The Medipattern Corporation

TSX VENTURE : MKI


The Medipattern Corporation

November 30, 2012 06:00 ET

Medipattern Reports Highlights and Results for Q1 2013

TORONTO, ONTARIO--(Marketwire - Nov. 30, 2012) -

Attention: Business/Financial Editors

The Medipattern Corporation ("Medipattern" or "Company") (TSX VENTURE:MKI), is pleased to report first quarter highlights and results of operations from the Company's 2013 financial year, to September 30, 2012.

HIGHLIGHTS FOR THE QUARTER:

  • Increased Visualize: Vascular™ customer base to a total of 46 customers which provide services in a combined total of 272 sites.

  • Processed 1,243 cases in the quarter.

  • Completed the acquisition of Mytrak Health Systems Inc.'s Mobile Technology Business Unit ("mHealth division") in conjunction with a $1.8 million financing.

"The customer base for our vascular product line continues to grow. We are refining the installation and training to streamline our start up process for Visualize: Vascular™ customers. We have implemented a cloud based system for delivery of medical images and reports for our customers so we can begin to scale the solution as we anticipate increased scanning volume. This new delivery system will enable our customers to begin to increase their volumes as we transition many of them from pre-revenue test scanning to contracted primary workload cases," stated Jeff Collins, CEO of The Medipattern Corporation. "The company also introduced its wearable mobile health device, SMARTCOACH™, into its Visualize: Vascular™ customer base. The medical community appreciates the device's ability to highlight heart activity and monitor the intensity of physical activity. Zwanger-Pesiri Radiology is utilizing SMARTCOACH™ as a method to encourage all 600 of their employees to meet their individual wellness goals, emphasizing that the entire organization benefits when the team is in good health."

"A new case study shows that Visualize: Vascular™ improved the Physician's ability to better identify those patients at risk to stroke," Collins stated. "The paper was presented at the Annual Meeting of the Society of Radiologists in Ultrasound, a division of the American College of Radiology. The paper shows that Visualize's 3D rendering results have a >99% correlation to Magnetic Resonance Angiography (MRA). Each case was run with the standard of care: Carotid Ultrasound and MRA, and then with Visualize. Angiography is the gold standard for determining vascular integrity. The study shows that the standard of care Carotid Ultrasound only agreed with MRA 75% of the time. Using Visualize's 3D with Carotid Ultrasound improved diagnostic accuracy to the same level as angiography, bringing the accuracy of angiography to ultrasound. Clinical results continue to strongly substantiate the benefits of our vascular product line."

Collins continues, "Medipattern is positioned well to continue growing its vascular product line and increase delivery of its mHealth division products through this channel."

Financial Highlights for Q1 Fiscal 2013:

  • Revenue totaled $100,743 for the three month period ended September 30, 2012 (Q1 Fiscal 2013) versus $6,504 for Q1 Fiscal 2012. Of the $94,239 increase, device and accessories sales from the new mHealth division accounted for $76,399, subscription fees for Visualize: Vascular™, B-CAD-FOR-LIFE™ and SMARTCOACH™ accounted for $14,344 and $10,000 from the sale of B-CAD® licenses. Throughout Q1 2013 the Company continued to focus its core R&D resources and marketing expertise on meeting its iaHealth division deadlines for final commercialization of its Visualize: Vascular™ software, while improving the customer user experience and device interface on its mHealth division technology platform. As a consequence, no licensing or professional fees were earned in the quarter (Q1 2012 - $nil);

  • Non-interest operating expenses in Q1 Fiscal 2013 totaled $1,291,287 versus $581,029 for Q1 Fiscal 2012, an overall increase of 122%. Of the $710,258 increase, $403,492 was attributable to the addition of the new mHealth division, while related acquisition costs, increased patent fees and higher share-based compensation accounted for the balance of the increased expenses. The Company remains committed to controlling all discretionary non-interest spending until operating cash flow improves and new financing is arranged;

  • Total interest expense (including accreted interest on Convertible Debt) for Q1 Fiscal 2013 increased 68% to $201,279 (Q1 2012 - $120,097) as a result of the commencement of 8% interest due on certain Convertible Notes starting on January 1, 2012;

  • In Q1 Fiscal 2013 the Company also recorded 2 significant non-cash items; one, a fair value gain on embedded conversion options in its 2010 Convertible Notes of $619,765 (Q1 - 2012 - $39,287) and two, a goodwill impairment provision on its recently acquired mHealth division of $1,764,584;

