<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                         TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)

|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended JUNE 30, 2001
                          -------------

                                       OR

| |      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from _____________________ to ________________________

                        Commission File number 000-27977


                  LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


                 Delaware                                        98-0213257
      -------------------------------                        -------------------
      (State or Other Jurisdiction of                        (I.R.S. Employer
      Incorporation or Organization)                         Identification No.)

 8851 Trans-Canada Highway, St-Laurent, Quebec, Canada             H4S 1Z6
 -----------------------------------------------------            ----------
       (Address of Principal Executive Offices)                   (Zip Code)

Registrant's telephone number, including area code: (514) 331-3738
                                                    ---------------

Securities registered pursuant to Section 12(b) of the Act:  NONE
                                                             ----

Securities registered pursuant to Section 12(g) of the Act:

                         COMMON STOCK, $0.001 PAR VALUE
                         ------------------------------
                                (Title of Class)



         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____


<PAGE>   2
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of September 25, 2001 was US$13,467,616. The registrant has no
non-voting stock. There were 38,478,905 shares of common stock, $0.001 par
value, of the registrant outstanding as of September 25, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's definitive Proxy Statement for its 2001
Annual Meeting of Stockholders scheduled to be held on November 14, 2001, which
will be filed with the Securities and Exchange Commission no later than 120 days
after June 30, 2001, are incorporated by reference into Part III of this Annual
Report on Form 10-K.

                           FORWARD-LOOKING STATEMENTS

         This Annual Report on Form 10-K includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 that are subject to a number of risks and
uncertainties. All statements, other than statements of historical facts,
included in this Annual Report on Form 10-K regarding our strategy, future
operations, financial position, estimated revenues, projected costs, prospects,
plans and objectives of management are forward-looking statements. When used in
this Annual Report on Form 10-K, the words "will", "believe", "anticipate",
"intend", "estimate", "expect", "project" and similar expressions are intended
to identify forward-looking statements. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers, dispositions,
joint ventures or strategic alliances. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including risks described in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and elsewhere in
this Annual Report on Form 10-K. We do not assume any obligations to update any
of the forward-looking statements we make.

                                WEB SITE ADDRESS

         Our web site address is www.lumenon.com. References in this Annual
Report on Form 10-K to www.lumenon.com or any variations of the foregoing or any
other uniform resource locator or URL are inactive textual references only. The
information on our web site or at any other URL is not incorporated by reference
into this Annual Report on Form 10-K and should not be considered to be a part
of this document.




<PAGE>   3
                                   TRADEMARKS

         "Lumenon" is a trademark of Lumenon Innovative Lightwave Technology,
Inc. PHASIC(TM) is the trademark of Lumenon Innovative Lightwave Technology,
Inc. Other product, company or organization names cited in this Annual Report on
Form 10-K may be service marks, trademarks or trade names of their respective
companies or organizations.




<PAGE>   4

                                TABLE OF CONTENTS

<TABLE>
<S>              <C>                                                                                            <C>
PART I.........................................................................................................   1

   Item 1.      Business.......................................................................................   1

   Item 2.      Properties.....................................................................................  14

   Item 3.      Legal Proceedings..............................................................................  14

   Item 4.      Submission of Matters to a Vote of Security Holders............................................  14

PART II........................................................................................................  15

   Item 5.      Market for Registrant's Common Equity, Exchange Rate Information and Related
                Stockholder Matters............................................................................  15

   Item 6.      Selected Financial Data........................................................................  16

   Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations..........  18

   Item 7A.     Quantitative and Qualitative Disclosures about Market Risk.....................................  31

   Item 8.      Financial Statements and Supplementary Data....................................................  31

   Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........  31

PART III.......................................................................................................  32

   Item 10.     Directors and Officers of the Registrant.......................................................  32

   Item 11.     Executive Compensation.........................................................................  32

   Item 12.     Security Ownership of Certain Beneficial Owners and Management.................................  32

   Item 13.     Certain Relationships and Related Transactions.................................................  32

PART IV........................................................................................................  33

   Item 14.     Exhibits, Financial Statement Schedules, and Current Reports on Form 8-K.......................  33

</TABLE>



<PAGE>   5

                                     PART I

ITEM 1.  BUSINESS.

OVERVIEW

         Lumenon is a development stage company. We design, develop and build
optical components and devices in the form of compact hybrid glass circuits on
silicon chips for equipment providers in the telecommunications, data
communications and cable markets. These photonic components and devices, which
are based on our hybrid glass technology and our patented PHASIC(TM) design
process and manufacturing methodology, offer equipment providers the ability to
reduce the network system costs of their customers, the service providers. Our
optical components and integrated optical devices enable the reduction of
network costs by significantly boosting bandwidth in fiber optic cabling, the
pipeline for today's burgeoning telecommunications, data communications and
cable industries.

         Our plan of operations for the fiscal year ending June 30, 2002 is to
finalize the development of our optical components and devices to be used in
dense wavelength division multiplexing networks, known as DWDM networks, and
coarse wavelength division multiplexing networks, known as CWDM networks, and to
bring these devices to market through volume manufacturing. We will focus our
management efforts in five areas:

         -        refining our technology and development process to ensure a
                  smooth transition from the research and development to the
                  manufacture of our optical components and devices, thereby
                  allowing us to more easily scale to volume production;

         -        broadening our product offerings from simple passive
                  components to a mix of products, ranging from simple devices
                  offered on unpackaged optical chips to packaged,
                  multi-functional integrated optical devices, and providing
                  related services;

         -        continuing qualification and test programs for our products in
                  order to achieve required industry and customer standards,
                  such as Telcordia;

         -        continuing to provide samples of optical components and
                  integrated optical devices in pursuit of design wins, as well
                  as engaging customers in pursuit of volume orders and
                  deliveries; and

         -        prudently managing our resources to achieve our growth
                  objectives while endeavoring to ensure the long term viability
                  of the company by broadening and deepening our base of skilled
                  technology staff and augmenting our reserves of working
                  capital.

         As a development stage company, we have not generated product revenues
to date. We do not anticipate generating product revenues until at least the
third quarter of the fiscal year ending June 30, 2002.




<PAGE>   6

HISTORY OF LUMENON

         Lumenon's principal place of business is located in St-Laurent, a
suburb of Montreal, in Quebec, Canada. We were incorporated in the State of
Delaware in February 1996 under the name of WWV Development, Inc. In July 1998,
we acquired all of the issued and outstanding shares of Lumenon Innovative
Lightwave Technology, Inc., a Canadian corporation, which we refer to as LILT,
and was founded in March 1998 by Dr. S. Iraj Najafi and Dr. Mark P. Andrews.
Upon consummation of the acquisition, we changed our name from WWV Development,
Inc. to Lumenon Innovative Lightwave Technology, Inc. As consideration for such
acquisition, we issued 12,200,000 shares of common stock to the shareholders of
LILT, which resulted in a change in control of WWV Development, Inc. Under
applicable accounting rules and policies, LILT is deemed the acquiring
corporation and the financial information contained herewith is that of LILT, as
consolidated with Lumenon.

INDUSTRY BACKGROUND

         Accelerating technological innovation and government deregulation of
telecommunications, data communications and cable markets have in recent years
facilitated the widespread use of the Internet, e-mail, cable networks and
mobile telephony. These developments have altered the manner in which
individuals and entities communicate with one another, retrieve information,
transfer data and utilize audio, video and interactive services for both
business and personal uses. Exponential growth in user traffic and the adoption
of data-intensive applications on telecommunication and cable networks have
fueled strong demand for the continued installation of communication networks
and greater network capacity, otherwise known as bandwidth.

         As information traffic increases, service providers are increasingly
installing networks that use fiber optic cables to transmit light signals
because fiber optic cables deliver greater systems capacity in a more
cost-effective manner than traditional copper networks.

         Optical fiber is deployed across all segments of the telecommunications
network:

         -        long haul, including ultra-long haul and submarine, for
                  distance connections between widely separated cities;

         -        regional networks, for mid-range distances between nearby
                  cities;

         -        metropolitan, for connections within urban areas; and

         -        access and enterprise, for connections to individual homes,
                  organizations and businesses, and for connections between
                  various buildings operated by a single organization or
                  business.

         Installing fiber optic networks is a slow and extremely capital
intensive process. As a result, service providers are seeking to maximize system
capacity over existing networks as well as to increase dramatically the capacity
of new networks. This has led to the adoption of wavelength division
multiplexing, or WDM. Multiplexing devices combine, or multiplex, optical
signals of different wavelengths together on a single optical fiber without
those


                                       2


<PAGE>   7

wavelengths interfering with one another. Instead of transmitting data on a
single wavelength or color, multiplexers multiply the capacity of a fiber optic
network by combining different wavelengths of light, each carrying data, onto
one optical stream and transmitting it through a single fiber. At the other end,
signals are again separated, or demultiplexed. This permits a single fiber to
transmit multiple optical channels, thereby increasing the data transmission
capacity of any given fiber optic network. Multiplexing technology has been
further advanced through the introduction of dense wavelength division
multiplexing and coarse wavelength division multiplexing. DWDM permits many
wavelengths of light to be spaced closer together, thereby allowing even more
specific wavelengths of light, or optical channels, to be placed onto one
optical fiber. CWDM has more widely spaced optical channels and, therefore, less
capacity per fiber than DWDM, but it allows less costly lasers and other
components to be used in the accompanying network solution.

         DWDM and CWDM networks require mechanisms to direct selected optical
channels to specific customers. First generation optical networks accomplished
this by converting optical data to electronic form, directing the data using
legacy electronic switches, then converting the data back into optical form.
Service providers want to eliminate optical to electronic conversions in their
networks whenever possible in order to improve performance. Optical subsystems
capable of directing optical channels without converting to electronic signals
include optical add drop multiplexers, known as OADM. OADMs allow service
providers to receive, or add, channels from the network or deliver, or drop,
selected channels to specific customers. OADMs can either be fixed, whereby they
can deliver or receive the same optical channel, or configurable, known as
COADM, whereby they can be reprogrammed to add or drop different channels as
required.

         During the fiscal year ended June 30, 2001, the telecommunications
sector, and in particular the fiber optic networking sector, suffered a severe
downturn, with system providers scaling back on deployment and equipment
manufacturers relying on component inventories to meet reduced demand. The
reduction in demand has been particularly severe in the North American long haul
sector and less severe in the international metropolitan, access and enterprise
segments. In addition to the market downturn, there has also been an incredible
growth in the number of companies competing with Lumenon in the optical
components market. A large number of these companies were established and funded
in 1999 and 2000 and are now competing in a dramatically reduced market.

         However, despite the recent turmoil in the industry, we believe that
the future market for optical components remains very attractive. We believe
that specific sectors, such as integrated optical devices and other components
for the metropolitan, access and enterprise segments, will experience
particularly strong growth. The metropolitan, access and enterprise networks
connect the ultimate consumers of bandwidth - individuals, organizations and
businesses - to the network core - the long haul and regional connections -
which have experienced the rapid build out in recent years. Service providers
continue to struggle with a variety of challenges including reducing the cost,
power requirements and size of optical components and eliminating the bandwidth
"bottleneck" connecting the consumers at the edge of the network to the
relatively vast capacity of the network core. Fortunately, many of these
challenges will be addressed by the introduction and wide scale use of our
integrated optics such as our integrated optical devices.


                                       3


<PAGE>   8
MARKET OPPORTUNITY

         Traditionally, optical devices have been highly specialized, bulky
devices requiring a large numbers of parts to accommodate the integration of
disparate technologies and significant footprint requirements for fiber
management and connections. The production of those devices using traditional
techniques generally required labor intensive precision engineering and manual
assembly techniques, making them expensive and difficult to manufacture. The
footprint, volume, cost and manufacturing drawbacks of these devices limit the
deployment of such devices by service providers. Manufacturers of fiber optic
network equipment are increasingly demanding components and devices that meet
the following requirements:

         HIGHER LEVELS OF FUNCTIONALITY. Fiber optic network equipment providers
         increasingly want to focus on system design and installation rather
         than component assembly and therefore prefer to purchase optical
         devices that combine multiple functions and are ready for installation
         into their network solutions. This in turn has increased the demand for
         fully assembled devices that combine multiple active or passive
         functions, or active and passive devices, in a single package rather
         than a collection of discrete components interconnected by fiber
         cables. Active devices are those that generate, detect and switch or
         modulate light signals, such as lasers, photodetectors, switches and
         modulators, and passive devices are those that manipulate, guide and
         route light signals, such as optical splitters, multiplexers,
         demultiplexers and taps (which is a splitter with power divided
         asymmetrically).

         HIGH VOLUME PRODUCTION. The extension of optical fiber into
         metropolitan, access and enterprise networks requires a new generation
         of optical devices that can be manufactured in higher volumes at lower
         unit costs. The complex design of existing components as well as the
         need for manual production of such components causes them to be
         ill-suited to meet these requirements.

         HIGHER PERFORMANCE. Fiber optic network providers and operators of
         fiber optic networks are demanding components that are reliable,
         cost-effective and energy-efficient. As a result, fiber optic network
         equipment providers are providing fully integrated products that
         typically have smaller footprints and volumes, consume less power and
         are more reliable and accurate than the traditional discrete products
         that are linked together. With a single integrated device, connectors
         between components are eliminated, thereby reducing system optical
         losses, minimizing system size and decreasing system manufacturing
         costs. Due to increased design complexity and the manufacturing
         constraints of the manual assembly process, producing components which
         combine both high performance and functional integration is very
         difficult for manufacturers using traditional manufacturing techniques.

         REDUCED TIME TO MARKET AND SHORTER PRODUCT LEAD TIMES. Rapid network
         installation makes it necessary for system providers and equipment
         manufacturers to procure the fiber optical components they need, in the
         quantities they require, in the shortest possible time. Component
         manufacturers in turn face strong customer demand and competitive
         pressures to reduce product development and production time from the
         moment when customer specifications and requirements are received to
         the moment when finished products are delivered.


                                       4


<PAGE>   9


        The evolution of the fiber optic components industry and the impact of
the evolving industry requirements have created a significant market opportunity
for optical component and device suppliers who can produce integrated fiber
optic components based on cost-effective, high volume and low unit cost
production technology that can easily be adapted to meet the changing needs of
the market. Existing manufacturers, relying on traditional manual production
techniques, face the burden of phasing out their products and production
facilities while at the same time designing new production processes, qualifying
them and installing new production equipment.

THE LUMENON PLAN

         Lumenon designs, builds and markets optical components and integrated
optical component solutions based upon our expertise in materials science and
optical design techniques for planar optical circuits and our patented Photonic
Hybrid Active Silica Integrated Circuit process, which we refer to as
PHASIC(TM).

         While traditional fiber optic component manufacturers combine discrete
elements in manually assembled devices, we can achieve similar functionality in
a single integrated chip with our proprietary silicon-based optical circuitry.
This technology enables us to apply the basic material used for integrated
electronic circuits, namely, silicon, to build high quality integrated optical
components. The process is similar to the design and production of
microelectronic chips widely used in computers and telecommunications
applications. Drawing on a combination of automated assembly techniques and
standard silicon fabrication technology, we are able to significantly reduce the
cost, time and complexity of designing and manufacturing optical components and
devices.

         Our components and devices are created from a class of proprietary
hybrid glass materials which are designed to provide both specific optical
properties and properties particular to the PHASIC(TM) manufacturing process.
Lumenon's patented low-temperature PHASIC(TM) technology creates planar
lightwave circuit components in the form of "optical chips" on silicon.
PHASIC(TM) is an end-to-end, integrated design process and manufacturing
methodology and the basis of Lumenon's capability to design rapidly and produce
both generic product platforms and customized devices to meet specific customer
needs.

         Key PHASIC(TM) features include:

         -        One-step coating of the highest optical quality for thin and
                  thick film components and devices;

         -        A generic material technology that extends beyond conventional
                  glass;

         -        Processing that is resist and metallisation free;

         -        Processing without high-temperature annealing;



                                       5


<PAGE>   10
         -        Topographical relief processing that avoids reactive ion
                  etching; and

         -        Extremely rapid product customization via a suite of
                  proprietary design tools, a library of characterized materials
                  and pre-designed planar circuit "objects" which easily combine
                  to assemble more complex, multifunctional devices.

         PHASIC(TM) allows us to develop a fast, direct photolithographic method
for depositing planar lightwave circuit components (e.g., waveguides) on
integrated optics devices at low temperatures (under 200 degrees Celsius). The
PHASIC(TM) manufacturing methodology works in much the same way as printing
photographs in a darkroom. It begins with a silicon substrate to which a coating
of low-temperature hybrid glasses with attractive features of organic polymers
and inorganic glasses is added. A contact mask placed on top of the substrate
maps the circuit components the chip will carry. Light striking onto the chip
through the openings in the mask changes the refractive index of the exposed
areas of the material, creating the desired circuit components.

