Preliminary Results

3D DIAGNOSTIC IMAGING PLC

("3D" or the "Company")

(AIM ticker 3DD)

Preliminary Results for the year ended 30 June 2011

3D, which owns the protected rights to a technology platform with a number of significant potential commercial applications, today announces its unaudited preliminary results for the year ended 30 June 2011.

Highlights

·; Results in line with trading statement in May 2011

·; New sales and marketing model in place

·; Distribution partners appointed covering 11 key territories

·; Significant cost savings achieved

·; Product relaunched - positive industry feedback

·; £1.41 million of funding secured to finance development of the Company - see separate announcement of today

James Noble, Non-executive Chairman of 3D Diagnostic Imaging said:

 "The year to June was challenging for 3D as we made progress in the transition towards commercialising the Company's key product, the CarieScan PRO. During the period a number of measures were taken to strengthen the business and provide it with a firm foundation for future growth as the CarieScan PRO rolled out to more territories. The Board is confident that, with the additional funds, the business is now well placed to exploit its underlying technology as it continues to expand."

Contact Details:

It should be noted that the following information has been extracted without adjustment from the final accounts of the Company for the year ended 30 June 2011 and this extract does not constitute Statutory Accounts for the purposes of Section 435 of the Companies Act 2006. Neither the Directors nor the Company's auditors anticipate any material change to the numbers so extracted.

Chairman's Statement

The year ended 30 June 2011 was one of mixed fortunes for 3D. Whilst, sales of the CarieScan PRO in the USA were negatively impacted following the identification of a manufacturing defect, the management team responded well and I am pleased to report that this defect was quickly rectified and that the product has been re-launched in the USA with an enhanced sales support operation. In the meantime, the Company has been focusing on territories outside the USA and has now signed a number of distribution agreements in Europe, China and India.

The Company has also taken a number of other measures to strengthen the business, including the appointment of Stefan Kaltenbach, a well known and highly respected businessman in the field of dental diagnostics, to the Board of CarieScan Limited ("CarieScan").

I am pleased to report that, since the year-end, the Company has launched its RemoteView software, signed agreements with further distribution partners and secured £1.41 million before costs of further equity funding, subject to shareholder and Takeover Panel approval, to enable the business to implement its future development strategy.

Results for the year

Revenue for the twelve months to 30 June increased to £715,000 (2010: £2,800), reflecting the launch of the CarieScan PRO in the USA and Canada. Operating expenses also increased to £2.9 million (2010: £1.2 million), principally reflecting the cost of building up a sales support operation in the USA. This led to an operating loss and loss before tax of £2.4 million (2010: £1.2 million). These results are in line with the trading statement issued by the Company in May 2011.

Revenue in the year comprises sales to North America (£553,000), UK and Europe (£139,000) and Rest of World (£23,000).

Cash at 30th June 2011 amounted to £520,000 (2010: £67,000).

CarieScan

3D's principal asset is its IP protected alternating current impedance spectroscopy technology ("ACIST") platform which enables the accurate measurement of the integrity of a structure. CarieScan is 3D's main operating subsidiary, with responsibility for exploiting the dental applications of the ACIST technology, which have been developed into an integrated Caries Management Support System ("CMSS"). The CMSS comprises of the CarieScan PRO a handheld device for the early detection of tooth decay, and RemoteView, a software package which captures data gathered by the PRO for instant display on a PC screen and for recall at a later date, allowing monitoring of the progression or regression of hidden caries (tooth decay).

The presence of caries causes a detectable deterioration in the integrity of a tooth's structure even before such decay becomes apparent by visual inspection. If detected sufficiently early the effects can be reversed through treatment and the integrity of the tooth restored. The CMSS enables the comprehensive monitoring of tooth decay and the efficacy of the treatment being applied to treat the condition. The Directors believe the system is the world's first integrated caries management system.

Evaluation of the CarieScan PRO by respected industry commentators has been undertaken at a number of locations in the USA and the product has received a number of plaudits, including the award for "Best Dental Diagnostic Device 2011" from the industry driver "Dr Bicuspid".

The Company has implemented a strategy of appointing distributors in relevant territories and this process originally started with the appointment of Patterson Dental in the USA and Canada, supported by staff directly employed by CarieScan in the USA. With the issues relating to the manufacturing defect mentioned above, sales were not sufficient to support this model and the Company has since announced a series of measures to improve its position, which include:

1. The manufacturing defect has now been resolved and the product has been re-launched in the USA with greatly improved marketing and educational materials;

2. The Company has replaced its own sales force with the appointment of a highly experienced dental sales company, CoreStrength Inc, which will provide over 20 sales support representatives in the USA; and

3. The Company has signed a series of distribution agreements with companies outside the USA, covering major European countries, India and China. These are positive and unanticipated opportunities for CarieScan.

As at 30 June 2011, agreements have now been signed with distribution partners covering the following countries:

Funding

As a consequence of the poor sales performance noted above, the Company has implemented a series of cost-cutting measures, including:

1. The elimination of the US sales force as described above and the effective closure of the US office;

2. A decision to terminate the Company's offshore status in the Isle of Man. While this offshore status had been seen as a tax-efficient way of exploiting the ACIST technology, it has become clear that it is unlikely to deliver the anticipated benefits to the Company or to shareholders. As a consequence of his other business interests James Cunningham-Davis, one of the Isle of Man non-executive Directors, has today stepped down from the Board and we would like to extend our thanks to James for all of his hard work on the Company's behalf. The other two Isle of Man non-executive Directors, Tina Rawlinson and Pritesh Desai, will step down from the Board at the close of the Company's forthcoming general meeting. The Board will consider the appointment of a suitable non-executive director in due course; 

3. Deferral of part or all of Directors' remuneration.

In all, it is expected that these savings amount to over £750,000 in a full year.

