PHLI PacificHealth Laboratories Inc (CE)

PacificHealth Laboratories, Inc. (OTCBB: PHLI), a leading nutrition company, today reported financial results for the three months and year ended December 31, 2009.

Year Ended December 31 Financial Results

For the year ended December 31, 2009, revenues increased 10% to $7,995,194 compared to $7,235,991 for the same period in 2008. The Company recorded a net loss of $1,676,124, or $0.11 per share, for the year 2009 compared to a net loss of $1,994,353, or $0.15 per share, for the same period in 2008. In the fourth quarter of 2009, the Company made the decision to forgo marketing its FORZE GPS™ weight management product line as the Company was unable to generate enough sales in 2009 to make this product line viable in the foreseeable future. As a result, the Company recorded $81,050 in non-cash restructuring charges consisting of writing off property and equipment specific to the marketing efforts of FORZE GPS and also recorded a $491,172 reserve for inventory as the value of this inventory may never be realized. As a result of a change in estimate relating to revenue recognition in connection with sales to a major customer, in 2009 the Company recognized revenues of approximately $279,000 and reduced inventory by approximately $129,000 that was previously recorded as deferred revenue and inventory, respectively. In the third quarter of 2008, the Company restructured its operations to better support its base sports performance business. As part of this restructuring, a number of positions within the Company were eliminated and certain market sectors were exited. As a result, the Company recorded $472,069 in non-cash restructuring charges and reserved $84,669 of SATIATRIM® finished goods as obsolete in the third quarter of 2008. In the fourth quarter of 2008, the Company also wrote off an additional $117,028 of finished goods and raw materials as obsolete.

Fred Duffner, President of PacificHealth said, “PHLI focused on two key areas in 2009. First, we focused on our core businesses with an emphasis on the sports specialty channel to drive new users of our Endurance products. This resulted in improving revenue by 10% during a challenging economic year with fourth quarter growth of 24%. We believe this will provide the foundation to continue to expand our consumer base and support future growth for the company. Second was the launch of innovation under the Forze GPS brand. We realized that PHLI could not support the continued cost of entry into this highly competitive market at this time and will therefore adjust our marketing investment for 2010.”

Three-Month Financial Results

Revenues in the fourth quarter of 2009 increased 24% to $1,198,230 compared to $969,991 for the same period in 2008. The Company recorded a net loss of $1,109,486, or $0.07 per share, compared to a net loss of $726,371, or $0.05 per share, for the same period in 2008. As noted above, in the fourth quarter of 2009, the Company recorded a restructuring charge of $81,050 and recorded a $491,172 reserve for inventory. In the fourth quarter of 2008, the Company also wrote off $117,028 of finished goods and raw materials as obsolete.

About the Company:

PacificHealth Laboratories, Inc. (OTCBB: PHLI) is a leading sports nutrition company that focuses on marketing, developing and selling premium nutrition tools for exercisers and athletes seeking to improve their health and performance. We are highly active in the endurance sports arena. Our brands and patents are typically protein-based and extend to cover areas such as appetite regulation. PHLI’s principle areas of focus are sports performance and recovery, including optimal weight management. To learn more, visit www.pacifichealthlabs.com.

Notice: This news release and oral statements made from time to time by Company representatives concerning the same subject matter may contain so-called "forward-looking statements". These statements can be identified by introductory words such as "expects", "plans", "will", "estimates", "forecasts", "projects" or words of similar meaning and by the fact they do not relate strictly to historical or current facts. Forward-looking statements frequently are used in discussing new products and their potential. Many factors may cause actual results to differ from forward-looking statements, including inaccurate assumptions and a broad variety of risks and uncertainties, some of which are known, such general economic conditions, consumer product acceptance and competitive products, and others of which are not. No forward-looking statements are a guarantee of future results or events, and one should avoid placing undue reliance on such statements.

SELECTED FINANCIAL DATA:

        PACIFICHEALTH LABORATORIES, INC. STATEMENTS OF OPERATIONS FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008     Three Months Twelve Months Ended December 31, Ended December 31, 2009 2008 2009 2008 Revenue: Net product sales $ 1,198,230 $ 969,991 $ 7,995,194 $ 7,235,991   Cost of goods sold: Product sales 718,759 558,679 4,282,777 4,009,817 Write-down of inventories   491,172     117,028     491,172     201,697   Total cost of goods sold   1,209,931     675,707     4,773,949     4,211,514     Gross (loss) profit   (11,701 )   294,284     3,221,245     3,024,477     Operating expenses: Sales and marketing expenses 539,385 164,383 1,880,102 898,914 General and administrative expenses 780,206 836,901 3,240,680 3,542,483 Research and development - 26,039 - 150,767 Restructuring expense   81,050     -     81,050     472,069     1,400,641     1,027,323     5,201,832     5,064,233     Loss before other income (expense) and benefit from income taxes   (1,412,342 )   (733,039 )   (1,980,587 )   (2,039,756 )   Other income (expense): Interest income 239 7,003 3,684 45,575 Interest expense (1,562 ) (335 ) (5,320 ) (1,468 ) Other income   248     -     4,248     1,296     (1,075 )   6,668     2,612     45,403     Loss before benefit from income taxes (1,413,417 ) (726,371 ) (1,977,975 ) (1,994,353 )   Benefit from income taxes   303,931     -     301,851     -     Net loss $ (1,109,486 ) $ (726,371 ) $ (1,676,124 ) $ (1,994,353 )   Net loss per common share - basic $ (0.07 ) $ (0.05 ) $ (0.11 ) $ (0.15 )   Net loss per common share - diluted $ (0.07 ) $ (0.05 ) $ (0.11 ) $ (0.15 )   Weighted average shares outstanding - basic   15,448,819     14,075,048     14,974,931     13,660,019     Weighted average shares outstanding - diluted   15,448,819     14,075,048     14,974,931     13,660,019         PACIFICHEALTH LABORATORIES, INC. BALANCE SHEETS   ASSETS December 31, December 31, 2009 2008 Current assets: Cash and cash equivalents $ 281,159 $ 888,993 Other short-term investments 175,000 300,000 Accounts receivable, net 763,288 455,851 Inventories, net 806,212 1,308,316 Prepaid expenses 92,702 159,200 Tax loss receivable   303,931     -   Total current assets 2,422,292 3,112,360   Property and equipment, net 110,904 236,721   Deposits   10,895     22,895     Total assets $ 2,544,091   $ 3,371,976     LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities: Notes payable $ 12,182 $ 58,810 Accounts payable and accrued expenses 1,042,051 555,354 Deferred revenue   306,239     347,945   Total current liabilities   1,360,472     962,109     Stockholders' equity: Common stock, $.0025 par value; authorized 50,000,000 shares; issued and outstanding: 15,624,017 and 14,194,613 shares, respectively 39,060 35,486 Additional paid-in capital 20,031,599 19,585,297 Accumulated deficit   (18,887,040 )   (17,210,916 )   1,183,619     2,409,867     Total liabilities and stockholders' equity $ 2,544,091   $ 3,371,976