Star Scientific Files Third Quarter Financial Report

Source from:  Business Wire - 11.08.07, 9:34 AM ET  11/12/2007

Star Scientific, Inc. (NASDAQ:STSI) filed its financial report on third quarter 2007 today with the Securities and Exchange Commission. The company reported a consolidated after-tax net loss for the third quarter of approximately $5.0 million, compared with a net loss of $3.6 million for the same prior-year period. The company ceased manufacturing and distributing discount cigarettes in June 2007, which drove the third-quarter loss from discontinued operations of approximately $0.5 million, compared to net income of $0.6 million for third quarter 2006. The net loss for the period from continuing operations was approximately $4.5 million compared with a net loss of $4.2 million for third quarter 2006. The company had gross sales from continuing operations of $140,800 for the quarter, a 7% increase over sales for the prior-year period, primarily as a result of increased sales volume. Net sales for the quarter totaled $51,600, a decrease of $64,800, or 55.6% from third quarter 2006. The net sales total for the quarter reflects sales incentives and related discounts. Star pursued a variety of initiatives during the third quarter aimed at continued expansion of the distribution of Ariva(R) and Stonewall dissolvable smokeless tobacco products. Those efforts included a test market in the Kroger grocery store chain and expansion of Ariva(R) distribution through the Walgreen's chain. The company also expects to begin distribution of an Ariva(R) Java blend during the fourth quarter. The results of third-quarter marketing efforts appear to confirm the company's view that Ariva(R) is the first smokeless tobacco product that is an acceptable alternative to cigarettes for female smokers, who make up approximately 50% of the U.S. smoking population. Stonewall dissolvable smokeless tobacco, which was developed for adults who use traditional moist snuff, is now available in three blends: Wintergreen, Natural and Java. The company had gross sales from continuing operations of $529,800 for the nine months ended September 30, 2007, a 63.1% increase compared to the prior year period, due largely to increased sales volumes. Net sales for the nine months ended September 30, 2007 totaled $398,900, an increase of $124,500, or 45.4%, compared with the same period in 2006. For the nine months ended September 2007 the company reported an after-tax net loss from continuing operations of $34.0 million compared to an after-tax net loss for the same period a year ago of $10.7 million. The current year continuing operations after-tax net loss includes two one-time transactions, the loss on the sale of the MSA funds of approximately $27.0 and the gain on the sale of tobacco curing barns of approximately $5.3 million. When discontinued operations are included, the net loss for the first nine months of 2007 was approximately $34.4 million, compared with a $9.1 million loss for the prior year period. The company noted in an earlier release that, as part of the patent infringement lawsuit, Star filed its opening brief with the US Court of Appeals for the Federal Circuit on September 10. RJR's opposition brief is due by November 20, and Star's reply to that brief is due on or before December 21. When briefing has been completed the Federal Circuit will assign a date for oral argument on Star's appeal. Enditem