UNITED STATES
                        SECURITIES EXCHANGE COMMISSION
                            Washington, D.C. 20549

------------------------------------------------------------------------------


                                 SCHEDULE 13G

                   Under the Securities Exchange Act of 1934
                               (Amendment No. )

                            LUNA INNOVATIONS, INC.
                            ----------------------
                               (Name of Issuer)


                   Common Stock, par value $0.001 per share
         -------------------------------------------------------------
                        (Title of Class of Securities)


                                   550351100
                      -----------------------------------
                                (CUSIP Number)


                                December 31, 2006
                     -------------------------------------
            (Date of Event which Requires Filing of this Statement)


Check  the  appropriate  box to  designate  the rule  pursuant  to which  this
Schedule is filed:

                              [ X ] Rule 13d-1(b)

                               [ ] Rule 13d-1(c)

                               [ ] Rule 13d-1(d)

* The  remainder  of this  cover  page  shall be  filled  out for a  reporting
person's  initial  filing on this form with  respect to the  subject  class of
securities,  and for any subsequent  amendment  containing  information  which
would alter the disclosures provided in a prior cover page.

The  information  required  in the  remainder  of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities  Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however,  see
the Notes).


                         Continued on following pages
                              Page 1 of 12 Pages
                            Exhibit Index: Page 11




                                 SCHEDULE 13G

CUSIP No.: 550351100                                        Page 2 of 12 Pages


------------------------------------------------------------------------------
1.    Names of Reporting Persons.
      I.R.S. Identification Nos. of above persons (entities only).

      MAGNETAR INVESTMENT MANAGEMENT, LLC
------------------------------------------------------------------------------
2.    Check the Appropriate Box if a Member of a Group
      (a) [ ]
      (b) [ ]
------------------------------------------------------------------------------
3.    SEC Use Only
------------------------------------------------------------------------------
4.    Citizenship or Place of Organization

      Delaware
------------------------------------------------------------------------------
Number of           5.       Sole Voting Power                  659,964
Shares              ----------------------------------------------------------
Beneficially        6.       Shared Voting Power                None
Owned by Each       ----------------------------------------------------------
Reporting           7.       Sole Dispositive Power             659,964
Person With         ----------------------------------------------------------
                    8.       Shared Dispositive Power           None
------------------------------------------------------------------------------
9.    Aggregate Amount Beneficially Owned by Each Reporting Person

      659,964
------------------------------------------------------------------------------
10.   Check if the Aggregate  Amount in Row (9) Excludes  Certain  Shares (See
      Instructions)

      [  ]
------------------------------------------------------------------------------
11.   Percent of Class Represented by Amount in Row (9)

      6.69% based on 9,860,664 shares outstanding as of November 9, 2006.
------------------------------------------------------------------------------
12.   Type of Reporting Person:

      IA; OO






                                 SCHEDULE 13G

CUSIP No.: 550351100                                        Page 3 of 12 Pages


------------------------------------------------------------------------------
1.    Names of Reporting Persons.
      I.R.S. Identification Nos. of above persons (entities only).

      MAGNETAR CAPITAL PARTNERS LP
------------------------------------------------------------------------------
2.    Check the Appropriate Box if a Member of a Group
      (a) [ ]
      (b) [ ]
------------------------------------------------------------------------------
3.    SEC Use Only
------------------------------------------------------------------------------
4.    Citizenship or Place of Organization

      Delaware
------------------------------------------------------------------------------
Number of           5.       Sole Voting Power                  None
Shares              ----------------------------------------------------------
Beneficially        6.       Shared Voting Power                869,523
Owned by Each       ----------------------------------------------------------
Reporting           7.       Sole Dispositive Power             None
Person With         ----------------------------------------------------------
                    8.       Shared Dispositive Power           869,523
------------------------------------------------------------------------------
9.    Aggregate Amount Beneficially Owned by Each Reporting Person

      869,523
------------------------------------------------------------------------------
10.   Check if the Aggregate  Amount in Row (9) Excludes  Certain  Shares (See
      Instructions)

      [  ]
------------------------------------------------------------------------------
11.   Percent of Class Represented by Amount in Row (9)

      8.82% based on 9,860,664 shares outstanding as of November 9, 2006.
------------------------------------------------------------------------------
12.   Type of Reporting Person:

       HC; OO





                                 SCHEDULE 13G

CUSIP No.: 550351100                                        Page 4 of 12 Pages


------------------------------------------------------------------------------
1.    Names of Reporting Persons.
      I.R.S. Identification Nos. of above persons (entities only).

