Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 09, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | LUNA | |
Entity Registrant Name | LUNA INNOVATIONS INC | |
Entity Central Index Key | 1,239,819 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 28,402,887 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 38,514,437 | $ 12,802,458 |
Accounts receivable, net | 8,940,405 | 10,269,012 |
Inventory | 7,300,035 | 6,848,835 |
Prepaid expenses and other current assets | 924,196 | 1,375,659 |
Current assets held for sale | 0 | 5,801,629 |
Total current assets | 55,679,073 | 37,097,593 |
Property and equipment, net | 3,145,769 | 3,482,687 |
Intangible assets, net | 3,264,285 | 3,367,217 |
Goodwill | 502,000 | 502,000 |
Long term receivable- sale of HSOR business | 4,000,000 | 0 |
Other assets | 18,024 | 38,194 |
Non-current assets held for sale | 0 | 10,509,282 |
Total assets | 66,609,151 | 54,996,973 |
Current liabilities: | ||
Current portion of long-term debt obligations | 1,833,333 | 1,833,333 |
Current portion of capital lease obligations | 49,070 | 52,128 |
Accounts payable | 2,188,776 | 2,954,742 |
Accrued liabilities | 9,586,554 | 7,913,544 |
Deferred revenue | 897,023 | 837,906 |
Current liabilities held for sale | 0 | 2,376,703 |
Total current liabilities | 14,554,756 | 15,968,356 |
Long-term deferred rent | 1,221,170 | 1,319,402 |
Long-term debt obligations | 1,057,263 | 2,420,032 |
Long-term capital lease obligations | 79,246 | 114,940 |
Non-current liabilities held for sale | 0 | 84,555 |
Total liabilities | 16,912,435 | 19,907,285 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at September 30, 2017 and December 31, 2016 | 1,322 | 1,322 |
Common stock, par value $0.001, 100,000,000 shares authorized, 28,402,887 and 27,988,104 shares issued, 27,815,060 and 27,541,277 shares outstanding at September 30, 2017 and December 31, 2016 | 29,074 | 28,600 |
Treasury stock at cost, 587,827 and 446,827 shares at September 30, 2017 and December 31, 2016 | (746,007) | (517,987) |
Additional paid-in capital | 83,204,263 | 82,451,958 |
Accumulated deficit | (32,791,936) | (46,874,205) |
Total stockholders’ equity | 49,696,716 | 35,089,688 |
Total liabilities and stockholders’ equity | $ 66,609,151 | $ 54,996,973 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 1,321,514 | 1,321,514 |
Preferred stock, issued (in shares) | 1,321,514 | 1,321,514 |
Preferred stock, outstanding (in shares) | 1,321,514 | 1,321,514 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 28,402,887 | 27,988,104 |
Common stock, outstanding (in shares) | 27,815,060 | 27,541,277 |
Treasury Stock (in shares) | 587,827 | 446,827 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Technology development | $ 4,590,054 | $ 4,118,245 | $ 13,428,428 | $ 11,772,731 |
Products and licensing | 7,052,094 | 7,066,908 | 19,593,648 | 18,301,631 |
Total revenues | 11,642,148 | 11,185,153 | 33,022,076 | 30,074,362 |
Cost of revenues: | ||||
Technology development | 3,491,840 | 3,068,360 | 10,045,261 | 8,986,312 |
Products and licensing | 3,617,547 | 3,758,765 | 10,201,459 | 9,954,987 |
Total cost of revenues | 7,109,387 | 6,827,125 | 20,246,720 | 18,941,299 |
Gross profit | 4,532,761 | 4,358,028 | 12,775,356 | 11,133,063 |
Operating expense: | ||||
Selling, general and administrative | 3,256,074 | 3,816,679 | 10,345,964 | 11,296,389 |
Research, development and engineering | 833,811 | 812,050 | 2,581,473 | 2,789,801 |
Total operating expense | 4,089,885 | 4,628,729 | 12,927,437 | 14,086,190 |
Operating income/(loss) | 442,876 | (270,701) | (152,081) | (2,953,127) |
Other income/(expense): | ||||
Other expense | (3,389) | (231) | (4,258) | (1,904) |
Interest expense | (55,099) | (71,991) | (179,860) | (237,081) |
Total other expense | (58,488) | (72,222) | (184,118) | (238,985) |
Income/(loss) from continuing operations before income taxes | 384,388 | (342,923) | (336,199) | (3,192,112) |
Income tax (benefit)/expense | (130,977) | 44,797 | (63,350) | (173,801) |
Net income/(loss) from continuing operations | 515,365 | (387,720) | (272,849) | (3,018,311) |
Income/(loss) from discontinued operations, net of income tax (benefit)/expense of $(349,515), $(35,095), $(349,515), and $209,678. | 145,293 | (57,358) | (644,241) | 342,685 |
Gain on sale, net of $1,508,373 of related income taxes | 15,096,666 | 0 | 15,096,666 | 0 |
Net income/(loss) from discontinued operations | 15,241,959 | (57,358) | 14,452,425 | 342,685 |
Net income/(loss) | 15,757,324 | (445,078) | 14,179,576 | (2,675,626) |
Preferred stock dividend | 33,699 | 28,941 | 97,331 | 74,731 |
Net income/(loss) attributable to common stockholders | $ 15,723,625 | $ (474,019) | $ 14,082,245 | $ (2,750,357) |
Net income/(loss) per share from continuing operations: | ||||
Basic (in dollars per share) | $ 0.02 | $ (0.01) | $ (0.01) | $ (0.11) |
Diluted (in dollars per share) | 0.02 | (0.01) | (0.01) | (0.11) |
Net income/(loss) per share from discontinued operations: | ||||
Basic (in dollars per share) | 0.55 | 0 | 0.52 | 0.01 |
Diluted (in dollars per share) | 0.47 | 0 | 0.52 | 0.01 |
Net income/(loss) per share attributable to common stockholders: | ||||
Basic (in dollars per share) | 0.57 | (0.02) | 0.51 | (0.10) |
Diluted (in dollars per share) | $ 0.48 | $ (0.02) | $ 0.51 | $ (0.10) |
Weighted average common shares and common equivalent shares outstanding: | ||||
Basic (in shares) | 27,692,539 | 27,605,028 | 27,611,905 | 27,531,730 |
Diluted (in shares) | 32,714,389 | 27,605,028 | 27,611,905 | 27,531,730 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Allocated tax (benefit)/expense | $ (349,515) | $ (35,095) | $ (349,515) | $ 209,678 |
Tax effect on gain from sale of discontinued operations | $ 1,508,373 | $ 0 | $ 1,508,373 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows provided by/(used in) operating activities | ||
Net income/(loss) | $ 14,179,576 | $ (2,675,626) |
Adjustments to reconcile net income/(loss) to net cash used in operating activities | ||
Depreciation and amortization | 2,241,867 | 2,759,877 |
Share-based compensation | 476,428 | 665,354 |
Bad debt expense | 40,753 | 255,522 |
Loss on disposal of fixed assets | 3,640 | 0 |
Gain on sale of discontinued operations | (15,096,666) | 0 |
Change in assets and liabilities | ||
Accounts receivable | 2,127,794 | (1,197,885) |
Inventory | (2,251,236) | 964,443 |
Other current assets | 380,858 | (381,632) |
Accounts payable and accrued expenses | (1,581,608) | (1,055,060) |
Deferred revenue | 59,980 | (120,871) |
Net cash provided by/(used in) operating activities | 581,386 | (785,878) |
Cash flows provided by/(used in) investing activities | ||
Acquisition of property and equipment | (893,698) | (1,433,260) |
Intangible property costs | (392,485) | (317,287) |
Proceeds from sale of property and equipment | 3,000 | 0 |
Proceeds from sales of discontinued operations | 28,026,528 | 0 |
Net cash provided by/(used in) investing activities | 26,743,345 | (1,750,547) |
Cash flows provided by/(used in) financing activities | ||
Payments on capital lease obligations | (38,752) | (44,404) |
Payments of debt obligations | (1,375,000) | (1,375,000) |
Repurchase of common stock | (228,020) | (325,060) |
Proceeds from the exercise of options | 29,020 | 0 |
Net cash used in financing activities | (1,612,752) | (1,744,464) |
Net increase in cash and cash equivalents | 25,711,979 | (4,280,889) |
Cash and cash equivalents—beginning of period | 12,802,458 | 17,464,040 |
Cash and cash equivalents—end of period | 38,514,437 | 13,183,151 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 173,275 | 239,347 |
Cash paid for income taxes | 41,131 | 203,305 |
Non-cash investing and financing activities | ||
Dividend on preferred stock, 59,469 shares of common stock issuable for the nine months ended September 30, 2017 and 2016 | 97,331 | 74,731 |
Capital expenditures funded by capital lease borrowings | $ 0 | $ 157,246 |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows (Parenthetical) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Cash Flows [Abstract] | ||
Dividend on preferred stock, shares of common stock issuable (in shares) | 59,469 | 59,469 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Nature of Operations Luna Innovations Incorporated (“we,” “Luna Innovations” or the “Company”), headquartered in Roanoke, Virginia, was incorporated in the Commonwealth of Virginia in 1990 and reincorporated in the State of Delaware in April 2003. We are a leader in advanced optical technology, providing unique capabilities in high performance fiber optic test products for the telecommunications industry, distributed fiber optic sensing for the aerospace and automotive industries, and custom optoelectronic components and subsystems. We are organized into two reportable segments, which work closely together to turn ideas into products: our Technology Development segment and our Products and Licensing segment. Our business model is designed to accelerate the process of bringing new and innovative technologies to market. We have a history of net losses from operations beginning in 2005. We have historically managed our liquidity through cost reduction initiatives, debt financings, capital markets transactions and the sale of assets. Unaudited Interim Financial Information The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for interim financial statements and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. The unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management reflect all adjustments, consisting of only normal recurring accruals considered necessary to present fairly our financial position at September 30, 2017 , results of operations for the three and nine months ended September 30, 2017 and 2016 , and cash flows for the nine months ended September 30, 2017 and 2016 . The results of operations for the three and nine months ended September 30, 2017 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . The consolidated interim financial statements, including our significant accounting policies, should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2016 , included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 20, 2017. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels: • 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 The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. The carrying value of our debt approximates fair value, as we consider the floating interest rate on our credit facilities with Silicon Valley Bank ("SVB") to be at market for similar instruments. Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis in accordance with U.S. GAAP. This includes items such as non-financial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived asset groups measured at fair value for an impairment assessment. In general, non-financial assets including intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. Net Loss Per Share Basic per share data is computed by dividing our net loss by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income, if applicable, by the weighted average shares outstanding during the period increased to include, if dilutive, the number of additional common share equivalents that would have been outstanding if potential shares of common stock had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method. The effect of 5.0 million common stock equivalents (which include outstanding warrants, preferred stock and stock options) are included for the diluted per share data for the three months ended September 30, 2017 . The effect of 5.6 million common stock equivalents are not included for the three months ended September 30, 2016 as they are anti-dilutive to earnings per share due to our net loss from continuing operations. The effect of 4.9 million and 5.7 million common stock equivalents are not included for the nine months ended September 30, 2017 and 2016 , respectively, as they are considered anti-dilutive to earnings per share due to our net loss from continuing operations. Recently Issued Accounting Pronouncements Effective January 1, 2017, we adopted Accounting Standards Update ("ASU") No. 2016-09, Improvements to Employee Share-Based Payment Accountin g. These amendments apply to several aspects of accounting for share-based compensation including the recognition of excess tax benefits and deficiencies and their related presentation in the statement of cash flows as well as accounting for forfeitures. The adoption of ASU No. 2016-09 did not have a significant impact on our financial condition, results of operations or cash flows. Effective January 1, 2017, we adopted ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes , which simplifies the presentation of deferred taxes by requiring that deferred tax assets and liabilities be classified as noncurrent in any classified balance sheet rather than being separated into current and non-current amounts. The adoption of ASU No. 2015-17 did not have a significant impact on our consolidated financial statements. In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This update simplifies the subsequent measurement of goodwill. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The accounting standard will be effective for reporting periods beginning after December 15, 2019. We do not expect ASU 2017-04 will have a material impact on our financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how cash receipts and cash payments are presented in the statement of cash flows. ASU 2016-15 is effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied retrospectively to all periods presented. We do not expect ASU 2016-15 will have a material impact on our financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from contracts with customers: Identifying Performance Obligations and Licensing , to clarify certain aspects of the existing standard specific to how an entity should recognize revenue to depict the transfer of promised goods or services to customers. Certain other ASUs have been issued specific to Topic 606 and our disclosure below includes our assessment of all ASUs specific to Topic 606 in the aggregate. In accordance with this update, we will adopt the requirements of the new standard effective January 1, 2018. We are finalizing our assessment of the financial impact of Topic 606. To date we have reached the following conclusions specific to the impact of Topic 606. Contracts in our Technology Development segment primarily provide research services. We have concluded that revenue specific to this segment will not be materially impacted upon the adoption of Topic 606 as revenue will continue to be recognized over time using an input model. Contracts in our Products and Licensing segment generally provide for the following revenue sources: standard product sales, custom product development and sales, product rental, extended warranties, training/service, and certain royalties. We expect revenue for this segment to be recognized using either “point in time” or “over time” based on the revenue source. Based on our analysis to date we expect the pattern of recognition of the customized products to potentially change from “point in time” to “over time” upon the adoption of Topic 606. Our revenue recognized specific to customized products approximates $10 million annually. This change will result in the acceleration of revenue when compared to existing standards with the cumulative adjustment relating to contracts that are not complete as of December 31, 2017 recognized as an adjustment to opening retained earnings on January 1, 2018. We are continuing to assess the impact of this potential change, or other changes which may be subsequently identified, on our financial statements and current processes and controls. We intend to adopt the standard using the modified retrospective transition method. Under the modified retrospective approach, the new standard will, for the period beginning January 1, 2018, apply to net contracts and those that were not completed as of January 1, 2018. For those contracts not completed as of January 1, 2018, this method will result in a cumulative catch-up adjustment to retained earnings. Prior periods will not be retrospectively adjusted, but we will maintain dual reporting for the year of initial application in order to disclose the effect on revenue of adopting the new guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases , which requires a lessee to recognize in its statement of financial position an asset and liability for most leases with a term greater than 12 months. Lessees should recognize a liability to make lease payments and a right-of-use asset representing the lessee's right to use the underlying asset for the lease term. The amendment is effective for fiscal years ending after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations On August 9, 2017 , we completed the sale of our high speed optical receivers ("HSOR") business, which was part of our Products and Licensing segment, to an unaffiliated third party for an initial purchase price of $33.5 million , of which $29.5 million in cash has been received, and $4.0 million was placed into escrow until December 15, 2018 for possible working capital adjustments to the purchase price and potential satisfaction of certain post-closing indemnification obligations (the "Transaction"). The purchase price is subject to adjustment in the future based upon a determination of final working capital, as defined in the asset purchase agreement. The HSOR business was a component of the operations of Advanced Photonix, Inc., which we acquired in May 2015. As part of the Transaction, the buyer also hired approximately 49 of our employees who were engaged in the development, manufacture, and sale of HSOR products in addition to certain corporate administrative functions. The buyer will provide certain transition services to us with respect to infrastructure and administration for which we will pay $0.3 million per month for a period of five months, for a total of $1.5 million , following the date of the Transaction. We have recorded this obligation as a reduction of the value of the purchase price. In assessing the fair value of the services expected to be received by us versus those we expect to deliver to the buyer, we concluded that the transition service payments were more closely aligned with the fair value of the assets sold versus the services received and thus should be part of the consideration reconciliation versus operating activities. As of September 30, 2017 , $0.6 million has been paid to the buyer and the remaining $0.9 million is included in accrued liabilities at September 30, 2017 . Our HSOR business accounted for 8.2% of revenues and 10.1% of our cost of revenues for the three months ended September 30, 2017 , and 16.1% of revenues and 18.5% of our costs of revenues for the nine months ended September 30, 2017 . We have reported the results of operations of our HSOR business as discontinued operations in our consolidated financial statements. We allocated a portion of the consolidated tax (benefit)/expense to discontinued operations based on the ratio of the discontinued business's loss/(income) before allocations. The following table presents a summary of the transactions related to the sale. September 30, 2017 (unaudited) Sale price $ 33,500,000 Less: transition services payments (1,500,000 ) Adjusted