Lumera Corporation (NASDAQ:LMRA), a leader in photonics communication,
today reported financial results for the second quarter 2008.
Revenues totaled $1,499,000 for the three months that ended June 30,
2008 compared to $934,000 for the same period in 2007, reflecting an
increase of 60%. Lumera’s loss from continuing
operations totaled $1,649,000 or $0.08 per share for the second quarter
of 2008 compared with a loss from continuing operations of $2,188,000 or
$0.11 per share for the same period in 2007.
Revenues totaled $1,983,000 for the six months ended June 30, 2008
compared to $1,794,000 for the same period in 2007, reflecting an
increase of 11%. Lumera’s loss from continuing
operations totaled $5,226,000 or $0.26 per share for the six months of
2008 compared with a loss from continuing operations of $3,909,000 or
$0.19 per share for the same period in 2007.
"We are pleased with our results this
quarter," said Dr. Joe Vallner, Interim Chief Executive Officer of
Lumera. "We have the highest level of
government contract revenue commitments in our history which, as
expected, will drive increasing contract revenues for us this year.
Achieving our Telcordia testing milestones validates for us that our
materials and devices can meet tough industry standards. Our
restructuring efforts are bearing fruit, allowing us to focus singularly
on our electro-optic business opportunities, and we’ve
made good headway reducing embedded operating costs. We expect to see
more of the same in the coming quarter leading up to our proposed merger.”
Lumera’s electro-optic business unit is
developing a new generation of electro-optic modulators and other
devices for optical networks and systems based on proprietary polymer
materials.
During the quarter, Lumera announced that it had successfully completed
its Telcordia standard reliability testing of its packaged polymer-based
electro-optic modulators. Achieving these positive test results for the
modulators demonstrates the viability of Lumera’s
electro-optic polymer technology for component fabrication and validates
the assertion that polymer modulators can pass the same rigorous tests
required of industry standard components. Lumera is now in a position to
share its internal reliability test results with potential customers and
business partners.
The company also recently announced that it had completed a device
shipment to Lockheed Martin in conjunction with a third order placed
under the Material Transfer Agreement signed with Lockheed Martin in the
first quarter 2008. This recent shipment evidences that Lumera’s
relationship with Lockheed is continuing and expanding beyond
electro-optic materials into prototype devices.
Proposed Merger with GigOptix, LLC
On March 27, 2008, Lumera Corporation and GigOptix, LLC ("GigOptix”)
announced their entry into a definitive agreement to merge the two
companies. Upon completion of the merger, which is subject to Lumera
shareholder and other regulatory approval, existing securities holders
of Lumera and GigOptix will each own approximately 50% of the
outstanding securities of a new holding company named "GigOptix,
Inc.” which will trade on the
Nasdaq Market
under the ticker symbol "GIGX.”
Lumera also recently announced that the Company had entered into
definitive agreements with selected institutional investors to sell 4
million shares of its common stock and warrants to purchase an
additional 2 million shares through a registered direct offering for net
proceeds of approximately $2.8 million, after deducting offering fees
and expenses. With the net proceeds from this offering, which was
completed on July 16, 2008, we have met the minimum capital requirements
closing condition in the GigOptix merger agreement.
Activities associated with our proposed merger with GigOptix continue to
progress, albeit on a delayed schedule, due to a longer than expected
period to produce audited GAAP financial statements at GigOptix.
Information pertaining to the proposed merger, audited historical
results for GigOptix LLC, and pro forma financial statements of the
combined businesses will become available when an initial Registration
Statement on Form S-4 is filed with the SEC. Due to the time required to
produce the GigOptix financial statements, we currently expect to file
the S-4 prior to the end of the third quarter. At that time, we
anticipate holding a joint conference call to introduce Dr. Avi Katz and
to discuss the proposed merger with GigOptix.