      SUPERNOVA MANAGEMENT LLC
------------------------------------------------------------------------------
2.    Check the Appropriate Box if a Member of a Group
      (a) [ ]
      (b) [ ]
------------------------------------------------------------------------------
3.    SEC Use Only
------------------------------------------------------------------------------
4.    Citizenship or Place of Organization

      Delaware
------------------------------------------------------------------------------
Number of           5.       Sole Voting Power                  None
Shares              ----------------------------------------------------------
Beneficially        6.       Shared Voting Power                869,523
Owned by Each       ----------------------------------------------------------
Reporting           7.       Sole Dispositive Power             None
Person With         ----------------------------------------------------------
                    8.       Shared Dispositive Power           869,523
------------------------------------------------------------------------------
9.    Aggregate Amount Beneficially Owned by Each Reporting Person

      869,523
------------------------------------------------------------------------------
10.   Check if the Aggregate  Amount in Row (9) Excludes  Certain  Shares (See
      Instructions)

      [  ]
------------------------------------------------------------------------------
11.   Percent of Class Represented by Amount in Row (9)

      8.82% based on 9,860,664 shares outstanding as of November 9, 2006.
------------------------------------------------------------------------------
12.   Type of Reporting Person:

      HC; OO







                                 SCHEDULE 13G

CUSIP No.: 550351100                                        Page 5 of 12 Pages


------------------------------------------------------------------------------
1.    Names of Reporting Persons.
      I.R.S. Identification Nos. of above persons (entities only).

      ALEC N. LITOWITZ
------------------------------------------------------------------------------
2.    Check the Appropriate Box if a Member of a Group
      (a) [ ]
      (b) [ ]
------------------------------------------------------------------------------
3.    SEC Use Only
------------------------------------------------------------------------------
4.    Citizenship or Place of Organization

      United States of America
------------------------------------------------------------------------------
Number of           5.       Sole Voting Power                  None
Shares              ----------------------------------------------------------
Beneficially        6.       Shared Voting Power                869,523
Owned by Each       ----------------------------------------------------------
Reporting           7.       Sole Dispositive Power             None
Person With         ----------------------------------------------------------
                    8.       Shared Dispositive Power           869,523
------------------------------------------------------------------------------
9.    Aggregate Amount Beneficially Owned by Each Reporting Person

      869,523
------------------------------------------------------------------------------
10.   Check if the Aggregate  Amount in Row (9) Excludes  Certain  Shares (See
      Instructions)

      [  ]
------------------------------------------------------------------------------
11.   Percent of Class Represented by Amount in Row (9)

      8.82% based on 9,860,664 shares outstanding as of November 9, 2006.
------------------------------------------------------------------------------
12.   Type of Reporting Person:

      HC





                                                            Page 6 of 12 Pages


Item 1(a).  Name of Issuer:

            Luna Innovations, Inc. (the "Issuer")
Item 1(b).
            Address of Issuer's Principal Executive Offices:

            1703 South Jefferson Street, SW, Suite 400
            Roanoke, VA 24016

Item 2(a).  Name of Person Filing

            This Statement is filed on behalf of each of the following persons
(collectively, the "Reporting Persons"):

            i)  Magnetar  Investment  Management,  LLC  ("Magnetar  Investment
                Management")

            ii)  Magnetar Capital Partners LP ("Magnetar Capital Partners");

            iii)  Supernova Management LLC ("Supernova Management"); and

            iv)  Alec N. Litowitz ("Mr. Litowitz").

            This Statement  relates to Shares (as defined herein) held for the
accounts of Magnetar  Capital  Master  Fund,  Ltd, a Cayman  Islands  exempted
company  ("Magnetar  Capital  Master  Fund"),  certain  managed  accounts (the
"Managed  Accounts"),  Magnetar SGR Fund,  Ltd.  and  Magnetar  SGR Fund,  LP.
Magnetar Capital Partners serves as the sole member and parent holding company
of Magnetar  Investment  Management,  and Magnetar  Financial  LLC, a Delaware
limited liability company ("Magnetar  Financial").  Each of Magnetar Financial
and Magnetar  Investment  Management are registered  investment advisers under
Section 203 of the  Investment  Advisers  Act of 1940,  as  amended.  Magnetar
Financial  serves as investment  adviser to Magnetar  Capital  Master Fund. In
such capacity,  Magnetar Financial  exercises voting and investment power over
the Shares held for the  account of Magnetar  Capital  Master  Fund.  Magnetar
Investment  Management  serves as investment  adviser to the Managed Accounts,
Magnetar SGR Fund, Ltd and Magnetar SGR Fund,  LP. In such capacity,  Magnetar
Investment  Management  exercises  voting and investment power over the Shares
held for the  accounts of the Managed  Accounts,  Magnetar  SGR Fund,  Ltd and
Magnetar SGR Fund, LP. Supernova Management is the general partner of Magnetar
Capital Partners. The manager of Supernova Management is Mr. Litowitz.

