Theralase Technologies Inc. Executive Summary – 2013

Company

Theralase Technologies Inc. (TSXV: TLT) designs, develops and manufactures patented, superpulsed laser technology used in a wide range of biostimulation and biodestruction clinical applications. The Theralase technology platform targets several diverse healthcare sectors:

Theralase Technologies Inc. is focused on a two‐part strategy:

1. Production, marketing and distribution of the Theralase Superpulsed Laser for sale to health care practitioners that are dedicated to the treatment of chronic pain, sports injuries and wounds. In 4Q2013, launch the patented TLC‐2000 biofeedback laser system internationally to provide a quantum leap in therapeutic laser technology.

2. Commercialization of patented cancer technology through preclinical research, human clinical trials and regulatory approvals in the direct destruction of cancer.

Science

In 1917, Albert Einstein first published the principle of Light Amplification by Stimulated Emission of Radiation, or quite simply lasers. In June 1960, Theodoro H. Maiman constructed, using a ruby crystal, the first operational laser. In 1965, doctors Sinclair, Knoll and Mester pioneered the way for therapeutic lasers; lasers that do not cut or destroy tissue, but lasers that heal and have a therapeutic curative effect on tissue. Approximately 3,000 clinical studies worldwide have attested to the beneficial and curative effects of therapeutic lasers. In the last twenty years, therapeutic lasers have dramatically increased in power and effectiveness and decreased in cost and size.

Therapeutic laser therapy is a universal way of treating and healing tissue structures, such as: muscles, tendons, ligaments, joints, connective tissues, bones and skin. There are thousands of tissue conditions that therapeutic medical lasers can be applied to, such as: pain relief, muscular‐skeletal conditions, nerve rehabilitation, wound healing, anti‐aging and addiction therapy.

Biodestructive laser therapy uses proprietary laser technology to activate the Photo Dynamic key of specifically designed Photodynamic Compounds (PDCs) that have an affinity to certain tissue types and when light activated have the ability to destroy the target cell. There are thousands of potential applications of this technology including the destruction of: cancer, bacteria and viruses. Theralase has a worldwide exclusive patent to a platform of PDCs that are unique in that they are activated via a Type 1 reaction that is independent of oxygen, an important characteristic, as solid core tumors (i.e. breast, bladder, lung, brain, prostate, et cetera) are hypoxic (low oxygen) in nature.

Products

1) TLC‐1000 Biomedical Laser Platform (to be phased out by 2014)

The TLC‐1000 therapeutic laser technology is a non‐invasive, superpulsed, dual wavelength, multiple diode laser system that has three specifically designed probes; a multiple probe used for neural muscular skeletal conditions, a dermatological probe used for facial and small area treatments and an acupuncture probe used for stimulation of acupuncture and trigger points. The TLC‐1000 is FDA, Health Canada and CE approved and is the current lead product in the Company’s US sales and marketing expansion. In addition, Theralase has product distributors in the Middle East and China.

Theralase provides turnkey support on its technology, enabling customers to deliver safe, effective and profitable rehabilitation treatments including customer service, clinical training, new applications, marketing and patient referrals.

2) TLC‐2000 Biofeedback Laser Platform (Launch date: 4Q2013)

The Theralase TLC‐2000 biofeedback laser system is a quantum leap forward in therapeutic laser technology. The TLC-2000 is able to measure a patient’s optical profile in a matter of seconds and then deliver a precise, clinical dosage of energy to their specific condition in a matter of minutes. Clinically effective dosages specific to optical tissue profiles will be stored in a HIPAA compliant central databank and be available real time to all practitioners utilizing the TLC‐2000 therapeutic laser. The TLC‐2000 laser system is also a learning device that remembers the most clinically effective treatments performed by practitioners and transmits this information to the central databank for the benefit of all users. Theralase is currently commercializing the technology and plans to introduce the TLC‐2000 laser system to the international medical market in 4Q2013. Theralase in keeping with its mandate of world-class customer service will allow every Theralase customer, the ability to trade up to the new state of the art TLC‐2000 laser system. In order to allow all laser practitioners a common tool to use in the delivery of precision therapeutic laser treatments, Theralase will allow purchasers of competitive products the ability to trade up to the TLC‐2000, under certain terms and conditions.

