Mera Pharmaceuticals Mera Pharmaceuticals Inc., posting its first earnings report since emerging from Chapter 11 reorganization bankruptcy in mid-September, said yesterday it lost $541,890 in the six remaining weeks of its fiscal 2002 fourth quarter.
losses continue
It lost $541,890 in the six weeks
after emerging from bankruptcyBy Dave Segal
dsegal@starbulletin.comThe 24-employee aquaculture company, formerly known as Aquasearch Inc., ended the 2002 fiscal year that concluded Oct. 31 with a loss of $2.4 million, compared with a deficit of $4.1 million a year earlier. Mera, which produces the nutritional product AstaFactor from microalgae, lost $20.4 million from its 1988 inception through Oct. 31, 2001, and an additional $901,353 last fiscal year after "fresh start" accounting principles were applied due to the reorganization. In fresh start accounting, all assets and liabilities are restated to reflect their fair values.
Total revenue fell 35.9 percent to $662,072 from just more than $1 million a year earlier. The decrease in revenues from the previous year were principally due to lower royalty revenues earned under a 2001 patent settlement agreement with rival Cyanotech Corp. and Mera's inability to financially support its sales and marketing efforts during the reorganization process.
Richard Propper, Mera's chairman and chief executive officer, said not to read much into the financial statement due to those limitations and the different accounting rules.
"We don't have any apples-to-apples comparisons," Propper said. "It's a very different process going forward the first few quarters after you get through bankruptcy. You're impacted by a number of different items and it's just a function of the accounting. It's not going to be reflective of what's truly going on."
Mera, which has a plant in Kona and administrative offices in Solana Beach, Calif., near San Diego, had its operations severely curtailed while it was operating under bankruptcy because its spending was controlled by the court in order to preserve the company. The former Aquasearch had been forced into bankruptcy by several creditors in October 2001.
"From a sales and revenue standpoint, we didn't have a chance to market and sell during the bankruptcy," Propper said. "It was just a mismatch. There wasn't any money to do that during the bankruptcy period. I don't see how anyone can look at the financial statement and make much out of it except to use it as a starting point."
Propper said he expects sales to accelerate late in the third quarter or early in the fourth quarter once the company's Chinese joint venture partner, Hainan Sunshine Ocean Bioengineering Ltd., completes construction of a $20 million microalgae plant on Hainan Island in China. The plant, fully owned by its partner, is contracted to be built to Mera's specifications. Mera has a licensing agreement that permits its partner to produce and distribute astaxanthin, a pigment found in many species of fish and seafood, to the worldwide market. Mera will get royalties from the sales.
Mera Pharmaceuticals Inc.