Lumera Corporation (NASDAQ: LMRA), a leader in the emerging field
of nanotechnology, today reported financial results for the fourth
quarter and full year 2006 and released information regarding its
current product development progress. Revenues totaled $1,158,000
for the three months ended December 31, 2006 compared with $240,000
for the same period in 2005, a 382 percent increase over the prior
year. Revenues totaled $3,356,000 for the twelve months ended
December 31, 2006 compared with $1,509,000 for the same period in
2005, a 122 percent increase over the prior year. Lumera�s net loss
totaled $12,118,000 or $0.70 per share for the twelve months ended
December 31, 2006 compared with $10,453,000 or $0.63 per share for
the same period in 2005. �We are very pleased to report the
doubling of our revenue year over year,� said Lumera Chief
Executive Officer Tom Mino. �We made important progress with the
scientific research community as it relates to key Lumera products
and we have a much stronger balance sheet resulting from our
successful $17 million round of funding in November of last year.�
Summary Discussion of Product Development Lumera develops
proprietary polymer materials which are used in bioscience products
and in electro-optic devices further detailed in the market
summaries below. Bioscience Lumera is developing label free high
throughput methods targeted at the biological and medical research
markets. During the quarter, the Company completed new design and
operating specifications for the ProteomicProcessor�, a high
throughput biochip analytical instrument, based on feedback from
potential customers. The new design was showcased at PepTALK, an
international protein conference held in San Diego in January. At a
Lumera-hosted luncheon event, Dr. Josh LaBaer of the Harvard
Proteomics Institute described his research using Lumera�s
ProteomicProcessor�. During the year, Lumera sold four beta
instruments to universities and research institutes. These included
Harvard Proteomics Institute, the Institute for Systems Biology,
Baylor Research Institute, and the Medical School at the University
of South Carolina. Electro-Optics Lumera is developing a new
generation of electro-optic modulators and other devices for
optical networks and systems based on proprietary polymer
materials. In December, Lumera announced the successful third party
test of its tri-band millimeter wave wireless bridge that is
designed to enable government and commercial entities to transmit
very large amounts of data via a variety of high speed
telecommunications networks. The successful test of its
multi-frequency band prototype, which is designed to transmit data
at spectrum frequencies of 35, 94, and 140 GHz, demonstrated data
rates from 2.5 Gbps to 10 Gbps. Lumera anticipates that the system
will have the capacity to operate at a range of up to three miles
per data link. In addition to high data rate transmission, the
multi-band system offers adaptive frequency switching to provide
link resilience by responding to changes in atmospheric conditions.
Potential applications for the wireless bridge include enterprise
campus connectivity, local area network (LAN) extension,
metropolitan area network (MAN), redundant access (network
diversity), storage access (SAN), distribution of high definition
video, and teleradiology. Target customers are organizations with
vast amounts of data to transmit, such as large commercial
enterprises and universities. Government agencies have also
expressed an interest in such a high-data-rate wireless bridge for
use in disaster recovery applications. Lumera's wireless bridge
offers high data transmission rates at low cost while avoiding the
expense of digging and laying optical fiber, in an integrated
system solution. During the quarter, the company also supplied
sample quantities of 40 and 95GHz modulators to potential customers
for evaluation. Summary Financial Discussion Revenues totaled
$1,158,000 for the three months ended December 31, 2006 compared
with $240,000 for the same period in 2005, a 382 percent increase
over the prior year. Government contract revenue totaled $1,118,000
for the current quarter, an increase of $898,000 from $220,000 in
2005 primarily due to billings under our contract with the Defense
Advanced Research Projects Agency (DARPA) which began in July 2006.
Product revenues totaled $40,000 for the quarter, reflecting sales
of electro-optic modulators and materials. Revenues totaled
$3,356,000 for the twelve months ended December 31, 2006 compared
with $1,509,000 for the same period in 2005, a 122 percent increase
over the prior year. Government contract revenue totaled $3,155,000
in 2006, an increase of $1,722,000 from $1,433,000 in 2005
primarily due to billings under our DARPA contract which began in
July 2006. Product revenues totaled $201,000 in 2006, an increase
of $125,000 from $76,000 in 2005, primarily due to the sale of two
beta-version ProteomicProcessors� and biochips for customer trials
and sales of electro-optic modulators and materials. Operating
expenses for the twelve months ended December 31, 2006 increased
$2,709,000 to $14,404,000 compared to $11,695,000 for the same
period in 2005. Research and Development Expense, which totaled
$6,734,000 for the twelve months ended December 31, 2006 increased
by $194,000, or 3 percent, from the same period in 2005. Marketing,
general and administrative expense, which totaled $7,670,000 for
the twelve months ended December 31, 2006 increased by $2,515,000,
or 49 percent, from the same period in 2005 due primarily to
additional cash compensation costs associated with additional sales
and marketing and administrative personnel and non-cash expenses
associated with share-based payments, travel and facilities related
costs. Lumera adopted Financial Accounting Standards Board (�FASB�)
Statement No.�123(R), Share-Based Payment, (�FAS 123R�) effective
January 1, 2006. During the twelve months ended December 31, 2006
we recorded non-cash share-based compensation expense of $367,000
to R&D expense and $1,408,000 to G&A expense, respectively.
