C O R P O R A T E  B A C K G R O U N D E R

For information contact:
Joni Morford, Communicore
714/721-8081
jmorford@communicore.com


ELECTROSCOPE, INC.


ElectroScope, Inc., was founded in 1991 to address the risks associated with 
laparoscopic monopolar electrosurgery and to develop and market its patented 
electrosurgical safety technology: Active Electrode Monitoring (AEMª).  In 1994, 
ElectroScope introduced the Electroshield Monitoring System¨, a major 
development in electrosurgical patient safety that prevents the release of stray 
electrical energy outside the surgical site and notifies the surgeon that potentially 
dangerous electrical energy is present.  If left undetected, these stray currents may 
result in injury to surrounding non-targeted tissue and organs that can result in 
severe and sometimes fatal complications following surgery.  The ability to detect 
and prevent electrosurgical effects beyond the surgeon's limited field of view during 
monopolar laparoscopic electrosurgery can improve patient safety, reduce liability, 
and promote an expansion of the uses of laparoscopic monopolar electrosurgery.

ElectroScope's Electroshield System consists of the company's EM-2 Electronic 
Monitor, which plugs directly into a standard electrosurgical generator, and 
electrosurgical instruments manufactured by ElectroScope that incorporate the 
shielding technology.  ElectroScope has also developed an adaptive sheath that 
provides electronic monitoring for other manufacturers' instruments, allowing a 
uniform standard of care for patients regardless of the brand of electrosurgical 
instruments used.

The American Association of Gynecological Laparoscopists (AAGL) has 
recommended consideration of Active Electrode Monitoring to prevent 
complications during minimally invasive surgery.  In addition, the Emergency Care 
Research Institute (ECRI), an independent, non-profit research agency that reviews 
and tests medical devices, has recommended the Electroshield Monitoring System as 
the highest level protection available against patient injury due to insulation failure 
and capacitive coupling.  The Electroshield Monitoring System is indeed the only 
product available that directly addresses the problem of capacitive coupling and 
electrical leakage in monopolar laparoscopic surgery and provides complete 
protection from these substantial dangers.  

Minimally invasive procedures account for at least 15 percent of all surgeries 
performed in the United States each year, and this percentage is expected to grow 
rapidly by the year 2000.  The worldwide market for minimally invasive 
electrosurgical equipment is estimated to be approximately $450 million annually.  
Market competition is limited to unshielded monopolar instruments and alternative 
minimally invasive surgical methods, such as laser surgery, bipolar electrosurgery, 
and the "harmonic scalpel."  Since monopolar electricity is recognized by the 
majority of hospitals and surgeons as the most effective minimally invasive energy 
tool, ElectroScope is in the unique position of advancing the standard of surgical 
care by providing the only true solution to the risks associated with the most 
commonly used form of minimally invasive surgery in the United States.

As minimally invasive laparoscopic procedures gain increased acceptance in current 
and future applications, the number of injured, litigious patients has been growing 
and is expected to grow still further.  Not surprisingly, to meet this response, the 
American Trial Lawyers Association formed the Laparoscopy Litigation Group in 
1994 to pool information on malpractice claims.  

A study conducted in May 1994 by the Physician Insurers Association of America 
(PIAA) found that 70 percent of minimally invasive mishaps are not detected until 
after the surgery is complete and the patient has gone home.  The study also found 
that of the 1 million minimally invasive surgery procedures performed in 1993, 600 
patients claimed injury; 35 of these injuries led to patient death, many from 
perforated bowels.  The PIAA survey noted that suits arising from laparoscopic 
accidents totaled $385 million since 1985 and carried an average indemnity of more 
than $130,000 per case.  Although these figures cover injuries during minimally 
invasive surgery as a whole, it is reasonable to assume that a substantial portion of 
these claims arose from minimally invasive monopolar electrosurgical complications.  
Cases involving confirmed electrosurgical injury suggest that these injuries 
represent a substantial medicolegal risk for surgeons and hospitals.  For example, in 
1993 a jury in Florida awarded $551,000 to a laparoscopic monopolar electrosurgery 
patient who developed a severe infection and underwent a colostomy after her colon 
was perforated by stray electrical currents during minimally invasive electrosurgery.

Cost considerations affect the acceptance of any new technology, and a hospital's 
ability to assimilate the Electroshield Monitoring System into its existing equipment 
portfolio should positively influence its speed of adoption.  The EM-2 Electronic 
Monitor is priced at approximately $3,200 and requires no change in surgical 
technique, no additional training for the surgeon, and no additional inconvenience 
to the surgical suite staff.  The Electroshield instruments are priced comparably to 
other manufacturers' reusable instruments and disassemble for easy sterilization and 
maintenance.  On a cost-per-use basis, ElectroScope's instruments are less expensive 
than disposable electrodes.  In short, unlike the alternatives to a monopolar system, 
the Electroshield Monitoring System avoids many of the common obstacles found 
with the introduction of a new technology and provides a sound basis for 
preserving the many technical advantages of monopolar electrosurgery while fully 
protecting patients from the risk of inadvertent electrosurgical injury.

ElectroScope plans to increase the availability and variety of shielded instruments 
for current and future electrosurgical applications.  The company's shares are 
publicly traded on the NASDAQ National Market System under the symbol ESCP.  
ElectroScope is located in Boulder, Colo., and employs 43 people. 


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