Description of Event or Problem · 1
RPTR REQUESTS THAT CARDIAC SCIENCE CORP ("CSC") LOAN THEM SEVEN NEW AUTOMATED EXTERNAL DEFIBRILLATORS UNTIL SUCH TIME AS CSC IS CAPABLE OF PROVIDING RPTR WITH SOFTWARE TO ALLOW IT TO REPROGRAM ITS EXISTING UNITS. RPTR PURCHASED SEVEN POWERHEART AED G3 UNITS AND ASSOCIATED EQUIPMENT IN 2004. AN AUTOMATED EXTERNAL DEFIBRILLATOR ("AED") IS A VITAL [EMPHASIS ADDED] PIECE OF EQUIPMENT USED IN THE HANDS OF A TRAINED RESPONDER, AND IT IS DESIGNED TO DETECT AND DISCRIMINATE LIFE-THREATENING ARRHYTHMIAS. THESE UNITS ALSO PROVIDE A SHOCK TO THE HEART TO RESTORE RHYTHM IN PEOPLE WHO ARE EXPERIENCING CARDIAC ARREST. AT THE TIME OF PURCHASE, THESE UNITS WERE IN COMPLIANCE WITH AMERICAN HEART ASSOCIATION ("AHA") GUIDELINES. RPTR PURCHASED THESE UNITS WITH THE INTENT THAT THE DEVICES COULD GUIDE A TRAINED PERSON THROUGH THE PROCESS OF PROVIDING EMERGENCY CARE UNDER THE AHA GUIDELINES. IN LATE 2005, THE AHA GUIDELINES WERE SIGNIFICANTLY MODIFIED WHICH REQUIRES A REPROGRAMMING OF EXISTING AEDS TO MEET THOSE NEW GUIDELINES. CSC RECOGNIZED THIS NEED TO REPROGRAM ITS EXISTING UNITS ON 01/10/06 IN A STATEMENT ISSUED ON ITS WEB SITE. SPECIFICALLY, THE WEB SITE STATES THAT ... "[F]UTURE POWERHEART AEDS WILL FULLY INCORPORATE THE NEW GUIDELINES. IN ADDITION, ALL POWERHEART AEDS CURRENTLY IN USE TODAY ARE CAPABLE OF BEING RECONFIGURED TO SUPPORT THE NEW RECOMMENDED ONE-SHOCK DEFIBRILLATION PROTOCOL. SOFTWARE UPDATES TO IMPLEMENT THE NEW GUIDELINES IN CURRENT POWERHEART AEDS WILL BE AVAILABLE DURING 2006." HTTP://WWW.CARDIACSCIENCE.COM/NEWS/NEWS_DETAIL.CFM?ID=340. THIS STATEMENT WAS ISSUED UNDER THE NAME OF MIKE MATYSIK, CSC SR. VICE PRESIDENT AND CFO. ON 03/16/07, CSC STATED IN ITS FORM 10-K FILED WITH THE SECURITY AND EXCHANGE COMMISSION THAT IT..."CURRENTLY MANUFACTURE[S] AEDS WHICH COMPLY WITH THE LATEST CPR AND DEFIBRILLATION PROTOCOLS ESTABLISHED BY THE AHA IN 11/05. IN ADDITION, [IT IS] CURRENTLY PROVIDING SOFTWARE TO CUSTOMERS ALLOWING THEM TO UPGRADE MANY OF THEIR AEDS TO COMPLY WITH THESE GUIDELINES." AS EARLY AS 02/06, RPTR ASKED FOR SOFTWARE TO UPGRADE ITS POWERHEART AED G3 UNITS, BUT TO DATE HIS RECEIVED NO UPGRADES. ON A NUMBER OF OTHER OCCASIONS RPTR ASKED FOR UPGRADES. IN 08/06, CSC STATED THAT IT HOPED TO HAVE NEW SOFTWARE FOR RPTR IN 09/06. AGAIN, IN 10/06, CSC STATED THAT IT EXPECTED UPDATES IN 11/06 FOR RPTR'S UNITS. IN 01/07, RPTR WAS TOLD BY CSC THAT IT EXPECTED UPDATES WOULD BE AVAILABLE FOR RPTR'S DEVICES BY THE END OF 02/07. IN 03/07, RPTR WAS TOLD THAT CSC STILL HAD NOT RELEASED ITS UPGRADES FOR THE UNITS. AND IN 03/07, RPTR HAD ANOTHER COMMUNICATION FROM CSC WHICH STATED THAT THE UPGRADE WOULD NOT BE AVAILABLE FOR ANOTHER TWO MONTHS. IF THE UPGRADE TRULY BECAME AVAILABLE IN 05/07, THIS WOULD BE 18 MONTHS FOLLOWING THE ISSUANCE OF THE AHA REVISED GUIDELINES. RPTR OBVIOUSLY BOUGHT THE AEDS WITH THE INTENT TO RESPOND TO EMERGENCY, LIFE THREATENING SITUATIONS AND TO DO SO UNDER AHA AND NATIONAL SAFETY COUNCIL GUIDELINES. THE OVER-THE-COUNTER SALE OF AEDS WAS PERMITTED IN 2004 BY THE US FOOD AND DRUG ADMINISTRATION ("FDA"). THE FDA BASED ITS DECISION, IN PART, ON DATE THAT WAS SUBMITTED BY PHILLIPS MEDICAL THAT STATED AN AED COULD BE USED WITHOUT MEDICAL SUPERVISION AND THAT VOICE AND VISUAL PROMPTS COULD GUIDE THE USER THROUGH THE PROCESS. FDA TALK PAPER (09/16/04). PHILIPS HAD TO DEMONSTRATE THAT ITS DEVICE COULD SAFELY AND EFFECTIVELY BE USED BY LAY PEOPLE BASED UPON WRITTEN INSTRUCTIONS AND THE DEVICE ITSELF, INCLUDING VOICE AND VISUAL PROMPTS. TODAY, THE VOICE AND VISUAL PROMPTS THAT ARE ISSUED BY RPTR'S DEVICES ARE CURRENT, AND THEREFORE, RPTR DOES NOT HAVE UNITS THAT COMPLY WITH CURRENT AHA GUIDELINES. IF RPTR HAD TO USE A UNIT IN AN EMERGENCY TODAY, THE VICTIM WOULD NOT RECEIVE OPTIMAL CARE. RPTR IS FRUSTRATED WITH CSC'S EMPTY PROMISES FOR THE PAST YEAR THAT IT WILL PROVIDE UPGRADES, AND EXPECTS THAT YOU WILL BECOME PERSONALLY INVOLVED TO HELP SUPPLY RPTR WITH UPGRADES. IN THE INTERIM, RPTR EXPECTS THAT CSC WILL PROMPTLY LOAN SEVEN UNITS FREE OF CHARGE. THESE BORROWED DEVICES WILL BE RETURNED TO CSC ONCE RPTR RECEIVES THE SOFTWARE UPGRADE. RPTR WILL FACTOR RESPONSE INTO WHETHER IT CHOOSES TO PURCHASE FUTURE UNITS FROM CSC OR ONE OF ITS COMPETITORS. IN ADDITION, RPTR IS FORWARDING A COPY OF THIS LETTER TO THE SEC SO THAT IT IS AWARE OF THE GROWING PRODUCT DISSATISFACTION. THE SEC MAY ALSO DETERMINE WHETHER THE STATEMENTS MADE IN CSC'S FORM 10-K SUBMITTAL ARE TRUTHFUL. ANOTHER COPY IS BEING FORWARDED TO THE FDA TO INDICATE THAT CSC IS NOT AGGRESSIVELY SUPPORTING ITS MEDICAL DEVICES IN THE FIELD IN A TIMELY MANNER.