Luna Innovations Incorporated (NASDAQ:LUNA), a company focusing
on sensing & instrumentation and pharmaceutical nanomedicines,
today announced its financial results for the quarter ended June
30, 2009.
As compared to the same quarter last year, second quarter 2009
revenues decreased from $9.9 million to $8.7 million, gross profit
decreased from $4.1 million to $3.3 million, and loss per share
increased from $0.16 to $0.21. The increase in loss per share
resulted from lower product sales in addition to higher costs
associated with continuing litigation activities, partially offset
by improvements in other areas of operating expenses.
Kent Murphy, Chairman and Chief Executive Officer, provided this
comment related to the second quarter results and the company’s
decision to file for reorganization under Chapter 11 in July: “The
slowdown in product sales that began in the fourth quarter of last
year with the country’s overall economic decline continued to
affect our product sales in the second quarter. While the costs of
our ongoing litigation with Hansen Medical also continue to
adversely impact our bottom-line results, we have made significant
improvements in the efficiency of our operations and continue to
conduct business in the ordinary course. Our costs associated with
legal matters increased approximately $1 million, to $1.6 million,
in the second quarter of 2009 compared with approximately $0.8
million in the second quarter of 2008. Excluding that increase in
our legal costs, our operating expenses for the most recent quarter
would have decreased by approximately $1 million compared to the
same period last year. When we filed for reorganization in
mid-July, our objective was to protect the interests of all of our
stakeholders while trying to resolve our legal matters as quickly
as possible. If we are able to emerge from Chapter 11 quickly and
in accordance with the plan that we have filed with the court, we
will be positioned for continued success into the future.”
The company also announced today that it received notice on
September 8, 2009, that the Nasdaq Listing Qualifications Panel
decided to transfer its common stock from the NASDAQ Global Market
to the NASDAQ Capital Market and continue listing of its common
stock. The company had previously received a delisting letter on
July 17, 2009, and the company had appealed the proposed delisting
to the Panel. The hearing on the appeal was held on August 27,
2009. The company’s continued listing is subject to several
conditions, including its emergence from Chapter 11 reorganization
by December 31, 2009.
Second Quarter Financial
Highlights
- Total revenues for the second
quarter of 2009 decreased by $1.2 million to $8.7 million compared
to $9.9 million during the second quarter of 2008.
- Product and license revenues
decreased $0.7 million to approximately $2.2 million in the second
quarter of 2009 compared to $2.9 million in the second quarter of
2008.
- Technology Development Division
revenues decreased by $0.5 million as compared to the second
quarter of 2008.
- Gross profit for the second
quarter of 2009 decreased to $3.3 million from $4.1 million for the
corresponding period of 2008.
- Operating expenses decreased to
$5.6 million in the second quarter of 2009 from $5.8 million during
the second quarter of 2008, notwithstanding an increase in legal
fees of approximately $1 million.
- Net loss per share for the
second quarter of 2009 was $0.21 per share, an increase from a loss
per share of $0.16 for the second quarter of 2008.
- Cash and cash equivalents
decreased to $12.1 million at June 30, 2009, as compared to $13.2
million at March 31, 2009 and $15.5 million at December 31,
2008.
Second Quarter Business
Highlights
Technology Development Division
- Awarded $1.5 million corrosion
test methods contract
- Selected for negotiations in
NREL’s Photovoltaic Technology Pre-Incubator Program
- Demonstrated advanced material
technologies in hydrophobic watershedding coatings for windshields
and impact damage indicating paints during the Warrior 2009
demonstration sponsored by the Air Force Research Laboratory
(AFRL), which highlights promising new technologies in the field
during actual military exercise scenarios
- With the Mayo Clinic, published
a paper in the international journal Annals of Biomedical
Engineering discussing a next-generation fiber optic pressure
microsensor that improves size and performance over previous
generation sensors
Pharmaceuticals / Nanomedicine
- Published a paper titled
“Fullerene nanomaterials potentiate hair growth” in the
international, peer-reviewed journal Nanomedicine: Nanotechnology,
Biology, and Medicine (NBM)
Instrumentation, Test & Measurement
- Launched our distributed sensing
system with potential application in areas such as structural
health monitoring of carbon fiber reinforced materials of new
aircraft, aviation electronic systems and sink hole monitoring
systems for railways
Outlook for Remainder of
2009
Given the uncertainties associated with Luna’s Chapter 11
reorganization and the Hansen litigation, the company is unable to
provide a reasonable projection for its expected results of
operations for the remainder of 2009 at this time.
