Press ReleasesTeraRecon enters flat-panel area detector market through strategic investment in Acrorad San Mateo, CA--June 7, 2004: TeraRecon today announced a strategic investment in Acrorad Co., Ltd. (Okinawa, Japan), a company uniquely equipped with volume production capability for Cadmium-Telluride (CdTe), a semiconductor used for direct conversion X-ray and Gamma-ray detectors. Acrorad's CdTe detectors are used both for flat panel area-detectors and for Acrorad's own "Mini Gamma Camera", for which the company recently received FDA clearance to market in the United States. In addition to this strategic investment, TeraRecon management personnel assume both board and management positions with Acrorad. TeraRecon's investment in Acrorad consisted of the acquisition of 2,454 shares of previously issued common stock, and the exercise of a warrant for a further 1,400 shares of newly issued common stock. TeraRecon's total position in the company represents 35.9% of the issued equity, purchased for JPY750,000,000, a stake sufficiently large to ensure TeraRecon long-term strategic participation in the management of Acrorad. TeraRecon chief executive, Motoaki Saito, MD, Ph.D., has been appointed to the part-time position of chairman of the board of Acrorad, and Kimiaki Saito, MD, Ph.D. has assumed the full-time position of executive vice president and director with Acrorad. Through this management and board presence, TeraRecon intends to proactively support Acrorad's business development, leveraging strong synergies between Acrorad's detector and hand-held gamma camera technologies, and TeraRecon's image processing technology and distribution capability. Through this strategic investment, TeraRecon obtained the exclusive right to resell CdTe-based area detector systems from Acrorad, for medical applications, and preferential resale rights for other applications. TeraRecon will also co-operatively develop a turnkey scalable flat-panel detector system for resale to original equipment manufactures, to help develop Acrorad's area detector systems business. TeraRecon will deploy this cost-effective detector system in its own 3D CT scanner, enhancing its own business development in this area. TeraRecon also obtained the exclusive right to re-sell in North America the "Mini Gamma Camera", a hand-held gamma camera system used pre-operatively and inter-operatively for localizing sentinel nodes and other applications involving the detection of radio-nuclide tracers. TeraRecon will enhance its existing sales presence in North America to maximize distribution of this product offering for the mutual benefit of TeraRecon and Acrorad. TeraRecon and Acrorad will collaborate on development of a next-generation hand-held gamma camera. CdTe Area Detector TechnologyArea detectors are a technology of growing importance, since they provide a replacement for film as a means of recording images formed with X-rays or Gamma-rays. Applications are numerous in industrial applications and the field of dental and medical imaging, including planar x-ray, angiography and fluoroscopy applications as well as next generation 3D computed tomography applications. The need to remove analog film from these industries is driving strong demands for higher-performance, large format and lower-cost area detectors. Currently most conventional flat panel detectors utilize an "indirect conversion method", which results in an inefficient conversion ratio and lower spatial resolution due to the necessary conversion of X-rays and Gamma rays into visible light and modulation before final conversion into electrical signals. CdTe material is one of the few chemical semiconductor materials which can convert X-rays and Gamma-rays directly into electrical signals while attaining a high conversion efficiency and exhibiting very good radiation absorption characteristics. As a result CdTe has the potential to have a large impact on medical and industrial imaging markets. A previous obstacle to the widespread adoption of CdTe has been the difficulty and cost associated with producing large "monolithic" CdTe crystals, capable of detecting large images without introducing artifacts and non-linearity. Acrorad has achieved key innovations, protected through the company's substantial patent portfolio, making such large monolithic detectors possible, and additionally, through advanced propriety technologies, seamless scalable detectors can be produced in volume when multiple smaller crystals are tiled. This opens a large potential market for the CdTe detector systems to be developed in co-operation with TeraRecon, Inc. About Acrorad Co., Ltd. Acrorad Co., Ltd. was founded as Crest Electronics Co., Ltd. in 1984. The company acquired the CdTe Radiation Detector Development Department of Japan Energy Corporation through a management buyout in 1999, and changed name to Acrorad Co., Ltd. in January, 2001. Acrorad has built the world's largest CdTe volume production facility in Okinawa, Japan to produce CdTe components and derived products for the world market. This facility employs Acrorad's unique and patented production technologies for developing large monolithic CdTe crystals. Acrorad's chief executive is Mr. Ryouichi Ohno. The company operates from its Okinawa, Japan headquarters, with a branch office in Tokyo, Japan. The company has forty-eight employees in total, JPY769,750,000 in working capital, JPY265,000,000 sales revenue in 2003 and projected 2004 revenue of JPY640,000,000. Major shareholders include Nikko Principal Investment, Hitachi Ltd., and Nomura Securities. About TeraRecon,
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