  • Resulting net loss for Q1 Fiscal 2013 was $2,549,663 ($0.03 per share) versus $653,096 ($0.01 per share) for Q1 fiscal 2012;

  • As at September 30, 2012, cash totaled $238,733 (June 30, 2012 - $348,732), current assets, including short-term investments of $272,689 (June 30, 2012 - $271,665), were $1,549,431 (June 30, 2012 - $870,989) and current liabilities were $1,050,475 (June 30, 2012 - $355,636). Working capital at September 30, 2012 totaled $498,956 (June 30, 2012 - $515,353), total assets totaled $3,108,838 (June 30, 2012 - $922,373) and total liabilities were $6,814,934 (June 30, 2012 - $6,652,560).

Subsequent to September 30, 2012

  • The Company initiated significant cost reduction initiatives to minimize monthly cash expenses and allow available financial resources to focus specifically on revenue generation. Included in these cash containment measures is senior management's (including its NEO's) agreement to receive no or reduced salaries until sufficient new liquidity is achieved through either new capital financing or enhanced revenue generation.

  • November 7, 2012, the Company announced it had arranged a term debt facility ('Facility") to provide up to $1,000,000 of working capital. The Facility calls for advances to be made monthly to the Company, initially for $100,000. The Notes will expire on June 30, 2013, and will bear interest at 6% per annum. The Notes will be secured by a general security agreement over all the assets of the Company, in priority to all existing security interests granted by the Company. The closing of the Facility and the initial $100,000 advance is subject to completion of definitive agreements and TSX Venture Exchange approval. Medipattern and its Board have agreed the holders of the Notes have the right to appoint up to two representatives as directors of Medipattern's Board. To date, this Facility has not closed and no funds have been advanced.

THE MEDIPATTERN CORPORATION
UNAUDITED CONDENSED STATEMENT OF OPERATIONS and COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
Three Months Ended
September 30,
Three Months Ended
September 30,
2012 2011
Revenues
Devices and accessories $ 76,399 $ -
Licensing fees 10,000 -
Professional fees - -
Subscription rental fees 14,344 6,504
100,743 6,504
Expenses
Cost of Sales 70,549 -
Research and development 331,273 260,530
Administration and product support 752,935 209,910
Sales and marketing 136,530 110,589
Interest on convertible debt 117,547 49,943
Accretion of interest on convertible debt 83,732 70,154
Unrealized gain on convertible debt conversion option (619,765 ) (39,287 )
Goodwill impairment provision 1,764,584 -
Foreign exchange loss (gain) 6,488 (271 )
Investment income (2,165 ) (9,762 )
Depreciation of property and equipment 8,697 7,794
2,650,406 659,600
Net loss and total comprehensive loss $ (2,549,663 ) $ (653,096 )
Loss per share - basic and diluted $ (0.03 ) $ (0.01 )
Weighted average number of common shares
outstanding 75,286,469 57,404,579

About the Medipattern Corporation:

Medipattern® is the award-winning leader in the development and commercialization of healthcare solutions that positively impact people's lives through the prevention of disease and analysis of medical images and data. Medipattern's Knowledge-based Informatics (MKI) platform enables delivery of these streamlined solutions. Medipattern mHealth uses patented prevention technologies to engage, coach and monitor people in achieving their personalized goals. Medipattern iaHealth uses patented pattern recognition technology to analyze medical data to aid medical practitioners in the assessment of disease and critical anatomy. For more information, please visit the Company's website: www.medipattern.com.

Medipattern® and B-CAD® are registered marks of The Medipattern Corporation. Visualize:Vascular™ is a trademark of the Medipattern Corporation.

Forward-looking statements

This document contains forward-looking statements relating to Medipattern's performance, operations, or business environment. These statements are based on what we believe are reasonable assumptions given currently available information and our understanding of Medipattern's current activities. We have tried, whenever possible, to identify these forward-looking statements using words such as "anticipates'', "believes'', "estimates'', "expects'', "plans'', "intends'', "potential'', and similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict or control. A number of factors could cause actual outcomes and results to differ materially from those expressed in forward-looking statements. These factors include but are not limited to those set forth in the Company's corporate filings, (posted at www.sedar.com). In addition, these forward-looking statements relate to the date on which they are made. The Company disclaims any intention or obligation to update or revise any forward-looking statements for any reason. Readers should not rely on forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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