Specialized Health Products Reports First Quarter Financial Results; Company Achieves First $2 Million Revenue Quarter; Manufactured Product Sales Increase 74% to $1.4 Million.BOUNTIFUL, Utah Bountiful is a city in Davis County, Utah, United States. As of the 2000 census, the city population was 41,301, a small increase over the 1990 figure of 37,544. The estimated population in 2004 was 41,173, a slight decrease from 2000. -- Specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. Health Products International, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : SHPI SHPI Symposium on High Performance Interconnects ), a manufacturer and marketer of proprietary safety medical devices, today announced consolidated financial results for the first quarter ended March 31, 2006. Total revenue for the first quarter of 2006 exceeded $2.0 million, a 22% increase compared to $1.7 million reported in the same period last year. Manufactured product sales and royalty revenue combined increased 35% to $1.8 million and represented 90% of total revenue. Gross profit for the quarter was $1.3 million, representing a 64% gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. . SHPI reported a net loss of $543,000 for the quarter, including non-cash stock compensation expense of $327,000. This equates to a net loss of $(0.01) 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, including $(0.01) per share in non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , compared to a net loss of $218,000 or breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations on an earnings per diluted share basis for the same period last year. SHPI ended the first quarter of 2006 with $1.1 million in cash. The Company had positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $260,000 in the first quarter. Positive cash flow from operations was offset by net cash used of $348,000 for the purchase of capital equipment related to the development of new manufacturing lines and capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs related to SHPI's proposed merger with The Med-Design Corporation. "An important part of our business growth strategy is to build a strong base of recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue from our self-manufactured products," commented Jeff Soinski, President and Chief Executive Officer. "Our new MiniLoc(TM) Safety Infusion Set An infusion set is used with an insulin pump as part of intensive insulin therapy. The purpose of an infusion set is to deliver insulin under the skin. It is a complete tubing system to connect an insulin pump to the pump user: it includes a subcutaneous cannula, adhesive mount, and SecureLoc(TM) Safety Introducer Needle products, launched in the fourth quarter of 2005, were the primary drivers of our revenue growth in the first quarter, and were responsible for more than half of manufactured product sales. By combining MiniLoc(TM) sales with those of our already established LiftLoc(R) Safety Infusion Set product line, our total safety Huber Huber may refer to:
"As self-manufactured products become a larger part of our revenue mix, we had anticipated that gross profit margins would decline. However, as we transition our new manufactured products from single cavity cavity /cav·i·ty/ (kav´i-te) 1. a hollow place or space, or a potential space, within the body or one of its organs. 2. in dentistry, the lesion produced by caries. to multi-cavity molds, we expect our gross margins to improve in the second half of the year," continued Mr. Soinski. "We expect our blended gross margin for the year on a stand alone basis to be consistent with what we reported for 2005 at approximately 70%." "During the quarter we increased our pace of investment in R&D to complete development and commercialization of three new self-manufactured product lines anticipated to launch in the second half of the year," said Mr. Soinski. "Each of these products is already the subject of development and OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and supply agreements with major multinational partners, including the new agreement with Bard bard, in Wales, term originally used to refer to the order of minstrel-poets who composed and recited the poems that celebrated the feats of Celtic chieftains and warriors. Access Systems for a proprietary safety PEG peg 1. To fix the price of a new security issue during the issuance period through buying and selling it in the open market in order to ensure that the price in the secondary market will not fall below the offering price. Introducer Needle that we announced in April." "Based on our performance in the first quarter, we believe we are on track to achieve our revenue growth target of 25 to 35% for the year on a stand alone basis. Revenue related to the Med-Design merger would provide additional opportunities for growth," added Mr. Soinski. "We expect to be profitable before non-cash stock compensation expense and generate positive cash flow from operations in 2006." Conference Call SHPI will conduct a conference call to discuss fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005 financial results on Thursday Thursday: see week. , May 11, 2006, at 4:30 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . Investors can participate in the conference call live by dialing (800) 230-1093 in the U.S. and (612) 288-0337 internationally. In addition, the call will be webcast live and available for playback Playback could mean:
