IMGG Investors Grow Tired of Holding Their Breath

Imaging3 (IMGG.OB) suffered another major setback this week, triggering a massive selloff in its

stock, as the company fielded additional questions from federal regulators about its Dominion

scanning device.

By now, IMGG investors have waited years for the U.S. Food and Drug Administration to clear the

company’s Dominion scanner for sale under a 510(k) process that normally takes just a few short

months to complete. More than 900 days after IMGG first submitted its 3-D scanner for review,

however, the company is still waiting for the FDA to bless its breakthrough device.

Based on IMGG’s share price, which plummeted 30% to 50 cents early Tuesday morning, some

investors clearly wonder whether the company will ever secure FDA approval of its imaging device

at all. Those still holding onto IMGG’s hammered stock are hoping that CEO Dean Janes can at

least soften the blow with reassurances about the device’s chances during a conference call

scheduled for later on today. Even they could see their faith tested, however, when reviewing

the company’s long history of regulatory setbacks.

The following timeline highlights key events leading up to the latest delay.

October 1993: Janes establishes Imaging Services (which later becomes IMGG) to service medical

equipment manufactured by other companies.

August 2002: With its inventory destroyed by a fire earlier in the year, Imaging Services

changes its name to Imaging3 and announces plans to develop a medical device of its own.

November 2006: More than four years after changing its focus, IMGG unveils the first prototype

of its Dominion imaging device at the annual trade show hosted by the Radiological Society of

North America.

February 2007: IMGG predicts that it will submit the Dominion for FDA review within a few months

and begin production of the device by the end of the year.

June 2007: IMGG officially files a 510(k) application seeking clearance to sell its 3-D scanner.

The company estimates that it could receive FDA approval for the device in as little as six


April 2008: Nearly 10 months after submitting its 510(k) application, IMGG secures permission

from the FDA to distribute its Dominion scanner for “investigational purposes only.” The company

claims that the FDA’s action has taken it “one step closer to full approval” of the device.

August 2008: IMGG delivers a blow to hopeful shareholders, when it reveals that the FDA has

raised questions about its 510(k) application and could direct the company to re-file its

submission. Nevertheless, Janes offers a positive take on the development. “This is neither good

nor bad news,” he insists. “We know this process has continued longer than anticipated, though

we feel as confident as ever that we will eventually receive approval.”

December 2008: IMGG ends the year with its stock sitting at 7 cents a share, near the middle of

its 2008 trading range.

March 2009: IMGG files its latest annual report, expressing confidence that the company will

secure approval of its Dominion scanner by the end of the year.

August 2009: IMGG announces that the FDA has requested additional images from the company. It

promises to supply the images the following month and forecasts possible approval of the device

a few weeks later.

Third Quarter 2009: Through private placements, IMGG sells millions of shares of company stock

at an average price of just 2.5 cents a share. Those transactions will later spark concerns that

IMGG’s stock, which began to rocket after the end of the quarter, has become grossly overvalued.

October 2009: IMGG hosts a conference call to update investors about new delays in the FDA

approval process. During that call, Janes assures investors that the FDA has raised only minor

questions about the Dominion’s label and strongly suggests that the company could secure

approval of its device in time for the annual RSNA trade show at the end of November.

November 2009: After fetching mere pennies for years, IMGG’s stock peaks at $1.95 a share on

high hopes for imminent approval of the company’s 3-D imaging device. Later on that month,

TheStreetSweeper raises its first concerns about IMGG in a detailed report about the company and

its promotional activities. The stock, while down from its peak, is still fetching $1.35 a share

at this time.

December 2009: TheStreetSweeper continues to raise questions about IMGG, as the company nears

the end of yet another year without FDA approval of its device. Spooked by mounting concerns –

and management’s sudden silence – IMGG investors push the company’s stock down to just 73 cents

a share by the end of the year.

January 2010: More than a month after its latest update, IMGG finally breaks its silence by

announcing that the FDA has “requested further information” about its device. The company’s

stock plummets by 30% — touching 50 cents for the first time in months – before regaining some

of that lost ground ahead of a scheduled conference call with shareholders.

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