EXECUTIVE INFORMATIONAL OVERVIEW

Transcription

1 EXECUTIVE INFORMATIONAL OVERVIEW Developing Medical Safety Devices to Protect Healthcare Workers Snapshot May 16, 2011 MedPro Safety Products, Inc. ( MedPro or the Company ) is a medical device company developing and acquiring safety products that include technology designed to prevent needlestick injuries. A needlestick is a skin puncture by a hypodermic needle, syringe, or other sharp. Injury by a non-sterile device can expose the individual to bloodborne pathogens. MedPro focuses on devices with passive safety features that deploy with little or no effort by the user. The Company is developing novel safety products that target key segments within the medical device industry, with products such as traditional and prefilled syringes for medication delivery, insulin pen safety needle sets, and devices for blood collection (phlebotomy). MedPro plans to commercialize these products through global distribution partners. The Company estimates that the total global market addressed by its present product portfolio could exceed $6 billion. MedPro has a distribution agreement with a global partner, Greiner Bio-One GmbH, for three products: two models of the VACUETTE passive safety blood collection system (Tube-Touch and Skin-Touch), which differ in the way that the safety system engages, as well as a winged VACUETTE safety blood collection set, a collection and infusion system. As well, MedPro and Belgium-based Helvoet Pharmaceutical N.V. have entered into a Joint Development Agreement to create and commercialize a prefilled safety syringe, which the Company expects to launch in fiscal Recent Financial Data Ticker (Exchange) Recent Price (05/13/2011) $2.25 Key Points MPSP.OB (OTC.BB) 52-week Range $ $3.10 Shares Outstanding* ~13 million Market Capitalization ~$29.3 million Average 3-month Volume 1,795 Insider Owners +5% 45.8% Institutional Owners N/A EPS (Year ended 12/31/2010) ($1.18) Employees 14 * As of February 28, MedPro Safety Products, Inc. 145 Rose Street Lexington, KY Phone: (859) Fax: (859) In mid-2010, MedPro replaced two existing fixed minimum volume contracts with one agreement under which Greiner must produce and sell at least 350 million units of the VACUETTE blood collection products over the next six years. Greiner initiated product purchases and payments to MedPro in the fourth quarter 2010 and launched the first product under this contract (the Tube-Touch) in the U.S. during April MedPro is evaluating the possibility of similar distribution agreements for a proprietary fillable safety syringe product with an optional anti-blunting feature, a passive safety needle system for an insulin pen, and a prefilled pharmaceutical safety syringe. MedPro also intends to develop a needleless intravenous (IV) line using technology that it has acquired. MedPro s intellectual property (IP) portfolio includes 13 active patents and 5 patent applications. Most recently, MedPro obtained the product development rights to a fully passive technology called the Insulin Guard Self-Injector Safety Needle. The Company is actively seeking development and commercialization partners for all of its products not covered by the agreement with Greiner. As of April 2011, MedPro s cash position was roughly $13 million. In October 2010, MedPro issued $30 million in Senior Notes in a private placement to institutional investors. The royalties payable to MedPro under the Greiner contract are committed to pay the principal and interest due on the Notes. MedPro received nearly $23.3 million in net proceeds after paying offering expenses and establishing a $4.5 million interest reserve. BOLD WORDS ARE REFERENCED IN THE GLOSSARY ON PAGES

2 Table of Contents Snapshot... 1 Recent Financial Data... 1 Key Points... 1 Executive Overview... 3 Growth Strategy Intellectual Property Key Relationships Company Leadership Core Story Syringe Industry Overview Safety Syringe Market MedPro s Products and Technology Competition Milestones Key Points to Consider Historical Financial Results Risks Recent Events Glossary CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 2

3 Executive Overview MedPro Safety Products, Inc. ( MedPro or the Company ) has developed and/or acquired a product portfolio of medical device safety products that are designed to reduce or eliminate the risk of needlestick injuries accidental skin punctures by a hypodermic needle, syringe, or other sharp. A needlestick from a device that has been in contact with blood or other bodily fluids can be a lethal risk to healthcare workers as it can expose individuals to various bloodborne pathogens, such as hepatitis or human immunodeficiency virus (HIV). These injuries are not limited to nurses and physicians as they can impact anyone who comes in contact with a non-sterile, unprotected needle, including but not limited to cleaning staff, paramedics/emergency medical service personnel, law enforcement officials, correctional officers, and firefighters. Each year, approximately three million healthcare employees or roughly 10% of the global industry s workforce are exposed to bloodborne pathogens as a result of a needlestick injury (Source: WHO). In the U.S., roughly 600,000 to one million healthcare workers are injured by sharp instruments annually (Source: Johns Hopkins and the International Sharps Injury Prevention Society [ISIPS]). However, these figures are difficult to estimate as it is believed that only one out of every three needlestick injuries is ever reported in the U.S. Trend Toward the Use of Safer Medical Devices Government entities and healthcare organizations are emphasizing the use of safer medical devices as a preventive measure to protect medical employees and minimize costs that may be incurred as a result of a needlestick injury. Needlestick injuries not only pose a risk to healthcare employees, but they can also financially burden an employer due to costs of testing and diagnosis, treatment if the injured individual has acquired a bloodborne disease, and potential litigation costs or regulatory fines for noncompliance. Direct costs for the initial testing and follow-up treatment resulting from a needlestick injury can range from $500 to $3,000 or more per injury even if an infection does not occur (Source: the U.S. Centers for Disease Control and Prevention [CDC]). Corporations and organizations that have not made safety a priority in the workplace often have difficulty retaining staff due to fear of contracting a disease from a needlestick injury. To protect healthcare workers, government agencies worldwide are implementing and enforcing legislation to mandate the use of safer medical devices. In November 2000, the U.S. Congress signed the Federal Needlestick Safety and Prevention Act into law to address the continuing problem of occupational exposure to bloodborne pathogens due to accidental sharps injuries in healthcare and other settings. The passage of the Federal Needlestick Safety and Prevention Act stimulated the development of more effective needlestick prevention technology. In the past decade, the trend toward safer medical devices has accelerated in advanced healthcare markets such as those in the U.S., Canada, and Europe as legislation has been passed in these regions requiring the use of safety syringes. Despite this progress, conventional syringes are still widely used in a number of international markets. In 2008, the U.S. market for infection prevention products was valued at $19.8 billion, with over $5 billion attributed to safety-enhanced devices (Source: the Freedonia Group s Infection Prevention Products and Services, August 2009). Currently marketed safety syringes are differentiated in two key ways: (1) the method of safety mechanism activation; and (2) the degree to which the safety features are integrated into the device. Devices with integrated, built-in features are preferred to those with add-on, accessory safety mechanisms. Since the passage of the Federal Needlestick Safety and Prevention Act, various safety features have been developed and incorporated into conventional syringe technology to reduce the risk of needlestick injuries. As well, a variety of safety devices have been approved and marketed, including needleless systems, self-sheathing needles, retractable devices, and self-blunting technology, among others. The U.S. market for needle-based medical devices has experienced a widespread transition to safety syringes over the past two decades. Currently, safety features are included in 87% of the acute care market for hypodermic syringes, 92% of the specimen collection sets, and 94% of intravenous (IV) catheters. The alternate care market (e.g., emergency medical services, clinics, and home care) lags slightly, yet two-thirds of the syringe market uses safety mechanisms, with even higher penetration rates CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 3

4 among other devices (Sources: MedPro and the Global Hospitality Exchange). The European sharps market is transitioning toward safety devices as well. Recent legislation in the UK and Germany could facilitate a rapid transition to safety engineering controlled devices throughout the European Union (EU) in a manner similar to that which has taken place in the U.S. Several factors have driven increased usage of safety syringes in the U.S. The transmission of bloodborne diseases such as HIV/AIDS and hepatitis C to healthcare workers precipitated federal regulation that has spurred the development of more effective needlestick prevention technology. For example, CDC guidelines led to regulation by the Occupational Safety and Health Administration (OSHA) in the 1990s. The Federal Needlestick Safety and Prevention Act required OSHA to update and improve the existing Bloodborne Pathogens Standard (BPS), which was employed in 1992 to address concerns related to the occupational transmission of bloodborne pathogens. Prior to this legislation, existing needle-based devices often included no safety feature or required the healthcare worker to activate the safety mechanism. In consort with the American Nurses Association (ANA) and other organizations, the Company was involved in the lobbying process for the introduction of legislation that also required healthcare providers to include frontline workers in the device evaluation process. OSHA now enforces these standards by performing inspections and issues fines for non-compliance. Although there has been widespread adoption of safety products in the healthcare industry, available technologies have not completely eliminated sharps injuries. The International Healthcare Worker Safety Center at the University of Virginia has collected data on occupational exposures to bloodborne pathogens from a total of 84 hospitals in the U.S. since September Exposure data is collected annually and merged into an aggregate database, where it is analyzed using EPINet reporting software. The number of injuries attributable to a specific type of medical device is also published yearly. With an average daily census of 3,400, the EPINet data for 2007 (the latest year for which data is available) reports 289 needlesticks from disposable syringes, which accounts for over 30% of the reported sharps injuries for the year. Based on this data, MedPro has estimated the total number of needlestick injuries that may have occurred in the U.S. by device type, as shown in Table 1. Table 1 NEEDLESTICK INJURIES (AS APPROXIMATED BY MEDPRO BASED ON SAMPLE SIZE DATA FROM EPINET )* Syringe IV Catheter Blood Collection Set Prefilled Syringe/Cartridge Winged Needle Set Total ,497 58,223 69,207 52,844 51,250 56,937 59,500 13,213 11,520 12,857 5,309 6,866 5,946 5,559 11,672 12,422 11,078 6,113 6,189 2,522 3,294 6,551 6,731 4,513 4,102 2,417 3,964 5,559 13,074 14,087 23,798 9,732 12,281 12,072 10, , , ,453 78,100 79,003 81,441 84,618 $3,000 $327M $309M $364M $234M $237M $244M $254M EPINet Census Sample Size 10,087 5,118 8,703 7,239 3,885 3,400 * 12-year CAGR, 2.1% annual decline Note: U.S. hospital-based injuries based upon per census bed data, 700,000 national, extrapolated from International Healthcare Worker Safety Center, University of Virginia. Source: MedPro Safety Products, Inc. The figures in Table 1 are calculated based on one million licensed beds in medical facilities across the U.S., using an estimated 70% occupancy rate. Further, with the cost of each needlestick injury at approximately $3,000 on average to test and treat, the Company further calculates the estimated costs incurred each year. While significant safety improvements have been made in IV catheters and specimen collection in the past decade, other devices have shown considerably less progress. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 4

5 MedPro s Product Portfolio MedPro seeks to develop safety-oriented medical devices with significant commercial potential. To date, MedPro s intellectual property (IP) portfolio and the technology used in its research and development (R&D) has been acquired or obtained through agreements with third-party inventors, as detailed on pages Currently, MedPro s product portfolio contains novel safety medical devices for use in the drug delivery and blood collection markets, as listed in Table 2. Table 2 MedPro Safety Products, Inc. PRODUCT PORTFOLIO VACUETTE Tube-Touch VACUETTE Skin-Touch VACUETTE Premium Winged Safety Blood Collection Set Safety Syringe with Optional Anti-Blunting Feature Prefilled Safety Syringes Key-Lok Needleless IV System Insulin Guard Self-Injector Safety Needle Source: MedPro Safety Products, Inc. To minimize the risk of needlestick injuries to healthcare workers, MedPro develops products with fully passive mechanisms safety needles or needleless replacements that activate automatically and thus do not require secondary actions by the user. A study of 61 French hospitals evaluating the incidence of needlestick injuries among passive (automatic), semi-automatic, and manually activated safety devices determined that passively activated mechanisms were the most effective for preventing needlestick injuries in the healthcare setting (Source: Infection Control Hospital Epidemiology 2010; 31: ). MedPro seeks to generate revenue by establishing strategic partnership agreements with major medical product distributors, which then deliver the products to market. The CDC defines a passive safety feature as a safety mechanism that requires no action by the user (Source: Infection Control 2009). MedPro reports that the majority of available safety engineered medical devices require an active step to make a device safer during use, after use, and prior to disposal. To improve upon available technologies, MedPro has specifically designed its product portfolio to provide passive safety feature deployment while requiring minimal or no change to user technique. MedPro s products are compliant with the Federal Needlestick Safety and Prevention Act of 2000 and the Company is ISO 13485:2003 certified. Further, MedPro is in the process of obtaining a CE Mark a certification required for European distribution which it expects to obtain in the second quarter 2011 using final product validations that are currently underway. The Company s suppliers meet Good Manufacturing Practice (GMP) standards and are ISO certified or comply with applicable standards included in the Company s Quality System. The CDC s 2008 revision of the Workbook for Designing, Implementing, and Evaluating a Sharps Injury Prevention Program identifies several criteria that should be achieved by safety features on sharps devices, as listed in Table 3 (page 6). Because MedPro s technologies already contain many of these features including an integrated safety feature that activates automatically and uses a technique similar to that of conventional devices the Company believes that its products possess a solid competitive advantage in the market. The CDC s workbook also reports that the majority of devices with integrated safety features require action by the user to fully activate the protection mechanism. Further, while many currently available devices marketed as self-blunting, self-resheathing, or self-retracting imply passive control, these devices often require the user to activate the safety feature (Source: the CDC s Workbook for Designing, Implementing, and Evaluating a Sharps Injury Prevention Program, Revised 2008). As such, there is an unmet need in the sharps market for fully passive devices. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 5

6 Be an integral part of the device Ensure the user technique is similar to that of Be simple and obvious in operation conventional devices Be reliable and automatic Minimize the risk of infection to patients and should Provide a rigid cover that allows the hands to remain not create infection control issues beyond those of behind the needle conventional devices Ensure that the safety feature is in effect before Be cost effective disassembly and remains in effect after disposal Does not compromise patient care Have minimal increase in volume, relative to disposal Greiner Bio-One GmbH ( MedPro s global distribution and manufacturing partner for its phlebotomy products, is expected to market the VACUETTE safety products as part of current licensing agreements (detailed on page 13). MedPro s prefilled safety syringes may provide additional penetration of the EU markets via a Joint Development Agreement with Belgium-based Helvoet Pharmaceutical N.V. (also overviewed on page 13). MedPro is in the process of determining appropriate partners for the remainder of its product portfolio. Each of the Company s products is profiled in brief below, which greater details provided on pages of this Executive Informational Overview (EIO ). VACUETTE Blood Collection Safety Products Table 3 RECOMMENDED CRITERIA FOR A SAFETY FEATURE ON SHARPS DEVICES Source: the CDC s Workbook for Designing, Implementing, and Evaluating a Sharps Injury Prevention Program, The VACUETTE Premium Safety Needle System is a blood collection device that is equipped with a sleeve to automatically cover the needle during the blood collection process. As a fully passive and U.S. Food and Drug Administration (FDA) 510(k)-cleared device, the VACUETTE Premium Safety Needle System is currently available in two models described below and illustrated in Figure 1 and Figure 2 which differ in the way that the safety system deploys. Both VACUETTE models are manufactured, marketed, and distributed by Greiner under a guaranteed minimum volume contract. VACUETTE Tube-Touch Model (Figure 1). The safety system on MedPro s tube-activated model deploys when the first blood collection tube is fully inserted into the device and prior to blood collection activities. These actions lead to the release of the safety shield, which covers the needle as the device is pulled away from the patient s skin. Tube insertion is a required part of the blood collection practice and, as such, the deployment of the safety feature requires no additional action by the user. Importantly, blood cannot be drawn into the collection tube without deploying the safety feature. The Company completed final product testing of its Tube-Touch model in late Highvolume production and assembly of the VACUETTE Tube-Touch model commenced in 2010 and the product was launched in the U.S. in April VACUETTE Skin-Touch Model (Figure 2). The safety shield of the skin-activated model engages on skin contact, during the initial insertion of the needle into the patient s skin. MedPro is not aware of any comparable blood collection devices that are equipped with a fully passive, skin-activated safety system. Blood cannot be drawn into the collection tube without deploying the safety feature and the insertion of the blood collection tube is not required for safety system deployment. Figure 1 MedPro Safety Products, Inc. VACUETTE TUBE-TOUCH RENDERING Figure 2 MedPro Safety Products, Inc. VACUETTE SKIN-TOUCH RENDERING Source: MedPro Safety Products, Inc. Source: MedPro Safety Products, Inc. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 6

7 VACUETTE Premium Winged Safety Blood Collection Set Healthcare workers employ winged butterfly systems to collect blood, to access a vein or an artery, or to deliver medication to patients. However, these devices can also place employees at risk for a needlestick injury. Using its core technology, MedPro has developed a Winged Safety Blood Collection Set a small venous access device used for infusion and blood collection (as shown in Figure 3). The Company s winged collection system is similar to traditional systems in both appearance and in operation, with the addition of a safety system to protect healthcare workers. MedPro s safety system does not require active deployment by the operator and can be discarded without touching the needle. The safety feature deploys when the user grasps the wings during product removal from the patient an action that is also necessary when using conventional (non-safety) winged butterfly systems. No additional user interaction is required. MedPro has established an agreement with Greiner providing minimum volume guarantees and granting Greiner the exclusive worldwide rights to manufacture, market, and distribute MedPro s winged collection set. Figure 3 MedPro Safety Products, Inc. RENDERING OF THE VACUETTE PREMIUM WINGED SAFETY BLOOD COLLECTION SET Source: MedPro Safety Products, Inc. Premarket prototypes of MedPro s device were delivered for customer evaluations in November Using these prototypes, a formal pre-market focus group analysis was completed, with favorable results reported. The Company received 510(k) clearance to market the winged blood collection set during the fourth quarter MedPro expects Greiner to achieve high-volume production and market distribution in Safety Syringe with Anti-Blunting Feature MedPro s fillable safety syringe products include safety sheathing and an optional anti-blunting technology to increase patient and operator safety during the administration of medication via a fillable syringe. The anti-blunting feature allows a user to draw medicament into the safety syringe while protecting the actual injection cannula from becoming blunted (or dulled) and additionally preventing contamination from the medicament container. This eliminates the cost and time required for a practitioner to replace the needle used for filling with another needle to be used for the patient injection. Additionally, the safety sheathing covers the cannula as it is removed from the patient, preventing exposure of the contaminated sharp. The syringe uses a passive safety system that activates automatically as medicament is injected into the patient, providing safety both during and after the injection process. The contaminated needle is automatically and fully covered as it is removed from the patient following injection. The syringe will likely be offered in both a fixed and removable needle model providing a solution for a variety of injection requirements in addition to the anti-blunting option available on all models. A rendering of a 3 ml safety syringe with a removable needle is shown in Figure 4 (page 8). CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 7