Despite these measures, the business required further equity funding and, as announced today, has secured the necessary funding to move forward. The details of the funding are set out in a separate announcement, but, in summary:

1. The Company has secured conditional commitments to in excess of £1.41 million in equityat 2p per share;

2. This is conditional upon a number of approvals. In particular, the largest shareholder, Evolve Capital Plc (together with those deemed to be acting in concert with them) will, as a result of the fundraise, increase their interest which would, in normal circumstances and without requisite approvals, lead to a compulsory offer being required to be made for the entire issued share capital of the Company under the Takeover Code. For the fundraising to proceed without a requirement for such offer, independent shareholders are being asked to approve the waiver of such obligation at the forthcoming shareholder meeting. 

Outlook

3D has changed radically during the period under review. Many of the problems of the last year are typical of those affecting companies moving from a technically excellent invention to the reality of the marketplace. I am confident that the manufacturing issues are now solved and that the product is now sufficiently robust to achieve market success. The Company is now focused on delivering the current business model, which depends entirely on sales performance in a number of territories.

I look forward to reporting further progress over the next year and beyond.

James Noble

Non-executive Chairman

22 September 2011

Group Income Statement

for the year ended 30 June 2011

All of the revenue and profit/(loss) above is derived from continuing operations.

There is no other income for this period, and therefore no separate statement of comprehensive income has been presented.

Group Statement of Changes in Equity

for the year ended 30 June 2011

Group Statement of Financial Position

At 30 June 2011

Group Statement of Cash Flows

For the year ended 30 June 2011

Notes to the Preliminary Statements

1. General Information

The preliminary statements for the year ended 30 June 2011 have been extracted without adjustment from the Group's final accounts for the period. The final accounts have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies adopted in the final accounts are consistent with those used in the last published annual financial statements.

The preliminary statements for the year ended 30 June 2011 do not constitute statutory accounts for the purposes of Section 435 of the Companies Act 2006. Neither the Directors nor the Company's auditors anticipate any material changes to the numbers so extracted. The 2010 statutory accounts have been filed with the Registrar of Companies.

The preliminary statements may be viewed on the Company's website at www.3ddiagnosticimaging.com.

The Company currently anticipates posting its accounts for the year to 30 June 2011 to shareholders soon after the forthcoming general meeting.

2. Accounting Policies

Basis of Preparation

The final accounts have been prepared on the historical cost basis.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement. This statement also includes a summary of the Group's financial position and its cash flows.

Overall, the Directors believe the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The Group's forecasts and projections, which include the additional funding as per note 8 and, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities.

After making reasonable enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the final accounts.

Basis of Accounting

The Group's consolidated financial statements for the year ended 30 June 2011 and 30 June 2010 were prepared in accordance with International Financial Reporting Standards (IFRSs).

3. Segmental Reporting

All operating activities are conducted from the UK and as such the Directors consider that there to be only one business segment. Segmental information in respect of the Group's geographical activity is presented in the Chairman's statement.

4. Tax

The Group has recognised a taxation credit in relation to R&D taxation credits relating to the year ended 30 June 2010 of £25,124 which was received in September 2010.

No deferred tax asset has been recognised in respect of tax losses due to the uncertainty of future profit streams in the UK.

Notes to the Preliminary Statements (continued)

5. Loss Per Share and Dividends

(a) No dividends have been paid during the year ended 30 June 2011.

(b) Basic Loss Per Share

Basic earnings /(loss) per share is calculated by dividing the earnings attributable to equity holders of the parent by the weighted average number of shares in issue during the period.

Diluted earnings/ (loss) per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For share options a calculation is made to determine the number of shares which could be acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of the share options.

The directors consider the impact of the shares covered by share options to be anti-dilutive, as the exercise of the share options would result in a reduction in the loss per share.

In the current period, the weighted average number of shares has increased due to the placing of shares on AIM in November 2010. The weighted average number of shares, and therefore the loss per share, for the previous periods have been restated to reflect the impact of this placing.

Notes to the Preliminary Statements

continued

6. Notes to the Cash Flow Statement

7. Share Based Payments

The Group issues share-based benefits to employees. These share-based payments have been measured at their fair value at the date of grant and the fair value of expected shares is being expensed to the Income Statement on a straight-line basis over the vesting period. Fair value has been measured using the Black Scholes model and adjusted to reflect the most likely share vesting and exercise pattern. The impact on the accounting periods has been:

The cumulative provision for share-based payments of £68,220 (2010: £16,650) is shown as a reserve in the Group Statement of Financial Position.

8. Subsequent Events

In September 2011 the Company announced the conditional raising of an additional £1.41 million, before expenses, of equity capital through a subscription and placing of 70,500,000 new ordinary shares of 0.1p each at a subscription price of 2 pence per share. The placing are conditional upon shareholders approval which is to be sought at a general meeting of the Company to be held in October 2011. The proceeds are intended to provide additional working capital for CarieScan as it continues the development of its business.