|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
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
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
33,292,800
|
|
|
$
|
36,981,533
|
|
Accounts receivable, net
|
9,385,772
|
|
|
7,869,168
|
|
||
Receivable from sale of HSOR business
|
4,001,833
|
|
|
4,000,976
|
|
||
Contract assets
|
3,231,770
|
|
|
1,778,142
|
|
||
Inventory
|
6,906,998
|
|
|
6,951,110
|
|
||
Prepaid expenses and other current assets
|
1,054,984
|
|
|
1,220,650
|
|
||
Total current assets
|
57,874,157
|
|
|
58,801,579
|
|
||
Long-term contract assets
|
308,093
|
|
|
209,699
|
|
||
Property and equipment, net
|
3,323,749
|
|
|
3,453,741
|
|
||
Intangible assets, net
|
3,137,083
|
|
|
3,237,593
|
|
||
Goodwill
|
502,000
|
|
|
502,000
|
|
||
Other assets
|
18,024
|
|
|
18,024
|
|
||
Total assets
|
$
|
65,163,106
|
|
|
$
|
66,222,636
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt obligations
|
$
|
1,527,828
|
|
|
$
|
1,833,333
|
|
Current portion of capital lease obligations
|
34,661
|
|
|
43,665
|
|
||
Accounts payable
|
3,787,701
|
|
|
2,962,863
|
|
||
Accrued liabilities
|
5,554,481
|
|
|
6,557,649
|
|
||
Contract liabilities
|
1,400,922
|
|
|
3,428,625
|
|
||
Total current liabilities
|
12,305,593
|
|
|
14,826,135
|
|
||
Long-term deferred rent
|
1,109,397
|
|
|
1,184,438
|
|
||
Long-term debt obligations
|
—
|
|
|
603,007
|
|
||
Long-term capital lease obligations
|
54,970
|
|
|
71,275
|
|
||
Total liabilities
|
13,469,960
|
|
|
16,684,855
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at June 30, 2018 and December 31, 2017
|
1,322
|
|
|
1,322
|
|
||
Common stock, par value $0.001, 100,000,000 shares authorized, 29,025,529 and 28,354,822 shares issued, 27,772,424 and 27,283,918 shares outstanding at June 30, 2018 and December 31, 2017
|
29,897
|
|
|
29,186
|
|
||
Treasury stock at cost, 1,253,105 and 1,070,904 shares at June 30, 2018 and December 31, 2017
|
(2,116,640
|
)
|
|
(1,649,746
|
)
|
||
Additional paid-in capital
|
84,742,385
|
|
|
83,563,208
|
|
||
Accumulated deficit
|
(30,963,818
|
)
|
|
(32,406,189
|
)
|
||
Total stockholders’ equity
|
51,693,146
|
|
|
49,537,781
|
|
||
Total liabilities and stockholders’ equity
|
$
|
65,163,106
|
|
|
$
|
66,222,636
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(unaudited)
|
|
(unaudited)
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Technology development
|
$
|
5,466,281
|
|
|
$
|
4,602,272
|
|
|
$
|
10,103,056
|
|
|
$
|
8,838,375
|
|
Products and licensing
|
8,306,367
|
|
|
6,690,759
|
|
|
15,862,763
|
|
|
12,541,554
|
|
||||
Total revenues
|
13,772,648
|
|
|
11,293,031
|
|
|
25,965,819
|
|
|
21,379,929
|
|
||||
Cost of revenues:
|
|
|
|
|
|
|
|
||||||||
Technology development
|
3,945,126
|
|
|
3,443,954
|
|
|
7,298,628
|
|
|
6,553,423
|
|
||||
Products and licensing
|
4,155,054
|
|
|
3,482,867
|
|
|
7,968,605
|
|
|
6,583,913
|
|
||||
Total cost of revenues
|
8,100,180
|
|
|
6,926,821
|
|
|
15,267,233
|
|
|
13,137,336
|
|
||||
Gross profit
|
5,672,468
|
|
|
4,366,210
|
|
|
10,698,586
|
|
|
8,242,593
|
|
||||
Operating expense:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
3,767,456
|
|
|
3,367,716
|
|
|
7,577,072
|
|
|
7,089,889
|
|
||||
Research, development and engineering
|
1,003,863
|
|
|
818,891
|
|
|
2,105,352
|
|
|
1,747,662
|
|
||||
Total operating expense
|
4,771,319
|
|
|
4,186,607
|
|
|
9,682,424
|
|
|
8,837,551
|
|
||||
Operating income/(loss)
|
901,149
|
|
|
179,603
|
|
|
1,016,162
|
|
|
(594,958
|
)
|
||||
Other income/(expense):
|
|
|
|
|
|
|
|
||||||||
Investment income
|
100,846
|
|
|
—
|
|
|
175,756
|
|
|
—
|
|
||||
Other income/(expense)
|
1,187
|
|
|
(1,225
|
)
|
|
2,583
|
|
|
(869
|
)
|
||||
Interest expense
|
