Lumera Reports Third Quarter Results and Updates Product
Development Efforts BOTHELL, Wash., Nov. 3 /PRNewswire-FirstCall/
-- Lumera Corporation, (NASDAQ:LMRA), an emerging leader in the
field of nanotechnology, today reported financial results for the
third quarter of 2004 and released information regarding its
current product development efforts. "We are in the process of
transitioning from primarily providing custom materials under
government contracts to developing commercial products," said Tom
Mino, CEO of Lumera. "While we had expected to begin generating
modest product sales of our wireless antennas and biochips during
the third quarter, we continue to be very excited by the long-term
potential of our technology and our team. We think that our current
products and products under development have the potential to
significantly change the way our customers solve important
technical problems. "We are continuing actively to introduce our
proprietary materials to potential customers and are working
internally and with partners to refine and improve our products. We
remain very optimistic that our proprietary technologies, together
with a seasoned management team, and cash resources from our
recently completed initial public offering, will allow us to
accomplish our long-term objectives," Mino concluded. Summary
Financial Discussion Revenue for the three months ended September
30, 2004, was $292,000 compared to $676,000 for the same period in
2003. Revenue for the nine months ended September 30, 2004, was
$896,000 compared to $1,441,000 for the same period in 2003.
Revenues for both the current year periods are lower primarily due
to a government sub-contract awarded during 2003 that has not been
renewed due to defense spending priorities. Additionally, Lumera
has reallocated personnel and technical resources from
revenue-generating government contracts to product development work
for applications in future commercial markets, which has reduced
current revenue. Research and development expense for the three
months ended September 30, 2004 was $1,592,000, compared to
$1,886,000 for the same period in 2003. Research and development
expense for the nine months ended September 30, 2004 was
$2,662,000, compared to $5,926,000 for the same period in 2003.
Research and development expense decreased for both comparative
periods primarily due to lower expenses in 2004 associated with
agreements between Lumera and the University of Washington.
Marketing, general and administrative expense for the three months
ended September 30, 2004 was $1,513,000, compared to $268,000 for
the same period in 2003. Marketing, general and administrative
expense for the nine months ended September 30, 2004 was
$3,404,000, compared to $889,000 for the same period in 2003.
Marketing, general and administrative expense increased in both
comparative periods primarily due to non-cash stock based
compensation costs associated with stock options granted with
exercise prices below the fair value of the common stock at the
date of issue, additional executive headcount, and the costs of
being a public company. Lumera reported a net loss of $3,176,000 or
$0.24 per share for the third quarter of 2004 compared to a net
loss of $1,848,000 or $0.30 per share in the same period in 2003.
For the nine months ended September 30, 2004, the company reported
a net loss of $6,500,000 or $0.75 per share compared to $6,054,000
or $0.98 per share for the same period in 2003. We completed our
initial public offering in July 2004, raising net proceeds of $38.7
million before offering expenses, which totaled $2.0 million to
date. As of September 30, 2004, we had net cash and securities of
$33,095,000. Summary Discussion of Product Development Lumera
develops proprietary polymer materials and is working on a number
of products based on these materials for a broad range of
applications. To date, substantially all of Lumera's revenues have
come from contracts to develop custom-made electro-optic materials
and devices for government agencies. Lumera is developing products
for three distinct markets which we believe address significant
market opportunities, including biotechnology disposables,
electro-optic devices and wireless antennas and systems. Lumera has
not yet generated commercial sales of its products in any of these
markets. The status of Lumera's product commercialization efforts
in each of these markets is summarized below: Biotechnology
Disposables Lumera is developing various disposable biochips that
are fabricated with a proprietary polymer coating and process.
These biochips enable biologists to isolate DNA and protein samples
for testing. Delays in product testing efforts by a prospective
customer have slowed our plan to begin pilot production orders of
our biochips. We continue to work with prospective customers and
currently expect that pilot production could begin in early 2005.
Electro-Optic Devices We recently announced a new polymer material
with improved electro-optic properties that we believe will lead to
substantial opportunities in the commercial and government markets.
We have supplied samples of this material to multiple government
agencies and potential industrial partners. The applications for
this advanced material include electro-optic components such as
modulators and ring oscillators, polymer electronics such as high
performance diodes and transistors, and optical interconnects for
high speed (greater than 20 billion cycles per second) inter and
intra semiconductor chip communication. Lumera recently acquired
exclusive rights to a flexible polymer modulator design and process
from the University of Southern California that has the potential
to increase revenue from military and high volume metro access
telcom applications. During the 4th quarter Lumera expects to
deliver high speed, low power modulators to a U.S. government
agency under an existing contract, which could result in additional
dollars being allocated to this project by the funding agency
during 2005. Wireless Antennas and Systems Over the last several
months, we have re-evaluated our plans to start production of 2.4
and 5.2 GHz Wi-Fi antennas. After reviewing recent market data, we
developed a new product strategy that refocuses resources on our
"smart antenna" applications, which feature polymer-based
technology that provides electronic rather than mechanical beam
steering. Our smart antenna has no moving parts, which we expect
will improve its accuracy and durability compared to antennas that
use mechanical beam steering. We believe that smart antennas
represent a potential opportunity for Lumera and we will have
prototypes available for test marketing in early 2005. We have not
yet begun commercial production of smart antennas. Conference Call
Lumera will host a conference call to discuss its third quarter
2004 financial results at 4:30 p.m. EST today. The call will be
broadcast over the Internet and can be accessed from the company's
web site at http://www.lumera.com/. Additionally, U.S. participants
may join the conference call by dialing 888- 396-2384 ten minutes
prior to the start of the conference. International participants
can dial 617-847-8711. The conference passcode number is 60425681.
