x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 54-1560050 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
Title of Each Class | Name of Each Exchange on which Registered | |
Common Stock, par value $0.001 per share | The Nasdaq Stock Market LLC |
Large accelerated filer ¨ | Accelerated filer ¨ | |
Non-accelerated filer x | Smaller reporting company x |
• | Ownership. The company must be more than 50 percent owned and controlled by U.S. citizens or permanent resident aliens, or owned by an entity that is itself more than 50 percent owned and controlled by U.S. citizens or permanent resident aliens; and |
• | Size. The company, including its affiliates, cannot have more than 500 employees. |
• | accurately anticipate customer needs; |
• | innovate and develop new technologies and applications; |
• | successfully commercialize new technologies in a timely manner; |
• | price products competitively and manufacture and deliver products in sufficient volumes and on time; and |
• | differentiate our product offerings from those of our competitors. |
• | lost sales and customers as a result of customers deciding not to do business with us; |
• | complexities associated with managing the larger combined company with distant business locations; |
• | integrating personnel while maintaining focus on providing consistent, high quality products; |
• | loss of key employees; |
• | potential unknown liabilities associated with the acquisition; |
• | performance shortfalls as a result of the diversion of management's attention caused by completing the acquisition and integrating operations. |
• | having to comply with U.S. export control regulations and policies that restrict our ability to communicate with non-U.S. employees and supply foreign affiliates and customers; |
• | changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products, perform services or repatriate profits to the United States; |
• | the imposition of tariffs; |
• | hyperinflation or economic or political instability in foreign countries; |
• | imposition of limitations on, or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures; |
• | conducting business in places where business practices and customs are unfamiliar and unknown; |
• | the imposition of restrictive trade policies; |
• | the imposition of inconsistent laws or regulations; |
• | the imposition or increase of investment and other restrictions or requirements by foreign governments; |
• | uncertainties relating to foreign laws and legal proceedings; |
• | having to comply with a variety of U.S. laws, including the Foreign Corrupt Practices Act ("FCPA"); and |
• | having to comply with licensing requirements. |
• | we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents; |
• | we or our licensors might not have been the first to file patent applications for these inventions; |
• | others may independently develop similar or alternative technologies or duplicate any of our technologies; |
• | it is possible that none of our pending patent applications or the pending patent applications of our licensors will result in issued patents; |
• | patents may issue to third parties that cover how we might practice our technology; |
• | our issued patents and issued patents of our licensors may not provide a basis for commercially viable technologies, may not provide us with any competitive advantages, or may be challenged and invalidated by third parties; and |
• | we may not develop additional proprietary technologies that are patentable. |
• | sales of our common stock by our significant stockholders, or the perception that such sales may occur; |
• | changes in earnings estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’ earnings estimates; |
• | changes in our status as an entity eligible to receive SBIR contracts and grants; |
• | quarterly variations in our or our competitors’ results of operations; |
• | challenges integrating our recent or future acquisitions, including the inability to realize any expected synergies; |
• | general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors; |
• | announcements by us, or by our competitors, of acquisitions, new products, significant contracts, commercial relationships or capital commitments; |
• | pending or threatened litigation; |
• | any major change in our board of directors or management or any competing proxy solicitations for director nominees; |
• | changes in governmental regulations or in the status of our regulatory approvals; |
• | announcements related to patents issued to us or our competitors; |
• | a lack of, limited or negative industry or securities analyst coverage; |
• | discussions of our company or our stock price by the financial and scientific press and online investor communities; and |
• | general developments in our industry. |
• | a classified board of directors serving staggered terms; |
• | advance notice requirements to stockholders for matters to be brought at stockholder meetings; |
• | a supermajority stockholder vote requirement for amending certain provisions of our amended and restated certificate of incorporation and bylaws; and |
• | the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer. |
Years ended December 31, | |||||||||||||||||||
In thousands, except share and per share data | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
Consolidated Statement of Operations Data: | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Technology development | $ | 20,968 | $ | 18,576 | $ | 16,281 | $ | 13,599 | $ | 12,206 | |||||||||
Products and licensing | 21,950 | 14,505 | 13,323 | 12,975 | 9,054 | ||||||||||||||
Total revenues | 42,917 | 33,082 | 29,604 | 26,574 | 21,260 | ||||||||||||||
Cost of revenues: | |||||||||||||||||||
Technology development | 15,400 | 13,988 | 12,473 | 10,379 | 9,376 | ||||||||||||||
Products and licensing | 8,079 | 5,724 | 5,417 | 5,652 | 4,047 | ||||||||||||||
Total cost of revenues | 23,479 | 19,713 | 17,890 | 16,031 | 13,423 | ||||||||||||||
Gross profit | 19,438 | 13,369 | 11,714 | 10,543 | 7,837 | ||||||||||||||
Operating expense | 18,560 | 15,577 | 15,840 | 17,359 | 12,342 | ||||||||||||||
Operating income/(loss) | 878 | (2,208 | ) | (4,126 | ) | (6,816 | ) | (4,505 | ) | ||||||||||
Other (expense)/income, net | (17 | ) | 26 | 28 | (53 | ) | 111 | ||||||||||||
Interest income | 550 | — | — | — | — | ||||||||||||||
Interest expense, net | (124 | ) | (217 | ) | (317 | ) | (218 | ) | (96 | ) | |||||||||
Income/(loss) from continuing operations before income taxes | 1,286 | (2,399 | ) | (4,414 | ) | (7,087 | ) | (4,490 | ) | ||||||||||
Income tax expense/(benefit) | 48 | (1,149 | ) | (136 | ) | (602 | ) | (1,137 | ) | ||||||||||
Net income/(loss) from continuing operations | 1,238 | (1,250 | ) | (4,279 | ) | (6,484 | ) | (3,353 | ) | ||||||||||
Income from discontinued operations, net of income taxes | 9,766 | 15,866 | 1,909 | 8,801 | 9,347 | ||||||||||||||
Net income/(loss) | 11,004 | 14,616 | (2,369 | ) | 2,317 | 5,994 | |||||||||||||
Preferred stock dividend | 257 | 147 | 105 | 86 | 112 | ||||||||||||||
Net income/(loss) attributable to common stockholders | $ | 10,747 | $ | 14,469 | $ | (2,475 | ) | $ | 2,231 | $ | 5,882 | ||||||||
Net income/(loss) per share from continuing operations: | |||||||||||||||||||
Basic | $ | 0.04 | $ | (0.05 | ) | $ | (0.16 | ) | $ | (0.28 | ) | $ | (0.23 | ) | |||||
Diluted | $ | 0.04 | $ | (0.05 | ) | $ | (0.16 | ) | $ | (0.28 | ) | $ | (0.23 | ) | |||||
Net income per share from discontinued operations: | |||||||||||||||||||
Basic | $ | 0.35 | $ | 0.58 | $ | 0.07 | $ | 0.38 | $ | 0.63 | |||||||||
Diluted | $ | 0.30 | $ | 0.58 | $ | 0.07 | $ | 0.38 | $ | 0.63 | |||||||||
Net income/(loss) per share attributable to common stockholders: | |||||||||||||||||||
Basic | $ | 0.39 | $ | 0.52 | $ | (0.09 | ) | $ | 0.10 | $ | 0.40 | ||||||||
Diluted | $ | 0.33 | $ | 0.52 | $ | (0.09 | ) | $ | 0.10 | $ | 0.40 | ||||||||
Weighted-average shares: | |||||||||||||||||||
Basic | 27,596,401 | 27,579,988 | 27,547,217 | 23,026,494 | 14,880,697 | ||||||||||||||
Diluted | 32,452,228 | 27,579,988 | 27,547,217 | 23,026,494 | 14,880,697 |
As of December 31, | |||||||||||||||||||
In thousands | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||
Cash and cash equivalents | $ | 42,460 | $ | 36,982 | $ | 17,464 | $ | 14,117 | $ | 7,779 | |||||||||
Working capital | 56,089 | 43,975 | 23,417 | 15,413 | 10,106 | ||||||||||||||
Total assets | 75,599 | 66,223 | 58,132 | 27,584 | 19,704 | ||||||||||||||
Total current liabilities | 12,139 | 14,826 | 15,334 | 8,473 | 7,206 | ||||||||||||||
Total debt | 619 | 2,436 | 6,125 | 625 | 2,125 |
Years ended December 31, | |||||
2018 | 2017 | ||||
Revenues: | |||||
Technology development | 48.9 | % | 56.2 | % | |
Products and licensing | 51.1 | 43.8 | |||
Total revenues | 100.0 | 100.0 | |||
Cost of revenues: | |||||
Technology development | 35.9 | 42.3 | |||
Products and licensing | 18.8 | 17.3 | |||
Total cost of revenues | 54.7 | 59.6 | |||
Gross profit | 45.3 | 40.4 | |||
Operating expense | 43.2 | 47.1 | |||
Operating income/(loss) | 2.1 | (6.7 | ) | ||
Total other income/(expense) | 1.0 | (0.6 | ) | ||
Income/(loss) from continuing operations before income taxes | 3.1 | (7.3 | ) | ||
Income/(loss) from continuing operations, net of income taxes | 2.9 | (3.8 | ) | ||
Income from discontinued operations, net of income taxes | 22.8 | 48.0 | |||
Net income | 25.7 | % | 44.2 | % |
Years ended December 31, | ||||||||||||||
2018 | 2017 | $ Difference | % Difference | |||||||||||
Technology development revenues | $ | 20,967,556 | $ | 18,576,383 | $ | 2,391,173 | 12.9 | % | ||||||
Products and licensing revenues | 21,949,689 | 14,505,482 | 7,444,207 | 51.3 | % | |||||||||
Total revenues | $ | 42,917,245 | $ | 33,081,865 | $ | 9,835,380 | 29.7 | % |
Years ended December 31, | ||||||||||||||
2018 | 2017 | $ Difference | % Difference | |||||||||||
Technology development costs | $ | 15,400,475 | $ | 13,988,378 | $ | 1,412,097 | 10.1 | % | ||||||
Products and licensing costs | 8,078,870 | 5,724,457 | 2,354,413 | 41.1 | % | |||||||||
Total costs of revenues | $ | 23,479,345 | $ | 19,712,835 | $ | 3,766,510 | 19.1 | % |
Years ended December 31, | ||||||||||||||
2018 | 2017 | $ Difference | % Difference | |||||||||||
Selling, general and administrative expense | $ | 14,794,205 | $ | 12,923,841 | $ | 1,870,364 | 14.5 | % | ||||||
Research, development and engineering expense | 3,766,160 | 2,653,337 | 1,112,823 | 41.9 | % | |||||||||
Total operating expense | $ | 18,560,365 | $ | 15,577,178 | $ | 2,983,187 | 19.2 | % |
Years ended December 31, | |||||||
2018 | 2017 | ||||||
Net cash (used in)/provided by operating activities | $ | (3,308,825 | ) | $ | 915,042 | ||
Net cash provided by investing activities | 10,037,123 | 26,181,400 | |||||
Net cash used in financing activities | (1,249,564 | ) | (2,917,367 | ) | |||
Net increase in cash and cash equivalents | $ | 5,478,734 | $ | 24,179,075 |
Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | |||||||||||||||
Long-term debt obligations (1) | $ | 625,000 | $ | 625,000 | $ | — | $ | — | $ | — | |||||||||
Operating facility leases (2) | 4,608,720 | 1,216,124 | 1,758,484 | 1,089,408 | 544,704 | ||||||||||||||
Other leases (3) | 147,076 | 53,052 | 72,664 | 21,360 | — | ||||||||||||||
Purchase order obligation (4) | 752,448 | 752,448 | — | — | — | ||||||||||||||
MOI working capital adjustment (5) | 542,983 | 542,983 | — | — | — | ||||||||||||||
Other liabilities (6) | 440,000 | 440,000 | — | — | — | ||||||||||||||
Total | $ | 7,116,227 | $ | 3,629,607 | $ | 1,831,148 | $ | 1,110,768 | $ | 544,704 |
(1) | Amounts due under our debt obligations to SVB are payable in monthly installments, plus accrued interest, through May 2019. |
(2) | We lease our facilities in Blacksburg, Charlottesville and Roanoke, Virginia, Ann Arbor, Michigan, and Atlanta, Georgia under operating leases that as of December 31, 2018, are scheduled to expire between December 2018 and December 2024. Upon expiration of our office leases, we may exercise certain renewal options as specified in the leases. Rental payments associated with these option periods are not included in the table above. |
(3) | In August 2013 and January 2016, we executed leases in the amounts of $51,000, and $207,000, respectively, for office equipment. These equipment leases expire in 2018 and 2021, respectively. |
(4) | Purchase order obligations included outstanding orders for inventory purchases. In 2017 and 2018, our Luna Technologies subsidiary executed non-cancelable purchase orders for a total amount of $2.3 million for multiple shipments of tunable lasers to be delivered over an 18-month period beginning in November 2017. |
(5) | The final working capital associated with the acquisition of MOI is estimated to be higher than the target value specified in the asset purchase agreement and therefore such excess amount is payable to the stockholders of MOI. |
(6) | Other liabilities include remaining amounts payable for minimum royalty payments for certain licensed technologies payable over the remaining patent terms of the underlying technology. |
December 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 42,460,267 | $ | 36,981,533 | |||
Accounts receivable, net | 13,037,068 | 5,929,042 | |||||
Receivable from sale of HSOR business | 2,500,000 | 4,000,976 | |||||
Contract assets | 2,422,495 | 1,778,142 | |||||
Inventory | 6,873,742 | 4,634,781 | |||||
Prepaid expenses and other current assets | 935,185 | 1,140,999 | |||||
Current assets held for sale | — | 4,336,105 | |||||
Total current assets | 68,228,757 | 58,801,578 | |||||
Property and equipment, net | 3,627,886 | 2,854,641 | |||||
Intangible assets, net | 3,302,270 | 1,727,390 | |||||
Goodwill | 101,008 | — | |||||
Long term contract assets | 336,820 | 209,699 | |||||
Other assets | 1,995 | 1,995 | |||||
Non-current assets held for sale | — | 2,627,333 | |||||
Total assets | $ | 75,598,736 | $ | 66,222,636 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Current portion of long term debt obligations | $ | 619,315 | $ | 1,833,333 | |||
Current portion of capital lease obligations | 40,586 | 43,665 | |||||
Accounts payable | 2,395,984 | 2,111,077 | |||||
Accrued liabilities | 6,597,458 | 6,547,230 | |||||
Contract liabilities | 2,486,111 | 3,318,379 | |||||
Current liabilities held for sale | — | 972,451 | |||||
Total current liabilities | 12,139,454 | 14,826,135 | |||||
Long-term portion of deferred rent | 1,035,974 | 1,184,438 | |||||
Long-term debt obligations | — | 603,007 | |||||
Long-term capital lease obligations | 68,978 | 71,275 | |||||
Total liabilities | 13,244,406 | 16,684,855 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at December 31, 2018 and 2017 | 1,322 | 1,322 | |||||
Common stock, par value $0.001, 100,000,000 shares authorized, 29,209,506 and 28,354,822 shares issued, 27,956,401 and 27,283,918 shares outstanding at December 31, 2018 and 2017, respectively | 30,120 | 29,186 | |||||
Treasury stock at cost, 1,253,105 and 1,070,904 shares at December 31, 2018 and 2017, respectively | (2,116,640 | ) | (1,649,746 | ) | |||
Additional paid-in capital | 85,744,750 | 83,563,208 | |||||
Accumulated deficit | (21,305,222 | ) | (32,406,189 | ) | |||
Total stockholders’ equity | 62,354,330 | 49,537,781 | |||||
Total liabilities and stockholders’ equity | $ | 75,598,736 | $ | 66,222,636 |
Years ended December 31, | |||||||
2018 | 2017 | ||||||
Revenues: | |||||||
Technology development | $ | 20,967,556 | $ | 18,576,383 | |||
Products and licensing | 21,949,689 | 14,505,482 | |||||
Total revenues | 42,917,245 | 33,081,865 | |||||
Cost of revenues: | |||||||
Technology development | 15,400,475 | 13,988,378 | |||||
Products and licensing | 8,078,870 | 5,724,457 | |||||
Total cost of revenues | 23,479,345 | 19,712,835 | |||||
Gross profit | 19,437,900 | 13,369,030 | |||||
Operating expense: | |||||||
Selling, general and administrative | 14,794,205 | 12,923,841 | |||||
Research, development and engineering | 3,766,160 | 2,653,337 | |||||
Total operating expense | 18,560,365 | 15,577,178 | |||||
Operating income/(loss) | 877,535 | (2,208,148 | ) | ||||
Other income/(expense): | |||||||
Other (expense)/income, net | (17,143 | ) | 26,106 | ||||
Investment income | 549,580 | — | |||||
Interest expense, net | (124,344 | ) | (217,352 | ) | |||
Total other income/(expense) | 408,093 | (191,246 | ) | ||||
Income/(loss) from continuing operations before income taxes | 1,285,628 | (2,399,394 | ) | ||||
Income tax (expense)/benefit | (47,818 | ) | 1,148,579 | ||||
Net income/(loss) from continuing operations | 1,237,810 | (1,250,815 | ) | ||||
Operating income from discontinued operations, net of income tax expense of $183,921 and $876,588 | 1,170,634 | 194,692 | |||||
Gain on sale, net of $1,572,244 and $912,298 of related income taxes | 8,595,797 | 15,671,028 | |||||
Income from discontinued operations, net of income taxes | 9,766,431 | 15,865,720 | |||||
Net income | 11,004,241 | 14,614,905 | |||||
Preferred stock dividend | 257,302 | 146,889 | |||||
Net income attributable to common stockholders | $ | 10,746,939 | $ | 14,468,016 | |||
Net income/(loss) per share from continuing operations: | |||||||
Basic | $ | 0.04 | $ | (0.05 | ) | ||
Diluted | $ | 0.04 | $ | (0.05 | ) | ||
Net income per share from discontinued operations: | |||||||
Basic | $ | 0.35 | $ | 0.58 | |||
Diluted | $ | 0.30 | $ | 0.58 | |||
Net income per share attributable to common stockholders: | |||||||
Basic | $ | 0.39 | $ | 0.52 | |||
Diluted | $ | 0.33 | $ | 0.52 | |||
Weighted average shares: | |||||||
Basic | 27,596,401 | 27,579,988 | |||||
Diluted | 32,452,228 | 27,579,988 |
Preferred Stock | Common Stock | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||
Shares | $ | Shares | $ | Shares | $ | $ | $ | $ | |||||||||||||||||||||||
Balance—January 1, 2017 | 1,321,514 | $ | 1,322 | 27,541,277 | $ | 28,600 | 446,827 | $ | (517,987 | ) | $ | 82,451,958 | $ | (46,874,205 | ) | $ | 35,089,688 | ||||||||||||||
Exercise of stock option | — | — | 83,888 | 84 | — | — | 99,769 | — | 99,853 | ||||||||||||||||||||||
Stock-based compensation | — | — | 147,333 | 287 | — | — | 714,807 | — | 715,094 | ||||||||||||||||||||||
Non-cash compensation | — | — | 135,497 | 136 | — | — | 149,864 | — | 150,000 | ||||||||||||||||||||||
Stock dividends (1) | — | — | — | 79 | — | — | 146,810 | (146,889 | ) | — | |||||||||||||||||||||
Purchase of treasury stock | — | — | (624,077 | ) | — | 624,077 | (1,131,759 | ) | — | — | (1,131,759 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | — | — | 14,614,905 | 14,614,905 | ||||||||||||||||||||||
Balance—December 31, 2017 | 1,321,514 | $ | 1,322 | 27,283,918 | $ | 29,186 | 1,070,904 | $ | (1,649,746 | ) | $ | 83,563,208 | $ | (32,406,189 | ) | $ | 49,537,781 | ||||||||||||||
Impact of change in accounting policy | — | — | — | — | — | — | — | 354,028 | 354,028 | ||||||||||||||||||||||
Adjusted balance as of January 1, 2018 | 1,321,514 | 1,322 | 27,283,918 | 29,186 | 1,070,904 | (1,649,746 | ) | 83,563,208 | (32,052,161 | ) | 49,891,809 | ||||||||||||||||||||
Exercise of stock options and warrants | — | — | 442,425 | 441 | — | — | 1,096,592 | — | 1,097,033 | ||||||||||||||||||||||
Stock-based compensation | — | — | 282,394 | 282 | — | — | 627,857 | — | 628,139 | ||||||||||||||||||||||
Non-cash compensation | — | — | 129,865 | 131 | — | — | 199,871 | — | 200,002 | ||||||||||||||||||||||
Stock dividends (1) | — | — | — | 80 | — | — | 257,222 | (257,302 | ) | — | |||||||||||||||||||||
Purchase of treasury stock | — | — | (182,201 | ) | — | 182,201 | (466,894 | ) | — | — | (466,894 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | — | — | 11,004,241 | 11,004,241 | ||||||||||||||||||||||
Balance—December 31, 2018 | 1,321,514 | $ | 1,322 | 27,956,401 | $ | 30,120 | 1,253,105 | $ | (2,116,640 | ) | $ | 85,744,750 | $ | (21,305,222 | ) | $ | 62,354,330 |
(1) | The stock dividends payable in connection with the Series A Convertible Preferred Stock are issuable upon the request of Carilion. |
Years ended December 31, | |||||||
2018 | 2017 | ||||||
Cash flows (used in)/provided by operating activities: | |||||||
Net income | $ | 11,004,241 | $ | 14,614,905 | |||
Adjustments to reconcile net income to net cash (used in)/provided by operating activities: | |||||||
Depreciation and amortization | 1,218,559 | 2,526,609 | |||||
Stock-based compensation | 627,856 | 715,094 | |||||
Loss on disposal of fixed assets | (1,000 | ) | 3,640 | ||||
Gain on sale of discontinued operations, net of income taxes | (8,595,797 | ) | (15,671,028 | ) | |||
Bad debt | 6,000 | 99,888 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (6,240,377 | ) | 1,152,055 | ||||
Contract assets | (761,714 | ) | — | ||||
Inventory | (967,797 | ) | (1,902,311 | ) | |||
Other assets | 1,849,630 | 83,428 | |||||
Accounts payable and accrued expenses | (461,928 | ) | (896,534 | ) | |||
Contract liabilities | (986,498 | ) | — | ||||
Deferred revenue | — | 189,296 | |||||
Net cash (used in)/provided by operating activities | (3,308,825 | ) | 915,042 | ||||
Cash flows provided by investing activities: | |||||||
Acquisition of property and equipment | (386,890 | ) | (1,352,531 | ) | |||
Proceeds from sale of property and equipment | 1,000 | 3,000 | |||||
Intangible property costs | (374,766 | ) | (495,597 | ) | |||
Acquisition of Micron Optics | (5,001,750 | ) | — | ||||
Proceeds from sale of discontinued operations, net | 15,799,529 | 28,026,528 | |||||
Net cash provided by investing activities | 10,037,123 | 26,181,400 | |||||
Cash flows used in financing activities: | |||||||
Payments on debt obligations | (1,833,333 | ) | (1,833,333 | ) | |||
Payments on capital lease obligations | (46,653 | ) | (52,128 | ) | |||
Purchase of treasury stock | (466,894 | ) | (1,131,759 | ) | |||
Proceeds from the exercise of options and warrants | 1,097,316 | 99,853 | |||||
Net cash used in financing activities | (1,249,564 | ) | (2,917,367 | ) | |||
Net change in cash and cash equivalents | 5,478,734 | 24,179,075 | |||||
Cash and cash equivalents—beginning of period | 36,981,533 | 12,802,458 | |||||
Cash and cash equivalents—end of period | $ | 42,460,267 | $ | 36,981,533 | |||
Supplemental disclosure of cash flow information | |||||||
Cash paid for interest | $ | 117,616 | $ | 209,497 | |||
Cash paid for income taxes | $ | 1,846,037 | $ | 377,907 | |||
Cash received for income tax refunds | $ | 17,834 | $ | — | |||
Common stock issued pursuant to restricted stock vesting | $ | 200,202 | $ | 150,000 | |||
Dividend on preferred stock | $ | 257,302 | $ | 146,889 |
• | 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. |
Equipment | 3 – 7 years |
Furniture and fixtures | 7 years |
Software | 3 years |
Leasehold improvements | Lesser of lease term or life of improvements |
Balance at | Adjustment for | Adjusted balance at | |||||||||
December 31, 2017 | Topic 606 | January 1, 2018 | |||||||||
Assets: | |||||||||||
Current assets held for sale | $ | 4,336,105 | $ | 379,891 | $ | 4,715,996 | |||||
Liabilities: | |||||||||||
Contract liabilities | $ | 3,318,379 | $ | 2,250 | $ | 3,320,629 | |||||
Current liabilities held for sale | $ | 862,205 | $ | 23,613 | $ | 885,818 | |||||
Stockholders' equity: | |||||||||||
Accumulated deficit | $ | (32,406,189 | ) | $ | 354,028 | $ | (32,052,161 | ) |
December 31, 2017 | |||||||
As Reported | As Adopted | ||||||
Accounts receivables, net | $ | 9,857,009 | $ | 5,929,042 | |||
Contract assets | — | 1,778,142 | |||||
Current assets held for sale | — | 1,940,126 | |||||
Long-term contract assets | — | 209,699 | |||||
Accrued liabilities | 8,959,935 | 6,547,230 | |||||
Contract liabilities | — | 3,318,379 | |||||
Current liabilities held for sale | — | 120,665 | |||||
Deferred revenue | 1,026,339 | — |
Three Months Ended December 31, 2018 | Year Ended December 31, 2018 | |||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Technology Development | Products and Licensing | Total | Technology Development | Products and Licensing | Total | |||||||||||||||
Total Revenue by Geographic Location | ||||||||||||||||||||
United States | $ | 5,548,639 | $ | 3,624,247 | $ | 9,172,886 | $ | 20,967,556 | $ | 11,585,296 | $ | 32,552,852 | ||||||||
Asia | — | 2,697,215 | 2,697,215 | — | 5,977,563 | 5,977,563 | ||||||||||||||
Europe | — | 1,331,145 | 1,331,145 | — | 3,873,161 | 3,873,161 | ||||||||||||||
Canada, Central and South America | — | 282,990 | 282,990 | — | 382,797 | 382,797 | ||||||||||||||
All Others | — | 54,089 | 54,089 | — | 130,872 | 130,872 | ||||||||||||||
Total | $ | 5,548,639 | $ | 7,989,686 | $ | 13,538,325 | $ | 20,967,556 | $ | 21,949,689 | $ | 42,917,245 | ||||||||
Total Revenue by Major Customer Type | ||||||||||||||||||||
Sales to the U.S. government | $ | 5,418,679 | $ | 469,534 | $ | 5,888,213 | $ | 20,703,338 | $ | 1,834,289 | $ | 22,537,627 | ||||||||
U.S. direct commercial sales and other | 129,960 | 3,154,714 | 3,284,674 | 264,218 | 9,737,720 | 10,001,938 | ||||||||||||||
Foreign commercial sales & other | — | 4,365,438 | 4,365,438 | — | 10,377,680 | 10,377,680 | ||||||||||||||
Total | $ | 5,548,639 | $ | 7,989,686 | $ | 13,538,325 | $ | 20,967,556 | $ | 21,949,689 | $ | 42,917,245 | ||||||||
Total Revenue by Contract Type | ||||||||||||||||||||
Fixed-price contracts | $ | 2,777,012 | $ | 7,989,686 | $ | 10,766,698 | $ | 9,388,770 | $ | 21,949,689 | $ | 31,338,459 | ||||||||
Cost-type contracts | 2,771,627 | — | 2,771,627 | 11,578,786 | — | 11,578,786 | ||||||||||||||
Total | $ | 5,548,639 | $ | 7,989,686 | $ | 13,538,325 | $ | 20,967,556 | $ | 21,949,689 | $ | 42,917,245 | ||||||||
Total Revenue by Timing of Recognition | ||||||||||||||||||||
Goods transferred at a point in time | $ | — | $ | 7,824,102 | $ | 7,824,102 | $ | — | $ | 21,329,999 | $ | 21,329,999 | ||||||||
Goods/services transferred over time | 5,548,639 | 165,584 | 5,714,223 | 20,967,556 | 619,690 | 21,587,246 | ||||||||||||||
Total | $ | 5,548,639 | $ | 7,989,686 | $ | 13,538,325 | $ | 20,967,556 | $ | 21,949,689 | $ | 42,917,245 | ||||||||
Total Revenue by Major Products/Services | ||||||||||||||||||||
Technology development | $ | 5,548,639 | $ | — | $ | 5,548,639 | $ | 20,967,556 | $ | — | $ | 20,967,556 | ||||||||
Optical test and measurement systems | — | 7,625,325 | 7,625,325 | — | 19,641,434 | 19,641,434 | ||||||||||||||
Optical components and sub-assemblies | — | — | — | — | — | — | ||||||||||||||
Other | — | 364,361 | 364,361 | — | 2,308,255 | 2,308,255 | ||||||||||||||
Total | $ | 5,548,639 | $ | 7,989,686 | $ | 13,538,325 | $ | 20,967,556 | $ | 21,949,689 | $ | 42,917,245 |
Impact of changes in accounting policies | |||||||||||
December 31, 2018 | |||||||||||
As Reported | Adjustments | Balances without adoption of Topic 606 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 42,460,267 | $ | — | $ | 42,460,267 | |||||
Accounts receivable, net | 13,037,068 | — | 13,037,068 | ||||||||
Receivable from sale of HSOR business | 2,500,000 | — | 2,500,000 | ||||||||
Contract assets | 2,422,495 | — | 2,422,495 | ||||||||
Inventory | 6,873,742 | — | 6,873,742 | ||||||||
Prepaid expenses and other current assets | 935,185 | — | 935,185 | ||||||||
Total current assets | 68,228,757 | — | 68,228,757 | ||||||||
Long-term contract assets | 336,820 | — | 336,820 | ||||||||
Property and equipment, net | 3,627,886 | — | 3,627,886 | ||||||||
Intangible assets, net | 3,302,270 | — | 3,302,270 | ||||||||
Goodwill | 101,008 | — | 101,008 | ||||||||
Other assets | 1,995 | — | 1,995 | ||||||||
Total assets | $ | 75,598,736 | $ | — | $ | 75,598,736 | |||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt obligations | $ | 619,315 | $ | — | $ | 619,315 | |||||
Current portion of capital lease obligations | 40,586 | — | 40,586 | ||||||||
Accounts payable | 2,395,984 | — | 2,395,984 | ||||||||
Accrued liabilities | 6,597,458 | — | 6,597,458 | ||||||||
Contract liabilities | 2,486,111 | (3,880 | ) | 2,482,231 | |||||||
Total current liabilities | 12,139,454 | (3,880 | ) | 12,135,574 | |||||||
