Exhibit 99.1
ADVANCED NUTRACEUTICALS, INC.
(NASDAQ symbol: ANII)
Advanced Nutraceuticals, Inc. Announces Finalization of Agreements
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for Conversion of $1.6 Million in Debt to
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Common Stock and Other Corporate Developments
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Denver, CO, September 13, 2002 - Advanced Nutraceuticals, Inc. (NASDAQ: ANII),
announced today that it has reached agreements to convert $1,562,440 of
convertible notes payable to directors and their affiliates, otherwise scheduled
to mature during the period beginning November 2002 through July 2003, into
2,840,800 shares of ANII common stock. The conversion price agreed to was $0.55
per share, which represents approximately a 20% premium to the current trading
market value. Management of the Company believes that the conversion is
significant as it improves the financial position of the Company and improves
the Company's prospects of extending or securing an alternative financing
arrangement for, its senior debt facility, which matures in November 2002.
ANII's operations are conducted through two wholly owned subsidiaries, Bactolac
Pharmaceutical Inc. and ANI Pharmaceuticals, Inc. (ANIP). Bactolac is a private
label contract manufacturer of vitamins and supplements located in Hauppauge,
New York. Under the direction of its founder, Dr. Pailla Reddy, Bactolac
continues to show solid increases in revenues and profits, in a market that is
currently facing competitive pressures. Much of this improvement is attributed
to Dr. Reddy's continuing commitment to customer satisfaction, combined with
Bactolac's modern facility, which was recently upgraded with state-of-the-art
lab equipment, high speed manufacturing equipment, in-house thin film coating
equipment and flexible packaging equipment resulting in faster product turn
around times and greater control of the quality and production processes.
ANIP is a contract and private label manufacturer of over-the-counter liquid and
powder pharmaceutical products, primarily liquid stomach remedies, located in
Gulfport, MS. ANIP has incurred significant losses from operations. The goodwill
associated with the ANIP acquisition was written off earlier this year, as
previously disclosed. Based on recent increases in the backlog of open orders
combined with expense reductions, management is cautiously optimistic about
future results of ANIP. Management continues to closely monitor the performance
of this subsidiary, while exploring possible alternative strategic opportunities
to best enhance the performance and value of the Company.
In June 2001, ANII sold its former subsidiary, Nutrition For Life International,
Inc. ("NFLI") and received cash and two notes, a $5 million note payable in
quarterly installments as part of the purchase price and a $650,000 note to
Bactolac due in June 2002 in connection with a receivable for product sales. The
$650,000 note was not paid when due and ANII believes that NFLI is not in
compliance with various non-monetary provisions of the $5 million note. NFLI has
claimed that ANII owes NFLI approximately $500,000 for various expenses. ANII
believes that NFLI's claims have no merit.
At the time the sale of NFLI was recorded, ANII accounted for the two notes on
the cost recovery method, and the remaining $5.2 million in face amounts
outstanding on these notes is currently carried on ANII's balance sheet at
approximately $690,000. ANII is currently in the process of evaluating the need
to record an additional reserve of this remaining balance during the fourth
quarter of the current fiscal year.
For additional information contact:
Jeff McGonegal (303) 475-3786 (Email: jmcgonegal@anii.cc) or
Gregory Pusey (303) 722-4008 (Email: gpusey@anii.cc)
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This press release includes "forward looking statements" as defined by the
Securities and Exchange Commission (the "SEC"). All statements, other than
statements of historical fact, included in the press release that address
activities, events or developments that the Company believes or anticipates will
or may occur in the future are forward-looking statements. These statements are
based on certain assumptions made based on experience, expected future
developments and other factors ANII believes are appropriate in the
circumstances. Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of ANII. Investors are
cautioned that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those projected
in the forward-looking statements. Furthermore, ANII does not intend (and is not
obligated) to update publicly any forward-looking statements. The contents of
this release should be considered in conjunction with the warnings and
cautionary statements contained in the Company's recent filings with the SEC.