Summary Financial Discussion
Revenues totaled $1,499,000 for the three months ended June 30, 2008
compared to $934,000 for the same period in 2007, reflecting an increase
of 60%. Government contract revenues totaled $1,377,000 for the current
three month period, an increase of $448,000 or 48% from $929,000 in
2007. The expected increase in our current quarter contract revenues is
related to additional and renewed government contracts awarded late in
the first quarter. Product revenues for the three months ended June 30,
2008 totaled $122,000 consisting of electro-optic devices, primarily to
Lockheed Martin. Product revenues for the same period in 2007 totaled
$5,000.
Revenues totaled $1,983,000 for the six months ended June 30, 2008
compared to $1,794,000 for the same period in 2007, reflecting an
increase of 11%. Government contract revenues totaled $1,850,000 for the
current six month period, an increase of $147,000 or 9% from $1,703,000
in 2007. Product revenues for the six months ended June 30, 2008 totaled
$133,000 consisting of electro-optic devices and materials. Product
revenues for the same period in 2007 totaled $91,000.
Expenses from continuing operations for the three months ended June 30,
2008 totaled $2,560,000 compared to $2,939,000 for the same period in
2007. The decline in operating expenses is mostly due to lower non-cash
stock based compensation costs in the current period. Increases in
professional fees related to our proposed merger were mostly offset by
decreases in other expenses associated primarily with cost reduction
measures.
Expenses from continuing operations for the six months ended June 30,
2008 totaled $6,506,000 compared to $5,398,000 for the same period in
2007. Research and development expenses increased by $362,000 to
$1,572,000 for the six months ended June 30, 2008 from $1,210,000 in
2007 due primarily to lower contract revenues in the current period
which caused an increase in direct labor and related overhead costs
applied to research and development expense, and to higher materials
costs associated with device packaging development. Marketing, general
and administrative expense increased by $746,000 to $4,934,000 for the
six months ended June 30, 2008 from $4,188,000 in 2007. The increase
results from higher legal and financial advisory fees of $1,092,000
associated with our proposed merger, a $500,000 collectability reserve
against the Note Receivable from Asyrmatos and higher headcount related
compensation expenses of $182,000, which include severance costs, lower
non-cash stock based compensation costs of $769,000 due to option
forfeitures associated with current period reductions in workforce and
other general administrative cost reductions.
Lumera’s loss from continuing operations
totaled $1,649,000 or $0.08 per share for the second quarter of 2008
compared with a loss from continuing operations of $2,188,000 or $0.11
per share for the same period in 2007.
Lumera’s loss from continuing operations
totaled $5,226,000 or $0.26 per share for the six months ended June 30,
2008 compared with a loss from continuing operations of $3,909,000 or
$0.19 per share for the same period in 2007.
Discontinued Operations
As required by the provisions of Statement of Financial Accounting
Standards No. 144 Accounting for the Impairment of Disposal of
Long-Lived Assets, Lumera began reporting the results of Plexera as
discontinued operations in the quarter ended June 30, 2008. As such, the
discussion above relates only to Lumera’s
continuing electro-optics business unless otherwise noted.
Lumera’s net loss from discontinued
operations totaled $37,000 and $2,501,000 for the three and six months
ended June 30, 2008, respectively, or $0.00 and $0.12 per share compared
to a net loss of $1,155,000 and $2,130,000 for the same respective
comparative prior year periods, of $0.06 and $0.11 per share.
Conference Call
Lumera will host a conference call to discuss results of its second
quarter 2008, introduce GigOptix’s CEO, Dr.
Avi Katz, and discuss plans of the proposed merger once GigOptix’s
financial audit is completed and the S4 has been filed with the SEC.
Information on the date and time of the call along with dial-in
telephone numbers will be released at a later date.
About Lumera
Lumera is a leader in photonic communications. The company designs
electro-optic components based on proprietary polymer compounds for the
telecommunications and computing industries. 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 will file with the SEC a registration statement on Form S-4,
which will contain a proxy statement/prospectus regarding the proposed
merger transaction, as well as other relevant documents concerning the
transaction. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE
REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS AND THESE OTHER
DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT LUMERA, GIGOPTIX LLC AND THE PROPOSED
TRANSACTION. A definitive proxy statement/prospectus will be sent to
Lumera’s stockholders seeking their approval
of Lumera’s issuance of shares in the
transaction and to members of GigOptix LLC. Investors and security
holders may obtain a free copy of the registration statement and proxy
statement/prospectus (when available) and other documents filed by
Lumera with the SEC at the SEC’s web site at www.sec.gov.