         An essential feature of Lumenon's PHASIC(TM) process is the underlying
organic-inorganic hybrid glass technology used to fashion waveguides and
gratings on silicon by simple ultraviolet light imprinting. Lumenon's hybrid
glasses have properties which can be predictably tuned, from those closely
related to organic polymers, all the way to properties that approach those of
conventional inorganic glasses.

         Lumenon's approach has fewer process steps, less capital-intensive
equipment, fewer environmental dependencies and greater potential yield than
competing technologies. The process is less time consuming and more flexible
than other chip manufacturing methods, such as those used by our competitors.
The PHASIC(TM) manufacturing methodology also requires lower manufacturing
temperatures than the technologies used by our competitors - less than 200
degrees Celsius for the PHASIC(TM) process versus as much as 1,000 to 500
degrees Celsius as used by our competitors. This low temperature advantage
allows the possibility of producing and combining both active and passive
components on the same substrate.

         With the PHASIC(TM) design process and manufacturing methodology, the
manufacturing time and complexity does not scale with the number of channels per
chip because all channels are created simultaneously. A 32-channel DWDM, for
example, requires similar time and manufacturing steps to produce as a 4, 8 or
16 channel version, which permits much faster production rates and higher
product yield. In addition, fewer process steps ensure greater inherent
production quality and reliability.

         As part of the PHASIC(TM) technology, Lumenon has developed proprietary
design tools, including software algorithms and theories for creating product
designs for other optical devices. In addition, Lumenon has developed a library
of design tools and elements that can be used in modular form to assemble more
complex, multifunctional devices on a chip. These tools allow considerable time
savings both during the design phase of a new generic product platform and
during the customization of product platforms for specific customer
requirements.

         Our technology and processes are designed to meet the emerging
requirements of the optical component marketplace. Specific market requirements
addressed by Lumenon include:

                                       6



<PAGE>   11
         HIGHER PERFORMANCE. The combination of many optical functions on a
         single optical chip reduces the losses in optical power that generally
         occur when light is processed through a combination of discrete
         components and allows for increased precision and control over the
         optical signals.

         LOWER COST. By using high volume processing techniques, our devices
         benefit from cost advantages similar to those experienced with high
         volume electronic silicon chip manufacturing.

         SCALABLE, HIGH VOLUME PRODUCTION. Our technology permits a wide variety
         of optical components and devices to be manufactured using established
         process steps developed by the semiconductor industry. These process
         steps permit rapid production schedules and offer opportunities for
         economies of scale. Because we can readily draw upon and combine a
         variety of developed process steps, we can design and implement product
         variations quickly and increase production volumes with minimal delay
         or dislocation. This enables us to respond rapidly to changes in market
         or customer demands.

         COMPACT SIZE (SMALL FOOTPRINT). Because our technology takes advantage
         of the compactness of silicon chips, it allows us to considerably
         reduce the overall size of our optical components and devices.

         SIMPLIFIED PACKAGING. Conventional optical components require
         considerable technical skill and manual manipulation to attach and
         align the optical fiber. Our technology allows for a much simpler fiber
         attachment, resulting in easier and quicker device packaging and
         interfacing.

         RELIABILITY. Integrating all components and functions onto a single
         chip reduces the number of interfaces between separate components,
         thereby improving overall functionality and reliability.

         Our manufacturing methods are based upon those long accepted by the
semiconductor and microelectronics industries, allowing us to leverage existing
capital equipment designs and associated methodologies. We have adapted these
methods to produce hybrid silica glass integrated optical components and
devices. Our methodology reduces costs by avoiding complex and costly processing
and etching sequences. We believe that the relative simplicity of our PHASIC(TM)
process, using hybrid glasses, will enable us to fabricate optical chips across
the broadest range of photonic market opportunities in high volume.

LUMENON STRATEGY

         Our objective is to be a leading global provider of integrated optical
components and devices to telecommunications, data communications and cable
providers and thereby capture a significant share of the fiber optic component
market. We intend to achieve this goal by:

         DEVELOPING AND MARKETING A FULL LINE OF INTEGRATED, NETWORK-ENABLING
         OPTICAL COMPONENTS. By combining light generating, detecting and
         modulating (active) functions with light manipulating, guiding and
         routing (passive) functions onto one integrated silicon-based chip, we
         believe our technology will enable us to quickly develop and market, in
         the


                                       7


<PAGE>   12
         required numbers, optical components that are more responsive to market
         demands for greater bandwidth than is currently possible with other
         technologies. Our optical circuit technology can be applied to all
         basic optical functions and we intend to leverage our technology by
         introducing a full line of optical products, from basic passive devices
         to optical devices integrating multiple passive functions to integrated
         optical devices incorporating passive and active functionality.

         EXPLOITING HIGH VOLUME, LOW-COST MANUFACTURING PROCESSES AND
         TECHNOLOGIES. We intend to take commercial advantage of the mass
         production techniques, economies of scale, production yield and
         reductions in product development time that our optical circuit
         technology makes possible. To exploit our production technology, we
         have constructed a fully equipped, self-contained assembly and test
         facility in St-Laurent (Montreal, Quebec), Canada. We believe that the
         availability of this facility is a competitive advantage because it
         permits us to respond quickly and easily to specific customer
         requirements.

         ESTABLISHING AND MAINTAINING COLLABORATIVE RELATIONSHIPS. We intend to
         capitalize on and strengthen the close collaborative relationships we
         have established with leading companies active in the fiber optic
         market, such as Litton Poly-Scientific (now a subsidiary of Northrop
         Grumman). We believe that fostering close relationships with the
         leading companies in the fiber optics market affords us a competitive
         advantage in the areas of product design, acceptance and qualification.
         Some of these collaborative relationships have begun as companies seek
         access to Lumenon's unique expertise in materials, optical circuit
         design and manufacturing processes. We will pursue opportunities to
         provide a range of revenue generating services as these relationships
         develop. We intend to continue to establish appropriate collaborative
         relationships in order to gain access to markets, customers and
         technologies as well as to generate service revenue.

         ENHANCE SALES, MARKETING AND CUSTOMER SUPPORT CAPABILITIES. We believe
         that the highly technical nature of our products and the sophisticated
         and highly specialized needs of our potential customers require us to
         maintain a knowledgeable, proactive and capable sales and marketing
         staff. We continue to invest in staff devoted to sales and marketing
         functions, particularly in the areas of product management and direct
         selling and, where appropriate, to establish relationships with
         third-party distributors. Our initial geographical focus will be on
         customers in North America and Europe, followed by Asia and the rest of
         the world. We also intend to complement our sales and marketing efforts
         by investing in customer support functions to ensure that our close
         customer relationships continue after products are deployed to sustain
         the retention of existing customers and to identify areas for further
         technical improvement and development.

         CONTINUING TO ENHANCE OUR STRONG TECHNICAL STAFF. We have assembled a
         world class group of highly skilled scientists, engineers and
         technicians to design, develop and manufacture our components and
         integrated optical devices. As we move from a research and development
         phase into production, and from developing simple passive components to
         integrated optical devices, we recognize the need to selectively
         enhance our technical team with specific expertise and experience. We
         envision adding between


                                       8

<PAGE>   13
         10 to 20 technical staff members during the fiscal year ending June 30,
         2002. In addition, we will continue to enhance the skills of our
         existing staff through a structured in-house training program. This
         training program includes technical, project and general management
         components.

PRODUCTS AND PRODUCT DEVELOPMENT

PRODUCT PORTFOLIO

         Our technology and processes allow us to address a wide range of
product opportunities. Our optical circuit technology can be applied to all
basic optical functions and we intend to leverage our technology by introducing
a full line of optical products, from basic passive components to optical
devices integrating multiple passive functions and integrated optical devices
incorporating passive and active functionality.

         Lumenon's product development cycle begins with the identification of a
product opportunity. Our development process focuses on three areas: material
science, manufacturing processes, and optical design. One challenge is to define
a material solution based upon a library of existing proprietary material
characteristics, which can be modified to have the required properties, but in
such a way that the product is still manufacturable by the PHASIC(TM) process.
Another challenge is to define an optical circuit solution given the selected
material and process windows, which meets or exceeds the performance
requirements of the product. Lumenon uses design and simulation software,
coupled with existing libraries of component solutions, to quickly generate and
evaluate potential solutions. In addition to the above challenges, customers
often have specific requirements for the placement and type of connectors and
the dimensions of the device which place constraints on the design and introduce
product specific interconnect and thermal management requirements which must be
addressed. Lumenon has developed specific in-house, multi-disciplinary expertise
over the past three years of product development in order to address these
issues.

         Lumenon has focused primarily upon the design and development of
passive circuit components, such as splitters, couplers and arrayed waveguide
gratings, also known as AWG. This has allowed us to produce multiplexer and
demultiplexer filters for CWDM and DWDM optical networks. We have also taken the
next step and are developing optical devices that integrate two or more passive
circuit elements into a single device. Finally, we have under development
integrated optical devices, such as the COADM, which combine passive and active
circuit elements. These active circuit elements include detectors, lasers,
modulators, switches and attenuators.

         Our goal for the fiscal year ending June 30, 2002 is to accelerate the
transition from our offering of simple passive components to providing a mix of
products and services ranging from optical chips to integrated photonic devices.
We intend to offer our optical component products at three stages of the
production process:

         -        as chips to other component suppliers or to equipment
                  providers, which our customers can then use for their own
                  assembly purposes;




                                       9


<PAGE>   14

         -        as packaged devices, where we assemble chips with optical and
                  electrical connections; and

         -        as modules, which involve a higher level of additional
                  electronics in order to yield a higher level, value-added
                  product.

         Today, our products are primarily configured for metropolitan and
access network applications, where the need for high volume, cost-effective
components that feature reduced complexity and greater ease of production is
particularly critical. However, our long-term goal is to pursue opportunities in
all market segments, including the long haul market, regional and enterprise
segments. For the fiscal year ending June 30, 2002 and beyond, we aim to
increase our product range significantly. The following is a summary of our
product offerings and those products scheduled for launch during the fiscal year
ending June 30, 2002:

<TABLE>
<CAPTION>

PRODUCT                                                 DESCRIPTION                               STATUS
-------                                                 -----------                               ------
<S>                                     <C>                                          <C>
Multiplexers and Demultiplexers for     16 to 40 channel, 100 GHz multiplexers and   Undergoing manufacturing
DWDM Networks                           demultiplexers suitable for DWDM             optimization
                                        point-to-point, optical cross connections
                                        and wavelength applications

Multiplexers and Demultiplexers for     4 and 8 channel, 20 and 24 nm multiplexers   Undergoing manufacturing
CWDM Networks                           and demultiplexers suitable for CWDM         optimization
                                        point-to-point, optical cross connections
                                        and wavelength routing applications

Configurable Optical Add-Drop           Lumenon is developing key integrated         In development
Multiplexer (COADM) Components          optical modules as part of the joint
                                        development of a MEMS-based COADM
                                        solution with Litton Poly-Scientific
                                        (now a subsidiary of Northrop Grumman).
</TABLE>

RESEARCH AND DEVELOPMENT

         Since our inception, we have devoted a significant amount of our
resources to research and development. In our fiscal years ended June 30, 1999,
2000 and 2001, we have spent approximately CDN$162,000, CDN$219 million and
CDN$8.3 million, respectively, on research and development, net of tax credits
and grants. We believe that continued investment in our technology is critical
to our future success and that research and development expenses will increase
in absolute terms in future years.

         Our research and development organization includes more than 40
persons, 15 of whom hold advanced degrees. We believe the expertise of this
organization in the application of silicon-based technology to optical
components is unique. We have assembled a team with broad expertise in materials
formulation, photonic device design, hybrid glass integrated optics


                                       10


<PAGE>   15

circuit fabrication, product definition and industrial process engineering. This
team has pioneered the development of "photonic chips on silicon" based on
proprietary formulations of hybrid glasses and the creation of software design
tools. Our technical structure comprises software development/optical circuit
design, materials formulation and process engineering. This should allow us to
evolve as a significant provider of integrated optics products to the photonic
industry.

         We have also created a technical advisory board to advise us on
photonic market trends and technology and to assist in the development of an
optical information technology "roadmap" for our benefit. This board consists of
three external scientists with extensive experience and expertise in the
industry.

         Our research and development facilities in St-Laurent (Montreal,
Quebec), Canada include computer-aided design stations, modern laboratories and
automated test equipment. We intend to devote continued research and development
resources to expand our existing product line, enhance our manufacturing
processes in order to reduce production costs, provide increased device
performance and reduce the time to market in developing our products.

MANUFACTURING

         Lumenon's manufacturing facility, contained within our high technology
facility of approximately 53,427 square feet located in St-Laurent (Montreal,
Quebec), Canada, includes a materials formulation laboratory, which is a 1,000
square feet, class 10,000 clean room with temperature, humidity and light
control and is serviced with compressed air, nitrogen and vacuums for materials
preparation and a micro fabrication facility, which is a world class 3,000
square feet, class 100 clean room with the capacity to generate up to 500
devices a day.

ENGINEERING

         Lumenon uses both proprietary and industry standard design tools to
create our integrated optical devices. We have developed in-house theories and
software algorithms for creating product designs. We have also obtained licenses
for industry standard computer aided design, also known as CAD, and beam
propagation method, also known as BPM, software to model or design selected
performance features of simpler devices, like couplers and splitters.

EXECUTIVE OFFICERS

         Our executive officers and their respective ages, as of September 25,
2001, are as follows:

<TABLE>
<CAPTION>
NAME                                     AGE            POSITIONS
----                                     ---            ---------
<S>                                      <C>            <C>
Gary Moskovitz.......................    54             President, Chief Executive Officer, Secretary and Director

Dr. Mark P. Andrews..................    50             Vice President, Chief Technical Officer and Director
</TABLE>



                                       11


<PAGE>   16
         Gary Moskovitz has served as our President and Chief Executive Officer
and a director since May 2001 and as our Secretary since June 2001. Before
joining us, Mr. Moskovitz served as President and Chief Executive Officer of
Helysis, Inc., a company in the rapid prototyping systems industry, from 1998 to
2000. Mr. Moskovitz was Executive Vice President and Chief Operating Officer of
Quintar Corporation, a company in the electronic printing and networked image
server industry, from 1992 to 1998.

         Dr. Mark P. Andrews has served as our Vice President and Chief
Technical Officer and as a director since 1998. From 1998 to 2001, Dr. Andrews
also served as our Secretary. Dr. Andrews served as an Associate Professor in
the Department of Chemistry at McGill University from 1990 to 2000. Dr. Andrews
is also a member of the Materials Research Society and the International Society
for Optical Engineers.

EMPLOYEES

         In the fourth quarter of the fiscal year ended June 30, 2001, we
announced a restructuring plan designed to better align our cost structures with
continued adverse market conditions which resulted in reductions in our
headcount by approximately 25% from 120 employees to 90 employees as of June 30,
2001. This headcount reduction resulted in the elimination of various senior
management functions and a trimming of administration and support staff. Of the
90 persons we employed as of June 30, 2001, 26 were employed in manufacturing,
40 were employed in research and development and the remainder were employed in
sales, marketing and administration.

INTELLECTUAL PROPERTY

         Lumenon relies on a combination of patent, trade secret, copyright and
trademark law, as well as contracts with third parties, to establish and
maintain proprietary rights in our technology and products. We are the co-owner
of a United States patent and a pending provisional patent application relating
to our technology. There can be no assurance that our patent application, or any
others that may be filed in the future, will be issued, or that upon issuance,
the patents will not be challenged or invalidated. In addition, while we intend
to vigorously protect our rights, there can be no assurance that any such
measures will be successful.

         All of our scientists and engineers have executed confidentiality and
assignment of invention agreements. In addition, prior to disclosing
confidential information to third parties, we generally require the third party
to sign confidentiality or other agreements restricting the use and disclosure
of our confidential information.

MATERIAL AGREEMENTS

AGREEMENT WITH POLYVALOR AND MCGILL UNIVERSITY

         Lumenon has entered into a license agreement with Polyvalor and McGill
University pursuant to which Lumenon acquired an exclusive license in connection
with certain technology based on the work of Dr. Najafi at Ecole Polytechnique
and Dr. Andrews at McGill University and their respective teams of
collaborators. The exclusive license granted to us is subject to a license
granted to QPS Technology Inc. in May 1998.



                                       12


<PAGE>   17
AGREEMENT WITH POLAROID CORPORATION

         LILT Canada, Inc., a wholly-owned subsidiary of Lumenon, entered into a
license agreement with Polaroid Corporation pursuant to which LILT Canada, Inc.
obtained a worldwide, irrevocable, non-exclusive license for certain patents
owned by Polaroid Corporation.

AGREEMENT WITH LITTON POLY-SCIENTIFIC

         Lumenon and Litton Poly-Scientific (now a subsidiary of Northrop
Grumman) signed a Memorandum of Understanding (MOU) on February 8, 2001 which
defines a framework for co-operation in the joint development and marketing of a
Configurable Optical Add Drop Multiplexer, known as COADM. In the MOU, the
parties agreed to collaborate to define and market test a COADM design with the
stated intention of entering into subsequent agreements to develop and introduce
various versions of the COADM to market.

