Merger of Luna and API is approved

Combined company has stronger market and financial position

ROANOKE, VA, (May 11, 2015) Luna Innovations Incorporated (NASDAQ: LUNA), which develops and manufactures fiber optic sensing and test & measurement products for the telecommunications, aerospace, automotive, energy, and defense markets and Advanced Photonix, Inc., a leading supplier of optoelectronic sensors, devices, and instrumentation for the telecommunications, defense, medical, and industrial markets announced on Friday that they have completed their merger.  In their annual meeting on Friday, May 8, 2015, Luna’s stockholders approved the issuance of 0.31782 shares of Luna common stock to API stockholders for each share of their API common stock. API’s stockholders approved the merger in a separate special API stockholder meeting.  The merger received overwhelmingly positive response from stockholders, with over 99% of Luna’s voting stockholders and over 98% of API’s voting stockholders supporting the transaction.

“This merger has created a company with a stronger position as a leader in optical technology and provides improved opportunities for accelerated growth,” said Luna president and CEO My Chung. “We look forward to working with the talented team at API as we build a dynamic company with even greater potential.”

The merger essentially doubles the revenue base of each of the companies stand-alone, provides the opportunity to leverage a shared infrastructure and achieve significant cost savings by combining two public companies into one.

The company will build from a strong foundation of products – Luna’s core Test & Measurement products, and API’s High Speed Optical Receivers and Optosolutions products. The combined product lines will strengthen the merged company’s position in the marketplace by offering more for each customer, creating a significantly stronger company. This solid combined revenue base will enable continued investment in each of their identified growth opportunities- Luna’s strain & temperature sensing business and API’s Terahertz sensing systems. Additionally, their contract research and engineering teams will continue to develop a pipeline of new technologies for future commercialization.

In connection with the Merger, Luna also entered into a new $6 million term debt agreement with Silicon Valley Bank (“SVB”).  The new four year term debt replaces all of the outstanding loans of API and Luna prior to the completion of the Merger.  The new loan is to be repaid in 48 monthly installments, bears interest at the rate of prime plus 2%, is secured by substantially all of the company’s assets, and is subject to customary covenants, including the maintenance of certain minimum liquidity ratios.

Luna will keep its headquarters in Roanoke, VA, moving into its newly renovated downtown space in the Parkway 301 Building.  My E. Chung continues as president and CEO of the combined company and a member of the board of directors. The board of directors has been expanded to seven seats composed of Richard W. Roedel as chairman, John B. Williamson III, Michael W. Wise, Donald Pastor, Gary J. Spiegel and Ed J. Coringrato Jr.

About Luna and API

Luna (www.lunainc.com) is a public company composed of scientists, engineers, and business professionals developing and manufacturing a new generation of technologies and products. It has been successful in taking innovative technologies from applied research to product development and ultimately to the commercial market, driving breakthroughs in fields such as aerospace, automotive, telecommunications, healthcare, energy, and defense. Luna is now the parent of API (www.advancedphotonix.com), which is a leading supplier of optoelectronic sensors, devices and instruments used by Test and Measurement, Process Control, Medical, Telecommunication and Homeland Security markets. API has three product lines: High-Speed Optical Receiver (HSOR) products are used by the telecommunication market in both telecommunication equipment and in test and measurement equipment utilized in the manufacturing of telecommunication equipment. The Terahertz sensor product line is targeted to the Process Control (including through non-destructive testing) and Security markets. API’s T-Gauge® sensor can measure subsurface physical properties, like multi-layers thicknesses, density, moisture content, anomaly detection and some chemical features, online and in real time. Optosolutions focuses on enabling manufacturers to measure physical properties, including temperature, particular counting, color, and fluorescence for Medical, Homeland Security and Process Control applications.

Forward Looking Statements

This release includes information that constitutes “forward-looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. These statements include our expectations regarding the prospects of the combined company and the companies’ future growth. Management cautions the reader that these forward-looking statements are only predictions and are subject to a number of both known and unknown risks and uncertainties, and actual results, performance, and/or achievements of the companies may differ materially from the future results, performance and/or achievements expressed or implied by these forward-looking statements as a result of a number of factors. These factors include, but are not limited to: the uniqueness and advantages of Luna’s or API’s technology and intellectual property; potential costs savings and synergies from the merger; potential for greater profitability; potential for future commercialization of their technologies; the competitive advantage afforded by Luna’s or API’s technology; the potential efficacy of Luna’s or API’s technology; and growth potential of certain markets. Statements that describe the companies’ business strategies, goals, prospects, opportunities, outlook, plans or intentions are also forward-looking statements. Uncertainties regarding technical and scientific difficulties, issues that might arise in any particular business relationship and other risks and uncertainties are set forth in the companies’ periodic reports and other filings with the Securities and Exchange Commission. Such filings are available at the SEC’s website at http://www.sec.gov, and at the companies’ websites at http://www.lunainc.com and http://www.advancedphotonix.com. The statements made in this release are based on information available to the companies as of the date of this release and Luna and API undertake no obligation to update any of the forward-looking statements after the date of this release, except as required by law.

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Investor contact:
Dale Messick
Luna Innovations Incorporated
Phone: 1.540.769.8400
Email:  IR@lunainc.com