Sharps Compliance Corp. Announces 20% Growth in Customer Billings for Second Quarter of Fiscal...(emandof the Sharps Disposal by Mail Syst...),Health

Retail billings, which were up 15% year to date, reflect the use of the Sharps Disposal By Mail Systems(R) by an increasing number of retail health clinics and the use of our products to facilitate the proper disposal of syringes used to administer flu shots by national drug and grocery store chains. When including a $162 thousand billing to a major distributor of flu vaccine in June of 2007, retail billings were up 33% for the period.

Customer billings include all invoiced amounts associated with products shipped during the period reported. A significant portion of customer billings are deferred to future reporting periods and recognized as GAAP revenue when the Sharps Disposal By Mail Systems(R) products are returned to the Company's treatment facility for processing and destruction. Revenue represents customer billings adjusted to reflect the deferral of a portion of current period billings and recognition of certain revenue associated with product returned for treatment and destruction. The difference between customer billings and revenue is reflected in the Company's balance sheet as deferred revenue.

Operating Performance

For the three-month period ended December 31, 2007, gross margin was 42.8%, consistent with the same period of the prior fiscal year and slightly up sequentially from gross margin of 42.3% in the first quarter of fiscal 2008. Gross margin is expected to remain in the low to mid-40% range for the remainder of fiscal 2008.

Selling, general and administrative (SG&A) expenses were $1.2 million, or 31.6% of sales, in the second quarter of fiscal 2008 compared with $924 thousand, or 29.0% of sales, in the same period the prior year and $1.2 million, or 34.1% of sales, in the first quarter of fiscal 2008. The increase in SG&A expense over the prior year period was a result of increased sales and marketing expenses, facilities
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