Imagin Medical A 100,000X Improvement in Detecting Bladder Cancer

Imagin Medical Inc. has a clear mission. It expects that its dual-light, single-screen imaging system will set a new standard of care for doctors and surgeons in detecting bladder cancer. We believe Imagin (CSE: IME, OTC: IMEXF) can do just that. This is a rare chance to invest in a company with a breakthrough product that can quickly travel the path from unknown to market success. Imagin Medical (CSE: IME, OTC:IMEXF) has multiple strengths:

Imagin’s development and trials are focusing first on bladder cancer, a critical health issue in the US, Europe and Japan.

The i/Blue system should win FDA approval as its new system combines technologies already approved and widely trusted.

i/Blue offers a more than 100,000X improvement in sensitivity at revealing cancer cells compared to existing systems, which should significantly improve patient outcomes.

The Imagin system works with major brands of cystoscopes now in use—retrofitting , retraining, and peripheral costs are not issues.

Imagin’s management has deep medical marketing and product development expertise with a record of success.

Imagin Medical Inc. In Canada CSE: IME In the U.S. OTC: IMEXF Current price: $0.16 12-month target: $0.86 Buyout target $3-$4

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Imagin Medical—Investor’s Overview Imagin’s i/Blue system is a disruptive technology with the potential to achieve multimillion-dollar sales and reward investors richly. It takes a daunting array of competencies to execute all the scientific and medical issues along with engineering, financing, marketing, and manufacturing concerns that stand between a good idea and market success. We think Imagin Medical, located in the Boston, MA, amongst a super-cluster of biotech enterprises, is one of those special companies that can pull it all together. Breakthrough Technology Imagin’s i/Blue imaging system, designed to be used in cystoscopic surgery for bladder cancer, promises to be five orders of magnitude (100,000X) more sensitive than all its competition. Significant Healthcare Benefits Imagin’s system will allow surgeons to begin operations more quickly—within 15 minutes after dye is administered to the bladder through a catheter. Current best systems cause a 1-hour delay, a logistical nightmare in crowded hospitals. Its greater sensitivity will allow doctors to remove diseased tissue more thoroughly—which is key to preventing recurrences.

Pragmatism and Functionality Imagin’s practicality will be a decisive selling point. The i/Blue unit accepts major brands of cystoscopy wands that urologists use today. That means familiar, safer, conditions in use and less re-training for the entire health team. The combined white light/blue light image also allows the surgeon to operate using a single screen instead of two screens (one diagnostic, one showing actual tissue), which is currently the most advanced—and extremely cumbersome—practice. FDA Approval Process The Imagin system combines and upgrades technologies already

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approved by FDA. This is a “me too” study. Thus, Imagin should only need to establish that results from its system are equivalent to similar concepts to gain approval. Imagin’s legal team expects that an FDA Premarket Approval (PMA) application will suffice, which would take approximately 12 months. Imagin expects to gain FDA approval by late 2017. Bladder Cancer Is A Critical Health Concern Imagin has targeted bladder cancer as its initial development. area. This is the sixth most common cancer in the U.S. and third most common cancer for US men. Because of high recurrence rates, bladder cancer is also one of the most costly cancers to treat over a patient’s lifetime. Outstanding, Seasoned Management Team At the helm, Imagin’s CEO Jim Hutchens has held executive positions in two of the world’s most successful medical device makers and been a founder or key person in two other successful

medical device startup companies. The marketing team is equally impressive, and the system’s highly respected developer –with an international reputation in biomedical optics—will remain available to Imagin through the entire development process. Modest Development Costs The prototype preceding Imagin’s new i/Blue system was built and used on patients 5 years ago at University of California-Davis. Imagin now only needs to retrofit and refine the unit. As mentioned, the FDA trials should take only 12-15 months, further reducing R&D costs. Imagin believes it will be able to start selling units by early 2018. Robust Market Potential Between diagnosis, surgery and follow-up monitoring for recurrences, patients make about 1,500,000 visits to urologists annually. Imaging products for bladder cancer is a $500 million market. We believe doctors and hospitals will be very receptive to Imagin’s far superior technology at around the same price as its two major competitors.

