Luna Innovations (LUNA) 10-Q 9 Nov 20 2020 Q3 Quarterly report Financial data

Cover page

Cover page - shares	9 Months Ended
	Sep. 30, 2020	Nov. 06, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	000-52008
Entity Registrant Name	LUNA INNOVATIONS INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	54-1560050
Entity Address, Address Line One	301 First Street SW
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Roanoke
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	24011
City Area Code	540
Local Phone Number	769-8400
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	LUNA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		30,838,060
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001239819
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 26,422	$ 25,006
Accounts receivable, net	18,254	16,269
Receivable from sale of HSOR business	0	2,501
Contract assets	4,219	2,759
Inventory, net	11,713	10,294
Prepaid expenses and other current assets	3,268	1,287
Total current assets	63,876	58,116
Property and equipment, net	2,111	3,466
Intangible assets, net	9,193	10,194
Goodwill	10,542	10,542
Long-term contract assets	577	449
Other assets	7,855	2,341
Deferred tax asset	1,729	1,416
Total assets	95,883	86,524
Current liabilities:
Accounts payable	3,177	2,787
Accrued liabilities	7,716	10,369
Contract liabilities	3,721	3,888
Total current liabilities	14,614	17,044
Other long-term liabilities	7,761	2,011
Total liabilities	22,375	19,055
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, par value $0.001, 100,000,000 shares authorized, 32,510,506 and 31,788,896 shares issued, 30,823,065 and 30,149,105 shares outstanding at September 30, 2020 and December 31, 2019, respectively	33	32
Treasury stock at cost, 1,687,441 and 1,639,791 shares at September 30, 2020 and December 31, 2019, respectively	(4,666)	(4,337)
Additional paid-in capital	91,034	88,022
Accumulated deficit	(12,893)	(16,248)
Total stockholders’ equity	73,508	67,469
Total liabilities and stockholders’ equity	$ 95,883	$ 86,524

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
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)	32,510,506	31,788,896
Common stock, outstanding (in shares)	30,823,065	30,149,105
Treasury stock (in shares)	1,687,441	1,639,791

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Total revenues	$ 21,050	$ 18,389	$ 56,766	$ 51,036
Cost of revenues:
Total cost of revenues	10,101	9,114	27,936	26,241
Gross profit	10,949	9,275	28,830	24,795
Operating expense:
Selling, general and administrative	6,505	5,746	19,085	17,955
Research, development and engineering	1,616	2,047	4,717	5,241
Loss on sale of property and equipment	576	0	576	0
Total operating expense	8,697	7,793	24,378	23,196
Operating income	2,252	1,482	4,452	1,599
Other income/(expense):
Investment income	1	76	65	324
Other income/(expense)	14	1	19	(5)
Interest expense	(1)	(4)	(2)	(15)
Total other income	14	73	82	304
Income from continuing operations before income taxes	2,266	1,555	4,534	1,903
Income tax (benefit)/expense	(836)	325	(257)	(1,293)
Net income from continuing operations	3,102	1,230	4,791	3,196
Loss from discontinued operations, net of income tax of $464	0	0	(1,436)	0
Net income	3,102	1,230	3,355	3,196
Preferred stock dividend	$ 0	113	0	285
Net income attributable to common stockholders		$ 1,117	$ 3,355	$ 2,911
Net income per share from continuing operations:
Basic (in dollars per share)	$ 0.10	$ 0.04	$ 0.16	$ 0.11
Diluted (in dollars per share)	0.10	0.04	0.15	0.10
Net loss per share from discontinued operations:
Basic (in dollars per share)	0	0	(0.05)	0
Diluted (in dollars per share)	0	0	(0.04)	0
Net income per share attributable to common stockholders:
Basic (in dollars per share)	0.10	0.04	0.11	0.10
Diluted (in dollars per share)	$ 0.10	$ 0.03	$ 0.10	$ 0.09
Weighted average shares:
Basic (in shares)	30,809,896	28,291,297	30,593,954	28,193,330
Diluted (in shares)	32,411,086	32,115,847	32,478,625	31,768,575
Lightwave
Revenues:
Total revenues	$ 15,350	$ 13,088	$ 39,837	$ 35,129
Cost of revenues:
Total cost of revenues	5,670	5,449	15,736	15,063
Operating expense:
Operating income	2,509	859	3,654	667
Luna Labs
Revenues:
Total revenues	5,700	5,301	16,929	15,907
Cost of revenues:
Total cost of revenues	4,431	3,665	12,200	11,178
Operating expense:
Operating income	$ (257)	$ 623	$ 798	$ 932

Consolidated Statements of Op_2

Consolidated Statements of Operations (Unaudited) (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2020USD ($)
Income Statement [Abstract]
Tax benefit from loss on sale of discontinued operations	$ 464

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows provided by operating activities
Net income	$ 3,355	$ 3,196
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	2,126	1,835
Share-based compensation	1,538	1,140
Bad debt expense	147	0
Loss on sale of property and equipment	576	0
Loss from discontinued operations, net of tax	1,436	0
Deferred taxes	(313)	0
Tax benefit from release of valuation allowance	0	(1,889)
Change in assets and liabilities
Accounts receivable	(2,131)	(2,238)
Contract assets	(1,589)	(1,106)
Inventory	(1,419)	(73)
Other current assets	(1,982)	(74)
Other long term assets	0	(339)
Accounts payable and accrued expenses	(1,481)	(114)
Contract liabilities	(166)	747
Net cash provided by operating activities	97	1,085
Cash flows provided by/(used in) investing activities
Acquisition of property and equipment	(422)	(501)
Intangible property costs	(291)	(192)
Proceeds from sale of property and equipment	403	0
Proceeds from sale of discontinued operations	600	0
Acquisition of General Photonics Corporation	0	(19,004)
Net cash provided by/(used in) investing activities	290	(19,697)
Cash flows provided by/(used in) financing activities
Payments on finance lease obligations	(39)	(27)
Payments of debt obligations	0	(625)
Repurchase of common stock	(329)	(2,220)
Proceeds from the exercise of options and warrants	1,397	438
Net cash provided by/(used in) financing activities	1,029	(2,434)
Net increase/(decrease) in cash and cash equivalents	1,416	(21,046)
Cash and cash equivalents—beginning of period	25,006	42,460
Cash and cash equivalents—end of period	26,422	21,414
Supplemental disclosure of cash flow information
Cash paid for interest	3	17
Cash paid for income taxes	2,000	735
Non-cash investing and financing activities
Contingent liability for business combination	0	940
Dividend on preferred stock, 59,469 shares of common stock issuable for the nine months ended September 30, 2019	$ 0	$ 285

Consolidated Statements of Ca_2

Consolidated Statements of Cash Flows (Unaudited) (Parenthetical)	9 Months Ended
	Sep. 30, 2019shares
Statement of Cash Flows [Abstract]
Dividend on preferred stock, shares of common stock issuable (in shares)	59,469

Basis of Presentation and Signi

Basis of Presentation and Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
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 high performance fiber optic test, measurement and control products for the telecommunications and photonics industries and distributed fiber optic sensing products for industries utilizing composite and other advanced materials, such as the automotive, aerospace, energy and infrastructure industries. Our distributed fiber optic sensing products help designers and manufacturers more efficiently develop new and innovative products by providing valuable information such as highly detailed stress, strain, and temperature measurements of a new design or manufacturing process. In addition, our distributed fiber optic sensing products are used to monitor the structural integrity or operational health of critical assets, including large civil structures such as bridges. Our communications test and control products accelerate the development of advanced fiber optic components and networks by providing fast and highly accurate characterization of components and networks. We also provide applied research services, typically under research programs funded by the U.S. government, in areas of advanced materials, sensing, and healthcare applications. Our business model is designed to accelerate the process of bringing new and innovative products to market. We use our in-house technical expertise across a range of technologies to perform applied research services for companies and for government funded projects. We continue to invest in product development and commercialization, which we anticipate will lead to increased product sales growth. Unaudited Interim Financial Information The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 interim 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, 2020, results of operations and changes in stockholders' equity for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30, 2020 and 2019. The results of operations for the three and nine months ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The consolidated balance sheet as of December 31, 2019 was derived from our audited consolidated financial statements. The COVID-19 pandemic has resulted in a global slowdown of economic activity. While the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use reasonably available information to assess certain accounting matters including, but not limited to, accounts receivable, inventory and the carrying value of goodwill and other long-lived tangible and intangible assets. While the assessments have not resulted in any material impacts to our financial statements as of September 30, 2020, we believe the full impact of the pandemic remains uncertain and ongoing developments related to the pandemic may cause material impacts to our consolidated financial statements. 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, 2019, included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 13, 2020. Reclassifications Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net income or stockholders' equity. Goodwill and Intangible Assets Goodwill and intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis, as of October 1 of each year, or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Purchased intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives and reviewed for impairment as described above. 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 significant value drivers are observable. • Level 3—Valuations derived from valuation techniques in which significant value drivers are unobservable. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short-term nature of these instruments. The carrying amount of lease liabilities approximate fair value because these financial instruments bear interest at rates that approximate current market rates for similar agreements with similar maturities and credit. We consider the terms of the Silicon Valley Bank ("SVB") debt facility including its interest rate of prime plus 1%, to be at market based upon similar instruments that would be available to us. Reportable Segments We have two operating and reportable segments: Lightwave and Luna Labs. During the three months ended June 30, 2020, we changed our reportable segments to Lightwave and Luna Labs to align with how our Chief Operating Decision Maker (CODM) evaluates segment performance and allocates resources to the segments. Prior to the three months ended June 30, 2020, we reported under two different reporting segments, Products and Licensing and Technology Development. We have reflected these new segment measures beginning in the three months ended June 30, 2020 and prior periods have been restated for comparability. The Lightwave segment develops, manufactures and markets distributed fiber optic sensing products and fiber optic communications test and control products. The Luna Labs segment performs applied research principally in the areas of sensing and instrumentation, advanced materials and health sciences. Net Income Per Share Basic per share data is computed by dividing our net income by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income 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 effects of 1.6 million and 3.8 million common stock equivalents are included for the diluted per share data for the three months ended September 30, 2020 and 2019, respectively. The effects of 1.9 million and 3.6 million common stock equivalents are included for the diluted per share data for the nine months ended September 30, 2020 and 2019, respectively. Stock options and deferred stock units credited to our directors under our non-employee deferred compensation plan are included in our common stock equivalents for the three and nine months ended September 30, 2020 and 2019. In addition, accrued stock dividends and preferred stock are also included for the three and nine months ended September 30, 2019. Recently Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04 Simplifying the Test for Goodwill Impairment , which simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test which previously measured a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount. We adopted ASU 2017-04, effective January 1, 2020. As a result of adopting the new rules, we compare the estimated fair value of our reporting segments to their respective carrying values when evaluating the recoverability of goodwill. If the carrying value of a reporting unit exceeds its fair value, an impairment charge will be recognized for the amount by which its carrying value exceeds the reporting unit's fair value; however, the loss recognized will not exceed the goodwill allocated to the reporting unit. The adoption of ASU 2017-04 did not have a significant impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements in ASC 820 by adding, changing, or removing certain disclosures. The ASU applies to all entities that are required under this guidance to provide disclosures about recurring or nonrecurring fair value measurements. We adopted these amendments, effective January 1, 2020. The adoption of ASU 2018-13 did not have a significant impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU 2018-15, effective January 1, 2020. The adoption of ASU 2018-15 did not have a significant impact on our consolidated financial statements. Recently Issued Pronouncements, not yet adopted In December 2019, the FASB issued ASU 2019-12 Simplifying the Accounting for Income Taxes , which removes certain exceptions to the general principles of the accounting for income taxes and also improves consistent application of and simplification of other areas when accounting for income taxes. The guidance is effective for us beginning in the first quarter of fiscal year 2021, while early adoption is permitted. We are currently in the process of evaluating the impact of adoption of ASU 2019-12, but we do not expect the adoption of these new accounting rules to have a significant impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments, which requires companies to measure financial assets at an amortized cost basis to be presented at the net amount expected to be collected. The new accounting rules eliminate the probable initial recognition threshold and, instead, reflect an entity's current estimate of all expected credit losses. ASU 2016-13 is applicable to our trade receivables. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date for entities that qualify as a small reporting company. We have elected this extension and the effective date for us to adopt this standard will be for fiscal years beginning after December 15, 2022. We are currently in the process of evaluating the impact of ASU 2016-13, but we do not expect the adoption of these new accounting rules to have a significant impact on our consolidated financial statements.

