Luna Innovations Incorporated (NASDAQ:LUNA), a company focusing
on sensing & instrumentation and pharmaceutical nanomedicines,
today announced its financial results for the first quarter ended
March 31, 2009.
As compared to the same quarter last year, first quarter 2009
revenues decreased from $8.9 million to $8.5 million, gross profit
decreased from $3.4 million to $2.7 million, and loss per share
increased from $0.17 to $3.66. The increase in loss per share was
driven primarily by $38.2 million in additional aggregate expenses
that the company recognized in connection with the estimated loss
resulting from the company�s litigation with Hansen Medical.
Kent Murphy, Chairman and Chief Executive Officer, provided this
comment related to the recent verdict on the Hansen lawsuit and its
effect on the first quarter�s earnings results: �We are
disappointed with the decision of the jury and are directing all
efforts towards opportunities to reduce the loss exposure. While we
are preparing our post-trial motions, we are committed to
continuing to serve our customers� needs and develop industry
leading products.
�Apart from the litigation, I am pleased with the continuing
successes throughout the organization. Despite the severity of the
weakened economy, we were able to deliver higher revenues in our
Technology Development Division and total overall revenues that
were down less than 5% as compared to the first quarter 2008. We
have achieved significant efficiencies in our operating costs over
the past two years. Excluding the impact of the estimated outcome
of our litigation and the related impairment of certain intangible
assets, our operating expenses of $42.8 million during the first
quarter of 2009 would have been $5.2 million. That level of
operating expenses is the same level that we realized in the first
quarter of 2007, despite including approximately $0.9 million of
legal fees in 2009 that we were not incurring back in 2007. In
other words, since the first quarter of 2007, we grew our revenue
base by approximately 20% while we also reduced our baseline
expenses by approximately 17%, all of which increased the
efficiency of our operations.�
First Quarter Financial
Highlights
- Total revenues for the first
quarter of 2009 decreased by $0.4 million to $8.5 million compared
to $8.9 million during the first quarter of 2008.
- Product and license revenues
decreased 30% to approximately $1.6 million in the first quarter of
2009 compared to $2.3 million in the first quarter of 2008.
- Gross profit for the first
quarter of 2009 decreased to $2.7 million, or 32% of total
revenues, from $3.4 million, or 38% of total revenues, for the
corresponding period of 2008.
- Operating expenses increased to
$42.8 million in the first quarter of 2009 due primarily to the
impact of an estimated $36.3 million litigation loss accrual
related to the Hansen lawsuit and a related impairment charge of
$1.3 million on intangible assets related to the potential outcome
of that litigation. Not including those items, operating expenses
for the first quarter of 2009 would have been consistent with the
levels experienced during the first quarter of 2008.
- Income tax expense increased
$0.6 million due to an increase in the valuation allowance provided
against the company�s deferred tax asset.
- Net loss per share for the first
quarter of 2009 was $3.66 per share, an increase from a loss per
share of $0.17 for the first quarter of 2008.
- Cash and cash equivalents
decreased to $13.2 million at March 31, 2009, as compared to $15.5
million at December 31, 2008.
- The current portion of long term
debt increased in the first quarter, primarily due to
non-compliance with certain financial covenants under the facility
with Silicon Valley Bank driven by additional expenses recognized
related to the Hansen lawsuit.
First Quarter Business
Highlights
Technology Development Division
- Revenues grew by 4% compared to
the first quarter of 2008.
- Contract backlog remains
consistent with prior periods at $26.4 million.
Pharmaceuticals / Nanomedicine
- Presented the results of Luna�s
nanomedicines to treat allergies at the several medical conferences
including the annual meeting of the American Association of
Immunologists. The company has been invited to speak at the
Congress of the European Academy of Allergology and Clinical
Immunology in Warsaw, Poland, to be held in June 2009.
- Demonstrated progress in
targeting Luna�s exclusive HYDROCHALARONE� nanomaterials to
atherosclerotic plaque, which could lead to improved diagnosis and
treatment of coronary artery and other diseases.