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Wedging a Giant Foot in the Door— i/Blue Expects to Sets a New Standard of Care So High Doctors Are Compelled to Adopt It New medical devices have to show they are significantly better than current equipment to win sales. But when a new technology is orders of magnitude better and affordable, it is practically irresistible. The highest level of improvement in any therapy is a “new standard of care.” This is an important designation in the medical world. When one doctor or hospital offers a new standard of care, those that fail to offer it can be viewed as second-rate. Perhaps even remiss.

We Expect Strong Buying Pressure from Patients and Doctors Patients compare notes with friends. They read magazine articles and search the Internet about their health problems. And when they are worried about cancer, they seek the best. In addition, most patients are referred to urologists through their primary care physicians, who also want the best for their patients.

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When a new standard of care can be accessed at no extra cost to patients or their insurance companies, the choice is a no-brainer.

Most bladder cancer surgeries today are done with a cystoscope with white light. Cystoscopes work well when the cancer is protruding upward, as shown on the left. However, white light is poor at showing the margins of cancerous areas as well as precancerous cells and flat lesions.

Two companies, Karl Storz and Olympus Corp., have begun to offer systems that use a second type of light for diagnosis. Imagin believes its dual-light, single-screen system should prove to be far superior to even these best alternatives. More importantly, Imagin expects to price the i/Blue system slightly above Storz’ price range and below Olympus’. We believe that doctors will not be able to say no. As we will show in the valuation section below, we believe that within five years of marketing its first i/Blue unit, Imagin Medical will control a major portion of the urological cancer imaging market.

The i/Blue System Could Be the Weapon of Choice in 70% of Bladder Cancer Treatments About 70% of bladder cancers are discovered when they are “superficial.” The cancer cells are in the bladder lining, but have not yet invaded underlying muscle. These cancers are almost always treated by operating through a cystoscope—removing only the tissue that appears diseased and leaving the bladder intact. Unfortunately, since recurrence rates are high. Follow-up cystoscopies are routine. Urologists perform about 4 million cystoscopies every year—at a cost of about $4 billion annually. And the i/Blue system would be appropriate for all those procedures.

11,703 urologists in the United States 3,9067 practice in hospitals or academic medical centers—Imagin’s first line of customers 2,583 belong to urology specialty groups—Imagin’s second sales focus 8,790 work in multi- specialty or private practices

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Inside the Machine--How Imagin’s Simple Tweaks Increase Image Sensitivity by 100,000 Times Imagin Medical holds three patents and exclusive license to intellectual property developed at the Lawrence Livermore National Laboratory. It is definitely a disruptive technology that no other company can offer. And yet, the i/Blue system will feel a lot like everything doctors, nurses, and the medical team already like and know how to use—except the image will be easier to see and appear in less than 15 minutes.

A Familiar Feel in the Surgeon’s Hand With i/Blue units, surgeons can continue to use the cystoscope (the wand that goes into the bladder) brand they prefer.

This, we believe, will be a strong plus for future sales. Physicians are the most influential personnel in medical device spending. i Doctors and hospitals will be able to radically upgrade their standard of care with one purchase—in the moderately priced i/Blue unit. They will not need to change cystoscopes or any other ancillary equipment.

Combined Image, One Screen A cystoscope is lighted to illuminate the bladder. Once hooked to the i/Blue unit, it sends a picture back to the imaging processor. What happens next is different. The best systems now use two light sources. But they are awkward to use. A white light is used to view the bladder clearly to navigate and operate. A filtered blue light is used to create a map-like image showing where cancerous cells are.

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Surgeons are now forced look at two different screens. It’s a challenge to use the high-contrast blue-light image to locate the cancer, then switch to a white-light view to operate. The i/Blue system combines the blue and white-light images into one composite. The physician always knows—in real time without switching screens—whether he is working exactly where cancerous cells show up in the bladder.