Discontinued Operations

Discontinued Operations	9 Months Ended
	Sep. 30, 2020
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 Lightwave segment (and which was previously included in our Products and Licensing segment in prior periods), to an unaffiliated third party for an initial purchase price of $33.5 million, of which $29.5 million in cash was 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"). As of December 31, 2019, $1.5 million of the escrow had been received with $2.5 million remaining in escrow pending resolution of a dispute. In March 2020, we settled the dispute resulting in us receiving $0.6 million and the buyer receiving $1.9 million. We have recorded a loss from discontinued operations of $1.4 million, net of tax benefit, for the nine months ended September 30, 2020, to reflect the settlement of the dispute. There were no results from discontinued operations for the three months ended September 30, 2020 and 2019 or for the nine months ended September 30, 2019. The following table presents a summary of the transactions related to the sale of the HSOR business for the nine months ended September 30, 2020: Nine Months Ended September 30, 2020 (in thousands) Settlement of HSOR receivable $ 1,900 Loss on sale 1,900 Allocated income tax benefit (464) Loss from discontinued operations, net of related income tax $ 1,436

Intangible assets, net

Intangible assets, net	9 Months Ended
	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets, net	Intangible assets, net Intangible assets, net at September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 December 31, 2019 (in thousands) Patent costs $ 5,582 $ 5,291 Developed technology 9,800 9,800 In-process research & development 1,580 1,580 Customer base 700 700 Trade names and trademarks 550 550 18,212 17,921 Accumulated amortization (9,019) (7,727) $ 9,193 $ 10,194 Amortization expense for the three and nine months ended September 30, 2020 was $0.4 million and $1.3 million, respectively. Estimated aggregate amortization, based on the net value of intangible assets at September 30, 2020, for each of the next five years and beyond is as follows (amounts in thousands): Year Ending December 31, 2020 - remaining 3 months $ 425 2021 1,689 2022 1,539 2023 1,466 2024 1,276 2025 & beyond 2,798 Total $ 9,193

Goodwill

Goodwill	9 Months Ended
	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	Goodwill    Goodwill was approximately $10.5 million at September 30, 2020 and December 31, 2019 and has been allocated to the Lightwave segment.

Inventory, net

Inventory, net	9 Months Ended
	Sep. 30, 2020
Inventory Disclosure [Abstract]
Inventory, net	Inventory, netInventory 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 net realizable value. Components of inventory were as follows: September 30, December 31, (in thousands) Finished goods $ 2,211 $ 1,695 Work-in-process 1,238 1,008 Raw materials 8,264 7,591 Total inventory, net $ 11,713 $ 10,294

Accrued Liabilities

Accrued Liabilities	9 Months Ended
	Sep. 30, 2020
Payables and Accruals [Abstract]
Accrued Liabilities	Accrued Liabilities Accrued liabilities at September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 December 31, 2019 (in thousands) Accrued compensation $ 5,829 $ 6,416 Accrued professional fees 44 113 Accrued income tax — 716 Current operating lease liability 1,209 1,283 Current finance lease liability 18 50 Royalties 269 365 Accrued liabilities - other 347 426 Contingent liability - General Photonics — 1,000 Total accrued liabilities $ 7,716 $ 10,369

Debt

Debt	9 Months Ended
	Sep. 30, 2020
Debt Disclosure [Abstract]
Debt	Debt Silicon Valley Bank Facility We maintained a Loan and Security Agreement with SVB (the "Credit Facility") under which we had a term loan with an original borrowing amount of $6.0 million (the “Original Term Loan”). The Original Term Loan carried a floating annual interest rate equal to SVB’s prime rate then in effect plus 2%. The Original Term Loan matured and was repaid in May 2019. On October 10, 2019, we entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with SVB, which amended and restated in its entirety our previous Credit Facility. Under the Loan Agreement, SVB agreed to make advances available up to $10.0 million (the “Revolving Line”). If we borrow from the Revolving Line, such borrowing would carry a floating annual interest rate equal to the greater of (i) the Prime Rate (as defined in the Loan Agreement) then in effect plus 1% or (ii) 6%. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date (defined below), reborrowed. The Revolving Line terminates on October 10, 2020 (the “Revolving Line Maturity Date”), unless earlier terminated by us. As of September 30, 2020, no amounts have been borrowed under this Loan Agreement. We amended and restated the Loan Agreement on October 8, 2020, as described in Note 14 - Subsequent Event. Amounts due under the Loan Agreement are secured by our assets, including all personal property, inventory and bank accounts; however, intellectual property is not secured under the Loan Agreement. The inventory used to secure the amount due does not include demo or loaner equipment with an aggregate book value up to $1.0 million. The Loan Agreement requires us to observe a number of financial and operational covenants, including maintenance of a specified Liquidity Coverage Ratio (as defined in the Loan Agreement), protection and registration of intellectual property rights and customary negative covenants. 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, 2020, there were no events of default on the Credit Facility. On April 28, 2020, we were granted a loan (the "Loan") from SVB in the aggregate amount of $4.5 million, pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act, which was enacted March 27, 2020. On May 4, 2020, we returned the full amount of the proceeds of the Loan to SVB. The decision to return the proceeds was based on the revised guidance issued by the U.S. Department of Treasury and the Small Business Administration subsequent to our application for the Loan. Interest expense, net for the three and nine months ended September 30, 2020 and 2019 consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Interest expense on Term Loans $ — $ — $ — $ 8 Amortization of debt issuance costs — — — 1 Other interest expense 1 4 2 6 Total interest expense, net $ 1 $ 4 $ 2 $ 15

Leases

Leases	9 Months Ended
	Sep. 30, 2020
Leases [Abstract]
Leases	Leases We recognize right-of-use ("ROU") assets and lease liabilities on the balance sheet for those leases classified as operating or finance leases with terms greater than twelve months. We have operating leases for our facilities, which have remaining terms ranging from 1 to 10 years. Most of our leases do not have an option to extend the lease period beyond the stated term unless the new term is agreed to by both parties. They also do not have an early termination clause included. Our operating lease agreements do not contain any material restrictive covenants. Some of our operating lease agreements contain variable payment provisions that provide for rental increases based on consumer price indices. The change in rent expense resulting from changes in these indices are included within variable rent. We also have finance leases for equipment which have remaining terms ranging from 1 to 3 years. These lease agreements are for general office equipment with a 5-year useful life. These lease agreements do not have an option to extend the lease beyond the stated terms nor do they have an early termination clause. These lease agreements do not have any variable payment provisions included. The finance lease costs consist of interest expense and amortization, and are included primarily in selling, general and administrative expense in our consolidated statements of operations. The discount rate for both our operating and finance leases was not readily determinable in the specific lease agreements. As a result, our incremental borrowing rate was used as the discount rate when establishing the ROU assets and corresponding lease liabilities. Our lease components included in the consolidated balance sheets were as follows: Lease component Classification September 30, 2020 December 31, 2019 (in thousands) Assets ROU assets - operating lease Other assets $ 7,785 $ 2,236 ROU assets - finance lease Other assets 36 70 Total ROU assets $ 7,821 $ 2,306 Liabilities Current operating lease liability Accrued liabilities $ 1,209 $ 1,283 Current finance lease liability Accrued liabilities 18 50 Long-term operating lease liability Other liabilities 7,745 1,988 Long-term finance lease liability Other liabilities 16 23 Total lease liabilities $ 8,988 $ 3,344 Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Operating lease costs $ 320 $ 407 $ 1,099 $ 1,214 Variable rent costs 155 (37) 141 (110) Total rent expense $ 475 $ 370 $ 1,240 $ 1,104 Future minimum lease payments under non-cancelable operating and finance leases were as follows as of September 30, 2020 (amounts in thousands): Operating Leases Finance Leases Year Ending December 31, 2020 - remaining 3 months $ 434 $ 14 2021 1,721 11 2022 1,657 10 2023 1,616 5 2024 1,274 — 2025 and beyond 4,633 — Total future minimum lease payments 11,335 40 Less: interest 2,381 6 Total lease liabilities $ 8,954 $ 34 Current lease liability $ 1,209 $ 18 Long-term lease liability 7,745 16 Total lease liabilities $ 8,954 $ 34 Other information related to leases is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except weighted-average data) 2020 2019 2020 2019 Finance lease cost: Amortization of right-of-use assets $ 7 $ 11 $ 35 $ 33 Interest on lease liabilities 1 2 3 4 Total finance lease cost $ 8 $ 13 $ 38 $ 37 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 320 $ 407 $ 1,064 $ 1,214 Finance cash flows from finance leases $ 13 $ 13 $ 39 $ 27 Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,274 $ — $ 6,805 $ — Right-of-use assets obtained in exchange for new finance lease liabilities $ — $ — $ — $ 15 Weighted-average remaining lease term (years) - operating leases 7.7 3.8 7.7 3.8 Weighted-average remaining lease term (years) - finance leases 2 2.2 2 2.2 Weighted-average discount rate - operating leases 6 % 7 % 6 % 7 % Weighted-average discount rate - finance leases 7 % 7 % 7 % 7 %
Leases	Leases We recognize right-of-use ("ROU") assets and lease liabilities on the balance sheet for those leases classified as operating or finance leases with terms greater than twelve months. We have operating leases for our facilities, which have remaining terms ranging from 1 to 10 years. Most of our leases do not have an option to extend the lease period beyond the stated term unless the new term is agreed to by both parties. They also do not have an early termination clause included. Our operating lease agreements do not contain any material restrictive covenants. Some of our operating lease agreements contain variable payment provisions that provide for rental increases based on consumer price indices. The change in rent expense resulting from changes in these indices are included within variable rent. We also have finance leases for equipment which have remaining terms ranging from 1 to 3 years. These lease agreements are for general office equipment with a 5-year useful life. These lease agreements do not have an option to extend the lease beyond the stated terms nor do they have an early termination clause. These lease agreements do not have any variable payment provisions included. The finance lease costs consist of interest expense and amortization, and are included primarily in selling, general and administrative expense in our consolidated statements of operations. The discount rate for both our operating and finance leases was not readily determinable in the specific lease agreements. As a result, our incremental borrowing rate was used as the discount rate when establishing the ROU assets and corresponding lease liabilities. Our lease components included in the consolidated balance sheets were as follows: Lease component Classification September 30, 2020 December 31, 2019 (in thousands) Assets ROU assets - operating lease Other assets $ 7,785 $ 2,236 ROU assets - finance lease Other assets 36 70 Total ROU assets $ 7,821 $ 2,306 Liabilities Current operating lease liability Accrued liabilities $ 1,209 $ 1,283 Current finance lease liability Accrued liabilities 18 50 Long-term operating lease liability Other liabilities 7,745 1,988 Long-term finance lease liability Other liabilities 16 23 Total lease liabilities $ 8,988 $ 3,344 Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Operating lease costs $ 320 $ 407 $ 1,099 $ 1,214 Variable rent costs 155 (37) 141 (110) Total rent expense $ 475 $ 370 $ 1,240 $ 1,104 Future minimum lease payments under non-cancelable operating and finance leases were as follows as of September 30, 2020 (amounts in thousands): Operating Leases Finance Leases Year Ending December 31, 2020 - remaining 3 months $ 434 $ 14 2021 1,721 11 2022 1,657 10 2023 1,616 5 2024 1,274 — 2025 and beyond 4,633 — Total future minimum lease payments 11,335 40 Less: interest 2,381 6 Total lease liabilities $ 8,954 $ 34 Current lease liability $ 1,209 $ 18 Long-term lease liability 7,745 16 Total lease liabilities $ 8,954 $ 34 Other information related to leases is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except weighted-average data) 2020 2019 2020 2019 Finance lease cost: Amortization of right-of-use assets $ 7 $ 11 $ 35 $ 33 Interest on lease liabilities 1 2 3 4 Total finance lease cost $ 8 $ 13 $ 38 $ 37 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 320 $ 407 $ 1,064 $ 1,214 Finance cash flows from finance leases $ 13 $ 13 $ 39 $ 27 Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,274 $ — $ 6,805 $ — Right-of-use assets obtained in exchange for new finance lease liabilities $ — $ — $ — $ 15 Weighted-average remaining lease term (years) - operating leases 7.7 3.8 7.7 3.8 Weighted-average remaining lease term (years) - finance leases 2 2.2 2 2.2 Weighted-average discount rate - operating leases 6 % 7 % 6 % 7 % Weighted-average discount rate - finance leases 7 % 7 % 7 % 7 %

