A Diagnostics & Imaging Week

NeoMatrix (Irvine, California), developer of the HALO breast pap test, an automatic, noninvasive test designed to identify breast cancer risk, reported that it has closed a Series C round of equity financing for an undisclosed sum.

The company said the financing will enable an expanded market release of the HALO system, which is designed to test asymptomatic women for the presence of atypical ductal hyperplasia (ADH), a known biomarker that can be a precursor to breast cancer. ADH is often found in the breast years earlier than a lesion might be found on a mammogram or a self exam, facilitating early follow-up and treatment or chemoprevention measures.

“This fundraising has enabled us to hire our first sales representatives, expand our marketing team and to develop the infrastructure and marketing programs required to drive awareness and adoption of the HALO system,” said Paul Fitzpatrick, CEO of NeoMatrix. It also allowed us to convert or retire 100% of the debt previously used to finance the research and development of both the HALO system and its broad patent protection.

In other financing news:

• Health Discovery (HDC; Savannah, Georgia) reported that it has closed an equity investment of $2.1 million with a financial institution and other accredited investors. The company also reported that about $2.1 million of its previously issued secured debt will be converted into equity.

“The combination of new cash proceeds and the conversion of this debt results in an increased equity base of about $4.2 million for HDC,” said Stephen Barnhill, MD, HDC’s CEO and chairman. Our strengthened financial position allows us to focus on executing a business plan that features more biomarker discoveries, licensing and development opportunities, and continued enhancement and protection of our valuable patent estate.”

HDC is a developer of pattern recognition technology. The company said its SVM and other pattern recognition tools have application potential in markets such as radiology, Internet search and spam, homeland security, financial futures and other areas where analysis of large volumes of complex data is required.

• Pall (East Hills, New York) reported that it has received all waivers required to be obtained by Sept. 6 under the terms of its recently concluded amendment and waiver relating to the company’s $500 million revolving credit facility.

The additional waivers relate to previously disclosed tax and financial reporting matters that are the subject of an independent inquiry by Pall’s audit committee.

The company reported in early August that its annual and quarterly financial statements for the fiscal years 1999 through 2006 and the first three quarters of 2007 should no longer be relied upon and may need to be restated.

The company said it believes that taxes payable with respect to the intercompany payable balances could be in excess of $130 million, exclusive of interest and penalties. It also believes that it may have one or more material weaknesses in its internal control over financial reporting.

The company reported the most recent amendment and waiver under its $500 million revolving credit facility in its report on Form 8-K filed with the Securities and Exchange Commission on Aug. 20. Under that amendment and waiver, the company must still obtain other necessary waivers or amendments under its remaining agreements by Oct. 31.

Separately, Pall reported that it will delay the release of its 4Q07 results previously planned for Sept. 13. The company also expects that it will delay the filing of its fiscal year 2007 Form 10-K beyond the prescribed due date of Oct. 1 and the subsequent extension to Oct. 16 that is permitted under rules of the Securities and Exchange Commission.

“We are focused on regaining our compliance with filing requirements as soon as possible and are committed to resolving any issues that may be identified by the Audit Committee’s independent inquiry,” said Eric Krasnoff, Pall CEO and chairman. “During this difficult period, the continued support of all of our principal banks is deeply appreciated.”

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