As
filed with the Securities and Exchange Commission on May 16,
2008
Registration
No. 333-149919
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
AMENDMENT
NO. 1
TO
FORM
S-3
REGISTRATION
STATEMENT
Under
the
Securities
Act of 1933
LUMERA
CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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91-2011728
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(State
or other jurisdiction
of
incorporation or organization)
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(I.R.S.
Employer
Identification
Number)
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19910
North Creek Parkway
Bothell,
Washington 98011
(425)
415-6900
(Address,
including zip code, and telephone number, including area code, of registrant's
principal executive offices)
Joseph
Vallner
Interim
Chief Executive Officer
Lumera
Corporation
19910
North Creek Parkway
Bothell,
Washington 98011
(425)
415-6900
(Name,
address, including zip code, and telephone number, including area code, of
agent
for service)
Copies
of all communications, including communications sent to agent for service,
should be sent to:
Christopher
J. Austin, Esq.
Ropes
& Gray LLP
One
International Place
Boston,
Massachusetts 02110
Phone:
(617) 951-7000
Fax:
(617) 951-7050
Approximate
date of commencement of proposed sale to the public:
From
time
to time after the effectiveness of the Registration Statement.
If
the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box:
o
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box:
x
If
this
Form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
__________________________
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. _____________________
If
this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
o
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box.
o
Indicate
by a check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act (Check one):
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Large
accelerated filer
o
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Accelerated
filer
x
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Non-
accelerated filer
o
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Smaller
reporting company
o
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The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer
to sell nor does it seek an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
Subject
to Completion, dated May16, 2008
PRELIMINARY
PROSPECTUS
4,000,000
Shares
Lumera
Corporation
Common
Stock
This
prospectus relates to the resale of up to 4,000,000 shares of our common stock
that we may issue to the selling stockholder listed in the section beginning
on
page 20 of this prospectus. The shares of common stock offered under this
prospectus by the selling stockholder are issuable to Kingsbridge Capital
Limited (“Kingsbridge”) pursuant to a common stock purchase agreement between
Kingsbridge and ourselves dated February 21, 2008 and a warrant we issued to
Kingsbridge on that date. We are not selling any securities under this
prospectus and will not receive any of the proceeds from the sale of shares
by
the selling stockholder. Kingsbridge is an “underwriter” within the meaning of
the Securities Act. To the extent the warrant held by the selling stockholder
is
exercised at its current exercise price, we would receive approximately $540,000
in cash proceeds, unless such warrant is exercised on a cashless basis pursuant
to its terms.
The
selling stockholder may sell the shares of common stock described in this
prospectus in a number of different ways and at varying prices. We provide
more
information about how the selling stockholder may sell its shares of common
stock in the section titled “Plan of Distribution” on page 21. We will not be
paying any underwriting discounts or commissions in this offering. We will
pay
the expenses incurred in registering the shares, including legal and accounting
fees.
Our
common stock is quoted on The NASDAQ Global Market under the symbol “LMRA.” The
last reported sale price for our common stock on May 14, 2008 was $1.42 per
share. As of May 5, 2008, we had 20,088,352 shares of common stock outstanding,
excluding shares being sold in this offering, of which 20,027,192 shares
were held by non-affiliates. Consequently, the aggregate market value of our
outstanding common stock held by non-affiliates as of May 5, 2008 was
$28,438,613. We did not sell any shares of common stock nor, to our knowledge,
have any shares been sold on our behalf, during the twelve months immediately
prior to the date of this prospectus. The aggregate market value of the shares
of our common stock offered under this prospectus is $5,680,000, which is less
than one third of the aggregate market value of the shares of our common stock
held by non-affiliates.
Investment
in our common stock involves a high degree of risk. See “Risk Factors” beginning
on page 7 of this prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is May __, 2008.
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Page
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Prospectus
Summary
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3
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Risk
Factors
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7
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Disclosure
Regarding Forward-Looking Statements
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19
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Use
of Proceeds
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19
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Selling
Stockholder
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20
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Plan
of Distribution
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21
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Legal
Matters
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22
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Experts
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23
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Where
You Can Find More Information
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23
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Incorporation
of Certain Documents by Reference
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23
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EXHIBIT
5.1
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EXHIBIT
23.1
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INFORMATION
CONTAINED IN THIS PROSPECTUS
You
should rely only on the information contained or incorporated by reference
in
this prospectus. We have not, and the selling stockholder has not, authorized
anyone to provide you with additional or different information. These securities
are not being offered in any jurisdiction where the offer is not permitted.
You
should assume that the information in this prospectus is accurate only as of
the
date on the front of this document and that any information we have incorporated
by reference is accurate only as of the date of the document incorporated by
reference, regardless of the time of delivery of this prospectus or of any
sale
of our common stock. Unless the context otherwise requires, references to
“Lumera,” “we,” “us,” “our” or the “company” in this prospectus mean Lumera
Corporation.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
We
have
made forward-looking statements in this prospectus and in documents that we
incorporate by reference into this prospectus. We base these forward-looking
statements on our expectations, assumptions, estimates and projections about
our
business and the industry in which we operate as of the date of this prospectus.
These forward-looking statements are subject to a number of risks and
uncertainties that cannot be predicted, quantified or controlled and that could
cause actual results to differ materially from those set forth in, contemplated
by, or underlying the forward-looking statements. Statements in this prospectus,
and in documents incorporated into this prospectus, including those set forth
below in “Risk Factors,” describe factors, among others, that could contribute
to or cause these differences. In light of these risks and uncertainties, there
can be no assurance that the forward-looking statements contained in this
prospectus will in fact transpire or prove to be accurate. We undertake no
duty
to update any of these forward-looking statements.
The
following summary highlights information contained in this prospectus or
incorporated by reference. You should, however, read this entire prospectus
carefully, including the risks of investing discussed under “Risk Factors”
beginning on page 7, and the information to which we refer you and the
information incorporated into this prospectus by reference, for a complete
understanding of our business and this offering. References in this prospectus
to “our company,” “we,” “our,” “Lumera” and “us” refer to Lumera Corporation.
References to the “selling stockholder” refer to the stockholder listed herein
under the heading “Selling Stockholder” on page 20, who may sell shares from
time to time as described in this prospectus.
Lumera
Corporation
We
were
established in 2000 to develop proprietary polymer materials and products based
on these materials. We are currently developing products for the electro-optics
market. We design and synthesize polymer materials at the molecular level.
Our
goal is to optimize the electrical, optical and surface properties of these
materials. We use these materials to improve the design, performance and
functionality of products for use in optical communications devices 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.
From
our
inception through December 31, 2003, we were considered to be in the
development stage concentrating primarily on the development of our technology
and potential products. Products for wireless networking and biochip
applications became available for customer evaluation in early 2004; therefore,
we were considered to have exited the development stage in 2004. To date,
substantially all of our revenues have come from contracts to develop
custom-made electro-optic materials and devices for government agencies. As
we
transition to a product-based company, we expect to record both revenue and
expense from product sales, and to incur increased costs for sales and marketing
and to increase general and administrative expense. Accordingly, the financial
condition and results of operations reflected in our historical financial
statements are not expected to be indicative of our future financial condition
and results of operations.
On
March
27, 2008, we signed a merger agreement with GigOptix, LLC (“GigOptix”). The
proposed merger is described in our Current Report on Form 8-K, filed on April,
1, 2008 and the definitive agreements that are exhibits to that filing. We
will
file a Registration Statement on Form S-4 which will include more information
with respect to the merger, including historical financial information with
respect to GigOptix. We are currently in the process of preparing that
Registration Statement.
Effective
July 1, 2007, we contributed substantially all of the assets of our bioscience
segment to a newly formed wholly-owned subsidiary, Plexera Bioscience LLC
(“Plexera”). Plexera was formed to further clarify the purpose, business
and funding requirements and market opportunities for both Lumera and Plexera.
In the first quarter of 2008, we elected to exit our bioscience business due
primarily to its continued losses and inability to raise additional capital
to
fund such business. In the first quarter of 2008, we completed the terminations
of the workforce employed by and ceased operations of Plexera.
Lumera
was founded in 2000 as a Washington corporation and reincorporated in 2004
as a
Delaware corporation. Our principal executive office is located at 19910 North
Creek Parkway, Suite 100, Bothell Washington 98011, and our telephone number
is
(425) 415-6900. Our website address is
www.lumera.com
. The
information found on our website is not, however, a part of this
prospectus.
In
this
prospectus, references to the “company,” “Lumera,” “we,” “us” and “our” are to
Lumera Corporation, a Delaware corporation, unless the context requires
otherwise.
"LUMERA"
is our registered trademark, and we have pending trademark applications for
“PROTEOMICPROCESSOR,” “ACTIVECORE GUIDE” and “NANOCAPTURE”. This prospectus also
includes trademarks, trade names and service marks of other companies. Use
or
display by us of other parties’ trademarks, trade names or service marks is not
intended to and does not imply a relationship with, or endorsement or
sponsorship of us by, these other parties.
Equity
Financing Facility With Kingsbridge Capital
On
February 21, 2008, we entered into a Committed Equity Financing Facility
(“CEFF”) with Kingsbridge, pursuant to which Kingsbridge committed to purchase,
subject to certain conditions, up to 10 million shares or $25 million of
our common stock, whichever is less. In connection with the CEFF, we entered
into a common stock purchase agreement and registration rights agreement with
Kingsbridge, both dated February 21, 2008, and on that date we also issued
a
warrant to Kingsbridge to purchase 180,000 shares of our common stock at an
exercise price of $3.00 per share. This warrant is exercisable beginning six
months after February 21, 2008 and for a period of five years
thereafter.
