Luna Innovations (NASDAQ:LUNA) Incorporated (NASDAQ:LUNA) disclosed today that it will restate its financial statements for the second and third quarters of 2023 due to revenue recognition errors.
The announcement follows the preliminary findings of an independent review by a Special Committee of the Board of Directors, which is currently examining certain transactions that were incorrectly accounted for under U.S. generally accepted accounting principles (GAAP).
The review, supported by external legal and financial advisors, has also uncovered material weaknesses in the company's internal controls over financial reporting for the periods ending June 30, 2023, and September 30, 2023. Consequently, Luna Innovations has determined that its disclosure controls and procedures for these quarters were ineffective.
The Audit Committee, after consulting with the company’s management and the Special Committee's advisors, reached a conclusion on Tuesday that the previously issued unaudited interim condensed consolidated financial statements for these quarters should not be relied upon.
The company will issue restated financial results for the affected periods once the independent review is concluded and the full extent of the impact is understood.
Luna Innovations has not yet ascertained the complete repercussions of these findings on its financial statements for other periods. The company is also in the process of developing a remediation plan to address the identified material weaknesses and will provide further details when it reports the restated financials.
The company's management and the Audit Committee have communicated these developments to Ernst & Young LLP, Luna Innovations' independent registered public accounting firm.
Investors should note that the information presented is based on a press release statement and is subject to change pending the outcome of the ongoing independent review. Luna Innovations has committed to transparency and thoroughness in its investigation and subsequent remediation efforts.
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