SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

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

For the quarterly period ended:                 December 31, 1999
                               ------------------------------------------------

/ /      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:       0-27977
                       ---------------------------------------------------------

                  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 Identification No.)
incorporation or organization)
9060 Ryan Avenue, Dorval, (QC), Canada                  H9P 2M8
--------------------------------------                  -------
(Address of Principal Executive Offices)               (Zip Code)

                                 (514) 631-0023
                                 --------------
              (Registrant's telephone number, including area code)


Indicate by check whether the registrant:  (1) has filed all reports to be filed
by  Section 13 or 15(d) of the  Securities  Exchange  Act of 1934  during the 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  Explanatory  Note: The issuer became subject to such filing
requirements on January 4, 2000.


State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest  practicable  date:  24,551,189  shares of Common Stock,
$.001 par value, as of February 1, 2000.


<PAGE>

         LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC. and SUBSIDIARIES
                                TABLE OF CONTENTS


                                                                        Page No.

PART I.      FINANCIAL INFORMATION


Item 1.      Financial Statements

             Consolidated Balance Sheets as of December 31,
             1999 (unaudited) and June 30, 1999

             Consolidated  Statements  of  Operations
             (unaudited)  for the three  months ended
             December  31,  1999 and 1998 and the six
             months ended  December 31, 1999 and 1998
             and the period from inception (March 2, 1998)
             to December 31, 1999

             Consolidated  Statements  of Cash  Flows
             (unaudited)  for the three  months ended
             December  31,  1999 and 1998, the six
             months  ended  December 31, 1999 and 1998
             and the period from inception (March 2, 1998)
             to December 31, 1999

             Notes to Consolidated Financial Statements

Item 2.      Management's Discussion and Analysis
             of Financial Condition and Results of
             Operations

PART II.     OTHER INFORMATION

Item 2.      Changes in Securities and Use of Proceeds

Item 6.      Exhibits and Reports on Form 8-K

Signatures


                                       -2-

<PAGE>

PART 1. FINANCIAL INFORMATION

Item 1.  Financial Statements









                                       -3-
<PAGE>




                       Consolidated Financial Statements of
                       (Unaudited)


                       LUMENON INNOVATIVE
                       LIGHTWAVE TECHNOLOGY, INC.
                       (a Development Stage Enterprise)



                       Three-month  period ended  December 31, 1999 and 1998 and
                       period from  inception  (March 2, 1998) to  December  31,
                       1999


                                      -4-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Consolidated Financial Statements
(Unaudited)

Three-month  period ended  December 31, 1999 and 1998 and period from  inception
(March 2, 1998) to December 31, 1999


Financial Statements

      Consolidated Balance Sheets...........................................1

      Consolidated Statements of Operations.................................2

      Consolidated Statements of Cash Flows.................................3

      Notes to Consolidated Financial Statements............................4



                                      -5-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------
                                                       December 31,         December 31,                    June 30,
                                                               1999                 1999                        1999
--------------------------------------------------------------------------------------------------------------------------
                                                              (US$)               (CAN$)                      (CAN$)
                                                           (note 7)
Assets

Current assets:
<S>                                                   <C>                <C>                            <C>
      Cash and cash equivalents                       $   2,903,107      $     4,190,055                $  1,722,871
      Term deposits                                       1,920,348            2,771,201                          -
      Interest and sales tax receivable                     169,395              244,488                     237,539
      Research tax credits receivable                       109,539              158,097                      34,218
      Prepaid expenses                                       13,435               19,390                      49,956
--------------------------------------------------------------------------------------------------------------------------
                                                          5,115,824            7,383,231                   2,044,584

Property and equipment                                    1,988,338            2,869,589                   1,492,495

Other assets                                                  8,744               12,620                      10,001

--------------------------------------------------------------------------------------------------------------------------
                                                      $   7,112,906      $    10,265,440                $  3,547,080
--------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current liabilities:
      Accounts payable                                $     897,319      $     1,295,016                $    523,550
      Accrued liabilities                                    13,330               19,243                     180,312
      Convertible promissory notes                               -                    -                      298,720
--------------------------------------------------------------------------------------------------------------------------
                                                            910,649            1,314,259                   1,002,582

Stockholders' equity:
      Share capital                                          26,060               37,612                      30,330
      Additional paid-in capital                         17,428,232           25,153,618                   3,404,408
      Deposit on subscription of shares                          -                    -                      146,820
      Accumulated deficit                               (11,252,035)         (16,240,049)                 (1,037,060)
--------------------------------------------------------------------------------------------------------------------------
                                                          6,202,257            8,951,181                   2,544,498

--------------------------------------------------------------------------------------------------------------------------
                                                      $   7,112,906      $    10,265,440                $  3,547,080
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.