The
common stock purchase agreement entitles us to sell and obligates Kingsbridge
to
purchase, from time to time over a period of three years, shares of our common
stock for cash consideration up to an aggregate of $25 million, subject to
certain conditions and restrictions. The shares of common stock that may be
issued to Kingsbridge under the common stock purchase agreement and the warrant
will be issued pursuant to an exemption from registration under the Securities
Act of 1933, as amended. Pursuant to the registration rights agreement, we
have
filed a registration statement of which this prospectus is a part, covering
the
possible resale by Kingsbridge of any shares that we may issue to Kingsbridge
under the common stock purchase agreement or upon exercise of the warrant.
Through this prospectus, the selling stockholder may offer to the public for
resale shares of our common stock that we may issue to Kingsbridge pursuant
to
the common stock purchase agreement or that Kingsbridge may acquire upon
exercise of the warrant.
For
a
period of 36 months from the first trading day following the effectiveness
of this prospectus, we may, from time to time, at our discretion and subject
to
certain conditions that we must satisfy, draw down funds under the CEFF by
selling shares of our common stock to Kingsbridge. The purchase price of these
shares will be at a discount of up to 12 percent from the volume weighted
average of the price of our common stock for each of the eight trading days
following our election to sell shares, or “draw down,” under the CEFF. The
discount on each of these eight trading days will be determined as
follows:
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VWAP*
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Percent of VWAP
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(Applicable Discount)
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Greater
than $10.00 per share
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94
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%
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(6
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%)
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Less
than or equal to $10.00 per share but greater than $6.00 per
share
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92
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%
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(8
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%)
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Less
than or equal to $6.00 per share but greater than $2.00 per
share
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90
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%
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(10
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%)
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Less
than or equal to $2.00 per share but greater than or equal to $1.25
per
share
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88
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%
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(12
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%)
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*
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As
set forth in the common stock purchase agreement, “VWAP” means the volume
weighted average price (the aggregate sales price of all trades of
our
common stock during each trading day divided by the total number
of shares
of common stock traded during that trading day) of our common stock
during
any trading day as reported by Bloomberg, L.P. using the AQR function.
The
VWAP and corresponding discount will be determined for each of the
eight
trading days during a draw down pricing
period.
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During
the eight trading day pricing period for a draw down, if the VWAP for any one
trading day is less than the greater of (i) $1.25 or (ii) 90 percent
of the closing price of our common stock for the trading day immediately
preceding the beginning of the draw down period, the VWAP from that trading
day
will not be used in calculating the number of shares to be issued in connection
with that draw down, and the draw down amount for that pricing period will
be
reduced by one-eighth of the draw down amount we had initially specified. In
addition, if trading in our common stock is suspended for any reason for more
than three consecutive or non-consecutive hours during any trading day during
a
draw down pricing period, that trading day will not be used in calculating
the
number of shares to be issued in connection with that draw down, and the draw
down amount for that pricing period will be reduced by one eighth of the draw
down amount we had initially specified.
The
maximum number of shares of common stock that we can issue pursuant to the
CEFF
is 10 million shares. An additional 180,000 shares of common stock are issuable
if Kingsbridge exercises the warrant that we issued to it in connection with
its
entry into the CEFF. We intend to exercise our right to draw down amounts under
the CEFF, if and to the extent available, at such times as we have a need for
additional capital and when we believe that sales of stock under the CEFF
provide an appropriate means of raising capital. We may exercise our right
to
draw down shortly after the effectiveness of the registration statement of
which
this prospectus is a part.
Our
ability to require Kingsbridge to purchase our common stock is subject to
various limitations. We can make draw downs of a maximum amount of, at our
discretion, either (i) 2.0 percent of our market capitalization at the time
of the draw down, or (ii) the lesser of (A) 3.0 percent of our market
capitalization at the time of the draw down and (B) the alternative draw down
amount calculated pursuant to the common stock purchase agreement. Neither
(i)
nor (ii) may exceed a $10 million limit. Unless Kingsbridge agrees
otherwise, a minimum of three trading days must elapse between the expiration
of
any draw down pricing period and the beginning of the next draw down pricing
period. Kingsbridge is not obligated to purchase shares at prices below $1.25
per share.
During
the term of the CEFF, without Kingsbridge’s prior written consent, we may not
issue securities that are, or may become, convertible or exchangeable into
shares of common stock where the purchase, conversion or exchange price for
that
common stock is determined using a floating discount or other post-issuance
adjustable discount to the market price of the common stock, including pursuant
to an equity line or other financing that is substantially similar to the
arrangement provided for in the CEFF, but excluding a Rule 144 offering to
qualified institutional buyers that contain price adjustments.
The
issuance of our common stock under the CEFF or upon exercise of the Kingsbridge
warrant will have no effect on the rights or privileges of existing holders
of
common stock, except that the economic and voting interests of each stockholder
will be diluted as a result of the issuance. Although the number of shares
of
common stock that existing stockholders currently own will not decrease, these
shares will represent a smaller percentage of our total shares that will be
outstanding after any issuances of shares of common stock to Kingsbridge. If
we
draw down amounts under the CEFF when our share price is decreasing, we will
need to issue more shares to raise the same amount than if our stock price
were
higher. Such issuances will have a dilutive effect and may further decrease
our
stock price.
Kingsbridge
agreed in the common stock purchase agreement that during the term of the CEFF,
neither Kingsbridge nor any of its affiliates, nor any entity managed or
controlled by it, will enter into any short sale of any shares of our common
stock, as defined in Regulation SHO promulgated under the Securities
Exchange Act of 1934, as amended.
Before
Kingsbridge is obligated to buy any shares of our common stock pursuant to
a
draw down, the following conditions, none of which is in Kingsbridge’s control,
must be met:
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·
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Each
of our representations and warranties in the common stock purchase
agreement must be true and correct in all material respects as of
the date
when made and as of the draw down exercise date as though made at
that
time, except for representations and warranties that are expressly
made as
of a particular date.
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·
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We
must have performed, satisfied and complied in all material respects
with
all covenants, agreements and conditions required by the common stock
purchase agreement, the registration rights agreement and the warrant
to
be performed, satisfied or complied with by
us.
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·
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We
must have complied in all material respects with all applicable federal,
state and local governmental laws, rules, regulations and ordinances
in
connection with the execution, delivery and performance of the common
stock purchase agreement and the consummation of the transactions
it
contemplates.
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·
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The
registration statement, which includes this prospectus, must have
previously become effective and shall remain
effective.
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·
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We
must not have knowledge of any event that could reasonably be expected
to
have the effect of causing the registration statement, of which this
prospectus is a part, to be suspended or otherwise
ineffective.
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·
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Trading
in our common stock must not have been suspended by the Securities
and
Exchange Commission, the NASDAQ Global Market or the Financial Industry
Regulatory Authority, formerly National Association of Securities
Dealers,
and trading in securities generally on the NASDAQ Global Market must
not
have been suspended or limited.
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·
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No
statute, rule, regulation, executive order, decree, ruling or injunction
can have been enacted, entered, promulgated or endorsed by any court
or
governmental authority which prohibits the consummation of any of
the
transactions contemplated by the common stock purchase
agreement.
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·
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No
action, suit or proceeding before any arbitrator or any governmental
authority can have been commenced, and no investigation by any
governmental authority can have been, to our knowledge, threatened,
against us or any of our officers, directors or affiliates seeking
to
enjoin, prevent or change the transactions contemplated by the common
stock purchase agreement.
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·
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We
must have sufficient shares of common stock, calculated using the
closing
trade price of the common stock as of the trading day immediately
preceding a draw down, registered under the registration statement
to
issue and sell such shares in accordance with such draw
down.
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·
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The
warrant to purchase 180,000 shares of our common stock must have
been duly
executed, delivered and issued to Kingsbridge, and we must not be
in
default in any material respect under the
warrant.
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·
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Kingsbridge
must receive an opinion of our legal counsel in the form previously
agreed
to.
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·
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We
are current on all undisputed expense invoices that we are required
to pay
pursuant to the common stock purchase
agreement.
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There
is
no guarantee that we will be able to meet the foregoing conditions or any other
conditions under the common stock purchase agreement or that we will be able
to
draw down any portion of the amounts available under the CEFF.
We
have
entered into a registration rights agreement with Kingsbridge. Pursuant to
the
registration rights agreement, we have filed with the SEC the registration
statement that includes this prospectus relating to the selling stockholder’s
resale of any shares of common stock purchased by Kingsbridge under the common
stock purchase agreement or issued to Kingsbridge as a result of the exercise
of
the Kingsbridge warrant. The effectiveness of this registration statement is
a
condition precedent to our ability to sell common stock to Kingsbridge under
the
common stock purchase agreement. We are entitled in certain circumstances,
including the existence of certain kinds of nonpublic information, to deliver
a
blackout notice to Kingsbridge to suspend the use of this prospectus and
prohibit the selling stockholder from selling shares under this prospectus.
If
we deliver a blackout notice in the 15 trading days following the settlement
of
a draw down, or if the registration statement of which this prospectus is a
part
is not effective in circumstances not permitted by the registration rights
agreement, then we must pay Kingsbridge, or issue Kingsbridge additional shares
in lieu of payment, calculated by means of a varying percentage of an amount
based on the number of shares held by Kingsbridge that were purchased pursuant
to the draw down and the change in the market price of our common stock between
the date the blackout notice is delivered (or the registration statement is
not
effective) and the date the registration statement again becomes
effective.
The
foregoing summary of the CEFF does not purport to be complete and is qualified
by reference to the common stock purchase agreement, the registration rights
agreement and the warrant, copies of which have been filed as exhibits to the
registration statement of which this prospectus is a part.