COMPETITION

         A large number of component suppliers produce optical components for
DWDM and CWDM networks in the market. A partial list of suppliers include JDS
Uniphase Corp., Gould Fiber Optics, Corning OCA, NTT Electronics Corporation,
Lightwave Microsystems Corp. and Bookham Technology plc. In addition, several
equipment providers, such as Lucent Technologies, Inc., Alcatel SA, Cisco
Systems, Inc., Nortel Networks Corp., NEC Corp. and Fujitsu Limited, also have
divisions or companies which produce optical components. We expect competition
to increase in the future from existing competitors and from companies that may
enter our markets with solutions that may be less costly or provide better
performance or features. To be successful, we must continue to respond promptly
and effectively to changing customer preferences, feature and pricing
requirements, technological change and competitors' innovations.

         Many of our potential customers have substantial technological
capabilities and financial resources. These customers may currently be
developing, or may in the future decide to develop or acquire, products or
technologies that are similar to or may be substituted for our products. This
may diminish purchases of our products. A number of our current and potential
competitors have longer operating histories, greater name recognition, access to
larger customer bases and significantly greater financial, technical, marketing
and other resources than us. As a result, they may be able to adapt more quickly
to new or emerging technologies and changes in customer requirements or to
devote greater resources to the promotion and sale of their products. In
addition, current and potential competitors may determine, for strategic
reasons, to consolidate, to lower the price of their products substantially or
to bundle their products with other products, thereby increasing competition for
our products. Current and potential competitors have established or may
establish financial or strategic relationships among themselves or with existing
or potential customers, resellers or other third parties. Accordingly, it is
possible that new competitors or alliances among competitors could emerge and
rapidly acquire significant market share. Increased competition may result in
price reductions, reduced gross margins and loss of market share.



                                       13


<PAGE>   18
         We believe that our ability to compete successfully depends on a number
of factors, both within and outside of our control. These factors include:

         -        the price, performance and quality of our products and those
                  of our competitors';

         -        the timing and success of new product and feature
                  introductions by us, our customers and our competitors;

         -        the emergence of new standards in the optical communications
                  industry and the development of technical innovations;

         -        the availability of raw materials;

         -        the efficiency of production;

         -        the rate at which our customers integrate our products into
                  their products and the number and nature of our competitors in
                  a given market;

         -        the assertion of intellectual property rights; and

         -        general market and economic conditions.

ITEM 2.  PROPERTIES

         We currently lease approximately 53,427 square feet in St-Laurent
(Montreal, Quebec), Canada where both our corporate headquarters and our
manufacturing and processing facilities are located. Our manufacturing facility
features materials preparation, fabrication, packaging, optical test and quality
control facilities for our products. Our processing facilities include modified
silicon processing equipment, such as lithography, etching, analytical
measurement and control equipment. We believe our current facilities will be
sufficient to meet our needs for the foreseeable future, but that additional
space will be available on commercially reasonable terms to meet space
requirements if they arise.

         We intend to sublease our remaining lease obligation for our
manufacturing facility in Dorval, Canada, which we no longer use. There are
approximately 2.5 years remaining in our lease obligation.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is subject to several lawsuits brought by former
employees. We believe these lawsuits are without merit and we intend to defend
these matters vigorously.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended June 30, 2001 through the solicitation
of proxies or otherwise.


                                       14


<PAGE>   19

                                    PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, EXCHANGE RATE INFORMATION AND
         RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         Our common stock has been traded on The Nasdaq National Market under
the symbol "LUMM" since April 13, 2000. From July 27, 1998, the day on which
trading in our common stock commenced, through January 19, 2000, our common
stock was quoted on the OTC Bulletin Board. From January 20, 2000 to March 9,
2000, pending the effectiveness of our registration statement on Form 10,
trading in our common stock was reported by the National Quotation Bureau on the
pink sheets. From March 10, 2000 through April 12, 2000, our common stock was
quoted on the OTC Bulletin Board. The following table sets out in US dollars the
high and low bid prices of our common stock for the two most recent fiscal
years. Prices through April 12, 2000 reflect inter-dealer prices, without retail
mark-up, markdown or commissions and may not necessarily represent actual
transactions.

<TABLE>
<CAPTION>

FISCAL YEAR ENDED JUNE 30, 2000                                              High                  Low
-------------------------------                                            --------              --------
<S>                                                                        <C>                   <C>
First Quarter ended September 30, 1999 ............................        US$14.25              US$ 1.63
Second Quarter ended December 31, 1999 ............................        US$40.97              US$ 7.56
Third Quarter ended March 31, 2000 ................................        US$53.00              US$11.03
Fourth Quarter ended June 30, 2000 ................................        US$28.38              US$ 8.30

FISCAL YEAR ENDED JUNE 30, 2001
-------------------------------

First Quarter ended September 30, 2000 ............................        US$28.94              US$14.38
Second Quarter ended December 31, 2000 ............................        US$16.06              US$ 4.03
Third Quarter ended March 31, 2001 ................................        US$ 8.63              US$ 1.69
Fourth Quarter ended June 30, 2001 ................................        US$ 2.56              US$ 0.50
</TABLE>



HOLDERS OF COMMON STOCK

         On September 25, 2001, there were 111 holders of records of our common
stock.

DIVIDENDS

         We have not paid and do not intend to pay cash dividends on our common
stock. We currently intend to reinvest earnings, if any, in the development and
expansion of our business. The declaration of dividends in the future will be at
the election of our board of directors and will depend upon our earnings,
capital requirements and financial position, general economic conditions and
other relevant factors.


                                       15

<PAGE>   20
EXCHANGE RATE INFORMATION

         Our functional and reporting currency is the Canadian dollar. The table
below sets forth, for the periods and dates indicated, information concerning
the noon buying rates for the Canadian dollar per US$1.00. The rate reflects the
noon buying rate for cable transfers in New York City in foreign currencies
certified by the Federal Reserve Bank of New York. The average consists of the
average noon buying rates on the last day of each full month during the
indicated period.

<TABLE>
<CAPTION>
                                                       CLOSE           AVERAGE            HIGH             LOW
                                                       ------          -------           ------           ------
<S>                                                    <C>              <C>              <C>              <C>
Fiscal year ended December 31, 1998                    1.5375           1.4993           1.5770           1.4075
Fiscal year ended June 30, 1999                        1.4735           1.4886           1.5302           1.4512
Fiscal year ended June 30, 2000                        1.4798           1.4727           1.5135           1.4350
Fiscal year ended June 30, 2001                        1.5175           1.5199           1.5790           1.4639
</TABLE>

SALES OF UNREGISTERED SECURITIES

         We did not issue any unregistered securities during the fourth quarter
of the fiscal year ended June 30, 2001.

ITEM 6.   SELECTED FINANCIAL DATA

         The following table sets forth selected financial data for the Company
for the periods indicated, derived from consolidated financial statements
prepared in accordance with generally accepted accounting principles in the
United States that have been audited by KPMG LLP, Montreal, Canada, for the
periods ended June 30, 2001, June 30, 2000, June 30, 1999 and December 31, 1998.
The data set forth below should be read in conjunction with our consolidated
financial statements and notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Annual Report on Form 10-K.

         We changed our fiscal year end from December 31 to June 30, effective
in 1999.

         Our functional and reporting currency is the Canadian dollar. For
convenience, our most recent financial information has also been presented in US
dollars. The US dollar figures in items 6 and 7 are converted from the Canadian
dollar using the Bank of Canada closing rate of CDN 1.5140 per US dollar as at
June 29, 2001, except for the conversion prices of the convertible notes and the
original proceeds of these notes.




                                       16


<PAGE>   21

                             SELECTED FINANCIAL DATA
               (In thousands of dollars, except per share amounts)

<TABLE>
<CAPTION>

                                          JUNE 30,          JUNE 30,            JUNE 30,           JUNE 30,          DECEMBER 31,
                                           2001              2001                2000               1999                 1998
                                         --------          --------            --------           --------          ------------
                                      (U.S. dollars)   (Canadian dollars)  (Canadian dollars) (Canadian dollars)  (Canadian dollars)

CONSOLIDATED BALANCE SHEET DATA
-------------------------------
<S>                                       <C>               <C>                 <C>                <C>               <C>
Current Assets                            $16,082           $24,347             $ 6,059            $ 2,045           $   553

Property and Equipment                     14,040            21,257               4,603              1,493                --

Total Assets                               30,649            46,402              12,200              3,547                553

Current Liabilities                         3,098             4,690               1,607              1,003                119

Convertible Notes                           7,442            11,267                  --                 --                --

Stockholders' Equity                       19,205            29,077              10,314              2,545               434
</TABLE>



<TABLE>
<CAPTION>

                                       FISCAL YEAR      FISCAL YEAR       FISCAL YEAR         SIX MONTHS          FROM INCEPTION
                                          ENDED            ENDED             ENDED               ENDED                  TO
                                      JUNE 30, 2001    JUNE 30, 2001     JUNE 30, 2000       JUNE 30, 1999       DECEMBER 31, 1998
                                      -------------    -------------     -------------       --------------      ------------------
                                     (U.S. dollars) (Canadian dollars) (Canadian dollars)  (Canadian dollars)    (Canadian dollars)


CONSOLIDATED STATEMENT OF OPERATIONS DATA
-----------------------------------------
<S>                                     <C>             <C>                <C>                    <C>                  <C>
Research and Development
 Expenses(1)                            $ 5,466         $ 8,276            $218,968              $ 162                 $  12

General and Administrative(2)            16,575          25,093               4,914                569                   290

Other Expenses (Income)(3)               16,543          25,047                (320)                18                   (14)
                                        -------         -------            --------               ----                 -----
Net Loss                                 38,584          58,416             223,562                749                   288
                                        =======         =======            ========               ====                 =====

Loss Per Share
 Basic and diluted(4)                   $  1.04         $  1.58            $   8.80              $0.04                 $0.02

</TABLE>

-----------------------------

(1)      Amounts shown are net of tax credits and grants.

(2)      Including depreciation of CDN$4.9 million (US$3.2 million) for 2001
         compared to CDN$894,000 for 2000 and a write-down of property and
         equipment of CDN$2.5 million (US$1.7 million) for 2001, zero in prior
         years.

(3)      Including interest expense of CDN$2.3 million (US$1.5 million) in 2001
         and CDN$42,000 in 2000, financing charges of CDN$25.1 million (US$16.6
         million) in 2001, interest income of CDN$2.1 million (US$1.4 million)
         in 2001, CDN$279,000 in 2000, CDN$1,000 in 1999 and CDN$7,000 in 1998
         and gain on foreign exchange of CDN$278,000 (US$184,000) in 2001,
         CDN$83,000 in 2000 and CDN$7,000 in 1998 as well as a loss on foreign
         exchange of CDN$19,000 in 1999.


                                       17

<PAGE>   22

(4)      For the periods presented, Lumenon had 36,957,777, 25,415,601,
         17,480,967 and 14,972,188 weighted average number of issued and
         outstanding shares, respectively. We have never paid dividends on our
         common stock.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with "Selected Financial
Data" and the financial statements and notes thereto appearing elsewhere in this
Annual Report on Form 10-K.

OVERVIEW

         Lumenon changed its fiscal year end from December 31 to June 30,
effective in 1999. From inception (March 2, 1998) to December 31, 1998,
activities were oriented towards the organization of Lumenon. During the
six-month period ended June 30, 1999, key activities include certain financial
arrangements entered into in connection with the construction of our pilot plant
in Dorval, Quebec, Canada and the acquisition of related capital assets.

         For the purpose of this Management's Discussion and Analysis, 2001
refers to the fiscal year ended June 30, 2001 and 2000 refers to the fiscal year
ended June 30, 2000. In addition, figures for the six-month period ended June
30, 1999 and from inception (March 2, 1998) to December 31, 1998 are combined
and referred to as 1999.

FINANCIAL HIGHLIGHTS IN 2001

         As stated in item 5 above, we issued convertible notes for an aggregate
principal amount of CDN$51.2 million (US$35.0 million) on July 25, 2000. The
holders of the notes also received five year common stock purchase warrants
entitling them to acquire a total of 5,000,800 shares of our common stock. This
transaction was recorded by increasing the additional paid-in capital by
CDN$51.2 million as a result of the amount allocated to the stock purchase
warrants and the beneficial conversion feature of the notes. Accordingly, the
notes were discounted and are presented in our financial statements net of the
debt discount. During the rest of the year, CDN$15 million, net of the debt
discount (gross principal amount of CDN$33.3 million (US$22.7 million)) plus
interest, was converted into 2,931,666 shares of our common stock.

         In April 2001, Molex Incorporated, referred to as Molex, and Lumenon
mutually agreed to terminate a Stock Restriction Agreement and a Teaming
Agreement entered into in 1999 between the parties. Under the terms of the
agreements, Lumenon and Molex had agreed to jointly develop certain products
relating to the DWDM market and other photonic devices. In connection therewith,
Molex was committed to providing services towards the development of the
products and Lumenon granted Molex a warrant to purchase up to 5,800,000 shares
of common stock, which become exercisable as Molex fulfilled its obligations
pursuant to the agreements.



                                       18


<PAGE>   23
         In early May 2001, with the arrival of Mr. Moskovitz as our new
President and Chief Executive Officer, we eliminated various senior management
functions and streamlined the organization. We also reduced non-staff related
operating expenditures. The changes represented an approximate 25% net reduction
in headcount as of June 30, 2001, from 120 employees to 90 employees. In August
2001, we also completed the consolidation of our research and development
facility in Dorval, Canada into our new, state-of-the-art headquarters and
manufacturing center in St-Laurent (Montreal, Quebec), Canada.

RESULTS OF OPERATIONS

         Lumenon is a development stage enterprise, which has not, during the
periods presented in the selected financial data set forth above, realized any
revenues from operations.

RESEARCH AND DEVELOPMENT EXPENSES

COMPARISON OF 2000 TO 2001

         Research and development expenses decreased from CDN$219 million in
2000 to CDN$8.3 million (US$5.5 million) in 2001, a decrease of CDN$210.7
million. This decrease was principally due to a CDN $217.4 million non-cash
expense recorded during 2000, which resulted from the issuance of shares of our
common stock in consideration of certain services rendered by Molex under the
terms of the Teaming Agreement. The decrease is partially offset by an increase
in the size of our research and development team and the effect of certain
changes in our stock option incentive plan. During 2001, we increased our
research and development team by 22 additional people, resulting in an expense
of approximately CDN$574,000 (US$379,000). In addition, during the third quarter
of 2001, Lumenon changed the exercise period of certain outstanding options
granted under our stock option incentive plan from two to five years. The
modification of the terms of the outstanding options and the compensation
expenses associated with the grant of options to certain of our consultants
created a total non-cash compensation expense of CDN$4.9 million (US$3.3
million), of which CDN$1 million (US$684,000) was recorded under research and
development expenses. There was no significant expense of this nature in 2000.

COMPARISON OF 1999 TO 2000

         Research and development expenses increased from CDN$174,000 in 1999 to
CDN$219 million in 2000, an increase of CDN $218.8 million. Of this cost,
CDN$217.4 million was a non-cash expense which resulted from the issuance of
shares of our common stock in consideration of certain services rendered by
Molex under the terms of the Teaming Agreement.

         Lumenon's research and development expenses, other than those recorded
under the Teaming Agreement with Molex, increased by CDN$1.4 million. During
1999, Lumenon incurred few research and development expenses because, as of June
30, 1999, we had not engaged in full technical operations. At June 30, 2000, we
had operations consisting of a sizeable research and development group, a
facility and an expansion project underway.



                                       19


<PAGE>   24
GENERAL AND ADMINISTRATIVE EXPENSES

COMPARISON OF 2000 TO 2001

         The general and administrative expenses were CDN$4.9 million in 2000
and CDN$25.1 million (US$16.6 million) in 2001, an increase of CDN$20.2 million.
The increase was mainly attributable to expenses associated with the hiring of
13 administrative employees and the movement of our headquarters to a new
facility in St-Laurent (Montreal, Quebec), Canada. As a result of our growth,
the depreciation charges increased by CDN$4.0 million (US$2.6 million) during
2001. In addition, during the fiscal year ended June 30, 2001, we acquired
certain equipment anticipated to be used in production. Subsequently, we
concluded that we needed additional time and efforts to complete the development
of our initial product and, as a result, the recoverability of plant equipment
and laboratory installation to be used in commercial production has been
established on fair value under FAS 121 Accounting for Impairment of Long-Lived
Assets and a write-down of CDN$2.5 million (US$1.7 million) has been recorded.
Finally, part of the increase in general and administration expenses resulted
from the CDN$3.9 million (US$2.6 million) non-cash compensation expense, arising
from the modification of the terms of outstanding options granted under our
stock option incentive plan to our general and administrative staff.