On behalf of the Board:

______________________ Director

______________________ Director


                                      -6-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
                                                       Three months        Three months          Three months
                                                              ended               ended                 ended
                                                       December 31,        December 31,          December 31,
                                                               1999                1999                  1998
------------------------------------------------------------------------------------------------------------------
                                                              (US$)              (CAN$)                (CAN$)
                                                           (note 7)

<S>                                                    <C>                 <C>                    <C>             <C>
Revenues - interest                                    $     35,780        $     51,641           $     7,869     7

Expenses:
      Research and development                            8,245,831          11,901,208                14,440     5
      Research tax credits                                  (48,292)            (69,700)               (2,149)    )
------------------------------------------------------------------------------------------------------------------
                                                          8,197,539          11,831,508                12,291

      General and administrative expenses                   547,406             790,071               226,546
      (Gain) loss on foreign exchange                       (22,383)            (32,304)               (1,975)
      Interest expense                                        1,059               1,528                    -
------------------------------------------------------------------------------------------------------------------
                                                          8,723,621          12,590,803               236,862

------------------------------------------------------------------------------------------------------------------
Net loss                                               $  8,687,841        $ 12,539,162           $   228,993
------------------------------------------------------------------------------------------------------------------

Net loss per share                                     $       0.37        $       0.53           $      0.01
------------------------------------------------------------------------------------------------------------------

Weighted average number of shares outstanding            23,583,147          23,583,147            16,455,000
------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
                                                     Six months                   Six months                        From
                                                          ended                        ended                inception to
                                                   December 31,                 December 31,                December 31,
                                                           1999                         1998                        1999
------------------------------------------------------------------------------------------------------------------------
                                                         (CAN$)                       (CAN$)                      (CAN$)


<S>                                                 <C>                          <C>                    <C>
Revenues - interest                                 $    67,876                  $     7,869            $          76,917

Expenses:
      Research and development                       13,969,796                        14,440                  14,178,675
      Research tax credits                             (104,893)                      (2,149)                   (139,111)
------------------------------------------------------------------------------------------------------------------------
                                                     13,864,903                       12,291                  14,039,564

      General and administrative expenses             1,368,197                      290,435                   2,228,090
      (Gain) loss on foreign exchange                    22,657                       (7,348)                     34,155
      Interest expense                                   15,108                           -                       15,157
------------------------------------------------------------------------------------------------------------------------
                                                     15,270,865                      295,378                  16,316,966

------------------------------------------------------------------------------------------------------------------------
Net loss                                            $15,202,989                    $ 287,509            $     16,240,049
------------------------------------------------------------------------------------------------------------------------

Net loss per share                                  $      0.68                    $    0.02
------------------------------------------------------------------------------------------------------------------------

Weighted average number of shares outstanding        22,350,069                   15,926,739
------------------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.

                                       -7-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                Three months                Three months              Three months
                                                                       ended                       ended                     ended
                                                                December 31,                December 31,              December 31,
                                                                        1999                        1999                      1998
----------------------------------------------------------------------------------------------------------------------------------
                                                                       (US$)                      (CAN$)                    (CAN$)
                                                                    (note 7)
Cash flows from:

Operating activities:
<S>                                                       <C>                         <C>                       <C>
      Net loss                                            $       (8,687,841)         $      (12,539,162)       $         (228,993)
      Adjustment for items not involving cash:
            Compensation cost                                             -                           -                         -
            Shares issuable for services                           8,015,691                  11,569,049                        -
            Depreciation                                              69,476                     100,274                        -
      Change in operating assets and liabilities:
            Interest and sales tax receivable                         89,754                     129,541                   (11,302)
            Research tax credits receivable                          (59,640)                    (85,967)                   (2,149)
            Prepaid expenses                                           5,176                       7,470                    21,235
            Accounts payable and accrued liabilities                 478,340                     690,388                    94,880
            Advance to shareholder                                        -                           -                     24,500
----------------------------------------------------------------------------------------------------------------------------------
                                                                     (89,044)                   (128,407)                 (101,829)
Financing activities:
      Proceeds from issuance of common shares                      2,904,503                   4,192,070                        -
      Cash from the acquisition of a subsidiary                           -                           -                         -
      Share issue expenses                                           (24,938)                    (35,993)                  (32,818)
      Proceeds from issuance of convertible
         promissory notes                                                 -                           -                         -
-----------------------------------------------------------------------------------------------------------------------------------
                                                                   2,879,565                   4,156,077                   (32,818)
Investing activities:
      Additions to property and equipment                           (715,909)                 (1,033,272)                       -
      Additions to other assets                                       (1,815)                     (2,619)                     (243)
      Purchase of term deposits                                     (531,420)                   (766,985)                       -
      Disposal of term deposits                                      542,565                     783,084                        -
-----------------------------------------------------------------------------------------------------------------------------------
                                                                    (706,579)                 (1,019,792)                     (243)
-----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash  and cash equivalents                  2,083,942                   3,007,878                  (134,890)

Cash and cash equivalents, beginning of period                       819,165                   1,182,177                   664,560
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                  $        2,903,107          $        4,190,055        $          529,670
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                      Six months        Six months                        From
                                                                           ended             ended                inception to
                                                                    December 31,      December 31,                December 31,
                                                                            1999              1998                        1999
------------------------------------------------------------------------------------------------------------------------------
                                                                          (CAN$)            (CAN$)                      (CAN$)
Cash flows from:

Operating activities:
<S>                                                                 <C>                    <C>                  <C>
      Net loss                                                      $(15,202,989)          (287,509)            $  (16,240,049)
      Adjustment for items not involving cash:
            Compensation cost                                                 -                 -                      241,058
            Shares issuable for services                              13,461,670                -                   13,461,670
            Depreciation                                                 191,138                -                      191,138
      Change in operating assets and liabilities:
            Interest and sales tax receivable                             (6,949)          (21,093)                   (244,488)
            Research tax credits receivable                             (123,879)           (2,149)                   (158,097)
            Prepaid expenses                                              30,566                -                      (19,390)
            Accounts payable and accrued liabilities                     610,397           119,349                   1,314,259
            Advance to shareholder                                            -                 -                           -
------------------------------------------------------------------------------------------------------------------------------
                                                                      (1,040,046)         (191,402)                 (1,453,899)
Financing activities:
      Proceeds from issuance of common shares                          8,177,352               372                  11,088,841
      Cash from the acquisition of a subsidiary                               -            814,322                     814,322
      Share issue expenses                                              (328,070)          (93,379)                   (713,381)
      Proceeds from issuance of convertible
         promissory notes                                                     -                 -                      298,720
------------------------------------------------------------------------------------------------------------------------------
                                                                       7,849,282           721,315                  11,488,502
Investing activities:
      Additions to property and equipment                             (1,568,232)               -                   (3,060,727)
      Additions to other assets                                           (2,619)             (243)                    (12,620)
      Purchase of term deposits                                       (3,554,285)               -                   (3,554,285)
      Disposal of term deposits                                          783,084                -                      783,084
------------------------------------------------------------------------------------------------------------------------------
                                                                      (4,342,052)             (243)                 (5,844,548)
------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash  and cash equivalents                      2,467,184           529,670                   4,190,055

Cash and cash equivalents, beginning of period                         1,722,871                -                           -
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                            $  4,190,055         $ 529,670               $   4,190,055
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.
                                      -8-
<PAGE>
LUMENON
INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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


      In the opinion of management, the accompanying unaudited interim financial
      statements,  prepared in accordance with US generally accepted  accounting
      principles,  contain  all  adjustments  (consisting  of  normal  recurring
      accruals) necessary to present fairly the Corporation's financial position
      as at December 31, 1999 and June 30, 1999,  its results of operations  and
      cash flows for the  three-month  and six-month  periods ended December 31,
      1999 and 1998 and from inception to December 31, 1999.

      While management  believes that the disclosures  presented are adequate to
      make  the  information  not  misleading,   these  consolidated   financial
      statements and notes should be read in conjunction with the  Corporation's
      Consolidated Financial Statements at June 30, 1999.


1.    Organization and business activities:

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

      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  change in  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 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 $814,322  (US$540,000).  This company
      was subsequently dissolved.

      The  Corporation's  principal  business  activity  is to develop  products
      related to the Dense  Wavelength  Division  Multiplexing  market and other
      photonics markets.

      The  Corporation  is  subject to a number of risks,  including  successful
      development  and marketing of its  technology and attracting and retaining
      key  personnel.  In order to achieve its business  plan,  the  Corporation
      anticipates the need to raise additional capital (see notes 3 and 4).


2.    Property and equipment:

      During the  six-month  period ended  December 31,  1999,  the  Corporation
      purchased property and equipment  totalling  $1,568,232  (US$1,086,560) of
      which  $1,286,360   (US$891,263)  relate  to  laboratory  and  pilot  plan
      equipment.


                                      -9-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements, Continued
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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

3.    The Molex agreements:

      (a)   Under the terms of a Stock Purchase Agreement:

            Molex  Incorporated  (Molex),  a  Delaware  corporation,  agreed  to
            purchase from Lumenon 3,000,000 common shares at $0.74 (US$0.50) per
            share in two  transactions.  The first closing was held in June 1999
            for 1,500,000  common shares and the second  closing will take place
            in March 2000 for an additional  1,500,000 common shares. The second
            closing is contingent  on the progress  made by Lumenon  proving out
            its technology and its ability to  manufacture  and deliver  certain
            devices.

            Lumenon granted to Molex a Services Common Stock Purchase Warrant to
            receive  5,800,000  common shares.  The warrant expires in June 2001
            and is subject to Molex  fulfilling  its  obligations  pursuant to a
            Teaming  Agreement.  Value of the shares  issued will be recorded as
            Molex fulfills such obligations  (see (c) thereafter).  In addition,
            if Molex elects not to proceed with the second  closing  referred to
            above, all rights related to the warrant will be extinguished except
            to the extent of expenses incurred under the Teaming Agreement.

            Lumenon  granted to Molex a Cash Common  Stock  Purchase  Warrant to
            purchase  1,666,667  common shares at a price of $1.32 (US$0.90) per
            share. The warrant was exercised in November 1999.

      (b) Under the terms of a Stock Restriction Agreement:

            No primary  stockholders  can sell any share to competitors of Molex
            without Molex's prior consent. The agreement includes Right of First
            Refusal  and  Preemptive   rights  except  that  Lumenon  can  issue
            6,000,000  units (one common share and a warrant for the purchase of
            one common share at a price not less than $1.32 (US$0.90) per share)
            at a price not less than $0.74  (US$0.50)  per unit to raise capital
            within 24 months from the date of the agreement.

            Certain rights or  restrictions  might be terminated upon completion
            of a Public Sale, a Public Offering as defined in the agreement,  or
            if Molex elects not to proceed with the second  closing  referred to
            above or if the teaming agreement is terminated.


                                      -10-
<PAGE>

LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements, Continued
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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


3.    The Molex agreements (continued):

      (c) Under the terms of a Teaming Agreement:

            Lumenon and Molex agreed to jointly develop certain products related
            to the  Dense  Wavelength  Division  Multiplexing  market  and other
            photonics  markets.  Under  the  terms  of the  agreement,  Molex is
            committed  to  provide  services  towards  the  development  of  the
            products.  Subject to Lumenon  proving  out its  technology  and its
            ability  to  manufacture  and  deliver  certain  devices,  Molex  is
            committed to purchase the entire production of Lumenon for the first
            twelve  months with a maximum  number of units per month.  After the
            twelve-month  period,  Molex  will have the option to  purchase  all
            production   of  Lumenon  at  fair  market   value.   Under  certain
            circumstances,   Molex  may  have  the  right  to  manufacture   all
            components  of the  devices  in return of a royalty  of 25% of gross
            cost of Molex.  For the six-month period ended December 31, 1999, an
            amount of $13,461,670(US$9,327,008)  was recorded under research and
            development expenses (see note 4 (a)).


4.    Share capital:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
                                                              September 30,            June 30,
                                                                       1999                1999
-----------------------------------------------------------------------------------------------

<S>                                                        <C>                      <C>
      Authorized:
            1,000,000 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:
            25,175,036 common shares
               (June 30, 1999 - 20,215,000)                $         37,612         $    30,330
-----------------------------------------------------------------------------------------------
</TABLE>


      During the  six-month  period ended  December 31,  1999,  the  Corporation
concluded the following share capital transactions:

      (a)   Issue of shares:

            For the three-month period ended September 30, 1999:

            (i)   1,397,000 common shares were issued for cash  consideration of
                  $3,685,281  (US$2,503,000) of which $146,820  (US$101,725) was
                  received prior to June 30, 1999;


                                      -11-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements, Continued
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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

4.    Share capital (continued):

      (a)   Issue of shares (continued):

            (ii)  promissory notes of $298,720  (US$200,000) were converted into
                  400,000 common shares;

            (iii) stockholders'  equity was adjusted to reflect  262,253  common
                  shares issuable for services received from Molex in the amount
                  of $1,892,621  (US$1,311,315);  the  transaction was accounted
                  for by using the  average  market  price of the  shares of the
                  Corporation for the three-month period then ended;

            (iv)  in connection  with  issuance of common shares  referred to in
                  (i) and (ii)  above,  1,767,000  warrants  were  issued  to be
                  exercised  at prices  varying  from $1.32  (US$0.90)  to $8.80
                  (US$6.00) per share.

            For the three-month period ended December 31, 1999:

            (i)   31,500  common  shares were issued for cash  consideration  of
                  $376,318  (US$255,000) with 31,500 warrants to be exercised at
                  prices varying from $13.20 (US$9.00) to $22.74  (US$15.50) per
                  share;

            (ii)  2,421,667  common shares were issued upon exercise of warrants
                  and   options   for   cash    consideration    of   $4,115,756
                  (US$2,822,000);

            (iii) stockholders'  equity was adjusted to reflect  447,616  common
                  shares issuable for services received from Molex in the amount
                  of $11,569,049  (US$8,015,693);  the transaction was accounted
                  for by using the  average  market  price of the  shares of the
                  Corporation for the three-month period then ended;

      (b) Stock option plans:

            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  will  be
            determined by the Board of Directors.  The plan  contemplates that a
            maximum of 2,500,000  common shares may be optioned  under the stock
            option plan. In addition, no optionee shall hold options to purchase
            more than 5% of the number of shares issued and  outstanding  at any
            one time. The subscription price for each share covered by an option
            shall be  established by the Board of Directors but such price shall
            not be lower than the fair market value at the date of grant.



                                      -12-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements, Continued
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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

4.    Share capital (continued):

      (b)   Stock option plans (continued):

            Options granted have to be exercised over a period not exceeding ten
            years.  At  December  31,  1999,  750,000  outstanding  options  are
            exercisable and 1,657,500  outstanding options vest over a period of
            two to five years.

            (i) Changes in outstanding options for the year were as follows:
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
                                                                 Number         Exercise price per share
--------------------------------------------------------------------------------------------------------------

<S>                                                           <C>                    <C>
                  Options outstanding, January 1, 1999               -               $                -
                  Granted                                     1,860,000                   1.47 (US$1.00)
                  Granted                                        80,000                   0.74 (US$0.50)
--------------------------------------------------------------------------------------------------------------
                  Options outstanding, June 30, 1999          1,940,000

                  Granted                                        85,000                   2.94 (US$2.00)
                  Exercised                                     (30,000)                  1.47 (US$1.00)
--------------------------------------------------------------------------------------------------------------
                  Options outstanding, September 30, 1999     1,995,000

                  Granted                                       150,000                 33.20 (US$23.00)
                  Granted                                        12,500                 21.65 (US$15.00)
                  Granted                                       250,000                 18.76 (US$13.00)
                  Granted                                        50,000                  11.55 (US$8.00)
                  Exercised                                     (50,000)                  1.47 (US$1.00)

--------------------------------------------------------------------------------------------------------------
                  Options outstanding, December 31, 1999      2,407,500
--------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -13-
<PAGE>

LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements, Continued
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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

4.    Share capital (continued):

            (ii) Stock-based compensation:

                  The Corporation  applies APB Opinion 25,  Accounting for Stock
                  Issued to Employees,  in accounting for its stock option plan.
                  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:
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------
                                                    Three months          Six months              From
                                                           ended               ended      inception to
                                                    December 31,        December 31,      December 31,
                                                            1999                1999              1999
------------------------------------------------------------------------------------------------------

<S>                                                 <C>                 <C>               <C>
                  Net loss      As reported         $ 12,539,162        $ 15,270,865      $ 16,240,049
                                Pro-forma             12,877,793          15,646,548        16,986,543

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

                  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
                  rate of 5.5%, dividend yield of 0%, expected volatility of 90%
                  and 210%,  and  expected  life of 3 to 5 years.  The per share
                  weighted  average fair value of stock options  granted  during
                  the three-month period was $21.29 (US$14.75).

                  The effects of applying SFAS 123 for the pro-forma disclosures
                  are not representative of the effects expected on reported net
                  earnings in future years since  valuations are based on highly
                  subjective assumptions about the future, including stock price
                  volatility and exercise patterns.

                                      -14-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements, Continued
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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

      (c)   Warrants:

            The following warrants are outstanding at December 31, 1999:

--------------------------------------------------------------------------------
            Warrants           Expiry date           Exercise price per share
--------------------------------------------------------------------------------


            1,210,000          August 2000                 $   1.32 (US$0.90)
            282,000         September 2000                     8.80 (US$6.00)
            21,500          September 2000                    12.99 (US$9.00)
            10,700          September 2000                     8.80 (US$6.00)
            10,000            October 2000                   14.43 (US$10.00)
            960,000              June 2001                     2.20 (US$1.50)
            500,000            August 2001                     1.32 (US$0.90)
            5,090,131          August 2001                                  *
            400,000           October 2001                     1.32 (US$0.90)
            30,000            October 2001                     1.32 (US$0.90)

--------------------------------------------------------------------------------
            8,514,331
--------------------------------------------------------------------------------

            *     As per the Services  Common Stock Purchase  Warrant granted to
                  Molex.  Exercise price to be fair value of the shares when the
                  services are received.

5.    Commitments:

      Under  employment  agreements,  the  Corporation  is  committed  to pay to
      certain  employees  an  aggregate  of $375,000  per year for the next four
      years and approximately $280,000 during the fifth year.


6.    Agreements:

      In December 1999, the Corporation  entered into an agreement with Molex in
      connection  with the  issuance of common  shares at $34.00 (US $23.19) per
      share for an aggregate of $4,445,000 (US  $3,000,000).  Molex will receive
      also one half common  share  purchase  warrant per share  purchased  to be
      exercised before December 2000 at a price of $43.00 (US $29.00).


                                      -15-
<PAGE>
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
(a Development Stage Enterprise)
Notes to Consolidated Financial Statements, Continued
(Unaudited)

Three-month  and six-month  periods ended  December 31, 1999 and 1998 and period
from inception (March 2, 1998) to December 31, 1999 (in Canadian dollars)

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

6.    Agreements (continued):

      The Corporation  also entered into an agreement with a private investor in
      connection  with the  issuance of common  shares at $34.45 (US $23.25) per
      share for an aggregate of $2,963,000 (US $2,000,000). The private investor
      will  receive  also one half  common  share  purchase  warrant  per  share
      purchased to be exercised  before  December  2000 at a price of $44.50 (US
      $30.00). Closing of this financing was held in January 2000.


7. Functional currency and convenience translation:

      The functional currency of the Corporation is the Canadian dollar.

      US  dollar  amounts  presented  on  the  balance  sheets,   statements  of
      operations  and cash flows are provided for  convenience of reference only
      and are based on the closing exchange rate at December 31, 1999, which was
      $1.4433 Canadian dollar per US dollar.


8.    Uncertainty due to the Year 2000 Issue:

      The Year 2000 Issue  arises  because  many  computerized  systems  use two
      digits  rather  than four to identify a year.  Date-sensitive  systems may
      recognize  the year 2000 as 1900 or some other date,  resulting  in errors
      when information using year 2000 dates is processed. In addition,  similar
      problems  may arise in some  systems  which use  certain  dates in 1999 to
      represent  something  other than a date.  Although  the change in date has
      occurred, it is not possible to conclude that all aspects of the Year 2000
      Issue  that  may  affect  the  Corporation,  including  those  related  to
      customers, suppliers, or other third parties, have been fully resolved.


                                      -16-
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

Three Months Ended December 31, 1999 Compared to Three Months Ended December 31,
1998

The Company is a Development Stage  Enterprise,  which has not, during the three
months ended December 31, 1999, realized any revenues from operations.  Interest
income,  consisting  of interest on cash and term  deposits,  earned  during the
three month period ended  December 31, 1999  amounted to US$35,780  (CDN$51,641)
compared to US$5,133  (CDN$7,869)  for the three month period ended December 31,
1998,  an increase of  US$30,647  (CDN$43,772).  The increase is due to the fact
that the Company had more cash on hand during this quarter than the same quarter
last year as a result of  capital  raised  through  private  placements  and the
exercise of warrants.

Research and development  expenses for the three month period ended December 31,
1999, net of research tax credits, were US$8,197,539 (CDN$11,831,508).  Of these
costs,  US$8,015,691  (CDN$11,569,049)  are non-cash expenses resulting from the
issuance of the  Company's  common stock in  consideration  of certain  services
rendered  by Molex  under the terms of a Teaming  Agreement  dated May 19,  1999
between  the  Company and Molex for the joint  development  of certain  products
related to the Dense Wavelength Division Multiplexing market and other photonics
markets.  The  common  stock will be issued to Molex on  partial  exercise  of a
Services  Common Stock Purchase  Warrant for 5,800,000  common shares granted to
Molex  in  connection  with  the  services  to be  rendered  under  the  Teaming
Agreement.  The warrants expire in June 2001 and are subject to Molex fulfilling
its  obligations  under the Teaming  Agreement.  During the three months  ending
December 31, 1999,  based on Molex's  estimate of the cost of its work under the
Teaming  Agreement,  447,616  common  shares  would be  issuable to Molex at the
average  market  price of the shares of the Company for the  three-month  period
then ended.

The Company's research and development  expenditures,  other than those recorded
under the Services Common Stock Purchase  Warrant,  net of research tax credits,
were US$181,848  (CDN$262,459)  during the three month period ended December 31,
1999,  compared  to  US$8,018  (CDN$12,291)  for the three  month  period  ended
December 31, 1998,  an increase of  US$173,830  (CDN$250,168).  During the three
month period  ended  December  31,  1998,  the Company  incurred no research and
development  expenses  because  it was  not  yet  engaged  in  operations  (only
financing  activities).  During the three  months ended  December 31, 1999,  the
Company  had an  existing  operation  consisting  of a team of 15  employees,  a
facility,  a teaming  agreement  with Molex and an expansion  project  underway.
During  this  period,  the  Company  developed  a new DWDM  design  and  adapted
materials and processes accordingly.



                                      -17-

<PAGE>
As of December 31, 1999, the Company's  research and development staff consisted
of 15  employees,  all of whom are  located in Dorval,  Quebec  with most of the
employees holding science, engineering or other advanced technical degrees.

General and  administrative  expenses  (including  foreign exchange and interest
expenses)  were  US$526,082  (CDN$759,295)  during the three month  period ended
December  31, 1999,  compared to  US$146,491  (CDN$224,571)  for the three month
period ended  December 31, 1998,  an increase of US$379,591  (CDN$534,724).  The
charges for this period  consist mainly of salaries as a result of the increased
number of administrative  personnel and related expenses to manage the increased
activities of the Company from its expansion project.

As a result of the above, the Company's  overall loss for the three month period
ended  December 31, 1999 amounted to  US$8,687,841  (CDN$12,539,162)  or US$0.37
(CDN$0.53)  per  share,  compared  to  US$149,376  (CDN$228,993),   or  US$0.009
(CDN$0.014) per share for the comparable period in 1998.

Six Months  Ended  December 31, 1999  Compared to Six Months Ended  December 31,
1998

The Company is a Development  Stage  Enterprise which from its inception to June
30, 1998 did not have any significant  business  activities,  other than seeking
potential  financing to grow the Company.  During the six months ended  December
31, 1999,  the Company did not realize any revenues  from  operations.  Interest
income,  consisting  of  interest  earned  on funds  received  from the  private
placements  of the Company and the  exercise of  warrants,  during the six month
period ended December 31, 1999, amounted to US$47,028  (CDN$67,876)  compared to
US$5,133  (CDN$7,869)  in the same  period last year,  an increase of  US$41,895
(CDN$60,007).  The increase is due to the fact that the Company had more cash on
hand  during this  period  than the  equivalent  period last year as a result of
capital raised through private placements and the exercise of warrants.

Research and  development  expenses for the six month period ended  December 31,
1999, net of research tax credits, were US$9,606,390 (CDN$13,864,903).  Of these
costs,  US$9,327,008  (CDN$13,461,670)  are non-cash expenses resulting from the
issuance of the  Company's  common stock in  consideration  of certain  services
rendered  by Molex  under the terms of a Teaming  Agreement  dated May 19,  1999
between  the  Company and Molex for the joint  development  of certain  products
related to the Dense Wavelength Division Multiplexing market and other photonics
markets.  The  common  stock will be issued to Molex on  partial  exercise  of a
Services  Common Stock Purchase  Warrant for 5,800,000  common shares granted to
Molex  in  connection  with  the  services  to be  rendered  under  the  Teaming
Agreement.  The warrants expire in June 2001 and are subject to Molex fulfilling
its  obligations  under the Teaming  Agreement.  At December 31, 1999,  based on
Molex's  estimate of the cost of its work under the Teaming  Agreement,  709,869
common  shares  would be issuable to Molex at the  average  market  price of the
shares of the Company for the six-month period then ended.



                                       -18-

<PAGE>
The Company's research and development  expenditures,  other than those recorded
under the Services Common Stock Purchase  Warrant,  net of research tax credits,
were  US$279,382  (CDN$403,233)  during the six month period ended  December 31,
1999,  compared to US$8,018  (CDN$12,291) for the equivalent  period in 1998, an
increase of US$271,364  (CDN$390,942).  During the six months ended December 31,
1998, the Company  incurred no research and development  expenses because it was
not yet engaged in operations (only financing activities).  During the six month
period ended December 31, 1999, the Company had an existing operation consisting
of a team of 15 employees,  a facility,  a teaming  agreement  with Molex and an
expansion project underway. During this period, the Company developed a new DWDM
design and adapted materials and processes accordingly.

As of December 31, 1999, the Company's  research and development staff consisted
of 15  employees,  all of whom are  located in Dorval,  Quebec  with most of the
employees holding science, engineering or other advanced technical degrees.

General and  administrative  expenses  (including  foreign exchange and interest
expenses) were US$974,130  (CDN$1,405,962)  during the six months ended December
31, 1999,  compared to US$184,662  (CDN$283,087) for the same period in 1998, an
increase of US$789,468  (CDN$1,122,875).  The increase is a result of additional
salaries  arising  from an  increased  number of  administrative  personnel  and
related  expenses to manage the  increased  activities  of the Company  from its
expansion project.

As a result of the above,  the  Company's  overall loss for the six month period
ended  December 31, 1999 amounted to  US$10,533,491  (CDN$15,202,989)  or US$.47
(CDN$0.68)  per  share,  compared  to  US$187,547   (CDN$287,509),   or  US$0.01
(CDN$0.02) per share for the comparable period in 1998.

Financial Condition, Liquidity and Capital Resources

For  information  in respect of certain  risks to which the  Company is subject,
reference  is made to the  material  under the  caption  "Risk  Factors"  in the
Company's Registration Statement on Form 10.

At December 31, 1999, the Company had cash and cash  equivalents of US$2,903,107
(CDN$4,190,055).  In addition,  the Company had US$1,920,348  (CDN$2,771,201) of
term  deposits  with  maturity  date no later than February 18, 2000 and with no
restriction  in their use. At December 31, 1999,  the market value  approximated
the carrying value.

Since June 30, 1999, the Company collected US$5,438,427 (CDN$7,849,282) from the
issuance  of  common  shares,  net of  share  issuance  expenses  of  US$227,305
(CDN$328,070).  These funds have been partially  offset by operating  activities
amounting  to  US$720,603   (CDN$1,040,046)  and  investments  in  property  and
equipment  of  US$1,086,560   (CDN$1,568,232),   consisting  of  investments  in
laboratory  equipment   (US$891,263)   (CDN$1,286,360),   leasehold  improvement
(US$161,932)   (CDN$233,716),   computer  equipment  and  software   (US$18,390)
(CDN$26,543)  and  office  equipment  and  fixtures  (US$14,975)   (CDN$21,613).
Depreciation of US $132,431 (CDN$191,138) has been charged to expenses.



                                      -19-

<PAGE>

Subsequent Event

The  Company  accepted  in January  2000 an offer to lease  space for its future
manufacturing facilities.  Under the terms of the offer, annual minimum payments
for a twelve  year lease  agreement  commencing  on July 1, 2000 will  amount to
US$246,882  (CDN$356,325)  per year for the first  six  years and to  US$292,195
(CDN$421,725)  per year for the  remaining  period.  Total  payments  amount  to
US$3,234,255  (CDN$4,668,000).  The  Company has made a deposit in the amount of
US$519,642 (CDN$750,000) in connection with the offer. The Company estimates the
necessary  funding for the  construction  of such facility and  installation  of
manufacturing  equipment  therein  to be  approximately  US$20  million  (CDN$29
million).  The  Company is  actively  investigating  potential  sources for such
funding.

Lumenon is jointly  developing its 8, 16 and 32-channel  DWDM devices for use in
the DWDM market  pursuant to a Teaming  Agreement  with  Molex.  (See  "Material
Agreements  Agreement  with Molex" for a description of the terms of the Teaming
Agreement.)  The  Company  will  initially  rely  on this  relationship  for the
marketing and distribution of its jointly developed  products.  This reliance on
Molex  poses  an  operating  risk to the  Company.  Termination  of the  Teaming
Agreement  could  materially  and  adversely  affect  the  Company's   business,
financial condition and the results of operations.

Year 2000

As of February 16, 2000, the Company has not  experienced  any  difficulties  or
delays as a result of Year 2000.

Foreign Currency Transactions

Because the Canadian dollar is the primary currency in the economic  environment
in which the Company operates,  the Canadian dollar is its functional  currency.
Accordingly,  monetary amounts  maintained in currencies other than the Canadian
dollar  (principally  short-term  investments)  are  provided,  in the financial
statements of the Company,  for  convenience  of reference only and are based on
the closing  exchange  rate at September 30, 1998,  December 31, 1998,  June 30,
1999,  September  30,  1999 and  December  31,  1999,  which  were  CDN  $1.526,
CDN$1.533,  CDN$1.472, CDN$1.467 and CDN$1.4433 per US dollar, respectively. The
rate stated is from the Bank of Canada for each respective date.

The effects of foreign currency remeasurement are reported in current operations
and have been immaterial to date.

PART II.  OTHER INFORMATION

Item 2.      Changes in Securities and Use of Proceeds

The Registrant  hereby  incorporates by reference the  information  contained in
Item 10. Recent Sales of Unregistered Securities.  of its Registration Statement
on Form 10,  insofar  as such  information  relates to the period for which this
report is filed.

Item 6.   Exhibits and Reports on Form 8-K

Exhibits:
             27.1 Financial Data Schedule - December 31, 1999

             Reports on Form 8-K:

             The Registrant did not file any Current Report on Form 8-K during
             the period covered by this report.

                                      -20-

<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                   LUMENON INNOVATIVE LIGHTWAVE
                                   TECHNOLOGY, INC.


                                   By: /s/ Iraj Najafi
                                       ----------------------------------------
                                       Iraj Najafi
                                       President and Chief Executive Officer


                                   By: /s/ Vincent Belanger
                                       ----------------------------------------
                                       Vincent Belanger
                                       Chief Financial Officer (Principal
                                       Financial Officer and Chief Accounting
                                       Officer)



Dated: February 17, 2000



                                       -21-