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The June 2018 issue of CompositesWorld highlights Luna’s ODiSI measurement system and its value in the design and testing of composite materials and components.  The design and validation of composite components and systems is significantly more complex than for traditional materials, and the article describes how high-definition fiber optic sensing (HD-FOS) is uniquely suited for composite test and measurement.  Specifically, HD-FOS can be used to:

  • More accurately and completely validate composite models and simulations
  • Assess and characterize performance of adhesive bonds and multi-material joints
  • Create smart parts using embedded sensors

Read the complete article in CompositesWorld here.

Learn more about the ODiSI measurement system for HD-FOS here.

The following is a re-post of a popular past blog post that explains the basics of return loss, why it’s an important measurement, and technologies for measuring return loss.

Fiber optic networks span a wide range of lengths. Intercity and transoceanic fiber optic telecommunications networks span thousands of kilometers. In aircrafts and ships, telecommunications systems have link lengths up to 500m. Data center networks have lengths on the order of meters. Finally fiber optic components have very short lengths on the centimeter and smaller scale.

Across all these applications, data needs to be sent with great fidelity from the source to the receiver. Any loss or reflection events along the way will contribute to a degradation of the signal. This blog post is intended to give an overview of potential sources of optical return loss (RL) and the importance of measuring it.

Definition of Return Loss

In technical terms, RL is the ratio of the light reflected back from a device under test, Pout, to the light launched into that device, Pin, usually expressed as a negative number in dB. 

            RL = 10 log10(Pout/Pin)

Sources of loss include reflections and scattering along the fiber network. A typical RL value for an Angled Physical Contact (APC) connector is about -55dB, while the RL from an open flat polish to air is typically about -14dB. High RL is a large concern in high bitrate digital or analog single mode systems and is also an indication of a potential failure point, or compromise, in any optical network.

What Does High Return Loss Indicate?

Dirty Connector

There are some very simple faults within an optical network that can cause high RL. A dirty connector is one such source. Even a tiny dust particle on a 5 micron single-mode core can end up blocking the optical signal, resulting in signal loss.

Broken Optical Fiber

A break in the optical fiber can also cause high RL. In some instances, it is possible for the optical fiber to have a break in it, but still be able to guide light through. In this case, a measurement of insertion loss (IL) across this fiber will result in a low IL. This disguises the extent of the problem where a direct RL measurement would immediately highlight it. In addition, a crack in a fiber can have both low IL and low RL and easily be missed as a problem in the system.  However, a sensitive RL measurement will show a reflection peak where there should be none, indicating a crack in the fiber that will likely lead to failure. 

Poorly Mated Connector

If a connector is not fully seated, the resulting air gap between connector end faces would result in high RL from that point. In this case, the IL may be low and the signal fidelity could still be good. However, this would be a source of concern as this loose connection is now a possible source of failure, as it could become misaligned or completely disconnected while in service.

Creates Multipath Interference and Degrades Signal

Multiple high reflection points within a network can lead to the optical effect known as multipath interference. This interference can easily lead to signal degradation, especially in high speed networks. In addition, many fiber optic transmission systems use lasers to transmit signals over optical fiber. High RL can cause undesirable feedback into the laser cavity which can also lead to signal degradation.

Methods for Measuring Return Loss

There are three established reflectometry techniques used for measuring RL as a function of location along an optical fiber assembly or network: optical time domain reflectometry (OTDR), optical low coherence reflectometry (OLCR) and optical frequency domain reflectometry (OFDR). The different methods have tradeoffs in range, resolution, speed, sensitivity and accuracy. Typically, the low coherence technique is used for sub-millimeter resolution measurements over a limited range (< 5 m). OTDR is typically used for long range (several kilometers) measurements with low spatial resolution.

OFDR by Luna

OFDR, the technology used in our OBR product line, is ideal for measurements from the component level to short networks (up to 2 km). OFDR produces measurements with spatial resolutions as fine as 10 microns over 30 m or a few mm over 2 km. This high spatial resolution measurement over intermediate lengths can provide significant advantages.  For example, when an OBR is used to troubleshoot a network on an aircraft it is able to very precisely pinpoint the location of a fault, so that a technician knows which panel to open or on which side of a connector the fault was located.  The sensitivity of OFDR also makes it possible to detect small RL events such as cracks that would be difficult to detect with other methods, but could lead to in-service failures.

For more information on how OBR reflectometers use OFDR technology to deliver ultra-high resolution of loss, as well as polarization, dispersion, and other optical measurements, explore the OBR here.

Learn more about OFDR technology.

