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Biotech / Medical : Isolyser (OREX)- Any comments

OREX 0.223

-34.4%

Apr 3 5:00 PM EST

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To: Kelly R. Conaty who wrote (578)	5/27/1998 4:20:00 PM
From: Eric Hovdesven	Read Replies (2) of 617

I just attended the annual meeting. They had an interesting display of the "old" OREX materials and the "new" OREX materials. The new stuff is far better in breathability, look, feel etc. They stated that disposal costs in the U.S.A. have not gone up and thus at this point they do not see OREX becoming a huge profit maker to hospitals. But sales continue to hospitials, and new hospitals are using the product. But the main focus of the meeting was OREX moving away from being a R&D, manufacturer and packager and seller of products. They are looking to sell or enter into joint agreements on the abbeville and arden plants and to sell White Knight. The president of the company has committed to reducing debt by $25,000,000 this year. He stated that he saw the company as a 40 to 50 million dollar revenue company with profits at year end. They have 6 offers of different degrees for White Knight - closed by the end of 3rd quarter They have a offer on the ARDEN plant which will amount to a joint use of the plant, possible utilization of OREX license by the other plant partner in other technology and a purchase of the charged off inventory (which will be at prices below market but above its present carrying price). By end of this quarter. They have a imminent offer letter on the Abeyville plant - third quarter. They are starting up in Canada and Australia where land disposal costs are higher - they said the U.S. is not as environmentally concerned as these countries and Europe (but Europe is more of a reusable market no great OREX medical potential seen in Europe). They are actively pursuing other uses for OREX technology - clean rooms (OREX does not hold a charge and is lint free) and pipeline remediation And they are constantly adding to the portfolio of patents. They feel secure in their protection of the technology, saying the whole idea of disposing of PVA down the sewer system as well as other aspects is their's and is protected by patent. They have a positive cash flow and with the elimination of the divisions and plants that they have already charged off (he would not commit but it seemed he thought the charge offs were more than enough) and the corresponding reduction in debt, the company will be profitable. Oh and they are close to using a spun lace that the Chinese can now provide at good quality to reduce their cost of OREX by 30% which could be enough to make OREX profitable as a medical material. My belief is that the company is not in danger of bankruptcy and I can only hope that that the new management turns this huge mistake around. I do wonder how the underwriters did not figure that the costs of making OREX.

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