8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 26, 2019

Luna Innovations Incorporated

(Exact name of registrant as specified in its charter)

301 1st Street SW, Suite 200

Roanoke, VA 24011

(Address of principal executive offices, including zip code)

540-769-8400

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth Company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b‑2 of the Securities Exchange Act of 1934 (§240.12b‑2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value per share	LUNA	The Nasdaq Stock Market LLC

Item 9.01 Explanatory Note

As previously reported, on March 1, 2019, Luna Technologies, Inc., a wholly-owned subsidiary of Luna Innovations Incorporated (the "Company"), acquired all of the outstanding stock of General Photonics Corporation ("GP"). This Form 8-K/A is filed as an amendment to the Form 8-K filed by the Company on March 4, 2019. The information previously reported in Form 8-K is hereby incorporated by reference into this Form 8-K/A. The purpose of this Form 8-K/A is to file the financial statements and pro forma information required by Item 9.01.

(a) Financial statements of businesses acquired

The following audited year-end financial statements of GP are filed herewith as Exhibit 99.1 and incorporated by reference herein:

Independent Auditor's Report

Consolidated Balance Sheets as of December 31, 2017 and 2016

Consolidated Income Statements for the years ended December 31, 2017 and 2016

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2017 and 2016

Consolidated Statements of Cash Flows for the year ended December 31, 2017 and 2016

Notes to Consolidated Financial Statements

The following unaudited interim financial statements of GP are filed herewith as Exhibit 99.2 and incorporated by reference herein:

Unaudited Consolidated Balance Sheet as of September 30, 2018

Unaudited Consolidated Statements of Operations for the nine months ended September 30, 2018 and 2017

Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017

Notes to Unaudited Consolidated Interim Financial Statements

(b) Pro forma financial information

The following pro forma information is filed herewith as Exhibit 99.3 and incorporated by reference herein:

Unaudited Pro Forma Balance Sheet as of September 30, 2018

Unaudited Pro Forma Statement of Operations for the nine months ended September 30, 2018

Unaudited Pro Forma Statement of Operations for the year ended December 31, 2017

Notes to Unaudited Pro Forma Financial Statements

(c) Shell company transactions

- Not applicable

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

Exhibit	Description
23.1	Consent of Independent Auditor
99.1	Audited Financial Statements of Business Acquired
99.2	Interim Unaudited Financial Statements of Business Acquired
99.3	Pro Forma Financial Information

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Luna Innovations Incorporated
By:	/s/ Scott A. Graeff
	Scott A. Graeff President and Chief Executive Officer

Date: May 15, 2019

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated May 14, 2019, with respect to the consolidated financial statements of General Photonics Corporation and its subsidiary for the years ended December 31, 2017 and 2016 included in the Current Report on Form 8-K/A of Luna Innovations Incorporated dated May 15, 2019. We consent to the incorporation by reference of said report in the Registration Statements of Luna Innovations Incorporated on Form S-3 (File No. 333-191809), and on Forms S-8 (File No. 333-211802, File No. 333-204435, and File No. 333-138745).

/s/ Simon & Edward, LLP

Diamond Bar, California

May 15, 2019

EX-99.1

EX-99.2

EX-99.3

Exhibit 99.3

Unaudited Pro Forma Financial Statements

The following Unaudited Pro Forma Financial Statements (the “pro forma financial statements”) give effect to the acquisition of the outstanding equity of General Photonics Corporation ("GP") by Luna Technologies, Inc., a wholly owned subsidiary of Luna Innovations Incorporated ("Luna"), in a transaction to be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations, with Luna as the identified acquirer (the "Transaction"). These pro forma financial statements have been derived from the historical financial statements of Luna and GP and are prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). The Unaudited Pro Forma Statement of Operations (the “pro forma statement of operations”) for the nine months ended September 30, 2018 and for the year ended December 31, 2017 combine the historical consolidated statement of operations of Luna and GP for the respective periods, and give pro forma effect to the Transaction as if it had been completed on January 1, 2017. The Unaudited Pro Forma Balance Sheet (the “pro forma balance sheet”) as of September 30, 2018 combines the historical consolidated balance sheets of Luna and GP as of September 30, 2018 and gives pro forma effect to the acquisition as if it had been completed on September 30, 2018.

