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For Luna Innovations, another delay in financial reporting
Luna Innovations Inc., already late on 2023 financial reportshas informed the Securities and Exchange Commission that it will not have its first quarter 2024 report ready anytime soon.
The publicly traded Roanoke-based technology company, which parted ways with its chief executive and chief financial officer this year, had previously determined that its revenue recognition was irregular and that accounting errors affected its 2022 reportsalso.
A committee made up of Luna board members and outside legal and financial advisors continues to investigate irregularities related to the timing of the company’s revenue reporting. Under federal rules, these reports are generally made upon completion of a service and not necessarily when a payment is received. The committee determined that the problems resulted from deficiencies in internal controls over financial reporting, according to previous SEC filings.
Luna’s first quarter of 2024 ended on March 31. The company, which manufactures and distributes fiber-optic sensing and monitoring technology, later announced that it had indefinitely postponed its annual and fourth-quarter reports until 2023. The committee would later determine that all of the previous year’s reports were unreliable and must be resubmitted, according to SEC filings.
In a document filed Monday, the company wrote that it had not determined the full impact on the affected financial statements or whether other reports would be affected. It was unclear whether the company would discover additional accounting errors, according to the document.
“There is no guarantee when the review will be completed or when the Company will be able to complete the preparation and filing” of required reports, the company stated in Monday’s filing.
On April 2nd, The Nasdaq Stock Market sent Luna a written warning informing the company that it is at risk of being delisted due to delayed reporting.
Former CEO Scott Graeff, who resigned at the end of Marchengaged in conduct that constituted “cause” under his contract, Luna determined, and the company announced in early May that it had canceled his severance pay and stripped him of shares. Luna fired its chief technology officer, Brian Soller, for cause, and accepted the resignation of CFO George Gomez-Quintero, who will receive no severance or benefits, according to a company filing with the SEC at the time.
[Disclosure: Quinn Graeff, who is married to Scott Graeff, is a member of the Cardinal Productions Inc. board of directors. The Graeffs are also contributors to Cardinal News. Neither board members nor donors have any influence or say in news decisions; see our policy.]
A lawsuit filed in California federal court last month alleges that Luna and executives Graeff, Gomez-Quintero and former CFO Eugene Nestro violated securities laws. The author seeks to form a collective action.
Graeff said in a May 2 email exchange: “Given the ongoing investigation, all I can say is that in my 20+ years in leadership roles at Luna, I have strived to ensure every decision I have made and My conduct as a leader was consistent with my values.”
Meanwhile, Luna has hired a new CFO, a public accounting consultant and two operations and strategy consultants to join Richard Roedel, the company’s interim executive chairman and interim president. The company continued to search for a new CEO, even considering a sale or merger among its options.
A message left for Roedel on Wednesday was not immediately returned.