As the name implies, PDPR is in the artificial limb business, with a focus on the needs of the infant-pediatrics segment of the amputation market.

From a profitability standpoint, the significance of PDPR focusing on children and infants is that these young patients, unlike adults, require re-fits at least on an annual basis until about age 15 – effectively an annuity.

The company is also on the forefront of myoelectric upper extremity prosthetics. The artificial limb in myoelectric cases contains tiny but powerful electric motors and the moving parts necessary to grasp and open upon command. Delicate myoelectric sensors, which do not require surgical implantation, detect actual nerve impulses, magnify them greatly, and produce a signal that then activates the electric motors that cause motion.

These myoelectric hands are now being designed and produced to look extremely life like and non-threatening and to be safe. Recent success in the use of myoelectric hands, not to mention ongoing design improvements, has many industry observers predicting that myoelectric prosthetics technology will soon be applied to artificial lower extremities, an opportunity PDPR is already actively exploring.

Since PDPR shares were initially issued late last year, the company has completed significant leasehold improvements at its new 6500 square foot center near Houston’s Willowbrook Mall, which opened in January and is only about 10 miles from Bruce Airfield.
The Industry

It is the consensus of most prosthetic organizations that in 2004 the prosthetics industry will see revenues in excess of $ 2 billion. It is also estimated that as many as 150,000 amputations will be performed in 2004 and that at present domestically licensed prosthetists number fewer than 6,000.

Of this $ 2 billion in industry revenues, cases involving children and infants 14 years old and under will account for about 5%, or $ 100 million. And approximately 1,000 infants will be born in 2004 with missing limbs.

While these industry numbers are quite sizable, they are actually miniscule compared to the nation’s overall healthcare costs. And this is precisely why the prosthetics industry is so often referred to as being “fragmented.” Specifically, because the amputations and birth defects that necessitate prosthetics are quite rare in a local sense, true prosthetic specialists, particularly those specializing in pediatrics; seem to be few and far between and concentrated in densely-populated areas.

This fragmented state of the industry is precisely the void that PDPR hopes to fill by establishing a coast-to-coast prosthetics network that focuses on infants and children under 14 years old. PDPR has already made much progress in the way of establishing such a network, setting up the required insurance relationships, and training the personnel necessary to service this network; and as today’s press release confirms, the company is way ahead of schedule.---
Conclusion

In light of the impressive progress cited above, not to mention the prevailing supply-demand imbalance within the infant & pediatric sectors of the prosthetics industry that were also addressed above, Sparky thinks PDPR is likely to become profitable in its first full year of operations – which is truly a rarity in pink sheet circles.

According to Ken Bean, about 85 million of PDPR’s 100 million authorized shares are outstanding, of which about 48 million are held by insiders. Bean estimates that the current trading float is around 22 million shares

For these reasons, Sparky thinks that PDPR’s shares, currently trading around a dime, are presently very undervalued and that they represent an excellent addition to any growth-oriented portfolio.

Sincerely,