(33,988
|
)
|
|
(60,386
|
)
|
|
(75,234
|
)
|
|
(124,760
|
)
|
||||
Total other income/(expense)
|
68,045
|
|
|
(61,611
|
)
|
|
103,105
|
|
|
(125,629
|
)
|
||||
Income/(loss) from continuing operations before income taxes
|
969,194
|
|
|
117,992
|
|
|
1,119,267
|
|
|
(720,587
|
)
|
||||
Income tax (benefit)/expense
|
(98,133
|
)
|
|
40,937
|
|
|
(96,736
|
)
|
|
67,627
|
|
||||
Net income/(loss) from continuing operations
|
1,067,327
|
|
|
77,055
|
|
|
1,216,003
|
|
|
(788,214
|
)
|
||||
Loss from discontinued operations, net of income tax of $0
|
—
|
|
|
(298,817
|
)
|
|
—
|
|
|
(789,534
|
)
|
||||
Net loss from discontinued operations
|
—
|
|
|
(298,817
|
)
|
|
—
|
|
|
(789,534
|
)
|
||||
Net income/(loss)
|
1,067,327
|
|
|
(221,762
|
)
|
|
1,216,003
|
|
|
(1,577,748
|
)
|
||||
Preferred stock dividend
|
63,235
|
|
|
29,536
|
|
|
127,660
|
|
|
63,632
|
|
||||
Net income/(loss) attributable to common stockholders
|
$
|
1,004,092
|
|
|
$
|
(251,298
|
)
|
|
$
|
1,088,343
|
|
|
$
|
(1,641,380
|
)
|
Net income/(loss) per share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.04
|
|
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
(0.03
|
)
|
Diluted
|
$
|
0.03
|
|
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
(0.03
|
)
|
Net loss per share from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
Diluted
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
Net income/(loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.04
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
Diluted
|
$
|
0.03
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.06
|
)
|
Weighted average common shares and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
27,531,361
|
|
|
27,600,147
|
|
|
27,368,185
|
|
|
27,570,919
|
|
||||
Diluted
|
31,506,745
|
|
|
32,579,379
|
|
|
31,257,277
|
|
|
27,570,919
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(unaudited)
|
||||||
Cash flows used in operating activities
|
|
|
|
||||
Net income/(loss)
|
$
|
1,216,003
|
|
|
$
|
(1,577,748
|
)
|
Adjustments to reconcile net income/(loss) to net cash used in operating activities
|
|
|
|
||||
Depreciation and amortization
|
622,577
|
|
|
1,753,748
|
|
||
Share-based compensation
|
212,149
|
|
|
321,756
|
|
||
Bad debt expense
|
6,000
|
|
|
40,753
|
|
||
Gain on disposal of fixed assets
|
(1,000
|
)
|
|
(670
|
)
|
||
Change in assets and liabilities
|
|
|
|
||||
Accounts receivable
|
(1,522,604
|
)
|
|
1,433,014
|
|
||
Contract assets
|
(645,824
|
)
|
|
(326,333
|
)
|
||
Inventory
|
(482,194
|
)
|
|
(1,170,519
|
)
|
||
Other current assets
|
164,809
|
|
|
325,005
|
|
||
Accounts payable and accrued expenses
|
(253,372
|
)
|
|
(894,315
|
)
|
||
Contract liabilities
|
(2,053,566
|
)
|
|
(215,555
|
)
|
||
Net cash used in operating activities
|
(2,737,022
|
)
|
|
(314,321
|
)
|
||
Cash flows used in investing activities
|
|
|
|
||||
Acquisition of property and equipment
|
(198,012
|
)
|
|
(796,217
|
)
|
||
Intangible property costs
|
(185,909
|
)
|
|
(318,942
|
)
|
||
Proceeds from sale of property and equipment
|
1,000
|
|
|
3,000
|
|
||
Net cash used in investing activities
|
(382,921
|
)
|
|
(1,112,159
|
)
|
||
Cash flows used in financing activities
|
|
|
|
||||
Payments on capital lease obligations
|
(25,309
|
)
|
|
(25,611
|
)
|
||
Payments of debt obligations
|
(916,665
|
)
|
|
(916,666
|
)
|
||
Repurchase of common stock
|
(466,894
|
)
|
|
(143,266
|
)
|
||
Proceeds from the exercise of options and warrants
|
840,078
|
|
|
820
|
|
||
Net cash used in financing activities
|
(568,790
|
)
|
|
(1,084,723
|
)
|
||
Net decrease in cash and cash equivalents
|
(3,688,733
|
)
|
|
(2,511,203
|
)
|
||
Cash and cash equivalents—beginning of period
|
36,981,533
|
|
|
12,802,458
