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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2004

Commission File Number 000-50862

LUMERA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Lumera Corporation

19910 North Creek Parkway

Bothell, Washington 98011-3008

(425) 415-6900

(Address, including zip code, of principal executive offices And telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act: none

Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 par value

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 past 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.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Act of 1933).    Yes  ¨    No  x

The registrant’s Common Stock was not publicly traded as of the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value of the common stock held by non-affiliates of the registrant as of December 31, 2004 was approximately $82,228,246 (based on the closing price for the registrant’s Common Stock on the NASDAQ National Market of $7.70 per share).

The number of shares of the registrant’s Common Stock outstanding as of March 1, 2005 was 16,571,930.

Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement to be filed with the Commission pursuant to Regulation 14A in connection with the Registrant’s Annual Meeting of Shareholders to be held on June 2, 2005 are incorporated herein by reference into Part III of this report.

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Lumera Corporation

Form 10-K

INDEX

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PART I

Preliminary Note Regarding Forward-Looking Statements

The information set forth in this report in Item 1 “Description of Business” and in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the safe harbor created by that section. Such statements may include, but are not limited to, projections of revenues, income or loss, capital expenditures, plans for product development and cooperative arrangements, future operations, financing needs or plans of the Company, as well as assumptions relating to the foregoing. The words “believe,” “expect,” “will,” “anticipate,” “estimate,” “target,” “project,” “plan,” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Certain factors that realistically could cause actual results to differ materially from those projected in the forward-looking statements are set forth in Item 1 “Description of Business—Risk Factors Related to the Company’s Business.”

Overview

We develop proprietary polymer materials and are developing products based on these materials for a broad range of applications. Using our expertise in nanotechnology, we design and synthesize polymer materials at the molecular level—to optimize their electrical, optical and surface properties. We are developing products for three distinct markets that we believe provide significant market opportunities, including biotechnology diagnostics and disposables, electro-optic devices and wireless antennas and systems. We believe we have developed a proprietary intellectual property position based on a combination of patents, licenses and trade secrets relating to the design and characterization of polymer materials, methods of polymer synthesis and production of polymers in commercial quantities, as well as device design, characterization, fabrication, testing and packaging technology.

We are developing products in the following key areas:

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We have the ability to engineer, analyze and test polymer materials and related devices and the ability to fabricate advanced products, including the use of clean room manufacturing technology and processes. By controlling key manufacturing processes, we seek to accelerate the product design and development cycle for our potential products.

We have strategic relationships with universities, government agencies and corporate partners, which provide us access to important technology. We describe a number of our most important research relationships below.

Technology Background

Nanotechnology: Polymer Materials, Engineering and Process Development

Polymers are large carbon-based molecules that bond many small molecules together to form a long chain. Polymer materials can be engineered and optimized using nanotechnology to create a system in which unique surface, electrical, chemical and electro-optic characteristics can be controlled. Nanotechnology refers to the development of products and production processes at a scale smaller than 100 nanometers (a nanometer is one-billionth of a meter).

Materials based on polymers are used in a multitude of industrial and consumer products, from automotive parts to home appliances and furniture, as well as scientific and medical equipment. We believe that polymer materials engineered at the molecular level can have a significant role in the future development of commercially significant biotechnology and electro-optic related products. In addition, polymers, polymer-based devices and the processes used to create them are often patentable, which can provide the developers of such technology with a significant competitive advantage.

Markets and Lumera Products

The following table summarizes our target markets, our current and potential products and the initial applications for these products.

Biotechnology Disposable

The Market

We believe that a substantial opportunity in biotechnology markets exists in designing, manufacturing and selling biotechnology disposables, including biochips (also known as microarrays). Biochips are small glass or silicon chips, usually one inch by three inches in size, which are used to hold DNA or protein samples for analysis and diagnostic testing. Polymer coatings can be used on biochips to define the microwells in which the DNA or protein samples are placed. These coatings are effective in keeping the samples separate from each other on the surface of the chips due to unique surface properties of the polymers.

