CHAD Therapeutics Reports Fiscal 2006 Second Quarter and First Half Financial Results; Announces Engagement of Investment Bank to Assist Management in Evaluating Alternatives to Maximize Shareholder Value.CHATSWORTH Chatsworth, estate, Derbyshire, central England, near Chesterfield. It is the seat of the dukes of Devonshire. Begun in 1552, the present Classical-style Chatsworth House was rebuilt in 1686. , Calif. -- CHAD Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. , Inc. (AMEX AMEX See: American Stock Exchange :CTU CTU Colorado Technical University CTU Czech Technical University in Prague CTU Counter Terrorist Unit CTU Clinical Trials Unit CTU Catholic Theological Union CTU Chicago Teachers Union CTU Computer Training Unit CTU Control Unit ) today reported financial results for the second quarter and first half of fiscal 2006, and announced that it has engaged an investment banking firm to assist management in evaluating strategic alternatives to maximize shareholder value. "As previously reported, for the past few months we have been in discussions with several parties concerning the distribution of both our TOTAL O(2)(R) home oxygen filling system and the products we are developing for the sleep disorder Sleep disorder Any condition that interferes with sleep. At least 84 have been identified, according to the American Sleep Disorders Association. Mentioned in: Insomnia, Night Terrors market. During the course of these discussions, our Board of Directors decided to broaden the scope of its consideration of various strategic alternatives for the Company," said Earl L. Yager Ya´ger n. 1. (Mil.) In the German army, one belonging to a body of light infantry armed with rifles, resembling the chasseur of the French army. , Chief Executive Officer and President. "Accordingly, we have engaged Ewing Ew·ing , James 1866-1943. American pathologist. An authority on cancer, he established oncology as a clinical specialty. Bemiss & Co., a highly respected private firm based in Richmond Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , Va., with substantial investment banking experience in the medical device industry, to assist in evaluating these opportunities and considering alternatives to maximize value for CHAD's shareholders." Second Quarter and First Half Results For the three months ended September September: see month. 30, 2005, revenue declined to $5,375,000 from $6,309,000 for the second quarter of fiscal 2005. The net loss for the second quarter of fiscal 2006 was $210,000, or $0.02 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. This compares to net earnings for the second quarter of fiscal 2005 of $455,000, or $0.04 per diluted share. For the six months ended September 30, 2005, revenue declined to $11,270,000 from $12,408,000 for last year's period. The net loss for the first six months of fiscal 2006 was $252,000, or $0.02 per diluted share. This compares to net earnings for the first six months of fiscal 2005 of $717,000, or $0.07 per diluted share. Conserver con·serve v. con·served, con·serv·ing, con·serves v.tr. 1. a. To protect from loss or harm; preserve: Product Update Sales of oxygen conservers to domestic customers declined 29% during the first six months of fiscal 2006 compared to the prior year, reflecting continuing pressure on prices as well as the significant reduction in sales to a major customer which has been previously reported. During the same period, international conserver sales increased 181%. "While we expect price pressure to continue in the domestic conserver market, we believe that growth in the international market and the introduction of our new LOTUS electronic oxygen conserver offer opportunities to improve our future operating results," Yager said. He said that initial shipments of the advanced LOTUS conserver began last week and will contribute to sales in the current quarter. "Based on orders in hand, we expect international conserver sales to remain robust through at least the rest of fiscal 2006, and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the longer-term growth potential of the international conserver market," Yager said. "CHAD is well positioned to benefit from this growth because our wide variety of conserver products enables us to meet customers' specific needs in many international markets." TOTAL O(2) System Update Sales of CHAD's proprietary TOTAL O(2) home oxygen filling system increased 39% during the first six months of fiscal 2006 compared to the first six months of fiscal 2005. "At the Medtrade show for the home health care industry held in Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. last month, we saw further evidence that home care providers are actively seeking ways to reduce monthly operating costs operating costs npl → gastos mpl operacionales as a primary strategy to deal with changes in Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. . CHAD's TOTAL O(2) system can significantly reduce operating costs while at the same time improving patient care. We are increasingly confident that the TOTAL O(2) system can become a major contributor to CHAD's growth," Yager said. Sleep Disorder Product Update The CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. added, "We continue to make progress with the initial products we are developing for the sleep disorder market. We have applied for 16 patents on our technology to date, of which one has issued and two more have been allowed. We have demonstrated that our diagnostic products provide accurate, easy-to-interpret data for use in the diagnosis of sleep disorders Sleep Disorders Definition Sleep disorders are a group of syndromes characterized by disturbance in the patient's amount of sleep, quality or timing of sleep, or in behaviors or physiological conditions associated with sleep. . On the therapeutic side, following up on the recent successful completion of an initial clinical trial at a university sleep clinic in the Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