|
|
||
Cash and cash equivalents—end of period
|
$
|
33,292,800
|
|
|
$
|
10,291,255
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
72,127
|
|
|
$
|
120,191
|
|
Cash paid for income taxes
|
$
|
8,156
|
|
|
$
|
40,937
|
|
Non-cash investing and financing activities
|
|
|
|
||||
Dividend on preferred stock, 39,646 shares of common stock issuable for the six months ended June 30, 2018 and 2017
|
$
|
127,660
|
|
|
$
|
63,632
|
|
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
|
|
Balance at
|
|
Adjustment for
|
|
Adjusted balance at
|
||||||
|
December 31, 2017
|
|
Topic 606
|
|
January 1, 2018
|
||||||
Assets:
|
|
|
|
|
|
||||||
Contract assets
|
$
|
1,778,142
|
|
|
$
|
906,197
|
|
|
$
|
2,684,339
|
|
Inventory
|
$
|
6,951,110
|
|
|
$
|
(526,306
|
)
|
|
$
|
6,424,804
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Contract liabilities
|
$
|
3,428,625
|
|
|
$
|
25,863
|
|
|
$
|
3,454,488
|
|
|
|
|
|
|
|
||||||
Stockholders' equity:
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(32,406,189
|
)
|
|
$
|
354,028
|
|
|
$
|
(32,052,161
|
)
|
|
December 31, 2017
|
|||||
|
As Reported
|
As Adopted
|
||||
Accounts receivables, net
|
$
|
9,857,009
|
|
$
|
7,869,168
|
|
Contract assets
|
—
|
|
1,778,142
|
|
||
Long-term contract assets
|
—
|
|
209,699
|
|
||
Accrued liabilities
|
8,959,935
|
|
6,557,649
|
|
||
Contract liabilities
|
—
|
|
3,428,625
|
|
||
Deferred revenue
|
1,026,339
|
|
—
|
|
|
Impact of changes in accounting policies
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
||||||
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
33,292,800
|
|
|
$
|
—
|
|
|
$
|
33,292,800
|
|
Accounts receivable, net
|
9,385,772
|
|
|
—
|
|
|
9,385,772
|
|
|||
Receivable from sale of HSOR business
|
4,001,833
|
|
|
—
|
|
|
4,001,833
|
|
|||
Contract assets
|
3,231,770
|
|
|
(1,249,551
|
)
|
|
1,982,219
|
|
|||
Inventory
|
6,906,998
|
|
|
725,351
|
|
|
7,632,349
|
|
|||
Prepaid expenses and other current assets
|
1,054,984
|
|
|
7,175
|
|
|
1,062,159
|
|
|||
Total current assets
|
57,874,157
|
|
|
(517,025
|
)
|
|
57,357,132
|
|
|||
Long-term contract assets
|
308,093
|
|
|
—
|
|
|
308,093
|
|
|||
Property and equipment, net
|
3,323,749
|
|
|
—
|
|
|
3,323,749
|
|
|||
Intangible assets, net
|
3,137,083
|
|
|
—
|
|
|
3,137,083
|
|
|||
Goodwill
|
502,000
|
|
|
—
|
|
|
502,000
|
|
|||
Other assets
|
18,024
|
|
|
—
|
|
|
18,024
|
|
|||
Total assets
|
$
|
65,163,106
|
|
|
$
|
(517,025
|
)
|
|
$
|
64,646,081
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Current portion of long-term debt obligations
|
$
|
1,527,828
|
|
|
$
|
—
|
|
|
$
|
1,527,828
|
|
Current portion of capital lease obligations
|
34,661
|
|
|
—
|
|
|
34,661
|
|
|||
Accounts payable
|
3,787,701
|
|
|
—
|
|
|
3,787,701
|
|
|||
Accrued liabilities
|
5,554,481
|
|
|
—
|
|
|
5,554,481
|
|
|||
Contract liabilities
|
1,400,922
|
|
|
(18,270
|
)
|
|
1,382,652
|
|
|||
Total current liabilities
|
12,305,593
|
|
|
(18,270
|
)
|
|
12,287,323
|
|
|||
Long-term deferred rent
|
1,109,397
|
|
|
—
|
|
|
1,109,397
|
|
|||
Long-term debt obligations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Long-term capital lease obligations
|
54,970
|
|
|
—
|
|
|
54,970
|
|
|||
Total liabilities
|
13,469,960
|
|
|
(18,270
|
)
|
|
13,451,690
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at June 30, 2018 and December 31, 2017
|
1,322
|
|
|
—
|
|
|
1,322
|
|
|||
Common stock, par value $0.001, 100,000,000 shares authorized, 29,025,529 and 28,354,822 shares issued, 27,772,424 and 27,283,918 shares outstanding at June 30, 2018 and December 31, 2017
|
29,897
|
|
|
—
|
|
|
29,897
|
|
|||
Treasury stock at cost, 1,253,105 and 1,070,904 shares at June 30, 2018 and December 31, 2017
|
(2,116,640
