|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
54-1560050
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
ITEM 1.
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
ITEM 1.
|
||
ITEM 1A.
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
ITEM 5.
|
||
ITEM 6.
|
||
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
December 31, 2014
|
|
March 31, 2015
|
||||
|
|
|
(unaudited)
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
14,116,969
|
|
|
$
|
13,296,415
|
|
Accounts receivable, net
|
5,689,615
|
|
|
4,817,836
|
|
||
Inventory, net
|
3,364,233
|
|
|
3,807,294
|
|
||
Prepaid expenses
|
523,553
|
|
|
425,133
|
|
||
Other current assets
|
191,749
|
|
|
221,411
|
|
||
Total current assets
|
23,886,119
|
|
|
22,568,089
|
|
||
Property and equipment, net
|
3,497,057
|
|
|
3,379,214
|
|
||
Intangible assets, net
|
199,277
|
|
|
181,491
|
|
||
Other assets
|
1,995
|
|
|
1,995
|
|
||
Total assets
|
$
|
27,584,448
|
|
|
$
|
26,130,789
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt obligation
|
$
|
625,000
|
|
|
$
|
250,000
|
|
Current portion of capital lease obligation
|
70,725
|
|
|
66,492
|
|
||
Accounts payable
|
1,447,177
|
|
|
2,266,437
|
|
||
Accrued liabilities
|
3,965,945
|
|
|
4,522,346
|
|
||
Deferred revenue
|
861,081
|
|
|
811,918
|
|
||
Total current liabilities
|
6,969,928
|
|
|
7,917,193
|
|
||
Long-term deferred rent
|
1,570,377
|
|
|
1,536,067
|
|
||
Long-term capital lease obligation
|
39,582
|
|
|
26,529
|
|
||
Total liabilities
|
8,579,887
|
|
|
9,479,789
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, par value $ 0.001, 1,321,514 shares authorized, issued and outstanding at December 31, 2014 and March 31, 2015
|
1,322
|
|
|
1,322
|
|
||
Common stock, par value $ 0.001, 100,000,000 shares authorized, 15,110,924 and 15,117,744 shares issued, 15,088,199 and 15,095,017 shares outstanding at December 31, 2014 and March 31, 2015
|
15,541
|
|
|
15,567
|
|
||
Less treasury stock at cost, 22,725 shares at December 31, 2014 and March 31, 2015
|
(32,221
|
)
|
|
(32,221
|
)
|
||
Additional paid-in capital
|
64,147,666
|
|
|
64,447,793
|
|
||
Accumulated deficit
|
(45,127,747
|
)
|
|
(47,781,461
|
)
|
||
Total stockholders’ equity
|
19,004,561
|
|
|
16,651,000
|
|
||
Total liabilities and stockholders’ equity
|
$
|
27,584,448
|
|
|
$
|
26,130,789
|
|
|
Three Months Ended
March 31, |
||||||
|
2014
|
|
2015
|
||||
|
(unaudited)
|
||||||
Revenues:
|
|
|
|
||||
Technology development revenues
|
$
|
2,675,452
|
|
|
$
|
2,875,515
|
|
Products and licensing revenues
|
1,796,429
|
|
|
2,463,587
|
|
||
Total revenues
|
4,471,881
|
|
|
5,339,102
|
|
||
Cost of revenues:
|
|
|
|
||||
Technology development costs
|
2,025,155
|
|
|
2,083,624
|
|
||
Products and licensing costs
|
894,640
|
|
|
966,689
|
|
||
Total cost of revenues
|
2,919,795
|
|
|
3,050,313
|
|
||
Gross profit
|
1,552,086
|
|
|
2,288,789
|
|
||
Operating expense:
|
|
|
|
||||
Selling, general and administrative
|
2,755,078
|
|
|
4,569,107
|
|
||
Research, development and engineering
|
749,154
|
|
|
334,891
|
|
||
Total operating expense
|
3,504,232
|
|
|
4,903,998
|
|
||
Operating loss
|
(1,952,146
|
)
|
|
(2,615,209
|
)
|
||
Other income/(expense):
|
|
|
|
||||
Other income, net
|
82,106
|
|
|
—
|
|
||
Interest expense
|
(32,365
|
)
|
|
(9,137
|
)
|
||
Total other income/(expense)
|
49,741
|
|
|
(9,137
|
)
|
||
Loss from continuing operations, before income taxes
|
(1,902,405
|
)
|
|
(2,624,346
|
