Monday August 16, 6:10 pm Eastern Time
Company Press Release
SOURCE: Gum Tech International, Inc.
Gum Tech Shows Steady
Improvement, Increased Margins for Second Quarter
1999
PHOENIX, Aug. 16 /PRNewswire/ -- Gum Tech International, Inc. (Nasdaq: GUMM -
news) reported consolidated second quarter 1999 net sales at $1.9 million, up over
50% compared to the second quarter of 1998. The Company reported a loss of
$759,402 for the quarter.
A summary of the Company's consolidated financial results for the second quarter of
1999 follows:
1999 1998 1999 1998
($000's) 2nd Qtr 2nd Qtr YTD YTD
Net Sales $1,919 $1,213 $4,364 $2,317
Cost of Sales 1,289 1,025 3,130 1,815
Gross Profit $630 $188 $1,234 $502
Operating Expenses 1,044 720 1,996 3,989
Research and Development 106 27 225 142
Income (Loss) from operations $(520) $(559) $(987) $(3,629)
Interest and other income 10 32 19 75
Interest Expense 219 138 329 262
Net Income (Loss) $(729) $(665) $(1,297) $(3,816)
Preferred Stock Dividends 30 0 30 0
Net Income (Loss)
for Common Stock $(759) $(665) $(1,327) $(3,816)
Net Income (Loss) per share ($0.10) ($0.10) ($0.19) ($0.62)
Shares Outstanding (millions) 7.3 6.4 7.1 6.2
Second quarter sales attributable to Gum Operations totaled $1.82 million. Second
quarter sales for Zicam(TM), the cold remedy marketed by the Gel Tech LLC joint
venture, totaled almost $100,000.
A breakdown of the Company's operating results for the second quarter of 1999
between the Gum Operations and the Gel Tech LLC joint venture follows:
($000's) Gum Operations Zicam
Net Sales $1,820 $98
Cost of Sales 1,247 42
Gross Profit 573 56
Operating Expenses 721 323
Research and Development 72 33
Income (Loss) from operations $(220) (300)
''Gum sales for the quarter continued to come from our primary customers: Heritage,
Rarur, Breath Asure, and PharmaGreen,'' said William Hemelt, Gum Tech's Chief
Financial Officer. ''We are pleased with our continued progress in increasing net sales
on a year-to-year basis. Sales of Zicam(TM) were as expected. As noted at the end of
the last reporting period, we anticipate that increasing sales of Zicam(TM) will start to be
reflected in the third quarter.''
Hemelt continued, ''We were also very pleased with our significantly improved gross
margin for the gum side of our business. At 31%, it stands at the highest level in several
quarters. We believe that this improved margin is due to increasing volumes and getting
settled into using the equipment we purchased over the last several months.''
''The operating loss for gum operations, $220,000, represents a significant
improvement over prior periods. It is worth noting that $91,000 of that operating loss
was a non-cash charge attributable to options granted to Whitehill Oral Technologies as
part of the Microdent(TM) licensing agreement,'' Hemelt said.
Hemelt added, ''The operating loss for Gel Tech came in as expected. Investors should
continue to expect losses for the near term, as any operating profits will be reinvested to
build the Zicam(TM) brand.''
Hemelt concluded, ''We closed the financing with Citadel Investment Group during the
quarter. As a result, we incurred cash and non-cash interest and dividend expenses. We
also incurred a non-cash interest expense due to the conversion of the remaining $1
million worth of convertible debt. We believe that the interest and dividend expenses
due to the Citadel financing, while a drag on our bottom line, are justified by our
investment in the Gel Tech LLC joint venture.''
Gum Tech develops, manufactures, and distributes specialty chewing gum products
designed to provide health benefits to customers. The company partners with major
food, pharmaceutical, or marketing companies to develop and manufacture gum
products under contract manufacturing agreements and supports its own line of branded
gums. Gum Tech operates one of the most advanced chewing gum manufacturing
plants in the U.S. and is the only stainless steel gum manufacturing facility registered
with the Food and Drug Administration to manufacture gum with over-the-counter drug
products.
Gum Tech is located at 246 East Watkins Street, Phoenix, Arizona 85004. E-mail:
Brown@gum-tech.com.
Gum Tech Forward-Looking Statement:
This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements regarding the
Company's anticipated growth in business and future results of operations. These
forward-looking statements are based on the Company's expectations and are subject
to a number of risks and uncertainties, many of which cannot be predicted or quantified
and are beyond the Company's control. Future events and actual results could differ
materially from those set forth in, contemplated by, or underlying the forward-looking
statements. Please refer to the risk factors in the Company's filings with the Securities
and Exchange Commission, which identify certain important factors that could cause
actual results to differ materially from those anticipated in the forward-looking
statements. These factors include, but are not limited to, less than anticipated demand
for the Company's chewing gum products, lack of market acceptance for or
uncertainties concerning the efficacy of Zicam, a decrease in the level of reorders from
existing customers, financial difficulties encountered by one or more of the Company's
principal customers, difficulties in obtaining additional capital for marketing, research
and development, and other expenses, the possibility of material charges incurred as a
result of prior activities, aggressive pricing and marketing efforts by rival gum
manufacturers, unavailability of third-party material products at reasonable prices,
inventory obsolescence due to shifts in market demand, and material litigation involving
product liabilities and consumers' issues.
SOURCE: Gum Tech International, Inc.
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