The historical consolidated financial data has been adjusted to give pro forma effect to events that are (i) directly attributable to the Transaction, (ii) factually supportable and (iii) with respect to the statement of operations, expected to have a continuing impact on the combined results. The pro forma adjustments are preliminary and based on management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the Transaction and certain other adjustments.

Assumptions and estimates underlying the unaudited adjustments to the pro forma financial statements are described in the accompanying notes, which should be read in conjunction with the pro forma financial statements. Since the pro forma financial statements have been prepared based on preliminary estimates, the final amounts recorded at the date of closing of the Transaction may differ materially from the information presented. These estimates are subject to change pending further review of the assets acquired and liabilities assumed and the final purchase price and its allocation thereof.

The pro forma financial statements have been presented for illustrative purposes only in accordance with Article 11 of Regulation S-X and are not necessarily indicative of the financial condition or results of operations of future periods or the financial condition or results of operations that actually would have been realized had the entities been combined during the period presented. The pro forma financial statements do not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the Transaction. These financial statements also do not include any integration costs, dissynergies or estimated future transaction costs, except for fixed contractual transaction costs, that the companies may incur as a result of the Transaction.

Pro Forma Financial Information
Unaudited Pro Forma Balance Sheet
As of September 30, 2018
		Luna Historical			GP Historical		Excluded Assets and Liabilities of GP			Pro Forma Adjustments			Note	Pro Forma Combined
Assets
	Cash and cash equivalents	$	47,144,719		$	2,130,045	$	(2,130,045	)	$	(19,000,000	)	(a)	$	28,144,719
	Short term investments	—			1,566,803		(1,566,803		)	—				—
	Accounts receivable	9,110,713			1,973,978		—			—				11,084,691
	Receivable from sale of HSOR business	4,002,342			—		—			—				4,002,342
	Contract assets	2,611,122			—		—			—				2,611,122
	Inventory	5,462,414			2,088,022		—			—				7,550,436
	Prepaid expenses and other current assets	730,368			286,978		(198,531		)	—				818,815
	Total current assets	69,061,678			8,045,826		(3,895,379		)	(19,000,000		)		54,212,125
	Long term contract assets	343,492			—		—			—				343,492
	Property and equipment	2,678,411			141,399		—			144,601			(c)	2,964,411
	Intangible assets	1,709,003			1,131,385		—			(1,138,624		)	(b)	9,901,764
										8,200,000			(c)
	Goodwill	—			—		—			10,616,194			(c)	10,616,194
	Other assets	1,995			34,040		—			—				36,035
	Total assets	$73,794,579			$9,352,650		$(3,895,379)			$(1,177,829)				$78,074,021
Liabilities and Stockholders' Equity
	Current portion of long term debt	$	1,073,571		$	—	$	—		$	—			$	1,073,571
	Current portion of capital lease obligations	39,748			—		—			—				39,748
	Accounts payable	2,297,457			795,367		—			—				3,092,824
	Accrued liabilities	6,589,310			682,622		—			900,000			(g)	8,171,932
	Contract liabilities	1,548,371			—		—			—				1,548,371
	Liabilities held for disposal	—			271,467		(271,467		)	—				—
	Total current liabilities	11,548,457			1,749,456		(271,467		)	900,000				13,926,446
	Long term capital lease obligations	83,405			—		—			—				83,405
	Deferred rent	1,072,696			—		—			—				1,072,696
	Other long term liabilities	—			36,306		—			—				36,306
	Total liabilities	12,704,558			1,785,762		(271,467		)	900,000				15,118,853
Stockholders' Equity
	Preferred stock	1,322			—		—			—				1,322
	Common stock	30,081			2,408,091		(2,408,091		)	—				30,081
	Treasury stock	(2,116,640		)	—		—			—				(2,116,640		)
	Additional paid in capital	85,353,909			—		—			—				85,353,909

(Accumulated deficit)/retained earnings	(22,178,651	)	5,158,797	(5,158,797	)	1,865,147		(f)	(20,313,504	)
Total stockholders' equity	61,090,021		7,566,888	(7,566,888	)	1,865,147			62,955,168
Total liabilities and stockholders' equity	$73,794,579		$9,352,650	$(7,838,355)		$	2,765,147		$78,074,021

The accompanying notes are an integral part of these pro forma financial statements.