)
|
||
Income tax (benefit)/expense
|
(769,190
|
)
|
|
2,808
|
|
||
Net loss from continuing operations
|
(1,133,215
|
)
|
|
(2,627,154
|
)
|
||
Income from discontinued operations, net of income taxes
|
9,673,439
|
|
|
—
|
|
||
Net income/(loss)
|
8,540,224
|
|
|
(2,627,154
|
)
|
||
Preferred stock dividend
|
29,536
|
|
|
26,560
|
|
||
Net income/(loss) attributable to common stockholders
|
$
|
8,510,688
|
|
|
$
|
(2,653,714
|
)
|
Net loss per share from continuing operations:
|
|
|
|
||||
Basic and diluted
|
$
|
(0.08
|
)
|
|
$
|
(0.17
|
)
|
Net income per share from discontinued operations:
|
|
|
|
||||
Basic and diluted
|
$
|
0.66
|
|
|
$
|
—
|
|
Net income/(loss) per share attributable to common stockholders:
|
|
|
|
||||
Basic and diluted
|
$
|
0.58
|
|
|
$
|
(0.18
|
)
|
Weighted average common shares and common equivalent shares outstanding:
|
|
|
|
||||
Basic and diluted
|
14,653,262
|
|
|
15,117,679
|
|
|
Three Months Ended
March 31, |
||||||
|
2014
|
|
2015
|
||||
|
(unaudited)
|
||||||
Cash flows used in operating activities
|
|
|
|
||||
Net income/(loss)
|
$
|
8,540,224
|
|
|
$
|
(2,627,154
|
)
|
Adjustments to reconcile net income/(loss) to net cash used in operating activities
|
|
|
|
||||
Depreciation and amortization
|
202,305
|
|
|
165,081
|
|
||
Share-based compensation
|
230,939
|
|
|
271,077
|
|
||
Gain on sale of discontinued operations, net of income taxes
|
(9,701,515
|
)
|
|
—
|
|
||
Tax benefit from utilization of loss from current year operations
|
(787,318
|
)
|
|
—
|
|
||
Change in assets and liabilities
|
|
|
|
||||
Accounts receivable
|
896,194
|
|
|
871,779
|
|
||
Inventory
|
13,314
|
|
|
(443,061
|
)
|
||
Other current assets
|
112,286
|
|
|
68,758
|
|
||
Other assets
|
18,792
|
|
|
—
|
|
||
Accounts payable and accrued expenses
|
(821,763
|
)
|
|
1,341,352
|
|
||
Deferred revenue
|
(138,593
|
)
|
|
(49,163
|
)
|
||
Net cash used in operating activities
|
(1,435,135
|
)
|
|
(401,331
|
)
|
||
Cash flows provided by/(used in) investing activities
|
|
|
|
||||
Acquisition of property and equipment
|
(67,944
|
)
|
|
(18,321
|
)
|
||
Intangible property costs
|
(126,091
|
)
|
|
(11,131
|
)
|
||
Proceeds from sale of discontinued operations, net of fees
|
4,958,891
|
|
|
—
|
|
||
Net cash provided by/(used in) investing activities
|
4,764,856
|
|
|
(29,452
|
)
|
||
Cash flows used in financing activities
|
|
|
|
||||
Payments on capital lease obligations
|
(16,282
|
)
|
|
(17,286
|
)
|
||
Payment of debt obligations
|
(375,000
|
)
|
|
(375,000
|
)
|
||
Proceeds from the exercise of options
|
169,035
|
|
|
2,515
|
|
||
Net cash used in financing activities
|
(222,247
|
)
|
|
(389,771
|
)
|
||
Net increase/(decrease) in cash and cash equivalents
|
3,107,474
|
|
|
(820,554
|
)
|
||
Cash and cash equivalents—beginning of period
|
7,778,541
|
|
|
14,116,969
|
|
||
Cash and cash equivalents—end of period
|
$
|
10,886,015
|
|
|
$
|
13,296,415
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
30,000
|
|
|
$
|
7,583
|
|
Dividend on preferred stock, 19,823 shares of common stock issuable for the three months ended March 31, 2014 and 2015
|
$
|
29,536
|
|
|
$
|
26,560
|
|
Cash paid for income taxes
|
$
|
—
|
|
|
$
|
2,808
|
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
•
|
Level 1—Quoted prices for identical instruments in active markets
|
•
|
Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets
|
•
|
Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable
|
2.
