EGI.L Regulatory News (EGI)

6 March 2015

Electrical Geodesics, Inc

Proposed Placing of 3,076,923 new Common Shares at 65 pence per share

EUGENE, OREGON, US, 6 March 2015 - Electrical Geodesics, Inc. ("EGI" or the "Company"), a leading neurodiagnostic medical technology company, has agreed to raise £2 million (approximately £1.7 million net of expenses) through the conditional placing of 3,076,923 new Common Shares to existing and new investors at 65 pence per shares (the "Placing Price") pursuant to the terms of the Placing Agreement. EGI intends to apply the funds for general working capital purposes and to fund an exploratory clinical study for GTEN in epilepsy.

The Placing is conditional (amongst other things) upon the passing of the Resolution to be proposed at the Special Meeting of the Company to be held at the Company's office at 500 East 4th Avenue, Suite 200, Eugene, OR 97401 USA at 9.00 a.m. (US Pacific time) on 16 March 2015. If the Resolution is passed, it is anticipated that dealings in the Placing Shares will commence on 17 March 2015.

Accordingly, the Directors have convened the Special Meeting at which Stockholders will, if thought fit, disapply the provisions of paragraph C of Article 4 of the Company's Certificate of Incorporation in respect of the allotment of the Placing Shares. The Circular, the Notice of the Special Meeting, Form of Proxy and Form of Direction will be posted to Stockholders on 6 March 2015. The Directors believe the Placing to be in the best interests of the Company and its Stockholders and recommend that you vote in favour of the Resolution. The Directors have irrevocably undertaken to vote in favour of the Resolution in respect of their legal and/or beneficial stockholdings amounting, in aggregate, to 15,779,103 Common Shares representing approximately 64.5% of the Existing Share Capital.

Don Tucker, Chairman and CEO commented: "We are delighted to have this support from new and existing shareholders. We look forward to bringing our strong, near-term development pipeline to market to supplement our existing product portfolio and drive sales growth."

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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

Glossary

Background to the Placing

EGI designs, develops and commercialises a range of non-invasive neurodiagnostic products used to monitor and interpret 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.

Founded in 1992, and based in Eugene, Oregon, USA, the Company has operations in the UK, India, China, the Netherlands and Switzerland and has some 90 employees. Sales are driven by EGI's sales team of 17 employees who are supported by a strong international network of distributors. Over 1,000 EGI systems have been installed in over 740 laboratories at over 600 customer sites and in over 50 countries, generating revenues from the initial sale of equipment and from sales of on-going services and consumables. In addition, EGI has received over $28m of US government grant funding since inception, working alone and in conjunction with certain of its customers to deliver numerous research publications which in turn help attract further interest in the Company's technology.

EGI's dEEG systems, available in the GES 300 and the new GES 400 lines, capitalise on the Company's unique Hydrocel Geodesic Sensor Net (the ''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 centres 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 has achieved consistent growth in its customer base and strong traction in translational and clinical sites as the advantages of dEEG as an imaging tool are recognised and the knowledge of the clinical utility of dEEG and neuromodulation advances. The addition of routine EEG products and a broader product offering is expected to allow access to a wider customer base. EEG is a reimbursed procedure in many health care systems and the Directors believe that moves are underway in a number of territories for differential reimbursement for dEEG, which would further support the clinical advantages of EGI's technologies.

At the time of the Company's IPO in April 2013, the stated aims were to deliver the Company's understanding of brain physiology and advanced dEEG technology to a wider range of customers as a diagnostic and monitoring tool, and to expand into new therapeutic areas as both an imaging technology to map brain activity for use in areas such as the planning of brain surgeries and ultimately as a therapeutic intervention. Through continued innovation, the Company believes it can retain its strong position in the research market whilst delivering products with regulatory clearance for medical and clinical use that take it into the much larger clinical markets for EEG monitoring and neuromodulation.

The Company uses a number of distributors to enhance its international sales and seeks strategic partnerships in order to build its geographic and market reach. Examples announced since the IPO include relationships with Hitachi to co-sell their NIRS products with the Company's dEEG, Soterix in tDCS and ElMindA Ltd, where EGI's dEEG systems are sold alongside the FDA cleared BNATM brain analysis system that is being used in the assessment of concussion.