Capital Stock and Share-Based C

Capital Stock and Share-Based Compensation	9 Months Ended
	Sep. 30, 2020
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 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. The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Risk-free rate 0.46 % — 0.69 % 2.59 % Expected volatility 62.78 % — 62.84 % 64.63 % Expected term (in years) 7 — 7 7 Stock Options A summary of the stock option activity for the nine months ended September 30, 2020 is presented below: Options Outstanding Options Exercisable Number of Price per Share Weighted Aggregate Number of Weighted Aggregate (in thousands, except share, per share and weighted-average data) Balance, January 1, 2020 3,160,397 $1.18 - $7.37 $ 2.72 $ 14,460 1,835,799 $ 2.28 $ 9,198 Granted 70,000 $6.27 - $7.59 $ 6.65 Exercised (688,495) $1.18 - $4.43 $ 2.84 Canceled (100,187) $1.27 - $4.75 $ 3.33 Balance, September 30, 2020 2,441,715 $1.18 - $7.59 $ 2.77 $ 7,971 1,396,231 $ 2.18 $ 5,323 (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, 2020, the outstanding stock options to purchase an aggregate of 2.4 million shares had a weighted-average remaining contractual term of 6.3 years, and the exercisable stock options to purchase an aggregate of 1.4 million shares had a weighted-average remaining contractual term of 4.8 years. The fair value of shares underlying vested options was $8.3 million at September 30, 2020. The fair value of shares underlying options exercised during the nine months ended September 30, 2020 was $4.1 million. For the nine months ended September 30, 2020 and 2019 we recognized $1.5 million and $1.1 million in share-based compensation expense, respectively, which is included in our selling, general and administrative expense in the accompanying consolidated interim financial statements. We expect to recognize $2.4 million in share-based compensation expense over the weighted-average remaining service period of 2.2 years for stock options outstanding as of September 30, 2020. Restricted Stock and Restricted Stock Units Historically, we have granted shares of restricted stock to certain employees that have vested in three equal annual installments on the anniversary dates of their grant. However, beginning in 2019, we altered our approach for these grants to replace the grant of restricted stock subject to time-based vesting with the grant of a combination of restricted stock units ("RSUs") subject to time-based vesting and performance-based vesting. Each RSU represents the contingent right to receive a single share of our common stock upon the vesting of the award. For the nine months ended September 30, 2020, we granted an aggregate of 138,650 RSUs to certain employees. Of the RSUs granted during the nine months ended September 30, 2020, 76,700 of such RSUs are subject to time-based vesting and are scheduled to vest in three equal annual installments on the anniversary dates of the grant. The remaining 61,950 RSUs are performance-based awards that will vest based on our achievement of long-term performance goals, in particular, based on our levels of 2022 revenue and operating income. The 61,950 shares issuable upon vesting of the performance-based RSUs represent the maximum payout under our performance-based awards, based upon 150% of our target performance for 2022 revenue and operating income (the payout of such awards based on target performance for 2022 revenue and operating income would be 41,300 shares). In the case of the time-based and performance-based RSUs, vesting is also subject to the employee's continuous service with us through vesting. During the nine months ended September 30, 2020, 137,999 shares of restricted stock vested and 55,668 shares of RSUs issued to employees vested. In addition, in conjunction with our 2018, 2019, and 2020 Annual Meetings of Stockholders, we granted RSUs to certain members of our Board of Directors in respect of the annual equity compensation under our non-employee director compensation policy (other members of our Board of Directors elected to receive their annual equity compensation for Board service in the form of stock units under our Deferred Compensation Plan as described below). RSUs granted to our non-employee Directors vest at the earlier of the one-year anniversary of their grant or the next annual stockholders' meeting. For the nine months ended September 30, 2020, we granted 10,652 RSUs to certain non-employee members of our Board of Directors in respect of the annual equity grants pursuant to our non-employee director compensation policy. During the nine months ended September 30, 2020, 11,600 RSUs issued pursuant to our non-employee director compensation policy vested. Unamortized restricted stock and RSUs expense at September 30, 2020 that will amortize over the weighted-average remaining service period of 1.4 years totaled $1.4 million. The following table summarizes the number of unvested shares underlying our restricted stock awards and RSUs and the value of our unvested restricted stock awards and RSUs: (in thousands, except share and weighted-average share data) Number of Unvested Shares Weighted Average Grant Date Fair Value Aggregate Grant Date Fair Value of Unvested Shares Balance, January 1, 2020 502,102 $ 3.32 $ 1,667 Granted 149,302 6.48 967 Vested (205,267) 2.86 (587) Balance, September 30, 2020 446,137 $ 4.58 $ 2,047 Employee Stock Purchase Plan On April 7, 2020, our board of directors approved, and on May 11, 2020, our stockholders approved, the Luna Innovations Incorporated 2020 Employee Stock Purchase Plan (the "2020 ESPP"). The first offering period under the 2020 ESPP commenced on July 1, 2020. The 2020 ESPP grants our eligible employees a purchase right to purchase up to that number of shares of common stock purchasable either with a percentage or with a maximum dollar amount, as designed by the Board of Directors, during the period that begins on the offering date and ends on the date stated in the offering. The maximum number of shares of common stock that may be issued under the 2020 ESPP is 1,200,000 shares. The 2020 ESPP is considered a compensatory plan and the fair value of the discount and the look-back period will be estimated using the Black-Scholes option pricing model and expense will be recognized over the six Non-employee Director Deferred Compensation Plan We maintain a non-employee director deferred compensation plan (the “Deferred Compensation Plan”) that permits our non-employee directors to defer receipt of certain of the compensation that they receive for serving on our board and board committees. The Deferred Compensation Plan has historically permitted the participants to elect to defer cash fees to which they were entitled for board and committee service. For participating directors, in lieu of payment of cash fees, we credit their accounts under the Deferred Compensation Plan with a number of stock units based on the trading price of our common stock as of the date of the deferral. These stock units vest immediately, although the participating directors do not receive the shares represented by such units until a future qualifying event. Pursuant to our Deferred Compensation Plan, non-employee directors can also elect to defer the receipt of some or all of the equity compensation that they receive for board and committee service. Stock units representing this equity compensation vest at the earlier of the one-year anniversary of their grant or the next annual stockholders' meeting. The following is a summary of our stock unit activity under the Deferred Compensation Plan for the nine months ended September 30, 2020: (in thousands, except stock units and weighted-average share data) Number of Stock Units Weighted Average Grant Date Fair Value per Share Intrinsic Value Outstanding Balance, January 1, 2020 629,003 $ 2.09 $ 4,585 Granted 47,015 6.70 281 Issued (47,377) 1.65 — Balance, September 30, 2020 628,641 $ 2.37 $ 3,759 As of September 30, 2020, 24,855 of the outstanding stock units had not yet vested. The following table details our equity transactions during the nine months ended September 30, 2020: Preferred Stock Common Stock Treasury Stock Additional Accumulated Deficit Total Shares $ Shares $ Shares $ $ $ $ (in thousands, except share data) Balance, January 1, 2020, as previously reported — $ — 30,149,105 $ 32 1,639,791 $ (4,337) $ 88,022 $ (16,248) $ 67,469 Exercise of stock options — — 316,504 — — — 1,198 — 1,198 Share-based compensation — — 55,668 — — — 502 — 502 Net income — — — — — — — (1,116) (1,116) Forfeitures of restricted stock — — (34,700) — — — (276) — (276) Balance, March 31, 2020 — $ — 30,486,577 $ 32 1,639,791 $ (4,337) $ 89,446 $ (17,364) $ 67,777 Exercise of stock options — — 346,461 — — — 726 — 726 Share-based compensation — — 11,600 — — — 465 — 465 Deferred compensation issuance — — 47,377 — — — 78 — 78 Net income — — — — — — — 1,369 1,369 Forfeitures of restricted stock — — (61,530) — — — (410) — (410) Purchase of treasury stock — — (32,950) — 32,950 (204) — — (204) Balance, June 30, 2020 — $ — 30,797,535 $ 32 1,672,741 $ (4,541) $ 90,305 $ (15,995) $ 69,801 Exercise of stock options — — 25,530 1 — — 33 — 34 Share-based compensation — — — — — — 571 — 571 Net income — — — — — — — 3,102 3,102 Forfeitures of restricted stock — — 14,700 — — — 125 — 125 Purchase of treasury stock — — (14,700) — 14,700 (125) — — (125) Balance, September 30, 2020 — $ — 30,823,065 $ 33 1,687,441 $ (4,666) $ 91,034 $ (12,893) $ 73,508 The following table details our equity transactions during the nine months ended September 30, 2019: Preferred Stock Common Stock Treasury Stock Additional Accumulated Deficit Total Shares $ Shares $ Shares $ $ $ $ (in thousands, except share data) Balance, January 1, 2019, as previously reported 1,321,514 $ 1 27,956,401 $ 30 1,253,105 $ (2,117) $ 85,745 $ (21,305) $ 62,354 Exercise of stock options — — 189,312 — — — 185 — 185 Share-based compensation — — — — — — 343 — 343 Stock dividends to Carilion Clinic — — — — — — 83 (83) — Net income — — — — — — — 1,126 1,126 Balance, March 31, 2019 1,321,514 $ 1 28,145,713 $ 30 1,253,105 $ (2,117) $ 86,356 $ (20,262) $ 64,008 Exercise of stock options — — 207,786 — — — 182 — 182 Share-based compensation — — — — — — 378 — 378 Stock dividends to Carilion Clinic — — — — — — 90 (90) — Net income — — — — — — — 841 841 Purchase of treasury stock — — (52,733) — 52,733 (220) — — (220) Balance, June 30, 2019 1,321,514 $ 1 28,300,766 $ 30 1,305,838 $ (2,337) $ 87,006 $ (19,511) $ 65,189 Exercise of stock options — — 83,204 1 — — 70 — 71 Share-based compensation — — 16,286 — — — 420 — 420 Stock dividends to Carilion Clinic — — 770,454 — — — 113 (113) — Preferred stock to common stock conversion (1,321,514) (1) 1,321,514 1 — — — — — Net income — — — — — — — 1,230 1,230 Purchase of treasury stock — — (333,953) — 333,953 (2,000) — — (2,000) Balance, September 30, 2019 — $ — 30,158,271 $ 32 1,639,791 $ (4,337) $ 87,609 $ (18,394) $ 64,910