|
Discontinued Operations
|
|
Three Months Ended
|
||||||
|
March 31, 2014
|
|
March 31, 2015
|
||||
Net revenues
|
$
|
—
|
|
|
$
|
—
|
|
Cost of revenues
|
46,204
|
|
|
—
|
|
||
Operating expenses
|
—
|
|
|
—
|
|
||
Loss before income taxes
|
(46,204
|
)
|
|
—
|
|
||
Allocated tax benefit
|
(18,128
|
)
|
|
—
|
|
||
Operating loss from discontinued operations, net of income taxes
|
(28,076
|
)
|
|
—
|
|
||
Gain on sale, net of $1.0 million of related income taxes
|
9,701,515
|
|
|
—
|
|
||
Income from discontinued operations, net of income taxes
|
$
|
9,673,439
|
|
|
$
|
—
|
|
3.
|
Inventory
|
|
December 31,
2014 |
|
March 31,
2015 |
||||
Finished goods
|
$
|
580,184
|
|
|
$
|
669,842
|
|
Work-in-process
|
262,025
|
|
|
331,549
|
|
||
Raw materials
|
2,522,024
|
|
|
2,805,903
|
|
||
Total inventory, net
|
$
|
3,364,233
|
|
|
$
|
3,807,294
|
|
|
December 31, 2014
|
|
March 31, 2015
|
||||
Accrued compensation
|
$
|
2,362,608
|
|
|
$
|
2,771,186
|
|
Accrued sub-contracts
|
244,218
|
|
|
270,693
|
|
||
Accrued professional fees
|
177,712
|
|
|
716,824
|
|
||
Accrued income tax
|
166,550
|
|
|
8,820
|
|
||
Deferred rent
|
182,340
|
|
|
159,498
|
|
||
Royalties
|
392,945
|
|
|
179,086
|
|
||
Warranty reserve
|
69,264
|
|
|
67,325
|
|
||
Accrued liabilities - other
|
370,308
|
|
|
348,914
|
|
||
Total accrued liabilities
|
$
|
3,965,945
|
|
|
$
|
4,522,346
|
|
5.
|
Debt
|
|
December 31, 2014
|
|
|
March 31, 2015
|
|
||
Silicon Valley Bank Term Loan
|
$
|
625,000
|
|
|
$
|
250,000
|
|
Less: current portion
|
625,000
|
|
|
250,000
|
|
||
Total long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
Three months ended March 31,
|
||||
|
2014
|
|
2015
|
||
Interest expense
|
30,000
|
|
|
7,622
|
|
Amortization of transaction costs
|
2,573
|
|
|
1,568
|
|
Total interest expense
|
32,573
|
|
|
9,190
|
|
6.