8 Figure 4 MedPro Safety Products, Inc. RENDERING OF A FILLABLE HYPODERMIC SAFETY SYRINGE (3 ML) WITH REPLACEABLE NEEDLE Source: MedPro Safety Products, Inc. Prefilled Safety Syringes Prefilled syringes contain a precise dose of injectable medicine stored within a syringe in a manner that is prepared for immediate use. Using a proprietary patent-pending design, MedPro is developing prefilled syringes with a novel safety mechanism that is integrated and fully passive. MedPro s line of safety syringes includes a model that can accept prefilled cartridges of common medicaments or specified dosages of pharmaceutical medicines. Novel and specialty medicines can also be offered with the prefilled safety syringe. MedPro believes that these applications represent low-volume, high-value, and typically high-volume prefilled medicament solutions for the delivery of prefilled products. Illustrated in Figure 5, the Company s prefilled device is fully compatible with both existing pharmaceutical manufacturing lines and contract cartridge filling lines. Customers can insert medicament cartridges filled in their own factories into MedPro s pre-assembled safety syringe, or may use a filled cartridge that has been outsourced to a contract filling operation. The Company is advancing its prefilled product with a partner (Belgium-based Helvoet Pharmaceutical N.V.) and anticipates market entry in MedPro also expects to jointly develop its prefilled and fillable syringes, which have some similar components and functionality. Figure 5 MedPro Safety Products, Inc. RENDERING OF MEDPRO'S PREFILLED SAFETY SYRINGE WITH MEDICAMENT CARTRIDGE Source: MedPro Safety Products, Inc. In March 2010, MedPro entered into a Joint Development Agreement with Helvoet Pharmaceutical N.V. for the development and distribution of the prefilled passive safety syringe system (detailed on pages 27-29). The Company has produced prototypes of its prefilled syringe, and development is progressing under this recently executed agreement. MedPro believes that this agreement provides significant industry expertise to the Company for the development of the cartridge component. MedPro expects to have prototypes of its fillable syringe available during the first half of The Company is in the process of determining a potential distributor for this product line. Key-Lok Needleless IV System Within the healthcare industry, medical personnel employ a specific type of needle called a transfer needle to deliver or withdraw fluids or medications from bottles, ampoules, bags, IV administration sets, or access ports. Conventional transfer needles have sharp, pointed tips that can cause an accidental needlestick. Because of this, companies have transitioned toward the use of safer product systems that eliminate the use of sharp transfer needles. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 8

9 To address this trend, MedPro acquired the rights to a complete needleless IV technology, called the Key-Lok Needleless IV System (KLS), shown in Figure 6. KLS provides a secure connection to deliver medication without using a needle. The needleless syringe used in the Company s IV system is shown in Figure 7. MedPro believes that its needleless IV technology which has received 510(k) clearance is positioned to compete with Interlink, the leading system on the market. Interlink is produced through a joint venture between Baxter International Inc. (BAX -NYSE) and Becton, Dickinson and Co. (or BD [BDX-NYSE]). Designed to be cost competitive with needle-based products, KLS contains few components versus the more complex needleless systems currently marketed. The Company is working with two external groups to identify a healthcare company that could assist in bringing KLS to market through a private-label process. Figure 6 MedPro Safety Products, Inc. KEY-LOK NEEDLELESS IV SYSTEM Figure 7 MedPro Safety Products, Inc. KEY-LOK NEEDLELESS SYRINGE Source: MedPro Safety Products, Inc. Source: MedPro Safety Products, Inc. Continued Portfolio Development In January 2010, MedPro obtained additional product development rights to a novel, fully passive Insulin Guard self-injector safety needle designed to reduce the risk of needlestick injury in the home healthcare and diabetic user settings. The Company believes that the fully passive characteristic of this technology addresses a significant unmet need in the market. MedPro has identified potential commercialization partners for the Insulin Guard. Corporate Information Founded in 1995, MedPro Safety Products, Inc. is a Nevada C corporation with headquarters in Lexington, Kentucky. In December 2007, the Company completed a business combination with Dentalserv.com, a public shell company controlled by the New York-based hedge fund sponsor firm Vision Capital Advisors, LLC. The merger occurred in connection with a financing in which MedPro sold securities to institutional investors for $13 million. The combined company changed its name to MedPro Safety Products, Inc. and its stock began trading on the OTC Bulletin Board (OTC.BB) under the symbol MPSP. In line with MedPro s corporate objective to develop and market medical safety devices that incorporate proprietary needlestick prevention technology, the Company has acquired rights to various technologies over the past decade, including rights to blood collection devices (Tube-Touch, Skin-Touch, and the winged technology) and to the fillable and prefilled syringe devices, as well as rights to Key- Lok, among others. MedPro currently employs 14 individuals. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 9

10 Growth Strategy MedPro is developing and commercializing novel products in four related product sectors: (1) fillable hypodermic syringes; (2) phlebotomy; (3) prefilled syringes for pharmaceutical applications; and (4) infusion. The Company aims to introduce its products to the market through strategic partnership agreements with major medical product distributors, seeking to establish fixed minimum volume contracts, which require distributors to purchase minimum unit volumes of the Company s products. MedPro identifies potential distribution partners by focusing on a specific technology and selecting entities that the Company believes can provide market access, distribution capabilities, and credibility as suppliers of value-added safety technology. The Company s sales and marketing strategy entails creating alliances with partners that are capable of worldwide distribution. In early 2008, MedPro acquired a fully integrated information technology (IT) platform, which enables the Company to satisfy its sales and ordering processes in an efficient manner while maintaining an appropriate level of internal control. MedPro plans to continue to outsource the production of many of its products to established medical safety device manufacturers while seeking to develop or acquire its own manufacturing capabilities. On October 15, 2008, MedPro received certificate FM signifying its compliance and registration with ISO 13485:2003 for the design and manufacturing of medical devices. To date, MedPro has established a distribution agreement for three of its products. The Company also seeks to establish distribution arrangements for its additional products: (1) a proprietary safety syringe product with an optional anti-blunting feature; (2) a prefilled pharmaceutical safety syringe; and (3) an insulin pen safety needle system. The Company has executed a Joint Development Agreement for its prefilled safety syringe, and anticipates that this partnership could lead to commercialization opportunities. MedPro further plans to develop a needleless IV line based on its proprietary patents and designs. MedPro has identified the following objectives that it believes are key to its corporate growth: Complete the market launch of both blood collection device models (Tube-Touch and Skin-Touch) with Greiner through a manufacturing, marketing, and distribution exclusive global license agreement; Complete development of its winged blood collection set and introduce it to the U.S. healthcare market under an existing contract with Greiner; Develop a prefilled safety syringe through a distribution partner that is already established in the prefilled market; Enter the U.S. hypodermic market with the launch of a fillable safety syringe in 1 ml and 3 ml varieties (with an optional anti-blunting feature) and evaluate the addition of a 5 ml or larger version (to be used with interchangeable needles); Broaden distribution channels by establishing additional partnership alliances with medical product distributors, including for the commercialization of the insulin self-injector needle system; and Develop supplemental pipeline candidates with solid market potential and evaluate the potential market demand for these products. MedPro became a revenue-generating company in 2010 following the receipt of payments on its existing contract with Greiner. High-volume production and assembly of the VACUETTE Tube-Touch model commenced in 2010 and the product was launched in the U.S. in April Based on the structure of the Company s minimum guarantee contracts, MedPro believes that its products could generate high gross margins, potentially enabling it to achieve profitability at a relatively low cost to market. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 10

11 Intellectual Property MedPro owns or holds rights to acquire IP in the U.S. and abroad including patents, patent applications, technology, trade secrets, know-how, copyrights, and trademarks. Presently, the Company has 13 active patents and 5 pending patent applications for its IP portfolio. MedPro s approved and pending patent applications in the U.S. are listed in Table 4. MedPro has completed prior art searches on its safety IV winged collection set, the tube-activated blood collector, the skin-activated blood collector, and the prefilled safety syringe. To the Company s knowledge, its IP does not infringe any issued U.S. patent. MedPro believes that no single patent, technology, trademark, or IP asset is specifically material in relation to its business; rather, the Company s business is reliant upon its entire IP portfolio. Table 4 MedPro Safety Products, Inc. U.S. INTELLECTUAL PROPERTY PORTFOLIO Product Reference Application No. Patent/ Publication No. Title Application, Pub., or Issue Date Key-Lok 09/136,478 6,146,362 Needleless IV medical delivery system 11/14/2000 Vacu-Mate 08/632,010 5,688,241 Automatic non-reusable needle guard 11/18/1997 Vacu-Mate 09/336,405 6,379,336 Protection device for injection or aspiration needle 04/30/2002 Vacu-Mate 10/289,508 6,869,415 Safety device for blood collection 03/22/2005 Vacu-Mate 10/621,973 7,357,783 Safety system for a blood collection device 04/15/2008 Syringe Guard 10/983,108 7,198,617 Passively guarded, fillable injection syringe 04/03/2007 Syringe Guard 11/055, / Syringe guard with selected needle configuration 05/25/2006 Syringe Guard 11/211, / Syringe guard for prefilled medicament vial 04/05/2007 Syringe Guard 11/422, / Hypodermic needle tip protector 12/13/2007 Butterfly 10/434,717 6,840,920 Butterfly needle with passive guard 01/11/2005 Butterfly 10/978,614 7,144,387 Butterfly needle with passive guard 12/05/2006 Insulin Pen 11/267, / Automatic needle guard for medication pen 05/10/2007 Source: MedPro Safety Products, Inc. Importantly, the Tube-Touch and Skin-Touch blood collection models incorporate the technology from the Vacu-Mate patents listed in Table 4. To date, MedPro s IP and R&D technology have been acquired or obtained through agreements with third-party inventors. To this extent, the Company has established a strategic alliance with Mr. Hooman Asbaghi, a designer and developer of new medical safety technologies as well as the inventor of several of MedPro s products to date. MedPro has the first right of refusal to IP that Mr. Asbaghi develops under an exclusive consulting agreement. This key relationship is described under Visual Connections, Inc. and Advanced MedTech, Inc. (AMT) on page 12. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 11

12 Key Relationships MedPro has entered into multiple relationships for the R&D, manufacture, marketing, and distribution of its products. Where information has been made available, the Company s key relationships are overviewed below. Technology Development and Acquisition Visual Connections, Inc. MedPro maintains a strategic alliance with Visual Connections, Inc., a design and development firm based in San Diego, California. Visual Connections is owned by Mr. Hooman Asbaghi, an inventor and designer who, on occasion, has assisted MedPro in developing customer relationships within the medical device industry. In 2004, MedPro acquired Visual Connections interest in patents related to the VACUETTE passive safety blood collection system. In addition to an initial payment of $2.0 million, MedPro is also expected to pay Visual Connections royalty fees of 6% of net sales on products created from this technology through patent expiry or a minimum of $250,000 if this amount is greater than 6% of net sales during the third through eighth years of production. In 2007, the Company entered into an agreement with SGPF LLC, a company created by Mr. W. Craig Turner, MedPro s chairman, chief executive officer (CEO), and largest common shareholder (biography on page 14), in order to acquire technology that MedPro believed could be commercialized successfully without placing additional financial obligations or risks on the Company. The agreement enabled MedPro to manage and direct the development of SGPF s blunt technology with the goal of commercializing a product as quickly as possible. SGPF s interest in the technology was acquired through Visual Connections and entailed five inventions for the anti-blunting safety syringe and prefilled pharmaceutical products as well as the rights to the related patent and patent applications. The agreement also included an option for MedPro to acquire the anti-blunting technology from SGPF, which enabled the Company to assess the product s potential and develop a business plan. MedPro exercised the option in September 2008 and paid SGPF over $3.3 million in cash and assumed $1.5 million in technology transfer payments due to Visual Connections. In addition, SGPF is to receive 690,608 shares of MedPro s Common Stock when revenue exceeds $5.0 million, any part of the technology is sold, the Company undergoes a change in control, or other administrative events. Additionally, in June 2008, MedPro acquired the IP rights to the technology behind the winged safety blood collection set through an agreement with Visual Connections and Mr. Asbaghi. MedPro delivered an initial transfer payment of $250,000 and agreed to pay transfer payments totaling $1.0 million in four quarterly installments, which commenced in October As well, the Company is expected to pay a 4% royalty fee based on the product s adjusted gross sales. MedPro has the first right of refusal to any IP that Mr. Asbaghi has an interest in or any products he develops. Mr. Asbaghi possesses expertise in the design and R&D of new medical safety technologies and has filed over 100 patents globally since 1995, including designs for fully passive injection needles and blood collection holders. In January 2010, MedPro purchased product development rights for a novel, fully passive Insulin Guard Self-Injector Needle System from Visual Connections. Per the terms of the agreement, Visual Connections is to receive a 5% royalty on adjusted net sales of the pen needle following device commercialization. Advanced MedTech, Inc. (AMT) In September 2009, MedPro entered into an exclusive agreement with Advanced MedTech, Inc. (AMT), which is wholly owned by Mr. Asbaghi. Per the terms of the agreement, AMT is to provide R&D, market research, product design and development, engineering, and other services to MedPro. Additionally, the Company obtained the first right of refusal to acquire future medical device inventions jointly developed by Mr. Asbaghi and AMT. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 12

13 Helvoet Pharmaceutical N.V. In March 2010, MedPro entered into a Joint Development Agreement with Belgium-based Helvoet Pharmaceutical N.V. for the development and distribution of the prefilled passive safety syringe system. The Company anticipates that the partnership with Helvoet provides critical design and marketing expertise for the prefilled safety syringe product and may accelerate the time to market. Manufacturing, Marketing, and Distribution Greiner Bio-One GmbH Greiner Bio-One GmbH is a division of Greiner Bio-One International AG, an international manufacturer and supplier of medical products with a worldwide distribution network supported by locations in Austria, Germany, Hungary, the U.S., and Brazil. On July 16, 2010, MedPro replaced two prior agreements with Greiner Bio-One GmbH into a single contract granting Greiner exclusive rights to manufacture, market, and distribute three safety blood collection and infusion products. The agreement includes two VACUETTE Premium Safety Needle System products (the Tube-Touch and Skin-Touch) as well as the VACUETTE Premium Winged Safety Blood Collection Set. The contract lasts six years from October 1, 2010 the date on which Greiner expects to commence commercial manufacturing of the first of the products (the Tube-Touch). The agreement established firm launch and revenue dates. The first product, the Tube-Touch, was released to the U.S. market in April 2011, while the winged product is expected to be released in In addition, Greiner has commenced making payments to MedPro under the terms of the contract. MedPro believes that its contract with Greiner could accelerate global market access for its products and worldwide exposure for the Company. Greiner has agreed to manufacture a combined minimum total of 350 million units of the three blood collection products over six years. Under the contract, Greiner controls production and pays MedPro a production royalty fee on each product for a minimum volume of units. Per the terms of the agreement, Greiner must pay MedPro a total minimum royalty of no less than $43,750,000, based on a minimum number of units per quarter. As well, MedPro agreed to make quarterly contributions to Greiner totaling approximately $6.65 million to help cover the anticipated costs of marketing the VACUETTE products. The agreement may be extended for up to three years in certain circumstances. To date, Greiner has completed automation lines for the Tube-Touch VACUETTE product at its new manufacturing plant in Rainbach, Austria. Specific details as to the terms of the agreement with Greiner are included in MedPro s Form 8-K filed with the U.S. Securities and Exchange Commission (SEC) on July 22, To raise capital and develop products in its pipeline, MedPro issued $30.0 million in Senior Notes in late 2010 in a private placement to institutional investors. The royalties payable to MedPro under the Greiner agreement are committed to pay the principal and interest due on the Notes. MedPro received more than $23.0 million in net proceeds after establishing a $4.5 million interest reserve and paying offering expenses. Interplex Medical, LLC MedPro has engaged Ohio-based Interplex Medical, LLC to assemble, package, sterilize, and deliver initial quantities of the VACUETTE blood collection safety products until high-volume production equipment is available to meet anticipated demand. MedPro may also contract Interplex to design and manufacture an automatic assembly system that can consistently produce the blood collection products in compliance with product specifications, the Food, Drug and Cosmetic Act, and FDA requirements. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 13

14 Company Leadership Management MedPro s management team is led by several individuals who have been with the Company since its inception in 1993, including Mr. W. Craig Turner, the Company s founder, CEO, and chairman, and Mr. Walter W. Weller, MedPro s president and director. Mr. Turner has over 15 years of experience in the medical device industry. Mr. Weller has more than 10 years of manufacturing expertise in addition to 15 years of experience with MedPro. Table 5 summarizes MedPro s key management, followed by detailed biographies. W. Craig Turner Chief Executive Officer and Chairman of the Board of Directors Walter W. Weller President and Director Gregory C. Schupp Chief Operating Officer Marc T. Ray Vice President of Finance and Chief Financial Officer Source: MedPro Safety Products, Inc. Table 5 MedPro Safety Products, Inc. MANAGEMENT W. Craig Turner, Chief Executive Officer and Chairman of the Board of Directors Mr. Turner is the founder of MedPro and has been the Company s CEO and chairman of its Board of Directors since its inception in He has been involved in the medical device industry for over 15 years, overseeing the strategic development and distribution of needle destruction technology as well as the production and distribution of dental safety needles. Mr. Turner managed the purchase of eight different passive medical technologies, providing the foundation for MedPro s portfolio of products and the establishment of key partner relationships for the Company. He is the founder of CRM Companies ( which employs over 350 individuals throughout the southeastern U.S. Mr. Turner has served on numerous Boards and is the cofounder of CMF, a charitable foundation. Mr. Turner currently serves as finance chairman on the Board of Regents of Eastern Kentucky University. Walter W. Weller, President and Director Mr. Weller has been president of MedPro since He served as chief operating officer (COO) from the Company s inception in 1993 through Mr. Weller has been responsible for MedPro s product strategy, building customer relationships with key channel partners and coordinating day-to-day activities for the Company. Before joining MedPro, Mr. Weller spent approximately 10 years working in manufacturing, seven years in financial and operational management, and five years in financial software design and implementation services Gregory C. Schupp, Chief Operating Officer Mr. Schupp joined MedPro as COO in April Since 2009, Mr. Schupp served as director of operations, G.M. of U.S. manufacturing for the Sorin Group, a global medical device manufacturer and distributor based in Milan, Italy. From 2005 through 2008, he served as vice president operations of the New Jersey facilities of Maquet, Inc., a global medical equipment company headquartered in Rastatt, Germany. Mr. Schupp has served in strategic and operational positions for medical and telecommunications manufacturers for more than 20 years. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 14

15 Marc T. Ray, Vice President of Finance and Chief Financial Officer Mr. Ray was appointed vice president of finance and chief financial officer of MedPro s predecessor in October 2007 and continued in the same capacity when the Company s merger took effect in December Mr. Ray has served as the treasurer and as a member of MedPro s Board of Directors from July 1994 to August Mr. Ray has over 30 years of experience. From November 2004 to October 2007, Mr. Ray served as the managing member of Ray, Foley, Hensley & Company, PLLC, a public accounting firm that he founded in Lexington, Kentucky. From February 1994 to October 2004, Mr. Ray was president of the Lexington-based public accounting firm Ray, Hager & Henderson, PSC. In addition, from November 1997 until November 2005, Mr. Ray served at various times as treasurer, director, Executive Committee member, and Compensation Committee member of Prevent Child Abuse America, a national charitable organization headquartered in Chicago, Illinois. From 1976 to 1978 and 1982 through January 1994, Mr. Ray was employed or was a partner (1986) with Coopers & Lybrand, a predecessor of PricewaterhouseCoopers. In the intervening years, Mr. Ray was employed as a financial analyst with a Fortune 500 company and was a partner in a local accounting firm. Board of Directors MedPro s Board of Directors oversees the conduct of and supervises the Company s management. Table 6 provides a summary of Board members, followed by detailed biographies. Table 6 MedPro Safety Products, Inc. BOARD OF DIRECTORS W. Craig Turner Chief Executive Officer and Chairman of the Board of Directors Walter W. Weller President and Director Gary A. Peterson Director Warren Rustand Director Ernest L. Fletcher, M.D. Director W. Leo Kiely III Director Carl Kleidman Director Source: MedPro Safety Products, Inc. W. Craig Turner, Chief Executive Officer and Chairman of the Board of Directors Biography provided on page 14. Walter W. Weller, President and Director Biography provided on page 14. Gary A. Peterson, Director Mr. Peterson has served as a member of the Board since 1998 and as president and CEO of MedPro from 1998 to Mr. Peterson is president and CEO of Baton Development, Inc., a virtual incubator for new medical products, and has been the managing partner of Baton Ventures LLC and PSF Health Care Fund LLC as well as a venture partner of Affinity Ventures LLC all of which are venture capital funds. He has spent over 35 years in the medical device and health services business and has served as a member of the Board of Directors of numerous public and private medical companies. Prior to the venture capital business, Mr. Peterson cofounded Angiomedics Inc. and was its chief operating officer and executive vice president. Angiomedics was acquired by Pfizer Inc. (PFE-NYSE), renamed Schneider USA, and sold to Boston Scientific Corporation (BSX-NYSE) for over $2 billion. Prior to Angiomedics, Mr. Peterson was responsible for product management and long-range product planning for Cardiac Pacemakers, Inc., which became Guidant Corp. and was also acquired by Boston Scientific, and held various sales and marketing management positions with Renal Systems, Inc. (now Minntech Corporation). CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 15