Conference Call
Information
As previously announced, Luna Innovations will conduct an
investor conference call at 5:00 p.m. (EDT) today to discuss its
financial results for the second quarter of 2009. The call can be
accessed by dialing 1.866.314.4865 domestically or
1.617.213.8050 internationally prior to the start of the
call. The access code is 77289631. 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) Luna’s intention to continue to serve its customers’
needs; (ii) improvements in operating efficiencies; (iii) the
company’s position if it can emerge from Chapter 11 quickly under
its filed plan of reorganization; (iv) demonstration of material
technologies; and (v) the potential expansion of applications for
the company’s distributing sensing technology. 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
risks inherent in current or future litigation proceedings,
particularly with respect to Hansen Medical, Inc.; the company’s
inability to continue to operate its business in the normal course;
whether the company can emerge from Chapter 11 reorganization in
the near future; and difficulties with the application of the
company’s technologies. 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 Six Months Ended
June 30, June 30, 2009 2008 2009
2008 (unaudited) (unaudited)
(unaudited) (unaudited) Revenues: Contract research
revenues $ 6,446,971 $ 6,947,276 $ 13,329,343 $ 13,549,023 Product
and license revenues 2,214,808 2,931,027
3,825,991 5,249,203 Total
revenues 8,661,779 9,878,303 17,155,334 18,798,226 Cost of
revenues: Contract research costs 4,271,252 4,382,001 9,169,008
8,575,648 Product and license costs 1,048,249
1,427,553 1,926,850 2,769,232
Total cost of revenues 5,319,501 5,809,554
11,095,858 11,344,880 Gross
profit 3,342,278 4,068,749 6,059,476 7,453,346 Operating
expense: Selling, general, and administrative 4,907,564 4,899,559
9,142,073 9,455,192 Research, development, and engineering 684,755
934,111 1,681,475 1,638,910 Litigation reserve - - 36,303,643 -
- - 1,310,598 -
Operating expense 5,592,319 5,833,670
48,437,789 11,094,102
Operating loss (2,250,041 ) (1,764,921 )
(42,378,313 ) (3,640,756 ) Other expense Other (17,244 ) -
(18,167 ) - Interest expense, net (139,875 ) (33,576
) (298,864 ) (9,689 ) Total other income
(157,119 ) (33,576 ) (317,031 ) (9,689 ) Loss
before income taxes (2,407,160 ) (1,798,497 ) (42,695,344 )
(3,650,445 ) Income tax expense - -
600,000 - Net loss $ (2,407,160 ) $
(1,798,497 ) $ (43,295,344 ) $ (3,650,445 ) Net loss per share:
Basic $ (0.21 ) $ (0.16 ) $ (3.87 ) $ (0.34 ) Diluted $ (0.21 ) $
(0.16 ) $ (3.87 ) $ (0.34 ) Weighted average shares: Basic
11,207,021 10,935,370 11,184,348
10,858,367 Diluted 11,207,021
10,935,370 11,184,348 10,858,367
Luna Innovations Incorporated
Consolidated Balance Sheets
June 30, December 31, 2009
2008 Assets (unaudited) Current assets Cash
and cash equivalents $ 12,110,258 $ 15,518,960 Accounts receivable,
net 6,879,920 7,332,034 Refundable income taxes 98,092 98,092
Inventory 2,851,581 2,828,991 Other current assets 418,980
342,598 Total current assets 22,358,831
26,120,675 Property and equipment, net 4,710,871 5,363,957
Intangible assets, net 175,862 1,813,643 Deferred tax asset -
