About Luna Innovations

Luna Innovations Incorporated is a leader in advanced optical technology, providing high performance fiber optic test, measurement and control products for the telecommunications and photonics industries; and distributed fiber optic sensing solutions that measure and monitor materials and structures for applications in aerospace, automotive, oil and gas, security and infrastructure. The company has a broad range of products for these applications based on proprietary technology covered by a portfolio of over 700 patents either owned or exclusively in-licensed. The company’s communications test and control products help customers test their fiber optic networks and assemblies with speed and precision in both lab and production environments. The company’s test and measurement products accelerate the development of high speed fiber optic components like photonic integrated circuits (‘PICs’), coherent receivers and short-run fiber networks. The company’s distributed fiber optic sensing products help designers and manufacturers more efficiently develop new and innovative products by measuring stress, strain, and temperature at a high resolution for new designs or manufacturing processes. In addition, the company’s distributed fiber optic sensing products ensure the safety and structural integrity or operational health of critical assets in the field, by monitoring stress, strain, temperature and vibration in large civil and industrial infrastructure, such as bridges, roads, pipelines and borders. The company manufactures and sells ‘terahertz’ (THz) products for layer thickness measurements for materials like plastics, rubber, and paint. The company’s THz products are used in the aerospace and automotive/EV sectors. The company also provides applied research services, primarily under federally funded development programs that leverage its sensing and instrumentation technologies to meet the specific needs and applications of the company’s customers. Dispositions and Acquisitions Luna Labs On March 8, 2022, the company completed the sale of substantially all of the company’s equity interests in the company’s Luna Labs business to certain members of Luna Labs’ senior management team and a group of outside investors for an initial purchase price of $20.4 million before working capital and escrow adjustments and transaction fees. The company had been actively marketing the company’s Luna Labs segment to prospective buyers during 2021 as part of the company’s growth strategy for the company’s Lightwave segment. LIOS Sensing On March 10, 2022, the company acquired NKT Photonics GmbH and LIOS Technology Inc. (collectively, ‘LIOS Sensing’). LIOS Sensing provides temperature and strain sensing products, which are highly complementary to the company’s existing portfolio of fiber optic offerings. Lightwave The company’s Lightwave segment develops, manufactures, and markets optical measurement technologies, including the following: Sensing, including short, medium and long-range distributed fiber optic sensing solutions; and Terahertz, ‘THz’ measurement products. Communications test and photonic control, including test equipment for communications devices and networks; and specialty laser and photonic components. The company’s Lightwave segment also performs applied research principally in the areas of optical sensing and THz technologies. The company’s key initiative for long term growth is to become a leading provider of products and solutions in these two markets. For the company’s sensing market, the acquisition of OptaSense Holdings Limited (‘OptaSense’) in 2020 added distributed acoustic sensing technology to the company’s existing suite of sensing products and provided for expansion into high-growth markets, such as security and perimeter detection, smart infrastructure monitoring, and oil and gas. The company’s products have historically been strong shorter-range and discrete applications, which are best when specific, known locations need to be monitored. OptaSense's product offering has helped the company fill a gap for long range, fully distributed measurement, which is best for applications where signals can occur anywhere along the length of the sensor. The addition of the Lios sensing portfolio brings long range, distributed temperature and strain measurement capability to the company’s sensing solutions portfolio. This additional capability compliments the company’s sensing products to bring a complete set of fiber optic measurement and monitoring solutions. The company’s two primary markets are as follows: Communications Test and Photonic Controls Products Test and Measurement Equipment for Fiber Optic Components and Sub-Assemblies The company’s optical test and measurement products primarily serve the telecommunications industry, as well as provide valuable applications in other fields. The company’s test and measurement products test and monitor the integrity of fiber optic network components and sub-assemblies. These products are designed for manufacturers and suppliers of optical components and sub-assemblies allowing them to reduce development, test and production costs and improve the quality of their products. The company’s products are particularly useful for characterizing and testing photonic integrated circuits, such as silicon photonics components, which are a critical technology enabling the growing worldwide demand for internet connectivity. Most manufacturers and suppliers of optical components and modules use a combination of different types of optical test equipment to measure performance and identify failures in optical networks, such as bad splices, bends, crimps and other reflective and