Free copies of Lumera’s SEC filings are
available on Lumera’s web site at www.lumera.com
and also may be obtained without charge by directing a request to Lumera
Corporation, 19910 North Creek Parkway, Bothell, WA 98011-3008,
Attention: Investor Relations or by telephoning us at (425) 398-6546.
Lumera and its directors and executive officers may be deemed, under SEC
rules, to be participants in the solicitation of proxies from Lumera’s
stockholders with respect to the proposed transaction. Information
regarding Lumera’s directors and executive
officers is included in its annual report on Form 10-K filed with the
SEC on March 17, 2008, as amended by Form 10-K/A filed with the SEC on
March 27, 2008. More detailed information regarding the identity of
potential participants and their direct or indirect interests in the
transaction, by securities holdings or otherwise, will be set forth in
the registration statement and proxy statement/prospectus and other
documents to be filed with the SEC in connection with the proposed
transaction.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Lumera Corporation Balance Sheet
(In thousands)
(Unaudited)
June 30,
December 31,
2008
2007
Assets
Current Assets
Cash and cash equivalents
$
5,733
$
7,132
Investment securities, available-for-sale, current
-
7,494
Accounts receivable, net of allowance
136
57
Costs and estimated earnings in excess of billings on uncompleted
contracts
468
101
Other current assets
268
350
Total current assets
6,605
15,134
Property and equipment, net
2,128
2,597
Assets held for sale
34
36
Restricted Investments
700
700
Other assets
46
46
Total Assets
$
9,513
$
18,513
Liabilities and Shareholders' Equity
Liabilities
Current Liabilities
Accounts payable
$
689
$
923
Accrued liabilities
1,029
1,160
Current liabilities of disposal group held for sale
126
879
Total current liabilities
1,844
2,962
Deferred rent, net of current portion
242
303
Total liabilities
2,086
3,265
Commitments and contingencies
Shareholders' Equity
Common stock, $0.001 par value, 120,000,000 shares authorized;
20,088,852 shares issued and outstanding at June 30, 2008, and
20,055,352 shares issued and outstanding at December 31, 2007
20
20
Additional Paid-in Capital
91,908
91,998
Accumulated other comprehensive income
-
4
Accumulated deficit
(84,501
)
(76,774
)
Total shareholders' equity
7,427
15,248
Total Liabilities and Shareholders' Equity
$
9,513
$
18,513
Lumera Corporation Statements of Operations
(In thousands, except earnings per share and share data)
(Unaudited)
`
Three months
ended June 30,
Six months
ended June 30,
2008
2007
2008
2007
Revenue
$
1,499
$
934
$
1,983
$
1,794
Cost of revenue
653
484
889
927
Gross Profit
846
450
1,094
867
Research and development expense
628
567
1,572
1,210
Marketing, general and administrative expense
1,932
2,372
4,934
4,188
Total operating expenses
2,560
2,939
6,506
5,398
Loss from operations
(1,714
)
(2,489
)
(5,412
)
(4,531
)
Interest income
65
301
186
622
Loss from Continuing Operations
(1,649
)
(2,188
)
(5,226
)
(3,909
)
Loss from Discontinued Operations
(37
)
(1,155
)
(2,501
)
(2,130
)
Net Loss
$
(1,686
)
$
(3,343
)
$
(7,727
)
$
(6,039
)
Net Loss per Share Basic and Diluted
Continuing Operations
$
(0.08
)
$
(0.11
)
$
(0.26
)
$
(0.19
)
Discontinued Operations
$
(0.00
)
$
(0.06
)
$
(0.12
)
$
(0.11
)
Weighted Average Shares Outstanding -
Basic and Diluted
20,088,352
20,055,352
20,085,440
20,055,352
