ADVANCED NUTRACEUTICALS INC., (NASDAQ: ANII)

Dear Readers:

On Monday we notified you that we would soon be profiling a compelling ‘Health & Wealth’ company listed on the NASDAQ. Well, today’s the day. 

One thing that came out of the ashes of the “dot-bomb” era was the renewed appreciation of companies that actually had brick and mortar facilities and tangible assets that could be depreciated on taxes and upgraded to meet growing production. 

Our feature company today, ADVANCED NUTRACEUTICALS INC., (NASDAQ: ANII), has two manufacturing facilities employing hundreds of people and an established supply chain. ANII can also lay claim to sales at $4.35 per share and assets at $5.03 per share. That’s pretty interesting considering the company is trading in the $0.90 range. 

In an industry that typically trades at a multiple of book value, ANII trades at less than a third of book value.

Before we begin our StockUpTicks profile we wanted to also let you know that ANII has issued an after-market press release, which of course means that for once you won’t be the last to hear about it. In fact, since this was issued after market, NO ONE HAS BEEN ABLE TO REACT YET and won’t be able to until the morning.

You may want to read the profile first but here’s the headline and a handy-dandy hyperlink to the full after-market news.
 

** TODAY'S LATE BREAKING NEWS **

Press Release
November 06, 2002 
4:05 EST

DENVER, Nov. 6 /PRNewswire-FirstCall/ -- Advanced Nutraceuticals, Inc. (Nasdaq: ANII), announced today that it expects to record a profit for the current quarter ending December 31, 2002, which is the first quarter of fiscal 2003. ANII is a holding company with two operating subsidiaries, Bactolac Pharmaceutical Inc. (Bactolac) and ANI Pharmaceuticals, Inc. (ANIP). Bactolac has been consistently profitable. ANIP, which had been losing money, has recently experienced a substantial improvement in its bookings. 

Click here to see the full news
 

** ABOUT ADVANCED NUTRACEUTICALS **

· Bactolac, operating in the vitamin and nutraceutical segment, continues to grow and contribute significant profitability and cash flow with 2002 EBITDA estimated to be $2.5 million.

· ANI Pharmaceuticals, operating in the O-T-C pharmaceutical segment has increased revenues to a current annualized rate of over $12 million, resulting in recent break-even performance and positive cash flow. 

· ANI insiders regularly purchase stock on the open market (Click Here for SEC filings).

· ANI receives regular quarterly payments on a  $5 million note receivable (NFLI) it carries on its books for less than $400,000.
 

** MARKETS **

ANI Customers Include:
Specialty food retailers, mass-market drug stores, multi-level marketers, catalog marketers, retail distributors, direct mail sellers, infomercial marketers and international distributors. 

The Private Label Industry
Store brands now account for one of every five items sold every day in the U.S. They represent a nearly $50 billion segment of the retailing business that is achieving new levels of growth every year. For American consumers, more than 90% of all consumers polled were familiar with store brands, and 83% said that they purchase these products on a regular basis. 

The Over The Counter Drug Industry
According to a Business Communications Co., Inc. study total worldwide drug sales reached $145 billion in 1998, with $94.5 billion in domestic use. Ethical, generics and OTC drugs accounted for $42.7 billion, $22.8 billion and $29 billion respectively. 
 

** BACTOLAC PHARMACEUTICAL, INC. **

Bactolac is led by its founder, Dr. Pailla M. Reddy and was was founded in 1995. It was acquired by ANI in late 1999 and has grown to be a substantial entity with estimated 2002 sales exceeding $12 million. Bactolac Pharmaceutical Inc. manufactures nutritional supplements for private label customers and creates products from raw materials through to finished bottled products.

Bactolac has manufactured over 1,000 different vitamins and supplements, for various companies engaged in the marketing and distribution of vitamins, mineral supplements, herbs and other health and nutrition consumer products. Bactolac manufactures a comprehensive assortment of vitamin, mineral and nutritional supplement products, which include a variety of vitamins, beta carotene, magnesium, folic acid, calcium and potassium, as well as various herbs such as Echinacea, St. John's Wort, Ginko Biloba, Saw Palmetto Ginseng, and various multivitamin combinations. 

Bactolac is known for creating high quality, unique formulas for a variety of uses, including weight loss, antioxidants, formulas designed specifically for men, women and children, sport nutrition, energy products, stress formulas, relaxation formulas, life extension formulas, immune enhancement, brain products, cleansing products, cholesterol products, liver products, heart formulas and hundreds of herbal remedies. To support this consistent growth and to expand its customer service capabilities, Bactolac recently moved into a state of the art, 37,500 square foot Good Manufacturing Process facility located in Hauppauge, NY.