Revenue Recognition

Revenue Recognition	9 Months Ended
	Sep. 30, 2020
Revenue from Contract with Customer [Abstract]
Revenue Recognition	Revenue Recognition Disaggregation of Revenue We disaggregate our revenue from contracts with customers by geographic locations, customer type, contract type, timing of recognition, and major categories for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. We disaggregate revenue on the basis of where the physical goods are shipped. We also classify revenue by the customer type of entity for which it does business, which is an indicator of the diversity of our client base. We attribute revenues generated from being a subcontractor to a commercial company as government revenue when the ultimate client is a government agency or department. Disaggregation by contract mix provides insight in terms of the degree of performance risk that we have assumed. Fixed-price contracts are considered to provide the highest amount of performance risk as we are required to deliver a scope of work or level of effort for a negotiated fixed price. Cost-based contracts are considered to provide the lowest amount of performance risk since we are generally reimbursed for all contract costs incurred in performance of contract deliverables with only the amount of incentive or award fees (if applicable) dependent on the achievement of negotiated performance requirements. By classifying revenue by major product and service, we attribute revenue from a client to the major product or service that we believe to be the client's primary market. The details are listed in the table below for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 (in thousands) Lightwave Luna Labs Total Lightwave Luna Labs Total (unaudited) Total Revenue by Geographic Location United States $ 8,729 $ 5,700 $ 14,429 $ 7,086 $ 5,301 $ 12,387 Asia 4,532 — 4,532 3,729 — 3,729 Europe 1,694 — 1,694 1,912 — 1,912 Canada, Central and South America 319 — 319 219 — 219 All Others 76 — 76 142 — 142 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Major Customer Type Sales to the U.S. government $ 2,599 $ 5,287 $ 7,886 $ 2,793 $ 4,879 $ 7,672 U.S. direct commercial sales and other 6,130 413 6,543 4,293 422 4,715 Foreign commercial sales & other 6,621 — 6,621 6,002 — 6,002 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Contract Type Fixed-price contracts $ 14,717 $ 3,349 $ 18,066 $ 12,166 $ 3,215 $ 15,381 Cost-type contracts 633 2,351 2,984 922 2,086 3,008 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Timing of Recognition Goods transferred at a point in time $ 12,987 $ 314 $ 13,301 $ 11,229 $ 408 $ 11,637 Goods/services transferred over time 2,363 5,386 7,749 1,859 4,893 6,752 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Major Products/Services Technology development $ 2,040 $ 5,386 $ 7,426 $ 1,602 $ 4,893 $ 6,495 Test, measurement and sensing systems 12,987 — 12,987 11,234 — 11,234 Other 323 314 637 252 408 660 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Nine Months Ended September 30, 2020 2019 (in thousands) Lightwave Luna Labs Total Lightwave Luna Labs Total (unaudited) Total Revenue by Geographic Location United States $ 21,622 $ 16,929 $ 38,551 $ 19,120 $ 15,907 $ 35,027 Asia 11,857 — 11,857 9,451 — 9,451 Europe 5,261 — 5,261 5,343 — 5,343 Canada, Central and South America 782 — 782 936 — 936 All Others 315 — 315 279 — 279 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Major Customer Type Sales to the U.S. government $ 6,119 $ 15,399 $ 21,518 $ 6,980 $ 14,658 $ 21,638 U.S. direct commercial sales and other 15,503 1,530 17,033 12,140 1,249 13,389 Foreign commercial sales & other 18,215 — 18,215 16,009 — 16,009 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Contract Type Fixed-price contracts $ 37,667 $ 9,615 $ 47,282 $ 32,823 $ 9,291 $ 42,114 Cost-type contracts 2,170 7,314 9,484 2,306 6,616 8,922 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Timing of Recognition Goods transferred at a point in time $ 34,023 $ 1,148 $ 35,171 $ 29,308 $ 995 $ 30,303 Goods/services transferred over time 5,814 15,781 21,595 5,821 14,912 20,733 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Major Products/Services Technology development $ 5,275 $ 15,781 $ 21,056 $ 4,665 $ 14,912 $ 19,577 Test, measurement and sensing systems 34,023 — 34,023 29,323 — 29,323 Other 539 1,148 1,687 1,141 995 2,136 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Contract Balances Our contract assets consist of unbilled amounts for technology development contracts as well as custom product contracts. Also included in contract assets are royalty revenue and carrying amounts of right of return inventory. Long-term contract assets include the fee withholding on cost reimbursable contracts that will not be billed within a year. Contract liabilities include excess billings, subcontractor accruals, warranty expense, extended warranty revenue, right of return refund, and customer deposits. For the nine months ended September 30, 2020, net contract assets/(liabilities) increased $1.8 million, due primarily to an increase in our Fixed-Price contracts that have not yet reached milestones as designated in their respective contracts but for which revenue has been recognized. The increase is also attributable to subcontractor work that has been performed but not yet invoiced. The following table shows the components of our contract balances as of September 30, 2020 and December 31, 2019: (in thousands) September 30, 2020 December 31, 2019 Contract assets $ 4,796 $ 3,208 Contract liabilities 3,721 3,888 Net contract liabilities $ 1,075 $ (680) Performance Obligations

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes We and our subsidiaries file U.S. Federal income tax returns and income tax returns in various state, local and foreign jurisdictions. For the nine months ended September 30, 2020, our effective income tax rate was (5.66)% compared to (67.92)% for the nine months ended September 30, 2019. Our effective income tax rate has fluctuated primarily because there was a valuation allowance release in 2019, as a result of the acquisition of GP, as well as claiming R&D credit not previously claimed. The effective tax rate for 2020 differs from the Federal statutory rate of 21%, primarily as a result of state taxes and permanent differences related to equity compensation and benefit for R&D credits. The effective tax rate for 2019 differs from the Federal statutory rate of 21%, primarily as a result of the partial release of the valuation allowance related to the net operating loss carryforwards expected to be used to offset taxable income in the period and certain discrete items. We consider both positive and negative evidence when evaluating the recoverability of our deferred tax assets ("DTAs"). The assessment is required to determine whether based on all available evidence, it is more likely than not (i.e. greater than a 50% probability) that all or some portion of the DTAs will be realized in the future. As of September 30, 2020, our valuation allowance was $0.4 million, which related to our dormant entities.

Reportable Segments

Reportable Segments	9 Months Ended
	Sep. 30, 2020
Segment Reporting [Abstract]
Reportable Segments	Reportable Segments We have two operating and reportable segments: Lightwave and Luna Labs. During the three months ended June 30, 2020, we changed our reportable segments to Lightwave and Luna Labs to align with how our Chief Operating Decision Maker (CODM) evaluates segment performance and allocates resources to the segments. Prior to the three months ended June 30, 2020, we reported under two different reporting segments. We have reflected these new segment measures beginning in the three months ended June 30, 2020 and prior periods have been restated for comparability. The Lightwave segment develops, manufactures and markets distributed fiber optic sensing products and fiber optic communications test and control products. The Luna Labs segment performs applied research principally in the areas of sensing and instrumentation, advanced materials and health sciences. Through September 30, 2020, our Chief Executive Officer and his direct reports (collectively represented our CODM), 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 13, 2020). The table below presents revenues and operating income/(loss) for reportable segments: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) (unaudited) (unaudited) Revenues: Lightwave $ 15,350 $ 13,088 $ 39,837 $ 35,129 Luna Labs 5,700 5,301 16,929 15,907 Total revenues $ 21,050 $ 18,389 $ 56,766 $ 51,036 Lightwave operating income $ 2,509 $ 859 $ 3,654 $ 667 Luna Labs operating income (257) 623 798 932 Total operating income $ 2,252 $ 1,482 $ 4,452 $ 1,599 Depreciation, Lightwave $ 272 $ 192 $ 689 $ 599 Depreciation, Luna Labs $ 41 $ 40 $ 115 $ 106 Amortization, Lightwave $ 417 $ 425 $ 1,231 $ 1,078 Amortization, Luna Labs $ 33 $ 12 $ 91 $ 52 The table below presents assets for reportable segments: September 30, December 31, (in thousands) (unaudited) Total segment assets: Lightwave $ 72,688 $ 70,276 Luna Labs 23,195 16,248 Total assets $ 95,883 $ 86,524 Property plant and equipment, and intangible assets, Lightwave $ 21,303 $ 23,201 Property plant and equipment, and intangible assets, Luna Labs $ 543 $ 1,001

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies 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 December 2018, we received a notice of claim (the "Claim") from Macom Technology Solutions, Inc. ("Macom"), who acquired our HSOR business in August 2017 pursuant to an asset purchase agreement. Under the asset purchase agreement, we agreed to indemnify Macom for certain matters, including, among other things, the collection of accounts receivable from certain major customers, and placed $4.0 million of the purchase price into an escrow account for the potential settlement of any valid indemnity claims. As of December 31, 2019, $1.5 million of the escrow had been received with $2.5 million remaining in escrow pending resolution of the dispute. In March 2020, we settled the dispute resulting in us receiving $0.6 million and Macom receiving $1.9 million. For the nine months ended September 30, 2020, we have recorded a loss from discontinued operations of $1.4 million, net of income tax benefit, to reflect the settlement of the dispute. On July 31, 2018, we sold the assets associated with our Opto components business to an unaffiliated third party. The asset purchase agreement provides for additional consideration of up to $1.0 million contingent upon the achievement of a specified revenue level by the sold business during the 18 months following the sale. In addition, the asset purchase agreement provides for a potential adjustment to the consideration paid, either positive or negative, to the extent that working capital transferred to the buyer is greater or less than a specified target amount. We did not receive any of the additional $1.0 million of consideration because the minimum revenue targets were not achieved. On March 1, 2019, we acquired all of the outstanding stock of General Photonics Corporation ("GP"), a leading provider of innovative components, modules and test equipment focused on the generation, measurement and control of polarized light critical in fiber optic-based applications for aggregate consideration of $19.0 million with an earn-out provision of up to $1.0 million. Of the purchase price, $17.1 million was paid at closing and $1.9 million was placed into escrow for possible working capital adjustments to the purchase price and potential satisfaction of certain post-closing indemnification obligations. As of September 30, 2020, the $1.0 million in additional cash consideration has been paid as a result of the successful completion of the earn-out provision. We executed non-cancelable purchase orders totaling $1.5 million in the third quarter of 2020 for multiple shipments of tunable lasers to be delivered over an 18-month period. At September 30, 2020, approximately $1.4 million of these commitments remained and are expected to be delivered by December 31, 2021. 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.

Subsequent Event

Subsequent Event	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent Event	Subsequent EventOn October 8, 2020, we entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”) with SVB, which amended and restated in its entirety our previous Loan and Security Agreement dated as of October 10, 2019, as amended (see Note 7). Under the A&R Loan Agreement, SVB agreed to make advances available up to $10.0 million (the “A&R Revolving Line”). If we borrow from the A&R Revolving Line, such borrowing would carry a floating annual interest rate equal to the greater of (i) the Prime Rate (as defined in the Loan Agreement) then in effect plus .50% or (ii) 4.75%. Amounts borrowed under the A&R Revolving Line may be repaid and, prior to the A&R Revolving Line Maturity Date (defined below), reborrowed. The Revolving Line terminates on October 10, 2021 (the “A&R Revolving Line Maturity Date”), unless earlier terminated by us. No amounts have been borrowed under this A&R Loan Agreement. Amounts due under the A&R Loan Agreement are secured by our assets, including all personal property and bank accounts; however, intellectual property is not secured under the Loan Agreement. The Loan Agreement requires us to observe a number of financial and operational covenants, including maintenance of a specified Liquidity Coverage Ratio (as defined in the A&R Loan Agreement), protection and registration of intellectual property rights and customary negative covenants. On October 29, 2020, we acquired a small company that develops and manufactures fiber optic test and measurement equipment and advanced fiber optic subsystems primarily for telecommunication and radio-over-fiber applications. The company's acquired operations will be integrated into, and reported as a part of, our Lightwave division. This acquisition supports our growth strategy in the communications test arena.