Investing
in our common stock involves a high degree of risk. You should consider
carefully the risk factors described below, and all other information contained
in or incorporated by reference in this prospectus, before deciding to invest
in
our common stock. If any of the following risks actually occur, they may
materially harm our business, financial condition, operating results or cash
flow. As a result, the market price of our common stock could decline, and
you
could lose all or part of your investment. Additional risks and uncertainties
that are not yet identified or that we think are immaterial may also materially
harm our business, operating results or financial condition and could result
in
a complete loss of your investment.
Risks
Related To Our Business
We
have incurred substantial operating losses since our inception and will continue
to incur substantial operating losses for the foreseeable
future.
Since
our
inception, we have been engaged primarily in the research and development of
our
polymer materials technologies and potential products. As a result of these
activities, we incurred net losses of $60.8 million from inception through
December 31, 2006 and an additional net loss of $16 million for the twelve
months ended December 31, 2007. We anticipate that we will continue to incur
operating losses through at least 2009. As of December 31, 2007, we had an
accumulated deficit of $76.8 million.
We
may
not be able to generate significant additional revenue either through
development contracts from the U.S. government or government subcontractors
or
through customer contracts for our potential products or technologies. We expect
to continue to make significant operating and capital expenditures for research
and development and to improve and expand production, sales, marketing and
administrative systems and processes. As a result, we will need to generate
significant additional revenue to achieve profitability.
We
may require additional capital to continue to fund our operations. If we do
not
obtain additional capital, we may be required to substantially limit our
operations.
Our
business does not presently generate the cash needed to finance our current
and
anticipated operations. Based on our current operating plan and budgeted cash
requirements, we believe that we will be able to fund our operations into the
second quarter of 2009. We may need to seek additional funding through public
or
private financings, including equity financings, and through other arrangements,
including collaborations. We may also pursue opportunistic acquisitions,
restructurings or dispositions for one or both of our business units which
may
require different financing arrangements. Poor financial results, unanticipated
expenses or unanticipated opportunities could require additional financing
sooner than we expect. Such financing may be unavailable when we need it or
may
not be available on acceptable terms. If we raise additional funds by issuing
equity or convertible debt securities, the percentage ownership of our existing
stockholders may be reduced, and these securities may have rights superior
to
those of our common stock. If adequate funds are not available to satisfy either
short-term or long-term capital requirements, or if planned revenues are not
generated, we may be required to limit our operations substantially. These
limitations of operations may include a possible sale or shutdown of portions
of
our business, reductions in capital expenditures and reductions in staff and
discretionary costs.
We
are subject to the risks frequently experienced by early stage
companies.
The
likelihood of our success must be considered in light of the risks frequently
encountered by early stage companies, especially those formed to develop and
market new technologies. These risks include our potential inability
to:
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·
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establish
product sales and marketing
capabilities;
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establish
and maintain markets for our potential
products;
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identify,
attract, retain and motivate qualified
personnel;
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continue
to develop and upgrade our technologies to keep pace with changes
in
technology and the growth of markets using polymer
materials;
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develop
expanded production facilities and outside contractor
relationships;
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maintain
our reputation and build trust with
customers;
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improve
existing and implement new transaction-processing, operational and
financial systems;
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scale
up from production of small pilot or prototype quantities to large
quantities of product on a consistent
basis;
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contract
for or develop the internal skills needed to master large volume
production of our products; and
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fund
the capital expenditures required to develop volume production due
to the
limits of our available financial
resources.
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We
are entering new markets, and if we fail to accurately predict growth in these
markets, we may suffer substantial losses.
We
are
devoting significant resources to the development of products and the support
of
marketing and sales efforts in new markets. We expect to continue to seek to
identify and develop products for new markets. New markets change rapidly and
we
cannot assure you that they will grow or that we will be able to accurately
forecast market demand, or lack thereof, in time to respond appropriately.
Our
investment of resources to develop products for these markets may either be
insufficient to meet actual demand or result in expenses that are excessive
in
light of actual sales volumes. Failure to predict growth and demand accurately
in new markets may cause us to suffer substantial losses. In addition, as we
enter new markets, there is a significant risk that:
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the
market may not accept the price and/or performance of our
products;
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there
may be issued patents of which we are not aware that could block
our entry
into the market or result in litigation;
and
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the
time required for us to achieve market acceptance of our products
may
exceed our capital resources, which would require additional
investment.
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The
establishment and maintenance of original equipment manufacturer and other
collaborative relationships is critical to the success of our
business.
We
expect
to sell many of our products directly to research laboratories and commercial
customers or through potential industry partners. Our ability to generate
revenues depends significantly on the extent to which potential customers and
other potential industry partners develop, promote and sell systems that
incorporate our products. Any failure by potential customers and other potential
industry partners to successfully develop and market systems that incorporate
our products could adversely affect our sales. The extent to which potential
customers and other industry partners develop, promote and sell systems
incorporating our products is based on a number of factors that are largely
beyond our ability to control.
Our
future growth will suffer if we do not achieve sufficient market acceptance
of
our products.
We
are
developing enhanced polymer-based products. We do not know when a market for
these products will develop, if at all. Our success depends, in part, upon
our
ability to gain market acceptance of our products. To be accepted, our products
must meet the technical and performance requirements of our potential customers.
The optical communications industry is currently fragmented with many
competitors developing different technologies. We expect that only a few of
these technologies will ultimately gain market acceptance. Products based on
polymer materials may not be accepted by OEMs and systems integrators of optical
communications networks. In addition, even if we achieve some degree of market
acceptance for our potential products in one industry, we may not achieve market
acceptance in other industries for which we are developing products. If the
markets we are targeting fail to accept polymer-based products or determine
that
other products are superior, we may not be able to achieve market acceptance
of
our products.
All
of
our current products are either in the development stage or are being tested
by
potential customers. We cannot be assured that these customer tests will be
successful or that they will result in actual material sales of our
products.
Achieving
market acceptance for our products will require marketing efforts and the
expenditure of financial and other resources to create product awareness and
demand by customers. We may be unable to offer products that compete effectively
due to our limited resources and operating history. Also, certain large
corporations may be predisposed against doing business with a company of our
limited size and operating history. Failure to achieve broad acceptance of
our
products by customers and to compete effectively would harm our operating
results.
Successful
commercialization of our current and future products will require us to maintain
a high level of technical expertise.
Technology
in our target markets is undergoing rapid change. To succeed in our target
markets, we will have to establish and maintain a leadership position in the
technology supporting those markets. Accordingly, our success will depend on
our
ability to:
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accurately
predict the needs of our target customers and develop, in a timely
manner,
the technology required to support those
needs;
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provide
products that are not only technologically sophisticated but are
also
available at prices acceptable to customers and competitive with
comparable products;
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establish
and effectively protect our intellectual property;
and
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enter
into relationships with companies that have developed complementary
technology into which our products may be
integrated.
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We
cannot
assure you that we will be able to achieve any of these objectives.
Many
of our potential products will have long sales cycles, which may cause us to
expend resources without an acceptable financial return and which makes it
difficult to plan our expenses and forecast our
revenues.
Many
of
our products will have long sales cycles that involve numerous steps, including
initial customer contacts, specification writing, engineering design, prototype
fabrication, pilot testing, possible regulatory approvals, sales and marketing
and commercial manufacture. During this time, we may expend substantial
financial resources and management time and effort without any assurance that
product sales will result. The anticipated long sales cycle for some of our
products makes it difficult to predict the quarter in which sales may occur.
Delays in sales may cause us to expend resources without an acceptable financial
return and make it difficult to plan expenses and forecast
revenues.
We
currently derive substantially all of our revenue from a small number of
development contracts with the U.S. Department of Defense and government
contractors. The termination or non-renewal of one or more of these contracts
could significantly reduce our revenue.
In
2007,
2006, and 2005, 95%, 94%, and 95%, respectively, of our revenue was derived
from
performance on a limited number of development contracts with various agencies
within the U.S. Department of Defense. Any significant disruption or
deterioration of our relationships with the Department of Defense could
significantly reduce our revenues. Our government programs must compete with
programs managed by other contractors for limited amounts and uncertain levels
of funding. The total amount and levels of funding are susceptible to
significant fluctuations on a year-to-year basis. Our competitors frequently
engage in efforts to expand their business relationships with the government
and
are likely to continue these efforts in the future. In addition, our development
contracts with government agencies are subject to potential profit and cost
limitations and standard provisions that allow the U.S. government to terminate
such contracts at any time at its convenience. Termination of our development
contracts, a shift in government spending to other programs in which we are
not
involved, or a reduction in government spending generally or defense spending
specifically could severely harm our business. We intend to continue to compete
for government contracts and we expect such contracts will be a significant
percentage of our revenue for the foreseeable future.
Our
development contracts with various agencies within the U.S. Department of
Defense require ongoing compliance with applicable federal procurement
regulations. 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 such development contracts. Also, the reporting and
appropriateness of costs and expenses under these development contracts are
subject to extensive regulation and audit by the Defense Contract Audit Agency,
an agency of the U.S. Department of Defense. Any failure to comply with
applicable government regulations could jeopardize our development contracts
and
otherwise harm our business.
Some
of our products in development are directed at the telecommunications and
networking markets, which continue to be subject to overcapacity and slow growth
or decline.
We
intend
over the next several years to derive a substantial portion of our revenues
from
the sale of electro-optic devices to the telecommunications and networking
markets. We have not yet made material commercial sales of these products,
and
developments that adversely affect the telecommunications or networking markets,
including delays in traffic growth and changes in U.S. government regulation,
could halt our efforts to generate revenue or cause revenue growth to be slower
than anticipated from sales of electro-optic modulators and related products.
Reduced spending and technology investment by telecommunications companies
may
make it more difficult for our products to gain market acceptance. Such
companies may be less willing to purchase new technology such as ours or invest
in new technology development when they have reduced capital expenditure
budgets.
Our
quarter-to-quarter performance may vary substantially, and this variance, as
well as general market conditions, may cause our stock price to fluctuate
greatly and potentially expose us to litigation.
