Mera makes first operating profit

Mera Pharmaceuticals Inc. has recorded a first-time profit of $7,521 for its fiscal third quarter ending July 31, its first positive period since pulling out of bankruptcy in 2002.

Third-quarter net $7,521 Year-earlier loss $83,923

The profit is a stark contrast to the $83,923 loss during the same quarter last year.

Mera, the Kona-based maker of nutritional products from microalgae, generated $173,098 in revenue in the third quarter, up 31.5 percent from $131,608 in the same period last year, according to a filing yesterday with the Securities and Exchange Commission.

Operating expenses were trimmed to $172,721, down from $200,008 during the same quarter last year.

"It's the first time in the company's history that it made a profit from continuing operations," said Mera Chief Executive Gregory Kowal. "Our expenses have come down, we've kept our costs in line, and now our real plans are to grow the business. It took two-and-a-half years to get where we want to be. Now the plans are to grow the business."

Profits came from a revised licensing agreement struck with HR BioPetroleum Inc. in December 2007, as well as an expanded line of AstaFactor products and some new products under development.

The agreement with Honolulu-based HRBP offers the use of Mera's facilities for a research project relating to the large-scale cultivation and production of certain microalgae species, as well as intellectual property, in exchange for technical service fees.

That agreement - which accounted for about 56 percent of total revenue in the third quarter - is expected to run through Mera's fiscal 2009 first quarter, which ended on Jan. 31.

Both parties are expected to renew the agreement after that date. Mera is also hoping to explore other technical service contracts with other entities.

Kowal had said in previous quarters that he believed Mera was on the path to profitability as revenue continued to grow.

In the third-quarter filing, Mera indicated that it expects revenue to continue rising about 15 percent, in the fiscal fourth quarter over the previous year, up from initial projections of 10 percent.

Since the company's reorganization in September 2002, Mera had an accumulated deficit of about $6.2 million.

Mera only one other time - in its fiscal 2004 second quarter - posted a net income of $93,779 due to an agreement to reduce its accounts payable by about $300,000 after a compromise over disputed claims.