COMPARISON OF 1999 TO 2000

         General and administrative expenses were CDN$859,000 in 1999 compared
to CDN$4.9 million in 2000, an increase of CDN$4.0 million. The charges for 1999
consisted mainly of salaries resulting from an increase in the number of
administrative personnel and related expenses incurred in connection with the
management of our expansion project. During 2000, we began to build a corporate
services infrastructure to support the growth of our manufacturing activities.

OTHER EXPENSES OR INCOME

COMPARISON OF 2000 TO 2001

         Other income was CDN$320,000 in 2000 compared to other expenses of
CDN$25.0 million (US$16.5 million) in 2001, an increase of CDN$25.3 million. The
increase is primarily composed of the financing charges related to the
beneficial conversion feature of the convertible notes issued on July 25, 2000
and the amortization of the debt discount, a non-cash expense totaling CDN$25.1
million (US$16.6 million). In addition, the interest expense on the convertible
notes amounted to CDN$2.1 million (US$1.4 million) in 2001. The interest income
and the gain on foreign exchange also increased in 2001 by CDN$2.0 million on
account of the increase in cash and short-term investments due to the raising of
capital throughout 2001. In 2000, other income of CDN$320,000 resulted mainly
from interest income and gain on foreign exchange.

COMPARISON OF 1999 TO 2000

         Other expenses was CDN$4,000 for 1999 compared to other income of
CDN$320,000 in 2000, an increase of CDN$324,000. The increase was mainly related
to interest on cash and




                                       20


<PAGE>   25

term deposits resulting from an increased cash balance due to the raising
capital through private placements, the exercise of warrants and options and
gains on foreign exchange due to a favorable variation in the exchange rate
between the Canadian and the US dollar.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

         During the 18 month period ended June 30, 1999, we had been engaged in
capital raising, developmental and organizational activities and the
construction of our pilot plant in Dorval, Quebec, Canada. In 2000 and 2001, we
made significant investments in staffing and equipment. These investments and
costs have been financed mainly through proceeds from private placements, the
exercise of warrants issued in such private placements and the exercise of stock
options.

         We do not believe that inflation has had a significant impact on our
results of operations.

         Cash flows used in investing activities were CDN$37.1 million (US$24.5
million) for 2001, primarily due to expenditures for plant equipment and
laboratory installation at the new St-Laurent (Montreal, Quebec), Canada
headquarters and manufacturing center.

         Cash flows generated from financing activities were CDN$53.6 million
(US$35.4 million) for 2001. These cash flows resulted from the issuance of the
convertible notes and common stock, net of issue costs and partially offset by
the repayments of capital lease obligations.

         If the notes and unpaid interest calculated at the rate of 7.5% are not
converted into additional common stock upon maturity, we will be required to pay
an aggregate of CDN$18.5 million (US$12.2 million) plus accrued interest to the
noteholders. These notes might become repayable without demand, before maturity,
upon the occurrence of an event of default.

         We terminated certain of our employees during 2001. To date, two
employees have filed lawsuits claiming various amounts with respect to damages
and losses related to their severances and the outcome, if any, is unpredictable
at this time. We believe that the legal actions are without merit and we intend
to vigorously defend such lawsuits.

         As of June 30, 2001, we had cash on hand of CDN$2.4 million (US$1.6
million). We also had CDN$19.9 million (US$13.2 million) in commercial paper and
term deposits with maturity dates no later than December 31, 2001 and with no
restriction in their use. As of June 30, 2001, the market value approximated the
carrying value.

         The above balances in cash, commercial paper and term deposits should,
in management's estimation, be sufficient to meet our financial needs for at
least the next 14 months, excluding unforeseen significant capital expenditures.
We have no other significant financial obligations at June 30, 2001, other than
operating lease commitments for our premises


                                       21



<PAGE>   26
and equipment and employment agreements. Minimum lease payments under our
operating lease agreements for premises and equipment for the next 12 months
amount to CDN$1.2 million (US$764,000).

         During 2000, we realized net proceeds of CDN$13.5 million from private
placements and exercises of warrants and options.

         Funds raised through our financing activities were partially offset by
operating activities amounting to CDN$5.4 million. We have invested CDN$2.9
million in property and equipment during 2000 and made deposits of CDN$1.5
million on lease agreements and equipment ordered.

CERTAIN FACTORS WHICH MAY AFFECT FUTURE RESULTS

         The following important factors, among others, could cause actual
results to differ materially from those indicated by forward-looking statements
made in this Annual Report on Form 10-K and presented elsewhere by or on behalf
of us from time to time. Any or all of our forward-looking statements in this
Annual Report on Form 10-K, and in any other public statements we make, may turn
out to be wrong. They can be affected by inaccurate assumptions we might make or
by known or unknown risks and uncertainties. Many factors mentioned in the
discussion below will be important in determining future results. Consequently,
no forward-looking statement can be guaranteed. Actual future results may vary
materially. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any further disclosures we make in our
reports filed with the Securities and Exchange Commission.

WE ARE A DEVELOPMENT STAGE COMPANY WITH NO EXPERIENCE IN MANUFACTURING AND
MARKETING OUR PRODUCTS, MAKING IT DIFFICULT TO EVALUATE OUR BUSINESS AND YOUR
INVESTMENT.

         We have no history in manufacturing and marketing our products. We are
a development stage company and, to date, have not had any significant revenues
from sales of our products. Our operating history provides no basis for
evaluating us and our prospects. We must successfully develop and commercialize
our products, address our competition, attract, retain and motivate qualified
employees, expand our operations and market and sell products using our licensed
proprietary technology in large volumes to have significant revenues and to be
profitable.

         Our future will depend on our ability to develop, manufacture and
commercialize products based upon our licensed proprietary technologies. We did
not have material revenues from product sales during 2001. Our first product was
transferred to production in the last quarter of 2001 and we expect to make only
limited shipments of these products in the first half of 2002. Potential
customers may not accept our products and these products may be difficult to
produce in large volumes, fail to perform as expected, cost too much to produce
or be barred from production by the proprietary rights of others.

         We expect to spend considerable sums to develop and market our new
products. We expect our operating expenses to increase as we develop our
technology and products, increase our sales and marketing activities and expand
our assembly operations. We expect to continue incurring considerable operating
losses and negative cash flows as we incur significant operating



                                       22


<PAGE>   27

expenses and make capital expenditures in our business. The amount we lose and
when, if ever, we will have profits is highly uncertain. If we are unsuccessful
at developing, manufacturing and marketing our products, we will not generate
sufficient revenues to become profitable.

WE HAVE A SIGNIFICANT NUMBER OF OUTSTANDING CONVERTIBLE NOTES, WARRANTS AND
OPTIONS, THE EXERCISE OR CONVERSION OF WHICH COULD DECREASE THE PRICE OF OUR
COMMON STOCK, WHICH WOULD LEAD TO ADDITIONAL SHARES OF OUR COMMON STOCK BECOMING
ISSUABLE UPON THE CONVERSION OF ANY REMAINING OUTSTANDING CONVERTIBLE NOTES.

         To date, we have issued numerous warrants, options and notes, which are
exercisable or convertible into shares of our common stock. No holder may
convert any portion of the notes or exercise any portion of the warrants issued
in July 2000 if upon such conversion or exercise that holder or any of its
affiliates would beneficially own more than 4.99% of our outstanding common
stock. Therefore, a holder may have to sell shares of common stock in order to
be able to convert notes or exercise warrants. The notes are convertible into
shares of common stock at a price equal to the average of the closing bid prices
of our common stock for the five trading days ending immediately prior to
conversion; however, the minimum conversion price is fixed at US$7.00 and the
maximum conversion price is fixed at US$25.00. The conversion price may be
adjusted to reflect the effect of any stock splits, stock dividends or other
similar transactions. Moreover, in the event that we issue any securities which
are convertible or exchangeable into common stock at a price lower than the
minimum conversion price of US$7.00, the holders of the notes issued in July
2000 shall be entitled to convert the notes at the lower price. As a result, if
any market activity occurs which results in the depression of the price of our
common stock, including the taking of a significant short position against our
stock, the number of shares issuable upon the conversion of the notes could
increase, which could result in substantial dilution to the holders of our
common stock. The following table sets forth the number of shares of common
stock that would be issuable upon the conversion of US$12,250,000, the amount
remaining outstanding under the notes as of June 30, 2001, at assumed conversion
prices and the exercise of the warrants issued in connection with the note
financing, as well as the percentage of our outstanding share capital that those
shares will represent as of June 30, 2001:





                                       23


<PAGE>   28
<TABLE>
<CAPTION>
                                                             Number of Shares           % of Outstanding
                                 Number of Shares              Issuable Upon              Share Capital
                                  Issuable Upon              Conversion of the         Beneficially Owned
                                   Conversion               Notes and Exercise          After Conversion
     Conversion Price             of the Notes               of the Warrants             and Exercise
     ----------------            ----------------           -------------------        -------------------
<S>                                 <C>                      <C>                           <C>
         US$25.00                      490,000                  5,490,800                     14.27%
         US$20.00                      612,500                  5,613,300                     14.59%
         US$15.00                      816,667                  5,817,467                     15.12%
         US$10.00                    1,225,000                  6,225,800                     16.18%
         US$ 7.00                    1,750,000                  6,750,800                     17.54%
</TABLE>

         The exercise of outstanding options and warrants and the conversion of
outstanding notes will dilute the then current stockholders' ownership of common
stock. Sales in the public market of common stock acquired upon exercise of
options and warrants and conversion of notes could depress the price of our
common stock, which could adversely affect our ability to sell additional shares
of common stock.

WE HAVE A HISTORY OF LOSSES, WE EXPECT FUTURE LOSSES AND OUR FUTURE
PROFITABILITY IS UNCERTAIN.

         We have incurred operating losses since our inception, and as of June
30, 2001, had an accumulated deficit of approximately CDN$283 million (US$186.9
million). We expect to spend substantial funds to continue research and product
development, to establish sales, marketing and quality control departments and
for other general corporate purposes. As a result, we expect to incur increasing
losses over the next several years.

         In addition, we may never become profitable. Even if we do become
profitable, we may not be able to sustain or increase profitability on a
quarterly or annual basis. If we fail to become and remain profitable, then the
market price of our common stock will decline.

SEVERAL OF OUR AGREEMENTS WILL REDUCE THE AMOUNT OF REVENUES THAT WE WILL
RECEIVE UPON THE SALE OF OUR PRODUCTS AND THIS MAY DECREASE OUR PROFITABILITY.

         We did not have material revenues from product sales during 2001. Our
agreement with Polyvalor and McGill University requires that we pay a royalty
based upon our gross sales. Furthermore, our agreement with Polaroid Corporation
requires us to pay them a percentage of the net selling price of products
incorporating their technology. In the event that we do generate revenues, those
agreements require us to allocate a percentage of our revenues to our strategic
partners which may ultimately lower our gross profit margin.




                                       24


<PAGE>   29
WE MAY BE UNABLE TO OBTAIN FUNDING TO MEET OUR FUTURE CAPITAL NEEDS, WHICH COULD
CAUSE US TO DELAY OR ABANDON SOME OR ALL OF OUR ANTICIPATED SPENDING, CUT BACK
OUR OPERATIONS, SELL ASSETS OR LICENSE OUR TECHNOLOGIES TO THIRD PARTIES.

         We will require substantial additional funding over the next several
years to develop our technology, to broaden and commercialize our products and
to expand assembly capacity. Additional funding could be unavailable on
favorable terms, or not be available at all. If we are unable to obtain
sufficient additional funding, we may have to delay or abandon some or all of
our anticipated spending, cut back our operations significantly, sell some or
all of our assets, or license potentially valuable technologies to third parties
that we currently plan to commercialize ourselves.

         To date, we have received approximately CDN$73 million from third
parties through various debt and equity financings. If we borrow additional
funds, we may become subject to restrictive financial covenants and our interest
obligations will increase. In addition, we may need to raise additional capital
by issuing additional securities, including additional floating-price
convertible securities, which could result in additional dilution to our
existing stockholders.

THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH THE MANUFACTURE OF OUR PRODUCT.

         We have never assembled large amounts of our products. The manufacture
of our chips is a complex, sophisticated process, requiring a clean room and
precision assembly equipment. Very small amounts of contaminants in assembly,
defects in components, difficulties in the assembly process or other factors can
cause a significant number of products to be nonfunctional or to have
unacceptable defects. This could significantly reduce yields and increase the
cost of our products. The difficulty in uncovering these problems and resolving
these issues may require much time and may prove to be costly.

         We must effectively transfer production information from our research
and product departments to our new manufacturing facility and rapidly achieve
volume production. If we fail to manage this process effectively or if we
experience delays, disruptions or quality control problems in our manufacturing
operations, the shipments of products to our customers could be delayed.
Additional capital expenditures could be required to remedy these problems.

         Changes in our manufacturing processes or the inadvertent use of
defective materials could significantly reduce our manufacturing yields and
product reliability. Because most of our manufacturing costs are relatively
fixed, manufacturing yields are critical to the results of our operations. Lower
than expected production yields could delay product shipments and reduce our
gross margins.

OUR BUSINESS MAY EXPAND RAPIDLY AND THE FAILURE TO MANAGE THIS EXPANSION
EFFECTIVELY, AS WELL AS THE STRAIN ON OUR RESOURCES WHICH EXPANSION MAY CREATE,
COULD IMPAIR OUR ABILITY TO OPERATE PROFITABLY.

         Our success will depend on the expansion of our operations and the
effective management of our growth, which will place a significant strain on our
management, operations and financial resources. In particular, once we begin
volume assembly of our products, our operations are anticipated to expand
substantially. We must hire and train additional


                                       25



<PAGE>   30
engineering, manufacturing, marketing, sales, administrative and management
personnel and buy additional equipment, facilities, information technology and
other infrastructure. We must also continue to develop our management,
operational and financial systems, procedures and controls. Because we have no
history with the assembly, marketing or sale of our products in large
quantities, we do not know if we will be able to expand our business rapidly or
adequately enough to manage this growth. If we do not accurately predict demand
for our products, we may have too much or too little production capacity. If we
overestimate demand, we may incur fixed production expenses that are excessive
in relation to revenues generated. This would increase our net loss and if we
underestimate demand, we may lose customers which would decrease our revenues.

CREATING INTERNATIONAL SALES AND MANAGING INTERNATIONAL OPERATIONS WILL BE
DIFFICULT AND OUR FAILURE TO DO SO SUCCESSFULLY COULD AFFECT OUR ABILITY TO
BECOME PROFITABLE OVER THE LONG TERM.

         In order to achieve our long-term business goals, we will have to
generate sales in international markets. This will require us to establish
international operations and hire additional personnel. Our failure to do so in
a timely and effective manner could have a material adverse effect on our
business, prospects, financial condition and operating results. Our plans to
expand internationally may be affected by a number of risks including:

         -        changes in foreign currency exchange rates;

         -        challenges inherent in managing geographically dispersed
                  operations;

         -        multiple, conflicting and changing governmental laws and
                  regulations;

         -        political and economic instability or conflicts;

         -        changes in tariffs, taxes and other trade barriers; and

         -        the need to develop local distribution channels through third
                  parties.

THE MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE AND SUBJECT TO RAPID
TECHNOLOGICAL CHANGE; WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY IF WE ARE
UNABLE TO ADAPT TO NEW TECHNOLOGIES AND SUCCESSFULLY DEVELOP NEW AND EVOLVING
PRODUCTS WHICH MAY LEAD TO REDUCED SALES OF OUR PRODUCTS, REDUCED REVENUES AND
REDUCED MARKET SHARE.

         We must become a key supplier of components to the photonics industry
to be successful. The photonics market is highly competitive and subject to
continuous, rapid technological change, including changing industry standards,
frequent introduction of new products, anticipated and unanticipated decreases
in average selling prices and fierce price competition. We may be unable to
adapt to rapid technological change or to continue new product development. This
may lead to reduced sales of our products, reduced revenues and reduced market
share.



                                       26

<PAGE>   31
         We must:

         -        anticipate what features and functions our customers and their
                  end-users will need and demand in our products, both for
                  general industry use and specific custom-made usage;

         -        incorporate those anticipated features and functions into our
                  products;

         -        meet specific and exacting design requirements;

         -        price our products competitively; and

         -        introduce our products at a receptive time to meet market
                  demand.

         The life cycle of the products we make may be short. We must introduce
new products on a timely basis and we must spend large amounts of capital to
develop new products. Due to the complexity of our products, we could experience
delays in introducing new products. The success of our new products will depend
on many factors, including:

         -        proper product definition;

         -        the timely completion and introduction of new designs;

         -        the ability of our customers to incorporate our product into
                  their product offerings;

         -        the quality and performance of our products;

         -        the differentiation of our products from those of our
                  competitors'; and

         -        market acceptance of our products and those of our customers'.

         If we are unable to introduce new products on a timely and
cost-efficient basis, we could lose sales and customers, resulting in reduced
revenues.