The TLC‐2000 will also be used to launch Theralase into a new business model, the recurring revenue model; whereby:

Theralase will provide the technology, training, ongoing service and ongoing marketing / customer referrals for a one time up-front fee, plus a small portion of each treatment delivered. In this model, Theralase will partner with medical practitioners by lowering the up-front cost of the equipment and participating in each treatment delivered by the practitioner. The equipment will be billed through the internet; thus, allowing real time payments and control over non-payment by practitioners.

The Theralase TLC‐2000 biofeedback laser technology is patented in the United States, five European countries and Canada.

Theralase therapeutic laser systems are manufactured in an ISO‐13485 internationally certified medical manufacturing facility based in Toronto, Ontario, Canada.

3) TLC‐3000 Photodynamic Compound (PDC) / Laser Technology Platform

This technology involves the research and development of Photodynamic Compounds combined and activated by proprietary biomedical lasers for the selective destruction of cancers, bacteria and viruses. The clinical applications of this technology may possibly have a significant impact on one of the most devastating diseases of our time.

Theralase has successfully completed Milestone 1 – in‐vitro Analysis in the R&D of this technology and has successfully destroyed brain, breast and colon cancer cell lines in an in‐vitro analysis in 2010.

Theralase has successfully completed Milestone 2 – Small Animal in‐vivo preclinical analysis of the PDC technology, which commenced in 2011 and was successfully completed in 2012.In this phase, complete destruction of colon cancer in an orthotopic mouse model was achieved with the mice now living cancer free for over 1 year post treatment.

Theralase is currently pursuing Milestone 3a – Destruction of bladder cancer in an orthotopic animal model.

Therapeutic Market

Therapeutic laser technology could potentially be used by over 1 million healthcare practitioners and 300 million public consumers in the US and Canada in the next 5 years.

The therapeutic laser market is extremely fragmented with no one company seen as the industry leader. All companies claim to have the best product in terms of efficacy, often without any scientific research support. Theralase therapeutic lasers have been tested in gold standard blinded, randomised, controlled clinical studies and have proven unequivocally that the Theralase therapeutic laser system is clinically and statistically effective in reducing pain and inflammation in a wide variety of patients. Many of Theralase’s clinical studies have been peer-reviewed and accepted for publication in medical journals as well as presented at international scientific conferences.

Strategic Opportunity

Theralase plans to introduce a new business mode in therapeutic lasers, the recurring revenue model; whereby, Theralase will provide the technology, training, service and customer referrals, in exchange for an upfront fee and monthly usage fee. In this model, Theralase will partner with the medical practitioner by lowering the up-front cost of the equipment and participating in each treatment delivered by the practitioner. The equipment will be billed through the internet; thus allowing real time payments and control over non-payment by practitioners. Theralase expects to generate annual recurring revenue of $48 to $60 million per year within the next 5 years with 8,000 to 10,000 units in operation producing a minimum monthly revenue stream of $500 per month per laser. This financial model has been successfully employed by many Fortune 500 companies, including: cell phone, photocopier, satellite and cable TV industries.

Cancer Market

Bladder cancer has been chosen as Theralase’s principal cancer target for its lead PDC compound. Theralase PDCs have proved to be toxic to bladder cancer cells when light activated (100% kill rate) at very low effective concentrations.

$3.98 billion is spent annually for Bladder Cancer Treatment in the USA. There are 73,000 new cases and over 15,000 deaths in the US each year; worldwide 386,000 new bladder cancer cases occur annually.

Bladder cancer is the most expensive cancer to treat with a recurrence rate of up to 80%. Standard treatment has remained relatively unchanged with no new drugs approved since 1998.

Strategic Opportunity

Completion of a FDA Phase 1/2a clinical study in bladder cancer within 3 years. Theralase would then move to sell all rights to the bladder cancer PDC technology to a pharmaceutical company for a milestone payment of between $113 to $362 million, research and development costs and would include an annual royalty stream of $50 to 60 million for 17 years.

Sales

To roll-out the TLC‐2000 Biofeedback Laser Platform, Theralase will implement a US and Canadian sales strategy which focuses on establishing beach heads through physical locations in each of the 5 largest US states and 2 largest Canadian provinces by population; California, New York, Illinois, Texas, Florida, Alberta and  Ontario. A 1500 to 2000 square foot leased property will be secured in each of the major cities of these territories and employ a full time receptionist, clinic manager, multidisciplinary practitioners (revenue sharing basis) and a Territory Sales Manager (TSM). The clinic manager will be responsible for clinic sales, while the TSM will be responsible for product sales. The property will provide multiple functions in one location; including: a multidisciplinary clinic used to generate brand awareness and clinic sales to offset the overhead of the facility, provide a training and teaching location for new practitioners, provide a service depot for product warranty exchanges and provide a sales location for the TSM to generate product sales and build a distribution network of sales professionals to sell the Company’s products on a commission basis.

