PacificHealth Laboratories, Inc. Reports Year End and Fourth Quarter 2002 Results; Sports Performance Revenues Up 40%

WOODBRIDGE, N.J.--(BUSINESS WIRE)--March 26, 2003--Pacific Health Laboratories, Inc. (NASDAQ: PHLI), an innovative nutrition technology company, announced revenues of $5,120,353 for the year ended December 31, 2002 versus revenues of $6,145,525 for the same period in 2001. Revenues for 2001 included $1,250,000 in licensing revenues from the Company's licensing agreement with GlaxoSmithKline ("GSK") as well as significant sales of the Company's SATIETROL(R) appetite control product that had received strong one-time independent editorial exposure during 2001. The Company reported a net loss of ($2,570,452), or ($0.42) per share, for the year ended December 31, 2002 after a $1,300,000 (or $0.21 per share) write-off of excess SATIETROL inventory. This compares to net income of $285,627, or $0.04 per share fully diluted, for the same period in 2001.

For the three-month period ended December 31, 2002, revenues were $743,347 compared to revenues of $345,273 for the same period in 2001. Revenues in the fourth quarter of 2001 included $250,000 in licensing revenues from our licensing agreement with GSK and a reduction for $450,000 of returns of our SATIETROL product from GNC. We had no such returns in the fourth quarter of 2002. The Company reported a net loss of ($598,152), or ($0.10) per share, for the three months ended December 31, 2002 compared to a net loss of ($846,581), or ($0.14) per share, for the same period in 2001.

Significant accomplishments during 2002 included:

-- 40% increase in sales of sports performance products including
a 175% increase in sales of ACCELERADE(R) , the Company's new
generation of sports drink, which was launched in June of
2001, and a 23% increase in sales of Endurox R4(R) Recovery

-- Completed two Company-sponsored, double blind trials on an
improved version of the Company's SATIETROL appetite control
technology. SATIETROL can now potentially be added to a
variety of foods and beverages without modifying their flavor
profile as well as potentially be developed into a tablet or
capsule form which could substantially increase its market

-- The Company and Cargill, Inc. announced a strategic alliance
for the launch of the Company's new ready-to-drink ACCELERADE.
Cargill is providing marketing, distribution, and
manufacturing support.

-- Expanded sales and marketing staff including the hiring of
Bruce Bollinger, a seasoned executive formerly with the
Snapple Beverage Group, as Executive Vice President-Marketing
in November 2002, laying the groundwork for expansion of the
distribution of the Company's sports drink products including
the launch of ACCELERADE in a ready-to-drink form. A test
market of the ready-to-drink form of ACCELERADE is currently
underway in the San Diego and Colorado Springs areas.

-- The Company began distribution of its ACCELERADE Sports Drink
to the Rite Aid drugstore chain. Rite Aid sells ACCELERADE
nationwide in 900 of its top performing stores that have a
special nutrition section.

-- The Company added two leading sports-specialty chains to the
distribution base: Sports Chalet, a 26-store chain located in
California and Nevada, and Recreational Equipment, Inc. (REI),
a national 65-store chain.

-- Expanded technology position by receiving three additional
patents for the SATIETROL technology.

Dr. Robert Portman, President and CEO of PHLI, said, "2002 was a very positive year for our sports drink business. It was a year in which we were able to market our exciting new sports drink, ACCELERADE, for a full 12 months. We saw rapid acceptance and repurchase of ACCELERADE by serious athletes from the amateur to the professional. Sales of ACCELERADE were up 175%. With a small amount of marketing dollars, we created a large impact in the marketplace. We also began an aggressive development program to introduce a ready-to-drink version. ACCELERADE ready-to-drink was an enormous technical achievement. The uniqueness of ACCELERADE is evidenced by the fact that 7-Eleven agreed to a market test in San Diego and Colorado Springs starting in March 2003."

Dr. Portman continued, "Although we were initially disappointed with the termination of our licensing agreement with GSK, we continued to improve the SATIETROL technology, specifically a tablet form. We are excited about its potential. We will be fielding additional trials on the use of a SATIETROL tablet for the treatment of Type 2 diabetes, the fastest growing chronic disease in the US, as well as to evaluate its effectiveness in a 12-week weight loss study."

Dr. Portman concluded, "Our accomplishments over the past year have laid a foundation for growth. We established a strong beachhead in the sports drink market for ACCELERADE, which we intend to build upon in 2003. The management at PHLI continues to be optimistic about this year as we plan to continue to expand our sports drink business and improve our weight loss technology."

About the Company

PacificHealth Laboratories, Inc., Woodbridge, NJ, was founded in 1995 to develop and commercialize functionally unique nutritional products for sports nutrition, weight loss and Type 2 diabetes. To learn more about PacificHealth Laboratories, Inc., visit:;;

Notice: This news release and oral statements made from time to time by Company representatives concerning the same subject matter may contain so-called "forward-looking statements". These statements can be identified by introductory words such as "expects", "plans", "will", "estimates", "forecasts", "projects", "potentially" or words of similar meaning and by the fact they do not relate strictly to historical or current facts. Forward-looking statements frequently are used in discussing new products and their potential. Many factors may cause actual results to differ from forward-looking statements, including inaccurate assumptions and a broad variety of risks and uncertainties, some of which are known, such general economic conditions, consumer product acceptance and competitive products, and others of which are not. No forward-looking statements are a guarantee of future results or events, and one should avoid placing undue reliance on such statements.

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