Basis of Presentation and Sig_2

Basis of Presentation and Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2020
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 high performance fiber optic test, measurement and control products for the telecommunications and photonics industries and distributed fiber optic sensing products for industries utilizing composite and other advanced materials, such as the automotive, aerospace, energy and infrastructure industries. Our distributed fiber optic sensing products help designers and manufacturers more efficiently develop new and innovative products by providing valuable information such as highly detailed stress, strain, and temperature measurements of a new design or manufacturing process. In addition, our distributed fiber optic sensing products are used to monitor the structural integrity or operational health of critical assets, including large civil structures such as bridges. Our communications test and control products accelerate the development of advanced fiber optic components and networks by providing fast and highly accurate characterization of components and networks. We also provide applied research services, typically under research programs funded by the U.S. government, in areas of advanced materials, sensing, and healthcare applications. Our business model is designed to accelerate the process of bringing new and innovative products to market. We use our in-house technical expertise across a range of technologies to perform applied research services for companies and for government funded projects. We continue to invest in product development and commercialization, which we anticipate will lead to increased product sales growth.
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 interim 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, 2020, results of operations and changes in stockholders' equity for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30, 2020 and 2019. The results of operations for the three and nine months ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The consolidated balance sheet as of December 31, 2019 was derived from our audited consolidated financial statements. The COVID-19 pandemic has resulted in a global slowdown of economic activity. While the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use reasonably available information to assess certain accounting matters including, but not limited to, accounts receivable, inventory and the carrying value of goodwill and other long-lived tangible and intangible assets. While the assessments have not resulted in any material impacts to our financial statements as of September 30, 2020, we believe the full impact of the pandemic remains uncertain and ongoing developments related to the pandemic may cause material impacts to our consolidated financial statements.
Reclassifications	Reclassifications Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net income or stockholders' equity.
Goodwill and Intangible Assets	Goodwill and Intangible Assets Goodwill and intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis, as of October 1 of each year, or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Purchased intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives and reviewed for impairment as described above.
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 significant value drivers are observable. • Level 3—Valuations derived from valuation techniques in which significant value drivers are unobservable.
Reportable Segments	Reportable Segments We have two operating and reportable segments: Lightwave and Luna Labs. During the three months ended June 30, 2020, we changed our reportable segments to Lightwave and Luna Labs to align with how our Chief Operating Decision Maker (CODM) evaluates segment performance and allocates resources to the segments. Prior to the three months ended June 30, 2020, we reported under two different reporting segments, Products and Licensing and Technology Development. We have reflected these new segment measures beginning in the three months ended June 30, 2020 and prior periods have been restated for comparability. The Lightwave segment develops, manufactures and markets distributed fiber optic sensing products and fiber optic communications test and control products. The Luna Labs segment performs applied research principally in the areas of sensing and instrumentation, advanced materials and health sciences.
Net Income Per Share	Net Income Per ShareBasic per share data is computed by dividing our net income by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income 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 Adopted Accounting Pronouncements/Recently Issued Pronouncements, net yet adopted	Recently Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04 Simplifying the Test for Goodwill Impairment , which simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test which previously measured a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount. We adopted ASU 2017-04, effective January 1, 2020. As a result of adopting the new rules, we compare the estimated fair value of our reporting segments to their respective carrying values when evaluating the recoverability of goodwill. If the carrying value of a reporting unit exceeds its fair value, an impairment charge will be recognized for the amount by which its carrying value exceeds the reporting unit's fair value; however, the loss recognized will not exceed the goodwill allocated to the reporting unit. The adoption of ASU 2017-04 did not have a significant impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements in ASC 820 by adding, changing, or removing certain disclosures. The ASU applies to all entities that are required under this guidance to provide disclosures about recurring or nonrecurring fair value measurements. We adopted these amendments, effective January 1, 2020. The adoption of ASU 2018-13 did not have a significant impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU 2018-15, effective January 1, 2020. The adoption of ASU 2018-15 did not have a significant impact on our consolidated financial statements. Recently Issued Pronouncements, not yet adopted In December 2019, the FASB issued ASU 2019-12 Simplifying the Accounting for Income Taxes , which removes certain exceptions to the general principles of the accounting for income taxes and also improves consistent application of and simplification of other areas when accounting for income taxes. The guidance is effective for us beginning in the first quarter of fiscal year 2021, while early adoption is permitted. We are currently in the process of evaluating the impact of adoption of ASU 2019-12, but we do not expect the adoption of these new accounting rules to have a significant impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments, which requires companies to measure financial assets at an amortized cost basis to be presented at the net amount expected to be collected. The new accounting rules eliminate the probable initial recognition threshold and, instead, reflect an entity's current estimate of all expected credit losses. ASU 2016-13 is applicable to our trade receivables. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date for entities that qualify as a small reporting company. We have elected this extension and the effective date for us to adopt this standard will be for fiscal years beginning after December 15, 2022. We are currently in the process of evaluating the impact of ASU 2016-13, but we do not expect the adoption of these new accounting rules to have a significant impact on our consolidated financial statements.

Discontinued Operations (Tables

Discontinued Operations (Tables)	9 Months Ended
	Sep. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]
Components of Discontinued Operations	The following table presents a summary of the transactions related to the sale of the HSOR business for the nine months ended September 30, 2020: Nine Months Ended September 30, 2020 (in thousands) Settlement of HSOR receivable $ 1,900 Loss on sale 1,900 Allocated income tax benefit (464) Loss from discontinued operations, net of related income tax $ 1,436

Intangible assets, net (Tables)

Intangible assets, net (Tables)	9 Months Ended
	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Summary of Intangible Assets	Intangible assets, net at September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 December 31, 2019 (in thousands) Patent costs $ 5,582 $ 5,291 Developed technology 9,800 9,800 In-process research & development 1,580 1,580 Customer base 700 700 Trade names and trademarks 550 550 18,212 17,921 Accumulated amortization (9,019) (7,727) $ 9,193 $ 10,194
Estimated Aggregate Amortization Based on Net Value of Intangible Assets	Amortization expense for the three and nine months ended September 30, 2020 was $0.4 million and $1.3 million, respectively. Estimated aggregate amortization, based on the net value of intangible assets at September 30, 2020, for each of the next five years and beyond is as follows (amounts in thousands): Year Ending December 31, 2020 - remaining 3 months $ 425 2021 1,689 2022 1,539 2023 1,466 2024 1,276 2025 & beyond 2,798 Total $ 9,193

Inventory, net (Tables)

Inventory, net (Tables)	9 Months Ended
	Sep. 30, 2020
Inventory Disclosure [Abstract]
Components of Inventory	Components of inventory were as follows: September 30, December 31, (in thousands) Finished goods $ 2,211 $ 1,695 Work-in-process 1,238 1,008 Raw materials 8,264 7,591 Total inventory, net $ 11,713 $ 10,294

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	9 Months Ended
	Sep. 30, 2020
Payables and Accruals [Abstract]
Schedule of Accrued Liabilities	Accrued liabilities at September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 December 31, 2019 (in thousands) Accrued compensation $ 5,829 $ 6,416 Accrued professional fees 44 113 Accrued income tax — 716 Current operating lease liability 1,209 1,283 Current finance lease liability 18 50 Royalties 269 365 Accrued liabilities - other 347 426 Contingent liability - General Photonics — 1,000 Total accrued liabilities $ 7,716 $ 10,369

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2020
Debt Disclosure [Abstract]
Summary of Debt Interest Expense	Interest expense, net for the three and nine months ended September 30, 2020 and 2019 consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Interest expense on Term Loans $ — $ — $ — $ 8 Amortization of debt issuance costs — — — 1 Other interest expense 1 4 2 6 Total interest expense, net $ 1 $ 4 $ 2 $ 15

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 30, 2020
Leases [Abstract]
Schedule of lease components	Our lease components included in the consolidated balance sheets were as follows: Lease component Classification September 30, 2020 December 31, 2019 (in thousands) Assets ROU assets - operating lease Other assets $ 7,785 $ 2,236 ROU assets - finance lease Other assets 36 70 Total ROU assets $ 7,821 $ 2,306 Liabilities Current operating lease liability Accrued liabilities $ 1,209 $ 1,283 Current finance lease liability Accrued liabilities 18 50 Long-term operating lease liability Other liabilities 7,745 1,988 Long-term finance lease liability Other liabilities 16 23 Total lease liabilities $ 8,988 $ 3,344
Schedule of other information related to leases	Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Operating lease costs $ 320 $ 407 $ 1,099 $ 1,214 Variable rent costs 155 (37) 141 (110) Total rent expense $ 475 $ 370 $ 1,240 $ 1,104 Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except weighted-average data) 2020 2019 2020 2019 Finance lease cost: Amortization of right-of-use assets $ 7 $ 11 $ 35 $ 33 Interest on lease liabilities 1 2 3 4 Total finance lease cost $ 8 $ 13 $ 38 $ 37 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 320 $ 407 $ 1,064 $ 1,214 Finance cash flows from finance leases $ 13 $ 13 $ 39 $ 27 Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,274 $ — $ 6,805 $ — Right-of-use assets obtained in exchange for new finance lease liabilities $ — $ — $ — $ 15 Weighted-average remaining lease term (years) - operating leases 7.7 3.8 7.7 3.8 Weighted-average remaining lease term (years) - finance leases 2 2.2 2 2.2 Weighted-average discount rate - operating leases 6 % 7 % 6 % 7 % Weighted-average discount rate - finance leases 7 % 7 % 7 % 7 %
Schedule of future operating lease payments	Future minimum lease payments under non-cancelable operating and finance leases were as follows as of September 30, 2020 (amounts in thousands): Operating Leases Finance Leases Year Ending December 31, 2020 - remaining 3 months $ 434 $ 14 2021 1,721 11 2022 1,657 10 2023 1,616 5 2024 1,274 — 2025 and beyond 4,633 — Total future minimum lease payments 11,335 40 Less: interest 2,381 6 Total lease liabilities $ 8,954 $ 34 Current lease liability $ 1,209 $ 18 Long-term lease liability 7,745 16 Total lease liabilities $ 8,954 $ 34
Schedule of future finance lease payments	Future minimum lease payments under non-cancelable operating and finance leases were as follows as of September 30, 2020 (amounts in thousands): Operating Leases Finance Leases Year Ending December 31, 2020 - remaining 3 months $ 434 $ 14 2021 1,721 11 2022 1,657 10 2023 1,616 5 2024 1,274 — 2025 and beyond 4,633 — Total future minimum lease payments 11,335 40 Less: interest 2,381 6 Total lease liabilities $ 8,954 $ 34 Current lease liability $ 1,209 $ 18 Long-term lease liability 7,745 16 Total lease liabilities $ 8,954 $ 34

Capital Stock and Share-Based_2

Capital Stock and Share-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2020
Equity [Abstract]
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions	The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Risk-free rate 0.46 % — 0.69 % 2.59 % Expected volatility 62.78 % — 62.84 % 64.63 % Expected term (in years) 7 — 7 7
Summary of Stock Option Activity	A summary of the stock option activity for the nine months ended September 30, 2020 is presented below: Options Outstanding Options Exercisable Number of Price per Share Weighted Aggregate Number of Weighted Aggregate (in thousands, except share, per share and weighted-average data) Balance, January 1, 2020 3,160,397 $1.18 - $7.37 $ 2.72 $ 14,460 1,835,799 $ 2.28 $ 9,198 Granted 70,000 $6.27 - $7.59 $ 6.65 Exercised (688,495) $1.18 - $4.43 $ 2.84 Canceled (100,187) $1.27 - $4.75 $ 3.33 Balance, September 30, 2020 2,441,715 $1.18 - $7.59 $ 2.77 $ 7,971 1,396,231 $ 2.18 $ 5,323 (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 number of unvested shares underlying our restricted stock awards and RSUs and the value of our unvested restricted stock awards and RSUs: (in thousands, except share and weighted-average share data) Number of Unvested Shares Weighted Average Grant Date Fair Value Aggregate Grant Date Fair Value of Unvested Shares Balance, January 1, 2020 502,102 $ 3.32 $ 1,667 Granted 149,302 6.48 967 Vested (205,267) 2.86 (587) Balance, September 30, 2020 446,137 $ 4.58 $ 2,047 The following is a summary of our stock unit activity under the Deferred Compensation Plan for the nine months ended September 30, 2020: (in thousands, except stock units and weighted-average share data) Number of Stock Units Weighted Average Grant Date Fair Value per Share Intrinsic Value Outstanding Balance, January 1, 2020 629,003 $ 2.09 $ 4,585 Granted 47,015 6.70 281 Issued (47,377) 1.65 — Balance, September 30, 2020 628,641 $ 2.37 $ 3,759
Details of Equity Transactions	The following table details our equity transactions during the nine months ended September 30, 2020: Preferred Stock Common Stock Treasury Stock Additional Accumulated Deficit Total Shares $ Shares $ Shares $ $ $ $ (in thousands, except share data) Balance, January 1, 2020, as previously reported — $ — 30,149,105 $ 32 1,639,791 $ (4,337) $ 88,022 $ (16,248) $ 67,469 Exercise of stock options — — 316,504 — — — 1,198 — 1,198 Share-based compensation — — 55,668 — — — 502 — 502 Net income — — — — — — — (1,116) (1,116) Forfeitures of restricted stock — — (34,700) — — — (276) — (276) Balance, March 31, 2020 — $ — 30,486,577 $ 32 1,639,791 $ (4,337) $ 89,446 $ (17,364) $ 67,777 Exercise of stock options — — 346,461 — — — 726 — 726 Share-based compensation — — 11,600 — — — 465 — 465 Deferred compensation issuance — — 47,377 — — — 78 — 78 Net income — — — — — — — 1,369 1,369 Forfeitures of restricted stock — — (61,530) — — — (410) — (410) Purchase of treasury stock — — (32,950) — 32,950 (204) — — (204) Balance, June 30, 2020 — $ — 30,797,535 $ 32 1,672,741 $ (4,541) $ 90,305 $ (15,995) $ 69,801 Exercise of stock options — — 25,530 1 — — 33 — 34 Share-based compensation — — — — — — 571 — 571 Net income — — — — — — — 3,102 3,102 Forfeitures of restricted stock — — 14,700 — — — 125 — 125 Purchase of treasury stock — — (14,700) — 14,700 (125) — — (125) Balance, September 30, 2020 — $ — 30,823,065 $ 33 1,687,441 $ (4,666) $ 91,034 $ (12,893) $ 73,508 The following table details our equity transactions during the nine months ended September 30, 2019: Preferred Stock Common Stock Treasury Stock Additional Accumulated Deficit Total Shares $ Shares $ Shares $ $ $ $ (in thousands, except share data) Balance, January 1, 2019, as previously reported 1,321,514 $ 1 27,956,401 $ 30 1,253,105 $ (2,117) $ 85,745 $ (21,305) $ 62,354 Exercise of stock options — — 189,312 — — — 185 — 185 Share-based compensation — — — — — — 343 — 343 Stock dividends to Carilion Clinic — — — — — — 83 (83) — Net income — — — — — — — 1,126 1,126 Balance, March 31, 2019 1,321,514 $ 1 28,145,713 $ 30 1,253,105 $ (2,117) $ 86,356 $ (20,262) $ 64,008 Exercise of stock options — — 207,786 — — — 182 — 182 Share-based compensation — — — — — — 378 — 378 Stock dividends to Carilion Clinic — — — — — — 90 (90) — Net income — — — — — — — 841 841 Purchase of treasury stock — — (52,733) — 52,733 (220) — — (220) Balance, June 30, 2019 1,321,514 $ 1 28,300,766 $ 30 1,305,838 $ (2,337) $ 87,006 $ (19,511) $ 65,189 Exercise of stock options — — 83,204 1 — — 70 — 71 Share-based compensation — — 16,286 — — — 420 — 420 Stock dividends to Carilion Clinic — — 770,454 — — — 113 (113) — Preferred stock to common stock conversion (1,321,514) (1) 1,321,514 1 — — — — — Net income — — — — — — — 1,230 1,230 Purchase of treasury stock — — (333,953) — 333,953 (2,000) — — (2,000) Balance, September 30, 2019 — $ — 30,158,271 $ 32 1,639,791 $ (4,337) $ 87,609 $ (18,394) $ 64,910