purchase price 32,000,000 Assets held for sale (16,851,540 ) Liabilities held for sale 2,330,052 Transaction costs (873,473 ) Income tax expense (1,508,373 ) Gain on sale of discontinued operations $ 15,096,666 A ssets and liabilities held for sale as of December 31, 2016 were as follows: December 31, 2016 Assets Current assets: Accounts receivable, net $ 4,028,713 Inventory 1,521,400 Prepaid expenses and other current assets 251,516 Total current assets 5,801,629 Property and equipment, net 3,298,151 Intangible assets, net 5,314,046 Goodwill 1,846,331 Other assets 50,754 Total non-current assets 10,509,282 Total assets held for sale $ 16,310,911 Liabilities Current liabilities: Accounts payable $ 1,511,450 Accrued liabilities 753,556 Deferred revenue 111,697 Total current liabilities 2,376,703 Long-term deferred rent 84,555 Total non-current liabilities 84,555 Total liabilities held for sale $ 2,461,258 The key components of income from discontinued operations were as follows: Three Months Ended Nine Months Ended September 30, 2017 2016 2017 2016 (unaudited) (unaudited) Net revenues $ 1,041,310 $ 3,433,767 $ 6,356,237 $ 13,178,475 Cost of revenues 797,678 2,182,495 4,599,042 8,687,783 Operating expenses 447,854 1,342,117 2,750,951 3,901,685 Other expenses — (1,608 ) — (36,644 ) (Loss)/income before income taxes (204,222 ) (92,453 ) (993,756 ) 552,363 Allocated tax (benefit)/expense (349,515 ) (35,095 ) (349,515 ) 209,678 Operating income/(loss) from discontinued operations 145,293 (57,358 ) (644,241 ) 342,685 Gain on sale, net of related income taxes 15,096,666 — 15,096,666 — Net income/(loss) from discontinued operations $ 15,241,959 $ (57,358 ) $ 14,452,425 $ 342,685 For the nine months ended September 30, 2017 and 2016 , cash flows (used in)/provided by operating activities for discontinued operations were $(0.8) million and $0.2 million , respectively. For the nine months ended September 30, 2017 and 2016 , cash flows provided by/(used in) investing activities for discontinued operations were $27.1 million and $(1.4) million , respectively. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory consists of finished goods, work-in-process and raw materials valued at the lower of cost (determined on the first-in, first-out basis) or market. We write down inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions. Components of inventory were as follows: September 30, December 31, (unaudited) Finished goods $ 2,234,828 $ 1,952,885 Work-in-process 844,083 714,867 Raw materials 4,221,124 4,181,083 Total inventory $ 7,300,035 $ 6,848,835 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities at September 30, 2017 and December 31, 2016 consisted of the following: September 30, 2017 December 31, 2016 (unaudited) Accrued compensation $ 4,377,850 $ 4,742,760 Income tax payable 1,027,687 — Claims reserve 1,727,123 1,577,123 Transition services 900,000 — Accrued sub-contracts 581,544 483,477 Accrued professional fees 70,308 67,719 Deferred rent 141,500 155,138 Royalties 263,625 345,895 Warranty reserve 212,849 185,125 Accrued liabilities - other 284,068 356,307 Total accrued liabilities $ 9,586,554 $ 7,913,544 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Silicon Valley Bank Facility We currently have a Loan and Security Agreement with SVB (the "Credit Facility") under which, as amended on May 8, 2015, we have a term loan with an original borrowing amount of $6.0 million (the “Original Term Loan”). The Original Term Loan is repayable in 48 monthly installments of $125,000 , plus accrued interest payable monthly in arrears, and unless earlier terminated, is scheduled to mature in May 2020. The Original Term Loan carries a floating annual interest rate equal to SVB’s prime rate then in effect plus 2% . We may prepay amounts due under the Original Term Loan at any time, subject to an early termination fee of up to 2% of the amount of prepayment. In September 2015, we entered into the Waiver and Seventh Loan Modification Agreement, which provided an additional $1 million of available financing for purchases of equipment through December 31, 2015, which we fully borrowed in December 2015 (the "Second Term Loan" and, together with the Original Term Loan, the "Term Loans"). The Second Term Loan also bears interest at a floating prime rate plus 2% and is to be repaid in 35 monthly installments of $27,778 plus accrued interest. The Credit Facility requires us to maintain a minimum cash balance of $4.0 million and to maintain at each month end a ratio of cash plus 60% of accounts receivable greater than or equal to 1.5 times the outstanding principal of the Term Loans. The Credit Facility also requires us to observe a number of additional operational covenants, including protection and registration of intellectual property rights, and certain customary negative covenants. As of September 30, 2017 , we were in compliance with all covenants under the Credit Facility. Amounts due under the Credit Facility are secured by substantially all of our assets, including intellectual property, personal property and bank accounts. In addition, the Credit Facility contains customary events of default, including nonpayment of principal, interest or other amounts, violation of covenants, material adverse change, an event of default under any subordinated debt documents, incorrectness of representations and warranties in any material respect, bankruptcy, judgments in excess of a threshold amount, and violations of other agreements in excess of a threshold amount. If any event of default occurs SVB may declare due immediately all borrowings under the Credit Facility and foreclose on the collateral. Furthermore, an event of default under the Credit Facility would result in an increase in the interest rate on any amounts outstanding. As of September 30, 2017 , there were no events of default on the Credit Facility. The aggregate balance under the Term Loans at September 30, 2017 and December 31, 2016 , was $2.9 million and $4.3 million , respectively. The effective rate of our Term Loan at September 30, 2017 was 6.25% . The following table presents a summary of debt outstanding as of September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 (unaudited) Silicon Valley Bank Term Loan $ 2,916,666 $ 4,291,666 Less: unamortized debt issuance costs 26,070 38,301 Less: current portion 1,833,333 1,833,333 Total long-term debt $ 1,057,263 $ 2,420,032 The schedule of remaining principal payments under our Term Loans as of September 30, 2017 was as follows: 2017 $ 458,333 2018 1,833,333 2019 625,000 $ 2,916,666 |
Capital Stock and Share-Based C
Capital Stock and Share-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Capital Stock and Share-Based Compensation | Capital Stock and Share-Based Compensation We recognize share-based compensation expense based upon the fair value of the underlying equity award on the date of the grant. For restricted stock awards and restricted stock units, we recognize expense based upon the price of our underlying stock at the date of the grant. We have elected to use the Black-Scholes-Merton option pricing model to value any option or warrant awards granted. We recognize share-based compensation for such awards on a straight-line basis over the requisite service period of the awards. The risk-free interest rate is based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the stock options. The expected life and estimated post-employment termination behavior is based upon historical experience of homogeneous groups within our company. We also assume an expected dividend yield of zero for all periods, as we have never paid a dividend on our common stock and do not have any plans to do so in the future. A summary of the stock option activity for the nine months ended September 30, 2017 is presented below: Options Outstanding Options Exercisable Number of Shares Price per Share Weighted Average Exercise Price Aggregate Intrinsic Value (1) Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value (1) Balance, January 1, 2017 2,857,114 $0.61 - $6.83 $ 1.89 $ 107,063 2,367,630 $ 1.93 $ 101,071 Granted 80,000 $1.51 - $1.54 $ 1.53 Exercised (31,953 ) $0.82 - $1.38 $ 0.95 Canceled (170,590 ) $1.40 - $6.83 $ 2.27 Balance, September 30, 2017 2,734,571 $0.61 - $6.55 $ 1.87 $ 585,292 2,619,914 $ 1.88 $ 555,926 (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. At September 30, 2017 , the outstanding stock options to purchase an aggregate of 2.7 million shares had a weighted-average remaining contractual term of 4.4 years, and the exercisable stock options to purchase an aggregate of 2.6 million shares had a weighted-average remaining contractual term of 4.3 years. For the nine months ended September 30, 2017 and 2016 we recognized $0.5 million and $0.7 million in share-based compensation expense, respectively, which is included in our selling, general and administrative expense in the accompanying consolidated financial statements. We expect to recognize $0.1 million in share-based compensation expense over the weighted-average remaining service period of 1.8 years for stock options outstanding as of September 30, 2017 . The following table summarizes the value of our unvested restricted stock awards: Number of Unvested Shares Weighted Average Grant Date Fair Value Aggregate Value of Unvested Shares Balance, January 1, 2017 829,998 $ 1.19 $ 988,763 Granted 428,865 $ 1.54 660,752 Vested (442,498 ) $ 1.20 (531,853 ) Repurchased — $ — — Forfeitures (51,667 ) $ 1.14 (58,917 ) Balance, September 30, 2017 764,698 $ 1.38 $ 1,058,745 Restricted Stock Units We issue restricted stock units ("RSUs"), to our non-employee directors for service on our board of directors. Under our