PacificHealth Laboratories Reports First Quarter Results

MATAWAN, N.J., May 15, 2006 (BUSINESS WIRE) -- PacificHealth Laboratories, Inc. (PHLI) , an innovative nutrition technology company, reported today a 58% increase in revenues to $1,575,396 for the quarter ended March 31, 2006 compared to revenues of $997,661 for the same period in 2005. The company recorded net operating income of $13,323 for the three-months ended March 31, 2006 compared to a net operating loss of ($701,276) for the three-month period ended March 31, 2005. The company recorded pre-tax income of $3,902,293, or $0.35 per share, for the three-months ended March 31, 2006 compared to a pre-tax net loss of ($719,231) or ($0.07) per share, for the same period in 2005. The company recorded net income attributable to common stockholders of $2,619,293, or $0.22 per share fully diluted, for the three-months ended March 31, 2006 compared to a net loss attributable to common stockholders of ($724,679), or ($0.07) per share, for the same period in 2005. Fully diluted common shares for 2006 include the as-converted number of common shares from the preferred convertible stock. During the first quarter of 2005, the Company deferred revenue on approximately $716,000 in shipments to a major customer as a result of a new purchasing agreement with that customer that increased certain sell-through minimum commitments. Net income in the first quarter of 2006 included approximately $3,900,000 from gain on the sale of patents and technology to Mott's LLP, a division of Cadbury Schweppes.

Dr. Robert Portman, President and CEO of PacificHealth said, "Our first quarter results reflect a number of changes we instituted last year pertaining to our sales and marketing strategy. These changes resulted in a major turnaround in our operations. This year we had an operating profit of $13,000 compared to a ($701,000) loss for the corresponding quarter in 2005. The first quarter is traditionally a weak one because of the seasonal nature of sports drink sales. However, this year sales were up 58% compared to last year. We introduced a new flavor for our Accel Gel(R) line and we will be shipping our new Lemonade Accelerade(R) this month."

Dr. Portman continued, "In the first quarter we completed the asset purchase transaction with Mott's, which is part of the Cadbury Schweppes Americas Beverages group. We used the initial down payment to eliminate our outstanding debt which has greater improved our balance sheet. As Mott's moves closer to the introduction of an Accelerade RTD, our powder should receive a positive boost because of increased brand spend. This plus the potential of significant royalties paints a very positive picture for both our Accelerade and Endurox(R) R4(R) powder and gel business. This week we announced that Accelerade has become the official drink of the National Strength and Conditioning Association, the largest health and fitness organization in the world. This agreement will increase awareness of Accelerade and Endurox R4 among a key group of influencers, the strength and conditioning coaches."

Dr. Portman added, "The launch of Satietrim(R), our new appetite control product, is on target. We have made great strides on Satietrim from both an efficacy and consumer perspective. The product is almost twice as effective as the first generation product that we had licensed to GlaxoSmithKline five years ago. In addition to reducing food intake by up to 20%, Satietrim contains ingredients to increase calorie burn and provide energy. We are excited about the great taste of the new product, which will be introduced in at least two flavors, orange and strawberry-banana. What we now have is a cutting-edge weight loss product that has been proven to reduce appetite in multiple studies, that consumers will find effective and easy to use in helping them lose weight, and is delicious. We anticipate launching in the third quarter of 2006. This month we will make it easy for interested consumers to log onto our website and learn more about the product and pre-order it prior to launch."

About the Company:
PacificHealth Laboratories, Inc. (PHLI.OB), a leading nutrition technology company, has been a pioneer in discovering, developing and commercializing patented, protein-based nutritional products that stimulate specific peptides involved in appetite regulation and that activate biochemical pathways involved in muscle performance and growth. PHLI's principle areas of focus include weight loss, management of Type 2 diabetes and sports performance. To learn more, 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" 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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