Lumera�s net loss totaled $12,118,000 or $0.70 per share for the
twelve months ended December 31, 2006 compared with $10,453,000 or
$0.63 per share for the same period in 2005. Lumera used $9.6
million in cash to fund operations and working capital requirements
during 2006, ending the year with $26.3 million in cash and
investment securities. We used approximately $1.4 million more cash
to fund 2006 operating activities than in 2005, primarily due to
higher cash operating expenses and working capital requirements. We
used approximately $2.4 million to expand and equip our laboratory
and administrative offices during 2006 compared with $526,000 in
2005. In November 2006 we completed a private offering of our
common stock, raising $15.7 million after expenses and increasing
our total shares outstanding to 20.1 million. During the fourth
quarter we also received approximately $1.2 million in net proceeds
from the exercise of stock options. Our current level of cash
expenditure is not indicative of cash requirements for future
periods, which we expect to increase as we develop new
opportunities. We invest cash not needed to fund near term
operations in highly liquid investments with varying stated
maturities, all of which are available for sale. Other News The
company also announced that C. James Judson, a Director since 2004,
had been named Chairman. Mr. Ratliffe will remain as a Director.
Mr. Judson has been a business law partner at Davis Wright Tremaine
in Seattle since 1975. Mr. Judson has a B.A. from Stanford
University in Economics and an L.L.B. from Stanford Law School. �We
thank Bob for his contribution to Lumera as Chairman and look
forward to his continued guidance as a Director,� said Mino. �Jim
Judson has been an insightful voice on the Board and I�m personally
happy that he has agreed to be Chairman.� The company also reported
that the record date for the annual shareholder meeting is April 6,
2007. The annual shareholder meeting will be held on June 1, 2007
at 9:30 a.m. at the Country Inn and Suites, 19333 North Creek
Parkway, Bothell WA 98011. Conference Call Lumera will host a
conference call to discuss its third quarter of 2006 financial
results on Thursday, March 8 at 4:30 p.m. EST. The call will be
broadcast over the Internet and can be accessed from the company's
web site at www.lumera.com. Additionally, U.S. participants may
join the conference call by dialing 866-825-1709 ten minutes prior
to the start of the conference. International participants can dial
617-213-8060. The conference passcode number is 39340297. A
telephone replay of the call will be available through March 15,
and can be accessed by dialing 888-286-8010 (for U.S. participants)
or 617-801-6888 (for international participants). The replay
passcode is 49339768. A replay of the conference call will be
available on the company's web site. About Lumera Lumera is an
emerging leader in the field of nanotechnology. The company designs
proprietary molecular structures and polymer compounds for the
bioscience and communications industries, both of which represent
large market opportunities. The company also has developed
proprietary processes for fabricating such devices. For more
information, please visit www.lumera.com. Certain statements
contained in this release are forward-looking statements that
involve a number of risks and uncertainties. Factors that could
cause actual results to differ materially from those projected in
the company's forward-looking statements include the following:
market acceptance of our technologies and products; our ability to
obtain financing; our financial and technical resources relative to
those of our competitors; our ability to keep up with rapid
technological change; government regulation of our technologies;
our ability to enforce our intellectual property rights and protect
our proprietary technologies; the ability to obtain additional
contract awards and to develop partnership opportunities; the
timing of commercial product launches; the ability to achieve key
technical milestones in key products; and other risk factors
identified from time to time in the company's SEC reports,
including its Annual Report on Form 10-K, and its Quarterly Reports
on Form 10-Q. Lumera Corporation Condensed Balance Sheets (In
thousands) (Unaudited) � December 31, December 31, Assets � 2006� �
2005� Current assets Cash and cash equivalents $ 10,521� $ 4,885�
Investment securities, available-for-sale 15,788� 16,871� Accounts
Receivable, net of allowance 380� -� Costs and estimated earnings
in excess of billings on uncompleted contracts 338� 77� Other
current assets � 600� � 551� Total current assets 27,627� 22,384� �
Property and equipment, net 2,759� 1,276� Restricted Investments
700� -� Other Assets � 46� � 46� Total assets $ 31,132� $ 23,706� �
� Liabilities and Shareholders' equity � Current liabilities
Accounts payable $ 850� $ 493� Accrued liabilities 893� 1,059�
Other current liabilities � 89� � -� Total current liabilities
1,832� 1,552� � Deferred rent, net of current portion � 407� � -�
Total current liabilities 2,239� 1,552� � Commitments and
contingencies � Shareholders' equity Common stock at par value 20�
17� Additional paid-in capital 89,690� 71,070� Deferred stock-based
compensation -� (215) Accumulated other comprehensive loss 1� (18)
Accumulated deficit � (60,818) � (48,700) Total shareholders'
equity � 28,893� � 22,154� Total liabilities and shareholders'
equity $ 31,132� $ 23,706� Lumera Corporation Statements of
Operations (In thousands, except earnings per share and share data)
(Unaudited) � Three months ended December 31, � Twelve months ended
December 31, � 2006� � 2005� � 2006� � 2005� � Revenue $ 1,158� $
240� $ 3,356� $ 1,509� Cost of revenue � 641� � 147� � 1,911� �
922� Gross profit � 517� � 93� � 1,445� � 587� � Research and
development expense 2,111� 1,656� 6,734� 6,540� Marketing, general
and administrative expense � 1,788� � 1,228� � 7,670� � 5,155�
Total operating expenses � 3,899� � 2,884� � 14,404� � 11,695� �
Loss from operations (3,382) (2,791) (12,959) (11,108) Interest
income � 256� � 176� � 841� � 655� Net loss from operations $
(3,126) $ (2,615) $ (12,118) $ (10,453) � Net loss per share-basic
and diluted $ (0.17) $ (0.16) $ (0.70) $ (0.63) � Weighted-average
shares outstanding - basic and diluted � 18,677,271� � 16,680,862�
� 17,256,070� � 16,607,653�
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