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We anticipate that the market for biotechnology disposables will continue to grow as the field of proteomics develops. Proteomics is the study of proteins, including their location, structure and function. Specific protein levels have been shown to be effective indicators of a number of diseases, including heart disease and several forms of cancer. A Global Industry Analysts, Inc. report states that the addressable world-wide market for proteomic research for diagnostics and disposables will surpass $1.2 billion in 2005, and is growing at a nearly 24 percent compound annual rate. We believe that there is a substantial market opportunity within this broader market for our tools and technology. In particular, we anticipate that as proteomics evolves, there will be an increasing demand for low-cost disposable diagnostic biochips and other devices for detecting disease.

We anticipate that a number of current and emerging diagnostic technologies related to genomics and proteomics will evolve from primarily a research tools to diagnostic tools, leading to increased demand for disposable biochips used in analysis for biologic molecules.

Lumera Product Opportunity

Our NanoCapture^™ Arrays are biochips that are coated with our proprietary hydrophobic polymers. These water-resistant polymers surround the microwells on the biochips, better containing the DNA samples in the microwells and reducing cross-contamination between wells. Unlike most other currently available biochips that use Teflon to produce microwells, we use a very thin layer of polymer coating on our NanoCapture^™ Arrays, providing a cost-effective alternative to Teflon. Because our polymer coatings are applied to our NanoCapture^™ Arrays in very thin layers, these biochips provide the ability to isolate and contain extremely small amounts of samples for testing. This allows the production of biochips that can hold large numbers of samples on the same biochip, providing high throughput with minimal sample volumes. In addition, the polymers we use on our NanoCapture^™ Arrays are compatible with silicon, glass, metal, plastic or other materials that provide the base layer for biochips, allowing for a wide range of additional applications.

Although we have designed our NanoCapture^™ Arrays specifically for genetic analysis, they can be used in a broad range of biotechnology applications. We intend these arrays to be among the first disposable biochips used in mass spectrometry analysis for biologic molecules. Currently our NanoCapture^™ Arrays are being tested by a prospective customer. In addition, we are developing other disposable low-cost diagnostic devices based on our ability to design and produce polymeric structures that have the ability to enhance detection of biologic molecules.

Lumera recently acquired exclusive rights within our markets to Helix Biopharma’s Heterodimer Protein Technology (HPT). The combination of Helix’s HPT technology and Lumera’s proprietary nanosurface modification chemistry will, for the first time, allow researchers to consistently utilize existing DNA arrays to produce protein arrays that accurately mimic the native living cell environment of the body.

Lumera is collaborating with the Institute for Systems Biology to develop a high-throughput, label-free detection platform. The technology platform consists of Lumera’s ProteomicProcessor^™ and NanoCapture^™ Array technology. The ProteomicProcessor^™ tool reads Lumera’s high density NanoCapture^™ Microarrays in real-time, without the use of molecular labels. By combining these technologies, researchers will be able to more quickly isolate, compile and process large amounts of data at high-speeds to accelerate proteomic research.

Electro-Optic Devices

The Market

Electro-optic devices such as modulators translate electric signals into optical signals. Such devices are used in communication systems to transfer data over fiber-optic networks. Optical data transfer is significantly faster and more efficient than transfer technologies using only electric signals, permitting more cost-effective use of bandwidth for broadband Internet and voice services.

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Current technologies that translate electric signals into optical signals generally rely on inorganic electro-optic materials. Polymer-based electro-optic modulators provide advantages over traditional switching technologies based on inorganic materials in terms of switching speed, optical transmission properties and lower operating voltages. We believe that the advantages in switching speed and other characteristics of polymer-based electro-optic modulators may drive increased sales of these modulators over the next several years.

We anticipate that an additional market for electro-optic devices may develop in connection with computer components. Some integrated circuit manufacturers are seeking to solve problems that exist with metal interconnects, which are used to move data directly from microprocessors to other computer components. Metal interconnects may become more problematic as processor speeds continue to increase. Unlike many metal interconnects, polymer-based interconnects can operate at higher circuit speeds by optically transmitting data between computer components and systems.