Sensitivity + Specificity + Speed = Greater Confidence Introducing a photosensitive dye to the bladder and using a filtered blue light causes suspicious tissues to fluoresce, turning bright pink. It normally takes an hour for the dye to absorb into the bladder. Meanwhile, a bed is tied up and a whole medical team is either waiting or fitting in another procedure.

The i/Blue system uses such a high-intensity light that the image potentially develops within 6-8 minutes. At most, the surgeon must wait 15 minutes to begin. i/Blue may also require

less dye and still achieve 100,000 times greater sensitivity—meaning it does a more thorough job of finding all the affected cells, including precancerous ones. It also has greater specificity. Specificity means it establishes healthy cells better by filtering out the false positives.

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Imagin’s i/Blue System Finds Large Opportunity in Bladder Cancer, But There Will Be More To Come Imagin Medical’ s decision to focus on bladder cancer is a compelling strategy for hockey-stick growth rates from the beginning.

Bladder cancer is the sixth most common cancer in the U.S., third for men

There were 76,960 new cases of bladder cancer in the U.S. in 2016

And 16,390 deaths that yearii

Over 500,000 people in US are living under threat of the disease recurrence

Globally, there are over 430,000 new cases per year iii

High recurrence rates make it the most expensive cancer to treat over patients’ lifetimes

This Market Will Grow Despite All Other Health Advances Smokers have four to seven times higher risk of developing bladder cancer than nonsmokers. Industrial chemicals, dyes, radiation, and arsenic in water are also risk factors. iv But the strongest correlation comes with aging—patients over age 55 comprise 90% of new cases. v Higher rates of

bladder cancer tend to occur in countries with older populations. Belgium, with the highest incidence of bladder cancer in the world, ranks 9th among nations with populations over 65.

Lungs, Colon, Bile Duct, Uterus…. Imagin is beginning its proof of concept with bladder cancer because it is a high-need area and the disease has very high recurrence rates.

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In addition to the rigid cystoscope used in bladder surgeries conducted in hospitals, flexible cystoscopes are used in doctor’s offices. Imagin is testing rigid cystoscopes first, but will be adding flexible ones to reach the physician practice market as well. But a cystoscope for bladder procedures is just one of many types of endoscopes to be used in minimally invasive surgery… The i/Blue system will likely be expanded to other markets, starting with bile duct surgery. In the future, it could be fitted with a laparoscope for uterine surgery, a bronchoscope for lung procedures, or a gastroscope for stomach imaging and surgery.

Farther Ahead, i/Red Is Next—No Dyes, Same High Contrast Imagin is also working on an i/Red system that creates the same kind of blended image as i/Blue—but without any dye agents. The i/Red system works on the natural fluorescence produced by the body and cancer tumors. The natural porphyrin content of cancer cells and normal cells differ, which makes cancer cells stand out.

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A Seasoned Team That Knows How to Guide Imagin from Concept to Market The wisdom of investing in medical startups depends heavily on the quality of the company’s management. Med-tech is a high-risk, high-reward area:

Among the more than 1,800 biotech companies founded since 1980, for instance, less than 200 are now generating revenues.vi

For medical device companies, 75% of startups fail.vii

We believe Imagin Medical is exceptionally well staffed to succeed.

Imagin Management CEO E. James Hutchens. Highly experienced, he has the ability to recognize disruptive technologies (like Imagin’s i/Blue system) and guide them to market. Hutchens personally founded a successful minimally invasive surgical instrument company. He was also VP of Marketing and Sales at an early stage GI endoscopy company while it grew from $200,000 to over $20 million in sales. He has held executive positions at medical device giants Boston Scientific and Smith & Nephew. Director of Sales Thom McMahon. Currently the owner of Urolaze, an independent urology-focused distribution company, McMahon is one of the world’s best medical device salesmen. He worked at Imagin’s competitor Karl Storz for over 25 years, and was Storz’ #1 sales rep for 10 years. With over 35 years in the business, he is on first-name basis with most of the leading urologists in the Northeast. He has already signed on to sell Imagin and recruited six other dynamic medical tech sales people. As soon as Imagin hits the market, probably at the outset of 2018, McMahon’s team is ready to go.