Substantially
all of our revenues to date have been generated from a limited number of
development contracts with the U.S. government and government contractors.
Our
revenues have varied significantly based on when government contracts commence
or end and whether they receive funding appropriations. Because we intend to
expand into commercial sales of products, we are unable to accurately estimate
future quarterly revenue and operating expenses based on historical performance.
Our quarterly operating results may vary significantly based on many factors,
including:
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reductions
or delays in funding of development programs involving new polymer
materials technologies by the U.S.
government;
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delays
in our introduction and sale of our potential
products;
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additions
of new customers;
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fluctuating
demand for our potential products and
technologies;
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announcements
or implementation by our competitors of technological innovations
or new
products;
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the
status of particular development programs and the timing of performance
under specific development
agreements;
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timing
and amounts relating to the expansion of our operations;
and
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costs
related to possible future acquisitions of technologies or
businesses.
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Our
current and future expense estimates are based, in large part, on estimates
of
future revenue, which is difficult to predict. We expect to continue to make
significant operating and capital expenditures in the area of research and
development and to invest in and expand production, sales, marketing and
administrative systems and processes. We may be unable to, or may elect not
to,
adjust spending quickly enough to offset any unexpected revenue shortfall.
If
our increased expenses are not accompanied by increased revenue in the same
quarter, our quarterly operating results would be harmed.
In
one or
more future quarters, our results of operations may fall below the expectations
of investors and the trading price of our common stock may decline as a
consequence. We believe that quarter-to-quarter comparisons of our operating
results will not be a good indication of our future performance and should
not
be relied upon to predict the future performance of our stock price. In the
past, companies that have experienced volatility in the market price of their
stock have often been subject to securities class action litigation. We may
be
the target of this type of litigation in the future. Securities litigation
against us could result in substantial costs and divert our management’s
attention from other business concerns, which could seriously harm our
business.
We
cannot predict the pace of marketable products we may generate, and any
inability to generate a sufficient number of marketable products would reduce
our anticipated future revenues and harm our
business.
Our
future revenues and profitability are dependent upon our ability to create
marketable products, whether through our own research and development efforts
or
through collaborations with customers or industry partners. Because of the
inherently uncertain nature of research and development activities, we cannot
predict the pace of new product introductions. We must undertake additional
research and development before we are able to develop additional products
for
commercial sale. Product development delays by us or potential product
development partners, or the inability to enter into relationships with these
potential partners, may delay or prevent us from introducing products for
commercial sale. In addition, our product candidates may not result in products
having the commercial potential we anticipate. Any of these factors could reduce
our potential commercial sales and lead to inability to generate revenue and
attain profitability.
The
failure to compete successfully could harm our
business.
We
expect
to face competitive pressures from a variety of companies in each of our target
markets. Some of our present and potential competitors have or may have
substantially greater research and product development capabilities, financial,
scientific, marketing, manufacturing and human resources, name recognition
and
experience than we have. As a result, these competitors may:
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succeed
in developing products that are equal to or superior to our potential
products or that will achieve greater market acceptance than our
potential
products;
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devote
greater resources to developing, marketing or selling their
products;
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respond
more quickly to new or emerging technologies or scientific advances
and
changes in customer requirements, which could render our technologies
or
potential products obsolete;
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introduce
products that make the continued development of our potential products
uneconomical;
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obtain
patents that block or otherwise inhibit our ability to develop and
commercialize our potential
products;
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withstand
price competition more successfully than we
can;
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establish
cooperative relationships among themselves or with third parties
that
enhance their ability to address the needs of our prospective customers;
and
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take
advantage of acquisitions or other opportunities more readily than
we
can.
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The
failure to compete successfully against existing or future competitors could
harm our business.
We
may be unable to obtain effective intellectual property protection for our
potential products and technology.
Our
intellectual property, or any intellectual property that we may acquire, license
or develop in the future, may not provide meaningful competitive advantages.
Our
patents and patent applications, including those we license, may be challenged
by competitors, and the rights granted under such patents or patent applications
may not provide meaningful proprietary protection. For example, we are aware
of
numerous patents held by third parties that relate to polymer materials and
electro-optic devices. These patents could be used as a basis to challenge
the
validity or limit the scope of our patents or patent applications. A successful
challenge to the validity or limitation of the scope of our patents or patent
applications could limit our ability to commercialize our polymer materials
technology and, consequently, reduce our revenues.
Moreover,
competitors may infringe our patents or those that we license, or successfully
avoid these patents through design innovation. To combat infringement or
unauthorized use, we may need to resort to litigation, which can be expensive
and time-consuming and may not succeed in protecting our proprietary rights.
In
addition, in an infringement proceeding, a court may decide that our patents
or
other intellectual property rights are not valid or are unenforceable, or that
the other party's use does not infringe our rights. Policing unauthorized use
of
our intellectual property is difficult and expensive, and we may not be able
to,
or have the resources to, prevent misappropriation of our proprietary rights,
particularly in countries where the laws may not protect these rights as fully
as the laws of the United States.
We
also
rely on the law of trade secrets to protect unpatented technology and know-how.
We try to protect this technology and know-how by limiting access to those
employees, contractors and strategic partners with a need to know this
information and by entering into confidentiality agreements with these parties.
Any of these parties could breach the agreements and disclose our trade secrets
or confidential information to our competitors, or these competitors might
learn
of the information in other ways. Disclosure of any trade secret not protected
by a patent could materially harm our business.
We
may be subject to patent infringement claims, which could result in substantial
costs and liability and prevent us from commercializing our potential
products.
Third
parties may claim that our potential products or related technologies infringe
their patents. Any patent infringement claims brought 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, as a result of a patent
infringement suit, we may be forced to stop or delay developing, manufacturing
or selling potential products that are claimed to infringe a patent covering
a
third party’s intellectual property unless that party grants us rights to use
its intellectual property. We may be unable to obtain these rights on terms
acceptable to us, if at all. Even if we are able to obtain rights to a third
party’s patented intellectual property, these rights may be non-exclusive, and
therefore our competitors may obtain access to the same intellectual property.
Ultimately, we may be unable to commercialize our potential products or may
have
to cease some of our business operations as a result of patent infringement
claims, which could severely harm our business.
If
our
potential products infringe the intellectual property rights of others, we
may
be required to indemnify customers for any damages they suffer. Third parties
may assert infringement claims against our current or potential customers.
These
claims may require us to initiate or defend protracted and costly litigation
on
behalf of customers, regardless of the merits of these claims. If any of these
claims succeed, we may be forced to pay damages on behalf of these customers
or
may be required to obtain licenses for the products they use. If we cannot
obtain all necessary licenses on commercially reasonable terms, we may be unable
to continue selling such products.
The
technology we license from various third parties may be subject to government
rights and retained rights of the originating research
institution.
We
license technology from the University of Washington and various other research
institutions or companies. Many of our partners and licensors have obligations
to government agencies or universities. Under their agreements, a government
agency or university may be entitled to certain rights over the technology
that
we have developed and licensed, including the right to require that a compulsory
license be granted to one or more third parties selected by the government
agency.
In
addition, our partners often retain certain rights under their licensing
agreement with us, including the right to use the technology for noncommercial
academic and research use, to publish general scientific findings from research
related to the technology, and to make customary scientific and scholarly
disclosures of information relating to the technology. It is difficult to
monitor whether our partners limit their use of the technology to these uses,
and we could incur substantial expenses to enforce our rights to our licensed
technology in the event of misuse.
A
delay or failure to hire and retain a permanent chief executive officer, the
loss of our key management personnel, or any inability to attract and retain
additional personnel, could impair our ability to maintain or expand our
business.
We
currently do not have a permanent chief executive officer (“CEO”). Joseph
Vallner is currently serving as our Interim CEO, while we work to complete
our
merger with GigOptix. If we do not complete the merger, we will need to find
a
permanent CEO.
Our
future success depends to a significant extent on the continued service of
our
key management personnel. We do not maintain key person life insurance on any
of
our executive officers and do not intend to purchase any in the
future.
Our
future success will also depend on our ability to attract, retain and motivate
highly skilled personnel. In particular, we will need to hire a
significant number of technical personnel. Competition for highly educated
qualified personnel in the polymer industry is intense. If we fail to hire
and retain a sufficient number of qualified engineering, sales and technical
personnel, we will not be able to maintain or expand our business.
If
we fail to develop and maintain the quality of our manufacturing processes,
our
operating results would be harmed.
The
manufacture of our potential products is a multi-stage process that requires
the
use of high-quality materials and advanced manufacturing technologies. Also,
polymer-related device development and manufacturing must occur in a highly
controlled, clean environment to minimize particles and other yield- and
quality-limiting contaminants. In spite of stringent quality controls,
weaknesses in process control or minute impurities in materials may cause a
substantial percentage of a product in a lot to be defective. If we are not
able
to develop and continue to improve on our manufacturing processes or to maintain
stringent quality controls, or if contamination problems arise, our operating
results will be harmed.
If
we decide to make commercial quantities of products at our facilities, we may
be
required to make significant capital expenditures to increase capacity or
purchase wafers or components from contract
manufacturers.
We
lack
the internal ability to manufacture products at a level beyond the stage of
early commercial introduction. To the extent we do not have an outside vendor
to
manufacture our products, we will have to increase our internal production
capacity and we will be required to expand our existing facilities or to lease
or construct new facilities or to acquire entities with additional production
capacities. These activities would require us to make significant capital
investments and may require us to seek additional equity or debt financing.
We
cannot be assured that such financing would be available to us when needed
on
acceptable terms, or at all. If we are unable to expand internal production
capacity on a timely basis to meet increases in demand, we could lose market
opportunities for sales. Further, we cannot be assured that any increased demand
for our potential products would continue for a sufficient period of time to
recoup our capital investments associated with increasing our internal
production capacity.
