Press ReleasesTeraRecon receives strategic capital investment from PENTAX Corporation San Mateo, CA--June 18, 2004: TeraRecon today announced that PENTAX Corporation, (Fumio Urano, President, Tokyo, Japan) has made a capital investment in the company and entered into a strategic alliance agreement relating to medical endoscopic imaging and consumer electronics digital camera applications. The agreement and investment occurred by the end of May PENTAX acquired 341,000 shares of newly issued series G preferred stock, representing 2.18% of issued equity in TeraRecon, for $5,626,500. Under the terms of the strategic alliance agreement, TeraRecon has awarded PENTAX the right to include TeraRecon's signal and image processing processor and software technologies in products targeted for any market with certain specific exceptions mutually agreed upon between the companies. In addition, TeraRecon will conduct a feasibility study related to the application of TeraRecon's technology to new product development specifically in the areas of, but not limited to, optical endoscopic imaging and consumer electronics digital camera applications, with the potential of outsourced product development by TeraRecon or collaborative development with PENTAX dependent on a favorable outcome to the feasibility study, to potentially lead to a first new product delivery within 2 years from the beginning of the feasibility study. TeraRecon has developed a broad portfolio of core technology in high-speed signal and image processing which the company has used as the foundation for numerous subsystem projects undertaken on behalf of major equipment manufacturers. TeraRecon has deployed the same technologies in its own line of end-user products including advanced 3D and 4D image processing workstations and servers, and high-pixel density, high-resolution flat panel display systems. The company pursues the visionary goal of revolutionizing visual information management systems through widespread delivery of advanced functionality and powerful image processing performance. In the field of medical imaging, TeraRecon has already achieved early milestones with realization of an enterprise server delivering advanced image processing and diagnostic power to computers across the healthcare enterprise. The company similarly believes that the consumer electronics field is poised for dramatic change as this new disruptive technology enables new paradigms in distributed image management and manipulation. TeraRecon's chief executive, Motoaki Saito, M.D., Ph.D., said, "TeraRecon's strategic alliance with PENTAX, a leading provider of optical endoscopic systems, will allow us to explore the potential of a next-generation endoscope which will apply the best aspects of conventional optical technology and new, innovative digital approaches including virtual endoscopic views created from minimally invasive CT or MR examinations." The companies will also explore the potential for distributing endoscopic examinations enterprise-wide using TeraRecon's processor area network technology, and a variety of new technological approaches including the potential for quasi-3D rendering from optical endoscopic images. The intense image processing demands of such applications will be met by TeraRecon's XTrillion processor featuring the proprietary HISC processor architecture. The companies also intend to leverage the potential of the XTrillion technology in PENTAX's high-volume consumer product lines such as digital cameras. Through this strategically significant alliance, TeraRecon is simultaneously expanding its access to the horizontal consumer electronics market while broadening its presence in the vertical diagnostic imaging market with the addition of endoscopic applications to the company's participation in this area. About TeraRecon, Inc. Contact:
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