Spectral announces fourth quarter and fiscal 2012 results

Spectral Diagnostics Inc., (TSX:SDI) (OTCQX: DIAGF), a Phase III company
developing the first theranostic treatment for patients with septic shock, today
announced its audited financial results for the fourth quarter and year ended
December 31, 2012.

2012 Highlights:

• Continued enrolling patients into the Company's Phase III EUPHRATES trial at
  a per site rate that is higher than previous sepsis trials. Directed by the
  Company's Endotoxin Activity Assay (EAA™), which is the only FDA-cleared
  diagnostic for the risk of developing sepsis, Spectral's EUPHRATES trial is
  currently targeted to enroll 306 evaluable patients at up to 60 sites in North America. Contingent on maintaining current
  enrolment rates and timely site start ups, the trial should be fully enrolled by
  the end of 2014.
  


• As of March 25, 2013, 100 patients have been
  randomized into Spectral's EUPHRATES trial.
  


• Announced an exclusive distribution agreement with Toray International Italy S.r.l. - a subsidiary of Toray Industries, Inc. -
  to sell the Company's Endotoxin Activity Assay in combination with Toraymyxin in
  Saudi Arabia and Turkey. The expansion of commercial jurisdictions with
  Toray further confirms the outstanding market opportunity for the Company's
  unique theranostic treatment for septic shock.
  


• Subsequent to year end, announced that the first interim analysis has been
  conducted on the initial 76 randomized patients in its EUPHRATES trial. The Data
  and Safety Monitoring Board (DSMB), consisting of experts in the fields of
  critical care medicine, infectious disease, nephrology, biostatistics and
  regulatory affairs, reviewed the totality of the data set for evidence of safety
  concerns, such as adverse events and/or adverse device effects, related to the
  use of the Toraymyxin cartridge. The results from the first interim safety
  analysis by the DSMB state that there are no safety issues to date concerning
  the application of the Toraymyxin cartridge to patients in the EUPHRATES trial.
  In addition, the results state that the EUPHRATES clinical protocol appears to
  be defining the correct target patient population for this study.
  


• Concluded the reporting period with approximately $10.5
  million in cash, cash equivalents and short- term
  investments.
  


• Subsequent to year end, on March 7, 2013, the
  Company announced it entered into a private placement agreement with Toray
  Industries, Inc. Under the terms of the private placement, Spectral will issue
  16,666,667 common shares in the capital of the Company to Toray at a price of
  $0.30 per common share, for gross proceeds of $5 million. On March 18, 2013
  the Company announced that other investors had subscribed for an additional
  $ 0.6 million under the same terms, bringing the
  total private placement gross proceeds to $5.6
  million. The net proceeds of the private placement will be used to
  continue to support the Company's EUPHRATES clinical trial and for general
  operating purposes. Immediately after the closing of the private placement,
  Toray's investment will represent approximately 12.6% of the issued and
  outstanding common shares of Spectral, calculated on a non-diluted basis.
  Closing of the private placement is expected at the beginning of April, 2013 and
  is subject to the approval of the Toronto Stock
  Exchange.

"2012 was a very important year for the Company," said Dr. Paul Walker, President and CEO of Spectral
Diagnostics. "We made crucial and significant progress with our Phase III sepsis
asset and consequently we are now potentially less than a year away from our
second planned interim analysis of the trial data."

The second interim analysis will occur after 184 randomized
patients have been followed for 28 days. At the second analysis, the trial's
DSMB will advise Spectral on the trial's safety, efficacy or futility, with
stopping rules in place for efficacy and futility. A sample size recalculation
will be done if necessary. Management remains on track to disclose information
from the second interim analysis in the first half of 2014.

Financial Review

Revenue for the three months ended December 31, 2012 was $647,000
compared to $628,000 for the same period in the
preceding year. For the year ended December 31,
2012, revenue was $2,589,000 compared to
$2,430,000 for the same period in 2011.

Revenue was positively impacted by the revised terms of certain
EAA™ distribution agreements that took effect during 2012. Conversely, revenues
were negatively impacted by the increased strength of the Canadian dollar
compared to the U.S. dollar and the Euro. It is anticipated that revenue in 2013
will be consistent with levels achieved in 2012.

For the quarter ended December 31,
2012, the Company reported a loss of $2,067,000 compared to a loss of $1,940,000 for the corresponding period in 2011. For the
year ended December 31, 2012, Spectral reported a
loss of $8,543,000 compared to $6,713,000 for the same period in 2011. The Company's loss
was greater for the three and twelve months of 2012 due to higher costs for its
EUPHRATES trial.

Cash, cash equivalents and short-term investments on hand at
December 31, 2012 were $10.5
million. Cash was used during the quarter ended December 31, 2012 to fund operations and for working
capital purposes.

The total number of shares outstanding for the Company was
113,883,394 as at December 31, 2012.

About Spectral Diagnostics
Spectral is a Phase III
company seeking U.S. FDA approval for its lead theranostics product for the
treatment of severe sepsis with septic shock. Toraymyxin is a therapeutic
hemoperfusion device that removes endotoxin, which can cause sepsis, from the
bloodstream. Directed by the Company's Endotoxin Activity Assay (EAA™), the only
FDA cleared diagnostic for the risk of developing sepsis. Spectral's EUPHRATES
trial is the world's first theranostics trial in the area of sepsis.

