A SECOND attempt to commercialise dental disease detection technology developed by Scottish universities has been dealt a blow after 3D Diagnostic Imaging unveiled a huge cost-cutting exercise and said it planned to delist from the Alternative Investment Market.

Shares in 3D Diagnostic Imaging plunged 53.8%, closing at 0.15p, compared to their listing price of 6p in November 2010.

The core of 3D Diagnostic had been on AIM before as IDMoS, a company that collapsed into administration in 2008. 3D is now valued at just £361,000.

Isle of Man-based 3D Diagnostic's sole product is a dental scanner produced by Dundee-based subsidiary CarieScan using technology developed by Dundee and St Andrews universities.

But it has struggled to pick up sales, issuing a profit warning in December and cautioning of "adverse trading conditions" in May.

Its main backers are London-based investment house Evolve Capital and Scottish Enterprise.

A Scottish Enterprise spokeswoman said: "In the continuing economic climate it's vital for companies to adapt and make changes to secure a positive future in challenging times.

"3D Diagnostic is doing everything it can to manage its risks and take the right steps towards stabilising its business model."

3D Diagnostic said it wants to reduce its monthly overhead base to less than £60,000. It did not disclose its current costs.

The company has made a "small number" of redundancies, including two of its eight Dundee-based staff, while the others are having their wages cut by one-quarter.

Chief executive Graham Lay, former chief operating officer at IDMoS, will see his salary, which amounted to £181,000 last year reduced by 60%.

Finance director Oliver Cooke, who is also company secretary of Evolve, is having his pay shrunk by 80%. Chairman David Snow, a non-executive director of Evolve, will continue to waive his fee.

3D Diagnostic said that over the past 15 months the executives had deferred one-third of their salaries and Mr Snow, and his predecessor James Noble, who stepped down in February, deferred all of their fees. The directors have now waived their entitlement to these amounts. In return, 3D Diagnostic will grant them extra share options and rebase the exercise price of existing options.

3D Diagnostic insisted that sales revenues from CarieScan grew in each of the first six months of 2012 "albeit from a modest base". The company said that the reduction in costs and rising sales means the company has sufficient cash to meet its immediate requirements.

But it said that "for the sake of prudence", it would seek to strengthen its balance sheet. "The directors believe that with only a relatively small amount of additional capital the company will be robustly positioned to grow into the future," 3D Diagnostic added.

It said that in the current market environment the access to development capital it hoped would be provided by an AIM listing has not materialised and it could not justify the costs of a stock market listing.

It will require 75% approval by shareholders to delist.

3D Diagnostic said that if it delists it will continue to retain a non-executive director on its board and send shareholders copies of its accounts. 3D Diagnostic Imaging initially had a successful debut on AIM after stepping up from the third-tier Plus market.

The listing allowed it to raise £2.7m, including an additional £1.75m from Scottish Enterprise, a 20.5% shareholder, which was to fund a move into the US market.

Its shares initially traded at as much as 9p, valuing the company at £15.3 million.

3D's product is the CarieScan PRO device, which uses electrical current to test for dental decay.

The device is made by SKF in Livingston and the sensors by Interplex in Arbroath.