanent disability under the
then established rules of the Company or in the event of the death and before
the date of expiration of such Option, such Option may be exercised until the
earlier of such date of expiration or one (1) year following the date of such
termination for reason of permanent disability or death. Should such termination
for reason of permanent disability or death occur after the first anniversary of
the date at which the optionee was first employed or otherwise began to serve
the Company, the Option may be exercised for up to the greater of (i) 50% of all
Option shares (and such shares shall be deemed vested) or (ii) the number of
shares that had vested as of the date of such death or such retirement. After
the death of the Optionee, his executors, administrators or any person or
persons to whom his Option may be transferred by will

-3-
<PAGE>

or by the laws of descent and distribution, shall have the right to exercise the
Option.

(c) Retirement. If, before the date of expiration of the Option, the
----------
optionee as an employee shall be retired in good standing from the employ of the
Company for reasons of age under the then established rules of the Company, the
Option may be exercised until the earlier of such date of expiration or thirty
(30) days after the date of such retirement, to the extent to which the optionee
was entitled to exercise such Option immediately prior to such retirement.

13. Employment Relationship; Consultant Relationship. An employment relationship
------------------------------------------------

between the Company and the optionee shall be deemed to exist during any period
in which the optionee is employed by the Company. A consultant relationship
between the Company and the optionee shall be deemed to exist during any period
in which the optionee renders services as a consultant or otherwise on an
independent contractor basis to the Company.

14. Requirements of Law.
-------------------

The Company shall not be required to sell or issue any shares under any
Option if the issuance of such shares shall constitute a violation by the
optionee or by the Company of any provision of any law, regulation or order of
any governmental authority. Without limiting the generality of the foregoing,
upon exercise of any Option, the Company shall not be required to issue such
shares unless the Board of Directors has received evidence satisfactory to it to
the effect that the holder of such Option will not transfer such shares except
pursuant to a registration statement in effect under the Securities Act of 1933,
as now in effect or hereafter amended (the "Act"), and under the applicable
securities laws of any State, unless the Company has received an opinion of
counsel satisfactory to the Company, in form and substance satisfactory to the
Company, to the effect that such registration is not required. Any determination
in this connection by the Board of Directors shall be final, binding and
conclusive. In the event the shares issuable on exercise of an Option are not
registered under the Act, the Company may imprint the following legend or any
other legend which counsel for the Company considers necessary or advisable to
comply with the Act or other applicable laws:

"The shares of stock represented by this certificate have
not been registered under the Securities Act of 1933 or
under the securities laws of any State and may not be sold
or transferred except upon such registration or upon receipt
by the Corporation of an opinion of counsel satisfactory to
the Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale
or transfer."

The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Act; and in the event any shares are
so registered the Company may remove any legend on certificates representing
such shares. The Company shall not be obligated to take any other affirmative
action in order to cause the exercise of an Option or the issuance of shares
pursuant thereto to comply with any other law, regulation or order of any
governmental authority.

15. No Rights as Stockholder. No optionee shall have rights as a stockholder
------------------------
with respect to shares covered by his Option until the date of issuance of a
stock certificate for such shares; and, except as otherwise provided in
Paragraph 16 hereof, no adjustment for dividends, or otherwise,

-4-
<PAGE>

shall be made if the record date therefor is prior to the date of issuance of
such certificate.

16. Employment Obligation. The granting of any Option shall not impose upon
---------------------
the Company any obligation to employ or continue to employ, or to retain or to
continue to retain the services of, any optionee; and the right of the Company
to terminate the employment or services of any officer or other employee or
consultant shall not be diminished or affected by reason of the fact that an
Option has been granted to him.

17. Changes in the Company's Capital Structure.
------------------------------------------

(a) Rights of the Company. The existence of outstanding Options
---------------------
shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

(b) Recapitalization, Stock Splits, and Dividends. If the Company
---------------------------------------------
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction of
the number of shares of the Common Stock outstanding, without receiving
compensation therefor in money, services or property, then (i) the number,
class, and per share price of shares of stock subject to outstanding Options
hereunder shall be appropriately adjusted in such a manner as to entitle an
optionee to receive upon exercise of an Option, for the same aggregate cash
consideration, the same total number and class of shares as he would have
received as a result of the event requiring the adjustment had he exercised his
Option in full immediately prior to such event; and (ii) the number and class of
shares with respect to which Options may be granted under the Plan shall be
adjusted by substituting for the total number of shares of Common Stock then
reserved that number and class of shares of stock that would have been received
by the owner of an equal number of outstanding shares of Common Stock as the
result of the event requiring the adjustment.

(c) Merger of Company With No Change of Control. After a merger of
-------------------------------------------
one or more corporations into the Company, or after a consolidation of the
Company with one or more corporations in which (i) the Company shall be the
surviving corporation and (ii) the stockholders of the Company prior to such
merger or consolidation hold at least fifty percent (50%) of the voting shares
of the Company after such merger or consolidation, each holder of an outstanding
Option shall, at no additional cost, be entitled upon exercise of such Option to
receive (subject to any required action by stockholders) in lieu of the number
of shares as to which such Option shall then be so exercisable, the number and
class of shares of stock or other securities to which such holder would have
been entitled pursuant to the terms of the agreement of merger or consolidation
if, immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of Common Stock equal to the number of
shares as to which such Option shall be so exercised.

(d) Sale or Merger of Company Where Company Does Not Survive. If the
--------------------------------------------------------
Company is merged into or consolidated with another corporation under
circumstances where the Company is not the surviving corporation, or if there is
a merger or consolidation where the Company is the

-5-
<PAGE>

surviving corporation and the Stockholders of the Company prior to such merger
or consolidation do not hold at least fifty percent (50%) of the voting shares
of the Company after such merger or consolidation occurs, or if the Company is
liquidated, or sells or otherwise disposes of substantially all its assets to
another corporation while unexercised Options remain outstanding under the Plan,
(i) subject to the provisions of clause (iii) below, after the effective date of
such merger, consolidation or sale, as the case may be, each holder of an
outstanding Option shall be entitled, upon exercise of such Option, to receive,
in lieu of shares of Common Stock, shares of such stock or other securities,
cash or property as the holders of shares of Common Stock received pursuant to
the terms of the merger, consolidation or sale; (ii) the Board of Directors may
accelerate the time for exercise of all unexercised and unexpired Options to and
after a date prior to the effective date of such merger, consolidation,
liquidation or sale, as the case may be, specified by the Board; or (iii) all
outstanding Options may be cancelled by the Board of Directors as of the
effective date of any such merger, consolidation, liquidation or sale provided
that (x) notice of such cancellation shall be given to each holder of an Option
and (y) each holder of an Option shall have the right to exercise such Option to
the extent that the same is then exercisable or, if the Directors shall have
accelerated the time for exercise of all unexercised and unexpired Options, in
full during the 30-day period preceding the effective date of such merger,
consolidation, liquidation, sale or acquisition.