A telephone replay of the call will be available through November
17, 2005, and can be accessed by dialing 888-286-8010 (for U.S.
participants) or 617-801-6888(for international participants. The
replay passcode is 68399754. 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 a broad
range of electro-optic, RF and specialty coating applications. The
company also has developed proprietary processes for fabricating
such devices. For more information, please visit
http://www.lumera.com/. Forward-Looking Statements Disclaimer
Certain statements contained in this release, including expected
results, projections of future revenues, plans for product
development and production volume, future development contracts and
commercial arrangements, growth in demand, future product benefits
and future operations, as well as statements containing words like
"believes", "estimate", "expects", "anticipates", "target",
"plans", "will", "could" and other similar expressions, 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: our ability to raise additional
capital when needed; market acceptance of our technologies and
products; our financial and technical resources relative to those
of our competitors; our ability to keep up with rapid technological
change; our dependence on the defense industry and a limited number
of government development contracts; 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; the timing of commercial product
launches and delays in product development; the ability to achieve
key technical milestones in key products; dependence on third
parties to develop, manufacture, sell and market our products;
potential product liability claims and other risk factors
identified from time to time in the company's SEC reports. Except
as expressly required by the federal securities laws, we undertake
no obligation to publicly update or revise any forward- looking
statements, whether as a result of new information, future events,
changes in circumstances or any other reason. Consolidated Balance
Sheet (In thousands) (Unaudited) September 30, December 31, Assets
2004 2003 Current assets Cash and cash equivalents $8,183 $560
Investment securities, available-for-sale, current 9,081 Accounts
receivable, net of allowances 28 151 Costs and estimated earnings
in excess of billings on uncompleted contracts 155 166 Prepaid
stock-based research costs -- 159 Other current assets 487 55 Total
current assets 17,934 1,091 Investment securities,
available-for-sale, long-term 15,831 -- Property and equipment, net
2,074 2,867 Other assets -- 100 Total assets $35,839 $4,058
Liabilities, mandatorily redeemable convertible preferred stock and
shareholders' equity (deficit) Current liabilities Accounts payable
$509 $159 Payable to related party 45 42 Current portion of
research liability 27 -- Accrued liabilities 1,214 576 Total
current liabilities 1,795 777 Research liability -- 1,948 Other
long-term liabilities -- 16 Total liabilities 1,795 2,741
Commitments and contingencies -- -- Mandatorily redeemable
convertible preferred stock -- 27,206 Shareholders' deficit Common
stock at par value 70,372 -- Class A Common stock at par value --
3,361 Class B Common stock at par value -- 105 Deferred stock-based
compensation (977) (31) Accumulated other comprehensive gain (loss)
(27) - Accumulated deficit (35,324) (29,324) Total shareholders'
equity (deficit) 34,044 (25,889) Total liabilities, mandatorily
redeemable convertible preferred stock and shareholders' equity
(deficit) $35,839 $4,058 Lumera Corporation Consolidated Statement
of Operations (In thousands, except earnings per share data)
(Unaudited) Three months ended, Nine months ended September 30,
September 30, 2004 2003 2004 2003 Revenue $292 $676 $896 $1,441
Cost of revenue 164 373 546 756 Gross Profit 128 303 350 685
Research and development expense 1,592 1,886 2,662 5,926 Marketing,
general and administrative expense 1,513 268 3,404 889 Total
operating expenses 3,105 2,154 6,066 6,815 Loss from operations
(2,977) (1,851) (5,716) (6,130) Interest income 63 3 64 37 Interest
expense (262) (348) Realized gain on sale of investment securities
-- -- -- 39 Net loss $(3,176) $(1,848) $(6,000) $(6,054) Deemed
dividend upon issuance of mandatorily redeemable convertible
preferred stock (500) Net loss available to common shareholders
$(3,176) $(1,848) $(6,500) $(6,054) Net loss per share - basic and
diluted $(0.24) $(0.30) $(0.75) $(0.98) Weighted-average shares
outstanding - basic and diluted 13,485,804 6,172,400 8,627,996
6,172,400 DATASOURCE: Lumera Corporation CONTACT: media, Todd
Wolfenbarger, +1-801-595-1155, or investors, Peter Biere,
+1-425-398-6544, both for Lumera Corporation Web site:
http://www.lumera.com/
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