Trading Update

Electrical Geodesics, Inc.

Trading Update

EUGENE, OREGON, US, 13 January 2017 - Electrical Geodesics, Inc. ("EGI" or the "Company"), a leading neurodiagnostic medical technology company, today provides a trading update for the year ended 31 December 2016.

On a preliminary, unaudited basis, the Company expects to report revenues for the year ended 31 December 2016 of approximately $14.3m, an increase of 5% over the $13.6m reported for 2015 but with revenues for the second half of 2016 some 9% lower than the Company's record second half performance in 2015. A weaker than expected fourth quarter reflects a significant number of sales opportunities moving into 2017 with customers reporting uncertainties arising from the US election results and the impact on research funding and the likely efforts to repeal the Affordable Care Act. Indications are that a portion of the US commercial opportunities that were expected to close in the fourth quarter of 2016 will likely finalise in the first half of 2017. International sales continue to be challenged by the strength of the US dollar but the major markets in the EU and Asia showed growth over 2015.

On a preliminary, unaudited basis, and in addition to the above revenues, the Company expects to recognise grant income of approximately $2.0m for 2016 (2015: $1.5m).

The Company's cash reserves as of 31 December 2016 were approximately $1.1m ($1.1m at 30 June 2016). Outstanding borrowings under the Company's revolving credit facility as of 31 December 2016 were $1.8m ($1.0m at 30 June 2016) and eligible collateral provided remaining availability of approximately $0.5m but was limited by the $2.0m maximum borrowing amount on the credit facility. EGI has recently entered into an amendment to the credit facility increasing the maximum borrowing amount from $2.0m to $2.3m. The credit facility bears interest at the prime rate plus 6.0%, with a minimum rate of 9.5%. The present borrowing rate is 9.75%. Generally, availability under the credit facility is the sum of 85% of eligible accounts receivable plus a portion secured by inventory which is calculated as 15% of eligible accounts receivable, or $200,000, whichever is less.

During the fourth quarter of 2015 and to a lesser extent the first quarter of 2016, the Company incurred and deferred $0.4m of legal, accounting and other costs that were in support of a planned financing. Due to poor market conditions, this particular financing was terminated and in September 2016 the Company expensed the deferred offering costs in their entirety.

The Directors are carefully managing the Company's cash flows whilst also reviewing potential financing options to increase the working capital available to the Group which would assist the Company in maintaining necessary levels of liquidity and maximizing its growth opportunities. The Directors expect to renew the Company's credit facility which falls due in June 2017. Some combination of new financing and additional cost controls will however be required in order for the Company to maintain adequate levels of liquidity throughout 2017.

Don Tucker, CEO of EGI, commented: "I am pleased that despite the market delays in the second half of the year, EGI still delivered revenue growth for 2016 although not quite at the level which had been expected earlier in the year. I believe the strong order opportunities for the early months of 2017 reflect the delay rather than loss of a significant portion of those sales that had been expected to close in the final quarter of 2016. It is still early in 2017 but we will have better visibility on the outlook for 2017 at the time of publication of the Group's final results which are expected to be released on 6 April 2017. Operationally, EGI achieved strategically critical milestones in 2016 with the release of our GTEN and GeoSource 3 systems to the research markets and the release of our flagship, next-generation Net Station 5.3 software for clinical laboratories. We expect that these products will continue to impact favourably our sales worldwide in 2017. The increasing levels of sales of dEEG systems to high-end epilepsy evaluation centers, both in the US and in Europe, bodes well for our revenue projections. The adoption of dEEG as a standard of care by several European neurology societies will further support continuing clinical growth."

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.

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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

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