Lumera Product Opportunity

We are developing a new generation of electro-optic modulators and other devices for optical networks based on our proprietary polymer materials. Our polymer-based modulators can operate at speeds up to five times faster than existing inorganic crystal-based electro-optic modulators. In addition, using our polymers we can build modulators with three-dimensional flexible geometries that are not possible using inorganic materials. We believe we can design polymer-based electro-optic modulators that are smaller, lighter and more energy efficient than electro-optic modulators using inorganic crystals.

We delivered modulators to a U.S. government agency for testing in the second half of 2004. As the commercial market develops, we will introduce a 10 gigahertz modulator designed to have significant price, power and size advantages over competing modulators. In addition, we have developed electro-optic materials that are being tested by several potential customers to be used in optical interconnects for high-speed computing applications.

Wireless Antennas and Systems

The Market

We believe an opportunity exists in the emerging market for wireless “smart” antennas. Smart antennas, which currently are used primarily in the defense sector, have historically used mechanical parts to steer radio frequency beams. This functionality allows the antenna to dynamically track users of the antenna signal, thereby improving the user’s quality of service through associated software that can provide better allocation of bandwidth among a number of users. Potential applications for smart antennas include global positioning satellite devices and systems and cellular, automotive, aerospace and defense applications.

Lumera Product Opportunity

Our AccuPath^™ Smart Antenna, which is in the development phase, features polymer-based technology that provides electronic rather than mechanical beam steering. Accordingly, our smart antenna has no moving parts, which we expect will improve its accuracy and durability compared to antennas that use mechanical beam steering. In addition, we anticipate that our proprietary design will result in a smart antenna that is small, lightweight and low cost. We are developing a smart antenna for customer specific applications for potential use in WiMAX wireless broadband services. We have not yet begun commercial production of smart antennas.

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The table below outlines the position of our key products within our product pipeline.

Government Research Applications

In addition to our various products in development for commercial markets, Lumera continues to work with various U.S. government agencies such as the Defense Advanced Research Projects Agency (DARPA) and the Air Force Research Labs to develop polymers and polymer-enabled devices to improve the performance and reduce the cost of airborne and space-based wireless applications, including sensors and navigation, tracking and communications systems.

In addition, we expect increased government-sector demand for biotechnology disposables. The National Institutes of Health, the National Science Foundation and agencies associated with the Department of Homeland Security provide substantial funding for the private sector. These agencies represent a significant resource for additional product research funds to develop testing and diagnostic methods using biochips.

We develop customized products on a contract basis for U.S. government agencies and government subcontractors, including high performance electro-optic modulators currently unavailable in the commercial market. These development contracts provide us with revenues, help fund our research and development efforts and provide access to certain technological resources of the government and government subcontractors.

Business Strategy

Our objective is to be a leading provider of products based on our proprietary technology and know-how in nanotechnology-based polymer materials. We are initially targeting the markets for biotechnology disposables, electro-optic devices and wireless antennas and systems. We are also developing customized polymer-based applications for government agencies. Our business strategy has the following components:

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Research and Development Process

We have integrated our operations with the goal of minimizing the time to market for our potential products and streamlining the product development process. We have four internal technical service groups supporting our research and development efforts:

Materials and chemistry. Our materials and chemistry group develops materials to meet the performance specifications requested by customers. This group is responsible for using existing synthesis methods as well as developing new methods to create novel polymer materials that meet customer specifications. Once a polymer material has passed all of the testing parameters and has been shown to have promise for commercial applications, this group develops new methods to synthesize larger quantities of such material.

Materials characterization and testing. Our materials characterization and testing group oversees early stage evaluations and conducts a full battery of tests at the completion of the synthesis of each new polymer material. This group evaluates test data using our central database. The group also helps create development strategies to optimize materials to meet customer specifications.

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Process development and device fabrication. Our process development and device fabrication group integrates data from the material characterization and testing group to fabricate devices. This group analyzes device testing results to refine and improve fabrication processes and methods. In addition, the group works closely with the other departments, providing technical proposals on how materials or design variations can help enable more efficient fabrication processes.

Device design, testing and packaging. Our device design, testing and packaging group takes customer specifications and creates an initial device design using simulation software. Following device fabrication, this group runs a series of optical and electronic tests and creates a report that provides our other groups with directions on enhancing performance in future generations of materials and processes. The group also has the capability to package devices in pilot production quantities.

