Luna Innovations Incorporated (NASDAQ:LUNA) today announced its
financial results for its first quarter ended March 31, 2007. As
compared to the same quarter last year, revenues grew by 57%, from
$4.5 million to $7.1 million, gross profit increased from $1.3
million to $2.4 million, and the loss per share declined from $0.34
to $0.27. Kent Murphy, Chairman and Chief Executive Officer,
provided this overview: �We view our first quarter 2007 results as
further validation of our business model. Growth in technology
development has led to greater revenue and a growing intellectual
property portfolio, which is the basis for our commercialization
efforts. As a result, higher margin product and license revenues
are becoming a larger percentage of our total revenues, increasing
from 13% of total revenues in the first quarter of 2006 to 25% in
this year�s first quarter. In fact, product sales increased
year-over-year by 200%, from $595,000 to $1.8 million, and gross
profit, as a percentage of revenue, increased from 30% in the first
quarter of 2006 to 34% in our most recent quarter.� Murphy said
that the results are in line with the company�s expectations for
the year � total revenues of $30.0 million to $32.0 million, which
would represent growth of between 28% and 36% over 2006 revenues of
$23.5 million. The company expects a net loss of $9.0 to $9.5
million for the full year ending December 31, 2007. �In the first
quarter, revenues exceeded expectations and net loss came in well
below expectations. Our cash usage was on target with our planned
investments in high-growth, higher-margin product development and
reflected both the anticipated seasonality in our business and the
majority of our capital spending for the year,� Murphy added.
Murphy commented, �We also recently achieved a major milestone in
medical devices with the completion of the Food and Drug
Administration (FDA) 510(k) submission for the EDAC� (Emboli
Detection and Classification) QUANTIFIER, a blood circuit monitor
that uses advanced ultrasound technology to noninvasively count and
measure gaseous emboli in the extracorporeal circuit in real-time.
Emboli have been linked to decreased cognitive function following
certain surgical procedures. FDA approval would enable us to market
and sell the EDAC QUANTIFIER for clinical use in the United States.
First Quarter Financial Highlights -- Total revenues for the first
quarter of 2007 increased 57% compared to the first quarter of
2006. -- Product revenues represented over 25% of total revenues in
the first quarter of 2007, compared to 13% in the first quarter of
2006. Product revenues grew 200% to approximately $1.8 million in
the first quarter of 2007, compared to $595,000 in the first
quarter of 2006. -- Gross profit for the first quarter of 2007
increased to $2.4 million, or 34% of revenues, from $1.3 million,
or 30% of revenues, for the corresponding period of 2006. -- The
company reported a loss per share for the first quarter of 2007 of
$0.27 per share, on a diluted basis, compared to a loss per share
of $0.34 for the first quarter of 2006. -- Cash and cash
equivalents totaled $13.9 million at March 31, 2007, compared to
$17.9 million at December 31, 2006. Business Highlights Technology
Development -- Booked more than $5.3 million in new technology
development contracts in the first quarter 2007, representing an
increase of more than 13% in new technology development contract
bookings over the first quarter of 2006. -- Awarded a total of $1.6
million in ballistic missile defense contracts associated with the
U.S. Missile Defense Agency. Under the multi-year programs, Luna
will develop low-cost, common sensor electronics for use in the
next-generation exoatmospheric kill vehicles (EKV). Healthcare
Products -- Submitted 510(k) application for clearance to the FDA
for the EDAC QUANTIFIER, a medical device that counts and measures
gaseous emboli in the blood circuit during procedures such as
heart-lung bypass surgery. Instrumentation, Test & Measurement
Products -- Introduced an improved Optical Backscatter
Reflectometer (OBR�) in a smaller, more mobile platform offering
increased resolution, speed and flexibility. Potential applications
include optical component manufacturing, installation and
maintenance testing for aerospace, mobile platforms and secure
networks. Luna�s OBR family of products offer an ultra-high
resolution optical time domain reflectometer (OTDR) solution with
unique diagnostic capabilities in locating and troubleshooting
problem areas in modern fiber optic components and assemblies.
