CHAD Therapeutics Reports Fiscal 2006 Third Quarter and Nine Month Financial Results.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 third quarter and first nine months of fiscal 2006. Evaluation of Strategic Opportunities As previously reported, CHAD has been in discussions with several parties concerning the distribution of both the Company's TOTAL O(2)(R) home oxygen filling system and the products it is 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, the Board of Directors decided to broaden the scope of its consideration of various strategic alternatives for the Company, and has engaged an investment banking firm to assist the Board in evaluating strategic opportunities and considering alternatives to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. value for CHAD's shareholders. This process continues. Given the nature of the process, the Company is unable to provide further comment at this time. CHAD plans to report publicly at such time as the evaluation of strategic opportunities is completed and its impact on CHAD's business is assessed. Third Quarter and Nine-Month Results For the three months ended December December: see month. 31, 2005, revenue declined to $5,907,000 from $6,444,000 for the third quarter of fiscal 2005. Net earnings for the third quarter of fiscal 2006 were $39,000, or $0.00 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, as compared to $505,000, or $0.05 per diluted share, for the third quarter of fiscal 2005. For the nine months ended December 31, 2005, revenue declined to $17,177,000 from $18,852,000 for the same period last year. The net loss for the first nine months of fiscal 2006 was $213,000, or $0.02 per diluted share. This compares to net earnings for the first nine months of fiscal 2005 of $1,222,000, or $0.12 per diluted share. Sales of oxygen conservers to domestic customers declined 30% during the first nine months of fiscal 2006 compared to the prior year, reflecting pricing pressure and the reduction in sales to a major customer which have been previously reported. During the same period, international conserver con·serve v. con·served, con·serv·ing, con·serves v.tr. 1. a. To protect from loss or harm; preserve: sales increased 312%. Sales of CHAD's proprietary TOTAL O(2) home oxygen filing system declined 2% during the first nine months of fiscal 2006 compared to the first nine months of fiscal 2005, primarily because a large customer deferred purchases during the third quarter of fiscal 2006. The customer has now resumed purchasing TOTAL O(2) systems. As previously reported, a major university sleep clinic has agreed to evaluate CHAD's initial sleep products. Certain tests of CHAD's diagnostic devices have been completed, and the university has expressed interest in expanding its work to include an evaluation of the Company's therapeutic technology. About CHAD Therapeutics CHAD Therapeutics, Inc. is in the business of developing, producing and marketing respiratory respiratory /res·pi·ra·to·ry/ (res´pi-rah-tor?e) pertaining to respiration. res·pi·ra·to·ry adj. Of, relating to, used in, or affecting respiration. 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 per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. competitive advantages over the Company's products, changes or proposed changes in health care reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. which affect home care providers, the terms of any distribution agreement which may be negotiated with respect to our TOTAL O2 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 efficacy /ef·fi·ca·cy/ (ef´i-kah-se) 1. the ability of an intervention to produce the desired beneficial effect in expert hands and under ideal circumstances. 2. , 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)
Nine Months Ended Three Months Ended
December 31, December 31,
-------------------------------------------------
2005 2004 2005 2004
------------ ------------ ----------- -----------
Net sales $17,177,000 $18,852,000 $5,907,000 $6,444,000
Cost of sales 11,194,000 11,116,000 3,806,000 3,741,000
------------ ------------ ----------- -----------
Gross profit 5,983,000 7,736,000 2,101,000 2,703,000
Selling, general
and administrative 5,101,000 5,306,000 1,558,000 1,858,000
Research and
development 1,202,000 1,207,000 435,000 380,000
------------ ------------ ----------- -----------
Total costs and
expenses 6,303,000 6,513,000 1,993,000 2,238,000
------------ ------------ ----------- -----------
Operating income
(loss) (320,000) 1,223,000 108,000 465,000
Other income, net 23,000 28,000 4,000 14,000
------------ ------------ ----------- -----------
Earnings (loss)
before income taxes (297,000) 1,251,000 112,000 479,000
Income tax expense
(benefit) ( 84,000) 29,000 73,000 (26,000)
------------ ------------ ----------- -----------
Net earnings
(loss) $(213,000) $1,222,000 $39,000 $505,000
============ ============ =========== ===========
Earnings (loss) per
share:
Basic $(0.02) $0.12 $0.00 $0.05
Diluted $(0.02) $0.12 $0.00 $0.05
============ ============ =========== ===========
Weighted shares
outstanding:
Basic 10,142,000 10,119,000 10,151,000 10,124,000
Diluted 10,142,000 10,622,000 10,569,000 10,647,000
CHAD THERAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
December 31,
-------------------------
Assets 2005 2004
------------ ------------
Current assets:
Cash $820,000 $2,021,000
Accounts receivable, net 3,202,000 3,628,000
Income taxes refundable 402,000 --
Inventories, net 7,356,000 7,357,000
Prepaid expenses and other assets 184,000 349,000
Deferred income taxes 501,000 691,000
------------ ------------
Total current assets 12,465,000 14,046,000
------------ ------------
Property, plant and equipment, net 1,056,000 1,140,000
Intangible assets, net 877,000 700,000
Deferred income taxes 376,000 --
Other assets 74,000 87,000
------------ ------------
Total Assets $14,848,000 $15,973,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $862,000 $1,839,000
Accrued expenses 1,142,000 1,290,000
Income taxes payable -- 418,000
------------ ------------
Total current liabilities 2,004,000 3,547,000
Other long-term liabilities 5,000 --
------------ ------------
Total liabilities 2,009,000 3,547,000
------------ ------------
Shareholders' equity:
Common shares, $.01 par value, authorized
40,000,000 shares, 10,158,000 and
10,022,000 issued and outstanding 13,397,000 13,360,000
Retained earnings (accumulated deficit) (558,000) (934,000)
------------ ------------
Net shareholders' equity 12,839,000 12,426,000
------------ ------------
Total Liabilities and Shareholders'
Equity $14,848,000 $15,973,000
============ ============
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