Building on its proprietary technology base, the Company is now poised to move into the fast growing neuromodulation market through use of its brain imaging technologies and the development and planned commercialisation of GTEN for a range of indications, initially selling as a research tool for use in experimentation and clinical evaluation and also as a therapeutic intervention.

EGI's dEEG systems Dense-array EEG, using up to 256 electrodes, can provide significantly greater levels of information and accuracy about the brain's function and electrical activity than lower-channel count EEG systems. Alone or in combination with other imaging technologies such as MRI, PET and NIRS, EGI can build accurate estimations of the activity and function of certain parts of the brain or, for example, the likely sites causing seizures in epilepsy patients.

The Company's proprietary Sensor Net allows the rapid and painless placement of the sensors or electrodes on a range of patients from premature babies through children, adults and difficult-to-monitor patients, and is a key differentiating factor for EGI's products. EGI continues to develop its

Sensor Net product range and has introduced several new sizes to meet customer demand. The MicroCel 100 Sensor Net (the ''MicroCel Net'') is nearing full commercial launch. With its lower pedestals for the electrodes, the MicroCel Net allows simultaneous use of dEEG with technologies such as MEG and TMS. The Company is also planning to develop a Sensor Net that interlinks sensors from technologies such as NIRS allowing concurrent use of these technologies.

The CE marked GES 400 platform was launched in mid-2013 and received FDA 510(k) approval in February 2014. With on-board computing capability, the powerful amplifiers offer both research and clinical customers a quick, powerful EEG system capable of modular upgrade, either to higher channel count systems, as part of multiple linked systems, or multi-modal capability allowing the integration of sister tools and products. EGI's software, algorithms and electrode positioning tools together allow accurate pictures of the location of function of certain parts of the brain when used alongside MRI images of the subject's skull. This creates an ''image'' of electrical activity in the brain, with potential utility in multiple areas of neurology, including epilepsy, depression, autism, planning brain surgery, traumatic brain injury, schizophrenia, stroke, tinnitus and concussion.

Product enhancements

EGI continues to invest in producing the next generation of products for its customers. Projects are underway to ensure compatibility between all Company hardware and software, ensuring customers can acquire a range of EGI products suitable to their needs, each of which works seamlessly with the other. In the coming months, the Company intends to release further software packages and software upgrades which are expected to provide enhanced features such as the use with video cameras which is important in areas such as epilepsy monitoring where physical signs can be linked to EEG activity with milli-second precision.

Clinical customers require easy, secure and reliable storage of data. The ability to stream data from the Company's Net Station product to network storage is vital and although interim measures are already available, EGI is planning to include this feature in its next software release to be followed by the launch of its NOLIS database product in the first half of 2015 which would allow integration with database systems to international HL7 hospital standard. Epilepsy monitoring centres are important users of EEG, with multiple patients monitored over extensive timeframes. EGI is now able to offer competitive solutions in this core market, with a range of easily applied Sensor Nets suitable for overnight monitoring; modular networkable amplifiers and portable, ambulatory systems; rapid intuitive software; database capabilities and integration with physical measurements.

Brain mapping & visualisation

Historically, researchers and clinicians have studied brain activity through a number of invasive technologies, including intra-cranial electrodes and stimulators. Whilst EGI products are being adapted to work alongside intra-cranial grids to deliver enhanced information, the Directors believe the Company's 256-channel non-invasive monitoring can localise the onset of seizures, reducing the need for invasive recording. When used in conjunction with EGI's photogrammetry system and GeoSource and GPS software tools, the exact position of the electrodes can be mapped onto a 3-dimensional MRI image of the subject's brain, thus allowing for example, the precise identification and localisation of, the focus of epileptic seizures. Improved versions of the GeoSource and GPS source imaging software, an improved photogrammetry system and additional head-modelling tools are scheduled for launch within the coming months.

EGI has developed workflows that are now being used in several leading teaching hospitals and epilepsy centres to guide brain surgery for epilepsy. These have the potential to lead to compelling product offerings in the planning for general brain surgery through the non-invasive identification of motor areas of the cortex, currently identified through direct stimulation of the brain on patients who remain awake during surgery. Epilepsy monitoring and surgical planning are core to EGI's clinical strategy.