Collaborative Relationships

External collaborations are an important aspect of our strategic plan. We have relationships with the following partners:

University of Washington. We collaborate actively with the University of Washington, a leading research institution, to conduct research and development in the field of optical materials technology. In October 2000, we entered into a sponsored research agreement with the University of Washington to further the development of electro-optic materials and devices. Pursuant to this agreement, we approved a research plan submitted by the University of Washington and sponsor several post-doctoral researchers and graduate research assistants. Their research covers improvements to polymer materials in several areas, including electro-optic activity, optical loss, long-term thermal stability and nanotechnology processibility. This research has resulted in 6 U.S. patent applications that are subject to our licensing agreement with the university. Pursuant to the sponsored research agreement, we agreed to pay the University of Washington an aggregate of $5.8 million. As of December 31, 2004, we had paid $5.1 million of this amount.

In connection with the sponsored research agreement, we also entered into an exclusive licensing agreement with the University of Washington in October 2000, pursuant to which we acquired rights to intellectual property relating to electro-optic polymers and related organic materials and processes in the following fields of use:

The sponsored research agreement allows us to add new patents and technology under the licensing agreement. The licensing agreement terminates upon the expiration of the last of the University of Washington’s patents that relate to this technology and that are licensed to us under the agreement, unless earlier terminated by the university or by us. Pursuant to the agreement, we issued shares of our common stock to the university valued at an aggregate of approximately $3.0 million. We also paid a $200,000 license fee to the university in March 2001. We have also agreed to pay certain costs related to filing and processing patents related to the agreement and to make ongoing royalty payments of at least $75,000 per year.

We have also paid an additional $900,000 to the University of Washington under the terms of a separate letter agreement for additional research related to the optical materials.

Arizona Microsystems, L.L.C. We have a consulting agreement with Arizona Microsystems, a company that specializes in the research and development of electro-optic polymeric materials and fabrication processes. Pursuant to this agreement, Arizona Microsystems provides us with consulting services in the field of electro-optic polymers. Pursuant to this consulting agreement, we have agreed to pay them $5,000 per month during the

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term of the agreement. In addition, pursuant to a separate licensing agreement with Arizona Microsystems, we have an exclusive sublicense in the field of electro-optic polymers to the rights to seven patents from Arizona Microsystems.

Helix Biopharma/Sensium. We recently entered into a worldwide exclusive license agreement with Sensium Technologies, Inc., a subsidiary of Helix BioPharma. Sensium licensed to us a number of patents and the related technology for use in our NanoCapture^™ Arrays. If we incorporate the Sensium technology into a product, we will pay Sensium a negotiated royalty on all sales of such products.

Institute for Systems Biology. We recently entered into a collaborative agreement with the Institute for Systems Biology (ISB) for the purpose of developing high-throughput diagnostic tools and accelerate the path to market for our ProteomicProcessor^™ and related consumables.

We also have arrangements with various individual consultants who are experts in the field of polymers, including a professor at the University of Colorado at Boulder who has published numerous scholarly articles relating to novel polymer devices and applications of interest in high-speed digital-to-analog conversion and optically controlled phased-array radar. We also have arrangements with a professor at the University of Southern California who specializes in material characterization, device processing, optical device design and device applications, and a professor at the University of California, Los Angeles who consults with us in the areas of device processing, optical device design, high-speed radio frequency design and system-level device applications.

Patents and Other Intellectual Property

We were founded to develop and exploit technologies relating to polymers and related materials. Specifically, our technologies relate to:

As a small company seeking to market and sell novel products in new markets, we believe that a robust technology portfolio is an essential element of our business strategy. Accordingly, we believe that our success will depend in large part on our ability to:

Our intellectual property consists principally of patentable inventions and trade secrets. We have developed some of this intellectual property internally and have also acquired intellectual property from our strategic partners and others. We and our strategic partners protect our intellectual property by filing domestic and foreign patent applications where appropriate and by maintaining an active program designed to preserve the confidentiality of our trade secrets. With respect to inventions and other intellectual property created under our development contracts with the U.S. government and government contractors, we typically have the right to

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retain title to any patents that issue to us in connection with the performance of these contracts, with the government retaining a non-exclusive license to use the patented technology for government purposes. The government typically also retains rights in any technical data that we develop using federal funding and deliver under a development contract. If we do not comply with government notice requirements with respect to inventions developed under these development contracts, the government could demand ownership of the inventions, in which case we would retain a license to use the inventions.