|
)
|
|
—
|
|
|
(2,116,640
|
)
|
|||
Additional paid-in capital
|
84,742,385
|
|
|
—
|
|
|
84,742,385
|
|
|||
Accumulated deficit
|
(30,963,818
|
)
|
|
(498,755
|
)
|
|
(31,462,573
|
)
|
|||
Total stockholders’ equity
|
51,693,146
|
|
|
(498,755
|
)
|
|
51,194,391
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
65,163,106
|
|
|
$
|
(517,025
|
)
|
|
$
|
64,646,081
|
|
|
Impact of changes in accounting policies
|
||||||||||||||||||||||
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
||||||||||||
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Technology development
|
$
|
5,466,281
|
|
|
$
|
—
|
|
|
$
|
5,466,281
|
|
|
$
|
10,103,056
|
|
|
$
|
—
|
|
|
$
|
10,103,056
|
|
Products and licensing
|
8,306,367
|
|
|
(231,975
|
)
|
|
8,074,392
|
|
|
15,862,763
|
|
|
(357,752
|
)
|
|
15,505,011
|
|
||||||
Total revenues
|
13,772,648
|
|
|
(231,975
|
)
|
|
13,540,673
|
|
|
25,965,819
|
|
|
(357,752
|
)
|
|
25,608,067
|
|
||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Technology development
|
3,945,126
|
|
|
—
|
|
|
3,945,126
|
|
|
7,298,628
|
|
|
—
|
|
|
7,298,628
|
|
||||||
Products and licensing
|
4,155,054
|
|
|
(63,680
|
)
|
|
4,091,374
|
|
|
7,968,605
|
|
|
(213,025
|
)
|
|
7,755,580
|
|
||||||
Total cost of revenues
|
8,100,180
|
|
|
(63,680
|
)
|
|
8,036,500
|
|
|
15,267,233
|
|
|
(213,025
|
)
|
|
15,054,208
|
|
||||||
Gross profit
|
5,672,468
|
|
|
(168,295
|
)
|
|
5,504,173
|
|
|
10,698,586
|
|
|
(144,727
|
)
|
|
10,553,859
|
|
||||||
Operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative
|
3,767,456
|
|
|
—
|
|
|
3,767,456
|
|
|
7,577,072
|
|
|
—
|
|
|
7,577,072
|
|
||||||
Research, development and engineering
|
1,003,863
|
|
|
—
|
|
|
1,003,863
|
|
|
2,105,352
|
|
|
—
|
|
|
2,105,352
|
|
||||||
Total operating expense
|
4,771,319
|
|
|
—
|
|
|
4,771,319
|
|
|
9,682,424
|
|
|
—
|
|
|
9,682,424
|
|
||||||
Operating income
|
901,149
|
|
|
(168,295
|
)
|
|
732,854
|
|
|
1,016,162
|
|
|
(144,727
|
)
|
|
871,435
|
|
||||||
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment income
|
100,846
|
|
|
—
|
|
|
100,846
|
|
|
175,756
|
|
|
—
|
|
|
175,756
|
|
||||||
Other income
|
1,187
|
|
|
—
|
|
|
1,187
|
|
|
2,583
|
|
|
—
|
|
|
2,583
|
|
||||||
Interest expense
|
(33,988
|
)
|
|
—
|
|
|
(33,988
|
)
|
|
(75,234
|
)
|
|
—
|
|
|
(75,234
|
)
|
||||||
Total other income
|
68,045
|
|
|
—
|
|
|
68,045
|
|
|
103,105
|
|
|
—
|
|
|
103,105
|
|
||||||
Income from continuing operations before income taxes
|
969,194
|
|
|
(168,295
|
)
|
|
800,899
|
|
|
1,119,267
|
|
|
(144,727
|
)
|
|
974,540
|
|
||||||
Income tax expense
|
(98,133
|
)
|
|
—
|
|
|
(98,133
|
)
|
|
(96,736
|
)
|
|
—
|
|
|
(96,736
|
)
|
||||||
Net income from continuing operations
|
$
|
1,067,327
|
|
|
$
|
(168,295
|
)
|
|
$
|
899,032
|
|
|
$
|
1,216,003
|
|
|
$
|
(144,727
|
)
|
|
$
|
1,071,276
|
|
3.
|
Contract Balances
|
|
Contract Assets
|
|
Contract Liabilities
|
||||
Opening Balance as of January 1, 2018
|
$
|
2,894,038
|
|
|
$
|
3,454,488
|
|
Revenue recognized that was included in the contract liabilities balance at the beginning of the period
|
—
|
|
|
(855,906
|
)
|
||
Transferred to payables from contract liabilities recognized at the beginning of the period
|
—
|
|
|
(2,041,792
|
)
|
||
Increases due to cash received or adjustment of estimates, excluding amounts recognized as revenue during the period
|
—
|
|
|
844,132
|
|
||
Transferred to receivables from contract assets recognized at the beginning of the period
|
(2,245,515
|
)
|
|
—
|
|
||
Increases as a result of cumulative catch-up adjustment arising from changes in the estimate of the stage of completion
|
2,891,340
|
|
|
—
|
|
||
Balance as of June 30, 2018
|
$
|
3,539,863
|
|
|
$
|
1,400,922
|
|
4.