|
Capital Stock and Additional Paid-in Capital
|
|
Three Months Ended March 31,
|
||
|
2014
|
|
2015
|
Risk-free interest rate
|
2.14%
|
|
1.88%
|
Expected life of options (in years)
|
7.5
|
|
7.5
|
Expected stock price volatility
|
106%
|
|
103%
|
Executive turnover rates
|
—%
|
|
—%
|
Non-executive turnover rates
|
33.6%
|
|
40.0%
|
Expected dividend yield
|
—%
|
|
—%
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||||||||
|
Number of
Shares
|
|
Price per Share
Range
|
|
Weighted
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value (1)
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value (1)
|
||||||||||
Balance, January 1, 2015
|
4,289,631
|
|
|
$0.35 - $6.55
|
|
$
|
1.93
|
|
|
$
|
512,901
|
|
|
3,111,199
|
|
|
$
|
2.11
|
|
|
$
|
453,032
|
|
Granted
|
32,250
|
|
|
$1.45
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|||||||
Exercised
|
4,577
|
|
|
$1.59 - $174
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|||||||
Canceled
|
4,313
|
|
|
$0.35 - $2.15
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|||||||
Balance, March 31, 2015
|
4,312,991
|
|
|
$0.35 - $6.55
|
|
$
|
1.93
|
|
|
$
|
533,715
|
|
|
3,253,115
|
|
|
$
|
2.08
|
|
|
$
|
470,695
|
|
(1)
|
The intrinsic value of an option represents the amount by which the market value of the stock exceeds the exercise price of the option of in-the-money options only. The aggregate intrinsic value is based on the closing price of our common stock on the NASDAQ Capital Market, as applicable, on the respective dates.
|
|
Number of Vested Shares
|
Number of Unvested Shares
|
Weighted Average Grant Date Fair Value
|
Aggregate Value of Vested Shares
|
Aggregate Value of Unvested Shares
|
||||||
Balance at January 1, 2015
|
128,663
|
|
528,000
|
|
$
|
1.36
|
|
183,115
|
|
707,700
|
|
Granted
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
—
|
|
Vested
|
112,500
|
|
(112,500
|
)
|
$
|
1.26
|
|
141,750
|
|
(141,750
|
)
|
Exercised
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
—
|
|
Balance at March 31, 2015
|
241,163
|
|
415,500
|
|
$
|
1.36
|
|
324,865
|
|
565,950
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Treasury Stock
|
Additional
Paid-in
Capital
|
|||||||||||||
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
$
|
|||||||
Balance, December 31, 2014
|
1,321,514
|
|
|
1,322
|
|
|
15,088,199
|
|
|
15,541
|
|
|
22,725
|
|
|
(32,221
|
)
|
64,147,666
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
6,818
|
|
|
7
|
|
|
—
|
|
|
—
|
|
2,508
|
|
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
220,814
|
|
Non-cash compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
50,264
|
|
Stock dividends to Carilion Clinic(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
26,541
|
|
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
Balance, March 31, 2015
|
1,321,514
|
|
|
1,322
|
|
|
15,095,017
|
|
|
15,567
|
|
|
22,725
|
|
|
(32,221
|
)
|
64,447,793
|
|
(1)
|
The stock dividends payable in connection with Carilion Clinic’s Series A Preferred Stock will be issued subsequent to
March 31, 2015
. For the period from January 12, 2010, the original issue date of the Series A Preferred Stock, through
March 31, 2015
, the Series A Preferred Stock issued to Carilion has accrued
$898,914
in dividends. The accrued and unpaid dividends as of
March 31, 2015
will be paid by the issuance of
412,560
shares of our common stock upon Carilion’s written request.
|
7.