About Specialized Health Products International, Inc. Specialized Health Products International, Inc. ("SHPI") is a leading developer, manufacturer and marketer of proprietary disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. medical devices for clinician clinician /cli·ni·cian/ (kli-nish´in) an expert clinical physician and teacher. cli·ni·cian n. and patient safety. SHPI has developed multiple safety needle products based upon two primary patented technology platforms, FlexLoc(R) and SecureLoc(TM), which apply to virtually all medical needles used today. SHPI manufactures and markets certain products, including LiftLoc(R) and MiniLoc(TM) Safety Infusion Sets, under its own label. It licenses or supplies other products to leading manufacturers and marketers in the global disposable medical products industry, including Tyco Healthcare Tyco Healthcare was the former healthcare division of Tyco International Ltd. On June 29, 2007 it became a wholly independent publicly traded company named Covidien Ltd. , Bard Access Systems, and BD Medical. In November November: see month. 2005, SHPI announced a merger agreement with The Med-Design Corporation (Nasdaq: MEDC MEDC Michigan Economic Development Corporation MEDC More Economically Developed Country MEDC Maharashtra Economic Development Council (India) MEDC Mobile & Embedded Developers Conference (Microsoft) ), another leading technology provider in the safety medical needle space. For more information about SHPI, visit the company's website at www.shpi.com. Additional Information In connection with the proposed merger with Med-Design, SHPI has filed with the Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4 that includes a joint proxy statement/prospectus and other relevant materials in connection with the proposed merger. INVESTORS AND SECURITY HOLDERS OF SHPI AND MED-DESIGN ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND THE OTHER RELEVANT MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT SHPI, MED-DESIGN, AND THE MERGER. The joint proxy statement/prospectus and other relevant materials, and any other documents filed by SHPI or Med-Design with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by SHPI by directing a request to: Specialized Health Products International, Inc., 585 West 500 South, Bountiful, Utah 84010, Attn: Investor Relations Investor relations The process by which the corporation communicates with its investors. . Investors may obtain free copies of the documents filed with the SEC by Med-Design by directing a request to: The Med-Design Corporation, 2810 Bunsen Avenue, Ventura, California Incorporated in 1866, the city of San Buenaventura (usually referred to as Ventura) is the county seat of Ventura County, California. Ventura has a population of 106,744.[1] Ventura is accessible via U.S. 93003, Attn: Investor Relations. SHPI, Med-Design and their respective executive officers and directors may be deemed to be participants in the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of proxies from the stockholders of SHPI and Med-Design in favor of upon the side of; favorable to; for the advantage of. See also: favor the merger. Information about the executive officers and directors of SHPI and their ownership of SHPI common stock is set forth in SHPI's Form 10-KSB for the fiscal year ended December 31, 2005, which was filed with the SEC on March 8, 2006. Information about the executive officers and directors of Med-Design and their ownership of Med-Design's common stock is set forth in Med-Design's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2005, which was filed with the SEC on March 31, 2006. Investors and security holders may obtain more detailed information regarding the direct and indirect interests of SHPI, Med-Design and their respective executive officers and directors in the merger by reading the joint proxy statement/prospectus regarding the merger. This news release contains 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. within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . The foregoing statements regarding our outlook on our future performance, the potential impact of new product agreements, the trends with respect to new products, our revenue expectations and statements regarding the proposed transaction between SHPI and Med-Design and the transactions related thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. include forward looking statements, which are subject to risks and uncertainties, including but not limited to the fact that our success is dependent on sales generated by our distribution and licensing partners, we have a history of losses, most of our revenues are based on relationships with two companies, which relationships may cease for a variety of reasons, we are dependent on third party manufacturers, we may need and be unable to obtain additional financing, we can be harmed by adverse governmental regulation, we may fail to obtain certain FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. approvals, we are subject to negative pricing pressures, our products may fail, our research and development efforts may fail, and the proposed transaction with Med-Design may not ultimately close for any of a number of reasons, such as we or Med-Design not obtaining stockholder approval; that we will forego business opportunities while the transaction is pending; that prior to the closing of the transaction, the businesses of SHPI and Med-Design may suffer due to uncertainty; that, in the event the transaction is completed, the combination of SHPI and Med-Design may not result in a stronger company; and that the costs related to the transaction will exceed the benefits. Statements made herein are subject to risks and uncertainties that could cause actual results to vary materially from those projected in the forward-looking statements. We may experience significant fluctuations in future operating results due to a number of economic conditions, risks in product and technology development, the effect of our accounting policies and other risk factors detailed in our SEC filings. These factors and others could cause operating results to vary significantly from those in prior periods and those projected in forward-looking statements. Additional information with respect to these and other factors, which could materially affect us and our operations, are included on certain forms we file with the Securities and Exchange Commission. (Financial Tables Follow)
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
-----------------------
Revenue: March 31, March 31,
2006 2005
----------- -----------
Product sales $1,389,848 $798,567
Product royalties 434,811 556,612
Technology fees and license revenues 49,167 198,906
Development fees and related services 154,015 105,801
----------- -----------
Total revenues 2,027,841 1,659,886
Cost of revenues 723,328 326,256
----------- -----------
Gross profit 1,304,513 1,333,630
----------- -----------
Operating expenses:
Research and development (2006 and 2005
totals exclude amortization of deferred
compensation of $109,854 and $106,789,
respectively) 830,292 671,233
Sales and marketing (2006 and 2005 totals
exclude amortization of deferred
compensation of $5,528 and $3,348,
respectively) 280,360 223,070
General and administrative (2006 and 2005
totals exclude amortization of deferred
compensation of $211,395 and $208,729,
respectively) 378,480 330,869
Amortization of deferred compensation 326,777 318,866
----------- -----------
Total operating expenses 1,815,909 1,544,038
----------- -----------
Loss from operations (511,396) (210,408)
----------- -----------
Other income (expense):
Interest income 118 3,390
Other income (expense) (28,317) (7,079)
----------- -----------
Total other income (expense), net (28,199) (3,689)
Income/franchise tax (3,435) (3,539)
----------- -----------
Net loss $(543,030) $(217,636)
=========== ===========
Basic and diluted net loss per common share $(.01) $.00
=========== ===========
Basic and diluted weighted average number of
common shares outstanding 44,630,556 44,458,261
=========== ===========
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS March 31, December 31,
------ 2006 2005
------------ ------------
Current assets:
Cash $1,118,960 $707,222
Accounts receivable 1,164,513 1,577,715
Inventory 668,324 618,490
Prepaid expenses and other 106,632 58,190
------------ ------------
Total current assets 3,058,429 2,961,617
------------ ------------
Property and equipment, net 1,054,424 886,141
Intangible assets, net 236,115 241,115
Other assets 687,102 549,742
------------ ------------
$5,036,070 $4,638,615
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities $2,450,248 $2,162,895
Deferred revenue, net of current portion 319,568 368,735
Deferred rent 1,270 3,176
Accrual for patent litigation expenses,
net of current portion 722,627 845,200
Note payable - long term 1,000,000 500,000
------------ ------------
Total liabilities 4,493,713 3,880,006
------------ ------------
Stockholders' equity:
Preferred stock, $.001 par value;
30,000,000 shares authorized,
no shares outstanding - -
Common stock, $.02 par value; 70,000,000
shares authorized, 44,629,445 and
44,457,995 shares issued and
outstanding, respectively 893,589 892,589
Additional paid-in capital 40,103,231 42,153,783
Deferred compensation - (2,376,330)
Accumulated deficit (40,454,463) (39,911,433)
------------ ------------
Total stockholders' equity 542,357 758,609
------------ ------------
$5,036,070 $4,638,615
============ ============
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