(e) Changes to Common Stock Subject to Options. Except as
------------------------------------------
hereinbefore expressly provided, the issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, for cash
or property, or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock then subject to
outstanding Options.

18. Amendment or Termination of Plan. The Board of Directors may modify,
--------------------------------
revise or terminate this Plan at any time and from time to time, except that the
class of employees and consultants eligible to receive Options and the aggregate
number of shares issuable pursuant to this Plan shall not be changed or
increased, other than by operation of Paragraph 16 hereof, without the consent
of the stockholders of the Company; provided, however, that no amendment shall
modify (within the meaning of Section 425(h) of the Code) any Incentive Stock
Option outstanding on the date of such amendment.

19. Written Agreement. Each Option granted hereunder shall be embodied in a
-----------------
written option agreement which shall be subject to the terms and conditions
prescribed above and shall be signed by the President, any Vice President or the
Treasurer of the Company for and in the name and on behalf of the Company. Such
an option agreement shall contain such other provisions as the Board of
Directors in its discretion shall deem advisable.

20. Effective Date and Duration of Plan. The Plan shall become effective upon
-----------------------------------
its adoption by the Board of Directors, provided that the stockholders of the
Company shall have approved the Plan within twelve (12) months prior to or
following the adoption of the Plan by the Board of Directors. Options may not
be granted under the Plan more than ten (10) years after said effective date.
The Plan shall terminate (i) when the total amount of the Common Stock with
respect to which Options may be granted shall have been issued upon the exercise
of Options or (ii) by action of the Board of Directors pursuant to Paragraph 17
hereof, whichever shall first occur.

-6-
<PAGE>

21. "Lockup" Agreement. The Board of Directors may in its discretion specify
------------------
upon granting an Option that the Optionee shall agree for a period of time (not
to exceed 180 days) from the effective date of any registration of securities of
the Company (upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities), not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
shares issued pursuant to the exercise of such Option, without the prior written
consent of the Company or such underwriters, as the case may be.

* * *

-7-

<PAGE>

LIGHTBRIDGE, INC.

1996 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN

SECTION 1. PURPOSE

This 1996 Incentive and Non-Qualified Stock Option Plan (the "Plan") is
intended as a performance incentive for officers and employees of Lightbridge,
Inc., a Delaware corporation (the "Company"), or its Subsidiaries (as
hereinafter defined) and for certain other individuals providing services to or
acting as directors of the Company or its Subsidiaries, to enable the persons to
whom options are granted (an "Optionee" or "Optionees") to acquire or increase a
proprietary interest in the Company and its success. The Company intends that
this purpose will be effected by the granting of incentive stock options
("Incentive Options") as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and other stock options ("Non-Qualified Options")
under the Plan. The term "Subsidiaries" means any corporations in which stock
possessing 50% or more of the total combined voting power of all classes of
stock of such corporation or corporations is owned directly or indirectly by the
Company.

SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION

2.1. Options to be Granted. Options granted under the Plan may be either
---------------------
Incentive Options or Non-Qualified Options. If an option is intended to be an
Incentive Option, and if for any reason such option (or any portion thereof)
shall not qualify as an Incentive Option, then, to the extent of such
nonqualification, such option (or portion thereof) shall be regarded as a Non-
Qualified Option appropriately granted under the Plan provided that such option
(or portion thereof) otherwise meets the Plan's requirements relating to Non-
Qualified Options. The Board may, as a condition of grant, require the Optionee
to execute a confidentiality and noncompetition agreement with the Company.

2.2. Administration. This Plan shall be administered by the Compensation
--------------
Committee or any other committee of the Board of Directors of the Company (the
"Board"), consisting of two or more "Outside Directors" (such committee may
hereinafter be referred to as the "Plan Administrator"). As used herein, the
term "Outside Director" means any director who: (i) is not an employee of the
Company or of any "affiliated group" (as such term is defined in Section 1504(a)
of the Code) which includes the Company (an "Affiliate"); (ii) is not a former
employee of the Company or any Affiliate who is receiving compensation for prior
services (other than benefits under a tax-qualified retirement plan) during the
Company's or any Affiliate's taxable year; (iii) has not been an officer of the
Company or any Affiliate; and (iv) does not receive remuneration from the
Company or any Affiliate, either directly or indirectly, in any capacity other
than as a director.
<PAGE>

Except as specifically reserved to the Board under the terms of the Plan, the
Plan Administrator shall have full and final authority to operate, manage and
administer the Plan on behalf of the Company. This authority includes, but is
not limited to: (i) the power to grant options conditionally or
unconditionally; (ii) the power to prescribe the form or forms of the
instruments evidencing options granted under this Plan; (iii) the power to
interpret the Plan; (iv) the power to provide regulations for the operation of
the incentive features of the Plan, and otherwise to prescribe regulations for
interpretation, management and administration of the Plan; (v) the power to
delegate to other persons the responsibility for performing ministerial acts in
furtherance of the Plan's purpose; (vi) the power to make, in its sole
discretion, changes to any outstanding option granted under the Plan, including
the power to reduce the exercise price, to accelerate the vesting schedule, or
to extend the expiration date; and (vii) the power to engage the services of
persons or organizations in furtherance of the Plan's purpose, including but not
limited to banks, insurance companies, brokerage firms and consultants.

In addition, as to each option, the Plan Administrator shall have full and
final authority, in its sole discretion: (i) to determine the number of shares
subject to each option; (ii) to determine the time or times at which options
will be granted; (iii) to determine the conditions on which options will be
granted or may be exercised; (iv) to determine the option price for the shares
subject to each option, which price shall be subject to the applicable
requirements, if any, of Section 5.1(c) hereof; and (v) to determine the time or
times when each option shall become exercisable and the duration of the exercise
period, which shall not exceed the limitations specified in Section 5.1(a).

No member of the committee serving as Plan Administrator shall be liable for
any action or determination made in good faith with respect to the Plan or any
option granted thereunder.

2.3. Appointment and Proceedings of Committee. The Board may, from time to
----------------------------------------
time, appoint members of the committee serving as Plan Administrator in
substitution for, or in addition to, members previously appointed and may fill
vacancies, however caused, in such committee; provided, however, that each such
appointee will be an Outside Director, as described in Section 2.2. The
committee serving as Plan Administrator shall hold its meetings at such times
and places as it shall deem advisable. A majority of its members shall
constitute a quorum, and all actions of such committee shall require the
affirmative vote of a majority of its members. Any action may be taken by a
written instrument signed by all of the members, and any action so taken shall
be as fully effective as if it had been taken by a vote of a majority of the
members at a meeting duly called and held.

