The Medipattern Corporation
TSX VENTURE : MKI

The Medipattern Corporation

March 01, 2011 06:30 ET

Medipattern to Raise $3,000,000 Through Senior Secured Convertible Note Offering

Releases Unaudited Results for Q2 2011

TORONTO, ONTARIO--(Marketwire - March 1, 2011) -

Attention: Business/Financial Editors

The Medipattern Corporation ("Medipattern") (TSX VENTURE:MKI), a pioneer in the development of imaging software solutions that help medical practitioners better understand lesions and critical anatomy, is pleased to announce that it is entered into a term sheet with Ingalls & Snyder LLC of New York, along with Sebago Capital of Boston, to raise $3,000,000 through the issue of senior secured convertible notes (the "Convertible Notes"), which will bear interest after December 31, 2011 on a semi-annual basis, payable on March 31 and September 30 each year at the rate of 8% in 2012, 16% in 2013, and maturing on December 31, 2013 (the "Offering"). Medipattern has received confirmations for the entire Offering, with closing of the Offering expected on or about March 4, 2011, subject to regulatory approval. The Convertible Notes may be converted by holders into common shares of Medipattern, at a conversion price of $0.37 per share, subject to adjustment in certain circumstances. Once closed the proceeds from the Offering will be used by Medipattern to augment operating working capital and commercialize its Visualize:Vascular™ product which was cleared for use by the US FDA on February 16.

Jeff Collins, President and CEO of Medipattern, commented "we are very excited to be completing this Offering which will enable us to enter the vascular market with enough funding to ensure successful commercialization of Visualize:Vascular™. We anticipate that the program will begin showing revenue during fiscal Q4 with the full commercial launch scheduled in June 2011 to coincide with the annual meetings for the Society of Vascular Medicine (SVM), the Society of Vascular Surgery (SVS) and The Society of Vascular Ultrasound (SVU). The product has been enthusiastically accepted by our clinical partners in the cardiology, vascular surgery, interventional and diagnostic radiology markets. We will begin installing sites within the Navix Diagnostix Network as we prepare for full commercialization. Visualize:Vascular™ will be available on a per report basis adding 3D reconstruction of the carotid artery to Color Flow Duplex Ultrasound (CFDU) studies. The vascular market is very well established with over 39 million scans performed annually in the United States and Canada alone with a 10-15% annual growth projection over the next decade as forecasted by industry analyst Frost and Sullivan. This is in stark contrast to the breast ultrasound market, the target market for the Company's B-CAD® product, where the number of out-of-pocket procedures such as mammograms has decreased over the past few years. Reimbursement denials for B-CAD weaken Medipattern's performance and as a result our fiscal Q2 2011 revenue remained much lower than projected. We do not have these same limitations in the vascular market. Along with strong physician interest in our vascular product we expect to be able to increase revenue substantially over the coming months," concluded Collins.

"The beauty of this technology [Visualize:Vascular™] is that it is totally non-invasive and can serve as an adjunct to standard duplex ultrasound. Traditionally, we use Doppler to measure the velocities of blood flow in the vessel. From this data we estimate the degree of narrowing to determine if there is significant disease. Visualize affords us the ability to measure the diameter of the residual lumen directly. Clinically this is a tremendous asset for us and will ultimately lead to improved patient care," commented Francis J. Porreca, MD, FACS, RPVI, Director of Vascular Surgery, Weiler Division of Montefiore, The University Hospital of the Albert Einstein College of Medicine. "I believe Visualize has the potential to revolutionize the way we look at ultrasound which will have a positive impact on patient management."

The American Heart Association cites an estimated 80,700,000 American adults (one in three) have one or more types of cardiovascular disease (CVD) and the statistics echo throughout the population worldwide. Restrictions in the residual lumen can cause reduced organ function and tissue degeneration. Vascular diseases are estimated to be among the largest causes of lifestyle impairment, including stroke, amputation and heart attack.

Vascular ultrasound is one of the largest and higher growth market segments for ultrasound imaging today," commented Robert Kane, Senior Vice President of Clinical Services, Navix Diagnostix, Inc. "We saw that Medipattern's technology had the power to let us see inside vessels in an ultrasound setting. The preliminary response from the physicians that we regularly work with is very enthusiastic and we are committed to seeing this product roll out through all of our NAVIX sites."

Further, Medipattern released its business highlights and financial results for its second fiscal quarter of 2011 ended December 31, 2010.

Business Highlights of Fiscal 2010 and for the 6 months ended December 31, 2010:

  • June 9, 2010 – Medipattern announces it will introduce and preview its 3D Visualize:Vascular™ software at the 2010 Annual Vascular Meeting of the Society of Vascular Surgeons and Society of Vascular Ultrasound.
  • September 22, 2010 – Medipattern announces its core technology "system and method of computer-aided detection (CAD)" received United States Patent # 7,783,094.
  • February 17, 2011 – Medipattern announces it has received US FDA clearance for its new Visualize:Vascular™ 3D vascular ultrasound imaging product.