Learn more about OBR high-resolution reflectometers.

by Judy M. Obliosca, Dimpal Patel, Yang Xu, Christopher Tison

Rapid and Sensitive Detection of Organ Injuries Could Save Lives

Major organ injuries such as those to the liver, lung, kidney and brain can lead to high mortality in critically ill patients. Since these injuries are internal and frequently do not present for easy identification, their misdiagnosis can be deadly. Advanced noninvasive testing with low level detection (high sensitivity) and the ability to identify the exact problem (high specificity) is therefore needed to enhance detection, particularly at early stages. Biomarkers may have predictive values before tissue injury for specific organs becomes irreversible. Identification of such biomarkers in clinical samples would improve the early detection of organ injury, help identify appropriate preventive or curative strategies, prevent organ injury from proceeding to organ failure, and improve quality of life. So far, detection of these biomarkers relies on expensive and time consuming methods such as polymerase chain reaction, mass spectrometry, bead- and absorption-based assays and enzyme-linked immunosorbent assay (ELISA). Even with their drawbacks, they still don’t have the specificity and sensitivity desired, and are limited to looking for one biomarker at a time.

The nanoSPRi Technology Fills a Critical Market Need

Luna has developed a sensing chip that monitors biomolecular interactions on its surface.  Technically, it’s an in vitro diagnostic assay based on a nano-enhanced surface plasmon resonance imaging (nanoSPRi) technique. Luna’s assay immobilizes diverse capture points of antibodies and aptamers onto designated regions of the chip.  When the sample of human serum is flowed across the chip, specific proteins and nucleic acids (DNA/RNA) are simultaneously trapped by their respective capture agents on the chip.  This binding enables a portable, benchtop SPRi instrument equipped with a highly sensitive CCD camera to capture changes in the reflectivity on the chip in real-time. The results from the detection are displayed as a “sensorgram” (binding response on the y-axis plotted against time on the x-axis). From studying the shape of the produced sensorgram, capabilities of the technique such as binding, specificity, affinity, kinetics, active binding concentration and limit of detection were determined.

Luna’s nanoSPRi-based assay is designed for rapid, highly sensitive and specific detection of protein and nucleic acid (DNA/RNA) organ injury biomarkers in human serum in less than an hour of assay analysis time. Activated sensing chip is both functionalized and blocked using Luna’s blocking system.

 

Luna’s nanoSPRi-based assay is designed for rapid, highly sensitive, and simultaneous detection of protein, DNA, and microRNA biomarkers in human serum in less than an hour of analysis. Luna’s assay consists of 3 major features: (1) The novel sensing chip surface functionalization and blocking system that can almost eliminate (>95%) non-specific binding events from human serum. (2) The array technology that enables multiplexed detection of a panel of biomarkers (both protein- and nucleic acid-based) for diverse types of organ (lung, liver, brain) injuries. (3) The nanoenhancer quantum dots (QD) that enable ultrasensitive biomarker detection at very low concentration (pg/mL). Combined, these features result in a highly sensitive, rapid, and multiplexed.

Successful detection of human interleukin 4 (IL4) biomarker in human serum using Luna’s nanoSPRi platform. (A) 10 ng/mL IL4 in 10% and (B) 100% human serum. (C) Detection of IL4 in 10% serum shows very high sensitivity with limit of detection at 0.1 pg/mL. (D) Simultaneous detection of 3 biomarkers (MIP3, IL4 and MIP1b, 5 ng/mL each) in 10% human serum.

 

Proprietary Modifications to the Sensor Have Resulted in Significant Advances in Biomarker Analysis

Luna has successfully developed a novel functionalization and blocking system on the sensing chip surface for use with human serum-based samples, and eliminated >95% of non-specific binding of unwanted constituents. By using the activated sensing chip, the inflammatory biomarker human interleukin 4 (IL-4) was successfully detected in less than an hour for both dilute (10%) and whole (100%) human serum samples. The assay achieved a 0.1 pg/mL IL4 limit of detection, which is 2 orders of magnitude better than that obtained using a typical ELISA. Luna also successfully achieved simultaneous detection of 6 inflammatory and acute lung injury biomarkers (IL4, MIP3, MIP1b, TNF-α, IL1β and IL8), 2 nucleic acid-based liver injury biomarkers (the DNA counterpart of miR122 and the human angiopoietin-like 3) and 1 traumatic brain injury biomarker (eotaxin CCL11) in 10% human serum with great sensitivity, selectivity and high S/N ratio. Moreover, Luna successfully integrated protein and DNA/RNA biomarker detections in serum on a single sensing chip with minimal cross-reactivity issue.

