PacificHealth is in deep water
worsen in Q2 2005 and payment terms are stretched to allow it to
continue operating.
The New Jersey-based company, which develops and commercializes sports nutrition and weight loss products and products for sufferers of type-2 diabetes, reported a net loss of $407,350 for the quarter ended June 30 2005, compared to $290,115 for the same period of 2004.
Sales revenues slipped from $2.2 million last year to $2.02 million.
The latest results come on the back of a run of bad luck, including a 'challenging' full year 2004 in which operating loss was $1 million more than in 2003. In March of this year, retailer GNC informed the company that it was discontinuing PacificHealth's NTS strength training product line, leading the latter to write off its own inventory of $679,000 in the full year results and patents in the amount of $137,138.
At the end of January, the company received $1 million equity investment from Hormel Health Labs in the form of preferred convertible stock. The company was upbeat about this investment, saying it signals the start of a strategic relationship that has the potential to create value for shareholders.
But while Hormel boosted the cash in the ailing company's coffers to $292,476 at the close of Q2 compared to $25,832 at the same point in 2004, current liabilities still exceeded current assets by around $57,000.
The management is actively seeking additional financing, but in its SEC filing it said that if none is forthcoming PacificHealth will only be able to continue operating for between 30 and 60 days from 15 August 2005.
The uncertainty over the future has not cropped up for the first time with this set of results. The full year 2004 results were met with expressions of doubt from the auditors that PacificHealth will be able to effect a turnaround and continue as a going concern.
In Q2 it trimmed back its operating expenses to $1.07 million, compared to $1.31 million for the prior year period. The negotiation of extended payment terms from its vendors, and consequent increase in its accounts payable, have allowed it to continue operating.
This is no long-term solution, but it seems the hope is that it will allow PacificHealth to keep its head above water until a helping hand is offered.