         In addition, competing technologies may force us to sell our products
at lower prices than we expect. Thus, we will need to introduce new products in
order to remain competitive and to maintain our current selling prices. This
need for additional product introduction may require us to expend greater
resources on product research and development than we presently anticipate,
which could result in an increase in our future expenses.

THE SMALL NUMBER OF POTENTIAL CUSTOMERS FOR OUR PRODUCTS WILL GIVE THESE
CUSTOMERS CONSIDERABLE LEVERAGE OVER US, WHICH COULD LEAD TO LOWER SALES PRICES.

         For the foreseeable future, we expect to market our products to a
relatively limited number of leading original equipment manufacturers. We will
rely on these customers to develop their own systems, thereby creating demand
for our products. As a result of the limited number of customers and the intense
competition in the market, our customers will exert considerable leverage in
negotiating purchases from us which could lead to lower sales prices.



                                       27

<PAGE>   32
OUR COMPETITION MAY BE ABLE TO MORE EFFECTIVELY DEVELOP AND MARKET THEIR
PRODUCTS, MAKING OUR PRODUCTS OBSOLETE.

         Our competitors include much larger companies that have substantially
greater financial experience, technical, marketing, distribution and other
resources, broader product lines, greater name recognition and longer standing
relationships with leading original equipment manufacturers than we do. Our
competitors include companies already manufacturing large volumes of products
based on established technologies, as well as companies selling emerging
technological solutions which could replace the technologies we are currently
using. Potential competitors could also include our own customers, which may
decide to manufacture products competitive with ours, rather than purchasing our
products.

WE ARE DEPENDENT ON KEY PERSONNEL; WE MAY NOT BE ABLE TO ATTRACT, TRAIN AND
RETAIN SUFFICIENTLY QUALIFIED PERSONNEL WHICH COULD LIMIT OUR ABILITY TO GROW
OUR BUSINESS.

         Our success will depend to a significant degree upon the continued
services of key management, technical, and scientific personnel, including Gary
Moskovitz, our President and Chief Executive Officer and Dr. Mark P. Andrews,
our Vice President and Chief Technology Officer. We do not currently maintain
key-man life insurance on any of our personnel.

         Our success will also depend on our ability to attract, train and
retain additional management and other highly skilled technical, sales,
marketing and support personnel. In addition, as we grow, we will need to hire
skilled operators for our assembly process. Our competitors for qualified
personnel are often long-established, highly profitable companies and the
process of hiring qualified personnel is often lengthy. Our management and other
employees may voluntarily leave us at any time. We may not be able to meet our
revenue goals if we cannot attract, train and retain sufficient qualified
personnel.

         Our future profitability will also depend on our ability to develop an
effective sales force. Competition for employees with sales and marketing
experience in the photonics industry is intense. We require sales people with a
good technical understanding of our products and of the industry. We may be
unable to attract and retain qualified salespeople or build an effective sales
and marketing organization.

IF WE BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER PROCEEDINGS TO
ENFORCE OUR PATENT RIGHTS, OR IF ANYONE BRINGS A CLAIM OF INFRINGEMENT AGAINST
US, WE COULD INCUR SUBSTANTIAL COSTS OR SUBSTANTIAL LIABILITY FOR DAMAGES OR BE
REQUIRED TO STOP OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS.

         Problems associated with the protection of our intellectual property or
potential infringement of the intellectual property of others could have a
significant negative impact on our business and our financial condition.

         In order to protect or enforce our patent rights, we may have to
initiate legal proceedings against third parties, such as infringement suits or
interference proceedings. By initiating legal proceedings to enforce our
intellectual property rights, we may also provoke these third parties to assert
claims against us. Intellectual property litigation is costly, and, even if we
prevail, could divert management attention and resources away from our business.




                                       28


<PAGE>   33

         If we do not prevail in such litigation, in addition to any damages we
might have to pay, any patents we may obtain could be narrowed, invalidated or
rendered unenforceable by a court. We could also be required to obtain a license
to use certain technologies. Any required license may not be available to us on
acceptable terms, or at all. In addition, some licenses may be nonexclusive, and
therefore, our competitors may have access to the same technology which we have
licensed from others. If we fail to obtain a required license or are unable to
design around a patent, we may be unable to sell some of our products, which
would make it more difficult for us to achieve profitability.

         We also rely on trade secret and copyright law and employee and
third-party nondisclosure agreements to protect our intellectual property
rights. We may be unable to secure meaningful protection of our trade secrets,
copyrights, know-how or other proprietary information in the event of
infringement by others and others may independently develop similar
technologies.

         Many participants in the photonics and related communications
industries have a significant number of patents and have frequently demonstrated
a readiness to commence litigation based on allegations of patent and other
intellectual property infringement. Although we are not aware of any material
claim of infringement or misappropriation against us, there can be no assurance
that third parties will not assert claims in the future with respect to our
products. Responding to claims, regardless of merit, could cause product
shipment delays or require us to enter into royalty or licensing arrangements.
Claims could also lead to costly litigation that would require significant
expenditures of time, capital and other resources by us. Moreover, no assurance
can be given that any necessary royalty or licensing agreement can be obtained
on commercially reasonable terms.

WE ARE DEPENDENT ON EQUIPMENT SUPPLIERS AND CONTRACT MANUFACTURERS WHO COULD
DISRUPT OUR BUSINESS IF THEY STOPPED, DECREASED OR DELAYED SHIPMENTS TO US.

         We rely on outside suppliers to provide some of the equipment we use in
our manufacturing process. We do not maintain long-term agreements with any of
these suppliers and, therefore, they could stop supplying equipment to us at any
time. If the equipment which any particular supplier provides to us were to
malfunction, we would, at a minimum, experience delays in the shipment of our
products and we could be required to find another equipment manufacturer. Delays
in shipments could result in the loss of customers and reductions in our
revenues.

         In addition, we may rely on third party manufacturers to produce some
of the components used in our products. Our potential dependence upon third
party manufacturing relationships could lead to:

         -        reduced control over equipment delivery schedules;

         -        lack of quality assurance over the components produced by
                  third parties; and

         -        the delivery of poor quality components which could lead to
                  poor manufacturing yields of our products and ultimately
                  higher product costs.


                                       29


<PAGE>   34
         Any supply deficiencies relating to the quality or quantity of
equipment or components we use to manufacture our products could affect our
ability to fulfill customer orders and ultimately reduce our revenues and
profitability.

OUR BUSINESS INVOLVES THE USE OF SOME HAZARDOUS MATERIALS AND ENVIRONMENTAL LAWS
AND REGULATIONS MAY EXPOSE US TO LIABILITY AND THEREFORE INCREASE OUR COSTS.

         We handle small amounts of hazardous materials as part of our
manufacturing activities. As a result, our operations and assembly processes are
subject to certain federal, provincial and local environmental protection laws
and regulations. These relate to our use, handling, storage, discharge and
disposal of certain hazardous materials and wastes, the pre-treatment and
discharge of process waste waters and the control of process air pollutants.
Compliance with these regulations requires us to establish compliance procedures
and safety programs. If environmental laws or regulations were to change, our
manufacturing costs or product sales could be adversely affected by forcing us
to modify production processes or use more costly materials. We may be required
to incur additional costs to comply with current or future environmental laws.
In addition, if we fail to comply with either present or future environmental
regulations, we may be subject to fines and production halts. As with other
companies engaged in manufacturing activities that involve hazardous materials,
the risk of environmental liability is inherent in our manufacturing activities.
The costs associated with environmental compliance or remediation efforts or
other environmental liabilities could adversely affect our business.

PROVISIONS OF OUR CORPORATE DOCUMENTS AND APPLICABLE LAW MAY PREVENT OR HINDER A
CHANGE OF CONTROL.

         Provisions of our certificate of incorporation and by-laws and of
applicable law could make it more difficult for another party to acquire us or
discourage another party from attempting to acquire us. This may reduce the
value of our common stock. For example, we could issue preferred stock with
rights senior to the common stock without any further vote or action by
stockholders. The issuance of preferred stock as part of a future financing
could have the effect of preventing a change of control and could make it more
difficult for holders of our common stock to take certain corporate actions,
including the replacement of incumbent directors. Additionally, preferred stock
may have preference over and harm the rights of the holders of common stock.


                                       30


<PAGE>   35
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are exposed to immaterial levels of market risk with respect to
changes in foreign currency exchange rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange rates. To the extent that we consummate financings outside of
Canada, we receive proceeds in currency other than the Canadian dollar. Most of
our operating expenses are incurred in Canadian dollars. Thus, our operations
will tend to be adversely affected if there is a strong Canadian dollar. We do
not enter into derivatives or other financial instruments for trading or
speculative purposes, nor do we enter into financial instruments to manage and
reduce the impact of changes in foreign currency exchange rates.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Index to Financial Statements.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.





                                       31

<PAGE>   36

                                    PART III

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

         See "Executive Officers" in Part I of this Annual Report on Form 10-K.
Information required by this item regarding directors of the Registrant appears
in our definitive Proxy Statement for our 2001 Annual Meeting of Stockholders,
which will be filed with the Securities and Exchange Commission no later than
120 days after June 30, 2001, and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         The information required by this item appears in our definitive Proxy
Statement for our 2001 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission no later than 120 days after June 30,
2001, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item appears in our definitive Proxy
Statement for our 2001 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission no later than 120 days after June 30,
2001, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item appears in our definitive Proxy
Statement for our 2001 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission no later than 120 days after June 30,
2001, and is incorporated herein by reference.






                                       32


<PAGE>   37
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND CURRENT REPORTS ON
         FORM 8-K

(a)      The following documents are filed as part of this report:

         (1)      Financial Statements

         -        Auditors' Report to the Shareholders.

         -        Consolidated Balance Sheets as at June 30, 2001 and 2000.

         -        Consolidated Statements of Operations for the years ended June
                  30, 2001, 2000, the six-month period ended June 30, 1999 and
                  the periods from inception (March 2, 1998) to December 31,
                  1998 and to June 30, 2001.

         -        Consolidated Statements of Cash Flows for the years ended June
                  30, 2001, 2000, the six-month period ended June 30, 1999 and
                  the periods from inception (March 2, 1998) to December 31,
                  1998 and to June 30, 2001.

         -        Consolidated Statements of Stockholders' Equity for the
                  periods from inception (March 2, 1998) to June 30, 2001.

         -        Notes to Consolidated Financial Statements.

         (2)      Financial Statement Schedule

                  None.

         (3)      Exhibits

                  The Exhibits filed as part of this Annual Report on Form 10-K
         are listed on the Index to Exhibits immediately preceding such
         Exhibits, which Index to Exhibits is incorporated herein by reference.
         Documents listed on such Index to Exhibits and identified by asterisks
         are being filed as exhibits herewith. Documents otherwise identified
         are not being filed herewith and, pursuant to Rule 12b-32 under the
         Securities Exchange Act of 1934, reference is made to such documents as
         previously filed as exhibits filed with the Securities and Exchange
         Commission. Lumenon's file number under the Securities and Exchange Act
         of 1934 is 000-27977.

(b)      Current Reports on Form 8-K.

         (1)      The Company filed a report on Form 8-K with the Securities and
                  Exchange Commission on July 28, 2000 announcing under Item 5
                  the private placement of US$35 million of convertible notes.



                                       33


<PAGE>   38
         (2)      The Company filed a report on Form 8-K with the Securities and
                  Exchange Commission on April 27, 2001 announcing under Item 5
                  the termination of the Teaming Agreement with Molex.

         (3)      The Company filed a report on Form 8-K with the Securities and
                  Exchange Commission on May 8, 2001 announcing under Item 5 the
                  resignation of Dr. Iraj Najafi as President, CEO and Chairman
                  of the Board and the appointment of Gary Moskovitz as
                  President and CEO and Gilles Marcotte as Chairman of the
                  Board.

         (4)      The Company filed a report on Form 8-K with the Securities and
                  Exchange Commission on May 11, 2001 announcing under Item 5
                  the resignations of Dr. Iraj Najafi and Dr. Anthony Moretti as
                  directors.

         (5)      The Company filed a report on Form 8-K with the Securities and
                  Exchange Commission on June 20, 2001 announcing under Item 5
                  the Company's focus on scaling to achieve volume production.







                                       34


<PAGE>   39

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

                                  LUMENON INNOVATIVE LIGHTWAVE
                                  TECHNOLOGY, INC.

                                  By:  /s/ Gary Moskovitz
                                     ---------------------------------------
                                       Gary Moskovitz
                                       President and Chief Executive Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

SIGNATURES                               TITLE                                            DATE
----------                               -----                                            ----
<S>                                      <C>                                              <C>
/s/ Gary Moskovitz                       President and Chief Executive Officer            September 28, 2001
-------------------------------------    (Principal executive officer and principal
Gary Moskovitz                           financial and accounting officer)

/s/ Mark P. Andrews                      Vice President, Chief Technology Officer         September 28, 2001
-------------------------------------    and Director
Dr. Mark P. Andrews

/s/ Gilles Marcotte                      Chairman of the Board                            September 28, 2001
-------------------------------------
Gilles Marcotte

/s/ Pierre-Paul Allard                   Director                                         September 28, 2001
-------------------------------------
Pierre-Paul Allard

/s/ Guy Brunet                           Director                                         September 28, 2001
-------------------------------------
Guy Brunet

/s/ Pierre-Andre Roy                     Director                                         September 28, 2001
-------------------------------------
Pierre-Andre Roy

</TABLE>



                                       35



<PAGE>   40


LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Financial Statements

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001


AUDITORS' REPORT TO THE SHAREHOLDERS ....................................... F-1

FINANCIAL STATEMENTS

     Consolidated Balance Sheets ........................................... F-2

     Consolidated Statements of Operations ................................. F-3

     Consolidated Statements of Cash Flows ................................. F-4

     Consolidated Statements of Stockholders' Equity ....................... F-5

     Notes to Consolidated Financial Statements ............................ F-6








<PAGE>   41


AUDITORS' REPORT TO THE SHAREHOLDERS



We have audited the consolidated balance sheets of Lumenon Innovative Lightwave
Technology, Inc. (the "Corporation") as at June 30, 2001 and June 30, 2000 and
the consolidated statements of operations, cash flows and stockholders' equity
for the years ended June 30, 2001 and 2000, the six-month period ended June 30,
1999 and for the periods from inception (March 2, 1998) to December 31, 1998 and
to June 30, 2001. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

With respect to the consolidated financial statements for the year ended June
30, 2001, we conducted our audit in accordance with United States generally
accepted auditing standards. With respect to the consolidated financial
statements for the year ended June 30, 2000 and the six-month period ended June
30, 1999, we conducted our audit in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Corporation as at
June 30, 2001 and June 30, 2000 and the consolidated results of its operations
and cash flows for the years ended June 30, 2001 and 2000, the six-month period
ended June 30, 1999 and for the periods from inception (March 2, 1998) to
December 31, 1998 and to June 30, 2001, in accordance with United States
accounting principles generally accepted.




Chartered Accountants


Montreal, Canada

August 8, 2001



                                      F-1


<PAGE>   42

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets
(In thousands of Canadian dollars, except per share amounts)

<TABLE>
<CAPTION>
==============================================================================================================
                                                             June 30,            June 30,             June 30,
                                                                 2001                2001                 2000
--------------------------------------------------------------------------------------------------------------
                                                                (US$)              (CAN$)               (CAN$)
                                                         (note 2 (a))

<S>                                                        <C>                <C>                   <C>
ASSETS

Current assets:
     Cash                                                  $    1,573         $     2,382           $    1,125
     Commercial papers and term deposits                       13,153              19,913                4,300
     Interest and sales tax receivable                            267                 404                  341
     Government contribution and tax credits
       receivable                                               1,031               1,561                  216
     Prepaid expenses                                              58                  87                   77
--------------------------------------------------------------------------------------------------------------
                                                               16,082              24,347                6,059

Deposits (notes 8 (b) and (c))                                    516                 782                1,525
Property and equipment (note 4)                                14,040              21,257                4,603
Other assets                                                       11                  16                   13

--------------------------------------------------------------------------------------------------------------
                                                           $   30,649         $    46,402           $   12,200
==============================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                      $      749         $     1,134           $    1,047
     Accrued liabilities                                          289                 438                  223
     Accrued compensation costs                                 1,439               2,178                  102
     Obligations under capital leases (note 6)                    621                 940                  235
--------------------------------------------------------------------------------------------------------------
                                                                3,098               4,690                1,607

Obligations under capital leases (note 6)                         904               1,368                  279
Convertible notes (note 5)                                      7,442              11,267                   --

Stockholders' equity:
     Share capital (note 7)                                        38                  57                   49
     Additional paid-in capital                               206,100             312,035              234,864
     Accumulated deficit during the development
       stage                                                 (186,933)           (283,015)            (224,599)
--------------------------------------------------------------------------------------------------------------
                                                               19,205              29,077               10,314
Commitments (note 8)
Contingencies (note 12)
--------------------------------------------------------------------------------------------------------------
                                                           $   30,649         $    46,402           $   12,200
==============================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.



