Sales a tough swallow

Sales a tough swallow

manufacturing by Mark Gordon | Managing Editor

HQ Inc. makes a high 'wow' quotient product, carries a starry client list and boasts top-notch testimonials. What it doesn't have - yet - is soaring revenues.

Not many client lists are as eclectic and celebrity-laden as the one at HQ Inc., a Palmetto-based manufacturer of a pill and electronic data-recorder that monitors internal body temperature.

Over the last 15 years, the pill has been inside those young and old, from every freshman football player at the University of Florida, to U.S. Sen. John Glenn when he rode the space shuttle at 77 years old in 2000.

It goes from hot to cold, from firefighters to swimmers off the coast of Antarctica.

And it's been ingested by the calm, such as those partaking in sleep-studies, as well as full-motion athletes, including dozens of pro football players, marathon runners and Olympians.

The pills and monitoring devices have gone across the world, too, traveling to Israel, Brazil and Scotland, as well as the Bering Strait and the top of Mt. McKinley.

The product has even been in places other than humans, making up another unusual list. That one includes racecar engines, cows, sea lions, dolphins and paper mill machinery.

Still, despite owning a high 'wow' factor product and being manufactured and sold since 1990, HQ Inc.'s pill and its patented and copyrighted CorTemp Wireless Monitoring System lacks one important distinction: Wow-like sales.

"It's still somewhat of a mystery product," says Susan Smith, sales and marketing manager. "There's a lot of mystique to it."

Another problem is something more familiar to many small business owners and entrepreneurs: Lack of understanding in what the product is about. Says HQ president Bill Hicks: "It has taken years and years for people to understand it."

Smith and Hicks have been leading the HQ effort to eliminate the mystique and create more understanding of CorTemp. Sales were stagnant for much of the first decade or so the product was around, but the past two years, revenues have grown about 10% to 15%, says Hicks, as the company concentrates on marketing more heavily to sports teams.

The company declined to release specific revenue numbers, although Smith says in each of the past two years, the company has doubled the number of pills it's sold, at $30 a pop, to about 7,000 in 2006, giving it about $210,000 in annual pills sales. The data recording machines cost about $2,200 each; Smith didn't say how many machines the company sells a year.

The pill and corresponding data machine are the only products HQ makes and sells.

'Research-based credibility'

A great cool quotient not translating to high sales isn't a problem unique to HQ Inc. Hundreds of startups, especially those in technology and science fields, regularly face similar problems. But one factor separating HQ's product from many others is both its longevity and its industry appreciation.

Testimonials have trickled in from doctors, trainers, college and pro coaches and others, all pointing to how essential the product is in protecting athletes from heat-induced health problems. One product endorsement, for example, came late last year from University of South Florida football coach Jim Leavitt, who says the news of other school's players dying from heat-exhaustion have hit him and his staff pretty hard. "If this can help save lives," Leavitt asks, "why in the world wouldn't you do it?"

USF is currently an HQ Inc. customer, as is the University of Texas and the University of Connecticut.

Testimonials like those and others from scientists who conduct studies with the product are heavenly manna for Smith, who says, "research-based credibility is the best validation of the product."

Scientists and researchers at a Johns Hopkins University physics lab initially conceived CorTemp in the mid-1980s to study astronauts in hypothermic conditions in space. About the size of a thumbnail, the pill is coated with silicone and contains a telemetry system, a 1.5-volt micro battery and a quartz crystal temperature gauge.

Once the FDA-approved pill is inside the gastrointestinal tract, a sensor vibrates relative to the temperature of the surrounding body tissue. That sensor then sends a harmless signal through the body to the data box, officially called the CorTemp Ambulatory Data Recorder. Pills stay effective in a person's system for 24 to 36 hours, changing based on the subject's height, weight and other physiological factors.

An athletic trainer or a research scientist holds the recorder, the size of pocket calculator, up to the subject's mid-section and can get a temperature within a few seconds.

To monitor an entire team, a trainer can program in each player's uniform number into the recorder.

After getting the temperatures of the athletes or research subjects, the data can then be downloaded into Excel spreadsheets or other charts.

In addition to monitoring athletes, CorTemp has several other clinical research uses, says Smith. It can monitor patients recovering from surgery, observe the level of fever during serious illnesses and measure temperature changes in the female reproductive cycle.

Recruiting Jeff Gordon

Those clinical research uses are double-edged, though, says Hicks, the HQ Inc. president, as many times those end up being a special one-time project. In those cases, HQ might get a product endorsement, but it doesn't acquire a repeat customer.

Another problem that has stalled sales over the years: Investors in the original version of the company, called Human Technologies, focused their time and money on a different product. The company was formed in St. Petersburg in 1986, and back then it sold systems that would give an electronic shock to autistic children, in a form of then-medically accepted negative reinforcement therapy.

Within about 10 years, though, products like that became both medically unacceptable as well as illegal in many states, including Florida. So by the late '90s, the company's focus turned to CorTemp; it bought the patent for the product in 1990.

In 2001, Ed Goggin, the owner of Palmetto-based cell phone tower equipment manufacturer Quest Controls, bought HQ Inc. Goggin moved the company from St. Petersburg to Palmetto, next door to Quest, and now the two companies share purchasing, shipping, finance and sometimes manufacturing employees.

In the next few years, Smith and Hicks say they hope to continue picking up more college and sports teams as clients, as well as pick up customers in some newer markets, such as firefighters and high school sports teams.

What's more, the star-studded client list continues to grow: Earlier this month, a representative for racecar driver Jeff Gordon called and said the champion driver is interested in testing the pill.

REVIEW SUMMARY

Company: HQ Inc., Palmetto

Business: Manufacturers, markets and sells CorTemp, an internal body temperature-reading pill and device.

Key: Company is seeking a revenue increase by heavily marketing to college and professional sports teams.