-2-
<PAGE>

SECTION 3. STOCK

3.1. Shares Subject to Plan. The stock subject to the options granted under
----------------------
the Plan shall be shares of the Company's authorized but unissued common stock,
par value $.01 per share ("Common Stock"), or shares of the Company's Common
Stock held in treasury. The total number of shares that may be issued pursuant
to options granted under the Plan shall not exceed an aggregate of 1,000,000
shares of Common Stock. Such number of shares shall be subject to adjustment as
provided in Section 7 hereof.

3.2. Lapsed or Unexercised Options. Whenever any outstanding option under
-----------------------------
the Plan expires, is cancelled or is otherwise terminated (other than by
exercise), the shares of Common Stock allocable to the unexercised portion of
such option shall be restored to the Plan and shall again become available for
the grant of other options under the Plan.

3.3. Limitation on Grants. In no event may any Plan participant be granted
--------------------
options with respect to more than 500,000 shares of Common Stock in any fiscal
year. The number of shares of Common Stock issuable pursuant to an option
granted to a Plan participant in a fiscal year that is subsequently forfeited,
cancelled or otherwise terminated shall continue to count toward the foregoing
limitation in such fiscal year. In addition, if the exercise price of an option
is subsequently reduced, the transaction shall be deemed a cancellation of the
original option and the grant of a new one so that both transactions shall count
toward the maximum shares issuable in the fiscal year of each respective
transaction.

SECTION 4. ELIGIBILITY

4.1. Eligible Optionees. Incentive Options may be granted only to officers
------------------
and other employees of the Company or its Subsidiaries, including members of the
Board who are also employees of the Company or a Subsidiary. Non-Qualified
Options may be granted to officers or other employees of the Company or its
Subsidiaries, to members of the Board or the board of directors of any
Subsidiary whether or not employees of the Company or such Subsidiary, and to
consultants and other individuals providing services to the Company or its
Subsidiaries.

4.2. Limitations on 10% Stockholders. No Incentive Option shall be granted
-------------------------------
to an individual who, at the time the Incentive Option is granted, owns
(including ownership attributed pursuant to Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or Subsidiary of the Company (a "greater-than-10%
stockholder"), unless such Incentive Option provides that (i) the purchase price
per share shall not be less than 110% of the fair market value of the Common
Stock at the time such Incentive Option is granted, and (ii) that such Incentive
Option shall not be exercisable to any extent after the expiration of five years
from the date on which it is granted.

4.3. Limitation on Exercisable Options. The aggregate fair market value
---------------------------------
(determined at the time the Incentive Option is granted) of the Common Stock
with respect to which Incentive Options are exercisable for the first time by
any person during any calendar year under the Plan and under any other option
plan of the Company (or a parent or

-3-
<PAGE>

subsidiary as defined in Section 424 of the Code) shall not exceed $100,000.
Any option granted in excess of the foregoing limitation shall be specifically
designated as being a Non-Qualified Option.

4.4. Option Grants to Directors. As compensation for services to the
--------------------------
Company, each Director of the Company who is not an employee of the Company (an
"Outside Director") and who (a) is a member of the Board immediately after the
closing of the Company's initial public offering and at the time of such closing
holds no outstanding stock option granted to such Director in his or her
capacity as a Director (a "Prior Option") or (b) is elected to the Board after
the closing of the Company's initial public offering shall automatically be
granted, immediately after the closing of the Company's public offering or upon
his or her initial election, as the case may be, a Non-Qualified Option (an
"Initial Option") to purchase 20,000 shares of Common Stock of the Company,
vesting in equal installments on the first three anniversaries of the date of
grant (provided that the Optionee is then a Director of the Company). In
addition, immediately following each annual meeting of stockholders of the
Company or special meeting in lieu thereof, there shall automatically be granted
to each Outside Director reelected at or remaining in office after such meeting
a fully-vested Non-Qualified Option to purchase 4,000 shares of Common Stock;
provided that no such automatic grant shall be made to any Outside Director who
- --------
at the time of such meeting holds any outstanding Initial Option or Prior Option
that is not fully vested, unless at least two annual meetings of stockholders of
the Company or special meetings in lieu thereof have intervened between the
closing of the Company's initial public offering (or, if later, the date of the
initial election of such Outside Director) and the meeting following which such
automatic grant would occur. Each Non-Qualified Option granted to an Outside
Director pursuant to this Section 4.4 shall expire on the tenth anniversary of
the date of grant. The exercise price of each Non-Qualified Option granted
pursuant to this Section 4.4 shall be equal to the fair market value of the
Common Stock on the date the Non-Qualified Option is granted, such fair market
value to be determined in accordance with the provisions of Section 5.1(c).

SECTION 5. TERMS OF THE OPTION AGREEMENTS

5.1. Mandatory Terms. Each option agreement shall contain such provisions
---------------
as the Plan Administrator shall from time to time deem appropriate. Option
agreements need not be identical, but each option agreement by appropriate
language shall include the substance of all of the following provisions:

(a) Expiration. Notwithstanding any other provision of the Plan or of any
----------
option agreement, each option shall expire on the date specified in the option
agreement, which date shall not be later than the tenth anniversary of the date
on which the option was granted (fifth anniversary in the case of an Incentive
Option granted to a greater-than-10% stockholder).

(b) Exercise. Each option shall be exercisable in full or in installments
--------
(which need not be equal) and at such times as designated by the Plan
Administrator. To the extent not exercised, installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the option expires.

-4-
<PAGE>

(c) Purchase Price. The purchase price per share of the Common Stock
--------------
under each Incentive Option shall be not less than the fair market value of the
Common Stock on the date the option is granted (110% of the fair market value in
the case of a greater-than-10% stockholder). The price at which shares may be
purchased pursuant to Non-Qualified Options shall be specified by the Plan
Administrator at the time the option is granted, and may be equal to or greater
than the fair market value of the shares of Common Stock on the date such Non-
Qualified Option is granted, but shall not be less than the par value of shares
of Common Stock. For the purpose of the Plan, the fair market value of the
Common Stock shall be the closing price per share on the date of grant of the
option as reported by a nationally recognized stock exchange, or, if the Common
Stock is not listed on such an exchange, as reported by the National Association
of Securities Dealers Automated Quotation System, Inc. ("Nasdaq"), or, if the
Common Stock is not quoted on Nasdaq, the fair market value as determined by the
Plan Administrator.

(d) Transferability of Options. Options granted under the Plan and the
--------------------------
rights and privileges conferred thereby may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will or by applicable laws of descent and distribution, and shall
not be subject to execution, attachment or similar process. Upon any attempt so
to transfer, assign, pledge, hypothecate or otherwise dispose of any option
under the Plan or any right or privilege conferred hereby, contrary to the
provisions of the Plan, or upon the sale or levy or any attachment or similar
process upon the rights and privileges conferred hereby, such option shall
thereupon terminate and become null and void.