                                      F-2


<PAGE>   43
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations
(In thousands of Canadian dollars, except per share amounts)

<TABLE>
<CAPTION>

===========================================================================================================================
                                        Year          Year           Year      Six-month             From             From
                                       ended         ended          ended   period ended     inception to     inception to
                                    June 30,      June 30,       June 30,       June 30,      December 31,         June 30,
                                        2001          2001           2000           1999              1998             2001
---------------------------------------------------------------------------------------------------------------------------
                                       (US$)        (CAN$)         (CAN$)         (CAN$)            (CAN$)           (CAN$)
                                (note 2 (a))
<S>                              <C>           <C>            <C>               <C>            <C>                 <C>
Expenses:
     Research and development:
         Internal research       $     5,541   $     8,389    $     1,878       $    169       $        14         $ 10,450
         External research
           (note 3)                       --            --        217,382             25                --          217,407
         Research tax credits
          and grants                     (75)         (113)          (292)           (32)               (2)            (439)
---------------------------------------------------------------------------------------------------------------------------
                                       5,466         8,276        218,968            162                12          227,418

     General and administrative       11,700        17,713          4,020            569               290           22,592
     Depreciation                      3,215         4,867            894             --                --            5,761
     Write-down of property and
       equipment                       1,660         2,513             --             --                --            2,513
---------------------------------------------------------------------------------------------------------------------------
                                      16,575        25,093          4,914            569               290           30,866

Other expenses (income):
     Interest expense                  1,534         2,323             42             --                --            2,365
     Interest income                  (1,387)       (2,100)          (279)            (1)               (7)          (2,387)
     Financing charges (note 5)       16,580        25,102             --             --                --           25,102
     (Gain) loss on foreign
       exchange                         (184)         (278)           (83)            19                (7)            (349)
---------------------------------------------------------------------------------------------------------------------------
                                      16,543        25,047           (320)            18               (14)          24,731

---------------------------------------------------------------------------------------------------------------------------
Net loss                         $    38,584    $   58,416    $   223,562       $    749       $       288         $283,015
===========================================================================================================================

Net loss per share:
     Basic and diluted           $      1.04    $     1.58    $      8.80       $   0.04       $      0.02
===========================================================================================================================

Weighted average number
   of shares outstanding          36,957,777    36,957,777     25,415,601     17,480,967        14,972,188
===========================================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.




                                      F-3



<PAGE>   44

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows

(In thousands of Canadian dollars, except per share amounts)

<TABLE>
<CAPTION>
====================================================================================================================================
                                                          Year          Year         Year    Six-month            From          From
                                                         ended         ended        ended  period ended   inception to  inception to
                                                      June 30,      June 30,     June 30,      June 30,   December 31,      June 30,
                                                          2001          2001         2000          1999           1998          2001
------------------------------------------------------------------------------------------------------------------------------------
                                                         (US$)        (CAN$)       (CAN$)        (CAN$)         (CAN$)        (CAN$)
                                                  (note 2 (a))
<S>                                                  <C>          <C>          <C>          <C>          <C>              <C>
Cash flows from operating activities:
     Net loss                                        $ (38,584)   $ (58,416)   $(223,562)   $    (749)   $    (288)       $(283,015)
     Adjustments for:
         Compensation costs                              3,260        4,936           51          241           --            5,228
         Interest on convertible notes                   1,404        2,126           --           --           --            2,126
         Common shares issued for services                  --           --      217,359           --           --          217,359
         Depreciation                                    3,215        4,867          894           --           --            5,761
         Write-down of property and
           equipment                                     1,660        2,513           --           --           --            2,513
         Financing charges                              16,580       25,102           --           --           --           25,102
         Unrealized loss on foreign exchange             1,257        1,903           --           --           --            1,903
     Net change in operating assets
       and liabilities (note 10)                         1,155        1,749         (126)         285           97            2,005
------------------------------------------------------------------------------------------------------------------------------------
                                                       (10,053)     (15,220)      (5,384)        (223)        (191)         (21,018)
Cash flows from financing activities:
     Proceeds from issuance of common shares             3,986        6,037       14,336        2,764           --           23,137
     Share issue expenses                                  (26)         (40)        (713)        (292)         (93)          (1,138)
     Principal repayments of capital
       lease obligations                                  (520)        (787)         (90)          --           --             (877)
     Deposit on subscription of shares                      --           --           --          147           --              147
     Proceeds from issuance of
       convertible notes, net of issue costs            31,957       48,382           --          299           --           48,681
     Cash from the acquisition of a subsidiary              --           --           --           --          814              814
------------------------------------------------------------------------------------------------------------------------------------
                                                        35,397       53,592       13,533        2,918          721           70,764
Cash flows from investing activities:
     Purchase of term deposits                        (141,033)    (213,524)     (19,813)          --                      (233,337)
     Additions to other assets                              (2)          (3)          --          (10)          --              (13)
     Disposal of term deposits                         130,721      197,911       15,513           --           --          213,424
     Additions to property and
       equipment (note 10)                             (14,691)     (22,242)      (2,922)      (1,492)          --          (26,656)
     Deposits                                              491          743       (1,525)          --           --             (782)
------------------------------------------------------------------------------------------------------------------------------------
                                                       (24,514)     (37,115)      (8,747)      (1,502)          --          (47,364)

------------------------------------------------------------------------------------------------------------------------------------
Net decrease (increase) in cash and
   cash equivalents                                        830        1,257         (598)       1,193          530            2,382

Cash and cash equivalents,
   beginning of period                                     743        1,125        1,723          530           --               --

------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents,
   end of period                                     $   1,573    $   2,382    $   1,125    $   1,723    $     530        $   2,382
====================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.




                                      F-4


<PAGE>   45

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Stockholders' Equity

Periods from inception (March 2, 1998) to June 30, 2001 (In thousands of
Canadian dollars, except per share amounts)

<TABLE>
<CAPTION>
=============================================================================================================================
                                                              Additional                         Deposit on
                                                                 paid-in        Accumulated    subscription
                                        Shares  Par value        capital            deficit       of shares             Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>       <C>               <C>                 <C>           <C>
Issue of common shares at
  inception                            255,000        $ 1       $     --          $      --           $  --         $       1

Issue of common shares              16,200,000         24            790                 --              --               814

Share issue expenses                        --         --            (93)                --              --               (93)

Net loss for the period                     --         --             --               (288)             --              (288)
-----------------------------------------------------------------------------------------------------------------------------

Balance as at December 31, 1998     16,455,000         25            697               (288)             --               434

Issue of common shares               3,760,000          5          2,759                 --              --             2,764

Share issue expenses                        --         --           (292)                --              --              (292)

Compensation costs related to
   stock options granted                    --         --            241                 --              --               241

Net loss for the period                     --         --             --               (749)             --              (749)

Deposit on subscription of shares           --         --             --                 --             147               147
-----------------------------------------------------------------------------------------------------------------------------

Balance as at June 30, 1999         20,215,000         30          3,405             (1,037)            147             2,545

Issue of common shares              12,755,039         19        232,121                 --            (147)          231,993

Share issue expenses                        --         --           (713)                --              --              (713)

Compensation costs related
   to stock options granted                 --         --             51                 --              --                51

Net loss for the period                     --         --             --           (223,562)             --          (223,562)
-----------------------------------------------------------------------------------------------------------------------------

Balance as at June 30, 2000         32,970,039         49        234,864           (224,599)             --            10,314

Issue of common shares               5,508,866          8         21,032                 --              --            21,040

Share issue expenses                        --         --            (40)                --              --               (40)

Stock purchase warrants and
   beneficial conversion feature
   of convertible notes                     --         --         51,243                 --              --            51,243

Compensation costs related
   to stock options granted                 --         --          4,936                 --              --             4,936

Net loss for the period                     --         --            --             (58,416)             --           (58,416)
-----------------------------------------------------------------------------------------------------------------------------

Balance as at June 30, 2001         38,478,905        $57       $312,035         $ (283,015)          $  --         $  29,077
=============================================================================================================================

Balance as at June 30, 2001
   in US dollars (note 2 (a))       38,478,905        $38       $206,100         $ (186,933)          $  --         $  19,205
=============================================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                      F-5

<PAGE>   46
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

1.   ORGANIZATION AND BUSINESS ACTIVITIES:

     Lumenon Innovative Lightwave Technology, Inc. ("Lumenon" or the
     "Corporation") was incorporated in the State of Delaware in February 1996
     under the name of WWV Development Inc. as a shell company.

     In July 1998, under an acquisition plan, Lumenon acquired LILT Canada Inc.
     ("LILT"), a Canadian corporation, by issuing 12,200,000 common shares to
     the shareholders of LILT which resulted in the shareholders of LILT
     acquiring control of Lumenon. Accordingly, LILT has been determined the
     acquiring corporation and these consolidated financial statements present
     the results of operations and cash flows of LILT since its inception, March
     2, 1998.

     Under the acquisition plan mentioned above, Lumenon issued 4,000,000 common
     shares to acquire Dequet Capital, Inc., a Nevada corporation. Dequet
     Capital, Inc.'s only asset was cash in the amount of $814 (US$540). This
     corporation was subsequently dissolved.

     The Corporation's principal business activity is to design, develop and
     build integrated optic devices in the form of compact hybrid glass circuits
     on silicon chips. Lumenon activities are performed through LILT, in Canada.

     Lumenon was established to capitalize on innovations in compact optical
     circuit design and hybrid glass materials for integrated optics. In July
     1999, Lumenon opened its pilot plant to support its ongoing research and
     development initiatives. In October 2000, the Corporation inaugurated its
     53,000-square-foot facility. This facility serves as the Corporation's
     headquarters and, when operative, will be a high-volume manufacturing
     plant. In March 2001, in response to a perceived market downturn for
     optical circuits, the Corporation re-focused its process of providing only
     simple passive components to one of offering a mix of products and services
     ranging from optical chips to integrated photonic devices.

     The Corporation is subject to a number of risks, including the overall
     economic environment in its field of activities, the successful development
     and marketing of its technology and the attraction and retention of key
     personnel. In addition, achievement of its business plan is dependent on
     the ability of Lumenon to raise additional capital.



                                      F-6



<PAGE>   47


LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

2.   SIGNIFICANT ACCOUNTING POLICIES:

     The occurrence of such an event would result in the reclassification of the
     notes under current liabilities thus reducing working capital by such
     amount.

     These financial statements have been prepared by management in accordance
     with accounting principles generally accepted in the United States. The
     significant accounting principles are as follows:

     (a)  Consolidated financial statements and basis of presentation:

          The consolidated financial statements include the accounts of Lumenon
          and the accounts of LILT. All intercompany transactions and balances
          have been eliminated.

          US dollar amounts presented on the consolidated balance sheets,
          consolidated statements of operations and cash flows are provided for
          the convenience of readers and are based on the closing exchange rate
          at June 30, 2001, which was $1.514 Canadian dollar for each US dollar.

          The functional currency of the Corporation is the Canadian dollar.

     (b)  Property and equipment:

          Equipment and leasehold improvements are recorded at cost.
          Depreciation and amortization are provided using the straight-line
          method and the following periods:

          =====================================================================
          Asset                                                          Period
          ---------------------------------------------------------------------

          Plant equipment and laboratory installation         3, 5 and 12 years
          Leasehold improvements                                  Term of lease
          Office equipment and fixtures                                 5 years
          Computer equipment and software                               3 years
          Vehicle equipment                                             3 years

          =====================================================================



                                      F-7

<PAGE>   48

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     (c)  Other assets:

          Other assets, consisting of license and patent costs, are recorded at
          cost when acquired and are being amortized on a straight-line basis
          over their economic useful lives or their legal terms of existence,
          ranging between 10 and 20 years. The capitalized amount with respect
          to those assets does not necessarily reflect their present or future
          value and the amount ultimately recoverable is dependent upon the
          successful commercialization of the related products.

     (d)  Research and development costs:

          Research and development costs and the cost of intangibles that are
          purchased from others for use in research and development activities
          and that have no alternative future uses are expensed as incurred.
          Research tax credits on eligible research expenses incurred in Canada
          are accounted for as a reduction of research and development expenses.

     (e)  Government assistance:

          Government assistance is recorded as a reduction of the expenses or
          the assets for which it was obtained.

     (f)  Foreign exchange:

          The Canadian dollar is the functional currency of the Corporation.
          Foreign denominated monetary assets and liabilities are translated at
          the rate of exchange prevailing at the balance sheet date.
          Non-monetary assets and liabilities are translated at the rate of
          exchange prevailing at the date of the transaction. Revenues and
          expenses are translated at the monthly average exchange rate
          prevailing during the period. Foreign exchange gains and losses are
          included in the determination of net earnings.






                                      F-8

<PAGE>   49
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     (g)  Income taxes:

          The Corporation uses the asset and liability method of accounting for
          income taxes. Under this method, deferred tax assets and liabilities
          are recognized for the estimated future tax consequences attributable
          to differences between the financial statement carrying amounts of
          existing assets and liabilities and their respective tax bases. This
          method also requires the recognition of future tax benefits such as
          net operating loss carryforwards, to the extent that realization of
          such benefits is more likely than not. Deferred tax assets and
          liabilities are measured using enacted tax rates expected to apply to
          taxable income in the years in which those temporary differences are
          expected to be recovered or settled. The effect on deferred tax assets
          and liabilities of a change in tax rates is recognized in the
          statement of operations in the period that includes the enactment
          date.

     (h)  Stock option plan:

          The Corporation applies the intrinsic value-based method of accounting
          prescribed by Accounting Principles Board ("APB") Opinion no. 25,
          Accounting for Stock Issued to Employees, and related interpretations
          for stock options granted to employees. As such, compensation expense
          would be recorded on the date of grant only if the then current market
          price of the underlying stock exceeded the exercise price.

          The Corporation applies FASB Statement 123, Accounting for Stock-Based
          Compensation ("SFAS 123") for stock options granted to non-employees.
          As such, compensation expense is recorded at the date of grant, based
          on the fair value as at that date using the Black-Scholes option -
          pricing model.





                                      F-9


<PAGE>   50

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     (i)  Impairment of long-lived assets and long-lived assets to be disposed
          of:

          The Corporation accounts for impairment of long-lived assets in
          accordance with the provisions of SFAS No. 121, Accounting for the
          Impairment of Long-Lived Assets and for Long-Lived Assets to Be
          Disposed of. This statement requires that long-lived assets and
          certain identifiable intangibles be reviewed for impairment whenever
          events or changes in circumstances indicate that the carrying amount
          of an asset may not be recoverable. Recoverability of assets to be
          held and used is measured by a comparison of the carrying amount of an
          asset to future net cash flows expected to be generated by the asset.
          If such assets are considered to be impaired, the impairment to be
          recognized is measured by the amount by which the carrying amount of
          the assets exceeds the fair value of the assets. Assets to be disposed
          of are reported at the lower of the carrying amount or fair value less
          costs to sell.

     (j)  Net loss per share:

          Net loss per share is computed using the weighted average number of
          shares outstanding during the period. Under the accounting for the
          LILT transaction described in note 1, the 12,200,000 shares have been
          considered to be outstanding on a retroactive basis for all periods
          presented.

     (k)  Use of estimates:

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent liabilities at the date of
          the financial statements and the reported amounts of revenues and
          expenses during the reporting periods. Actual results could differ
          from those estimates.




                                      F-10


<PAGE>   51
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

3.   THE MOLEX AGREEMENT:

     Under the terms of a Teaming Agreement, Lumenon and Molex Incorporated
     ("Molex") had agreed to jointly develop certain products related to the
     Dense Wavelength Division Multiplexing market and other photonic devices.
     Under the terms of the agreement, Molex was committed to provide services
     towards the development of the products. In connection therewith, Lumenon
     had granted to Molex a warrant to receive 5,800,000 common shares issuable
     as Molex fulfilled its obligations pursuant to the Teaming Agreement.
     During the year 2000 as Molex provided the services, an amount of $217,359
     (US$147,003) was recorded under research and development expenses and share
     capital pursuant to the exercise of the warrant (see note 7 (a) (vi)).
     Under the terms of this agreement, Molex was committed to purchase a
     certain number of photonic devices of Lumenon after the commencement of the
     marketing phase.

     In April 2001, Molex and Lumenon mutually agreed to terminate the Teaming
     Agreement. No share remains to be issued under the warrant.


