Medipattern™ Corporation Reports Results for Fiscal 2010

TORONTO, ONTARIO--(Marketwire - October 29, 2010) - Attention: Business/Financial Editors

The Medipattern Corporation (“Medipattern”) (TSX VENTURE: MKI), a pioneer in the development of medical software solutions that help improve imaging workflow and productivity, today announced its business highlights and financial results for the fiscal year ended June 30, 2010.

Jeff Collins, CEO of Medipattern, commented “Results for fiscal 2010 are much weaker than we anticipated due mainly to weaker than expected acceptance of reimbursement from US healthcare insurance companies (payers) for the B-CAD® procedure. During our fiscal year 2010 we significantly increased the footprint of B-CAD FOR LIFE™ gaining valuable knowledge about its usage and what it will take to make this product a success. At the end of June 2010 we had approximately 127 users generating over 10,000 scans per month. Revenue for this new software as a service model started to flow in during the second quarter of fiscal 2010. We have made progress in helping our customers earn incremental revenue while using B-CAD to increase accuracy and improve communications. Medipattern is pursuing a reimbursement strategy that would ultimately lead to a unique Current Procedural Terminology (CPT) code for B-CAD. We continue to use Healthcare iQ to provide reimbursement advice to our customers and to manage denials from payers while gaining acceptance. Had we been successful in this strategy, we are confident we would have made our projections. We continue to establish usage in the market as well as prove clinical effectiveness. A paper demonstrating the clinical utility of B-CAD will be presented this year at RSNA and several studies have been conducted to show enhancement to workflow and reductions in time required to complete breast ultrasound exams”.

Collins also remarked “We have been working with our partner PenRad Technologies Inc. to expand CAD for breast ultrasound into their existing installed base as part of our national roll out strategy. We will demonstrate an integrated B-CAD system with PenRad at RSNA in their PenView Mammography Review and Reporting Workstation. Our entry into the vascular market is expected in early calendar 2011 with the release of our Visualize:Vascular™ product. We have had strong indications that this product will be well received based on our showcasing the vascular product to various luminary groups and our clinical partner Navix Diagnostix Inc. the leading provider of outsourced vascular imaging services in the Northeastern US. We continue to believe we are providing solutions that fit a market need and will do everything possible to generate meaningful revenue in 2011.”

Business Highlights of Fiscal 2010:

 -- August 4, 2009 - Medipattern signs an agreement for B-CAD-FOR-LIFE™ with Manhattan Diagnostic Radiology. -- November 26, 2009 - Medipattern and PenRad Technologies Inc. sign a sales and distribution agreement for PenRad to incorporate Medipattern’s B-CAD™ computer aided detection for breast ultrasound imaging product line. -- November 29, 2009 - Medipattern and Sentinelle Medical Inc. announce that they are entering a technology access and distribution agreement to partner in the development of Breast MRI solutions. -- December 14, 2009 - Medipattern announces the expansion of its B-CAD- FOR-LIFE™ program with Ocean Medical Imaging Centers in New Jersey, U.S.A. -- December 21, 2009 - Medipattern installs 150th B-CAD® license at Weinstein Imaging in Pennsylvania, U.S.A. -- March 2, 2010 - Medipattern announces Doshi Diagnostic Imaging to deploy B-CAD-FOR-LIFE™ in 38 centers in the United States. -- 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. 

Subsequent to the end of the fiscal year:

 -- September 22, 2010 - Medipattern announces its core technology “system and method of computer-aided detection (CAD)” received United States Patent # 7,783,094. 

Financial Highlights for Fiscal 2010:

 -- Revenue totaled $304,935 (2009 - $229,466) for the fiscal year ended June 30, 2010 (fiscal 2010), an increase of 33%. Licensing fees totaled $272,573 compared to $107,123 for the fiscal year ended June 30, 2009 (fiscal 2009) while subscription rental fees increased to $32,262 (2009 - nil) in response to the roll out of the Company’s B-CAD-FOR-LIFE subscription rental program. No professional fees were earned in fiscal 2010 (2009 - $122,343) as the Company remained focused on meeting its deadlines for completion of internal development and commercialization of its new vascular software Visualize:Vascular™ scheduled for early calendar 2011. Fiscal 2009 professional fees were the result of software development work done to customize is B-CAD™ software for a specific customer; -- Operating expenses in fiscal 2010 totaled $2,925,681 versus $4,099,479 in fiscal 2009, an overall decline of 29%. Medipattern remains committed to 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 the 2010 fiscal year was $2,620,746 ($0.05 per share) versus $ 4,240,990 ($0.10 per share) for the previous year. The results for fiscal 2009 included impairment write-downs totaling $370,977, or $0.01 per share, of deferred technology charges and web site development costs; -- As at June 30, 2010, cash and cash equivalents totaled $269,329 (2009 - $1,529,507), current assets, including highly liquid short-term investments of $1,250,000 (2009 - $321-133), were $2,070,913 (2009 - $2,213,614) and current liabilities were $377,443 (June 30, 2009 - $351,745). Working capital at June 30, 2010 totaled $1,693,470 (2009 - $1,861,869). 

Results of Operations:

 THE MEDIPATTERN CORPORATION AUDITED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT FOR FISCAL YEARS ENDED JUNE 30, 2010 AND 2009 2010 2009 --------------------- --------------------- --------------------- --------------------- REVENUES Licensing fees $ 272,573 $ 107,123 Professional fees - 122,343 Subscription rental fees 32,362 - --------------------- --------------------- 304,935 229,466 --------------------- --------------------- EXPENSES Research and development 929,788 1,417,360 Administration and product support 1,114,295 1,396,670 Sales and marketing 806,129 1,251,624 Interest on convertible debt 18,305 10,681 Accretion of interest on convertible debt 10,008 38,940 Foreign exchange loss (gain) 8,224 (18,228) Investment income (3,859) (52,924) Investment income on held to maturity investment - (3,037) Amortization of property and equipment 42,791 53,480 Amortization of intangible assets - 4,913 --------------------- --------------------- 2,925,681 4,099,479 --------------------- --------------------- LOSS BEFORE UNDERNOTED (2,620,746) (3,870,013) Impairment of intangible assets - (370,977) --------------------- --------------------- NET LOSS AND COMPREHENSIVE LOSS $ (2,620,746) $ (4,240,990) --------------------- --------------------- --------------------- --------------------- DEFICIT, BEGINNING OF YEAR $ (16,348,417) $ (12,146,367) Net loss (2,620,746) (4,240,990) Transfer of equity portion of convertible debenture upon redemption - 38,940 --------------------- --------------------- DEFICIT, END OF YEAR $ (18,969,163) $ (16,348,417) --------------------- --------------------- 

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

2010 Upcoming Events:

 -- RSNA (Radiological Society of North America), November 28 to December 2, 2010, Chicago, IL. 

About The Medipattern Corporation:

Medipattern® (TSX VENTURE: MKI) is a pioneer in the development of medical software solutions that help improve imaging workflow and productivity. Our first-to-market, award-winning B-CAD® advances breast ultrasound computer aided detection (CAD) by streamlining workflow and organizing information into a comprehensive patient record. Medipattern uses its Cadenza™ CAD Technology to power the digital conversion in medical communications. B-CAD automatically creates fully digital standardized worksheets and reports that make every practice more efficient, productive and ultimately more effective. For more information, please visit the Company’s website at: www.medipattern.com.

B-CAD™ and B-CAD MRI™ are trademarks of The Medipattern Corporation. Medipattern® is a registered mark 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.