No one should be buying at any level over .50 cents. The only thing that should be done with LUMM at these levels is sell/sell short.
Here are the reasons directly from their Form 10.
1. At LEAST two floorless convertibles.
In March 1999, the Company issued $200,000 (CDN $294,400) principal amount of
its 10% Convertible Notes (the "Notes"). Each $1,000 (CDN $1,472) principal
amount of the Notes was initially convertible into common stock at $0.50 (CDN
$0.74) per share. Upon conversion of the Notes, the holder thereof was entitled
to receive for each $1,000 (CDN $1,472) principal amount thereof warrants to
purchase 1,000 additional shares of Common Stock at $0.90 (CDN $1.32) per share
with a term of 30 months.
In June 1999, the Company issued 1,500,000 shares of Common Stock, 1,667,667
cash common stock purchase warrants and 5,800,000 service common stock purchase
warrants to Molex under the Molex Agreements, for a cash consideration of
$750,000 (CDN $1,104,000). Each cash common stock purchase warrant entitles
Molex to acquire one share of Common Stock at a price of $0.90 (CDN $1.32) on or
before August 1, 2001. Each service common stock purchase warrant entitles Molex
to receive one share of Common Stock for services rendered under the Molex
Agreements. See "Item 1. Business Agreements with Molex."
At the pace described by the Form 10, it is HIGHLY likely that LUMM has done
several more floorless convertibles since they have no other means of obtaining
financing.
In particular, the Company anticipates requiring
approximately $20 million to construct and equip a high volume assembly facility
and upgrade its current facility.
Let's see, 20,000,000 / .50 cents a shares means 40,000,000 or MORE shares are
soon going to be added to the float.
2. Private placements at .50 cents, 1.00 and 4.00 a share!!!!
Under the Stock Purchase Agreement, Molex agreed to purchase 3,000,000 shares of
the Common Stock of Lumenon (the "Common Stock") at a price of $0.50 per share
in two stages. The first closing was held on June 21, 1999 for 1,500,000 shares
of Common Stock and the second closing is scheduled for March 2000 for an
additional 1,500,000 shares of Common Stock. The second closing is contingent
upon Lumenon's progress in proving its technology and its ability to manufacture
and deliver certain DWDM devices. Lumenon also issued to Molex a warrant to
purchase 1,666,667 additional shares of Common Stock at a price of $0.90 per
share.
During the six-month period ended June 30, 1999, Lumenon issued 2,260,000 units
at a price of $0.50 (CDN $0.74) per unit. Each unit comprised one share of its
common stock and one warrant for the purchase of one additional share at a price
of $1.00 (CDN $1.47) per share, of which warrants to purchase 1,050,000 shares
expire on August 23, 2001 and warrants to purchase 1,210,000 shares expire on
August 23, 2000.
In July 1999, Lumenon issued 960,000 units of its capital at a price of US $1.00
(CDN $1.47) per unit. Each unit was comprised one share of Common Stock and one
warrant for the purchase of one additional share at a price of $1.50 (CDN
$2.21) per share before June 2001.
In September 1999, Lumenon issued 407,000 additional units at a price of $4.00
(CDN $5.89) per unit. Each unit was comprised one share of Common Stock and one
warrant for the purchase of one additional share at a price of $6.00 (CDN $8.83)
per share before September 2000.
In September 1999 Lumenon issued 400,000 additional units of its capital stock
to holders of convertible notes issued in 1999 in the principal amount of
$200,000 (CDN $294,400) upon the full conversion of their notes. Each unit
comprised one share of Common Stock and one warrant for the purchase of one
additional share at a price of $0.90 (CDN $1.32) per share before September 30,
2001. Lumenon issued an additional 30,000 units to the underwriter who had
placed the securities upon conversion of the notes into units.
3. BIG time dilution is coming--warrants exercisable at extremely low prices!!!!
As of September 30, 1999, the Company had outstanding options to purchase an
aggregate of 1,995,000 shares of Common Stock at a weighted average exercise
price of $1.07 per share and outstanding warrants to purchase an aggregate of
5,814,366 shares of Common Stock at a weighted average exercise price of $1.33
per share. The exercise of outstanding options and warrants will dilute the then
current stockholders' ownership of Common Stock, and any sales in the public
market of shares acquired upon such exercise could adversely affect prevailing
prices of the Common Stock.
4. LUMM is a development stage company that doesn't spend much on R&D:
The low level of research and development charged to the Company since its
inception is due to the fact that over six years of research and development
have been performed at McGill University and Universite de Montreal
(Polytechnique). The technology that has been developed at these universities
has been transferred to the Company under a Licence Agreement between the
Company, McGill, and Polyvalor, an affiliate of Polytechnique.
5. Afrayem is warning shorts of unlimited losses. Usually he does this
right before the roof caves in.
Witness NCDR (it was 30 at the time, now it is delisted)
Message 9267236
Message 10449897
Hey Isaac, I'm still waiting for the unlimited losses on NCDR, XDSL, etc.....
Anyone who reads the Form 10 should be very concerned. When the
convertible holders begin to short to lock in their profits and when those .50
cent cost basis holders begin to sell hundreds of thousands of shares, this bad
boy is going to drop like a rock.
Fortunately, there is no uptick rule on OTC BB stocks.... |
