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STICKER FOR ULTRAFEM PROSPECTUS
On September 13, 1996, the Company filed a Registration Statement with
respect to the offering by the Company of 3,000,000 shares (3,450,000 shares if
the over-allotment is exercised in full) of Common Stock. At June 30, 1996, the
Company had an accumulated deficit of approximately $21 million and working
capital of approximately $17.9 million. During its fiscal year ended June 30,
1996, the Company spent approximately $2.5 million in connection with the launch
of INSTEAD-TM-, approximately $1.5 million of which was spent in the last
quarter of fiscal year 1996. The Company anticipates that INSTEAD-TM- will be
available for sale by retailers in the Pacific Northwest in the Fall of 1996,
including the major markets of San Francisco, Seattle, and Portland. In order to
achieve this timetable, the Company began shipment of INSTEAD-TM- in August
1996. Subsequent to the IPO in February 1996, the Company entered into a lease
for manufacturing and office space in Missoula, Montana and remodeled the
manufacturing space principally to create the controlled environment module that
secures the manufacturing equipment. The special thermoforming line which
produces INSTEAD-TM- completed high volume testing and, in June 1996, commenced
manufacturing commercial quantities of INSTEAD-TM- for the Fall 1996 launch. The
Company placed an order for a second semi-automated line scheduled to be
installed in the Fall of 1996 and an order for a fully automated line scheduled
to be installed in the Spring of 1997. There can be no assurance, however, that
any of the foregoing goals or timetables can be met. Subsequent to the IPO, the
Company identified its target geography for the initial launch of INSTEAD-TM-,
established a broker network, and established certain key trade accounts. The
initial indications from the early stages of the launch reflect higher costs
related to trade, distribution and marketing spending levels than previously
anticipated. The Company believes that this is due to the response to the launch
of INSTEAD-TM- by companies with competitive products. There can be no assurance
that the Company's competitors will not significantly increase their spending on
promotional activities as a reaction to the introduction of INSTEAD-TM-.