4.   PROPERTY AND EQUIPMENT:

     <TABLE>
     <CAPTION>

     =======================================================================================================
                                                                             June 30, 2001
                                                        ----------------------------------------------------
                                                                           Accumulated              Net book
                                                            Cost          depreciation                 value
     -------------------------------------------------------------------------------------------------------

     <S>                                                <C>                    <C>                  <C>
     Plant equipment and laboratory installation         $22,657                $4,767               $17,890
     Leasehold improvements                                1,625                   353                 1,272
     Office equipment and fixtures                         1,343                   242                 1,101
     Computer equipment and software                       1,182                   345                   837
     Vehicle equipment                                       183                    26                   157
     -------------------------------------------------------------------------------------------------------
                                                         $26,990                $5,733               $21,257
     =======================================================================================================
     </TABLE>

     <TABLE>
     <CAPTION>

     =======================================================================================================
                                                                             June 30, 2000
                                                        ----------------------------------------------------
                                                                           Accumulated              Net book
                                                            Cost          depreciation                 value
     -------------------------------------------------------------------------------------------------------

     <S>                                                <C>                    <C>                  <C>
     Plant equipment and laboratory installation         $ 3,840                $  756               $ 3,084
     Leasehold improvements                                1,052                    79                   973
     Office equipment and fixtures                           198                    14                   184
     Computer equipment and software                         407                    45                   362
     -------------------------------------------------------------------------------------------------------
                                                         $ 5,497                $  894               $ 4,603
     =======================================================================================================
</TABLE>



                                      F-11


<PAGE>   52
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

4.   PROPERTY AND EQUIPMENT (CONTINUED):

     A government contribution of $1,250 is recorded as a reduction to property
     and equipment at June 30, 2001.

     During 2001, Lumenon acquired certain equipment anticipated to be used in
     production. Subsequently, the Corporation concluded it needed to pursue
     further the development of its products and, as a result, commencement of
     related production activity was delayed.

     Because Lumenon is a development stage enterprise, the recoverability of
     plant equipment and laboratory installation to be used in commercial
     production has been established on fair value and a write-down of $2,513
     has been recorded.

     Fair value is based on information obtained from suppliers and other
     companies operating in the same field of activity.

     Cost and net book value of plant equipment, laboratory installation and
     vehicle equipment held under capital leases amount to $2,941 and $2,151 as
     at June 30, 2001 and $857 and $499 as at June 30, 2000.


5.   CONVERTIBLE NOTES:

     On July 25, 2000, the Corporation closed a financing involving the issuance
     of five-year convertible notes in the aggregate principal amount of $51,243
     (US$35,000) bearing interest at 7.5% per annum. Interest is payable upon
     the earlier of the repayment or conversion of a note. The notes are
     convertible at any time by the holder into the Corporation's common stock
     at a conversion price based on the closing bid price of the common stock at
     the time of conversion with a floor of $10.60 (US$7) and a ceiling of
     $37.85 (US$25).

     The investors also received five-year common stock purchase warrants
     entitling them to acquire a total of 5,000,800 shares of the Corporation's
     common stock. The warrants are exercisable on or after January 25, 2002 and
     expire on July 25, 2005. The exercise price of the warrants may vary from
     $15.14 (US$10) to $45.42 (US$30) based upon a formula set forth in the
     warrants. In addition, the exercise price will be lower than the fair
     market value of the common stock unless the fair market value of the common
     stock is equal to or lower than $15.14 (US$10).



                                      F-12


<PAGE>   53
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

5.   CONVERTIBLE NOTES (CONTINUED):

     The Corporation applied APB-14 ("Accounting for Convertible Debt and Debt
     Issued with Stock Purchase Warrants") and EITF 98-5 ("Accounting for
     Convertible Securities with Beneficial Conversion Features or Contingently
     Adjustable Conversion Ratios"). As a result, the convertible notes were
     discounted and are presented net of the debt discount, which is amortized
     over the term of the notes. Additional paid-in capital was increased by
     $51,243 as a result of the amount allocated to the stock purchase warrants
     and the beneficial conversion feature of the notes. Interest expense with
     respect to the beneficial conversion feature of convertible notes and
     amortization of debt discount was recorded in the amount of $25,102.
     Interest expense on convertible notes of $2,126 was recorded under interest
     expense in 2001.

     During the year 2001, $15,003, net of debt discount (gross principal amount
     of $33,308 (US$22,750)), of the convertible notes plus interest was
     converted into 2,931,666 shares of common stock. As of June 30, 2001,
     $18,547 (US$12,250) of the gross principal amount remains outstanding.

     Convertible notes include certain events of default that, upon occurrence,
     would result in the Corporation having the obligation to pay the
     outstanding principal amount and accrued interest. In addition, the
     conversion price would be reduced to $0.001 and the warrants would
     immediately become exercisable.


6.   OBLIGATIONS UNDER CAPITAL LEASES:

     Future minimum lease payments under capital leases are as follows:

     <TABLE>
     <CAPTION>
     ==================================================================================================
     <S>                                                                                         <C>
     2002                                                                                        $1,156
     2003                                                                                         1,025
     2004                                                                                           387
     --------------------------------------------------------------------------------------------------
     Total minimum lease payments                                                                 2,568

     Less amount representing interest (at rates varying from 10.196% to 18.85%)                    260
     --------------------------------------------------------------------------------------------------
     Present value of net minimum capital lease payments                                          2,308

     Current portion of obligations under capital leases                                            940
     --------------------------------------------------------------------------------------------------
     Long-term portion of obligations under capital leases                                       $1,368
     ==================================================================================================
    </TABLE>



                                      F-13


<PAGE>   54
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

6.   OBLIGATIONS UNDER CAPITAL LEASES (CONTINUED):

     Interest on capital lease of $199 was recorded as interest expense in 2001.


7.   SHARE CAPITAL:

     <TABLE>
     <CAPTION>
     =========================================================================================
                                                                 June 30,             June 30,
                                                                     2001                 2000
     -----------------------------------------------------------------------------------------

     <S>                                                           <C>                   <C>
     Authorized:
         5,000,000 preferred shares, par value of
           US$0.001 per share
         100,000,000 common shares, par value of
           US$0.001 per share

     Issued and outstanding:
         38,478,905 common shares (2000 - 32,970,039)                $57                  $49
     =========================================================================================
     </TABLE>


     (a)  Issue of shares:

          As mentioned in note 1, Lumenon acquired LILT in 1998 under a
          reorganization and acquisition plan by issuing 12,200,000 common
          shares to the shareholders of that corporation. At the date of
          acquisition, there were 255,000 outstanding common shares of Lumenon
          at an amount of $0.372 (US$0.255). In addition, Lumenon issued
          4,000,000 common shares to the shareholders of Dequet Capital, Inc.
          Assets of the latter consisted of cash in the amount of $814 (US$540).

          1999
          ----
          During the six-month period ended June 30, 1999, under a Stock
          Purchase Agreement, Molex agreed to purchase from Lumenon 3,000,000
          common shares at $0.74 (US$0.50) per share in two transactions.

          During the period, the Corporation issued 3,760,000 common shares
          (including 1,500,000 shares to Molex) for a cash consideration of
          $2,764 (US$1,880) along with warrants for the purchase of 3,926,667
          common shares at a price of $1.32 (US$0.90) per share.



                                      F-14


<PAGE>   55
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

7.   SHARE CAPITAL (CONTINUED):

     (a)  Issue of shares (continued):

          2000
          ----
          During the year ended June 30, 2000, the Corporation concluded the
          following share capital transactions:

          (i)   1,484,522 common shares were issued for a cash consideration of
                $7,099 (US$4,844), of which $147 (US$99) was received prior to
                June 30, 1999;

          (ii)  promissory notes were converted into 400,000 common shares with
                a value of $299 (US$200);

          (iii) in connection with the issuance of common shares referred to in
                (i) and (ii), 1,912,211 warrants were issued to be exercised at
                prices varying from $1.36 (US$0.90) to $45.42 (US$30.00) per
                share;

          (iv)  under the Stock Purchase Agreement with Molex, an additional
                1,500,000 common shares for cash consideration of $1,093
                (US$750) were issued; this issuance was subject to Lumenon
                proving out its technology and its ability to manufacture and
                delivering certain devices;

          (v)   3,570,517 common shares were issued upon exercise of warrants
                and options for cash consideration of $6,104 (US$4,171);

          (vi)  5,800,000 common shares were issued upon the exercise of the
                warrant for services received from Molex in the amount of
                $217,359 (US$147,003). The value of the shares issued has been
                recorded as Molex fulfilled its obligations pursuant to the
                Teaming Agreement (see note 3). The transaction was accounted
                for by using the average market price of the shares of the
                Corporation during the periods the services were rendered by
                Molex.

          2001
          ----
          During the year ended June 30, 2001, the Corporation issued 2,577,200
          common shares upon exercise of warrants and options for cash
          consideration of $6,037 (US$4,096) and 2,931,666 common shares as a
          result of the conversion of convertible notes (see note 5).





                                      F-15


<PAGE>   56
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

7.   SHARE CAPITAL (CONTINUED):

     (b)  Stock option plan:

          Under a stock option incentive plan established in May 1999, the
          Corporation may grant options to purchase common shares to key
          employees, directors, officers and service-providers. The terms,
          number of common shares covered by each option as well as the
          permitted frequency of the exercise of such options are determined by
          the Board of Directors. The plan contemplates that a maximum of
          6,000,000 common shares may be optioned under the stock option plan.
          No optionee can hold options to purchase more than 5% of the number of
          shares issued and outstanding at any time. The subscription price for
          each share covered by an option is established by the Board of
          Directors but such price shall not be lower than the market value at
          the date of grant.

          Options for the purchase of 4,327,500 common shares at a price ranging
          from $1.075 (US$0.71) to $41.70 (US$27.54) per share have been granted
          during the year ended June 30, 2001.

          Options granted have to be exercised over a period not exceeding ten
          years. At June 30, 2001, 1,182,070 outstanding options are exercisable
          and 3,753,580 outstanding options vest over a period of one to five
          years.

          (i) Changes in outstanding options for the period were as follows:

              <TABLE>
              <CAPTION>

              =====================================================================================================
                                                                                              Weighted average
                                                                 Number               exercise price per share
              -----------------------------------------------------------------------------------------------------

              <S>                                           <C>                       <C>
              Options outstanding, January 1, 1999                   --                 $               --
              Granted                                         1,940,000                   1.48    (US$0.98)

              -----------------------------------------------------------------------------------------------------
              Options outstanding, June 30, 1999              1,940,000

              Granted                                         1,250,000                 $26.01   (US$17.18)
              Exercised                                        (822,850)                  1.44    (US$0.95)
              Cancelled                                         (90,000)                  2.36    (US$1.56)

              -----------------------------------------------------------------------------------------------------
              Options outstanding, June 30, 2000              2,277,150

              Granted                                         4,327,500                 $15.22   (US$10.05)
              Exercised                                        (239,000)                  1.55    (US$1.02)
              Cancelled                                      (1,430,000)                 20.68   (US$13.66)

              -----------------------------------------------------------------------------------------------------
              Options outstanding, June 30, 2001              4,935,650
              =====================================================================================================
              </TABLE>



                                      F-16

<PAGE>   57

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

7.   SHARE CAPITAL (CONTINUED):

     (b)  Stock option plan (continued):

          (ii) The following table summarizes significant ranges of outstanding
               options as at June 30, 2001:

               <TABLE>
               <CAPTION>
               ===============================================================================================
                                            Options outstanding                           Options exercisable
                                  -------------------------------------------          ------------------------
                                                   Weighted          Weighted                          Weighted
               Range of                             average           average                           average
               exercise                           remaining          exercise                          exercise
               prices                Options           life             price          Options            price
               ------------------------------------------------------------------------------------------------

               <S>              <C>                <C>                 <C>              <C>              <C>
               $ 1.09 - $ 1.51     1,268,650       9.3 years           $ 1.22          405,320           $ 1.34
               $ 2.97 - $ 3.17     1,582,750       9.8 years             2.98           82,750             3.08
               $11.20 - $27.34       873,750       9.1 years            21.03          236,500            17.57
               $28.21 - $42.39     1,210,500       8.9 years            37.26          457,500            38.14
               ===============================================================================================
               </TABLE>

         (iii) The following table summarizes the weighted-average grant-date
               fair value of options granted during 2001:

               <TABLE>
               <CAPTION>
               ===============================================================================================
                                                        Weighted average                       Weighted average
               Options granted                            exercise price                  grant-date fair value
               ------------------------------------------------------------------------------------------------

               <S>                                      <C>                               <C>
                       857,500                                      1.09                                   1.09
                     1,775,000                                     31.72                                  23.51
                     1,695,000                                      5.08                                   5.80
               ===============================================================================================
</TABLE>

         (iv)  Stock-based compensation:

               The exercise price of certain stock options is below the market
               price of the stock at the date of grant and, accordingly,
               compensation costs of $3,133 (2000 - nil) have been recognized
               for stock options granted to employees in the financial
               statements. On February 8, 2001, the exercise period of the
               options granted under the stock option plan was extended from 2
               to 5 years. As a result, compensation costs of $1,803 were
               recorded in the year.




                                      F-17


<PAGE>   58

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

7.   SHARE CAPITAL (CONTINUED):

     (b)  Stock option plan (continued):

          (iv) Stock-based compensation (continued):

               Had compensation cost for the Corporation's stock option plan
               been determined based on the fair value at the grant dates for
               awards under the plan consistent with the method of FASB
               Statement 123, Accounting for Stock-Based Compensation ("SFAS
               123"), the Corporation's net loss would have been adjusted to the
               pro-forma amounts indicated below including the effect of the
               modifications that occurred on February 8, 2001 as mentioned
               above:

               <TABLE>
               <CAPTION>
               ================================================================================================
                                              Year         Year         Six-month           From           From
                                             ended        ended      period ended   inception to   inception to
                                          June 30,     June 30,          June 30,   December 31,       June 30,
                                              2001         2000              1999           1998           2001
               ------------------------------------------------------------------------------------------------

               <S>                        <C>         <C>                 <C>              <C>        <C>
               Net loss   As reported      $58,416     $223,562            $  749           $288       $283,015
                          Pro-forma        $69,208      225,874             1,120            288        296,490

               ------------------------------------------------------------------------------------------------
               Pro-forma  compensation     $10,792     $  2,312           $   371           $ -        $ 13,475
               ================================================================================================

               US dollars
                 (note 2(a))
                          As reported      $38,584
                          Pro-forma         45,712
               -----------------------------------
               Pro-forma  compensation  $    7,128
               ===================================
               </TABLE>

               <TABLE>
               <CAPTION>
               ================================================================================================
                                                          Year              Year      Six-month            From
                                                         ended             ended   period ended    inception to
                                                      June 30,          June 30,       June 30,    December 31,
                                                          2001              2000           1999            1998
               ------------------------------------------------------------------------------------------------

               <S>                                      <C>               <C>            <C>             <C>
               Pro-forma net loss per share:
                  Basic and diluted                      $1.87             $8.89          $0.06           $0.02
                  US dollars                              1.23
               ================================================================================================
</TABLE>




                                      F-18


<PAGE>   59

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

7.   SHARE CAPITAL (CONTINUED):

     (b)  Stock option plan (continued):

          (iv) Stock-based compensation (continued):

               The fair value of each option grant was estimated on the date of
               grant using the Black-Scholes option-pricing model with the
               following weighted average assumptions: risk-free interest of
               5.8%, dividend yield of 0%, expected volatility of generally 200%
               and expected life of 5 to 7.5 years (2000 - risk-free interest
               rate of 5.8%, dividend yield of 0%, expected volatility of
               generally 200%, and expected life of 2 to 5 years). The per share
               weighted average fair value of stock options granted during 2001
               and 2000 was $14.74 (US$9.74) and $0.87 (US$0.59), respectively.

     (c)  Warrants:

          The following warrants are outstanding at June 30, 2001:

          <TABLE>
          <CAPTION>
          =================================================================================
             Warrants                    Expiry date              Exercise price per share*
          ---------------------------------------------------------------------------------

           <S>                         <C>                            <C>
              700,000                  December 2001                   $ 2.22     (US$1.50)
               14,000                      July 2003                    37.68    (US$25.00)
            5,000,800                      July 2005                        *

          ---------------------------------------------------------------------------------
            5,714,800
          =================================================================================
          </TABLE>

          * The exercise price per share, to be established on or after January
            25, 2002, may vary from $15.14 (US$10.00) to $45.42 (US$30.00)
            subject to the then traded value of the stock (note 5).


8.   COMMITMENTS:

     (a)  Under the terms of a license agreement, Lumenon has the rights to
          produce, sell, distribute and promote products derived from the
          know-how relating to integrated optical components for Dense
          Wavelength Division Multiplexing and Plastic Optical Fibre devices for
          telecommunications, data communications and sensor applications.
          Lumenon is committed to pay a royalty on gross sales up to a maximum
          amount of $3,583 (US$2,367) until October 2017. The Corporation also
          entered into a non-exclusive license for patents with a third party in
          connection with array wave guides until the last patent expires.
          Lumenon is committed to pay a royalty on net sales at various rates
          which are based on the level of sales realized.




                                      F-19


<PAGE>   60

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

8.   COMMITMENTS (CONTINUED):

     (b)  The Corporation leases premises under operating lease agreements that
          expire in January 2004 and July 2012. The first lease contains a
          renewal option for a period of five years at the end of the initial
          term. Those leases require the Corporation to pay all executory costs
          such as maintenance and insurance. Rental payments under the terms of
          these leases are secured by a deposit of $750 (US$507), of which $75
          (US$50) is refundable per year, beginning in fiscal 2002.