In
addition, we do not have experience manufacturing our potential products in
large quantities. In the event of significant demand for our potential products,
large-scale production might prove more difficult or costly than we anticipate
and lead to quality control issues and production delays.
We
may not be able to manufacture products at competitive
prices.
To
date,
we have produced limited quantities of products for research, development
and
demonstration purposes. The cost per unit for these products currently exceeds
the price at which we could expect to profitably sell them. If we cannot
substantially lower our cost of production as we move into sales of products
in
commercial quantities, our financial results will be harmed.
We
conduct all of our operations at a single facility, and circumstances beyond
our
control may result in significant interruptions.
We
conduct all of our research and development, internal manufacturing and
management activities at a single facility in Bothell, Washington. A disaster
such as a fire, flood, earthquake, volcanic eruption or severe storm at or
near
this facility could prevent us from further developing our technologies or
manufacturing our potential products, which would harm our
business.
We
could be exposed to significant product liability claims that could be
time-consuming and costly and impair our ability to obtain and maintain
insurance coverage.
We
may be
subject to product liability claims if any of our potential products are
alleged
to be defective or harmful. Product liability claims or other claims related
to
our potential products, regardless of their outcome, could require us to
spend
significant time and money in litigation, divert our management’s time and
attention from other business concerns, require us to pay significant damages,
harm our reputation or hinder acceptance of our potential products. Any
successful product liability claim may prevent us from obtaining adequate
product liability insurance in the future on commercially reasonable terms.
The
inability to obtain sufficient insurance coverage at an acceptable cost or
otherwise to protect against potential product liability claims could impair
our
ability to commercialize our potential products.
If
we fail to effectively manage our growth, our business could
suffer.
Failure
to manage our growth could harm our business. To date, substantially all
of our
activities and resources have been directed at the research and development
of
our technology and development of potential products. The transition from
research and development to manufacturing and selling commercial products
will
require effective planning and management. In addition, future expansion
will be
expensive and will likely strain our management and other
resources.
In
order
to effectively manage growth, we must:
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continue
to develop an effective planning and management process to implement
our
business strategy;
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hire,
train and integrate new personnel in all areas of our business;
and
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expand
our facilities and increase our capital
investments.
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We
cannot
assure you that we will be able to accomplish these tasks effectively or
otherwise effectively manage our growth.
We
are subject to regulatory compliance related to our
operations.
We
are
subject to various U.S. governmental regulations related to occupational
safety
and health, labor and business practices. Failure to comply with current
or
future regulations could result in the imposition of substantial fines,
suspension of production, alterations of our production processes, cessation
of
operations, or other actions, which could harm our business.
We
may be unable to export our potential products or technology to other countries,
convey information about our technology to citizens of other countries or sell
certain products commercially, if the products or technology are subject to
United States export or other regulations.
We
are
developing certain polymer-based products that we believe the United States
government and other governments may be interested in using for military and
information gathering or antiterrorism activities. United States government
export regulations may restrict us from selling or exporting these potential
products into other countries, exporting our technology to those countries,
conveying information about our technology to citizens of other countries or
selling these potential products to commercial customers. We may be unable
to
obtain export licenses for products or technology if necessary. We currently
cannot assess whether national security concerns would affect our potential
products and, if so, what procedures and policies we would have to adopt to
comply with applicable existing or future regulations.
We
may incur liability arising from the use of hazardous
materials.
Our
business and our facilities are subject to a number of 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. Many of these environmental laws and
regulations subject current or previous owners or occupiers of land to liability
for the costs of investigation, removal or remediation of hazardous materials.
In addition, these laws and regulations typically impose liability regardless
of
whether the owner or occupier knew of, or were responsible for, the presence
of
any hazardous materials and regardless of whether the actions that led to the
presence were taken in compliance with the law. In our business, we use
hazardous materials that are stored on site. We use various chemicals in our
manufacturing process which may be toxic and covered by various environmental
controls. The waste created by use of these materials is transported off-site
by
an unaffiliated waste hauler. Many environmental laws and regulations require
generators of waste to take remedial actions at an off-site disposal location
even if the disposal was conducted lawfully. The requirements of these laws
and
regulations are complex, change frequently and could become more stringent
in
the future. Failure to comply with current or future environmental laws and
regulations may result in the imposition of substantial fines, suspension of
production, alteration of our production processes, cessation of operations
or
other actions, which could severely harm our business.
Acquisitions
or investments may be unsuccessful and may divert our management’s attention and
consume significant resources.
We
may in
the future acquire or make investments in other businesses as well as products
and technologies to complement our current business. Any future acquisition
or
investment may require us to use significant amounts of cash, issue potentially
dilutive equity securities or incur debt. In addition, acquisitions involve
numerous risks, any of which could harm our business, including:
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difficulties
in integrating the operations, technologies and personnel of acquired
businesses;
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diversion
of our management’s attention from other business
concerns;
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unavailability
of financing for future
acquisitions;
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potential
loss of key employees of acquired
businesses;
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inability
to maintain the key business relationships and the reputations
of acquired
businesses;
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responsibility
for liabilities of acquired
businesses;
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inability
to maintain our standards, controls, procedures and policies;
and
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Our
plan to develop relationships with strategic partners may not be
successful.
As
part
of our business strategy, we have developed relationships and entered into
agreements with strategic partners to conduct research and development of
technologies and products. We expect to continue to evaluate similar
opportunities. For these efforts to be successful, we must identify partners
whose competencies complement ours. We must also successfully enter into
agreements with them on terms attractive to us, and integrate and coordinate
their resources and capabilities with our own. We may be unsuccessful in
entering into agreements with acceptable partners or negotiating favorable
terms
in these agreements. Also, we may be unsuccessful in integrating the resources
or capabilities of these partners. In addition, our strategic partners may
prove
difficult to work with or less skilled than we originally expected. If we are
unsuccessful in our collaborative efforts, our ability to develop and market
products could be severely limited.
As
our business grows, if we need to establish global operations, we will be
subject to various risks.
Many
of
the markets that we propose to address are global and may require us to conduct
foreign operations, including the establishment of sales, manufacturing and
possible research and development facilities in other countries. While the
specific risks that will apply to these activities would depend on the
circumstances, we may become subject to risks relating to foreign currency
fluctuations, political and social unrest, local regulatory systems and varying
standards for the protection of intellectual property. The existence of any
of
these risks will complicate our business and may lead to unexpected and adverse
effects on our business. If we are required to conduct significant foreign
operations, we will also need expertise in such operations, which we do not
presently have.
Our
limited operating history makes financial forecasting difficult for us and
for
others that may publish estimates of our future financial
results.
As
a
result of our limited operating history, it is difficult to accurately forecast
our revenue and results, including product sales and government contract
revenue, cost of revenue, research and development expenses, marketing, general
and administrative expenses and other financial and operating data. We have
a
limited amount of meaningful historical financial data upon which to base
projected revenue or expenses. We base our current expense levels and estimates
of future expense levels on our operating plans and estimates of future revenue,
and our future expenses will be dependent in large part upon our future levels
of product sales. Sales and results are difficult to forecast because we do
not
currently have any commercial customers, we are uncertain of the extent of
orders for our products and the mix, volume and timing of any such orders.
Additionally, we are uncertain of the receipt of and extent of performance
under
government contracts. As a result, we may be unable to make accurate financial
forecasts of revenue or expenses. Financial analysts and others that may seek
to
project our future performance face similar difficulties. This inability to
accurately forecast our revenue and expenses could cause our financial results
to differ materially from any projected financial results and could cause a
decline in the trading price of our common stock.
Risks
Related to Our Proposed Merger with GigOptix
Our
planned merger with GigOptix, LLC involves risk that could be harmful to our
business.
On
March 27, 2007,we announced the signing of a definitive agreement to merge
with
GigOptix, LLC, a privately-held provider of integrated circuits for optically
connected communication systems ("GigOptix").
Under
the terms of the merger agreement, which was approved unanimously by the boards
of directors of both companies, we and GigOptix will become wholly-owned
subsidiaries of a newly formed company, GigOptix, Inc. ("Holdings"). Upon
closing of the merger, Lumera securities will be exchanged for approximately
50%
of the outstanding securities of Holdings and the GigOptix securities will
be
exchanged for approximately 50% of the outstanding securities of Holdings.
In
addition, Holdings will issue a number of options and warrants to GigOptix
generally matching options and warrants outstanding at the Company.
The
transaction is subject to approval by a majority of the our shareholders and
the
satisfaction of other closing conditions. The companies expect that the
transaction will close in the third quarter of 2008.
Our
planned merger with GigOptix involves certain risks including, but not limited
to:
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difficulties
assimilating the merged operations and
personnel;
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potential
disruptions of our ongoing
business;
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the
diversion of resources and management
time;
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the
possibility that uniform standards, controls, procedures and policies
may
not be maintained;
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risks
associated with entering new markets in which we have little or
no
experience;
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the
potential impairment of relationships with employees or customers
as a
result of changes in management;
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difficulties
in evaluating the future financial performance of the merged
businesses;
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difficulties
integrating network equipment and operating support
systems;
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brand
awareness issues related to the combined
companies;
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risks
associated with attainment of targeted synergy and savings goals
including
reductions in personnel, reductions or changes in current and proposed
spending, and changes to current business plans;
and
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the
impact of such risks to our business could be exacerbated if the
merger
does not close as anticipated, or if closing is
delayed.
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We
will be subject to business uncertainties and contractual restrictions while
the
merger is pending that could adversely affect its
business.