Luna’s nanoSPRi Assay is Posed to Revolutionize Advanced Biomarker Detection in Multiple Fields

Overall, Luna’s superior results demonstrate that the assay is a promising platform for accurate early diagnosis of multiple organ injuries. To date, this has been demonstrated with high sensitivity detection of biomarkers indicated in lung, liver, and kidney injuries. Further, our recently successful detection of the brain injury biomarker eotaxin CCL11 demonstrates capability for use in military and sports head trauma injury analysis. For example, CCL11 was recently shown to be predictive of chronic traumatic encephalopathy, or CTE, and has become a critical focus in brain injuries to professional athletes. This diagnostic capability being developed by Luna is a platform technology, and upon successful implementation for organ injuries, could be reconfigured for the study of a wide variety of diseases in various body fluids.

This work was supported by the US Army Medical Research Acquisition Activity (USAMRAA) under Contract No. W81XWH-14-C-0146. The views, opinions, and findings contained are those of the author(s) and should not be construed as official USAMRAA position, policy, or decision unless designated by other documentation.

The TeraMetrix division of Luna will be announcing two new products for the non-destructive testing (NDT) market at ECNDT in Gothenburg, Sweden (http://www.ecndt2018.com).  The products will be displayed in the booth of Baugh and Weedon NDE, http://www.bw-nde.com (Booth #:  C04:01).

Both the pulsed terahertz SPG (Single Point Gauge) and the LSG (Line Scan Gauge) will be available for demonstration.  These handheld terahertz sensors are easy to use, and can make multiple measurements.

The SPG is a tool for analyzing the waveform return (A-scan) from an object, and displaying on the handheld screen a variety of measurements, including multi-layer thickness, delamination, water ingress and more.  The SPG is connected to the T-Ray 5000 TCU (Terahertz Control Unit).

The LSG uses the same control unit, but provides a cross-sectional image of the sample under test (B-scan).  The LSG provides a real time image useful for identifying defects, or sub-surface structure of an object.

The SPG and the LSG were both originally developed for use in manufacture and testing of the F-35 Joint Strike Fighter.  For more information contact terahertzsales@lunainc.com.

During the time before deployment and usage, armaments (missiles, rockets, bombs) are placed in storage for long durations and exposed to a variety of environmental conditions during transportation.  Training missions, in which armaments are loaded and unloaded from active aircraft, can expose them to the severe flight environment, stressing the systems’ electronics, structures, and payload.  Throughout their lifecycles, missile systems may experience a multitude of environmental and physical effects that can induce degradation.  Tracking individual missiles is a challenge, but knowing their history of environmental exposure and operational use is next to impossible.  Two missiles of the same age could have very different use profiles and very different maintenance and sustainment needs. 

Sensors exist that monitor some environmental effects on armaments, but due to power limitations none are currently able to remain operational for a full armament lifetime.  Any system must be battery operated as there are no power supplies available in missile storage locations, so no sensors have been able to identify and log time spent in various states such as in storage or installed on aircraft.  As long term exposure to harsh environments during storage and transportation can have significant negative effects on missiles, bombs, and other armaments, it has become critical to understand the full life-cycle exposure of in-service weapon systems.  Rudimentary efforts at better understanding storage and handling conditions using small MEMS accelerometers have been attempted, but up to now there is no sensor system available that is able to track and identify the full profile of environments – in storage, on the flightline, on aircraft, or in the air – that would lead to more efficient sustainment through condition based maintenance. 

Building on our extensive experience with low power sensing and wireless communication, Luna is currently developing a solution to track the environmental and physical parameters experienced by missile armaments in a form factor that is readily applicable to existing platforms.  Luna’s system, known as ArmaLife™, will collect key environmental parameters and use this data to classify the missile as being in one of four states: indoor storage, ground transportation/handling, active/open storage, and flight.

ArmaLife: Lifecycle Monitoring for Improved Reliability, Maintainability, and Availability

The ArmaLife sensor will be small and low power with an integrated battery.  It will be designed so it can be retrofit to the outside of an existing missile casing for rapid upgrading of current weapons.  The sensor system will be used to monitor environmental factors experienced by the armament over its entire lifetime (at least 20 years) such as vibration, temperature, relative humidity, ultraviolet intensity, lux (ambient light) intensity, and barometric pressure.  By combining these parameters using sensor fusion algorithms, the ArmaLife system will quantify the amount of time an armament has spent in indoor/outdoor storage, in transport, on a flightline, installed on a plane, or in flight (Figure 1).  The system will be developed with extremely low power consumption components to ensure extended sensor lifetimes with limited power sources.  The ArmaLife hardware will use small, reliable, inexpensive sensor designs to enable ease of integration into legacy and future armament systems. 

Figure 1. ArmaLife sensor system architecture and representative data collected from handling a 4” steel test pipe.

In addition to recording armament status information and environmental exposure, the sensing system will categorize vibration events into low, intermediate, and high levels.  To provide additional information for determining armament reliability, maintainability, and availability (RM&A), the sensing system will record min/max values and duration of environmental factors experienced by the missile.  To make collected data easily accessible, the ArmaLife sensor system will use a radio frequency identification (RFID) transponder chip to monitor for a wake-up command from a maintainer, in turn initiating the transfer of collected data through wireless communications.  The ArmaLife system is currently being engineered to be ultra-low profile for external armament integration, while not interfering with mechanical, electrical, or aerodynamic operation of the weapon.