Long-term deferred rent | 1,035,974 | — | 1,035,974 | ||||||||
Long-term capital lease obligations | 68,978 | — | 68,978 | ||||||||
Total liabilities | 13,244,406 | (3,880 | ) | 13,240,526 | |||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at December 31, 2018 and December 31, 2017, respectively | 1,322 | — | 1,322 | ||||||||
Common stock, par value $0.001, 100,000,000 shares authorized, 29,209,506 and 28,354,822 shares issued, 27,956,401 and 27,283,918 shares outstanding at December 31, 2018 and 2017, respectively | 30,120 | — | 30,120 | ||||||||
Treasury stock at cost, 1,253,105 and 1,070,904 shares at December 31, 2018 and December 31, 2017, respectively | (2,116,640 | ) | — | (2,116,640 | ) | ||||||
Additional paid-in capital | 85,744,750 | — | 85,744,750 | ||||||||
Accumulated deficit | (21,305,222 | ) | 3,880 | (21,301,342 | ) | ||||||
Total stockholders’ equity | 62,354,330 | 3,880 | 62,358,210 | ||||||||
Total liabilities and stockholders’ equity | $ | 75,598,736 | $ | — | $ | 75,598,736 |
Impact of changes in accounting policies | |||||||||||||||||||||||
Three Months Ended December 31, 2018 | Year Ended December 31, 2018 | ||||||||||||||||||||||
As reported | Adjustments | Balances without adoption of Topic 606 | As reported | Adjustments | Balances without adoption of Topic 606 | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Technology development | $ | 5,548,639 | $ | — | $ | 5,548,639 | $ | 20,967,556 | $ | — | $ | 20,967,556 | |||||||||||
Products and licensing | 7,989,686 | — | 7,989,686 | 21,949,689 | 1,630 | 21,951,319 | |||||||||||||||||
Total revenues | 13,538,325 | — | 13,538,325 | 42,917,245 | 1,630 | 42,918,875 | |||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||
Technology development | 4,268,509 | — | 4,268,509 | 15,400,475 | — | 15,400,475 | |||||||||||||||||
Products and licensing | 2,697,538 | — | 2,697,538 | 8,078,870 | — | 8,078,870 | |||||||||||||||||
Total cost of revenues | 6,966,047 | — | 6,966,047 | 23,479,345 | — | 23,479,345 | |||||||||||||||||
Gross profit | 6,572,278 | — | 6,572,278 | 19,437,900 | 1,630 | 19,439,530 | |||||||||||||||||
Operating expense: | |||||||||||||||||||||||
Selling, general and administrative | 4,896,136 | — | 4,896,136 | 14,794,205 | — | 14,794,205 | |||||||||||||||||
Research, development and engineering | 1,252,663 | — | 1,252,663 | 3,766,160 | — | 3,766,160 | |||||||||||||||||
Total operating expense | 6,148,799 | — | 6,148,799 | 18,560,365 | — | 18,560,365 | |||||||||||||||||
Operating income | 423,479 | — | 423,479 | 877,535 | 1,630 | 879,165 | |||||||||||||||||
Other income: | |||||||||||||||||||||||
Other expense | (1,070 | ) | — | (1,070 | ) | (17,143 | ) | — | (17,143 | ) | |||||||||||||
Investment income | 198,525 | — | 198,525 | 549,580 | — | 549,580 | |||||||||||||||||
Interest expense | (21,136 | ) | — | (21,136 | ) | (124,344 | ) | — | (124,344 | ) | |||||||||||||
Total other income | 176,319 | — | 176,319 | 408,093 | — | 408,093 | |||||||||||||||||
Income from continuing operations before income taxes | 599,798 | — | 599,798 | 1,285,628 | 1,630 | 1,287,258 | |||||||||||||||||
Income tax expense | 722,148 | — | 722,148 | 47,818 | — | 47,818 | |||||||||||||||||
Net (loss)/income from continuing operations | $ | (122,350 | ) | $ | — | $ | (122,350 | ) | $ | 1,237,810 | $ | 1,630 | $ | 1,239,440 |
December 31, | |||||||
2018 | 2017 | ||||||
Finished goods | $ | 1,339,832 | $ | 762,394 | |||
Work-in-process | 643,420 | 288,165 | |||||
Raw materials | 4,890,490 | 3,584,222 | |||||
$ | 6,873,742 | $ | 4,634,781 |
3. | Contract Balances |
Contract Assets | Contract Liabilities | ||||||
Opening Balance as of January 1, 2018 | $ | 1,987,841 | $ | 3,320,629 | |||
Revenue recognized that was included in the contract liabilities balance at the beginning of the period | — | (878,402 | ) | ||||
Transferred to payables from contract liabilities recognized at the beginning of the period | — | (2,078,640 | ) | ||||
Increases due to cash received or adjustment of estimates, excluding amounts recognized as revenue during the period | — | 2,122,524 | |||||
Transferred to receivables from contract assets recognized at the beginning of the period | (1,679,363 | ) | — | ||||
Increases as a result of cumulative catch-up adjustment arising from changes in the estimate of the stage of completion | 2,450,837 | — | |||||
Balance as of December 31, 2018 | $ | 2,759,315 | $ | 2,486,111 |
December 31, | |||||||
2018 | 2017 | ||||||
Silicon Valley Bank Term Loans | $ | 625,000 | $ | 2,458,333 | |||
Less: unamortized debt issuance costs | 5,685 | 21,993 | |||||
Less: current portion | 619,315 | 1,833,333 | |||||
Total long-term debt obligations | $ | — | $ | 603,007 |
Year | Amount | ||
2019 | $ | 625,000 | |
Total | $ | 625,000 |
Years ended December 31, | ||||||||
2018 | 2017 | |||||||
Interest expense on Term Loans | $ | 108,062 | $ | 201,696 | ||||
Amortization of debt issuance costs | 16,308 | 16,308 | ||||||
Other interest income | (26 | ) | (652 | ) | ||||
Total interest expense | $ | 124,344 | $ | 217,352 |
December 31, | |||||||
2018 | 2017 | ||||||
Billed | $ | 13,289,790 | $ | 6,189,625 | |||
Other | 31,361 | 20,000 | |||||
13,321,151 | 6,209,625 | ||||||
Less: allowance for doubtful accounts | (284,083 | ) | (280,583 | ) | |||
$ | 13,037,068 | $ | 5,929,042 |
December 31, | |||||||
2018 | 2017 | ||||||
Building | $ | 69,556 | $ | 69,556 | |||
Equipment | 9,341,007 | 8,213,626 | |||||
Furniture and fixtures | 640,890 | 565,885 | |||||
Software | 1,122,231 | 1,122,231 | |||||
Leasehold improvements | 4,950,510 | 4,840,510 | |||||
16,124,194 | 14,811,808 | ||||||
Less—accumulated depreciation | (12,496,308 | ) | (11,957,167 | ) | |||
$ | 3,627,886 | $ | 2,854,641 |
December 31, | |||||||||
Estimated Life | 2018 | 2017 | |||||||
Patent costs | 1 - 18 years | $ | 4,991,460 | $ | 4,658,198 | ||||
Developed technology | 5 years | 2,600,000 | 1,400,000 | ||||||
In-process research and development | N/A | 200,000 | — | ||||||
Customer base | 7 years | 100,000 | — | ||||||
Trade names | 3 years | 150,000 | — | ||||||
8,041,460 | 6,058,198 | ||||||||
Accumulated amortization | (4,739,190 | ) | (4,330,808 | ) | |||||
$ | 3,302,270 | $ | 1,727,390 |
Year Ending December 31, | |||
2019 | $ | 591,120 | |
2020 | 558,156 | ||
2021 | 535,288 | ||
2022 | 480,219 | ||
2023 | 279,631 | ||
2023 and beyond | 857,856 | ||
$ | 3,302,270 |
December 31, | ||||||||
2018 | 2017 | |||||||
Accrued compensation | $ | 4,467,587 | $ | 5,274,005 | ||||
Accrued professional fees | 198,062 | 117,445 | ||||||
Accrued income tax | 236,636 | 403,547 | ||||||
Deferred rent | 146,542 | 144,740 | ||||||
Royalties | 302,428 | 290,235 | ||||||
Accrued liabilities-other | 404,752 | 317,258 | ||||||
Working capital payable | 542,983 | — | ||||||
Liability to related party | 298,468 | — | ||||||
Total accrued liabilities | $ | 6,597,458 | $ | 6,547,230 |
Years ended December 31, | |||||||
2018 | 2017 | ||||||
Current: | |||||||
Federal | $ | (44,727 | ) | $ | (1,154,105 | ) | |
State | 92,545 | 5,526 | |||||
Deferred federal | — | — | |||||
Deferred state | — | — | |||||
Income tax expense/(benefit) | $ | 47,818 | $ | (1,148,579 | ) |
December 31, 2018 | December 31, 2017 | ||||||||
Long-Term | Long-Term | ||||||||
Bad debt and inventory reserve | $ | 332,721 | $ | 226,358 | |||||
Inventory adjustment | (21,785 | ) | 405,242 | ||||||
UNICAP | 2,804 | 32,579 | |||||||
Deferred revenue | 115,676 | 84,669 | |||||||
Deferred rent | 288,017 | 340,199 | |||||||
Depreciation and amortization | (838,540 | ) | (1,238,458 | ) | |||||
Charitable contributions | — | 3,385 | |||||||
Net operating loss carryforwards- Luna | 349,421 | 349,421 | |||||||
Net operating loss carryforwards- API | 1,265,538 | 1,436,568 | |||||||
Net operating loss carryforwards - state | 179,149 | 534,194 | |||||||
Net operating loss carryforwards- Canada | 10,503 | 10,503 | |||||||
Research and development credits | — | 235,613 | |||||||
California manufacturing credit | — | 15,554 | |||||||
Accrued liabilities | 394,118 | 504,472 | |||||||
Deferred compensation | 216,944 | 223,607 | |||||||
Stock-based compensation | 803,757 | 1,275,372 | |||||||
Restricted stock | 60,681 | — | |||||||
State bonus | 44,861 | — | |||||||
AMT credit | — | 581,467 | |||||||
Transaction costs | 63,668 | — | |||||||
Total | 3,267,533 | 5,020,745 | |||||||
Valuation allowance | (3,267,533 | ) | (5,020,745 | ) | |||||
Net deferred tax asset | $ | — | $ | — |
Years ended December 31, | ||||||
2018 | 2017 | |||||
Income tax expense at federal statutory rate | 21.00 | % | 34.00 | % | ||
State taxes, net of federal tax effects | — | % | (10.84 | )% | ||
Change in tax rate from Tax Cuts and Jobs Act | — | % | (79.17 | )% | ||
Change in valuation allowance | (27.65 | )% | 113.86 | % | ||
Incentive stock options | (1.05 | )% | (9.65 | )% | ||
Provision to return adjustments | 21.16 | % | 3.87 | % | ||
Meals and entertainment | 0.97 | % | (0.65 | )% | ||
Capitalized merger costs | — | % | — | % | ||
AMT Carryover | (9.83 | )% | — | % | ||
Other permanent differences | (0.88 | )% | (3.55 | )% | ||
Income tax expense/(benefit) | 3.72 | % | 47.87 | % |
Options Outstanding | Options Exercisable | ||||||||||||||||||||||
Number of Shares | Price per Share Range | Weighted Average Exercise Price | Aggregate Intrinsic Value (1) | Number of Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value (1) | |||||||||||||||||
Balance at January 1, 2017 | 2,857,114 | $0.61 - 6.83 | $ | 1.89 | $ | 107,063 | 2,367,630 | $ | 1.93 | $ | 101,071 | ||||||||||||
Forfeited | (178,665 | ) | $1.27 - 6.83 | $ | 2.24 | ||||||||||||||||||
Exercised | (83,888 | ) | $0.82 - 1.40 | $ | 1.19 | ||||||||||||||||||
Granted | 120,000 | $1.51 - 2.40 | $ | 1.82 | |||||||||||||||||||
Balance at December 31, 2017 | 2,714,561 | $0.61 - 6.55 | $ | 1.88 | $ | 2,098,195 | 2,590,030 | $ | 1.89 | $ | 2,013,034 | ||||||||||||
Forfeited | (675,607 | ) | $1.15 - 6.55 | $ | 1.90 | ||||||||||||||||||
Exercised | (96,425 | ) | $0.65 - 2.46 | $ | 2.07 | ||||||||||||||||||
Granted | 1,166,339 | $2.67 - 3.53 | $ | 3.09 | |||||||||||||||||||
Balance at December 31, 2018 | 3,108,868 | $0.61 - 6.55 | $ | 2.26 | $ | 3,669,794 | 1,986,740 | $ | 1.81 | $ | 3,314,494 |
(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. |
Years ended December 31, | ||||
2018 | 2017 | |||
Risk-free interest rate range | 3.0% | 2.05% | ||
Expected life of option-years | 7 | 6.5 | ||
Expected stock price volatility | 67% | 69% | ||
Expected dividend yield | —% | —% |
Options Outstanding | Options Exercisable | ||||||||||||
Range of Exercise Prices | Options Outstanding | Weighted Average Remaining Life in Years | Weighted Average Exercise Price | Options Exercisable | Weighted Average Exercise Price of Options Exercisable | ||||||||
Year ended December 31, 2017 | $0.61 - 6.55 | 2,714,561 | 4.23 | $1.88 | 2,590,030 | $1.89 | |||||||
Year ended December 31, 2018 | $0.61 - 6.55 | 3,108,868 | 5.72 | $2.26 | 1,986,740 | $1.81 |
Total Intrinsic Value of Options Exercised | Total Fair Value of Options Vested | ||||||
Year ended December 31, 2017 | $ | 62,549 | $ | 3,962,746 | |||
Year ended December 31, 2018 | $ | 112,213 | $ | 2,980,110 |
Number of Unvested Shares | Weighted Average Grant Date Fair Value | Aggregate Value of Unvested Shares | ||||||
Balance at January 1, 2017 | 829,998 | $1.19 | $ | 988,763 | ||||
Granted | 478,865 | $1.63 | $ | 780,252 | ||||
Vested | (617,498 | ) | $1.23 | $ | (758,653 | ) | ||
Forfeitures | (201,667 | ) | $1.35 | $ | (272,017 | ) | ||
Balance at December 31, 2017 | 489,698 | $1.51 | $ | 738,345 | ||||
Granted | 296,287 | $3.07 | $ | 909,600 | ||||
Vested | (312,365 | ) | $1.45 | $ | (454,339 | ) | ||
Forfeitures | (15,000 | ) | $1.41 | $ | (21,150 | ) | ||
Balance at December 31, 2018 | 458,620 | $2.56 | $ | 1,172,456 |
Number of Stock Units | Weighted Average Grant Date Fair Value per Share | Intrinsic Value Outstanding | ||||||
January 1, 2017 | 393,012 | $1.37 | ||||||
Granted | 73,690 | $1.54 | ||||||
Vested | — | $1.15 | ||||||
Converted | — | $0.00 | ||||||
December 31, 2017 | 466,702 | $1.40 | $ | 1,134,086 | ||||
Granted | 40,588 | $2.99 | ||||||
Vested | — | $1.15 | ||||||
Converted | — | $0.00 | ||||||
December 31, 2018 | 507,290 | $1.40 | $1,699,422 |
2019 | 1,216,124 | ||
2020 | 1,117,684 | ||
2021 | 640,800 | ||
2022 | 544,704 | ||
2023 | 544,704 | ||
Thereafter | 544,704 | ||
$ | 4,608,720 |
Years ended December 31, | ||||||||
2018 | 2017 | |||||||
Technology Development revenue | $ | 20,967,556 | $ | 18,576,383 | ||||
Products and Licensing revenue | 21,949,689 | 14,505,482 | ||||||
Total revenue | 42,917,245 | 33,081,865 | ||||||
Technology Development operating income/(loss) | 378,212 | (120,417 | ) | |||||
Products and Licensing operating income/(loss) | 499,323 | (2,087,731 | ) | |||||
Total operating income/(loss) | $ | 877,535 | $ | (2,208,148 | ) | |||
Depreciation, Technology Development | $ | 379,952 | $ | 359,626 | ||||
Depreciation, Products and Licensing | $ | 273,185 | $ | 747,216 | ||||
Amortization, Technology Development | $ | 130,765 | $ | 139,067 | ||||
Amortization, Products and Licensing | $ | 418,349 | $ | 1,280,699 |
December 31, | |||||||
2018 | 2017 | ||||||
Total segment assets: | |||||||
Technology Development | $ | 34,823,525 | $ | 32,011,084 | |||
Products and Licensing | 40,775,211 | 34,211,552 | |||||
Total | $ | 75,598,736 | $ | 66,222,636 | |||
Property plant and equipment and intangible assets, Technology Development | $ | 2,103,711 | $ | 2,361,663 | |||
Property plant and equipment and intangible assets, Products and Licensing | $ | 4,927,453 | $ | 4,831,671 |
Quarter Ended | |||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Technology development | $ | 4,637 | $ | 5,466 | $ | 5,316 | $ | 5,549 | $ | 4,235 | $ | 4,602 | $ | 4,591 | $ | 5,549 | |||||||||||||||
Products and licensing | 4,131 | 4,457 | 5,371 | 7,990 | 2,398 | 3,681 | 3,713 | 4,637 | |||||||||||||||||||||||
Total revenues | 8,768 | 9,923 | 10,687 | 13,538 | 6,633 | 8,283 | 8,304 | 10,186 | |||||||||||||||||||||||
Gross margin | 4,929 | 5,693 | 5,998 | 6,572 | 1,770 | 2,414 | 2,385 | 4,384 | |||||||||||||||||||||||
Operating income/(loss) | (373 | ) | 205 | 581 | 423 | (1,374 | ) | (237 | ) | (150 | ) | (61 | ) | ||||||||||||||||||
Net income/(loss) from continuing operations | (272 | ) | 299 | 1,293 | (122 | ) | (1,254 | ) | (195 | ) | 194 | 257 | |||||||||||||||||||
Income/(loss) from discontinued operations net of income taxes | 421 | 768 | 7,556 | 1,062 | (102 | ) | (26 | ) | 15,563 | 749 | |||||||||||||||||||||
Net (loss)/income | 149 | 1,067 | 8,849 | 940 | (1,356 | ) | (221 | ) | 15,757 | 1,006 | |||||||||||||||||||||
Net (loss)/income attributable to common stockholders | $ | 84 | $ | 1,004 | $ | 8,785 | $ | 873 | $ | (1,390 | ) | $ | (251 | ) | $ | 15,723 | $ | 939 | |||||||||||||
Net income/(loss) per share from continuing operations: | |||||||||||||||||||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.01 | $ | 0.05 | $ | — | $ | (0.05 | ) | $ | (0.01 | ) | $ | 0.01 | $ | 0.01 | ||||||||||||
Diluted | $ | (0.01 | ) | $ | 0.01 | $ | 0.04 | $ | — | $ | (0.05 | ) | $ | (0.01 | ) | $ | 0.01 | $ | 0.01 | ||||||||||||
Net income/(loss) per share from discontinued operations: | |||||||||||||||||||||||||||||||
Basic | $ | 0.02 | $ | 0.03 | $ | 0.27 | $ | 0.04 | $ | — | $ | — | $ | 0.56 | $ | 0.03 | |||||||||||||||
Diluted | $ | 0.02 | $ | 0.02 | $ | 0.23 | $ | 0.04 | $ | — | $ | — | $ | 0.48 | $ | 0.02 | |||||||||||||||
Net income/(loss) attributable to common stockholders: | |||||||||||||||||||||||||||||||
Basic | $ | — | $ | 0.04 | $ | 0.31 | $ | 0.03 | $ | (0.05 | ) | $ | (0.01 | ) | $ | 0.57 | $ | 0.03 | |||||||||||||
Diluted | $ | — | $ | 0.03 | $ | 0.27 | $ | 0.03 | $ | (0.05 | ) | $ | (0.01 | ) | $ | 0.48 | $ | 0.03 | |||||||||||||
Weighted average shares: | |||||||||||||||||||||||||||||||
Basic | 27,204,989 | 27,531,361 | 27,901,631 | 28,067,348 | 27,541,356 | 27,600,147 | 27,692,539 | 27,485,278 | |||||||||||||||||||||||
Diluted | 27,204,989 | 31,506,745 | 33,055,881 | 28,067,348 | 27,541,356 | 27,600,147 | 32,714,389 | 31,790,418 |
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Sale price | $ | 17,500,000 | $ | 33,500,000 | |||
Less: transition services payments | — | (1,500,000 | ) | ||||
Adjusted purchase price | 17,500,000 | 32,000,000 | |||||
Assets held for sale | (8,193,184 | ) | (16,851,540 | ) | |||
Liabilities held for sale | 989,453 | 2,330,052 | |||||
Transaction costs | (858,227 | ) | (895,186 | ) | |||
Return of working capital | 730,000 | — | |||||
Income tax expense | (1,572,245 | ) | (912,298 | ) | |||
Gain on sale of discontinued operations | $ | 8,595,797 | $ | 15,671,028 |
December 31, 2017 | ||||
Assets | ||||
Current assets: | ||||
Accounts receivable, net | $ | 1,940,125 | ||
Inventory | 2,316,329 | |||
Prepaid expenses and other current assets | 79,651 | |||
Total current assets | 4,336,105 | |||
Property and equipment, net | 599,102 | |||
Intangible assets, net | 1,510,203 | |||
Goodwill | 502,000 | |||
Other assets | 16,028 | |||
Total non-current assets | 2,627,333 | |||
Total assets held for sale | $ | 6,963,438 | ||
Liabilities | ||||
Current liabilities: | ||||
Accounts payable | $ | 851,785 | ||
Accrued liabilities | 120,666 | |||
Deferred revenue | — | |||
Total current liabilities | 972,451 | |||
Long-term deferred rent | — | |||
Total non-current liabilities | — | |||
Total liabilities held for sale | $ | 972,451 |
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Net revenues | $ | 8,363,606 | $ | 19,511,646 | |||
Cost of revenues | 5,294,268 | 12,994,656 | |||||
Operating expenses | 1,728,113 | 5,413,952 | |||||
Other (income)/expenses | (13,330 | ) | 31,758 | ||||
Income before income taxes | 1,354,555 | 1,071,280 | |||||
Allocated tax expense | 183,921 | 876,588 | |||||
Operating income from discontinued operations | 1,170,634 | 194,692 | |||||
Gain on sale, net of related income taxes | 8,595,797 | 15,671,028 | |||||
Net income from discontinued operations | $ | 9,766,431 | $ | 15,865,720 |
Preliminary | ||||
Allocation | ||||
Accounts receivable | $ | 1,742,693 | ||
Inventory | 1,435,606 | |||
Other current assets | 69,951 | |||
Property and equipment | 996,460 | |||
Identifiable intangible assets | 1,650,000 | |||
Goodwill | 101,008 | |||
Accounts payable and accrued expenses | (450,985 | ) | ||
Total purchase consideration | $ | 5,544,733 |
Estimated | Estimated | |||||
Fair Value | Useful Life | |||||
Developed technology | $ | 1,200,000 | 5.0 years | |||
In process research and development | 200,000 | 7.0 years | ||||
Trade names | 150,000 | 3.0 years | ||||
Customer base | 100,000 | 7.0 years | ||||
$ | 1,650,000 |
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
(unaudited) | (unaudited) | |||||||
Revenue | $ | 49,494,358 | $ | 40,954,093 | ||||
Income/(loss) from continuing operations | $ | 1,579,318 | $ | (2,778,487 | ) |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted- average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||
Equity compensation plans approved by security holders | 3,316,888 (1) | 2.16 (2) | 2,702,667 | |||
Total | 3,316,888 (1) | 2.16 (2) | 2,702,667 |
(a) | The following documents are filed as part of this Annual Report on Form 10-K: |
(1) | Financial Statements. See Index to Consolidated Financial Statements at Item 8 of this Report on Form 10-K. |
(2) | Schedules. |
Column A | Column B | Column C | Column D | Column E | |||||||||||
Balance at beginning of Period | Additions | Deductions | Balance at end of period | ||||||||||||
Year Ended December 31, 2017 | |||||||||||||||
Reserves deducted from assets to which they apply: | |||||||||||||||
Deferred tax valuation allowance | $ | 21,309,546 | $ | — | $ | (16,288,802 | ) | $ | 5,020,744 | ||||||
Allowances for doubtful accounts | 247,239 | 99,888 | (60,410 | ) | 286,717 | ||||||||||
$ | 21,556,785 | $ | 99,888 | $ | (16,349,212 | ) | $ | 5,307,461 | |||||||
Year Ended December 31, 2018 | |||||||||||||||
Reserves deducted from assets to which they apply: | |||||||||||||||
Deferred tax valuation allowance | $ | 5,020,744 | $ | — | $ | (1,753,211 | ) | $ | 3,267,533 | ||||||
Allowances for doubtful accounts | 286,717 | 3,500 | (6,134 | ) | 284,083 | ||||||||||
$ | 5,307,461 | $ | 3,500 | $ | (1,759,345 | ) | $ | 3,551,616 |
(3) | Exhibits. The exhibits filed as part of this report are listed under “Exhibits” at subsection (b) of this Item 15. |
(b) | Exhibits |
Exhibit No. | Exhibit Document |
2.1(2)# | |
2.2(32)# | |
2.3(33)# | |
2.4(34)+# | |
3.1(3) | |
3.2(4) | |
3.3(5) | |
3.4(6) | |
3.4(2) | |
4.1(7) | |
4.2(8) | |
4.3(5) | |
4.4(29) | |
4.5(29) | |
4.6(35) | |
4.7(30) | |
10.1(9) | |
10.2(7)** | |
10.3(7)** | |
10.4(7)** | |
10.5(10) | |
10.6(11)** | |
10.8(12) | |
10.9(4) | |
10.10(4) | |
10.11(4) | |
10.12(4) | |
10.13(36) | |
10.14(13)** | |
10.15(13)** | |
10.16(13) | |
10.17(13) |
10.18(14) | |
10.19(15) | |
10.20(16) | |
10.21(17) | |
10.22(18) | |
10.23(36) | |
10.24(19) | |
10.25(20) | |
10.28(21) | |
10.27(1)** | |
10.28(1)** | |
10.29(22) | |
10.30(22) | |
10.31(22) | |
10.32(23) | |
10.33(24) | |
10.34(25) | |
10.35(26) | |
10.36(27) | |
10.37(28) | |
10.38(31) | |
21.1 | |
23.1 | |
24.1 | Power of Attorney (see signature page) |
31.1 | |
31.2 | |
32.1*** | |
32.2*** |
(1) | Incorporated by reference to the exhibit to the Registrant's Quarterly Report on Form 10-A, Commission File No. 000-52008, filed on May 13, 2014. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(2) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on February 2, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(3) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on June 8, 2006. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(4) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on January 15, 2010 (reporting under Items 1.01, 3.02, 3.03, 5.03 and 9.01). The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(5) | Incorporated by reference to the exhibit to the Registrant’s Registration Statement on Form S-1, Commission File No. 333-131764, filed on February 10, 2006. The number given in parentheses indicates the corresponding exhibit number in such Form S-1. |
(6) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed with the Securities and Exchange Commission on May 10, 2010. The number in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(7) | Incorporated by reference to the exhibit to Amendment No. 5 of the Registrant’s Registration Statement on Form S-1, Commission File No. 333-131764, filed on May 19, 2006. The number given in parentheses indicates the corresponding exhibit number in such Form S-1. |
(8) | Incorporated by reference to the exhibit to Amendment No. 3 of the Registrant's Registration Statement on Form S-1, Commission File No. 333-131764, filed on April 28, 2006. The number given in parentheses indicates the corresponding exhibit number in such Form S-1. |
(9) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on July 17, 2009 (reporting under Items 1.01, 5.02 and 9.01). The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(10) | Incorporated by reference to the exhibit to Amendment No. 1 to Registrant’s Annual Report on Form 10-K, Commission File No. 000-52008, filed on April 6, 2007. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K/A. |
(11) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on June 14, 2007. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(12) | Incorporated by reference to the exhibit to Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on May 9, 2008. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(13) | Incorporated by reference to the exhibit to Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on May 17, 2010. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(14) | Incorporated by reference to the exhibit to Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on August 16, 2010. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(15) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on March 9, 2011. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(16) | Incorporated by reference to the exhibit to Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on May 16, 2011. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(17) | Incorporated by reference to the exhibit to Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on August 12, 2011. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(18) | Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K, Commission File No. 000-52008, filed on March 29, 2012. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K. |
(19) | Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on August 9, 2012. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(20) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on July 11, 2012. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(21) | Incorporated by reference to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on March 27, 2013. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(22) | Incorporated by reference to the exhibit to the Registrant's Quarterly Report on Form 10-K, Commission File No. 000-52008, filed on March 16, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K. |
(23) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on May 11, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(24) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, Commission File No. 000-52008, filed on October 5, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(25) | Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on May 14, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(26) | Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 10-Q, Commission File No. 000-52008, filed on August 14, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(27) | Incorporated by reference to the exhibit to the Registrant's Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on November 13, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(28) | Incorporated by reference to the exhibit to the Registrant's Annual Report on Form 10-K, Commission File No. 000-52008, filed on March 20, 2017. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K. |
(29) | Incorporated by reference to the exhibit to the Registrant’s Registration Statement on Form S-8, Commission File No. 333-211802, filed on June 3, 2016. The number given in parentheses indicates the corresponding exhibit number in such Form S-8. |
(30) | Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on August 10, 2016. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(31) | Incorporated by reference to the exhibit to the Registrant's Current Report on Form 8-K, Commission File No. 000-52008, filed on August 1, 2018. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(32) | Incorporated by reference to the exhibit to the Registrant's Quarterly Report on Form 10-Q, Commission File No. 000-52008, filed on August 1, 2018. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q. |
(33) | Incorporated by reference to the exhibit to the Registrant's Current Report on Form 8-K, Commission File No. 000-52008, filed on October 16, 2018. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(34) | Incorporated by reference to the exhibit to the Registrant's Current Report on Form 8-K, Commission File No. 000-52008, filed on March 4, 2018. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(35) | Incorporated by reference to the exhibit to the Registrant's Current Report on Form 8-K, Commission File No. 000-52008, filed on January 14, 2019. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K. |
(36) | Incorporated by reference to the exhibit to the Registrant's Annual Report on Form 10-K, Commission File No. 000-52008, filed on March 21, 2018. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K. |
# | Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to this agreement are omitted, but will be furnished to the Securities and Exchange Commission upon request. |
** | Confidential treatment has been granted with respect to portions of this exhibit, indicated by asterisks, which has been filed separately with the Securities and Exchange Commission. |
*** | These certifications are being furnished solely to accompany this annual report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
ITEM 16. | FORM 10-K SUMMARY |
LUNA INNOVATIONS INCORPORATED | |||
By: | /s/ Dale E. Messick | ||
Dale E. Messick Chief Financial Officer |
Signature | Title | Date | ||
/s/ Scott A. Graeff | President, Chief Executive Officer and Director (Principal Executive Officer) | March 14, 2019 | ||
Scott A. Graeff | ||||
/s/ Dale E. Messick | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | March 14, 2019 | ||
Dale E. Messick | ||||
/s/ Michael W. Wise | Director | March 14, 2019 | ||
Michael W. Wise | ||||
/s/ Donald Pastor | Director | March 14, 2019 | ||
Donald Pastor | ||||
/s/ John B. Williamson III | Director | March 14, 2019 | ||
John B. Williamson III | ||||
/s/ N. Leigh Anderson | Director | March 14, 2019 | ||
N. Leigh Anderson | ||||
/s/ Warren B. Phelps, III | Director | March 14, 2019 | ||
Warren B. Phelps, III | ||||
/s/ Gary Spiegel | Director | March 14, 2019 | ||
Gary Spiegel | ||||
/s/ Richard W. Roedel | Chairman of the Board of Directors | March 14, 2019 | ||
Richard W. Roedel |
Page | ||
ARTICLE 1 | INTRODUCTION | |
ARTICLE 2 | ELIGIBILITY | |
ARTICLE 3 | DEFERRAL ELECTIONS | |
ARTICLE 4 | DEFERRED COMPENSATION ACCOUNTS | |
ARTICLE 5 | DISTRIBUTION OF DEFERRED COMPENSATION | |
ARTICLE 6 | UNFUDED STATUS | |
ARTICLE 7 | DESIGNATION OF BENEFICIARY | |
ARTICLE 8 | ADMINISTRATION | |
ARTICLE 9 | TAXES | |
ARTICLE 10 | SECURITIES LAWS COMPLIANCE | |
ARTICLE 11 | GENERAL PROVISIONS | |
ARTICLE 12 | DEFINITIONS |
(a) | The Participant’s Separation from Service; |
(b) | Change in Control; or |
(c) | A Specified Date. |
(a) | Such election does not take effect until at least twelve (12) months after the date on which the election is made; |
(b) | Such election must defer the distribution for a period of at least five (5) years from the date such distribution would otherwise have been made; and |
(c) | If the distribution is scheduled to begin at specified time or pursuant to a fixed schedule, then such election must be made no less than twelve (12) months before the date the distribution is scheduled to be made. |
(a) | _____% of my aggregate Cash Director Fees shall be credited to my Stock Unit Account as provided for in the Plan; |
(b) | _____% of my aggregate Cash Director Fees shall not be deferred; |
(c) | _____% of my aggregate Stock Director Fees shall be credited to my Stock Unit Account as provided for in the Plan; and |
(d) | _____% of my aggregate Stock Director Fees shall not be deferred. |
(a) | My Separation of Service (as defined by the Plan); |
(b) | My _______ birthday, which is ____________, 20___ (indicate the age you would like to trigger the distribution and the date upon which you will be that age); |
(c) | ____________ (indicate date that you would like to trigger distribution); or |
(d) | A Change in Control (as defined by the Plan). |
1. | I have reviewed this annual report on Form 10-K of Luna Innovations Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ Scott A. Graeff | |
Scott A. Graeff | |
President and Chief Executive Officer (principal executive officer) |
1. | I have reviewed this annual report on Form 10-K of Luna Innovations Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ DALE E. MESSICK | |
Dale E. Messick | |
Chief Financial Officer (principal financial officer) |
/S/ Scott A. Graeff | |
Scott A. Graeff | |
President and Chief Executive Officer (principal executive officer) |
/S/ DALE E. MESSICK | |
Dale E. Messick | |
Chief Financial Officer (principal financial officer) |
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Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Mar. 12, 2019 |
Jun. 29, 2018 |
|
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | LUNA | ||
Entity Registrant Name | LUNA INNOVATIONS INC | ||
Entity Central Index Key | 0001239819 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 28,125,598 | ||
Entity Public Float | $ 71.9 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock authorized (in shares) | 1,321,514 | 1,321,514 |
Preferred stock issued (in shares) | 1,321,514 | 1,321,514 |
Preferred stock outstanding (in shares) | 1,321,514 | 1,321,514 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock issued (in shares) | 29,209,506 | 28,354,822 |
Common stock outstanding (in shares) | 27,956,401 | 27,283,918 |
Treasury stock (in shares) | 1,253,105 | 1,070,904 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Statement [Abstract] | ||
Allocated tax expense | $ 183,921 | $ 876,588 |
Tax effect on gain from sale of discontinued operations | $ 1,572,244 | $ 912,298 |
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Cash flows (used in)/provided by operating activities: | ||
Net income | $ 11,004,241 | $ 14,614,905 |
Adjustments to reconcile net income to net cash (used in)/provided by operating activities: | ||
Depreciation and amortization | 1,218,559 | 2,526,609 |
Stock-based compensation | 627,856 | 715,094 |
Loss on disposal of fixed assets | (1,000) | 3,640 |
Gain on sale of discontinued operations, net of income taxes | (8,595,797) | (15,671,028) |
Bad debt | 6,000 | 99,888 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (6,240,377) | 1,152,055 |
Contract assets | (761,714) | 0 |
Inventory | (967,797) | (1,902,311) |
Other assets | 1,849,630 | 83,428 |
Accounts payable and accrued expenses | (461,928) | (896,534) |
Contract liabilities | (986,498) | 0 |
Deferred revenue | 0 | 189,296 |
Net cash (used in)/provided by operating activities | (3,308,825) | 915,042 |
Cash flows provided by investing activities: | ||
Acquisition of property and equipment | (386,890) | (1,352,531) |
Proceeds from sale of property and equipment | 1,000 | 3,000 |
Intangible property costs | (374,766) | (495,597) |
Acquisition of Micron Optics | (5,001,750) | 0 |
Proceeds from sale of discontinued operations, net | 15,799,529 | 28,026,528 |
Net cash provided by investing activities | 10,037,123 | 26,181,400 |
Cash flows used in financing activities: | ||
Payments on debt obligations | (1,833,333) | (1,833,333) |
Payments on capital lease obligations | (46,653) | (52,128) |
Purchase of treasury stock | (466,894) | (1,131,759) |
Proceeds from the exercise of options and warrants | 1,097,316 | 99,853 |
Net cash used in financing activities | (1,249,564) | (2,917,367) |
Net change in cash and cash equivalents | 5,478,734 | 24,179,075 |
Cash and cash equivalents—beginning of period | 36,981,533 | 12,802,458 |
Cash and cash equivalents—end of period | 42,460,267 | 36,981,533 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 117,616 | 209,497 |
Cash paid for income taxes | 1,846,037 | 377,907 |
Cash received for income tax refunds | 17,834 | 0 |
Common stock issued pursuant to restricted stock vesting | 200,202 | 150,000 |
Dividend on preferred stock | $ 257,302 | $ 146,889 |
Organization and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Luna Innovations Incorporated (“we” 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 products for the telecommunications industry 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 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. Consolidation Policy Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include our accounts and the accounts of our wholly owned subsidiaries. We eliminate from our financial results all intercompany transactions. Reclassifications Certain amounts in the prior period have been reclassified to conform to current presentation. As a result of the adoption of Accounting Standards Codification ("ASC") 2014-09, Revenue from Contracts with Customers (Topic 606), we presented balances entitled contract assets and contract liabilities within the consolidated balance sheet as well as the impact of the changes in these balances within the consolidated statement of cash flows. We reclassified comparable balances within the December 31, 2017 consolidated balance sheet as well as the impact of changes in those balances within the consolidated statement of cash flows in order to enhance comparability. These reclassifications had no effect on our reported financial condition, results of operations, or cash flows. Any other reclassifications were immaterial to the consolidated interim financial statements taken as a whole. Use of Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may differ from such estimates and assumptions. Technology Development Revenues We perform research and development for U.S. Federal government agencies, educational institutions and commercial organizations. We account for a research contract when a contract has been executed, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the contract price is considered probable. Revenue is earned under cost reimbursable, time and materials and fixed price contracts. Direct contract costs are expensed as incurred. Our contracts with agencies of the U.S. government are subject to periodic funding by the respective contracting agency. Funding for a contract may be provided in full at inception of the contract or ratably throughout the contract as the services are provided. In evaluating the probability of funding for purposes of assessing collectability of the contract price, we consider our previous experience with our customers, communication with our customers regarding funding status and our knowledge of available funding for the contract or program. If funding is not assessed as probable, revenue recognition is deferred until realization is reasonably assured. Under the typical payment terms of our U.S. government contracts, the customer pays us either performance-based payments ("PBPs") or progress payments. PBPs, which are typically used in the firm fixed price contracts, are interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments, which are typically used in our cost type contracts, are interim payments based on costs incurred as the work progresses. For our U.S. government cost-type contracts, the customer generally pays us during the performance period for 80% to 90% of our actual costs incurred. Because the customer retains a small portion of the contract price until completion of the contract and audit of allowable costs, cost type contracts generally result in revenue recognized in excess of billings which we present as contract assets on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. For non-U.S. government contracts, we typically receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment. We recognize a liability for these advance payments and PBPs paid in advance which are in excess of the revenue recognized and present these amounts as contract liabilities on the balance sheet. To determine the proper revenue recognition method for research and development contracts, we evaluate whether two or more contracts should be combined and accounted for as one single modified contract and whether the combined or single contract should be accounted for as more than one performance obligation. For instances where a contract has options that were bid with the initial contract and awarded at a later date, we combine the options with the original contract when options are awarded. For most of our contracts, the customer contracts for research with multiple milestones that are interdependent. Consequently, the entire contract is accounted for as one performance obligation. The effect of the combined or modified contract on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract revenue recognition is measured over time as we perform because of continuous transfer of control to the customer. For U.S. government contracts which are typically subject to the Federal Acquisition Regulation, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for cost incurred plus a reasonable profit and take control of any work in process. From time to time, as part of normal management processes, facts may change, causing revisions to estimated total costs or revenues expected. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. We generally use the input method, more specifically the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The underlying bases for estimating our contract research revenues are measurable expenses, such as labor, subcontractor costs and materials, and data that are updated on a regular basis for purposes of preparing our cost estimates. Our research contracts generally have a period of performance of six months to three years, and our estimates of contract costs have historically been consistent with actual results. Revisions in these estimates between accounting periods to reflect changing facts and circumstances have not had a material impact on our operating results, and we do not expect future changes in these estimates to be material. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Under cost reimbursable contracts, we are reimbursed for costs that are determined to be reasonable, allowable and allocable to the contract and paid a fixed fee representing the profit negotiated between us and the contracting agency. Revenue from cost reimbursable contracts is recognized as costs are incurred plus an estimate of applicable fees earned. We consider fixed fees under cost reimbursable contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue from time and materials contracts is recognized based on direct labor hours expended at contract billing rates plus other billable direct costs. Fixed price contracts may include either a product delivery or specific service performance throughout a period. For fixed price contracts that are based on the proportional performance method and involve a specified number of deliverables, we recognize revenue based on the proportion of the cost of the deliverables compared to the cost of all deliverables included in the contract as this method more accurately measures performance under these arrangements. For fixed price contracts that provide for the development and delivery of a specific prototype or product, revenue is recognized based upon the percentage of completion method. Whether certain costs under government contracts are allowable is subject to audit by the government. Certain indirect costs are charged to contracts using provisional or estimated indirect rates, which are subject to later revision based on government audits of those costs. Management is of the opinion that costs subsequently disallowed, if any, would not likely have a significant impact on revenues recognized for those contracts. Product Sales Revenues Revenues from product sales are generated by the sale of commercial products and services under various sales programs to the end user and through distribution channels. We sell fiber optic sensing systems to end users for use in numerous fiber optic based measurement applications. Revenues are recorded net of applicable sales taxes collected from customers and payable to state or local governmental entities. To determine the proper revenue recognition method for Products and Licensing contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. We recognize revenue when the performance obligation has been satisfied by transferring the control of the product or service to the customer. For tangible products that contain software that is essential to the tangible product’s functionality, we consider the product and software to be a single performance obligation and recognize revenue accordingly. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on their relative stand-alone selling prices. In such circumstances, we use the observable price of goods or services which are sold separately in similar circumstances to similar customers. If these prices are not observable, then we will estimate the stand-alone selling price using information that is reasonably available. For the majority of our standard products and services, price list and discount structures related to customer type are available. For products and services that do not have price list and discount structures, we may use one or more of the following: (i) adjusted market assessment approach, (ii) expected cost plus a margin approach, and (iii) residual approach. The adjusted market approach requires us to evaluate the market in which we sell goods or services and estimate the price that a customer in that market would be willing to pay for those goods or services. The expected cost plus margin approach requires us to forecast our expected costs of satisfying the performance obligation and then add a reasonable margin for that good or service. The residual approach decreases the total transaction price by the sum of the observable standalone selling prices if either the company sells the same good or services to different customers for a broad range of amounts or the company has not established a price for the good or service and that good or service has not been sold on a standalone basis. Shipping and handling activities primarily occur after a customer obtains control and are considered fulfillment cost rather than separate performance obligations. Similarly, sales and similar taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer are excluded from the measurement of the transaction price. For standard products, we recognize revenue at a point in time when control passes to the customer. Absent substantial product acceptance clauses, this is based on the shipping terms. For custom products that require engineering and development based on customer requirements, we will recognize revenue over time using the output method for any items shipped and any finished goods or work in process that is produced for balances of open sales orders. For any finished goods or work in process that has been produced for the balance of open sales orders we recognize revenue by applying the average selling price for such open order to the lesser of the on hand balance in finished goods or open sales order quantity which we present as a contract asset on the balance sheet. Cost of sales is recognized based on the standard cost of the finished goods and work in process associated with this revenue and inventory balances are reduced accordingly. For extended warranties and product rentals, revenue is recognized over time using the output method based on the time elapsed for the warranty or service period. In the case of warranties, we record a contract liability for amounts billed but that are not recognized until subsequent period. A separate contract liability is recorded for the cost associated with warranty repairs based on our estimate of future expense. For testing services where we are performing testing on an asset the customer controls, revenue is recognized over time by the output method using the performance to date. For training where the customer is receiving the benefit of training as it is occurring and for repairs to a customer controlled asset, revenue is recognized over time by the output method using the performance to date. For royalty revenue, we apply the practical expedient “royalty exception” recognizing revenue based on the royalty agreement which specifies an amount based on sales or minimum amount, whichever is greater. In some product rental contracts, a customer may be offered a discount on the purchase of an item that would provide for a material right. When a material right has been provided to a customer, a separate performance obligation is established and a portion of the rental revenue will be deferred until the future product is purchased or the option expires. This deferred revenue is recognized as a contract liability on the balance sheet. In certain circumstances we may offer a "right of return" to a distributor of our products, in which case a contract liability is calculated based on the terms of the agreement and recorded as a reduction to revenue. In addition, a contract asset for the rights to recover products from customers and a reduction of cost of sales is also calculated and recorded. Allowance for Uncollectible Receivables Accounts receivable are recorded at their face amount, less an allowance for doubtful accounts. We review the status of our uncollected receivables on a regular basis. In determining the need for an allowance for uncollectible receivables, we consider our customers’ financial stability, past payment history and other factors that bear on the ultimate collection of such amounts. The allowance was $0.3 million at each of December 31, 2018 and 2017. Cash Equivalents We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. To date, we have not incurred losses related to cash and cash equivalents. Cash equivalents at December 31, 2018 and 2017 included $38.3 million and $25.2 million, respectively, invested in U.S. Treasury obligations through a sweep account with our bank. The full value of amounts invested through the sweep account are convertible to cash on a daily basis. Our cash transactions are processed through reputable commercial banks. We regularly maintain cash balances with financial institutions which exceed Federal Deposit Insurance Corporation (“FDIC”) insurance limits. At December 31, 2018 and 2017, we had approximately $4.0 million and $11.5 million, respectively, in excess of FDIC insured limits. We have outstanding term loans that require us to comply with certain financial covenants, including maintaining a minimum cash balance of at least $4.0 million. Fair Value Measurements Our financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. Valuation techniques are based on observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These two types of inputs have created the following fair value hierarchy:
The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. We consider the terms of the Silicon Valley Bank ("SVB") debt facility including its interest rate of prime plus 2%, to be at market based upon similar instruments that would be available to us. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. We record depreciation using the straight-line method over the following estimated useful lives:
Intangible Assets Intangible assets consist of patents related to certain intellectual property that we have developed or acquired and identifiable intangible assets recognized in connection with our merger with Advanced Photonix, Inc. ("API") and Micron Optics, Inc. ("MOI"). We amortize our identified intangible assets over their estimated useful lives ranging between one and eleven years, and analyze the reasonableness of the remaining useful life whenever events or circumstances indicate that the carrying amount may not be recoverable to determine whether their carrying value has been impaired. Goodwill Goodwill is reviewed for impairment at least annually, or more frequently if events or circumstances indicate that goodwill might be impaired. We have established October 1 as our specified annual date for impairment testing. Research, Development and Engineering Research, development and engineering expenses not related to contract performance are expensed as incurred. We expensed $3.8 million and $2.7 million of non-contract related research, development and engineering expenses for the year ended December 31, 2018 and 2017, respectively. Valuation of Long-Lived Assets We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Assets to be disposed of by sale are reflected at the lower of their carrying amount or fair value less cost to sell. Inventory Inventory consists of finished goods, work in process and raw materials valued at the lower of cost (determined on the first-in, first-out basis) or net realizable value. Net Income/(Loss) per Share Basic per share data is computed by dividing net income/(loss) attributable to common stockholders by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income/(loss) attributable to common stockholders 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 common shares had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method. The effect of 4.9 million common stock equivalents (which include outstanding warrants, preferred stock, accrued stock dividends, and stock options) are included for the diluted per share data for the year ended December 31, 2018. The effect of 4.3 million common stock equivalents (which include outstanding warrants, preferred stock and stock options) are not included for the year ended December 31, 2017, as they are anti-dilutive to earnings per share due to us having a net loss from continuing operations. Stock-Based Compensation We have two stock-based compensation plans, which are described further in Note 10. We recognize compensation expense based upon the fair value of the underlying equity award as of the date of grant. We have elected to use the Black-Scholes option pricing model to value any stock options granted. Restricted stock and restricted stock units awarded are valued at the closing price of our common stock on the date of the award. We recognize stock-based compensation for such awards on a straight-line method over the requisite service period of the awards taking into account the effects of the employees’ expected exercise. We reduce stock-based compensation expense for the value of any forfeitures of vested awards as such forfeitures occur. We recognize expense for equity instruments issued to non-employees based upon the fair value of the equity instruments issued. Advertising We expense the cost of advertising as incurred. Advertising expenses were $0.1 million for each of the years ended December 31, 2018 and 2017. Income Taxes We account for income taxes using the liability method. Deferred tax assets or liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when the differences reverse. A valuation allowance against net deferred tax assets is provided unless we conclude it is more likely than not that the deferred tax assets will be realized. We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We evaluate our ability to benefit from all deferred tax assets and establish valuation allowances for amounts we believe are not more-likely-than-not to be realizable. For uncertain tax positions, we use a more-likely-than-not threshold, 51% or greater, based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements. Penalties, if probable and reasonably estimable, and interest expense related to uncertain tax positions are recognized as a component of the tax provision. We account for income taxes using the liability method. Deferred tax assets or liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when the differences reverse. A valuation allowance against net deferred tax assets is provided unless we conclude it is more likely than not that the deferred tax assets will be realized. Recent Accounting Pronouncements Effective January 1, 2018, we adopted Revenue from Contracts with Customers (Topic 606), using the modified retrospective transition method. Under the modified retrospective approach, we apply the standards to new contracts and those that were not completed as of January 1, 2018. For those contracts not completed as of January 1, 2018, this method resulted in a cumulative adjustment to decrease the accumulated deficit in the net amount of $0.4 million. Prior periods will not be retrospectively adjusted, but we will maintain dual reporting for the year of initial application in order to maintain comparability of the periods presented. The cumulative effect of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of Topic 606 was as follows:
Contract assets were formerly reported as unbilled accounts receivable. Contract liabilities were formerly reported as accrued liabilities or deferred revenue. Inventory was also impacted by the adoption of the new guidance. The titles have been changed in the table below to be consistent with accounts currently used under the new standard.
