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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

 
For the quarterly period ended March 31, 2005
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from ________ to ________.
 
Commission File Number 000-50862
 
 
LUMERA CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
 
 
Delaware
 
91-2011728
(State or Other Jurisdiction of
Incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
19910 North Creek Parkway, Bothell, Washington 98011
(Address of Principal Executive Offices) (Zip Code)
 
(425) 415-6900
(Registrant’s telephone number, including area code)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No
 
As of March 31, 2005, 16,574,555 shares of the Company’s common stock, $0.001 par value, were outstanding.
 
 
1

PART I
FINANCIAL INFORMATION

 
Page
Item 1 - Financial Statements  (unaudited)
  
     
 
Condensed Balance Sheets as of March 31, 2005 and December 31, 2004
3
     
 
Condensed Statements of Operations for the three months ended
March 31, 2005 and 2004
4
     
 
Condensed Statements of Comprehensive Loss for the three months ended
March 31, 2005 and 2004
5
     
 
Condensed Statement of Changes in Shareholders' Equity for the period from
January 1, 2005 to March 31, 2005
6
     
 
Condensed Statements of Cash Flows for the three months ended
March 31, 2005 and 2004
7
     
 
Notes to Condensed Financial Statements
8
     
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
10
     
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
22
     
Item 4 - Controls and Procedures
22

PART II
OTHER INFORMATION

Item 1 - Legal Proceedings
22
   
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
22
   
Item 6 - Exhibits and Reports on Form 8-K
22
 
2

PART I
FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

LUMERA CORPORATION

CONDENSED BALANCE SHEETS
 
   
March 31,
2005
  
December 31,
2004
  
Assets
  
 
      
Current Assets
  
 
      
Cashand cash equivalents
  
$
2,901,000
  
$
3,505,000
  
Investment securities, available-for-sale, current
    
23,570,000
    
15,460,000
  
Accounts receivable
    
91,000
    
32,000
  
Costs and estimated earnings in excess of billings on uncompleted contracts
    
111,000
    
3,000
  
Other current assets
    
546,000
    
623,000
  
 
              
Total current assets
    
27,219,000
    
19,623,000
  
Investment securities, available-for-sale, long-term
    
987,000
    
11,216,000
  
Property and equipment, net
    
1,873,000
    
2,047,000
  
 
              
TOTAL ASSETS
  
$
30,079,000
  
$
32,886,000
  
 
              
LIABILITIES AND SHAREHOLDERS’ EQUITY
            
CURRENT LIABILITIES
            
Accounts payable
  
$
344,000
  
$
416,000
  
Research liability
    
50,000
    
101,000
  
Accrued liabilities
    
914,000
    
976,000
  
 
              
Total current liabilities
    
1,308,000
    
1,493,000
  
 
              
COMMITMENTS AND CONTINGENCIES (Note 5)
    
   
 
               
SHAREHOLDERS’ EQUITY
          
 
Common stock, $0.001 par value, 120,000,000 shares authorized; 16,574,555 shares issued and outstanding at March 31, 2005 and 16,546,430 shares issued and outstanding at December 31, 2004
    
16,000
    
16,000
  
Additional Paid-in Capital
    
70,555,000
    
70,435,000
  
Deferred stock-based compensation
    
(503,000
)
  
(666,000
)
Accumulated other comprehensive loss
    
(172,000
)
  
(145,000
)
Accumulated deficit
    
(41,125,000
)
  
(38,247,000
)
 
              
Total shareholders’ equity
   
28,771,000
    
31,393,000
  
 
              
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
30,079,000
  
$
32,886,000
  
 
 
The accompanying notes are an integral part of these condensed financial statements.
 
3

LUMERA CORPORATION

CONDENSED STATEMENTS OF OPERATIONS
 
     
Three Months Ended March 31,
  
     
2005
    
2004
  
Revenue
  
$
240,000
  
$
316,000
  
Cost of revenue
    
168,000
    
194,000
  
 
              
GROSS PROFIT
    
72,000
    
122,000
  
 
              
Research and development expense
    
1,735,000
    
1,794,000
  
Marketing, general and administrative expense
    
1,384,000
    
920,000
  
 
              
Total operating expenses
    
3,119,000
    
2,714,000
  
 
              
Loss from operations
    
(3,047,000
)
  
(2,592,000
)
Interest income
    
169,000
    
—
 
 
              
Net loss
    
(2,878,000
)
  
(2,592,000
)
Deemed dividend upon issuance of mandatorily redeemable convertible preferred stock
    
—
   
(500,000
)
 
              
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS
  
$
(2,878,000
)
$
(3,092,000
)
 
              
NET LOSS PER SHARE-BASIC AND DILUTED
  
$
(0.17
)
$
(0.50
)
 
              
WEIGHTED-AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED
    
16,565,403
    
6,172,000
  
 
              
 
The accompanying notes are an integral part of these condensed financial statements.
 
4
 
LUMERA CORPORATION
 
STATEMENTS OF COMPREHENSIVE LOSS
 
     
For the three months ended
March 31,
  
     
2005