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Little bit of volume lately!!!
PSTX.. $1.20 First Quarter 2011 Results
Sold my positions.. No longer Moderate the board..
05/24/11 9:59 AM EDT Sell 40 PSTX Executed @ $1.16 Details | Edit
05/24/11 9:59 AM EDT Sell 1100 PSTX Executed @ $1.16 Details | Edit
05/24/11 9:58 AM EDT Sell 10846 PSTX Executed @ $1.1 Details | Edit
05/24/11 9:56 AM EDT Sell 2500 PSTX Executed @ $1.15 Details | Edit
05/24/11 9:55 AM EDT Sell 12500 PSTX Executed @ $1.16 Details | Edit
05/24/11 9:55 AM EDT Sell 500 PSTX Executed @ $1.17 Details | Edit
Patient Safety Technologies Reports First Quarter 2011 Results
PR Newswire - May 23 at 18:11
Company Symbols: OTC-PINK:PSTX
Number of hospitals using the SurgiCount Safety-Sponge® System grows to new high
Period over period customer base increases 33%
Continued competitive conversions
IRVINE, Calif., May 23, 2011 /PRNewswire/ -- Patient Safety Technologies, Inc. (the "Company", OTCQB:PSTX) today announced financial results for its first quarter of 2011 ended March 31, 2011.
Financial Highlights
During the first quarter of 2011 the number of institutions using the Company's SurgiCount Safety-Sponge® System surpassed 65 and the Company lost no customers. This compares to approximately 49 institutions using the solution at the end of the first quarter of 2010. Although not necessarily proportional to reported revenue, the number of hospitals using our products is a good indicator of our underlying business.
Total revenue for the quarter ended March 31, 2011 was $2.0 million, which included $0.6 million of revenue from the delivery to the Company's exclusive distributor as part of a $10.0 million inventory stocking order. Excluding the effect of this inventory stocking arrangement, revenue for the quarter ended March 31, 2011 would have been $1.3 million. This compares with total revenue for the quarter ended March 31, 2010 of $2.4 million, which included approximately $1.0 million of revenue from the delivery under the same inventory stocking order. Excluding the effect of this inventory stocking order, revenue for the first quarter of 2010 would have been $1.3 million. Despite the considerable growth in the number of hospitals using the Safety-Sponge® System at the end of the first quarter of 2011 as compared to the first quarter of 2010, and losing no customers during that time period, total reported revenue did not grow proportionally for a number of factors, including: 1) the larger amount of revenue from the inventory stocking order in the first quarter of 2010 as compared to the first quarter of 2011, 2) the negative effect on our reported revenue during the first quarter of 2011 caused by the temporary shutdown of our contract manufacturer during the end of the quarter to accommodate an upgrade to their IT system and 3) the effect of certain inventory management practices of our exclusive distributor during the first quarter of 2011.
Reported gross profit was $0.9 million in the first quarter of 2011 as compared to $1.3 million during the same period in 2010. The primary factor for the decrease in reported gross profit was the lower revenue recognized from the inventory stocking order in the first quarter of 2011 as compared to the same period in 2010. Reported gross margins were 47% and 54% for the first quarter of 2011 and 2010, respectively. This decline in reported gross margin was primarily attributable to 1) higher non cash depreciation expense in our cost of revenue in the first quarter of 2011 as compared to the first quarter of 2010 as the result of a larger amount of hardware purchased by the Company to support new hospital implementations, and 2) a larger than normal level of lower margin hardware purchases by certain hospital customers during the first quarter of 2011 who implemented our solution during the quarter. The gross margins realized from the sale of recurring disposable products (i.e. sponges and towels that make up the vast majority of our revenue), were 55% and 56% during the first quarters of 2011 and 2010, respectively.
As a result of a comprehensive restructuring program focused on a number of initiatives including reducing cash operating expenses, our operating expenses in the first quarter of 2011 were reduced significantly as compared to the first quarter of 2010. Reported operating expenses were $1.8 million and $2.7 million for the first quarters of 2011 and 2010, respectively, a decrease of $0.9 million or 34%. Excluding the effects of non-cash and certain one-time expenses, operating expenses were $1.4 million and $2.2 million, a decrease of $0.8 million or 36%. The Company generated an Adjusted Operating Loss (defined as reported operating income adjusted to exclude certain non-cash expenses) of $0.6 million and $0.9 million during the first quarter of 2011 and 2010, respectively, a decrease of 39%.
The Company ended the first quarter of 2011 with $6.3 million of cash and cash equivalents.
Expanded customer base, competitive conversions
Current users of the SurgiCount Safety-Sponge® System include over 65 hospitals, including five of the 14 hospitals named to the U.S. News and World Report 2010-11 Honor Roll. Further, during the first quarter of 2011 the Company continued to add to the hospitals now using the Safety-Sponge® System who converted from competitive products.
"I am pleased to see the continued growth of our user base, especially additional competitive conversions, while maintaining our lowered cost structure. We will continue to keep a focus on our spend levels while also opportunistically putting the capital we recently raised to work in high expected return areas," said Brian E. Stewart, President and Chief Executive Officer of Patient Safety Technologies.
The Company's first quarter 2011 financial statements are included in its Quarterly Report on Form 10-Q filed by the company on May 23rd, 2011 and available at the SEC's website at www.sec.gov
Reconciliation of GAAP to Non-GAAP Results (Unaudited)
Non-GAAP Measures
($ in 000's)
Q1 2010 Q1 2011
Reported Operating Income / (Loss) $ (1,403.4) $ (830.8)
Plus:
Stock based compensation 324.2 149.7
Depreciation and amortization 162.3 122.3
Adjusted Operating Income / (Loss) $ (916.9) $ (558.9)
To supplement the Company's presentation of operating income measured in accordance with GAAP, we also use a non-GAAP measure of operating income, herein defined as Adjusted Operating Income. Reconciliation to GAAP operating income from Adjusted Operating Income is included immediately above in this press release.
Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that the use of non-GAAP operating income provides meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes this non-GAAP measure, which excludes the non-cash expenses of depreciation, amortization and stock based compensation, when viewed with GAAP results and the accompanying reconciliation, enhances the comparability of results against prior periods and allows for greater transparency of financial results. The Company believes this non-GAAP measure facilitates management's internal comparison of the Company's financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of this non-GAAP measure is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
Forward Looking Statements
Statements in this press release regarding our business that are not historical facts are "forward-looking statements" (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties. Forward-looking statements reflect our management's current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words "anticipates," "believes," "expects," "intends," "future," and other similar expressions, without limitation, identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include but are not limited to: the early stage of adoption of our Safety-Sponge® System and the need to expand adoption of our Safety-Sponge® System; the impact on our future revenue and cash flows from the ordering patterns of our exclusive distributor Cardinal Health; our need for additional financing to support our business; our reliance on third-party manufacturers, some of whom are sole-source suppliers, and on our exclusive distributor; and any inability to successfully protect our intellectual property portfolio. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.
Forward-looking statements can be affected by many other factors, including, those described in the "Business", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Factors Affecting Future Results" sections of our Annual Report on Form 10-K for 2010, our Quarterly Reports on Form 10-Q and in our other public filings. These documents are available online through the SEC's website, www.sec.gov. Forward-looking statements are based on information presently available to senior management, and we have not assumed any duty to update any forward-looking statements.
PATIENT SAFETY TECHNOLOGIES, INC.
Consolidated Balance Sheets
March 31, 2011
(unaudited) December 31, 2010
Assets
Current assets
Cash and cash equivalents $ 6,089,395 $ 1,896,034
Restricted cash 223,630 223,630
Accounts receivable 457,153 772,381
Inventory, net 927,677 1,110,832
Prepaid expenses 62,404 104,628
Total current assets 7,760,259 4,107,505
Property and equipment, net 930,474 979,833
Goodwill 1,832,027 1,832,027
Patents, net 2,707,847 2,789,083
Other assets 43,988 39,038
Total assets $ 13,274,595 $ 9,747,486
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 618,252 $ 2,605,669
Warrant derivative liability 781,420 991,682
Deferred revenue 869,163 1,477,720
Accrued liabilities 864,679 942,472
Total current liabilities 3,133,514 6,017,543
Stockholders' equity
Total stockholders' equity 10,141,081 3,729,943
Total liabilities and stockholders' equity $ 13,274,595 $ 9,747,486
PATIENT SAFETY TECHNOLOGIES, INC.
Consolidated Statements of Operations
For the Three months Ended March 31,
2011 (unaudited) 2010 (unaudited)
Revenues $ 1,970,656 $ 2,364,819
Cost of revenue 1,041,101 1,088,887
Gross profit 929,555 1,275,932
Operating expenses:
Research and development 29,462 33,331
Sales and marketing 659,036 994,116
General and administrative 1,071,896 1,651,861
Total operating expenses 1,760,394 2,679,308
Operating loss (830,839) (1,403,376)
Other income
Interest expense (4,192) (6,333)
Gain on change in fair value of warrant
derivative liability 210,262 1,718,738
Other income — 51,944
Total other income 206,070 1,764,349
Income (loss) before income taxes (624,769) 360,973
Income tax (provision) benefit (3,773) 32,573
Net income (loss) (628,542) 393,546
Preferred dividends (123,959) (19,163)
Net income (loss) applicable to common
shareholders $ (752,501) $ 374,383
Income (loss) per common share
Basic $ (0.03) $ 0.02
Diluted
$ (0.03) $ 0.01
Weighted average common shares
outstanding:
Basic 24,200,785 23,456,063
Diluted 24,200,785 25,199,632
SOURCE Patient Safety Technologies, Inc.
PSTX.. $1.10.. Hits YE Earnings out of the park.. hank
Patient Safety Technologies Reports Fiscal 2010 Fourth Quarter and Full Year Results
PR Newswire - Apr 14 at 06:30
Company Symbols: OTC-PINK:PSTX
Customer user base increases 110% during 2010
Fourth quarter total revenues of $4.5 million
Full year 2010 total revenues of $14.8 million
Second consecutive quarter of positive Adjusted Operating Income
Substantially improved balance sheet
SurgiCount Safety-Sponge® System Surpasses 2 million procedures milestone
IRVINE, Calif., April 14, 2011 /PRNewswire/ -- Patient Safety Technologies, Inc. (the "Company", OTCQB: PSTX) today announced financial results for its fourth quarter and full fiscal year end 2010.
Financial Highlights
During the full year 2010 the total number of hospitals using the Company's SurgiCount Safety-Sponge® System more than doubled and no customers were lost. Although not necessarily proportional to future revenues, the number of hospitals using our system is a good indicator of our underlying business. The Company reported fourth quarter revenues of $4.5 million compared to $1.6 million in the fourth quarter of 2009. For the full year 2010, revenues increased 229% to $14.8 million from $4.5 million during the full year 2009. Fourth quarter and full year revenues in 2010 included $3.1 million and $8.9 million, respectively, of revenue from shipments to the Company's distributor under a $10.0 million inventory stocking arrangement entered into in late 2009. Excluding the effect of this inventory stocking arrangement, revenue for the full year 2010 would have been $5.9 million, or an increase of 31% from 2009 revenue.
Reported gross profit was $2.0 million in the fourth quarter as compared to $565 thousand in the fourth quarter of 2009. Gross margins were 44.9% for the fourth quarter, as compared to 36.2% for the same period in 2009. For the full year 2010, reported gross profit was $7.5 million, an increase of 315% as compared to the full year 2009, and included $4.5 million of gross profit from the inventory stocking arrangement with our distributor. Excluding the effect of the inventory stocking arrangement, gross profit for the fourth quarter and full year of 2010 would have been $665 thousand and $3.0 million. Reported gross margins were 50.4% for the full year 2010 compared to 40.0% for the full year 2009. The increase in gross margin during 2010 reflects improved pricing on newer customers and product mix issues.
During the third quarter of 2010, newly appointed management initiated a comprehensive restructuring program focused on a number of initiatives, including reducing operating expenses and achieving positive operating income and operating cash flow. As a result of this initiative, combined with the continued growth of the Company's revenues from both the inventory stocking arrangement and orders from our distributor to fulfill immediate end user demand, the Company generated positive Adjusted Operating Income (defined as reported operating income adjusted to exclude certain non-cash expenses) during both the third and fourth quarter of 2010. The Company generated cumulative Adjusted Operating Income of $1.8 million during the combined third and fourth quarters of 2010 as compared to a cumulative negative $1.8 million during the combined first and second quarters of 2010.
Balance Sheet Review
As previously announced, in March of 2011, the Company closed a $7.1 million common stock private placement. The proceeds of this placement, combined with the successful implementation of the restructuring initiatives started in the third quarter of 2010 and the resulting positive effect on cash flows from operations, has caused the Company's liquidity and financial position to substantially improve. As evidence of our improved liquidity, the going concern explanatory paragraph that was included in the prior year audit report from the Company's independent registered public accounting firm was not included in their current year report dated April 14, 2011. Additionally, the Company has: (i) removed the deferred tax liability of $806 thousand previously reported on the Company's balance sheet through netting the liability against deferred tax assets based on completing a Section 382 analysis, and (ii) extinguished the remaining indebtedness on the Company's balance sheet, the $1.4 million convertible note payable through the previously disclosed three way settlement between the Company, the holder of the Company's indebtedness and a creditor of the holder.