Toraymyxin has been approved for therapeutic use in Japan and Europe, and
has been used safely and effectively on more than 100,000 patients to date. In
March 2009, Spectral obtained the exclusive
development and commercial rights in the U.S. for Toraymyxin, and in November 2010, signed an exclusive distribution agreement
for this product in Canada. More than 250,000
patients are diagnosed with severe sepsis and septic shock in North America each year, representing a greater than
$1 billion market opportunity for Spectral. Spectral
is listed on the Toronto Stock Exchange under the
symbol SDI, and on the OTCQX under the symbol DIAGF. For more information please
visit www.spectraldx.com

Forward-looking statement

Information in this news release that is not current or
historical factual information may constitute forward-looking information within
the meaning of securities laws. Implicit in this information, particularly in
respect of the future outlook of Spectral and anticipated events or results, are
assumptions based on beliefs of Spectral's senior management as well as
information currently available to it. While these assumptions were considered
reasonable by Spectral at the time of preparation, they may prove to be
incorrect. Readers are cautioned that actual results are subject to a number of
risks and uncertainties, including the availability of funds and resources to
pursue R&D projects, the successful and timely completion of clinical
studies, the ability of Spectral to take advantage of business opportunities in
the biomedical industry, the granting of necessary approvals by regulatory
authorities as well as general economic, market and business conditions, and
could differ materially from what is currently expected.

The TSX has not reviewed and does not accept responsibility for
the adequacy or accuracy of this statement.

Spectral Diagnostics Inc. Statement of Financial Position
(in thousands of Canadian dollars)
			December 31 2012			December 31 2011
			$			$
Assets
Current assets
Cash and cash equivalents			5,425			13,470
Short-term investment			5,137			5,086
Trade and other receivables			590			515
Inventories			277			295
Prepayments			226			407
			11,655			19,773
Non-current assets
Property, plant and equipment			497			419
Intangible assets			434			459
			931			878
Total assets			12,586			20,651
Liabilities
Current liabilities
Trade and other  payables			1,913			1,610
Deferred revenue			99			102
Total liabilities			2,012			1,712
Equity
Share capital			27,101			27,101
Contributed surplus			3,864			3,864
Other equity reserves			8,260			8,082
Deficit			(28,651)			(20,108)
Total equity			10,574			18,939
Total liabilities and equity			12,586			20,651

Spectral Diagnostics Inc. Statement of Loss and Comprehensive Loss For the years ended December 31, 2012 and 2011
(in thousands of Canadian dollars, except for share and per share data)
			2012			2011
			$			$
Revenue			2,589			2,430
Other income			110			109
Expenses
Changes in inventories of finished goods and work-in-process			277			288
Raw materials and consumables used			471			264
Employee benefits			2,944			2,662
Consulting and professional fees			4,619			3,047
Management services			1,013			1,500
Regulatory and investor relations			502			270
Travel and entertainment			772			554
Depreciation and amortization			216			316
Foreign exchange loss			26			2
Other expenses			473			414
			11,313			9,317
Operating loss			(8,614)			(6,778)
Finance  income			71			65
Loss and comprehensive loss for the year			(8,543)			(6,713)
Basic and diluted loss per common share			(0.08)			(0.07)
Weighted average number of common shares outstanding
			113,883,394			90,869,696

Spectral Diagnostics Inc. Statement of Changes in Equity For the years ended December  31, 2012 and 2011
(in thousands of Canadian dollars)
		Issued capital		Contributed surplus	Share-based compensation	Warrants	Deficit	Total Equity
		Number	$	$	$	$	$	$
Balance, January 1, 2011		80,550,061	17,538	3,696	2,722	5,311	(13,395)	15,872
Private placement		33,333,333	9,563	-	-	-	-	9,563
Loss and comprehensive loss for the year		-	-	-	-	-	(6,713)	(6,713)
Share-based compensation		-	-	-	217	-	-	217
Warrants expired				168		(168)		-
Balance, December 31, 2011		113,883,394	27,101	3,864	2,939	5,143	(20,108)	18,939
Loss and comprehensive loss for the year		-	-	-	-	-	(8,543)	(8,543)
Share-based compensation		-	-	-	178	-	-	178
Balance, December 31, 2012		113,883,394	27,101	3,864	3,117	5,143	(28,651)	10,574

Spectral Diagnostics Inc. Statement of Cash Flows For the years ended December  31, 2012 and 2011
(in thousands of Canadian dollars)
					2012					2011
					$					$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the year					(8,543)					(6,713)
Adjustments for:
	Depreciation on property, plant, and equipment				191					173
	Amortization of intangible assets				25					143
	Share-based compensation				178					217
Changes in items of working capital :
	Trade and other receivables				(75)					80
	Inventories				18					(86)
	Prepayments				181					(376)
	Trade and other payables				303					288
	Deferred revenue				(3)					1
Net cash used in operating activities					(7,725)					(6,273)
Investing activities
Property, plant and equipment expenditures					(269)					(66)
Redemption of short-term investment					5,086					5,021
Purchase of short-term investment					(5,137)					(5,086)
Net cash used in investing activities					(320)					(131)
Financing activities
Private placement					-					9,563
Net cash provided by  financing activities					-					9,563
(Decrease) increase in cash and cash equivalents					(8,045)					3,159
Cash and cash equivalents, beginning of year					13,470					10,311
Cash and cash equivalents, end of year					5,425					13,470

  

SOURCE: Spectral Diagnostics Inc.

For further information: 

Anthony Businskas
Executive Vice President and CFO
416-626-3233 ext.
2200

Adam Peeler
Investor Relations
TMX Equicom
416-815-0700 ext.
225
[e-mail]