Item 2(b).  Address of Principal Business Office or, if None, Residence:

            The address of the principal  business  office of each of Magnetar
Investment Management,  Magnetar Capital Partners,  Supernova Management,  and
Mr. Litowitz is 1603 Orrington Avenue, 13th Floor, Evanston, Illinois 60201.

Item 2(c).  Citizenship:

            i)  Magnetar   Investment   Management   is  a  Delaware   limited
                liability company;

            ii) Magnetar Capital Partners is a Delaware limited partnership;





                                                            Page 7 of 12 Pages


      iii) Supernova Management is a Delaware limited liability company; and

      iv) Mr. Litowitz is a citizen of the United States of America.

Item 2(d).  Title of Class of Securities:

            Common Stock, par value $.001 per share (the "Shares")
Item 2(e).  CUSIP Number:

            550351100

Item 3.     If This  Statement  is Filed  Pursuant  to  ss.ss.240.13d-1(b)  or
            240.13d-2(b) or (c), Check Whether the Person Filing is a:

            (a) [ ]     Broker or dealer  registered  under  Section 15 of the
                        Exchange Act.
            (b) [ ]     Bank as  defined in  Section  3(a)(6) of the  Exchange
                        Act.
            (c) [ ]     Insurance  company as defined in Section  3(a)(19)  of
                        the Exchange Act.
            (d) [ ]     Investment  company  registered under Section 8 of the
                        Investment Company Act.
            (e) [X]     An  investment   adviser  in   accordance   with  Rule
                        13d-1(b)(1)(ii)(E);
            (f) [ ]     An  employee   benefit  plan  or  endowment   fund  in
                        accordance with Rule 13d-1(b)(1)(ii)(F).
            (g) [ ]     A  parent   holding   company  or  control  person  in
                        accordance with Rule 13d-1(b)(1)(ii)(G).
            (h) [ ]     A savings  association  as defined in Section  3(b) of
                        the Federal Deposit Insurance Act.
            (i) [ ]     A church plan that is excluded from the  definition of
                        an investment  company  under Section  3(c)(14) of the
                        Investment Company Act.

Item 4.     Ownership:

Item 4(a)   Amount Beneficially Owned:

            (i) As of February 5, 2007,  each of  Magnetar  Capital  Partners,
Supernova Management and Mr. Litowitz may be deemed to be the beneficial owner
of 869,523  Shares.  This amount  consists of: (A) 209,559 Shares held for the
account of  Magnetar  Capital  Master  Fund;  ((B) 3,391  Shares  held for the
account of Magnetar  SGR Fund Ltd;  (C) 55,850  Shares held for the account of
Magnetar  SGR  Fund LP and (D)  600,723  Shares  held for the  account  of the
Managed Accounts).

            (ii) As of February 5, 2007, Magnetar Investment Management may be
deemed to be the beneficial owner of 659,964 Shares.  This amount consists of:
(A) 3,391 Shares held for the account of SGR Fund Ltd; (B) 55,850  Shares held
for the account of SGR Fund LP and (C) 600,723  Shares held for the account of
the Managed Accounts.

Item 4(b)   Percent of Class:





                                                            Page 8 of 12 Pages


            (i) The  number  of  Shares  of  which  each of  Magnetar  Capital
Partners,  Supernova  Management  and Mr.  Litowitz  may be  deemed  to be the
beneficial owner constitutes approximately 8.82% of the total number of Shares
outstanding  (based  upon  information  provided  by the  Issuer  in its  most
recently filed  registration  statement on Form 10-Q, there were approximately
9,860,664 shares outstanding as of November 9, 2006).

            (ii) The number of Shares of which Magnetar Investment  Management
may be deemed to be the beneficial owner  constitutes  approximately  6.69% of
the total number of Shares outstanding.