ArmaLife Hardware and Targeted Data Analysis Will Lead to Better Condition Based Maintenance

The ability to monitor critical parameters and use them to classify armament status throughout the weapon system’s life-cycle will allow the Air Force to perform high efficiency condition based maintenance.  The Air Force will be able to observe how long the armaments resides in each lifecycle stage, such as handling and transportation (Figure 2).  Engineers and operators can then review exposure conditions and analyze what status and exposure effects have contributed to the current condition of their assets.  The ArmaLife system will give the Air Force another data point in assessing missile reliability, maintainability, and availability for optimization of current maintenance schedules to effectively execute condition based maintenance.  

Figure 2. Handling of AIM-9X missile. (U.S. Air Force photo/Levin Gaddie, http://www.eglin.af.mil/News/Photos/igphoto/2001863705/)

This week at Space Tech Expo in Pasadena, CA, we are showcasing our industry leading ODiSI 6100 measurement sensor for high-definition fiber optic sensing (HD-FOS).  We are highlighting the unique capabilities of the ODiSI 6100 by demonstrating the real-time acquisition of strain across the entire surface of a carbon fiber composite sample.  The composite sample was instrumented with a Luna HD strain sensor, a polyimide coated optical fiber calibrated for accurate strain measurements.  The 5m long HD fiber optic sensor was attached with epoxy to the interior surface of the composite sample, traversing the entire surface back and forth in order to get a full picture of strain across the entire component.  The surface has some tight curves which would be very difficult or impossible to instrument with traditional foil strain gages.

The screenshot below from the ODiSI 6100 software shows real-time strain from the attached sensor versus length.  The large periodic positive and negative peaks occur on sections of the sensor that are in line with the applied strain, while sections of the sensor running transverse to the applied strain show very low or zero strain.  This plot, taken with the ODiSI configured for a 1.3 mm gage pitch, is literally displaying nearly 4000 unique strain measurements along the length of the sensor.  This resolution can even be increased further by simply reconfiguring the ODiSI for a 0.65 mm gage pitch.

With dense data like this, alternative visualization of the data can be very useful. For example, the following visualization shows the measured strain data mapped to a 3D model of the composite component, indicating the intensity of the strain with color.

While you could have seen all this live and in person in Pasadena this week, there are plenty of other opportunities to see and learn how HD-FOS sensing and the ODiSI can deliver unprecedented resolution and visibility into your designs or processes.  You can learn more about the ODiSI 6100 measurement system here, or contact us to arrange a consultation with one of our engineers and see the ODiSI in action yourself.

In a recently published AFRL article titled “New Corrosion Evaluation System Makes Sense for Air Force”, Dr. Chad Hunter of Air Force Research Laboratory (AFRL) discusses how CorRESTM from Luna Innovations enables the Air Force to rapidly introduce new corrosion protection and control technologies with minimal risk. According to Dr. Hunter, “There’s a lot of variability in corrosion tests, and CorRES allows us to monitor this variability and provides quantitative data that helps us better understand a coating’s performance in the lab so we can project how it will perform in the operational environment.”

CorRES is an evaluation system providing continuous measurement of coatings performance and the test environment over time. Quantitative, time dependent measurements allow for more accurate and thorough determination of coating performance.  CorRES measurements offer a significant advantage to those who are either interested in shortening new coatings or additive materials development time, or are responsible for coating qualification and want to reduce performance risk associated with new coating introductions.  

The technology was developed in partnership between Luna, AFRL, and the Air Force Corrosion Prevention and Control Office. The support and participation of Dr. Hunter and Mr. David Ellicks and their team has been instrumental to Luna’s successful development of a robust test system for use in accelerated test chambers and outdoor exposure sites. CorRES is now available for purchase and is used by government and industry customers across the world. Contact sensinst@lunainc.com for more information.

Quantified, Real-Time Coatings Performance

CorRES multi-sensor panels (MSP) with interdigitated electrode (IDE) sensors are used to quantify coating performance continuously throughout a test.  The MSP are designed to be coated and scribed using conventional panel preparation techniques. Measurements are made per ANSI/NACE Standard TM0416-2016 “Test Method for Monitoring Atmospheric Corrosion Rate by Electrochemical Measurements”.

Versatile

CorRES test systems are designed to withstand harsh, corrosive conditions to allow for long term use in corrosion test chambers and outdoor environments.  When used in laboratory test chambers the CorRES operates off of line power, and for prolonged unattended outdoor tests, the system can be supplied with a battery pack.  This low-power device collects coating performance data for extended periods of time (> 1year) without a battery replacement.