non-employee director compensation policy, continuing non-employee directors receive an annual RSU grant at the time of our annual meeting of stockholders, which grant vests on the earlier of the one year anniversary of the grant or the following annual meeting of stockholders. Under our non-employee director deferred compensation plan, as amended (the "NEDCP") non-employee directors may also elect to receive their annual cash retainers for board and committee service in RSUs which are issued quarterly and vest immediately upon their issuance, subject to deferred settlement in accordance with the NEDCP. The following is a summary of our RSU activity for the nine months ended September 30, 2017 : Number of RSUs Intrinsic Value Issued Unvested Weighted Average Grant Date Fair Value per Share Outstanding Unvested Balance, January 1, 2017 393,012 — $1.37 $ 577,728 $ — Granted 55,748 — $1.57 Vested — — $0.00 Forfeitures — — $0.00 Converted — — $0.00 Balance, September 30, 2017 448,760 — $1.39 $ 758,404 $ — The following details our equity transactions during the nine months ended September 30, 2017 : Preferred Stock Common Stock Treasury Stock Additional Paid-in Capital Shares $ Shares $ Shares $ $ Balance, January 1, 2017 1,321,514 1,322 27,541,277 28,600 446,827 (517,987 ) 82,451,958 Exercise of stock options — — 31,953 32 — — 819 Share-based compensation — — 299,000 299 — — 476,128 Non-cash compensation — — 135,497 136 — — 178,035 Stock dividends to Carilion Clinic (1) — — — 59 — — 97,271 Forfeitures of restricted stock grants — — (51,667 ) (52 ) — — — Repurchase of common stock — — (141,000 ) — 141,000 (228,020 ) 52 Balance, September 30, 2017 1,321,514 1,322 27,815,060 29,074 587,827 (746,007 ) 83,204,263 (1) The stock dividends payable in connection with Carilion Clinic’s Series A Preferred Stock will be issued subsequent to September 30, 2017 . For the period from January 12, 2010, the original issue date of the Series A Preferred Stock, through September 30, 2017 , the Series A Preferred Stock issued to Carilion has accrued $1,110,773 in dividends. The accrued and unpaid dividends as of September 30, 2017 will be paid by the issuance of 611,870 shares of our common stock upon Carilion’s written request. Stock Repurchase Program In May 2016, our board of directors authorized us to repurchase up to $2.0 million of our common stock through May 31, 2017. As of May 31, 2017, we had repurchased a total of 205,500 shares for an aggregate purchase price of $0.2 million under this stock repurchase program, after which this stock repurchase program expired. In September 2017, our board of directors re-instituted the stock repurchase program and authorized us to repurchase up to $2.0 million of our common stock through September 19, 2018. Our stock repurchase program does not obligate us to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. As of September 30, 2017 , we had repurchased a total of 50,100 shares for an aggregate purchase price of $0.1 million under this stock repurchase program. We currently maintain all repurchased shares under these stock repurchase programs as treasury stock. |
Operating Segments
Operating Segments | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Operating Segments | Operating Segments Our operations are divided into two operating segments—“Technology Development” and “Products and Licensing”. The Technology Development segment provides applied research to customers in our areas of focus. Our engineers and scientists collaborate with our network of government, academic and industry experts to identify technologies and ideas with promising market potential. We then compete to win fee-for-service contracts from government agencies and industrial customers who seek innovative solutions to practical problems that require new technology. The Technology Development segment derives its revenues primarily from services. The Products and Licensing segment derives its revenues from product sales, funded product development and technology licenses. Through September 30, 2017 , our Chief Executive Officer and his direct reports collectively represented our chief operating decision makers, and they evaluated segment performance based primarily on revenues and operating income or loss. The accounting policies of our segments are the same as those described in the summary of significant accounting policies (see Note 1 to our Financial Statements, “Organization and Summary of Significant Accounting Policies,” presented in our Annual Report on Form 10-K as filed with the SEC on March 20, 2017). The table below presents revenues and operating income/(loss) for reportable segments: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (unaudited) (unaudited) Revenues: Technology development $ 4,590,054 $ 4,118,245 $ 13,428,428 $ 11,772,731 Products and licensing 7,052,094 7,066,908 19,593,648 18,301,631 Total revenues $ 11,642,148 $ 11,185,153 $ 33,022,076 $ 30,074,362 Technology development operating income/(loss) $ 182,776 $ 139,134 $ (77,323 ) $ (253,833 ) Products and licensing operating income/(loss) 260,100 (409,835 ) (74,758 ) (2,699,294 ) Total operating income/(loss) $ 442,876 $ (270,701 ) $ (152,081 ) $ (2,953,127 ) Depreciation, technology development $ 87,389 $ 87,884 $ 267,282 $ 264,549 Depreciation, products and licensing $ 117,219 $ 300,530 $ 688,700 $ 827,661 Amortization, technology development $ 28,935 $ 23,651 $ 95,540 $ 141,490 Amortization, products and licensing $ 247,522 $ 486,209 $ 1,178,113 $ 1,526,177 Products and licensing depreciation includes amounts from discontinued operations of $0.1 million and $0.2 million for the three months ended September 30, 2017 and 2016 , respectively. Products and licensing amortization includes amounts from discontinued operations of $0.1 million and $0.4 million for the three months ended September 30, 2017 and 2016 , respectively. Products and licensing depreciation includes amounts from discontinued operations of $0.4 million and $0.5 million for the nine months ended September 30, 2017 and 2016 , respectively. Products and licensing amortization includes amounts from discontinued operations of $0.9 million and $1.2 million for the nine months ended September 30, 2017 and 2016 , respectively. The table below presents assets for reportable segments: September 30, December 31, (unaudited) Total segment assets: Technology development $ 30,738,481 $ 16,923,090 Products and licensing 35,870,670 38,073,883 Total assets $ 66,609,151 $ 54,996,973 Property plant and equipment, and intangible assets, technology development $ 2,427,556 $ 2,602,803 Property plant and equipment, and intangible assets, products and licensing $ 4,484,498 $ 4,749,144 There are no material inter-segment revenues for any period presented. Total assets for September 30, 2017 include proceeds from the sale of HSOR in the amount of $33.5 million (which includes a long term receivable of $4.0 million ) allocated evenly between the two segments. For December 31, 2016, the products and licensing segment assets include assets held for sale in the amount of $16.3 million . Property plant and equipment, and intangible assets excludes HSOR amounts for September 30, 2017 and December 31, 2016 . The U.S. government accounted for 45% and 39% of total consolidated revenues for the three months ended September 30, 2017 and 2016 , respectively, and for 45% and 42% of total consolidated revenues for the nine months ended September 30, 2017 and 2016 , respectively. International revenues (customers outside the United States) accounted for 19% and 15% of total consolidated revenues for the three months ended September 30, 2017 and 2016 , respectively, and 20% and 18% of the total consolidated revenues for the nine months ended September 30, 2017 and 2016 , respectively. No single country, outside of the United States, represented more than 10% of total revenues in the three and nine months ended September 30, 2017 and 2016 . |
Contingencies and Guarantees
Contingencies and Guarantees | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Guarantees | Contingencies and Guarantees We are from time to time involved in certain legal proceedings in the ordinary course of conducting our business. While the ultimate liability pursuant to these actions cannot currently be determined, we believe it is not reasonably possible that these legal proceedings will have a material adverse effect on our financial position or results of operations. In September 2014, we received a preliminary audit report from the Defense Contract Audit Agency (the "DCAA"), with respect to our 2007 incurred cost submission and questioning $0.8 million of claimed costs that the DCAA believes are expressly unallowable under the Federal Acquisition Regulations and, therefore, subject to potential penalty. In June 2015, we received from the Defense Contract Management Agency ("DCMA") a final determination and demand for payment of penalties, interest, and over billing in the aggregate amount of $1.1 million . In July 2015, we filed an appeal with the Armed Services Board of Contract Appeals ("ABSCA"). In January 2017, a hearing was held before the ASBCA. No ruling has yet been issued with respect to our appeal. In April 2017, we made a settlement offer of $150,000 to the DCMA, and we have accrued that amount in our financial statements as of September 30, 2017 . The DCMA notified us in May 2017 that it has declined our settlement offer. The appeals process remains ongoing. In the third quarter of 2016 we executed two non-cancelable purchase orders totaling $1.4 million for multiple shipments of tunable lasers to be delivered over an 18 -month period. At September 30, 2017 , approximately $0.3 million of this commitment remained and is expected to be delivered by February 28, 2018 . We have entered into indemnification agreements with our officers and directors, to the extent permitted by law, pursuant to which we have agreed to reimburse the officers and directors for legal expenses in the event of litigation and regulatory matters. The terms of these indemnification agreements provide for no limitation to the maximum potential future payments. We have a directors and officers insurance policy that may, in certain instances, mitigate the potential liability and payments. |