Financial Highlights for Q2 Fiscal 2011:

  • Revenue totaled $21,739 (Q2 2010 - $16,010) for the fiscal quarter ended December 31, 2010, a 36% increase from last year, while 6 month revenues increased significantly in fiscal 2011 to $55,173 compared to 2010's $18,130. Licensing fees in Q2 2011 were $10,000 (Q2 2010 - $9,963) and totaled $26,432 for the 6 months compared to $9,963 for fiscal 2010. Subscription rental fees in Q2 2011 increased to $11,739 (Q2 2010 – $6,047) and for the 6 months ended December 31, 2011 totaled $28,741 versus $8,167 in fiscal 2010. No professional fees were earned in fiscal 2011 (fiscal 2010 - Nil) as the Company remains committed to focusing its internal resources on meeting its deadlines for completion of development and commercialization of its new 3D vascular ultrasound software Visualize:Vascular™ scheduled for late fiscal 2011;
  • Operating expenses in Q2 fiscal 2011 totaled $617,064 versus $811,638 in last years' fiscal quarter, an overall decline of $194,574 or 24%. For the 6 months ended December 31, 2010 operating expenses totaled $1,224,163 versus $1,531,044 in the same 6 month period in 2010, a YTD 20% decline. Medipattern remains committed to preserving its cash resources and controlling all discretionary spending until operating cash flow improves in response to its ongoing commercialization of its award winning software products;
  • Resulting net loss for Q2 fiscal 2011 was $595,325 ($0.01 per share) versus $795,628 ($0.01 per share) for Q2 2010. For the 6 months ended December 31, 2010 Medipattern reported a loss of $1,168,990 ($0.02 per share) versus a loss of $1,512,914 ($0.03 per share) for the previous half year, a 23% improvement;
  • As at December 31, 2010, cash and cash equivalents totaled $150,381 (June 30, 2010 - $269,329), current assets, including highly liquid short-term investments of $544,598 (June 30, 2010 - $1,250,000), were $1,153,639 (June 30, 2010 - $2,070,913) and current liabilities were $265,437 (June 30, 2010 - $377,443). Working capital in the 6 month period ended December 31, 2010 declined $805,268 to $888,202 (June 30, 2010 - $1,693,470) as cash consumed in period operating losses was augmented by positive changes in operating working capital items.

Results of Operations:

THE MEDIPATTERN CORPORATION
UNAUDITED STATEMENT OF OPERATIONS and COMPREHENSIVE LOSS
FOR THE 6 and 3 MONTH PERIODS ENDED DECEMBER 31, 2010 AND 2009
                 
                 
  December 31, 2010   December 31, 2009   December 31, 2010   December 31, 2009  
  UNAUDITED   UNAUDITED   UNAUDITED   UNAUDITED  
  (6 months)   (6 months)   (3 months)   (3 months)  
   
REVENUES:                        
  Licensing fees $ 26,432   $ 9,963   $ 10,000   $ 9,963  
  Professional fees   -     -     -     -  
  Subscription rental fees   28,741     8,167     11,739     6,047  
    55,173     18,130     21,739     16,010  
OPERATING EXPENSES                        
  Research and development   463,783     466,308     233,719     245,730  
  Administration and product support   407,270     551,887     206,818     290,596  
  Sales and marketing   205,891     480,617     102,301     262,167  
  Interest on convertible debt   84,277     -     42,586     -  
  Accreted interest on convertible debt   43,644     -     22,517     -  
  Foreign exchange loss   7,273     13,072     2,594     3,053  
  Investment income   (5,008 )   (1,825 )   (2,146 )   (546 )
  Amortization of property and equipment   17,033     20,985     8,675     10,638  
    1,224,163     1,531,044     617,064     811,638  
   
NET LOSS AND COMPREHENSIVE LOSS $ (1,168,990 ) $ (1,512,914 ) $ (595,325 ) $ (795,628 )

For further details concerning Medipattern's results, please see the Company's filings on SEDAR (www.sedar.com).

2011 Upcoming Events:

  • Society of Vascular Medicine (SVM) Annual Meeting, Boston June 2-4
  • Society of Vascular Surgery (SVS) Annual Meeting, Chicago June 16-18
  • Society of Vascular Ultrasound (SVU) Annual Meeting, Chicago June 16-18

About The Medipattern Corporation:

Medipattern® is a pioneer in the development of imaging software solutions that help medical practitioners better understand lesions and critical anatomy. Medipattern uses its Cadenza™ Algorithm Technology to power Visualize:Vascular™ 3D reconstruction of areas of interest within the vessel as well as our first-to-market, award-winning B-CAD® advanced breast ultrasound computer aided detection (CAD). For more information, please visit the Company's website at: www.medipattern.com.

B-CAD® and Medipattern® are registered marks of The Medipattern Corporation. Visualize:Vascular™ and Cadenza™ are trademarks 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.

Contact Information