|
Operating Segments
|
|
Three Months Ended
March 31, |
||||||
|
2014
|
|
2015
|
||||
|
(unaudited)
|
||||||
Revenues:
|
|
|
|
||||
Technology development revenues
|
$
|
2,675,452
|
|
|
$
|
2,875,515
|
|
Products and licensing revenues
|
1,796,429
|
|
|
2,463,587
|
|
||
Total revenues
|
$
|
4,471,881
|
|
|
$
|
5,339,102
|
|
Technology development operating loss
|
$
|
(1,527,646
|
)
|
|
$
|
(259,486
|
)
|
Products and licensing operating loss
|
(424,500
|
)
|
|
(2,355,723
|
)
|
||
Total operating loss
|
$
|
(1,952,146
|
)
|
|
$
|
(2,615,209
|
)
|
Depreciation, technology development
|
$
|
56,743
|
|
|
$
|
73,335
|
|
Depreciation, products and licensing
|
$
|
38,100
|
|
|
$
|
62,829
|
|
Amortization, technology development
|
$
|
64,293
|
|
|
$
|
15,573
|
|
Amortization, products and licensing
|
$
|
43,169
|
|
|
$
|
13,343
|
|
|
December 31,
2014 |
|
March 31,
2015 |
||||
Total segment assets:
|
|
|
|
||||
Technology development
|
$
|
16,503,316
|
|
|
$
|
14,073,430
|
|
Products and licensing
|
11,081,132
|
|
|
12,057,359
|
|
||
Total
|
$
|
27,584,448
|
|
|
$
|
26,130,789
|
|
Property plant and equipment, and intangible assets, technology development
|
$
|
2,122,157
|
|
|
$
|
1,917,712
|
|
Property plant and equipment, and intangible assets, products and licensing
|
$
|
1,574,177
|
|
|
$
|
1,642,993
|
|
8.
|
Contingencies and Guarantees
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2014
|
|
2015
|
|
$ Difference
|
|
% Difference
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Technology development revenues
|
$
|
2,675,452
|
|
|
$
|
2,875,515
|
|
|
$
|
200,063
|
|
|
7
|
%
|
Products and licensing revenues
|
1,796,429
|
|
|
2,463,587
|
|
|
$
|
667,158
|
|
|
37
|
%
|
||
Total revenues
|
$
|
4,471,881
|
|
|
$
|
5,339,102
|
|
|
$
|
867,221
|
|
|
19
|
%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2014
|
|
2015
|
|
$ Difference
|
|
% Difference
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|||||||
Technology development costs
|
$
|
2,025,155
|
|
|
$
|
2,083,624
|
|
|
$
|
58,469
|
|
|
3
|
%
|
Products and licensing costs
|
894,640
|
|
|
966,689
|
|
|
$
|
72,049
|
|
|
8
|
%
|
||
Total cost of revenues
|
$
|
2,919,795
|
|
|
$
|
3,050,313
|
|
|
$
|
130,518
|
|
|
4
|
%
|
Gross Profit
|
$
|
1,552,086
|
|
|
$
|
2,288,789
|
|
|
$
|
736,703
|
|
|
47
|
%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2014
|
|
2015
|
|
$ Difference
|
|
% Difference
|
|||||||
Operating expense:
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
$
|
2,755,078
|
|
|
$
|
4,569,107
|
|
|
$
|
1,814,029
|
|
|
66
|
%
|
Research, development and engineering
|
749,154
|
|
|
334,891
|
|
|
$
|
(414,263
|
)
|
|
(55
|
)%
|
||
Total operating expense
|
$
|
3,504,232
|
|
|
$
|
4,903,998
|
|
|
$
|
1,399,766
|
|
|
40
|
%
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2014
|
|
2015
|
|
$ Difference
|
||||||
Net cash used in operating activities
|
$
|
(1,435,135
|
)
|
|
$
|
(401,331
|
)
|
|
$
|
1,033,804
|
|
Net cash provided/(used in) by investing activities
|
4,764,856
|
|
|
(29,452
|
)
|
|
$
|
(4,794,308
|
)
|
||
Net cash used in financing activities
|
(222,247
|
)
|
|
(389,771
|
)
|
|
$
|
(167,524
|
)
|
||
Net change in cash
|
$
|
3,107,474
|
|
|
$
|
(820,554
|
)
|
|
$
|
(3,928,028
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
we may need to expand our manufacturing operations, and our production processes may have to change to accommodate this growth;
|
•
|
to increase our manufacturing output significantly, we will have to attract and retain qualified employees, who are in short supply, for the assembly and testing operations;
|
•
|
we might have to sub-contract to outside manufacturers which might limit our control of costs and processes; and
|
•
|
our manufacturing operations may have to comply with government or customer-mandated specifications.
