Luna Innovations Inc. (LUNA, Financial) filed Quarterly Report for the period ended 2009-09-30.
LUNA INNOVATIONS INCORPORATED develops and manufactures new-generation products for the healthcare, telecommunications, energy and defense markets. Luna develops technologies in four primary areas: Sensors & Systems; Health Sciences; Materials & Secure Computing. Luna's product offerings generally fit into two categories: Instrumentation, Test & Measurement & Healthcare. The 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. Luna Innovations Inc. has a market cap of $17.1 million; its shares were traded at around $1.5199 with and P/S ratio of 0.4.
Operating expense was flat at approximately $5.4 million for the quarters ending September 30, 2008 and 2009. While our operating expense was flat year over year, our professional fees remain high and we expect that we will continue to incur increased professional fees in future periods in connection with our reorganization under Chapter 11 and our ongoing litigation with Hansen. During the three months ended September 30, 2009 we incurred approximately $1.6 million with respect to these activities compared to $0.5 million in the third quarter of 2008. Excluding these legal fees, operating expenses would have decreased $1.0 million, or 20% due to the companys overall expense reduction initiatives throughout 2009. We anticipate that our continuing legal fees associated with our reorganization under Chapter 11 and the Hansen litigation will be significant.
Cost of revenues decreased 7.4% to $16.5 million for the nine months ended September 30, 2009 from $17.8 million for the corresponding 2008 period. Product and Licensing cost of revenue accounted for $1.1 million of this decrease or 84%, while technology development cost of revenues accounted for only $0.2 million or 16% of the decrease.
Operating expense increased 227% to $53.9 million for the nine months ended September 30, 2009 from $16.5 million for the corresponding period in 2008. This change is primarily due to the estimated loss recognized in conjunction with our litigation with Hansen of $36.3 million and associated impairment of goodwill and other intangible assets totaling $1.3 million in our product and license business segment.
On May 21, 2008, we entered into a $10 million maximum debt facility with Silicon Valley Bank. Included in this facility was a four-year term debt of $5 million and a revolving line of credit facility available for the remaining balance. The facility had a total maximum debt capacity of $10 million. At June 30, 2009, there was an outstanding balance of $4.3 million under the term loan, and no outstanding balance under the revolving facility. Principal under the term loan was payable in 42 monthly installments beginning in January 2009. The loan terms required us to meet certain covenants relating to minimum adjusted EBITDA, and other specified financial ratios.
In March 2004, we received a grant of $0.9 million from the City of Danville, Virginia under a Grant Agreement to support the expansion of economic and commercial growth within the City. Under the Grant Agreement, we agreed to locate a nanomaterials manufacturing and research facility and maintain its operations in Danville until March 25, 2009, In December 2008 we received a determination letter from the City of Danville that we had met 100% of the grant relating to job creation and 29% relating to capital expenditures. As a result, we recognized in 2008 approximately $668,000 of the grant as other income. On July 14, 2009, we were asked to repay $107,965 under the Grant Agreement based on a computation of the pro rata amount of capital expenditures falling below required levels. We have classified this amount and the remaining unearned revenue of $88,750 as a current liability subject to compromise on our balance sheet as of September 30, 2009.
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LUNA INNOVATIONS INCORPORATED develops and manufactures new-generation products for the healthcare, telecommunications, energy and defense markets. Luna develops technologies in four primary areas: Sensors & Systems; Health Sciences; Materials & Secure Computing. Luna's product offerings generally fit into two categories: Instrumentation, Test & Measurement & Healthcare. The 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. Luna Innovations Inc. has a market cap of $17.1 million; its shares were traded at around $1.5199 with and P/S ratio of 0.4.
Highlight of Business Operations:
Our revenues were $8.9 million and $10.7 million during the three months ended September 30, 2009 and 2008, respectively, and we had net losses of $2.0 million and $0.5 million for the same periods, respectively.Operating expense was flat at approximately $5.4 million for the quarters ending September 30, 2008 and 2009. While our operating expense was flat year over year, our professional fees remain high and we expect that we will continue to incur increased professional fees in future periods in connection with our reorganization under Chapter 11 and our ongoing litigation with Hansen. During the three months ended September 30, 2009 we incurred approximately $1.6 million with respect to these activities compared to $0.5 million in the third quarter of 2008. Excluding these legal fees, operating expenses would have decreased $1.0 million, or 20% due to the companys overall expense reduction initiatives throughout 2009. We anticipate that our continuing legal fees associated with our reorganization under Chapter 11 and the Hansen litigation will be significant.
Cost of revenues decreased 7.4% to $16.5 million for the nine months ended September 30, 2009 from $17.8 million for the corresponding 2008 period. Product and Licensing cost of revenue accounted for $1.1 million of this decrease or 84%, while technology development cost of revenues accounted for only $0.2 million or 16% of the decrease.
Operating expense increased 227% to $53.9 million for the nine months ended September 30, 2009 from $16.5 million for the corresponding period in 2008. This change is primarily due to the estimated loss recognized in conjunction with our litigation with Hansen of $36.3 million and associated impairment of goodwill and other intangible assets totaling $1.3 million in our product and license business segment.
On May 21, 2008, we entered into a $10 million maximum debt facility with Silicon Valley Bank. Included in this facility was a four-year term debt of $5 million and a revolving line of credit facility available for the remaining balance. The facility had a total maximum debt capacity of $10 million. At June 30, 2009, there was an outstanding balance of $4.3 million under the term loan, and no outstanding balance under the revolving facility. Principal under the term loan was payable in 42 monthly installments beginning in January 2009. The loan terms required us to meet certain covenants relating to minimum adjusted EBITDA, and other specified financial ratios.
In March 2004, we received a grant of $0.9 million from the City of Danville, Virginia under a Grant Agreement to support the expansion of economic and commercial growth within the City. Under the Grant Agreement, we agreed to locate a nanomaterials manufacturing and research facility and maintain its operations in Danville until March 25, 2009, In December 2008 we received a determination letter from the City of Danville that we had met 100% of the grant relating to job creation and 29% relating to capital expenditures. As a result, we recognized in 2008 approximately $668,000 of the grant as other income. On July 14, 2009, we were asked to repay $107,965 under the Grant Agreement based on a computation of the pro rata amount of capital expenditures falling below required levels. We have classified this amount and the remaining unearned revenue of $88,750 as a current liability subject to compromise on our balance sheet as of September 30, 2009.
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