ROANOKE, Va., Nov. 6 /PRNewswire-FirstCall/ -- Luna Innovations Incorporated today announced its financial results for the quarter ended September 30, 2006.
Revenues for the 2006 third quarter increased 53% to $6.0 million, from $3.9 million for the same quarter of 2005, reflecting growth in contract research revenues of approximately $0.9 million and product and license revenues of approximately $1.2 million. Gross profit increased to $1.9 million, or 32% of revenues, in the third quarter of 2006, from $0.9 million, or 22% of revenues, in the third quarter of 2005. Operating expenses were $4.1 million in the third quarter of 2006, compared to $4.3 million in the second quarter of 2006 and $1.0 million in the third quarter of 2005. The increase in year over year operating expense reflects the company’s strategy, begun in late 2005, to increase its product portfolio and product sales, which included the acquisition of Luna Technologies in September 2005. Operating expenses in the third quarter of 2006 also include an additional $0.4 million in share-based compensation expense, as well as administrative costs associated with the company’s growing employee base and its transformation to a public company. As a result of these increases in operating expenses, the company incurred a loss from operations of $2.2 million in the third quarter of 2006, versus a loss from operations of $0.2 million for the prior year’s comparable quarter.
The net loss applicable to common stockholders for the third quarter of 2006 was $1.9 million, or $0.20 per share on a diluted basis, compared to a net loss applicable to common stockholders of $0.1 million or $0.01 per share, for the third quarter of the previous year.
Kent Murphy, Chairman and Chief Executive Officer, commented, “The third quarter proved to be an excellent one for Luna Innovations. In addition to over fifty percent top line revenue growth and substantially improved gross margins, we showed momentum in the core parts of our business model.
“In contract research, we booked over $6.1 million in new contract awards. On the product side, we launched our EN-TACT(TM) ultrasonic medical device and entered into a joint development product agreement with Acterna, a division of JDSU. In addition, we won a large development contract from a major Department of Defense prime contractor to help develop an advanced electronics subsystem for a next generation defense system and also signed new technology assessment contracts to apply our fiber optic sensing technology to new medical applications,” Murphy reported.
Business Highlights
-- Generated the company’s most impressive quarterly customer list to date, including significant deals with several new customers. The company expanded existing customer relationships with an international communications and information technology company, two top-tier semiconductor companies, two major federal government contractors, an oil and gas field equipment provider, an optical network component and element manufacturer, and a fiber optic sensing company. New customers include a leading producer of supercomputers, a company that produces optical components on hybrid optical/electrical integrated chips, and a federal laboratory.
-- Announced a joint development agreement between the Luna Technologies subsidiary and Acterna, a division of JDSU, that enables both companies to take advantage of new growth opportunities in the area of fiber optics test and measurement, particularly new products aimed at platforms for installation and maintenance testing of modern optic networks. Products that result from the joint development will be jointly marketed and distributed under the agreement.
-- Launched the EN-TACT(TM) (Emergency Noninvasive Tissue and Compartment Testing) ultrasonic medical device that quickly and non-invasively measures and monitors intramuscular pressures. Based on technology originally developed for the defense industry, the portable system is designed to be operated with minimal training and is ideal for traumatic injuries, sports medicine and military combat situations where compartment syndrome is common.
-- Received the Frost & Sullivan 2006 Patient Monitoring Technology of the Year Award for the innovative design and the development of the EDAC(TM) (Embolus Detection and Classification) QUANTIFIER. Based on technology originally developed for the defense industry, the EDAC system will permit cardiothoracic surgeons, perfusionists and anesthesiologists to detect and monitor air bubbles that can occur in the bloodstream during critical medical procedures such as cardio-pulmonary bypass surgery.
Financial Highlights
-- Revenues for the third quarter of 2006 increased 53% compared to the third quarter of 2005 and 23% compared to the second quarter of 2006.
-- Product revenues represented over 19% of total revenues in the third quarter of 2006, versus 0% in the third quarter of 2005, and 15% in the second quarter of 2006. Product revenues grew to approximately $1.2 million in the third quarter of 2006, versus $0.8 million in the second quarter of 2006.
-- Gross profit for the third quarter of 2006 increased to $1.9 million, or 32% of revenues, from $0.9 million, or 22% of revenues, for the corresponding period of 2005.
-- The company reported a loss per share for the third quarter of 2006 of $0.20 per share, on a diluted basis, compared to a loss per share of $0.01 for the third quarter of 2005.
-- Cash and cash equivalents totaled $22.4 million at September 30, 2006, compared to $12.5 million at December 31, 2005.