Basis of Presentation and Sig16
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations Luna Innovations Incorporated (“we,” “Luna Innovations” or the “Company”), headquartered in Roanoke, Virginia, was incorporated in the Commonwealth of Virginia in 1990 and reincorporated in the State of Delaware in April 2003. We are a leader in advanced optical technology, providing unique capabilities in high performance fiber optic test products for the telecommunications industry, distributed fiber optic sensing for the aerospace and automotive industries, and custom optoelectronic components and subsystems. We are organized into two reportable segments, which work closely together to turn ideas into products: our Technology Development segment and our Products and Licensing segment. Our business model is designed to accelerate the process of bringing new and innovative technologies to market. We have a history of net losses from operations beginning in 2005. We have historically managed our liquidity through cost reduction initiatives, debt financings, capital markets transactions and the sale of assets. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for interim financial statements and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. The unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management reflect all adjustments, consisting of only normal recurring accruals considered necessary to present fairly our financial position at September 30, 2017 , results of operations for the three and nine months ended September 30, 2017 and 2016 , and cash flows for the nine months ended September 30, 2017 and 2016 . The results of operations for the three and nine months ended September 30, 2017 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . The consolidated interim financial statements, including our significant accounting policies, should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2016 , included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 20, 2017. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels: • 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 The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. The carrying value of our debt approximates fair value, as we consider the floating interest rate on our credit facilities with Silicon Valley Bank ("SVB") to be at market for similar instruments. Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis in accordance with U.S. GAAP. This includes items such as non-financial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived asset groups measured at fair value for an impairment assessment. In general, non-financial assets including intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. |
Net Loss Per Share | Net Loss Per Share Basic per share data is computed by dividing our net loss by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income, if applicable, by the weighted average shares outstanding during the period increased to include, if dilutive, the number of additional common share equivalents that would have been outstanding if potential shares of common stock had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Effective January 1, 2017, we adopted Accounting Standards Update ("ASU") No. 2016-09, Improvements to Employee Share-Based Payment Accountin g. These amendments apply to several aspects of accounting for share-based compensation including the recognition of excess tax benefits and deficiencies and their related presentation in the statement of cash flows as well as accounting for forfeitures. The adoption of ASU No. 2016-09 did not have a significant impact on our financial condition, results of operations or cash flows. Effective January 1, 2017, we adopted ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes , which simplifies the presentation of deferred taxes by requiring that deferred tax assets and liabilities be classified as noncurrent in any classified balance sheet rather than being separated into current and non-current amounts. The adoption of ASU No. 2015-17 did not have a significant impact on our consolidated financial statements. In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This update simplifies the subsequent measurement of goodwill. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The accounting standard will be effective for reporting periods beginning after December 15, 2019. We do not expect ASU 2017-04 will have a material impact on our financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how cash receipts and cash payments are presented in the statement of cash flows. ASU 2016-15 is effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied retrospectively to all periods presented. We do not expect ASU 2016-15 will have a material impact on our financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from contracts with customers: Identifying Performance Obligations and Licensing , to clarify certain aspects of the existing standard specific to how an entity should recognize revenue to depict the transfer of promised goods or services to customers. Certain other ASUs have been issued specific to Topic 606 and our disclosure below includes our assessment of all ASUs specific to Topic 606 in the aggregate. In accordance with this update, we will adopt the requirements of the new standard effective January 1, 2018. We are finalizing our assessment of the financial impact of Topic 606. To date we have reached the following conclusions specific to the impact of Topic 606. Contracts in our Technology Development segment primarily provide research services. We have concluded that revenue specific to this segment will not be materially impacted upon the adoption of Topic 606 as revenue will continue to be recognized over time using an input model. Contracts in our Products and Licensing segment generally provide for the following revenue sources: standard product sales, custom product development and sales, product rental, extended warranties, training/service, and certain royalties. We expect revenue for this segment to be recognized using either “point in time” or “over time” based on the revenue source. Based on our analysis to date we expect the pattern of recognition of the customized products to potentially change from “point in time” to “over time” upon the adoption of Topic 606. Our revenue recognized specific to customized products approximates $10 million annually. This change will result in the acceleration of revenue when compared to existing standards with the cumulative adjustment relating to contracts that are not complete as of December 31, 2017 recognized as an adjustment to opening retained earnings on January 1, 2018. We are continuing to assess the impact of this potential change, or other changes which may be subsequently identified, on our financial statements and current processes and controls. We intend to adopt the standard using the modified retrospective transition method. Under the modified retrospective approach, the new standard will, for the period beginning January 1, 2018, apply to net contracts and those that were not completed as of January 1, 2018. For those contracts not completed as of January 1, 2018, this method will result in a cumulative catch-up adjustment to retained earnings. Prior periods will not be retrospectively adjusted, but we will maintain dual reporting for the year of initial application in order to disclose the effect on revenue of adopting the new guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases , which requires a lessee to recognize in its statement of financial position an asset and liability for most leases with a term greater than 12 months. Lessees should recognize a liability to make lease payments and a right-of-use asset representing the lessee's right to use the underlying asset for the lease term. The amendment is effective for fiscal years ending after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Components of Income from Discontinued Operations | A ssets and liabilities held for sale as of December 31, 2016 were as follows: December 31, 2016 Assets Current assets: Accounts receivable, net $ 4,028,713 Inventory 1,521,400 Prepaid expenses and other current assets 251,516 Total current assets 5,801,629 Property and equipment, net 3,298,151 Intangible assets, net 5,314,046 Goodwill 1,846,331 Other assets 50,754 Total non-current assets 10,509,282 Total assets held for sale $ 16,310,911 Liabilities Current liabilities: Accounts payable $ 1,511,450 Accrued liabilities 753,556 Deferred revenue 111,697 Total current liabilities 2,376,703 Long-term deferred rent 84,555 Total non-current liabilities 84,555 Total liabilities held for sale $ 2,461,258 The key components of income from discontinued operations were as follows: Three Months Ended Nine Months Ended September 30, 2017 2016 2017 2016 (unaudited) (unaudited) Net revenues $ 1,041,310 $ 3,433,767 $ 6,356,237 $ 13,178,475 Cost of revenues 797,678 2,182,495 4,599,042 8,687,783 Operating expenses 447,854 1,342,117 2,750,951 3,901,685 Other expenses — (1,608 ) — (36,644 ) (Loss)/income before income taxes (204,222 ) (92,453 ) (993,756 ) 552,363 Allocated tax (benefit)/expense (349,515 ) (35,095 ) (349,515 ) 209,678 Operating income/(loss) from discontinued operations 145,293 (57,358 ) (644,241 ) 342,685 Gain on sale, net of related income taxes 15,096,666 — 15,096,666 — Net income/(loss) from discontinued operations $ 15,241,959 $ (57,358 ) $ 14,452,425 $ 342,685 The following table presents a summary of the transactions related to the sale. September 30, 2017 (unaudited) Sale price $ 33,500,000 Less: transition services payments (1,500,000 ) Adjusted purchase price 32,000,000 Assets held for sale (16,851,540 ) Liabilities held for sale 2,330,052 Transaction costs (873,473 ) Income tax expense (1,508,373 ) Gain on sale of discontinued operations $ 15,096,666 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Components of Inventory | Components of inventory were as follows: September 30, December 31, (unaudited) Finished goods $ 2,234,828 $ 1,952,885 Work-in-process 844,083 714,867 Raw materials 4,221,124 4,181,083 Total inventory $ 7,300,035 $ 6,848,835 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities at September 30, 2017 and December 31, 2016 consisted of the following: September 30, 2017 December 31, 2016 (unaudited) Accrued compensation $ 4,377,850 $ 4,742,760 Income tax payable 1,027,687 — Claims reserve 1,727,123 1,577,123 Transition services 900,000 — Accrued sub-contracts 581,544 483,477 Accrued professional fees 70,308 67,719 Deferred rent 141,500 155,138 Royalties 263,625 345,895 Warranty reserve 212,849 185,125 Accrued liabilities - other 284,068 356,307 Total accrued liabilities $ 9,586,554 $ 7,913,544 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of Debt Outstanding | The following table presents a summary of debt outstanding as of September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 (unaudited) Silicon Valley Bank Term Loan $ 2,916,666 $ 4,291,666 Less: unamortized debt issuance costs 26,070 38,301 Less: current portion 1,833,333 1,833,333 Total long-term debt $ 1,057,263 $ 2,420,032 |
Schedule of Remaining Principal Payments Under the Term Loan | The schedule of remaining principal payments under our Term Loans as of September 30, 2017 was as follows: 2017 $ 458,333 2018 1,833,333 2019 625,000 $ 2,916,666 |
Capital Stock and Share-Based21
Capital Stock and Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Summary of Stock Option Activity | A summary of the stock option activity for the nine months ended September 30, 2017 is presented below: Options Outstanding Options Exercisable Number of Shares Price per Share Weighted Average Exercise Price Aggregate Intrinsic Value (1) Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value (1) Balance, January 1, 2017 2,857,114 $0.61 - $6.83 $ 1.89 $ 107,063 2,367,630 $ 1.93 $ 101,071 Granted 80,000 $1.51 - $1.54 $ 1.53 Exercised (31,953 ) $0.82 - $1.38 $ 0.95 Canceled (170,590 ) $1.40 - $6.83 $ 2.27 Balance, September 30, 2017 2,734,571 $0.61 - $6.55 $ 1.87 $ 585,292 2,619,914 $ 1.88 $ 555,926 (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. |
Summary of Restricted Stock Awards and Units | The following table summarizes the value of our unvested restricted stock awards: Number of Unvested Shares Weighted Average Grant Date Fair Value Aggregate Value of Unvested Shares Balance, January 1, 2017 829,998 $ 1.19 $ 988,763 Granted 428,865 $ 1.54 660,752 Vested (442,498 ) $ 1.20 (531,853 ) Repurchased — $ — — Forfeitures (51,667 ) $ 1.14 (58,917 ) Balance, September 30, 2017 764,698 $ 1.38 $ 1,058,745 The following is a summary of our RSU activity for the nine months ended September 30, 2017 : Number of RSUs Intrinsic Value Issued Unvested Weighted Average Grant Date Fair Value per Share Outstanding Unvested Balance, January 1, 2017 393,012 — $1.37 $ 577,728 $ — Granted 55,748 — $1.57 Vested — — $0.00 Forfeitures — — $0.00 Converted — — $0.00 Balance, September 30, 2017 448,760 — $1.39 $ 758,404 $ — |
Details of Equity Transactions | The following details our equity transactions during the nine months ended September 30, 2017 : Preferred Stock Common Stock Treasury Stock Additional Paid-in Capital Shares $ Shares $ Shares $ $ Balance, January 1, 2017 1,321,514 1,322 27,541,277 28,600 446,827 (517,987 ) 82,451,958 Exercise of stock options — — 31,953 32 — — 819 Share-based compensation — — 299,000 299 — — 476,128 Non-cash compensation — — 135,497 136 — — 178,035 Stock dividends to Carilion Clinic (1) — — — 59 — — 97,271 Forfeitures of restricted stock grants — — (51,667 ) (52 ) — — — Repurchase of common stock — — (141,000 ) — 141,000 (228,020 ) 52 Balance, September 30, 2017 1,321,514 1,322 27,815,060 29,074 587,827 (746,007 ) 83,204,263 (1) The stock dividends payable in connection with Carilion Clinic’s Series A Preferred Stock will be issued subsequent to September 30, 2017 . For the period from January 12, 2010, the original issue date of the Series A Preferred Stock, through September 30, 2017 , the Series A Preferred Stock issued to Carilion has accrued $1,110,773 in dividends. The accrued and unpaid dividends as of September 30, 2017 will be paid by the issuance of 611,870 shares of our common stock upon Carilion’s written request. |
Operating Segments (Tables)
Operating Segments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Revenues, Operating Income (Loss) and Assets for Reportable Segments | The table below presents revenues and operating income/(loss) for reportable segments: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (unaudited) (unaudited) Revenues: Technology development $ 4,590,054 $ 4,118,245 $ 13,428,428 $ 11,772,731 Products and licensing 7,052,094 7,066,908 19,593,648 18,301,631 Total revenues $ 11,642,148 $ 11,185,153 $ 33,022,076 $ 30,074,362 Technology development operating income/(loss) $ 182,776 $ 139,134 $ (77,323 ) $ (253,833 ) Products and licensing operating income/(loss) 260,100 (409,835 ) (74,758 ) (2,699,294 ) Total operating income/(loss) $ 442,876 $ (270,701 ) $ (152,081 ) $ (2,953,127 ) Depreciation, technology development $ 87,389 $ 87,884 $ 267,282 $ 264,549 Depreciation, products and licensing $ 117,219 $ 300,530 $ 688,700 $ 827,661 Amortization, technology development $ 28,935 $ 23,651 $ 95,540 $ 141,490 Amortization, products and licensing $ 247,522 $ 486,209 $ 1,178,113 $ 1,526,177 Products and licensing depreciation includes amounts from discontinued operations of $0.1 million and $0.2 million for the three months ended September 30, 2017 and 2016 , respectively. Products and licensing amortization includes amounts from discontinued operations of $0.1 million and $0.4 million for the three months ended September 30, 2017 and 2016 , respectively. Products and licensing depreciation includes amounts from discontinued operations of $0.4 million and $0.5 million for the nine months ended September 30, 2017 and 2016 , respectively. Products and licensing amortization includes amounts from discontinued operations of $0.9 million and $1.2 million for the nine months ended September 30, 2017 and 2016 , respectively. The table below presents assets for reportable segments: September 30, December 31, (unaudited) Total segment assets: Technology development $ 30,738,481 $ 16,923,090 Products and licensing 35,870,670 38,073,883 Total assets $ 66,609,151 $ 54,996,973 Property plant and equipment, and intangible assets, technology development $ 2,427,556 $ 2,602,803 Property plant and equipment, and intangible assets, products and licensing $ 4,484,498 $ 4,749,144 |
Basis of Presentation and Sig23
Basis of Presentation and Significant Accounting Policies (Details) shares in Millions | Jan. 01, 2018USD ($) | Sep. 30, 2017USD ($)shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2017USD ($)segmentshares | Sep. 30, 2016USD ($)shares |
Accounting Policies [Abstract] | |||||
Number of reportable segments | segment | 2 | ||||
Common stock equivalents included in diluted per share data (in shares) | shares | 5 | ||||
Antidilutive securities excluded from computation of net loss per share (in shares) | shares | 5.6 | 4.9 | 5.7 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Approximate revenues | $ | $ 11,642,148 | $ 11,185,153 | $ 33,022,076 | $ 30,074,362 | |
Retained Earnings | Scenario, Forecast | Accounting Standards Update 2016-10 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Approximate revenues | $ | $ 10,000,000 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) | Aug. 09, 2017USD ($)employee | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sales of discontinued operations | $ 28,026,528 | $ 0 | ||||
Transition services | $ 900,000 | $ 900,000 | 900,000 | $ 0 | ||
Cash flows provided by/(used in) operating activities for discontinued operations | (800,000) | 200,000 | ||||
Cash flows used in investing activities for discontinued operations | 27,100,000 | $ (1,400,000) | ||||
High Speed Optical Receivers Business | Disposed of by Sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Initial purchase price | $ 33,500,000 | 33,500,000 | 33,500,000 | 33,500,000 | ||
Proceeds from sales of discontinued operations | 29,500,000 | |||||
Placed in escrow | $ 4,000,000 | |||||
Number of employees expected to be hired by buyer | employee | 49 | |||||
Transition costs, monthly payment | $ 300,000 | |||||
Transition period | 5 months | |||||
Total transition costs | $ 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | ||
Transition costs paid | 600,000 | |||||
Transition services | $ 900,000 | $ 900,000 | $ 900,000 | |||
High Speed Optical Receivers Business | Disposed of by Sale | Product Concentration Risk | Revenues | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Concentration risk | 8.20% | 16.10% | ||||