Neuromodulation - therapeutic intervention

Neuromodulation, using electrical or magnetic stimulation to modify the brain's functioning, is increasingly being accepted as an adjunct to or replacement for pharmacological treatment of major neurological conditions and is an area of growing research interest with numerous and rapidly growing numbers of research papers and clinical studies. DBS technologies are in wide clinical use in areas such as Parkinson's disease and the treatment of depression using TMS technology has received clearance from the FDA. Neuromodulation, a market currently estimated to be worth around $6bn, is a natural progression for EGI, building on the clinical strength of EGI's products in neurosurgical planning and brain function mapping.

EGI's technology is already being used to identify or localise the position of the sources of epileptic seizures and to assist brain surgery. The enhanced GeoSource 3.0 software is nearing completion and launch is planned in mid-2015, with FDA submission for medical use soon after. Proprietary computational anatomy software captures head tissue properties from MRI and high performance computing is used to model the brain's electrical fields propagating through the conductive head tissues. EGI is able to achieve detailed mapping of cortical activity which the Directors believe will be a key driver of future clinical sales in general neurosurgical planning and neuromodulation.

The Company's novel neuromodulation technology, GTEN, integrates the GES 400 platform technology with capabilities in matching anatomical and electrical features of the head, and its proprietary computational simulations, to deliver highly specific neuromodulation. This is achieved by the delivery of small amounts of electric current to excite or suppress the activity of neurons in specific areas of the brain. Each of the 256 electrodes can be assigned either to modulate or to record electrical activity.

This integrated approach capitalises on EGI's intellectual property and knowledge of the physiology and conductivity of the skull and brain potentially to deliver very precise electrical currents to the targeted region of the brain with immediate feedback of results through simultaneous EEG recording. Subject to receiving CE-mark, EGI intends to launch GTEN for limited research use in mid-2015 and sees opportunities to build revenues through sales to researchers and for use in controlled clinical studies in multiple areas of poorly or unmet medical need including depression, schizophrenia, tinnitus, chronic pain, Parkinson's disease, neuro-rehabilitation with traumatic brain injury, stroke, limb transplant, Alzheimer's disease, Attention Deficit Hyperactivity Disorder, autism and migraine.

Competition

There are a number of established neuromodulation techniques dominated by invasive, implanted technologies. Competition includes existing devices from companies such as Medtronic, Inc., Boston Scientific Corporation, St Jude Medical, Inc. and Cyberonics, Inc. and earlier stage technologies such as TMS and tDCS.

DBS for the treatment of Parkinson's disease through implanted electrodes is the dominant technology in this market. The Directors believe that EGI's dEEG technology could in certain circumstances enhance DBS by guiding the optimal placement of the implanted electrodes.

TMS, which delivers electrical neuromodulation through a magnetic coil held near to the skull, is an established technology cleared by the FDA in the treatment of depression in certain patient groups. EGI's research has demonstrated that EGI's dEEG and MicroCel Net will allow the simultaneous recording of the impact of TMS as it is delivered, enhancing the precision and effectiveness of the technology.

tDCS is being researched in multiple areas of clinical use. Currently marketed tDCS devices typically use a smaller number of larger electrodes than EGI's GTEN product to deliver electrical stimulation to the brain. As announced in June 2014, EGI has entered into a one year, renewable agreement to distribute certain tDCS products manufactured by Soterix Medical Inc. (Soterix) for transcranial stimulation and transcutaneous spinal stimulation for use under investigational device exemption (IDE) studies. Soterix's products are being used in a number of clinical studies at leading medical research centres in the study of the non-invasive neuromodulation for treatment of major depression, attention disorders, chronic pain and brain injury rehabilitation.

Commercial strategy

The GTEN product (comprising small hardware adaptors and the GTEN targeting software) is nearing completion, and is expected to be available for sale for use in research and controlled clinical studies from mid-2015. The Directors believe that GTEN should then deliver an immediate revenue stream from new and existing research customers. GTEN will be offered as an upgrade module to existing customers with GES 400 systems where hardware changes, if any, are expected to be minor and to new customers as part of an entire integrated EEG/GTEN system.

