Star Scientific Files Second-Quarter Financials for 2013
GLEN ALLEN, Va., Aug. 9, 2013 /PRNewswire/ -- Star Scientific, Inc., (NASDAQ: STSI) today filed with the Securities and Exchange Commission its Form 10-Q for the quarter ended June 30, 2013.
The Company reported net sales totaling $2.5 million for the three months ending June 30, 2013, compared with net sales of $1.4 million for the same period in 2012. The increase of 74% was attributable exclusively to increased Anatabloc® sales volume. Net sales for the six months ending June 30, 2013, totaled $5.0 million, a 100% increase compared with $2.5 million for the same period in 2012. During the second quarter 2013, the Company began to further align its marketing and distribution efforts with GNC as its primary strategic partner for growth. The Company believes that as a result of this shift in advertising and marketing expenditures to focus on sales at GNC stores, the Company's internet sales, which have higher margins, decreased, while sales at GNC increased by approximately 20%. The Company further believes that this strategic shift should result in lower customer acquisition cost and overall increased net sales due to higher sales volume.
Gross profits totaled $1.0 million for the three months ending June 30, 2013, compared with gross profits of $0.7 million for the same period in 2012. The improved gross profit is attributable exclusively to increased Anatabloc® sales volume. Gross profits totaled $2.1 million for the six months ending June 30, 2013, compared with gross profits of $1.2 million for the same period in 2012. The Company has reported positive gross profits for the past six quarters. The net loss for the second quarter of 2013 was ($8.7) million compared with a net loss of ($8.0) million for the same period in 2012. The net loss for the six months ending June 30, 2013, totaled ($16.9) million compared with a net loss of ($13.2) million for the same period in 2012. The increase in net loss was attributable primarily to increased legal costs relating to the previously reported government investigation and the Company's internal investigation, as well as increased sales and marketing expenses.
As reflected in the 10-Q report, the Company has been cooperating fully with the government investigation being conducted by the United States Attorney's Office for the Eastern District of Virginia. Based on the results of the Company's internal investigation, the cooperation with the United States Attorney's Office, and discussions and communications between the Company's outside counsel and the United States Attorney's Office, the Company does not believe that it will be prosecuted for any of the matters that the United States Attorney's Office has been investigating. Also, the Company's internal investigation conducted by the international law firm of Chadbourne & Parke LLP was substantially completed as of late June. Based on those developments, costs relating to the investigations are expected to be significantly lower on a going forward basis. Following the close of the second quarter, the Company completed transactions relating to previously issued warrants, which resulted in the exercise of the warrants and gross proceeds to the Company of approximately $4 million.
Certain statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of our company's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including, but not limited to, results of clinical trials and/or other studies, the challenges inherent in new product development initiatives, including the continued development and market acceptance of our nutraceutical dietary supplements products, the effect of any competitive products, our ability to license and protect our intellectual property, our ability to raise additional capital in the future that is necessary to maintain our business, changes in government policy and/or regulation, potential litigation by or against us, any governmental review of our products or practices and the outcome of the ongoing investigations as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our annual report on Form 10-K for the fiscal year ended December 31, 2012 and our quarterly report on Form 10-Q for the quarter ended March 31, 2013. We undertake no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.
About Star Scientific
Star Scientific, Inc. is a technology-oriented company with a mission to promote maintenance of a healthy metabolism and lifestyle. Through its wholly owned subsidiary, Rock Creek Pharmaceuticals, Star Scientific has been engaged in the manufacturing, sale, and marketing of two nutraceutical dietary supplements, a cosmetic facial cream and facial serum, as well as the development of other nutraceuticals and pharmaceuticals. The company also continues to pursue the licensing of the technology behind its proprietary StarCured® curing process and its related products. Rock Creek Pharmaceuticals has scientific and research offices in Gloucester, MA, and a regulatory office in Washington, DC. Star Scientific has a Corporate and Sales Office in Glen Allen, VA, and an Executive, Scientific & Regulatory Affairs office in Washington, DC.
Talhia T. Tuck
Vice President, Communications and Investor Relations
Star Scientific, Inc.
SOURCE Star Scientific, Inc.