600,000 Other assets 101,981 118,292
Total assets $ 27,347,545 $
34,016,567
Liabilities and stockholders’
equity
Current liabilities Current portion of capital lease obligation $
11,782 $ 17,396 Current portion of long-term debt obligation
4,285,715 1,428,572 Accounts payable 1,778,275 2,667,192 Accrued
liabilities 5,491,100 5,161,308 Litigation reserve 36,303,643 -
Deferred credits 1,866,249 1,854,282
Total current liabilities 49,736,764 11,128,750 Long-term
debt obligation 5,000,000 8,571,428
Total liabilities 54,736,764 19,700,178
Stockholders’ equity:
Preferred stock, par value $0.001,
5,000,000 shares authorized, no shares issued and outstanding
- -
Common stock, par value $0.001,
100,000,000 shares authorized, 11,209,836 and 11,137,882 shares
issued and outstanding
11,209 11,138 Additional paid-in capital 39,550,593 37,960,928
Accumulated deficit (66,951,021 ) (23,655,677 )
Total stockholders’ equity
(27,389,219 ) 14,316,389
Total liabilities and
stockholders’ equity
$ 27,347,545 $ 34,016,567
Luna Innovations Incorporated
Consolidated Statements of Cash Flows
Six months ended June 30, 2009
2008 (unaudited) (unaudited) Cash flows
used in operating activities Net loss $ (43,295,344 ) $
(3,650,445 )
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 1,142,846 958,953 Impairment of
intangible assets 1,310,598 - Share-based compensation 1,569,043
1,422,902 Deferred tax expense 600,000 - Change in assets and
liabilities: Accounts receivable 452,114 1,220,259 Refundable
income taxes - 5,401 Inventory (22,590 ) (605,471 ) Other assets
(60,071 ) (160,362 ) Litigation reserve 36,303,643 - Accounts
payable and accrued expenses (559,125 ) 138,964 Deferred credits
11,967 (297,695 ) Net cash used in operating
activities (2,546,919 ) (967,494 )
Cash flows used
in investing activities Acquisition of property and equipment
(41,445 ) (552,355 ) Intangible property costs (121,132 )
(291,452 ) Net cash used in investing activities
(162,577 ) (843,807 )
Cash flows from financing
activities Proceeds from/ (Payments on) debt obligations
(714,285 ) 4,928,150 Payments on capital lease obligations (5,614 )
(16,517 ) Proceeds from the exercise of options and warrants
20,693 105,362 Net cash used in financing
activities (699,206 ) 5,016,995
Net change
in cash (3,408,702 ) 3,205,694 Cash - beginning of period
15,518,960 12,046,945 Cash - end of
period $ 12,110,258 $ 15,252,639
Luna Innovations Incorporated
Reconciliation of EBITDA and Adjusted EBITDA to Net Loss
Luna Innovations
Incorporated Reconciliation of EBITDA and Adjusted EBITDA to Net
Loss
Three Months Ended Six Months
Ended June 30, June 30, 2009 2008
2009 2008 (unaudited) (unaudited)
(unaudited) (unaudited) Net Loss $ (2,407,160
) $ (1,798,497 ) $ (43,295,344 ) $ (3,650,445 ) Interest
139,875 33,576 298,864 9,689 Taxes - - 600,000 - Depreciation and
amortization 523,058 477,121
1,142,846 958,953 EBITDA (1,744,227 )
(1,287,800 ) (41,253,634 ) (2,681,803 ) Share based
compensation 779,532 663,260 1,569,043 1,422,902 Litigation reserve
- - 36,303,643 - Impairment of intangible assets -
- 1,310,598 -
Adjusted EBITDA $ (964,695 ) $ (624,540 ) $ (2,070,350 ) $
(1,258,901 )
Luna Innovations (NASDAQ:LUNA)
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