These 7 TSM’s will be supported by the Company with:

1) Affiliation with well-known teaching hospitals, chiropractic, physical therapist and medical doctor teaching universities and colleges to provide high-level clinical and testimonial support

3) Regional and national sales and marketing programs focused on bringing healthcare practitioners to the clinic to learn about the technology and become a “Theralase Certified Laser Center” in their area

4) National and regional marketing to patients about the benefits of therapeutic laser technology including a presence at major healthcare and industry conferences

5) Seminar and Webinar series to present Theralase’s technology to healthcare practitioners

Key Employees and Advisors

Roger Dumoulin-White, P.Eng, President and CEO

Mr. Dumoulin-White founded Theralase in 1995 and has over 25 years as a senior manager with private and public companies. As an award-winning entrepreneur, he has pioneered Low-Level Laser Therapy for use in treating pain, inflammation and for tissue regeneration of neural muscular skeletal conditions and wound healing. He is responsible for developing patented Photo Dynamic Compounds (PDCs) that are able to target and destroy cancers, bacteria and viruses when light activated by Theralase’s proprietary laser technology.

Kristina Hachey, CGA, CFO

Ms. Hachey has over 16 years of experience in finance and financings in public and private companies.

Arkady Mandel, MD, Ph.D., D.Sc., Chief Scientific Officer

Dr. Mandel has over 20 years of experience as a key founder of therapeutic uses of lasers in dermatology and other areas of clinical medicine. He is an experienced executive manager of research and development teams dedicated to the field of biotechnology, drug development and photobiology. He has published over 100 original scientific papers to his name, combined with over 200 international patents attributed to his research. He is an editor of many peer reviewed scientific and medical journals.

Lothar Lilge, Ph.D., Professor in the Department of Medical Biophysics, University of Toronto, Senior Scientist at the Ontario Cancer Institute / Princess Margaret Cancer Centre / University Health Network

Dr. Lilge's research is focused on photodynamic therapy (PDT), optical diagnostics, destruction of cancer and bacteria by light activated PDTs and the use of light as a microscopic tool for biomedical research. He has published over 30 original scientific papers and is an editor of peer reviewed scientific journals. Dr. Lilge is a much sought after speaker at many international medical and scientific conferences.

Michael Jewett, MD, FRCSC, FACS, Professor of Surgery in the Division of Urology at the University of Toronto, a member of the Department of Surgical Oncology at Princess Margaret Cancer Centre and of the Division of Urology at the University Health Network. He is a member of Theralase’s Medical and Scientific Advisory Board. Dr. Jewett is internationally known for his contributions in the fields of bladder, testis and kidney cancer fundamental and clinical research. He has been the Principal Investigator/Co-Principal Investigator on over 60 Phase I-Phase III clinical trials and the Lead Principal Investigator of several Cooperative Group Trials. These clinical trials have primarily been focused on proving the safety, efficacy and clinical benefits of technology in the destruction of cancer, with the ultimate goal of achieving FDA or Health Canada clinical approval. He is a recent Past-President of the Canadian Urology Association and a member of many urological and surgical oncology societies worldwide. Dr. Jewett has published over 175 original medical research papers.

James Andrews, MD, Founding member of Andrews Sports Medicine and Orthopaedic Center in Birmingham, Alabama. He is also a founder of the American Sports Medicine Institute (ASMI) a non-profit institute dedicated to injury prevention, education and research in orthopaedics and sports medicine. He is a member of Theralase’s Medical and Scientific Advisory Board. Doctor Andrews is internationally known and recognized for his skills as an orthopaedic surgeon as well as his scientific and clinic research contributions in knee, shoulder and elbow injury prevention and treatment. Doctor Andrews is Senior Consultant for the Washington Redskins Professional Football team and Medical Director for the Tampa Bay Rays Professional Baseball Team and the Ladies Professional Golf Association.

For further information, please call 1-866-843-5273 or visit www.theralase.com