non-reflective events that can cause defects and negatively impact product performance. The company’s optical test equipment products eliminate the need to employ multiple test products by addressing all stages of the end user’s product development lifecycle, including design verification, component qualification, assembly process verification and failure analysis. Polarization Control The company’s polarization control products include components, modules and instruments to measure, manage and control polarization and group delay in fiber optic networks. The laser light that is used in all modern fiber communication and other photonic architectures is polarized in nature. The company manufactures the tools used to measure, monitor and manipulate the polarization of laser light in a fiber optic system or network. The company’s proprietary fiber optic squeezing technology enables a high- performance polarization control and measurement system for the accurate measurement of polarization properties of light sources and optical materials. The company also manufactures and sells fiber optic coils for use in gyroscopes. Tunable Lasers The company’s swept tunable lasers are integrated into products to help customers build faster and more flexible test and measurement products. The company’s laser has desirable properties in the quality of the laser light produced, the speed at which it can operate, the small size of the package, and the environmental conditions in which it can operate, making it possible to bring these capabilities out of the laboratory, and into more demanding environments, such as aircraft structural health monitoring, automotive manufacturing, green energy and industrial applications. The company has developed and/or licensed all of the intellectual property related to its tunable lasers and the company manufactures them. These lasers are used in the company’s various different product platforms and are also sold as OEM modules to the company’s customers in applications, including fiber sensing and medical robotics. Single Frequency Lasers Through the acquisition of OptaSense, the company acquired laser manufacturing capabilities for a range of highly coherent, integrated, very narrow line-width lasers for use in long range sensing applications. These lasers are manufactured under the company’s ‘RIO’ trade name and are used as the primary light source for the company’s long range, DAS sensing products. The company also sells these lasers as OEM components to other sensing and Light Detection and Ranging (‘LiDAR’) system manufacturers. Sensing and Non-Destructive Test Products ODiSI Sensing Solution The company’s ODiSI products provide fully distributed strain and temperature measurements delivering an extraordinary amount of information by using an optical fiber as a continuous sensor to produce measurements every millimeter for a sensor up to 50 meters in length (x8 sensors per system). Compared to traditional sensing methods, such as electrical strain gages, this technology provides greater insight into the performance, tolerances and failure mechanisms of composite structures and vehicles and can be integrated into locations and environments not accessible with traditional sensors. The company’s ODiSI products provide exceptional value to the aerospace and automotive industries as they continue to adopt electrification and move to lighter weight systems made of composite structures. ODiSI incorporates multiple channels of fiber optic sensors whose inputs are integrated through an advanced measurement system and software using fiber optic sensing technology with the company’s innovative monitoring system that allows several thousand sensors to be networked along a single optical fiber. Distributed Temperature Sensing (DTS) System The company’s DTS system, which the company acquired as part of the LIOS business, monitors temperature over long distances or across large surfaces, such as submarine or underground power cables, by using a single strand of optical fiber as a sensor as an alternative to installing countless numbers of conventional sensors. DTS uses light scattering in the fiber to measure temperature. Because the DTS system can accurately locate the position down the length of the fiber that the scattering is originated, temperature can be mapped with high precision and accuracy over very long lengths. DTS provides a long range, fully distributed temperature and strain sensing capability that complements the company’s legacy offerings, brings a diverse, blue-chip customer base, representing a significant opportunity for cross-selling, expands the company’s intellectual property portfolio, augments the company’s international presence, building upon the company’s already strong international customer base and sales capability, generates rapid expansion opportunities into high-growth markets, such as green energy power generation, smart infrastructure monitoring and oil and gas, and leverages the company’s acquisition of LIOS to grow its operations, customer base, offerings, and financial profile. Because DTS uses passive optical fibers as distributed sensors, a LIOS sensing system is immune to vibration, electromagnetic noise, dust, cryogenic temperatures, and moisture. The company’s DTS sensing systems have been installed worldwide in critical applications, such as fire detection in road and rail tunnels, special hazardous buildings, power cable and aerial transmission line monitoring, in oil and gas exploration, and in industrial induction furnaces and LNG tanks. Hyperion Sensing Solution The company’s Hyperion sensing products expand its capabilities in fiber optic sensing by providing distributed sensing using