(e) Termination of Employment or Disability or Death of Optionee. Except
------------------------------------------------------------
as may be otherwise expressly provided in the terms and conditions of the option
granted to an Optionee:

(i) Options granted hereunder shall terminate on the earliest to
occur of:

(A) the date of expiration thereof;

(B) thirty days after the date of termination of the Optionee's
employment with or performance of services for the Company (other than as a
result of death or permanent and total disability of the Optionee), including
upon the Optionee's retirement; or

(C) twelve months after the date of termination of the Optionee's
employment with or performance of services for the Company as a result of the
death or permanent and total disability of an Optionee under the then
established rules of the Company.

(ii) In the event of the termination of an Optionee's employment with
or performance of services for the Company by the Company (other than as a
result of death or permanent and total disability of the Optionee) or upon the
Optionee's retirement, the Optionee's option shall be exercisable during the
thirty-day post-termination period described in Paragraph 5.1(e)(i)(B) to the
extent that it was exercisable at the time of such termination

-5-
<PAGE>

of employment or performance of services. In the event of the termination of the
Optionee's employment with or performance of services for the Company as a
result of the permanent and total disability of an Optionee, the Optionee's
option shall be exercisable during the twelve-month post-termination period
referred to in Paragraph 5.1(e)(i)(C) to the extent that it was exercisable at
the time of such termination of employment or performance of services. In the
event of the termination of the Optionee's employment with or performance of
services for the Company as a result of the death of the Optionee, the
Optionee's executor, administrator or any person or persons to whom his option
may be transferred by will or by laws of descent and distribution shall have the
right at any time during the twelve-month post-termination period referred to in
Paragraph 5.1(e)(i)(C) to exercise such option, to the extent the Optionee was
entitled to exercise such option at the time of such termination of employment
or performance of services. Should such termination for reason of permanent
disability or death occur after the first anniversary of the date at which the
Optionee was first employed or otherwise began to serve the Company, then at the
Board's discretion, the Option may be exercised for up to the greater of (A) 50%
of all Option shares (and such shares shall be deemed vested) or (B) the number
of shares that had vested as of the date of such death or such retirement. After
the death of the Optionee, his executors, administrators or any person or
persons to whom his Option may be transferred by will or by the laws of descent
and distribution, shall have the right to exercise the Option.

(iii) An employment or consulting relationship between the Company
and the Optionee shall be deemed to exist during any period in which the
Optionee is employed in any capacity by the Company or by any Subsidiary or
providing services to the Company, as the case may be. Whether authorized leave
of absence or absence on military or government service shall constitute
termination of the employment relationship between the Company and the Optionee
shall be determined by the Plan Administrator at the time thereof.

(f) Rights of Optionees. No Optionee shall be deemed for any purpose to
-------------------
be the owner of any shares of Common Stock subject to any option unless and
until (i) the option shall have been exercised with respect to such shares
pursuant to the terms thereof, and (ii) the Company shall have issued and
delivered a certificate representing such shares. Thereupon, the Optionee shall
have full voting, dividend and other ownership rights with respect to such
shares of Common Stock.

5.2. Certain Optional Terms. The Plan Administrator may in its discretion
----------------------
provide, upon the grant of any option hereunder, that the Company shall have an
option to repurchase all or any number of shares purchased upon exercise of such
option. The repurchase price per share payable by the Company shall be such
amount or be determined by such formula as is fixed by the Plan Administrator at
the time the option for the shares subject to repurchase was granted. The Plan
Administrator may also provide that the Company shall have a right of first
refusal with respect to the transfer or proposed transfer of any shares
purchased upon exercise of an option granted hereunder. In the event the Plan
Administrator shall grant options subject to the Company's repurchase rights or
rights of first refusal, the certificate or certificates representing the shares
purchased pursuant to the exercise of such option shall carry a legend
satisfactory to counsel for the Company referring to such rights.

-6-
<PAGE>

SECTION 6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE

6.1. Notice of Exercise. Any option granted under the Plan may be exercised
------------------
by the Optionee by delivering to the Company on any business day a written
notice specifying the number of shares of Common Stock the Optionee then desires
to purchase and specifying the address to which the certificates for such shares
are to be mailed, accompanied by payment for such shares.

6.2. Means of Payment and Delivery. Common Stock purchased on exercise of
-----------------------------
an option must be paid for as follows: (a) in cash or by check (acceptable to
the Company in accordance with guidelines established for this purpose), bank
draft or money order payable to the order of the Company, or (b) through the
delivery of shares of Common Stock (which in the case of shares acquired from
the Company upon exercise of an option, have been outstanding for at least six
months) having a fair market value on the last business day preceding the date
of exercise equal to the purchase price, or (c) by delivery of an unconditional
and irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (d) if so permitted by the
instrument evidencing the option (or in the case of a Non-Qualified Option, by
the Plan Administrator on or after grant of the option), by delivery of a
promissory note of the Optionee to the Company, payable on such terms as are
specified by the Plan Administrator, or (e) by any combination of the
permissible forms of payment; provided, that if the Common Stock delivered upon
--------
exercise of the option is an original issue of authorized Common Stock, at least
so much of the exercise price as represents the par value of such Common Stock
must be paid other than by the Optionee's promissory note or personal check. In
the event that payment of the option price is made under (b) above, the Plan
Administrator may provide that the Optionee be granted an additional option
covering the numbers of shares surrendered, at an exercise price equal to the
fair market value of a share of Common Stock on the date of surrender. For the
purpose of this Section, the fair market value of the shares of Common Stock so
delivered to the Company shall be determined in the manner specified in Section
5.1(c) hereof. As promptly as practicable after receipt of such written
notification and payment, the Company shall deliver to the Optionee certificates
for the number of shares with respect to which such Option has been so
exercised, issued in the Optionee's name; provided, however, that such delivery
shall be deemed effected for all purposes when the Company or a stock transfer
agent of the Company shall have deposited such certificates in the United States
mail, addressed to the Optionee, at the address specified pursuant to Section
6.1.

SECTION 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

7.1 No Effect of Options upon Certain Corporate Transactions. The existence
--------------------------------------------------------
of outstanding options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or

-7-
<PAGE>

other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of Common Stock, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

7.2. Stock Dividends, Recapitalizations, Etc. If at any time after the
---------------------------------------
effective date of the Plan the Company shall effect a subdivision or
consolidation of shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of the Common
Stock outstanding, without receiving compensation therefor in money, services or
property, then: (i) the number, class and per share price of shares of stock
subject to outstanding options hereunder, and the number of shares as to which
automatic formula grants of options are to be made under Section 4.4 above,
shall be appropriately adjusted in such a manner as to entitle an Optionee to
receive upon exercise of an option, for the same aggregate cash consideration,
the same total number and class of shares that the owner of an equal number of
outstanding shares of Common Stock would own as a result of the event requiring
the adjustment; and (ii) the number and class of shares with respect to which
options may be granted under the Plan shall be adjusted by substituting for the
total number of shares of Common Stock then reserved for issuance under the Plan
that number and class of shares of stock that the owner of an equal number of
outstanding shares of Common Stock would own as the result of the event
requiring the adjustment.

