IPO FILING: ZONARE MEDICAL SYSTEMS (ZONE)

ZONARE MEDICAL SYSTEMS, INC. has filed for an initial public offering to sell up to $86.25 million as the nominal securities amount.  The company has applied to take on the stock ticker of "ZONE" on NASDAQ.

The underwriting group has listed Citigroup and Piper Jaffray as joint book-runners and listed the co-managers as Cowen & Co. and Canaccord Adams.

The company is involved in innovative software based image acquisition technology with its own proprietary Zone Sonography(tm) system which allows ultrasound systems to convert from full featured cart-based systems to premium compact systems.  In short, it is a diagnostic imaging system across a wide range of clinical applications and settings.  The company received FDA clearance in September 2002 and has received regulatory approvals to sell products in most major countries. It shipped its first commercial ultrasound system, the z.one system, in March 2005 and subsequently launched the z.one mini system in November 2006 and z.one ultra system in March 2007.

It sells systems through a 26-person direct sales force in the United States and through a combination of distributors and direct sales personnel in approximately 40 international markets.

For the three months ended March 31, 2008, its combined total of revenue and change in deferred revenue totaled $9.5 million compared to $5.4 million for the three months ended March 31, 2007.  In the year ended December 31, 2007, Zonare had a combined total of revenue and change in deferred revenue of $30.0 million and total revenue of $27.5 million, which represented growth over the year ended December 31, 2006 of 61% and 388%, respectively.  Its net loss for 2007 was $26.0 million and the company has not been profitable since inception and as of March 31, 2008 its accumulated deficit was $148.5 million.

Jon C. Ogg
July 2, 2008