hundreds of Fiber-Bragg Grating (‘FBG’) or Extrinsic Fabry-Perot (‘FP’) sensors integrated into long-rage sensors of up to 40km in length, measured at sampling rates up to 5KHz. Hyperion enables rapid full-spectrum data acquisition and flexible peak detect algorithms of FBGs, Long Period FBGs and FP sensors with low-latency access to data for closed-loop feedback applications. The company’s Hyperion products target fiber optic sensing applications that require more dynamic measurement capabilities or longer distances than provided by the company’s ODiSI platform, like monitoring of large, civil and industrial infrastructure. Terahertz Sensing Systems The company’s THz gauging and imaging product line uses pulsed THz waves to provide precise single- and multi-layer thickness, density, basis weight and caliper thickness measurements to serve the industrial, non-destructive testing, and research markets. Similar to x-ray images, THz wavelengths penetrate through most non-conductive materials and can easily reveal imperfections such as voids, cracks, and density variations. THz offers a significant advantage over x-rays because the radiation is non-ionizing and thus is completely safe. THz technology, unlike other traditional methods, is non-contact, works with both opaque and translucent materials, and works well for multilayer structures. The ability to accurately measure layer thickness is critical for ensuring consistent quality, minimizing defects and reducing material usage for products, such as tubing, tires, plastic bottles, adhesives and coatings. Handheld THz sensors can measure and scan specialty coatings and multilayer structures to check thickness consistency and locate subsurface defects. THz systems can be used to inspect the high-performance coatings used on military aircraft, verifying thickness of applied coatings with submicron accuracy. Distributed Acoustic Sensing Products The company’s line of advanced DAS interrogator units delivers superior measurements for a wide range of applications from advanced industrial monitoring through high performance geophysical measurements. Applications of these units include real-time pipeline monitoring preventing disruption flow, advance monitoring and evaluation of reservoir and wellbore to reduce risk and optimize recovery, real-time information detection on highways and railways for traffic management and ensuring safety, cost-effective surveillance of borders and national assets and the precise detection of faults in power and utility infrastructure. The company’s DAS operations include a market leading laser technology company that supports and vertically integrates the most critical element of the DAS system, its internal laser. Sales and Marketing The company primarily markets its fiber optic test, measurement and control products to telecommunications companies, defense agencies, government system integrators, researchers, original equipment manufacturers, distributors, testing labs and strategic partners worldwide. The company has a regional sales force that markets and sells its products directly, as well as through manufacturer representative organizations to customers in North America and through partner and distribution channels for sales outside of North America, including the EMEA, LATAM and APAC regions. The company has a dedicated sales force for direct marketing of the company’s distributed sensing products, with an initial focus on customers in the automotive, aerospace, and energy industries. The company sells and markets its THz instruments primarily to original equipment manufacturers through a mix of technical sales engineers, value added resellers and independent sales representatives. The company markets these products and capabilities through industry specific channels, including the internet, industry trade shows and through trade journals. The company provides a high level of support in developing and maintaining the company’s long-term relationships with the company’s customers. Customer service and support are provided through the company’s offices and those of the company’s partners that are located throughout the world. Intellectual Property The company owns or licenses approximately 745 U.S. and international patents and approximately 68 U.S. and international patent applications. The company’s issued patents generally have terms that are scheduled to expire between 2023 and 2042. The patents scheduled to expire in 2023 are not expected to have a significant impact on the company’s revenues or results of operations. A discussion of the company’s material in-licensed patents is set forth below. Shape Sensing Patents Two U.S. patents that the company licenses back from Intuitive cover the use of optical frequency domain reflectometry and multiple, closely spaced Bragg gratings for shape sensing, and the use of the inherent scatter as a strain sensor for shape sensing. These two patents expire in July 2025. The company also licenses back from Intuitive patents and patent applications that cover certain refinements to the measurements covered in the foregoing two patents and related technologies, which are necessary in order to achieve the necessary accuracies for medical and other applications. These patent applications were filed in the United States, the European Patent Office, China, India, Russia, Brazil, Japan, Indonesia and elsewhere. These patents and patent applications can support other nonmedical applications of the company’s fiber optic shape sensing technology. History Luna Innovations Incorporated was founded in 1990. The company was incorporated in the Commonwealth of Virginia in 1990 and reincorporated in the state of Delaware in 2003.