Imaging Dynamics Provides Corporate Update.

Business/High-Tech Editors and Medical Writers

CALGARY, Alberta--(BUSINESS WIRE)--May 14, 2001

The spotlight on the emerging digital imaging world gains strength each day as key players, such as Imaging Dynamics, move forward in helping to shape this new landscape. The management of Imaging Dynamics Corporation (IDC)(CDNX:ID) would like to provide you with a brief overview of the Corporation's past challenges and recent victories.

Past Challenges

From a research and development perspective, the Corporation has responded to customer feedback for improved image quality through software enhancements, and increased efficiency through a new lens design. Strict quality assurance protocols have been developed to ensure regulatory compliance and effective exception handling procedures. After 4 years of research and development, the year 2000 saw IDC begin the natural progression toward building a company positioned to generate revenues. With our patented technology complete, and business partners showing interest, IDC geared up to deploy and market the Xplorer 1700 digital x-ray system. Partnering with A.L.I. Technologies (ALI) and Analogic Corporation (Analogic), two recognized industry leaders in the medical informatics arena, resulted in further strengthening IDC's position. The ALI partnership provides IDC a robust and industry accepted end-user interface while Analogic provides the Corporation with Federal Drug Administration (FDA) certified image processing algorithms to be used within the Xplorer solution system. Analogic's algorithms are considered to be among the best in the field of digital image processing.

Throughout 2000, Imaging Dynamics encountered many twists and turns while building the foundation for a potentially commercially successful company. A volatile technology stock market, coupled with the challenges of an emerging industry, caused the company to re-evaluate all ongoing activities and to focus on securing immediate revenue streams.

However, the vision and foundation remains the same; deploy and manufacture an affordable, efficient high-resolution digital radiography detector and diagnostic image management system that eliminates the need for film in general human diagnostic imaging. As 2000 concluded, Imaging Dynamics had made significant progress in the transition toward becoming a commercially mature company.

IDC's first quarter results, for the period ending March 31, 2001, will soon be released. The statement will show a continued loss and investment in infrastructure. However, the Corporation's management also incorporated stringent expenditure approval processes and implemented many cost rationalization decisions to effectively manage the current financial resources. This included personnel reduction in management and administrative support staff as well as reduced infrastructure support costs. The efforts in this area have already made a positive impact resulting in a 31% reduction in general administration expenses during quarter one of 2001 as compared to the previous quarter, and this will pave the way for favorable results in future quarters.

Recent Victories

Sales and Marketing

From a sales and marketing standpoint, since the Radiological Society of North America (RSNA), the Corporation has secured conditional and firm orders for 44 systems. This includes a 31 unit commitment from Integra Medical Imaging of Australia, a 6 unit conditional order from MEVA, a German reseller, a 4 unit conditional order from Medisend, Inc., a medical equipment reseller based in Colorado, one from the Boston Medical Centre in Boston, Massachusetts an order from Cross Cancer Institute in Edmonton, Alberta and one from Prince George Hospital, British Columbia. The Corporation also participated at the Healthcare Information and Management Systems Society's (HIMSS) trade show held in February in New Orleans and secured further leads.

Independent researchers have estimated that the digital imaging market in the U.S. alone to be $7.2 billion annually and management believes IDC is well positioned to capitalize on this market. As well, the Corporation continues to aggressively pursue other opportunities both from an end user and a channel sales perspective. Most recently, the Corporation partnered with A.L.I. Technologies Inc. (ALI) to act as a marketing channel for IDC's Xplorer system. As well, the two companies have agreed to implement co-operative marketing programs to leverage their respective product solutions.

Production and Manufacturing

From a production and manufacturing standpoint, the Corporation entered into an agreement with Channel Access Incorporated to outsource manufacturing. Based in Los Gatos, California, Channel Access will be responsible for product assembly, IT integration, regulatory compliance, procurement and testing for the Xplorer system. The partnership should allow the Corporation to meet the market demand for its Xplorer 1700 product while improving manufacturing efficiencies, lowering costs and managing its working capital requirements. The Corporation anticipates it will start producing Xplorer 1700 units by the end of this quarter and have the manufacturing capabilities fully ramped up by the end of the third quarter.

Evaluation Sites

The Corporation has gained a tremendous amount of knowledge from the evaluation sites to date and we appreciate the patience of the sites and our shareholders as we field-tested our technology. Based on customer feedback and test results, it became evident that technology works and works very well in most situations. Dr. John R. Mathisson, Head of Radiology at the Royal Jubilee Hospital in Victoria B.C., said, "The initial results of the Xplorer clinical trials are really exciting and very positive. We have overcome several obstacles and made considerable progress over the past few months. We are now producing some really quite superb images."

Michael Baker, President of IDC America said, "Even though we were very pleased with the results, we realized very quickly, based on our customer's feed back that the Xplorer 1000 did not meet all their needs. This resulted in the Corporation moving to the Xplorer 1700. The 1700 is designed to capture a larger area, with less radiation dose and better connectivity and image processing tools. A much improved ergonomic design was also incorporated."

Ron King, President and CEO, said, "While the Xplorer 1000 has clearly demonstrated the effectiveness of Imaging Dynamics' core technology, the 1700 includes additional functional attributes which are vastly superior in meeting all of the needs of a clinical setting. I believe, it places the Corporation in a significantly improved competitive position."

In conclusion, all key decisions made by the company over the past few months has been a deliberate step toward commercial viability. To this end, management has set some aggressive targets for its performance, including achieving profitable operations by year end, and is in the process of redefining its compensation plan to be tied to sales targets, profitability and cash positive operations.

About IDC

Imaging Dynamics manufactures the Xplorer system, an affordable, efficient, high-resolution digital radiography detector and diagnostic image management system that eliminates the need for film in general human diagnostic imaging. IDC believes that its product provides a price-to-performance ratio superior to competitive products. The Corporation has Health Canada approval and U.S. Food and Drug Administration marketing clearances.

Additional information is available on the web at www.imagingdynamics.com.

Statements in this release which describe IDC's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of IDC to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. IDC may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions. Known and unknown risks and uncertainties include: the early stage of commercialization of IDC's products; the infancy of the digital radiography industry in general; IDC's ability to manufacture its products with a sufficient level of quality and in volumes which satisfy market demand; the ability of IDC to establish direct and indirect sales channels; the ability of IDC to establish industry partnerships; IDC's ability to attract and retain key personnel; the strength and breadth of IDC's patents; and other factors relating to general economic conditions, specific industry conditions and IDC's particular situation.

The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this information.