16 Warren Rustand, Director Mr. Rustand was appointed to the Board in December He is currently managing partner for SC Capital Partners LLC and has served as a member of the Board of Directors for over 40 public, private, and nonprofit organizations, including as chairman of more than half of those organizations. In the medical field, Mr. Rustand has served as chairman of Tucson Medical Center, Health Partners of Arizona, TLC Vision, Medical Body Sculpting, and Health Equity, Incorporated. Mr. Rustand also served as appointment secretary and cabinet secretary to former U.S. President Gerald Ford. Ernest L. Fletcher, M.D., Director A former Kentucky governor, Dr. Fletcher has served as an Air Force fighter pilot, engineer, family doctor, lay minister, state legislator, and U.S. congressman. Dr. Fletcher served his community as a family practice physician in Lexington for 12 years, including two years as CEO of the Saint Joseph Medical Foundation. Dr. Fletcher s legislative career began in 1995 as a state representative for Kentucky s 78 th District. Dr. Fletcher s public service continued when he was elected to the U.S. House of Representatives in 1998 from Kentucky s 6 th Congressional District. In Congress, he served as a member of the House Committees on Energy and Commerce and was selected to chair the Policy Subcommittee on Health. Dr. Fletcher is currently involved in business development and healthcare consulting. He received a B.S. from the University of Kentucky, College of Engineering, and an M.D. from the University of Kentucky, College of Medicine. W. Leo Kiely III, Director Mr. Kiely is CEO of MillerCoors LLC. Most recently, he was the president and CEO of Molson Coors Brewing Company (TAP-NYSE). He has guided the company through major transitions in recent years, including the merger of Adolph Coors Company and Molson Inc. in 2005 and the acquisition of what is now Coors Brewers Limited in the UK. Previously, Mr. Kiely served in executive management and marketing positions with Frito-Lay Inc., a subsidiary of Pepsico, Inc. (PEP-NYSE), and Ventura Coastal Corporation, a division of Seven Up, Inc. (part of Dr Pepper Snapple Group Inc. [DPS-NYSE]). He earned a Bachelor s degree from Harvard University and an MBA from the Wharton School of the University of Pennsylvania. Carl Kleidman, Director Mr. Kleidman was elected as a director of MedPro in August Mr. Kleidman is managing director of investments of Vision Capital Advisors LLC, a hedge fund with over $750 million in assets under management. Mr. Kleidman is also a director of NovaRay Medical, Inc., a medical imaging company. Before joining Vision in November 2007, Mr. Kleidman served as a managing director at Centrecourt Asset Management from January to November 2007, and at ComVest Investment Partners from 2002 through He has also served as head of investment banking at Commonwealth Associates and Barington Capital Group, and was a partner at Shea & Gould, a former New York-based law firm. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 16

17 Core Story SYRINGE INDUSTRY OVERVIEW A syringe is a small hollow glass or plastic tube that is widely used in medical fields to inject or withdraw liquids. Syringes can be attached to a needle to withdraw fluid from the body or to administer medication or other fluids into the body. Medications are often delivered to patients through a syringe when the formulation could become less potent or ineffective if it comes into contact with digestive secretions (if swallowed) or when a patient is incapable of taking the therapeutic by mouth. While syringes provide ample benefits, these medical devices can also pose a health hazard to medical practitioners resulting from the risk of needlestick injuries an accidental puncture of the skin while handling hypodermic needles, syringes, or other sharps that results in contact with blood or other bodily fluids. Needlestick Injuries If a sharp has been in contact with a patient s bodily fluids, a needlestick injury could expose the injured individual to a number of bloodborne diseases (Source: Needlestick Injuries: The Point of Prevention, January 2009). Even the smallest prick with a contaminated needle carries the risk of transmitting an infectious disease. The transfer of bloodborne pathogens through an accidental needlestick is potentially one of the most deadly risks to healthcare workers. Common pathogens contracted due to a puncture with an unsanitary sharp are hepatitis B, hepatitis C, and human immunodeficiency virus (HIV). In a 2008 study by the American Nurses Association (ANA), 64% of the 706 nurses surveyed reported being accidentally injured by a needle at work, 74% of whom were stuck by a contaminated needle. The majority of needlestick injuries occur during several activities that are widely performed in the healthcare industry: (1) administering injections; (2) drawing blood; (3) needle disposal; and (4) handling trash and dirty linens. As such, a needlestick injury is not limited to nurses and physicians; rather, it can impact anyone that comes in contact with a non-sterile, unprotected needle, including cleaning staff, paramedics/emergency medical service personnel, law enforcement officials, correctional officers, and firefighters. In all, disposable syringes cause more needlestick injuries than any other type of device. Although nurses sustain the highest rate of needlestick injuries, all healthcare workers from physicians to cleaning staff as well as other individuals are at risk for harm. Consequently, fear of contracting a bloodborne disease from a needlestick injury is one of the greatest workplace concerns for healthcare employees. Other concerns include potential anxiety about disease exposure, the social stigma associated with contracting an infectious pathogen, lost work productivity, and litigation expenses. In addition to the risks faced by healthcare workers, a needlestick injury can also be a costly event for the organizations and businesses that employ healthcare workers. According to the U.S. Centers for Disease Control and Prevention (CDC), direct costs for initial testing and follow-up treatment of a needlestick injury, even if an infection does not occur, can range from $500 to $3,000 or more per injury. In addition, employees who incur a needlestick injury may choose to take legal action against employers who did not provide a safe working environment. Because there is no mandated database for needlesticks and other sharps-related percutaneous injuries, it is difficult to estimate the actual prevalence of these events. In the U.S., an estimated 600,000 to one million healthcare workers are injured by sharp instruments each year (Source: Johns Hopkins and the International Sharps Injury Prevention Society [ISIPS]). Worldwide, approximately three million healthcare employees or roughly 10% of the global industry s workforce are believed to be exposed to bloodborne pathogens as a result of a needlestick injury annually (Source: WHO). Many instances often go unreported, particularly by physicians who are much less likely to report a needlestick injury than other healthcare professionals. According to the ANA, roughly half of all sharps injuries go unreported by employees. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 17

18 To help protect healthcare workers from needlestick injuries, many healthcare markets worldwide are transitioning to the mandatory use of safety syringes. In 2000, with the passage of the Federal Needlestick Safety and Prevention Act, the U.S. became the first country to adopt and actively enforce legislation requiring healthcare facilities to use safety syringes. Likewise, Canadian, EU, and Australian healthcare markets are also working toward the mandatory protection of healthcare workers from needlestick injuries. In countries such as the U.S., where the use of safety syringes is mandated, healthcare facilities are required to conduct annual evaluations of new sharps safety products to assess which devices provide the safest working environment. Healthcare facilities can minimize their risk of fines or litigation by selecting sharps safety products that best protect their employees. Government agencies responsible for occupational health and safety conduct random inspections of healthcare facilities and issue citations and heavy fines for noncompliance. A key to reducing the number of needlestick injuries is prevention, including the use of sharps that either integrate safety mechanisms or have add-on safety features. As well, governments worldwide have begun implementing legislation that limits the frequency of actions that often lead to a needlestick injury. To this extent, due to the frequency of injury to healthcare personnel, recapping needles in the U.S. is now against the law (except in very rare circumstances). Government Standards and Regulations The U.S. Congress established the Occupational Safety and Health Administration (OSHA) in 1971 under the Occupational Safety and Health Act of OSHA was designed to minimize and prevent workrelated injuries, illnesses, and deaths by implementing and enforcing health and safety standards in the workplace. Penalties of up to $70,000 can be issued for infractions, depending on the severity of the incident (how likely the violation is to result in serious harm) and whether or not the violation is isolated. Since OSHA s origin, the rate of occupational deaths and work-related injuries in the U.S. has declined significantly. In particular, the recorded incidence of injuries and illnesses in the workplace among private industry employers has decreased by roughly 0.2 cases per 100 employees each year since 2003 (Source: the Bureau of Labor Statistics Workplace Injury and Illness Summary 2008). The Bloodborne Pathogens Standard (BPS) and the Federal Needlestick Safety and Prevention Act OSHA employed the Bloodborne Pathogens Standard (BPS) in 1992 to address concerns related to the occupational transmission of bloodborne pathogens. The standard was primarily designed to protect healthcare workers including those at hospitals, nursing homes, clinics, and research laboratories as well as law enforcement, emergency responders, and funeral home employees (Source: Oklahoma State University). Essentially, the BPS protects any employee who may be exposed to bodily fluids (e.g., human blood or other potentially infectious materials) in the workplace. Despite the implementation of the BPS, exposure to bloodborne pathogens from accidental sharps injuries continues to be a pervasive risk in healthcare and other occupational settings. The state of California elected to address this threat independently of OSHA in 1999 by being the first state to implement more stringent regulations on employers, requiring them to protect healthcare workers by taking action to prevent needlestick injuries. Subsequently, U.S. healthcare groups, including the ANA, placed pressure on the U.S. government to establish more protective guidelines nationwide. In November 2000, the U.S. Congress signed the Federal Needlestick Safety and Prevention Act into law to address the continuing problem of occupational exposure to bloodborne pathogens due to accidental sharps injuries in healthcare and other occupational settings. The Act required OSHA to update and improve the existing BPS. In January 2001, OSHA published the revised standard in the Federal Register and began to actively enforce the new standards in April In addition to standards already in place, the new legislation incorporated four additional requirements to reduce the occupational transmission of bloodborne pathogens, as listed in Table 7 (page 19). While conventional needle technology often lacked safety features or required the user to manually activate the safety mechanism, the passage of the Federal Needlestick Safety and Prevention Act stimulated the development of more effective needlestick prevention technology. In addition, the Act provided greater details for employers related to OSHA s requirement to identify, evaluate, and implement safer medical devices. The new legislation also established rules for employers, including maintaining a sharps injury log and involving non-managerial staff in the evaluation and selection of devices. In 2003, the Medicare CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 18

19 Modernization Act modified the BPS further by requiring that hospitals not previously covered by the Federal OSHA Act, such as public hospitals in states without an OSHA-approved state plan, comply with the BPS. Table 7 MODIFICATIONS TO THE BPS AS A RESULT OF THE NEEDLESTICK SAFETY AND PREVENTION ACT (1) Use safer devices that have engineered safety characteristics when possible (2) Maintain an exposure control log that adapts to changes in technology to minimize exposure to bloodborne pathogens and documents the annual consideration and use of safer medical devices on the market (3) Retain a detailed sharps injury log (4) Involve non-managerial employees who are directly responsible for patient care and are at risk for contaminated needlestick injuries in the selection, implementation, and evaluation of safety devices Source: OSHA < OSHA has taken action against a number of U.S. healthcare facilities for noncompliance with the BPS. The number of BPS citations issued by OSHA to U.S. healthcare facilities for noncompliance in the use of safety devices has increased in recent years, from 77 in 2001 to 270 in OSHA s citations demonstrate the organization s resolve to promote full compliance with the safety-engineered medical device requirement as well as its willingness to impose significant fines when companies fail to meet the BPS. Between 2002 and 2007, one in every five healthcare facilities to receive an OSHA hospital inspection was cited for noncompliance with the use of sharps safety devices. OSHA defines a safety-engineered sharp device as a non-needle sharp or a needle device used to withdraw bodily fluids, access a vein or artery, or deliver medications or other fluids that contains a built-in safety feature or mechanism to minimize the risk of an exposure incident. There is no list of approved or endorsed safety products; rather, it is the employer s responsibility to determine which engineering controls are appropriate for specific hazards presented by the medical procedures being conducted, what is feasible, and what is commercially available. To select an appropriate safety device, OSHA recommends using the U.S. Food and Drug Administration s (FDA) selection criteria as listed in Table 8. Provide a barrier between the hands and the needle after use with the safety feature allowing or requiring the worker s hands to remain behind the needle at all times Be an integral part of the device and not an accessory Be in effect before disassembly (passive) and remain in effect after disposal to protect users and trash handlers as well as for environmental safety Be as simple as possible, requiring little or no training to use effectively Safety Syringes Table 8 SELECTION CRITERIA FOR SAFETY DEVICES Sources: OSHA < and the FDA < A variety of syringes on the market are designed to reduce the risk of a needlestick injury. These types of syringes mainly differ in two key areas: (1) how the safety mechanisms are activated; and (2) the degree to which the safety features have been integrated into the device. To be classified as a safety device, syringes can be equipped with either passive or active safety features. Devices with active safety features require the user to manually activate the mechanism, whereas passive devices remain in effect before, during, and after use and do not require any specific action by the user beyond normal use. According to OSHA, organizations, companies, and employees in the healthcare industry prefer integrated safety designs, which include mechanisms that are built into the device and cannot be removed, versus add-on or accessory safety features that are installed manually by the user before the device is employed. The ability of add-on safety mechanisms to minimize the risk of needlestick injury is dependent on compliance by the operator of the device. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 19

20 Since the Federal Needlestick Safety and Prevention Act, various safety features have been developed and incorporated into conventional syringe technology to reduce the risk of needlestick injuries, including those described below. Needleless Systems. Needleless designs have been created to connect IV delivery systems, thus reducing the number of needles required to deliver medication, fluids, or nutrition or to draw blood samples through an IV. The development and implementation of needleless IV systems has been one of the most significant impacts in the reduction of needlestick injuries in the healthcare setting (Source: Managing Infection Control, May 2009). Self-sheathing Needles. Needles equipped with a cover (called a sheath) that slides over the needle after use and locks into place are self-sheathing needles. The shield is designed to protect the user from needlestick injury and can be attached to disposable syringes and vacuum tube holders. Retractable Needles. Needles that can be drawn back into a syringe, vacuum tube holder, or other medical device following use to prevent an accidental needlestick injury are retractable needles. Self-blunting Technology. Before the needle is withdrawn from a patient s vein, a blunt cannula positioned inside a phlebotomy or winged steel butterfly needle is advanced beyond the needle s tip. This technique is used to make the tip of the instrument dull and safe after use for handling and disposal. Hinged Shields. A safety shield attached to various types of needles (e.g., phlebotomy, winged steel, or blood gas needles) that is hinged or can slide into place is called a hinged shield. Incorporating these technologies, several products have been developed to minimize or eliminate the risk of needlestick injury for medical workers in healthcare settings and departments. A snapshot of the types of safety syringe technologies that are currently marketed is shown in Figure 8. Figure 8 EXAMPLES OF NEEDLE DEVICES WITH SAFETY FEATURES Self Re-sheathing Needles The syringe is equipped with a sleeve that can be slid over the needle after use, where it locks in place and provides a guard around the contaminated needle. Syringe with Retractable Needles Following use, the operator can press down the plunger to retract the needle into the syringe so that the risk of needle exposure is eliminated. Blunt-tipped Blood Drawing Needles Before the needle is removed from the patient, a blunt tip needle can be moved into position just past the needle point to prevent the sharp tip from causing injury. Winged Steel Needles The operator rotates a third wing to blunt the needle point prior to removing the needle from the patient. "Add on" Safety Feature Hinged or sliding shields can be attached to a needle as an unintegrated accessory feature. Source: OSHA. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 20

21 SAFETY SYRINGE MARKET On an annual basis, roughly eight billion syringes are used in the U.S. alone, with as many as 30 billion syringes used worldwide (Source: SmallcapInsights.com s Preventing Needlestick Injury: The Global Market for Safety Syringes, a white paper, September 2009). Since the 1990s, pharmaceutical and medical device companies have gradually emphasized the importance of incorporating safety mechanisms into syringes in an effort to help protect healthcare workers from needlestick injury. In the past decade, this trend has accelerated in advanced healthcare markets such as the U.S., Canada, and Europe as legislation has been passed in these regions requiring the use of safety syringes. Despite progress, conventional syringes are still widely used in a number of international markets. With the passage of the Needlestick Safety and Prevention Act in 2000 (described on pages 18-19), the U.S. was the first country to pass legislation requiring healthcare facilities to use safety syringes. In addition to the transition toward safety devices in the U.S., other developed countries are also seeking alternatives to traditional syringes that can minimize the occurrence of needlestick injuries in the workplace. For example, healthcare markets in Canada, the EU, and Australia have begun mandating the protection of healthcare workers from needlestick injury. In several European countries, including France, England, Germany, and Italy, organized healthcare worker unions have sought to make safety a higher priority by promoting the implementation and use of safer medical devices. In particular, legislation was introduced in Germany in 2007 requiring the use of safety syringes in all healthcare facilities, with risk of monetary fines or up to three years imprisonment if an injury or claim occurs as a result of noncompliance. German employers must provide devices with integrated safety features that only require one hand for activation after use and that cannot be reused. Several regions in Asia and Africa are also considering the use of safety syringes and other safety sharps products as a method to reduce the transmission of bloodborne diseases. Factors driving this trend toward the use of safety syringes include the following: (1) the risk of harm to healthcare workers; (2) enforcement of legislation by government agencies worldwide; (3) the costs associated with testing and treating bloodborne pathogens; (4) the difficulty in retaining staff due to fear of contracting a disease from a needlestick injury; and (5) an employer s risk of litigation if a needlestick injury occurs as a result of an unsafe working environment. The market for U.S. infection prevention demand was valued at $19.8 billion in 2008 over $5 billion of which was attributed to safety-enhanced devices and is expected to increase nearly 5% annually through 2013 (Source: The Freedonia Group s Infection Prevention Products and Services, August 2009). Annually, over 1.3 million people die from unsafe injection practices, which can occur when syringes are reused or shared, disposed of improperly or unsafely, or as a result of an accidental needlestick injury. Some organizations have recognized that the costs associated with testing and treating employees following exposure to bloodborne pathogens each year can exceed the cost of supplying safety syringes. As such, these entities may be willing to pay higher costs for medical devices that are equipped with safety features designed to reduce or eliminate needlestick injuries, which can minimize an organization s overall costs (Source: Greystone Associates Retractable Safety Syringes January 2007). The CDC estimates that the direct costs for the initial testing and follow-up treatment of a needlestick injury can range from $500 to $3,000 or more per injury even if an infection does not result. MedPro s Identified Market Opportunities Since the passage of the Needlestick Safety and Prevention Act, MedPro has focused on identifying, acquiring, and developing medical safety products that use inherent passive needles or needleless replacements. The Company s safety solutions do not require the user to activate the safety mechanism. The use of this passive needlestick technology can provide the following benefits: (1) reduced insurance premiums for facilities; (2) increased productivity by preventing lost work time due to needlestick injury; and (3) decreased fear of accidental needlesticks by blood collection workers, which could improve the quality of labor. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 21