Revenue Recognition (Tables)

Revenue Recognition (Tables)	9 Months Ended
	Sep. 30, 2020
Revenue from Contract with Customer [Abstract]
Schedule of Disaggregation of Revenue	The details are listed in the table below for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 (in thousands) Lightwave Luna Labs Total Lightwave Luna Labs Total (unaudited) Total Revenue by Geographic Location United States $ 8,729 $ 5,700 $ 14,429 $ 7,086 $ 5,301 $ 12,387 Asia 4,532 — 4,532 3,729 — 3,729 Europe 1,694 — 1,694 1,912 — 1,912 Canada, Central and South America 319 — 319 219 — 219 All Others 76 — 76 142 — 142 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Major Customer Type Sales to the U.S. government $ 2,599 $ 5,287 $ 7,886 $ 2,793 $ 4,879 $ 7,672 U.S. direct commercial sales and other 6,130 413 6,543 4,293 422 4,715 Foreign commercial sales & other 6,621 — 6,621 6,002 — 6,002 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Contract Type Fixed-price contracts $ 14,717 $ 3,349 $ 18,066 $ 12,166 $ 3,215 $ 15,381 Cost-type contracts 633 2,351 2,984 922 2,086 3,008 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Timing of Recognition Goods transferred at a point in time $ 12,987 $ 314 $ 13,301 $ 11,229 $ 408 $ 11,637 Goods/services transferred over time 2,363 5,386 7,749 1,859 4,893 6,752 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Total Revenue by Major Products/Services Technology development $ 2,040 $ 5,386 $ 7,426 $ 1,602 $ 4,893 $ 6,495 Test, measurement and sensing systems 12,987 — 12,987 11,234 — 11,234 Other 323 314 637 252 408 660 Total $ 15,350 $ 5,700 $ 21,050 $ 13,088 $ 5,301 $ 18,389 Nine Months Ended September 30, 2020 2019 (in thousands) Lightwave Luna Labs Total Lightwave Luna Labs Total (unaudited) Total Revenue by Geographic Location United States $ 21,622 $ 16,929 $ 38,551 $ 19,120 $ 15,907 $ 35,027 Asia 11,857 — 11,857 9,451 — 9,451 Europe 5,261 — 5,261 5,343 — 5,343 Canada, Central and South America 782 — 782 936 — 936 All Others 315 — 315 279 — 279 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Major Customer Type Sales to the U.S. government $ 6,119 $ 15,399 $ 21,518 $ 6,980 $ 14,658 $ 21,638 U.S. direct commercial sales and other 15,503 1,530 17,033 12,140 1,249 13,389 Foreign commercial sales & other 18,215 — 18,215 16,009 — 16,009 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Contract Type Fixed-price contracts $ 37,667 $ 9,615 $ 47,282 $ 32,823 $ 9,291 $ 42,114 Cost-type contracts 2,170 7,314 9,484 2,306 6,616 8,922 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Timing of Recognition Goods transferred at a point in time $ 34,023 $ 1,148 $ 35,171 $ 29,308 $ 995 $ 30,303 Goods/services transferred over time 5,814 15,781 21,595 5,821 14,912 20,733 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036 Total Revenue by Major Products/Services Technology development $ 5,275 $ 15,781 $ 21,056 $ 4,665 $ 14,912 $ 19,577 Test, measurement and sensing systems 34,023 — 34,023 29,323 — 29,323 Other 539 1,148 1,687 1,141 995 2,136 Total $ 39,837 $ 16,929 $ 56,766 $ 35,129 $ 15,907 $ 51,036
Schedule of components of contract balances	The following table shows the components of our contract balances as of September 30, 2020 and December 31, 2019: (in thousands) September 30, 2020 December 31, 2019 Contract assets $ 4,796 $ 3,208 Contract liabilities 3,721 3,888 Net contract liabilities $ 1,075 $ (680)

Reportable Segments (Tables)

Reportable Segments (Tables)	9 Months Ended
	Sep. 30, 2020
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 September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) (unaudited) (unaudited) Revenues: Lightwave $ 15,350 $ 13,088 $ 39,837 $ 35,129 Luna Labs 5,700 5,301 16,929 15,907 Total revenues $ 21,050 $ 18,389 $ 56,766 $ 51,036 Lightwave operating income $ 2,509 $ 859 $ 3,654 $ 667 Luna Labs operating income (257) 623 798 932 Total operating income $ 2,252 $ 1,482 $ 4,452 $ 1,599 Depreciation, Lightwave $ 272 $ 192 $ 689 $ 599 Depreciation, Luna Labs $ 41 $ 40 $ 115 $ 106 Amortization, Lightwave $ 417 $ 425 $ 1,231 $ 1,078 Amortization, Luna Labs $ 33 $ 12 $ 91 $ 52 The table below presents assets for reportable segments: September 30, December 31, (in thousands) (unaudited) Total segment assets: Lightwave $ 72,688 $ 70,276 Luna Labs 23,195 16,248 Total assets $ 95,883 $ 86,524 Property plant and equipment, and intangible assets, Lightwave $ 21,303 $ 23,201 Property plant and equipment, and intangible assets, Luna Labs $ 543 $ 1,001

Basis of Presentation and Sig_3

Basis of Presentation and Significant Accounting Policies (Details) shares in Millions	Oct. 10, 2019	Sep. 30, 2020shares	Jun. 30, 2020segment	Sep. 30, 2019shares	Sep. 30, 2020segmentshares	Sep. 30, 2019shares
Debt Instrument [Line Items]
Number of operating segments					2
Number of reportable segments			2		2
Common stock equivalents included in diluted per share data (in shares) | shares		1.6		3.8	1.9	3.6
Revolving Credit Facility | Prime Rate | Silicon Valley Bank
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	1.00%				1.00%

Discontinued Operations - Addit

Discontinued Operations - Additional Information (Details) - USD ($) $ in Thousands	Aug. 09, 2017	Mar. 31, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of discontinued operations			$ 600	$ 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]
Consideration received	$ 33,500
Proceeds from sale of discontinued operations	29,500
Escrow deposits related to indemnity claims	$ 4,000				$ 2,500
Amount of the escrow balance received		$ 600			$ 1,500
Loss on sale of discontinued operations			$ 1,436
High speed optical receivers business | Disposed of by Sale | Macom
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Amount of the escrow balance received		$ 1,900

Discontinued Operations - Compo

Discontinued Operations - Components of Income from Discontinued Operations (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Allocated income tax benefit	$ (464)
High speed optical receivers business | Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on sale	1,900
Allocated income tax benefit	(464)
Loss from discontinued operations, net of related income tax	$ 1,436

Intangible assets, net - Summar

Intangible assets, net - Summary of Intangible Assets (Details) - USD ($)	Sep. 30, 2020	Sep. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 18,212,000	$ 17,921,000
Accumulated amortization	(9,019,000)	(7,727,000)
Total	9,193,000	10,194,000
Patent costs
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	5,582,000	5,291,000
Developed technology
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	9,800,000	9,800,000
In-process research & development
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	1,580,000	1,580,000
Customer base
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	700,000	700,000
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 550,000	$ 550,000

Intangible assets, net - Additi

Intangible assets, net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 0.4	$ 1.3

Intangible assets, net - Estima

Intangible assets, net - Estimated Aggregate Amortization (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
2020 - remaining 3 months	$ 425
2021	1,689
2022	1,539
2023	1,466
2024	1,276
2025 & beyond	2,798
Total	$ 9,193	$ 10,194

Goodwill (Details)

Goodwill (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 10,542	$ 10,542

Inventory, net (Details)

Inventory, net (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Finished goods	$ 2,211	$ 1,695
Work-in-process	1,238	1,008
Raw materials	8,264	7,591
Total inventory, net	$ 11,713	$ 10,294

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accrued compensation	$ 5,829	$ 6,416
Accrued professional fees	44	113
Accrued income tax	0	716
Current operating lease liability	1,209	1,283
Current finance lease liability	18	50
Royalties	269	365
Accrued liabilities - other	347	426
Contingent liability - General Photonics	0	1,000
Total accrued liabilities	$ 7,716	$ 10,369

Debt - Additional Information (

Debt - Additional Information (Details) - USD ($)	Oct. 10, 2019	May 31, 2019	Sep. 30, 2020	Apr. 28, 2020
Unsecured Debt | Payment Protection Plan
Debt Instrument [Line Items]
Debt, face amount				$ 4,500,000
Silicon Valley Bank
Debt Instrument [Line Items]
Line of credit facility	$ 10,000,000
Silicon Valley Bank | Term Loan
Debt Instrument [Line Items]
Debt, face amount		$ 6,000,000
Silicon Valley Bank | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility, commitment fee percentage	6.00%
Borrowings outstanding			$ 0
Collateral amount			$ 1,000,000
Silicon Valley Bank | Prime Rate | Term Loan
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		2.00%
Silicon Valley Bank | Prime Rate | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	1.00%		1.00%

Debt - Summary of Interest Expe

Debt - Summary of Interest Expense, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Debt Disclosure [Abstract]
Interest expense on Term Loans	$ 0	$ 0	$ 0	$ 8
Amortization of debt issuance costs	0	0	0	1
Other interest expense	1	4	2	6
Total interest expense, net	$ 1	$ 4	$ 2	$ 15

Leases - Additional Information

Leases - Additional Information (Details)	9 Months Ended
	Sep. 30, 2020
Office equipment
Lessee, Lease, Description [Line Items]
Useful life	5 years
Minimum
Lessee, Lease, Description [Line Items]
Operating leases contract terms	1 year
Finance leases contract terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Operating leases contract terms	10 years
Finance leases contract terms	3 years