|
•
|
having to comply with U.S. export control regulations and policies that restrict our ability to communicate with non-U.S. employees and supply foreign affiliates and customers;
|
•
|
changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products, perform services or repatriate profits to the United States;
|
•
|
the imposition of tariffs;
|
•
|
hyperinflation or economic or political instability in foreign countries;
|
•
|
imposition of limitations on, or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures;
|
•
|
conducting business in places where business practices and customs are unfamiliar and unknown;
|
•
|
the imposition of restrictive trade policies;
|
•
|
the imposition of inconsistent laws or regulations;
|
•
|
the imposition or increase of investment and other restrictions or requirements by foreign governments;
|
•
|
uncertainties relating to foreign laws and legal proceedings;
|
•
|
having to comply with a variety of U.S. laws, including the Foreign Corrupt Practices Act, or FCPA; and
|
•
|
having to comply with licensing requirements.
|
•
|
we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;
|
•
|
we or our licensors might not have been the first to file patent applications for these inventions;
|
•
|
others may independently develop similar or alternative technologies or duplicate any of our technologies;
|
•
|
it is possible that none of our pending patent applications or the pending patent applications of our licensors will result in issued patents;
|
•
|
patents may issue to third parties that cover how we might practice our technology;
|
•
|
our issued patents and issued patents of our licensors may not provide a basis for commercially viable technologies, may not provide us with any competitive advantages, or may be challenged and invalidated by third parties; and
|
•
|
we may not develop additional proprietary technologies that are patentable.
|
•
|
accurately anticipate customer needs;
|
•
|
innovate and develp new technologies and applications;
|
•
|
successfully commercialize new technologies in a timely manner;
|
•
|
price API's products competitively and manufacture and deliver API's products in sufficient volumes and on time; and
|
•
|
differentiate API's offerings from API's competitors' offerings.
|
•
|
foreign countries could change regulations or impose currency restrictions and other restraints;
|
•
|
changes in foreign currency exchange rates and hyperinflation or deflation in the foreign contries in which API operates;
|
•
|
exchange controls;
|
•
|
some countries impose burdensome tariffs and quotas;
|
•
|
political changes and economic crises may lead to changes in the business environment in which API operates;
|
•
|
international conflict, including terrorist acts, could significantly impact our financial condition and results of operations; and
|
•
|
economic downturns, political instability and war or civil disturbances may disrupt distribution logistics or limit sales in individual markets.
|
•
|
lost sales and customers as a result of customers of either of the two companies deciding not to do business with the combined company;
|
•
|
complexities associated with managing the larger combined company with distant business locations;
|
•
|
integrating personnel from the two companies while maintaining focus on providing consistent, high quality products;
|
•
|
the loss of key employees;
|
•
|
potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Merger; and
|
•
|
performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the Merger and integrating the companies’ operations.
|
•
|
sales of our common stock by our significant stockholders, or the perception that such sales may occur, including sales pursuant to the Form S-3 registration statement or sales of shares issued in the Merger, as described above;
|
•
|
changes in earnings estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’ earnings estimates;
|
•
|
changes in our status as an entity eligible to receive SBIR contracts and grants;
|
•
|
quarterly variations in our or our competitors’ results of operations;
|
•
|
general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors;
|
•
|
announcements by us, or by our competitors, of acquisitions, new products, significant contracts, commercial relationships or capital commitments;
|
•
|
pending or threatened litigation;
|
•
|
any major change in our board of directors or management or any competing proxy solicitations for director nominees;
|
•
|
changes in governmental regulations or in the status of our regulatory approvals;
|
•
|
announcements related to patents issued to us or our competitors;
|
•
|
a lack of, limited or negative industry or securities analyst coverage;
|
•
|
discussions of our company or our stock price by the financial and scientific press and online investor communities such as chat rooms; and
|
•
|
general developments in our industry.