Data can be downloaded from the system by user command. Luna’s intuitive graphical user interface provides data visualization and allows data to be retrieved in common file format for easy exporting to analysis and processing software.

CorRES Supports:

  • High throughput measurement for performance testing and coating formulation development
  • Protective coating and inhibitor selection and coating qualification
  • Measurements of coating performance and alloy corrosion for specific atmospheric exposures or service environments
  • Automated environmental data collection and record keeping for comparing conditions and results among test chambers, between labs, and relative to previous tests

References

1 “New Corrosion Evaluation System Makes ‘Sense’ for Air Force,” Wright Patterson Air Force Base News, March 20, 2018, http://www.wpafb.af.mil/News/Article-Display/Article/1469372/new-corrosion-evaluation-system-makes-sense-for-air-force/.

We invite you to join us in Germany next week at the Materials in Car Body Engineering event.  One of our sales representatives, Andreas Stern, will be presenting at this conference.  He will be discussing how our High-Definition Fiber Optic Sensing (HD-FOS) technology is solving some of the most challenging verification tasks in the design and manufacturing of components and systems using advanced materials, such as composites. 

Materials in Car Body Engineering
May 15-17, 2018
Bad Nauheim, Germany

Title:  Ultra-High Resolution Strain and Temperature Measurements in Lightweight Materials
Date:  May 15, 2018
Time:  4:30 p.m

 

  • Total revenues of $12.2 million for the three months ended March 31, 2018, up 21% compared to the three months ended March 31, 2017
  • Products and licensing revenues of $7.6 million for the three months ended March 31, 2018, up 29% compared to the three months ended March 31, 2017
  • Net income improved to $0.1 million for the three months ended March 31, 2018 compared to a net loss of $(1.4) million for the three months ended March 31, 2017
  • Adjusted EBITDA improved to $0.6 million for the three months ended March 31, 2018 compared to $(0.2) million for the three months ended March 31, 2017

(ROANOKE, VA, May 9, 2018) – Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in advanced optical technology, today announced its financial results for the three months ended March 31, 2018.

“By continuing to focus on our strategic priorities, we delivered a profitable first quarter for the first time in our history. We drove robust organic revenue growth of over 20% compared to the three months ended March 31, 2017 in a quarter that is typically our weakest, and we delivered the corresponding improvement to our bottom line,” said Scott Graeff, President and Chief Executive Officer of Luna. “The strong revenue performance, resulting largely from a nearly 70% increase in sales of our test and measurement products, along with prudent cost management, allowed us to realize positive net income from continuing operations for the fourth consecutive quarter, also a company record. Luna is positioned to continue to leverage the trends of growth in optical connectivity in high speed networks and data centers as well as the expanding use of composite materials and the need for improved means of testing their structural integrity.  We expect those trends to drive top line growth into the future.”

For the three months ended March 31, 2018, Luna reported net income of $0.1 million compared to a net loss of $(1.4) million for the three months ended March 31, 2017.  Net income from continuing operations improved by $1.0 million, to $0.1 million, or  $0.01 per share, for the three months ended March 31, 2018, compared to a net loss from continuing operations of $(0.9) million, or $(0.03) per share, for the three months ended March 31, 2017. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $0.6 million for the three months ended March 31, 2018 compared to a loss of $(0.2) million for the three months ended March 31, 2017.  A reconciliation of net income/(loss) to adjusted EBITDA can be found in the schedules included in this release.

First Quarter Financial Summary

Total revenues for the three months ended March 31, 2018 were $12.2 million compared to $10.1 million for the three months ended March 31, 2017.  Technology development revenues increased 9% to $4.6 million for the three months ended March 31, 2018, compared to $4.2 million for the three months ended March 31, 2017.  Products and licensing revenues increased 29% to $7.6 million for the three months ended March 31, 2018, compared to $5.9 million for the three months ended March 31, 2017.   The increase in the products and licensing revenues for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 was realized primarily in Luna’s ODiSI, Optical Backscatter Reflectometer, and tunable laser products.

Gross profit was $5.0 million, or 41% of revenues, for the three months ended March 31, 2018, compared to gross profit of $3.9 million, or 38% of revenues, for the three months ended March 31, 2017.

Selling, general and administrative expenses were $3.8 million for the three months ended March 31, 2018, compared to $3.7 million for the three months ended March 31, 2017.

Research, development and engineering expenses were $1.1 million for the three months ended March 31, 2018, compared to $0.9 million for the three months ended March 31, 2017 due to increased development costs associated with Luna’s ODiSI and Terahertz instruments.

Net income from continuing operations improved to $0.1 million for the three months ended March 31, 2018, compared to a net loss from continuing operations of $(0.9) million for the three months ended March 31, 2017.  Net loss from discontinued operations was $(0.5) million for the three months ended March 31, 2017.

