NQCI Announces New Business Plan to Exploit Its Wearable Kidney Technology

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NQCI Announces New Business Plan to Exploit Its Wearable Kidney Technology

BEVERLY HILLS, Calif.-(Business Wire)-February 9, 2007 - National Quality Care, Inc. (OTCBB:NQCI) ("NQCI") announced today that its Board of Directors have adopted a new strategic plan for the company.

NQCI had previously terminated certain agreements and transactions with Xcorporeal, Inc., including a Merger Agreement and a License Agreement, each dated as of September 1, 2006. In addition, NQCI has terminated all of the transactions and other agreements between NQCI and Xcorporeal that are referenced in or contemplated by the Merger Agreement or the License Agreement. We stated in our termination notice to Xcorporeal that we had exercised our termination rights with respect to such agreements and transactions on the basis of Xcorporeal's continuing, uncured and uncurable breaches of the Merger Agreement and its fraudulent and other wrongful conduct related to the Merger Agreement, the License Agreement and certain related matters.

In a written notice dated January 2, 2007, Xcorporeal consented to the termination of the Merger Agreement but disputed our termination of the License Agreement (claiming that it is still in effect). We anticipate that the status of the License Agreement may be resolved by arbitration or a court of law.

Our current strategic plan includes our engagement of a new key executive team, beginning with the appointment of a new Chief Scientific Officer, to direct the development and commercialization of our wearable artificial kidney, or Wearable Kidney. In fulfillment of this plan we intend to launch a search for such persons and will consult with our historical advisers to assist us in recruiting persons to replace our former Chief Scientific Officer, Victor Gura, and to add other key personnel to our team. Second, to build on our success to date in the development of our Wearable Kidney, we intend to identify both sources of outside equity financing and potential strategic partners to exploit this technology as efficiently as possible.

Our wearable artificial kidney, or Wearable Kidney, on which we have been working for 4 years, is designed to provide 24-hour dialysis while still maintaining a reasonable life style. At present, a patient suffering from ESRD must spend several hours per day for 3 or 4 days per week on a dialysis machine, which places an enormous burden on patients and caregivers alike. More importantly, dialysis, as currently practiced, is ultimately only a stopgap, and except for the fortunate few persons who qualify for renal transplant, persons suffering from chronic kidney failure in the U.S. have an average death rate of 20% per year. Our Wearable Kidney, for which we have developed a prototype, is designed to provide dialysis 24 hours a day, 7 days a week, without requiring the patient to spend long hours attached to a large machine. We believe that this device would drastically improve the effectiveness of treatment and reduce mortality in the ESRD population and significantly reduce the costs associated with providing care to these patients.

On November 15, 2004, we announced that we had developed a working prototype of a Wearable Kidney, or the Prototype, which is designed to be powered by a battery and to operate continuously, and that a version of the Prototype has been successfully tested in bench studies and has performed safely and effectively in animal testing studies conducted at the research facilities of Cedars Sinai Medical Center in Los Angeles, California, or Cedars. The results of this research were also presented at the annual meeting of the American Society of Nephrology in November 2004. An abstract of the presentation was published in the Journal of the American Society of Nephrology. We have demonstrated the feasibility of our device by testing it on 12 pigs.

In late March, 2005, the United States Patent and Trademark Office sent us a Notice of Allowance for a patent application covering the design of the Wearable Kidney. This patent issued in early November, 2005. In addition, in late April, 2006, we announced the development of a wearable ultrafiltration device to remove excess fluid from patients with congestive heart failure. This prototype device is intended to be worn as a belt and operated with batteries, much like our Wearable Kidney.

We believe that the Wearable Kidney can be manufactured in a lightweight, low-cost design. The Prototype was assembled with a proprietary design that cost comparatively little to produce. The commercial version is projected to cost substantially less to manufacture in quantity and is expected to weigh less than 5 pounds. We will require significant funds and efforts to advance the design from its current state to the final product design.

We intend to recruit engineering personnel early in the product development cycle. Their expertise is anticipated to ensure that the design pursued by the engineering team meets all the necessary parameters for high volume and low-cost manufacturing. At this time, we expect to outsource the manufacturing of the various components, and to perform assembly and quality assurance testing internally. This process is anticipated to allow us to minimize capital investments, leverage the manufacturing expertise of third parties and maintain the high levels of quality needed to consistently produce a reliable medical device.

About National Quality Care, Inc.

NQCI will continue to focus on the development of its Wearable Kidney, which can be worn as a belt and operates 24 hours a day, 7 days a week. The Company also has developed a continuous ultrafiltration belt for the treatment of patients with Congestive Heart Failure. The Wearable Kidney is designed to treat patients suffering from End Stage Renal Disease by providing continuous dialysis from a device worn as a belt by the patient. However, recent studies have indicated that the device can also be used safely and effectively in a simplified version to treat the salt and fluid overload afflicting patients with Class III and IV Congestive Heart Failure.

Some paragraphs of this press release, particularly those describing the Company's strategies, operating expense reductions and business plans, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While the Company is working to achieve those goals, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including difficulties in marketing its products and services, need for capital, competition from other companies and other factors, any of which could have an adverse effect on the business plans of the Company, its reputation in the industry or its expected financial return from operations. Factors such as these could have an adverse effect on the Company's results of operations. In light of significant uncertainties inherent in forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company and its subsidiaries that it will be achieved.

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