Star Scientific, Inc. (NASDAQ: STSI - News) announced that it is filing its first quarter results today with the Securities and Exchange Commission.
In commenting on the first quarter results, Christopher G. Miller, Star's Chief Financial Officer, said, "In January 2002, we began to broaden distribution of our very low-TSNA smokeless tobacco products(1) as we continued to reposition our company in the smokeless tobacco marketplace. Notwithstanding significantly increased marketing and product introduction costs for the multi-state distribution program, during the first quarter the company generated more than $1 million of pre-tax income, and $578,000 of net income."
Paul L. Perito, Star's Chairman, President and COO, commented, "As we stated in our March 29 release, we anticipate that profits in the second quarter may be slightly above break-even as we continue our investment in distribution and marketing. We are confident that, as we proceed, the higher margins we expect to achieve with ARIVA(TM) sales will strengthen Star's position as a disruptive and profitable force in the tobacco industry. As we maintain leadership in the emerging 'When You Can't Smoke'(TM) market, we continue to expand distribution channels for ARIVA(TM) in the United States. The product now is available in approximately 15,000 stores in more than 40 states, and we currently are on target to make it available to consumers in 25,000 retail outlets by the end of the second quarter."
Mr. Jonnie R. Williams, Star's cofounder and CEO, commented: "The investment we are making in very low-TSNA smokeless tobacco products, and particularly ARIVA(TM), is essential to our long-term objectives and business plan. We are pleased that the feedback we have been receiving from adult consumers has generally been positive, and that ARIVA(TM) appears to be highly satisfactory as an alternative to a cigarette in a variety of situations where smoking is prohibited or inconvenient. This leads us to believe that ARIVA(TM) is gaining recognition as a branded product in the smokeless tobacco marketplace."
In April, the Company announced that certain of its senior executives and Directors would be purchasing shares from the Francis E. O'Donnell, Jr., MD Irrevocable Trust. As of this date, approximately two million shares have been purchased pursuant to that announcement. It is expected that executives and Directors will purchase additional shares from the O'Donnell Trust on a going-forward basis.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as "anticipates", "believes", "estimates", "expects", "plans", "intends" and similar expressions. These statements reflect the Company's current beliefs and are based upon information currently available to it. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties and contingencies include, without limitation, the challenges inherent in new product development initiatives particularly in the smokeless tobacco area, changes in government regulation, the uncertainties inherent in the progress of scientific research, the Company's ability to raise the capital necessary to grow its business, potential disputes concerning the Company's intellectual property, risks associated with litigation regarding such intellectual property, potential delays in obtaining any necessary government approvals of the Company's low-TSNA tobacco products, market acceptance of the Company's proposed new smokeless tobacco products, competition from companies with greater resources than the Company, the Company's decision not to join the Master Settlement Agreement ("MSA") and its decision to challenge the constitutionality of the MSA, the effect of state statutes adopted under the MSA and any subsequent modification of the MSA, the Company's dependence on key employees and on its strategic relationships with Brown & Williamson Tobacco Corporation. The impact of potential litigation, if initiated against or by individual states that have adopted the MSA, could be materially adverse to the Company.
See additional discussion under "Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, and other factors detailed from time to time in the Company's other filings with the Securities and Exchange Commission, available online at www.sec.gov. The Company undertakes no obligation to update or advise upon any such forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
About Star Scientific
Star Scientific is a technology-oriented tobacco company with a toxicity reduction mission. It is engaged in the development of tobacco products that deliver less carcinogenic toxins (principally tobacco specific nitrosamines, or TSNAs), through the utilization of the innovative StarCured(TM) tobacco curing technology, and in sublicensing that technology to others. Star Scientific has a Corporate and Sales Office in Chester, VA, an Executive, Scientific & Regulatory Affairs office in Bethesda, MD, and manufacturing and processing facilities in Petersburg and Chase City, VA.
See Star's website at: http://www.starscientific.com
* (1) TSNAs are widely known to be among the most potent cancer-causing toxins in tobacco leaf and tobacco smoke. However, Star currently has no proof that a reduction in these toxins can be quantified by a reduction in health risk, and therefore makes no direct or indirect health claims about these products.
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