Net income attributable to common stockholders for the three months ended March 31, 2018 was $0.1 million, compared to a net loss attributable to common stockholders of $(1.4) million for the three months ended March 31, 2017.  Adjusted EBITDA was $0.6 million for the three months ended March 31, 2018, compared to $(0.2) million for the three months ended March 31, 2017.

Non-GAAP Measures

In evaluating the operating performance of its business, Luna’s management considers Adjusted EBITDA, which excludes certain charges and credits that are required by generally accepted accounting principles (“GAAP”). Adjusted EBITDA provides useful information to both management and investors by excluding the effect of certain non-cash expenses and items that Luna believes may not be indicative of its operating performance, because either they are unusual and Luna does not expect them to recur in the ordinary course of its business or they are unrelated to the ongoing operation of the business in the ordinary course. Adjusted EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Adjusted EBITDA has been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.

Conference Call Information

As previously announced, Luna will conduct an investor conference call at 5:00 pm (EDT) today to discuss its financial results for the three months ended March 31, 2018, and recent business developments. The call can be accessed by dialing 844.578.9643 domestically or 270.823.1522 internationally prior to the start of the call. The participant access code is 2475628. Investors are advised to dial in at least five minutes prior to the call to register. The conference call will also be webcast live over the Internet. The webcast can be accessed by logging on to the “Investor Relations” section of the Luna website, www.lunainc.com, prior to the event. The webcast will be archived under the “Webcasts and Presentations” section of the Luna website for at least 30 days following the conference call.

About Luna

Luna Innovations Incorporated (www.lunainc.com) is a leader in optical technology, providing unique capabilities in high speed optoelectronics and high performance fiber optic test products for the telecommunications industry and distributed fiber optic sensing for the aerospace and automotive industries.  Luna is organized into two business segments, which work closely together to turn ideas into products: a Technology Development segment and a Products and Licensing segment. Luna’s business model is designed to accelerate the process of bringing new and innovative technologies to market.

Forward-Looking Statements

The statements in this release that are not historical facts constitute “forward-looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties.  These statements include Luna’s expectations regarding Luna’s future top line growth and Luna continuing to leverage the trends of growth in optical connectivity in high speed networks and data centers, as well as the expanding use of composite materials and the need for improved means of testing their structural integrity.  Management cautions the reader that these forward-looking statements are only predictions and are subject to a number of both known and unknown risks and uncertainties, and actual results, performance, and/or achievements of Luna may differ materially from the future results, performance, and/or achievements expressed or implied by these forward-looking statements as a result of a number of factors. These factors include, without limitation, failure of demand for Luna’s products and services to meet expectations, technological challenges and those risks and uncertainties set forth in Luna’s periodic reports and other filings with the Securities and Exchange Commission (“SEC”). Such filings are available on the SEC’s website at www.sec.gov and on Luna’s website at www.lunainc.com. The statements made in this release are based on information available to Luna as of the date of this release and Luna undertakes no obligation to update any of the forward-looking statements after the date of this release.

 

Luna Innovations Incorporated
Consolidated Statements of Operations

 

Three Months Ended
 March 31,

 

 

 

2018

 

2017

 

 

 

(unaudited)

 

 

Revenues:

 

 

 

 

 

Technology development

$

4,636,776

 

 

$

4,236,102

 

 

 

Products and licensing

7,556,396

 

 

5,850,795

 

 

 

Total revenues

12,193,172

 

 

10,086,897

 

 

 

Cost of revenues:

 

 

 

 

 

Technology development

3,353,501

 

 

3,109,467

 

 

 

Products and licensing

3,813,553

 

 

3,101,045

 

 

 

Total cost of revenues

7,167,054

 

 

6,210,512

 

 

 

Gross profit

5,026,118

 

 

3,876,385

 

 

 

Operating expense:

 

 

 

 

 

Selling, general and administrative

3,809,617

 

 

3,722,170

 

 

 

Research, development and engineering

1,101,488

 

 

928,772

 

 

 

Total operating expense

4,911,105

 

 

4,650,942

 

 

 

Operating income/(loss)

115,013

 

 

(774,557

)

 

 

Other income/(expense):

 

 

 

 

 

Investment income

75,912

 

 

 

 

 

Other (expense)/income

(115

)

 

351

 

 

 

Interest expense

(40,738

)

 

(64,374

)

 

 

Total other income/(expense)

35,059

 

 

(64,023

)

 

 

Income/(loss) from continuing operations before income taxes

150,072

 

 

(838,580

)

 

 

Income tax expense

1,396

 

 

26,690

 

 

 

Net income/(loss) from continuing operations

148,676

 

 

(865,270

)

 

