Emergency Filtration Products 2005 Year-End Progress Report
EFP commenced production of its NanoMask filters at the company's Henderson facility in mid-November 2005. Following an initial ramp-up period, which was used to fine-tune equipment, hire workers and establish standard operating procedures, the company was able to ship approximately 600,000 NanoMask filters to distributors by year-end 2005. EFP also shipped approximately 50,000 NanoMask shells by year-end 2005.
EFP continues to manufacture NanoMask filters and is continuing to ship them -- along with NanoMask shells -- to distributors. EFP has received approximately half of the 300,000 mask shells ordered from its Taiwanese manufacturer; the balance of the 300,000 shells order is expected to begin shipment from Taiwan the week of Jan. 16, 2006. Current production -- which is about 200,000 filters per week -- would have been higher had the company received an operational high-speed bagging machine. Unfortunately, the machine was damaged during shipment and was received in inoperable condition. EFP is waiting for a new unit, and has been informed by the manufacturer that it should be available by Jan. 20, 2006. At present, the company has approximately 27 employees, 20 of whom are involved directly with production of NanoMask filters.
Nogales, Mexico Production Facility
The company is working diligently to establish production in Mexico. All of the equipment necessary to produce the NanoMask filters awaits shipment from Henderson, Nev., to Nogales, Mexico. The company is awaiting Mexican governmental approval prior to transporting the machinery to Nogales. Depending on the length of time that the Mexican government takes to issue approval, the company expects to commence operations in Mexico between the end of January and mid-February 2006. A production manager has already been hired to run the Nogales plant. The number of EFP employees is expected to grow to approximately 80 once the Mexican operation begins production, the overwhelming majority of which will be directly involved in production.
Once the Nogales plant is fully operational, the company expects to be able to produce approximately 750,000 filters per week, which will enable EFP to not only meet its supply commitments to existing distributors, but also allow it to sign additional distributors in other countries, and most importantly, to pursue national and international accounts among retailers with whom the company has already held discussions.
International Distributors of NanoMask and NanoMask Filters
To date, the company has entered into distribution agreements with a total of 11 international distributors, the most recent of which are based in the United Kingdom and the Czech Republic. Previously announced distributors included distributors in the countries of: New Zealand, Denmark, South Korea, Pakistan, South Africa, Canada, Australia, Thailand and Sweden. In the aggregate, these distributors have committed to purchase a total of 560,000 masks and 9,400,000 filters in 2006; and, 685,000 masks and 10,950,000 filters in 2007.
EFP also expects to launch a less-expensive, enhanced surgical mask, along with a child's version of the NanoMask in the near future. In addition, the company is pursuing the acquisition and development of additional products to feed its growing distribution channels.
Seasonal Marketing Strategy, Ongoing Research
The recent media coverage of the H5N1 virus, also known as the avian or bird flu, has led to unprecedented demand for the company's NanoMask and NanoMask filters. EFP intends to mitigate the effect of the inherent seasonality that it expects in demand for its products by focusing on a two-hemisphere strategy. During the traditional winter flu season, EFP will concentrate its marketing efforts in the Northern Hemisphere countries, before shifting marketing resources to Southern Hemisphere countries in the early spring through late autumn period.
EFP maintains an ongoing research and development program that includes the testing of different enhanced filter media against different contaminants. The objective of this program is to continually work to discover which enhanced filters work most efficiently against a wide range of contaminants.
The current strain of the H5N1 virus, or avian flu, is approximately 0.1 micron (100 nm) in size. EFP has not yet tested its filter against the H5N1 virus due to a lack of opportunity to do so.
EFP has been developing ELVIS (Emergency Life-support Ventilation and Intubation System), a completely self-contained manual resuscitation bag with proprietary features, since 2001. ELVIS is now in pre-production; molds are being manufactured, and the company expects to commence production in the near future. EFP intends to apply for "fast-track" FDA medical device approval immediately after its initial production run.
Itochu Techno Chemical
The company continues to work with Itochu Techno Chemical Inc. on modifications to comply with Japanese Ministry of Health standards. EFP has furnished its third set of product and mold modifications on the Vapor Isolation Valve (VIV) to Itochu to meet their most recent requests. Although the company had expected to begin shipment of this product some time ago, cooperative efforts between Itochu and EFP are ongoing, and the company expects to favorably resolve the issues that have delayed the VIV's product launch in Japan.
EFP continues to work closely with the U.S. military on developing applications for its filter technology platform. Due to the classified nature of this work, the company is constrained from discussion of these developments.
About the NanoMask
EFP's 2H Nano-Enhanced Environmental Mask, the NanoMask, relies on the company's core 2H Technology(TM) filtration system, which utilizes a combination of hydrophobic and hydrophilic filters able to capture and isolate bacterial and viral microorganisms with efficiencies of 99.9%. The environmental mask utilizes the company's patented 2H Technology(TM) and nanotechnology to enhance the capture-and-isolation characteristics of the filter media.
About Emergency Filtration Products (http://www.emergencyfiltration.com/)
EFP is an air filtration products manufacturer whose patented 2H Technology(TM) filter system has produced filtration efficiencies of "greater than 99.99%" at a particulate size of 0.027 microns. Its initial products were developed for the medical market: the Vapor Isolation Valve(TM) and RespAide(R) CPR Isolation Mask used for resuscitation of respiratory/cardiac arrest cases; and the 2H Breathing Circuit Filter for ventilators, respirators and anesthesia circuitry. Each has received FDA approval. The company also markets an Automated External Defibrillator Prep Kit featuring RespAide; and the NanoMask(R), a nanotechnology-enhanced environmental mask. In addition to filtration products, the company supplies Superstat(R), a modified hemostatic collagen, to the U.S. military for surgery and extreme wound care.
Safe Harbor Statement
This release may contain statements that are forward looking. Such statements are made based upon current expectations that are subject to risk and uncertainty. EFP does not undertake to update forward-looking statements in this news release to reflect actual results of and changes in assumptions or changes in other factors affecting such forward-looking information. The actual future results of the company could differ significantly from such forward-looking statements. Sales may be dependent on the success of future marketing campaigns, the signing of definitive agreements with additional distributors, and both the perceived need for EFP's products and the competitive performance of such products in the marketplace.