We have 5 issued United States patents and approximately 29 currently pending United States patent applications, 2 of which have received notices of allowance. Our patents and patent applications are directed to polymer and small molecule materials, methods of making materials, processing of materials, processing of devices, device designs and microarray analysis methods. We also have an exclusive sublicense in the field of electro-optic polymers to the rights to seven patents from Arizona Microsystems and have licensed four patent applications covering technology from the University of Washington. In addition, we have 7 international patent applications pending under the Patent Cooperation Treaty. In connection with our transaction with Sensium, we licensed 3 U.S. patents and rights under patents granted under 2 additional U.S. patent applications, each of which has various corresponding international patents.

The discoveries or technologies covered by the patents and patent applications we own or license may not have commercial value. Also, issued patents may not provide commercially meaningful protection against competitors. Other parties may be able to design around our issued patents or independently develop technology having effects similar or identical to our patented technology. In addition, the scope of our patents and patent applications is subject to uncertainty and competitors or other parties may obtain similar patents of uncertain scope. For example, other parties may discover uses for polymers or technology different from the uses covered in our patents or patent applications, and these other uses may be separately patentable. Also, other parties may have patents covering the composition of polymers for which we have patents or patent applications covering only methods of use of these polymers.

Third parties may infringe the patents that we own or license, or claim that our potential products or related technologies infringe their patents. Any patent infringement claims that might be brought by or against us may cause us to incur significant expenses, divert the attention of our management and key personnel from other business concerns and, if successfully asserted against us, require us to pay substantial damages. In addition, a patent infringement suit against us could force us to stop or delay developing, manufacturing or selling potential products that are claimed to infringe a patent covering a third party’s intellectual property.

In addition to our patented intellectual property, we also rely on unpatented technology, trade secrets and confidential information. We require each of our employees and consultants to execute a confidentiality agreement before beginning their employment or consulting relationship with us. These agreements generally provide that the individual must keep confidential and not disclose to other parties any confidential information developed or learned by the individual during the course of his or her relationship with us. Our agreements with employees provide that any intellectual property developed by the employee during the course of his or her employment is automatically assigned to us. Our agreements with consultants generally provide that we have the option to exclusively license all inventions conceived by the consultant in the course of rendering services to us. These agreements with employees and consultants may not provide effective protection of our technology or confidential information or, in the event of unauthorized use or disclosure, may not provide adequate remedies.

As part of our business strategy we collaborate with third parties in our research and development activities. Accordingly, disputes may arise about inventorship and corresponding rights to know-how and inventions resulting from the joint creation or joint use of intellectual property. In addition, these third parties may circumvent any proprietary protection we do have. They may independently develop equivalent technologies or independently gain access to and disclose substantially equivalent information, and confidentiality agreements and material transfer agreements we have entered into with them may not provide us with effective protection.

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Manufacturing

We currently manufacture prototype NanoCapture^™ Arrays in our research facilities. Our in-house facilities are capable of producing sufficient quantities of bio-chips to meet initial commercial development quantities. We will require additional capacity to meet anticipated further demand. We are investigating leasing additional production laboratory space that would accommodate larger bio-chip volumes as well as enable polymer modulator production. We may also expand our facilities to accommodate larger production volumes and research capability.

Sales and Marketing

Lumera is transitioning from a product-focused company to becoming a customer-focused organization. We are aggressively pursuing sales and marketing of our products targeting opinion / market leaders and initial customers. We have identified a number of high profile beta test sites in each of our current target markets, which will serve to validate the instrument and chips, as well as create awareness about Lumera’s technology. We will leverage these expected initial sales with opinion and market leaders to obtain future contracts and sales references. We are partnering with leading U.S. research institutions and opinion leaders such as the Institute of Systems Biology.

