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Technology Stocks : LUMM - Lumenon Innovative Lightwave Technology Inc. -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (1604)	3/20/2000 12:20:00 PM
From: Don Johnstone	Read Replies (1) \| Respond to of 2484

I rest my case! ragingbull.com ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The first 12 months of production, Apr/July 2000 - Apr/July 2001, Molex buys UP TO 400 units per month. Question - what does a 'unit' consist of? A chip only or a packaged chip? From the 10-12G/A: tenkwizard.com *********************** Under the Teaming Agreement, the Company and Molex agreed to jointly develop 8, 16 and 32-channel DWDM products for sale to Molex and distribution and marketing by Molex to other customers. Subject to testing of the Lumenon technology and proof of its manufacturing capability, Molex is committed to purchase a maximum of 400 units per month of Lumenon's 8, 16 and 32-channel DWDM production for the first 12 months, at gross cost to Lumenon plus 25%. The average revenue per unpackaged chip sold for the first year of production is currently estimated by the Company at approximately US $1,000 (CDN$1,470). After the first 12-month period, Molex has the option to purchase all of Lumenon's 8, 16 and 32-channel DWDM production at fair market value for the succeeding three-year period. Variable wording like 'DWDM products', 'units', 'DWDM production', 'unpackaged chip' makes my comprehension of what is team effort and what is not team effort difficult if not impossible. Notice 'unpackaged chip' - that's clear enough. But to me a 'DWDM product' is a chip plus packaging. And I think 'units' means unpackaged chips, but I'm not sure. You see, when the agreement was drawn up LUMM never thought that it would package the chips themselves. If LUMM packaged those same chips, and they can, now, they could sell each DWDM, containing one chip, for $750/channel. So an 8 channel DWDM would sell for $6000. Molex could do the same packaging. Using my math that means Molex collects $6000, gives LUMM $1000 for the chip, spends $1000 to package it, making Molex's costs $2000, giving them a gross margin of$4000. LUMM's gross margin would be $1000 less their cost of $100/chip = $900. LUMM $900 versus Molex $4000. Those Molex people may not say much but do they ever know how to do business! That's the first year. The next three years Molex can buy all LUMM's production but at fair market value. And LUMM will be producing at 500/day and then 1000/day during that 3 year period. From the S-8: 10kwizard.com *********************** Our contractual relationship with Molex gives us access to Molex's global distribution network and requires us to reserve our first year of jointly developed products, up to a maximum of 400 units per month, to Molex. After the first year, Molex will have the option to purchase all of our production of the jointly developed products at fair market value for the succeeding three year period. ************************ From the 10-12G/A: tenkwizard.com ************************ Under the Teaming Agreement, the Company will produce and deliver to Molex up to a maximum of 400 units per month, upon satisfactory testing of such devices commencing in July 2000. All of the Company's production of the jointly developed products (the 8, 16 and 32-channel DWDM devices) for the first year is reserved for Molex, and thereafter Molex will have the option to purchase all of such products at fair market value for the succeeding three year period. The Company anticipates making sales of its products to customers other than Molex after the first year of production. ************************** So Molex gets the first year's Jointly developed 8, 16, and 32 channel chips/DWDMs(?) up to a maximum of 400/month. And all production of jointly developed chips/DWDMs(?) thereafter for the 3 following years at fair market value. The 8, 16 and 32 channel chips/DWDMs(?), jointly developed are for Molex, up to 400 the first year and all for the next 3 years. So the 2-7 and 33 and up channel chips/DWDMs are LUMM's alone - important. Next, Molex wont likely be able to take all LUMM's following 3 years of production, so what Molex can't take is LUMM's alone - important. And what Molex does take is at fair market value. Question to which I don't have the answer - Is the LUMM packaged DWDM a 'joint development'? LUMM can now package all its own DWDMs. Does the chip joint development make the overall packaged unit a joint development? I think it does, but there is a question in my mind, especially if Molex's involvement in production was for the packaging development and not the chip development. DJ (Voluntary Disclosure: ST Rating- Strong Buy) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ And Pat, it's not that I want to end the discussion. It's that I feel I am unable to provide you the answers to the questions you want answered. You are thus unsatisfied and I am frustrated. If there are answers out there that will answer your questions I wish you luck in finding them. Please post whatever you find. I am interested in what you discover that goes beyond what I know. And, boy, there is plenty I don't know. I still invested in LUMM. Silly or smart. We'll know soon enough. DJ