 

Loss from discontinued operations, net of income tax of $0

 

 

(490,717

)

 

 

Net loss from discontinued operations

 

 

(490,717

)

 

 

Net income/(loss)

148,676

 

 

(1,355,987

)

 

 

Preferred stock dividend

64,425

 

 

34,096

 

 

 

Net income/(loss) attributable to common stockholders

$

84,251

 

 

$

(1,390,083

)

 

 

Net income/(loss) per share from continuing operations:

 

 

 

 

 

Basic

$

0.01

 

 

$

(0.03

)

 

 

Diluted

$

 

 

$

(0.03

)

 

 

Net loss per share from discontinued operations:

 

 

 

 

 

Basic

$

 

 

$

(0.02

)

 

 

Diluted

$

 

 

$

(0.02

)

 

 

Net income/(loss) per share attributable to common stockholders:

 

 

 

 

 

Basic

$

 

 

$

(0.05

)

 

 

Diluted

$

 

 

$

(0.05

)

 

 

Weighted average common shares and common equivalent shares outstanding:

 

 

 

 

 

Basic

27,204,989

 

 

27,541,356

 

 

 

Diluted

31,198,833

 

 

27,541,356

 

 

 

 

Luna Innovations Incorporated
Consolidated Balance Sheets

 

 

March 31, 2018

 

December 31, 2017

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

33,442,674

 

 

$

36,981,533

 

 

Accounts receivable, net

8,098,703

 

 

7,869,168

 

 

Receivable from sale of HSOR business

4,001,496

 

 

4,000,976

 

 

Contract assets

2,408,930

 

 

1,778,142

 

 

Inventory

6,534,899

 

 

6,951,110

 

 

Prepaid expenses and other current assets

1,086,837

 

 

1,220,650

 

 

Total current assets

55,573,539

 

 

58,801,579

 

 

Long-term contract assets

263,722

 

 

209,699

 

 

Property and equipment, net

3,425,544

 

 

3,453,741

 

 

Intangible assets, net

3,204,843

 

 

3,237,593

 

 

Goodwill

502,000

 

 

502,000

 

 

Other assets

18,024

 

 

18,024

 

 

Total assets

$

62,987,672

 

 

$

66,222,636

 

 

Liabilities and stockholders’ equity

 

 

 

 

Liabilities:

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt obligations

$

1,750,000

 

 

$

1,833,333

 

 

Current portion of capital lease obligations

38,145

 

 

43,665

 

 

Accounts payable

2,357,649

 

 

2,962,863

 

 

Accrued liabilities

5,742,777

 

 

6,557,649

 

 

Contract liabilities

1,804,125

 

 

3,428,625

 

 

Total current liabilities

11,692,696

 

 

14,826,135

 

 

Long-term deferred rent

1,148,370

 

 

1,184,438

 

 

Long-term debt obligations

232,084

 

 

603,007

 

 

Long-term capital lease obligations

63,184

 

 

71,275

 

 

Total liabilities

13,136,334

 

 

16,684,855

 

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at March 31, 2018 and December 31, 2017

1,322

 

 

1,322

 

 

Common stock, par value $0.001, 100,000,000 shares authorized, 28,365,549 and 28,354,822 shares issued, 27,162,195 and 27,283,918 shares outstanding at March 31, 2018 and December 31, 2017

29,217

 

 

29,186

 

 

Treasury stock at cost, 1,203,354 and 1,070,904 shares at March 31, 2018 and December 31, 2017

(1,955,787

)

 

(1,649,746

)

 

Additional paid-in capital

83,744,496

 

 

83,563,208

 

 

Accumulated deficit

(31,967,910

)

 

(32,406,189

)

 

Total stockholders’ equity

49,851,338

 

 

49,537,781

 

 

Total liabilities and stockholders’ equity

$

62,987,672

 

 

$

66,222,636

 

 

 

Luna Innovations Incorporated
Consolidated Statements of Cash Flows

 

 

Three Months Ended March 31,

 

2018

 

2017

 

(unaudited)

Cash flows provided by/(used in) operating activities

 

 

 

Net income/(loss)

$

148,676

 

 

$

(1,355,987

)

Adjustments to reconcile net income/(loss) to net cash (used in)/provided by operating activities

 

 

 

Depreciation and amortization

307,852

 

 

956,687

 

Share-based compensation

94,606

 

 

170,084

 

Bad debt expense

 

 

29,671

 

Change in assets and liabilities

 

 

 

Accounts receivable

(229,535

)

 

1,824,454

 

Contract assets

221,386

 

 

187,448

 

Inventory

(110,095

)

 

(352,435

)

Other current assets

133,293

 

 

55,092

 

Accounts payable and accrued expenses

(1,456,154

)

 

(1,464,847

)

Contract liabilities

(1,650,363

)