Item 4(c)   Number of Shares of which such person has:

Magnetar Investment Management:
-------------------------------

(i) Sole power to vote or direct the vote:                              659,964

(ii) Shared power to vote or direct the vote:                                 0

(iii) Sole power to dispose or direct the                               659,964
      disposition of:

(iv) Shared power to dispose or direct the                                    0
     disposition of:

Magnetar Capital Partners, Supernova Management, and Mr. Litowitz:
------------------------------------------------------------------

(i) Sole power to vote or direct the vote:                                    0

(ii) Shared power to vote or direct the vote:                           869,523

(iii) Sole power to dispose or direct the                                     0
      disposition of:

(iv) Shared power to dispose or direct the                              869,523
     disposition of:


Item 5.     Ownership of Five Percent or Less of a Class:

            This Item 5 is not applicable.

Item 6.     Ownership of More than Five Percent on Behalf of Another Person:

            This Item 6 is not applicable.

Item 7.     Identification and Classification of the Subsidiary Which Acquired
            the Security Being Reported on By the Parent Holding Company:

            See disclosure in Item 2 hereof.

Item 8.     Identification and Classification of Members of the Group:

            This Item 8 is not applicable.

Item 9.     Notice of Dissolution of Group:

            This Item 9 is not applicable.

Item 10.    Certification:





                                                            Page 9 of 12 Pages


            By signing below each of the Reporting  Persons certifies that, to
the best of their knowledge and belief, the securities  referred to above were
not  acquired  and are not  held for the  purpose  of or with  the  effect  of
changing or  influencing  the control of the issuer of the securities and were
not acquired and are not held in connection  with or as a  participant  in any
transaction having that purpose or effect.






                                                           Page 10 of 12 Pages


                                   SIGNATURE

      After reasonable inquiry and to the best of my knowledge and belief, the
undersigned  certify that the information set forth in this statement is true,
complete and correct.

Date: February 14, 2007              MAGNETAR INVESTMENT MANAGEMENT, LLC

                                     By: Magnetar Capital Partners LP
                                         As Sole Member

                                     By:  /s/ Alec N. Litowitz
                                          ------------------------------
                                     Name:  Alec N. Litowitz
                                     Title: Manager of Supernova Management
                                            LLC, as General Partner of
                                            Magnetar Capital Partners LP


Date: February 14, 2007              MAGNETAR CAPITAL PARTNERS LP


                                     By:  /s/ Alec N. Litowitz
                                          ------------------------------
                                     Name:  Alec N. Litowitz
                                     Title: Manager of Supernova Management
                                            LLC, as General Partner of
                                            Magnetar Capital Partners LP

Date: February 14, 2007              SUPERNOVA MANAGEMENT LLC


                                     By:  /s/ Alec N. Litowitz
                                          ------------------------------
                                     Name:  Alec N. Litowitz
                                     Title: Manager

Date: February 14, 2007              ALEC N. LITOWITZ


                                     /s/ Alec N. Litowitz
                                     ------------------------------






                                                           Page 11 of 12 Pages


                                 EXHIBIT INDEX


Ex.                                                                   Page No.
---                                                                   --------

A.    Joint Filing  Agreement,  dated February 14, 2007 by and among
      Magnetar Investment  Management, LLC, Magnetar Capital Partners
      LP, Supernova Management LLC, and Alec N. Litowitz ...........        12






                                                           Page 12 of 12 Pages


                                   EXHIBIT A

                            JOINT FILING AGREEMENT

      The undersigned hereby agree that the statement on Schedule 13G with
respect to the Common Stock of Luna Innovations, Inc. dated as of February 14,
2007 is, and any amendments thereto (including amendments on Schedule 13D)
signed by each of the undersigned shall be, filed on behalf of each of us
pursuant to and in accordance with the provisions of Rule 13d-1(k) under the
Securities Exchange Act of 1934, as amended.


Date: February 14, 2007              MAGNETAR INVESTMENT MANAGEMENT, LLC
                                     By: Magnetar Capital Partners LP
                                         As Sole Member

                                     By:  /s/ Alec N. Litowitz
                                          ------------------------------
                                     Name:  Alec N. Litowitz
                                     Title: Manager of Supernova Management
                                            LLC, as General Partner of
                                            Magnetar Capital Partners LP


Date: February 14, 2007              MAGNETAR CAPITAL PARTNERS LP


                                     By:  /s/ Alec N. Litowitz
                                          ------------------------------
                                     Name:  Alec N. Litowitz
                                     Title: Manager of Supernova Management
                                            LLC, as General Partner of
                                            Magnetar Capital Partners LP

Date: February 14, 2007              SUPERNOVA MANAGEMENT LLC


                                     By:  /s/ Alec N. Litowitz
                                          ------------------------------
                                     Name:  Alec N. Litowitz
                                     Title: Manager

Date: February 14, 2007              ALEC N. LITOWITZ


                                     /s/ Alec N. Litowitz
                                     ------------------------------