The GES 400 EEG platform was designed as an upgradeable, multi-functional product and customers can benefit from its modular nature, choosing to upgrade lower-channel count products to higher density or adding modules such as GTEN to allow greater functionality.

Following clinical studies, and approval for clinical use, EGI expects that it will be able to generate significant revenues from the sale of dEEG systems to clinicians, including GTEN software and consumables and will evaluate the options of providing remote head modelling, targeting services or side effect monitoring, or providing GTEN on a SAAS model. Moreover, the Directors intend to evaluate opportunities to collaborate with technology partners to maximise the commercial value of GTEN in epilepsy and other indications.

Neuromodulation for the treatment of epilepsy

Epilepsy arises in infants from developmental abnormalities in brain tissue, whilst trauma is a major cause among both children and adults. There is a high prevalence of epilepsy (~85 million patients globally) with significant levels of unmanaged or poorly managed patients from infants through to adults and large numbers of drug-resistant or drug-refractory patients. Research studies have indicated the potential for neuromodulation to reduce the incidence and severity of seizures.

Evidence from international research studies shows that even somewhat crudely targeted tDCS and TMS can suppress spikes and seizures for a period of days or even weeks. EGI has an established position in epilepsy. Its dEEG systems are now used in leading epilepsy centres worldwide, and are being applied by leading epileptologists to identify the position of the sources of epileptic seizures to assist in brain surgery. The Company's global presence has provided access to KOLs' willing to participate in clinical trials aimed at an FDA-approved treatment. These factors have encouraged the Company to choose epilepsy as the first area in which to evaluate GTEN.

Potential use of GTEN in the treatment of epilepsy

GTEN delivers precise electrical currents to specific regions of the brain using EGI's core GES 400 technology platform and can therefore deliver targeted electrical modulation with immediate feedback of results via dEEG recording. GTEN uses the brain's natural electrical fields to plan transcranial electrical neuromodulation. A computational model calculates the optimal pattern of ''sources'' and ''sinks'' in the 256 dense array of electrodes, and the patient's individual head model shows the specifics of electrical pathways. Precision targeting of treatment is expected through EGI's proprietary Discriminative Cortical Surface Vector ("DCSV") targeting which seeks to maximise current to target, and minimise current to non-targets.

Pre-clinical testing with the GTEN prototype system has shown that conventional tDCS manipulations, such as of the excitability of areas of the motor cortex using GTEN, work as expected from published literature. GTEN has been demonstrated to modulate cortical activity noninvasively, and if successful and subject to regulatory clearance, the Directors believe that the Company's existing sales channel would be able to market a successful GTEN epilepsy treatment to clinical customers.

Clinical development plan

The Company proposes to conduct a feasibility and safety study at two sites seeking to demonstrate the effectiveness of GTEN in the temporary suppression of seizures in drug-resistant epilepsy. This study will seek to establish that GTEN is safe in not increasing the number of seizures and effective in reducing the incidence of interictal epileptiform discharges (spikes) in drug-refractory epilepsy patients as a primary endpoint. The patient numbers will vary depending on the level of treatment effect but the initial expectation will be to recruit and treat 20-30 patients over the next 12 to 18 months. The feasibility study will be conducted at Harborview Medical Centre in Seattle and at EGI's own facility under the direction of an outside neurologist although the other leading epilepsy centres remain keen to be involved in the assessment of the technology. EGI plans to develop reimbursement strategies as the study progresses. Total costs for the feasibility study are expected to be around $0.3m- $0.5m, depending on a number of factors, including the speed of patient recruitment, patient numbers, treatment effect and length of treatment with results expected in mid-2016.

If the feasibility study is successful, a review of the design of pivotal studies with the FDA and potential trial investigators will follow on from safety and feasibility results with the same primary endpoint of the reduction of spikes and a possible secondary endpoint of the reduction in seizures. At that point the Company will review the options available to it in order to run pivotal studies, based on the success of the study, the uptake of GTEN in research, the availability of relevant grant funding, potential partner support and other finance. Support and interest in study participation in a wider study has been received from leading epilepsy research centres, including Harborview Medical Center University of Washington, Beth Israel Deaconess Medical Center, Harvard Medical School, and Stanford Hospital Epilepsy Center in the U.S., and Huashan Hospital, Shanghai, China.