|
•
|
a classified board of directors serving staggered terms;
|
•
|
advance notice requirements to stockholders for matters to be brought at stockholder meetings;
|
•
|
a supermajority stockholder vote requirement for amending certain provisions of our amended and restated certificate of incorporation and bylaws; and
|
•
|
the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
|
Luna Innovations Incorporated
|
|
Date:
|
May 14, 2015
|
|
By:
|
/s/ Dale Messick
|
|
|
|
|
Dale Messick
|
|
|
|
|
Chief Financial Officer
(principal financial and accounting officer and duly authorized officer)
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1(1)*
|
|
Agreement and Plan of Merger and Reorganization, dated as of January 30, 2015, by and among Luna Innovations Incorporated, a Delaware corporation, API Merger Sub, a Delaware corporation and a wholly owned subsidiary of Luna Innovations Incorporated, and Advanced Photonix, Inc., a Delaware corporation (Exhibit 2.1).
|
|
|
|
3.1(1)
|
|
Amendment to Amended and Restated Bylaws of Luna Innovations Incorporated (Exhibit 3.1).
|
|
|
|
10.1(1)
|
|
Form of Voting Agreement by and between Luna Innovations Incorporated, Advanced Photonix, Inc. and directors and executive officers of Advanced Photonix, Inc., dated as of January 30, 2015 (Exhibit 10.1.
|
|
|
|
10.2(1)
|
|
Form of Voting Agreement by and between Luna Innovations Incorporated, Advanced Photonix, Inc. and directors and executive officers of Luna Innovations Incorporated, dated as of January 30, 2015 (Exhibit 10.2)
|
|
|
|
10.3
|
|
First Amendment to Industrial Lease Agreement by and between the Economic Development Authority of Montgomery County, Virginia and Luna Innovation Incorporated, dated January 20, 2015.
|
|
|
|
10.4
|
|
Sixth Amendment to Luna Innovations Lease of Riverside Center, dated January 20, 2015, by and between Carilion Clinic Properties, LLC and Luna Innovations Incorporated
|
|
|
|
10.5**
|
|
2015 Senior Management Incentive Compensation Plan
.
|
|
|
|
31.1
|
|
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1***
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2***
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2014 and March 31, 2015, (ii) Consolidated Statements of Operations for the three months ended March 31, 2014 and 2015, (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2015 and (iv) Notes to Unaudited Consolidated Financial Statements.
|
(1)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on February 2, 2015 (reporting under Items 1.01, 5.03 and 7.01). The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
*
|
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC, certain exhibits and schedules to this agreement have been omitted, the Registrant hereby agrees to furnish supplementary to the SEC, upon its request, any or all of such omitted exhibits or schedules.
|
**
|
Confidential treatment has been granted with respect to portions of this exhibit, indicated by asterisks, which has been filed separately with the SEC upon request.
|
***
|
These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
|
1.
|
Landlord agrees that Tenant may terminate the Lease at any time upon thirty (30) days prior written notice to Landlord; provided that regardless of whether notice is given by Tenant to Landlord in accordance with the preceding sentence, the term of the Lease shall terminate no later than July 31, 2015.
|
2.
|
Except as modified herein, all other terms and provisions of the Lease remain unchanged and are hereby ratified and affirmed.
|
Date:
December 1
, 2014
|
LANDLORD:
|
Date:
January 20
, 2015
|
TENANT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Component Weight
|
|
|
Minimum - 5% of Base Salary*
|
|
Target – 50% of Base Salary*
|
|
Maximum – 75% of Base Salary*
|
|
Components:
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue**
|
|
40
|
%
|
|
|
$[***]
|
|
$[***]
|
|
$[***]
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss), excluding costs associated with the merger with API **
|
60
|
%
|
|
|
$[***]
|
|
$[***]
|
|
$[***]
|
|||
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Luna Innovations Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/S/ MY E. CHUNG
|
|
My E. Chung
|
|
President and Chief Executive Officer
(principal executive officer)
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Luna Innovations Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/S/ DALE E. MESSICK
|
|
Dale E. Messick
|
|
Chief Financial Officer
(principal financial officer)
|
|
/S/ MY E. CHUNG
|
|
My E. Chung
|
|
President and Chief Executive Officer
(principal executive officer)
|
|
/S/ DALE E. MESSICK
|
|
Dale E. Messick
|
|
Chief Financial Officer
(principal financial officer)
|
|