YEAR-END REPORT, JANUARY - DECEMBER 2012

Fourth quarter, October - December 2012 compared with 2011

• Income after financial items -5,916,563 SEK ( -3,103,074)
• Earnings per share -0.92 SEK ( -0.48)

Full year 2012 compared with 2011

• Income after financial items -15,769,779 SEK (-9,636,622)
• No. of shares at end of period 6,400,000 (6,400,000)
• Average No. of shares 6,400,000 (4,628,694)
• Earnings per share -2.46 SEK (-2.08)
• Shareholders' equity per share 3.81 SEK (6.27 )
• Cash and cash equivalents at year-end amounted to 23 MSEK
• No. of employees at end of period 6 (4)
• Equity/assets ratio 87.4 % (95.2%)

Significant events, October - December 2012

• Episurf Medical announced that the company expects to receive CE-marking one year sooner than planned. Hence, the company expects to significantly bring forward the market introduction of Episealer Knee®.
• Episurf Medical announced the completion of a successful surgery with the Episealer KneeR implant. The surgery was carried out with implant and surgical tools uniquely designed for the patient using Episurf Medicalfs proprietary μiFidelity system. The surgery was conducted in Stockholm by Dr. Nicolas Martinez Carranza under the assistance of Dr. Leif Ryd, orthopaedic surgeon and
  former professor at the Karolinska Institute and board member of Episurf Medical.
• Episurf Medical appointed Peter Rautio sales manager. He will be responsible for the sales of Episurf Medicals patient-specific implants for early treatment of cartilages damages.
• Episurf Medical AB together with Avanza Bank carried through the second of two distributions of ownership in the year, directed towards the public in Sweden. The transaction added 180 new shareholders.
• The board and the CEO proposed that no dividend be paid for the financial year 2012-01-01 to 2012-12-31.

Significant events, full year 2012

• Episurf Medical filed an application to Lakemedelsverket, Swedish Medical Products Agency (SMPA), concerning the initiation of the first clinical trial.
• The development of the order management system ƒÊiFidlity was
  completed.
• Two European patents were granted. The first concerns one of the companyfs core technologies, and the second provides
  protection for the companyfs design-technology for patient-specific surgical tools and implants.
• Episurf Medical received approval from Lakemedelsverket (SMPA) to initiate a clinical trial. The clinical trial concerns Episealer Knee®  and is conducted in collaboration with two orthopaedic clinics in Sweden.
• Medical appointed Anders Karlsson development manager for optimization of the companyfs software.
• Three new PCT applications were filed in order to strengthen the companyfs patent portfolio.
• In the first quarter, Episurf Medical AB together with Avanza Bank carried through the first of two distributions of ownership directed towards the public in Sweden. The first transaction generated 300 new shareholders.
• On two occasions, A-shares were transferred to B-shares. After the first transaction in the second quarter, there were 3,375,903 A-shares and 3,024,097 B-shares in the company. The second conversion of A- and B-shares was carried out in the third quarter. The total number of shares in the company is 6,400,000; 3,367,049 A-shares and 3,032,951 B-shares. 
• From the first quarter of 2012 the companyfs development costs will no longer be activated in the balance sheet but will be
  accounted in the period when it arises. All the comparative amounts have been adjusted. The accumulated effect of the change in the accounting principle amounts to 8,339,589 SEK and has been reported as equity.  

         Nina Bake, President
         Phone: +46 736 125 563 e-mail: nina.bake@episurf.com