Luna receives second payment of $6 million from Intuitive Surgical

Luna Innovations Incorporated (NASDAQ: LUNA), which develops and manufactures new-generation products for the telecommunications, aerospace, automotive, energy, and defense markets, today announced that it has received the second payment of $6 million as originally agreed upon with Intuitive Surgical, Inc.

The payment is related to the sale of Luna’s shape-sensing technology for medical applications that was executed with Intuitive in January of this year. In accordance with the terms of the deal, Luna has now received a total of $12 million from Intuitive and may receive up to an additional $18 million in the future upon the achievement of certain technical milestones and commercial measures.

The sale, which may generate proceeds of up to $30 million, has enabled Luna to focus on the growth potential of its fiber-optic sensing business, specifically toward serving the strain & temperature sensing industries through its ODiSI product line.

“Completing the transaction with Intuitive provided two key benefits for us,” said Luna President and CEO My Chung. “First, it gave us the opportunity to monetize the shape-sensing technology in the medical area on an accelerated pace, having received $12 million in the first half of the year. Second, it has allowed us to concentrate our focus and devote the necessary resources to drive the increased adoption of our solutions for fiber optic sensing of strain and temperature. We have targeted a portion of the proceeds to further expand our sales force, enhance our marketing efforts and continue to improve the functionality of our ODiSI platform.”

With strain and temperature sensing now as its key focus, Luna will continue to develop technological solutions for a growing market. Its core team of engineers is driving technological improvements as Luna continues to focus on marketing the ODiSI platform in automotive, aerospace and energy applications.

Additionally, Luna will continue to sell its test and measurement products to the telecommunications industry, as well as develop an ongoing pipeline of technologies through its contract research division.

About Luna

Luna Innovations Incorporated (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.

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, including statements regarding, but not limited to: Luna’s potential future receipt of deferred and contingent payments in connection with the transaction with Intuitive; Luna’s focus on markets outside of the medical industry; the uniqueness of Luna’s technology and intellectual property; potential for future commercialization of its technologies; the competitive advantage afforded by Luna’s technology; the potential efficacy of Luna’s technology; growth potential of certain markets and potential benefits of the incorporation of Luna’s shape-sensing technology in robotic and non-robotic surgery and Intuitive’s ability to improve the delivery of healthcare by virtue of the transaction. 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 the ability of the technology transferred to Intuitive to achieve certain technical specifications that are required for triggering future payment under the asset purchase agreement, Intuitive’s successful development of surgical systems incorporating the Luna technology; approval of such systems for marketing by the United States Food and Drug Administration and similar foreign regulatory bodies; market adoption of Intuitive surgical systems incorporating Luna technology; uncertainties regarding the growth of the markets for the company’s temperature and strain sensing technology outside of the medical industry; technical and scientific difficulties; issues that might arise in any particular business relationship; and 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.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.

Contacts:

Luna Innovations Incorporated
Dale Messick, 1-540-769-8400
IR@lunainc.com

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