Luna Innovations Emerges from Chapter 11 Reorganization

Luna Exits Chapter 11 Less Than Six Months After Filing

ROANOKE, Va., Jan 12, 2010 -- Luna Innovations Incorporated (NASDAQ: LUNA), a company focusing on sensing, instrumentation and nanotechnology, announced today that it has emerged from Chapter 11 reorganization, less than six months after filing.

The Honorable William F. Stone, Jr. of the U.S. Bankruptcy Court for the Western District of Virginia, Roanoke Division, confirmed the company's Joint Plan of Reorganization on Jan. 12, 2010. Luna's reorganization plan provides that Luna's creditors will receive a 100 percent recovery on their valid claims and that Luna's current shareholders will retain their shares.

Luna voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 17, 2009, in response to a potential negative outcome in its litigation with Hansen Medical, Inc. The two companies reached a settlement in December 2009, resolving the outstanding litigation between them. The settlement resulted in a development and supply agreement between Luna and Hansen, and a license of Luna's fiber optic shape sensing technology to Hansen in the fields of medical robotics and certain medical non-robotics.

"Thank you to our customers, shareholders, partners and vendors for standing by us during this trying time," stated Kent Murphy, Chief Executive Officer. "A special thanks goes to our employees for continuing to stay focused and providing our customers with excellent service and products during this difficult time. From the outset, our intent during this restructuring has been to continue to serve our customers, keep the pace of our key development initiatives, maintain employment at our four facilities in Virginia, settle with Hansen, provide our creditors with a full recovery on their valid claims, and allow current shareholders to retain their shares. Today, we can say we succeeded in those goals and did so in a relatively short time frame. Emerging from Chapter 11 will allow Luna to move forward on developing technologies that will provide tremendous value for our partners and customers. In addition, we appreciate Intuitive Surgical for its support and agreement, which was required to reach settlement, and Hansen for working hard to reach agreeable terms."

More information about Luna's Chapter 11 reorganization and subsequent emergence can be found on its Reorganization News Web page at http://www.lunainnovations.com/news/reorganization.htm.

About Luna Innovations:

Luna Innovations Incorporated (http://www.lunainnovations.com) is focused on sensing and instrumentation, and pharmaceutical nanomedicines. Luna develops and manufactures new-generation products for the healthcare, telecommunications, energy and defense markets. The company's products are used to measure, monitor, protect and improve critical processes in the markets we serve. Through its disciplined commercialization business model, Luna has become a recognized leader in transitioning science to solutions. Luna is headquartered in Roanoke, Virginia.

Forward-Looking Statements:

This release may include information that constitutes "forward-looking statements" made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Statements that describe the Company's business strategy, goals, prospects, opportunities, outlook, plans or intentions are also forward-looking statements. Actual results may differ materially from the expectations expressed in such forward-looking statements as a result of various factors, including 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 http://www.sec.gov, and at the company's website at http://www.lunainnovations.com. The statements made in this release are based on information available to the company as of the date of this release and Luna Innovations undertakes no obligation to update any of the forward-looking statements after the date of this release.

Luna Innovations Incorporated
Investor Contact:
Dale Messick, 1-540-769-8400
[email protected]