Conference Call Information
As previously announced, Luna Innovations will conduct an investor conference call at 5:00 p.m. (EST) today to discuss the company’s third quarter 2006 financial results. The call can be accessed by dialing 1.866.383.8003 domestically or 1.617.597.5330 internationally prior to the start of the call. The access code is 67270827. 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 researches, develops and commercializes innovative technologies in molecular technology and sensing solutions. Luna Innovations accelerates the process of bringing new and innovative products to market by focusing on technologies that can fulfill identified market needs and then takes these technologies from the applied research stage through commercialization. Since its inception, Luna Innovations has successfully developed products for the energy, telecommunications, life sciences and defense industries. Headquartered in Roanoke, Virginia, the company has research, development and manufacturing facilities in Blacksburg, Charlottesville, Hampton, and Danville, Virginia, and a sales office in McLean, Virginia. Additional information can be found at http://www.lunainnovations.com.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060627/LUNALOGO )
FORWARD LOOKING STATEMENTS
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 (i) the company’s joint development agreement with JDSU enables both companies to take advantage of new growth opportunities in the area of fiber optics test and measurement, (ii) products developed from the joint development agreement with JDSU will be jointly marketed, and (iii) the company’s EDAC system will permit cardiothoracic surgeons, perfusionists and anesthesiologists to detect and monitor air bubbles that can occur in the bloodstream and that can occur during critical medical procedures such as cardio-pulmonary bypass surgery. In general, the company attempts, whenever possible, to identify these 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 Luna Innovations’ control. Luna Innovations cannot guarantee future results, levels of activity, performance, or achievements. Factors that could cause actual results to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to: (1) we may be unable to manage our growth effectively, (2) we may experience continuing losses, (3) we may not be successful in identifying market needs for new products, (4) we will continue to rely on contract research, including government grants and contracts available only to small businesses, for a significant portion of our revenue, (5) we may become ineligible for small business government grants and contracts in the future, (6) we face substantial competition in our markets, (7) our proprietary rights may be insufficient to protect our technologies, (8) third parties may claim that we infringe their intellectual property rights, (9) as a provider of contract research for the U.S. government, we may be subject to federal audits and investigations, (10) our ability to develop and market certain of our products may be delayed by U.S. Food and Drug Administration or other regulatory requirements, (11) we may continue to face difficulty in, or increased costs related to, hiring, training and retaining skilled employees, (12) we have limited manufacturing experience and may experience unanticipated manufacturing or supply problems, (13) we may experience changes in customer demand for our products and product candidates, (14) our product sales may be impacted by a slowdown in the overall economy, and (15) the uncertainty of the current global political environment and the potential for terrorist attacks. Additional factors that may affect the future results of Luna Innovations are set forth in its Registration Statement on Form S-1, its quarterly report on Form 10-Q 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 Statements of Operations Three Months Ended Nine Months Ended September 30, September 30, ----------- ---------- ----------- ----------- 2006 2005 2006 2005 ----------- ---------- ----------- ----------- (unaudited) (unaudited) Revenues: Contract research revenues $4,885,854 $3,942,195 $12,977,066 $11,111,721 Product and license revenues 1,163,663 - 2,521,403 - ----------- ---------- ----------- ----------- Total revenues 6,049,517 3,942,195 15,498,469 11,111,721 Cost of revenues: Contract research costs 3,587,280 3,068,372 9,600,404 8,539,567 Product and license costs 520,699 - 1,194,969 - ----------- ---------- ----------- ----------- Total cost of revenues 4,107,979 3,068,372 10,795,373 8,539,567 ----------- ---------- ----------- ----------- Gross Profit 1,941,538 873,823 4,703,096 2,572,154 Operating expense 4,110,926 1,040,235 11,805,277 2,952,666 ----------- ---------- ----------- ----------- Operating loss (2,169,388) (166,412) (7,102,181) (380,512) ----------- ---------- ----------- ----------- Other income (expense) Other income (expense) 934 (782) 10,331 (92) Interest income / (expense), net 232,649 (9,893) 345,794 (75,206) ----------- ---------- ----------- ----------- Total other income (expense) 233,583 (10,675) 356,125 (75,298) ----------- ---------- ----------- ----------- Loss before income taxes (1,935,805) (177,087) (6,746,056) (455,810) Income tax expense (benefit) 12,829 (126,396) 