22 MedPro believes that it is positioned to capture a significant portion of the needlestick prevention technology market as the Company s research and development (R&D) approach has focused primarily on identifying and acquiring technology in this space. Since its inception, the Company has acquired technology and developed products across several medical device safety segments, as listed below. MedPro s products are detailed on pages The Phlebotomy Market. Based on MedPro s research and discussions with potential distribution partners, the Company estimates that 700 million blood collection devices are used in the U.S. annually. On a global scale, MedPro approximates that 1.5 billion to 2 billion units are used each year. A major trend for acute care facilities in the blood collection market has been the conversion to safety devices. MedPro estimates that roughly 83% of these facilities use a type of safety blood collection device. Presently, the market is dominated by two key competitors, Smiths Medical (SMIN- LSE) and Becton, Dickinson and Co. (or BD [BDX-NYSE]). Based upon its understanding of the market, and as stated informally throughout the industry, MedPro believes that these companies collectively account for roughly 80% of the market. However, to the Company s knowledge, neither entity currently offers a fully passive device within its product line, which could potentially provide MedPro with a competitive advantage. MedPro s fully passive devices do not require the operator to specifically activate the safety features of the needle, but rather they are activated through normal use. The Safety Hypodermic Syringe Market. Hypodermic syringes are ubiquitous in all clinical settings. The market includes allergy, insulin (minus home self-injectors), and tuberculosis syringes. The hypodermic safety syringe market in the U.S. is estimated at $220 million (Source: MedPro Safety Products, Inc.). BD and Covidien, Ltd. (COV-NYSE) collectively represent over 80% of the hypodermic syringe market, with Retractable Technologies, Inc. (RVP -NYSE Amex) holding a roughly 10% share (Source: MedPro Safety Products, Inc.). The European market is experiencing regulatory trends similar to those that have driven the U.S. to convert to safety products. To address the worldwide hypodermic syringe market, MedPro has identified several strategic partners with global reach. The Intravenous (IV) Market. The Company estimates that the U.S. market for IV catheters is increasing by roughly 3% annually. Although the majority of IV catheters include a safety feature, 2007 data from the University of Virginia s International Healthcare Worker Safety Center showed that a catheter needlestick occurs per roughly every 125 census beds, which would equate to 5,000 to 6,000 annual injuries in hospital settings alone. To MedPro s knowledge, no fully passive blood collection sets or passive winged collection and access devices are currently being marketed. Healthcare professionals use winged infusion sets to collect blood, to access a vein or artery, or to administer medicine to patients. To address this market need, the Company is developing a winged infusion set with a fully passive safety system, which MedPro believes may accelerate the market s transition to safety devices to a level equivalent to that seen in related markets (e.g., safety syringes). The Pharmaceutical (Prefilled Syringe) Market. Historically, the majority of pharmaceuticals have been distributed in multi-dose vials, which eventually evolved into single-dose vials. Presently, vial and syringe suppliers have noted a trend toward pre-sterilized syringe assemblies ready for singledose, prefill lines in the pharmaceutical and biotechnology industries. Prefilled syringes contain a single, premeasured dose intended for one patient. The entire device can be disposed of after use. Prefilled syringes can be used for injectable drugs such as vaccines, anticoagulants, and therapeutic proteins. Due to drug stability issues and the potential for incompatible drug interactions with plastic, the majority of prefilled syringes used today have glass vials. Additionally, while many prefilled syringes include a pre-attached or staked needle, some use a luer slip or lock needle (not preattached). An additional advantage of prefilled syringes is a potential cost reduction, as conventional vials require 20% to 24% overfill of medicine (Source: Pharmaceutical & Medical Packaging News, Prefill Revolution: A Market Segment on the Rise, March 2009). Companies such as MedPro are looking to further improve the safety of prefilled devices and gain a competitive advantage in the market by integrating mechanisms to reduce or eliminate the risk of needlesticks. The market for prefilled syringes is estimated to be between 2 billion and 2.5 billion syringes per year (Source: Visiongain, an independent business information provider for the pharmaceutical and other industries). CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 22

23 MEDPRO S PRODUCTS AND TECHNOLOGY MedPro is developing products within four related product segments phlebotomy, hypodermic syringe, IV, and pharmaceutical (prefilled syringe) which may be launched in the next 24 months. The Company s products comply with the federal Needlestick Safety and Prevention Act of 2000 and are fully passive. MedPro s portfolio of safety syringes may create applications for more than 15 related products. The product family includes various sizes, blunts, plungers, and other combinations of the Company s core technology. MedPro believes that the total global market for its current portfolio of products could exceed $6 billion. Since the passage of the Needlestick Safety and Prevention Act, MedPro has focused on the development of syringe solutions with safety mechanisms that require minimal or no user activation. The Company s business strategy entails identifying and acquiring technology that can be used to develop safety-oriented medical devices with significant commercial potential. MedPro s intellectual property (IP) portfolio and the technology used in its R&D has been obtained through technology agreements with third-party inventors or acquired. The Company s initiatives have been supported through a key relationship with Visual Connections, Inc., a company that develops IP designed to reduce needlestick injuries in various applications and settings. MedPro has plans to directly engage in research and product development activities in the future. The Company s syringe designs incorporate inherent passive safety needles or needleless replacements to minimize the risk of needlestick injuries. Traditional safety features often integrate a safety accessory that acts as an engineering control to prevent a needlestick injury after use, but are only effective if activated correctly by the user. Passive safety features are automatically activated and thus do not require action by the user. As such, passive technology may reduce risks in locations where healthcare worker injuries and exposures continue to occur. A study of 61 French hospitals evaluated the incidence of needlestick injuries among passive (automatic), semi-automatic, and manually activated safety devices. Data released from the study showed that passively activated mechanisms were associated with the lowest needlestick injury rates during the course of the study and thus were the most effective for preventing needlestick injuries in the healthcare setting (Source: Infection Control Hospital Epidemiology 2010; 31: ). In the past, adoption of a safety device may have required trade-offs between providing safety and requiring direct practitioner interaction and changes to established techniques. To facilitate the conversion to safety products, MedPro designs products that include full passivity, limited or no change in user technique, and equivalent core features (e.g., barrel clarity, needle sharpness, breadth of line). The Company also aims to price its products competitively to current safety devices on the market and at expected margins for strategic partners. MedPro ensures that its current and prospective suppliers comply with Good Manufacturing Practice (GMP) standards and are International Organization for Standardization (ISO) certified or meet equivalent applicable standards. MedPro has received a Certificate of Registration from BSI Management Systems demonstrating compliance with ISO 13485:2003, which covers the design and manufacture of single-use medical devices. In addition, the Company is in the process of obtaining a CE Mark a certification required for European distribution which it believes it may obtain in the second quarter 2011 using final product validations that are currently underway. MedPro s Information Technology Platform MedPro acquired a fully integrated information technology (IT) platform in early The platform enables the Company to satisfy its sales and ordering processes in an efficient manner while maintaining an appropriate level of internal control. MedPro has also engaged a full service vendor that provides various services for the Company, including data integrity, IT security, managed network services, disaster recovery, offsite encrypted data storage, and voice and data communications support. Altogether, MedPro s IT system provides a high level of security, backup, and risk management, which the Company believes significantly reduces its risk of IT failure. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 23

24 VACUETTE Blood Collection Safety Products MedPro s product pipeline includes a blood collection device called the VACUETTE Premium Safety Needle System. The safety system encompasses a shield that automatically covers the needle during the blood collection process to protect healthcare workers from needlestick injury. The VACUETTE Premium Safety Needle System is fully passive and is available in two designs, including tube-activated and skinactivated models, which have both received 510(k) clearance by the FDA. Each model varies in the way that the safety system a shield that covers the needle after the completion of blood collection is deployed. An important feature of the VACUETTE Premium Safety Needle System is that the device cannot be used by the operator to collect blood unless the safety system has been activated. VACUETTE Tube-Touch Model The safety system on MedPro s VACUETTE Tube-Touch model is employed when the first blood collection tube is fully inserted into the device and prior to blood collection activities. These actions lead to the automatic release of the safety sleeve, which covers the needle during the blood collection process. The activation process for the Tube-Touch model is illustrated in Figure 9. Tube insertion is a required and current part of blood collection practice and, as such, the deployment of the safety feature requires no additional action by the user. Importantly, blood cannot be drawn into the collection tube without deploying the safety feature. In addition to the integrated safety shield, the Company s tube-activated design also has a multiple-sample needle, which allows the operator to draw more than one blood sample from the patient during a single procedure. Figure 9 MedPro Safety Products, Inc. VACUETTE TUBE-TOUCH Sources: MedPro Safety Products, Inc. and Crystal Research Associates, LLC. The Tube-Touch model is designed for single-patient use and is available in three gauges: 20G, 21G, and 22G. In September 2009, MedPro announced that it completed preliminary testing and met all necessary regulatory requirements for the Tube-Touch model, including those stipulated by the FDA and ISO. As well, the device meets testing protocols imposed by MedPro and its customers and relevant safety and efficacy standards. The Company estimates that the current phlebotomy market is roughly 700 million units in the U.S. and approximately 1.5 billion to 2 billion units globally. In November 2009, MedPro completed final product testing of its Tube-Touch model, which represented the final required step prior to its release for human use and to the initiation of high-volume production of the product for market distribution. Marketing for the Tube-Touch model commenced in the U.S. during April CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 24

25 VACUETTE Skin-Touch Model In contrast, the safety shield of the Skin-Touch model engages on skin contact, during the initial insertion of the needle into the patient s skin. The device is fully passive, indicating that the user need not perform any additional steps to activate the safety feature. Blood cannot be drawn into the collection tube without deploying the safety mechanism, and the insertion of the blood collection tube is not required to deploy the safety system. The Skin-Touch model is illustrated in Figure 10. The safety shield covers the needle as the device is removed from the patient, passively protecting the administrator and the patient upon completion. The Skin-Touch model also allows the acquisition of a multiple sample blood draw. The Skin- Touch model is available in several product gauges, including 20G, 21G, and 22G. MedPro is not aware of any comparable blood collection devices on the market that are equipped with a fully passive, skinactivated safety system. The Company believes that if the skin-activated model is perceived to be a premium product, it could generate higher volumes and margins versus its tube-activated model. Figure 10 MedPro Safety Products, Inc. VACUETTE SKIN-TOUCH Sources: MedPro Safety Products, Inc. and Crystal Research Associates, LLC. MedPro has established an agreement for the exclusive rights to manufacture, market, and distribute both models of the VACUETTE safety system with an international manufacturer and supplier of medical products, Greiner Bio-One GmbH (a division of Greiner Bio-One International AG). Greater details on this agreement are provided on page 13. Greiner has agreed to minimum volumes for both models of the VACUETTE Premium Safety Needle System over six years beginning October 1, The Company completed the production of human-use pieces during the first quarter Presently, MedPro is completing human-use sample production, which is part of the Company s verification/validation build for the VACUETTE system. The Company has completed formal evaluations of the VACUETTE system. The product was formally launched in U.S. markets in April VACUETTE Premium Winged Safety Blood Collection Set MedPro s Winged Safety Blood Collection Set is a small venous access device used for both infusion and blood collection that is sterile and designed for single use. In general, winged butterfly systems are used to collect blood, access a vein or artery, or to administer medication in the healthcare setting, where patient comfort and ease of venous access are emphasized. Using its core technology, MedPro has transitioned from its tube and skin safety engagement system and developed a passive safety IV winged valve line. The Company s winged collection system is based on an internally developed design that is similar to conventional winged butterfly systems in both appearance and in operation allowing the safety feature to engage in a manner that is familiar to the user. The safety mechanism employed in MedPro s butterfly system is fully passive. The Company believes that this feature may accelerate the market s transition toward safety devices at penetration levels seen in other related product categories (e.g., safety syringes). According to the Company, the estimated annual market for winged butterfly systems is 200 million units, of which only roughly 35% utilize safety features. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 25

26 The safety feature deploys as the device is removed from the patient. As shown in Figure 11, the fully passive safety system activates as the user grips the wings and pushes them together which is a necessary and standard action when operating winged butterfly systems. When the wings close to roughly 20 degrees, the safety guard automatically releases over the needle and protects the user from an accidental needlestick as the needle is fully covered by the guard while it is withdrawn from the patient s skin. Once released, the safety guard becomes secured in a fully extended and locked position covering the needle, which prevents the wings from reopening. The safety system on MedPro s winged butterfly device does not require active deployment by the user and can be discarded without the need to touch the needle at any point throughout the process. To the Company s knowledge, there are no products with a passive safety system available on the market. As such, MedPro believes the VACUETTE Premium Winged Safety Blood Collection Set could become the first passive safety system on the market. Figure 11 MedPro Safety Products, Inc. WINGED SAFETY BLOOD COLLECTION SET Sources: MedPro Safety Products, Inc. and Crystal Research Associates, LLC. In July 2010, MedPro entered into a new manufacturing agreement with Greiner Bio-One GmbH. The agreement grants Greiner the exclusive global rights to manufacture, market, and distribute the three VACUETTE blood collection products, including the winged safety blood collection set. Greiner must purchase a minimum of 350 million units of the three products over six years. MedPro obtained 510(k) clearance to market the winged safety blood collection set in the fourth quarter Anti-Blunting Safety Syringe MedPro s fillable safety syringe includes both anti-blunting technology to prevent the cannula from becoming dull and a safety sheath to avoid needlestick injury during the administration of medication through a fillable syringe. The anti-blunting feature is an outer covering that protects the actual injection cannula from becoming blunted (or dulled) as the user draws medicine from the medicament container into the syringe. It also protects the injection cannula from contamination. This eliminates the cost and time required for a practitioner to replace the needle used for filling with another needle to be used for the patient injection. In order to provide a solution for a variety of injection requirements, MedPro plans to offer the syringe in both fixed and removable needle models, both of which are available with or without the anti-blunting feature. The passive safety feature, which is used in both the Company s fillable and prefilled safety syringes, is a sheath that activates automatically as the user injects medicament into the patient providing safety that starts during the injection process and continues after completion. The safety sheath completely covers the cannula as it is removed from the patient, preventing any exposure of the contaminated sharp to the user. The anti-blunting device s two-stage safety system is shown in Figure 12 (page 27). It is important to note that both stages are activated passively. The Company obtained the rights to the anti-blunting safety syringe technology through its strategic relationship with Visual Connections, Inc., as described on page 12. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 26

27 Figure 12 MedPro Safety Products, Inc. "BLUNT" SAFETY SYRINGE Stage One Activation of Anti-blunting Technology to Maintain a Sterile, Non-blunt Needle for the Patient Stage Two Activation of Safety Syringe Sheathing to Prevent Needlestick Injury to the Operator Sources: MedPro Safety Products, Inc. and Crystal Research Associates, LLC. Prefilled Safety Syringes MedPro is also focused on the development and commercialization of its prefilled safety syringes, which are based on the Company s patent-pending design and include a novel, fully passive safety mechanism that is integrated into the device. Prefilled syringes contain a precise dose of injectable medicine, stored within a syringe in a manner that is prepared for immediate use. Once the device is filled, it can then be packaged and shipped to end users, such as healthcare workers or patients, who self-administer prescribed treatments at home. MedPro s prefilled device (illustrated in Figure 13) comprises two parts: (1) a standard glass cartridge that acts as both a prefilled medicament reservoir and syringe plunger; and (2) a plastic safety syringe that incorporates a fully passive safety deployment system. The glass cartridge is being developed through a partnership with Helvoet Pharmaceutical N.V. (described more fully on page 13). Figure 13 MedPro Safety Products, Inc. RENDERING OF THE PREFILLED SAFETY SYRINGE WITH MEDICAMENT CARTRIDGE AND PACKAGING Source: MedPro Safety Products, Inc. MedPro s model can accept prefilled cartridges of commonly used medicines or specific doses of pharmaceutical medicaments. The prefilled safety syringe can also be applied to specialty medicines. MedPro believes that these applications represent low-volume, high-value, and typically high-volume prefilled medicament solutions for the delivery of prefilled products. The Company s anticipated product development may include a model for higher volume prefilled applications. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 27

28 One advantage of the Company s prefilled device is that it is fully compatible with existing pharmaceutical manufacturing lines and contract cartridge filling lines and does not require any change to the assembly process. Customers that select MedPro s pre-assembled safety syringe may be able to fill a medicament cartridge in their existing factories or may use a filled cartridge that has been outsourced to a contract filling operation, which can then be snapped into the Company s device. MedPro s design allows filling at standard contract cartridge filling companies and is compatible with both glass and plastic medicament cartridges. Because of the design compatibility with current pharmaceutical industry practices, MedPro anticipates that it can deliver its prefilled product at a competitive price. The Company has produced prototypes of its prefilled syringe, and development is progressing under its recently executed Joint Development Agreement (detailed below). MedPro expects to have prototypes of its prefilled syringe available during The entire development process could take roughly 24 months, with potential for MedPro to enter the marketplace in 2012 based upon responses to preliminary product development meetings with potential distributors. The Company is in the process of determining a potential distributor for this product line. MedPro also expects to jointly develop its prefilled and fillable syringes, which have some similar components and functionality. The Company believes that this strategy could be launched quickly. MedPro is presently identifying distribution channels for the fillable syringe and has engaged in preliminary discussions. Joint Development Partnership with Helvoet Pharmaceutical N.V. In March 2010, MedPro entered into a Joint Development Agreement with Helvoet Pharmaceutical N.V. for the development and distribution of the prefilled passive safety syringe system. With headquarters in Alken, Belgium, Helvoet is the pharmaceutical packaging division of the Dätwyler Holding (Altdorf, Switzerland). Helvoet manufactures and supplies pharmaceutical-grade coated rubber products, packaging components, and injectable drug closures, producing over 12 billion units worldwide annually. Per the terms of the agreement, MedPro is developing the safety syringe component of the prefilled passive safety syringe system, while Helvoet is responsible for producing the rubber components and assisting with related components that go into the cartridge. The Company anticipates that the partnership with Helvoet provides critical design functions for the prefilled safety syringe product and may accelerate the time to market. Prefilled Syringe Market Overview Prefilled syringes have become a preferred container for many injectable drug delivery systems (Source: ONdrugDeliveryLtd s Prefilled Syringes: the Container of Choice for Today s Injectables 2008). The market for prefilled syringes, which is estimated to be 2.6 billion syringes per year, is expected to expand by over 14% annually (Source: Greystone Associates Pre-filled Syringes, February 2008). MedPro believes that several factors are contributing to the significant conversion to prefilled syringes: approximately 70% of pharmaceuticals in development are expected to be injectable and thus are prospects for prefilled delivery; a number of vaccines are also in development, which may use prefilled syringes; increasing numbers of patients are using self-administered injectable medications in the home setting; the packaging of prefilled syringes versus traditional medicament eliminates several required steps before use of a drug in a vial, reduces the risk of contamination and infection, minimizes medication errors and waste, requires less handling time, and improves productivity for the administrator; and office-based physicians express a preference for prefilled syringes over vials as they save staff preparation documentation time and improve accuracy and patient safety. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 28

