PETERSBURG, Va. - (Business Wire) Star Scientific, Inc. (NASDAQ:STSI) filed its first quarter report on Form 10-Q today with the Securities and Exchange Commission. The company reported net sales of its dissolvable low-TSNA smokeless products for the quarter of $145,651, compared with $151,136 for first quarter 2007. While this represents a 3.6% decrease in sales comparatively, roughly 46% of first-quarter 2007 sales were made in connection with the national launch of the company
’s Stonewall
® Natural blend dissolvable smokeless tobacco product. The company reported an operating loss of $5.4 million for the first quarter 2008 compared with $3.6 million for the same quarter in 2007. The net loss for first-quarter 2007 was $5.5 million compared with a net loss of $28.2 million for first quarter 2007. The 2007 total reflected a $26.8 million loss on the sale of the company
’s MSA escrow interest stream, an operating loss of roughly $4.5 million and net loss on discontinued cigarette sales operations of $0.9 million, which was partially offset by a $3.6 million gain from the sale of 990 of the company
’s tobacco curing barns. At the end of the first quarter the company reported approximately $15.8 million in cash and cash equivalents and positive working capital of roughly $14.8 million.
Star Scientific also reported that today it entered into a securities purchase agreement under which it sold 2,469,135 shares of its common stock at $1.62 per share, and warrants to purchase an additional 2,469,135 shares at an exercise price of $2.00 per share. These warrants may be exercised beginning six months after the closing of this transaction and for five years thereafter. The warrants also are callable at the company’s option, prior to their expiration, if the company’s stock trades above $6.00 per share for twenty consecutive trading days. The execution of this agreement will result in gross proceeds of $4.0 million, which the company intends to use to support the drug development efforts of its subsidiary, Star Pharma, as well as the company’s general operations. As the company noted in a February 28 press release, Curtis Wright, MD, MPH joined Star as Senior Vice President and Medical/Clinical Director of the pharmaceutical subsidiary on March 17.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as "anticipates", "believes", "estimates", "expects", "plans", "intends" and similar expressions. These statements reflect the Company's current beliefs and are based upon information currently available to it. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties and contingencies include, without limitation, the challenges inherent in new product development initiatives, particularly in the smokeless tobacco area, the uncertainties inherent in the progress of scientific research, the Company's ability to raise additional capital in the future necessary to maintain its business, potential disputes concerning the Company's intellectual property, risks associated with litigation regarding such intellectual property, potential delays in obtaining any necessary government approvals of the Company's low-TSNA tobacco products, market acceptance of the Company's new smokeless tobacco products, competition from companies with greater resources than the Company, the Company's decision not to join the Master Settlement Agreement ("MSA"), the effect of state statutes adopted under the MSA, and the Company's dependence on key employees and on its strategic relationships with Brown & Williamson Tobacco Corporation in light of its combination with RJ Reynolds Tobacco Company, Inc. The impact of potential litigation, if initiated against or by individual states that have adopted the MSA, could be materially adverse to the Company.
See additional discussion under "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the SEC on March 17, 2008, and other factors detailed from time to time in the Company's other filings with the SEC, available at www.sec.gov. The Company undertakes no obligation to update or advise upon any such forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
About Star Scientific
Star Scientific is a technology-oriented tobacco company with a toxin reduction mission. It is engaged in the development of dissolvable smokeless tobacco products that deliver fewer carcinogenic toxins (principally tobacco specific nitrosamines, or TSNAs), through the utilization of the innovative StarCured® tobacco curing technology, and in sublicensing that technology to others. Star Scientific has a Corporate and Sales Office in Petersburg, VA, an Executive, Scientific & Regulatory Affairs office in Bethesda, MD, and manufacturing and tobacco processing facilities in Chase City, VA and in Petersburg, VA.
See Star’s website at: http://www.starscientific.com
Star Scientific, Inc.
Sara Troy Machir
Vice President, Communications & Investor Relations
301-654-8300
smachir@starscientific.com