 

13,880

 

Net cash (used in)/provided by operating activities

(2,540,334

)

 

64,047

 

Cash flows used in investing activities

 

 

 

Acquisition of property and equipment

(129,720

)

 

(157,308

)

Intangible property costs

(113,108

)

 

(133,054

)

Net cash used in investing activities

(242,828

)

 

(290,362

)

Cash flows used in financing activities

 

 

 

Payments on capital lease obligations

(13,611

)

 

(12,697

)

Payments of debt obligations

(458,333

)

 

(458,333

)

Repurchase of common stock

(306,041

)

 

 

Proceeds from the exercise of options

22,288

 

 

820

 

Net cash used in financing activities

(755,697

)

 

(470,210

)

Net decrease in cash or cash equivalents

(3,538,859

)

 

(696,525

)

Cash and cash equivalents-beginning of period

36,981,533

 

 

12,802,458

 

Cash and cash equivalents-end of period

$

33,442,674

 

 

$

12,105,933

 

 

Luna Innovations Incorporated
Reconciliation of Net Income/(Loss) to EBITDA and Adjusted EBITDA

 

 

Three Months Ended
 March 31,

 

 

2018

 

2017

 

 

(unaudited)

 

Net income/(loss)

$

148,676

 

 

$

(1,355,987

)

 

Less loss from discontinued operations, net of income taxes

 

 

(490,717

)

 

Net income/(loss) from continuing operations

148,676

 

 

(865,270

)

 

Interest expense

40,738

 

 

64,374

 

 

Tax expense

1,396

 

 

26,690

 

 

Depreciation and amortization

307,852

 

 

356,816

 

 

EBITDA

498,662

 

 

(417,390

)

 

Share-based compensation

94,606

 

 

170,084

 

 

Adjusted EBITDA

$

593,268

 

 

$

(247,306

)

 

###

Investor Contact:
Dale Messick, CFO
Luna Innovations Incorporated
Phone: 1.540.769.8400
Email: IR@lunainc.com

 

May 13-16, 2018
Anaheim Convention Center | Anaheim, CA

This year at the TechConnect World 2018 Conference, members of Luna’s Materials Group will be presenting on advanced fluid resistant, durable surface treatments that protect numerous surfaces including glass, plastic, paint, and rubber. These coatings are currently being evaluated for numerous applications within the automotive, aerospace, marine, ophthalmic and medical industries, as well as protecting high voltage (HV) networks. Luna’s inorganic-polymer hybrid coatings utilize a unique combination of surface segregating and low surface energy nanostructured materials to provide fluid repellency with excellent durability to abrasion, wear and weathering. Come join us at the Anaheim Convention Center May 13-16 to learn about Luna’s protective coatings and surface treatments

About TechConnect: For over 20 years the TechConnect World Innovation Conference and Expo has connected top applied research and early-stage innovations from universities, labs, and startups with industry end-users and prospectors. The 2018 TechConnect World Innovation event includes the annual SBIR/STTR Spring Innovation Conference, Spring Defense TechConnect, the TechConnect Technical Program – more than 35 world-class technical symposiums, and the Nanotech Conference Series – the world’s largest and longest running nanotechnology event.

Fluid Resistant Surfaces – Oral Presentation – Monday May 14, 2018; 10:55-11:20 AM (Session 251C)

Bryan Koene will be presenting on Luna’s array of extremely durable, easily applied hydrophobic and oleophobic coatings, including our commercial Gentoo™ Advanced Hydrophobic Coating. These hydrophobic/oleophobic surfaces have demonstrated beneficial properties of easy cleaning, anti-ice, antifouling, corrosion resistance, and rain repellency. The technology utilizes a unique self-assembled nanostructure that combines the hardness and barrier properties of a ceramic with the flexibility of a tough polymer, leading to excellent abrasion resistance and environmental stability.

Durable Hydrophobic Coatings for High Voltage Silicone Rubber Insulators – Oral Presentation – Tuesday May 15, 2018; 11:15-11:35 AM (Session 251C)

Jesse Kelly will be presenting on Luna’s durable, hydrophobic sol-gel coating for HV silicon rubber (SiR) insulating materials. HV electric fields have a unique influence on water and other external surface contaminants, and can induce damaging arc discharge events (flashover) on SiR insulation used in power transmission & distribution (PT&D) and AM broadcasting. Luna’s new coating technology has proven to reduce damaging flashover, or corona events, thus enhancing the safety and long-term operation of SiR insulators. This is accomplished by maintaining a hydrophobic surface while immersed in HV electric fields. The sol-gel coating is designed for both OEM application to new SiR insulators and for field application to existing components via brush or spray application.

Be sure to check the TechConnect 2018 schedule for up to date presentation times and locations.  We look forward to seeing you there!