We are targeting life science research centers and universities for protein pathway basic discovery and are in discussions with biotech companies and large pharmaceutical companies interested in the mechanisms of molecular biology, protein-protein interactions and networking, cell signaling, aging, death and disease. We plan to reach these potential customers through targeted direct selling, followed by non-exclusive co-marketing partnerships. In addition, we plan to advertise in trade journals, participate in targeted industry trade shows and organizations, engage in focused public relations campaigns, and make scientific presentations at technical conferences.

In addition to our bioscience expertise, we have employees with experience in the marketing of polymer materials and related products. Our marketing professionals are focused on selling our bioscience biochips/instruments, electro-optic devices and smart antenna product offerings. As our potential products advance in development, we expect to increase our marketing and sales resources.

In addition to using our own sales and marketing organization, we may promote our potential products with marketing partners. We may also rely on relationships with companies with established distribution systems and direct sales forces to distribute and sell our potential products.

Competition

The markets that we are targeting for our polymer materials technology are intensely competitive. In the biotechnology disposables market, we expect to compete with Tactical Fabs, Inc., Erie Scientific Company and Corning Incorporated. In the bioscience instrumentation and tools area we expect to compete with BiaCore, Affymetrix, Applera, Agilent and others. In the electro-optic modulators market, we expect to compete with Fujitsu Limited, Sumitomo Osaka Cement Company, Ltd., Avanex, Inc. and JDS Uniphase Corporation. In the wireless antenna and systems market, we expect to compete with Skycross, Inc., Cushcraft Corporation, HyperLink Technologies, Inc. and MAXRAD, Inc.

We believe the principal competitive factors affecting our markets are the:

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Although we believe that we are well positioned to compete adequately with respect to these factors in the future, our future success is currently difficult to predict because we are an early stage company and all of our potential products are still in early stages of development.

Many of our existing and potential competitors have substantially greater research and product development capabilities and financial, scientific, marketing and human resources than we do. As a result, these competitors may:

Government Regulation

We are subject to federal, state and local laws and regulations relating to the generation, handling, treatment, storage and disposal of certain toxic or hazardous materials and waste products that we use or generate in our operations. We regularly assess our compliance with environmental laws and management of environmental matters.

We are also subject to federal procurement regulations associated with our U.S. government contracts. Violations of these regulations can result in civil, criminal or administrative proceedings involving fines, compensatory and punitive damages, restitution and forfeitures as well as suspensions or prohibitions from entering into government contracts. In addition, the reporting and appropriateness of costs and expenses under our government contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an agency of the U.S. Department of Defense. The contracts and subcontracts to which we are a party are also subject to potential profit and cost limitations and standard provisions that allow the U.S. government to terminate such contracts at its convenience. We will be entitled to reimbursement of our allowable costs and to an allowance for earned profit if the contracts are terminated by the U.S. government for convenience.

Sales of our potential products and services internationally may be subject to the policies and approval of the U.S. Department of State and Department of Defense. Any international sales may also be subject to United States and foreign government regulations and procurement policies, including regulations relating to import-export control, investments, exchange controls and repatriation of earnings.

Employees

As of December 31, 2004, we employed 38 full-time and part-time employees. Our team of chemists, materials scientists, electrical engineers, and optical physicists includes 11 Ph.D.s. From time to time, we also use independent contractors. None of our employees is represented by collective bargaining arrangements. To date, we have experienced no work stoppages, and we believe that our relationship with our employees is good.

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Our facilities occupy approximately 16,000 square feet of combined use office and laboratory space at our headquarters facility in Bothell, Washington. We lease these facilities from Microvision pursuant to a sublease that expires in April 2006.

Our facilities contain the following:

In addition, our facilities contain general office space for up to 40 employees. We anticipate that we will sublease additional space until April 2006, at which time we anticipate leasing enough space to accommodate all of our foreseeable office and research lab space we need to meet the requirements of our growth.

The Company is subject to various claims and pending or threatened lawsuits in the normal course of business. The Company is not currently party to any legal proceedings that management believes the adverse outcome of which would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

There were no matters submitted to a vote of shareholders during the fourth quarter of the year ending December 31, 2004.