7.3. Determination of Adjustments. Adjustments under this Section 7 shall
----------------------------
be determined by the Plan Administrator and such determinations shall be
conclusive. The Plan Administrator shall have the discretion and power in any
such event to determine and to make effective provision for acceleration of the
time or times at which any option or portion thereof shall become exercisable.
No fractional shares of Common Stock shall be issued under the Plan on account
of any adjustment specified above.

7.4. No Adjustment in Certain Cases. Except as hereinbefore expressly
------------------------------
provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock then subject to outstanding options.

SECTION 8. EFFECT OF CERTAIN TRANSACTIONS

If the Company is a party to a reorganization or merger with one or more
other corporations, whether or not the Company is the surviving or resulting
corporation, or if the Company consolidates with or into one or more other
corporations, or if the Company is liquidated or sells or otherwise disposes of
substantially all of its assets to another corporation (each hereinafter
referred to as a "Transaction"), in any such event while unexercised options
remain outstanding under the Plan, then: (i) subject to the provisions of clause
(iii) below, after the effective date of such Transaction unexercised options
shall remain outstanding and shall be exercisable in shares of Common Stock, or,
if applicable,

-8-
<PAGE>

shares of such stock or other securities, cash or property as the holders of
shares of Common Stock received pursuant to the terms of such Transaction; (ii)
the Plan Administrator may accelerate the time for exercise of all unexercised
and unexpired options to and after a date prior to the effective date of such
Transaction; or (iii) any outstanding options may be cancelled by the Plan
Administrator as of the effective date of such Transaction, provided that: (x)
notice of such cancellation shall be given to each holder of an option; (y) the
Plan Administrator shall have accelerated the time for exercise of all
unexercised and unexpired options that it proposes to cancel; and (z) each
holder of an option shall have the right to exercise such option in full.

SECTION 9. AMENDMENT OR TERMINATION OF THE PLAN

The Board may terminate the Plan at any time, and may amend the Plan at any
time and from time to time, subject to the limitation that, except as provided
in Sections 7 and 8 hereof, no amendment shall be effective unless approved by
the stockholders of the Company in accordance with applicable law and
regulations, at an annual or special meeting held within twelve months before or
after the date of adoption of such amendment, in any instance in which such
amendment would: (i) increase the number of shares of Common Stock as to which
options may be granted under the Plan; or (ii) change in substance the
provisions of Section 4 hereof relating to eligibility to participate in the
Plan.

Except as provided in Sections 7 and 8 hereof, rights and obligations under
any option granted before termination or amendment of the Plan shall not be
altered or impaired by such termination or amendment except with the consent of
the Optionee,

SECTION 10. NON-EXCLUSIVITY OF THE PLAN; NON-UNIFORM DETERMINATIONS

Neither the adoption of the Plan by the Board nor the approval of the Plan by
the stockholders of the Company shall be construed as creating any limitations
on the power of the Board to adopt such other incentive arrangements as it may
deem desirable, including without limitation the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.

The Plan Administrator's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive or are eligible to
receive options under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Plan
Administrator shall be entitled, among other things, to make non-uniform and
selective determinations, and to enter into non-uniform and selective option
agreements, as to (i) the persons to receive options under the Plan, (ii) the
terms and provisions of options, (iii) the exercise by the Plan Administrator of
its discretion in respect of the exercise of options pursuant to the terms of
the Plan, and (iv) the treatment of leaves of absence pursuant to Section 5.1(e)
hereof.

-9-
<PAGE>

SECTION 11. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW; WITHHOLDING TAXES

The obligation of the Company to sell and deliver shares of Common Stock with
respect to options granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by government agencies
as may be deemed necessary or appropriate by the Plan Administrator. All shares
sold under the Plan shall bear appropriate legends. The Company may, but shall
in no event be obligated to, register or qualify any shares covered by options
under applicable federal and state securities laws; and in the event that any
shares are so registered or qualified the Company may remove any legend on
certificates representing such shares. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an option or
the issuance of shares pursuant thereto to comply with any law or regulation of
any governmental authority. The Plan shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.

Whenever under the Plan shares are to be delivered upon exercise of an
option, the Company shall be entitled to require as a condition of delivery that
the Optionee remit an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto. An employee may elect
to have such tax withholding obligation satisfied, in whole or in part, by: (i)
authorizing the Company to withhold from shares of Common Stock to be issued
pursuant to the exercise of a Non-Qualified Option a number of shares with an
aggregate fair market value (as defined in Section 5.1(c) hereof determined as
of the date the withholding is effected) that would satisfy the withholding
amount due with respect to such exercise; or (ii) transferring to the Company
shares of Common Stock owned by the employee with an aggregate fair market value
(as defined in Section 5.1(c) hereof determined as of the date the withholding
is effected) that would satisfy the withholding amount due.

-10-
<PAGE>

SECTION 12. "LOCKUP" AGREEMENT

The Plan Administrator may in its discretion specify upon granting an option
that the Optionee shall agree, for a period of time (not to exceed 180 days)
from the effective date of any registration of securities of the Company, upon
request of the Company or the underwriter or underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
shares issued pursuant to the exercise of such option, without the prior written
consent of the Company or such underwriter or underwriters, as the case may be.

SECTION 13. EFFECTIVE DATE AND DURATION OF PLAN

The Plan shall become effective upon the closing of the Company's initial
public offering of shares of Common Stock provided that the stockholders of the
Company shall have approved the Plan within twelve months prior to or following
the adoption of the Plan by the Board. No option may be granted under the Plan
after the tenth anniversary of the effective date. The Plan shall terminate (i)
when the total amount of the Stock with respect to which options may be granted
shall have been issued upon the exercise of options or (ii) by action of the
Board pursuant to Section 9 hereof, whichever shall first occur.

-11-

<PAGE>

LIGHTBRIDGE, INC.

1996 EMPLOYEE STOCK PURCHASE PLAN

1. PURPOSE AND EFFECTIVE DATE.

The Lightbridge, Inc. 1996 Employee Stock Purchase Plan (the "Plan") is
intended to provide a method whereby employees of Lightbridge, Inc. (the
"Company") will have an opportunity to acquire an ownership interest (or
increase an existing ownership interest) in the Company through the purchase of
shares of the Common Stock of the Company. It is the intention of the Company
that the Plan qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of
the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code. The Plan shall become effective upon the closing of the Company's
initial public offering of shares of Common Stock.

2. DEFINITIONS.

(a) "Board" means the Board of Directors of the Company.

(b) "Code" shall have the meaning set forth in Paragraph 1.

(d) "Common Stock" means the common stock, par value $.01 per share, of
the Company.

(e) "Company" shall also include any Subsidiary (as hereinafter
defined) of Lightbridge, Inc. designated as a participant in the Plan by the
Board, unless the context otherwise requires.

(f) "Compensation" means, for the purpose of any Offering pursuant to
the Plan, base pay in effect as of the Offering Commencement Date (as
hereinafter defined). Compensation shall not include any deferred compensation
other than contributions by an individual through a salary reduction agreement
to a cash or deferred plan pursuant to Section 401(k) of the Code or to a
cafeteria plan pursuant to Section 125 of the Code.

(g) "Employee" means any person who is customarily employed by the
Company for more than 20 hours per week and more than five months in any
calendar year.

(h) "Offering" shall have the meaning set forth in Paragraph 4.
<PAGE>

(i) "Offering Commencement Date" shall have the meaning set forth in
Paragraph 4.

(j) "Offering Termination Date" shall have the meaning set forth in
Paragraph 4.

(k) "Plan" shall have the meaning set forth in Paragraph 1.

(l) "Subsidiary" shall mean any present or future corporation which is
or would constitute a "subsidiary corporation" as that term is defined in
Section 424(f) of the Code.

3. ELIGIBILITY.

(a) Participation in the Plan is completely voluntary. Participation in
any one or more of the Offerings under the Plan shall neither limit, nor
require, participation in any other Offering (as hereinafter defined).

(b) Each employee of the Company shall be eligible to participate in
the Plan on the first Offering Commencement Date, as hereinafter defined,
following the completion of six months of continuous service with the Company.
Notwithstanding the foregoing, no employee shall be granted an option under the
Plan:

(i) if, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company or any Subsidiary; for purposes of this Paragraph, the rules of Section
424(d) of the Code shall apply in determining the stock ownership of any
employee;

(ii) which permits his rights to purchase stock under all Section
423 employee stock purchase plans of the Company and its Subsidiaries to exceed
$25,000 of the fair market value of the stock (determined at the time such
option is granted) for each calendar year in which such option is outstanding;
for purposes of this Paragraph, the rules of Section 423(b)(8) of the Code shall
apply; or

(iii) if such employee is an officer of the Company, but only if
such employee is a "highly compensated employee" within the meaning of Section
414(q) of the Code.

4. OFFERING DATES.

The right to purchase stock hereunder shall be made available by a
series of six month offerings (the "Offering" or "Offerings") to employees
eligible in accordance with Paragraph 3 hereof. The Committee will, in its
discretion, determine the applicable date of commencement ("Offering
Commencement Date") and termination date ("Offering Termination Date") for each
Offering. Participation in any one or more of the Offerings under the Plan shall
neither limit, nor require, participation in any other Offering.

-2-
<PAGE>

5. PARTICIPATION.

Any eligible employee may become a participant by completing a payroll
deduction authorization form provided by the Company and filing it with the
Company's Treasurer 20 days prior to each applicable Offering Commencement Date,
as determined by the Committee pursuant to Paragraph 4.

6. PAYROLL DEDUCTIONS.

(a) At the time a participant files an authorization for a payroll
deduction, the participant shall elect to have deductions made from his or her
pay on each payday during any Offering in which he or she is a participant, at a
specified percentage of his or her Compensation as determined on the applicable
Offering Commencement Date; said percentage shall be in increments of one
percent up to a maximum percentage of six percent.

(b) Payroll deductions for a participant shall commence on the Offering
Commencement Date when the applicable authorization for a payroll deduction
becomes effective and shall end on the Offering Termination Date of the Offering
to which such authorization is applicable, unless sooner terminated by the
participant as provided in Paragraph 9.

(c) All payroll deductions made for a participant shall be credited to
his or her account under the Plan. A participant may not make any separate cash
payment into such account.

7. GRANTING OF OPTION.

(a) Except as set forth in Paragraph 7(c) hereof, on the Offering
Commencement Date of each Offering, a participating employee shall be deemed to
have been granted an option to purchase a maximum number of shares of the Common
Stock equal to an amount determined as follows: (i) 85% of the market value per
share of the Common Stock on the applicable Offering Commencement Date shall be
divided into the percentage of the employee's Compensation which he or she has
elected to have withheld (multiplied by the employee's Compensation over the
Offering period) multiplied by (ii) two. Such market value per share of the
Common Stock shall be determined as provided in clause (i) of Paragraph 7(b).

(b) The option price of the Common Stock purchased with payroll deductions
made during each such Offering for a participant therein shall be the lower of:

-3-
<PAGE>

(i) 85% of the average of the bid and the asked prices as reported
by Nasdaq in the Wall Street Journal, or, if the Common Stock is designated as a
national market security by the National Association of Securities Dealers, Inc.
("NASD"), the last trading price of the Common Stock as reported by the Nasdaq
National Market System in the Wall Street Journal, or, if the Common Stock is
listed on an exchange, the closing price of the Common Stock on the exchange on
the Offering Commencement Date applicable to such Offering (or on the next
regular business date on which shares of the Common Stock shall be traded, in
the event that no shares of the Common Stock have been traded on the Offering
Commencement Date); or if the Common Stock is not quoted on Nasdaq, not
designated as a Nasdaq national market security and not listed on an exchange,
85% of the fair market value on the Offering Commencement Date as determined by
the Committee; and

(ii) 85% of the average of the bid and the asked prices as reported
by Nasdaq in the Wall Street Journal, or, if the Common Stock is designated as a
national market security by the NASD, the last trading price of the Common Stock
as reported by the Nasdaq National Market System in the Wall Street Journal, or,
if the Common Stock is listed on an exchange, the closing price of the Common
Stock on the exchange on the Offering Termination Date applicable to such
Offering (or on the next regular business date on which shares of the Common
Stock shall be traded, in the event that no shares of the Common Stock shall
have been traded on the Offering Termination Date); or if the Common Stock is
not quoted on Nasdaq, not designated as a Nasdaq national market security and
not listed on an exchange, 85% of the fair market value on the Offering
Termination Date as determined by the Committee.

8. EXERCISE OF OPTION.

(a) Unless a participant gives written notice to the Treasurer of the
Company as hereinafter provided, his or her option for the purchase of Common
Stock with payroll deductions made during any Offering will be deemed to have
been exercised automatically on the Offering Termination Date applicable to such
Offering for the purchase of the number of full shares of Common Stock which the
accumulated payroll deductions in his or her account at that time will purchase
at the applicable option price (but not in excess of the number of shares for
which options have been granted to the employee, pursuant to Paragraph 7(a)),
and any excess in his account at that time will be returned to the participant,
without interest.

