TomTec shuts down operations after investors decide to pull out

June 11, 1997

New company will service TomTec installed base, howeverTomTec Imaging Systems called it quits on June 1 following unsuccessful attempts to gain new funding sources following the withdrawal of its venture-capital backers. At the same time, the

New company will service TomTec installed base, however

TomTec Imaging Systems called it quits on June 1 following unsuccessful attempts to gain new funding sources following the withdrawal of its venture-capital backers. At the same time, the Boulder, CO-based cardiac ultrasound developer also closed its Singapore and Tokyo regional headquarters and began the process required under German law to shut down its Munich office.

TomTec was formed in 1993 following the merger of stress-echo and digital networking vendor Prism Imaging/Freeland Systems and ultrasound image-processor supplier Tomographic Technologies of Munich, Germany (SCAN 1/19/94). The vendor targeted the 3-D echocardiography, stress-echo, and digital-echo networking markets.

While TomTec was experiencing success in the growing digital networking market, revenues had not grown enough to counteract a decline in revenues from its add-on stress-echo products. This dropoff in demand, caused by the introduction of integrated stress-echo options on several ultrasound scanners, occurred much quicker than expected. Demand for add-ons for the installed base of scanners that were not equipped with these stress-echo options also did not materialize as much as anticipated, said Mark Low, vice president of marketing.

TomTec was also one of the earliest companies to address the 3-D cardiac ultrasound marketplace. This segment, however, has remained primarily a research market in the U.S., Low said.

"We had anticipated that 3-D would be a growing segment of the marketplace, but that growth did not manifest itself in the time frame that we had hoped," Low said.

TomTec had several OEM customers, including Toshiba America Medical Systems, which signed an agreement last year to combine TomTec's integrated digital ultrasound platform with Toshiba's PowerVision cardiovascular ultrasound scanner (SCAN 11/20/96). TomTec pursued all potential funding options before deciding to close its doors, Low said.

"There was a concerted effort on the part of the company to seek strategic partners, new venture funding, new equity placements, and even mergers and acquisitions," he said.

TomTec customers in the U.S. will receive service and support from CraMar Technologies, a company that was formed for this purpose. Made up mostly of ex-TomTec employees, CraMar has acquired an inventory of spare parts, test equipment, and technical information to handle the TomTec product line, according to the company. CraMar, which will also be trying to complete installations of recent TomTec sales, will also be based in Boulder. TomTec is still working to secure a similar service and support network for its international customers.

Liquidation of TomTec's assets, including its intellectual property and product lines, is being handled by Claymore Partners, a financial consultant firm. TomTec's technology could be sold as complete product lines or broken down into components, Low said. Companies that might be interested in TomTec's technology include related ultrasound technology companies as well as information management vendors.

"We've had a number of interested parties contact us to talk about the business," he said. "We all feel very strongly that the technology was a valuable one in the industry and we hope that it continues. We're sad that we weren't able with our resources to be able to do it ourselves."