TMX group

TORONTO, July 28 /CNW/ - The Canadian Medical Discoveries Fund Inc. and
Canadian Medical Discoveries Fund II Inc. (individually, a "Fund",
collectively, the "CMDF Funds"), each have acquired by way of private
placement, 2,045,918 common shares of Spectral Diagnostics Inc. ("Spectral")
(TSX: SDI) together with warrants to purchase 231,250 additional common shares
(the "Warrants") and a $1,156,250 non-interest bearing, unsecured, convertible
note due December 31, 2010 (the "Note"). The Warrants are exercisable at
anytime prior to June, 2011 at an exercise price of $0.47 per common share.
The common shares, Warrants and Note were acquired as of June 19, 2006 to
settle debts payable to IDx Inc. and were distributed in amounts which were
proportionate to each Fund's respective security holdings of IDx Inc. and have
a cost base of $1,925,000 for each Fund.
The common shares acquired by the CMDF Funds are subject to a four-month
hold period under Ontario securities legislation. The securities of Spectral
were acquired by each of the CMDF Funds for investment purposes only and the
CMDF Funds have no intention to acquire ownership of additional securities of
Spectral nor do the CMDF Funds, on their own or together, intend to acquire
control of Spectral. Each Fund currently owns 2,241,996 common shares,
representing approximately 9.3% of the current issued and outstanding common
shares of Spectral. If a Fund exercised its Warrants, that Fund would receive
an additional 231,250 common shares (which together with the common shares
currently held by the Fund would represent 10.2% of the common shares on an
as-converted basis). If both CMDF Funds exercised their Warrants, the CMDF
Funds would collectively own 20.1% of the common shares of Spectral on an
as-converted basis.
The Note can be repaid at any time by Spectral in cash or by the issue of
common shares of Spectral subject to regulatory approvals. If Spectral elects
to repay the Note in cash then, at that time, the CMDF Funds can elect to have
the Note repaid in common shares of Spectral based on a conversion factor
derived from, subject to TSX approval, the average market price of Spectral
during the preceding 60 trading days less a 15% discount. The Notes are not
convertible at the option of either of the CMDF Funds except on maturity or at
the time that Spectral elects to repay the Notes prior to maturity. If a
Fund's Note was repaid with common shares of Spectral today, that Fund would
receive, subject to approval of the conversion factor by the TSX, an
additional 3,029,608 common shares (which together with the common shares
issued on exercise of the Warrants and those currently held by the Fund would
represent 20.1% of the common shares on an as-converted basis). If both CMDF
Funds' Notes were repaid with common shares of Spectral today and both
exercised their Warrants, the CMDF Fund's would collectively own 35.9% of the
common shares of Spectral on an as-converted basis.
The CMDF Funds may be considered to be joint actors because they are both
managed by Medical Discovery Management Corporation and each Fund's board of
directors is comprised of the same members.

The CMDF Funds are labour sponsored venture capital investment funds
(LSIFs). Established in 1994, Canadian Medical Discoveries Fund Inc. is
Canada's most mature health sciences LSIF. Together the funds have
approximately $230 million in managed assets and have venture capital
investments in more than 50 companies involved in health sciences,
biotechnology, diagnostics, medical devices, drug discovery and development,
health care delivery services and e-health.
The CMDF Funds are both located at 181 Bay Street, Suite 3740, Toronto,
Ontario, M5J 2T3.