Roanoke technology company Luna Innovations announced Monday that it intends to “voluntarily accelerate” its delisting from the Nasdaq Stock Market and suspend future financial reporting obligations.
In the same Monday news release, the fiber optic sensing and monitoring company said that its bookings for the second half of the 2024 fiscal year represent about 40% growth over the first half of the year. The numbers have been unclear for months, though, as the company has by its own reckoning repeatedly failed to file accurate quarterly and annual financial statements with the Securities and Exchange Commission.
Luna, in announcing those failures last year, also noted that multiple statements filed before February 2024 were inaccurate and must be restated. After Luna missed multiple deadlines to file proper financial reports, Nasdaq informed the company this month that it would suspend it from trading and move toward delisting it.
The central issue was revenue recognition — whether the company reported earnings at the correct time. Federal law states that companies must report revenue after a service has been delivered, and not before. The financial reporting issues led to stockholder lawsuits and a complete turnover of the company’s executives.
In the Monday news release, Luna said that it will file on Feb. 6 with the SEC to be delisted and deregistered with Nasdaq. Separately, it will file to terminate its obligations to report its finances to the SEC. It is eligible to do so because it had fewer than 300 stockholders as of Dec. 31, according to a report posted Monday at the SEC website.
“The Company anticipates that its common stock will remain on the [Over the Counter] Expert Market,” according to the SEC post. “However, no guarantee can be made that a trading market in the Company’s common stock in any over-the-counter market will be maintained.”
The OTC markets website showed that Luna closed on Monday trading at about 90 cents a share. The Expert Market is for unsolicited customer orders only, with quotations restricted from public viewing. Only professional and other expert investors may view the quotations.
Luna stock had traded at $7.92 a share on the Nasdaq as recently as February 2024. The price began a steady decline about mid-March, after the company’s announcements about the financial statements.
Luna Chief Executive Officer Kevin Ilcisin called Monday’s moves “a strategic decision” in the company news release. Luna factored in expected cost savings and its “current inability to realize the traditional benefits of public company status.”
He added: “Moreover, we believe this move will redirect resources from regulatory compliance to business operations, including delivering differentiated products and solutions to our valued customers. This focus aims to further strengthen our balance sheet and maintain a profitable growth trajectory going forward.”
Luna officials continue to seek a buyer, under the terms of a line of credit has taken out with one of the company investors, White Hat Capital.
The company gave an indication of its recent financial performance. It said in the news release:
“Bookings are expected to be between $125 million and $130 million, with bookings for the second half of fiscal 2024 representing approximately 40% growth relative to the first half of the year. Backlog as of December 31, 2024 is expected to exceed $40 million.
“Revenue is expected to be between $110 million and $115 million. Revenue for the second half of 2024 is expected to be approximately 30% higher than in the first half of 2024.”
Luna noted that these were preliminary estimates of selected, unaudited financial “and other” information for the fiscal year ended Dec. 31. The statement added that its full, audited, condensed and consolidated financial statements “are not yet available.”
“The information contained herein reflects our preliminary estimates based on currently available information and is subject to change,” the release read.
The company credited its recent growth to contracts won in the “data center, artificial intelligence and quantum spaces.”
“Luna started 2024 with a series of challenges which generated headwinds in the first half of the year,” Ilcisin said in the news release. “Despite these challenges, our team demonstrated resilience and commitment to customers, suppliers and innovation, with results materializing in the second half of 2024.”