Leases - Lease Components (Deta

Leases - Lease Components (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
ROU assets - operating lease	$ 7,785	$ 2,236
ROU assets - finance lease	36	70
Total ROU assets	7,821	2,306
Current operating lease liability	1,209	1,283
Current finance lease liability	18	50
Long-term operating lease liability	7,745	1,988
Long-term finance lease liability	16	23
Total lease liabilities	$ 8,988	$ 3,344
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:AccruedLiabilitiesCurrent	us-gaap:AccruedLiabilitiesCurrent
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:AccruedLiabilitiesCurrent	us-gaap:AccruedLiabilitiesCurrent
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent

Leases - Rent Expense (Details)

Leases - Rent Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Leases [Abstract]
Operating lease costs	$ 320	$ 407	$ 1,099	$ 1,214
Variable rent costs	155	(37)	141	(110)
Total rent expense	$ 475	$ 370	$ 1,240	$ 1,104

Leases - Future Operating and F

Leases - Future Operating and Finance Lease Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Operating Leases
2020 - remaining 3 months	$ 434
2021	1,721
2022	1,657
2023	1,616
2024	1,274
2025 and beyond	4,633
Total future minimum lease payments	11,335
Less: interest	2,381
Total lease liabilities	8,954
Current lease liability	1,209	$ 1,283
Long-term lease liability	7,745	1,988
Total lease liabilities	8,954
Finance Leases
2020 - remaining 3 months	14
2021	11
2022	10
2023	5
2024	0
2025 and beyond	0
Total future minimum lease payments	40
Less: interest	6
Total lease liabilities	34
Current finance lease liability	18	50
Long-term finance lease liability	16	$ 23
Total lease liabilities	$ 34

Leases - Other Lease Informatio

Leases - Other Lease Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Finance lease cost:
Amortization of right-of-use assets	$ 7	$ 11	$ 35	$ 33
Interest on lease liabilities	1	2	3	4
Total finance lease cost	8	13	38	37
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	320	407	1,064	1,214
Finance cash flows from finance leases	13	13	39	27
Right-of-use assets obtained in exchange for new operating lease liabilities	1,274	0	6,805	0
Right-of-use assets obtained in exchange for new finance lease liabilities	$ 0	$ 0	$ 0	$ 15
Weighted-average remaining lease term (years) - operating leases	7 years 8 months 12 days	3 years 9 months 18 days	7 years 8 months 12 days	3 years 9 months 18 days
Weighted-average remaining lease term (years) - finance leases	2 years	2 years 2 months 12 days	2 years	2 years 2 months 12 days
Weighted-average discount rate - operating leases	6.00%	7.00%	6.00%	7.00%
Weighted-average discount rate - finance leases	7.00%	7.00%	7.00%	7.00%

Capital Stock and Share-Based_3

Capital Stock and Share-Based Compensation - Additional Information (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020USD ($)shares	Sep. 30, 2020USD ($)installmentshares	Sep. 30, 2019USD ($)	Jul. 01, 2020shares	Dec. 31, 2019shares
Equity [Abstract]
Expected dividend yield		0.00%
Aggregate outstanding stock options (in shares)	2,441,715	2,441,715			3,160,397
Outstanding stock options, weighted average remaining contractual term		6 years 3 months 18 days
Exercisable stock options (in shares)	1,396,231	1,396,231			1,835,799
Exercisable stock options, weighted average remaining contractual term		4 years 9 months 18 days
Fair value of shares vested | $	$ 8.3	$ 8.3
Fair value of options exercised during period | $		4.1
Stock-based compensation expense | $		1.5	$ 1.1
Stock-based compensation expense not yet recognized | $	2.4	$ 2.4
Weighted average remaining service period		2 years 2 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining service period		2 years 2 months 12 days
Stock-based compensation expense not yet recognized | $	2.4	$ 2.4
Share-based compensation expense | $	0.1	0.1
Restricted stock units (RSUs)
Equity [Abstract]
Stock-based compensation expense not yet recognized | $	1.4	$ 1.4
Weighted average remaining service period		1 year 4 months 24 days
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining service period		1 year 4 months 24 days
Stock-based compensation expense not yet recognized | $	$ 1.4	$ 1.4
Restricted stock units (RSUs) | Employee director compensation plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares not yet vested (in shares)	24,855	24,855
Restricted stock
Equity [Abstract]
Stock-based compensation expense not yet recognized | $	$ 1.4	$ 1.4
Weighted average remaining service period		1 year 4 months 24 days
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining service period		1 year 4 months 24 days
Stock-based compensation expense not yet recognized | $	$ 1.4	$ 1.4
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee stock ownership plan (in shares)				1,200,000
Withholding period		6 months
Employees | Restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of vesting installments | installment		3
Shares issued (in shares)		138,650
Shares vested (in shares)		55,668
Employees | Restricted stock units (RSUs) | Vest in three equal annual installments on the anniversary dates of grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of vesting installments | installment		3
Shares not yet vested (in shares)	76,700	76,700
Employees | Restricted stock units (RSUs) | Vest based on levels of 2201 revenue and operating income
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares not yet vested (in shares)	61,950	61,950
Target performance as percent of revenue and operating income		150.00%
Payout of shares upon achievement of target performance (in shares)		41,300
Employees | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares vested (in shares)		137,999
Directors | Restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)		10,652
Shares vested (in shares)		11,600
Vesting period, earlier of grant anniversary, or annual stockholders' meeting		1 year

Capital Stock and Share-Based_4

Capital Stock and Share-Based Compensation - Fair Values of Stock Options (Details) - Stock Options	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free rate	0.46%	0.69%	2.59%
Expected volatility	62.78%	62.84%	64.63%
Expected term (in years)	7 years	7 years	7 years

Capital Stock and Share-Based_5

Capital Stock and Share-Based Compensation - Summary of Activity of Equity Incentive Plans (Details) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020USD ($)$ / sharesshares	Dec. 31, 2019USD ($)$ / sharesshares
Options Outstanding, Number of Shares
Beginning Balance (shares) | shares	3,160,397
Granted (in shares) | shares	70,000
Exercised (in shares) | shares	(688,495)
Canceled (in shares) | shares	(100,187)
Ending Balance (shares) | shares	2,441,715	3,160,397
Price per Share Range
Outstanding, lower limit (in dollars per share)	$ 1.18	$ 1.18
Outstanding, upper limit (in dollars per share)	7.59	7.37
Granted, lower limit (in dollars per share)	6.27
Granted, upper limit (in dollars per share)	7.59
Exercised, lower limit (in dollars per share)	1.18
Exercised, upper limit (in dollars per share)	4.43
Canceled, lower limit (in dollars per share)	1.27
Canceled, upper limit (in dollars per share)	4.75
Options Outstanding, Weighted Average Exercise Price
Beginning balance (in dollars per share)	2.72
Granted (in dollars per share)	6.65
Exercised (in dollars per share)	2.84
Canceled (in dollars per share)	3.33
Ending balance (in dollars per share)	$ 2.77	$ 2.72
Additional Disclosures
Options outstanding, aggregate intrinsic value | $	$ 7,971	$ 14,460
Exercisable stock options (in shares) | shares	1,396,231	1,835,799
Options exercisable, weighted average exercise price (in dollars per share)	$ 2.18	$ 2.28
Options exercisable, aggregate intrinsic value | $	$ 5,323	$ 9,198

Capital Stock and Share-Based_6

Capital Stock and Share-Based Compensation - Summary of Restricted Awards (Details) - Restricted stock and RSUs $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2020USD ($)$ / sharesshares
Number of Unvested Shares
Beginning balance (in shares) | shares	502,102
Granted (in shares) | shares	149,302
Vested (in shares) | shares	(205,267)
Ending balance (in shares) | shares	446,137
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 3.32
Granted (in dollars per share) | $ / shares	6.48
Vested (in dollars per share) | $ / shares	2.86
Ending balance (in dollars per share) | $ / shares	$ 4.58
Aggregate Grant Date Fair Value of Unvested Shares
Aggregate Grant Date Fair Value of Unvested Shares, Beginning balance | $	$ 1,667
Granted | $	967
Aggregate grant date fair value of shares, Vested | $	(587)
Aggregate Grant Date Fair Value of Unvested Shares, Ending balance | $	$ 2,047

Capital Stock and Share-Based_7

Capital Stock and Share-Based Compensation - Summary of Restricted Stock Units (Details) - Restricted stock units (RSUs) - Employee director compensation plan $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2020USD ($)$ / sharesshares
Number of Stock Units
Beginning balance (in shares) | shares	629,003
Granted (in shares) | shares	47,015
Issued (in shares) | shares	(47,377)
Ending balance (in shares) | shares	628,641
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 2.09
Granted (in dollars per share) | $ / shares	6.70
Issued (in dollars per share) | $ / shares	1.65
Ending balance (in dollars per share) | $ / shares	$ 2.37
Intrinsic Value Outstanding
Aggregate Grant Date Fair Value of Unvested Shares, Beginning balance | $	$ 4,585
Granted | $	281
Issued | $	0
Aggregate Grant Date Fair Value of Unvested Shares, Ending balance | $	$ 3,759

Capital Stock and Share-Based_8

Capital Stock and Share-Based Compensation - Equity Transactions (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Increase (Decrease) in Stockholders' Equity
Stockholder's equity beginning balance	$ 69,801	$ 67,777	$ 67,469	$ 65,189	$ 64,008	$ 62,354	$ 67,469	$ 62,354
Exercise of stock options (in shares)							688,495
Exercise of stock options	34	726	1,198	71	182	185
Share-based compensation	571	465	502	420	378	343
Deferred compensation issuance		78
Net income	3,102	1,369	(1,116)	1,230	841	1,126	$ 3,355	3,196
Forfeitures of restricted stock	125	(410)	(276)
Purchase of treasury stock	(125)	(204)		(2,000)	(220)
Stockholder's equity ending balance	$ 73,508	$ 69,801	$ 67,777	$ 64,910	$ 65,189	$ 64,008	$ 73,508	$ 64,910
Preferred Stock
Increase (Decrease) in Stockholders' Equity
Beginning balance (in shares)	0	0	0	1,321,514	1,321,514	1,321,514	0	1,321,514
Stockholder's equity beginning balance	$ 0	$ 0	$ 0	$ 1	$ 1	$ 1	$ 0	$ 1
Preferred stock to common stock conversion (in shares)				(1,321,514)
Preferred stock to common stock conversion				$ (1)
Ending balance (in shares)	0	0	0	0	1,321,514	1,321,514	0	0
Stockholder's equity ending balance	$ 0	$ 0	$ 0	$ 0	$ 1	$ 1	$ 0	$ 0
Common Stock
Increase (Decrease) in Stockholders' Equity
Beginning balance (in shares)	30,797,535	30,486,577	30,149,105	28,300,766	28,145,713	27,956,401	30,149,105	27,956,401
Stockholder's equity beginning balance	$ 32	$ 32	$ 32	$ 30	$ 30	$ 30	$ 32	$ 30
Exercise of stock options (in shares)	25,530	346,461	316,504	83,204	207,786	189,312
Exercise of stock options	$ 1			$ 1
Share-based compensation (in shares)		11,600	55,668	16,286
Deferred compensation issuance (in shares)		47,377
Stock dividends to Carilion Clinic (in shares)				770,454
Preferred stock to common stock conversion (in shares)				1,321,514
Preferred stock to common stock conversion				$ 1
Forfeitures of restricted stock (in shares)	14,700	(61,530)	(34,700)
Purchase of treasury stock (in shares)	14,700	32,950		333,953	52,733
Ending balance (in shares)	30,823,065	30,797,535	30,486,577	30,158,271	28,300,766	28,145,713	30,823,065	30,158,271
Stockholder's equity ending balance	$ 33	$ 32	$ 32	$ 32	$ 30	$ 30	$ 33	$ 32
Treasury Stock
Increase (Decrease) in Stockholders' Equity
Beginning balance (in shares)	1,672,741	1,639,791	1,639,791	1,305,838	1,253,105	1,253,105	1,639,791	1,253,105
Stockholder's equity beginning balance	$ (4,541)	$ (4,337)	$ (4,337)	$ (2,337)	$ (2,117)	$ (2,117)	$ (4,337)	$ (2,117)
Purchase of treasury stock (in shares)	14,700	32,950		333,953	52,733
Purchase of treasury stock	$ (125)	$ (204)		$ (2,000)	$ (220)
Ending balance (in shares)	1,687,441	1,672,741	1,639,791	1,639,791	1,305,838	1,253,105	1,687,441	1,639,791
Stockholder's equity ending balance	$ (4,666)	$ (4,541)	$ (4,337)	$ (4,337)	$ (2,337)	$ (2,117)	$ (4,666)	$ (4,337)
Additional Paid-in Capital
Increase (Decrease) in Stockholders' Equity
Stockholder's equity beginning balance	90,305	89,446	88,022	87,006	86,356	85,745	88,022	85,745
Exercise of stock options	33	726	1,198	70	182	185
Share-based compensation	571	465	502	420	378	343
Deferred compensation issuance		78
Stock dividends to Carilion Clinic				113	90	83
Forfeitures of restricted stock	125	(410)	(276)
Stockholder's equity ending balance	91,034	90,305	89,446	87,609	87,006	86,356	91,034	87,609
Accumulated Deficit
Increase (Decrease) in Stockholders' Equity
Stockholder's equity beginning balance	(15,995)	(17,364)	(16,248)	(19,511)	(20,262)	(21,305)	(16,248)	(21,305)
Stock dividends to Carilion Clinic				(113)	(90)	(83)
Net income	3,102	1,369	(1,116)	1,230	841	1,126
Stockholder's equity ending balance	$ (12,893)	$ (15,995)	$ (17,364)	$ (18,394)	$ (19,511)	$ (20,262)	$ (12,893)	$ (18,394)