|
Inventory
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(unaudited)
|
|
|
||||
Finished goods
|
$
|
1,725,710
|
|
|
$
|
2,143,953
|
|
Work-in-process
|
644,696
|
|
|
578,195
|
|
||
Raw materials
|
4,536,592
|
|
|
4,228,962
|
|
||
Total inventory
|
$
|
6,906,998
|
|
|
$
|
6,951,110
|
|
|
June 30, 2018
|
|
December 31, 2017
|
|
||||
|
(unaudited)
|
|
|
|
||||
Accrued compensation
|
$
|
4,396,462
|
|
|
$
|
5,274,005
|
|
|
Income tax payable
|
371,186
|
|
|
403,548
|
|
|
||
Accrued professional fees
|
122,626
|
|
|
117,445
|
|
|
||
Deferred rent
|
148,506
|
|
|
144,741
|
|
|
||
Royalties
|
148,433
|
|
|
290,235
|
|
|
||
Accrued interest
|
8,854
|
|
|
—
|
|
|
||
Accrued liabilities - other
|
358,414
|
|
|
327,675
|
|
|
||
Total accrued liabilities
|
$
|
5,554,481
|
|
|
$
|
6,557,649
|
|
|
6.
|
Debt
|
|
June 30, 2018
|
|
December 31, 2017
|
|
||||
|
(unaudited)
|
|
|
|
||||
Silicon Valley Bank Term Loan
|
$
|
1,541,667
|
|
|
$
|
2,458,333
|
|
|
Less: unamortized debt issuance costs
|
13,839
|
|
|
21,993
|
|
|
||
Less: current portion
|
1,527,828
|
|
|
1,833,333
|
|
|
||
Total long-term debt
|
$
|
—
|
|
|
$
|
603,007
|
|
|
2018 (remaining six months)
|
916,666
|
|
|
2019
|
625,000
|
|
|
|
$
|
1,541,666
|
|
7.
|
Capital Stock and Share-Based Compensation
|
|
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, 2018
|
2,714,561
|
|
|
$0.61 - $6.55
|
|
$
|
1.88
|
|
|
$
|
2,098,195
|
|
|
2,590,030
|
|
|
$
|
1.89
|
|
|
$
|
2,013,034
|
|
Granted
|
73,212
|
|
|
$2.32 - $2.67
|
|
$
|
2.46
|
|
|
|
|
|
|
|
|
|
|||||||
Exercised
|
(53,939
|
)
|
|
$0.65 - $2.46
|
|
$
|
2.27
|
|
|
|
|
|
|
|
|
|
|||||||
Canceled
|
(540,487
|
)
|
|
$1.21 - $6.55
|
|
$
|
2.15
|
|
|
|
|
|
|
|
|
|
|||||||
Balance, June 30, 2018
|
2,193,347
|
|
|
$0.61 - $6.23
|
|
$
|
1.83
|
|
|
$
|
2,911,106
|
|
|
2,082,354
|
|
|
$
|
1.81
|
|
|
$
|
2,812,472
|
|
(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 Unvested Shares
|
|
Weighted Average Grant Date Fair Value
|
|
Aggregate Value of Unvested Shares
|
|||||
Balance, January 1, 2018
|
489,698
|
|
|
$
|
1.51
|
|
|
$
|
738,345
|
|
Granted
|
296,287
|
|
|
$
|
3.07
|
|
|
909,600
|
|
|
Vested
|
(312,365
|
)
|
|
$
|
2.75
|
|
|
(454,339
|
)
|
|
Balance, June 30, 2018
|
473,620
|
|
|
$
|
2.52
|
|
|
$
|
1,193,606
|
|
|
Number of Stock Units
|
|
Weighted Average Grant Date Fair Value per Share
|
|
Intrinsic Value Outstanding
|
||||
Balance, January 1, 2018
|
466,702
|
|
|
$1.40
|
|
$
|
1,134,086
|
|
|
Granted
|
70,445
|
|
|
$3.00
|
|
|
|||
Forfeitures
|
—
|
|
|
—
|
|
|
|
||
Converted
|
—
|
|
|
—
|
|
|
|
||
Balance, June 30, 2018
|
537,147
|
|
|
$1.61
|
|
$
|
1,600,698
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated Deficit
|
|
Total
|
|||||||||||||||
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
$
|
|
|
|
|
|||||||||
Balance at January 1, 2018, as previously reported
|
1,321,514
|
|
|
1,322
|
|
|
27,283,918
|
|
|
29,186
|
|
|
1,070,904
|
|
|
(1,649,746
|
)
|
|
83,563,208
|
|
|
(32,406,189
|
)
|
|
49,537,781
|
|
Impact of change in accounting policy
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
354,028
|
|
|
354,028
|
|
As adjusted balance at January 1, 2018
|
1,321,514
|
|
|
1,322
|
|
|
27,283,918
|
|
|
29,186
|
|
|
1,070,904
|
|
|
(1,649,746
|
)
|
|
83,563,208
|
|
|
(32,052,161
|
)
|
|
49,891,809
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
260,842
|
|
|
261
|
|
|
—
|
|
|
—
|
|
|
639,536
|
|
|
—
|
|
|
639,797
|
|
Share-based compensation
|
—
|
|
|
—
|
|
|
280,000
|
|
|
280
|
|
|
—
|
|
|
—
|
|
|
212,150
|
|
|
—
|
|
|
212,430
|
|
Non-cash compensation
|
—
|
|
|
—
|
|
|
129,865
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
199,871
|
|
|
—
|
|
|
200,001
|
|
Stock dividends to Carilion Clinic
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
127,620
|
|
|
(127,660
|
)
|
|
—
|
|
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,216,003
|
|
|
1,216,003
|
|
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(182,201
|
)
|
|
—
|
|
|
182,201
|
|
|
(466,894
|
)
|
|
—
|
|
|
—
|
|
|
(466,894
|
)
|
Balance, June 30, 2018
|
1,321,514
|
|
|
1,322
|
|
|
27,772,424
|
|
|
29,897
|
|
|
1,253,105
|
|
|
(2,116,640
|
)
|
|
84,742,385
|
|
|
(30,963,818
|
)
|
|
51,693,146
|
|
(1)
|
The stock dividends payable in connection with Carilion Clinic’s Series A Preferred Stock will be issued subsequent to
June 30, 2018
. For the period from January 12, 2010, the original issue date of the Series A Preferred Stock, through
June 30, 2018
, the Series A Preferred Stock issued to Carilion has accrued
$1,287,991
in dividends. The accrued and unpaid dividends as of
June 30, 2018
will be paid by the issuance of
671,339
shares of our common stock upon Carilion’s written request.
|
8.
|
Income Taxes
|
9.
|
Operating Segments
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
||||||||||||
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||
|
(unaudited)
|
|
|
(unaudited)
|
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Technology development
|
$
|
5,466,281
|
|
|
$
|
4,602,272
|
|
|
|
$
|
10,103,056
|
|
|
$
|
8,838,375
|
|
|
Products and licensing
|
8,306,367
|
|
|
6,690,759
|
|
|
|
15,862,763
|
|
|
12,541,554
|
|
|
||||
Total revenues
|
$
|
13,772,648
|
|
|
$
|
11,293,031
|
|
|
|
$
|
25,965,819
|
|
|
$
|
21,379,929
|
|
|
Technology development operating income/(loss)
|
$
|
445,042
|
|
|
$
|
32,920
|
|
|
|
$
|
544,274
|
|
|
$
|
(260,099
|
)
|
|
Products and licensing operating income/(loss)
|
456,107
|
|
|
146,683
|
|
|
|
471,888
|
|
|
(334,859
|
)
|
|
||||
Total operating income/(loss)
|
$
|
901,149
|
|
|
$
|
179,603
|
|
|
|
$
|
1,016,162
|
|
|
$
|
(594,958
|
)
|
|
Depreciation, technology development
|
$
|
94,774
|
|
|
$
|
88,698
|
|
|
|
$
|
188,374
|
|
|
$
|
176,918
|
|
|
Depreciation, products and licensing
|
$
|
75,314
|
|
|
$
|
240,504
|
|
|
|
$
|
139,631
|
|
|
$
|
571,480
|
|
|
Amortization, technology development
|
$
|
40,856
|
|
|
$
|
26,169
|
|
|
|
$
|
78,062
|
|
|
$
|
74,759
|
|
|
Amortization, products and licensing
|
$
|
103,781
|
|
|
$
|
437,612
|
|
|
|
$
|
216,510
|
|
|
$
|
930,591
|
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(unaudited)
|
|
|
||||
Total segment assets:
|
|
|
|
||||
Technology development
|
$
|
30,704,165
|
|
|
$
|
32,011,084
|
|
Products and licensing
|
34,458,941
|
|
|
34,211,552
|
|
||
Total assets
|
$
|
65,163,106
|
|
|
$
|
66,222,636
|
|
Property plant and equipment, and intangible assets, technology development
|
$
|
2,204,428
|
|
|
$
|
2,361,663
|
|
Property plant and equipment, and intangible assets, products and licensing
|
$
|
4,758,404
|
|
|
$
|
4,831,671
|
|
10.