High Speed Optical Receivers Business | Disposed of by Sale | Product Concentration Risk | Cost of Revenues | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Concentration risk | 10.10% | 18.50% |
Discontinued Operations - Summa
Discontinued Operations - Summary of Transactions Related to Sale (Details) - USD ($) | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Aug. 09, 2017 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Income tax expense | $ (1,508,373) | $ 0 | $ (1,508,373) | $ 0 | ||
Gain on sale, net of related income taxes | 15,096,666 | $ 0 | 15,096,666 | $ 0 | ||
High Speed Optical Receivers Business | Disposed of by Sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Sale price | $ 33,500,000 | 33,500,000 | 33,500,000 | $ 33,500,000 | ||
Less: transition services payments | (1,500,000) | (1,500,000) | (1,500,000) | $ (1,500,000) | ||
Adjusted purchase price | 32,000,000 | $ 32,000,000 | $ 32,000,000 | |||
Assets held for sale | (16,851,540) | |||||
Liabilities held for sale | 2,330,052 | |||||
Transaction costs | (873,473) | |||||
Income tax expense | (1,508,373) | |||||
Gain on sale, net of related income taxes | $ 15,096,666 |
Discontinued Operations - Asset
Discontinued Operations - Assets and Liabilities Held For Sale (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Total current assets | $ 0 | $ 5,801,629 |
Total non-current assets | 0 | 10,509,282 |
Current liabilities: | ||
Total current liabilities | 0 | 2,376,703 |
Total non-current liabilities | $ 0 | 84,555 |
Held for Sale | ||
Current assets: | ||
Accounts receivable, net | 4,028,713 | |
Inventory | 1,521,400 | |
Prepaid expenses and other current assets | 251,516 | |
Total current assets | 5,801,629 | |
Property and equipment, net | 3,298,151 | |
Intangible assets, net | 5,314,046 | |
Goodwill | 1,846,331 | |
Other assets | 50,754 | |
Total non-current assets | 10,509,282 | |
Total assets held for sale | 16,310,911 | |
Current liabilities: | ||
Accounts payable | 1,511,450 | |
Accrued liabilities | 753,556 | |
Deferred revenue | 111,697 | |
Total current liabilities | 2,376,703 | |
Long-term deferred rent | 84,555 | |
Total non-current liabilities | 84,555 | |
Total liabilities held for sale | $ 2,461,258 |
Discontinued Operations - Compo
Discontinued Operations - Components of Income from Discontinued Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||||
Net revenues | $ 1,041,310 | $ 3,433,767 | $ 6,356,237 | $ 13,178,475 |
Cost of revenues | 797,678 | 2,182,495 | 4,599,042 | 8,687,783 |
Operating expenses | 447,854 | 1,342,117 | 2,750,951 | 3,901,685 |
Other expenses | 0 | (1,608) | 0 | (36,644) |
(Loss)/income before income taxes | (204,222) | (92,453) | (993,756) | 552,363 |
Allocated tax (benefit)/expense | (349,515) | (35,095) | (349,515) | 209,678 |
Operating income/(loss) from discontinued operations | 145,293 | (57,358) | (644,241) | 342,685 |
Gain on sale, net of related income taxes | 15,096,666 | 0 | 15,096,666 | 0 |
Net income/(loss) from discontinued operations | $ 15,241,959 | $ (57,358) | $ 14,452,425 | $ 342,685 |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 2,234,828 | $ 1,952,885 |
Work-in-process | 844,083 | 714,867 |
Raw materials | 4,221,124 | 4,181,083 |
Total inventory | $ 7,300,035 | $ 6,848,835 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 4,377,850 | $ 4,742,760 |
Income tax payable | 1,027,687 | 0 |
Claims reserve | 1,727,123 | 1,577,123 |
Transition services | 900,000 | 0 |
Accrued sub-contracts | 581,544 | 483,477 |
Accrued professional fees | 70,308 | 67,719 |
Deferred rent | 141,500 | 155,138 |
Royalties | 263,625 | 345,895 |
Warranty reserve | 212,849 | 185,125 |
Accrued liabilities - other | 284,068 | 356,307 |
Total accrued liabilities | $ 9,586,554 | $ 7,913,544 |
Debt - Additional Information (
Debt - Additional Information (Details) | May 08, 2015USD ($)installment | Sep. 30, 2015USD ($)installment | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | ||||
Aggregate term loan balance | $ 2,916,666 | $ 4,291,666 | ||
Term Loan | Silicon Valley Bank | ||||
Debt Instrument [Line Items] | ||||
Debt, face amount | $ 6,000,000 | |||
Debt, number of monthly payment | installment | 48 | |||
Early termination fee | 2.00% | |||
Effective interest rate | 6.25% | |||
Term Loan | Silicon Valley Bank | Prime Rate | ||||
Debt Instrument [Line Items] | ||||
Debt, additional interest above prime rate | 2.00% | |||
Term Loan | Silicon Valley Bank | Sixth Loan Modification Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt, monthly principal payments | $ 125,000 | |||
Term Loan | Silicon Valley Bank | Seventh Loan Modification Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt, face amount | $ 1,000,000 | |||
Debt, number of monthly payment | installment | 35 | |||
Debt, monthly principal payments | $ 27,778 | |||
Debt, additional interest above prime rate | 2.00% | |||
Minimum cash balance | $ 4,000,000 | |||
Liquidity covenant component, accounts receivable percentage | 60.00% | |||
Liquidity covenant component, outstanding principal loan balance multiplier | 1.5 |
Debt - Summary of Debt Outstand
Debt - Summary of Debt Outstanding (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Silicon Valley Bank Term Loan | $ 2,916,666 | $ 4,291,666 |
Less: unamortized debt issuance costs | 26,070 | 38,301 |
Less: current portion | 1,833,333 | 1,833,333 |
Long-term debt obligations | $ 1,057,263 | $ 2,420,032 |
Debt - Remaining Principal Paym
Debt - Remaining Principal Payments Under the Term Loan (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,017 | $ 458,333 | |
2,018 | 1,833,333 | |
2,019 | 625,000 | |
Silicon Valley Bank Term Loan | $ 2,916,666 | $ 4,291,666 |
Capital Stock and Share-Based33
Capital Stock and Share-Based Compensation - Additional Information (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Equity [Abstract] | |||
Expected dividend yield | 0.00% | ||
Aggregate outstanding stock options (in shares) | 2,734,571 | 2,857,114 | |
Outstanding stock options, weighted average remaining contractual term | 4 years 5 months | ||
Exercisable stock options (in shares) | 2,619,914 | 2,367,630 | |
Exercisable stock options, weighted average remaining contractual term | 4 years 3 months | ||
Share-based compensation | $ 476,428 | $ 665,354 | |
Stock-based compensation expense not yet recognized | $ 100,000 | ||
Weighted average remaining service period | 1 year 9 months |
Capital Stock and Share-Based34
Capital Stock and Share-Based Compensation - Summary of Activity of Equity Incentive Plans (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Options Outstanding, Number of Shares | ||
Beginning Balance (shares) | 2,857,114 | |
Granted (in shares) | 80,000 | |
Exercised (in shares) | (31,953) | |
Canceled (in shares) | (170,590) | |
Ending Balance (shares) | 2,734,571 | 2,857,114 |
Price per Share Range | ||
Outstanding, lower limit (in dollars per share) | $ 0.61 | $ 0.61 |
Outstanding, upper limit (in dollars per share) | 6.83 | 6.83 |
Granted, lower limit (in dollars per share) | 1.51 | |
Granted, upper limit (in dollars per share) | 1.54 | |
Exercised (in dollars per share) | 0.82 | |
Canceled, lower limit (in dollars per share) | 1.40 | |
Canceled, upper limit (in dollars per share) | 3.69 | |
Options Outstanding, Weighted Average Exercise Price | ||
Beginning Balance (in dollars per share) | 1.89 | |
Granted (in dollars per share) | 1.53 | |
Exercised (in dollars per share) | 0.95 | |
Canceled (in dollars per share) | 2.27 | |
Ending Balance (in dollars per share) | $ 1.87 | $ 1.89 |
Additional Disclosures | ||
Options Outstanding, Aggregate Intrinsic Value | $ 585,292 | $ 107,063 |
Options Exercisable, Number of Shares (in shares) | 2,619,914 | 2,367,630 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 1.88 | $ 1.93 |
Options Exercisable, Aggregate Intrinsic Value | $ 555,926 | $ 101,071 |
Capital Stock and Share-Based35
Capital Stock and Share-Based Compensation - Summary of Restricted Stock Awards (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Number of Unvested Shares | |
Beginning balance (in shares) | shares | 829,998 |
Granted (in shares) | shares | 428,865 |
Vested (in shares) | shares | (442,498) |
Repurchased (in shares) | shares | 0 |
Forfeitures (in shares) | shares | (51,667) |
Ending balance (in shares) | shares | 764,698 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in usd per share) | $ / shares | $ 1.19 |
Granted (in usd per share) | $ / shares | 1.54 |
Vested (in usd per share) | $ / shares | 1.20 |
Repurchased (in usd per share) | $ / shares | 0 |
Forfeitures (in usd per share) | $ / shares | 1.14 |
Ending balance (in usd per share) | $ / shares | $ 1.38 |
Aggregate Value of Unvested Shares | |
Aggregate value of shares, Beginning balance | $ | $ 988,763 |
Aggregate value of shares, Granted | $ | 660,752 |
Aggregate value of shares, Vested | $ | (531,853) |
Aggregate value of shares, Repurchased | $ | 0 |
Aggregate value of shares, Forfeitures | $ | (58,917) |
Aggregate value of shares, Ending balance | $ | $ 1,058,745 |
Capital Stock and Share-Based36
Capital Stock and Share-Based Compensation - Summary of Restricted Stock Units (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Number of Unvested Shares | ||
Beginning balance (in shares) | 829,998 | |
Granted (in shares) | 428,865 | |
Vested (in shares) | (442,498) | |
Forfeitures (in shares) | (51,667) | |
Ending balance (in shares) | 764,698 | |
Weighted Average Grant Date Fair Value | ||
Beginning balance (in usd per share) | $ 1.19 | |
Granted (in usd per share) | 1.54 | |
Vested (in usd per share) | 1.20 | |
Forfeitures (in usd per share) | 1.14 | |
Ending balance (in usd per share) | $ 1.38 | |
