There are approximately four million births in the United States annually. Births occurring before 37 weeks of pregnancy are defined as preterm, and in recent years they have occurred on average at a rate of over 1,300 per day, or 480,000 per year. According to the Centers for Disease Control and Prevention, the percentage of preterm births in the United States grew to 12% of all births in 2002, an increase of 29% since 1981. This increase in the preterm birth rate is a growing public health concern. In January 2003, the March of Dimes launched a five-year, $75 million campaign to reduce the number of preterm births.

According to a 1994 publication cited by the March of Dimes, the cost of medical care for a complicated birth ranged between $20,000 and $400,000 from delivery to hospital discharge, while the average cost of a normal birth was $6,400. Infants born preterm often receive specialized care in a neonatal intensive care unit, or NICU, with charges ranging from approximately $800 to $2,700 per day in 1998.

According to the CDC National Center for Health Statistics, approximately 6.1 million women in the United States are affected by some form of infertility. It was estimated that approximately 1.2 million women had an infertility appointment in 1995 in the United States.

According to the American Society of Reproductive Medicine, the average cost of an IVF cycle is $12,400. Receptivity of the uterus to undergo implantation varies by patient, and there are not any current methods by which to evaluate women on this basis. The ability to predict good candidates for IVF procedures would help prevent unnecessary and costly IVF cycles.

The TLiIQ System consists of the TLiIQ instrument and printer. The printer for the TLiIQ System generates a label with the patient test result.

The Fetal Fibronectin Test cassette is a single-use, dry chemistry cassette. All the necessary reagents for one test are contained within the cassette.

A healthcare provider collects a sample of the patient’s vaginal secretions using the Company’s Fetal Fibronectin Specimen Collection Kit. The Fetal Fibronectin Specimen Collection Kit contains a sterile polyester swab and specimen transport tube. The swab is placed into the transport tube, which contains a proprietary buffer solution that extracts and stabilizes the fetal fibronectin sample during transport. The transport tube containing the patient sample is sent to the hospital or clinical laboratory for analysis on the TLiIQ instrument. At the laboratory, the Fetal Fibronectin Test cassette is inserted into the chamber of the TLiIQ instrument, and then the patient sample is dispensed into the sample well to begin the Fetal Fibronectin Test. The TLiIQ instrument produces a positive or negative test result in less than 25 minutes and prints the test result on a label that can be affixed to the patient’s record. The Fetal Fibronectin Test can be easily run with minimal training of laboratory personnel required.

Cost of product sales for the six months ended June 30, 2004 was $3.3 million, an increase of 9.3% from $3.1 million for the six months ended June 30, 2003 as the result of increased unit sales.

Gross profit for the six months ended June 30, 2004 was $12.3 million, an increase of $2.8 million from $9.5 million in the six months ended June 30, 2003.

Selling and marketing expenses for the six months ended June 30, 2004 were $7.5 million, an increase of 27.5% from $5.9 million for the six months ended June 30, 2003.