	Unaudited Pro Forma Statement of Operations
	For the Nine Months September 30, 2018
		Luna Historical			GP Historical		Pro Forma Adjustments			Note	Pro Forma Combined
Revenues
	Technology development	$	15,418,919		$	—	$	—			$	15,418,919
	Products and licensing	13,960,003			7,711,898		—				21,671,901
	Total revenues	29,378,922			7,711,898		—				37,090,820
Cost of revenues
	Technology development	11,131,965			—		—				11,131,965
	Products and licensing	5,381,333			3,665,234		—				9,046,567
	Total cost of revenues	16,513,298			3,665,234		—				20,178,532
Gross profit		12,865,624			4,046,664		—				16,912,288
Operating expense
	Selling, general and administrative	9,898,064			2,373,484		244,260			(d)	13,361,682
							845,874			(e)
	Research, development and engineering	2,513,497			173,267						2,686,764
	Total operating expenses	12,411,561			2,546,751		1,090,134				16,048,446
Operating income		454,063			1,499,913		(1,090,134		)		863,842
Other income/(expense)
	Investment income	350,976			—		—				350,976
	Other income/(expense)	(16,001		)	10,327		—				(5,674		)
	Interest (expense)/income	(103,208		)	10,063		—				(93,145		)
	Total other income	231,767			20,390		—				252,157
Income from continuing operations before income taxes		685,830			1,520,303		(1,090,134		)		1,115,999
Income tax (benefit)/expense		(674,329		)	409,121		—				(265,208		)
Net income from continuing operations		$	1,360,159		$	1,111,182	$	(1,090,134	)		$	1,381,207
Net income per share from continuing operations
	Basic	$	0.05								$	0.05
	Diluted	$	0.04								$	0.04
Weighted average common shares and common equivalent shares outstanding
	Basic	27,547,955									27,547,955
	Diluted	32,721,860									32,721,860

The accompanying notes are an integral part of these pro forma financial statements.

	Unaudited Pro Forma Statement of Operations
	For the Year Ended December 31, 2017
		Luna Historical			GP Historical			Pro Forma Adjustments			Note	Pro Forma Combined
Revenues
	Technology development	$	18,576,383		$	—		$	—			$	18,576,383
	Products and licensing	14,505,482			9,128,249			—				23,633,731
	Total revenues	33,081,865			9,128,249			—				42,210,114
Cost of revenues
	Technology development	13,988,378			—			—				13,988,378
	Products and licensing	5,724,457			3,610,235			—				9,334,692
	Total cost of revenues	19,712,835			3,610,235			—				23,323,070
Gross profit		13,369,030			5,518,014			—				18,887,044
Operating expense
	Selling, general and administrative	12,923,841			3,771,791			325,680			(d)	18,149,144
								1,127,832			(e)
	Research, development and engineering	2,653,337			170,582			—				2,823,919
	Total operating expense	15,577,178			3,942,373			1,453,512				20,973,063
Operating (loss)/income		(2,208,148		)	1,575,641			(1,453,512		)		(2,086,019		)
Other expense
	Other income/(expense)	26,106			(127,113		)	—				(101,007		)
	Interest (expense)/income	(217,352		)	6,603			—				(210,749		)
	Total other expense	(191,246		)	(120,510		)	—				(311,756		)
(Loss)/income from continuing operations before income taxes		(2,399,394		)	1,455,131			(1,453,512		)		(2,397,775		)
Income tax (benefit)/expense		(1,148,579		)	556,936			(1,865,147		)	(f)	(2,456,790		)
Net (loss)/income from continuing operations		$	(1,250,815	)	$	898,195		$	411,635			$	59,015
Net loss per share from continuing operations
	Basic and diluted	$	(0.05	)								$	—
Weighted average common shares and common equivalent shares outstanding
	Basic and diluted	27,579,988										27,579,988

The accompanying notes are an integral part of these pro forma financial statements.