|
Subsequent Event - Sale of Luna Optoelectronics
|
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Current assets
|
|
(unaudited)
|
||||||||
|
Accounts receivable
|
|
$
|
2,159,843
|
|
|
$
|
1,940,126
|
|
|
|
Contract assets
|
|
1,249,551
|
|
|
—
|
|
|||
|
Inventory
|
|
1,736,107
|
|
|
2,316,329
|
|
|||
|
Prepaid expenses and other current assets
|
|
89,592
|
|
|
125,821
|
|
|||
|
|
Total current assets
|
|
5,235,093
|
|
|
4,382,276
|
|
||
Property and equipment, net
|
|
607,468
|
|
|
599,102
|
|
||||
Intangible assets, net
|
|
1,423,546
|
|
|
1,510,203
|
|
||||
Goodwill
|
|
502,000
|
|
|
502,000
|
|
||||
Other assets
|
|
16,029
|
|
|
16,029
|
|
||||
Total assets of the disposal group
|
|
$
|
7,784,136
|
|
|
$
|
7,009,610
|
|
||
|
|
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||||
|
Accounts payable
|
|
$
|
1,018,950
|
|
|
$
|
960,116
|
|
|
|
Accrued compensation
|
|
444,860
|
|
|
458,342
|
|
|||
|
Contract Liabilities
|
|
158,758
|
|
|
—
|
|
|||
|
Other accrued liabilities
|
|
—
|
|
|
17,920
|
|
|||
|
Total current liabilities
|
|
1,622,568
|
|
|
1,436,378
|
|
|||
Deferred rent
|
|
—
|
|
|
2,271
|
|
||||
Total liabilities of the disposal group
|
|
$
|
1,622,568
|
|
|
$
|
1,438,649
|
|
||
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(unaudited)
|
|
(unaudited)
|
||||||||||||
Revenues
|
|
$
|
3,849,283
|
|
|
$
|
3,010,465
|
|
|
$
|
7,273,925
|
|
|
$
|
6,462,998
|
|
Cost of revenues
|
|
2,407,467
|
|
|
1,953,967
|
|
|
4,645,616
|
|
|
4,059,829
|
|
||||
Gross profit
|
|
1,441,816
|
|
|
1,056,498
|
|
|
2,628,309
|
|
|
2,403,169
|
|
||||
Operating expense
|
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
|
502,047
|
|
|
420,270
|
|
|
978,174
|
|
|
938,367
|
|
||||
Research, development and engineering
|
|
243,588
|
|
|
219,291
|
|
|
465,484
|
|
|
448,035
|
|
||||
Total operating expense
|
|
745,635
|
|
|
639,561
|
|
|
1,443,658
|
|
|
1,386,402
|
|
||||
Operating income
|
|
696,181
|
|
|
416,937
|
|
|
1,184,651
|
|
|
1,016,767
|
|
||||
Other (expense)/income
|
|
(12,055
|
)
|
|
(3,329
|
)
|
|
22,703
|
|
|
(14,151
|
)
|
||||
Income tax expense
|
|
(59,864
|
)
|
|
(140,626
|
)
|
|
18,499
|
|
|
(340,889
|
)
|
||||
Income attributable to disposal group
|
|
$
|
624,262
|
|
|
$
|
272,982
|
|
|
$
|
1,225,853
|
|
|
$
|
661,727
|
|
11.
|
Contingencies and Guarantees
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
2018
|
2019
|
2020
|
2021
|
2022 and beyond
|
Total
|
||||||||||||
Products and Licensing
|
$
|
3,775,446
|
|
$
|
1,559,621
|
|
$
|
131,614
|
|
$
|
22,878
|
|
$
|
18,438
|
|
$
|
5,507,997
|
|
Technology Development
|
2018
|
2019
|
2020
|
2021
|
2022 and beyond
|
Total
|
||||||||||||
Funded
|
$
|
8,047,918
|
|
$
|
5,649,998
|
|
$
|
550,744
|
|
$
|
11,064
|
|
$
|
5,532
|
|
$
|
14,265,256
|
|
Unfunded
|
$
|
1,275,476
|
|
$
|
2,214,964
|
|
$
|
868,710
|
|
$
|
472,613
|
|
$
|
236,306
|
|
$
|
5,068,069
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Difference
|
|
% Difference
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Technology development
|
$
|
5,466,281
|
|
|
$
|
4,602,272
|
|
|
$
|
864,009
|
|
|
19
|
%
|
Products and licensing
|
8,306,367
|
|
|
6,690,759
|
|
|
1,615,608
|
|
|
24
|
%
|
|||
Total revenues
|
$
|
13,772,648
|
|
|
$
|
11,293,031
|
|
|
$
|
2,479,617
|
|
|
22
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Difference
|
|
% Difference
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|||||||
Technology development
|
$
|
3,945,126
|
|
|
$
|
3,443,954
|
|
|
$
|
501,172
|
|
|
15
|
%
|
Products and licensing
|
4,155,054
|
|
|
3,482,867
|
|
|
672,187
|
|
|
19
|
%
|
|||
Total cost of revenues
|
8,100,180
|
|
|
6,926,821
|
|
|
1,173,359
|
|
|
17
|
%
|
|||
Gross profit
|
$
|
5,672,468
|
|
|
$
|
4,366,210
|
|
|
$
|
1,306,258
|
|
|
30
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Difference
|
|
% Difference
|
|||||||
Operating expense:
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
$
|
3,767,456
|
|
|
$
|
3,367,716
|
|
|
$
|
399,740
|
|
|
12
|
%
|
Research, development and engineering
|
1,003,863
|
|
|
818,891
|
|
|
184,972
|
|
|
23
|
%
|
|||
Total operating expense
|
$
|
4,771,319
|
|
|
$
|
4,186,607
|
|
|
$
|
584,712
|
|
|
14
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Difference
|
|
% Difference
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Technology development
|
$
|
10,103,056
|
|
|
$
|
8,838,375
|
|
|
$
|
1,264,681
|
|
|
14
|
%
|
Products and licensing
|
15,862,763
|
|
|
12,541,554
|
|
|
3,321,209
|
|
|
26
|
%
|
|||
Total revenues
|
$
|
25,965,819
|
|
|
$
|
21,379,929
|
|
|
$
|
4,585,890
|
|
|
21
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Difference
|
|
% Difference
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|||||||
Technology development
|
7,298,628
|
|
|
$
|
6,553,423
|
|
|
$
|
745,205
|
|
|
11
|
%
|
|
Products and licensing
|
7,968,605
|
|
|
6,583,913
|
|
|
1,384,692
|
|
|
21
|
%
|
|||
Total cost of revenues
