SCOLR Pharma total revenue decreases 34% to $618,000 for 2010

Twelve Months 2010 compared to Twelve Months 2009 Financial Results

Total revenues decreased 34%, or $317,000, to $618,000 for the twelve months ended December 31, 2010, compared to $935,000 for the same period in 2009. This decrease is primarily due to a reduction in royalty revenue from the Company's relationship with Perrigo Company following the discontinuance by several retailers of Perrigo's licensed products.

For the twelve months ended December 31, 2010, the Company's marketing and selling expenses increased 38%, or $110,000, to $399,000 compared to $289,000 for the comparable period in 2009. This increase is primarily due to an increase in sales and marketing activities related to the future direct sale of our nutritional products.  

General and administrative expenses decreased 49%, or $2.4 million, to $2.5 million for the twelve months ended December 31, 2010, compared to $4.9 million for the same period in 2009, primarily due to a reduction in personnel related costs through reductions in employees and in executive compensation.

Research and development expenses decreased 53%, or $1.2 million, to $1.2 million for the twelve months ended December 31, 2010, compared to $2.4 million for the same period in 2009, primarily due to reductions in personnel and other expenses reflecting the deferral of development activities for certain product candidates.

The net loss for the twelve months ended December 31, 2010, decreased 54%, or $3.7 million, to $3.2 million, compared with a net loss of $6.9 million for the same period in 2009. This decrease was primarily due to lower overall operating expenses.  

As of December 31, 2010, the Company had approximately $1.9 million in cash and cash equivalents, and $257,000 in restricted cash.  Based on its current operating plan, the Company anticipates that existing cash and cash equivalents, will be sufficient to fund its operations into the second quarter of 2011, provided that it may experience additional constraints on its liquidity based on the timing of inventory requirements necessary to fulfill anticipated orders of its nutritional products, or as a result of other unforeseen events.  The Company is actively managing its liquidity by limiting clinical and development expenses to its lead products and supporting existing alliances and collaborations.

The Company has implemented expense reduction strategies to reduce operating costs and preserve cash. The Company's board of directors has agreed to defer their quarterly cash retainer and the Company has deferred all significant expenditures on new projects pending additional financing or partnership support.

The Company also announced today that it has restated its financial statements for the quarters ended March 31, 2010, June 30, 2010, and September 30, 2010.  The restatements are included within the Company's annual report on Form 10-K for the period ended December 31, 2010.  This restatement is the result of misapplication of accounting guidance applicable to a stock purchase warrant issued in 2002.  The accounting guidance was effective for the Company January 1, 2009 and the error in accounting for the warrant affected the seven subsequent quarters.  The impact was not material to the 2009 financial statements, however the Company corrected the December 31, 2009 amounts in its 2010 10-K for comparative purposes.  The warrant will now be classified as a liability, with changes in the fair value of the warrant recorded as non-cash income or expense in each reporting period.

The restatement of the financial statements for the quarters ended March 31, 2010, June 30, 2010, and September 30, 2010 has no impact on previously reported revenues, operating expenses, total assets or cash position.