On March 1, 2019, Luna Technologies Inc., a wholly-owned subsidiary of Luna Innovations Incorporated, ("Luna" or the "Company") completed the acquisition of the outstanding equity of General Photonics Corporation ("GP"). Under the terms of the stock purchase agreement, Luna acquired all outstanding capital stock of GP, for aggregate consideration of $19.0 million, including $17.1 million in cash paid at closing and $1.9 million in escrow until later of September 1, 2020 or the date that specified matters are resolved as agreed by Luna and the representative for the former GP shareholders. The former GP shareholders retaining the pre-closing cash and debt of the company. In addition, the stock purchase agreement provides up to an additional $1.0 million of additional cash consideration to be paid contingent upon the achievement of a specified revenue targets during the twelve month period following the acquisition. The unaudited pro forma financial statements have been prepared to give effect to the completed acquisition as if the acquisition had taken place as of January 1, 2017, the beginning of the earliest fiscal period presented, with respect to the pro forma statements of operations, and as of September 30, 2018, with respect to the pro forma balance sheet.

The pro forma amounts have been developed from the unaudited consolidated financial statements for the nine months ended September 30, 2018, for Luna and GP, as well as the audited consolidated financial statements of Luna for the year ended December 31, 2017 contained in its Annual Report on Form 10-K for the year ended December 31, 2018, and the audited financial statements of GP for the year ended December 31, 2017. The assumptions, estimates, and adjustments here have been made solely for the purposes of developing the financial statements.

In accordance with the purchase method of accounting, the assets and liabilities of GP were recorded at their respective estimated fair values as of the date of acquisition. Management's estimates of the fair value of assets acquired and liabilities assumed are based, in part, on third-party evaluations. The preliminary allocation of the purchase price was based upon a preliminary valuation, and our estimates and assumptions are subject to change.

The unaudited pro forma financial statements are provided for illustrative purposes only and are not intended to represent the actual consolidated results of operations or the consolidated financial positions of Luna had the acquisition occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. The unaudited pro forma financial statements should be read in conjunction with the separate historical consolidated financial statements of Luna and GP.

Note A. Basis of Presentation

On March 1, 2019, Luna completed the acquisition of the outstanding equity of GP, a leading provider of optical instruments and modules for optical networks, sensor systems, and biometric diagnosis systems. The acquisition expands Luna's capabilities in fiber-optic based communications test and measurement applications. The purchase price was $19.0 million in cash, including $17.1 million in cash paid at closing and $1.9 million placed in escrow until later of September 1, 2020 or the date that specified matters are resolved as agreed to by Luna and the representative for the former GP shareholders, subject to future adjustment based upon the final determination of the working capital of GP, as defined in the stock purchase agreement. In addition, up to an additional $1 million is payable contingent upon the achievement of certain specified revenue targets during the twelve month period following the date of the acquisition. The estimated excess of the purchase price over the estimated fair value of the net tangible assets acquired was approximately $17.9 million. The identifiable intangible assets acquired consist primarily of acquired technology, customer relationships, and trade names. Luna is still evaluating the fair value of the acquired assets and liabilities and any pre-acquisition contingencies. Therefore, the final allocation of the purchase price has not been completed.

Note B. Pro Forma Adjustments

Amounts included under the column heading "Excluded Assets and Liabilities of GP" on the unaudited pro forma balance sheet represent the values of the assets and liabilities of GP that were not acquired or assumed by Luna under the terms of the stock purchase agreement. The excluded assets and liabilities consist primarily of cash, amounts receivable from related parties, and any debt of GP.

Amounts included under the column heading "Pro Forma Adjustments" in the unaudited financial statements include the estimated purchase price allocation, incremental share-based compensation expense for stock options granted to certain key employees at the acquisition date, and amortization expense associated with the identified intangible assets. The pro forma adjustments included in the unaudited financial statements are as follows:

(a)- Reflect the payment of the purchase price to GP

(b)- Eliminate balance of intangible assets recorded prior to the acquisition

(c)- Record estimated value of intangible assets, including goodwill, acquired as identified in preliminary purchase price allocation

(d)- Record incremental share-based compensation expense associated with stock options granted at the acquisition date

(e)- Eliminate historical depreciation expense of GP property and equipment assets and amortization expense associated with the historical intangible assets of GP and record the amortization expense associated with the fair value of property and equipment and intangible assets identified in the preliminary purchase price allocation.

(f)- Record income tax benefit associated with a reduction in the deferred tax asset valuation allowance.

(g)- Record estimated fair value of contingent consideration.

Note C. Intangible Assets Acquired

The estimated value and lives of acquired intangible assets are as follows:

	Estimated Useful Life	Estimated Value
Developed technology	8 years	$	7,200,000
Trade names and trademarks	3 years	400,000
Customer base	15 years	600,000
		$	8,200,000