29 In the U.S., federal law requires the use of safety products to minimize the risk of needlestick injury. The global market is moving toward implementing similar requirements. To MedPro s knowledge, there are no fully passive prefilled safety syringes currently available in the U.S. The Company estimates that only 15% of the prefilled market has converted to safety devices. Key-Lok Needleless IV System Many needles used in the healthcare industry are designed for purposes other than skin penetration. These needles, called transfer needles, can be used to deliver or withdraw fluids or medications from bottles, ampoules, bags, IV administration sets, or access ports. Traditional transfer needles consist of sharp, pointed tips that place healthcare workers at risk for accidental needlestick injury. Recognizing this hazard, companies within the industry have transitioned toward developing safer product systems that eliminate the use of sharp transfer needles. Using industry estimates, MedPro approximates that over 85% of healthcare facilities now rely on needleless IV delivery systems. MedPro has a complete needleless IV system, called the Key- Lok Needleless IV System (KLS), which has received 510(k) clearance from the FDA. Key-Lok is expected to replace and improve upon traditional products by providing a secure connection for medication delivery without the use of a needle, reducing the risk of accidental needlestick injuries. KLS has five components, as depicted in Figure 14. MedPro believes that its needleless IV technology has wide application, provides an improved solution to current products, and is positioned to compete with Interlink, a leading system in the market ( Figure 14 MedPro Safety Products, Inc. KEY-LOK COMPOSITE Source: MedPro Safety Products, Inc. In 2006, MedPro acquired the rights to Key-Lok from Baton Ventures, LLC, an entity managed by Baton Development, Inc. Baton Development is owned by Mr. Gary A. Peterson, a member of MedPro s Board of Directors. MedPro s design uses a blunt cannula injection system versus traditional sharps systems that rely on a needle. With few components, Key-Lok is designed to be cost competitive with needle-based products versus the more complex needleless systems that are currently offered. In addition, KLS is created using latex-free material to minimize the risk of an allergic reaction by healthcare professionals or patients. MedPro believes that KLS provides the following key advantages: (1) enables healthcare professionals to administer medicine that previously required transfer needles without using unprotected sharps, virtually eliminating any potential for accidental needlestick injuries; (2) reduces the risk of cross contamination; and (3) decreases the risk of hypersensitivities or allergic reactions caused by latex. The Company may use its winged butterfly product, described on pages 25-26, on the front end of the Key-Lok system for infusion purposes. The addition of a passive butterfly product to Key-Lok results in a complete passive needleless IV system. Additionally, as part of its development strategy for Key- Lok, MedPro has evaluated the potential to supply components of the system to accessory providers in the marketplace versus offering the complete IV kit. Presently, MedPro estimates that Interlink needleless IV access devices which are produced through a joint venture between Baxter International Inc. (BAX -NYSE) and Becton, Dickinson and Co. hold greater than a 92% share in the market. MedPro may market its winged product in one of two ways: (1) as a complete kit designed to directly compete with Interlink ; or (2) on an accessory level to provide a more functional and lower-cost solution to Interlink. The Company is working to identify a healthcare company that could assist in bringing Key-Lok to market through a private-label process. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 29

30 Additional Development Initiatives In early 2010, MedPro purchased the rights to develop an Insulin Guard Self-Injector Safety Needle. The Company has identified potential commercialization partners. Insulin Guard Self-Injector Safety Needle In January 2010, MedPro purchased the rights to develop a novel Insulin Guard Self-Injector from Visual Connections. Like MedPro s other products, the insulin safety needle system is fully passive such that the safety system automatically encloses the contaminated end of the needle immediately after use. In doing so, this technology protects the patient, caregivers, and individuals involved in waste removal. Figure 15 provides engineering renderings of the MedPro s insulin safety needle system from pre-use (with a safety cap) to full retraction of the needle. Figure 15 MedPro Safety Products, Inc. RENDERING OF THE INSULIN GUARD SELF-INJECTOR SAFETY NEEDLE SYSTEM Source: MedPro Safety Products, Inc. According to the CDC, there are approximately 23.6 million people in the U.S. with diabetes (Source: the CDC s Diabetes Successes and Opportunities for Population-based Prevention and Control: At a Glance 2009). Many diabetics, both in the U.S. and globally, administer insulin through routine injections in the home. MedPro believes that its Insulin Guard addresses a significant need in the home healthcare and diabetic markets with a truly passive safety self-injector that diminishes the risk of accidental needlesticks. The Company is also investigating the use of the Insulin Guard in the hospital setting a strategy that could significantly expand the product s potential market opportunity. The Company intends to market the Insulin Guard to both current and potential global medical device partners. These entities, in turn, are expected to brand and sell the Insulin Guard to their worldwide customer base. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 30

31 Competition The medical device market is a complex and highly competitive market. In the past several decades, medical technology in the syringe industry has changed dramatically as a result of technological innovation and scientific discoveries, as well as tightened government regulations in both the U.S. and abroad emphasizing the protection and safety of healthcare workers. Reflecting these trends, many pharmaceutical and medical device companies have gradually begun incorporating safety mechanisms into syringes to meet market demand for safer and more convenient medical devices. MedPro competes with companies of various sizes in the global medical technology market, some of which are more specialized or have greater financial resources. MedPro estimates that the current phlebotomy market is largely dominated by two companies Smiths Medical and Becton, Dickinson and Co. (BD) which account for roughly 80% of the market. Similarly, in the hypodermic safety syringe market, BD and Covidien, Ltd. are believed to collectively hold an 80% market share, followed by Retractable Technologies with an approximate 10% share. The competitive environment of the medical device industry has been affected by several factors: (1) new companies entering the field, many focused on safety-engineered devices and life sciences; (2) distributors of medical technology products, which have initiated manufacturing of these devices; and (3) a focus on acquisitions and collaborations to obtain a competitive advantage. A company s ability to compete in the medical device market depends on many factors, including price, quality, innovation, service, reputation, distribution, and promotion. In 2008, the market for U.S. infection prevention demand was valued at $19.8 billion over $5 billion being attributed to safety-enhanced devices (Source: The Freedonia Group s Infection Prevention Products and Services, August 2009). MedPro believes that it is positioned to capture a significant portion of the needlestick prevention technology market as its R&D approach has focused primarily on identifying and acquiring technology in this space. To the Company s knowledge, its products represent the most passive technologies available on the market as they deploy without conscious activation by the user and require little or no clinician training versus competing products. A list of MedPro s potential competitors is provided in Table 9. MedPro believes that this list contains potential partners as well. This is not an exhaustive summation of competitors but it is believed to be representative of the type of competition that MedPro may face as it develops and commercializes its products and technologies. Information regarding other companies has been prepared from publicly available information and has not been independently verified by MedPro or Crystal Research Associates. Company Symbol (Exchange) Table 9 MedPro Safety Products, Inc. COMPETITION Last Trade (05/16/11) 52-week Range B. Braun Medical Inc. Closely held Baxter International Inc. BAX (NYSE) $59.70 $ $ ,618,860 $22.25 $34.12B Becton, Dickinson and Co. BDX (NYSE) $87.92 $ $ ,340,080 $15.45 $19.25B Cardinal Health, Inc. CAH (NYSE) $44.94 $ $ ,539,270 $16.17 $15.66B Consort Medical plc* CSRT (LSE) ,685 1, M Covidien, Ltd. COV (NYSE) $15.66 $ $ ,567,980 $16.67 $27.88B Hospira, Inc. HSP (NYSE) $54.97 $ $ ,453,640 $25.47 $9.20B Inviro Medical Devices Closely held Retractable Technologies, RVP (NYSE $1.45 $ $2.25 9,766 $37.75 $36.22M Inc. Am ex) Safety Syringes, Inc. Closely held Smiths Medical* SMIN (LSE) 1, , , ,264, B Terumo Corporation** 4543 (TYO) 4, , , B Unilife Corp. UNIS (NASDAQ) $5.42 $ $ ,726 $324.57B * Amounts in pence sterling (GBX); 1p US$0.02 at 05/16/11. ** Amounts in Japanese yen; 1 yen US$0.01 at 05/16/11. Sources: Yahoo! Finance ( and Crystal Research Associates, LLC. Avg. Vol. (3 month) P/E Market Cap. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 31

32 B. Braun Medical Inc. Headquartered in Bethlehem, Pennsylvania, B. Braun is a healthcare and medical device company with over 38,000 employees worldwide. The company offers products for drug delivery, IV therapy, pain control, clinical nutrition, dialysis, and vascular intervention. B. Braun is dedicated to improving safety throughout the entire continuum of care. Through its emphasis on innovation and healthcare safety, the company has developed Safsite, a needle-free IV system that uses a two-way reflux valve for injection, gravity/pump flow, and aspiration or infusion of fluids or medications. According to B. Braun s estimates, over 800 U.S. facilities use the Safsite system. The company offers two additional needleless IV systems: (1) Ultrasite, a capless system that uses positive displacement; and (2) Safeline, a splitseptum system. B. Braun s additional safety products include the Introcan Safety IV catheter and the Surecan safety huber needle. Both devices are activated passively. The Introcan Safety IV catheter uses a patented safety clip technology that engages as the operator withdraws the needle from the base plate. Baxter International Inc. Baxter is a global healthcare company headquartered in Deerfield, Illinois, focusing on medical devices, pharmaceuticals, and biotechnology. The company employs roughly 48,500 individuals and operates through its subsidiaries to treat complex medical conditions. Baxter creates products that are designed to reduce errors throughout the medication management process. Baxter manufactures various products to deliver fluids and drugs to patients, including IV solutions and administration sets, prefilled vials and syringes, and electronic infusion pumps, among others. In particular, the company considers itself to be a leader in prefilled syringes, which can minimize the risk of both medication dosing errors and microbial contamination. Baxter also offers Bio-Set Luer Admixture Systems, which is a ready-to-mix system for the needleless syringe admixture of drug vials. The product promotes safety by reducing the potential of medication errors through the use of a transferable drug label and minimizes the risk of needlestick injuries through the implementation of a needleless system. Becton, Dickinson and Co. (BD) With headquarters in Franklin Lakes, New Jersey, and offices in at least 50 other countries worldwide, BD develops, manufactures, and sells medical supplies, devices, laboratory instruments, antibodies, reagents, and diagnostic products to various market segments. BD employs approximately 29,000 individuals. BD s medical division sells a variety of injectable products, including needles, syringes, and IV catheters; self-injected syringes and pen needles; prefillable drug/device combination products; and some needleless systems, among other medical devices. Many of these products come equipped with advanced safety features to help healthcare workers avoid injury. In particular, BD has several products that may compete in the safety medical device arena: (1) the BD Integra, a retractable syringe; (2) the BD SafetyGlide, a needle guard; (3) the BD Preventis, an external sheath used with prefilled syringes; and (4) the BD Vacutainer Push Button Blood Collection Set, which has a safety mechanism that is activated with the push of a button. The company also offers a range of BD Pens to administer medicine, such as insulin, as well as a disposable auto-disable injection system called BD UnijectSCF for intramuscular and subcutaneous injections, among other devices. BD is further investigating the use of a one-button activation disposable autoinjector for prefilled syringes called the BD Physioject. Based on a licensing agreement established in 1991, BD co-markets Interlink needleless IV access devices with Baxter International Inc. The license, which extends through the full-term of the last-issued Interlink patent, granted BD an exclusive license to manufacture and sell the needle-replacing component of Baxter s needleless IV system. The Interlink system is designed to accommodate all aspects of IV therapy. The system delivers low catheter reflux, is 510(k)-cleared for flushing efficacy, can accurately test blood, and can provide emergency access in critical medical situations. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 32

33 Cardinal Health, Inc. Headquartered in Dublin, Ohio, Cardinal Health is a healthcare services company that employs over 30,000 people worldwide and aims to make health and medical services more cost effective and profitable by improving efficiency and quality. Cardinal Health offers pharmaceutical, medical, and surgical products and has a range of safety products, including devices designed for blood collection, IV insertion, sharps handling, injection safety, IV medication delivery, and scalpels, among others. Cardinal Health offers numerous varieties of needles and syringes, including its Allegiance line (designed for general use) and prefilled heparin and saline flush syringes. The company also has a line of auto retractable safety syringes, which are latex free and have both visual and audible safety features. In addition, the safety mechanism on the device can be activated by the operator using only one hand. The retraction capability ensures that the syringe can be used only once by causing the needle hub to break. Consort Medical plc With headquarters in Hemel Hempstead, UK, Consort Medical is a healthcare company focused on medical device technologies for drug delivery and management of patient airways. In late 2009, Consort Medical acquired The Medical House PLC (TMH), which specializes in the design, development, licensing, and supply of innovative drug delivery devices for the pharmaceutical and biotechnology industries. TMH now operates under Consort Medical s Bespak division. Through its acquisition of TMH, Bespak offers the ASI disposable autoinjector platform, an automated, disposable, retractable syringe that enables the administration of accurate and consistent doses. TMH also brought to Bespak reusable needle-free jet injectors. Both the ASI autoinjector and the reusable needle-free jet injectors have received Europe s CE Mark and the U.S. s 510(k) clearance. In July 2009, TMH began supplying Merck Serono International S.A., a division of Merck KGaA, with an advanced needle-free jet injector system cool.click 2 which incorporates a number of features not previously associated with needle-free devices (e.g., innovative dose display). Covidien, Ltd. Covidien is headquartered in Dublin, Ireland, and operates under eight brand names derived from its three strategic business segments: (1) medical devices; (2) pharmaceuticals; and (3) medical supplies. The company employs roughly 41,000 individuals. Covidien s Kendall brand manufactures and distributes medical products used in various settings, such as healthcare facilities and in patients homes. The company s MONOJECT safety syringes are equipped with a safety shield that locks into place in two steps to prevent needlestick injuries during transport and disposal. The MONOJECT line is compliant with OSHA s BPS for engineering controls. Each syringe is currently available prefilled with insulin for diabetes patients or with tuberculin for tuberculosis testing. Also under the Kendall brand, Covidien has developed Magellan Safety Needle and Syringe Combinations, which incorporate a needle-based safety device that is intended to keep clinicians safe while providing clinical flexibility. Hospira, Inc. With headquarters in Lake Forest, Illinois, Hospira is a global specialty pharmaceutical and medication delivery company focused on developing products that reduce the safety, cost, and productivity of patient care. Hospira has over 14,000 employees globally. One of the company s specialties is generic injectable pharmaceuticals, through which it offers a broad range of acute care and oncology injectables, integrated infusion therapy, and medication management solutions. As well, Hospira provides contract manufacturing services to proprietary pharmaceutical and biotechnology companies for injectable pharmaceuticals, including formulation development, filling, and finishing. The company offers several lines of drug delivery systems that use syringes, including the Carpuject syringe system, isecure syringes, emergency syringes, and prefilled flush syringes. Hospira s isecure syringe is a prefilled, ready-to-use, disposable syringe with a needle-free design that is focused on easy administration and disposal. The company s prefilled flushes also have a needle-free design and use a luer lock connection to prevent needlestick injuries. The product comes preassembled and ready to use. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 33

34 Inviro Medical Devices With headquarters in Atlanta, Georgia, Inviro Medical is a medical device company focused on developing and marketing medication delivery systems that emphasize sharps safety in the U.S., Canada, and Europe. The company developed its patented InviroSNAP! Safety Syringe using end-user feedback to optimize its features and performance. To properly use the InviroSNAP! syringe, operators administer the medication and then manually pull back on the plunger with their hands to withdraw the needle into the barrel. Consequently, this causes the needle to retract back into the barrel where the plunger is subsequently broken off by the operator to prevent needlestick injuries or reuse of the device. The company also offers a standard luer lock syringe and the patented EZ Wing Vial Access Blunt Plastic Cannula, which offers passive protection to healthcare workers by replacing steel needles for withdrawing medication from vials. To reduce the risk of medication errors, Inviro has added a write-on stripe, called InviroSTRIPE, onto its full range of InviroSNAP! manually retractable needles as well as on its luer lock syringe. InviroSTRIPE allows annotation of critical information directly onto the syringe barrel. Retractable Technologies, Inc. (RTI) RTI seeks to establish safe and reliable medical devices that reduce the worldwide spread of infectious bloodborne diseases. Based in Texas, RTI was established in 1989 to address complaints by physicians that design engineers were insensitive and unresponsive to the daily dangers faced by frontline healthcare workers. Today, RTI produces a line of safety products under the VanishPoint brand, which it believes virtually eliminates the risk of contaminated needlestick injuries. The primary feature of RTI s VanishPoint devices is the company s patented friction ring mechanism, which enables automated retraction of the needle from the patient back into the device. In addition, these products are designed to be non-reusable and are intended to offer easy, single-handed activation. RTI s devices include retractable, auto-disable syringes; 1cc tuberculin, insulin, and allergy antigen VanishPoint syringes; 3cc, 5cc, and 10cc VanishPoint syringes; a VanishPoint blood collection tube holder and small tube adapter; a VanishPoint IV safety catheter; and Patient Safe syringes designed to reduce the risk of bloodstream infections resulting from catheter hub contamination. Safety Syringes, Inc. Headquartered in Carlsbad, California, Safety Syringes develops anti-needlestick devices, such as prefilled pharmaceutical glass syringes and cartridges, as well as disposable plastic hypodermic syringes, among other products for the healthcare industry. For example, Safety Syringes offers the UltraSafe Passive Delivery System, which has a safety guard that passively locks into place after the completion of the injection. The delivery system is designed for use with prefilled pharmaceutical glass syringes that are used for vaccines, low-molecular-weight heparins (LMWHs), and biotechnology drugs, among other medicines. The Company markets several additional products that promote healthcare safety: (1) a Tamper Evident UltraSafe Passive Delivery System that seeks to prevent the counterfeiting of prefilled glass syringes; (2) an UltraSafe Passive Delivery System for luer lock and luer slip syringes; (3) an Auto Injector with the UltraSafe Passive Delivery System; and (4) UltraSafe Needle Guards that attach to prefilled glass syringes. Safety Syringes customers have included Amgen, Inc. (AMGN -NASDAQ), Pfizer Inc., and Merck & Co., Inc. (MRK-NYSE), among others. In 2008, the company launched its 20 th drug with an UItraSafe anti-needlestick device. Smiths Medical Headquartered in London, England, Smiths Medical is a global provider of medical devices for healthcare facilities as well as home and specialist environments. Smiths Medical employs roughly 7,500 people and is one of five divisions comprising the UK-based Smiths Group plc. Smiths Medical manufactures and distributes disposable medical products related to anesthesia, respiratory care, critical care, and infection control under its Portex, Inc. division, which is located in Keene, New Hampshire. Through Portex, the company has developed a line of sharps safety products such as the Needle-Pro device, which is equipped with a patented, hinged sheath to minimize the amount of time that the clinician is exposed to the needle. Smiths Medical has used the Needle-Pro technology to develop a range of needles that can be used in medication delivery, tuberculosis testing, insulin and allergy injections, immunizations, and venous blood draws. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 34

35 Terumo Medical Corporation (TMC) Headquartered in Somerset, New Jersey, and parented by the Terumo Corporation, TMC manufactures, exports, imports, and markets a variety of medical devices, supplies, and accessories. The company employs roughly 140 individuals. TMC s main product lines include catheters, wires, sheaths, syringes, needles, and transfusion products. TMC aims to offer solutions for healthcare providers that comply with the latest OSHA requirements for sharps devices with a built-in safety feature. Specifically, TMC has developed SurGuard2 Syringes with Safety Needles, which incorporate a needle-locking mechanism. To ensure that this mechanism has been activated and the needle is locked into place, the operator is signaled by an audible click. While some of TMC s products and devices are currently produced in Japan, the company is transitioning to full-scale manufacturing operations in its facility in Elkton, Maryland. Unilife Corporation Headquartered in York, Pennsylvania, Unilife develops and supplies innovative safety medical devices to healthcare and pharmaceutical markets. Unilife employs over 85 individuals. The company primarily targets pharmaceutical markets for prefilled safety syringes, healthcare markets that mandate the use of sharps safety devices to prevent needlestick injuries, and the U.S. medical device contract manufacturing market. Unilife s product lines include the Unifill Syringe, the Unitract 1mL Insulin and Safe Syringes, and the Unitract Clinical Range. Unilife s safety syringes allow the operator to control the speed of automatic needle retraction within a fully integrated safety syringe. In July 2008, sanofi-aventis SA (SNY- NYSE) signed an Exclusive Agreement with Unilife, under which sanofi-aventis paid $13.9 million ( 10 million) for the right to purchase the Unifill Syringe for five years. Sanofi-aventis is also financing Unilife s three-year industrialization program for the Unifill Syringe, which could have a total value of up to 17 million (~$23.4 million). CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 35

36 Milestones MedPro has achieved or seeks to achieve the following milestones over the next 12 to 24 months as it continues to develop and expand its product portfolio. Recent Milestones Became a revenue-generating company in 2010 Received 510(k) clearance for the winged blood collection set Produced prototypes of its prefilled syringe Began marketing the Tube-Touch model in the U.S. Potential Milestones Obtain European CE Mark clearance for the Tube-Touch model Release the winged butterfly product Present prototypes of its fillable syringes CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 36

37 Key Points to Consider MedPro Safety Products, Inc. develops and acquires transformational safety medical technologies that reduce or eliminate the risk of needlestick injury. The Company focuses on products with fully passive safety mechanisms that activate automatically, requiring no action by the user. Increasingly, government entities and healthcare organizations alike are emphasizing the use of safer medical devices to minimize costs that may be incurred as a result of a needlestick injury and to protect healthcare workers. Direct costs for the initial testing and follow-up treatment of a needlestick injury can range from $500 to $3,000 or more per injury (even if an infection does not result). MedPro s VACUETTE Premium Safety Needle System is a fully passive, 510(k)-cleared blood collection device that is equipped with a sleeve to automatically cover the needle during the blood collection process. The VACUETTE system is available in two models Tube-Touch and Skin- Touch which differ in the way that the safety system is deployed. MedPro s VACUETTE Premium Winged Safety Blood Collection Set is a fully passive, 510(k)- cleared venous access device for infusion and blood collection. The product is similar in appearance and operation to traditional systems, with the addition of a safety system that deploys without any additional action by the user. MedPro is also developing a fillable safety syringe with anti-blunting technology to increase patient and operator safety while administering medicine through a syringe. The two-stage, passive safety system entails anti-blunting technology to protect the needle from contamination as well as a sheath that covers the needle after use to help prevent needlestick injury. MedPro has acquired the rights to the Key-Lok Needleless IV System (KLS), which provides a secure connection to deliver medicine intravenously without using a needle. KLS addresses a market need as healthcare companies have transitioned toward products that eliminate the use of sharp transfer needles. MedPro is seeking a partner to help bring KLS to market via a private-label process. In March 2010, the Company entered into a Joint Development Agreement to develop and commercialize its prefilled safety syringe, which could be launched during fiscal MedPro s business model focuses on establishing strategic partnerships with major medical product distributors. Its first such partnership is with Greiner Bio-One GmbH. Under the agreement, MedPro granted Greiner the exclusive rights to manufacture, market, and distribute three VACUETTE blood collection products, and Greiner committed to produce and purchase a minimum of 350 million units of those products over six years. MedPro intends to enter into similar production and distribution agreements for its prefilled and fillable products. The Company s products comply with the federal Needlestick Safety and Prevention Act and ISO 13485:2003. MedPro is also in the process of obtaining a CE Mark. Each of its suppliers follows Good Manufacturing Practices (GMPs) and is ISO certified or meets equivalent standards. In 2008, the market for U.S. infection prevention was valued at $19.8 billion over $5 billion of which was attributed to safety-enhanced devices. MedPro estimates that the total global market for its current portfolio of products could exceed $6 billion. MedPro s intellectual property (IP) portfolio contains 13 active patents and 5 pending patent applications. The Company acquires and obtains IP via contracts with third-party inventors. In January 2010, MedPro obtained product development rights to a fully passive Insulin Guard Self- Injector Safety Needle. MedPro improved its cash position in late 2010 by issuing $30 million in Senior Notes in a private placement to institutional investors. The Company received nearly $23.3 million in net proceeds after establishing a $4.5 million interest reserve and paying offering expenses. The royalties under the Greiner agreement are committed to pay the principal and interest due on the Notes. As of April 2011, MedPro s cash position was roughly $13 million. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 37

38 Historical Financial Results Tables 10, 11 (pages 39-40), and 12 (page 41) provide a summary of MedPro s year-end audited financial statements: its Statements of Operations, Balance Sheets, and Statements of Cash Flows. Table 10 MedPro Safety Products, Inc. STATEMENTS OF OPERATIONS For the Years Ended December 31, 2010 and 2009 For the Year Ended For the Year Ended December 31, 2010 December 31, 2009 Revenues Product royalty income $ 150,000 Needlyzer sales $ 5,388 Automation services 12,045 Total revenue 150,000 17,433 Cost of revenue 832,235 11,679 Gross profit/(loss) (682,235) 5,754 Operating Expenses Salaries, wages, and payroll taxes 6,708,668 9,229,378 Qualified profit-sharing plan 221, ,656 Advertising and promotion 260, ,480 Product development costs 864, ,052 Professional and insurance 1,839,491 1,333,774 General and administrative 366, ,366 Travel and entertainment 429, ,279 Settlement of royalty dispute 600,000 Write downs of abandoned equipment and technology 696,331 2,892 Depreciation and amortization 382, ,112 Total operating expenses 12,369,873 13,027,989 Loss from operations (13,052,108) (13,022,235) Other Income (Expenses) Interest expense (2,168,681) (250,546) Interest income 19,910 45,869 Change in fair value of derivative liabilities (313,335) 21,603,185 Total other income (expenses) (2,462,106) 21,398,508 Provision for income taxes Net income /(loss) $ (15,514,214) $ 8,376,273 Net earnings /(loss) per Common Share Basic net earnings /(loss) per share $ (1.18) $ 0.63 Fully diluted net earnings /(loss) per share $ $ 0.20 Shares used in computing earnings per share Weighted average number of shares outstanding - basic 13,163,332 13,296,075 Weighted average number of shares outstanding - diluted 42,170,030 Source: MedPro Safety Products, Inc. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 38

39 Table 11 MedPro Safety Products, Inc. BALANCE SHEETS December 31, 2010 and 2009 December 31, December 31, ASSETS Current Assets Cash $ 8,315,644 $ 4,072,443 Restricted cash 3,864,411 Accounts receivable, net 179,107 Inventory 247,981 Accrued interest income 3,898 18,694 Prepaid expenses and other current assets 29,368 20,414 Prepaid investor relations costs 1,634 Escrowed Senior Note Funds 7,870,000 Total current assets 20,262,428 4,361,166 Property and Equipment Equipment and tooling 887,607 1,042,869 Leasehold improvements 240, ,377 Computers, network, and phones 210, ,574 Furniture and fixtures 117, ,019 Trade show booth 7,341 7,341 1,464,071 1,558,180 Less: accumulated depreciation 422, ,966 Property and equipment, net 1,041,485 1,305,214 Other Assets Intangible assets 8,317,810 9,067,457 Recoupable royalties Visual Connections Wing 100,000 Deferred financing costs 1,887,210 55,718 Total other assets 10,305,020 9,123,175 Total assets $ 31,608,933 $ 14,789,555 Source: MedPro Safety Products, Inc. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 39

40 Table 11 (cont.) MedPro Safety Products, Inc. BALANCE SHEETS December 31, 2010 and 2009 LIABILITIES AND SHAREHOLDERS EQUITY / (DEFICIENCY) Current Liabilities Accounts payable and accrued expenses $ 762,523 $ 406,121 Accrued interest payable 700,000 10,674 Current portion of long-term debt 3,413,533 Derivative liabilities fair value of Warrants 1,157,823 Current portion of technology transfer payments - Visual Connections, Inc. 250,000 Total current liabilities 2,620, Long-Term Liabilities Notes payable - long-term portion 30,000, ,000, Total liabilities 32,620, Shareholders Equity / (Deficiency) Preferred Stock $.01 par value: 10,000,000 shares authorized: Series A Preferred 6,668,229 shares issued and outstanding. Liquidation preference $1,820,829 and $1,215,544, respectively 66,682 66,682 Series B Preferred 1,493,779 shares issued and outstanding 14,937 14,937 Series C Preferred 1,571,523 and 0 shares issued and outstanding, respectively 15,715 15,715 Common Stock $.001 par value; 90,000,000 shares authorized; 13,091,507 and 13,215,311 shares issued and outstanding, respectively 13,092 13,215 Additional paid-in capital 72,075,435 67,410,070 Unearned share-based compensation (167,600) Treasury Stock (105,080 Common Shares) (731,194) (386,370) Accumulated deficit (72,466,080) (56,951,866) Total shareholders equity / (deficiency) (1,011,413 10,014,783 Total liabilities and shareholders equity $ 31,608,933 $ 14,789,555 Source: MedPro Safety Products, Inc. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 40

41 Table 12 MedPro Safety Products, Inc. STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2010 and 2009 For the Year Ended For the Year Ended December 31, 2010 December 31, 2009 Cash Flows From Operating Activities Net income (loss) $ (15,514,214) $ 8,376,273 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization 169, ,340 Amortization of financing costs 767,005 41,772 Debt discount accretion 685,000 Write off of prepaid automation 2,892 Write down of inventory 266,085 Loss on abandonment of equipment 696,331 Share-based compensation 4,992,454 7,282,507 Change in fair value of Warrant (derivative liabilities) 313,335 (21,511,242) Changes in operating assets and liabilities Accounts receivable and accrued interest (164,311) (18,625) Inventory (18,104) 40,433 Other current assets (7,320) 668,541 Accounts payable and accrued expenses 356, ,796 Accrued interest payable 689,326 (23,602) Deferred revenue (464,900) Net cash flows from operating activities (6,768,201) (5,311,815) Cash Flows From Investing Activities Purchase of property, equipment, and intangible (2,451,261) (480,865) Restricted cash, net of releases of $635,589 (3,864,411) Prepaid royalties (100,000) Net cash flows from investing activities (6,415,672) (480,865) Cash Flows From Financing Activities Payments on Note - technology transfer payments (250,000) (2,000,000) Proceeds from bank borrowings 1,500,000 Repayments on bank borrowings (4,107,977) (3,262,119) Proceeds from Notes payable to and advances from shareholders 2,800, Payments on Notes payable to and advances from shareholders (2,800,000) (383,333) Net cash from issuance of Preferred Shares 2,760,000 Cash from issuance of Notes 30,000,000 Escrowed Senior Note Funds (7,870,000) Purchase of Treasury Stock (344,949) (386,476) Net cash flows from financing activities 17,427,074 (1,771,720) Net increase / (decrease) in cash 4,243,201 (7,564,400) Cash at the beginning of the period 4,072,443 11,636,843 Cash at the end of the period $ 8,315,644 $ 4,072,443 Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 794,355 $ 277,324 Non-cash proceeds from issuance of Series C Preferred Shares derivative liability exchanged for Shares $ 17,901,129 Source: MedPro Safety Products, Inc. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 41

42 Risks Some of the information in this Executive Informational Overview (EIO ) relates to future events or future business and financial performance. Statements that express opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results are based upon the current views of MedPro s management about future events. Words or phrases such as anticipate, believe, estimate, expect, forecast, seek, intend, may be, objective, plan, predict, project, will be, and similar words or phrases (or the negative thereof) are intended to identify such forwardlooking statements. These forward-looking statements include all matters that are not historical facts. These forward-looking statements are not guarantees of future performance and are subject to numerous assumptions, risks, and uncertainties. Actual events or results may differ from those discussed due to the risks described in MedPro s statements on Forms 10-K, 10-Q, and 8-K, as well as other forms filed from time to time. The content of this report with respect to MedPro has been compiled primarily from information available to the public released by the Company through news releases, Annual Reports, and U.S. Securities and Exchange Commission (SEC) filings. MedPro is solely responsible for the accuracy of this information. Information as to other companies has been prepared from publicly available information and has not been independently verified by the Company. For more complete information about MedPro, please refer to the Company s website at Readers should carefully consider the risks and information about MedPro s business described below and in MedPro s recent SEC filings. Readers should not interpret the order in which these considerations are presented as an indication of their relative importance. The risks and uncertainties described below are not the only risks that the Company faces. Additional risks and uncertainties not presently known to MedPro or that the Company currently believes to be immaterial may also adversely affect its business. If any of the following risks and uncertainties develops into actual events, its business, financial condition, and results of operations could be materially and adversely affected, and the trading price of the Company s shares could decline. RISKS RELATING TO MEDPRO S BUSINESS MedPro has incurred substantial losses since inception. The Company may incur net losses in the foreseeable future and may never become profitable. Since MedPro s inception in 1995, the Company has incurred significant losses and negative cash flows from operations. MedPro incurred net losses from operations of ($13,052,108) in 2010 and ($13,022,235) in In 2010, the Company had a net loss of ($15,514,214). Net income in 2009 was $8,376,273 after taking into account other income, which included a non-cash $21,603,185 gain on the change in fair value of derivative liabilities. As of December 31, 2010, MedPro had an accumulated deficit of ($72,466,080), which was ($15,514,214) larger than at the end of This change reflects the net loss for MedPro anticipates incurring additional losses for at least several more fiscal quarters through approximately the first quarter The Company expects to spend significant resources over the next few years to fund the continued development of its pipeline of potential products. Before 2010, MedPro had derived only limited revenue from the sale of two products, both of which have been discontinued. In 2010, the Company began to realize royalty revenue from the first of three blood collection devices being manufactured and distributed by a customer under a six-year agreement. MedPro s ability to generate revenues and become profitable will depend on its ability to timely, efficiently, and successfully develop and commercialize more products. The Company may not ever become profitable. If MedPro sustains losses over an extended period of time, the Company may be unable to continue its business. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 42

43 MedPro will need substantial additional funding to develop products and for its future operations. If the Company cannot obtain the funds necessary to do so, MedPro may be required to delay, scale back, or eliminate its product development or may be unable to continue its business. The development of the Company s products will require substantial funds to obtain regulatory approvals and bring its products to market. Net cash used in operations was $6,768,201 in Although MedPro s cash has increased during 2010 by $8,107,612 to $12,180,055 at December 31, 2010, and in January 2011 the Company received an additional $7,870,000 that was released from an escrow account after receiving FDA clearance on its wing device, MedPro still may need additional cash in periods after In the future, the Company will need financing in addition to its current cash on hand to maintain its present operations. MedPro s future capital requirements will depend on the following factors: the progress and costs of its R&D programs, including the Company s ability to develop its current portfolio of medical safety products or to identify, acquire, and develop new ones; the time and cost involved in obtaining regulatory approvals; the cost of manufacturing products; competing technological and market developments; MedPro s ability to establish and maintain arrangements with third parties to assist in bringing its products to market and the cost of such arrangements; costs associated with the integration of any new operation, including costs relating to future mergers and acquisitions with companies that have complementary capabilities; expenses related to the establishment of sales and marketing capabilities; the level of the Company s sales and marketing expenses; and its ability to introduce and sell new products. MedPro anticipates that it will need to raise additional funds to support its current operations and future expansion and growth plans, and the Company may need additional capital sooner than currently anticipated. MedPro s funding requirements may change as a result of many factors, including underestimates of budget items, unanticipated cash requirements, delays in bringing its products to market, future product and service opportunities, and future business combinations. The Company cannot be certain that additional financing will be available on acceptable terms, or at all. To the extent MedPro raises additional capital through the sale of equity securities, the ownership position of its existing stockholders could be substantially diluted. If additional funds are raised through the issuance of Preferred Stock or debt securities, these securities are likely to have rights, preferences, and privileges senior to the Company s Common Stock. Fluctuating interest rates could also increase the costs of any debt financing MedPro may obtain. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its products or grant licenses on unfavorable terms. Failure to successfully address liquidity requirements could have a material adverse effect on MedPro s business. If the Company is unable to obtain additional capital on acceptable terms when needed, MedPro may be required to take actions that harm its business and ability to achieve cash flow in the future, including possibly the surrender of rights to some technologies or product opportunities, delaying clinical trials or curtailing or ceasing operations. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 43

44 The indenture governing MedPro s Notes issued in September and October 2010 restricts the amount of additional debt the Company can incur during the term of the Notes to $7,500,000 of senior debt and $15,000,000 of unsecured debt. This may limit MedPro s ability to fund capital equipment and development costs without issuing additional equity securities. Issuing equity securities may not be feasible or accepted by the investing public. MedPro s future growth depends upon its ability to develop new products. A significant element of the Company s strategy is to increase revenue by focusing on products that deliver greater benefits to patients, healthcare workers, and researchers. The development of these products requires significant R&D and financial resources, clinical trials, and regulatory approvals. The results of MedPro s product development efforts may be affected by a number of factors, including its ability to innovate, develop, acquire, and manufacture new products, complete clinical trials, obtain regulatory approvals and reimbursement in the U.S. and abroad, or gain and maintain market approval of its products. In addition, patents obtained by others could preclude or delay the Company s commercialization of a product. None of MedPro s products currently in development or that it may seek to develop in the future may achieve technological feasibility, obtain regulatory approval, or gain market acceptance. Even if the Company receives regulatory approval for its products, those products may never be commercially successful. Even if MedPro develops medical safety products that obtain the necessary regulatory approval, and it has access to the necessary manufacturing, sales, marketing, and distribution capabilities, the Company s success depends to a significant degree upon the commercial success of those products. If MedPro s products fail to achieve or subsequently maintain market acceptance or commercial viability, the Company s business would be significantly harmed because its future royalty revenue or other revenue would depend upon sales of these products. The following factors may affect the market acceptance and commercial success of its products: the timing of market entry versus competitive products; the rate of adoption of new medical safety products by hospital, clinics, and medical practitioners; convenience and ease of administration; pricing; marketing; availability of alternative products; and activities by MedPro s competitors. The Company will likely rely on third parties to manufacture its medical safety products. MedPro s business strategy relies on third parties to manufacture and produce its medical safety devices in accordance with Good Manufacturing Practices (GMPs) established by the FDA or similar regulations in other countries. The Company s products may compete with other products or companies for access to these facilities and may be subject to delays in manufacture if third parties give other products greater priority than MedPro s products. These third parties may not deliver sufficient quantities of the Company s products, manufacture its products in accordance with specifications, or comply with applicable government regulations. In addition, if the manufactured products fail to perform as specified, MedPro s business and reputation could be significantly harmed. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 44