The Company also removed all previously identified material weaknesses in its internal controls, resulting in no material weaknesses identified in its 2010 annual report.
Additional Achievements
-- SurgiCount Safety-Sponge® System surpasses 2 million procedures
milestone – To date over 45 million Safety-Sponges® have been
successfully used in over 2 million procedures at a growing number of
community, teaching and government hospitals across the U.S..
-- Expanded customer base, competitive conversions – Current users of the
SurgiCount Safety-Sponge® System include over 60 hospitals, including
five of the 14 hospitals named to the U.S. News and World Report 2010-11
Honor Roll. Further, a number of the Company's recent implementations
include hospitals that converted to the SurgiCount Safety-Sponge®
System from competitive products.
"I am pleased with the financial and operational improvements we have made, the growth of our customer base and the strides we have taken to improve our balance sheet, all of which better position us to more successfully capitalize on the growth opportunities ahead of us," said Brian E. Stewart, President and Chief Executive Officer of Patient Safety Technologies.
The Company's fiscal 2010 full year financial statements are included in its Annual Report on Form 10-K filed by the company on April 14th, 2011 and available at the SEC's website at www.sec.gov
Reconciliation of GAAP to Non-GAAP Results (Unaudited)
Non-GAAP Measures
1st Half 2nd Half Full Year
($ in 000's) Q1 2010 Q2 2010 2010 Q3 2010 Q4 2010 2010 2010
Reported
Operating
Income /
(Loss) $ (1,403) $ (1,456) $ (2,859) $ 925 $ (250) $ 675 $ (2,184)
Plus:
Stock
Compensation 288 447 735 151 712 863 1,598
Amortization 81 81 162 81 81 162 324
Depreciation 81 70 151 45 69 114 265
Adjusted
Operating
Income /
(Loss) $ (953) $ (858) $ (1,811) $ 1,202 $ 612 $ 1,814 $ 4
To supplement the Company's presentation of operating income measured in accordance with GAAP, we also use a non-GAAP measure of operating income, herein defined as Adjusted Operating Income. Reconciliation to GAAP operating income from Adjusted Operating Income is included immediately above in this press release.
Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance, prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes that the use of non-GAAP operating income provides meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results. The Company believes this non-GAAP measure, which excludes the non-cash expenses of depreciation, amortization and stock based compensation, when viewed with GAAP results and the accompanying reconciliation, enhances the comparability of results against prior periods and allows for greater transparency of financial results. The Company believes this non-GAAP measure facilitates management's internal comparison of the Company's financial performance to that of prior periods as well as trend analysis for budgeting and planning purposes. The presentation of this non-GAAP measure is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
Forward Looking Statements
Statements in this press release regarding our business that are not historical facts are "forward-looking statements" (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties. Forward-looking statements reflect our management's current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words "anticipates," "believes," "expects," "intends," "future," and other similar expressions, without limitation, identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include but are not limited to: the early stage of adoption of our Safety-Sponge® System and the need to expand adoption of our Safety-Sponge® System; the impact on our future revenue and cash flows from the ordering patterns of our exclusive distributor Cardinal Health; our need for additional financing to support our business; our reliance on third-party manufacturers, some of whom are sole-source suppliers, and on our exclusive distributor; and any inability to successfully protect our intellectual property portfolio. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.
Forward-looking statements can be affected by many other factors, including, those described in the "Business", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Factors Affecting Future Results" sections of our Annual Report on Form 10-K for 2010, our Quarterly Reports on Form 10-Q and in our other public filings. These documents are available online through the SEC's website, www.sec.gov. Forward-looking statements are based on information presently available to senior management, and we have not assumed any duty to update any forward-looking statements.
PATIENT SAFETY TECHNOLOGIES, INC.
Consolidated Balance Sheets
December 31,
2010 2009
Assets
Current assets
Cash and cash equivalents $ 1,896,034 $ 3,446,726
Restricted cash 223,630 —
Accounts receivable 772,381 906,136
Inventory, net 1,110,832 565,823
Prepaid expenses 104,628 207,598
Total current assets 4,107,505 5,126,283
Property and equipment, net 979,833 744,646
Goodwill 1,832,027 1,832,027
Patents, net 2,789,083 3,114,025
Long-term investment — 666,667
Other assets 39,038 43,246
Total assets $ 9,747,486 $ 11,526,894
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable $ 2,605,669 $ 2,043,166
Accrued liabilities 942,472 1,242,876
Convertible note payable — 1,424,558
Capital lease-current portion — 19,330
Warrant derivative liability 991,682 3,666,336
Deferred revenue 1,477,720 8,099,144
Total current liabilities 6,017,543 16,495,410
Capital lease, less current portion — 58,274
Deferred tax liability — 805,768
Total liabilities 6,017,543 17,359,452
Stockholders' equity (deficit)
Total stockholders' equity (deficit) 3,729,943 (5,832,55)
Total liabilities and stockholders' equity
(deficit) $ 9,747,486 $ 11,526,894
PATIENT SAFETY TECHNOLOGIES, INC.
Consolidated Statements of Operations
For the Years Ended December 31,
2010 2009
Revenues $ 14,797,013 $ 4,503,535
Cost of revenue 7,334,125 2,703,931
Gross profit 7,462,888 1,799,604
Operating expenses:
Research and development 186,089 321,116
Sales and marketing 2,865,652 1,926,580
General and administrative 6,595,815 10,357,021
Total operating expenses 9,647,556 12,604,717
Operating loss (2,184,668) (10,805,113)
Other income (expense)
Gain (loss) on extinguishment of debt 893,003 (537,919)
Interest expense (7,405) (383,485)
Gain (loss) on change in fair value of
warrant derivative liability 2,674,654 (5,564,125)
Loss on impairment of long-term investment (666,667) —
Amortization of debt discount — (588,374)
Gain on warrant exchange — 164,226
Other income 433,989 5,138
Total other income (expense) 3,327,574 (6,904,539)
Income (loss) before income taxes 1,142,906 (17,709,652)
Income tax benefit 857,122 178,397
Net income (loss) 2,000,028 (17,531,255)
Preferred dividends (186,725) (76,650)
Net income (loss) applicable to common
shareholders $ 1,813,303 $ (17,607,905)
Income (loss) per common share
Basic $ 0.08 (0.90)
Diluted $ 0.06 (0.90)
Weighted average common shares outstanding:
Basic 23,472,730 19,537,938
Diluted 30,768,576 19,537,938
SOURCE Patient Safety Technologies, Inc.
PSTX.. $0.85.
CFO DREYER Buys 100,000 Of PATIENT SAFETY TECHNOLOGIES INC PSTX
Dow Jones and Company, Inc. - Apr 01 at 14:58
Company Symbols: OTC-PINK:PSTX
SOURCE: Form 4
ISSUER: PATIENT SAFETY TECHNOLOGIES INC
SYMBOL: PSTX
FILER: DREYER DAVID C
TITLE: Chief Financial Officer
DATE TRANSACTION SHARES PRICE VALUE
3/30/11 Purchase 100,000 $0.75 $75,000
OWNERSHIP: 205,000 (Direct)
The Form 4 is filed with the Securities and Exchange Commission by insiders
to report transactions in their companies' shares. Open market purchases
and sales must be reported within two business days of the transaction.
Insider Data Source: The Washington Service
(info@washingtonservice.com or 301-913-5100)
PSTX..$0.77... Independent Clinical Research Confirms Clinical Efficacy and Cost-Effectiveness of the SurgiCount Safety-Sponge® System
PR Newswire - Jan 18 at 08:31
Company Symbols: NASDAQ-OTCBB:PSTX, NYSE:CAH
SurgiCount Medical's Safety-Sponge® System shown to help prevent the most commonly reported surgical adverse event, retained surgical sponges
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=57956697&txt2find=pstx
IRVINE, Calif. and DUBLIN, Ohio, Jan. 18, 2011 /PRNewswire/ -- Results of a multi-year, independent clinical research study on retained surgical sponges published in the February edition of The Joint Commission Journal on Quality and Patient Safety show that the institution implementing the SurgiCount Safety-Sponge® System eliminated the occurrence of retained surgical sponges and the costs associated with these preventable surgical errors.
The peer-reviewed publication details two, randomized, controlled trials conducted at a high-volume surgical practice, the subsequent implementation of the Safety-Sponge® System across all of the 128 operating rooms at the affiliated institution and a comprehensive evaluation of the solution after 18 months of use. The evaluation considered variables including system effectiveness on reducing retained surgical sponges, efficiency, impact on operative time, ergonomics and staff satisfaction.
Key results and conclusions of the study include:
Prior to implementation, a retained surgical sponge occurred at the institution on average every 64 days. During the study, 87,404 procedures were performed over 18 months using 1,862,373 Safety-Sponges®, and none were retained.
Use of the Safety-Sponge® System caused no workflow disruption or increase in case duration.
Staff satisfaction with the Safety-Sponge® System was acceptable with a high degree of trust in the system.
The Safety-Sponge® System was found to be highly reliable and cost-effective.
"To my knowledge this is by far the most extensive study ever performed on this important patient safety issue, and we are proud to have this comprehensive, independent research validate the SurgiCount Safety-Sponge® System," said Brian E. Stewart, president and chief executive officer of Patient Safety Technologies, the parent company of SurgiCount Medical, and co-inventor of the Safety-Sponge® System.
The SurgiCount Safety-Sponge® System is a complete sponge counting and documentation system shown to help prevent the occurrence of retained sponges by assuring a more accurate accounting of those items before and after surgery. By labeling each sponge with a unique identifier, the system helps to prevent users from incorrectly counting the individual sponges and unintentionally leaving one inside the patient. The system is currently used in more than 65 government, teaching and community hospitals across the U.S., including five of the 14 "Honor Roll Hospitals" for 2010-2011, as cited by U.S. News and World Report.
"Avoidable medical errors cost the U.S. health care industry an estimated $20 billion every year and put patient lives in jeopardy(1)," said Lisa Ashby, president, Category Management for the Medical Segment of Cardinal Health. "We work continuously with partners like SurgiCount to connect our customers to innovative, cost-effective solutions that help reduce errors and increase the quality of care, and these results confirm that we're making a positive impact on the future of health care."
The Safety-Sponge® System is a proprietary product provided by SurgiCount Medical, the wholly-owned operating subsidiary of Patient Safety Technologies (OTC Bulletin Board: PSTX), and distributed by Cardinal Health (NYSE: CAH).
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a proprietary solution shown to help improve patient safety and reduce health care costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $99 billion health care services company that improves the cost-effectiveness of health care. As the business behind health care, Cardinal Health helps pharmacies, hospitals, ambulatory surgery centers and physician offices focus on patient care while reducing costs, improving efficiency and quality, and increasing profitability. Cardinal Health is an essential link in the health care supply chain, providing pharmaceuticals and medical products to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #17 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com.
(1) J. Shreve, J. Van Den Bos, T. Gray, M. Halford, K. Rustagi, and E. Ziemkiewicz, "The Economic Measurement of Medical Errors." P 5, 2010.
Some statements in this release may be "forward-looking statements" for the purposes of the Private Securities Litigation Reform Act of 1995. In some cases forward-looking statements can be identified by words such as "believe," "expect," "anticipate," "plan," "potential," "continue" or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in Patient Safety Technologies, Inc. Annual Report on Form 10-K for the year ended December 31, 2009, as updated from time to time in our filings with the Securities and Exchange Commission.
SOURCE Cardinal Health, Inc.
PSTX.. $0.85
CFO DREYER Buys 105,000 Of PATIENT SAFETY TECHNOLOGIES INC PSTX
Dow Jones and Company, Inc. - Dec 20 at 18:17
Company Symbols: NASDAQ-OTCBB:PSTX
SOURCE: Form 4
ISSUER: PATIENT SAFETY TECHNOLOGIES INC
SYMBOL: PSTX
FILER: DREYER DAVID C
TITLE: Chief Financial Officer
DATE TRANSACTION SHARES PRICE VALUE
12/16/10 Purchase 105,000 $0.75 $79,002
OWNERSHIP: 105,000 (Direct)
The Form 4 is filed with the Securities and Exchange Commission by insiders
to report transactions in their companies' shares. Open market purchases
and sales must be reported within two business days of the transaction.
Insider Data Source: The Washington Service
(info@washingtonservice.com or 301-913-5100)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/nae/al?rnd=JMiej4xd8fH1qYUi7Hsbig%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
12-20-10 1817ET
PSTX.. $0.80 SurgiCount Medical Announces the Successful Implementation of the Safety-Sponge® System at the University of Michigan Health System
PR Newswire - Dec 17 at 14:28
Company Symbols: NASDAQ-OTCBB:PSTX
IRVINE, Calif., Dec. 17, 2010 /PRNewswire/ -- SurgiCount Medical, the wholly-owned operating subsidiary of Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX) today announced the successful implementation of the Safety-Sponge® System at the University of Michigan Health System located in Ann Arbor, Michigan. The Safety-Sponge® System is a proven solution to prevent one of the most common surgical errors, retained surgical sponges.
Since the founding of the University of Michigan Medical School in 1848, the academic medical center, now known as the U-M Health System, has been recognized as a leading innovator and health care provider in Michigan, nationally, and worldwide. It is consistently ranked among the nation&;s best by U.S. News and World Report, currently a member of the 2010-2011 Honor Roll, the only hospital in Michigan to make this list for 15 consecutive years and is also recognized for excellence in 15 specialty care areas. With nearly 900 beds across three hospitals, U-M Health System has over 43,000 patient admissions, and performs over 45,000 surgical procedures on inpatients and outpatients across a broad range of specialties.
&;We are proud to include the University of Michigan Health System to the growing list of users of the Safety-Sponge® System and believe adding an institution of this caliber further validates the benefits and advantages of the solution. We look forward to supporting them in their ongoing effort to deliver excellence in patient care,&; stated Brian E. Stewart, President and CEO of Patient Safety Technologies.
&;We have implemented the SurgiCount System to provide an added safety mechanism to the long-established practice of a manual sponge-counting process in our operating rooms,&; said Shawn Murphy MS, RN, Operating Room Director for UMHS. &;The SurgiCount technology provides the protection of identifying and counting each sponge used during a surgical procedure and also helps to support a standard practice for counting sponges that improves our ability to deliver safer care for our patients.&;
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
About University of Michigan Healthcare System
The University of Michigan Health System includes three hospitals, six specialty centers, and more than 50 health centers and 120 outpatient clinics, along with the U-M Medical School and its Faculty Group Practice, the U-M School of Nursing and the Michigan Health Corp. The U-M Hospitals, Medical School and School of Nursing consistently rank among the best in the nation. For more information, visit www.med.umich.edu.
Patient Safety Technologies Contact
For further information please contact Brian E. Stewart at (949) 387-2277.
Some statements in this release may be &;forward-looking statements&; for the purposes of the Private Securities Litigation Reform Act of 1995. In some cases forward-looking statements can be identified by words such as &;believe,&; &;expect,&; &;anticipate,&; &;plan,&; &;potential,&; &;continue&; or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in Patient Safety Technologies, Inc. Annual Report on Form 10-K for the year ended December 31, 2009, as updated from time to time in our filings with the Securities and Exchange Commission.
SOURCE Patient Safety Technologies, Inc.
PSTX.. $0.75 Present at LD MICRO Conference December 9, 2010
PR Newswire - Nov 30 at 14:09
Company Symbols: NASDAQ-OTCBB:PSTX
IRVINE, Calif., Nov. 30, 2010 /PRNewswire/ -- Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX) today announced that it will be presenting at the 3rd Annual LD MICRO Growth Conference in Los Angeles on Thursday, December 9th, 2010 at 3:30 PM PST. Through its wholly-owned operating subsidiary SurgiCount Medical, Patient Safety Technologies provides a proven solution for improving patient safety and reducing healthcare costs. President and Chief Executive Officer Brian E. Stewart will provide a corporate overview and discuss the Company&;s growth strategy.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
About LD MICRO
LD MICRO is a by-invitation only newsletter firm that focuses on finding undervalued companies in the micro-cap space. Since 2002, the firm has published an annual list of recommended stocks as well as comprehensive reports on select companies throughout the year. LD MICRO concentrates on finding, researching, and investing in companies that are overlooked by institutional investors. It is a non-registered investment advisor.
For more information on the list of presenting companies or to register for the event, please visit http://www.ldmicro.com or call (408) 457-1042
SOURCE Patient Safety Technologies, Inc.
PSTX.. $0.75 Patient Safety Technologies Reports Third Quarter 2010 Results
PR Newswire - Nov 22 at 09:15
Company Symbols: NASDAQ-OTCBB:PSTX
Third quarter total revenues of $4.1 million
Positive reported operating income and adjusted cash flow from operations
Awarded GPO contract
Expanded intellectual property portfolio
Increased hospital adoptions, additional scheduled implementations
IRVINE, Calif., Nov. 22, 2010 /PRNewswire-FirstCall/ -- Patient Safety Technologies, Inc. (the &;Company&;, OTC Bulletin Board: PSTX) today announced financial results for its third quarter of 2010 and for the nine months ended September 30, 2010.
Financial Highlights
The Company reported third quarter revenues of $4.1 million compared to $978 thousand reported in the third quarter of 2009. Third quarter revenues included $2.5 million shipped to the Company&;s distributor under an inventory stocking purchase order that applies solely to 2010. Excluding the effect of these shipments, third quarter revenues were $1.7 million, an increase of 70% versus the prior year quarterly period.
Reported gross profit was $2.2 million in the third quarter compared to $438 thousand reported in the third quarter of 2009. Reported gross margins were 52.7% for the quarter, compared to 44.8% for the same period in 2009.
During the third quarter of 2010, newly appointed management initiated a comprehensive restructuring program focused on a number of initiatives, including reducing operating expenses and achieving positive operating income and operating cash flow. As a direct result of this initiative, combined with the continued growth of the Company&;s revenues (both from hospital consumption and inventory stocking shipments to its distributor), the Company reported positive operating income of $925 thousand for the third quarter, the first period of reported positive operating income since the Company&;s acquisition of SurgiCount Medical in 2005. Additionally, excluding a payment of $2.4 million for past due amounts owed to the Company&;s manufacturing partner, cash flow from operations would have turned positive during the third quarter.
&;Our revenue growth, combined with the early success of our restructuring efforts have improved our financial strength and better positioned us to accelerate adoption of the Safety-Sponge® System and improve shareholder value. We will continue to proactively manage our cash burn while investing in our future growth,&; stated Brian E. Stewart, President and Chief Executive Officer.
&;During the third quarter, not only did we make great strides in our efforts to improve financial performance, but we also continued to add to our impressive list of user hospitals. Additionally, during the quarter we scheduled a number of new hospitals for implementation of the Safety-Sponge® System in the fourth quarter of 2010 and first quarter of 2011,&; continued Mr. Stewart.
Additional Milestones Achieved During the Third Quarter
•Awarded GPO Contract – During the quarter, the Company was awarded a contract by a large group purchasing and supply chain management organization (the &;GPO&;) to provide the Safety-Sponge® System to its more than 3,300 member hospitals. Prior to awarding the agreement, the GPO had created an entirely new product category called Retained Surgical Sponge Prevention. The Company intends on collaborating with the GPO on customized marketing promotions and educational efforts in an attempt to drive adoption of the Safety-Sponge® System into its membership base.
•Expanded Intellectual Property Portfolio – In September the Company was issued an additional patent focused on protecting both current and future potential features and capabilities of the Safety-Sponge® System. Combined with another patent issued to the Company during the second quarter of 2010, the Company has significantly expanded its intellectual property portfolio during the year.
Current users of the SurgiCount Safety-Sponge® System include over 50 hospitals across the U.S., including five of the 14 hospitals named to the U.S. News and World Report 2010-11 Honor Roll. Over an estimated 36 million Safety-Sponges® have been used in more than 1.45 million procedures without a single undetected sponge left inside a patient in all cases where our solution was utilized.
The Company&;s third quarter financial statements are included in their Quarterly Report on Form 10-Q filed by the company on November 19, 2010 and available at the SEC&;s website at www.sec.gov
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (949) 387-2277 or visit www.surgicountmedical.com.
Forward Looking Statements
Statements in this press release regarding our business that are not historical facts are &;forward-looking statements&; (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties. Forward-looking statements reflect our management&;s current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words &;anticipates,&; &;believes,&; &;expects,&; &;intends,&; &;future,&; and other similar expressions, without limitation, identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include: •our need for additional financing to support our business; the early stage of adoption of our Safety-Sponge® System and the need to expand adoption of our Safety-Sponge® System; any failure of our new management team and Board of Directors to operate effectively; our reliance on third-party manufacturers, some of whom are sole-source suppliers, and on our exclusive distributor; and any inability to successfully protect our intellectual property portfolio. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.
Forward-looking statements can be affected by many other factors, including, those described in the &;Business&;, &;Management&;s Discussion and Analysis of Financial Condition and Results of Operations&; and &;Factors Affecting Future Results&; sections of our Annual Report on Form 10-K for 2009, our Quarterly Reports on Form 10-Q and in our other public filings. These documents are available online through the SEC&;s website, www.sec.gov. Forward-looking statements are based on information presently available to senior management, and we have not assumed any duty to update any forward-looking statements
SOURCE Patient Safety Technologies, Inc.
PSTX.. $0.75 DD 10Q released 11/19/10..
PATIENT SAFETY TECHNOLOGIES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
September 30,
2010 December 31,
2009
Assets
Current assets:
Cash and cash equivalents $ 2,796,742 $ 3,446,726
Restricted cash 223,630 —
Accounts receivable, net 679,760 906,136
Inventories, net 1,729,969 565,823
Prepaid expenses 256,057 207,598
Total current assets 5,686,158 5,126,283
Property and equipment, net 918,563 744,646
Goodwill 1,832,027 1,832,027
Patents, net 2,870,318 3,114,025
Long-term investment 666,667 666,667
Other assets 48,801 43,246
Total assets $ 12,022,534 $ 11,526,894
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable $ 1,677,252 $ 2,043,166
Accrued liabilities 865,608 1,242,876
Convertible note payable 1,424,558 1,424,558
Capital lease-current portion — 19,330
Warrant derivative liability 980,757 3,666,336
Deferred revenue 4,446,647 8,099,144
Total current liabilities 9,394,822 16,495,410
Capital lease, less current portion — 58,274
Deferred tax liability 708,049 805,768
Total liabilities 10,102,871 17,359,452
Commitments and contingencies (Note 20)
Stockholders’ equity(deficit):
Series A preferred stock, $1.00 par value, cumulative 7% dividend:
1,000,000 shares authorized; 10,950 issued and outstanding at September 30, 2010
and December 31, 2009;
(Liquidation preference of $1.2 million at September 30, 2010 and December 31, 2009) 10,950 10,950
Series B convertible preferred stock, $1.00 par value, cumulative 7% dividend:
150,000 shares authorized; 60,067 issued and outstanding at September 30, 2010
and 0 issued and outstanding at December 31, 2009;
(Liquidation preference of $6.0 million at September 30, 2010 and $0 at December 31, 2009) 60,067 —
Common stock, $0.33 par value: 100,000,000 shares authorized;
23,456,063 shares issued and outstanding at September 30, 2010 and December 31, 2009 7,740,501 7,740,501
Additional paid-in capital 51,266,092 44,834,321
Accumulated deficit (57,157,947 ) (58,418,330 )
Total stockholders’ equity (deficit) 1,919,663 (5,832,558 )
Total liabilities and stockholders’ equity (deficit) $ 12,022,534 $ 11,526,894
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
1
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PATIENT SAFETY TECHNOLOGIES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
Revenues $ 4,122,560 $ 978,461 $ 10,252,897 $ 2,942,066
Cost of revenue 1,950,573 540,013 4,829,821 1,707,575
Gross profit 2,171,987 438,448 5,423,076 1,234,491
Operating expenses:
Research and development 35,246 69,270 166,548 267,851
Sales and marketing 518,570 609,921 2,341,132 1,812,146
General and administrative 693,235 1,256,580 4,849,573 5,162,428
Total operating expenses 1,247,051 1,935,771 7,357,253 7,242,425
Operating income (loss) 924,936 (1,497,323 ) (1,934,177 ) (6,007,934 )
Other income (expense)
Interest income (expense) 3,598 (303,580 ) (5,062 ) (744,000 )
Gain (loss) on change in fair value of warrant derivative liability 15,631 (1,762,384 ) 2,685,579 (4,332,503 )
Other income (expense) — 194,447 433,958 194,447
Total other income (expense) 19,229 (1,871,517 ) 3,114,475 (4,882,056 )
Income (loss) before income taxes 944,165 (3,368,840 ) 1,180,298 (10,889,990 )
Income tax benefit 32,573 31,758 139,862 96,477
Net income (loss) 976,738 (3,337,082 ) 1,320,160 (10,793,513 )
Preferred dividends (14,682 ) (19,163 ) (59,777 ) (57,488 )
Net income (loss) applicable to common shareholders $ 962,056 $ (3,356,245 ) $ 1,260,383 $ (10,851,001 )
Income (loss) per common share
Basic $ 0.04 $ (0.17 ) $ 0.05 $ (0.60 )
Diluted $ 0.04 $ (0.17 ) $ 0.04 $ (0.60 )
Weighted average common shares outstanding:
Basic 23,456,063 20,229,483 23,456,063 18,219,514
Diluted 24,031,063 20,229,483 35,659,766 18,219,514
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
2
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PATIENT SAFETY TECHNOLOGIES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
2010 2009
Operating activities:
Net income (loss) $ 1,320,160 $ (10,793,513 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation 388,006 253,496
Amortization of patents 243,706 243,706
Amortization of debt discount — 461,000
Stock based compensation 965,078 896,326
Gain on reduction of contingent tax liability (427,700 )
Warrant exchange — (193,000 )
Loss on abandonment of lease 151,973 —
Loss on capital lease write-off 3,917 —
Non-cash interest — 1,323,000
(Gain) loss on change in fair value of warrant derivative liability (2,685,579 ) 4,333,136
Change in deferred tax liability (97,719 ) (97,079 )
Changes in operating assets and liabilities:
Accounts receivable 226,376 232,200
Inventories (1,164,147 ) (530,000 )
Prepaid expenses (48,459 ) (10,333 )
Other assets (5,554 ) 8,000
Accounts payable 634,086 897,022
Accrued liabilities (101,540 ) (100,649 )
Deferred revenue (3,652,497 ) —
Net cash used in operating activities (4,249,893 ) (3,076,688 )
Investing activities:
Purchase of property and equipment (627,888 ) (89,020 )
Net cash used in investing activities (627,888 ) (89,020 )
Financing activities:
Proceeds from issuance of notes payable — 2,000,000
Proceeds from issuance of convertible preferred stock and warrants — 1,706,000
Proceeds from issuance of convertible preferred stock 5,000,000 —
Payments for stock issuance costs (480,010 )
Capital lease principle payments (15,556 ) —
Payments of preferred dividends (53,007 ) (57,488 )
Transfer to restricted cash in connection with tax escrow account (223,630 ) —
Net cash provided by financing activities 4,227,797 3,648,512
Net increase (decrease) in cash and cash equivalents (649,984 ) 482,804
Cash and cash equivalents at beginning of period 3,446,726 296,185
Cash and cash equivalents at end of period $ 2,796,742 $ 778,989
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ — $ 36,000
Cash paid during the period for taxes $ 16,113 $ —
Non cash investing and financing activities:
Issuance of convertible preferred stock for accounts payable $ 1,000,000 $ —
Dividends accrued $ 53,007 $ 57,488
Reduction of fixed assets based on write-off of capital lease $ 62,048 $ —
Payment of Series B preferred dividends in shares $ 6,770 $ —
Reclassification of accrued interest to notes payable $ — $ 165,000
Debt discount recorded in connection with issuance of notes payable $ — $ 1,311,311
Reclassification of warrant equities to derivative liability $ — $ 4,240,000
Issuance of common stock in payment of notes payable and accrued interest $ — $ (258,000 )
Cancellation of warrants in connection with warrant exchange $ — $ (5,722,036 )
Reclassification of warrant derivative liability to equity $ — $ (2,152,940 )
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements and the related notes thereto appearing elsewhere in this quarterly report on Form 10-Q and our audited consolidated financial statements and related notes thereto and the description of our business appearing in our annual report on Form 10-K for the year ended December 31, 2009. This discussion contains forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” Known and unknown risks, uncertainties and other factors could cause our actual results to differ materially from those projected in any forward-looking statements. In evaluating these statements, you should specifically consider various factors, including, but not limited to, those set forth under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2009.
Overview
We focus on the development, marketing and sales of products and services in the medical patient safety markets. Our proprietary Safety-Sponge® System is a patented system of bar-coded surgical sponges, SurgiCounter™ scanners, and software applications integrated to form a comprehensive counting and documentation system. This system is designed to eliminate the possibility of retained surgical sponges being unintentionally left inside of patients during surgical procedures by allowing faster and more accurate counting of surgical sponges. As of September 30, 2010, we reached a milestone of having had a cumulative total of over an estimated 36,625,000 of our sponges used in more than 1,450,000 procedures without a single undetected sponge left inside a surgical patient in all cases where our solution was utilized. We sell our Safety-Sponge® System to hospitals through our direct sales force, but rely on an exclusive distributor for the ongoing supply of our proprietary surgical sponge products to hospitals that have adopted our system. Our business model consists of selling our unique surgical sponge products, which are manufactured for us by an exclusive supplier, on a recurring basis to those hospitals that have adopted our Safety-Sponge® System. One of the ways in which we differentiate our products from other competing products is by working closely with hospital personnel through education and implementation services. We currently sell our Safety-Sponge® System only in the United States and we had revenues of $4.1 million and $10.3 million for the three and nine months ended September 30, 2010, which included $2.5 million and $5.9 million, respectively, shipped to Cardinal Health under the First Forward Order which does not necessarily represent sales of that product to end user hospitals (see “Factors Affecting Future Results —Cardinal Health Supply Agreement”).
Sources of Revenues and Expenses
Revenues
Surgical Sponge Revenues. We generate revenues primarily from the sale of surgical sponges used in our Safety-Sponge® System to our exclusive distributor, who then sells directly and through sub-distributors to hospitals that have adopted our Safety-Sponge® System. We expect hospitals that adopt our Safety-Sponge® System to commit to its use and thus provide a recurring source of revenues from ongoing sales of surgical sponges and other products used in our system. We recognize revenues from the sale of surgical sponges upon shipment to our distributor because most of our surgical sponge sales are to our distributor, FOB shipping point. Note that because of the way our sales cycle works there is a gap between the time we begin incurring costs associated with our new customer arrangements and when we begin generating revenues from such arrangements.
Hardware, Software and Maintenance Agreement Revenues. We also generate revenues from the sale of related hardware and software to hospitals that have adopted our Safety-Sponge® System. The sale of our Safety-Sponge® System includes hardware (the SurgiCounter™ scanners and certain related hardware), our proprietary file management software (Citadel™) and an initial one-year maintenance agreement (which may be renewed). All of these items are considered to be separate deliverables within a multiple-element arrangement and, accordingly, we allocate the total price of this arrangement among each respective deliverable, and recognize revenue as each element is delivered. For the hardware and software elements of our Safety-Sponge® System, we recognize revenues on delivery, which is the time of shipment (if terms are FOB shipping point) or upon receipt by the customer (if terms are FOB destination). Delivery with respect to our initial one-year maintenance agreements is considered to occur on a monthly basis over the term of the one-year period; we recognize revenues related to this element on a pro-rata basis during this period. Because of the change in our business model discussed below under “—Factors Affecting Future Results,” we do not expect these sales to represent a significant portion of our revenues going forward.
Prior to the third quarter of 2009, our business model included the sale of our SurgiCounter™ scanners and related software used in our Safety-Sponge® System to most hospitals that adopted our system. Beginning with the third quarter of 2009, we modified our business model and began to provide our SurgiCounter™ scanners and related software to all hospitals at no cost when they adopt our Safety-Sponge® System. Because we no longer engage primarily in direct SurgiCounter™ scanner sales, we generally anticipate only recognizing revenues associated with our SurgiCounter™ scanners in connection with reimbursement arrangements under our agreement with Cardinal Health. Therefore, we do not expect that our SurgiCounter™ scanners and related hardware will represent a sizable source of future revenues for us. Deferred scanner revenue associated with the reimbursement from Cardinal Health, will be recognized over the life of the specific hospital contract.
Cost of revenues
Our cost of revenues consists primarily of our direct product costs for surgical sponges and products from our exclusive third-party manufacturer. We also include a reserve expense for obsolete and slow moving inventory in cost of revenues. In addition, when we provide scanners to hospitals for their use (rather than sell), we include only the depreciation expense of the scanners in cost of revenues (not the full product cost). We estimate the useful life of the scanners to be three years. However, should we sell the scanners to hospitals, our cost of revenues include the full product cost when shipped.
Research and development expenses
Our research and development expenses consist of costs associated with the design, development, testing and enhancement of our products. We also include salaries and related employee benefits, research-related overhead expenses and fees paid to external service providers in our research and development expenses. There was a reclassification starting in 2010 of certain personnel-related expenses to sales and marketing expenses.
Sales and marketing expenses
Our sales and marketing expenses consist primarily of salaries and related employee benefits, sales commissions and support costs, professional service fees, travel, education, trade show and marketing costs.
General and administrative expenses
Our general and administrative expenses consist primarily of salaries and related employee benefits, professional service fees, expenses related to being a public entity, and depreciation and amortization expense.
Total other income (expense)
Our total other income (expense) primarily reflects changes in the fair value of warrants classified as derivative liabilities. Under applicable accounting rules (discussed below under “—Critical Accounting Policies—Warrant Derivative Liability”), we are required to make estimates of the fair value of our warrants each quarter, and to record the change in fair value each period in our statement of operations. As a result, changes in our stock price from period to period result in other income (when our stock price decreases) or other expense (when our stock price increases) on our income statement.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the financial statements. Critical accounting policies are those accounting policies that may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance. While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies used in the preparation of our financial statements require significant judgments and estimates. For additional information relating to these and other accounting policies, see Note 3 to our condensed consolidated interim financial statements.
Warrant Derivative Liability
Under applicable accounting guidance, an evaluation of outstanding warrants is made to determine whether warrants issued are required to be classified as either equity or a liability. Because certain warrants we have issued in connection with past financings contain certain provisions that may result in an adjustment to their exercise price, we classify them as derivative liabilities, and accordingly, we are then required to estimate the fair value of such warrants, at the end of each fiscal quarter. We use the Black-Scholes option pricing model to estimate such fair value, which requires the use of numerous assumptions, including, among others, expected life (turnover), volatility of the underlying equity security, a risk-free interest rate and expected dividends. The use of different values by management in connection with these assumptions in the Black Scholes option pricing model could produce substantially different results. Because we record changes in the fair value of warrants classified as derivative liabilities in total other income (expense), materially different results could have a material effect on our results of operations.
Goodwill
Our goodwill represents the excess of the purchase price over the estimated fair values of the net tangible and intangible assets of SurgiCount Medical, Inc., which we acquired in February 2005. We review goodwill for impairment at least annually in the fourth quarter, as well as whenever events or changes in circumstances indicate its carrying value may not be recoverable. We are required to perform a two-step impairment test on goodwill. In the first step, we will compare the fair value to its carrying value. If the fair value exceeds the carrying value, goodwill will not be considered impaired, and we are not required to perform further testing. If the carrying value exceeds the fair value, then we must perform the second step of the impairment test in order to determine the implied fair value of goodwill and record an impairment loss equal to the difference. Determining the implied fair value involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. To the extent additional events or changes in circumstances occur, we may conclude that a non-cash goodwill impairment charge against earnings is required, which could have an adverse effect on our financial condition and results of operations.
Stock-Based Compensation
We recognize compensation expense in an amount equal to the estimated grant date fair value of each option grant, or stock award over the estimated period of service and vesting. This estimation of the fair value of each stock-based grant or issuance on the date of grant involves numerous assumptions by management. Although we calculate the fair value under the Black Scholes option pricing model, which is a standard option pricing model, this model still requires the use of numerous assumptions, including, among others, the expected life (turnover), volatility of the underlying equity security, a risk free interest rate and expected dividends. The model and assumptions also attempt to account for changing employee behavior as the stock price changes and capture the observed pattern of increasing rates of exercise as the stock price increases. The use of different values by management in connection with these assumptions in the Black Scholes option pricing model could produce substantially different results.
Impairment of Long-Lived Assets
Our management reviews our long-lived assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We recognize an impairment loss when the sum of the future undiscounted net cash flows expected to be realized from the asset is less than its carrying amount. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Considerable judgment is necessary to estimate the fair value of the assets and accordingly, actual results could vary significantly from such estimates. Our most significant estimates and judgments relating to the long-lived asset impairments include the timing and amount of projected future cash flows.
Accounting for Income Taxes
Deferred income taxes result primarily from temporary differences between financial and tax reporting. Deferred tax assets and liabilities are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates. Future tax benefits are subject to a valuation allowance when management is unable to conclude that our deferred tax assets will more-likely-than-not be realized from the results of operations. Our estimate for the valuation allowance for deferred tax assets requires management to make significant estimates and judgments about projected future operating results. If actual results differ from these projections, or if management’s expectations of future results change, it may be necessary to adjust the valuation allowance.
Since January 1, 2007, we have measured and recorded uncertain tax positions in accordance with rules that took effect on such date that prescribe a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Accordingly, we now only recognize (or continue to recognize) tax positions meeting the more-likely-than-not recognition threshold (or that met such threshold on the effective date). Accounting for uncertainties in income tax positions involves significant judgments by management. If actual results differ from management’s estimates, we may need to adjust the provision for income taxes.
Recent Accounting Pronouncements
For additional discussion regarding these, and other recent accounting pronouncements, see Note 3 to our condensed consolidated interim financial statements, appearing elsewhere in this quarterly report on Form 10-Q.
Internal Control Over Financial Reporting
In connection with our assessment of internal controls over financial reporting as of December 31, 2009, we identified the following material weaknesses in our internal control over financial reporting due to:
· Ineffective control environment due to the following identified weaknesses:
o Failure to retain individuals competent in the application of generally accepted accounting principles (“GAAP”) to complex accounting transactions.
o Failure to establish sufficiently detailed accounting policies and procedures and to properly train accounting department staff.
· Ineffective internal control policies and procedures relating to the period end close process including lack of controls relating to journal entries, post closing adjustments and management review of conclusions regarding accounting and financial reporting matters.
· Ineffective internal control policies and procedures designed to provide reasonable assurance regarding the accuracy and integrity of spreadsheets used in the financial reporting system.
To remedy these material weaknesses, we are implementing policies and procedures to formalize our period end close process as well as to address the application of our accounting policies to ensure conformity with GAAP. We are also seeking to hire qualified personnel, or engage outside resources, as applicable, with appropriate knowledge/experience in the application of GAAP to complex accounting transactions and we are strengthening internal policies and procedures designed to ensure the accuracy and integrity of spreadsheets used in the financial reporting system. As discussed in Note 21, Subsequent Events, the Company hired a new Chief Financial Officer, Mr. Dreyer effective October 22, 2010. Mr. Dreyer is a Certified Public Accountant (CPA) with over 20 years experience in financial management of public companies. Management is fully committed to remediating the material weaknesses identified during last year’s assessment of internal controls.
For information regarding our evaluation of the effectiveness of our disclosure controls and procedures as well as any changes in our internal control over financial reporting as of the end of the period covered by this report, see “Controls and Procedures” below.
PSTX.. $0.75.. DD 11/18/10. Employment agreement, effective as of June 24, 2010 (the “Effective Date”), with Brian E. Stewart, President, Chief Executive Officer and director of the Company, regarding his employment with the Company Item 1.01. Entry Into a Material Definitive Agreement.
On November 15, 2010, Patient Safety Technologies, Inc. (the “Company”) entered into an employment agreement, effective as of June 24, 2010 (the “Effective Date”), with Brian E. Stewart, President, Chief Executive Officer and director of the Company, regarding his employment with the Company (the “Agreement”).
The term of the Agreement is three years from the Effective Date, and automatically extends for additional one-year terms thereafter unless either party delivers written notice of non-extension to the other party at least ninety days prior to the extension of the term. Mr. Stewart’s annual base salary is $200,000, to be increased to $245,000 for the remainder of the term upon a Positive Operating Income Determination (as defined in the Agreement). He is also eligible to participate in the Company’s executive bonus plan, under which the minimum target bonus opportunity is 25% of his annual base salary. The Company granted him a stock option for 2,000,000 shares of the Company’s common stock, 500,000 of which vest as of the date of the grant. An additional 250,000 stock options will vest and become exercisable six months from the Effective Date, and the remaining shares will vest over a 42-month period at a rate of 1/48th of the total shares per month, with 100% of the option becoming exercisable on the fourth anniversary of the Effective Date. The exercise price will be set at the weighted average trading price of the Company’s common stock on the Executive’s first day of employment, but not less than $0.75 per share. Based on that formula, the exercise price was established at $0.75 per share. The Agreement provides certain benefits in connection with termination without cause or resignation for good reason and changes of control of the Company.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) The disclosures in Item 1.01 of this Current Report on Form 8-K are incorporated into this Item 5.02(e).
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
10.1 Employment Agreement, effective as of June 24, 2010, between Patient Safety Technologies, Inc. and Brian E. Stewart.
PSTX.. $0.75 DD 11/16/10 Zealous Asset Management LLC Sues Patient Safety Technologies and Former Partners
Market Wire - Nov 16 at 06:00
Company Symbols: NASDAQ-OTCBB:PSTX
Ault Glazer Capital Partners and Zealous Partners Seek Payment and Damages for $2.4 Million Loan, Breach of Contract and Tortuous Interference
FOUNTAIN VALLEY, CA -- (MARKET WIRE) -- 11/16/10 -- Zealous Asset Management, LLC, Managing General Partner for hedge funds Zealous Partners, LLC (ZP) and Ault Glazer Capital Partners, LLC (AGCP) (collectively "The Funds") filed a lawsuit in Orange County Superior Court today, Case Number 30-2010-00424948, and have retained Arash Shirdel, Esq., Managing Partner of the Pacific Premier Law Group in Newport Beach, California. Mr. Shirdel will pursue their claims against Patient Safety Technologies, Inc. (OTCBB: PSTX) for breach of contract, breach of good faith and fair dealing, common counts-monies lent, intentional misrepresentation, fraud and tortuous interference, Dr. Louis Glazer, Board Member former Chief Executive Officer of PSTX.OB, major shareholder and Co-Founder of PSTX.OB, for fraud and tortuous interference, and Ms. Melanie Glazer, both major shareholder and Co-Founder of PSTX.OB for tortuous interference. Also named in the lawsuit is Stephen Bodnar a former partner in Ault Glazer Bodnar Acquisition Fund, LLC.
The suit alleges irreparable harm suffered by The Funds, Zealous Asset Management, LLC ("ZAM"), managing General Partner of The Funds and Zealous Holdings, Inc. ("ZHI"), parent of ZAM, as a result of the tortuous interference and misrepresentations made by the Glazers and management of PSTX.OB, about the financial strength of PSTX.OB and PSTX.OB's ability to service debts to The Funds. The lawsuit also alleges that due to the Glazer's controlling positions in the management of the AGCP and ZP, and as major shareholders in PSTX.OB, the Glazers were in unique positions to influence the decision making and actions of all of the companies and funds involved, often to the detriment of ZP, AGCP, ZAM and ZHI.
From 2005 to 2006, ZHI, through its wholly owned subsidiary AGCP, made loans totaling $2.4 million to PSTX.OB. ("The Loans") on which PSTX.OB defaulted. On or about March 2007, as a result of PSTX.OB'S default on The Loans, PSTX.OB approached AGCP in order to remove The Loans from default status. On or about June 2007 PSTX.OB and AGCP agreed to enter into a new agreement and remove The Loans from default status ("Convertible Note"). Shortly after entering into the Convertible Note, on or about March 2008, PSTX.OB again defaulted, this time on the Convertible Note.
In early 2008, prior to the collapse of world financial markets, Zealous Trading Group, Inc (ZLUS), the publicly traded parent of ZHI, with the full and enthusiastic support of the Glazers as ZLUS board members with control interest, made an internal decision to move into the Adult Entertainment Industry. To reflect the Company's change in direction, ZLUS changed its name to Adult Entertainment Capital, Inc. In response to and as a result of published articles, members of PSTX.OB's board and management became apprehensive of the company's affiliation with the Adult Entertainment Industry and threatened legal action if PSTX.OB's name was mentioned in association with Adult Entertainment Capital, Inc. and the Adult Entertainment Industry in general.
In order to appease PSTX.OB's board, the Glazers, as members of both the board of directors of PSTX.OB and ZLUS, urged AGCP to modify and further discount the outstanding Convertible Note (Modified Agreement). As a result of the Glazers' intimate knowledge of AGCP and with knowledge that a default by PSTX.OB on the Modified Agreement would lead to AGCP's collapse, PSTX.OB, with the approval of the Glazers, intentionally defaulted on the Modified Agreement to AGCP. PSTX.OB's intentional default on the Modified Agreement interfered with AGCP's ability to satisfy its own debts and resulted in the eventual bankruptcy of ZHI. Additionally, PSTX.OB has defaulted on preferred stock interest payments owed to ZP. After two years of unsuccessful settlement attempts and the bankruptcy of ZHI Zealous Asset Management, LLC, Ault Glazer Capital Partners LLC and Zealous Partners, Inc. have reluctantly decided to pursue legal recourse against Patient Safety Technologies, Inc., the Glazers and Mr. Bodnar.
About Zealous Partners, LLC, Ault Glazer Capital Partners, LLC and Zealous Holdings, Inc.
Zealous Partners, LLC, and Ault Glazer Capital Partners, LLC are independent Delaware Corporations and investment funds managed on behalf of Zealous Asset Management, Inc. and its parent company Zealous Holdings, Inc. whose parent is CoreStream Energy, Inc. f/k/a Zealous, Inc. Zealous Holdings, Inc. is a Nevada Corporation and a financial holding company and parent of Zealous Asset Management, LLC, a defunct company, and a wholly-owned subsidiary of CoreStream Energy, Inc. f/k/a Zealous, Inc. Zealous Holdings, Inc. is currently involved with bankruptcy proceedings.
Gary Patterson
714-369-2933
PSTX.. $0.75.. DD 10/27/10 Appoints New Chief Financial Officer
PR Newswire - Oct 27 at 09:15
Company Symbols: NASDAQ-OTCBB:PSTX
TEMECULA, Calif., Oct. 27 /PRNewswire-FirstCall/ -- Patient Safety Technologies, Inc. (the &;Company&;) (OTCBB: PSTX) today announced the appointment of David Dreyer as Vice President and Chief Financial Officer. Mr. Dreyer will be responsible for the finance, accounting and reporting requirements for the Company and its wholly-owned operating subsidiary, SurgiCount Medical, as well as play a key role in various strategic initiatives and operational improvements.
&;We are pleased to welcome David to the team and look forward to the addition of a proven healthcare executive with a depth of public company experience,&; said Brian E. Stewart, President and Chief Executive Officer.
Mr. Dreyer is a certified public accountant and brings over 20 years of experience as a Chief Financial Officer and senior executive in the healthcare industry. He has been the CFO of multiple publicly traded companies and has worked for a wide range of organizations in his career, including AMN Healthcare Services, AlphaStaff Inc., Sicor, Inc., Elan Pharma, Athena Neurosciences, Syntex Corporation and Arthur Andersen & Company. David brings an extensive background in SEC reporting, corporate governance and SOX compliance as well as financial reporting, forecasting and the implementation of ERP systems. He has successfully led numerous financings as well as a variety of strategic M&A and divestiture transactions.
&;I am very excited at the future opportunities SurgiCount Medical offers, and look forward to working with Brian, the board of directors and the entire management team,&; commented Mr. Dreyer.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (951) 587-6201 or visit www.surgicountmedical.com.
Some statements in this release may be &;forward-looking statements&; for the purposes of the Private Securities Litigation Reform Act of 1995. In some cases forward-looking statements can be identified by words such as &;believe,&; &;expect,&; &;anticipate,&; &;plan,&; &;potential,&; &;continue&; or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in Patient Safety Technologies, Inc. Annual Report on Form 10-K for the year ended December 31, 2009, as updated from time to time in our filings with the Securities and Exchange Commission.
SOURCE Patient Safety Technologies, Inc.
Item 1.01. Entry Into a Material Definitive Agreement.
Effective as of October 22, 2010 (the “Effective Date”), Patient Safety Technologies, Inc. (the “Company”) entered into an employment agreement with David Dreyer regarding his appointment to the positions of Chief Financial Officer and Vice President of the Company (the “Agreement”). The Agreement was signed October 22, 2010 and in reliance on Item 8.01 of Current Report on Form 8-K, this Current Report is being filed concurrently with the press release, included as Exhibit 99.1 to this Current Report and incorporated herein by reference, announcing the appointment of Mr. Dreyer.
The term of the Agreement is three years from the Effective Date, and automatically extends for additional one-year terms thereafter unless either party delivers written notice of non-extension to the other party at least ninety days prior to the extension of the term. Mr. Dreyer’s annual base salary will be $200,000, to be increased to $240,000 for the remainder of the term should the Company generate positive operating income (as specifically defined in the Agreement) for two consecutive fiscal quarters. He is also eligible to participate in the Company’s executive bonus plan, under which the minimum target bonus opportunity is 25% of his annual base salary. The Company granted him a stock option for 450,000 shares of the Company’s common stock, and upon the six-month anniversary of the Effective Date, 100,000 of those shares will vest and become exercisable. The remaining shares will vest over a 42-month period at a rate of 1/48th of the total shares per month, with 100% of the option becoming exercisable on the fourth anniversary of the Effective Date. The exercise price will be set at the weighted average trading price of the Company’s common stock on the Executive’s first day of employment, but not less than $0.75 per share. Based on that formula, the exercise price was established at $0.75 per share.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Mr. Dreyer, age 53, has accepted an offer of employment to serve as the Company’s Chief Financial Officer and Vice President, effective as of October 22, 2010. Prior to joining the Company, Mr. Dreyer was Chief Financial Officer at Alphastaff Inc., a professional employment outsourcing company specializing in outsourcing of human resources services, from August 2009 through September 2010, and Chief Financial Officer, Chief Accounting Officer and Treasurer at AMN Healthcare, Inc., a healthcare staffing company, from August 2004 through August 2009.
Further disclosure responsive to this Item 5.02 is incorporated herein by reference from Item 1.01 of this Report.
PSTX.. $0.75 DD 09/23/10 Mayo Clinic Research on SurgiCount To Be Presented at Conferences
PR Newswire - Sep 23 at 09:15
Company Symbols: NASDAQ-OTCBB:PSTX
Results of independent clinical research conducted by the Mayo Clinic on retained foreign object prevention and the SurgiCount Safety-Sponge® System to be presented
Discussion to include the selection, trial, implementation and evaluation of the SurgiCount Safety-Sponge® System
TEMECULA, Calif., Sept. 23 /PRNewswire/ -- SurgiCount Medical, the wholly-owned operating subsidiary of Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX), announced that results of independent, unsponsored clinical research conducted by the Mayo Clinic on their multi-year effort to reduce retained foreign objects will be presented and discussed at two upcoming conferences. The research and related discussion will include the evaluation of the SurgiCount Safety-Sponge® System and its impact on retained surgical sponges at the Mayo Clinic.
The upcoming conferences are as follows:
-- 23rd Annual Managing Today's OR Suite Conference, Orlando, Florida
Friday, October 1st, 9:30am – 10:45am
What Does It Take to Prevent Retained Foreign Objects
Robert R. Cima, MD, MA
Vice Chairman, Department of Surgery; Associate Professor of Surgery,
Mayo Clinic,
Rochester, Minnesota
Cheryl Weisbrod, RN, MSN
Nurse Administrator, Mayo Clinic
Sarah R. Pool, RN, MSN
Resource Nurse Manager, Mayo Clinic, Instructor in Nursing, College of
Medicine
James D. Clark, RN, MSN
Nursing Education Specialist, Surgical Services, Mayo Clinic
-- American College of Surgeons 96th Annual Clinical Congress, Washington
DC
Tuesday, October 5th, 2:30pm – 4:00pm
Quality and Outcomes Session I
Robert R. Cima, MD, MA of the Mayo Clinic will present the clinical
research study
"Evaluation and Implementation of a Bar Coded Sponge Counter System:
Impact on Retained Sponges After One Year" as part of a discussion
panel
&;We are honored to have our Safety-Sponge® solution validated by extensive, independent research conducted by such a prestigious institution and group of individuals. To my knowledge this is the first and only completely unsponsored clinical research on any technology solution to prevent retained surgical sponges. We will continue to follow the lead of the Mayo Clinic and other institutions to work to eliminate retained surgical sponges, a common yet entirely preventable surgical error,&; stated Brian E. Stewart, President and CEO of Patient Safety Technologies, Inc.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc. provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (951) 587-6201 or visit www.surgicountmedical.com.
Some statements in this release may be &;forward-looking statements&; for the purposes of the Private Securities Litigation Reform Act of 1995. In some cases forward-looking statements can be identified by words such as &;believe,&; &;expect,&; &;anticipate,&; &;plan,&; &;potential,&; &;continue&; or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in Patient Safety Technologies, Inc. Annual Report on Form 10-K for the year ended December 31, 2009, as updated from time to time in our filings with the Securities and Exchange Commission.
SOURCE Patient Safety Technologies, Inc.
PSTX.. $0.75 DD 09/10/10
Kalispell Regional Medical Center to Implement the SurgiCount Safety-Sponge® System
PR Newswire - Sep 10 at 09:15
Company Symbols: NASDAQ-OTCBB:PSTX
Joins prestigious and growing list of hospitals proactively raising the standard of patient care First hospital in the State of Montana to adopt the Safety-Sponge® System
TEMECULA, Calif., Sept. 10 /PRNewswire/ -- SurgiCount Medical, the wholly-owned operating subsidiary of Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX), today announced that it has signed a contract with Kalispell Regional Medical Center to implement the SurgiCount Safety-Sponge® System, a proven solution to prevent one of the most common surgical errors, retained surgical sponges. The first hospital in the State of Montana to adopt the SurgiCount solution, Kalispell Regional Medical Center joins a prestigious list of over 50 user hospitals including 5 of U.S. News and World Report&;s 2010-2011 Honor Roll Hospitals and a growing list of other teaching, community and government hospitals nationwide.
&;SurgiCount&;s impressive list of current hospitals and the strong references they provided was extremely compelling and made this an easy decision. If I or one of my family members were having surgery, I would want this solution used,&; stated Velinda Stevens, Chief Executive Officer of Kalispell Regional Medical Center.
&;We are proud to enable KRMC to continue to raise their standard of care and to help protect the hospital, the surgeons and nurses who practice there and their patients from this common but entirely preventable event,&; stated Brian E. Stewart, President and CEO of Patient Safety Technologies, Inc.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (951) 587-6201 or visit www.surgicountmedical.com.
Safe Harbor Statement
&;Safe Harbor&; statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding our business that are not historical facts are &;forward-looking statements&; (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties. Forward-looking statements reflect our management&;s current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words &;anticipates,&; &;believes,&; &;expects,&; &;intends,&; &;future,&; and other similar expressions, without limitation, identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include: •our need for additional financing to support our business; the early stage of adoption of our Safety-Sponge® System and the need to expand adoption of our Safety-Sponge® System; any failure of our new management team and Board of Directors to operate effectively; our reliance on third-party manufacturers, some of whom are sole-source suppliers, and on our exclusive distributor; and any inability to successfully protect our intellectual property portfolio. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.
Forward-looking statements can be affected by many other factors, including, those described in the &;Business&; and &;Management&;s Discussion and Analysis of Financial Condition and Results of Operations&; sections of our Annual Report on Form 10-K for 2009 and in our other public filings. These documents are available online through the SEC&;s website, www.sec.gov. Forward-looking statements are based on information presently available to senior management, and we have not assumed any duty to update any forward-looking statements.
SOURCE Patient Safety Technologies, Inc.
PSTX.. $0.75.. DD 08/17/10 Second Quarter 2010 Results
Patient Safety Technologies Reports Second Quarter 2010 Results
PR Newswire - Aug 17 at 09:15
Company Symbols: NASDAQ-OTCBB:PSTX
Second quarter total revenues of $3.77 million
SurgiCount Safety-Sponge® System use surpasses 1.3 million procedures, 32.5 million sponges
Expanded customer list
TEMECULA, Calif., Aug. 17 /PRNewswire-FirstCall/ -- Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX) today announced financial results for its second quarter of fiscal year 2010, which ended June 30, 2010.
The company reported second quarter revenues of $3.77 million compared to $1.03 million reported in the second quarter of fiscal year 2009. Reported second quarter revenues included $2.33 million shipped to the Company&;s distributor under a stocking purchase order. Excluding the effect of this order, second quarter revenues were $1.44 million.
Reported gross profit was $1.98 million in the second quarter compared to $409 thousand reported in the second quarter of fiscal year 2009. Reported gross margins were 52.4% in the second quarter, compared to 39.8% for the same period in 2009.
&;I am pleased with our revenue growth and margin expansion and the progress it represents. I believe it is evidence of increasing industry awareness as to the frequency of retained surgical sponges as well as a growing intolerance for accepting any occurrences of this preventable surgical error,&; stated Brian E. Stewart, President and Chief Executive Officer.
The company now estimates that over 32.5 million of its Safety-Sponges® have been used in more than 1.3 million cumulative procedures using the SurgiCount Safety-Sponge® System, all without a single undetected Safety-Sponge® being left unintentionally inside a patient. &;The clinical evidence as to the efficacy of our solution is overwhelming. For the hospitals using our system, we have taken what is estimated at a one in every 5,000 to 8,000 general surgeries event to zero in 1.3 million,&; stated Mr. Stewart.
Current contracted users of the SurgiCount Safety-Sponge® System now include over 50 hospitals across the U.S., including five of the 14 hospitals named to the U.S. News and World Report 2010-11 Honor Roll.
The company&;s second quarter financial statements are included in the Quarterly Report on Form 10-Q filed by the company on August 16, 2010 and available at the SEC&;s website at www.sec.gov
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information, contact SurgiCount Medical, Inc. at (951) 587-6201 or visit www.surgicountmedical.com.
Safe Harbor Statement
&;Safe Harbor&; statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding our business that are not historical facts are &;forward-looking statements&; (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties. Forward-looking statements reflect our management&;s current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words &;anticipates,&; &;believes,&; &;expects,&; &;intends,&; &;future,&; and other similar expressions, without limitation, identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. These factors and uncertainties include: •our need for additional financing to support our business; the early stage of adoption of our Safety-Sponge® System and the need to expand adoption of our Safety-Sponge® System; any failure of our new management team and Board of Directors to operate effectively; our reliance on third-party manufacturers, some of whom are sole-source suppliers, and on our exclusive distributor; and any inability to successfully protect our intellectual property portfolio. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.
Forward-looking statements can be affected by many other factors, including, those described in the &;Business&; and &;Management&;s Discussion and Analysis of Financial Condition and Results of Operations&; sections of our Annual Report on Form 10-K for 2009 and in our other public filings. These documents are available online through the SEC&;s website, www.sec.gov. Forward-looking statements are based on information presently available to senior management, and we have not assumed any duty to update any forward-looking statements
SOURCE Patient Safety Technologies, Inc.
PSTX $0.75 DD 10Q Released 08/16/10
PATIENT SAFETY TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
June 30,
2010 December 31,
2009
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 4,591,755 $ 3,446,726
Restricted cash 651,223 —
Accounts receivable 532,798 906,136
Inventories, net 1,179,826 565,823
Prepaid expenses 122,445 207,598
Total current assets 7,078,047 5,126,283
Property and equipment, net 873,131 744,646
Goodwill 1,832,027 1,832,027
Patents, net 2,951,554 3,114,025
Long-term investment 666,667 666,667
Other assets 42,671 43,246
Total assets $ 13,444,097 $ 11,526,894
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable $ 1,726,325 $ 2,043,166
Convertible note 1,424,558 1,424,558
Capital lease-current portion — 19,330
Warrant derivative liability 996,388 3,666,336
Deferred revenue 6,416,818 8,099,144
Accrued liabilities 1,334,277 1,242,876
Total current liabilities 11,898,366 16,495,410
Capital lease, less current portion — 58,274
Deferred tax liability 740,622 805,768
Total liabilities 12,638,988 17,359,452
Commitments and contingencies (Note 20)
Stockholders’ equity:
Series A preferred stock, $1.00 par value, cumulative 7% dividend: 1,000,000 shares authorized; 10,950 issued and outstanding at June 30, 2010 and December 31, 2009;
(Liquidation preference of $1.2 million at June 30, 2010 and December 31, 2009) 10,950 10,950
Series B convertible preferred stock, $1.00 par value, cumulative 7% dividend: 150,000 shares authorized; 60,067 issued and outstanding at June 30, 2010 and 0 issued and outstanding at December 31, 2009;
(Liquidation preference of $6.0 million at June 30, 2010 and $0 at December 31, 2009) 60,067 -
Common stock, $0.33 par value: 100,000,000 shares authorized; 23,456,063 shares issued and outstanding at June 30, 2010 and December 31, 2009 7,740,501 7,740,501
Additional paid-in capital 51,113,594 44,834,321
Accumulated deficit (58,120,003 ) (58,418,330 )
Total stockholders’ equity (deficit) 805,109 (5,832,558 )
Total liabilities and stockholders’ equity (deficit) $ 13,444,097 $ 11,526,894
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
1
--------------------------------------------------------------------------------
PATIENT SAFETY TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Revenues $ 3,765,517 $ 1,027,605 $ 6,130,337 $ 1,963,605
Cost of revenue 1,790,360 618,562 2,879,248 1,167,562
Gross profit 1,975,157 409,043 3,251,089 796,043
Operating expenses:
Research and development 97,972 85,581 131,302 198,581
Sales and marketing 828,445 553,225 1,822,562 1,202,225
General and administrative 2,076,776 1,359,848 3,728,638 3,910,848
Total operating expenses 3,003,193 1,998,654 5,682,502 5,311,654
Operating loss (1,028,036 ) (1,589,611 ) (2,431,413 ) (4,515,611 )
Other income (expense)
Interest expense (796 ) (219,733 ) (13,042 ) (439,733 )
Gain (loss) on change in fair value of warrant derivative liability 951,210 (2,155,119 ) 2,669,949 (2,570,119 )
Other income (expense) (5,075 ) — 52,782 —
Total other income (expense) 945,339 (2,374,852 ) 2,709,689 (3,009,852 )
Income (loss) before income taxes (82,697 ) (3,964,463 ) 278,276 (7,525,463 )
Income tax benefit 32,573 30,719 65,146 64,719
Net income (loss) 50,124 (3,933,744 ) 343,422 (7,460,744 )
Preferred dividends (25,932 ) (19,325 ) (45,095 ) (38,325 )
Net income (loss) applicable to common shareholders $ (76,056 ) $ (3,953,069 ) $ 298,327 $ (7,499,069 )
Income (loss) per common share
Basic $ (0.00 ) $ (0.23 ) $ 0.01 $ (0.44 )
Diluted $ (0.00 ) $ (0.23 ) $ 0.01 $ (0.44 )
Weighted average common shares outstanding:
Basic 23,456,063 17,197,872 23,456,063 17,197,872
Diluted 23,456,063 17,197,872 24,895,607 17,197,872
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
2
--------------------------------------------------------------------------------
PATIENT SAFETY TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
2010 2009
Operating activities:
Net income (loss) $ 343,422 $ (7,460,744 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation 277,779 170,360
Amortization of patents 162,471 162,471
Amortization of debt discount — 247,124
Stock based compensation 804,525 571,782
Gain on reduction of contingent tax liability (427,700 ) —
Loss on abandonment of lease 371,942 —
Loss on capital lease write-off 3,917 —
Non-cash expense related to issuance of additional warrants — 1,297,200
Non-cash interest — 61,000
(Gain) loss on change in fair value of warrant derivative liability (2,669,949 ) 2,569,000
Change in deferred tax liability (65,146 ) (64,319 )
Inventory valuation allowance — 106,059
Changes in operating assets and liabilities:
Accounts receivable 373,338 230,352
Inventories (614,003 ) (563,059 )
Prepaid expenses 85,153 (32,243 )
Other assets 575 7,826
Accounts payable 683,158 860,630
Accrued liabilities 147,158 (155,410 )
Deferred revenue (1,682,326 ) —
Net cash used in operating activities (2,205,686 ) (1,991,971 )
Investing activities:
Purchase of property and equipment (472,226 ) (14,768 )
Net cash used in investing activities (472,226 ) (14,768 )
Financing activities:
Proceeds from issuance of notes payable — 2,000,000
Proceeds from issuance of convertible preferred stock 5,000,000 —
Payments for stock issuance costs (471,955 )
Capital lease principle payments (15,556 ) —
Payments of preferred dividends (38,325 ) (38,325 )
Transfer to restricted cash in connection with tax escrow account (651,223 ) —
Net cash provided by financing activities 3,822,941 1,961,675
Net increase (decrease) in cash and cash equivalents 1,145,029 (45,064 )
Cash and cash equivalents at beginning of period 3,446,726 296,185
Cash and cash equivalents at end of period $ 4,591,755 $ 251,121
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ — $ 36,000
Cash paid during the period for taxes $ 16,113 $ —
Non cash investing and financing activities:
Issuance of convertible preferred stock for accounts payable $ 1,000,000 $ —
Dividends accrued $ 45,028 $ 38,325
Reduction of fixed assets based on write-off of capital lease $ 62,048 $ —
Reclassification of accrued interest to notes payable $ — $ 94,000
Debt discount recorded in connection with issuance of notes payable $ — $ 1,311,311
Reclassification of warrant equities to derivative liability $ — $ 4,240,000
PSTX.. $0.75 DD.. Patient Safety Technologies Appoints New Chief Operating Officer
PR Newswire - Aug 09 at 09:15
Company Symbols: NASDAQ-OTCBB:PSTX
TEMECULA, Calif., Aug. 9 /PRNewswire-FirstCall/ -- Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX) today announced the appointment of John (Jack) Hamilton as Vice President and Chief Operating Officer. Mr. Hamilton will play a key role in the operational management of SurgiCount Medical, the wholly-owned operating subsidiary of Patient Safety Technologies, Inc.
&;I am pleased to welcome Jack to the company and to announce the addition of an executive with such an extensive medical device operational background.&; said Brian E. Stewart, President and Chief Executive Officer.
Mr. Hamilton brings more than 28 years of medical device experience to the company. He joins from SRI Surgical where he spent over 18 years serving in a variety of executive positions, most recently as the Senior Vice President of Process Engineering & Quality Assurance. His responsibilities have included product development, process engineering, specification development, manufacturing as well as serving as the head of Quality Assurance and Regulatory Affairs. He also brings with him significant experience with automatic identification technologies including both RFID and barcode systems. Jack is a member of several influential industry associations, including AAMI (Association for the Advancement of Medical Instrumentation), ASQ (American Society for Quality) and ASTM (American Society for Testing and Materials) and is an active member of several AAMI working groups.
&;I am excited to be joining the company at this time of growth and opportunity and look forward to helping drive its success to the next level.&; said Mr. Hamilton.
About Patient Safety Technologies, Inc. and SurgiCount Medical
Patient Safety Technologies, Inc., through its wholly-owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects. For more information contact SurgiCount Medical, Inc. at (951) 587-6201 or visit www.surgicountmedical.com.
SOURCE Patient Safety Technologies, Inc.
Item 1.01. Entry Into a Material Definitive Agreement.
Effective as of August 9, 2010 (the “Effective Date”), Patient Safety Technologies, Inc., a Delaware corporation (the “Company”) entered into an employment agreement with John A. Hamilton regarding his appointment to the positions of Chief Operating Officer and Vice President of the Company (the “Agreement”). The Agreement was signed July 26, 2010 and in reliance on Instruction to Item 5.02(c) of Current Report on Form 8-K, this Current Report is being filed concurrently with the press release, included as Exhibit 99.1 to this Current Report and incorporated herein by reference, announcing the appointment of Mr. Hamilton.
The term of the Agreement is three years from the Effective Date, and automatically extends for additional one-year terms thereafter unless either party delivers a specified advance written notice. Mr. Hamilton’s annual base salary will be $185,000, to be increased to $210,000 for the remainder of the term when the Company’s total operating income reaches zero or greater for two consecutive fiscal quarters. He is also eligible to participate in the Company’s executive bonus plan, under which the minimum target bonus opportunity is 25% of his annual base salary. The Company granted him a stock option for 375,000 shares of the Company’s common stock, and upon the six-month anniversary of the Effective Date, 93,750 of those shares will vest and become exercisable. The remaining shares will vest over a 42-month period at a rate of 1/48th of the total shares per month, with 100% of the option becoming exercisable on the fourth anniversary of the Effective Date. The exercise price will be set at the weighted average trading price of the Company’s common stock on the Executive’s first day of employment, but not less than $0.75 per share. Upon a Change in Control, as such term is defined in the Agreement, half of Mr. Hamilton’s then unvested stock options and unvested deferred compensation will immediately vest.
The Company may terminate Mr. Hamilton’s employment at any time without Cause and he may resign for Good Reason, as such terms are defined in the Agreement. Upon termination without Cause or resignation for Good Reason, he may receive continued medical benefits and vesting of stock options, as well as between three and six months of severance payments based on his annual base salary at the time, depending on his term of employment with the Company.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
Item 5.02 (c). Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Mr. John A. Hamilton, 51, has accepted an offer of employment to serve as the Company’s Chief Operating Officer and Vice President, effective as of August 9, 2010. Further disclosure responsive to this Item 5.02 is incorporated herein by reference from Item 1.01 of this Report.
Prior to joining the Company, Mr. Hamilton was the Senior Vice President of Process Engineering and Quality Assurance for SRI Surgical since approximately 2006 and Vice President of Process Engineering and Quality Assurance since approximately 2002. Mr. Hamilton joined SRI Surgical (formerly known as Sterile Recoveries) in 1992 as Director of Product Development, expanding his role over time to include product engineering, manufacturing, quality assurance, development and implementation of new products and materials, process development, support of operations and vendor relations.
PSTX.. $0.75 DD 06/29/11 Item 1.01 Entry into a Material Definitive Agreement
Sale of Series B Convertible Preferred Stock
On June 24, 2010 (the “Closing Date”), Patient Safety Technologies, Inc., a Delaware corporation (“we,” “us,” “our,” or the “Company”) entered into a Convertible Preferred Stock Purchase Agreement (the “Purchase Agreement”) with the Buyers identified on the signature pages thereto, (the “Buyers”), each of whom is an accredited investor, as defined under Rule 501(a) of Regulation D of the Securities Act of 1933, as amended (the “Act”). The Buyers included A Plus International, Inc., JMR Capital Ltd. and Catalysis Partners, LLC. Wenchen (“Wayne”) Lin, a member of our Board of Directors (“Board”), is a founder and significant beneficial owner of A Plus International, Inc. John P. Francis, a member of our Board, has voting and investment control over securities held by Francis Capital Management, LLC, which acts as the investment manager for Catalysis Partners, LLC.
Pursuant to the Purchase Agreement, we issued to the Buyers an aggregate 60,000 shares of our Series B Convertible Preferred Stock (the “Series B Preferred”) at a purchase price of $100.00 per share (or $6,000,000 in the aggregate), payable in cash or as a reduction of indebtedness or a combination of both. The terms of the Series B Preferred are described below under (“—Terms of the Series B Convertible Preferred Stock”). We refer to this transaction as the “Financing.”
We also agreed to grant the Buyers certain pre-emptive rights in respect of any future issuance of equity securities (subject to certain exceptions set forth in the Purchase Agreement) for a period of five years from the closing date of the transactions contemplated by the Purchase Agreement, and agreed to reimburse the Buyers for their reasonable costs and expenses incurred in connection with the Financing up to $175,000. In addition, as contemplated by the Purchase Agreement, we granted the Buyers certain registration rights for the shares of our common stock issuable upon conversion of the Series B Preferred, as described below under “—Registration Rights Agreement.” In connection with the Financing, we placed a portion of the proceeds ($651,223) in an escrow account to pay certain contingent tax liabilities.
Terms of the Series B Convertible Preferred Stock
The rights, preferences and privileges of the Series B Preferred are set forth in the Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on the Closing Date (the “Series B Certificate”).
The Series B Certificate authorizes 150,000 shares of Series B Preferred, with a par value of $1.00 per share and a stated value per share of $100.00. Holders of the Series B Preferred are entitled to receive quarterly cumulative dividends at a rate of 7.00% per annum, beginning on July 1, 2010. All dividends due on or prior to December 31, 2011 are payable in kind in the form of additional shares of Series B Preferred, and all dividends payable after December 31, 2011 are payable solely in cash.
As long as shares of Series B Preferred are outstanding, we are restricted from making certain payments in respect of any of our junior and pari passu securities, except that we may pay dividends due and paid in the ordinary course on our Series A Convertible Preferred Stock when we are otherwise in compliance with our payment obligations to the holders of the Series B Preferred.
The Series B Preferred does not have voting rights except (a) as provided by Delaware law; (b) upon the occurrence of the fifth anniversary of the issue date; or (c) upon our failure to pay dividends for two consecutive quarters or three non-consecutive quarters. Upon the occurrence of either event described in (b) or (c), the holders of the Series B Preferred are entitled to elect two additional directors to our board of directors and, within two business days, we must create a special committee of our board of directors consisting of up to three directors, of which two must be the two newly-elected additional directors, and promptly grant such special committee sole and exclusive authority and power to investigate, negotiate and consummate a sale of the Company or strategic alternative thereto.
So long as any shares of Series B Preferred remain outstanding, we may not, without the consent of a majority of the holders of the Series B Preferred: (a) alter or change the powers, preferences or rights given to the Series B Preferred; (b) authorize, create or issue any class or series of stock, or issue additional shares of Series A Convertible Preferred Stock ranking senior to or pari passu with the Series B Preferred in terms of dividends, redemption or distribution of assets upon liquidation; (c) amend our certificate of incorporation, by-laws or other charter documents in a manner that adversely affects the rights of the holders of the Series B Preferred; (d) increase the number of authorized shares of Series B Preferred; (e) enter into any transaction with any affiliate that would be required to be disclosed in any public filing with the Securities and Exchange Commission (the “SEC”), unless made at arm’s length and approved by a majority of disinterested directors of the Company; (f) issue rights, options or warrants to all holders of our common stock that would entitle them to purchase shares of our common stock at a price per share that is lower than the daily volume weighted average price of such common stock on the applicable record date, or distribute (other than as a dividend) evidence of indebtedness, assets, rights or warrants to subscribe for or purchase such security, without, in either case, issuing or distributing such rights, options, warrants, indebtedness or assets proportionately to the holders of the Series B Preferred; or (g) enter into any agreement to do any of the above.
The Series B Preferred are entitled to receive, prior and in preference to all other shares of our capital stock (with an exception noted below), upon liquidation, dissolution or winding up of the Company an amount per share equal to the greater of (i) the stated value of the Series B Preferred, plus accrued but unpaid dividends, or (ii) such amount per share as would have been payable had all shares of Series B Preferred been converted into our common stock immediately prior to such liquidation. Notwithstanding the foregoing, the first $1,095,000 of distributable amounts in a liquidation shall first be paid to the holders of our Series A Convertible Preferred Stock. Mergers, sales of substantially all assets and similar transactions are deemed to be liquidations for purposes of the liquidation preference.
The Series B Preferred is convertible at any time at the option of the holder into shares of our common stock at $.75 per share, subject to conventional adjustments for stock splits, stock combinations and the like. We are subject to certain liquidated damages if we fail to timely honor our conversion obligations as set forth in the Series B Certificate.
The Series B Preferred is not redeemable either by the Company or by the holders. However, shares of our Series B Preferred automatically convert into shares of our common stock at the applicable conversion price if both of the following conditions are satisfied: (a) the daily volume weighted average price of our common stock is equal to or in excess of $1.50 per share for all trading days during any 6-month period and (b) the number of shares traded during such period averages at least 50,000 shares of common stock per trading day. Also, the Series B Preferred automatically convert into shares of our common stock at the applicable conversion price if our operating income is positive for at least four consecutive fiscal quarters and our cumulative operating income during such four fiscal quarters is at least $5,000,000.
There are certain limits to the ability of the holders of Series B Preferred to convert based upon various ownership levels that such holders may have. Generally, there are conversion limits that apply at the 4.9% and 9.9% beneficial ownership levels, and the 4.9% conversion limit can be increased up to 9.9% upon 61 days notice to the Company from the applicable holder.
Registration Rights Agreement
As contemplated by the Purchase Agreement, on the Closing Date we also entered into a Registration Rights Agreement with the Buyers and Ken Traub, a consultant to the Company (the “Holders”), to provide for certain registration rights (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, we agreed to file a registration statement to register the shares of common stock issued to the Holders upon conversion of the Series B Preferred Stock purchased by them in the Financing, as well as any other shares of common stock held by the Holders on the Closing Date, within 90 days, and have such registration statement declared effective within 150 days of the Closing Date. In addition to the foregoing mandatory registration, we also granted the Holders demand and “piggyback” registration rights. We have agreed to pay substantially all of the costs and expenses related to the filing of the registration statements and any underwritten public offering required pursuant to the Registration Rights Agreement.
Separation and Release Agreements
As contemplated by the Purchase Agreement, Steven H. Kane resigned as a Director, President and Chief Executive Officer, and Howard E. Chase, Loren McFarland, Eugene A Bauer, MD, and William M. Hitchcock also resigned as members of our Board of Directors (the “Board”) effective upon the closing of the Financing. Immediately following the closing the Financing, the remaining members of our Board, John P. Francis, Wayne Lin, Herbert Langsam, and Louis Glazer, MD, Ph.G. appointed Brian E. Stewart as President, Chief Executive Officer and Director.
In connection with Mr. Kane’s resignation as a Director, President and Chief Executive Officer, effective as of the Closing Date, we entered into a Separation Agreement and Mutual General Release with Steven Kane (the “Kane Release”). Other signatories of the Kane Release include Brian Stewart, John P. Francis, John P. Francis’ affiliated entities (Francis Capital Management, Catalysis Partners, LLC, and Catalysis Offshore, Ltd.), Wenchen (“Wayne”) Lin, A Plus International, Inc., and other stockholder members of the group that filed a certain Schedule 13D in respect of the Company on April 16, 2010. The Kane Release confirms that his termination shall be considered a termination “without Cause” for purposes of determining payments and benefits under his employment agreement and that he shall receive the severance and benefits he is entitled to under such agreement for a termination “without Cause,” provided that Mr. Kane waived his rights to any bonus payment, or payment for excise taxes. The Kane Release also provided for the payment to Mr. Kane, in cash, of an aggregate $234,573 as payment in full for all accrued Director fees and salary, accrued vacation, and severance benefits as provided in his employment agreement. The Kane Release extends the expiration date of his currently vested options to April 30, 2011, and provides that options that vest as a result of his employment agreement shall expire September 24, 2011. The Kane Release provides for a general mutual release of any and all claims occurring on or prior to the Closing Date and related to, involving or arising out of any act occurring prior to the execution of the Kane Release, as well as a waiver of unknown claims, a two year mutual non-disparagement clause, and an 18-month “standstill” agreement whereby Mr. Kane agreed not to solicit proxies in regard to the Company or acquire alone or with a group, beneficial ownership of more than 1% f our total outstanding shares (disregarding any shares acquired upon the exercise of options).
In connection with the resignation of Messrs. Chase, McFarland, Hitchcock and Dr. Bauer as members of our Board, effective as of the Closing Date, we entered into a Separation Agreement and Mutual General Release with such individuals (the “Director Release”). Other signatories of the Director Release include Brian Stewart, John P. Francis, John P. Francis’ affiliated entities (Francis Capital Management, Catalysis Partners, LLC, and Catalysis Offshore, Ltd.), A Plus International, Inc., Wenchen “Wayne” Lin, and other stockholder members of the group that filed a certain Schedule 13D in respect of the Company on April 16, 2010. The Director Release provides for a general mutual release of any and all claims occurring on or prior to the Closing Date and related to, involving or arising out of any act occurring prior to the execution of the Director Release, as well as an agreement not to sue and a waiver of unknown claims, and a mutual two year non-disparagement clause. The Director Release also acknowledges that options to acquire 200,000 shares held by each of Messrs. McFarland and Chase, and options to acquire 50,000 shares held by each of Mr. Hitchcock and Dr. Bauer are vested and extends the expiration date for Messrs. Chase, McFarland, Hitchcock and Dr. Bauer until June 30, 2012. The Director Release also provides for the payment, in cash, of the following accrued but unpaid Director’s fees: $83,488 to Mr. Chase, $64,912 to Mr. McFarland, $10,025 to Mr. Hitchcock and $10,025 to Dr. Bauer.
Rose Employment Agreement Amendment
In addition, effective as of the closing of the Financing on June 24, 2010, we amended Marc L. Rose’s employment agreement to revise the defined term “Good Reason” to provide that “Good Reason” also includes relocation of his assigned workplace or obligation to perform services at a location more than a 40 mile radius from Newtown, PA.
The foregoing descriptions of the Series B Certificate, Purchase Agreement, Registration Rights Agreement, Kane Release, Director Release, and amendment to Marc Rose’s employment agreement do not purport to be complete are qualified in their entirety by the full text of such certificate and agreements, which are filed as Exhibits 4.1, 10.1, 10.2, 10.3, 10.4 and 10.5 hereto, respectively, and incorporated by reference herein.
Item 1.02 Termination of Material Definitive Agreement
Disclosure responsive to this Item 1.02 is incorporated by reference from Item 1.01 of this Report.
Item 3.02 Unregistered Sale of Equity Securities
On the Closing Date we issued 60,000 shares of our Series B Preferred to the Buyers for $5,000,000 in cash and the cancellation of $1,000,000 of indebtedness. The Registration Rights Agreement provides for certain mandatory, demand and “piggyback” registration rights, which will require us to register all the shares of common stock issuable to the Holders upon conversion of the Series B Preferred, as well as all other shares of common stock held by the Holders on the Closing Date, under the Act in certain circumstances. The Series B Preferred have not been registered under the Act, or state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements.
The Series B Preferred were issued in reliance upon the exemption from the registration requirements of the Act pursuant to Rule 506 of Regulation D thereof. The offer, sale and issuance of the Series B Preferred was made without general solicitation or advertising. The Series B Preferred were offered and issued only to “accredited investors” as such term is defined in Rule 501 of Regulation D under the Act.
Neither this Current Report on Form 8-K nor the exhibits attached hereto is an offer to sell or the solicitation of an offer to buy shares of our common stock or any other security.
The disclosure in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
Officer and Director Resignations
Effective as of the Closing Date, Steven H. Kane resigned as a Director, President and Chief Executive Officer, and Howard E. Chase, Loren McFarland, Eugene A Bauer, MD, and William M. Hitchcock also resigned as members of our Board effective upon the closing of the Financing.
The disclosure provided in item 1.01 regarding the Kane Release and Director Release is incorporated by reference herein.
Appointment of New Director, President and Chief Executive Officer
Immediately following the closing the Financing, the remaining members of our Board, John P. Francis, Wayne Lin, Herbert Langsam, and Louis Glazer, MD, Ph.G. appointed Brian E. Stewart as President, Chief Executive Officer and Director.
The principal occupation and brief summary of the background of Mr. Stewart is as follows:
Brian E. Stewart, age 37, is the Chief Executive Officer, President and Director of the Company commencing June 24, 2010. He is the co-founder of our principal operating subsidiary SurgiCount Medical, Inc. and co-inventor of our Safety-Sponge® System. Mr. Stewart previously served as our Vice President Business Development from January 2009 until March 2010. Prior to returning to SurgiCount in January 2009, Mr. Stewart worked in the investment banking division of Credit Suisse from 2007 to 2009 and CIBC World Markets from 2002 to 2007. In addition to his investment banking and entrepreneurial experience, Mr. Stewart’s previous experience includes Strome Investment Management, a hedge fund in Santa Monica, CA. Mr. Stewart received his MBA from The Anderson School at UCLA and his BA in Economics from UCLA where he graduated Phi Beta Kappa and Summa Cum Laude.
There are no family relationships between or among any of our officers or directors who served immediately prior to or after the closing of the Financing.
From January 5, 2009 through March 26, 2010, Mr. Stewart served as our Vice President of Business Development and received compensation from the Company in such capacity. A description of the material terms of Mr. Stewart’s previous employment agreement is provided in our definitive proxy statement on Schedule 14A filed with the SEC on July 13, 2009 under the heading “—Employment Contracts and Termination and Change of Control Arrangements,” which description is incorporated by reference herein.
New COO and a great product. Too bad it was mismanaged for so long that any initial interest was killed. You only get one chance to make a good first impression.
It's because the company still hasn't been able to shake off the stench of Todd Ault from it's past history of blunders.
That guy is like Midas, except everything he touches turns to crap. Thank god the Zealous people are making a clean break from him.
Well I have been pretty clear so far. PSTX is DEAD money. I Mean DEAD. THis company has no idea how to provide one bit of investor news or support. Hello PSTX open your mouth and tell your story. There are 1000's of stocks out there and you think people are going to buy your stock with no news or support.
Shame on you!!!
.55 here we come
Frog
I have learn that Brian Stewart has filed a 13D and is attempting to remove the board of directors. This attack should weeken the company short term and bring tons of selling pressure on the stock short term. If Brian gains control of the company the stock will become a strong buy!
on the way to .55
Steven H. Kane Appointed as President and Chief Executive Officer of Patient Safety Technologies, Inc.
May 7, 2009 6:00:00 PM
Email Story Discuss on ZenoBank
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TEMECULA, Calif., May 7 /PRNewswire-FirstCall/ -- Patient Safety Technologies (OTC Bulletin Board: PSTX) announced that effective today, Steven H. Kane has been appointed as its President and Chief Executive Officer. David Bruce, the company's previous President and Chief Executive Officer has resigned to pursue other interests.
Mr. Kane has served as the Company's Chairman of the Board of Directors since March of 2008 and brings more than 25 years of experience in the healthcare industry to the company. His background encompasses sales, marketing and operations as well as successfully raising capital from both the public and private markets. Most recently, Mr. Kane was CEO of Protalex, Inc., an early stage drug development company. Previously he was Vice President of North American Sales and Field Operations for Aspect Medical Systems, where he helped guide that company through a successful initial public offering in January 2000. Prior to that, Mr. Kane was Eastern Area Vice President for Pyxis Corporation, where he was instrumental in positioning the company for its initial public offering in 1992 and its subsequent sale to Cardinal Health for approximately $1 billion. Earlier in his career, Mr. Kane worked in sales management with Eli Lilly & Company and Becton, Dickinson & Company.
"I am extremely excited to be assuming a more hands on role in directing the accelerating growth of SurgiCount Medical. SurgiCount Medical's Safety-Sponge(TM) System continues to see widespread adoption in hospitals across the United States and is uniquely positioned to quickly become the standard of care across the industry. I look forward to bringing my years of experience creating new medical device markets to help achieve this goal."
About Patient Safety Technologies, Inc. and SurgiCount Medical, Inc.
Patient Safety Technologies, Inc., through its wholly owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge(TM) System, a system designed to increase the standards of patient care and reduce healthcare costs by preventing the occurrence of surgical sponges and other items from being left inside patients after surgery, one of the most common errors in surgery. For more information, contact SurgiCount at (951) 587-6201, or visit www.surgicountmedical.com.
SOURCE Patient Safety Technologies, Inc.
----------------------------------------------
Brian Stewart
+1-951-587-6201
or Cell: +1-310-710-7839
bstewart@surgicountmedical.com
for Patient Safety Technologies
Inc.
Wish we had some traffic here.
Things are looking very good for a sale in the next year. Hope to see $3-$5
bigwilley thanks for the post...i'll have to do some more due diligence however from what you say it seems like they are on the right track... if you see my profile you will notice that i buy stocks and hold for the long term...
take care
indy
Willey,
A couple more questions:
1) The number you posted doesn't appear to be a working number. I get nothing. If you have a current number, that would be great.
2) Why is there so much dilution? We're talking close to 300% its previous shares outstanding (from 6 million to 16 million in a very short period of time) There are just way too many shares being issued. Seems like this is one of the reasons the stock has been going down so much.
I own stock and thought this looked like a very good prospect, but I don't like the smell of things.
Slawn,
1) I was not aware Ault Glazer sold any shares. There has been no public filing that I have seen that has stated this. With the market as crazy as it is many people have reasons to move in and out of a stock. The person who told me about PSTX sold half his position today to chase some other opportunity in the hopes of getting back into PSTX with a bigger position in a couple weeks. I told him he is going to loose his ass and he should stick with the sure thing but hell he has taken the CFA level 1 test 3 times so he thinks he knows more than the rest of us.
2) Not sure what your question is regarding Francis Capital. A simple search on the net would have answered your question. They are located at 100 Wilshire Blvd 15th floor Santa Monica,CA 90401. If you want to call them up the number is 1-310-752-1453
3)It is my understanding that the CEO left to be closer to his family. What the real reason is who knows. What I do no is that there are no records of him selling any shares, and the rest of the core management team is still in place.
It is good to be skeptical but like I said I have been invested in this for quite some time now. For me it has passed the smell test. PSTX does not stink. What stinks is a sponge that has been left to rot in some fat ladies stomach for six weeks before she realizes that her stomach ache is not from her addiction to taco bell. To the people in the OR that may smell like a dead rat in your trunk but to me that smells like dollars in my pocket.
Regards,
BW
Big Willy,
I am a bit skeptical. Just a few questions:
1) Why has Ault Glazer sold do many shares?
2) Who is Francis Capital Management? I can't seem to locate them. Do they exist?
3) Why did the CFO leave?
I hope this is not another one of those scam companies.
Indy,
Good to see a board set up for PSTX. Have owned this since about march of 2007. Been buying shares the entire time. This is one to hold and let develop. Can't day-trade this one or hope for a quick profit. In the long run this will should payoff nicely. They have contracts in over 37 hospitals, including some of the best in the country "UCSF Medical Center, Bringham & Women's Hospital". They have been hitting all the trade shows and medical conferences and I expect the number of contracts to grow quickly with the strong focus on sales.
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