corporations. His experience covers the gynecology, laparoscopic surgery, GI endoscopy, wound care, cardiology, urinary incontinence and regenerative technologies markets. Dir. of Quality Assurance and Regulatory Affairs Stephen Ruggles. Ruggles has over 30 years of experience in domestic and international regulatory affairs, operations management, manufacturing quality assurance, R&D, and supply chain management for early stage companies and large multinationals. As Director of QA / RA for Cambridge Endoscopic Devices, Mr. Ruggles led the effort to earn and maintain ISO 13485 registration, CE Mark, and compliance with Japan’s jPAL. Prior to Cambridge Endo, he served eight years at Becton Dickinson as a Supply Chain Quality Engineer, R&D Quality Engineer, Quality Manager and Regulatory Compliance Manager. CFO Jorge Avelino. With over 30 years in accounting, since 1986 Avelino has dealt with start-up ventures and public companies involved in the resource and high-tech industries. Prior to that, he was the general accountant for a Vancouver manufacturing & retail company in the forest industry.

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Trusted Advisors Technical Scientific Advisor Stavros G. Demos. A prolific inventor and scholar, Dr. Demos is a laser materials expert. Companies using his technologies include Muse Microscopy, Near Infrared Imaging, and Biosense/Webster. He holds 20 patents and has published more than 115 scholarly journal articles. He is the original inventor of the i/Blue system and is continuing to work with Imagin in developing the technology. Imagin has forged an agreement with UC Davis and the University of Rochester Laboratory for Laser Energetics where Dr. Demos will continue to support Imagin’s development team through clinical evaluations and FDA submittal.

Medical Advisor Ralph deVere White. One of the world’s leading authorities on bladder cancer, Dr. deVere White is the author of more than 300 peer-reviewed scientific articles. In collaboration with Dr. Demos, Dr. deVere White used prototype systems University of California Davis that led to Imagin’s current work on the i/Blue system. Dr. deVere White is the director of the UC Davis Comprehensive Cancer Center and a professor of urology at the university. He will actively consult with the Imagin team as questions arise about bladder cancer.

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Valuation We believe Imagin Medical (CSE:IME, OTC:IMXEF) is a worthy investment as a standalone company. We see the potential for the stock to gain 400% or more in the coming year, which should be an incentive to invest now. We would urge investors to consider this a longer-term holding as the potential for a buyout at a much higher price is the most probable outcome for Imagin. We will look at both possibilities.

As a Standalone Company Current price $0.16 12-15 month Target $0.86 Longer Term Target $3.00 - $4.00

Imagin does not have a product on the market as of yet. That gives us neither sales nor earnings for valuation purposes at the moment. However, we think the investor’s risk is mitigated because Imagin does own patents and exclusive marketing rights to a disruptive technology in the i/Blue system. As with all developmental stage companies, a projected valuation needs to look forward to potential sales. Following our projected timeline, the company should be able to finish FDA trials by the end of 2017. It intends to start manufacturing in the last quarter of 2017 and begin selling in 2018. The company’s own projections are modest—60 to 80 units in the first year as it concentrates on university hospitals. Within two years of beginning sales, it projects about 20 units a month. We think that might be too conservative. The bladder cancer imaging market is now worth $500 million. The current market is dominated by traditional endocsopes that use white light, but that is changing. Two companies, Karl Storz and Olympus Corp. have recognized the need to upgrade the market. They are gaining respect for their more sophisticated

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systems, which have been shown to do a significantly better job of diagnosing cancer cells than white-light-only systems. Imagin intends to cut deeply into this new territory. It has a product that looks likely to become the best in class when it is introduced. Thanks to a high-powered marketing team that will be publicizing the new device well ahead of release, we believe Imagin could grab a bit more than 1% of the market in its first year (2018) and conservatively rise as follows: Our Revenue Projections for Imagin Medical (CSE:IME, OTC:IMXEF) Year Market Share Revenues Rev. per share*

2018 rev. 1.5% $7.5 million $0.19 2019 rev. 4% $20 million $0.34 2020 rev. 10% $50 million $0.87

* based on 39.7 million shares outstanding in 2018. In 2019 and 2020, based on 57.7 million shares, fully diluted if all warrants are exercised.

