CHICAGO, July 27 /PRNewswire-FirstCall/ -- The Female Health Company (OTC:FHCO) (BULLETIN BOARD: FHCO) today issued a corporate update for its shareholders and members of the investment community, as follows: The first six months of FY2006 produced positive cash flow from operations and a 34% increase in revenues over the corresponding period in the previous fiscal year, reflecting higher shipments of the FC1 Female Condom to global and domestic public sector customers. The Company ended its second quarter with a debt-free balance sheet, shareholders equity of record $3.8 million, and over $1.8 million of cash in the bank. We entered the second half of our fiscal year with a great amount of optimism, for the following reasons: -- FHCO recently announced the first purchase of the FC Female Condom by the Indian Government for use in its HIV/AIDS prevention programs. The number of HIV/AIDS victims in India is the largest of any nation and is growing rapidly. While still less than 1% of its 1 billion plus population, the Government is aggressively developing prevention programs to preclude what occurred in Sub-Saharan Africa where HIV/AIDS victims exceed 20% of the population in some countries. -- FHCO and our partner, Hindustan Latex Limited (HLL), recently announced plans to manufacture our second generation female condom (FC-2) in India. HLL is an Indian Government company (website: http://www.hindlatex.com/ ) with an annual male condom manufacturing capacity of 1 billion units. In addition to sales to the Indian government, HLL is launching the female condom to consumers using the trade-name Confidom (website: http://www.confidom.com/ ) on a city by city basis. It is now available in Bangalore and Chennai, with a series of additional city launches planned and will soon be available on-line. -- We believe FC Female Condom is becoming a mainstream component of HIV/AIDS prevention programs throughout the world. This is highlighted by the recent orders FHCO received from the U.S. Agency for International Development (USAID). USAID orders in response to demand from the countries it services. Based on our contract with USAID we anticipated purchases of 2 million units in calendar 2006. USAID had an option to order up to an additional 6 million units. Subsequent to their evaluation of demand, USAID advised FHCO they would exercise their incremental purchase option, and the final orders totalled 8.5 million units for calendar 2006. -- Finally, our second generation product (FC-2), when produced at high volumes, will result in significantly lower costs. This will permit us to offer lower prices for high volume purchases and more rapidly penetrate the market. We expect to initiate sales of FC-2 in early FY2007. Our long term goal is to achieve 3% of the 6-9 billion unit male condom market. We have just initiated a series of meetings with brokers and analysts throughout the country and believe that as the story of our company gets out our stock price will improve. We are fully committed to improving shareholder value. "Safe Harbor" statement under the Private Securities Litigation Reform Action of 1995: The statements in this release which are not historical fact are forward-looking statements based upon the Company's current plan and strategies, and reflect the Company's current assessment of the risks and uncertainties related to its business, including such things as product demand and market acceptance; the economic and business environment and the impact of government pressures; currency risks; capacity; efficiency and supply constraints; and other risks detailed in the Company's press releases, shareholder communication and Securities and Exchange Commission filings. Actual events affecting the Company and the impact of such events on the Company's operations may vary from those currently anticipated. For more information about the Female Health Company, dial toll-free via fax, 1-800-PRO-INFO and enter company code "FHCO". Also, visit the Company's web site at http://www.femalehealth.com/ and http://www.femalecondom.org/ . If you would like to be added to an e-mail alert list, please send an e-mail to . DATASOURCE: The Female Health Company CONTACT: Investors, William R. Gargiulo, Jr., +1-231-526-1244, or Donna Felch, +1-312-595-9742, or Business-Product, Karen King, +1-312-595-9123, all of The Female Health Company Web site: http://www.femalehealth.com/ http://www.femalecondom.org/ http://www.hindlatex.com/ http://www.confidom.com/

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