Operational Capacity:
 

> High speed rotary tablet compression machines  > Fluidized bed drier for tablet granulation process  > High efficiency screening and comminuting machines  > FDA compliant large volume V blenders and cone blender  > Cross-trained, multi-skilled work force, minimum crew sizes  > Dust-contained, flexible facility designed for ease of change

Production Capacity:
 

> Tablet compression - 10 million per day  > Tablet coating - 3 million per day  > Powder blending - 6000 kg per day  > Encapsulation - 2 million per day  > Bottling - 40,000 units per day

** ANI PHARMACEUTICALS **

ANI Pharmaceuticals (ANIP) employs approximately 90 full-time and 10 temporary personnel for a total of 100 employees. ANIP originated as a Phillips Milk of Magnesia (Bayer) production facility some fifty years ago. The Company has the capability of producing virtually any liquid, tablet, topical analgesic, powder, liquid OTC drug. 

· ANIP Has An Excellent Industry Reputation.  The Company has developed and maintained an excellent industry reputation for providing high quality products and superior service – with a highly personalized customer service approach.

· Recent Significant Sales Increases.  The Company has recently achieved a substantial increase in monthly sales and anticipates the trend to continue based upon a open order back log. 

· FDA Approved Pharmaceutical Production Facility has sufficient Expansion Capacity in the Facility to triple current production levels.

· Milk of Magnesia
· Regular and Mint Flavored Antacids (Mylanta & Maalox)
· Pepto Bismal equivalent
· Cough and Cold Syrups and Elixirs 
· Acetaminophen Elixirs 
· Baby and Cosmetic Powders (Talc or Starch Based) 
· Medicated Body & Foot Powders 
· Antifungal Powders 
· Topical Antiseptics 

ANIP has an exceptional quality control record with the FDA.  The three most recent FDA inspections conducted in April 1997, March 1999, and March 2002 yielded no objectionable observations. The Company has the capability of performing all compendial and customer required testing. ANIP also has the ability to perform any stability and validation on new products as well as the capability to create products from samples currently available in the market. 

ANIP is a contract manufacturer of pharmaceutical and nutraceutical products operating out of a 132,000 sq. ft. facility located in Gulfport, Mississippi. The Gulfport facility was previously owned and operated by the Bayer Corporation. ANIP continues to follow the quality-driven procedures and principles established by Bayer at the facility. ANIP performed contract manufacturing for some of the largest and most respected pharmaceutical companies in the world, including: Bayer, Schering Plough, Ivax, Watson, CB Fleet, and others. 

The ANIP Facility  Is Comprised Of Four Areas Antacid manufacturing.  Powder manufacturing. Bulk magnesium hydroxide manufacturing.  Specialty Product manufacturing.

** What Sets ANI Pharmaceuticals Apart From Other Contract Manufacturers ? **

1) Superior personalized customer service.
2) Stringent quality control, which meets or exceeds all applicable standards, specifications, and regulations.
3) History with no objectionable observations from the FDA.
4) High-Speed pharmaceutical and nutraceutical production facility with current capacity for additional production.
5) Experienced and dedicated production staff complemented by an experienced and knowledgeable management team.
6) Timely, cost-effective production, providing rapid customer turn-around.
 

** SELECTED FINANCIAL HIGHLIGHTS **

Total shares outstanding: 4,992,800 
Approximate market capitalization: $4.5 million 
Approximate public float: 1,150,000 shares

FYE Estimated Revenues 09-02: $21,700,000
FYE Estimated Revenues 09-02: $4.35 per share
Total Stockholders Equity: $16,600,000
Total Stockholder Equity per share: $3.32
Total Assets: $25,100,000
Total Assets per share: $5.03
 

** MANAGEMENT **

Gregory Pusey
Chairman/CEO of ANI
Mr. Pusey has served as Chairman and CEO of the Company since November 1999. He is the President of Livingstone Capital, Ltd. A private capital firm since 1987. Mr. Pusey has served on numerous private & public boards while engaged in the venture capital business. Since 1988, Mr. Pusey has been the President and a director of Cambridge Holdings, Ltd., a publicly held real estate development firm. Mr. Pusey graduated summa cum laude from Boston College with a B.S. degree in finance in 1974. 
 

** CONTACT **

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