MicroThermX® Microwave Ablation System

Our MicroThermX^® Microwave Ablation System (“MicroThermX^®”) is a compact, mobile, state-of-the-art, proprietary system that includes a microwave generator, single-patient-use disposable antennas, and a thermistor-based temperature monitoring system. The innovative design of the MicroThermX^® is the first of its kind that allows delivery of higher power levels using a single generator. The MicroThermX^® utilizes innovative, patented, synchronous phased array microwave delivery technology that was developed by us. This proprietary microwave technology provides larger and more uniform size of ablations during a single procedure. The MicroThermX^® introduces into our product line an innovative disposable antenna (“SynchroWave antenna”). Up to three SynchroWave antennas are used in each ablation treatment, which will provide a significant ongoing revenue stream after the sale of the system. The soft tissue ablation world market potential is estimated to exceed $2.3 billion.

In August 2010, the FDA granted us a 510(k) clearance to market the MicroThermX^® for ablation of soft tissue. Clearance from the FDA of the 510(k) Premarket Notification submission authorizes the commercial sale of the MicroThermX^® in the United States. We have also received CE Marking for the MicroThermX^®, which allows us to market the MicroThermX^® in the thirty countries that comprise the European Union (“EU”) and the European Free Trade Association (“EFTA”). CE Marking is also recognized in many countries outside of the EU, providing us the ability to market the MicroThermX^® to a number of international markets. As further discussed below, we have established distribution in a number of EU countries and have accepted purchase orders for and have shipped both MicroThermX^® systems and SynchroWave antennas.

In June 2011, we completed nationwide sales coverage for the MicroThermX^® line of products through signing exclusive agreements with leading specialty distributors and hiring additional regional direct sales management. This increased sales activity has resulted in a full schedule of clinical evaluations and an increase in the number of sites evaluating MicroThermX^® equipment for purchase. In addition, we have placed a select number of MicroThermX^® systems with pivotal, high-profile, interventional oncology opinion leaders. These medical facilities continue to reorder disposable SynchroWave antennas, validating the ongoing revenue stream we anticipate. Existing users of the MicroThermX^® continue to report positive clinical results in the treatment of cancerous tumors.

We recently announced that the Company is approaching 100 patients successfully treated with the MicroThermX^® at hospitals throughout the U.S. and Europe. Clinicians have used the MicroThermX^® to treat patients with cancers of the liver, lung, bone, and kidneys. These evaluations represent an important milestone in the MicroThermX^® sales cycle. However, with hospital capital budgeting, committee review and other approvals, the sales cycle for the MicroThermX^® may extend to well over six months. Political and economic uncertainty in the industry due to recent government healthcare reform is also slowing hospital acquisition of capital equipment at all levels. This makes it difficult to predict when significant revenues from the sale of the MicroThermX^® and related disposables will begin.

To bolster our MicroThermX^® sales line and potentially accelerate and maximize revenues, we have recently added a MicroThermX^® fee-per-use equipment rental program. We have experienced ongoing success with a MicroThermX^® fee-per-use equipment rental program in the Salt Lake City, Utah area. The Company launched a program with 5 hospitals in Salt Lake City that allowed hospitals to purchase disposable SynchroWave antennas and pay a fee-per-use equipment rental for the treatment of patients using the MicroThermX^®, dramatically shortening the sales cycle. This rental program has generated a revenue stream from sales of disposable SynchroWave antennas combined with highly profitable equipment rental fees, and we believe it will produce the same successful results throughout the U.S.

With our United States sales and distribution network in place for our MicroThermX^® family of products, we are shifting our emphasis on Europe and other international markets. We recently hired a Director of International Sales, have met with several international distribution firms and have entered into exclusive distribution agreements with specialty distribution firms in Italy, Ireland and Northern Ireland, and The Netherlands. These three firms have purchased MicroThermX^® systems and SynchroWave antennas. We have provided these distributor sales teams with extensive hands-on training to ensure success in clinical use of the MicroThermX^® system. We continue to build our European sales and distribution network to expand upon a dedicated team of medically trained sales representatives presenting the advantages of the MicroThermX^® to interventional oncologists throughout key markets in Europe. We anticipate reaching agreements with additional international distribution firms, and we anticipate additional international shipments of the MicroThermX^® and supplies of SynchroWave antennas in calendar year 2012.