Mera loses $234,523
as revenue falls 33%

The Big Isle-based biotech company
has lost $4.3 million since September 2002

Mera Pharmaceuticals Inc. posted a $234,523 loss in its fiscal second quarter as sales of its microalgae-produced nutritional products plunged nearly 33 percent.

The Big Island company, which wants to begin testing and growing genetically modified microalgae at a Kona facility, has been seeking a state permit to import California microalgae that has been enhanced by human proteins.

Mera, known as Aquasearch Inc. before emerging from Chapter 11 reorganization in September 2002, never has made an actual profit. However, it recognized a net gain of $93,779 in the year-earlier quarter because of accounts payable that were reduced to resolve disputed claims by undisclosed parties.

On an operating basis, the company's loss for the quarter widened to $235,949 from $205,997 in the fiscal second quarter of 2004, according to yesterday's filing with the U.S. Securities and Exchange Commission.

The company, whose stock trades for between 2 and 3 cents on the Over the Counter Bulletin Board, had revenue of $108,706 in the quarter ended April 30 compared with $161,999 a year earlier.

Mera has lost more than $4.3 million since emerging from bankruptcy.

The company blamed last quarter's revenue shortfall on the uncertainty of the timing of large orders placed by wholesale distributors, and a contract research agreement with the Department of Energy that ended during the second quarter. Mera said it has entered into one agreement and is in discussion with other parties to provide a replacement for its contract research revenue.

Mera also disclosed in the filing that in March and April it issued more than 23.5 million shares of registration-exempt common stock to investors, consultants and executives as either compensation for services or cancellation of debt.

The company also said it has received shareholder approval to increase the amount of its authorized common stock to 750 million shares from 500 million.