(b) Fractional shares will not be issued under the Plan and any
accumulated payroll deductions which would have been used to purchase fractional
shares shall be automatically carried forward to the next Offering unless the
participant elects, by written notice to the Treasurer of the Company, to have
the excess cash returned to the participant.

-4-
<PAGE>

9. WITHDRAWAL AND TERMINATION.

(a) Prior to the Offering Termination Date for an Offering, any
participant may withdraw the payroll deductions credited to his or her account
under the Plan for such Offering by giving written notice to the Treasurer of
the Company. All of the participant's payroll deductions credited to such
account will be paid to the participant promptly after receipt of notice of
withdrawal, without interest, and no future payroll deductions will be made from
his or her pay during such Offering. The Company will treat any attempt to
borrow by a participant on the security of accumulated payroll deductions as an
election to withdraw such deductions.

(b) Except as set forth in Paragraphs 6(d) and 7(c), a participant's
election not to participate in, or withdrawal from, any Offering will not have
any effect upon his or her eligibility to participate in any succeeding Offering
or in any similar plan which may hereafter be adopted by the Company.

(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death, the payroll deductions credited to his
or her account will be returned to the participant, or, in the case of his or
her death, to the person or persons entitled thereto under Paragraph 13.

(d) Upon termination of the participant's employment because of death,
his or her beneficiary (as defined in Paragraph 13) shall have the right to
elect, by written notice given to the Company's Treasurer prior to the
expiration of a period of 90 days commencing with the date of the death of the
participant, either:

(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan; or

(ii) to exercise the participant's option for the purchase of stock
on the Offering Termination Date next following the date of the participant's
death for the purchase of the number of full shares which the accumulated
payroll deductions in the participant's account at the date of the participant's
death will purchase at the applicable option price (subject to the limitation
contained in Paragraph 7(a)), and any excess in such account will be returned to
said beneficiary. In the event that no such written notice of election shall be
duly received by the office of the Company's Treasurer, the beneficiary shall
automatically be deemed to have elected to withdraw the payroll deductions
credited to the participant's account at the date of the participant's death and
the same will be paid promptly to said beneficiary.

10. INTEREST.

No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participating employee.

-5-
<PAGE>

11. STOCK.

(a) The maximum number of shares of Common Stock available for issuance
and purchase by employees under the Plan, subject to adjustment upon changes in
capitalization of the Company as provided in Paragraph 16, shall be 100,000
shares of Common Stock, $.01 par value per share, of the Company. If the total
number of shares for which options are exercised on any Offering Termination
Date in accordance with Paragraph 8 exceeds the number of shares that remain
available for issuance and purchase by employees under the Plan, the Company
shall make a pro rata allocation of the shares available for delivery and
distribution in an equitable manner, with the balances of payroll deductions
credited to the account of each participant under the Plan returned to each
participant.

(b) The participant will have no interest in the stock covered by his
or her option until such option has been exercised.

12. ADMINISTRATION.

The Plan shall be administered by the Committee. The interpretation and
construction of any provision of the Plan and adoption of rules and regulations
for administering the Plan shall be made by the Committee. Determinations made
by the Committee with respect to any matter or provision contained in the Plan
shall be final, conclusive and binding upon the Company and upon all
participants, their heirs or legal representatives. Any rule or regulation
adopted by the Committee shall remain in full force and effect unless and until
altered, amended, or repealed by the Committee.

13. DESIGNATION OF BENEFICIARY.

A participant shall file with the Treasurer of the Company a written
designation of a beneficiary who is to receive any Common Stock and/or cash
under the Plan. Such designation of beneficiary may be changed by the
participant at any time by written notice. Upon the death of a participant and
upon receipt by the Company of proof of the identity and existence of a
beneficiary validly designated by the participant under the Plan, the Company
shall deliver such Common Stock and/or cash to such beneficiary. In the event
of the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such Common Stock and/or cash to the executor or
administrator of the estate of the participant. No beneficiary shall, prior to
the death of the participant by whom he or she has been designated, acquire any
interest in the Common Stock and/or cash credited to the participant under the
Plan.

-6-
<PAGE>

14. TRANSFERABILITY.

Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive Common Stock under
the Plan may be assigned, transferred, pledged, or otherwise disposed of in any
way by the participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 8(b).

15. USE OF FUNDS.

All payroll deductions received or held by the Company under the Plan
may be used by the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.

16. EFFECT OF CHANGES OF COMMON STOCK.

If at any time after the effective date of the Plan the Company shall
subdivide or reclassify the Common Stock which has been or may be optioned under
the Plan, or shall declare thereon any dividend payable in shares of such Common
Stock, or shall take any other action of a similar nature affecting such Common
Stock, then the number and class of shares of Common Stock which may thereafter
be optioned (in the aggregate and to any participant) shall be adjusted
accordingly and in the case of each option outstanding at the time of any such
action, the number and class of shares which may thereafter be purchased
pursuant to such option and the option price per share shall be adjusted to such
extent as may be determined by the Committee, following consultation with the
Company's independent public accountants and counsel, to be necessary to
preserve the rights of the holder of such option.

17. AMENDMENT OR TERMINATION.

The Board may at any time terminate or amend the Plan. No such
termination shall affect options previously granted, nor may an amendment make
any change in any option theretofore granted which would adversely affect the
rights of any participant holding options under the Plan.

18. NOTICES.

All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received by the Treasurer of the Company.

19. MERGER OR CONSOLIDATION.

If the Company shall at any time merge into or consolidate with another
corporation, the holder of each option then outstanding will thereafter be
entitled to receive at the next Offering Termination Date, upon the exercise of
such option and for each share as to which such option shall be exercised, the
securities or property which a holder of one

-7-
<PAGE>

share of the Common Stock was entitled to upon and at the time of such merger or
consolidation. In accordance with this Paragraph and Paragraph 16, the
Committee shall determine the kind and amount of such securities or property
which such holder of an option shall be entitled to receive. A sale of all or
substantially all of the assets of the Company shall be deemed a merger or
consolidation for the foregoing purposes.

20. APPROVAL OF STOCKHOLDERS.

The Plan is subject to the approval of the stockholders of the Company
by written consent or at their next annual meeting or at any special meeting of
the stockholders for which one of the purposes of such a special meeting shall
be to act upon the Plan.

21. GOVERNMENTAL AND OTHER REGULATIONS.

The Plan, and the grant and exercise of the rights to purchase shares
hereunder, and the Company's obligation to sell and deliver shares upon the
exercise of rights to purchase shares, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required. The Plan shall be governed by, and construed and enforced
in accordance with, the provisions of Sections 421, 423 and 424 of the Code and
the substantive laws of The Commonwealth of Massachusetts. In the event of any
inconsistency between such provisions of the Code and any such laws, said
provisions of the Code shall govern to the extent necessary to preserve the
favorable federal income tax treatment afforded employee stock purchase plans
under Section 423 of the Code.

