Biotech’s loss
widens 6-fold

Mera Pharmaceuticals Inc., which produces the human nutritional supplement AstaFactor from microalgae, posted a fiscal third-quarter loss that was six times greater than a year earlier after taking a $640,000 provision for excess inventory.

The Kona company had a loss of $972,194 in the quarter ended July 31 compared with a loss of $155,757 a year ago, according to a filing yesterday with the Securities and Exchange Commission. Revenues plunged nearly 65 percent to $120,812 from $342,022.

Mera didn't explain why it was reducing the value of its excess inventory but said it still has a $135,000 allowance in excess inventory that wasn't taken in the quarter.

Chief Executive Dan Beharry and Chairman Gregory Kowal could not be reached for comment.

Mera, which selected a Friday afternoon before a holiday weekend to release its earnings, also said it has reached an agreement with an undisclosed shareholder for repayment of a $170,000 promissory note, including interest, that was due to him. Mera said it agreed to pay the shareholder $100,000, with the balance due in monthly installments of $11,000. In return, the shareholder has agreed to stop accruing interest on the note and will return 14 million shares of common stock owned by his affiliate as well as more than 3.4 million in stock warrants.

AstaFactor revenues dropped dramatically in the quarter to $83,263 from $216,928 because of a decrease in sales through the company's retail brokers and the absence of raw material sales that had occurred a year ago. Contract revenue sales fell 60 percent to $37,549 from $94,519 because of a decrease in personnel assigned to work on a project Mera was doing for the U.S. Department of Energy. Those workers were reassigned to commercial production activities.

Mera also received no royalty revenue in the quarter after receiving $30,470 in royalties a year earlier. Mera stopped getting royalty income in January.

The company, known as Aquasearch Inc. before emerging from Chapter 11 reorganization in September 2002, has lost $3.8 million since emerging from bankruptcy and more than $26 million since it was founded in 1988.