Uncertainty
about the effect of the merger on employees and customers may have an adverse
effect on our business. Although the we intend to take actions to reduce any
adverse effects, these uncertainties may impair our ability to attract, retain
and motivate key personnel until the merger is completed, and could cause
customers, suppliers and others that deal with us to seek to change existing
business relationships withus. Employee retention may be particularly
challenging during the pendency of the merger, as employees may experience
uncertainty about their future roles. If, despite retention efforts, key
employees depart because of issues relating to the uncertainty and difficulty of
integration or a desire not to remain with the Company, our business could
be
seriously harmed.
The
merger agreement restricts us, without GigOptix's consent, from making
acquisitions and taking other specified actions until the merger occurs or
the
merger agreement terminates. These restrictions may prevent us from pursuing
otherwise attractive business opportunities and making other changes to our
business that may arise before completion of the merger or, if the merger is
abandoned, termination of the merger agreement.
Failure
to complete the merger could negatively affect the our
business.
If
the merger is not completed for any reason, we may be subject to a number of
material risks, including the following:
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we
will not realize the benefits expected from becoming part of a combined
company, including a potentially enhanced competitive and financial
position;
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the
trading price of our common stock may decline to the extent that
the
current market price of the common stock reflects a market assumption
that
the merger will be completed;
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our
current and prospective employees may experience uncertainty about
their
future roles with the companies, which may adversely affect our ability
to
attract and retain key management, marketing and technical personnel;
and
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some
costs related to the merger, such as legal, accounting and some financial
advisory fees, must be paid even if the mergers are not
completed
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Risks
Related To Our Stock
Shares
eligible for sale in the future could negatively affect our stock
price.
The
market price of our common stock could decline as a result of sales of a large
number of shares of our common stock, including sales of shares as a result
of
this offering, or the perception that these sales could occur. This may also
make it more difficult for us to raise funds through the issuance of debt or
the
sale of equity securities. As of May 5, 2008, we had 20,088,352 shares of common
stock outstanding, excluding shares being sold in this offering. Our
unregistered securities may be sold in the future pursuant to registration
statements filed with the SEC or without registration under the Securities
Act,
to the extent permitted by Rule 144 or other exemptions under the Securities
Act.
As
of May
5, 2008, there were an aggregate of 4,497,877 shares of common stock issuable
upon exercise of outstanding stock options and warrants, excluding warrants
being sold in this offering and being issued to the placement agent in
connection with this offering. We may issue additional shares in the future
in
connection with acquisitions, compensation or otherwise. We have not entered
into any agreements or understanding regarding any future acquisitions not
described herein and cannot ensure that we will be able to identify or complete
any acquisition in the future.
The
market price of our shares may experience substantial price and volume
fluctuations for reasons over which we have little
control.
The
trading price of our common stock has been, and is likely to continue to be,
extremely volatile. Since our initial public offering in July 2004, the closing
price of our common stock as reported on the NASDAQ Global Market has ranged
from a high of $10.35 to a low of $1.33.
Our
stock price could be subject to wide fluctuations in response to a variety
of
factors, including, but not limited to, the risks relating to an investment
in
our stock described above and the following:
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new
products or services offered by us or our
competitors;
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failure
to meet any publicly announced revenue
projections;
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actual
or anticipated variations in quarterly operating
results;
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changes
in financial estimates by securities
analysts;
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announcements
of significant acquisitions, product development milestones, strategic
partnerships, joint ventures or capital commitments by us or our
competitors;
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issuances
of debt or equity securities; and
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other
events or factors; many of which are beyond our
control.
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In
addition, the stock market in general, and the NASDAQ Global Market and
companies in our industry, have experienced substantial price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of these companies. Broad market and industry factors may negatively
affect the market price of our common stock, regardless of our actual operating
performance. In the past, following periods of volatility in the market price
of
a company’s securities, securities class action litigation has often been
instituted against such companies. This type of litigation, if instituted,
could
result in substantial costs and a diversion of management’s attention and
resources, which would harm our business.
Certain
provisions in our charter documents and otherwise may discourage third parties
from attempting to acquire control of our company, which may have an adverse
effect on the price of our common stock.
Our
certificate of incorporation and by-laws contain provisions that would make
it
more difficult for a third party to acquire control of us, including a provision
that our board of directors may issue preferred stock and fix the rights,
preferences, privileges and restrictions of such shares without shareholder
approval. Our by-laws also provide for special advance notice provisions for
proposed business at annual meetings. In addition, certain anti-takeover
provisions of Washington and Delaware law could make it more difficult for
a
third party to acquire control of us, even if such change in control would
be
beneficial to our shareholders.
Risks
Related To The Committed Equity Financing Facility With
Kingsbridge
Our
committed equity financing facility with Kingsbridge may not be available to
us
if we elect to make a draw down, may require us to make additional “blackout” or
other payments to Kingsbridge, and may result in dilution to our
stockholders.
In
February 2008, we entered into the CEFF with Kingsbridge. The CEFF entitles
us to sell and obligates Kingsbridge to purchase, from time to time over a
period of three years, shares of our common stock for cash consideration up
to
an aggregate of 10 million shares or $25.0 million whichever is less,
subject to certain conditions and restrictions. Kingsbridge will not be
obligated to purchase shares under the CEFF unless certain conditions are met,
which include a minimum price for our common stock; the accuracy of
representations and warranties made to Kingsbridge; compliance with laws;
effectiveness of the registration statement of which this prospectus is a part
and the continued listing of our stock on NASDAQ. In addition, Kingsbridge
is
permitted to terminate the CEFF if it determines that a material and adverse
event has occurred affecting our business, operations, properties or financial
condition and if such condition continues for a period of 10 days from the
date Kingsbridge provides us notice of such material and adverse event. If
we
are unable to access funds through the CEFF, or if the CEFF is terminated by
Kingsbridge, we may be unable to access capital on favorable terms or at
all.
We
are
entitled, in certain circumstances, to deliver a blackout notice to Kingsbridge
to suspend the use of the registration statement of which this prospectus is
a
part and prohibit Kingsbridge from selling shares under this prospectus. If
we
deliver a blackout notice in the 15 trading days following the settlement of
a
draw down, or if the registration statement is not effective in circumstances
not permitted by the agreement, then we must make a payment to Kingsbridge,
or
issue Kingsbridge additional shares in lieu of this payment, calculated on
the
basis of the number of shares held by Kingsbridge (exclusive of shares that
Kingsbridge may hold pursuant to exercise of the Kingsbridge warrant) and the
change in the market price of our common stock during the period in which the
use of the registration statement is suspended. If the trading price of our
common stock declines during a suspension of the registration statement, the
blackout or other payment could be significant.
Should we sell shares to Kingsbridge under the CEFF, or issue shares in
lieu of a blackout payment, it will have a dilutive effective on the holdings
of
our current stockholders, and may result in downward pressure on the price
of
our common stock. If we draw down under the CEFF, we will issue shares to
Kingsbridge at a discount of up to 12 percent from the volume weighted
average price of our common stock. If we draw down amounts under the CEFF when
our share price is decreasing, we will need to issue more shares to raise the
same amount than if our stock price was higher. Issuances in the face of a
declining share price will have an even greater dilutive effect than if our
share price were stable or increasing, and may further decrease our share
price.
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements in this prospectus that are subject to
risks and uncertainties. These forward-looking statements include information
about possible or assumed future results of our business, financial condition,
liquidity, results of operations, plans and objectives. In some cases, you
may
identify forward-looking statements by words such as “may,” “should,” “plan,”
“intend,” “potential,” “continue,” “believe,” “expect,” “predict,” “anticipate,”
“estimate,” the negative of these words or other comparable words. These
statements are only predictions. You should not place undue reliance on these
forward-looking statements. Statements regarding the following subjects are
forward-looking by their nature:
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our
future operating results;
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our
ability to obtain external
financing;
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our
understanding of our competition;
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industry
and market trends;
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future
capital expenditures;
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the
impact of technology on our products, operations and
business;
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issuance
of share of out common stock under the CEFF;
and
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registration
for resale of our securities issued under, and in connection with,
the
CEFF.
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The
forward-looking statements are based on our beliefs, assumptions and
expectations of our future performance, taking into account information
currently available to us. These beliefs, assumptions and expectations can
change as a result of many possible events or factors, including those events
and factors described by us in “Risk Factors,” not all of which are known to us.
Neither we nor any other person assumes responsibility for the accuracy or
completeness of these statements. We will update this prospectus only to the
extent required under applicable securities laws. If a change occurs, our
business, financial condition, liquidity and results of operations may vary
materially from those expressed in our forward-looking statements.
USE
OF PROCEEDS
We
will
not receive any of the proceeds from the sale of shares of our common stock
by
the selling stockholder pursuant to this prospectus. Any sale of shares by
us to
Kingsbridge under the common stock purchase agreement or in connection with
the
exercise of the Kingsbridge warrant will be made pursuant to an exemption from
the registration requirements of the Securities Act of 1933. We currently
anticipate using the net proceeds from these sales to fund continuing
development and commercialization of our electro-optics businesses, as well
as
for general corporate purposes.
The
amounts and timing of the expenditures may vary significantly, depending on
numerous factors, including the amount of cash generated by our operations,
competitive and industry developments, and the rate of growth, if any, of our
business. Pending the uses described above, we may invest the net proceeds
of
this offering in short-term investment-grade instruments, certificates of
deposit or direct or guaranteed obligations of the U.S. government.
Additionally, as of the date of this prospectus, we cannot specify with
certainty all of the particular uses for the net proceeds to us from the sale
of
shares to Kingsbridge. Accordingly, we will retain broad discretion over the
use
of these proceeds, if any.
SELLING
STOCKHOLDER
This
prospectus relates to the possible resale by the selling stockholder,
Kingsbridge, of shares of common stock that we may issue pursuant to the common
stock purchase agreement we entered into with Kingsbridge on February 21, 2008,
or upon exercise of the warrant we issued to Kingsbridge on that date. We are
filing the registration statement of which this prospectus is a part pursuant
to
the provisions of the registration rights agreement we entered into with
Kingsbridge on February 21, 2008.