Intrinsic value, outstanding | $ 1,058,745 | $ 988,763 |
Restricted Stock Units (RSUs) | Employee Director Compensation Plan | ||
Number of RSUs | ||
Beginning balance (in shares) | 393,012 | |
Granted (in shares) | 55,747.85 | |
Vested (in shares) | 0 | |
Forfeitures (in shares) | 0 | |
Converted (in shares) | 0 | |
Ending balance (in shares) | 448,760 | |
Number of Unvested Shares | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 0 | |
Vested (in shares) | 0 | |
Forfeitures (in shares) | 0 | |
Converted (in shares) | 0 | |
Ending balance (in shares) | 0 | |
Weighted Average Grant Date Fair Value | ||
Beginning balance (in usd per share) | $ 1.37 | |
Granted (in usd per share) | 1.57 | |
Vested (in usd per share) | 0 | |
Forfeitures (in usd per share) | 0 | |
Converted (in usd per share) | 0 | |
Ending balance (in usd per share) | $ 1.39 | |
Intrinsic value, outstanding | $ 758,404 | 577,728 |
Intrinsic value, unvested | $ 0 | $ 0 |
Capital Stock and Share-Based37
Capital Stock and Share-Based Compensation - Equity Transactions (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 13 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | May 31, 2017 | |
Increase (Decrease) in Stockholders' Equity | |||
Stockholder's equity beginning balance | $ 35,089,688 | ||
Preferred stock beginning balance (in shares) | 1,321,514 | ||
Common stock beginning balance (in shares) | 27,541,277 | ||
Treasury stock beginning balance (in shares) | 446,827 | ||
Exercise of stock options (in shares) | 31,953 | ||
Repurchase of common stock (in shares) | (50,100) | (205,500) | |
Preferred stock ending balance (in shares) | 1,321,514 | 1,321,514 | |
Common stock ending balance (in shares) | 27,815,060 | 27,815,060 | |
Treasury stock ending balance (in shares) | 587,827 | 587,827 | |
Stockholder's equity ending balance | $ 49,696,716 | $ 49,696,716 | |
Carilion Clinic | Series A Preferred Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Accrued dividends | $ 1,110,773 | $ 1,110,773 | |
Stock dividends for preferred shareholders (in shares) | 611,870 | ||
Preferred Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Stockholder's equity beginning balance | $ 1,322 | ||
Preferred stock beginning balance (in shares) | 1,321,514 | ||
Exercise of stock options | $ 0 | ||
Exercise of stock options (in shares) | 0 | ||
Share-based compensation | $ 0 | ||
Share-based compensation (in shares) | 0 | ||
Non-cash compensation | $ 0 | ||
Non-cash compensation (in shares) | 0 | ||
Stock dividends to Carilion Clinic | $ 0 | ||
Stock dividends to Carilion Clinic (in shares) | 0 | ||
Forfeitures of restricted stock grants | $ 0 | ||
Forfeitures of restricted stock grants (in shares) | 0 | ||
Repurchase of common stock | $ 0 | ||
Repurchase of common stock (in shares) | 0 | ||
Preferred stock ending balance (in shares) | 1,321,514 | 1,321,514 | |
Stockholder's equity ending balance | $ 1,322 | $ 1,322 | |
Common Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Stockholder's equity beginning balance | $ 28,600 | ||
Common stock beginning balance (in shares) | 27,541,277 | ||
Exercise of stock options | $ 32 | ||
Exercise of stock options (in shares) | 31,953 | ||
Share-based compensation | $ 299 | ||
Share-based compensation (in shares) | 299,000 | ||
Non-cash compensation | $ 136 | ||
Non-cash compensation (in shares) | 135,497 | ||
Stock dividends to Carilion Clinic | $ 59 | ||
Stock dividends to Carilion Clinic (in shares) | 0 | ||
Forfeitures of restricted stock grants | $ (52) | ||
Forfeitures of restricted stock grants (in shares) | (51,667) | ||
Repurchase of common stock | $ 0 | ||
Repurchase of common stock (in shares) | (141,000) | ||
Common stock ending balance (in shares) | 27,815,060 | 27,815,060 | |
Stockholder's equity ending balance | $ 29,074 | $ 29,074 | |
Treasury Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Stockholder's equity beginning balance | $ (517,987) | ||
Treasury stock beginning balance (in shares) | 446,827 | ||
Exercise of stock options | $ 0 | ||
Exercise of stock options (in shares) | 0 | ||
Share-based compensation | $ 0 | ||
Share-based compensation (in shares) | 0 | ||
Non-cash compensation | $ 0 | ||
Non-cash compensation (in shares) | 0 | ||
Stock dividends to Carilion Clinic | $ 0 | ||
Stock dividends to Carilion Clinic (in shares) | 0 | ||
Forfeitures of restricted stock grants | $ 0 | ||
Forfeitures of restricted stock grants (in shares) | 0 | ||
Repurchase of common stock | $ (228,020) | ||
Repurchase of common stock (in shares) | 141,000 | ||
Treasury stock ending balance (in shares) | 587,827 | 587,827 | |
Stockholder's equity ending balance | $ (746,007) | $ (746,007) | |
Additional Paid-in Capital | |||
Increase (Decrease) in Stockholders' Equity | |||
Stockholder's equity beginning balance | 82,451,958 | ||
Exercise of stock options | 819 | ||
Share-based compensation | 476,128 | ||
Non-cash compensation | 178,035 | ||
Stock dividends to Carilion Clinic | 97,271 | ||
Forfeitures of restricted stock grants | 0 | ||
Repurchase of common stock | 52 | ||
Stockholder's equity ending balance | $ 83,204,263 | $ 83,204,263 |
Capital Stock and Share-Based38
Capital Stock and Share-Based Compensation - Stock Repurchase Program (Details) - USD ($) | 1 Months Ended | 13 Months Ended | |
Sep. 30, 2017 | May 31, 2017 | May 31, 2016 | |
Equity [Abstract] | |||
Authorized share repurchase amount | $ 2,000,000 | $ 2,000,000 | |
Treasury shares repurchased (in shares) | 50,100 | 205,500 | |
Amount of stock repurchased | $ 100,000 | $ 200,000 |
Operating Segments - Additional
Operating Segments - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | Aug. 09, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting [Abstract] | ||||||
Number of operating segments | segment | 2 | |||||
Revenues | Government Contracts Concentration Risk | U.S. Government | ||||||
Segment Reporting Information [Line Items] | ||||||
Percentage of total consolidated revenues by customer | 45.00% | 39.00% | 45.00% | 42.00% | ||
Revenues | Geographic Concentration Risk | Outside of the United States | ||||||
Segment Reporting Information [Line Items] | ||||||
Percentage of total consolidated revenues by customer | 19.00% | 15.00% | 20.00% | 18.00% | ||
Disposed of by Sale | High Speed Optical Receivers Business | ||||||
Segment Reporting Information [Line Items] | ||||||
Sale price | $ 33,500,000 | $ 33,500,000 | $ 33,500,000 | |||
Placed in escrow | $ 4,000,000 | |||||
Held for Sale | ||||||
Segment Reporting Information [Line Items] | ||||||
Assets held for sale | $ 16,310,911 | |||||
Products and licensing | ||||||
Segment Reporting Information [Line Items] | ||||||
Depreciation | 117,219 | $ 300,530 | 688,700 | $ 827,661 | ||
Amortization | 247,522 | 486,209 | 1,178,113 | 1,526,177 | ||
Products and licensing | Discontinued Operations | ||||||
Segment Reporting Information [Line Items] | ||||||
Depreciation | 100,000 | 200,000 | 400,000 | 500,000 | ||
Amortization | $ 100,000 | $ 400,000 | $ 900,000 | $ 1,200,000 | ||
Products and licensing | Held for Sale | ||||||
Segment Reporting Information [Line Items] | ||||||
Assets held for sale | $ 16,300,000 |
Operating Segments - Revenues a
Operating Segments - Revenues and Operating Income (Loss) for Reportable Segments Not Including Discontinued Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Technology development | $ 4,590,054 | $ 4,118,245 | $ 13,428,428 | $ 11,772,731 |
Products and licensing | 7,052,094 | 7,066,908 | 19,593,648 | 18,301,631 |
Total revenues | 11,642,148 | 11,185,153 | 33,022,076 | 30,074,362 |
Segment Reporting Information [Line Items] | ||||
Total operating income (loss) | 442,876 | (270,701) | (152,081) | (2,953,127) |
Technology development | ||||
Segment Reporting Information [Line Items] | ||||
Total operating income (loss) | 182,776 | 139,134 | (77,323) | (253,833) |
Depreciation | 87,389 | 87,884 | 267,282 | 264,549 |
Amortization | 28,935 | 23,651 | 95,540 | 141,490 |
Products and licensing | ||||
Segment Reporting Information [Line Items] | ||||
Total operating income (loss) | 260,100 | (409,835) | (74,758) | (2,699,294) |
Depreciation | 117,219 | 300,530 | 688,700 | 827,661 |
Amortization | $ 247,522 | $ 486,209 | $ 1,178,113 | $ 1,526,177 |
Operating Segments - Assets for
Operating Segments - Assets for Reportable Segments (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Total segment assets: | ||
Total assets | $ 66,609,151 | $ 54,996,973 |
Property plant and equipment, and intangible assets | 3,145,769 | 3,482,687 |
Technology development | ||
Total segment assets: | ||
Total assets | 30,738,481 | 16,923,090 |
Property plant and equipment, and intangible assets | 2,427,556 | 2,602,803 |
Products and licensing | ||
Total segment assets: | ||
Total assets | 35,870,670 | 38,073,883 |
Property plant and equipment, and intangible assets | $ 4,484,498 | $ 4,749,144 |
Contingencies and Guarantees (D
Contingencies and Guarantees (Details) | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2017USD ($) | Sep. 30, 2016USD ($)purchase_order | Sep. 30, 2017USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Loss Contingencies [Line Items] | |||||
Number of non-cancelable purchase orders executed | purchase_order | 2 | ||||
Non-cancelable purchase order delivery period | 18 months | ||||
Tunable Lasers | |||||
Loss Contingencies [Line Items] | |||||
Non-cancelable purchase order commitment | $ 1,400,000 | ||||
Non-cancelable purchase order commitment remaining | $ 300,000 | ||||
Preliminary Audit Report | Defense Contract Audit Agency | |||||
Loss Contingencies [Line Items] | |||||
Claimed cost, subject to potential penalty | $ 1,100,000 | $ 800,000 | |||
Litigation settlement, offered, amount | $ 150,000 |