Executive officers are appointed by our Board of Directors and hold office until their successors are elected and duly qualified. Mr. Mino also serves as director of Lumera. The following persons serve as executive officers of Lumera:

Thomas D. Mino, age 58, has served as Chief Executive Officer, President and a director since September 2001. From November 1999 to September 2001, he served as Vice President and General Manager of the high-speed long-haul business unit of Agere Systems Inc., an optical components supplier. From 1991 to October 1998, Mr. Mino served as President and Chief Executive Officer of Synergy Semiconductor Corp., a specialty high-speed semiconductor manufacturer. Mr. Mino has a B.S.E.E. degree in Electrical Engineering from the University of Pittsburgh.

Robert J. Petcavich, Ph.D., age 50, has served as Senior Vice President Chief Technology Officer since July 2004 and as Chief Technology Officer since October 2003. From July 1992 to December 2002, Dr. Petcavich served as Chairman, Chief Executive Officer and Chief Technology Officer of Planet Polymer Technologies, Inc., an advanced materials company that he founded in 1991. From 1996 to December 2001, Dr. Petcavich served as the Chairman and Chief Executive Officer of Alife Medical Inc., a natural language processing software services provider that he founded in 1996. Dr. Petcavich has a Ph.D. degree in Polymer Science, an M.S. degree in Solid State Science, and a B.S. degree in Chemistry from Pennsylvania State University. Dr. Petcavich currently serves as a director of Planet Polymer Technologies.

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Daniel C. Lykken, age 51, has served as Vice President of Sales and Marketing since April 2004. From February 2003 to February 2004, Mr. Lykken served as Vice President Worldwide Sales of TeleSym Inc., a voice-over-Internet Protocol software company. From February 2002 to February 2003, Mr. Lykken served as a Strategic Account Team Manager of WatchMark Corporation, a service assurance and operational support system software provider. From October 2000 to August 2001, Mr. Lykken served as Director of Sales of Talk2 Technologies, Inc., an enhanced services provider to telecommunication carriers. From November 1999 to October 2000, Mr. Lykken served as Partner and Director of Sales of Meridian Venture Catalyst, LLC, a venture catalyst firm. From June 1999 to November 1999, Mr. Lykken served as Senior Sales Executive of Hitachi Data Systems, a data storage company. Mr. Lykken has a B.S. degree in Economics from Concordia College.

Peter J. Biere, age 48, has served as Chief Financial Officer and Treasurer of Lumera Corporation since August 2004. From September 2003 to August 2004, Mr. Biere acted as Interim CEO and CFO of Entrées, Inc. From February 2002 to August 2003, Mr. Biere provided financial consulting services. From July 1999 to January 2002, Mr. Biere served as Chief Financial Officer of Locate Networks, a location-based wireless service provider. From May 1993 to July 1999, Mr. Biere served as Senior Vice President and Chief Financial Officer of Zones, Inc., where he helped lead that company’s initial public offering. Mr. Biere has a B.A. in Accounting and an M.A. in Accounting from the University of Iowa.

PART II

The Company’s Common Stock trades on the NASDAQ National Market under the symbol “LMRA.” As of March 1, 2005, there were 2,850 holders of record of 16,571,930 shares of Common Stock outstanding. The Company has never declared or paid cash dividends on the Common Stock. As of March 1, 2005, the closing price of our Common Stock on the NASDAQ National Market was $4.89. The Company currently anticipates that it will retain any future earnings to fund the operation of its business and does not anticipate paying dividends on the Common Stock in the foreseeable future.

The Company’s Common Stock began trading publicly on July 26, 2004. The quarterly high and low sales prices of the Company’s common stock as reported by the NASDAQ National Market are as follows:

The information under the heading “Equity Compensation Plan Information” in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held June 2, 2005, to be filed with the SEC, is incorporated into Item 12 of this report by reference.

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Selected financial data presented below has been derived from and should be read in conjunction with our audited consolidated financial statements and the notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this report. A summary of selected annual financial data from Inception (January 7, 2000) through December 31 of each year-end is presented below: