LMIT Spotlight

Overview

Approx. Share-Related Items

Recent Price (05/28/02)	`$`.54
Market Capitalization	$15.39M
Shares Outstanding	`28.5M`
`Float`	`10.2M`
Avg. Daily Volume	36K
Delayed Quote

The desire for attractive white teeth is an increasingly important personal hygiene and appearance concern for the American public, especially as a large middle aged population with significant disposable income tries to hide one of the most obvious signs of aging. LumaLite Holdings (LMIT) offers a cost affordable solution for this emerging market and fills a niche by providing high quality teeth whitening products.

In our opinion LumaLite represents an excellent opportunity for the speculative investor looking to profit from early entry in the high-growth dental cosmetic industry. LMIT's products have proven results that are setting new standards for the competition and at a fraction of the price.

LumaLite's revolutionary tooth whitening system, the LumaArch, achieves results comparable or superior to competitive products in less time and at a suggested retail price that is significantly less than that of market leader BriteSmile. LMIT plans to use this distinct advantage to capitalize on the $1.3 billion domestic tooth whitening market which is anticipated to grow revenues in excess of $5 billion over the next seven years. The Company has addressed this market opportunity by rapidly introducing its core products LumaArch, and complimentary LumaWhite Bleaching material, to major dental distributors for use in dental offices worldwide.

LMIT is well positioned in an explosive industry and has laid the foundation for a very successful business model in addition to demonstrating the ability to execute in a very timely fashion. The Company intends to extend its distribution channels directly to consumers with the establishment of LumaWhite retail tooth whitening locations in the near future. LMIT's current business model, coupled with their proven, highly experienced management team and plans to establish retail centers, will be the keys that propel LMIT to significant growth in profitability and revenue.

Given the above factors, coupled with the gaining acceptance of LMIT's products and we see no reason why Lumalite will not be a huge success. LMIT's technology is the wave of the future and we believe the stock is extremely undervalued at current levels in comparison to its peers. We look for LMIT's price to appreciate commensurately with its higher revenues as it establishes retail locations, rolls-out new products and gains additional market share with existing products. One thing is for sure -- teeth whitening is an industry that is here to stay and LMIT owns the superior technology.

InvestorCommunications will be releasing a research report in the next week that will show LumaLite's target price to be in the $4.00+ range for FY 2003 based on management's earnings forecast and the average P/E ratio of the dental products and services industry.

Highlights

LumaLight Investor Highlights include:

LMIT is well positioned in a highly fragmented, multi-billion dollar growth industry expected to exceed $5 billion in sales within seven years. Currently there is no dominant player in the industry and it is estimated that no company owns more than 5% of the market share. This bodes well for LMIT's proprietary technology to gain rapid market share.

Patented liquid light guide process is the most advanced on the market today with first to market advantage.

Strong and seasoned management team with proven experience in developing and marketing medical and dental technologies.

The LumaArch bleaching system is technologically superior to existing tooth whitening systems employed by its principal competitors and sells for a fraction of the price.

LMIT has developed an effective wholesale distribution platform to rapidly penetrate national markets without incurring heavy marketing costs. Initial sales through distributors have proved very promising.

LMIT's partnership with leading dental supply companies, including Henry Schein and Patterson Dental, will provide rapid access to national marketing networks. These relationships provide the marketing power of 1,500 sales representatives while minimizing marketing expenditures.

Proprietary technologies gives LMIT distinct advantages over competition.

LMIT will expand in the fall of 2002 with the establishment of retail and teeth whitening service outlets and a full line of oral hygiene products in strategic locations.

Developing additional revenue streams through international expansion and addition of new product and service offerings.

Delivery of dental services is a $60 billion annual industry.

The potential domestic teeth whitening market is estimated to be between 10 to 15 billion dollars with an equally large foreign market.

LMIT is profitable and continues to gain market share.

In comparison to a peer grouping of similar companies engaged in the dental services and products industry, who trade at an average FY 2003 P/E of 21, LumaLite's fair value for 2003 would be $4.12 based on earnings of $.20 a share.

Company

LumaLite Holdings, Inc. (OTC BB: LMIT) www.luma-lite.com is a leading provider of comprehensive tooth whitening products and services sold through wholesale distribution to dental practices. Future expansion plans include the launch of corporate owned LumaWhite tooth whitening centers in late 2002. Based on its proprietary LumaArch bleaching product and associated Xenon-halogen illumination system, the LumaLite solution offers customers whitening results superior to the competition with less time spent in the dental chair and at lower cost.

LumaLite is well positioned to emerge as a major and innovative player within the high growth $1.3 billion domestic tooth whitening industry anticipated to exceed $5 billion in revenues within the next seven years. In 1999, according to the American Dental Association, the majority of the 60 million dental procedures performed were tooth whitening cosmetic dentistry procedures. Over half of respondents to a recent American Association of Cosmetic Dentistry survey indicated a desire for more attractive teeth, until recently, effective and widely available dental solutions have not existed at a price range that most prospective customers could afford. With its LumaArch bleaching system and proprietary technology, LumaLite has developed a highly marketable whitening system that provides comparable or superior whitening results to the competition at substantially reduced prices and in approximately half the time required by competition.

In the fourth quarter of 2000, LumaLite introduced The LumaArch, a tooth whitening system with a patented technology that cuts the bleaching process to approximately half the time of other competitive technologies. Through worldwide distribution channels, LumaLite is successfully positioned to rapidly commercialize new products and product line extensions. LumaLite currently has bleaching systems in over 1700 dental offices in the US and more than 300 in foreign locations. The products are sold through dental distributors worldwide.

LumaLite's Mission

The mission of LumaLite, Inc. is to design, develop, manufacture, and market new patented technologies in the industrial, medical, and dental fields. These products are marketed to specific niches, where they fill a current need by improving upon an existing technology or device. The goal of LumaLite, Inc. is to provide superior products at prices that offer the end-user exceptional value.

History

LumaLite, Inc. was founded in 1999 as a developer of advanced device technologies for the medical and dental industries. The Company quickly recognized the tremendous opportunities inherent with cosmetic and tooth whitening. A research and development effort headed by co-founder Dr. Dale Rorabaugh worked to develop a series of products catering to the high-end of this rapidly evolving and dynamic $1.3 billion tooth whitening market. LumaLite has historically marketed its products and services directly to the professional dental community via established distribution relationships with major dental supply companies.

With the introduction in late 2000 of the LumaArch, its comprehensive tooth whitening and bleaching system the Company has developed an industry leading solution that is more effective, cost efficient, and easier-to-use than existing competition. The LumaArch system utilizes a proprietary Xenon-halogen light curing technology and proprietary liquid light guides to produce uniform results without any heat in a simple, safe, and straightforward process. In conjunction with the LumaWhite Tooth Whitening material specially formulated to the energy wavelength produced by the LumaArch, the system provides up to 8 shades of whitening improvement (the same as the BriteSmile system) in a process that takes about 30-40 minutes of chair time. Dentists can simultaneously whiten both arches at the push of a button, simplifying a whitening procedure that was previously labor intensive and often took up to 3 hours.

The system is also much less expensive than competitive products currently on the market. By comparison laser-based bleaching systems retail for $10,000-$50,000 and cost patients $750-$2,000, while less effective power bleaching systems cost dentists $1,000-$5,000 at a cost to the patient of $500-$1,250. The primary comparable whitening system currently on the market with similar results and minimum chair time is offered by BriteSmile. In addition to the BriteSmile centers the BriteSmile system is only available to dental practitioners through a reportedly non-traditional $250 per procedure use leasing arrangement with a 10-year exclusive contract, at a patient cost of $500-$1,000.

The Company currently markets the LumaArch product to the more than 120,000 dental offices in the US through wholesale distribution channels with major dental supply companies acting as sales agents. Relative to competitive products within the tooth whitening market, LumaArch represents the most effective, efficient, and affordable solution currently on the market.

Growth Strategy

The Company intends to capitalize upon its innovative and superior technology by expanding distribution beyond wholesale and traditional dental offices into more consumer friendly retail locations. Beginning in the fall of 2002, LumaLite intends to open a series of Company owned and operated LumaLite retail tooth whitening centers, similar in concept to the whitening centers pioneered by BriteSmile, these centers will offer consumers accessible, pleasant, and affordable access to quality tooth whitening services in an upscale, �salon� type atmosphere.

Essentially, the company intends to separate tooth whitening services from the stigma of in-office dental visits and make tooth whitening painless and easy. LumaLite will place these retail locations in high traffic locations such as shopping malls and in �store-within-a-store� boutiques in major upscale department stores, fitness centers, and other locations such as resorts, spas and vacation destinations. This retail initiative will also serve to build the Company�s brand recognition and marketing exposure with these high profile locations. This retail business also offers numerous opportunities for growth of LumaLite�s customer base, and the company intends to pursue a number of initiatives such as strategic partnerships and co-branding relationships, the development of cosmetic service plans, franchise operations, and development of branded associate dental offices. The Company anticipates rolling-out six of these retail locations during FY 2002, and expanding to 50 locations during FY 2003, with a total of 125 corporate owned and 50 franchised retail operations anticipated for FY 2004.

Another integral component of the Company�s business is the sale of associated tooth whitening and oral hygiene products, such as at-home tooth whitening kits, toothpaste, and mouthwash. As there is a natural degradation of post-procedure tooth whiteness due to natural wear and the impact of coffee, nicotine, and red wine, these oral care and tooth whitening home care products are designed to supplement and reinforce the initial tooth whitening procedure. Beginning in late 2002, the Company is introducing a full-line of all-natural oral care products. Products will include LumaWhite DIY (Do-It-Yourself), a home bleaching and whitening kit, LumaWhite Toothpaste, Mouthwash, and chewing gum. Sales of these consumer products will leverage the Company�s established reputation within cosmetic dentistry and the tooth whitening industry and provide an additional, high margin, recurring revenue stream for the Company.

The introduction of retail distribution for the Company�s tooth whitening services and launch of the LumaLite line of oral hygiene products during 2002 will provide a major revenue increase for LumaLite while also helping to brand the corporate and product identity with the dental community and with consumers. The addition of these businesses will position LumaLite as a vertically integrated provider of comprehensive tooth whitening services and products that will appeal to a broad range of customers across the entire tooth whitening market from high end customers of in-office bleaching services to retail buyers of whitening toothpastes or home bleaching kits. With this broad product offering and through the Company�s efforts to compliment this substantial suite of teeth whitening products and services with additional, synergistic products, LumaLite is ideally positioned to benefit from the anticipated growth of the domestic tooth whitening industry from $1.3 billion in sales to an anticipated over $5 billion in revenues in the next seven years (an equally large potential is represented by foreign markets that are just starting to be penetrated by the company�s sales efforts). In the short-term, successful launch of the retail tooth whitening centers will prove a powerful validation of the Company�s technologies and services in the eyes of the public, the dental community, and investors.

The core of LumaLite�s current business is its wholesale distribution of the LumaArch bleaching system and single-use consumable LumaWhite Tooth-Whitening material to professional dental customers through established relationships with a national network composed of major dental distributors and dental equipment companies. LumaLite does not sell its products directly to dental offices, nor does it plan on doing so, in order to keep its marketing infrastructure and expenditures to a minimum. Through distributor relationships with some of the largest North American dental supply companies, including Henry Schein, Patterson Dental, and Benco Dental, this outsourced sales channel has enabled LumaLite to rapidly gain national market penetration and access to a huge target market of over 120,000 dentists. Effectively, this distribution method has provided LumaLite practical access to the equivalent of 1,500 sales representatives in the field, without the heavy up-front costs that such a sales platform would necessitate. Complimenting the national marketing network of its distributor relationships, the Company also utilizes a small sales force of 20 independent commissioned sales representatives who train and update dental end-users on the LumaArch product and its use.

The company is planning to launch a major new product in July of this year. The Inter-oral camera will provide the dentist with the ability to show the patient on a video screen the specific problem that requires correction.

Wholesale distribution provides a number of distinct benefits to the Company versus the more traditional direct marketing approach and independent distribution chains used by competitors. These models are costly, complex, and slow to gain momentum. Reportedly, BriteSmile employs an in-house marketing approach requiring dentist�s to sign a 10-year exclusivity contract and leases its systems at a fee of $250 per use, but also gaining access to the significant BriteSmile marketing push and brand identity. This platform comes at a high cost, especially in the early stages of corporate growth; in 2001 BriteSmile is estimated to have spent over $10 million on marketing and advertising costs which represents a large percentage of revenues. Even more traditional distribution methods pose significant disadvantages. Biolase sells its products directly to dentists and provides leasing options, due to the high cost of its systems, and incurs marketing expenses that are roughly 40-45% of revenues. By contrast, with its distributor networks and relationships, LumaLite anticipates that its overall marketing and advertising costs will stabilize in the range of 10-12% of revenues. LMIT�s highly efficient and cost-effective distribution model also allows it to implement a price leadership strategy for its LumaArch bleaching system to drive rapid market penetration. At a highly competitive wholesale price range of approximately $2,500, distributors can offer the system at a discount to its suggested retail price point of $5,995. The Company will then derive long-term recurring revenues from sale of the high margin, single-use LumaWhite Tooth-Whitening material as customers use the system over its lifetime.

The Company is currently in negotiations with several major national retailers. Franchising represents another business opportunity for the company, and a �Franchise" program will be introduced in early 2004. We anticipate that retail distribution of the Company�s services will rapidly become a major revenue driver for the Company. Moreover, these retail locations will help to solidify the Company�s branded identity and to drive cross sales of high margin tooth whitening accessories and other consumer products. This two tiered distribution model will position LumaLite as a wholly vertically integrated provider of tooth whitening solutions.

Professional Division

The Company has created a professional product sales arm that is expected to enjoy rapid market penetration by year end 2002 we estimate that the Company will have an installed base of 3,100 LumaArch systems worldwide by the end of 2002 with fiscal revenues from professional product sales of $7.6 million this year. With this domestic distribution infrastructure in place, the Company intends to take advantage of existing sales channels to cross-market new and complimentary product lines to its customer base. Additionally, LumaLite intends to implement its proven wholesale distribution model of professional product sales to lucrative international markets. Driven by these new revenue streams, and with more efficient penetration of the domestic market, we anticipate strong growth for this division of the Company generating sales of approximately $28.9 million in FY 2003 and $33.5 million during FY 2004. With this infrastructure in place, the Company is well positioned to emerge as a major player in the rapidly expanding tooth whitening industry and become a leader in a vital, rapidly evolving cosmetic dentistry market.

Products and Services

LumaArch� Bleaching System

Used in conjunction with a specially formulated hydrogen peroxide, LumaWhite Bleaching Gel, the LumaArch employs proprietary Xenon-Halogen illumination technology and highly efficient liquid light guides to simultaneously whiten both arches in a procedure that takes 30-40 minutes to brighten teeth by an average of 8 shades of improvement. The LumaArch produces virtually no heat in the activation process, helping to ensure a high safety standards and an unparalleled degree of patient comfort.

The LumaArch bleaching system allows dentists to offer patients a complete tooth whitening procedure in a single office visit. Unlike some existing whitening systems, the LumaArch bleaching system whitens both arches at the same time. Unique Xenon - halogen lamps, combined with filtered liquid light guides, produces a specific wavelength with virtually no heat. In less than 45 minutes of total chair time, the operator can produce superior results with improved patient comfort. The revolutionary LumaArch bleaching system is easy to operate and economically priced.

Simple, one-button start operation makes the product easy to use

Visual indicator displays bleach cycle time, minimizing errors

Functionally designed illuminator can be easily positioned over both arches, saving chair-side time

Virtually no heat production, reducing safety concerns

Audible signal tells the operator when the cycle is complete to avoid overexposure

Designed to fit within the operatory, complementing existing office design

Can be easily rolled from room to room, perfect for multi-operatory situations

Liquid LightGuides�

LightGuide liquid light guides for medical, dental, and commercial applications offer improved flexibility in a lightweight design. The guides provide 50% more light transmission than fiber-optic light guides and are more efficient than other liquid light guides. The guides come in 3mm, 5mm, and 7mm diameters; and 5�, 6�, 8�, and 10� lengths. Custom sizes and configurations are also available. LightGuide liquid light guides offer superior efficiency at a low cost.

LumaWhite�Tooth-Whitening Gel

LumaWhite�Tooth-Whitening material is a peroxide-based product that was specially formulated to be used with the LumaArch� Bleaching System. However, the material provides superior results with virtually any bleaching light. Its proprietary formulation increases the rate of oxidation of the intrinsic and extrinsic chromagens that cause tooth discoloration. This allows dentists to achieve a 3 to 4 vita shade improvement in just one office visit. LumaWhite Tooth-Whitening Gel offers excellent bleaching results at a competitive price.

Proprietary formulation produces rapid results, increasing productivity

3 to 4 vita shade improvement in one office visit, minimizing chair-side time

Each pre-measured packet contains two full arch applications, providing ease of use

Superior results with any bleaching light; can be used with existing equipment

Competitively priced

LMIT to Launch New Product in July 2002

LMIT is set to introduce a technologically innovative product line extension to the dental industry with their latest product, the Inter-oral camera. The Inter-oral camera is a portable device that transmits a video image in real-time to a TV monitor or computer screen, thus providing the dentist with the ability to show the patient specific problems which require correction. The video image is also captured to the dentist's computer hard drive for clinical analysis at a later date.

CONSUMER PRODUCTS To maintain the tooth whitening results of the LumaArch bleaching process, and in order to capitalize upon the revenue potentials that its captive market audience affords, LMIT is introducing a full line of oral hygiene and tooth whitening consumer products. This LumaWhite branded product suite will build out the Company�s comprehensive tooth whitening solution and provide the final component in a vertically integrated LumaLite offering. These products will be marketed initially to LumaArch customers as part of a post-procedure maintenance program designed to supplement and reinforce the initial tooth whitening service. This product line will also help to mitigate the natural degradation of whiteness that comes from consumption of coffee, nicotine, red wine, and similar food and drink. Sales of this product line will also be aided by brand equity developments from the LumaArch procedure and LumaWhite retail locations, and will be integrated as part of a LumaLite comprehensive tooth whitening suite of products and services.

Intended also to accommodate the substantial portions of the tooth whitening industry occupied by at home products with a lower price point, the LumaWhite product line will offer a wide array of oral hygiene products including a LumaWhite DIY (Do-It-Yourself), home bleaching and whitening kit, LumaWhite Toothpaste, chewing gum, a personal electronic toothbrush, and other similar items. The Company will market these products through its retail locations and in associated dental centers and dental customers of the LumaArch product. Sales of these products will generate high margins for LumaLite and provide a steady and recurring revenue stream to compliment its tooth whitening operations. In their first full year of introduction, we anticipate sales of approximately $1.6 million from this division and we expect revenues to grow along with the LumaWhite retail locations, exceeding $5 million for FY 2004. With margins above 50% on these products, a growing brand identity for the Company, increasing retail penetration of the LumaWhite retail tooth whitening centers, and the market size of tooth whitening product sales (for example whitening toothpaste currently generates $500 million in sales), we believe that consumer product sales has significant growth potential and could eventually generate as much as 10% of aggregate Company sales revenues.

CONSUMER SERVICES Through launch of its LumaWhite branded retail tooth whitening centers scheduled for fall of 2002, the Company has created a high growth business model that will offer consumers high quality tooth whitening services with unparalleled comfort, efficiency, and affordability. With these retail locations, the Company believes that it can fundamentally change consumer perceptions about tooth whitening from a service associated with dentistry, and therefore an unpleasant experience, to a personal hygiene task no more difficult or unpleasant than a haircut and one that is easily accessible in traditional retail locations. The Company intends to operate geographically targeted LumaWhite �store-within-a store� locations inside high profile retail establishments including upscale department stores, health spas, fitness clubs and vacation destinations. One of the objectives of these LumaWhite retail locations is to change the customers� perception of tooth whitening, and to facilitate this, locations will be designed to have the appearance of a luxury salon with amenities such as televisions and headphones. The LumaWhite locations will be staffed by dental assistants and technicians who perform the procedure and, where required by law (as in some states the whitening process is considered a dental rather than a cosmetic procedure), a contract dentist.

While this type of retail tooth whitening model has been attempted by competitor BriteSmile, the Company�s initiative has significant distinguishing features which should be more cost effective and productive. The Company intends primarily to open up initial locations as �store-within-a-store� locales, inside major department stores for example. This type of site placement not only helps to ensure high traffic and strong consumer visibility to build brand awareness and pique public interest but is also a very cost effective limited retail effort. While BriteSmile has pursued an expensive model of opening up large scale retail locations, the Company�s LumaWhite locations will be significantly smaller and less expensive to develop. In comparison to the estimated $650,000 required to furnish, equip, and open a BriteSmile retail outlet, LMIT anticipates spending under $100,000 to finish one of their teeth whitening "store-within-a-store" concept. Focusing on convenience, customer experience and pricing, LumaLite intends to use these retail locations to promote teeth whitening to its customer base as a necessary and periodical personal hygiene task and drive recurring revenues as well as cross-sales of its oral hygiene products.

Discussions are currently underway with major nationwide retailers to provide locations for LumaWhite within their stores. The Company is also actively pursuing new venues for these retail �store-within-a-store� locations such as resorts, spas and vacation destinations. LumaWhite locations will be opened up in geographic clusters to help build critical mass in selected markets. This cluster model will also help the Company to exploit the advantages of economies of scale, ensure cost effective management and administration, and promote advertising and promotional economies. The Company will additionally target nearby dental offices to become associated whitening centers, building referrals and helping to promote rapid customer turnover. With this high volume, cost effective retail model in place, the Company will be able to rapidly expand its locations. With six LumaWhite stores planned for launch in FY 2002, the Company intends to open another 50 locations in FY 2003, and 125 retail sites in FY 2004. Revenue growth from these LumaWhite �store-within-a-store� locations is anticipated to be significant, increasing from $400,000 in FY 2002 to over $36 million in the year ending 2004. Over the long term, we anticipate that retail distribution of the company�s services will become the most important revenue source for LumaLite.

Technology

Developed under the supervision of Company founder and Chairman Dr. Dale Rorabaugh, the core of LumaLite�s product and service suite is the Company�s proprietary LumaArch bleaching system, an easy-to-use tooth whitening product. This system is developed around the use of a proprietary Xenon-Halogen multiple illumination source that produces high lumen energy output in a specified band width within the visible spectrum. The Xenon-Halogen output is filtered through a patented liquid light guide to provide a highly focused, specific wavelength with virtually no heat as a byproduct. The use of liquid light guides, as opposed to more commonly used and less efficient fiber optic guides, is a major benefit of the Company�s process and helps to ensure quick activation time for the process. The Company believes that its liquid light guides are the most advanced currently on the market, providing operating efficiencies in the range of 85%. By comparison, more commonly used fiber optic light guides typically provide efficiencies of 45% while the only competitive liquid light product offered by a German manufacturer is 20% less efficient.

This system has several additional advantages over competitive technologies. Since it produces virtually no heat, safety and patient comfort are much greater than with some competitive products. The Xenon-Halogen wavelength output is formulated to specifically interact with the Company�s LumaWhite Tooth Whitening material for a speedy reaction process. The material is a proprietary formulation that increases the rate of oxidation on internal and external chromagens that cause tooth staining. The LumaArch system is also unique insofar as it simultaneously lightens both arches at the same time as it is designed only for whitening teeth (compared to some products which have multiple applications such as composite curing). The Company believes that this Xenon-Halogen lighting process and technology is superior to all existing competitive products, and has received one patent and filed three patent applications pertaining to this unique process.

Industry Overview

While tooth whitening had been practiced in rudimentary forms since the late 1800�s, it was not until the discovery of carbamide peroxide (which is still the active bleaching agent in almost all in-office systems nearly forty years later) and its accidental application to aesthetic dentistry in the 1960�s that the modern tooth whitening industry began to develop. Initial forays into cosmetic dentistry were limited and failed to live up to the potentials of the technology. In addition, tooth whitening procedures were cost prohibitive and time consuming; while many Americans wanted to improve their smile, the cost was too high and the process too onerous for all but an elite few. During the 1990�s widespread commercialization of teeth whitening technologies which resulted in industry growth to over $1.3 billion in aggregate sales in 2001, and which is expected to result in total industry domestic sales exceeding $5 billion within the next seven years. Driving this period there has been a fundamental shift in the focus of the dental profession. As the baby boomer generation ages there is less of a need for traditional dental services treating cavities and tooth decay. Among the image conscious American public the desire for white and good-looking teeth has become nearly universal, and the tooth whitening industry has exploded from a highly specialized and exclusive niche industry into the growth industry of the present day. According to the American Academy of Cosmetic Dentists more than 92% of adults believe that an attractive smile is a major social asset, and nearly 50% say they would like to improve the appearance of their smile.

There have been numerous stumbling blocks on the road to quality whitening solutions, however, pricing, convenience, and efficiency have all been concerns for potential customers. The most commonly used methods for whitening stained or discolored teeth have traditionally been at-home solutions such as whitening toothpaste or dentist prescribed bleaching trays that offer a modicum of shade improvement (on the Vita Scale toothpastes approach 1-3 shades average improvement while bleaching trays average 2-4 shades) for a moderately priced cost but are time consuming and slow processes. The most effective whitening solution have been services performed at the dental office with light or laser activated bleaching systems, though, at costs that approached $2,000 they were beyond the budget of most prospective patients. Additionally, many potential customers have an ingrained fear of dental visits and assumed that the in-office bleaching process would be painful, difficult, and generally uncomfortable.

With the introduction of BriteSmile�s patented tooth whitening procedure in 1999, these traditional concerns of cost, effectiveness, and ease-of-use were answered. In little more than an hour in a dental chair, BriteSmile could produce an average of 8 shades of improvement at an average price point of $500 -$600 which has placed in-office tooth whitening solutions within the range of an estimated 50 million consumers who have the discretionary income and desire for tooth bleaching services. The introduction of the Company�s LumaArch solution in late 2000 was an additional improvement upon the BriteSmile system, offering comparable results at significantly less costs and with less time in the dentist�s chair. LumaLite, with its in-office Xenon-Halogen bleaching system, offers superior results and efficiency when compared to more commonly-used whitening toothpastes, over-the-counter bleaching systems, and dentist administered bleaching trays. We believe that the Company, through its vertically integrated and comprehensive whitening solution and innovative distribution channels, is well positioned to benefit from the tremendous growth of the tooth whitening industry.

Competition

LumaLite, Inc. can be most easily compared to a peer grouping of companies engaged in the dental services and products industry, including Align Technologies (Nasdaq: ALGN), BriteSmile, Inc. (Nasdaq: BSML), Biolase Technology (Nasdaq: BLTI), DENTSPLY Inc. (Nasdaq: XRAY), and Sybron Dental (NYSE: SYB). Comparison with BriteSmile, due to the strong similarities in product line, business model, and distribution channels, is the most appropriate basis for relative analysis. The Company also merits comparison with Biolase Technology, owing to recent introduction to market of its LaserSmile cleaning and whitening product, and with Align Technologies, another company exploiting recent technological improvements to fundamentally improve cosmetic dental procedures (in this case orthodontic braces). We also feel that LumaLite can be favorably compared with DENTSPLY, Inc. and Sybron Dental, manufacturers of a broad array of dental and orthodontic products.

Opportunity

LumaLite, Inc. has developed a comprehensive tooth whitening solution with its LumaArch system and product that represents a major step forward for cosmetic tooth whitening products and services. With a suggested retail price that is significantly less than that of the closest competitor, results that are superior or comparable to existing products and a simpler and faster whitening procedure for the customer, represents a major catalyst for Company growth. Through a vertically integrated distribution strategy LumaLite has also developed an innovative and multi-tiered approach for rapid market penetration and business growth. With a proven wholesale distribution channel to professional dental customers and a near term launch of innovative retail tooth whitening centers, as well as introduction of a comprehensive line of cross-marketed oral hygiene products, we feel that the Company presents a compelling investment opportunity.

We further feel that LumaLite�s investment potential and growth prospects are bolstered by additional factors, including: (1) position at the forefront of an explosive growth $1.3 billion domestic tooth whitening industry anticipated to exceed $5 billion in revenues over the next seven years; (2) substantial service and products providing a comprehensive cosmetic tooth whitening solution; (3) a strong and seasoned management team with proven experience in developing and marketing medical and dental technologies; (4) first to market advantage for its patented process; and (5) development of additional revenue streams through international expansion and addition of new product and service offerings (6) Currently there is no dominant player in the industry and it is believed that no one company owns more than 5% of the market share. This bodes well for LMIT's proprietary technology to gain rapid market share. (7) LumaLite has set a goal to be listed on Nasdaq Small-Cap market or AMEX in six to nine months.

These considerations help to solidify LumaLite�s strong investment outlook and validate comparison with more established and better known players in the dental industry. At its current market price of $.54 per share, Lumalite is trading at less than three times our 2003 earnings estimate of $0.20 per share. By comparison, a peer grouping of public companies engaged in the dental industry, including direct competitors BriteSmile and Biolase Technology, trade at a projected average 2003 P/E multiple of 21. Relative to these factors, LumaLite is an undervalued issue and presents attractive upside potential. Based upon the Company�s competitively superior product and service offering, its unique distribution strategy, and it first-to-market positioning, we believe that our valuation framework is a conservative one, representing only a fraction of the upside potential that LumaLite should present over the intermediate term. By applying the peer grouping�s average FY 2003 price to earnings multiple to the Company�s anticipated 2003 financials; we can arrive at a relative valuation for LumaLite of approximately $4.12 per share representing a premium of over 700% from current trading levels.

Note: To meet the suggested target prices, the Company would have to trade at approximately the average 2003 P/E multiples of its closest competitors and the Company would have to achieve earnings and revenue estimates provided by management. A divergence either up or down from the projections could materially affect the target prices.

What to Look For:

Announcements of new store openings
Dramatically increasing revenues
Increasing market share
Growth rate of 100%+
Announcements of additional clients

Key Management

LMIT possesses an experienced, knowledgeable management team. Senior management has been instrumental in positioning the Company from a highly specialized niche market manufacturer of dental equipment into a vertically-integrated and innovative player in the $1.3 billion cosmetic dental industry.

The management team is seasoned in directing both startups and established companies in the dental and medical device industries, with specific experience in developing a number of new products in dentistry, optometry, medical thermometry, orthodontics, and medical lasers. Key individuals of the Company�s founders and officers were integrally involved in the successful creation of the one hour optical outlet industry and plan to leverage this valuable experience in creating one hour teeth whitening outlets.

Dr. Dale Rorabaugh
Chairman and Co-Founder

Dr. Rorabaugh received a doctorate from UC-Berkeley. Since founding the company in 1999, Dr. Rorabaugh has provided product design creativity and technical expertise to all of LumaLite�s proprietary products. Prior to LumaLite, Dr. Rorabaugh was the driving creative force for Kreativ, Inc., a manufacturer of a proprietary curing light used in the dental industry. Dr. Rorabaugh also served as CEO for DICON and held senior positions with The Aurora Group, Eclipse Ventures, Kreativ Inc, Cooper Vision, and Genesis Mgt Data Systems. Dr. Rorabaugh has 28 years experience as an inventor and entrepreneur in the medical and dental device industries. He holds advanced degrees in both Physics and Optometry.

Michael Jackson
President and COO

Mr. Jackson is responsible for sales and marketing for LumaLite as well as managing all functional aspects of the company. With 26 years experience in the medical and dental device industries, Mr. Jackson brings to LumaLite a broad knowledge of the dental community. He has been the driving force behind the successful negotiations of many key contracts and licensing agreements for LumaLite.

Prior to LumaLite, Mr. Jackson was Vice President of Sales for Kreativ, Inc. a manufacturer of dental device products. Before joining Kreativ, Mr. Jackson headed up worldwide sales for companies such as Dicon, TechnaVision, Coherent (Lasers), Cooper Vision and HGM Medical Lasers. Mr. Jackson studied at Virginia Tech.

Joe Forehand
VP of Operations

As head of operations, Mr. Forehand manages the engineering, manufacturing and regulatory operations at LumaLite. He has extensive experience in managing products from the prototype phase to delivery to the end customer. Prior to LumaLite, Mr. Forehand was V.P. of Operations at Kreativ, Inc. He has also held operations management positions with InfraSonics Inc. and Intelligent Surgical Lasers. Mr. Forehand attended University of Alabama.

Hank Schumer
VP, CFO & Co-Founder

Mr. Schumer is responsible for finance, Accounting and Administration for LumaLite. During his business career, he has been a principal in several technical start-up companies, and held positions with Dicon, Aurora Group, and Riker Maxon. Mr. Schumer has a bachelor of electrical engineering degree from C.C.N.Y. and an M.B.A. from Drexel Institute of Technology.

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