CHICAGO, Feb. 15 /PRNewswire-FirstCall/ -- The Female Health Company (BULLETIN BOARD: FHCO) reported net revenues of $1,545,657 and net loss attributable to common stockholders of $(1,223,265) or $(0.06) per diluted share for the three months ended December 31, 2004 compared to net revenues of $2,328,748 and a net loss attributable to common stockholders of $(655,292) or $(0.03) per diluted share for the three months ended December 31, 2003.
Operating loss increased $809,788 to ($1,145,833) for the three months ended December 31, 2004 from ($336,045) for the three months ended December 31, 2003.
Net revenues decreased $783,091 in the current quarter, or 34%, compared with the same period last year. The lower net revenues occurred because of lower unit sales shipped to global and domestic public customers coupled with a reduction of the average selling price per unit due to sales mix.
The revenue results are consistent with the Company's expectations that in executing its long-term strategies for growth, the Company expects significant quarter to quarter variation due to the timing of receipt of large orders, subsequent production scheduling, and shipping of products.
Selling, general and administrative expenses increased $129,934, or 12%, to $1,246,567 in the current quarter from $1,116,633 for the same period last year. The increase was a result of a rise in outside legal and consulting fees and an increase in UK operating expenses. The additional legal expense was a non-recurring charge relating to banking transactions. The higher consulting fees related to the design of an internal control environment that complies with Section 404 of the Sarbanes-Oxley Act. The higher UK operating costs were a result of adverse exchange rate fluctuation.
With the primary objective of retiring outstanding debt, the Company conducted a program between September 2004 and January 2005 to induce the holders of the Company's outstanding common stock purchase warrants to exercise their warrants. Pursuant to this program, the Company offered an incentive to such holders providing for issuance of (1) shares of the Company's common stock equal to 10% of the aggregate number of common stock purchase warrants exercised or (2) new common stock purchase warrants equal to 20% of the aggregate number of outstanding warrants exercised containing an exercise price per share equal to the closing price of the Company's common stock as reported on the OTC Bulletin Board on the date the holder committed to exercise the outstanding warrants. Under the incentive program, five investors exercised warrants to purchase a total of 1,500,000 shares and in total received 150,000 incentive shares. Two investors exercised warrants to purchase a total of 1,200,000 shares an in total received 240,000 incentive warrants with an exercise price in each case of $1.50 per share and an expiration date of November 23, 2007. Three of the investors were directors of the Company who in total invested $1.3 million to purchase 1,400,000 shares. On November 23, 2004, the Company paid off its remaining outstanding debt with a portion of these proceeds.
Non-cash stock compensation costs increased $358,249 to $406,147 for the current quarter compared to $47,898 for the same period last year. The higher costs during the current fiscal year were a result of the Company recording charges related to shares of common stock and stock purchase warrants issued as an incentive for exercising stock warrants during the first quarter of as well as increased compensation for investor relation. During the prior year first quarter the Company did not incur any charges related to issuance of incentive shares or warrants.
Net interest and other expenses decreased $263,274 to $52,925 for the current period from $316,199 for the same period last year. The decrease was due to the Company having a lower level of debt outstanding during the first quarter of fiscal year 2005 than the same period in fiscal year 2004. The result is a lower amount of both interest paid and non-cash expenses incurred from the amortization of discounts on notes payable during the current quarter than the same period in the prior year.
At December 31, 2004, the Company had working capital of $3.7 million and stockholder's equity of $2.9 million compared to working capital of $2.5 million and stockholder's equity of $1.8 million as of September 30, 2004.
The Female Health Company, based in Chicago, owns certain worldwide rights to FC Female Condom(TM) including patents which have been issued in the United States, United Kingdom, Japan, France, Italy, Germany, Spain, The People's Republic of China, Canada, New Zealand, South Korea and Australia. FC Female Condom(TM) is the only available product controlled by a woman that protects against sexually transmitted diseases including HIV/AIDS, and unintended pregnancy.
"Safe Harbor" statement under the Private Securities Litigation Reform Action of 1995: The statements in this release which are not historical fact are forward-looking statements based upon the Company's current plan and strategies, and reflect the Company's current assessment of the risks and uncertainties related to its business, including such things as product demand and market acceptance; the economic and business environment and the impact of government pressures; currency risks; capacity; efficiency and supply constraints; and other risks detailed in the Company's press releases, shareholder communications and Securities and Exchange Commission filings. Actual events affecting the Company and the impact of such events on the Company's operations may vary from those currently anticipated.
For more information about the Female Health Company, dial toll-free via fax, 1-800-PRO-INFO and enter company code "FHCO". Also, visit the Company's web site at http://www.femalehealth.com/ and http://www.femalecondom.org/ . If you would like to be added to an e-mail alert list, please send an e-mail to FHCInvestor@aol.com .
THE FEMALE HEALTH COMPANY Unaudited Condensed Consolidated Balance Sheets As Of December 31, December 31, 2004 2003 Cash $1,503,863 $641,628 Accounts receivable, net 1,429,209 2,717,354 Inventories, net 1,488,647 922,966 Prepaid and other current assets 327,324 242,320 Total Current Assets 4,749,043 4,524,268 Certificate of Deposit 46,225 69,593 Other non-current assets 340,813 450,008 Net property, plant & equipment 184,648 273,594 TOTAL ASSETS $5,320,729 $5,317,463 Notes payable, bank, net of unamortized discount $- $1,802,522 Notes payable, related party, net of unamortized discount - 915,851 Accounts payable 327,156 639,134 Accrued expenses 732,289 478,796 Current maturities of obligations under capital leases 17,119 31,409 Preferred dividends payable 7,306 3,048 Total current liabilities 1,083,870 3,870,760 Obligations under capital leases - 17,449 Deferred gain on sale of facility 1,309,660 1,321,184 Total liabilities 2,393,530 5,209,393 Total Stockholders' equity 2,927,199 108,070 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,320,729 $5,317,463 THE FEMALE HEALTH COMPANY Unaudited Condensed Consolidated Income Statements For the 3 Months Ended December 31, 2004 2003 NET REVENUES $1,545,657 $2,328,748 GROSS PROFIT 529,155 874,231 Advertising and promotion 4,588 11,474 Selling, general & administrative 1,246,567 1,116,633 Research & development 17,686 34,271 Stock compensation 406,147 47,898 Total Operating Expenses 1,674,988 1,210,276 OPERATING LOSS (1,145,833) (336,045) Interest, net and other expense 52,925 316,199 Foreign currency translation (gain)/loss (16,320) - Pretax loss (1,182,438) (652,244) Income taxes - - NET LOSS (1,182,438) (652,244) Preferred dividends 40,827 3,048 NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS (1,223,265) (655,292) NET LOSS PER COMMON SHARE $(0.06) $(0.03) Weighted average common shares 22,156,056 19,599,988
The Female Health CompanyCONTACT: Investors, William R. Gargiulo, Jr., +1-231-526-1244, orBusiness - Product, Mary Ann Leeper, Ph.D., +1-312-595-9123, both of FemaleHealth Company