|
15,267,233
|
|
|
13,137,336
|
|
|
2,129,897
|
|
|
16
|
%
|
|||
Gross profit
|
$
|
10,698,586
|
|
|
$
|
8,242,593
|
|
|
$
|
2,455,993
|
|
|
30
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
|
$ Difference
|
|
% Difference
|
|||||||
Operating expense:
|
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
$
|
7,577,072
|
|
|
$
|
7,089,889
|
|
|
|
$
|
487,183
|
|
|
7
|
%
|
Research, development and engineering
|
2,105,352
|
|
|
1,747,662
|
|
|
|
357,690
|
|
|
20
|
%
|
|||
Total operating expense
|
$
|
9,682,424
|
|
|
$
|
8,837,551
|
|
|
|
$
|
844,873
|
|
|
10
|
%
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
$ Difference
|
||||||
Net cash used in operating activities
|
$
|
(2,737,022
|
)
|
|
$
|
(314,321
|
)
|
|
$
|
(2,422,701
|
)
|
Net cash used in investing activities
|
(382,921
|
)
|
|
(1,112,159
|
)
|
|
729,238
|
|
|||
Net cash used in financing activities
|
(568,790
|
)
|
|
(1,084,723
|
)
|
|
515,933
|
|
|||
Net decrease in cash and cash equivalents
|
$
|
(3,688,733
|
)
|
|
$
|
(2,511,203
|
)
|
|
$
|
(1,177,530
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
accurately anticipate customer needs;
|
•
|
innovate and develop new technologies and applications;
|
•
|
successfully commercialize new technologies in a timely manner;
|
•
|
price products competitively and manufacture and deliver products in sufficient volumes and on time; and
|
•
|
differentiate our product offerings from those of our competitors.
|
•
|
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 ("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.
|
•
|
sales of our common stock by our significant stockholders, or the perception that such sales may occur;
|
•
|
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; 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
|
|
|
|
|
|
|||||
|
|
|
Total Number of
|
Approximate Dollar
|
|||||
|
|
|
Shares Purchased as
|
Value of Shares that
|
|||||
|
Total Number of Shares
|
Average Price Paid per
|
Part of a Publicly
|
May Yet be Purchased
|
|||||
Period
|
Purchased
|
Share
|
Announced Program
|
Under the Program(1)
|
|||||
6/1/2018 - 6/30/2018
|
49,751 (2)
|
$
|
3.23
|
|
—
|
|
$
|
931,809
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
•
|
severance payments equal to his then applicable base salary for a period of 9 months paid in installments on our regular payroll dates;
|
•
|
a discretionary lump sum bonus payment equal to the target bonus that he would have been eligible to receive for the year in which the termination occurs, which will be paid when we otherwise pay annual bonuses, so long as that date is no later than March 15th the following year in which the termination occurs; provided, however, if the termination occurs within three months prior to or 12 months following a "change in control" transaction (as defined in the employment agreement), then Mr. Messick will be entitled to receive a discretionary lump sum bonus payment equal to the maximum target bonus that he would have been eligible to receive for the year in which the termination occurs;
|
•
|
if he timely elects and remains eligible for continued coverage under COBRA, the health insurance premiums that we were paying on behalf of Mr. Messick and his covered dependents prior to the date of termination, until the earliest of (i) 12 months following termination, (ii) the date Mr. Messick becomes eligible for substantially equivalent insurance in connection with new employment or self-employment, or (iii) the date Mr. Messick ceases to be eligible for COBRA continuation coverage; and
|
•
|
a cash payment for any unvested company matching contributions in Mr. Messick's account under our 401(k) plan.
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description
|
10.1+
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
101
|
|
The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at June 30, 2018 and December 31, 2017, (ii) Consolidated Statements of Operations for the three months ended June 30, 2018 and 2017, (iii) Consolidated Statements of Cash Flows for the three months ended June 30, 2018 and 2017 and (iv) Notes to Unaudited Consolidated Financial Statements.
|
+
|
Indicates management contract or compensatory plan.
|
*
|
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.
|
|
|
|
Luna Innovations Incorporated
|
|
Date:
|
August 1, 2018
|
|
By:
|
/s/ Dale Messick
|
|
|
|
|
Dale Messick
|
|
|
|
|
Chief Financial Officer
(principal financial and accounting officer and duly authorized officer)
|
2.
|
COMPENSATION
.
|
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/ Scott A. Graeff
|
|
Scott A. Graeff
|
|
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/ Scott A. Graeff
|
|
Scott A. Graeff
|
|
President and Chief Executive Officer
(principal executive officer)
|
|
/S/ DALE E. MESSICK
|
|
Dale E. Messick
|
|
Chief Financial Officer
(principal financial officer)
|
|