Under the new standard, contracts in our Technology Development segment, which primarily provide research services, are not materially impacted upon the adoption of Topic 606 as revenue will continue to be recognized over time using an input model. Contracts in our Products and Licensing segment generally provide for the following revenue sources: standard product sales, custom product development and sales, product rental, extended warranties, training/service, and certain royalties. Revenues for this segment are recognized using either the “point in time” or “over time” methods of Topic 606, depending upon the revenue source. The major change in revenue recognition for the Products and Licensing segment related to custom optoelectronic products which changed from “point in time” to “over time” upon the adoption of Topic 606. This change results in the acceleration of revenue when compared to existing standards with the cumulative adjustment relating to contracts that are not complete as of December 31, 2017 recognized as an adjustment to opening accumulated deficit on January 1, 2018. The revenue received from our custom optoelectronic products segment is included as part of our discontinued operations (Note 17) and shown above in the current assets and liabilities held for sale as of December 31, 2017. Our revenue for our standard products will continue to be recognized using the "point in time" model of Topic 606, and the timing of such revenue recognition is not expected to differ materially from our historical revenue recognition. Other immaterial adjustments related to the Products and Licensing segment that are sometimes offered to customers include discounts on future purchases related to rental agreements, customer rights of return, and volume discounts. Technology Development Revenues We perform research and development for U.S. Federal government agencies, educational institutions and commercial organizations. We account for a research contract when a contract has been executed, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the contract price is considered probable. Revenue is earned under cost reimbursable, time and materials and fixed price contracts. Direct contract costs are expensed as incurred. Our contracts with agencies of the U.S. government are subject to periodic funding by the respective contracting agency. Funding for a contract may be provided in full at inception of the contract or ratably throughout the contract as the services are provided. In evaluating the probability of funding for purposes of assessing collectability of the contract price, we consider our previous experience with our customers, communication with our customers regarding funding status and our knowledge of available funding for the contract or program. If funding is not assessed as probable, revenue recognition is deferred until realization is reasonably assured. Under the typical payment terms of our U.S. government contracts, the customer pays us either performance-based payments ("PBPs") or progress payments. PBPs, which are typically used in the firm fixed price contracts, are interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments, which are typically used in our cost type contracts, are interim payments based on costs incurred as the work progresses. For our U.S. government cost-type contracts, the customer generally pays us during the performance period for 80% to 90% of our actual costs incurred. Because the customer retains a small portion of the contract price until completion of the contract and audit of allowable costs, cost type contracts generally result in revenue recognized in excess of billings which we present as contract assets on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. For non-U.S. government contracts, we typically receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment. We recognize a liability for these advance payments and PBPs paid in advance which are in excess of the revenue recognized and present these amounts as contract liabilities on the balance sheet. To determine the proper revenue recognition method for research and development contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. For instances where a contract has options that were bid with the initial contract and awarded at a later date, we combine the options with the original contract when options are awarded. For most of our contracts, the customer contracts for research with multiple milestones that are interdependent. Consequently, the entire contract is accounted for as one performance obligation. The effect of the combined or modified contract on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract revenue recognition is measured over time as we perform because of continuous transfer of control to the customer. For U.S. government contracts which are typically subject to the Federal Acquisition Regulation, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for cost incurred plus a reasonable profit and take control of any work in process. From time to time, as part of normal management processes, facts may change, causing revisions to estimated total costs or revenues expected. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. We generally use the input method, more specifically the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The underlying bases for estimating our contract research revenues are measurable expenses, such as labor, subcontractor costs and materials, and data that are updated on a regular basis for purposes of preparing our cost estimates. Our research contracts generally have a period of performance of six months to three years, and our estimates of contract costs have historically been consistent with actual results. Revisions in these estimates between accounting periods to reflect changing facts and circumstances have not had a material impact on our operating results, and we do not expect future changes in these estimates to be material. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Under cost reimbursable contracts, we are reimbursed for costs that are determined to be reasonable, allowable and allocable to the contract and paid a fixed fee representing the profit negotiated between us and the contracting agency. Revenue from cost reimbursable contracts is recognized as costs are incurred plus an estimate of applicable fees earned. We consider fixed fees under cost reimbursable contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue from time and materials contracts is recognized based on direct labor hours expended at contract billing rates plus other billable direct costs. Fixed price contracts may include either a product delivery or specific service performance throughout a period. For fixed price contracts that are based on the proportional performance method and involve a specified number of deliverables, we recognize revenue based on the proportion of the cost of the deliverables compared to the cost of all deliverables included in the contract as this method more accurately measures performance under these arrangements. For fixed price contracts that provide for the development and delivery of a specific prototype or product, revenue is recognized based upon the percentage of completion method. Whether certain costs under government contracts are allowable is subject to audit by the government. Certain indirect costs are charged to contracts using provisional or estimated indirect rates, which are subject to later revision based on government audits of those costs. Management is of the opinion that costs subsequently disallowed, if any, would not likely have a significant impact on revenues recognized for those contracts. We have agreed on final billing rates with the government through December 31, 2017. Products and Licensing Revenues We produce standard and customized products for commercial organizations, educational institutions, and U.S. Federal government agencies. In addition we will also offer extended warranties, product rentals, and services which include testing, training, or repairs for specific products. Customers also pay royalties as agreed based on sales or usage. We account for product and related items when a contract has been executed, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the contract price is considered probable. To determine the proper revenue recognition method for Products and Licensing contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. We recognize revenue when the performance obligation has been satisfied by transferring the control of the product or service to the customer. For tangible products that contain software that is essential to the tangible product’s functionality, we consider the product and software to be a single performance obligation and recognize revenue accordingly. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on their relative stand-alone selling prices. In such circumstances, we use the observable price of goods or services which are sold separately in similar circumstances to similar customers. If these prices are not observable, then we will estimate the stand-alone selling price using information that is reasonably available. For the majority of our standard products and services, price list and discount structures related to customer type are available. For products and services that do not have price list and discount structures, we may use one or more of the following: (i) adjusted market assessment approach, (ii) expected cost plus a margin approach, and (iii) residual approach. The adjusted market approach requires us to evaluate the market in which we sell goods or services and estimate the price that a customer in that market would be willing to pay for those goods or services. The expected cost plus margin approach requires us to forecast our expected costs of satisfying the performance obligation and then add a reasonable margin for that good or service. The residual approach decreases the total transaction price by the sum of the observable standalone selling prices if either the company sells the same good or services to different customers for a broad range of amounts or the company has not established a price for the good or service and that good or service has not been sold on a standalone basis. Shipping and handling activities primarily occur after a customer obtains control and are considered fulfillment cost rather than separate performance obligations. Similarly, sales and similar taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer are excluded from the measurement of the transaction price. For standard products, we recognize revenue at a point in time when control passes to the customer. Absent substantial product acceptance clauses, this is based on the shipping terms. For custom products that require engineering and development based on customer requirements, we will recognize revenue over time using the output method for any items shipped and any finished goods or work in process that is produced for balances of open sales orders. For any finished goods or work in process that has been produced for the balance of open sales orders we recognize revenue by applying the average selling price for such open order to the lesser of the on hand balance in finished goods or open sales order quantity which we present as a contract asset on the balance sheet. Cost of sales is recognized based on the standard cost of the finished goods and work in process associated with this revenue and inventory balances are reduced accordingly. For extended warranties and product rentals, revenue is recognized over time using the output method based on the time elapsed for the warranty or service period. In the case of warranties, we record a contract liability for amounts billed but that are not recognized until subsequent period. A separate contract liability is recorded for the cost associated with warranty repairs based on our estimate of future expense. For testing services where we are performing testing on an asset the customer controls, revenue is recognized over time by the output method using the performance to date. For training where the customer is receiving the benefit of training as it is occurring and for repairs to a customer controlled asset, revenue is recognized over time by the output method using the performance to date. For royalty revenue, we apply the practical expedient “royalty exception” recognizing revenue based on the royalty agreement which specifies an amount based on sales or minimum amount, whichever is greater. In some product rental contracts, a customer may be offered a discount on the purchase of an item that would provide for a material right. When a material right has been provided to a customer, a separate performance obligation is established and a portion of the rental revenue will be deferred until the future product is purchased or the option expires. This deferred revenue is recognized as a contract liability on the balance sheet. In certain circumstances we may offer a "right of return" to a distributor of our products, in which case a contract liability is calculated based on the terms of the agreement and recorded as a reduction to revenue. In addition, a contract asset for the rights to recover products from customers and a reduction of cost of sales is also calculated and recorded. Unfulfilled performance obligations represent amounts expected to be earned on executed contracts. Indefinite delivery and quantity contracts and unexercised options are not reported in total unfulfilled performance obligations. Unfulfilled performance obligations include funded obligations, which is the amount for which money has been directly authorized by the U.S. government and for which a purchase order has been received by a commercial customer, and unfunded obligations, representing firm orders for which funding has not yet been appropriated. The approximate value of our Technology Development segment unfulfilled performance obligations was $26.0 million at December 31, 2018. We expect to satisfy 87% of the performance obligations in 2019, 9% in 2020 and the remaining by 2022. The approximate value of our Products and Licensing segment unfulfilled performance obligations was $5.8 million at December 31, 2018. We expect to satisfy 95% of the performance obligations in 2019, 4% in 2020 and the remaining by 2023. 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. See details in the tables below.
The following tables summarize the impacts of adopting Topic 606 on our consolidated financial statements as of and for the three months and year ended December 31, 2018.
Effective January 1, 2018, we adopted Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (Topic 230), which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how cash receipts and cash payments are presented in the statement of cash flows. The adoption of ASU No. 2016-15 did not have a significant impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard revises the accounting for leases and requires lessees to recognize, for all leases with terms greater than one year, a right-of-use asset and liability which depicts the rights and obligations arising from a lease. This standard also requires qualitative and quantitative disclosures designed to provide information regarding the nature, amount and timing of lease expense. The new guidance is not expected to significantly change the recognition and measurement of lease expense. It is effective for the first interim and annual periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, permitting the recognition of a cumulative-effect adjustment to retained earnings on the date of adoption. We adopted the standard beginning January 1, 2019 using the alternative transition method. We are finalizing the value as of the adoption date of the right-of-use asset and lease liabilities and estimate that the right-of-use asset will be between $4 million and $5 million and that the lease liability will be reasonably consistent with the right-of-use asset amounts. We do not expect a material impact from adopting the new standard on our results of operations or cash flows. In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies the subsequent measurement of goodwill. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The accounting standard will be effective for reporting periods beginning after December 15, 2019. We do not expect ASU 2017-04 will have a material impact on our financial statements. In February 2018, the FASB issued ASU 2018-02: Income Statement – Reporting Comprehensive Income (Topic 220). Under current accounting guidance, the income tax effects for changes in income tax rates and certain other transactions are recognized in income from continuing operations resulting in income tax effects recognized in AOCI that do not reflect the current tax rate of the entity (“stranded tax effects”). The new guidance allows us the option to reclassify these stranded tax effects to accumulated deficit that relate to the change in the federal tax rate resulting from the passage of the Tax Cuts and Jobs Act. This update is effective for fiscal years beginning after December 15, 2018, including interim periods therein, and early adoption is permitted. We do not expect the adoption of this standard will 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. These amendments are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. We do not expect ASU 2018-13 will have a material impact on our financial statements. |
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Inventory | Inventory Inventory consists of finished goods, work-in-process and raw materials valued at the lower of cost (determined on the first-in, first-out basis) or net realizable value. Components of inventory are as follows:
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Contract Balances |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Balances | Contract Balances Our contract assets consist of unbilled amounts for technology development contracts, custom product contracts, royalty revenue receivable and the carrying amounts of right of returned 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. The following table shows the significant changes in contract balances for the year ended December 31, 2018:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Silicon Valley Bank Facility We currently have a Loan and Security Agreement with SVB (the "Credit Facility") under which, as amended on May 8, 2015, we have a term loan with an original borrowing amount of $6.0 million (the “Original Term Loan”). The Original Term Loan is repayable in 48 monthly installments of $125,000, plus accrued interest payable monthly in arrears, and unless earlier terminated, is scheduled to mature in May 2019. The Original Term Loan carries a floating annual interest rate equal to SVB’s prime rate then in effect plus 2%. We may prepay amounts due under the Original Term Loan at any time, subject to an early termination fee of up to 2% of the amount of prepayment. In September 2015, we entered into the Waiver and Seventh Loan Modification Agreement, which provided an additional $1.0 million of available financing for purchases of equipment through December 31, 2015, which we fully borrowed in December 2015 (the "Second Term Loan" and, together with the Original Term Loan, the "Term Loans"). The Second Term Loan was repaid in December 2018. The Credit Facility requires us to maintain a minimum cash balance of $4.0 million and to maintain at each month end a ratio of cash plus 60% of accounts receivable greater than or equal to 1.5 times the outstanding principal of the Term Loans. The Credit Facility also requires us to observe a number of additional operational covenants, including protection and registration of intellectual property rights, and certain customary negative covenants. As of December 31, 2018, we were in compliance with all covenants under the Credit Facility. Amounts due under the Credit Facility are secured by substantially all of our assets, including intellectual property, personal property and bank accounts. In addition, the Credit Facility contains customary events of default, including nonpayment of principal, interest or other amounts, violation of covenants, material adverse change, an event of default under any subordinated debt documents, incorrectness of representations and warranties in any material respect, bankruptcy, judgments in excess of a threshold amount, and violations of other agreements in excess of a threshold amount. If any event of default occurs SVB may declare due immediately all borrowings under the Credit Facility and foreclose on the collateral. Furthermore, an event of default under the Credit Facility would result in an increase in the interest rate on any amounts outstanding. As of December 31, 2018 there were no events of default on the Credit Facility. The aggregate balance under the Term Loans at December 31, 2018 and December 31, 2017 was $0.6 million and $2.5 million, respectively. The remaining term loan, with a balance of $0.6 million as of December 31, 2018, matures on May 1, 2019. The effective rate of our Term Loan at December 31, 2018 was 7%. The following table presents a summary of debt outstanding:
Debt issuance costs associated with the issuance of the SVB Term Loans totaled $55 thousand. Amortization of debt issuance costs is computed using the effective interest method and is included in interest expense. Amortization of the debt issuance costs totaled $16 thousand for the year ended December 31, 2018. Maturities on outstanding debt are as follows:
Interest expense for the years ended December 31, 2018 and 2017 consisted of the following:
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Accounts Receivable, Net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable-Trade | Accounts Receivable, Net Accounts receivable, net consist of the following:
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment, net, consists of the following:
Depreciation for the years ended December 31, 2018 and 2017 was approximately $0.5 million and $0.7 million, respectively. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Intangible assets, net consist of the following:
Amortization for the years ended December 31, 2018 and 2017 was approximately $0.4 million and $0.5 million, respectively. Estimated aggregate amortization, based on the net value of intangible assets at December 31, 2018, for each of the next five years and beyond is as follows:
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Accrued Liabilities |
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Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following:
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Income Taxes |
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Income Taxes | Income Taxes Income tax expense/(benefit) from continuing operations consisted of the following for the periods indicated:
Deferred tax assets consist of the following components:
The expense/(benefit) from income taxes from continuing operations differs from the amount computed by applying the federal statutory income tax rate to our loss from continuing operations before income taxes as follows for the periods indicated:
The realization of our deferred income tax assets is dependent upon sufficient taxable income in future periods. In assessing whether deferred tax assets may be realized, we consider whether it is more likely than not that some portion, or all, of the deferred tax asset will be realized. We consider scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies that we can implement in making our assessment. We have no U.S. federal income tax net operating loss carryforwards at December 31, 2018 for Luna and net operating loss carryforwards of approximately $6.0 million for API expiring at varying dates through 2025. In 2015, we performed a formal section 382 study and determined that we do not have a limitation on our net operating loss available to offset future income for the Luna net operating losses. As a result of the acquisition of API, the API net operating loss carryover and research and development credits will be subject to the Section 382 limitation. A formal Section 382 study was prepared in 2017, and it was determined that there was no ownership changes in 2017 resulting in a limitation on NOLs, but a portion of the net operating losses will expire unutilized. As there is a full valuation allowance against all of the API deferred tax assets, there will not be a statement of operations impact to any expiration of the net operating losses or research and development credits. The U.S. federal statute of limitations remains open for the year 2015 and onward. We currently have no federal income tax returns under examination. U.S. state jurisdictions have statutes of limitation generally ranging from three to seven years. We currently have no state income or franchise tax returns under examination. We currently do not file tax returns in any foreign tax jurisdiction other than Canada. We currently have no positions for which we expect that the amount of unrecognized tax benefit will increase or decrease significantly within twelve months of the reporting date or for which we believe there is significant risk of disallowance upon audit. We have no tax interest or penalties reported in either our statement of operations or statement of financial position for any year reported herein. Management believes it is not more likely than not that the deferred tax assets at December 31, 2018 or December 31, 2017 will not be realized, and as a result a valuation allowance was established against all such deferred tax assets. Effective January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers, which changes the timing of contract revenue recognition from recognizing at customer delivery to recognizing over a period of time. The adoption of ASC Topic 606 did not have a significant impact on our consolidated financial statements. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. This legislation makes significant changes in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from the current rate of 35% to 21%. As a result of the enacted law, we were required to revalue deferred tax assets and liabilities at the enacted rate. This revaluation resulted in a $1.9 million reduction in the deferred tax asset and a corresponding reduction in the valuation allowance. In 2018, we realized a benefit of $0.7 million in recovery of the alternative minimum tax credit from prior periods. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on our consolidated financial statements. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Series A Convertible Preferred Stock In January 2010, we entered into a transaction with Carilion, in which Carilion agreed to exchange all of its Senior Convertible Promissory Notes with an original principal amount of $5.0 million plus all accrued but unpaid interest, totaling $1.2 million, for 1,321,514 shares of our newly designated Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock is non-voting, carries a dividend of 6% payable in shares of common stock and maintains a liquidation preference up to $6.2 million. As of December 31, 2018, 710,985 shares of common stock were issuable to Carilion as dividends and have been recorded in the statement of stockholders’ equity. These dividends are issuable on demand. Each share of Series A Convertible Preferred Stock may be converted into one share of our common stock at the option of the holder. We recorded the fair value of the Series A Convertible Preferred Stock, determined based upon the conversion value immediately prior to the exchange, the fair value of the new warrant issued to Carilion, determined using the Black-Scholes valuation model, and the incremental fair value of the prior warrant due to the re-pricing and extension of maturity to stockholders’ equity. Equity Incentive Plans In April 2016, we adopted our 2016 Equity Incentive Plan (the "2016 Plan") as a successor to the 2006 Plan. Under the 2016 Plan, our Board of Directors is authorized to grant both incentive and non-statutory stock options to purchase common stock and restricted stock awards to our employees, directors, and consultants. The 2016 Plan provides for the issuance of 3,500,000 shares plus any amounts forfeited from grants under the 2006 Plan after the expiration date of the 2006 Plan. Options generally have a life of 10 years and exercise price equal to or greater than the fair market value of the Common Stock as determined by the Board of Directors. Vesting for employees typically occurs over a four-year period. The following table sets forth the activity of the options to purchase common stock under the 2006 Plan and the 2016 Plan. The prices represent the closing price of our Common Stock on the Nasdaq Capital Market on the respective dates.
The fair value of each option granted is estimated as of the grant date using the Black-Scholes option pricing model with the following assumptions:
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. Expected volatility is based upon the average historical volatility of our common stock over the period commensurate with the expected term of the related instrument. The expected life and estimated post-employment termination behavior is based upon historical experience of homogeneous groups, executives and non-executes, within our company. We do not currently pay dividends on our common stock nor do we expect to in the foreseeable future.