The
selling stockholder may from time to time offer and sell pursuant to this
prospectus any or all of the shares that it acquires under the common stock
purchase agreement or upon exercise of the warrant.
The
following table presents information regarding Kingsbridge and the shares that
it may offer and sell from time to time under this prospectus. This table is
prepared based on information supplied to us by the selling stockholder, and
reflects holdings as of March 21, 2008. As used in this prospectus, the term
“selling stockholder” includes Kingsbridge and any donees, pledges, transferees
or other successors in interest selling shares received after the date of this
prospectus from a selling stockholder as a gift, pledge or other non-sale
related transfer. The number of shares in the column “Number of Shares Being
Offered” represents all of the shares that the selling stockholder may offer
under this prospectus. The selling stockholder may sell some, all or none of
its
shares. We do not know how long the selling stockholder will hold the shares
before selling them, and we currently have no agreements, arrangements or
understandings with the selling stockholder regarding the sale of any of the
shares.
Beneficial
ownership is determined in accordance with Rule 13d-3(d) promulgated by the
SEC under the Securities Exchange Act of 1934, as amended. The percentage of
shares beneficially owned prior to the offering is based both on 20,088,352
shares of our common stock actually outstanding as of May 5, 2008 and on the
assumption that all shares of common stock issuable under the common stock
purchase agreement we entered into with Kingsbridge on February 21, 2008 and
all
shares of common stock issuable upon exercise of the warrant held by Kingsbridge
are outstanding as of that date.
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Security Holders
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Number of
Shares of Common Stock
Beneficially Owned
Prior to Offering
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Percent
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Number of Shares
Being Offered
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Number of
Shares of Common Stock
Beneficially Owned
After Offering
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Percent
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Kingsbridge Capital
Limited (1)
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4,000,000(2
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16.6
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%
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4,000,000
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0
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0
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%
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(1)
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The
address of Kingsbridge is Kingsbridge Capital Limited, Attention:
Mr. Tony
Hillman, P O Box 1075, Elizabeth House, 9 Castle Street, St. Helier,
Jessey, JE42QP, Channel Islands.
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(2)
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Consists
of (a) 3,820,000 shares of common stock issuable pursuant to the
common
stock purchase agreement we entered into with Kingsbridge on February,
21,
2008, and (b) 180,000 shares of common stock issuable upon exercise
of a
warrant issued to Kingsbridge on February 21, 2008, which warrant
is not
exerciseable before August 21, 2008. For purposes hereof, we assume
the
issuance of all 4,000,000 shares under (a) and (b). Adam Gurney,
Maria
O'Donoghue and Anthony Gardner-Hillman have voting and investment
control
of the securities held by Kingsbridge. Kingsbridge does not accept
third
party investments.
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We
are
registering 4,000,000 shares of common stock under this prospectus on
behalf of Kingsbridge. Except as described below, to our knowledge, the selling
stockholder has not entered into any agreement, arrangement or understanding
with any particular broker or market maker with respect to the shares of common
stock offered hereby, nor, except as described below, do we know the identity
of
the brokers or market makers that will participate in the sale of the
shares.
The
selling stockholder may decide not to sell any shares. The selling stockholder
may from time to time offer some or all of the shares of common stock through
brokers, dealers or agents who may receive compensation in the form of
discounts, concessions or commissions from the selling stockholder and/or the
purchasers of the shares of common stock for whom they may act as agent. In
effecting sales, broker-dealers that are engaged by the selling stockholder
may
arrange for other broker-dealers to participate. Kingsbridge is an “underwriter”
within the meaning of the Securities Act. Any brokers, dealers or agents who
participate in the distribution of the shares of common stock may also be deemed
to be “underwriters,” and any profits on the sale of the shares of common stock
by them and any discounts, commissions or concessions received by any such
brokers, dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act. Kingsbridge has advised us that it may
effect resales of our common stock through any one or more registered
broker-dealers. To the extent the selling stockholder may be deemed to be an
underwriter, the selling stockholder will be subject to the prospectus delivery
requirements of the Securities Act and may be subject to certain statutory
liabilities of, including but not limited to, Sections 11, 12 and 17 of the
Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934, as
amended, or the Exchange Act.
The
selling stockholder will act independently of us in making decisions with
respect to the timing, manner and size of each sale. Such sales may be made
on
The NASDAQ Global Market, on the over-the-counter market, in privately
negotiated transactions or otherwise, or in a combination of such methods of
sale, at then prevailing market prices, at prices related to prevailing market
prices or at negotiated prices. The shares of common stock may be sold according
to one or more of the following methods:
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a
block trade in which the broker or dealer so engaged will attempt
to sell
the shares of common stock as agent but may position and resell a
portion
of the block as principal to facilitate the
transaction;
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purchases
by a broker or dealer as principal and resale by such broker or dealer
for
its account pursuant to this
prospectus;
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an
over-the-counter distribution in accordance with the NASDAQ
rules;
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ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
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privately
negotiated transactions;
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a
combination of such methods of sale;
and
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any
other method permitted pursuant to applicable
law.
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Any
shares covered by this prospectus which qualify for sale pursuant to
Rule 144 of the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. In addition, the selling stockholder may transfer
the shares by other means not described in this prospectus.
Any
broker-dealer participating in such transactions as agent may receive
commissions from Kingsbridge (and, if they act as agent for the purchaser of
such shares, from such purchaser). Broker-dealers may agree with Kingsbridge
to
sell a specified number of shares at a stipulated price per share, and, to
the
extent such a broker-dealer is unable to do so acting as agent for Kingsbridge,
to purchase as principal any unsold shares at the price required to fulfill
the
broker-dealer commitment to Kingsbridge. Broker-dealers who acquire shares
as
principal may thereafter resell such shares from time to time in transactions
(which may involve crosses and block transactions and which may involve sales
to
and through other broker-dealers, including transactions of the nature described
above) on The NASDAQ Global Market, on the over-the-counter market, in
privately-negotiated transactions or otherwise at market prices prevailing
at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed
as
described above. To the extent required under the Securities Act, an amendment
to this prospectus, or a supplemental prospectus may be filed,
disclosing:
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the
name of any such broker-dealers;
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the
name of any such broker-dealers;
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the
price at which such shares are to be
sold;
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the
commission paid or discounts or concessions allowed to such
broker-dealers, where applicable;
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that
such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus,
as
supplemented; and
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other
facts material to the transaction.
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Underwriters
and purchasers that are deemed underwriters under the Securities Act may engage
in transactions that stabilize, maintain or otherwise affect the price of the
securities, including the entry of stabilizing bids or syndicate covering
transactions or the imposition of penalty bids. Kingsbridge and any other
persons participating in the sale or distribution of the shares will be subject
to the applicable provisions of the Securities Exchange Act and the rules and
regulations thereunder including, without limitation, Regulation M. These
provisions may restrict certain activities of, and limit the timing of,
purchases by the selling stockholder or other persons or entities. Furthermore,
under Regulation M, persons engaged in a distribution of securities are
prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to special exceptions or
exemptions. Regulation M may restrict the ability of any person engaged in
the distribution of the securities to engage in market-making and certain other
activities with respect to those securities. In addition, the anti-manipulation
rules under the Securities Exchange Act may apply to sales of the securities
in
the market. All of these limitations may affect the marketability of the shares
and the ability of any person to engage in market-making activities with respect
to the securities.
We
have
agreed to pay the expenses of registering the shares of common stock under
the
Securities Act, including registration and filing fees, printing expenses,
administrative expenses and certain legal and accounting fees, as well as
certain fees of counsel for the selling stockholder incurred in the preparation
of the CEFF agreements and the registration statement of which this prospectus
forms a part. The selling stockholder will bear all discounts, commissions
or
other amounts payable to underwriters, dealers or agents, as well as transfer
taxes and certain other expenses associated with the sale of
securities.
Under
the
terms of the common stock purchase agreement and the registration rights
agreement, we have agreed to indemnify the selling stockholder and certain
other
persons against certain liabilities in connection with the offering of the
shares of common stock offered hereby, including liabilities arising under
the
Securities Act or, if such indemnity is unavailable, to contribute toward
amounts required to be paid in respect of such liabilities.
At
any
time a particular offer of the shares of common stock is made, a revised
prospectus or prospectus supplement, if required, will be distributed. Such
prospectus supplement or post-effective amendment will be filed with the SEC
to
reflect the disclosure of required additional information with respect to the
distribution of the shares of common stock. We may suspend the sale of shares
by
the selling stockholder pursuant to this prospectus for certain periods of
time
for certain reasons, including if the prospectus is required to be supplemented
or amended to include additional material information.
LEGAL
MATTERS
For
the
purpose of this offering, Ropes & Gray LLP, Boston, Massachusetts, is giving
its opinion on the validity of the shares.
EXPERTS
The
financial statements and management's assessment of the effectiveness of
internal control over financial reporting (which is included in Management's
Report on Internal Control over Financial Reporting) is incorporated in this
prospectus by reference to the Annual Report on Form 10-K for the year ended
December 31, 2007 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and
accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file
annual, quarterly and special reports, proxy statements and other information
with the SEC. Our SEC filings are available over the Internet at the SEC’s web
site at
http://www.sec.gov
. You
may also read and copy any document we file with the SEC at its public reference
facility:
Public
Reference Room
100
F
Street, N.E.
