Summary of LUNA INNOVATIONS INC

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standa

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

On July 30, 2009, Luna Innovations Incorporated (the "Company") received a notice of deficiency from the NASDAQ Stock Market ("NASDAQ") listing qualifications department staff (the "Staff") indicating that the Company no longer complied with the independent director requirement as set forth in Rule 5605 as a result of the resignation of Bobbie Kilberg from the Board of Directors.

The Company had previously notified the Staff of this deficiency and filed a Current Report on Form 8-K with respect to the resignation of the director on July 22, 2009.

Pursuant to NASDAQ Marketplace Rule 5605(b)(1), the Staff has permitted the Company until the earlier of the Company's next annual shareholders' meeting or July 20, 2010, unless the next annual shareholders' meeting is held before January 19, 2010, in which case the Company has until January 19, 2010, to regain compliance. If the Company is unable to regain compliance within the permitted time period, the Staff may determine to delist the Company's shares of common stock from the NASDAQ Global Market and to suspend trading effective at a future date.

A copy of the press release announcing the Staff's determination is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The Company has previously requested a hearing before the NASDAQ Listing Qualifications Panel (the "Panel") with respect to a Staff Determination Notice from NASDAQ dated July 17, 2009 because the Company filed for protection under Chapter 11 of the US Bankruptcy Code on July 17, 2009. The delisting action has been stayed pending a hearing before the Panel, which has been scheduled for August 27, 2009. There can be no assurance that the Panel will grant the Company's request for continued listing. Pending a decision by the Panel, the Company's common stock will remain listed on the NASDAQ Global Market.