For the years ended December 31, 2018 and 2017, the weighted average grant date fair value of options granted was $2.07 and $1.18 per share, respectively. We estimate the fair value of options at the grant date using the Black-Scholes model. For all stock options granted through December 31, 2018, the weighted average remaining service period is 3.6 years. Unamortized stock option expense at December 31, 2018 that will be amortized over the weighted-average remaining service period of 3.6 years totaled $2.2 million. Restricted Stock and Restricted Stock Units In 2018 and 2017, we issued 280,000 and 349,000 shares of restricted stock, respectively, to certain employees. Shares issued to employees vest in three equal annual installments on the anniversary dates of their grant. In 2018 and 2017, 182,500 and 530,542 shares of restricted stock vested, respectively. In addition, in 2018 and 2017, we issued 16,286 and 129,865, respectively, restricted stock units to members of our Board of Directors in respect of the annual equity compensation under our non-employee director compensation policy. Restricted stock units issued to our Board of Directors vest at the earlier of the one year anniversary of their grant or the next annual stockholders' meeting. In 2018 and 2017, 129,865 and 86,956 restricted stock units, respectively, vested. The following table summarizes our aggregate restricted stock awards and restricted stock unit activity in 2018 and 2017:
We recognized $0.6 million and $0.7 million in stock-based compensation expense, which is recorded in selling, general and administrative expenses on the consolidated statement of operations for the years ended December 31, 2018 and 2017, respectively, and we will recognize $0.9 million over the remaining requisite service period. Unamortized restricted stock and restricted stock units expense at December 31, 2018 that will be amortized over the weighted-average remaining service period of 2 years totaled $1.0 million. 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. During the years ended December 31, 2018 and 2017, the Deferred Compensation Plan permitted the participants to elect to defer cash fees to which they were entitled for board and committee service. For 2018, the Deferred Compensation Plan also permitted participants to defer the annual equity compensation for board service (which would otherwise be issued in the form of restricted stock units) under our non-employee director compensation policy. For participating directors, 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 are vested immediately, in the case of stock units in lieu of cash fees, and upon the earlier of the one year anniversary date of the grant or next annual meeting of stockholders, in the case of annual equity compensation, although the participating directors do not receive the shares represented by such units until a future qualifying event. A summary of stock unit activity under the Deferred Compensation Plan for 2018 and 2017 is as follows.
Stock Repurchase Program In May 2016, our board of directors authorized us to repurchase up to $2.0 million of our common stock through May 31, 2017. As of May 31, 2017, we had repurchased a total of 205,500 shares for an aggregate purchase price of $0.2 million under this stock repurchase program, after which this stock repurchase program expired. In September 2017, our board of directors authorized a new stock repurchase program and providing for the repurchase of up to $2.0 million of our common stock through September 19, 2018. Our stock repurchase program did not obligate us to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. As of December 31, 2018 and 2017, we had repurchased a total of 565,629 and 433,179 shares, respectively, for an aggregate purchase price of $1.1 million under this stock repurchase program. We currently maintain all repurchased shares under these stock repurchase programs as treasury stock. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Obligation under Operating Leases We lease facilities in Virginia, Michigan, and Georgia under operating leases that as of December 31, 2018 were scheduled to expire between March 2020 and December 2024. Certain of the leases are subject to fixed escalations and provide for possible termination prior to their expiration dates. We recognize rent expense on such leases on a straight-line basis over the lease term. The difference between the straight line method and cash paid is reflected in changes to the deferred rent balance in our consolidated balance sheets. Deferred rent primarily resulted from recognition of the value of certain leasehold improvements associated with our Blacksburg, Virginia facility at the inception of the lease. Rent expense under these leases recorded in selling, general and administrative expense on our statements of operations totaled approximately $1.0 million and $1.1 million, respectively, for the years ended December 31, 2018 and 2017. Minimum future payments, as of December 31, 2018, under the aforementioned operating leases for each of the next five years and thereafter are:
Purchase Commitment We executed a non-cancelable purchase order totaling $0.5 million in the fourth quarter of 2017, a non-cancelable purchase order totaling $1.1 million in the first quarter of 2018, and a non-cancelable purchase order totaling $0.7 million in the second quarter of 2018 for multiple shipments of tunable lasers to be delivered over an 18-month period. At December 31, 2018, approximately $0.8 million of these commitments remained and is expected to be delivered by July 30, 2019. Royalty Agreement We have licensed certain third-party technologies from vendors for which we owe minimum royalties aggregating $0.4 million payable over the remaining patent terms of the underlying technology. |
Employee Profit Sharing Plan |
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Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employee Profit Sharing Plan | Employee Profit Sharing Plan We maintain a salary reduction/profit-sharing plan under provisions of Section 401(k) of the Internal Revenue Code. The plan is offered to all of our permanent employees. We contribute 25% of the salary deferral elected by each employee up to a maximum deferral of 10% of annual salary. We contributed approximately $0.3 million to the plan for each of the years ended December 31, 2018 and 2017. |
Litigation and Other Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Other Contingencies | Litigation and Other Contingencies From time to time, we may become involved in litigation in relation to claims arising out of our operations in the normal course of business. While management currently believes it is not reasonably possible the amount of ultimate liability, if any, with respect to these actions will have a material adverse effect on our financial position, results of operations or liquidity, the ultimate outcome of any litigation is uncertain. 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. The Claim received from Macom totaled $2.1 million under various indemnity provisions. We have disputed Macom's assertion of right to payment for the matters described in the Claim. It is uncertain what amount, if any, will be owed in settlement of the Claim. As of December 31, 2018, $1.5 million of the escrow balance had been received with the remaining $2.5 million in the escrow account pending resolution of the dispute. On July 31, 2018, we sold the assets associated with our optoelectronic components and sub-assemblies ("Opto") 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. There have been no amounts recorded in reference to the above matter in the financial statements as of December 31, 2018. It is uncertain what amount, if any, will be received with respect to this potential adjustment. We have made, and will continue to make, efforts to comply with current and future environmental laws. We anticipate that we could incur additional capital and operating costs in the future to comply with existing environmental laws and new requirements arising from new or amended statutes and regulations. In addition, because the applicable regulatory agencies have not yet promulgated final standards for some existing environmental programs, we cannot at this time reasonably estimate the cost for compliance with these additional requirements. The amount of any such compliance costs could be material. We cannot predict the impact that future regulations will impose upon our business. |
Relationship with Major Customers |
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Risks and Uncertainties [Abstract] | |
Relationship with Major Customers | Relationship with Major Customers During the years ended December 31, 2018 and 2017, approximately 53% and 48%, respectively, of our consolidated revenues were attributable to contracts with the U.S. government. At December 31, 2018 and 2017, receivables with respect to contracts with the U.S. government represented 23% and 20% of total trade receivables, respectively. |
Financial Information About Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information About Segments | Financial Information About Segments Our operations are divided into two operating segments: Technology Development and Products and Licensing. Our engineers and scientists collaborate with our network of government, academic and industry experts to identify technologies and ideas with promising market potential. We then compete to win fee-for-service contracts from government agencies and industrial customers who seek innovative solutions to practical problems that require new technology. The Technology Development segment derives its revenue primarily from services. The Technology Development segment provides applied research to customers in our areas of focus. The Products and Licensing segment develops and sells products or licenses technologies based on commercially viable concepts developed by the Technology Development segment. The Products and Licensing segment derives its revenue from product sales, funded product development and technology licenses. Our President and Chief Executive Officer and his direct reports collectively represent our chief operating decision makers, and they evaluate segment performance based primarily on revenue and operating income or loss. Information about the results of operations for each segment is set forth in the table below. There were no significant inter-segment sales during the years ended December 31, 2018 and 2017. During the years ended December 31, 2018 and 2017, 24% and 19%, respectively, of our total sales took place outside the United States. No single country, outside of the United States, represented more than 10% of total revenues during the years ended December 31, 2018 or 2017.
Products and licensing depreciation includes amounts from discontinued operations of $0.1 million and $0.4 million for the years ended December 31, 2018 and 2017, respectively. Products and licensing amortization includes amounts from discontinued operations of $0.1 million and $0.9 million for the years ended December 31, 2018 and 2017, respectively. Additional segment information is as follows:
For December 31, 2017, the products and licensing segment assets include assets held for sale in the amount of $7.0 million. Property plant and equipment, and intangible assets as of December 31, 2017 excludes assets associated with the optoelectronic components business sold during 2018. |
Quarterly Results (unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results (unaudited) | Quarterly Results (unaudited) The following table sets forth our unaudited historical revenues, operating loss and net (loss)/income by quarter during 2018 and 2017.
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Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations On August 9, 2017, we completed the sale of our high speed optical receivers ("HSOR") business, which was part of our Products and Licensing segment, to an unaffiliated third party for an initial purchase price of $33.5 million, of which $29.5 million in cash has been received, and $4.0 million was placed into escrow until December 15, 2018 for possible working capital adjustments to the purchase price and potential satisfaction of certain post-closing indemnification obligations (the "Transaction"). The purchase price is subject to adjustment in the future based upon a determination of final working capital, as defined in the asset purchase agreement. The HSOR business was a component of the operations of Advanced Photonix, Inc., which we acquired in May 2015. As part of the Transaction, the buyer also hired approximately 49 of our employees who were engaged in the development, manufacture, and sale of HSOR products in addition to certain corporate administrative functions. The buyer provided certain transition services to us with respect to infrastructure and administration for which we paid $0.3 million per month for a period of five months, for a total of $1.5 million. We recorded this obligation as a reduction of the value of the purchase price. In assessing the fair value of the services expected to be received by us in relation to those we expected to deliver to the buyer, we concluded that the transition service payments were more closely aligned with the fair value of the assets sold than the services received and, thus, should be accounted for as part of the consideration reconciliation rather than operating activities. Our HSOR business accounted for 16.1% of revenues and 18.5% of our costs of revenues for the year ended December 31, 2017. On July 31, 2018, we sold the assets and operations related to our Opto business, which was part of our Products and Licensing segment, to an unaffiliated third party for an initial purchase price up to $18.5 million, of which $17.5 million was received at closing and has been properly recorded in the financial statements in accordance with GAAP with the remaining purchase price adjustment up to $1.0 million which is contingent upon the attainment of specified revenue targets during the eighteen months following the closing of the sale. The purchase price is subject to adjustment in the future based upon a determination of final working capital, as defined in the asset purchase agreement. The Opto business was a component of the operations of API, which we acquired in May 2015, and represented all of our operations in our Camarillo, California and Montreal, Quebec facilities. We have reported the results of operations of both our HSOR and Opto businesses as discontinued operations in our consolidated financial statements. We allocated a portion of the consolidated tax expense to discontinued operations based on the ratio of the discontinued business's loss before allocations. We allocated a portion of the consolidated tax (benefit)/expense to discontinued operations based on the ratio of the discontinued business's loss/(income) before allocations. The following table presents a summary of the transactions related to the sales of Opto in the year ended December 31, 2018 and HSOR in the year ended December 31, 2017:
Assets and liabilities held for sale as of December 31, 2017 were as follows:
The key components of income from discontinued operations were as follows:
For the years ended December 31, 2018 and 2017, depreciation and amortization from discontinued operations were $0.2 million and $1.3 million, respectively. For the years ended December 31, 2018 and 2017, the acquisition of property plant and equipment for discontinued operations were $0.1 million in each period. For the years ended December 31, 2018 and 2017, intangible property costs associated with discontinued operations were $0.01 million and $0.1 million, respectively. Proceeds from the sale of the Opto business which were included in cash flows from investing activities in 2018 were $16.0 million and proceeds from the sale of the HSOR business which are included in cash flows from investing activities for 2017 were $28.0 million. The gain on sale of discontinued operations included in non-cash adjustments to cash flows from operating activities for 2018 and 2017 was $8.6 million and $15.7 million, respectively. |
Business Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions | Business Acquisitions On October 15, 2018, we acquired substantially all of the assets, other than cash, the United States operations of Micron Optics, Inc. ("MOI") for cash consideration of $5.5 million, of which $5.0 million was paid during 2018, with the remaining $0.5 million reflected in accrued liabilities. The transaction has been accounted for under the acquisition method of accounting in accordance with ASC 805. We incurred approximately $0.8 million of costs associated with the acquisition during 2018, which are included in selling, general and administrative expenses in our consolidated statement of operations. For the period from the closing of the acquisition through December 31, 2018, we recognized revenues of $2.6 million and income of $1.1 million associated with the operations of MOI. Under the acquisition method of accounting, the total estimated purchase consideration is allocated to the acquired tangible and intangible assets and assumed liabilities based on their estimated fair values as of the acquisition date. Any excess of the fair value of the acquisition consideration over the identifiable assets acquired and liabilities assumed is recognized as goodwill. We have completed a preliminary allocation of the purchase consideration with the assistance of a third-party valuation expert. The following allocation of the purchase consideration is subject to revision as additional information becomes known in the future.
The preliminary identifiable intangible assets and their estimated useful lives were as follows:
Developed technologies acquired primarily consists of MOI's existing technologies related to fiber optic sensing instruments, modules, and components. The developed technologies were valued using the "multi-period excess earnings" method, under the income approach. The multi-period excess earnings method reflects the present value of the projected cash flows that are expected by the developed technologies less charges representing the contribution of other assets to those cash flows. A discount rate of 24.5% was used to discount the cash flows to present value. In process research and development represents the fair value of incomplete MOI research and development projects that had not reached technological feasibility as of the closing date of the acquisition. In the future, the fair value of such project at the closing date of the acquisition will be either amortized or impaired depending on whether the project is completed or abandoned. The fair value of in process research and development was determined using the multi-period excess earnings method. A discount rate of 29.5% was used to discount the cash flows to the present value. Customer base represents the fair value of projected cash flows that will be derived from the sale of products to MOI's existing customers as of the closing date of the acquisition. Customer relationships were valued using the "distributor" method, under the income approach. Under this premise, the margin of a distributor within the industry is deemed to be the margin attributable to customer relationships. This isolates the cash flows attributable to the customer relationships for which a market participant would be willing to pay. A discount rate of 24.5% was used to discount cash flows to present value. Trade names and trademarks are considered a type of guarantee of a certain level of quality or performance represented by the MOI brand. Trade names and trademarks were valued using the "relief from royalty" method of the income approach. This method is based on the assumption that in lieu of ownership, a market participant would be willing to pay a royalty in order to exploit the related benefits of this asset. A discount rate of 17% was used to discount the cash flows to the present value. Goodwill represents the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed in connection with the acquisition. Pro forma consolidated results of operations The following unaudited pro forma financial information presents combined results of operations for each of the periods presented as if the acquisition of MOI had been completed on January 1, 2017. The pro forma information includes adjustments to depreciation expense for property and equipment acquired, to amortize expense for the intangible assets acquired, and to eliminate the acquisition transaction expenses recognized in each period. Transaction-related expenses associated with the acquisition and excluded from the pro forma income/(loss) from continuing operations were $0.8 million. The pro forma data are for informational purposes only and are not necessarily indicative of the consolidated results of operations or the combined business had the acquisition of MOI actually occurred on January 1, 2017, or the results of future operations of the combined business. For instance, planned or expected operational synergies following the acquisition are not reflected in the pro forma information. Consequently, actual results will differ from the unaudited pro forma information presented below.
On March 1, 2019, we acquired the outstanding stock of General Photonics Corporation for cash consideration of $19.0 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. Additionally, we can become obligated to pay additional cash consideration of up to $1.0 million if certain revenue targets for the General Photonics Corporation historical business are met for the twelve month period following the closing. The purchase price is also subject to adjustment based upon the determination of final working capital as of the closing date compared to a target working capital valued specified in the stock purchase agreement. We have not yet completed its analysis of the fair market value of the assets acquired and liabilities assumed as of the closing date and the associated allocation of the purchase price. |
Valuation and Qualifying Accounts |
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Valuation and Qualifying Accounts | Schedule II Luna Innovations Incorporated Valuation and Qualifying Accounts
All other schedules are omitted as the required information is inapplicable or the information is presented in the Consolidated Financial Statements and notes thereto in Item 8 of Part II of this Annual Report on Form 10-K.
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Organization and Summary of Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Nature of Operations | Luna Innovations Incorporated (“we” 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 products for the telecommunications industry 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 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. |
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Consolidation Policy | Consolidation Policy Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include our accounts and the accounts of our wholly owned subsidiaries. We eliminate from our financial results all intercompany transactions. |
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Reclassifications | Reclassifications Certain amounts in the prior period have been reclassified to conform to current presentation. As a result of the adoption of Accounting Standards Codification ("ASC") 2014-09, Revenue from Contracts with Customers (Topic 606), we presented balances entitled contract assets and contract liabilities within the consolidated balance sheet as well as the impact of the changes in these balances within the consolidated statement of cash flows. We reclassified comparable balances within the December 31, 2017 consolidated balance sheet as well as the impact of changes in those balances within the consolidated statement of cash flows in order to enhance comparability. These reclassifications had no effect on our reported financial condition, results of operations, or cash flows. Any other reclassifications were immaterial to the consolidated interim financial statements taken as a whole. |
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Use of Estimates | Use of Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may differ from such estimates and assumptions. |
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Technology Development and Product Sales Revenues | Technology Development Revenues We perform research and development for U.S. Federal government agencies, educational institutions and commercial organizations. We account for a research contract when a contract has been executed, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the contract price is considered probable. Revenue is earned under cost reimbursable, time and materials and fixed price contracts. Direct contract costs are expensed as incurred. Our contracts with agencies of the U.S. government are subject to periodic funding by the respective contracting agency. Funding for a contract may be provided in full at inception of the contract or ratably throughout the contract as the services are provided. In evaluating the probability of funding for purposes of assessing collectability of the contract price, we consider our previous experience with our customers, communication with our customers regarding funding status and our knowledge of available funding for the contract or program. If funding is not assessed as probable, revenue recognition is deferred until realization is reasonably assured. Under the typical payment terms of our U.S. government contracts, the customer pays us either performance-based payments ("PBPs") or progress payments. PBPs, which are typically used in the firm fixed price contracts, are interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments, which are typically used in our cost type contracts, are interim payments based on costs incurred as the work progresses. For our U.S. government cost-type contracts, the customer generally pays us during the performance period for 80% to 90% of our actual costs incurred. Because the customer retains a small portion of the contract price until completion of the contract and audit of allowable costs, cost type contracts generally result in revenue recognized in excess of billings which we present as contract assets on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. For non-U.S. government contracts, we typically receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment. We recognize a liability for these advance payments and PBPs paid in advance which are in excess of the revenue recognized and present these amounts as contract liabilities on the balance sheet. To determine the proper revenue recognition method for research and development contracts, we evaluate whether two or more contracts should be combined and accounted for as one single modified contract and whether the combined or single contract should be accounted for as more than one performance obligation. For instances where a contract has options that were bid with the initial contract and awarded at a later date, we combine the options with the original contract when options are awarded. For most of our contracts, the customer contracts for research with multiple milestones that are interdependent. Consequently, the entire contract is accounted for as one performance obligation. The effect of the combined or modified contract on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract revenue recognition is measured over time as we perform because of continuous transfer of control to the customer. For U.S. government contracts which are typically subject to the Federal Acquisition Regulation, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for cost incurred plus a reasonable profit and take control of any work in process. From time to time, as part of normal management processes, facts may change, causing revisions to estimated total costs or revenues expected. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. We generally use the input method, more specifically the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The underlying bases for estimating our contract research revenues are measurable expenses, such as labor, subcontractor costs and materials, and data that are updated on a regular basis for purposes of preparing our cost estimates. Our research contracts generally have a period of performance of six months to three years, and our estimates of contract costs have historically been consistent with actual results. Revisions in these estimates between accounting periods to reflect changing facts and circumstances have not had a material impact on our operating results, and we do not expect future changes in these estimates to be material. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Under cost reimbursable contracts, we are reimbursed for costs that are determined to be reasonable, allowable and allocable to the contract and paid a fixed fee representing the profit negotiated between us and the contracting agency. Revenue from cost reimbursable contracts is recognized as costs are incurred plus an estimate of applicable fees earned. We consider fixed fees under cost reimbursable contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue from time and materials contracts is recognized based on direct labor hours expended at contract billing rates plus other billable direct costs. Fixed price contracts may include either a product delivery or specific service performance throughout a period. For fixed price contracts that are based on the proportional performance method and involve a specified number of deliverables, we recognize revenue based on the proportion of the cost of the deliverables compared to the cost of all deliverables included in the contract as this method more accurately measures performance under these arrangements. For fixed price contracts that provide for the development and delivery of a specific prototype or product, revenue is recognized based upon the percentage of completion method. Whether certain costs under government contracts are allowable is subject to audit by the government. Certain indirect costs are charged to contracts using provisional or estimated indirect rates, which are subject to later revision based on government audits of those costs. Management is of the opinion that costs subsequently disallowed, if any, would not likely have a significant impact on revenues recognized for those contracts. Product Sales Revenues Revenues from product sales are generated by the sale of commercial products and services under various sales programs to the end user and through distribution channels. We sell fiber optic sensing systems to end users for use in numerous fiber optic based measurement applications. Revenues are recorded net of applicable sales taxes collected from customers and payable to state or local governmental entities. To determine the proper revenue recognition method for Products and Licensing contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. We recognize revenue when the performance obligation has been satisfied by transferring the control of the product or service to the customer. For tangible products that contain software that is essential to the tangible product’s functionality, we consider the product and software to be a single performance obligation and recognize revenue accordingly. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on their relative stand-alone selling prices. In such circumstances, we use the observable price of goods or services which are sold separately in similar circumstances to similar customers. If these prices are not observable, then we will estimate the stand-alone selling price using information that is reasonably available. For the majority of our standard products and services, price list and discount structures related to customer type are available. For products and services that do not have price list and discount structures, we may use one or more of the following: (i) adjusted market assessment approach, (ii) expected cost plus a margin approach, and (iii) residual approach. The adjusted market approach requires us to evaluate the market in which we sell goods or services and estimate the price that a customer in that market would be willing to pay for those goods or services. The expected cost plus margin approach requires us to forecast our expected costs of satisfying the performance obligation and then add a reasonable margin for that good or service. The residual approach decreases the total transaction price by the sum of the observable standalone selling prices if either the company sells the same good or services to different customers for a broad range of amounts or the company has not established a price for the good or service and that good or service has not been sold on a standalone basis. Shipping and handling activities primarily occur after a customer obtains control and are considered fulfillment cost rather than separate performance obligations. Similarly, sales and similar taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer are excluded from the measurement of the transaction price. For standard products, we recognize revenue at a point in time when control passes to the customer. Absent substantial product acceptance clauses, this is based on the shipping terms. For custom products that require engineering and development based on customer requirements, we will recognize revenue over time using the output method for any items shipped and any finished goods or work in process that is produced for balances of open sales orders. For any finished goods or work in process that has been produced for the balance of open sales orders we recognize revenue by applying the average selling price for such open order to the lesser of the on hand balance in finished goods or open sales order quantity which we present as a contract asset on the balance sheet. Cost of sales is recognized based on the standard cost of the finished goods and work in process associated with this revenue and inventory balances are reduced accordingly. For extended warranties and product rentals, revenue is recognized over time using the output method based on the time elapsed for the warranty or service period. In the case of warranties, we record a contract liability for amounts billed but that are not recognized until subsequent period. A separate contract liability is recorded for the cost associated with warranty repairs based on our estimate of future expense. For testing services where we are performing testing on an asset the customer controls, revenue is recognized over time by the output method using the performance to date. For training where the customer is receiving the benefit of training as it is occurring and for repairs to a customer controlled asset, revenue is recognized over time by the output method using the performance to date. For royalty revenue, we apply the practical expedient “royalty exception” recognizing revenue based on the royalty agreement which specifies an amount based on sales or minimum amount, whichever is greater. In some product rental contracts, a customer may be offered a discount on the purchase of an item that would provide for a material right. When a material right has been provided to a customer, a separate performance obligation is established and a portion of the rental revenue will be deferred until the future product is purchased or the option expires. This deferred revenue is recognized as a contract liability on the balance sheet. In certain circumstances we may offer a "right of return" to a distributor of our products, in which case a contract liability is calculated based on the terms of the agreement and recorded as a reduction to revenue. In addition, a contract asset for the rights to recover products from customers and a reduction of cost of sales is also calculated and recorded. |
