Advanced Nutraceuticals, Inc. Announces Second Quarter Results and Other Corporate Developments

DENVER, May 19 /PRNewswire-FirstCall/ -- Advanced Nutraceuticals, Inc. (OTC Bulletin Board: ANII), announced today results for the second quarter and the six months ended March 31, 2004. These are the first reported results of the Company's operations following the divestiture of its unprofitable subsidiary, ANI Pharmaceuticals, Inc. ("ANIP"), during March 2004. The operations of ANIP are now accounted for as a discontinued operation in the Company's financial statements. The successful operations and results of the
Company's subsidiary, Bactolac Pharmaceutical, Inc. ("Bactolac"), have been overshadowed in past years due to losses from ANIP.

Net sales from continuing operations for the six months ended March 31, 2004 were $8.4 million compared to $6.2 million for the comparable prior year period, a 35% increase. The Company reported net income from continuing operations of $2.7 million, or $.54 per common share, compared with net income of $855,000, or $.17 per common share for the 2003 period. The 2004 period included the effect of a recorded $1.3 million deferred income tax benefit.

Net sales from continuing operations for the three months ended March 31, 2004 were $4.3 million compared to $3.1 million for the three months ended March 31, 2003, a 37% increase. The Company reported net income from continuing operations of $2.1 million, or $.42 per common share for the quarter compared to net income of $401,000, or $.08 per common share, for the third quarter of 2003. The 2004 period included the effect of a recorded $1.3 million deferred income tax benefit.

Net loss from discontinued operations for the six months ended March 31, 2004 was $1.5 million, or $.30 per common share, compared with a net loss of $807,000, or $.16 per common share for the 2003 period. Net loss from discontinued operations for the three months ended March 31, 2004 was $1.1 million, or $.22 per common share, compared with a net loss of $571,000, or $.11 per common share for the second quarter of 2003. Both the six-month and three-month periods ended March 31, 2004, include the effect of a recorded $697,000 deferred tax benefit. The Company used the entire net cash proceeds from the ANIP sale to reduce the Company's secured debt by approximately $3.0 million.

In May of 2004 Bactolac entered into a new lease for an additional 29,000 square feet of space to expand its operations as well as commence production of liquid vitamin products.

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. Actual results or developments may differ materially from those projected in the forward-looking statements as a result of many factors, including adverse changes in market conditions, fluctuations in sales volumes and problems in collecting receivables. 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.

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