EGI.L Regulatory News (EGI)

Electrical Geodesics, Inc.

Business Update

EUGENE, OREGON, US, 6 March 2017 - Electrical Geodesics, Inc. ("EGI" or the "Company"), a leading neurodiagnostic medical technology company makes the following business update.

As reported on January 13, 2017 the company's preliminary, unaudited revenues grew 5% over the prior year to $14.3m with the lower than expected growth reflecting uncertainties arising from the US election results and consequent impacts on research funding and the challenges to international sales from the strength of the US currency. Whilst the Company's near-term sales prospects remain broadly consistent with expectations, these financial and market factors have continued to influence unfavourably the timing of sales and receipt of cash into the business.

In order to improve the Company's ability to manage its cash requirements as the current market factors prevail the Company is pleased to announce that it has recently closed a debt financing which has provided the Company with additional working capital.

The Company has entered into a subordinated secured Promissory Note with the principal amount of $1,000,000, 12% interest, maturing one year from the date of issuance. Significant other terms of the promissory note are set out at the end of this announcement.

Furthermore, the Company recently entered into amendments to its revolving credit facility extending the facilities maturity date by twelve months to June 2018 and increasing the credit line from $2.0m to $2.3m.

On an unaudited basis, the Company's cash reserves at 28 February 2017 (adjusted for the net proceeds from the Promissory Note) were approximately $1.9m and borrowings under the Company's revolving credit facility were $1.4m. The Directors are continuing to monitor the Company's cash availability and will seek to manage its cash position through additional debt or equity financing and cost controls as required .

The Company is pleased to report the issuance of a European patent on a novel invention for constraining dense array EEG source analysis with anatomical information from neural fiber tractography and, conversely, using the physiological covariance of dense array EEG sources to identify accurate fiber tract reconstruction. The US patent has been applied for and is under review. This invention is key to understanding the way in which the electrical activity in any one patient is linked to that patient's unique brain anatomy. It will provide a key competitive advantage for the Company's multimodal neuroimaging products in clinical neuroscience applications in neurology, psychiatry, and neurosurgery.

This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No 596/2014 and is disclosed in accordance with the Company's obligation under Article 17 of those Regulations.

For more information contact:

Additional details of the Promissory Note

· A minimum of one-year's interest will be due to the Holder if EGI prepays prior to the maturity date; change of control would trigger a premium to be paid to the Holder of $250,000.

· Assuming no earlier pre-payment, upon maturity on February 28, 2018, EGI will issue the note-holder warrants to purchase 867,152 shares of EGI's common stock at an exercise price in US dollars of $1.15 (calculated at the exchange rate prevailing at maturity and representing a premium of 20% over the US dollar-equivalent of the last reported sale price of EGI shares on AIM on February 28, 2017). If not exercised, the warrants will terminate five years from issuance.

· The promissory note is secured by a subordinated security interest in the assets of the Company.

Placement fees and related expenses amounted to approximately $100,000.

Special Note Regarding Forward Looking Statements

All statements, other than statements of historical fact, are forward-looking, including, without limitation, statements regarding: future operating results; market conditions and opportunities; timing and amount of expected orders and shipments; growing interest in EGI's core products; impact of new product releases and clinical sites on sales; new products expected to provide attractive growth opportunities; outcome of clinical trials and their ability to assess safety and feasibility; reviewing potential financing options and their ability to assist the Company in maximizing its growth opportunities; and confidence about the revenue opportunities for the first quarter and year of 2017. Words such as "believe," "anticipate," "expect," "estimate," "project," "will be," "will continue," "will likely result," or words or phrases of similar meanings identify forward-looking statements. Forward-looking statements reflect management's current expectations, plans or projections and are inherently uncertain and actual results could differ materially from such expectations, plans or projections. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Risks and uncertainties that could cause actual results to differ significantly from management's expectations include, but are not limited to, the following: EGI's limited financial and other resources; potential period-to-period revenue or expense fluctuations; production factors and timely access to raw materials; industry cost factors and conditions; competition; impacts of the repeal of the Affordable Care Act and new Presidential administration in the US; government regulation; labor disputes; technological changes; continued strengthening of the US Dollar against other world currencies; and other international business risks. Additional risks and uncertainties not presently known to EGI or which EGI currently deems immaterial also may impair its business or operations. EGI does not intend to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 Notes to Editors

Electrical Geodesics, Inc. in Summary

Founded in 1992, EGI designs, develops and commercialises a range of non-invasive neurodiagnostic and neuromodulation products used to monitor, interpret and modulate brain activity, based on its proprietary dense array electroencephalography ("dEEG") platform technology. The Company's technology uses up to 256 sensors, providing much higher resolution brain activity data compared to conventional 8 or 16 channel EEG and is used in medical, clinical and research settings in a diverse range of applications including important areas such as the diagnosis and monitoring of epilepsy, neurosurgical planning, sleep assessment, and many others.

EGI's dEEG systems, available in the GES 300 and now the GES 400 lines, capitalise on the Company's unique Hydrocel Geodesic Sensor Net which allows faster, easier, and more convenient placement of many EEG sensors in an even distribution over the entire scalp, providing more accurate and precise diagnosis and measurement. EGI's technology is now widely used in neuroscience research laboratories and is becoming more commonly used in clinics, care centers, and hospitals around the world. Data is measured and visualised using EGI's proprietary amplifier technology and software, providing a complete, advanced, high-resolution EEG platform. The Company's products are compatible with multiple diagnostic and imaging technologies, including magnetic resonance (MR) imaging, functional MRI (fMRI), and magneto-encephalography (MEG).

See our website www.egi.com