THE CEO'S CORNER: What’s New!

February 11, 2010


While the best thing about 2009 for much of the world’s economy is that it is our rear view mirror, we did end the year with a great ASHP show [see press release for December 14, 2009], an upswing in sales [see November 30, 2009 CEO Corner], placement on the GSA schedule for the future [see press release for November 23, 2009] and recognition of the lifesaving capabilities of our ValiMed™ MVS in award of the 2009 ASHP Literature Award for Pharmacy Practice Research to Dr. Jim Stevenson and his current and former staff at the CS Mott Children’s Hospital of the University of Michigan Health System [see press release for December 2, 2009]. We are starting the New Year with a bang -- signing a supplier agreement with McKesson Inc. and continuation of our sales momentum (more on that in coming months from Greg Firmbach, our new President). Awesome work by the entire CDEX staff!


With evidence of a thaw in frozen corporate hospital budgets, it is time to accelerate our marketing and sales efforts, which I am pleased to report, can be done thanks to loyal investors stepping forward – they are as much a part of the CDEX team as our Tucson based staff. Finally, with the upswing in units under contract and the need to look again at increasing production for 2010, I believe it is time to bring in a commercialization management team with medical and public company experience to take us to the next level. To complement our President Greg Firmbach’s strengths in sales and marketing, we are beginning a search for a new CEO with outstanding product commercialization and public company experience. Several candidates have already contacted us and we look forward to hearing from others who may be interested and qualified.


In addition, as we expand our revenue base we will bring in additional scientific support to give us a new look at our product and technology plans, which include reopening our efforts in explosive detection, an area in which we have received inquiries from other companies.


Many of you know that Tim Shriver, our COO, has been the Company’s technical rudder in moving our technology from ideas to marketable products. I think it is safe to say that he has been the single most important individual in the Company’s advancement. While Tim has been a true work horse for the Company since its inception, with Greg moving up to the position of President, Tim will be able to step down from the day to day rigor of the COO position. He will continue to lead Technical Operations and support the Company going forward.


In my last CEO Corner I noted that the CDEX story for 2009 was pulling through during turbulent economic times with the support of clients, employees, shareholders, vendors, and investors. The CDEX story for 2010 is shaping up to be the breakout year that 2009 should have been and getting back to our 2007 and 2008 trend of record revenues. Thanks for your interest and support of the Company and stay tuned for the future.


Malcolm Philips CEO


Tim Shriver – Management Briefing 11/30/09


Good Morning,


My name is Tim Shriver. I am the Chief Operating Officer for CDEX. I have the primary responsibility for the technical and manufacturing operation of our company. I am taking this opportunity to provide a brief update on the progress that has been made on the technical side of the Company with a focus on recent improvements of our product lines. First, I would like to add that Greg Firmbach, our Senior VP over sales and marketing, has a finger on the pulse of what improvements in our products that the market wants and it is my job to make it happen.


First, let's talk about ValiMed - our product line that is saving lives in hospitals today. As you may know, ValiMed evaluates the compounding of high risk medications in pharmacies to provide assurance that the medication is the right drug at the right dose, every time. I should add that our staff is driven by the numerous studies worldwide that report the alarming frequency of mistakes made in the compounding process. When we get reports back from the field that ValiMed has caught another error protecting patients, it makes all of our efforts worthwhile.


The drug/diluent combinations in our signature library provide the engine that drives the ValiMed System. For example, one signature would be Insulin 1 unit per-ml in D10W. The more signatures we have in our library, the more the ValiMed machine will be used and the greater the recurring revenue stream from our cuvette sales. In the past some of our clients have requested signatures that we could not develop easily. So, we had put those signatures on a back burner while we tackled the lower hanging fruit. Recent efforts by our technical team have unlocked additional approaches to identify and discriminate drug/dose/diluent combinations. The new approach has the potential to dramatically increase the ValiMed signature library. This is huge for us! We currently are actively partnering with two of our ValiMed clients to field validate this process. We fully expect these efforts to be successful based on our laboratory testing. This will open the door to re-evaluate a number of medications that had been requested by clients but were not previously available.


As a result of this partnership arrangement with our clients, we have also developed a system that permits our clients to actively participate in the development of all the ValiMed signatures. This ability permits our clients to immediately focus on their specific needs reducing development time and significantly reducing costs for both our clients and CDEX.


A last point with regard to the ValiMed system, we have recently undertaken efforts to expand the ability of the existing CCT platform to identify a broader range of potentially counterfeited medications. Previous work done in this area provides a high level of confidence that we will be successful and be able to provide a product to be used in the first line of defense in preventing the introduction of counterfeited or contaminated medications into our medical supply chain or the medical supply chains of our overseas partners.


Turning to our other product line the ID2 Meth Scanner. We are continuing our efforts to enhance the existing design of the production ID2 Meth Scanner. We have completed the preliminary design work to incorporate a number of functional enhancements such as the addition of a TFT LCD screen. Other enhancements include the addition of a date/time indicator and a download capability to relate specific evaluations to law enforcement reports. These enhancements will be ready for inclusion in our next ID2 Meth Scanner production run.


Looking to the future developments, preliminary evaluations have been conducted to validate modifications to the design of the next generation scanner to increase sensitivity and provide the ability to evaluate for multiple drugs using the same scanner unit. The results of the design testing have been positive and we have a high level of confidence that we will be able to finalize the design for the next generation ID2 Meth Scanner next year.


The recent successes we have had in the technical areas confirm the validity of our recent decisions to focus our attention and resources on our existing product lines and customer support. We will continue to update you on our progress and encourage you to provide your input or questions through our website access.


Have a good morning and I thank you for your interest in CDEX, Inc.


Briefings from the Management Team

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