Instrumentation, Test & Measurement
- Product and license revenue
decreased 30%, from $2.3 million in the first quarter of 2008 to
$1.6 million in first quarter of 2009
- Improved performance of our
underlying platform technology in terms of speed, accuracy, and
precision.
- Continued progress in business
development activities related to the platform in:
- non-robotic medical,
- energy,
- aerospace and
- defense.
Outlook for Remainder of
2009
Luna projects flat to modest revenue growth in 2009 with total
revenues between approximately $37 million and $40 million, which
is expected to consist of product and license revenue of
approximately $7 to $9 million and technology development revenue
of approximately $30 to $31 million. The company is currently
expecting revenues in the second quarter of 2009 of approximately
$9.0 to $9.5 million. Given the continued uncertainty of the Hansen
litigation, which is pending post-trial motions and final
judgments, Luna is unable to provide a reasonable projection for
its expected net income for the second quarter or full year 2009 at
this time.
Conference Call
Information
As previously announced, Luna Innovations will conduct an
investor conference call at 11:00 a.m. (EDT) today to discuss its
financial results for the first quarter and expectations for 2009.
The call can be accessed by dialing 1.866.578.5747
domestically or 1.617.213.8054 internationally prior to the
start of the call. The access code is 21871366. 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 (www.lunainnovations.com) 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. Luna is headquartered in
Roanoke, Virginia.
Forward Looking Statements:
This release includes information that constitutes
�forward-looking statements� made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 and
Section�21E of the Securities Exchange Act of 1934, including
statements regarding, but not limited to, (i) expectations
regarding the outcome of Luna�s litigation with Hansen, including
post-trial motions; (ii) plans and expectations to reduce loss
exposure; (iii) Luna�s intention to continue to serve its
customers� needs; (iv) expectations for continued growth of Luna�s
business; (v) expectations of achieving continued operating
efficiencies; (vi) expectations of continued backlog of contracts;
(vii) expectations regarding the successful development and
commercialization of new and existing technologies including, but
not limited to, nanomedicines and nanomaterial-based products;
(viii) continued development and improvement of instrumentation,
test & measurement products; (ix) the expected availability of
capital, including Luna�s line of credit and term loan with Silicon
Valley Bank; and (x) Luna�s financial outlook for the second
quarter and the remainder of the 2009 fiscal year, including
expected revenues and the components thereof. 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. 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,
continued or further weakness in the global economy; the company's
ability to transition its revenue mix to product revenues; risks
inherent in current or future litigation proceedings, particularly
with respect to Hansen Medical, Inc.; the company�s ability to
successfully identify market needs for new products; the company�s
ability to manage its cash and costs as well as to raise additional
capital; the potential adverse effects of nanotechnology, whether
real or perceived; and the potential limitations of regulatory
requirements in obtaining clearance by the U.S. Food and Drug
Administration or other regulatory agencies for the company�s
products. Additional factors that may affect the future results of
the company are set forth in the company�s 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 the
company�s website at http://www.lunainnovations.com. These risk
factors are updated from time to time through the filing of
periodic reports 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 Statements of Operations
� �
Three Months Ended March 31, 2009 �
2008 (unaudited) (unaudited) Revenues:
Technology development revenues $ 6,882,372 $ 6,601,748 Product and
license revenues � 1,611,184 � � 2,318,176 � Total revenues
8,493,556 8,919,924 Cost of revenues: Technology development costs
4,897,756 4,193,646 Product and license costs � 878,601 � �
1,344,411 � Total cost of revenues � 5,776,357 � � 5,538,057 �
Gross profit 2,717,199 3,381,867 Operating expense: Selling,
general and administrative 4,235,588 4,517,290 Research and
development 995,643 740,830 Litigation reserve 36,303,643 -
Impairment of intangible assets � 1,310,598 � � - � Total operating
expense � 42,845,472 � � 5,258,120 � Operating loss � (40,128,273 )
� (1,876,253 ) Other (income)/ expense Other (income)/ expense 923
777 Interest income (income)/ expense � 158,988 � � (25,082 ) Total
other income (expense) � 159,911 � � (24,305 ) Loss before income
taxes (40,288,184 ) (1,851,948 ) Income tax expense � 600,000 � � -
� Net loss $ (40,888,184 ) $ (1,851,948 ) Net loss per share: Basic
$ (3.66 ) $ (0.17 ) Diluted $ (3.66 ) $ (0.17 ) Weighted average
shares: Basic � 11,161,423 � � 10,781,363 � Diluted � 11,161,423 �
� 10,781,363 �
�
Luna Innovations Incorporated
Consolidated Balance Sheets
� �
March 31, �
December 31, 2009 2008
�
Assets (unaudited) Current assets Cash and cash
equivalents $ 13,179,040 $ 15,518,960 Accounts receivable, net
7,921,282 7,332,034 Refundable income taxes 98,092 98,092 Inventory
2,850,327 2,828,991 Other current assets � 347,915 � � 342,598 �
Total current assets 24,396,656 26,120,675 Property and equipment,
net 5,037,947 5,363,957 Intangible assets, net 274,051 1,813,643
Deferred tax asset - 600,000 Other assets � 100,564 � � 118,292 �
Total assets $ 29,809,218 �
$
34,016,567 �
Liabilities and stockholders' equity
Current liabilities Current portion of capital lease obligation $
14,597 $ 17,396 Current portion of long term debt 4,642,857
1,428,572 Accounts payable 3,215,412 2,667,192 Accrued liabilities
4,349,627 5,161,308 Litigation Reserve 36,303,643 - Deferred
credits � 2,054,542 � � 1,854,282 � Total current liabilities
50,580,678 11,128,750 � � Long-term debt obligation � 5,000,000 � �
8,571,428 � Total liabilities � 55,580,678 � � 19,700,178 �
Stockholders' equity:
Common stock, par value $0.001,
100,000,000 shares authorized, 11,181,197 and 11,137,882 shares
issued and outstanding
11,181 11,138 Additional paid-in capital 38,761,220 37,960,928
Accumulated deficit � (64,543,861 ) � (23,655,677 ) Total
stockholders' (deficit)/equity � (25,771,460 ) � 14,316,389 �
Total liabilities & stockholders' (deficit)/equity
$ 29,809,218 �
$ 34,016,567 � �
Luna Innovations Incorporated
Consolidated Statements of Cash Flows
� �
Three months ended March 31, 2009 �
2008 (unaudited) (unaudited) Cash flows
used in operating activities
Net loss
$ (40,888,184 ) $ (1,851,948 )
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 619,788 481,832 Impairment of
Intangible Assets 1,310,598 - Share-based compensation 789,511
759,642 Change in assets and liabilities: Accounts receivable
(589,248 ) 1,659,207 Inventory (21,336 ) (309,153 ) Other current
assets (5,317 ) 58,660 Deferred tax asset 600,000 - Other assets
17,728 - Accounts payable and accrued expenses 36,040,184
(1,211,503 ) Deferred revenues � 200,260 � � (205,822 ) Net cash
used in operating activities � (1,926,016 ) � (619,085 )
Cash
flows used in investing activities Acquisition of property and
equipment (34,037 ) (219,602 ) Intangible property costs � (30,749
) � (93,771 ) Net cash used in investing activities � (64,786 ) �
(313,373 )
Cash flows from financing activities Payments on
capital lease obligations (2,799 ) (11,380 ) Payments on debt
obligations (357,143 ) - Proceeds from the exercise of options and
warrants � 10,824 � � 75,669 � Net cash from financing activities �
(349,118 ) � 64,289 �
Net change in cash (2,339,920 )
(868,169 ) Cash - beginning of period � 15,518,960 � � 12,046,945 �
Cash - end of period $ 13,179,040 � $ 11,178,776 �
Supplemental
disclosure of cash flow information Cash paid for interest $
85,815 $ 10,099
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