Skyline Medical (SKLN) Surges After Announcing Plans to Form JV with EOR
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Skyline Medical surged Tuesday, gaining over 100%. Earlier it announced the signing of a letter of intent to form a joint venture with Electronic On-Ramp.
Skyline Medical Inc. (NASDAQ: SKLN), developer of the innovative STREAMWAY® waste fluid disposal system for medical applications, announces the signing of a letter of intent to form a joint venture with Electronic On-Ramp, Inc. (EOR), a Native American Indian, (8a) certified Small Disadvantaged Business owned by a Service Disabled Veteran. EOR's Partner contracts with the U.S. National Institutes of Health (NIH) and Department of Defense are expected to provide Skyline Medical with access to bid on procurement contracts for up to $550 million or more in federal funds budgeted for health, security, life safety systems support, humanitarian assistance and disaster preparedness.
The joint venture is subject to definitive agreements. Also, the joint venture cannot proceed unless the Company receives FOR votes representing a majority of Skyline Medical common shares outstanding on the first two proxy items for the Special Meeting of Stockholders to be held September 15, 2016. Those items include proposals to 1) increase the number of authorized shares of common stock to 200,000,000 from 100,000,000, and 2) effect a reverse stock split of its common stock at a ratio of between one-for-two and one-for-25 and a proportionate decrease in the number of authorized shares of common stock.
The two companies are establishing the joint venture to be in operation by the end of the year. The joint venture, expected to be 51% owned by EOR, will bid to supply medical products for mobile operating rooms, among other activities. Skyline intends to assist the venture in selling the STREAMWAY System and in sourcing other medical products to fulfill bids to the U.S. government, with the venture’s control structured to maintain its standing as a qualified government contractor.
“We are very excited to enter into this new joint venture with EOR as it provides access to significant federal, state and local funds some 18 months ahead of Skyline’s previous plan, and advances our strategy to increase our operating room footprint,” said Dr. Carl Schwartz, Interim Chief Executive Officer of Skyline Medical. “EOR has pre-negotiated contractual terms with the General Services Administration (GSA) for two contracts that afford Skyline immediate entrée to two schedules that provide access to highly efficient sales tools, entering a market for contractor awards of more than $15.8 billion in contracts last year alone.”
Dr. Schwartz added, “In addition to the joint venture bringing immediate access to existing contract vehicles, EOR and Skyline will work together to add contract vehicles specifically targeting environmental services and medical devices, a market with awards of $6 billion last year. These joint efforts will culminate in access to the market for $33 billion that federal, state and local government buyers spent through GSA schedule contracts in the fiscal year ended September 30, 2015.”
The two primary contracts EOR will utilize to promote sales of Skyline medical devices, services and other technical solutions include the $14.5 billion GSA Information Technology Schedule 70 contract, the largest GSA contract offered. The second contract EOR provides is the Security and Life Safety Schedule 84, which received more than $1.3 billion in contracts during fiscal year 2015.
Commenting on the joint venture, William Pullen, President of Electronic On-Ramp, said, “The STREAMWAY System will be the anchor product in our new venture, and utilizing our deep expertise working as a government contractor we foresee exciting opportunity. We look forward to tapping into Skyline’s medical device expertise to become a powerhouse supplier to the U.S. government not only of STREAMWAY, which is clearly needed in mobile operating rooms to mitigate exposure to contaminated body fluid waste, but also to identify and source additional medtech product opportunities.”
To date, EOR has been awarded two contracts including one with the NIH to provide government-wide health-related security, technology and information support, and one with the U.S. Southern and Northern Commands to provide operating room and medical equipment for the government for disaster relief efforts for North America and South America.
In addition to direct opportunities via the EOR joint venture, Skyline will bid jointly with the venture or separately where its distribution agreement with MUNRO Enterprises, an Economically-Disadvantaged, Woman-Owned Small Business, is helpful in qualifying for projects. Skyline anticipates a more robust relationship with EOR in the future, including exploration of further strategic partnerships and other relationships between the companies.
Conference Call and Webcast
Skyline Medical management will host a conference call beginning at 12:00 p.m. Eastern time on September 8, 2016 to discuss this announcement and answer questions. To access the call, dial (844) 751-1093 from within the U.S. or (574) 990-2954 from outside the U.S. All listeners should provide passcode 73407900. Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Company's website at www.skylinemedical.com.
Following the conclusion of the conference call, a telephone replay will be available through 11:59 p.m. Eastern time September 14, 2016 and can be accessed by dialing (855) 859-2056 from within the U.S. or (404) 537-3406 from outside the U.S. All listeners should provide passcode 73407900. The webcast will be available for 30 days.
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