Earnings Guidance Due to the delays in finalizing a distribution arrangement for the TOTAL O(2) system, management is withdrawing prior guidance relative to pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings for fiscal 2006 until such time as the evaluation of strategic opportunities is completed and its impact on CHAD's business is assessed. Conference Call Chad has scheduled a conference call today at 11:00 a.m. ET. A simultaneous webcast will be available from the Investor Relations Investor relations The process by which the corporation communicates with its investors. link at www.CHADTherapeutics.com. A replay will be available after 1:00 p.m. ET at this same Internet address There are two kinds of addresses that are widely used on the Internet. One is a person's e-mail address, and the other is the address of a Web site, which is known as a URL. Following is an explanation of Internet e-mail addresses only. For more on URLs, see URL and Internet domain name. . For a telephone replay, dial 800-633-8284, reservation #21265406, after 1:00 p.m. ET. About CHAD Therapeutics CHAD Therapeutics, Inc. is in the business of developing, producing and marketing respiratory care devices designed to improve the efficiency of oxygen delivery systems for home health care and hospital treatment of patients suffering from pulmonary pulmonary /pul·mo·nary/ (pool´mo-nar?e) 1. pertaining to the lungs. 2. pertaining to the pulmonary artery. pul·mo·nar·y adj. Of, relating to, or affecting the lungs. diseases. For more information, visit www.CHADTherapeutics.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statements under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The foregoing statements regarding prospects for future earnings and revenues, future sales trends, and the introduction of products under development are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve certain risks and uncertainties. A number of important factors could cause actual results to differ materially from those contemplated by such forward-looking statements. These include the potential loss of one of our major customers upon whom we depend for a material portion of our business, increased competition and continuing downward pressure on prices for certain of our products, the potential introduction of new products with perceived competitive advantages over the Company's products, changes or proposed changes in health care reimbursement which affect home care providers, the terms of any distribution agreement which may be negotiated with respect to our TOTAL O(2) system or our sleep products, and CHAD's ability to anticipate and respond to technological and economic changes in the home oxygen market. Moreover, the success of the Company's products and products under development will depend on their efficacy, reliability and the health care community's perception of the products' capabilities and benefits, the degree of acceptance the products achieve among homecare British Gas HomeCare is the name for British Gas Services which operates in the United Kingdom, which was originally set up to provide maintenance for central heating and other gas appliances. providers, and, with respect to products under development, obtaining timely regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval. Additional factors that could cause actual results to differ materially from those contemplated in this press release can be found in the Company's annual and quarterly reports filed with the Securities and Exchange Commission under the caption "Outlook: Issues and Risks."
CHAD THERAPEUTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
September 30, September 30,
------------------------- -------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $11,270,000 $12,408,000 $ 5,375,000 $ 6,309,000
Cost of sales 7,388,000 7,375,000 3,594,000 3,696,000
----------- ----------- ----------- -----------
Gross profit 3,882,000 5,033,000 1,781,000 2,613,000
Costs and
expenses:
Selling, general
and
administrative 3,543,000 3,448,000 1,699,000 1,712,000
Research and
development 767,000 827,000 435,000 417,000
----------- ----------- ----------- -----------
Total costs and
expenses 4,310,000 4,275,000 2,134,000 2,129,000
----------- ----------- ----------- -----------
Operating income
(loss) (428,000) 758,000 (353,000) 484,000
Other income, net 19,000 14,000 13,000 6,000
----------- ----------- ----------- -----------
Earnings (loss)
before income
taxes (409,000) 772,000 (340,000) 490,000
Income tax expense
(benefit) (157,000) 55,000 (130,000) 35,000
----------- ----------- ----------- -----------
Net earnings
(loss) $ (252,000) $ 717,000 $ (210,000) $ 455,000
----------- ----------- ----------- -----------
Earnings (loss)
per share:
Basic $ (0.02) $ 0.07 $ (0.02) $ 0.04
Diluted $ (0.02) $ 0.07 $ (0.02) $ 0.04
----------- ----------- ----------- -----------
Weighted shares
outstanding:
Basic 10,137,000 10,116,000 10,141,000 10,122,000
Diluted 10,137,000 10,609,000 10,141,000 10,598,000
CHAD THERAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
September 30,
2005 2004
--------------- --------------
Assets
Current assets:
Cash $ 434,000 $ 3,007,000
Accounts receivable, net 3,013,000 3,458,000
Inventories, net 8,118,000 5,362,000
Prepaid expenses and other assets 472,000 382,000
Deferred income taxes 518,000 434,000
--------------- --------------
Total current assets 12,555,000 12,643,000
--------------- --------------
Property, plant and equipment, net 1,124,000 1,132,000
Intangible assets, net 863,000 710,000
Deferred income taxes 568,000 --
Other assets 65,000 54,000
--------------- --------------
Total Assets $ 15,175,000 $ 14,539,000
=============== ==============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,210,000 $ 1,252,000
Accrued expenses 1,176,000 1,151,000
Income taxes payable -- 228,000
--------------- --------------
Total current liabilities 2,386,000 2,631,000
Capital lease obligation, net of
current portion 7,000 --
--------------- --------------
Total liabilities 2,393,000 2,631,000
--------------- --------------
Shareholders' equity:
Common shares, $.01 par value,
authorized 40,000,000 shares,
10,144,000 and 10,022,000 issued
and outstanding 13,379,000 13,347,000
Retained earnings (accumulated
deficit) (597,000) (1,439,000)
--------------- --------------
Net shareholders' equity 12,782,000 11,908,000
--------------- --------------
Total Liabilities and Shareholders'
Equity $ 15,175,000 $ 14,539,000
=============== ==============
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