45 The manufacturers on which the Company depends may not be able to successfully produce products on acceptable terms, or on a timely or cost-effective basis. They may not be able to manufacture MedPro s products in accordance with its product specifications or that meet FDA or other requirements. The Company must have sufficient and acceptable quantities of its products to conduct clinical trials and to market products, if and when they have been approved by the FDA for marketing. If MedPro is unable to obtain sufficient and acceptable quantities of its products, the Company may be required to delay the marketing and distribution of its products, which would further delay receipt of revenue. If MedPro s contract manufacturers are not satisfying its needs, it could be difficult and costly to change suppliers or to establish its own manufacturing capabilities. Any change in the location of manufacturing would require FDA inspection and approval, which could interrupt the supply of products and may be time-consuming and costly to obtain. If MedPro is unable to identify alternative contract manufacturers that are qualified to produce its products, the Company may have to temporarily suspend the production of products, and would be unable to generate revenue from the sale of products. If MedPro does not comply with applicable regulatory requirements in the manufacture and distribution of its products, the Company may incur penalties that may inhibit its ability to commercialize its products and adversely affect its revenue. MedPro s failure or the failure of its potential third-party manufacturers to comply with applicable FDA or other regulatory requirements, including manufacturing, quality control, labeling, safety surveillance, promoting, and reporting may result in criminal prosecution, civil penalties, recall or seizure of its products, total or partial suspension of production, or an injunction, as well as other regulatory action against the Company. Discovery of previously unknown problems with a product, supplier, manufacturer, or facility may result in restrictions on the sale of MedPro s products, including a withdrawal of such products from the market. The occurrence of any of these events would negatively impact MedPro s business, results of operations, and financial condition. Product defects could adversely affect the results of the Company s operations. The design, manufacture, and marketing of medical devices involve certain inherent risks. Manufacturing or design defects, unanticipated use of MedPro s products, or inadequate disclosure of risks relating to the use of the product can lead to injury or other adverse events. These events could lead to recalls or safety alerts relating to the Company s products (either voluntary or required by the FDA or similar government authorities in other countries), and could result, in certain cases, in the removal of a product from the market. Any recall could result in significant costs as well as negative publicity that could reduce demand for MedPro s products. Personal injuries relating to the use of the Company s products can also result in product liability claims being brought against MedPro. In some circumstances, such adverse events could also cause delays in new product approvals. Any of the foregoing circumstances could have a material adverse effect on the Company s financial condition or cash flows. The medical device industry is highly competitive. The medical device industry is subject to rapid technological changes and MedPro faces significant competition across its product lines and in each market in which its products are sold. The Company faces this competition from a wide range of companies. These include large medical device companies, which have greater financial and marketing resources than MedPro. The Company also faces competition from firms that are more specialized than it is with respect to particular markets. Non-medical device companies, including pharmaceutical companies, also offer alternative therapies for disease states that may be delivered without a medical device. In addition, some competitors have established manufacturing sites or have contracted with suppliers located in China and other low-cost manufacturing locations as a means to decrease their costs. New entrants may also appear, particularly in these lowcost countries. The development of new or improved products, processes or technologies by other companies may make MedPro s products or proposed products obsolete or less competitive and may materially adversely affect the Company s earnings, financial condition, or cash flows. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 45

46 Many potential competitors, including those who have greater resources and experience than MedPro does, may develop products or technologies that make the Company s products obsolete or noncompetitive. Many companies are engaged in developing medical safety devices. MedPro s future success may depend on its ability to maintain a competitive position with respect to technological advances. Technological developments by others may result in the Company s products and technologies becoming obsolete. Significant competitors include Baxter International Inc. and Becton, Dickinson and Co. (BD). Most of MedPro s current and potential competitors have substantially greater R&D capabilities and financial, regulatory, manufacturing, marketing, sales, human resources, and experience than the Company. Many of MedPro s competitors have several products that have already been developed, approved, and successfully commercialized, or are in the process of obtaining regulatory approval for their products in the U.S. and internationally. Many of these companies have substantially greater capital resources, R&D resources and experience, manufacturing capabilities, regulatory expertise, sales and marketing resources, and production facilities. The Company s competitors may succeed in developing technologies or products that are more effective, safer, more affordable or more easily commercialized than MedPro s, and its competitors may obtain intellectual property (IP) protection or commercialize products sooner than the Company. Developments by others may render the Company s product candidates or technologies obsolete. MedPro s failure to compete effectively would have a significant adverse effect on its business, financial condition, and results of operations. The Company s operations are subject to government regulation associated with the medical safety device industry, the operation and enforcement of which may restrict MedPro s ability to carry on its business. The development, manufacture, and marketing of products sold by the Company will likely be subject to extensive regulation by various government agencies, including the FDA and the U.S. Federal Trade Commission, as well as various state and local agencies. These agencies regulate production processes, product attributes, packaging, labeling, advertising, storage, and distribution. These agencies establish and enforce standards for safety, purity, and labeling. In addition, other governmental agencies (including OSHA), establish and enforce health and safety standards and regulations in the workplace. MedPro seeks to comply at all times with such laws and regulations. The Company also seeks to obtain and maintain all permits and licenses relating to its operations that are necessary so that its facilities and practices comply with applicable governmental laws and regulations. Nevertheless, there is no guarantee that MedPro will be able to comply with any future laws and regulations. The Company s failure to comply with applicable laws and regulations could subject MedPro to civil remedies including fines, injunctions, recalls, seizures, or potential criminal sanctions. As a result of such regulations, the Company may encounter a variety of difficulties or extensive costs, which could delay or preclude MedPro from marketing its products or continuing or expanding its operations. The Company cannot predict if all necessary approvals will be granted or that if granted, any approval will be received on a timely basis. If MedPro does not obtain required approvals, or if those approvals are delayed, it may also preclude the Company from marketing its products or continuing or expanding its operations. MedPro cannot guarantee that any of its strategic acquisitions, investments, or alliances will be successful. While the Company s strategy to increase revenue growth is driven primarily by development of products based on technology it owns or controls, MedPro will seek to supplement its growth through strategic acquisitions, investments, and alliances. Such transactions are inherently risky. Any number of factors may affect the success of any acquisition, investment, or alliance, including MedPro s ability to properly assess and value the potential business opportunity or to successfully integrate it into its existing business. There can be no assurance that any past or future transaction will be successful or that the transaction will not materially adversely affect MedPro s earnings, financial condition, or cash flows. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 46

47 The Company s operations depend in part on patents and other IP rights. MedPro s business relies on patent, trademark, and other IP rights. While the Company does not believe that the loss of any one patent or other IP asset would materially affect its operations, these IP assets, in the aggregate, are of material importance to MedPro s business. The Company can lose the protection afforded by these IP assets through patent expirations, legal challenges, or government action. Patents attained by competitors, particularly as patents on MedPro s products expire, may also adversely affect its competitive position. The loss of a significant portion of the Company s portfolio of IP assets may have a material adverse effect on its earnings, financial condition, or cash flows. MedPro s ability to compete in the medical device market may decline if the Company does not adequately protect its proprietary technologies. MedPro s success depends in part on its ability to obtain and maintain IP that protects its technologies and products, including rights that the Company has licensed. Patent positions may be highly uncertain and may involve complex legal and factual questions, and MedPro cannot predict the extent to which it may enforce these claims against its competitors. It may be necessary or useful for the Company to participate in opposition proceedings to determine the validity of its competitors patents or to defend the validity of any of MedPro s or its licensor s future patents, which could result in substantial costs and would divert the Company s efforts and attention from other aspects of the business. In addition, patent law outside the U.S. is uncertain and, in many countries, IP laws are undergoing review and revision. The laws of some countries do not protect IP rights to the same extent as domestic laws. Therefore, the degree of future protection for MedPro s proprietary rights is not certain, which could have a significant adverse effect on its business, financial condition, and results of operations. Technologies the Company licenses from others, or in-licensed technologies, are important to its business. The scope of MedPro s rights under its licenses may be subject to dispute by the Company s licensors or third parties. MedPro s rights to use these technologies and to practice the inventions claimed in the licensed patents are subject to its licensors abiding by the terms of those licenses and not terminating them. In particular, the Company has agreed to use commercially reasonable efforts to develop and commercialize some of its significant licensed technology. If MedPro fails to comply with those obligations, the Company may lose some of the rights that enable it to utilize this technology, and its ability to develop products could be seriously hampered. In addition, MedPro may in the future acquire rights to additional technologies by licensing rights from existing licensors or from third parties. Such in-licenses may be costly. Also, the Company generally does not control the patent prosecution, maintenance, or enforcement of in-licensed technologies. Accordingly, MedPro may not be able to exercise the same degree of control over this IP as it could over internally developed technologies. Disputes concerning the infringement or misappropriation of the Company s proprietary rights or the proprietary rights of others could be time-consuming and costly and could delay MedPro s R&D efforts. The Company s commercial success, if any, will be significantly harmed if it infringes the patent rights of third parties or if the Company breaches any license or other agreements that it has entered into with regard to its technology or business. MedPro is not currently a party to any litigation or any potentially adverse proceeding with regard to patent or trademark positions. If MedPro becomes involved in litigation, interference proceedings, oppositions, reexamination, protest, or other potentially adverse IP proceedings as a result of alleged infringement by the Company of the rights of others or as a result of priority of invention disputes with third parties, MedPro might have to spend significant amounts of money, time, and effort defending its position and may not be successful. In addition, any claims relating to the infringement of third-party proprietary rights or proprietary determinations, even if not meritorious, could result in costly litigation, lengthy governmental proceedings, divert management s attention and resources, or require MedPro to enter into royalty or license agreements that are not advantageous to the Company. If MedPro does not have the financial resources to support such litigation or appeals, it may forfeit or lose certain commercial rights. Even if the Company CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 47

48 has the financial resources to continue such litigation or appeals, MedPro may lose. If the Company loses, MedPro may be forced to pay substantial damages; have to obtain costly license rights that may not be available to the Company on acceptable terms, if at all; or may be prohibited from selling products that are found to infringe the patent rights of others. Uncertainties resulting from initiation and continuation of any patent proceeding or related litigation could harm MedPro s ability to compete and could have a significant adverse effect on its business, financial condition, and results of operations. An adverse ruling arising out of any IP dispute could undercut or invalidate the Company s IP position. An adverse ruling could also subject MedPro to significant liability for damages, including possible treble damages, prevent the Company from using technologies or developing products, or require MedPro to negotiate licenses to disputed rights from third parties. Although patent and IP disputes in the technology area are often settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and could include license fees and ongoing royalties. Furthermore, necessary licenses may not be available to MedPro on satisfactory terms, if at all. Failure to obtain a license in such a case could have a significant adverse effect on the Company s business, financial condition, and results of operations. If MedPro acquires products, technologies, or other businesses, it will incur a variety of costs, may have integration difficulties, and may experience numerous other risks that could adversely affect its business. To remain competitive, the Company may decide to acquire additional businesses, products, and technologies. MedPro has limited experience in identifying acquisition targets, successfully acquiring these entities, and integrating them into its current infrastructure. The Company may not be able to successfully integrate any businesses, products, technologies, or personnel that it might acquire in the future without a significant expenditure of operating, financial, and management resources, if at all. In addition, future acquisitions could require significant capital infusions and could involve the following risks: MedPro may have to issue convertible debt or equity securities to complete an acquisition, which would dilute its stockholders and could adversely affect the market price of its Common Stock; an acquisition may adversely affect the Company s results of operations because it may require it to incur large one-time charges to earnings, amortize or write down amounts related to goodwill and other intangible assets, or incur or assume substantial debt or liabilities, or it may cause adverse tax consequences, substantial depreciation, or deferred compensation charges; MedPro may encounter difficulties in assimilating and integrating the business, technologies, products, personnel, or operations of companies that it acquires; certain acquisitions may disrupt the Company s relationship with existing customers, distributers, or suppliers who compete with the acquired business; acquisitions may require significant capital infusions and the acquired businesses, products, or technologies may not generate sufficient revenue to offset acquisition costs; an acquisition may disrupt MedPro s ongoing business, divert resources, increase expenses, and distract management; acquisitions may involve the entry into a geographic or business market in which the Company has little or no prior experience; and key personnel of an acquired company may decide not to work for MedPro. Any of the foregoing risks could have a significant adverse effect on the Company s business, financial condition, and results of operations. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 48

49 To the extent that MedPro enters markets outside of the U.S., the Company will be subject to political, economic, legal, and social risks in those markets, which could adversely affect its business. There are significant regulatory and legal barriers in markets outside the U.S. that MedPro must overcome to the extent it enters or attempts to enter markets in countries other than the U.S. The Company will be subject to the burden of complying with a wide variety of national and local laws, including multiple and possibly overlapping and conflicting laws. MedPro also may experience difficulties adapting to new cultures, business customs, and legal systems. Any sales and operations outside the U.S. would be subject to the following political, economic, and social uncertainties: changes and limits in import and export controls; increases in custom duties and tariffs; changes in currency exchange rates; economic and political instability; changes in government regulations and laws; absence in some jurisdictions of effective laws to protect MedPro s IP rights; and currency transfer and other restrictions and regulations that may limit the Company s ability to sell certain products or repatriate profits to the U.S. Any changes related to these and other factors could adversely affect MedPro s business to the extent it enters markets outside the U.S. The Company may encounter difficulties managing its growth, which could adversely affect its business. MedPro s success will depend in part on the ability of its officers and key employees to continue to improve the Company s operational capabilities and its management information and financial control systems, and to expand, train, and manage its workforce. The Company has conducted an assessment of internal control over financial reporting as of December 31, 2010, as required by Section 404(a) of the Sarbanes-Oxley Act and have included management s assessment report in its most recent Form 10-K filed with the SEC on March 29, Although MedPro has engaged a third party to assist the Company with design, implementation, and testing of its compliance system, if MedPro is unable to successfully implement improvements to its management information and financial control systems in an efficient and timely manner, or if the Company encounters deficiencies in existing systems and controls, its management may not have adequate information to manage its day-to-day operations and MedPro s inability to manage its growth effectively could increase its losses. Future compliance with the Sarbanes- Oxley Act and auditing of MedPro s system of compliance may not be possible without the addition of accounting and compliance personnel. The Company depends on its key personnel, and the loss of their services may adversely affect its business. MedPro is highly dependent upon the efforts of its senior management team. The death or departure of any of the Company s key personnel could have a material adverse effect on its business. In particular, the loss of W. Craig Turner, MedPro s chairman and CEO, could significantly impact MedPro s ability to operate and grow the business and could cause performance to differ materially from projected results. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 49

50 MedPro could face labor shortages, which could slow its growth. The Company s success depends in part upon its ability to attract, motivate, and retain a sufficient number of qualified employees necessary to keep pace with its expansion plans. Qualified individuals of the requisite caliber needed to fill these positions are in short supply in some areas. Any material increases in employee turnover rates could have a material adverse effect on MedPro s business, financial condition, operating results, or cash flows. Additionally, competition for qualified employees could require the Company to pay higher wages to attract sufficient employees, which could result in increased labor costs. The Company may be sued for product liability, which could adversely affect its business. Because MedPro s business strategy involves the development of commercial products and sale of those products by the Company or its distribution partners, MedPro may be sued for product liability. The Company may be held liable if any product it develops and commercializes causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing, sale, or consumer use. In addition, the safety studies MedPro must perform and the regulatory approvals required to commercialize its medical safety products will not protect the Company from any such liability. MedPro carries product liability insurance. Currently, the Company s coverage limits are $2 million per event, and $2 million annual aggregate coverage for products liability. MedPro also intends to seek product liability insurance for any approved products that it may develop or acquire. However, if there are product liability claims against the Company, its insurance may be insufficient to cover the expense of defending against such claims, or may be insufficient to pay or settle such claims. Furthermore, MedPro may be unable to obtain adequate product liability insurance coverage for commercial sales of any of its approved products. If MedPro s insurance coverage is insufficient to protect the Company, its results of operations will suffer. If any product liability claim is made against MedPro, its reputation and future sales will be damaged, even if the Company has adequate insurance coverage. RISKS RELATING TO OWNERSHIP OF MEDPRO S COMMON STOCK MedPro s future operating results may fluctuate and cause the price of its Common Stock to decline. The Company s sales and operating results could fluctuate significantly from quarter to quarter due to various factors, many of which are beyond MedPro s control. The following factors could cause the Company s operating results to fluctuate, among others: MedPro s ability to identify and acquire medical safety device safety technologies with commercialization potential; its ability to successfully develop and bring products to market, including the Company s success in obtaining regulatory approvals, outsourcing production to reputable and capable manufacturers, and entering into profitable distribution arrangements; the Company s ability to generate and successfully increase sales of its products and expand into new markets; marketplace acceptance of MedPro s products and the impact of competition; its ability to obtain additional financing on satisfactory terms; its ability to attract and retain qualified employees; changes in the costs the Company pays; and government regulation associated with the medical safety products industry. If MedPro s sales or operating results fall below the expectations of investors or securities analysts, the price of the Company s Common Stock could significantly decline. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 50

51 The price of MedPro s Common Stock is expected to be volatile and an investment in the Company s Common Stock could decline in value. MedPro expects the market price of its Common Stock to be highly volatile. The following factors, in addition to other risk factors described in this report, and the potentially low volume of trades in the Company s Common Stock, may have a significant impact on the market price of its Common Stock, some of which are beyond MedPro s control: the announcement of new products or services by the Company or its competitors; quarterly variations in MedPro s and its competitors results of operations; changes in earnings estimates or recommendations by securities analysts; developments in the Company s industry; general market conditions; and other factors, including factors unrelated to MedPro s operating performance or the condition or prospects of its industry. Further, the stock market, in general, and securities of small-cap companies, in particular, can experience extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of MedPro s Common Stock, which could cause a decline in the value of its Common Stock. Readers should also be aware that price volatility might be worse if the trading volume of the Company s Common Stock is low. MedPro cannot assure readers that an active trading market for its Common Stock will develop. Since the Company s Common Stock is eligible for trading on the Over-the-Counter Bulletin Board (OTC.BB), MedPro s shareholders may find it difficult to obtain accurate quotations of its Common Stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price. The Company cannot assure investors that an active trading market for its Common Stock will develop. Accordingly, trades may occur infrequently, and holders of MedPro s Common Stock must assume they may have to bear the economic risk of an investment in its Common Stock for an indefinite period of time. The Company s Common Stock may be considered a penny stock and may be difficult to sell. The SEC has adopted regulations that generally define a penny stock to be an equity security that has a market or exercise price of less than $5.00 per share, subject to specific exemptions. MedPro s Common Stock has been trading at a market price below $5.00 per share and therefore may be designated as a penny stock according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser, and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell MedPro s Common Stock and may affect the ability of its stockholders to sell their shares. A significant number of the shares of MedPro s Common Stock have become eligible for sale since January 4, 2009, and the sale of those shares could depress the market price of its Common Stock. The sale of a significant number of shares of MedPro s Common Stock in the public market could harm the market price of the Company s Common Stock. On December 28, 2007, MedPro issued 11,878,685 shares of Common Stock in connection with its reverse merger. On that date, the Company also completed a private placement to accredited investors in which it issued Convertible Preferred Stock and Common Stock Purchase Warrants. In 2008 and 2009, MedPro issued Convertible Preferred Stock upon the exercise of, and in exchange for, outstanding Warrants, which could result in the issuance of CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 51

