EPMD EP Medsystems (MM)

EP MedSystems, Inc. (NASDAQ: EPMD), today reported its financial results for the first quarter ending March 31, 2008. The Company achieved quarterly revenue of $4.6 million, representing a 29% increase over the $3.5 million reported for the same period in 2007. The Company�s net loss declined 18% to $1,243,000, or $.04 per share, for the first quarter of 2008, compared to a net loss of $1.5 million, or $.05 per share, in the first quarter of 2007. Cash on hand at March 31, 2008 was $5.1 million, as compared to $5.6 million at December 31, 2007. St. Jude Medical Merger Agreement On April 8, 2008, St. Jude Medical, Inc. and EP MedSystems announced that the Boards of Directors of both companies have unanimously approved a definitive agreement (the �merger Agreement�) whereby St. Jude Medical will acquire all of the issued and outstanding stock of EP MedSystems for $3.00 per share payable in a combination of cash and St. Jude Medical stock, for a total of approximately $92 million. Of the consideration payable to holders of outstanding shares of common stock of the Company, no more than 60% of such consideration will consist of cash and no more than 40% will consist of shares of St. Jude Medical common stock, as determined as set forth in the Merger Agreement. The closing of the transaction is subject to customary conditions, including (i) the approval and adoption by the requisite vote of the holders of the outstanding shares of common stock of the Company, (ii) authorization of the listing of St. Jude Medical common stock for trading on the NYSE, (iii) absence of a Material Adverse Event (as defined in the Merger Agreement) and (iv) certain regulatory approvals. Additionally, consummation of the Merger is also subject to conditions requiring (1) that other parties to certain contracts shall not have terminated or repudiated, or given notice of an intent to terminate or repudiate, any such contract and (2) that the US Food and Drug Administration ("FDA") shall not have restricted the Company's ability to (i) manufacture, market, sell or otherwise distribute any Company products previously approved or cleared by the FDA for marketing and sale or (ii) obtain approval or clearance to market and sell any products which have not yet been approved or cleared for marketing and sale by the FDA. Additional Information St. Jude Medical and the Company will file a registration statement on Form S-4 containing a proxy statement addressed to the Company�s shareholders and a prospectus for the St. Jude Medical stock to be offered in the Merger with the Securities and Exchange Commission (the �SEC�). A definitive proxy statement will be sent to the Company�s shareholders seeking their approval of the Merger. Company stockholders are urged to read the definitive proxy statement regarding the proposed transaction when it becomes available, because it will contain important information. Investors and shareholders may obtain a free copy of the registration statement, when it becomes available, and other documents filed with, or furnished to, the SEC by St. Jude Medical or the Company at the SEC's website at http://www.sec.gov. Copies of the registration statement and other documents filed by St. Jude Medical or the Company with the SEC may also be obtained for free from the Company by directing a written request to EP MedSystems, Inc., 575 Route 73 North, Building D, West Berlin, New Jersey 08091 or from St. Jude Medical by directing a written request to St. Jude Medical, Inc., One Lillehei Plaza, St. Paul, Minnesota 55117. St. Jude Medical, the Company and their respective officers and directors may be deemed to be participants in the solicitation of proxies from Company shareholders with respect to the transactions contemplated by the proposed merger. A description of any interests of the executive officers and directors of the Company in the proposed merger will be set forth in the proxy statement/prospectus. About EP MedSystems: EP MedSystems develops, manufactures and markets a line of products for use in the cardiac rhythm management or electrophysiology (�EP�) market which are used for visualization, diagnosis and treatment of cardiac rhythm disorders. The Company's EP product line includes the EP-WorkMate� computerized electrophysiology workstation and the EP-4� Computerized Cardiac Stimulator, with options to incorporate the MapMate� Navigation Interface, the NurseMate� Remote Review Charting Station, and products linking our systems to hospital IT networks. In addition, our intracardiac echo (ICE) ultrasound catheter system, including our ViewFlex� intracardiac imaging catheters and ViewMate� II ultrasound imaging system, is used for live visualization of devices and anatomy during catheter based procedures in EP and interventional cardiology. For more information, visit our website at www.epmedsystems.com. EP MEDSYSTEMS, INC. SELECTED FINANCIAL DATA (Unaudited) � Three Months March 31, � March 31, 2008 � 2007 � Net sales 4,572,008 3,544,245 Cost of products sold � 1,275,470 � � � 1,156,762 � Gross profit � 3,296,538 � � � 2,387,483 � Operating costs and expenses: Sales and marketing expenses 2,496,969 2,310,059 Research and development expenses 1,063,218 665,449 General and administrative expenses � 970,925 � � � 946,082 � Total operating expenses � 4,531,112 � � � 3,921,590 � � Loss from operations (1,234,574 ) (1,534,107 ) Interest and other income 34,172 89,791 Interest expense � (42,458 ) � � (64,493 ) Net Loss $ (1,242,860 ) � $ (1,508,809 ) � � Basic and diluted loss per share $ (0.04 ) � $ (0.05 ) � Weighted average shares outstanding used to compute basic and diluted loss per share � 30,405,236 � � � 30,365,236 � EP MEDSYSTEMS, INC. SELECTED FINANCIAL DATA (Unaudited) � � March 31, December 31, � 2008 � � 2007 ASSETS Current assets: Cash and cash equivalents $ 5,116,513 $ 5,553,637 Accounts receivable, net 3,991,696 4,368,992 Inventories, net of reserves 2,534,348 2,331,567 Prepaid expenses and other current assets � 489,704 � � � 327,166 � Total current assets 12,132,261 12,581,362 Property, plant and equipment, net 1,520,573 1,581,835 Goodwill 341,730 341,730 Other intangible assets, net 80,829 102,293 Other assets � 112,192 � � � 20,105 � Total assets $ 14,187,585 � � $ 14,627,325 � � LIABILITIES AND SHAREHOLDERS� EQUITY Current liabilities: Secured convertible note, current - 1,998,595 Secured revolving loan 1,200,000 - Secured term loan 1,500,000 - Accounts payable 2,014,727 1,684,733 Accrued expenses 1,613,799 2,026,010 Deferred revenue � 838,607 � � � 814,979 � Total current liabilities 7,167,133 6,524,317 Deferred warranty revenue� non-current � 479,675 � � � 547,034 � Total liabilities $ 7,646,808 � � $ 7,071,351 � � Commitments and contingencies - - Shareholders� equity: Preferred stock - - Common stock 30,406 30,406 Additional paid-in capital 68,594,788 68,391,581 Accumulated other comprehensive loss (434,038 ) (458,494 ) Treasury stock, 50,000 shares at cost (100,000 ) (100,000 ) Accumulated deficit � (61,550,379 ) � � (60,307,519 ) Total shareholders� equity � 6,540,777 � � � 7,555,974 � � � � � � Total liabilities and shareholders� equity $ 14,187,585 � � $ 14,627,325 