Revenue Recognition - Schedule

Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Total revenues	$ 21,050	$ 18,389	$ 56,766	$ 51,036
Technology development
Disaggregation of Revenue [Line Items]
Total revenues	7,426	6,495	21,056	19,577
Test, measurement and sensing systems
Disaggregation of Revenue [Line Items]
Total revenues	12,987	11,234	34,023	29,323
Other
Disaggregation of Revenue [Line Items]
Total revenues	637	660	1,687	2,136
Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues	13,301	11,637	35,171	30,303
Goods/services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues	7,749	6,752	21,595	20,733
Fixed-price contracts
Disaggregation of Revenue [Line Items]
Total revenues	18,066	15,381	47,282	42,114
Cost-type contracts
Disaggregation of Revenue [Line Items]
Total revenues	2,984	3,008	9,484	8,922
Sales to the U.S. government
Disaggregation of Revenue [Line Items]
Total revenues	7,886	7,672	21,518	21,638
U.S. direct commercial sales and other
Disaggregation of Revenue [Line Items]
Total revenues	6,543	4,715	17,033	13,389
Foreign commercial sales & other
Disaggregation of Revenue [Line Items]
Total revenues	6,621	6,002	18,215	16,009
United States
Disaggregation of Revenue [Line Items]
Total revenues	14,429	12,387	38,551	35,027
Asia
Disaggregation of Revenue [Line Items]
Total revenues	4,532	3,729	11,857	9,451
Europe
Disaggregation of Revenue [Line Items]
Total revenues	1,694	1,912	5,261	5,343
Canada, Central and South America
Disaggregation of Revenue [Line Items]
Total revenues	319	219	782	936
All Others
Disaggregation of Revenue [Line Items]
Total revenues	76	142	315	279
Lightwave
Disaggregation of Revenue [Line Items]
Total revenues	15,350	13,088	39,837	35,129
Lightwave | Technology development
Disaggregation of Revenue [Line Items]
Total revenues	2,040	1,602	5,275	4,665
Lightwave | Test, measurement and sensing systems
Disaggregation of Revenue [Line Items]
Total revenues	12,987	11,234	34,023	29,323
Lightwave | Other
Disaggregation of Revenue [Line Items]
Total revenues	323	252	539	1,141
Lightwave | Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues	12,987	11,229	34,023	29,308
Lightwave | Goods/services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues	2,363	1,859	5,814	5,821
Lightwave | Fixed-price contracts
Disaggregation of Revenue [Line Items]
Total revenues	14,717	12,166	37,667	32,823
Lightwave | Cost-type contracts
Disaggregation of Revenue [Line Items]
Total revenues	633	922	2,170	2,306
Lightwave | Sales to the U.S. government
Disaggregation of Revenue [Line Items]
Total revenues	2,599	2,793	6,119	6,980
Lightwave | U.S. direct commercial sales and other
Disaggregation of Revenue [Line Items]
Total revenues	6,130	4,293	15,503	12,140
Lightwave | Foreign commercial sales & other
Disaggregation of Revenue [Line Items]
Total revenues	6,621	6,002	18,215	16,009
Lightwave | United States
Disaggregation of Revenue [Line Items]
Total revenues	8,729	7,086	21,622	19,120
Lightwave | Asia
Disaggregation of Revenue [Line Items]
Total revenues	4,532	3,729	11,857	9,451
Lightwave | Europe
Disaggregation of Revenue [Line Items]
Total revenues	1,694	1,912	5,261	5,343
Lightwave | Canada, Central and South America
Disaggregation of Revenue [Line Items]
Total revenues	319	219	782	936
Lightwave | All Others
Disaggregation of Revenue [Line Items]
Total revenues	76	142	315	279
Luna Labs
Disaggregation of Revenue [Line Items]
Total revenues	5,700	5,301	16,929	15,907
Luna Labs | Technology development
Disaggregation of Revenue [Line Items]
Total revenues	5,386	4,893	15,781	14,912
Luna Labs | Test, measurement and sensing systems
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Luna Labs | Other
Disaggregation of Revenue [Line Items]
Total revenues	314	408	1,148	995
Luna Labs | Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues	314	408	1,148	995
Luna Labs | Goods/services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues	5,386	4,893	15,781	14,912
Luna Labs | Fixed-price contracts
Disaggregation of Revenue [Line Items]
Total revenues	3,349	3,215	9,615	9,291
Luna Labs | Cost-type contracts
Disaggregation of Revenue [Line Items]
Total revenues	2,351	2,086	7,314	6,616
Luna Labs | Sales to the U.S. government
Disaggregation of Revenue [Line Items]
Total revenues	5,287	4,879	15,399	14,658
Luna Labs | U.S. direct commercial sales and other
Disaggregation of Revenue [Line Items]
Total revenues	413	422	1,530	1,249
Luna Labs | Foreign commercial sales & other
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Luna Labs | United States
Disaggregation of Revenue [Line Items]
Total revenues	5,700	5,301	16,929	15,907
Luna Labs | Asia
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Luna Labs | Europe
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Luna Labs | Canada, Central and South America
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Luna Labs | All Others
Disaggregation of Revenue [Line Items]
Total revenues	$ 0	$ 0	$ 0	$ 0

Revenue Recognition - Contract

Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Increase in net contract assets (liabilities)	$ 1,800
Contract assets	4,796	$ 3,208
Contract liabilities	3,721	3,888
Net contract liabilities	$ 1,075	$ (680)

Revenue Recognition - Performan

Revenue Recognition - Performance Obligation Amount (Details) $ in Millions	Sep. 30, 2020USD ($)
Lightwave
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation	$ 21.6
Lightwave | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	3 months
Remaining performance obligation, percentage	27.00%
Lightwave | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	1 year
Remaining performance obligation, percentage	45.00%
Luna Labs
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation	$ 24.4
Luna Labs | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	3 months
Remaining performance obligation, percentage	24.00%
Luna Labs | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, period	1 year
Remaining performance obligation, percentage	53.00%

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate	(5.66%)	(67.92%)
Valuation allowance	$ 0.4

Reportable Segments - Revenues

Reportable Segments - Revenues and Operating Income (Loss) for Reportable Segments Not Including Discontinued Operations (Details) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2020USD ($)	Jun. 30, 2020segment	Sep. 30, 2019USD ($)	Sep. 30, 2020USD ($)segment	Sep. 30, 2019USD ($)	Dec. 31, 2019USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment		2		2
Number of operating segments | segment				2
Revenues:
Total revenues	$ 21,050		$ 18,389	$ 56,766	$ 51,036
Total operating income (loss)	2,252		1,482	4,452	1,599
Amortization expense	400			1,300
Total segment assets:
Total assets	95,883			95,883		$ 86,524
Property plant and equipment, and intangible assets	2,111			2,111		3,466
Lightwave
Revenues:
Total revenues	15,350		13,088	39,837	35,129
Total operating income (loss)	2,509		859	3,654	667
Depreciation	272		192	689	599
Amortization expense	417		425	1,231	1,078
Total segment assets:
Total assets	72,688			72,688		70,276
Property plant and equipment, and intangible assets	21,303			21,303		23,201
Luna Labs
Revenues:
Total revenues	5,700		5,301	16,929	15,907
Total operating income (loss)	(257)		623	798	932
Depreciation	41		40	115	106
Amortization expense	33		$ 12	91	$ 52
Total segment assets:
Total assets	23,195			23,195		16,248
Property plant and equipment, and intangible assets	$ 543			$ 543		$ 1,001

Reportable Segments - Additiona

Reportable Segments - Additional Information (Details) - Revenues	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Government contracts concentration risk | U.S. government
Segment Reporting Information [Line Items]
Percentage of total consolidated revenues by customer	37.00%	42.00%	38.00%	42.00%
Geographic concentration risk | Outside of the United States
Segment Reporting Information [Line Items]
Percentage of total consolidated revenues by customer	31.00%	31.00%	32.00%	31.00%
Geographic concentration risk | China
Segment Reporting Information [Line Items]
Percentage of total consolidated revenues by customer	11.00%		11.00%

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($) $ in Thousands	Mar. 01, 2020	Jul. 31, 2018	Mar. 31, 2020	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Aug. 31, 2017	Aug. 09, 2017
Loss Contingencies [Line Items]
Cash consideration					$ 0	$ 19,004
Tunable lasers
Loss Contingencies [Line Items]
Non-cancelable purchase order delivery period				18 months
Non-cancelable purchase order commitment				$ 1,500	1,500
Non-cancelable purchase order commitment remaining				1,400	1,400
General photonics, Inc.
Loss Contingencies [Line Items]
Cash consideration	$ 19,000
Potential maximum obligation of contingent consideration	1,000
Cash paid at closing	17,100
Amount at closing placed in escrow	$ 1,900
Contingent obligation				$ 1,000	1,000
High speed optical receivers business | Disposed of by Sale
Loss Contingencies [Line Items]
Escrow deposits related to indemnity claims							$ 2,500		$ 4,000
Amount of the escrow balance received			$ 600				$ 1,500
Loss on sale of discontinued operations					$ 1,436
High speed optical receivers business | Disposed of by Sale | Macom
Loss Contingencies [Line Items]
Amount of the escrow balance received			$ 1,900
Optoelectronic components and subassemblies | Disposed of by Sale
Loss Contingencies [Line Items]
Contingent consideration on discontinued operation		$ 1,000
Non-cancelable purchase order delivery period		18 months
Macom | High speed optical receivers business | Disposed of by Sale
Loss Contingencies [Line Items]
Escrow deposits related to indemnity claims								$ 4,000

Subsequent Event (Details)

Subsequent Event (Details) - Silicon Valley Bank - USD ($)	Oct. 08, 2020	Oct. 10, 2019	Sep. 30, 2020
Subsequent Event [Line Items]
Line of credit facility		$ 10,000,000
Revolving Credit Facility
Subsequent Event [Line Items]
Line of credit facility, commitment fee percentage		6.00%
Revolving Credit Facility | Prime Rate
Subsequent Event [Line Items]
Debt instrument, basis spread on variable rate		1.00%	1.00%
Subsequent Event | Revolving Credit Facility | A&R Loan Agreement
Subsequent Event [Line Items]
Line of credit facility	$ 10,000,000
Debt Instrument, Interest Rate, Stated Percentage	4.75%
Subsequent Event | Revolving Credit Facility | Prime Rate | A&R Loan Agreement
Subsequent Event [Line Items]
Debt instrument, basis spread on variable rate	50.00%