* * *

-8-

<PAGE>

EXHIBIT 11.1

LIGHTBRIDGE, INC.

COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
YEARS ENDED SEPTEMBER 30, ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------- ---------------------- -----------------------
1993 1994 1995 1994 1995 1995 1996
--------- ---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
PRO-FORMA:
Weighted Average Number
of Common and Common
Equivalent Shares
Outstanding:
Common Stock........... 6,508,424 6,507,846 6,509,214 6,508,318 6,422,537
Assumed Conversion of
Preferred Stock....... 5,247,324 5,247,324 5,247,324 5,247,324 5,247,324
Common Equivalent
Shares Resulting from
stock options and
warrants (treasury
stock method)......... -- 480,753 499,313 -- 1,218,221
SAB 83 Shares (treasury
stock method)......... 926,167 926,167 926,167 926,167 926,167
----------- ---------- ---------- ----------- ----------
Total.................. 12,681,915 13,162,089 13,182,018 12,681,809 13,814,249
=========== ========== ========== =========== ==========
Net Income Applicable
to Common Stock....... $(2,432,914) $ 411,723 $ 72,205 $(1,735,842) $ 302,500
=========== ========== ========== =========== ==========
Pro-Forma Income per
Common Share.......... $ (0.19) $ 0.03 $ 0.01 $ (0.14) $ 0.02
=========== ========== ========== =========== ==========
PRIMARY:
Weighted Average Number
of Common and Common
Equivalent Shares
Outstanding:
Common Stock........... 5,666,400 6,493,091 6,508,424 6,507,846 6,509,214 6,508,318 6,422,537
Common Equivalent
Shares Resulting from
stock options and
warrants (treasury
stock method)......... -- 397,081 -- 480,753 499,313 -- 1,218,221
SAB 83 Shares (treasury
stock method)......... 926,167 926,167 926,167 926,167 926,167 926,167 926,167
--------- ---------- ----------- ---------- ---------- ----------- ----------
Total.................. 6,592,567 7,816,338 7,434,591 7,914,765 7,934,694 7,434,485 8,566,925
========= ========== =========== ========== ========== =========== ==========
Net Income (Loss)...... $(125,423) $ 950,272 $(2,432,914) $ 411,723 $ 72,205 $(1,735,842) $ 302,500
Dividends Accreted on
Preferred Stock....... (150,421) (182,544) (182,544) (45,635) (45,635) (91,270) (91,270)
--------- ---------- ----------- ---------- ---------- ----------- ----------
Net Income (Loss)
Applicable to Common
Stock................. $(275,844) $ 767,728 $(2,615,458) $ 366,088 $ 26,570 $(1,827,112) $ 211.230
========= ========== =========== ========== ========== =========== ==========
Primary Income per Com-
mon Share............. $ (0.04) $ 0.10 $ (0.35) $ 0.05 $ 0.00 $ (0.25) $ 0.02
========= ========== =========== ========== ========== =========== ==========
FULLY DILUTED:
Weighted Average Number
of Common and Common
Equivalent Shares
Outstanding:
Common Stock........... 5,666,400 6,493,091 6,508,424 6,507,846 6,509,214 6,508,318 6,422,537
Assumed Conversion of
Preferred Stock....... 2,910,621 3,243,326 3,243,326 3,243,326 3,243,326 3,243,326 4,213,924
Common Equivalent
Shares Resulting from
stock options and
warrants (treasury
stock method)......... -- 464,201 -- 480,753 499,313 -- 1,465,817
SAB 83 Shares (treasury
stock method)......... 926,167 926,167 926,167 926,167 926,167 926,167 926,167
--------- ---------- ----------- ---------- ---------- ----------- ----------
Total.................. 9,503,188 11,126,784 10,677,917 11,158,091 11,178,020 10,677,811 13,028,445
========= ========== =========== ========== ========== =========== ==========
Net Income Applicable
to Common Stock....... $(125,423) $ 950,272 $(2,432,914) $ 411,723 $ 72,205 $(1,735,842) $ 302,500
========= ========== =========== ========== ========== =========== ==========
Fully Diluted Income
per Common Share...... $ (0.01) $ 0.08 $ (0.23) $ 0.04 $ 0.01 $ (0.16) $ 0.02
========= ========== =========== ========== ========== =========== ==========
</TABLE>

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

To the Board of Directors and
Stockholders of Lightbridge,
Inc.:

We consent to the use in this Amendment No. 1 to Registration Statement No.
333-6589 of Lightbridge, Inc. of our report dated April 22, 1996 (except for
Notes 4 and 11 as to which the dates are August 8, 1996 and July 15, 1996,
respectively), appearing in this Prospectus, which is a part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Prospectus.

Deloitte & Touche LLP

Boston, Massachusetts

August 9, 1996

<PAGE>

<ARTICLE> 5

<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1995 DEC-31-1995 DEC-31-1996
<PERIOD-START> OCT-01-1994 OCT-01-1995 JAN-01-1996
<PERIOD-END> SEP-30-1995 DEC-31-1995 JUN-30-1996
<CASH> 539,025 58,064 3,532,294
<SECURITIES> 0 0 0
<RECEIVABLES> 2,883,858 4,716,952 5,292,830
<ALLOWANCES> 9,000 (2,000) (22,000)
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 3,572,454 4,917,310 9,207,957
<PP&E> 9,739,723 9,949,028 10,571,616
<DEPRECIATION> (4,419,891) (5,067,373) (6,481,994)
<TOTAL-ASSETS> 10,214,283 11,041,481 14,554,658
<CURRENT-LIABILITIES> 6,851,967 6,884,705 6,787,514
<BONDS> 0 0 0
3,130,983 3,176,618 9,226,288
0 0 0
<COMMON> 65,078 65,822 66,644
<OTHER-SE> (3,629,573) (3,600,927) (4,219,861)
<TOTAL-LIABILITY-AND-EQUITY> 10,214,283 11,041,481 14,554,658
<SALES> 19,350,467 6,512,050 13,263,057
<TOTAL-REVENUES> 19,350,467 6,512,050 13,263,057
<CGS> 12,607,879 3,484,175 7,511,529
<TOTAL-COSTS> 20,957,507 6,124,475 12,571,053
<OTHER-EXPENSES> 0 7,923 0
<LOSS-PROVISION> 0 20,000 0
<INTEREST-EXPENSE> 863,568 307,111 370,004
<INCOME-PRETAX> (2,432,914) 74,602 322,000
<INCOME-TAX> 0 2,397 19,500
<INCOME-CONTINUING> (2,432,914) 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (2,432,914) 72,205 302,500
<EPS-PRIMARY> (0.19) 0.01 0.02
<EPS-DILUTED> (0.19) 0.01 0.02

</TABLE>