Washington,
D.C. 20549
You
may
also obtain copies of the documents at prescribed rates by writing to the Public
Reference Section of the SEC, 100 F Street, N.E., Washington, DC 20549. Please
call 1-800-SEC-0330 for further information on the operations of the public
reference facility and copying charges.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC
allows us to “incorporate by reference” the information we file with them, which
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to
be
part of this prospectus, and the information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference in this prospectus the following documents filed by us with the
SEC:
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Our
Annual Report on Form 10-K for the year ended December 31, 2007,
filed on
March 17, 2008, including our amended Annual Report on Form 10-K/A
for the
year ended December 31, 2007, filed on March 27, 2008 and any further
amendment filed with the SEC for the purpose of updating such Annual
Report;
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Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008,
including any amendment filed for the purpose of updating such Quarterly
Report;
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·
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The
description of our common stock contained in our registration statement
on
Form 8-A (File No. 000-50862) filed under the Exchange Act, including
any
amendment or report filed for the purpose of updating such description;
and
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·
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Our
Current Reports on Form 8-K filed with the SEC on February 25, 2008,
March 11, 2008 and May 6,
2008.
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·
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We
also incorporate by reference all documents we file pursuant to Section
13(a), 13(c), 14 or 15 of the Securities Exchange Act of 1934 after
the
date of the initial registration statement and prior to effectiveness
of
the registration statement.
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·
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We
also incorporate by reference all documents we file in the future
pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of
1934 after the date of this prospectus and prior to the termination
of the
offering are also incorporated by reference and are an important
part of
this prospectus; provided, however, that we are not incorporating
any
information furnished under any of Item 2.02 or Item 7.01 of any
current
report on Form 8-K.
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Any
statement made in a document incorporated by reference or deemed incorporated
herein by reference is deemed to be modified or superseded for purposes of
this
prospectus if a statement contained in this prospectus or in any other
subsequently filed document which is also incorporated or deemed incorporated
by
reference herein modifies or supersedes that statement. Any such statement
so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
Statements
made in this prospectus or in any document incorporated by reference in this
prospectus as to the contents of any contract or other document referred to
herein or therein are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit
to
the documents incorporated by reference, each such statement being qualified
in
all material respects by such reference.
You
may
request a copy of these filings, at no cost, by writing or telephoning us at
the
following address:
Lumera
Corporation
19910
North Creek Parkway
Bothell,
Washington 98011
Attention:
Investor Relations
(425)
415-6900
Copies
of
these filings are also available, without charge, on our Internet website at
www.lumera.com
as soon
as reasonably practicable after they are filed electronically with the
SEC.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other expenses of Issuance and Distribution.
The
following table sets forth the various expenses in connection with the sale
and
distribution of the securities being registered. All amounts shown are
estimates, except the SEC registration fee. The registrant has agreed to pay
these costs and expenses.
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Securities
and Exchange Commission registration fee
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$
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340
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Printing
and engraving expenses
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$
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5,000
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*
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Legal
fees and expenses
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$
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75,000
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*
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Accounting
fees and expenses
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$
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5,000
|
*
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Blue
sky fees and expenses
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|
$
|
1,000
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*
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|
Transfer
Agent and Registrar fees
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$
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5,000
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*
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Trust
fees and expenses
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$
|
1,000
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*
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Miscellaneous
|
|
$
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7,660
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*
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|
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|
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Total
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$
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100,000
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*
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*Estimated.
Item
15. Indemnification of Directors and Officers.
Section
145 of the Delaware General Corporation Law provides that a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, other than an action by or
in
the right of the corporation, by reason of the fact that the person is or was
a
director, officer, employee or agent of the corporation or is or was serving
at
the corporation's request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
the
action, suit or proceeding if the person acted in good faith and in a manner
the
person reasonably believed to be in or not opposed to the best interests of
the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The power to
indemnify applies to actions brought by or in the right of the corporation
as
well, but only to the extent of expenses, including attorneys' fees but
excluding judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the person in connection with the defense or settlement
of the action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
the
corporation and except that no indemnification shall be made in respect of
any
claim, issue or matter as to which such person shall have been adjudged to
be
liable to the corporation unless and only to the extent that a court of
competent jurisdiction shall determine that such indemnity is
proper.
Section
145(g) of the Delaware General Corporation Law provides that a corporation
shall
have the power to purchase and maintain insurance on behalf of its officers,
directors, employees and agents, against any liability asserted against and
incurred by such persons in any such capacity.
Section
102(b)(7) of the General Corporation Law of the State of Delaware provides
that
a corporation may eliminate or limit the personal liability of a director to
the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which the director derived an improper personal
benefit. No such provision shall eliminate or limit the liability of a director
for any act or omission occurring prior to the date when such provision becomes
effective.
Our
Restated Certificate of Incorporation provides that our directors shall not
be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that the exculpation from
liabilities is not permitted under the Delaware General Corporation Law as
in
effect at the time such liability is determined. In addition, our restated
certificate of incorporation provides that we shall indemnify our directors
to
the full extent permitted by the laws of the State of Delaware.
Our
directors and officers are covered by insurance policies maintained by us
against specified liabilities for actions taken in their capacities as such,
including liabilities under the Securities Act. In addition, we have entered
into indemnification agreements with each of our non-employee directors that
provide for indemnification and expense advancement to the fullest extent
permitted under the Delaware General Corporation Law.
Item
16. Exhibits and Financial Statement Schedules
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Exhibit
Number
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Note
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Description
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4.1
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(1)
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Form
of Common Stock Certificate
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4.2
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(4)
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Warrant
for the purchase of shares of common stock, dated February 21, 2008,
issued by the Company to Kingsbridge Capital Limited.
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4.3
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(4)
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Registration
Rights Agreement, dated February 21, 2008, by and between the Company
and
Kingsbridge Capital Limited
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5.1
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(2)
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Opinion
of Ropes & Gray LLP
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10.1
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(3)
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2000
Stock Option Plan of the Registrant
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10.2
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(3)
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2004
Equity Incentive Plan of the Registrant.
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10.3
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(4)
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Common
Stock Purchase Agreement, dated as of February 21, 2008 by and between
the
Company and Kingsbridge Capital Limited.
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23.1
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(2)
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Consent
of PricewaterhouseCoopers LLP.
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23.2
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(3)
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Consent
of Ropes & Gray LLP (included in the opinion filed as Exhibit
5.1).
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24.1
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(3)
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Power
of Attorney. Included on signature page of this registration
statement
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(1)
|
Incorporated
by reference from our Amendment No. 5 to the Registrant’s Registration
Statement on Form S-1 filed on July 15, 2004, SEC File No.
333-115650.
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(2)
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Filed
with this registration statement.
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(3)
|
Incorporated
by reference from our Amendment No. 1 to the Registrant’s Registration
Statement on Form S-1 filed on June 24, 2004, SEC File No.
333-115650.
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(4)
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Incorporated
by reference from our Current Report on Form 8-K, filed on February
25,
2008.
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Item 17.
Undertakings
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended (the “Securities Act”);
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration
Statement is on Form S-3, Form S-8 or Form F-3, and the information required
to
be included in a post-effective amendment by those paragraphs is contained
in
periodic reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Exchange Act, that are incorporated by reference in the
Registration Statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each
such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That:
(i) For
purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by
the registrant under Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as
of
the time it is declared effective.
(ii) For
the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to
be a new registration statement relating to the securities offered, and the
offering of these securities at that time shall be deemed to be the initial
bona
fide offering.
(5) That,
for the purpose of determining liability under the Securities Act of 1933 to
any
purchaser:
(i) If
the registrant is relying on Rule 430B:
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement;
and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required by Section 10(a)
of the Securities Act of 1933 shall be deemed to be part of and included in
this
registration statement as of the earlier of the date such form of prospectus
is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in
Rule 430B, for liability purposes of the issuer and any person that is at
that date an underwriter, such date shall be deemed to be a new effective date
of the registration statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Provided, however, that no statement made in a registration statement or a
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of this registration statement will, as to a
purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in this registration statement
or prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date; or
(ii) If
the registrant is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other
than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of
and included in the registration statement as of the date it is first used
after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made
in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as
to a
purchaser with a time of contract of sale prior to such first use, supersede
or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
(6) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the
securities:
The
undersigned registrant undertakes that in a primary offering of securities
of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if
the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating
to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of
the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(7) That,
for purposes of determining any liability under the Securities Act, each filing
of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a
new registration statement relating to the securities offered therein, and
the
offering of such securities at that time shall be deemed to be the initial
bona
fide offering thereof.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the town of
Bothell, state of Washington, on the 16th day of May, 2008.
|
LUMERA
CORPORATION
|
|
By:
|
/s/ Joseph
J. Vallner
|
|
Name:
Joseph J. Vallner
|
|
Title:
Interim CEO
|
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
|
|
/s/
Joseph J. Vallner
|
|
Interim
Chief Executive Officer and
|
|
May
16, 2008
|
|
Joseph
J. Vallner
|
|
Director
(Principal Executive Officer)
|
|
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|
|
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|
|
/s/
Peter J. Biere
|
|
Chief
Financial Officer and Treasurer (Principal Financial and
|
|
May
16, 2008
|
|
Peter
J. Biere
|
|
Accounting
Officer)
|
|
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|
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|
|
|
|
/s/
James Judson*
|
|
|
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C.
James Judson
|
|
Chairman
of the Board of Directors
|
|
May
16, 2008
|
|
|
|
|
|
|
|
/s/
Fraser Black*
|
|
Director
|
|
May
16, 2008
|
|
Fraser
Black
|
|
|
|
|
|
|
|
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|
|
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|
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Donald
Guthrie
|
|
Director
|
|
May16,
2008
|
|
|
|
|
|
|
|
/s/
Robert Ratliffe*
|
|
Director
|
|
May
16, 2008
|
|
Robert
A. Ratliffe
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Kimberly D.C. Trapp*
|
|
Director
|
|
May
16, 2008
|
|
Kimberly
D.C. Trapp
|
|
|
|
|
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*By:
|
/s/
Peter J. Biere
|
|
|
Peter
J. Biere
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Attorney-in-Fact
|
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