Investors are now valuing the stocks of public medical device companies around 4 times annual sales now. They also tend to look a year ahead. Thus in 2017, anticipating 2018 revenues of 19 cents a share, we see the share price rising to just under $1. By 2019, anticipating 87 cents per share in revenues (for 2020), the share price would rise to $3.91 if our estimated sales are realized and investors respond with normal enthusiasm.

Imagin As An Acquisition Target Current price $0.16 Target price $3.00 - $4.00 Buyouts also tend to be priced around a company’s potential to bring in sales, but the rules are a bit different. Usually, the buyer pays a premium over the going market share in order to gain all the shares. Companies also think more about product fit and their long-term potential. With only two other companies now dominating the urological imaging market, Imagin would have very high value to either of them.

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The most likely candidates to buy Imagin are Karl Storz and Olympus Corp. Either would consider Imagin vital to protecting their market share. In recent years, valuations on acquisitions have fallen from the 6X revenues average in the early 2010 to a current average of 4X economic value in the past two years. Really attractive companies can command quite a bit more than that. Stryker paid about 16X sales to acquire Mako Surgical.viii May 2016 Abbott offer for St. Jude 4.5X sales May 2016 Danaher bought Iris International 2.9X sales May 2016 Thermo Fisher bought FEI 4.5X sales Mar 2017 Cannon bought Toshiba Medical 31.1 X sales Feb 2014 Smith& Nephew bought Arthrocare 4.0 X sales Mar 2013 Cynosure bought Palomar Med. Tech 2.6X sales 2015 data PMCF Med Tech M&A Review average 4.0 X EV

Timing Matters Medical imaging equipment will deliver an immediate tangible benefit to the medical services industry and significantly enhance their ability to deliver excellent service. We anticipate a buyout coming after Imagin has proven it can capture sales. We believe that once Imagin begins selling product in early 2018 it could be in play as an acquisition target. That market is worth $500 million in 2016. It should grow at least 4% a year, making worth $608 million in 2023. Given Imagin’s technical superiority and competitive price, and the presence of only two other major competitors with similarly advanced technologies, (Karl Storz and Olympus Corp.) we think a 25% market share within five years is reasonable. We believe an investment in Imagin Medical Inc. represents a bet on

a disruptive technology in a growing market supported by population demographics

that will propel its product demand.

IMAGIN MEDICAL INC. Recommendation Speculative Buy

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i https://think.storage.googleapis.com/docs/how-hospital-administrators-make-purchase-decisions_research-studies.pdf ii http://www.cancer.org/cancer/bladdercancer/detailedguide/bladder-cancer-key-statistics iii http://www.wcrf.org/int/cancer-facts-figures/data-specific-cancers/bladder-cancer-statistics. Data as of 2012. iv http://www.aafp.org/afp/2009/1001/p717.html

v http://www.cancer.org/cancer/bladdercancer/detailedguide/bladder-cancer-key-statistics vi http://qb3.org/sites/qb3.org/files/QB3Podcast20120521_6.pdf vii https://medtechengine.com/article/why-new-medical-devises-dont-make-it-to-market-or-fail/

viii http://www.sec.gov/Archives/edgar/data/1411861/000089710113000266/mako130784_10k.htm for sales

Disclaimer: This report is for information purposes only. You must not rely on the information herein as an alternative to advice from an appropriately qualified professional. If you have any specific questions about any financial matter or the suitability of the company described above, you should consult an appropriately qualified professional and review SEC documents.

Rising Tide Analytics' Report Imagin Medical Inc.

Summer 2016