12,829 (187,273) ----------- ---------- ----------- ----------- Net loss $(1,948,634) $(50,691) $(6,758,885) $(268,537) =========== ========== =========== =========== Net loss per share: Basic $(0.20) $(0.01) $(0.87) $(0.08) =========== ========== =========== =========== Diluted $(0.20) $(0.01) $(0.87) $(0.08) =========== ========== =========== =========== Weighted average shares: Basic 9,842,265 3,839,512 7,743,885 3,229,683 =========== ========== =========== =========== Diluted 9,842,265 3,839,512 7,743,885 3,229,683 =========== ========== =========== =========== Luna Innovations Incorporated Consolidated Balance Sheets September 30, December 31, 2006 2005 ---------------- ---------------- Assets (unaudited) Current assets Cash and cash equivalents $22,442,016 $12,514,839 Accounts receivable, net 5,194,447 5,129,911 Refundable income taxes 396,062 514,797 Inventory 681,559 448,475 Other current assets 535,076 227,409 ---------------- ---------------- Total current assets 29,249,160 18,835,431 Property and equipment, net 3,831,631 2,972,287 Intangible assets, net 1,425,852 999,544 Deferred offering costs - 710,018 Deferred tax asset 600,000 600,000 Other assets 13,447 16,550 ---------------- ---------------- Total assets $35,120,090 $24,133,830 ================ ================ Liabilities and stockholders’ equity Current liabilities Current portion of capital lease obligation $91,507 $98,820 Current portion of long-term debt obligation 214,955 - Accounts payable 1,639,717 3,647,505 Accrued liabilities 2,554,166 1,788,162 Deferred credits 1,076,549 1,458,393 ---------------- ---------------- Total current liabilities 5,576,894 6,992,880 Long-term capital lease obligation 50,216 117,134 Long-term debt obligation 5,000,000 5,214,955 Deferred credits 354,418 450,000 ---------------- ---------------- Total liabilities 10,981,528 12,774,969 ---------------- ---------------- Redeemable Class B common stock, 308,216 shares at December 31, 2005 - 504,984 ---------------- ---------------- Stockholders’ equity: Preferred stock, par value $0.001, 5,000,000 shares authorized at September 30, 2006, no shares issued and outstanding at September 30, 2006 - - Common stock Common stock, par value $0.001, 100,000,000 and 23,257,094 shares authorized at September 30, 2006 and December 31, 2005, respectively, 9,858,806 shares issued and outstanding at September 30, 2006 9,859 - Class A voting common stock, par value $0.001, 7,164,463 shares authorized at December 31, 2005, 2,834,814 shares issued and outstanding at December 31, 2005 - 2,835 Class B non-voting common stock, par value $0.001, 13,707,297 shares authorized at December 31, 2005, 734,427 shares issued and outstanding at December 31, 2005 - 734 Class C voting common stock, par value $0.001, 5,656,472 shares authorized at December 31, 2005, 2,131,474 shares issued and outstanding at December 31, 2005 - 2,131 Additional paid-in capital 30,970,277 10,935,049 Accumulated deficit (6,841,574) (86,872) ---------------- ---------------- Total stockholders’ equity 24,138,562 10,853,877 ---------------- ---------------- Total liabilities and stockholders’ equity $35,120,090 $24,133,830 ================ ================ Luna Innovations Incorporated Consolidated Statements of Cash Flows Nine Months Ended September 30, ----------------------------- 2006 2005 ----------- ---------- (unaudited) Cash flows used in operating activities Net loss $(6,758,885) $(268,537) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 792,725 355,026 Deferred income taxes - (4,358) Share-based compensation 1,164,709 137,829 Change in assets and liabilities: Accounts receivable (64,536) (509,743) Refundable income taxes 118,735 570,162 Other assets (524,201) (406,035) Accounts payable and accrued expenses (545,211) (175,595) Deferred revenues (477,426) (154,341) ----------- ---------- Net cash used in operating activities (6,294,090) (455,592) ----------- ---------- Cash flows used in investing activities Acquisition of property and equipment (1,377,466) (452,762) Intangible property costs (282,840) (159,749) Net cash from acquisition of Luna Technologies - 33,713 Capitalized software development costs - (14,468) ----------- ---------- Net cash used in investing activities (1,660,306) (593,266) ----------- ---------- Cash flows from financing activities Payments on capital lease obligations (74,229) (73,343) Proceeds from the issuance of common stock, net 17,866,241 7,000,000 Proceeds from the exercise of options and warrants 89,561 76,575 ----------- ---------- Net cash from financing activities 17,881,573 7,003,232 ----------- ---------- Net change in cash 9,927,177 5,954,374 Cash - beginning of period 12,514,839 609,636 ----------- ---------- Cash - end of period $22,442,016 $6,564,010 =========== ========== Supplemental disclosure of cash flow information Cash paid for interest $30,690 $72,151 Cash paid for income taxes $12,829 $25,927 Property and equipment financed by capital leases $ - $11,700
Luna Innovations Incorporated
CONTACT: Media: Mildred Cooper of Luna Innovations Incorporated,+1-540-557-7561, cooperm@lunainnovations.com; or Investors: Sally Beerbowerof Qorvis Communications, +1-703-744-7800, ir@lunainnovations.com, for LunaInnovations Incorporated
Web site: http://www.lunainnovations.com/