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Allowance for Uncollectible Receivables | Allowance for Uncollectible Receivables Accounts receivable are recorded at their face amount, less an allowance for doubtful accounts. We review the status of our uncollected receivables on a regular basis. In determining the need for an allowance for uncollectible receivables, we consider our customers’ financial stability, past payment history and other factors that bear on the ultimate collection of such amounts. |
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Cash Equivalents | Cash Equivalents We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. To date, we have not incurred losses related to cash and cash equivalents. Cash equivalents at December 31, 2018 and 2017 included $38.3 million and $25.2 million, respectively, invested in U.S. Treasury obligations through a sweep account with our bank. The full value of amounts invested through the sweep account are convertible to cash on a daily basis. Our cash transactions are processed through reputable commercial banks. We regularly maintain cash balances with financial institutions which exceed Federal Deposit Insurance Corporation (“FDIC”) insurance limits. |
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Fair Value Measurements | Fair Value Measurements Our financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. Valuation techniques are based on observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These two types of inputs have created the following fair value hierarchy:
The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. We consider the terms of the Silicon Valley Bank ("SVB") debt facility including its interest rate of prime plus 2%, to be at market based upon similar instruments that would be available to us. |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. We record depreciation using the straight-line method over the following estimated useful lives:
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Intangible Assets | Intangible Assets Intangible assets consist of patents related to certain intellectual property that we have developed or acquired and identifiable intangible assets recognized in connection with our merger with Advanced Photonix, Inc. ("API") and Micron Optics, Inc. ("MOI"). We amortize our identified intangible assets over their estimated useful lives ranging between one and eleven years, and analyze the reasonableness of the remaining useful life whenever events or circumstances indicate that the carrying amount may not be recoverable to determine whether their carrying value has been impaired. |
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Goodwill | Goodwill Goodwill is reviewed for impairment at least annually, or more frequently if events or circumstances indicate that goodwill might be impaired. We have established October 1 as our specified annual date for impairment testing. |
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Research, Development and Engineering | Research, Development and Engineering Research, development and engineering expenses not related to contract performance are expensed as incurred. |
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Valuation of Long-Lived Assets | Valuation of Long-Lived Assets We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Assets to be disposed of by sale are reflected at the lower of their carrying amount or fair value less cost to sell. |
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Inventory | Inventory Inventory consists of finished goods, work in process and raw materials valued at the lower of cost (determined on the first-in, first-out basis) or net realizable value. |
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Net Income/(Loss) per Share | Net Income/(Loss) per Share Basic per share data is computed by dividing net income/(loss) attributable to common stockholders by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income/(loss) attributable to common stockholders 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 common shares had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method. The effect of 4.9 million common stock equivalents (which include outstanding warrants, preferred stock, accrued stock dividends, and stock options) are included for the diluted per share data for the year ended December 31, 2018. The effect of 4.3 million common stock equivalents (which include outstanding warrants, preferred stock and stock options) are not included for the year ended December 31, 2017, as they are anti-dilutive to earnings per share due to us having a net loss from continuing operations. |
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Stock-Based Compensation | Stock-Based Compensation We have two stock-based compensation plans, which are described further in Note 10. We recognize compensation expense based upon the fair value of the underlying equity award as of the date of grant. We have elected to use the Black-Scholes option pricing model to value any stock options granted. Restricted stock and restricted stock units awarded are valued at the closing price of our common stock on the date of the award. We recognize stock-based compensation for such awards on a straight-line method over the requisite service period of the awards taking into account the effects of the employees’ expected exercise. We reduce stock-based compensation expense for the value of any forfeitures of vested awards as such forfeitures occur. We recognize expense for equity instruments issued to non-employees based upon the fair value of the equity instruments issued. |
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Advertising | Advertising We expense the cost of advertising as incurred. |
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Income Taxes | Income Taxes We account for income taxes using the liability method. Deferred tax assets or liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when the differences reverse. A valuation allowance against net deferred tax assets is provided unless we conclude it is more likely than not that the deferred tax assets will be realized. We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We evaluate our ability to benefit from all deferred tax assets and establish valuation allowances for amounts we believe are not more-likely-than-not to be realizable. For uncertain tax positions, we use a more-likely-than-not threshold, 51% or greater, based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements. Penalties, if probable and reasonably estimable, and interest expense related to uncertain tax positions are recognized as a component of the tax provision. We account for income taxes using the liability method. Deferred tax assets or liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when the differences reverse. A valuation allowance against net deferred tax assets is provided unless we conclude it is more likely than not that the deferred tax assets will be realized. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Effective January 1, 2018, we adopted Revenue from Contracts with Customers (Topic 606), using the modified retrospective transition method. Under the modified retrospective approach, we apply the standards to new contracts and those that were not completed as of January 1, 2018. For those contracts not completed as of January 1, 2018, this method resulted in a cumulative adjustment to decrease the accumulated deficit in the net amount of $0.4 million. Prior periods will not be retrospectively adjusted, but we will maintain dual reporting for the year of initial application in order to maintain comparability of the periods presented. Under the new standard, contracts in our Technology Development segment, which primarily provide research services, are not materially impacted upon the adoption of Topic 606 as revenue will continue to be recognized over time using an input model. Contracts in our Products and Licensing segment generally provide for the following revenue sources: standard product sales, custom product development and sales, product rental, extended warranties, training/service, and certain royalties. Revenues for this segment are recognized using either the “point in time” or “over time” methods of Topic 606, depending upon the revenue source. The major change in revenue recognition for the Products and Licensing segment related to custom optoelectronic products which changed from “point in time” to “over time” upon the adoption of Topic 606. This change results in the acceleration of revenue when compared to existing standards with the cumulative adjustment relating to contracts that are not complete as of December 31, 2017 recognized as an adjustment to opening accumulated deficit on January 1, 2018. The revenue received from our custom optoelectronic products segment is included as part of our discontinued operations (Note 17) and shown above in the current assets and liabilities held for sale as of December 31, 2017. Our revenue for our standard products will continue to be recognized using the "point in time" model of Topic 606, and the timing of such revenue recognition is not expected to differ materially from our historical revenue recognition. Other immaterial adjustments related to the Products and Licensing segment that are sometimes offered to customers include discounts on future purchases related to rental agreements, customer rights of return, and volume discounts. Technology Development Revenues We perform research and development for U.S. Federal government agencies, educational institutions and commercial organizations. We account for a research contract when a contract has been executed, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the contract price is considered probable. Revenue is earned under cost reimbursable, time and materials and fixed price contracts. Direct contract costs are expensed as incurred. Our contracts with agencies of the U.S. government are subject to periodic funding by the respective contracting agency. Funding for a contract may be provided in full at inception of the contract or ratably throughout the contract as the services are provided. In evaluating the probability of funding for purposes of assessing collectability of the contract price, we consider our previous experience with our customers, communication with our customers regarding funding status and our knowledge of available funding for the contract or program. If funding is not assessed as probable, revenue recognition is deferred until realization is reasonably assured. Under the typical payment terms of our U.S. government contracts, the customer pays us either performance-based payments ("PBPs") or progress payments. PBPs, which are typically used in the firm fixed price contracts, are interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments, which are typically used in our cost type contracts, are interim payments based on costs incurred as the work progresses. For our U.S. government cost-type contracts, the customer generally pays us during the performance period for 80% to 90% of our actual costs incurred. Because the customer retains a small portion of the contract price until completion of the contract and audit of allowable costs, cost type contracts generally result in revenue recognized in excess of billings which we present as contract assets on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. For non-U.S. government contracts, we typically receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment. We recognize a liability for these advance payments and PBPs paid in advance which are in excess of the revenue recognized and present these amounts as contract liabilities on the balance sheet. To determine the proper revenue recognition method for research and development contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. For instances where a contract has options that were bid with the initial contract and awarded at a later date, we combine the options with the original contract when options are awarded. For most of our contracts, the customer contracts for research with multiple milestones that are interdependent. Consequently, the entire contract is accounted for as one performance obligation. The effect of the combined or modified contract on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract revenue recognition is measured over time as we perform because of continuous transfer of control to the customer. For U.S. government contracts which are typically subject to the Federal Acquisition Regulation, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for cost incurred plus a reasonable profit and take control of any work in process. From time to time, as part of normal management processes, facts may change, causing revisions to estimated total costs or revenues expected. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. We generally use the input method, more specifically the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The underlying bases for estimating our contract research revenues are measurable expenses, such as labor, subcontractor costs and materials, and data that are updated on a regular basis for purposes of preparing our cost estimates. Our research contracts generally have a period of performance of six months to three years, and our estimates of contract costs have historically been consistent with actual results. Revisions in these estimates between accounting periods to reflect changing facts and circumstances have not had a material impact on our operating results, and we do not expect future changes in these estimates to be material. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on any type of contract are recognized in the period in which they become known. Under cost reimbursable contracts, we are reimbursed for costs that are determined to be reasonable, allowable and allocable to the contract and paid a fixed fee representing the profit negotiated between us and the contracting agency. Revenue from cost reimbursable contracts is recognized as costs are incurred plus an estimate of applicable fees earned. We consider fixed fees under cost reimbursable contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue from time and materials contracts is recognized based on direct labor hours expended at contract billing rates plus other billable direct costs. Fixed price contracts may include either a product delivery or specific service performance throughout a period. For fixed price contracts that are based on the proportional performance method and involve a specified number of deliverables, we recognize revenue based on the proportion of the cost of the deliverables compared to the cost of all deliverables included in the contract as this method more accurately measures performance under these arrangements. For fixed price contracts that provide for the development and delivery of a specific prototype or product, revenue is recognized based upon the percentage of completion method. Whether certain costs under government contracts are allowable is subject to audit by the government. Certain indirect costs are charged to contracts using provisional or estimated indirect rates, which are subject to later revision based on government audits of those costs. Management is of the opinion that costs subsequently disallowed, if any, would not likely have a significant impact on revenues recognized for those contracts. We have agreed on final billing rates with the government through December 31, 2017. Products and Licensing Revenues We produce standard and customized products for commercial organizations, educational institutions, and U.S. Federal government agencies. In addition we will also offer extended warranties, product rentals, and services which include testing, training, or repairs for specific products. Customers also pay royalties as agreed based on sales or usage. We account for product and related items when a contract has been executed, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the contract price is considered probable. To determine the proper revenue recognition method for Products and Licensing contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. We recognize revenue when the performance obligation has been satisfied by transferring the control of the product or service to the customer. For tangible products that contain software that is essential to the tangible product’s functionality, we consider the product and software to be a single performance obligation and recognize revenue accordingly. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on their relative stand-alone selling prices. In such circumstances, we use the observable price of goods or services which are sold separately in similar circumstances to similar customers. If these prices are not observable, then we will estimate the stand-alone selling price using information that is reasonably available. For the majority of our standard products and services, price list and discount structures related to customer type are available. For products and services that do not have price list and discount structures, we may use one or more of the following: (i) adjusted market assessment approach, (ii) expected cost plus a margin approach, and (iii) residual approach. The adjusted market approach requires us to evaluate the market in which we sell goods or services and estimate the price that a customer in that market would be willing to pay for those goods or services. The expected cost plus margin approach requires us to forecast our expected costs of satisfying the performance obligation and then add a reasonable margin for that good or service. The residual approach decreases the total transaction price by the sum of the observable standalone selling prices if either the company sells the same good or services to different customers for a broad range of amounts or the company has not established a price for the good or service and that good or service has not been sold on a standalone basis. Shipping and handling activities primarily occur after a customer obtains control and are considered fulfillment cost rather than separate performance obligations. Similarly, sales and similar taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer are excluded from the measurement of the transaction price. For standard products, we recognize revenue at a point in time when control passes to the customer. Absent substantial product acceptance clauses, this is based on the shipping terms. For custom products that require engineering and development based on customer requirements, we will recognize revenue over time using the output method for any items shipped and any finished goods or work in process that is produced for balances of open sales orders. For any finished goods or work in process that has been produced for the balance of open sales orders we recognize revenue by applying the average selling price for such open order to the lesser of the on hand balance in finished goods or open sales order quantity which we present as a contract asset on the balance sheet. Cost of sales is recognized based on the standard cost of the finished goods and work in process associated with this revenue and inventory balances are reduced accordingly. For extended warranties and product rentals, revenue is recognized over time using the output method based on the time elapsed for the warranty or service period. In the case of warranties, we record a contract liability for amounts billed but that are not recognized until subsequent period. A separate contract liability is recorded for the cost associated with warranty repairs based on our estimate of future expense. For testing services where we are performing testing on an asset the customer controls, revenue is recognized over time by the output method using the performance to date. For training where the customer is receiving the benefit of training as it is occurring and for repairs to a customer controlled asset, revenue is recognized over time by the output method using the performance to date. For royalty revenue, we apply the practical expedient “royalty exception” recognizing revenue based on the royalty agreement which specifies an amount based on sales or minimum amount, whichever is greater. In some product rental contracts, a customer may be offered a discount on the purchase of an item that would provide for a material right. When a material right has been provided to a customer, a separate performance obligation is established and a portion of the rental revenue will be deferred until the future product is purchased or the option expires. This deferred revenue is recognized as a contract liability on the balance sheet. In certain circumstances we may offer a "right of return" to a distributor of our products, in which case a contract liability is calculated based on the terms of the agreement and recorded as a reduction to revenue. In addition, a contract asset for the rights to recover products from customers and a reduction of cost of sales is also calculated and recorded. Unfulfilled performance obligations represent amounts expected to be earned on executed contracts. Indefinite delivery and quantity contracts and unexercised options are not reported in total unfulfilled performance obligations. Unfulfilled performance obligations include funded obligations, which is the amount for which money has been directly authorized by the U.S. government and for which a purchase order has been received by a commercial customer, and unfunded obligations, representing firm orders for which funding has not yet been appropriated. The approximate value of our Technology Development segment unfulfilled performance obligations was $26.0 million at December 31, 2018. We expect to satisfy 87% of the performance obligations in 2019, 9% in 2020 and the remaining by 2022. The approximate value of our Products and Licensing segment unfulfilled performance obligations was $5.8 million at December 31, 2018. We expect to satisfy 95% of the performance obligations in 2019, 4% in 2020 and the remaining by 2023. 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. Effective January 1, 2018, we adopted Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (Topic 230), which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how cash receipts and cash payments are presented in the statement of cash flows. The adoption of ASU No. 2016-15 did not have a significant impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard revises the accounting for leases and requires lessees to recognize, for all leases with terms greater than one year, a right-of-use asset and liability which depicts the rights and obligations arising from a lease. This standard also requires qualitative and quantitative disclosures designed to provide information regarding the nature, amount and timing of lease expense. The new guidance is not expected to significantly change the recognition and measurement of lease expense. It is effective for the first interim and annual periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, permitting the recognition of a cumulative-effect adjustment to retained earnings on the date of adoption. We adopted the standard beginning January 1, 2019 using the alternative transition method. We are finalizing the value as of the adoption date of the right-of-use asset and lease liabilities and estimate that the right-of-use asset will be between $4 million and $5 million and that the lease liability will be reasonably consistent with the right-of-use asset amounts. We do not expect a material impact from adopting the new standard on our results of operations or cash flows. In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies the subsequent measurement of goodwill. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The accounting standard will be effective for reporting periods beginning after December 15, 2019. We do not expect ASU 2017-04 will have a material impact on our financial statements. In February 2018, the FASB issued ASU 2018-02: Income Statement – Reporting Comprehensive Income (Topic 220). Under current accounting guidance, the income tax effects for changes in income tax rates and certain other transactions are recognized in income from continuing operations resulting in income tax effects recognized in AOCI that do not reflect the current tax rate of the entity (“stranded tax effects”). The new guidance allows us the option to reclassify these stranded tax effects to accumulated deficit that relate to the change in the federal tax rate resulting from the passage of the Tax Cuts and Jobs Act. This update is effective for fiscal years beginning after December 15, 2018, including interim periods therein, and early adoption is permitted. We do not expect the adoption of this standard will 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. These amendments are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. We do not expect ASU 2018-13 will have a material impact on our financial statements. Contract assets were formerly reported as unbilled accounts receivable. Contract liabilities were formerly reported as accrued liabilities or deferred revenue. Inventory was also impacted by the adoption of the new guidance. |
Organization and Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment Estimated Useful Lives | We record depreciation using the straight-line method over the following estimated useful lives:
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Summary of Impacts of Adopting Topic 606 | The following tables summarize the impacts of adopting Topic 606 on our consolidated financial statements as of and for the three months and year ended December 31, 2018.
The cumulative effect of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of Topic 606 was as follows:
The titles have been changed in the table below to be consistent with accounts currently used under the new standard.
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Disaggregation of Revenue | See details in the tables below.
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Inventory (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventory | Components of inventory are as follows:
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Contract Balances (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Significant Changes in Contract Balances | The following table shows the significant changes in contract balances for the year ended December 31, 2018:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Debt Outstanding | The following table presents a summary of debt outstanding:
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Maturities on Long-term Debt | Maturities on outstanding debt are as follows:
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Schedule of Interest Expense | Interest expense for the years ended December 31, 2018 and 2017 consisted of the following:
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Accounts Receivable, Net (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accounts Receivable, net | Accounts receivable, net consist of the following:
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Property and Equipment (Tables) |
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Property and Equipment, net | Property and equipment, net, consists of the following:
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Intangible Assets (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Intangible Assets | Intangible assets, net consist of the following:
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Estimated Aggregate Amortization Based on Net Value of Intangible Assets | Estimated aggregate amortization, based on the net value of intangible assets at December 31, 2018, for each of the next five years and beyond is as follows:
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Accrued Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued liabilities consist of the following:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Expense | Income tax expense/(benefit) from continuing operations consisted of the following for the periods indicated:
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Deferred Tax Assets and Liabilities | Deferred tax assets consist of the following components:
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Reconciliation of Income Tax Benefit (Expense) | The expense/(benefit) from income taxes from continuing operations differs from the amount computed by applying the federal statutory income tax rate to our loss from continuing operations before income taxes as follows for the periods indicated:
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Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity of Stock Options | The following table sets forth the activity of the options to purchase common stock under the 2006 Plan and the 2016 Plan. The prices represent the closing price of our Common Stock on the Nasdaq Capital Market on the respective dates.
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Assumptions Used to Estimate Fair Value of Option Granted | The fair value of each option granted is estimated as of the grant date using the Black-Scholes option pricing model with the following assumptions:
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Activity of Stock Option by Exercise Price Range |
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Activity of Restricted Stock | The following table summarizes our aggregate restricted stock awards and restricted stock unit activity in 2018 and 2017:
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Activity of Restricted Stock Units | A summary of stock unit activity under the Deferred Compensation Plan for 2018 and 2017 is as follows.
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Future Minimum Rental Payments for Operating Leases | Minimum future payments, as of December 31, 2018, under the aforementioned operating leases for each of the next five years and thereafter are:
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Financial Information About Segments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information About Results of Operations for Each Segment |
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Segment Information | Additional segment information is as follows:
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Quarterly Results (unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | The following table sets forth our unaudited historical revenues, operating loss and net (loss)/income by quarter during 2018 and 2017.
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Discontinued Operations (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Components of Discontinued Operations | The following table presents a summary of the transactions related to the sales of Opto in the year ended December 31, 2018 and HSOR in the year ended December 31, 2017:
Assets and liabilities held for sale as of December 31, 2017 were as follows:
The key components of income from discontinued operations were as follows:
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Business Acquisitions (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of the Purchase Consideration | The following allocation of the purchase consideration is subject to revision as additional information becomes known in the future.
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Schedule of Preliminary Identifiable Intangible Assets Acquired and their Estimated Lives | The preliminary identifiable intangible assets and their estimated useful lives were as follows:
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Unaudited Pro Forma Financial Information | The following unaudited pro forma financial information presents combined results of operations for each of the periods presented as if the acquisition of MOI had been completed on January 1, 2017. The pro forma information includes adjustments to depreciation expense for property and equipment acquired, to amortize expense for the intangible assets acquired, and to eliminate the acquisition transaction expenses recognized in each period. Transaction-related expenses associated with the acquisition and excluded from the pro forma income/(loss) from continuing operations were $0.8 million. The pro forma data are for informational purposes only and are not necessarily indicative of the consolidated results of operations or the combined business had the acquisition of MOI actually occurred on January 1, 2017, or the results of future operations of the combined business. For instance, planned or expected operational synergies following the acquisition are not reflected in the pro forma information. Consequently, actual results will differ from the unaudited pro forma information presented below.