          In addition, the Corporation leases certain equipment under operating
          leases. Minimum lease payments under operating lease agreements for
          premises and equipment for the next five years and thereafter are as
          follows:

          <TABLE>
          <CAPTION>
          ====================================================================
          <S>                                                          <C>
          2002                                                         $ 1,156
          2003                                                             988
          2004                                                             937
          2005                                                             888
          2006                                                             883
          Thereafter                                                     5,325

          --------------------------------------------------------------------
                                                                       $10,177
          ====================================================================
          </TABLE>


     (c)  The Corporation is committed to purchase equipment in the amount of
          $159 (US$105), for which $32 (US$21) was disbursed as at June 30, 2001
          and recorded under deposits.

          In addition, the Corporation is committed to acquire equipment through
          capital leases in the amount of $779 (US$514). Estimated future
          repayments including interest are as follows:

          <TABLE>
          <CAPTION>
          ====================================================================
          <S>                                                             <C>
          2002                                                            $281
          2003                                                             281
          2004                                                             281
          2005                                                             141

          --------------------------------------------------------------------
                                                                           984
          ====================================================================
          </TABLE>





                                      F-20


<PAGE>   61

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

8.   COMMITMENTS (CONTINUED):

     (d)  The following schedule shows the composition of total rental expense
          for all operating leases:

         <TABLE>
         <CAPTION>
         =====================================================================================================
                                                                                                     Six-month
                                                           Year ended          Year ended         period ended
                                                             June 30,            June 30,             June 30,
                                                                 2001                2000                 1999
         -----------------------------------------------------------------------------------------------------

         <S>                                                <C>                  <C>                  <C>
         Minimum rental payments                                 $810                 $78                  $28
         -----------------------------------------------------------------------------------------------------
         </TABLE>


     (e)  The Corporation entered into employment agreements with certain
          employees expiring at various dates in 2004 and 2005. Under the terms
          of these agreements, the Corporation is committed to pay salaries of
          approximately $769 in 2002, 2003 and 2004 as well as $376 in 2005.


9.   INCOME TAXES:

     Details of the components of income taxes are as follows:

     <TABLE>
     <CAPTION>
     =========================================================================================================
                                                                                Six-month       From inception
                                         Year ended        Year ended        period ended                   to
                                           June 30,          June 30,            June 30,         December 31,
                                               2001              2000                1999                 1998
     ---------------------------------------------------------------------------------------------------------

<S>                                         <C>              <C>                     <C>                  <C>
     Net loss:
         US (parent corporation)            $34,263          $    378                $241                 $ --
         Canadian operations                 24,153           223,184                 508                  287
     ---------------------------------------------------------------------------------------------------------
                                             58,416           223,562                 749                  287
     Less items not deductible for
       tax purposes:
         Compensation costs                   4,936                51                 241                   --
         Financing charges                   25,102                --                  --                   --
         Expense related to the
           Teaming Agreement                     --           215,510                  --                   --
     ---------------------------------------------------------------------------------------------------------
                                             28,378             8,001                 508                  287

     Basic income tax rate                      38%               38%                 38%                  38%
     ---------------------------------------------------------------------------------------------------------
                                             10,784             3,040                 193                  109

     Adjustment in income taxes
       resulting from:
         Loss carryforwards and
           unclaimed deductions
           not recognized                    10,784             3,040                 193                  109

     ---------------------------------------------------------------------------------------------------------
                                            $   --            $    --                $ --                 $ --
     ---------------------------------------------------------------------------------------------------------
</TABLE>





                                      F-21


<PAGE>   62

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

9.   INCOME TAXES (CONTINUED):

     At June 30, 2001, Lumenon and its subsidiary, LILT, the Canadian
     Corporation, had accumulated scientific research and experimental
     development expenditures and other unclaimed deductions which are available
     to reduce future years' taxable income.

     Details of the available deductions are as follows:

     <TABLE>
     <CAPTION>
     =========================================================================================================
                                                                Lumenon                      LILT
                                                                                 -----------------------------
                                                                                  Federal           Provincial
     ---------------------------------------------------------------------------------------------------------
     <S>                                                       <C>               <C>                  <C>
     Research and development expenditures,
       without time limitation                                  $    --           $15,142              $15,932

     Excess of the undepreciated capital cost of
       property and equipment over the net book
       value                                                         --             6,680                6,646

     Excess of the undepreciated capital cost of
       initial license fees over the net book value                  --               589                  589

     Losses carried forward:
         Expiring - 2006                                             --               405                  405
                  - 2007                                             --             2,485                2,485
                  - 2008                                             --             6,784                6,784
                  - 2019                                             10                --                   --
                  - 2020                                            323                --                   --
                  - 2021                                          4,226                --                   --

     =========================================================================================================
     </TABLE>


     In addition, research tax credits, not recorded in the accounts and
     available to reduce future Canadian Federal income taxes payable, amount to
     $257 and $843 and $1,674 and expire in 2009, 2010 and 2011, respectively.





                                      F-22

<PAGE>   63

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

9.   INCOME TAXES (CONTINUED):

     The income tax effect of temporary differences that give rise to the net
     deferred tax assets, net of the valuation allowance, is presented below:

     <TABLE>
     <CAPTION>
     =========================================================================================================
                                                                                 June 30,             June 30,
                                                                                     2001                 2000
     ---------------------------------------------------------------------------------------------------------
     <S>                                                                         <C>                  <C>
     Scientific research and experimental development                            $  4,767              $ 3,065
     Non-capital losses                                                             4,813                1,415
     Excess of undepreciated capital cost of equipment
       over the net book value                                                      2,069               (1,138)
     Excess of undepreciated capital cost of initial license
       fees over the net book value                                                   183                   --
     Investment tax credits                                                         1,914                  912
     Less valuation allowance                                                     (13,746)              (4,254)

     ---------------------------------------------------------------------------------------------------------
                                                                                 $     --              $    --
     =========================================================================================================
     </TABLE>


     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax assets will not be realized. The ultimate realization of deferred tax
     assets is dependent upon the generation of future taxable income and tax
     planning strategies. Since the Corporation is a development stage
     corporation and it has not yet generated taxable income, the generation of
     future taxable income is dependent on the successful commercialization of
     its products and technologies.





                                      F-23

<PAGE>   64

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

10.  SUPPLEMENTAL CASH FLOW DISCLOSURE:

     (a) Net change in operating assets and liabilities:

        <TABLE>
        <CAPTION>

         =====================================================================================================
                                  Year         Year         Year     Six-month             From           From
                                 ended        ended        ended  period ended     inception to   inception to
                              June 30,     June 30,     June 30,      June 30,     December 31,       June 30,
                                  2001         2001         2000          1999             1998           2001
         -----------------------------------------------------------------------------------------------------
                                 (US$)       (CAN$)       (CAN$)        (CAN$)           (CAN$)         (CAN$)
         <S>                   <C>          <C>           <C>           <C>              <C>           <C>
         Interest and sales
           tax receivable       $  (42)      $  (63)       $(128)        $(217)           $ (21)        $ (429)
         Government
           contribution and tax
           credits receivable      (63)         (95)        (157)          (32)              (2)          (286)
         Prepaid expenses           (6)         (10)         (27)          (50)              --            (87)
         Accounts payable,
           accrued liabilities
           and accrued
           compensation costs    1,266        1,917          186           584              120          2,807

         -----------------------------------------------------------------------------------------------------
                                $1,155       $1,749        $(126)        $ 285            $  97         $2,005
         =====================================================================================================
         </TABLE>


     (b)  Non-cash investing and financing activities:

          Acquisition of property and equipment through capital leases amounts
          to $2,581 (US$1,705) at June 30, 2001 (2000 - $604 (US$408)).

          Capital expenditures of $461 (US$304) are included in accounts payable
          at June 30, 2001 (2000 - $481 (US$326)).


11.  FINANCIAL INSTRUMENTS:

     (a)  Foreign currency risk management:

          Certain options and warrants are exercisable in US dollars and payable
          in such currency. Ultimate proceeds upon exercise of options and
          warrants may vary due to fluctuations in the value of the Canadian
          dollar relative to the US currency.

     (b)  Credit risk:

          Financial instruments that potentially subject the Corporation to
          significant concentrations of credit risk consist principally of
          short-term investments and accounts receivable.





                                      F-24



<PAGE>   65

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

11.  FINANCIAL INSTRUMENTS (CONTINUED):

     (b)  Credit risk (continued):

          The Corporation has investment policies that require placement of
          short-term investments in commercial papers of recognized institutions
          evaluated as highly creditworthy.

          In the normal course of business, the Corporation evaluates the
          financial condition of the parties with which it contracts on a
          continuing basis and reviews the creditworthiness of all new parties.
          The Corporation determines an allowance for doubtful accounts to
          reflect specific risks.

     (c)  Fair values:

          The following table presents the carrying amounts and estimated fair
          values of the Corporation's financial instruments at June 30, 2001 and
          2000. The fair value of a financial instrument is the amount at which
          the instrument could be exchanged in a current transaction between
          willing parties. Fair value estimates are made as of a specific point
          in time using available information about the financial instrument.
          These estimates are subjective in nature and often cannot be
          determined with precision.

         <TABLE>
         <CAPTION>
          ====================================================================================================
                                                                   June 30,                           June 30,
                                                                       2001                               2000
          ----------------------------------------------------------------------------------------------------

                                                  Carrying             Fair          Carrying             Fair
                                                    amount            value            amount            value
          ----------------------------------------------------------------------------------------------------
          <S>                                    <C>              <C>                <C>              <C>
          Financial assets:
              Cash                                 $ 2,382          $ 2,382            $1,125           $1,125
              Term deposits                         19,913           19,913             4,300            4,300
              Interest and sales tax receivable        404              404               366              366

          Financial liabilities:
              Accounts payable                       1,134            1,134             1,047            1,047
              Accrued liabilities                      438              438               223              223
              Accrued compensation costs             2,178            2,178                --               --
          ====================================================================================================
</TABLE>

          The carrying amounts of the above-mentioned assets and liabilities
          approximate their fair value because of the short maturity of these
          instruments.

          In addition, the fair value of the convertible notes and the related
          5,000,800 warrants (see note 5) amounts to $15,140 and $3,028,
          respectively.




                                      F-25


<PAGE>   66

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

================================================================================

11.  FINANCIAL INSTRUMENTS (CONTINUED):

     (c)  Fair values (continued):

          The fair value of the convertible notes and warrants issued along with
          the notes was established by an independent expert who has utilized
          recognized financial models including volatility of stock and interest
          rates.


12.  CONTINGENCIES:

     Certain employees were terminated during the year. Because settlement of
     these terminations has not been finalized, management has provided for the
     amount which it considers reasonable based on their estimations. Some of
     the employees have made claims to the Company in respect of settlement.

     In connection with the above matter, certain employees filed lawsuits
     claiming various amounts with respect to damage and loss related to their
     forfeitures and the outcome, if any, is unpredictable at this time. The
     Corporation believes that the legal actions are without merit and intends
     to vigorously defend such lawsuits.


13.  COMPARATIVE FIGURES:

     Certain of the 2000 comparative figures have been reclassified to conform
     with the basis of presentation adopted in the current year.




                                      F-26


<PAGE>   67

LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued

Years ended June 30, 2001 and 2000, six-month period ended June 30, 1999 and
periods from inception (March 2, 1998) to December 31, 1998 and to June 30, 2001
(In thousands of Canadian dollars, except per share amounts)

-------------------------------------------------------------------------------

14.      QUARTERLY FINANCIAL DATA (UNAUDITED):

The following table contains selected unaudited Statement of Operations
information for each quarter of years ended June 30, 2000 and 2001. The
Corporation believes that the following information reflects all normal
recurring adjustments necessary for a fair presentation of the information for
the periods presented. The operating results for any quarter are not necessarily
indicative of results for any future period.

<TABLE>
<CAPTION>
==========================================================================================
                                             For the quarters ended
------------------------------------------------------------------------------------------
                         September 30,      December 31,       March 31,          June 30,
                                  1999              1999            2000              2000
------------------------------------------------------------------------------------------
<S>                       <C>               <C>              <C>               <C>
Revenues                   $        --      $        --      $        --       $        --
Net loss                         2,664           12,539          157,647            50,712
Loss per share                    0.13             0.53             6.04              1.58
Shares used in computing
  loss per share            21,116,992       23,583,147       26,100,742        34,040,242
==========================================================================================
</TABLE>

<TABLE>
<CAPTION>
==========================================================================================
                                             For the quarters ended
------------------------------------------------------------------------------------------
                         September 30,      December 31,       March 31,          June 30,
                                  2000              2000            2001              2001
------------------------------------------------------------------------------------------
<S>                       <C>               <C>              <C>               <C>
Revenues                   $        --      $        --      $        --       $        --
Net loss                        27,519            7,036            8,670            15,191
Loss per share                    0.80             0.19             0.23              0.39
Shares used in computing
  loss per share            34,511,352       36,471,090       38,361,512        38,478,905
==========================================================================================
</TABLE>


                                      F-27
<PAGE>   68


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO.             DESCRIPTION
-----------             -----------
<S>                     <C>
2.1 (1)                 Amended Plan of Reorganization, Merger and Acquisition by which WWV Development, Inc.
                        acquired and merged into Lumenon Innovative Lightwave Technology, Inc. and acquired Dequet
                        Capital, Inc., dated July 7, 1998.

3.1*+                   Amended and Restated Certificate of Incorporation of the Registrant.

3.2 (2)                 Second Amended and Restated By-Laws of the Registrant.

4.1 (1)                 Specimen Certificate for Shares of Common Stock.

4.2 (1)                 Stock Option Incentive Plan.

4.3 (1)                 Form of Warrant to acquire shares of common voting stock.

4.4 (3)                 Form of Convertible Note dated July 25, 2000.

4.5 (3)                 Form of Stock Purchase Warrant, dated July 25, 2000.

10.1 (1)                License Agreement by and between Polyvalor and McGill University and Lumenon Innovative
                        Lightwave Technology, Inc.

10.2 (4)                Termination Agreement among Molex, Lumenon and Certain Stockholders of Lumenon, dated April
                        5, 2001 by and among Molex Incorporated, Molex Fiber Optics, Inc., Lumenon Innovative
                        Lightwave Technology, Inc., Lilt Canada Inc., Andrewma Holding Inc., Najafi Holding Inc.,
                        Dr. Mark Andrews and Dr. Iraj Najafi.

10.3 (3)                Securities Purchase Agreement by and among Lumenon Innovative Lightwave Technology, Inc.,
                        Capital Ventures International and Castle Creek Partners LLC, dated July 25, 2000.

10.4 (3)                Registration Rights Agreement by and among Lumenon Innovative Lightwave Technology, Inc.,
                        Capital Ventures International and Castle Creek Partners LLC, dated July 25, 2000.

10.5 (5)                Agreement of Lease between Liberty Sites Ltd. and LILT Canada, Inc., dated May 19, 2000.

10.6 (5)                License Agreement between Polaroid Corporation and LILT Canada, Inc., a subsidiary of
                        Lumenon Innovative Lightwave Technology, Inc., dated July 21, 2000.

#10.7*                  Employment agreement between the LILT Canada, Inc. and Dr. Mark P. Andrews, dated July 7,
                        2000.

#10.8*                  Employment agreement between the Registrant and Gary Moskovitz, dated May 3, 2001.

21 (1)                  Subsidiaries of the Company.

23*                     Consent of KPMG, LLP.

</TABLE>


<PAGE>   69

--------------------------------

 *   Filed herewith.

 #   Management contract or compensatory plan or arrangement filed as an exhibit
     to this form pursuant to Items 14(a) and 14(c) of Form 10-K.

 +   Superseding Exhibit

(1)  Previously filed with the Securities and Exchange Commission as an Exhibit
     to the Registrant's Registration Statement on Form 10 filed February 23,
     2000, as amended (File No. 0-27977), and incorporated herein by reference.

(2)  Previously filed with the Securities and Exchange Commission as an Exhibit
     to the Registrant's Current Report on Form 8-K filed August 20, 2001
     (File No. 000-27977) and incorporated herein by reference.

(3)  Previously filed with the Securities and Exchange Commission as an Exhibit
     to the Registrant's Current Report on Form 8-K filed July 28, 2000 (File
     No. 000-27977) and incorporated herein by reference.

(4)  Previously filed with the Securities and Exchange Commission as an Exhibit
     to the Registrant's Current Report on Form 8-K filed April 27, 2001 (File
     No. 000-27977) and incorporated herein by reference.

(5)  Previously filed with the Securities and Exchange Commission as an Exhibit
     to the Registrant's Registration Statement on Annual Report on Form 10-K
     filed September 8, 2000 (File No. 000-27977), and incorporated herein by
     reference.