While Luna Innovations continues to report a quarterly loss, the Roanoke-based company said it expects to report positive cash flow in a year as it makes strides toward becoming profitable.

The technology company that develops and manufactures products for health care, telecommunications, energy and defense markets reported a net loss of $473,985, or 4 cents a share, in the third quarter that ended Sept. 30, compared with a net loss of $1.8 million, or 18 cents a share, for the same period a year earlier.

That represents a 74 percent improvement.

Chairman and Chief Executive Officer Kent Murphy attributed the improvement to several factors, but highlighted Luna's achievement in surpassing $10 million in revenues for the quarter -- a first since becoming a publicly traded company in 2006.

Luna posted revenues of $10.7 million for the third quarter, a 21.5 percent increase from $8.8 million in revenues posted for the same quarter a year ago.

"We continue to gain significant traction from our growth strategy," Murphy said during a conference call with analysts and investors Wednesday morning.

Murphy emphasized the company is hoping to see growth in its commercialization goals by forming partnerships with companies to leverage the value of its products and get them to market faster.

In other areas, Luna has kept projects in-house, hoping to create a more lucrative product. Specifically, Murphy said Luna is not looking for a partner related to a recent grant from the National Cancer Institute to develop an improved MRI agent for enhanced brain tumor imaging.

The state of the economy is not having an impact on Luna's research and development, Murphy said, adding that Luna employs about 250 people and has about a dozen job openings.

"At the moment we're not seeing any slowdown, any measurable slowdown at all," he said.

However, stock market shares have continued to fall from its high of $10.45 on Dec. 14 and traded near Luna's 52-week low of $2.31 on Wednesday. Shares fell 27 cents to $2.60 in Wednesday trading.

Murphy said he expected earnings before interest, taxes, depreciation and amortization to be positive by the third quarter of 2009.

Also helping the improve the bottom line was a 3 percent reduction in operating expenses and a one-time $666,000 litigation settlement with the company's former auditors, said Dale Messick, chief financial officer.

The strides Luna made during the third quarter caused the company to favorably revise its year-end projections from a net loss between $6.5 million and $7 million to a net loss between $6 million and $6.5 million.

While improving slightly on the year-end projections, Messick said the fourth quarter is not expected to be as strong as the third quarter.

A net loss of $1.8 million to $2.3 million is expected in the fourth quarter, as the company prepares for a trial over allegations of misappropriation of trade secrets, unfair competition and breach of contract. In June 2007, California-based Hansen Medical Inc. announced it was taking legal action against Luna.