Luna�s OBR 4400 can be configured with an integrated distributed
sensing capability that transforms standard telecom-grade fiber
into a distributed strain and temperature sensor. Luna�s family of
Distributed Sensing System� (DSS�) products can be used to monitor
real-time structural health, highlight hot spots or potential
failures, or optimize process control. Potential applications
include aviation, power generation, industrial process control and
structural engineering. Outlook for Fiscal Year 2007 The company
reiterates its guidance for continued strong growth in both its
product and technology development divisions for the remainder of
2007. For fiscal year 2007, the company expects total revenue to be
in the range of $30.0 million to $32.0 million, consisting of
product and license revenue of $7.0 to $8.0 million and technology
development revenue of $23.0 to $24.0 million. For the full year
2007, the company anticipates a net loss in the range of $9.0 to
$9.5 million. For the second quarter of 2007, the company expects
revenue of approximately $7.4 million and a net loss of
approximately $2.6 million. The company plans to discuss its second
quarter and fiscal year 2007 guidance on its investor conference
call to be held later today. Conference Call Information As
previously announced, Luna Innovations will conduct an investor
conference call at 10:00 a.m. (EDT) today to discuss the company�s
first quarter financial results. The company will also discuss
expectations for 2007. The call can be accessed by dialing
1.866.362.5158 domestically or 1.617.597.5397 internationally prior
to the start of the call. The access code is 21562532. The
conference call will also be webcast live over the Internet. The
webcast can be accessed by logging on to the �Investor Relations�
section of the Luna Innovations website,
http://www.lunainnovations.com, prior to the event. The webcast
will be archived under the �Webcasts and Presentations� section of
the Luna Innovations website for at least 30 days following the
conference call. About Luna Innovations Luna Innovations
Incorporated develops and manufactures new-generation products for
the healthcare, telecommunications, energy and defense markets. Our
products are used to measure, monitor, protect and improve critical
processes in the markets we serve. Through its disciplined
commercialization business model, Luna has become a recognized
leader in transitioning science to solutions. Additional
information can be found at www.lunainnovations.com. Safe Harbor
Statement under the Private Securities Litigation Reform Act of
1995 This press release includes information that constitutes
"forward-looking statements" made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995,
including but not limited to statements regarding (i) revenue and
net loss guidance for the second quarter and full year 2007, (ii)
the anticipated seasonality of the company�s business and capital
spending; (iii) FDA approval would enable the company to market and
sell its EDAC product for clinical use in the U.S., (iv) the
company�s family of DSS products have potential applications in
aviation, power generation, industrial process control and
structural engineering, and (v) anticipated continued strong growth
in the both the product and technology development divisions in
2007. The company attempts, whenever possible, to identify
forward-looking statements by words such as "intends," "will,"
"plans," "anticipates," "expects," "may," "estimates," "believes,"
"should," "projects," or "continue," or the negative of those words
and other comparable words. Similarly, statements that describe the
company's business strategy, goals, prospects, opportunities,
outlook, objectives, plans or intentions are also forward-looking
statements. Luna Innovations wishes to take advantage of the "safe
harbor" provided by the Private Securities Litigation Reform Act of
1995 and you are cautioned that actual events or results may differ
materially from the expectations expressed in such forward-looking
statements as a result of various factors, including risks and
uncertainties, many of which are beyond the company's control.
Factors that could cause actual results to differ materially from
the expectations expressed in such forward-looking statements
include, but are not limited to: the company's ability to manage
its growth effectively; the company�s ability to transition its
revenue mix from technology development revenues to product and
licensing revenues; the company's ability to successfully identify
market needs for new products; the company's continued reliance on
contract research, including government grants and contracts
available only to small businesses, for a significant portion of
its revenue; the risk that the company may become ineligible for
small business government grants and contracts in the future; the
effect of competition in its markets and changes in customer
demand; the risk that company's proprietary rights may be
insufficient to protect its technologies, including potential
claims by third parties that the company infringes their
intellectual property rights; the potential impact of federal
audits and investigations; delay in obtaining clearance by the U.S.
Food and Drug Administration or other regulatory requirements, and
failure to comply fully with such regulations; the company�s
ability to secure third-party reimbursement for its healthcare
products; continued difficulty in, or increased costs related to,
hiring, training and retaining skilled employees; unanticipated
manufacturing or supply problems; a slowdown in the overall
economy; and uncertainty in the global political environment.
Additional factors that may affect the future results of the
company are set forth in its Registration Statement on Form S-1,
its quarterly and annual reports on Form 10-Q and Form 10-K,
respectively, and other filings with the Securities and Exchange
Commission ("SEC"), which are available at the SEC's website at
http://www.sec.gov, and at Luna Innovations� website at
http://www.lunainnovations.com. These risk factors are updated from
time to time through the filing of periodic reports and
registration statements with the SEC. The statements made in this
press release are based on information available to the company as
of the date of this release and Luna Innovations undertakes no
obligation to update any of the forward-looking statements herein
after the date of this press release. Luna Innovations Incorporated
Consolidated Balance Sheets � � March 31, Dec. 31, 2007� 2006� �
Assets (unaudited) Current assets Cash and cash equivalents $
13,889,186� $ 17,866,753� Accounts receivable, net 7,940,333�
7,233,406� Refundable income taxes 396,062� 396,062� Inventory
1,080,027� 843,294� Other current assets � 331,938� � 503,703�
Total current assets 23,637,546� 26,843,218� Property and
equipment, net 6,172,893� 5,730,094� Intangible assets, net
2,056,716� 2,031,489� Deferred tax asset 600,000� 600,000� Other
assets � 13,389� � 12,413� Total assets $ 32,480,544� $ 35,217,214�
Liabilities and stockholders' equity Current liabilities Current
portion of capital lease obligation $ 76,058� $ 85,378� Current
portion of long-term debt obligation -� 214,955� Accounts payable
2,107,202� 2,757,381� Accrued liabilities 3,854,412� 3,627,277�
Deferred credits � 861,911� � 874,676� Total current liabilities
6,899,583� 7,559,667� Long-term capital lease obligation 14,677�
27,873� Long-term debt obligation 5,000,000� 5,000,000� Deferred
credits and other long term liabilities � 604,418� � 554,418� Total
liabilities � 12,518,678� � 13,141,958� Stockholders' equity:
Preferred stock, par value $0.001, 5,000,000 shares authorized at
March 31, 2007, no shares issued and outstanding -� -� Common
stock, par value $0.001, 100,000,000 shares authorized, 10,022,254
and 9,911,546 shares issued and outstanding 10,022� 9,912�
Additional paid-in capital 32,154,357� 31,585,762� Accumulated
deficit � (12,202,513) � (9,520,418) Total stockholders' equity �
19,961,866� � 22,075,256� Total liabilities and stockholders'
equity $ 32,480,544� $ 35,217,214� Luna Innovations Incorporated
Consolidated Statements of Operations � Three Months Ended March
31, � 2007� � 2006� (unaudited) (unaudited) Revenues: Technology
development revenues $ 5,286,597� $ 3,920,939� Product and license
revenues � 1,783,576� � 595,298� Total revenues 7,070,173�
4,516,237� Cost of revenues: Technology development costs
3,849,615� 2,907,835� Product and license costs � 800,421� �
266,051� Total cost of revenues � 4,650,036� � 3,173,886� Gross
Profit 2,420,137� 1,342,351� Operating expense � 5,215,019� �
3,442,008� Operating loss � (2,794,882) � (2,099,657) Other income
Other income 519� 6,287� Interest income, net � 112,268� � 3,960�
Total other income � 112,787� � 10,247� Loss before income taxes
(2,682,095) (2,089,410) Income tax expense (benefit) � -� � -� Net
loss $ (2,682,095) $ (2,089,410) Net loss per share: Basic $ (0.27)
$ (0.34) Diluted $ (0.27) $ (0.34) Weighted average shares: Basic �
9,969,373� � 6,069,780� Diluted � 9,969,373� � 6,069,780� Luna
Innovations Incorporated Consolidated Statements of Cash Flows �
Three months ended March 31, 2007� 2006� (unaudited) (unaudited)
Cash flows used in operating activities Net loss $ (2,682,095) $
(2,089,410) Adjustments to reconcile net loss to net cash provided
by operating activities: Depreciation and amortization 428,796�
250,374� Share-based compensation 522,389� 408,687� Change in
assets and liabilities: Accounts receivable (706,927) 1,247,919�
Inventory (236,733) Other assets 171,764� (138,015) Accounts
payable and accrued expenses (524,022) (1,434,214) Deferred
revenues � 37,235� � (393,434) Net cash used in operating
activities � (2,989,593) � (2,148,093) Cash flows used in investing
activities Acquisition of property and equipment (765,768)
(211,668) Intangible property costs � (31,050) � (76,297) Net cash
used in investing activities � (796,818) � (287,965) Cash flows
from financing activities Payments on debt obligations (214,955) -�
Payments on capital lease obligations (22,516) (25,238) Proceeds
from the exercise of options and warrants � 46,315� � 45,516� Net
cash from financing activities � (191,156) � 20,278� Net change in
cash (3,977,567) (2,415,780) Cash - beginning of period �
17,866,753� � 12,514,839� Cash - end of period $ 13,889,186� $
10,099,059� Supplemental disclosure of cash flow information Cash
paid for interest $ 80,269� $ 13,403� Cash paid for income taxes $
-� $ -� Property and equipment financed by capital leases $ -� $ -�
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