Luna Announces Fiber-to-the-Home Supply Agreement

Picometrix Division signs multi-year agreement with leading PON network equipment supplier

ROANOKE, VA, February 22, 2016 -- Luna Innovations Incorporated (NASDAQ: LUNA), today announced that its Picometrix division has entered into a 2-year supply agreement for its 2.5G avalanche photodiode (APD) with a leading OEM supplier of network equipment for the fiber-to-the-home (FTTH) market. The company currently estimates revenue of approximately $4 million during the life of the agreement with shipments beginning in the second quarter of 2016 and $2.4 million of revenue committed in the first year of the agreement.

“We are excited to enter into this supply agreement which marks another step in our penetration of the large and rapidly growing FTTH Chinese market with our industry-leading 2.5G and 10G APD’s.  It is estimated that the China FTTH market will boost the number of subscribers in China to more than 200 million by 2018 -- up from about 70 million at the end of 2014,” commented Robin (Rob) Risser, vice president and chief operating officer of the Picometrix division.

With patented technology, the APD2.5A provides uncompromising sensitivity and bandwidth, which allows it to be used for both the central office node Optical Line Terminal (OLT) equipment, that requires higher speed, and the Optical Network Terminal (ONT) equipment that is at the end user location. The APD2.5A is just one of an industry-leading suite of high-speed optical products that Picometrix provides to cover the major modulation schemes for telecommunication systems. The suite of products includes receivers used in 10G, 100G and beyond targeted at the rapidly growing long-haul and metro markets, and 2.5G and 10G avalanche photodiodes targeted at the high volume and high growth PON FTTH markets (passive optical network fiber-to-the-home).

“This supply agreement exemplifies the effort that Luna has invested in growing our FTTH market offering,” said My Chung, president and chief executive officer of Luna. “We are pleased to enter 2016 with substantial momentum in our photodiode solutions given our recent successful negotiations and continued growth in 2.5G, 10G and 100G product platforms. The growth opportunity afforded by the Picometrix APD technology was a significant consideration in our decision to merge with Advanced Photonix last year, and I continue to believe that it positions us well for revenue growth in 2016 and beyond.”

About Luna

Luna Innovations Incorporated (www.lunainc.com) develops, manufactures and markets fiber optic sensing, test and measurement products and is focused on bringing new and innovative technology solutions to measure, monitor, protect and improve critical processes in the aerospace, automotive, energy, composite, telecommunications and defense industries. Following its merger with Advanced Photonix, Inc. (API), the company also packages optoelectronic semiconductors into high-speed optical receivers (HSOR products), custom optoelectronic subsystems (Optoelectronics products) and Terahertz (THz) instrumentation.  Luna is organized into two business segments, which work closely together to turn ideas into products: a Technology Development segment and a Products and Licensing segment. Luna's business model is designed to accelerate the process of bringing new and innovative technologies to market.

About the Picometrix Division

Picometrix is a division of Luna Innovations Incorporated that manufactures High-Speed Optical Receiver (HSOR) products used in telecommunication equipment as well as in test and measurement equipment utilized in the manufacturing of telecommunication equipment. Additionally, the Picometrix division manufactures the Terahertz sensor product line, which is targeted at the non-destructive testing Process Control, Quality Control, and Laboratory markets. The T-Gauge^® sensor can measure subsurface physical properties, like multi-layer thicknesses, density, moisture content, anomaly direction and some chemical features, online and in real time.

Forward-Looking Statements

The statements in this release that are not historical facts constitute “forward-looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include the company’s future revenue from the supply agreement, the company's expectations regarding the company’s future financial performance, operating results and future revenue growth, the growth of the China FTTH market and the growth of the company’s FTTH market offering. 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 company 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, without limitation, dependence on the performance of third parties including the OEM supplier, continued adoption of FTTH by consumers, continued investment in FTTH by telecommunications service providers, Chinese macroeconomic factors, technological challenges and those risks and uncertainties set forth in the company’s periodic reports and other filings with the Securities and Exchange Commission. Such filings are available at the SEC’s website at www.sec.gov and at the company’s website at www.lunainc.com. The statements made in this release are based on information available to the company as of the date of this release and Luna undertakes no obligation to update any of the forward-looking statements after the date of this release.

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Investor Contact:
Dale Messick, CFO
Luna Innovations Incorporated
Phone: 1.540.769.8400