Luna Innovations Inc., already behind on 2023 financial reports, has reported to the Securities and Exchange Commission that it will not have its 2024 first quarter report ready any time soon.
The Roanoke-based publicly traded technology company, which has parted ways with its chief executive officer and chief financial officer this year, had previously determined that its revenue recognition was irregular and that accounting errors affected its 2022 reports, as well.
A committee of Luna board members and outside legal and financial advisors continues to investigate the irregularities related to when the company reported revenue. According to federal rules, such reports are generally made after a service has been completed, and not necessarily when a payment is received. The committee has determined that the problems stemmed from weaknesses in internal controls over financial reporting, according to previous SEC filings.
Luna’s 2024 first quarter ended March 31. The company, which makes and distributes fiber-optic sensing and monitoring technology, subsequently announced that it had indefinitely delayed both its annual and fourth quarter reports for 2023. The committee would later determine that all reports from the previous year were unreliable and must be restated, according to SEC filings.
In a filing 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 uncover additional accounting errors, according to the filing.
“There can be no assurance as to when the review will be completed or when the Company will be able to complete the preparation and filing” of the required reports, the company stated in the Monday filing.
On April 2, the Nasdaq Stock Market sent Luna a written notice informing the company that it risks being delisted from the exchange because of its reporting delay.
Former CEO Scott Graeff, who resigned in late March, engaged in conduct that constituted “cause” under his contract, Luna determined, and the company announced in early May that it had canceled his severance payments and taken back stock from him. Luna terminated its chief technology officer, Brian Soller, for cause, and accepted the resignation of CFO George Gomez-Quintero, who will receive neither severance nor benefits, according to a company SEC filing 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 federal court in California last month alleges that Luna and executives Graeff, Gomez-Quintero and previous CFO Eugene Nestro violated securities laws. The plaintiff seeks to form a class action.
Graeff said in a May 2 email exchange: “Given the ongoing investigation, all I can say is that in my over 20 years in leadership roles with Luna, I strived to ensure each and every decision I made, and my conduct as a leader, was consistent with my values.”
Meanwhile, Luna brought on a new CFO, a public accounting adviser and a pair of 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 as it considered a sale or merger among its options.
A message left for Roedel on Wednesday was not immediately returned.