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Organization and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) shares in Millions |
3 Months Ended | 12 Months Ended | ||||||
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Jan. 01, 2018 |
May 08, 2015 |
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Jan. 01, 2019 |
|
Significant Accounting Policies [Line Items] | ||||||||
Allowance for uncollectible receivables | $ (284,083) | $ (284,083) | $ (280,583) | |||||
Cash in excess of FDIC insured limits | 4,000,000 | 4,000,000 | 11,500,000 | |||||
Debt covenant, minimum cash balance | 4,000,000 | 4,000,000 | ||||||
Research, development and engineering | 1,252,663 | $ 3,766,160 | 2,653,337 | |||||
Common stock equivalents included for diluted per share data (in shares) | (4.9) | |||||||
Effect of stock equivalents excluded from computation of earnings (in shares) | 4.3 | |||||||
Advertising expense | $ 100,000 | 100,000 | ||||||
Right-of-use assets | $ 4,000,000 | |||||||
Lease liabilities | 4,000,000 | |||||||
Technology Development | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Unfulfilled performance obligations | 26,000,000 | 26,000,000 | ||||||
Technology Development | Scenario, Forecast | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Percentage of performance obligations expected to satisfy | 9.00% | 87.00% | ||||||
Products and Licensing | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Unfulfilled performance obligations | $ 5,800,000 | $ 5,800,000 | ||||||
Products and Licensing | Scenario, Forecast | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Percentage of performance obligations expected to satisfy | 4.00% | 95.00% | ||||||
Accounting Standards Update 2014-09 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Cumulative adjustment to increase retained earnings | $ 400,000 | |||||||
Minimum | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Finite lived intangible asset, useful life | 1 year | |||||||
Right-of-use assets | 4,000,000 | |||||||
Minimum | Technology Development | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Duration of research contracts | 6 months | 6 months | ||||||
Maximum | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Finite lived intangible asset, useful life | 11 years | |||||||
Right-of-use assets | $ 5,000,000 | |||||||
Maximum | Technology Development | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Duration of research contracts | 3 years | 3 years | ||||||
Prime Rate | Silicon Valley Bank | Term Loan | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Debt, additional interest above prime rate | 2.00% | 2.00% | ||||||
U.S. Treasury Obligations | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Cash equivalents | $ 38,300,000 | $ 38,300,000 | $ 25,200,000 |
Organization and Summary of Significant Accounting Policies - Property and Equipment Estimated Useful Lives (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 3 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 7 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 7 years |
Software | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 3 years |
Organization and Summary of Significant Accounting Policies - Effect on Balance Sheet Items (Details) - USD ($) |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Assets | |||
Current assets held for sale | $ 0 | $ 4,715,996 | $ 4,336,105 |
Liabilities | |||
Contract liabilities | 2,486,111 | 3,320,629 | 3,320,629 |
Current liabilities held for sale | 0 | 885,818 | 972,451 |
Stockholders’ equity: | |||
Accumulated deficit | (21,305,222) | $ (32,052,161) | (32,406,189) |
As Reported | |||
Assets | |||
Current assets held for sale | 4,336,105 | ||
Liabilities | |||
Contract liabilities | 3,318,379 | ||
Current liabilities held for sale | 862,205 | ||
Stockholders’ equity: | |||
Accumulated deficit | (21,301,342) | (32,406,189) | |
Adjustments | Accounting Standards Update 2014-09 | |||
Assets | |||
Current assets held for sale | 379,891 | ||
Liabilities | |||
Contract liabilities | 2,250 | ||
Current liabilities held for sale | 23,613 | ||
Stockholders’ equity: | |||
Accumulated deficit | $ 3,880 | $ 354,028 |
Organization and Summary of Significant Accounting Policies - Effect on Contract Assets and Liabilities (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Accounts receivable, net | $ 13,037,068 | $ 5,929,042 |
Contract assets | 2,422,495 | 1,778,142 |
Current assets held for sale | 1,940,126 | |
Long term contract assets | 336,820 | 209,699 |
Accrued liabilities | 6,597,458 | 6,547,230 |
Contract liabilities | 2,486,111 | 3,318,379 |
Current liabilities held for sale | 120,665 | |
Deferred revenue | 0 | |
As Reported | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Accounts receivable, net | 13,037,068 | 9,857,009 |
Contract assets | 2,422,495 | 0 |
Current assets held for sale | 0 | |
Long term contract assets | 336,820 | 0 |
Accrued liabilities | 6,597,458 | 8,959,935 |
Contract liabilities | $ 2,482,231 | 0 |
Current liabilities held for sale | 0 | |
Deferred revenue | $ 1,026,339 |
Organization and Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | $ 13,538,325 | $ 10,687,000 | $ 9,923,000 | $ 8,768,000 | $ 10,186,000 | $ 8,304,000 | $ 8,283,000 | $ 6,633,000 | $ 42,917,245 | $ 33,081,865 |
Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,548,639 | 20,967,556 | ||||||||
Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 7,989,686 | 21,949,689 | ||||||||
Technology development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,548,639 | 20,967,556 | ||||||||
Technology development | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,548,639 | 20,967,556 | ||||||||
Technology development | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Optical test and measurement systems | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 7,625,325 | 19,641,434 | ||||||||
Optical test and measurement systems | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Optical test and measurement systems | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 7,625,325 | 19,641,434 | ||||||||
Optical components and sub-assemblies | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Optical components and sub-assemblies | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Optical components and sub-assemblies | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Other | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 364,361 | 2,308,255 | ||||||||
Other | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Other | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 364,361 | 2,308,255 | ||||||||
Goods transferred at a point in time | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 7,824,102 | 21,329,999 | ||||||||
Goods transferred at a point in time | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Goods transferred at a point in time | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 7,824,102 | 21,329,999 | ||||||||
Goods/services transferred over time | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,714,223 | 21,587,246 | ||||||||
Goods/services transferred over time | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,548,639 | 20,967,556 | ||||||||
Goods/services transferred over time | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 165,584 | 619,690 | ||||||||
Fixed-price contracts | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 10,766,698 | 31,338,459 | ||||||||
Fixed-price contracts | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 2,777,012 | 9,388,770 | ||||||||
Fixed-price contracts | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 7,989,686 | 21,949,689 | ||||||||
Cost-type contracts | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 2,771,627 | 11,578,786 | ||||||||
Cost-type contracts | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 2,771,627 | 11,578,786 | ||||||||
Cost-type contracts | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Sales to the U.S. government | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,888,213 | 22,537,627 | ||||||||
Sales to the U.S. government | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,418,679 | 20,703,338 | ||||||||
Sales to the U.S. government | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 469,534 | 1,834,289 | ||||||||
U.S. direct commercial sales and other | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 3,284,674 | 10,001,938 | ||||||||
U.S. direct commercial sales and other | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 129,960 | 264,218 | ||||||||
U.S. direct commercial sales and other | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 3,154,714 | 9,737,720 | ||||||||
Foreign commercial sales & other | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 4,365,438 | 10,377,680 | ||||||||
Foreign commercial sales & other | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Foreign commercial sales & other | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 4,365,438 | 10,377,680 | ||||||||
United States | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 9,172,886 | 32,552,852 | ||||||||
United States | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 5,548,639 | 20,967,556 | ||||||||
United States | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 3,624,247 | 11,585,296 | ||||||||
Asia | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 2,697,215 | 5,977,563 | ||||||||
Asia | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Asia | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 2,697,215 | 5,977,563 | ||||||||
Europe | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 1,331,145 | 3,873,161 | ||||||||
Europe | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Europe | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 1,331,145 | 3,873,161 | ||||||||
Canada, Central and South America | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 282,990 | 382,797 | ||||||||
Canada, Central and South America | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
Canada, Central and South America | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 282,990 | 382,797 | ||||||||
All Others | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 54,089 | 130,872 | ||||||||
All Others | Technology Development | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | 0 | 0 | ||||||||
All Others | Products and Licensing | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenues | $ 54,089 | $ 130,872 |
Organization and Summary of Significant Accounting Policies - Consolidated Balance Sheet (Details) - USD ($) |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Long-term debt obligations | $ 0 | $ 603,007 | ||
Current liabilities held for sale | 0 | $ 885,818 | 972,451 | |
Non-current assets held for sale | 0 | 2,627,333 | ||
Goodwill | 101,008 | 0 | ||
Current assets: | ||||
Cash and cash equivalents | 42,460,267 | 36,981,533 | $ 12,802,458 | |
Accounts receivable, net | 13,037,068 | 5,929,042 | ||
Receivable from sale of HSOR business | 2,500,000 | 4,000,976 | ||
Contract assets | 2,422,495 | 1,778,142 | ||
Inventory | 6,873,742 | 4,634,781 | ||
Prepaid expenses and other current assets | 935,185 | 1,140,999 | ||
Total current assets | 68,228,757 | 58,801,578 | ||
Long term contract assets | 336,820 | 209,699 | ||
Property and equipment, net | 3,627,886 | 2,854,641 | ||
Intangible assets, net | 3,302,270 | 1,727,390 | ||
Other assets | 1,995 | 1,995 | ||
Total assets | 75,598,736 | 66,222,636 | ||
Current liabilities: | ||||
Current portion of long term debt obligations | 619,315 | 1,833,333 | ||
Current portion of capital lease obligations | 40,586 | 43,665 | ||
Accounts payable | 2,395,984 | 2,111,077 | ||
Accrued liabilities | 6,597,458 | 6,547,230 | ||
Contract liabilities | 2,486,111 | 3,318,379 | ||
Total current liabilities | 12,139,454 | 14,826,135 | ||
Long-term portion of deferred rent | 1,035,974 | 1,184,438 | ||
Long-term capital lease obligations | 68,978 | 71,275 | ||
Total liabilities | 13,244,406 | 16,684,855 | ||
Commitments and contingencies | ||||
Stockholders’ equity: | ||||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at December 31, 2018 and 2017 | 1,322 | 1,322 | ||
Common stock, par value $0.001, 100,000,000 shares authorized, 29,209,506 and 28,354,822 shares issued, 27,956,401 and 27,283,918 shares outstanding at December 31, 2018 and 2017, respectively | 30,120 | 29,186 | ||
Treasury stock at cost, 1,253,105 and 1,070,904 shares at December 31, 2018 and 2017, respectively | (2,116,640) | (1,649,746) | ||
Additional paid-in capital | 85,744,750 | 83,563,208 | ||
Accumulated deficit | (21,305,222) | (32,052,161) | (32,406,189) | |
Total stockholders’ equity | 62,354,330 | $ 49,891,809 | 49,537,781 | $ 35,089,688 |
Total liabilities and stockholders’ equity | $ 75,598,736 | $ 66,222,636 | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Preferred stock authorized (in shares) | 1,321,514 | 1,321,514 | ||
Preferred stock issued (in shares) | 1,321,514 | 1,321,514 | ||
Preferred stock outstanding (in shares) | 1,321,514 | 1,321,514 | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Common stock authorized (in shares) | 100,000,000 | 100,000,000 | ||
Common stock issued (in shares) | 29,209,506 | 28,354,822 | ||
Common stock outstanding (in shares) | 27,956,401 | 27,283,918 | ||
Treasury stock (in shares) | 1,253,105 | 1,070,904 | ||
Balances without adoption of Topic 606 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Current liabilities held for sale | $ 862,205 | |||
Goodwill | $ 101,008 | |||
Current assets: | ||||
Cash and cash equivalents | 42,460,267 | |||
Accounts receivable, net | 13,037,068 | 9,857,009 | ||
Receivable from sale of HSOR business | 2,500,000 | |||
Contract assets | 2,422,495 | 0 | ||
Inventory | 6,873,742 | |||
Prepaid expenses and other current assets | 935,185 | |||
Total current assets | 68,228,757 | |||
Long term contract assets | 336,820 | 0 | ||
Property and equipment, net | 3,627,886 | |||
Intangible assets, net | 3,302,270 | |||
Other assets | 1,995 | |||
Total assets | 75,598,736 | |||
Current liabilities: | ||||
Current portion of long term debt obligations | 619,315 | |||
Current portion of capital lease obligations | 40,586 | |||
Accounts payable | 2,395,984 | |||
Accrued liabilities | 6,597,458 | 8,959,935 | ||
Contract liabilities | 2,482,231 | 0 | ||
Total current liabilities | 12,135,574 | |||
Long-term portion of deferred rent | 1,035,974 | |||
Long-term capital lease obligations | 68,978 | |||
Total liabilities | 13,240,526 | |||
Stockholders’ equity: | ||||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at December 31, 2018 and 2017 | 1,322 | |||
Common stock, par value $0.001, 100,000,000 shares authorized, 29,209,506 and 28,354,822 shares issued, 27,956,401 and 27,283,918 shares outstanding at December 31, 2018 and 2017, respectively | 30,120 | |||
Treasury stock at cost, 1,253,105 and 1,070,904 shares at December 31, 2018 and 2017, respectively | (2,116,640) | |||
Additional paid-in capital | 85,744,750 | |||
Accumulated deficit | (21,301,342) | (32,406,189) | ||
Total stockholders’ equity | 62,358,210 | |||
Total liabilities and stockholders’ equity | 75,598,736 | |||
Accounting Standards Update 2014-09 | Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Current liabilities held for sale | 23,613 | |||
Goodwill | 0 | |||
Current assets: | ||||
Cash and cash equivalents | 0 | |||
Accounts receivable, net | 0 | |||
Receivable from sale of HSOR business | 0 | |||
Contract assets | 0 | |||
Inventory | 0 | |||
Prepaid expenses and other current assets | 0 | |||
Total current assets | 0 | |||
Long term contract assets | 0 | |||
Property and equipment, net | 0 | |||
Intangible assets, net | 0 | |||
Other assets | 0 | |||
Total assets | 0 | |||
Current liabilities: | ||||
Current portion of long term debt obligations | 0 | |||
Current portion of capital lease obligations | 0 | |||
Accounts payable | 0 | |||
Accrued liabilities | 0 | |||
Contract liabilities | (3,880) | |||
Total current liabilities | (3,880) | |||
Long-term portion of deferred rent | 0 | |||
Long-term capital lease obligations | 0 | |||
Total liabilities | (3,880) | |||
Stockholders’ equity: | ||||
Preferred stock, par value $0.001, 1,321,514 shares authorized, issued and outstanding at December 31, 2018 and 2017 | 0 | |||
Common stock, par value $0.001, 100,000,000 shares authorized, 29,209,506 and 28,354,822 shares issued, 27,956,401 and 27,283,918 shares outstanding at December 31, 2018 and 2017, respectively | 0 | |||
Treasury stock at cost, 1,253,105 and 1,070,904 shares at December 31, 2018 and 2017, respectively | 0 | |||
Additional paid-in capital | 0 | |||
Accumulated deficit | 3,880 | $ 354,028 | ||
Total stockholders’ equity | 3,880 | |||
Total liabilities and stockholders’ equity | $ 0 |
Organization and Summary of Significant Accounting Policies - Consolidated Statement of Operations (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Revenues: | ||||||||||
Total revenues | $ 13,538,325 | $ 10,687,000 | $ 9,923,000 | $ 8,768,000 | $ 10,186,000 | $ 8,304,000 | $ 8,283,000 | $ 6,633,000 | $ 42,917,245 | $ 33,081,865 |
Cost of revenues: | ||||||||||
Total cost of revenues | 6,966,047 | 23,479,345 | 19,712,835 | |||||||
Gross profit | 6,572,278 | 5,998,000 | 5,693,000 | 4,929,000 | 4,384,000 | 2,385,000 | 2,414,000 | 1,770,000 | 19,437,900 | 13,369,030 |
Operating expense: | ||||||||||
Selling, general and administrative | 4,896,136 | 14,794,205 | 12,923,841 | |||||||
Research, development and engineering | 1,252,663 | 3,766,160 | 2,653,337 | |||||||
Total operating expense | 6,148,799 | 18,560,365 | 15,577,178 | |||||||
Operating income/(loss) | 423,479 | 581,000 | 205,000 | (373,000) | (61,000) | (150,000) | (237,000) | (1,374,000) | 877,535 | (2,208,148) |
Other income/(expense): | ||||||||||
Other expense | (1,070) | (17,143) | 26,106 | |||||||
Investment income | 198,525 | 549,580 | 0 | |||||||
Interest expense | (21,136) | (124,344) | (217,352) | |||||||
Total other income/(expense) | 176,319 | 408,093 | (191,246) | |||||||
Income/(loss) from continuing operations before income taxes | 599,798 | 1,285,628 | (2,399,394) | |||||||
Income tax expense | 722,148 | 47,818 | (1,148,579) | |||||||
Net income/(loss) from continuing operations | (122,350) | 1,293,000 | 299,000 | (272,000) | 257,000 | 194,000 | (195,000) | (1,254,000) | 1,237,810 | (1,250,815) |
Balances without adoption of Topic 606 | ||||||||||
Revenues: | ||||||||||
Total revenues | 13,538,325 | 42,918,875 | ||||||||
Cost of revenues: | ||||||||||
Total cost of revenues | 6,966,047 | 23,479,345 | ||||||||
Gross profit | 6,572,278 | 19,439,530 | ||||||||
Operating expense: | ||||||||||
Selling, general and administrative | 4,896,136 | 14,794,205 | ||||||||
Research, development and engineering | 1,252,663 | 3,766,160 | ||||||||
Total operating expense | 6,148,799 | 18,560,365 | ||||||||
Operating income/(loss) | 423,479 | 879,165 | ||||||||
Other income/(expense): | ||||||||||
Other expense | (1,070) | (17,143) | ||||||||
Investment income | 198,525 | 549,580 | ||||||||
Interest expense | (21,136) | (124,344) | ||||||||
Total other income/(expense) | 176,319 | 408,093 | ||||||||
Income/(loss) from continuing operations before income taxes | 599,798 | 1,287,258 | ||||||||
Income tax expense | 722,148 | 47,818 | ||||||||
Net income/(loss) from continuing operations | (122,350) | 1,239,440 | ||||||||
Accounting Standards Update 2014-09 | Adjustments | ||||||||||
Revenues: | ||||||||||
Total revenues | 0 | 1,630 | ||||||||
Cost of revenues: | ||||||||||
Total cost of revenues | 0 | 0 | ||||||||
Gross profit | 0 | 1,630 | ||||||||
Operating expense: | ||||||||||
Selling, general and administrative | 0 | 0 | ||||||||
Research, development and engineering | 0 | 0 | ||||||||
Total operating expense | 0 | 0 | ||||||||
Operating income/(loss) | 0 | 1,630 | ||||||||
Other income/(expense): | ||||||||||
Other expense | 0 | 0 | ||||||||
Investment income | 0 | 0 | ||||||||
Interest expense | 0 | 0 | ||||||||
Total other income/(expense) | 0 | 0 | ||||||||
Income/(loss) from continuing operations before income taxes | 0 | 1,630 | ||||||||
Income tax expense | 0 | 0 | ||||||||
Net income/(loss) from continuing operations | 0 | 1,630 | ||||||||
Technology development | ||||||||||
Revenues: | ||||||||||
Total revenues | 5,548,639 | 5,316,000 | 5,466,000 | 4,637,000 | 5,549,000 | 4,591,000 | 4,602,000 | 4,235,000 | 20,967,556 | 18,576,383 |
Cost of revenues: | ||||||||||
Total cost of revenues | 4,268,509 | 15,400,475 | 13,988,378 | |||||||
Technology development | Balances without adoption of Topic 606 | ||||||||||
Revenues: | ||||||||||
Total revenues | 5,548,639 | 20,967,556 | ||||||||
Cost of revenues: | ||||||||||
Total cost of revenues | 4,268,509 | 15,400,475 | ||||||||
Technology development | Accounting Standards Update 2014-09 | Adjustments | ||||||||||
Revenues: | ||||||||||
Total revenues | 0 | 0 | ||||||||
Cost of revenues: | ||||||||||
Total cost of revenues | 0 | 0 | ||||||||
Products and licensing | ||||||||||
Revenues: | ||||||||||
Total revenues | 7,989,686 | $ 5,371,000 | $ 4,457,000 | $ 4,131,000 | $ 4,637,000 | $ 3,713,000 | $ 3,681,000 | $ 2,398,000 | 21,949,689 | 14,505,482 |
Cost of revenues: | ||||||||||
Total cost of revenues | 2,697,538 | 8,078,870 | $ 5,724,457 | |||||||
Products and licensing | Balances without adoption of Topic 606 | ||||||||||
Revenues: | ||||||||||
Total revenues | 7,989,686 | 21,951,319 | ||||||||
Cost of revenues: | ||||||||||
Total cost of revenues | 2,697,538 | 8,078,870 | ||||||||
Products and licensing | Accounting Standards Update 2014-09 | Adjustments | ||||||||||
Revenues: | ||||||||||
Total revenues | 0 | 1,630 | ||||||||
Cost of revenues: | ||||||||||
Total cost of revenues | $ 0 | $ 0 |
Inventory (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,339,832 | $ 762,394 |
Work-in-process | 643,420 | 288,165 |
Raw materials | 4,890,490 | 3,584,222 |
Total Inventory | $ 6,873,742 | $ 4,634,781 |
Contract Balances (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Contract Assets | |
Opening Balance as of January 1, 2018 | $ 1,987,841 |
Transferred to receivables from contract assets recognized at the beginning of the period | (1,679,363) |
Increases as a result of cumulative catch-up adjustment arising from changes in the estimate of the stage of completion | 2,450,837 |
Balance as of December 31, 2018 | 2,759,315 |
Contract Liabilities | |
Opening Balance as of January 1, 2018 | 3,320,629 |
Revenue recognized that was included in the contract liabilities balance at the beginning of the period | (878,402) |
Transferred to payables from contract liabilities recognized at the beginning of the period | (2,078,640) |
Increases due to cash received or adjustment of estimates, excluding amounts recognized as revenue during the period | 2,122,524 |
Balance as of December 31, 2018 | $ 2,486,111 |
Debt - Additional Information (Details) |
12 Months Ended | ||||
---|---|---|---|---|---|
May 08, 2015
USD ($)
installment
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2015
USD ($)
|
May 01, 2015
USD ($)
|
|
Debt Instrument [Line Items] | |||||
Long-term debt obligation | $ 625,000 | $ 2,458,333 | |||
Current portion of long term debt obligations | 619,315 | 1,833,333 | |||
Debt issuance costs | 5,685 | 21,993 | |||
Amortization of debt issuance costs | 16,308 | 16,308 | |||
Silicon Valley Bank | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt, face amount | $ 6,000,000.0 | ||||
Debt, number of monthly payment | installment | 48 | ||||
Early termination fee, percentage | 2.00% | ||||
Long-term debt obligation | $ 600,000 | $ 2,500,000 | |||
Effective interest rate | 7.00% | ||||
Debt issuance costs | $ 55,000 | ||||
Silicon Valley Bank | Term Loan | Prime Rate | |||||
Debt Instrument [Line Items] | |||||
Debt, additional interest above prime rate | 2.00% | 2.00% | |||
Silicon Valley Bank | Term Loan | Sixth Loan Modification Agreement | |||||
Debt Instrument [Line Items] | |||||
Monthly installments | $ 125,000 | ||||
Silicon Valley Bank | Term Loan | Seventh Loan Modification Agreement | |||||
Debt Instrument [Line Items] | |||||
Debt, face amount | $ 1,000,000 | ||||
Debt covenant, minimum cash balance | $ 4,000,000 | ||||
Percentage of accounts receivable | 60.00% | ||||
Outstanding principal balance multiplier | 1.5 |
Debt - Summary of Debt Outstanding (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
Silicon Valley Bank Term Loans | $ 625,000 | $ 2,458,333 |
Less: unamortized debt issuance costs | 5,685 | 21,993 |
Less: current portion | 619,315 | 1,833,333 |
Total long-term debt obligations | $ 0 | $ 603,007 |
Debt - Maturities on Long Term Debt (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
2019 | $ 625,000 | |
Total | $ 625,000 | $ 2,458,333 |
Debt - Interest Expense (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Debt Disclosure [Abstract] | ||
Interest expense on Term Loans | $ 108,062 | $ 201,696 |
Amortization of debt issuance costs | 16,308 | 16,308 |
Other interest income | (26) | (652) |
Total interest expense | $ 124,344 | $ 217,352 |
Accounts Receivable, Net (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Billed | $ 13,289,790 | $ 6,189,625 |
Other | 31,361 | 20,000 |
Accounts receivable, gross | 13,321,151 | 6,209,625 |
Less: allowance for doubtful accounts | (284,083) | (280,583) |
Accounts receivable, net | $ 13,037,068 | $ 5,929,042 |
Property and Equipment - Components of Property and Equipment, Net (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Building | $ 69,556 | $ 69,556 |
Equipment | 9,341,007 | 8,213,626 |
Furniture and fixtures | 640,890 | 565,885 |
Software | 1,122,231 | 1,122,231 |
Leasehold improvements | 4,950,510 | 4,840,510 |
Property, plant and equipment, gross, total | 16,124,194 | 14,811,808 |
Less—accumulated depreciation | (12,496,308) | (11,957,167) |
Property and equipment, net | $ 3,627,886 | $ 2,854,641 |
Property and Equipment - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 0.5 | $ 0.7 |
Intangible Assets - Summary of Intangible Assets (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 8,041,460 | $ 6,058,198 |
Accumulated amortization | (4,739,190) | (4,330,808) |
Intangible assets, net | 3,302,270 | 1,727,390 |
In process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
In-process research and development | 200,000 | 0 |
Patent costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible assets gross | $ 4,991,460 | 4,658,198 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible asset, useful life | 5 years | |
Finite lived intangible assets gross | $ 2,600,000 | 1,400,000 |
Customer base | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible asset, useful life | 7 years | |
Finite lived intangible assets gross | $ 100,000 | 0 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible asset, useful life | 3 years | |
Finite lived intangible assets gross | $ 150,000 | $ 0 |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible asset, useful life | 1 year | |
Minimum | Patent costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible asset, useful life | 1 year | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible asset, useful life | 11 years | |
Maximum | Patent costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible asset, useful life | 18 years |
Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 0.4 | $ 0.5 |
Intangible Assets - Estimated Aggregate Amortization (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 591,120 |
2020 | 558,156 |
2021 | 535,288 |
2022 | 480,219 |
2023 | 279,631 |
2023 and beyond | 857,856 |
Finite lived intangible assets, net | $ 3,302,270 |
Accrued Liabilities (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 4,467,587 | $ 5,274,005 |
Accrued professional fees | 198,062 | 117,445 |
Accrued income tax | 236,636 | 403,547 |
Deferred rent | 146,542 | 144,740 |
Royalties | 302,428 | 290,235 |
Accrued liabilities-other | 404,752 | 317,258 |
Working capital payable | 542,983 | 0 |
Liability to related party | 298,468 | 0 |
Total accrued liabilities | $ 6,597,458 | $ 6,547,230 |
Income Taxes - Components of Income Tax Expense (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Current: | |||
Federal | $ (44,727) | $ (1,154,105) | |
State | 92,545 | 5,526 | |
Deferred federal | 0 | 0 | |
Deferred state | 0 | 0 | |
Income tax expense/(benefit) | $ 722,148 | $ 47,818 | $ (1,148,579) |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Income Tax Assets And Liabilities [Line Items] | ||
Bad debt and inventory reserve | $ 332,721 | $ 226,358 |
Inventory adjustment | (21,785) | |
Inventory adjustment | 405,242 | |
UNICAP | 2,804 | 32,579 |
Deferred revenue | 115,676 | 84,669 |
Deferred rent | 288,017 | 340,199 |
Depreciation and amortization | (838,540) | (1,238,458) |
Charitable contributions | 0 | 3,385 |
Research and development credits | 0 | 235,613 |
California manufacturing credit | 0 | 15,554 |
Accrued liabilities | 394,118 | 504,472 |
Deferred compensation | 216,944 | 223,607 |
Stock-based compensation | 803,757 | 1,275,372 |
Restricted stock | 60,681 | 0 |
State bonus | 44,861 | 0 |
AMT credit | 0 | 581,467 |
Transaction costs | 63,668 | 0 |
Total, long-term | 3,267,533 | 5,020,745 |
Valuation allowance, long-term | (3,267,533) | (5,020,745) |
Net deferred tax asset, long-term | 0 | 0 |
Net operating loss carryforwards - state | ||
Deferred Income Tax Assets And Liabilities [Line Items] | ||
Net operating loss carryforwards | 179,149 | 534,194 |
Net operating loss carryforwards- Canada | ||
Deferred Income Tax Assets And Liabilities [Line Items] | ||
Net operating loss carryforwards | 10,503 | 10,503 |
Net operating loss carryforwards- Luna | ||
Deferred Income Tax Assets And Liabilities [Line Items] | ||
Net operating loss carryforwards | 349,421 | 349,421 |
Net operating loss carryforwards- API | ||
Deferred Income Tax Assets And Liabilities [Line Items] | ||
Net operating loss carryforwards | $ 1,265,538 | $ 1,436,568 |
Income Taxes - Reconciliation of Income Tax Benefit (Expense) (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Income tax expense at federal statutory rate | 21.00% | 34.00% |
State taxes, net of federal tax effects | 0.00% | (10.84%) |
Change in tax rate from Tax Cuts and Jobs Act | 0.00% | (79.17%) |
Change in valuation allowance | (27.65%) | 113.86% |
Incentive stock options | (1.05%) | (9.65%) |
Provision to return adjustments | 21.16% | 3.87% |
Meals and entertainment | 0.97% | (0.65%) |
Capitalized merger costs | 0.00% | 0.00% |
AMT Carryover | (9.83%) | 0.00% |
Other permanent differences | (0.88%) | (3.55%) |
Income tax expense/(benefit) | 3.72% | 47.87% |
Income Taxes - Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 22, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Taxes [Line Items] | |||
Research and development credits | $ 0 | $ 235,613 | |
Unrecognized tax benefits net increases (decreases) resulting from current period tax positions | 0 | ||
Reduction in deferred tax asset due to Tax Act | $ 1,900,000 | ||
Reduction in valuation allowance | $ 1,900,000 | ||
AMT credit | 0 | $ 581,467 | |
Tax benefit realized in recovery of AMT credit from prior periods | 700,000 | ||
Luna | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | 0 | ||
API | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | $ 6,000,000 |
Stockholders' Equity - Additional Information (Details) |
1 Months Ended | 12 Months Ended | 13 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2016
shares
|
Jan. 31, 2010
USD ($)
shares
|
Dec. 31, 2018
USD ($)
installment
$ / shares
shares
|
Dec. 31, 2017
USD ($)
$ / shares
shares
|
May 31, 2017
shares
|
|
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Stock based compensation expense | $ | $ 600,000 | $ 700,000 | |||
Stock-based compensation expense expected to be recognized | $ | $ 900,000 | $ 900,000 | |||
Purchase of treasury stock (in shares) | 565,629 | 433,179 | 205,500 | ||
Carilion Clinic | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Senior convertible Promissory Notes principal amount converted | $ | $ 5,000,000.0 | ||||
Accrued interest converted | $ | $ 1,200,000 | ||||
Percentage of dividend payable on series A convertible preferred stock | 6.00% | ||||
Preferred stock liquidation preference value | $ | $ 6,200,000 | ||||
Shares of common stock dividends (in shares) | 710,985 | ||||
Carilion Clinic | Series A Convertible Preferred Stock | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Preferred stock issued in exchange of notes payable (in shares) | 1,321,514 | ||||
Stock Options | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Vesting period | 4 years | ||||
Weighted average grant date fair value of options granted (in dollars per share) | $ / shares | $ 2.07 | $ 1.18 | |||
Weighted average remaining service period related to compensation recognition | 3 years 7 months 12 days | ||||
Unamortized stock option expense to be recognized | $ | $ 2,200,000 | ||||
Stock Options | Carilion Clinic | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Conversion of stock, ratio | 1 | ||||
Restricted Stock | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Shares issued (in shares) | 280,000 | 349,000 | |||
Share-based compensation vesting installments | installment | 3 | ||||
Shares vested (in shares) | 182,500 | 530,542 | |||
Restricted Stock and Restricted Stock Units | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Weighted average remaining service period related to compensation recognition | 2 years | ||||
Shares issued (in shares) | 296,287 | 478,865 | |||
Shares vested (in shares) | 312,365 | 617,498 | |||
Unamortized restricted stock and restricted stock units expense to be recognized | $ | $ 1,000,000 | ||||
Restricted Stock Units (RSUs) | Member of Board of Directors | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Shares issued (in shares) | 16,286 | 129,865 | |||
Shares vested (in shares) | 129,865 | 86,956 | |||
2016 Equity Incentive Plan | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Shares available for future grant (in shares) | 3,500,000 | ||||
Stock option contractual term | 10 years |
Stockholders' Equity - Activity of Stock Options (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Options Outstanding, Number of Shares | ||
Beginning Balance (in shares) | 2,714,561 | 2,857,114 |
Forfeited (in shares) | (675,607) | (178,665) |
Exercised (in shares) | (96,425) | (83,888) |
Granted (in shares) | 1,166,339 | 120,000 |
Ending Balance (in shares) | 3,108,868 | 2,714,561 |
Options Outstanding, Price per Share Range | ||
Beginning Balance, lower limit (in dollars per share) | $ 0.61 | $ 0.61 |
Beginning Balance, upper limit (in dollars per share) | 6.55 | 6.83 |
Forfeited, lower limit (in dollars per share) | 1.15 | 1.27 |
Forfeited, upper limit (in dollars per share) | 6.55 | 6.83 |
Exercised, lower limit (in dollars per share) | 0.65 | 0.82 |
Exercised, upper limit (in dollars per share) | 2.46 | 1.40 |
Granted, lower limit (in dollars per share) | 2.67 | 1.51 |
Granted, upper limit (in dollars per share) | 3.53 | 2.40 |
Ending Balance, lower limit (in dollars per share) | 0.61 | 0.61 |
Ending Balance, upper limit (in dollars per share) | 6.55 | 6.55 |
Options Outstanding, Weighted Average Exercise Price | ||
Beginning balance (in dollars per share) | 1.88 | 1.89 |
Forfeited (in dollars per share) | 1.90 | 2.24 |
Exercised (in dollars per share) | 2.07 | 1.19 |
Granted (in dollars per share) | 3.09 | 1.82 |
Ending balance (in dollars per share) | $ 2.26 | $ 1.88 |
Options Outstanding, Aggregate Intrinsic Value beginning balance (in shares) | $ 2,098,195 | $ 107,063 |
Options Outstanding, Aggregate Intrinsic Value ending balance (in shares) | $ 3,669,794 | $ 2,098,195 |
Options Exercisable, beginning balance (in shares) | 2,590,030 | 2,367,630 |
Options Exercisable, ending balance (in shares) | 1,986,740 | 2,590,030 |
Options Exercisable, Weighted Average Exercise Price, beginning balance (in dollars per share) | $ 1.89 | $ 1.93 |
Options Exercisable, Weighted Average Exercise Price, ending balance (in dollars per share) | $ 1.81 | $ 1.89 |
Options Exercisable, Aggregate Intrinsic Value, beginning balance | $ 2,013,034 | $ 101,071 |
Options Exercisable, Aggregate Intrinsic Value, ending balance | $ 3,314,494 | $ 2,013,034 |
Stockholders' Equity - Assumptions Used to Estimate Fair Value of Options Granted (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Equity [Abstract] | ||
Risk-free interest rate range | 3.00% | 2.05% |
Expected life of option-years | 7 years | 6 years 6 months |
Expected stock price volatility | 67.00% | 69.00% |
Expected dividend yield | 0.00% | 0.00% |
Stockholders' Equity - Activity of Stock Option by Exercise Price Range (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Range of Exercise Prices, lower range (in dollars per share) | $ 0.61 | $ 0.61 | |
Range of Exercise Prices, upper range (in dollars per share) | $ 6.55 | $ 6.55 | |
Options Outstanding (in shares) | 3,108,868 | 2,714,561 | 2,857,114 |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 2.26 | $ 1.88 | $ 1.89 |
Options Exercisable (in shares) | 1,986,740 | 2,590,030 | 2,367,630 |
Weighted Average Exercise Price of Options Exercisable (in dollars per share) | $ 1.81 | $ 1.89 | $ 1.93 |
Total Intrinsic Value of Options Exercised | $ 112,213 | $ 62,549 | |
Total Fair Value of Options Vested | $ 2,980,110 | $ 3,962,746 | |
$0.61 - 6.55 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Options Outstanding (in shares) | 2,714,561 | ||
Options Outstanding, Weighted Average Remaining Life in Years | 4 years 2 months 23 days | ||
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 1.88 | ||
Options Exercisable (in shares) | 2,590,030 | ||
Weighted Average Exercise Price of Options Exercisable (in dollars per share) | $ 1.89 | ||
$0.61 - 6.55 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Options Outstanding (in shares) | 3,108,868 | ||
Options Outstanding, Weighted Average Remaining Life in Years | 5 years 8 months 20 days | ||
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 2.26 | ||
Options Exercisable (in shares) | 1,986,740 | ||
Weighted Average Exercise Price of Options Exercisable (in dollars per share) | $ 1.81 |
Stockholders' Equity - Activity of Restricted Stock Issuances (Details) - Restricted Stock and Restricted Stock Units - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Number of Unvested Shares | ||
Beginning balance (in shares) | 489,698 | 829,998 |
Granted (in shares) | 296,287 | 478,865 |
Vested (in shares) | (312,365) | (617,498) |
Forfeitures (in shares) | (15,000) | (201,667) |
Ending balance (in shares) | 458,620 | 489,698 |
Weighted Average Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ 1.51 | $ 1.19 |
Granted (in dollars per share) | 3.07 | 1.63 |
Vested (in dollars per share) | 1.45 | 1.23 |
Forfeitures (in dollars per share) | 1.41 | 1.35 |
Ending balance (in dollars per share) | $ 2.56 | $ 1.51 |
Aggregate Value of Unvested Shares | ||
Beginning balance | $ 738,345 | $ 988,763 |
Granted | 909,600 | 780,252 |
Vested | (454,339) | (758,653) |
Forfeitures | (21,150) | (272,017) |
Ending balance | $ 1,172,456 | $ 738,345 |
Stockholders' Equity - Activity of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) - Deferred Compensation Plan - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Number of Stock Units | ||
Beginning balance (in shares) | 466,702 | 393,012 |
Granted (in shares) | 40,588 | 73,690 |
Vested (in shares) | 0 | 0 |
Converted (in shares) | 0 | 0 |
Ending balance (in shares) | 507,290 | 466,702 |
Weighted Average Grant Date Fair Value per Share | ||
Beginning balance (in dollars per share) | $ 1.40 | $ 1.37 |
Granted (in dollars per share) | 2.99 | 1.54 |
Vested (in dollars per share) | 1.15 | 1.15 |
Converted (in dollars per share) | 0.00 | 0.00 |
Ending balance (in dollars per share) | $ 1.40 | $ 1.40 |
Intrinsic value, outstanding | $ 1,699,422 | $ 1,134,086 |
Stockholders' Equity - Share Repurchase Program (Details) - USD ($) |
12 Months Ended | 13 Months Ended | 16 Months Ended | ||||
---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
May 31, 2017 |
Dec. 31, 2018 |
Sep. 30, 2017 |
May 31, 2016 |
|
Equity [Abstract] | |||||||
Authorized share repurchase amount | $ 2,000,000.0 | $ 2,000,000.0 | |||||
Purchase of treasury stock (in shares) | 565,629 | 433,179 | 205,500 | ||||
Amount of stock repurchased | $ 466,894 | $ 1,131,759 | $ 200,000 | $ 1,100,000 |
Commitments and Contingencies - Additional Information (Details) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
purchase_order
|
Mar. 31, 2018
USD ($)
purchase_order
|
Dec. 31, 2017
USD ($)
purchase_order
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Commitments and Contingencies Disclosure [Line Items] | ||||||
Number of non-cancelable purchase orders executed | purchase_order | 1 | 1 | 1 | |||
Minimum royalty payable | $ 0.4 | |||||
Selling, General and Administrative Expenses | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Lease and rental expense | 1.0 | $ 1.1 | ||||
Tunable Lasers | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Non-cancelable purchase order commitment | $ 0.7 | $ 1.1 | $ 0.5 | $ 0.7 | $ 0.5 | |
Non-cancelable purchase order delivery period (in months) | 18 months | |||||
Non-cancelable purchase order commitment remained | $ 0.8 |
Commitments and Contingencies - Future Minimum Rental Payments for Operating Leases (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 1,216,124 |
2020 | 1,117,684 |
2021 | 640,800 |
2022 | 544,704 |
2023 | 544,704 |
Thereafter | 544,704 |
Future minimum payments due, total | $ 4,608,720 |
Employee Profit Sharing Plan (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Retirement Benefits [Abstract] | ||
Percentage of employer's matching contributions to a defined contribution plan that vests | 25.00% | |
Percentage of employees' gross pay for which employer contributes a matching contribution | 10.00% | |
Contribution to employee compensation plan by employer | $ 0.3 | $ 0.3 |
Litigation and Other Contingencies (Details) - USD ($) |
1 Months Ended | ||||
---|---|---|---|---|---|
Jul. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Aug. 31, 2017 |
Aug. 09, 2017 |
|
Loss Contingencies [Line Items] | |||||
Accounts receivable, net | $ 13,037,068 | $ 5,929,042 | |||
HSOR | Disposed of by Sale | |||||
Loss Contingencies [Line Items] | |||||
Placed into escrow | $ 4,000,000 | ||||
HSOR | Disposed of by Sale | Macom Technology Solutions, Inc. | |||||
Loss Contingencies [Line Items] | |||||
Placed into escrow | 2,500,000 | $ 4,000,000 | |||
Amount of the escrow balance received | 1,500,000 | ||||
Opto | Disposed of by Sale | |||||
Loss Contingencies [Line Items] | |||||
Contingent consideration | $ 1,000,000 | ||||
Asset purchase agreement duration following sale | 18 months | ||||
Customer Concentration Risk | Macom Technology Solutions, Inc. | |||||
Loss Contingencies [Line Items] | |||||
Accounts receivable, net | $ 2,100,000 |
Relationship with Major Customers (Details) - United States Government |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Consolidated Revenues | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 53.00% | 48.00% |
Billed Trade Receivables | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 23.00% | 20.00% |
Financial Information About Segments - Additional Information (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
segment
|
Dec. 31, 2017
USD ($)
|
|
Concentration Risk [Line Items] | ||
Number of operating segments | segment | 2 | |
Depreciation | $ 500,000 | $ 700,000 |
Amortization | 400,000 | 500,000 |
Products and Licensing | ||
Concentration Risk [Line Items] | ||
Depreciation | 273,185 | 747,216 |
Amortization | 418,349 | 1,280,699 |
Assets held for sale | 7,000,000 | |
Products and Licensing | Discontinued Operations | ||
Concentration Risk [Line Items] | ||
Depreciation | 100,000 | 400,000 |
Amortization | $ 100,000 | $ 900,000 |
Revenues | Geographic Concentration Risk | Outside of the United States | ||
Concentration Risk [Line Items] | ||
Percentage of total revenues by customer | 24.00% | 19.00% |
Financial Information About Segments - Information About Results of Operations for Each Segment (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | $ 13,538,325 | $ 10,687,000 | $ 9,923,000 | $ 8,768,000 | $ 10,186,000 | $ 8,304,000 | $ 8,283,000 | $ 6,633,000 | $ 42,917,245 | $ 33,081,865 |
Operating loss | 423,479 | 581,000 | 205,000 | (373,000) | (61,000) | (150,000) | (237,000) | (1,374,000) | 877,535 | (2,208,148) |
Depreciation | 500,000 | 700,000 | ||||||||
Amortization | 400,000 | 500,000 | ||||||||
Technology Development | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 5,548,639 | 20,967,556 | ||||||||
Operating loss | 378,212 | (120,417) | ||||||||
Depreciation | 379,952 | 359,626 | ||||||||
Amortization | 130,765 | 139,067 | ||||||||
Products and Licensing | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 7,989,686 | 21,949,689 | ||||||||
Operating loss | 499,323 | (2,087,731) | ||||||||
Depreciation | 273,185 | 747,216 | ||||||||
Amortization | 418,349 | 1,280,699 | ||||||||
Technology development | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 5,548,639 | 5,316,000 | 5,466,000 | 4,637,000 | 5,549,000 | 4,591,000 | 4,602,000 | 4,235,000 | 20,967,556 | 18,576,383 |
Products and licensing | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | $ 7,989,686 | $ 5,371,000 | $ 4,457,000 | $ 4,131,000 | $ 4,637,000 | $ 3,713,000 | $ 3,681,000 | $ 2,398,000 | $ 21,949,689 | $ 14,505,482 |
Financial Information About Segments - Segment Information (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 75,598,736 | $ 66,222,636 |
Property plant and equipment, and intangible assets | 3,627,886 | 2,854,641 |
Technology Development | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 34,823,525 | 32,011,084 |
Property plant and equipment, and intangible assets | 2,103,711 | 2,361,663 |
Products and Licensing | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 40,775,211 | 34,211,552 |
Property plant and equipment, and intangible assets | $ 4,927,453 | $ 4,831,671 |
Quarterly Results (unaudited) (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Revenues: | |||||||||||
Total revenues | $ 13,538,325 | $ 10,687,000 | $ 9,923,000 | $ 8,768,000 | $ 10,186,000 | $ 8,304,000 | $ 8,283,000 | $ 6,633,000 | $ 42,917,245 | $ 33,081,865 | |
Gross margin | 6,572,278 | 5,998,000 | 5,693,000 | 4,929,000 | 4,384,000 | 2,385,000 | 2,414,000 | 1,770,000 | 19,437,900 | 13,369,030 | |
Operating income/(loss) | 423,479 | 581,000 | 205,000 | (373,000) | (61,000) | (150,000) | (237,000) | (1,374,000) | 877,535 | (2,208,148) | |
Net income/(loss) from continuing operations | (122,350) | 1,293,000 | 299,000 | (272,000) | 257,000 | 194,000 | (195,000) | (1,254,000) | 1,237,810 | (1,250,815) | |
Income/(loss) from discontinued operations net of income taxes | 1,062,000 | 7,556,000 | 768,000 | 421,000 | 749,000 | 15,563,000 | (26,000) | (102,000) | 9,766,431 | 15,865,720 | |
Net income | 940,000 | 8,849,000 | 1,067,000 | 149,000 | 1,006,000 | 15,757,000 | (221,000) | (1,356,000) | 11,004,241 | $ 11,004,241 | 14,614,905 |
Net (loss)/income attributable to common stockholders | $ 873,000 | $ 8,785,000 | $ 1,004,000 | $ 84,000 | $ 939,000 | $ 15,723,000 | $ (251,000) | $ (1,390,000) | $ 10,746,939 | $ 14,468,016 | |
Net income/(loss) per share from continuing operations: | |||||||||||
Basic (in dollars per share) | $ 0.00 | $ 0.05 | $ 0.01 | $ (0.01) | $ 0.01 | $ 0.01 | $ (0.01) | $ (0.05) | $ 0.04 | $ (0.05) | |
Diluted (in dollars per share) | 0.00 | 0.04 | 0.01 | (0.01) | 0.01 | 0.01 | (0.01) | (0.05) | 0.04 | (0.05) | |
Net income/(loss) per share from discontinued operations: | |||||||||||
Basic (in dollars per share) | 0.04 | 0.27 | 0.03 | 0.02 | 0.03 | 0.56 | 0.00 | 0.00 | 0.35 | 0.58 | |
Diluted (in dollars per share) | 0.04 | 0.23 | 0.02 | 0.02 | 0.02 | 0.48 | 0.00 | 0.00 | 0.30 | 0.58 | |
Net income/(loss) attributable to common stockholders: | |||||||||||
Basic (in dollars per share) | 0.03 | 0.31 | 0.04 | 0.00 | 0.03 | 0.57 | (0.01) | (0.05) | 0.39 | 0.52 | |
Diluted (in dollars per share) | $ 0.03 | $ 0.27 | $ 0.03 | $ 0.00 | $ 0.03 | $ 0.48 | $ (0.01) | $ (0.05) | $ 0.33 | $ 0.52 | |
Weighted average shares: | |||||||||||
Basic (in shares) | 28,067,348 | 27,901,631 | 27,531,361 | 27,204,989 | 27,485,278 | 27,692,539 | 27,600,147 | 27,541,356 | 27,596,401 | 27,579,988 | |
Diluted (in shares) | 28,067,348 | 33,055,881 | 31,506,745 | 27,204,989 | 31,790,418 | 32,714,389 | 27,600,147 | 27,541,356 | 32,452,228 | 27,579,988 | |
Products and licensing | |||||||||||
Revenues: | |||||||||||
Total revenues | $ 7,989,686 | $ 5,371,000 | $ 4,457,000 | $ 4,131,000 | $ 4,637,000 | $ 3,713,000 | $ 3,681,000 | $ 2,398,000 | $ 21,949,689 | $ 14,505,482 | |
Technology development | |||||||||||
Revenues: | |||||||||||
Total revenues | $ 5,548,639 | $ 5,316,000 | $ 5,466,000 | $ 4,637,000 | $ 5,549,000 | $ 4,591,000 | $ 4,602,000 | $ 4,235,000 | $ 20,967,556 | $ 18,576,383 |
Discontinued Operations - Additional Information (Details) |
12 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2018
USD ($)
|
Aug. 09, 2017
USD ($)
employee
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from divestiture | $ 15,799,529 | $ 28,026,528 | ||
Depreciation and amortization from discontinued operations | 200,000 | 1,300,000 | ||
Acquisition of property, plant and equipment for discontinued operations | 100,000 | 100,000 | ||
Intangible property costs | 10,000 | 100,000 | ||
Gain on sale of discontinued operations | (8,595,797) | (15,671,028) | ||
HSOR | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from divestiture | 28,000,000 | |||
HSOR | Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Initial purchase price | $ 33,500,000 | 17,500,000 | 33,500,000 | |
Proceeds from divestiture | 29,500,000 | |||
Placed into escrow | $ 4,000,000 | |||
Employees hired by purchaser | employee | 49 | |||
Monthly payment for transition services | $ 300,000 | |||
Transition period | 5 months | |||
Total transition cost | $ 1,500,000 | 0 | 1,500,000 | |
Initial purchase price | 17,500,000 | 32,000,000 | ||
Gain on sale of discontinued operations | (8,595,797) | $ (15,671,028) | ||
HSOR | Revenues | Product Concentration Risk | Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Concentration percentage | 16.10% | |||
HSOR | Cost of Revenues | Product Concentration Risk | Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Concentration percentage | 18.50% | |||
Opto | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from divestiture | $ 16,000,000 | |||
Opto | Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from divestiture | $ 17,500,000 | |||
Initial purchase price | 18,500,000 | |||
Contingent consideration | $ 1,000,000 |
Discontinued Operations - Summary of Transactions Related to Sale (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Aug. 09, 2017 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Income tax expense | $ (1,572,244) | $ (912,298) | |
Gain on sale, net of related income taxes | 8,595,797 | 15,671,028 | |
HSOR | Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Sale price | 17,500,000 | 33,500,000 | $ 33,500,000 |
Less: transition services payments | 0 | (1,500,000) | $ (1,500,000) |
Adjusted purchase price | 17,500,000 | 32,000,000 | |
Assets held for sale | (8,193,184) | (16,851,540) | |
Liabilities held for sale | 989,453 | 2,330,052 | |
Transaction costs | (858,227) | (895,186) | |
Return of working capital | 730,000 | 0 | |
Income tax expense | (1,572,245) | (912,298) | |
Gain on sale, net of related income taxes | $ 8,595,797 | $ 15,671,028 |
Discontinued Operations - Assets and Liabilities Held For Sale (Details) - USD ($) |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Current assets: | |||
Total current assets | $ 0 | $ 4,715,996 | $ 4,336,105 |
Total non-current assets | 0 | 2,627,333 | |
Current liabilities: | |||
Total current liabilities | $ 0 | $ 885,818 | 972,451 |
Held-for-sale | |||
Current assets: | |||
Accounts receivable, net | 1,940,125 | ||
Inventory | 2,316,329 | ||
Prepaid expenses and other current assets | 79,651 | ||
Total current assets | 4,336,105 | ||
Property and equipment, net | 599,102 | ||
Intangible assets, net | 1,510,203 | ||
Goodwill | 502,000 | ||
Other assets | 16,028 | ||
Total non-current assets | 2,627,333 | ||
Total assets held for sale | 6,963,438 | ||
Current liabilities: | |||
Accounts payable | 851,785 | ||
Accrued liabilities | 120,666 | ||
Deferred revenue | 0 | ||
Total current liabilities | 972,451 | ||
Long-term deferred rent | 0 | ||
Total non-current liabilities | 0 | ||
Total liabilities held for sale | $ 972,451 |
Discontinued Operations - Components of Income from Discontinued Operations (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||
Net revenues | $ 8,363,606 | $ 19,511,646 | ||||||||
Cost of revenues | 5,294,268 | 12,994,656 | ||||||||
Operating expenses | 1,728,113 | 5,413,952 | ||||||||
Other (income)/expenses | (13,330) | 31,758 | ||||||||
Income before income taxes | 1,354,555 | 1,071,280 | ||||||||
Allocated tax expense | 183,921 | 876,588 | ||||||||
Operating income from discontinued operations | 1,170,634 | 194,692 | ||||||||
Gain on sale, net of related income taxes | 8,595,797 | 15,671,028 | ||||||||
Net income from discontinued operations | $ 1,062,000 | $ 7,556,000 | $ 768,000 | $ 421,000 | $ 749,000 | $ 15,563,000 | $ (26,000) | $ (102,000) | $ 9,766,431 | $ 15,865,720 |
Business Acquisitions - Additional Information (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Mar. 01, 2019 |
Oct. 15, 2018 |
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Business Acquisition [Line Items] | |||||
Cash payments for acquisition, net of cash acquired | $ 5,001,750 | $ 0 | |||
Micron Optics, Inc. | |||||
Business Acquisition [Line Items] | |||||
Cash payments for acquisition, net of cash acquired | $ 5,500,000 | $ 5,000,000 | |||
Accrued liability for consideration transferred | 500,000 | ||||
Acquisition costs | 800,000 | $ 800,000 | |||
Income recognized since acquisition | 2,600,000 | ||||
Revenue recognized since acquisition | $ 1,100,000 | ||||
Micron Optics, Inc. | Developed technology | |||||
Business Acquisition [Line Items] | |||||
Discount rate used to estimate fair value of acquired finite-lived intangible assets | 24.50% | ||||
Micron Optics, Inc. | In process research and development | |||||
Business Acquisition [Line Items] | |||||
Discount rate used to estimate fair value of acquired finite-lived intangible assets | 29.50% | ||||
Micron Optics, Inc. | Customer base | |||||
Business Acquisition [Line Items] | |||||
Discount rate used to estimate fair value of acquired finite-lived intangible assets | 24.50% | ||||
Micron Optics, Inc. | Trade names | |||||
Business Acquisition [Line Items] | |||||
Discount rate used to estimate fair value of acquired finite-lived intangible assets | 17.00% | ||||
Subsequent Event | General Photonics, Inc. | |||||
Business Acquisition [Line Items] | |||||
Cash consideration to purchase business | $ 19,000,000 | ||||
Cash paid at closing | 17,100,000 | ||||
Remaining purchase price placed in escrow | 1,900,000 | ||||
Contingent consideration | $ 1,000,000 |
Business Acquisitions - Allocation of Purchase Consideration (Details) - USD ($) |
Dec. 31, 2018 |
Oct. 15, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 101,008 | $ 0 | |
Micron Optics, Inc. | |||
Business Acquisition [Line Items] | |||
Accounts receivable | $ 1,742,693 | ||
Inventory | 1,435,606 | ||
Other current assets | 69,951 | ||
Property and equipment | 996,460 | ||
Identifiable intangible assets | 1,650,000 | ||
Goodwill | 101,008 | ||
Accounts payable and accrued expenses | (450,985) | ||
Total purchase consideration | $ 5,544,733 |
Business Acquisitions - Preliminary Identifiable Intangible Assets Acquired and their Estimated Lives (Details) - Micron Optics, Inc. |
Oct. 15, 2018
USD ($)
|
---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identifiable intangible assets | $ 1,650,000 |
Developed technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identifiable intangible assets | $ 1,200,000 |
Estimated useful life | 5 years 12 days |
In process research and development | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identifiable intangible assets | $ 200,000 |
Estimated useful life | 7 years 12 days |
Trade names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identifiable intangible assets | $ 150,000 |
Estimated useful life | 3 years 12 days |
Customer base | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identifiable intangible assets | $ 100,000 |
Estimated useful life | 7 years 12 days |
Business Acquisitions - Pro Forma Consolidated Results of Operations (Details) - Micron Optics, Inc. - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Business Acquisition [Line Items] | ||
Revenue | $ 49,494,358 | $ 40,954,093 |
Income/(loss) from continuing operations | $ 1,579,318 | $ (2,778,487) |
Valuation and Qualifying Accounts (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of Period | $ 5,307,461 | $ 21,556,785 |
Additions | 3,500 | 99,888 |
Deductions | (1,759,345) | (16,349,212) |
Balance at end of period | 3,551,616 | 5,307,461 |
Deferred tax valuation allowance | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of Period | 5,020,744 | 21,309,546 |
Additions | 0 | 0 |
Deductions | (1,753,211) | (16,288,802) |
Balance at end of period | 3,267,533 | 5,020,744 |
Allowances for doubtful accounts | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of Period | 286,717 | 247,239 |
Additions | 3,500 | 99,888 |
Deductions | (6,134) | (60,410) |
Balance at end of period | $ 284,083 | $ 286,717 |
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