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

To: pat mudge who wrote (2285)	5/28/2001 8:47:55 PM
From: Greg Thornton	Respond to of 2484

From the PR released on May 9, 2001: "... at March 31, 2001, Lumenon has a working capital of CDN$27,182,000 (US$17,232,000) compared to CDN$33,194,000 (US$22,128,000) as at December 31, 2000." Now, subtract CDN $27.182MM from CDN $33.194MM and you get CDN $6.012MM. Use today's conversion rate (0.647 US$ per CDN$) and you get US $3.890MM in cash burned during the quarter. This is consistent with the number they gave interested investors earlier in the quarter of roughly US $1.3MM per month. If you just subtract the US$ numbers ($22.128MM - $17.232MM) you get US $4.896MM burned during the quarter, which is clearly not the case. The reason for this, as I explained in my previous post, is that the exchange rate on December 31, 2001 was 0.667 US$ per CDN$ (close to the 52 week high), and the exchange rate on March 31, 2001 was 0.636 US$ per CDN$ (close to the 52 week low). These exchange rates were used to do the conversion from CDN$ to US$ on the two different dates and this is what has led to your confusion, IMHO. In any case, as I stated before, the burn rate in US$ is meaningless since they do not spend US dollars to run the company! And expenses are not rising, they are falling, and will be cut further in the near future. With US $17MM in cash and a burn rate of only US $1.3MM per month, they are good for at least another year and that is before taking any further cost reductions into account. As for your concerns: 1) Although Lumenon does not own the patent it uses to create the sol gel it uses in creating optical components with PHASIC, they are licensed to use the patent which is owned by the schools. The wording in the 10K is typical SEC filing, CYA type, lawyer mumbo jumbo. 2) The fact that management, the schools, and Molex control 50% of the stock should not be a surprise to anyone. Do you honestly think that any of them would turn down a reasonable offer for the company? 3) I am fully aware that the CFO was asked to resign and I, unlike you, think this is a good thing -- it shows that Moskovitz is already shaking things up. If you think that Belanger's departure is news, did you know that Reg Ross is gone as well? The position he held is not necessary at this point, IMHO, now that we have a businessman running the company. Greg