Regulatory status

As potentially the first non-invasive neuromodulation device under development to reduce seizure incidence, understanding the pathway to approval as a clinical treatment is important. EGI has engaged with the FDA over the last nine months in relation to the design of the upcoming feasibility and pivotal studies. The FDA has advised that whilst tDCS is generally a technology designated with No Significant Risk (NSR), given the special concerns of delivering any neuromodulation to patients with epilepsy, the feasibility study requires an Investigational Device Exemption (IDE) which has now been received by the Company, as announced on 2 March 2015. In the longer term, the Company interprets the feedback from the FDA pre-submission meeting to indicate a de novo 510(k) is the likely path for regulatory approval.

Neuromodulation for the treatment of depression and other therapeutic areas

Depression is an attractive market for neuromodulation given its high incidence, poorly-treated patient population and proven relationship to abnormal neuronal activity. 25-30% of all patients with major depression are still refractory after trying two drugs. Data from the US Center for Disease Control state that at any given point in time 4.1% of the population has major depression and anther 5.1% has some other form of depression. TMS is already cleared as a neuromodulation treatment in severe depression, and the Directors believe there are opportunities to improve TMS and also DBS through the simultaneous use of dEEG to guide the treatment and monitor its effect. Furthermore, the Directors believe GTEN itself could be an effective tool in treating depression.

At this stage the Company is not intending to finance clinical studies in depression but will look for partnering opportunities or grant funding in order to demonstrate the utility of its products in this therapeutic area. The Company's GES 400 and GeoSource products are already being used by researchers in conjunction with DBS treatments with the aim of improving the treatments' accuracy and effect.

EGI is in negotiations to gain distribution rights to TMS devices and neuro-navigator software systems, which EGI might then seek to clear for clinical use through a predicate device FDA 510(k) process. Compatibility of EGI's GES 400 system with TMS devices and EGI's new MicroCel Net is expected by the Directors to drive revenues from both research and clinical markets in 2015. It is also the Company's intention to sign a distribution agreement for a TMS device, for launch in mid-2015.

The Placing

The Company is proposing to raise £2 million (approximately £1.7 million after expenses) pursuant to the Placing by the allotment and issue of 3,076,923 Placing Shares at the Placing Price representing a discount of 54% to the EGI.L closing share price of 142p on 5 March 2015 and a 54% discount to the EGIC.L closing share price on 5 March 2015. Under the terms of the Placing Agreement, Peel Hunt has agreed, as agent of the Company, to use its reasonable endeavours to place, conditionally, inter alia, on Admission, the Placing Shares with institutional investors at the Placing Price. Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM and dealings in the Placing Shares is expected to commence on 17 March 2015.

The Placing Shares being placed pursuant to the Placing will represent 11.2% of the Enlarged Share Capital. The Placing Shares will rank pari passu with the Existing Share Capital. The Placing Agreement is conditional upon (amongst other things) the Placing Agreement not having been terminated, the passing of the Resolution at the Special Meeting and Admission occurring on or before 08.00 a.m. on 17 March 2015 (or such later date as Peel Hunt and the Company may agree, not being later than 08:00 a.m. on 24 March 2015).

The Placing Agreement contains customary warranties, representations and an indemnity given by the Company in favour of Peel Hunt in relation to, inter alia, the accuracy of the information in this announcement and other matters relating to the Company and its business. The Company has agreed to indemnify Peel Hunt in relation to certain liabilities which it may incur in respect of the Placing. Peel Hunt has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a breach of the warranties or a material adverse change.

The Placing Shares are expected to be delivered in certificated form by 26 March 2015.

Current Trading and Outlook

On 15 January 2015, EGI reported the following information, all of which is on a preliminary, unaudited basis. The Company expects to report full year revenues for 2014 of $13.2m (2013: $11.6m), an increase of some 14% year on year with sales in the second half of the year some 20% ahead of the equivalent period in 2013.

In addition, the Company recognised grant income of $0.6m in the year. Orders valued at $0.3m were received before the year end but were not able to be shipped and further orders for $0.5m were received immediately after the year end, delivering a strong start for 2015.