52 additional shares of Common Stock in the future. The Company also issued Warrants in 2010 to obtain interim financing that was repaid in September As of February 28, 2011, MedPro s outstanding Preferred Stock was convertible into 28,358,575 shares of Common Stock, and its outstanding Stock Purchase Warrants could be exercised for up to an additional 1,734,340 shares of Common Stock. Some or all of the shares of Common Stock issued in connection with the merger or that may be issued (in certain circumstances) upon the conversion of the Preferred Stock or the exercise of the Warrants may be offered from time to time in the open market pursuant to Rule 144 under the Securities Act of As additional shares of MedPro s Common Stock become available for resale in the public market, pursuant to Rule 144, the supply of the Company s Common Stock will increase, which could decrease its market price. In addition, the holders of MedPro s Preferred Stock and Stock Purchase Warrants may offer the shares of Common Stock issuable upon the conversion of the Preferred Stock or the exercise of the Warrants. The Company also completed a registration of 2,402,029 of its shares for resale by MedPro s Preferred Stockholders on August 12, Sales by either of these means may have a depressive effect on the market for the shares of Common Stock. In general, a person who has held shares of Restricted Common Stock for a period of six months and is not an affiliate of the issuer of those securities may sell those shares into the market. An initial 12-month holding period applied to shareholders who received their shares in MedPro s merger. An affiliate who has held restricted shares for the applicable holding period, upon filing of a notification on Form 144 with the SEC, may sell shares of Restricted Common Stock into the market in an amount up to the greater of 1% of the outstanding shares of Common Stock or the average weekly number of shares sold in the last four weeks before such sale. An affiliate may sell this number of shares once each three months. Sales of a substantial number of these shares of MedPro s Common Stock, or the perception that holders of a large number of shares intend to sell their shares, could depress the market price of the Company s Common Stock. In addition, the registration rights of the holders of MedPro s Preferred Stock and Stock Purchase Warrants could make it more difficult for the Company to raise funds through future offerings of its equity securities. MedPro s stockholders may experience additional dilution upon the exercise of Warrants. As of February 28, 2011, Warrants to purchase up to 1,734,340 shares of the Company s Common Stock were issued and outstanding. The exercise of the Warrants could decrease the net tangible book value of MedPro s Common Stock. The Company s stockholders may experience future dilution. MedPro s Articles of Incorporation permit its Board of Directors, without shareholder approval, to authorize shares of Preferred Stock, which may also be issued by the Board of Directors without shareholder approval. The Board of Directors may classify or reclassify any Preferred Stock to set the preferences, rights, and other terms of the classified or reclassified shares, including the issuance of shares of Preferred Stock that have preference rights over the Common Stock with respect to dividends, liquidation, voting, and other matters or shares of Common Stock having special voting rights. The issuance of additional shares of MedPro s Capital Stock could be substantially dilutive to investors shares and may negatively affect the market price of the Company s Common Stock. MedPro does not intend to pay dividends in the foreseeable future. For the foreseeable future, the Company intends to retain any earnings to finance the development of its business, and MedPro does not anticipate paying any cash dividends on its Common Stock. Any future determination to pay dividends will be at the discretion of the Company s Board of Directors and will depend upon then-existing conditions, including MedPro s financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the Company s Board of Directors considers relevant. Accordingly, investors must rely on sales of their Common Stock after price appreciation, which may never occur, as the only way to realize their investment. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 52

53 As a public company, MedPro is subject to extensive corporate governance and disclosure regulations that may result in additional operating expenses. The Company has incurred and expects to continue to incur significant ongoing legal, accounting, and other expenses as a result of becoming a public company in December Corporate governance requirements, requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC have significantly increased MedPro s legal and financial compliance costs and make some administrative functions more time-consuming and costly. Like many smaller public companies, compliance with Section 404 of the Sarbanes-Oxley Act of 2002 has had a significant impact on the Company s operating costs. Section 404 requires the management of public companies to evaluate the effectiveness of internal control over financial reporting. As a smaller reporting company, MedPro currently is exempt from compliance with Section 404(b), which requires that a company s independent auditors also attest to assessment conducted by its management. However, should the Company become an accelerated filer due to growth in its market capitalization, MedPro may not be able to effectively meet all of the requirements of Section 404 as currently known to the Company in the thenmandated timeframe. Any failure to implement effectively new or improved internal controls, or to resolve difficulties encountered in their implementation, could harm MedPro s operating results, cause it to fail to meet reporting obligations, or result in management being required to give a qualified assessment of its internal controls over financial reporting or its independent auditors providing an adverse opinion regarding the Company s internal controls over financial reporting. Any such result could cause investors to lose confidence in MedPro s reported financial information, which could have a material adverse effect on its stock price. The Company also expects these new rules and regulations may make it more difficult and more costly for MedPro to obtain director and officer liability insurance. The Company may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for MedPro to attract and retain qualified individuals to serve on its Board of Directors or as executive officers. The Company cannot predict or estimate the amount of additional costs it may incur or the timing of such costs. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 53

54 Recent Events 04/19/2011 MedPro Safety Products, Inc. and Greiner Bio-One GmbH jointly announced the market release of the VACUETTE Premium Safety Needle System Tube-Touch. The product is initially being sold in the U.S. MedPro expects to obtain European CE Mark clearance during the second quarter The product is being manufactured by Greiner in facilities in Austria. The first production units are available for release to customers. 03/15/2011 MedPro announced the hiring of Mr. Gregory C. Schupp as MedPro s chief operating officer beginning March 23, Mr. Schupp s biography is provided on page /03/2011 MedPro announced several corporate developments, including its receipt of the first royalty revenue from its Tube-Touch blood collection device. As well, the Company reported that it provided the first production samples of its passive safety winged blood collection set for human use to its manufacturing and marketing partner. In addition, MedPro announced plans to move its corporate headquarters in March 2011 to foster product incubation development in a collaborative environment. 10/06/2010 The Company announced that it completed the issuance of a final $5 million tranche of Senior Secured 14% Notes due in 2016 through a private placement with institutional investors managed by Cowen and Company, LLC. MedPro received roughly $4.6 million in net proceeds from the transaction. The terms of the Notes are the same as the Senior Secured Notes sold in the initial $25 million tranche announced September 1, /01/2010 MedPro announced that it completed the issuance of $25 million of Senior Secured 14% Notes due in 2016 through a private placement with institutional investors managed by Cowen and Company. SC Capital Partners, LLC also served as financial advisor to MedPro. The Senior Secured 14% Notes were issued by the Company s newly formed subsidiary, MedPro Investments, LLC. The Company received approximately $18.6 million in net proceeds after the establishment of a $4.5 million interest reserve and payment of offering expenses. MedPro expects to use the net proceeds to finance the development of its safety products and to retire debt. 07/22/2010 MedPro announced that it entered into a new agreement granting Greiner exclusive rights to manufacture, market, and distribute three safety blood collection and infusion products for a six-year term. The agreement superseded MedPro s two prior agreements with Greiner. As well, MedPro transferred the rights to receive all royalties under the new agreement with Greiner to its subsidiary, MedPro Investments. 08/05/2010 MedPro issued a Promissory Note to Vision Opportunity Master Fund, Ltd. (VOMF), a Cayman Island investment fund, evidencing a loan by VOMF to the Company in the original principal amount of $500,000. In consideration of the loan, MedPro granted VOMF Warrants to purchase up to 83,335 shares of Common Stock at an exercise price of $3.00 per share. 06/30/2010 MedPro made a $450,000 draw under its credit agreement with VOMF. Total draws under the credit agreement totaled $1 million, which is the maximum aggregate principal amount available under the credit agreement. Under the terms of the agreement, MedPro issued a Warrant to purchase 75,002 shares of Common Stock at $3.00 per share to VOMF in connection with the draw. 06/04/2010 MedPro made a $300,000 draw under its credit agreement with VOMF. Per the terms of the agreement, MedPro issued a Warrant to purchase 50,001 shares of Common Stock at $3.00 per share to VOMF in connection with the draw. As well, VOMF extended the date on which all principal and interest is due and payable on VOMF s $1,300,000 bridge loan to MedPro to September 30, /11/2010 MedPro entered into a Joint Development Agreement with Belgium-based Helvoet Pharmaceutical N.V. for the technical development and commercialization of MedPro s prefilled safety syringe. Helvoet Pharma is a global manufacturer and supplier of pharmaceutical-grade coated rubber products, packaging components, and injectable drug closures. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 54

55 03/03/2010 MedPro announced that it was scheduled to present at the Cowen and Company 30 th Annual Health Care Conference on March 8, 2010, at the Boston Marriott Copley Place in Boston, Massachusetts. Mr. W. Craig Turner, MedPro s chief executive officer (CEO) and chairman of the Board of Directors, and Mr. Walter W. Weller, the president and a director of the Company, were scheduled to discuss MedPro s leadership role in the emerging healthcare market for passive automatic safety technology. An audio webcast of MedPro s presentation was made available through Cowen s website. 01/19/2010 The Company purchased product development rights for a novel, fully passive Insulin Guard self-injector from Visual Connections, Inc., which is owned by Mr. Hooman Asbaghi. Mr. Asbaghi is the inventor of MedPro s fully passive phlebotomy collection devices, including two versions of a safety blood collection holder, a passive intravenous (IV) catheter, and a safety blood collection set. 01/12/2010 MedPro agreed to acquire product development rights for a novel, fully passive safety IV catheter from a company owned by Mr. Asbaghi and Mr. Don Millerd. The Company has allowed its option to acquire the safety IV catheter to expire. 11/23/2009 The Company reported on its progress, which included five initiatives: (1) executed a Letter of Intent regarding the commercial development of the fourth product in MedPro s current patent portfolio; (2) entered into an exclusive agreement with Advanced MedTech, Inc. (AMT), as described in greater detail under the entry on 09/28/2009; (3) continued development of its Winged Safety Blood Collection Set and deliverance of premarket prototypes to its customer for evaluation; (4) continued final product testing of the Tube-Touch blood collection device; and (5) continued to explore strategies to improve the liquidity and value of MedPro s Common Stock. 09/28/2009 MedPro entered into an exclusive agreement with AMT. AMT is wholly owned by Mr. Asbaghi. Under the agreement s terms, AMT is to provide MedPro with research and development (R&D), market research, product design and development, engineering, and other services as directed by MedPro. MedPro held the first right of refusal to all intellectual property (IP) in which Mr. Asbaghi had an interest and any products he developed. 09/09/2009 The Company announced the completion of preliminary testing and regulatory requirements for the VACUETTE Premium Safety Needle System Tube-Touch model, a single-patient, multiple sample blood collection safety needle system. The VACUETTE product also met U.S. Food and Drug Administration (FDA) and International Organization for Standardization (ISO) requirements; customer and MedPro stipulated testing protocols; and safety and efficacy standards. 06/25/2009 MedPro s Board of Directors authorized the repurchase of up to one million shares of the Company s Common Stock. The shares were expected to be available for repurchase from time to time at MedPro s discretion in open market transactions or privately negotiated transactions, subject to market conditions and other factors, including black-out periods during which the Company and its insiders are prohibited from trading in its Common Stock. 03/30/2009 MedPro announced that its two largest Preferred Stockholders, Vision Opportunity Master Fund, LLC (a New York based private equity firm) and Vision Capital Advantage Fund, agreed to exercise a portion of their Stock Purchase Warrants for cash totaling $3 million and to exchange all of their remaining outstanding Warrants for shares of new Series C Convertible Preferred Stock. Together, the two Vision funds acquired 1,571,523 shares of Series C Stock as a result of the Warrant exercise and exchange. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 55

56 Glossary 510(k)-cleared Device Section 510(k) of the Food, Drug, and Cosmetic Act requires device manufacturers to notify the FDA at least 90 days in advance of an intent to market a medical device. The FDA may then issue a 510(k) marketing clearance, allowing the commercialization of the device, upon making a determination that the device to be introduced into commercial distribution is safe and effective. Acute Care Medical care administered, frequently in a hospital or by nursing professionals, for the treatment of a serious injury or illness or during recovery from surgery. Medical conditions requiring acute care are typically periodic or temporary in nature, rather than chronic. American Nurses Association (ANA) A professional organization representing the interests of over three million registered nurses through its constituent member nurses associations, its organizational affiliates, and its workforce advocacy affiliate, the Center for American Nurses. Ampoules Small bottles that contain a drug, especially a sealed sterile container for injection by needle. Anti-blunting A device that allows the medical professional to fill the syringe, remove an outer needle to reveal a fresh, sharp needle within the outer needle, thus eliminating the requirement to replace the needle on the syringe prior to injecting the patient. Average Daily Census The average number of staffed beds that are occupied each day. The average daily census is calculated by dividing the total inpatient days by 365 days. Bloodborne Pathogens Disease-producing microorganisms spread by contact with blood or other body fluids contaminated with blood from an infected person. Bloodborne Pathogens Standard (BPS) A standard developed, promulgated, and enforced by the Occupational Safety and Health Administration (OSHA) directing employers to protect employees from occupational exposure to blood and other potentially infectious material. Cannula A small flexible tube inserted into a body cavity to drain fluid or introduce medication. CE Mark The regulatory approval system for all medical devices to be sold in the EU. It is used to indicate that a product conforms to the relevant EU health, safety, and environmental quality standards. Federal Needlestick Safety and Prevention Act A modification to OSHA s Bloodborne Pathogens Standard (BPS) to make more specific OSHA s requirement for employers to identify, evaluate, and implement safer medical devices. It also mandated additional requirements for maintaining a sharps injury log and involving non-managerial healthcare workers in evaluating and choosing devices. The Needlestick Safety and Prevention Act was signed into law on November 6, First Right of Refusal A provision in an agreement stating that a specified party must be given an opportunity before any others to either accept or reject an offer. Flushing Ensuring catheter pathways are clear, such as by the positive pressure flushing techniques used in the Interlink system, which offers consistently low levels of negative fluid displacement (catheter reflux). Flushing efficacy can be calculated by measuring removal of red blood cells from injection sites. Fully Passive The model does not require the operator to specifically activate the safety features of the needle but rather they are activated through normal use. Good Manufacturing Practice (GMP) In the U.S., the Quality System Regulation (QSR) overseen by the FDA, which includes requirements related to the methods used in, and the facilities and controls used for, designing, manufacturing, packaging, labeling, storing, installing, and servicing medical devices intended for human use. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 56

57 Hepatitis Inflammation of the liver caused by a virus or a toxin. Human Immunodeficiency Virus (HIV) The virus that causes acquired immune deficiency syndrome (AIDS). It replicates in and kills the helper T-cells. Hypodermic A hollow needle used with a syringe that has been adapted for injection beneath the epidermis. Intravenous Within or by means of a vein. Intravenous (IV) Catheter A small needle with a hollow tube inserted into a vein and used to give medicines or fluids. ISO 13485:2003 Specifies requirements for a quality management system where an organization needs to demonstrate its ability to provide medical devices and related services that consistently meet customer and regulatory requirements applicable to medical devices and related services. Luer Lock A type of connector with a locking mechanism that is used extensively in medical and laboratory applications. Luer Slip Whereas luer lock fittings are securely joined by means of a tabbed hub on the female fitting, which screws into threads in a sleeve on the male fitting, luer slip fittings conform to luer taper dimensions (a standardized system of small-scale fluid fittings used for making leak-free connections between a male-taper fitting and its mating female part on medical and laboratory instruments) and are pressed together and held by friction (they have no threads). Minimum Volume Contracts Contracts designed to require distributors to purchase minimum unit volumes of a product. Needlestick Injuries Penetrating wound caused by mishandling a needle. Needlestick injuries are of the foremost concern to healthcare workers due to their potential to transmit infectious diseases or unwanted medication into a healthy individual. Occupational Safety and Health Act A U.S. federal law that requires employers to provide employees with a workplace that is relatively free of hazardous conditions. Occupational Safety and Health Administration (OSHA) A federal agency under the U.S. Department of Labor responsible for establishing and enforcing safety and health standards in the workplace for most businesses and industries in the U.S. Passive Safety mechanisms that are activated automatically, requiring no action by the user. Percutaneous Administered, removed, or absorbed by way of the skin, as an injection, needle biopsy, or transdermal drug. Phlebotomy The letting of blood for transfusion, diagnosis, or experiment, and especially formerly in the treatment of disease. Prefilled A disposable syringe containing a single, premeasured dose intended for one patient that is sterile and ready for use. Private-label Brand owned not by a manufacturer or producer but by a retailer or supplier that gets its goods made by a contract manufacturer under its own label. Also called private brand. Sharp A general term for a needle or similar pointed object. Vacuum Tube A type of test tube that contains a vacuum that automatically aspirates blood into itself. The tubes are attached to a needle and hub and can be made of glass or plastic. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 57

58 Venous Blood Draws The process of obtaining a sample of blood from a vein. Vials Small containers for holding liquids. A small bottle that contains a drug (especially a sealed sterile container for injection by needle). White Paper A document written in essay style that provides an in-depth analysis of a technology, trend, product, or process. White papers are predominantly informational rather than promotional material. Winged Butterfly A needle with two plastic wings on either side, which are designed to allow the user to grasp the needle very close to the end in order to ensure accuracy. The butterfly needle also has flexible tubing and another needle at the other end (the hub ), which is generally sheathed with some sort of rubber-like material. This needle, unlike the exposed side, is not sharp. After the needle is inserted into the vein, the operator can push vacuum tubes into the hub to draw blood. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 58

59 Intentionally Blank. CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 59

60 Jeffrey J. Kraws and Karen B. Goldfarb Phone: (609) Fax: (609) Web: Legal Notes and Disclosures: This report has been prepared by MedPro Safety Products, Inc. ( MedPro or the Company ) with the assistance of Crystal Research Associates, LLC ( CRA ) based upon information provided by the Company. CRA has not independently verified such information. In addition, CRA has been compensated by the Company in cash of fifty-five thousand U.S. dollars and one hundred seventy-five thousand options/warrants for its services in creating this report, for updates, and for printing costs. Some of the information in this report relates to future events or future business and financial performance. Such statements constitute forward-looking information within the meaning of the Private Securities Litigation Act of Statements that express opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results are based upon the current views of MedPro s management about future events. Words or phrases such as anticipate, believe, estimate, expect, forecast, seek, intend, may be, objective, plan, predict, project, will be, and similar words or phrases, or the negative thereof, are intended to identify such forward-looking statements. These forward-looking statements include all matters that are not historical facts. These forward-looking statements are not guarantees of future performance and are subject to numerous assumptions, risks, and uncertainties. Actual events or results may differ from those discussed due to, among other things, the risks described in MedPro s reports on its 10-K, 10-Q, press releases, and other forms filed from time to time. The content of this report with respect to MedPro has been compiled primarily from information available to the public released by the Company. MedPro is solely responsible for the accuracy of that information. Information as to other companies has been prepared from publicly available information and has not been independently verified by MedPro or CRA. Certain summaries of scientific activities and outcomes have been condensed to aid the reader in gaining a general understanding. For more complete information about MedPro, the reader is directed to the Company s website at This report is published solely for information purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any state. Past performance does not guarantee future performance. Additional information about MedPro and its public filings, as well as copies of this report, can be obtained in either a paper or electronic format by calling (859) CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW PAGE 60