A total of 139 GES EEG systems and upgrades were shipped in 2014 (2013: 99), an increase of 40% and 15 Avatar portable EEG devices were also sold (2013: 4), delivering a very solid increase in the Group's customer base. GES systems are now installed in 740 laboratories or clinics, an increase of 92 in the year and the installed base in translational and clinical sites rose by 36 to 185 clinics.

Increased sales were seen across the entire dEEG product range, with average system prices in the second half of the year higher than seen in the first half. North American sales were $5.4m (2013: $5.6m) with US sales slightly ahead of the prior year but with a reduction in Canadian orders. International sales were strong with Europe contributing revenues of $4.6m (2013: $3.5m) and Asia $2.9m (2013: $1.9m).

The Company's cash reserves as at 31 December 2014 were approximately $1.2m. In addition, the Company has a $1.25m bank credit line secured on the assets of the business and which currently expires on 31 March 2015.

A full copy of the statement can be found on the Company's website (www.egi.com).

EGI's strategic goals for the near to mid-term are as follows:

· to maintain EGI's position as the leading provider of EEG solutions and tools to the neuroscience research community;

· to provide clinical customers with a full range of compatible, upgradeable solutions for their EEG imaging and neuromodulation needs and build market share;

· to establish EGI's technology as the leading solution for targeting and imaging brain activity to map and guide brain surgery in epilepsy and general neurosurgery using dEEG and GTEN;

· to establish GTEN as a leading neuromodulation tool in research and deliver effective, targeted non-invasive neuromodulation in epilepsy and build clinical utility; and

· to improve market share through strengthening of sales channels, strategic alliances, continued product improvement and innovation.

Use of Proceeds and Outlook

The Company intends to raise gross proceeds of £2m pursuant to the Placing. It is expected that the net proceeds of £1.7 million will be applied to general working capital purposes and to fund the exploratory study for GTEN in epilepsy.

The Company believes that the additional working capital provided by the Placing will be key to driving anticipated sales growth in excess of 20% in the current financial year, supported by the current sales momentum, the planned launch of GTEN for research use and a number of new and improved products that have been financed by the IPO proceeds and are now scheduled for launch over the next 6 to 9 months. The Directors are also targeting a gradual improvement in gross margins, driven by increased sales of higher-margin software and other products and efficiencies of scale and a tight control of costs, looking to keep increases at around 15% p.a. in order to leverage the sales growth to an increase in operating margins. Increases are expected in sales, marketing and support costs in order to deliver the planned increase in sales and customer base. Underlying research & development costs are expected to increase by a small amount and the Company also intends to fund the feasibility study, which is expected to cost around $0.3m-£0.5m.

The Directors intend to develop the value of the underlying diagnostic and monitoring business and to deliver and retain value in GTEN, bringing the feasibility study to completion by mid-2016 whilst assessing options to develop the product fully, including assessing relevant grant funding and support from strategic industrial commercial partnerships.

The Directors believe that the net proceeds of the Placing together with existing resources will be sufficient to support planned operations for at least twelve months from the date of the Admission.

The Directors continuously monitor the Company's working capital requirements based on, inter alia, the take up of GTEN in research markets, the outcome of the planned GTEN feasibility study, and the delivery of the core products and will adjust activities, particularly development expenditure, accordingly.

The Placing is conditional upon the passing of the Resolution at the Special Meeting. Stockholders should be aware that if the Resolution is not approved at the Special Meeting, the Placing will not proceed and the Company will not have sufficient working capital to fund its operations unless the Directors can secure alternative financing arrangements which may or may not be available, or may be available on terms which may be less favourable to the Company than if the Resolution is passed.

VCT Eligibility

The Directors consider that neither the Company nor its subsidiaries have, in the 12 months immediately prior to the Placing, received any investments (including under EIS and from VCTs) pursuant to a measure approved by the European Commission as compatible with Article 107 of the Treaty on the Functioning of the European Union in accordance with the principles laid down in the current Community Guidelines on State Aid to promote Risk Capital Investments in Small and Medium-sized Enterprises. Accordingly, investment in accordance with the Placing may be sought from VCTs, investors seeking EIS reliefs and any other State Aid risk capital investors up to maximum amount of £5 million in aggregate.

Definitions

The following words and expressions shall have the following meanings in this announcement unless the context otherwise requires: