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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
-OR-
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File No. 333-36379
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PACIFICHEALTH LABORATORIES, INC.
-------------------------------------------------
(Exact name of issuer as specified in its charter)
DELAWARE 22-3367588
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1480 Route 9 North, Suite 204
Woodbridge, NJ 07095
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 636-6141
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [_]
At November 12, 2002, there were 6,114,703 shares of common stock, par value
$.0025 per share, of the registrant outstanding.
Transitional small business disclosure format: Yes [ ] No [X]
PACIFICHEALTH LABORATORIES, INC.
TABLE OF CONTENTS
----------------------------------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of September 30, 2002 (Unaudited) and December 31, 2001................. 3
Statements of Operations (Unaudited) for the three and nine
months ended September 30, 2002 and September 30, 2001.................................. 4
Statements of Cash Flows (Unaudited) for the nine months ended
September 30, 2002 and September 30, 2001............................................... 5
Notes to Financial Statements............................................................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................................................... 8
ITEM 3. CONTROLS AND PROCEDURES.................................................................. 11
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings................................................................. 11
ITEM 2. Changes in Securities and Use of Proceeds......................................... 11
ITEM 3. Defaults Upon Senior Securities................................................... 12
ITEM 4. Submission of Matters to a Vote of Security Holders............................... 12
ITEM 5. Other Information................................................................. 12
ITEM 6. Exhibits and Reports.............................................................. 12
SIGNATURES.............................................................................................. 12
2
PACIFICHEALTH LABORATORIES, INC.
BALANCE SHEETS
ASSETS
September 30, December 31,
2002 2001
(Unaudited) (Audited)
------------ ------------
Current assets:
Cash and cash equivalents $ 888,559 $ 1,848,847
Accounts receivable, net 690,039 192,628
Inventories 1,663,660 2,634,272
Prepaid expenses 116,147 165,079
------------ ------------
Total current assets 3,358,405 4,840,826
------------ ------------
Property and equipment, net 75,538 62,709
Other assets:
Deposits 3,991 108,322
------------ ------------
Total assets $ 3,437,934 $ 5,011,857
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 22,353 $ 45,048
Accounts payable and accrued expenses 554,905 291,506
------------ ------------
Total current liabilities 577,258 336,554
------------ ------------
Stockholders' equity:
Common stock, $.0025 par value; authorized
50,000,000 shares; issued and outstanding:
6,114,703 shares at September 30, 2002 and
6,039,203 shares at December 31, 2001 15,287 15,098
Additional paid-in capital 13,831,963 13,674,479
Accumulated deficit (10,986,574) (9,014,274)
------------ ------------
2,860,676 4,675,303
------------ ------------
Total liabilities and stockholders' equity $ 3,437,934 $ 5,011,857
============ ============
3
PACIFICHEALTH LABORATORIES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------------- -------------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenues:
Product sales $ 1,401,981 $ 1,328,560 $ 4,377,007 $ 4,800,252
Licensing revenues -- -- -- 1,000,000
----------- ----------- ----------- -----------
Total Revenues 1,401,981 1,328,560 4,377,007 5,800,252
Cost of goods sold 1,995,213 589,998 3,366,137 2,321,267
----------- ----------- ----------- -----------
Gross Profit (593,232) 738,562 1,010,870 3,478,985
Selling, general, and administrative expenses 1,007,894 702,764 2,850,211 2,304,450
Research & development 64,453 22,611 111,813 73,454
Depreciation expense 13,905 11,161 32,479 33,585
----------- ----------- ----------- -----------
1,086,252 736,536 2,994,503 2,411,489
----------- ----------- ----------- -----------
Net operating income (loss) (1,679,484) 2,026 (1,983,633) 1,067,496
Other income (expense)
Interest income 3,269 18,450 13,210 27,026
Interest expense (235) (762) (1,877) (93,288)
----------- ----------- ----------- -----------
3,034 17,688 11,333 (66,262)
----------- ----------- ----------- -----------
Income (loss) before income taxes (1,676,450) 19,714 (1,972,300) 1,001,234
=========== =========== =========== ===========
Provision for income taxes -- -- -- --
=========== =========== =========== ===========
Net income (loss) $(1,676,450) $ 19,714 $(1,972,300) $ 1,001,234
=========== =========== =========== ===========
Basic income (loss) per share $ (0.27) $ 0.00 $ (0.32) $ 0.19
=========== =========== =========== ===========
Diluted income (loss) per share $ (0.27) $ 0.00 $ (0.32) $ 0.16
=========== =========== =========== ===========
Weighted average common shares:
Basic 6,110,899 5,898,070 6,070,650 5,279,649
=========== =========== =========== ===========
Diluted 7,085,104 7,311,663 7,178,704 6,205,688
=========== =========== =========== ===========
4
PACIFICHEALTH LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
2002 2001
----------- ------------
Cash flows from operating activities:
Net income (loss) (1,972,300) 1,001,234
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation 32,479 33,585
Intrinsic value of stock options granted 20,923 399,145
Writedowns associated with obsolete inventory 1,297,485 --
Changes in assets and liabilities:
(Increase) / Decrease in accounts receivable (497,411) (336,254)
(Increase) / Decrease in inventories (326,873) (652,052)
(Increase) / Decrease in prepaid expenses 48,932 35,089
(Increase) / Decrease in other assets 104,331 (100,000)
Increase / (Decrease) in accounts payable/accrued expenses 263,399 (39,802)
----------- ------------
Net cash provided by (used in) operating activities (1,029,035) 340,945
----------- ------------
Cash flows from investing activities:
Purchase of fixed assets (45,308) (19,220)
----------- ------------
Net cash used in investing activities (45,308) (19,220)
----------- ------------
Cash flows from financing activities:
Issuance of notes payable 52,700 36,050
Repayments of notes payable (75,395) (70,710)
Common stock issued -- 1,500,000
Common stock options/warrants exercised 136,750 595,073
----------- ------------
Net cash provided by financing activities 114,055 2,060,413
----------- ------------
Net increase (decrease) in cash (960,288) 2,382,138
Cash, beginning balance 1,848,847 170,491
----------- ------------
Cash, ending balance $ 888,559 $ 2,552,629
=========== ============
5
PACIFICHEALTH LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002
AND SEPTEMBER 30, 2001
(UNAUDITED)
1. Basis of Presentation:
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America for interim financial information and with the
instructions for Form 10-QSB and Item 310 of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months and nine months
ended September 30, 2002 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2002. The unaudited
financial statements should be read in conjunction with the financial
statements and footnotes thereto included in the Company's annual report
on Form 10-KSB for the year ended December 31, 2001. Certain amounts
included in selling, general, and administrative expenses have been
reclassified to interest expense for the nine-months ended September 30,
2001.
2. Inventories
As of September 30, 2002 and December 31, 2001, inventories consist of
the following:
2002 2001
---- ----
Raw Materials $ 44,304 $ 283,140
Work-in-process - -
Finished goods 2,441,099 2,354,437
Reserve for obsolescence (821,743) (3,305)
------------- ----------
$ 1,663,660 $2,634,272
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3. Stock Based Compensation
The Company granted 56,500 Incentive Stock Options (ISOs) to employees
during the first nine months of 2002. 20,000 options vested upon grant
with exercise prices ranging from $4.50 per share to $4.88 per share,
35,000 vest during the first six months of 2003 with exercise prices
ranging from $3.77 per share to $3.80 per share, and 1,500 vest during the
first six months of 2004 with an exercise price of $3.77 per share. The
exercise price for all 56,500 options was equal to the fair market value
of the common stock on the date of grant. Since the Company accounts for
its options under APB No. 25, no compensation expense was recognized. See
NOTE 6.
The Company also granted 1,500 stock options to consultants during the
first nine months of 2002. All 1,500 options vested upon grant with
exercise prices ranging from $1.50 per share to $3.80 per share. These
options were determined to have a value of $1,459 for the nine months
ended September 30, 2002. This amount was charged to operations in the
nine months ended September 30, 2002 and added to paid-in capital in
accordance with SFAS 123. 15,700 options and 56,875 warrants issued to
consultants expired during the first nine months of 2002.
4. Income Taxes
The Company has approximately $10,400,000 in Federal net operating loss
carryovers generated through September 30, 2002 and are available to
offset future taxable income in calendar years 2002 through 2023.
6
The components of the Company's deferred tax assets as of September 30,
2002 and December 31, 2001 are as follows:
2002 2001
---- ----
Net operating loss carry forwards $ 3,840,000 $ 3,035,000
Valuation allowance (3,840,000) (3,035,000)
----------- -----------
Deferred tax asset $ - $ -
5. Licensing Agreement
On June 1, 2001, the Company entered into an exclusive license agreement
with GlaxoSmithKline ("GSK"), one of the world's largest pharmaceutical
companies, for SATIETROL, the Company's appetite control product. The
agreement provided GSK with worldwide rights to the trademarks,
technology, patents, and know how for SATIETROL for the duration of the
patents which expire in 2017. Under the agreement, PHLI received an
initial payment of $1,000,000, has received a subsequent milestone payment
of $250,000. The agreement permitted GSK to terminate the license
agreement at any time for any reason, provided that it paid all milestone
payments earned prior to termination. GSK also purchased approximately 9%
of PHLI's common stock for $1.5 million under a contemporaneous stock
purchase agreement. As of September 30, 2002, the Company has received an
aggregate $2,750,000 from GSK from the combined licensing and stock
purchase agreements. During the third quarter of 2002, GSK terminated the
licensing agreement. All rights to the product under this agreement have
reverted to the Company.
6. Restatement of Prior Period Financial Statements
The Company granted options to its Chief Executive Officer under his 1998
Employment Agreement to purchase up to 475,000 shares of our common stock
at $6.00 per share. In connection with our CEO's 2001 Employment Agreement
(the "Agreement"), the Company re-priced the exercise price of those
options to $0.313 per share, which was the then market price of our common
stock on the date of the Agreement. At the time of the execution of the
Agreement such options were fully vested and had a fair value of $217,075.
The options were fully exercised early in the second quarter of 2001.
The Company did not record a charge to operations until the fourth quarter
of 2001. The Company determined that the transaction should have been
recorded in the first quarter of 2001 and as such, restated the financial
statements for the first quarter of 2001. In addition, the financial
statements for the nine months ended September 30, 2001 are hereby being
restated to incorporate the impact of the first quarter restatement with
the filing of this Form 10-QSB. The effect of this restatement was to
increase selling, general, and administrative expenses and net loss by
$217,075 for the three months ended March 31, 2001. Net income per share
for the nine months ended September 30, 2001 decreased from $0.20 to $0.16
on a fully diluted basis.
7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion may contain "forward-looking statements". Forward-looking
statements reflect the Company's current views with respect to future events.
Actual results may vary materially and adversely from those anticipated,
believed, estimated or otherwise indicated. 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 as general economic conditions, consumer product
acceptance, and competitive products, and others which are not known. No
forward-looking statements are a guarantee of future results or events, and one
should avoid placing undue reliance on such statements.
(a) Introduction
The Company was incorporated in April 1995 as a nutrition technology
company that researches, develops, and commercializes functionally unique
proprietary products for sports performance, weight loss, and Type 2 diabetes.
Sports Performance
Our first sports performance product, ENDUROX(R), was introduced in
March 1996 with commercial sales beginning in May 1996. In March 1997, we
extended the ENDUROX line of products with ENDUROX EXCEL(R). In February 1999,
we introduced ENDUROX(R)R4(R) Performance/Recovery Drink to be taken following
exercise. In clinical studies performed or funded by the Company, ENDUROX R4 has
demonstrated a number of exercise-related benefits including enhanced
performance, extended endurance, and decreased post-exercise muscle damage. In
June 2001, we introduced ACCELERADE Sports Drink, to be taken during exercise
using the same patented technology as ENDUROX R4. Research studies funded by the
Company have shown that ACCELERADE is significantly better than conventional
sports drinks in improving endurance during exercise. We are currently
formulating and developing a ready-to-drink version of ACCELERADE Sports Drink
expected to be test marketed in the 1st quarter of 2003.
Weight Loss
In weight loss, the Company has focused its research and development
efforts on development of novel nutritional compositions that stimulate the
body's major satiety peptide, or cholecystokinin (CCK). In April 2000, we
introduced our first weight loss product, SATIETROL(R), a natural appetite
control product based on this research. Clinical studies performed or funded by
the Company have shown that SATIETROL, a pre meal beverage, can reduce hunger up
to 43% 3 1/2 hours after eating. In January 2001, we extended our weight loss
product line with the introduction of SATIETROL COMPLETE(R), a 220-calorie meal
replacement product that incorporates the patented SATIETROL technology. In the
third quarter of 2002, clinicals studies funded by the Company showed that the
efficacy of SATIETROL can be improved. Further studies will be conducted in the
fourth quarter of 2002.
8
On June 1, 2001, the Company entered into an exclusive license
agreement with GlaxoSmithKline ("GSK"), one of the world's largest
pharmaceutical companies, for SATIETROL, the Company's appetite control product.
The agreement provided GSK with worldwide rights to the trademarks, technology,
patents, and know how for SATIETROL for the duration of the patents which expire
in 2017. Under the agreement, the Company received an initial payment of
$1,000,000 and received a subsequent milestone payment of $250,000. The
agreement permitted GSK to terminate the license agreement at any time for any
reason, provided that it pays all milestone payments earned prior to
termination. In the event the agreement was terminated, all rights to the
product would revert to the Company. GSK also purchased approximately 9% of the
Company's common stock for $1.5 million under a contemporaneous stock purchase
agreement. As of September 30, 2002, the Company has received an aggregate
$2,750,000 from GSK from the combined licensing and stock purchase agreements.
During the third quarter of 2002, GSK terminated the license agreement. As a
result, the Company is now free to explore other options for the SATIETROL
technology with other potential partners.
Type 2 Diabetes
Type 2 diabetes has become the fastest growing chronic condition in the
United States. Obesity and poor glucose regulation appear to be the primary
characteristics of this condition. Research has suggested that cholecystokinin
(CCK) may play a role in insulin release and glucose regulation. The Company's
research in this area has been to focus has been focused on developing a
nutritional product that can help Type 2 diabetics lose weight by controlling
appetite while improving glucose regulation.
(b) Results of Operations-Three and Nine Months Ended September 30, 2002 vs.
September 30, 2001
We recorded a net loss of ($1,676,450), or ($0.27) per share, for the
third quarter ended September 30, 2002, compared to net income of $19,714, or
$0.00 per share, for the third quarter ended September 30, 2001. We recorded a
net loss of ($1,972,300), or ($0.32) per share, for the nine-month period ended
September 30, 2002, compared to net income of $1,001,234, or $0.16 per share,
for the nine-month period ended September 30, 2001. The net loss in 2002 versus
the net income in 2001 for both the three- and nine- month periods ended
September 30 is due primarily to decreased revenues, increased selling, general
and administrative expenses, and a write down for excess SATIETROL inventory as
discussed below. Without taking into account the effect of our initial
$1,000,000 license fee from GSK (and any offsetting expenses booked in
connection with GSK), discussed below, our net income for the nine-month period
ended September 30, 2001 would have been $26,234, or $0.00 per share.
Revenues in the quarter ended September 30, 2002 were $1,401,981
compared to $1,328,560 for the same period in 2001. Revenues in the nine-month
period ended September 30, 2002 were $4,377,007 compared to $5,800,252 for the
same period in 2001. Although total revenues decreased due to decreases in sales
of our SATIETROL product line, revenues from our sports performance products
were up 16% for the three months ended September 30, 2002 versus the same period
in 2001 and up 40% for the nine months ended September 30, 2002 versus the same
period in 2001. This is due to continued product acceptance and usage as well as
our aggressive 2002 marketing and advertising campaign. SATIETROL revenues
declined significantly in the three- and nine- month periods ending September
30, 2002 versus the same periods in 2001 as in 2001 we received strong editorial
exposure in several national women's magazines resulting in $1,700,000 in
SATIETROL sales through September 30, 2001. Typically, our products in the
SATIETROL category do not receive this type of independent exposure. In the
nine- month period ending September 30, 2001, we also recorded $1,000,000 in
licensing revenues from GSK for our SATIETROL technology (see above). We had no
such licensing revenues in 2002.
9
Gross profit for the third quarter of 2002 was ($593,232), which
includes a $1,297,485 write down of excess SATIETROL inventory. Before this
write down, gross profit was $704,253. This compares to gross profit of $738,562
for the same period in 2001. In the third quarter of 2002, we chose to focus our
resources on developing our sports drink business resulting in reduced SATIETROL
sales. The decision to write down the excess SATIETROL inventory was made in
accordance with generally accepted accounting principles. Gross profit for the
nine months ended September 30, 2002 was $1,010,870 after the write down of
inventory, versus $3,478,985 for the same period in 2001. Gross profit for the
nine-month period in 2001 included the $1 million from the licensing revenue
from our SATIETROL licensing agreement with GlaxoSmithKline.
Our gross profit margin on product sales (before the inventory write
down) decreased to 50.2% for the three months ended September 30, 2002 from
55.6% for the three months ended September 30, 2001 and increased to 52.7% for
the nine-month period ended September 30, 2002 from 51.6% for the same period in
2001. The primary reason for the decrease in gross margin for the three-month
period in 2002 versus the same period in 2001 is that in the third quarter of
2002 we had a larger share of product sales made to distributors as opposed to
directly to retailers. The primary reasons for the increase in gross margin in
the nine-month periods were that, in 2001, sales discounts were given to new
customers to increase distribution of our products and payment discounts were
offered to customers to accelerate cash flow. Payment discounts stopped during
the second quarter of 2001 as the Company improved its cash position.
Our selling, general, and administrative ("S, G, & A") expenses
increased to $1,007,894 for the three-month period ended September 30, 2002 from
$702,764 for the three-month period ended September 30, 2001. Our S, G, & A
expenses increased to $2,850,211 for the nine-month period ended September 30,
2002 from $2,304,450 for the same period in 2001. The primary reason for the
increase in S, G, & A expenses in the three-month and nine-month periods ended
September 30, 2002 compared to the same periods in 2001 was an increase in
advertising and promotions expense as we carry out our 2002 marketing plan and
establish the ACCELERADE brand.
Research and development expenses were $64,453 for the three months
ended September 30, 2002 versus $22,611 for the three months ended September 30,
2001. Research and development expenses were $111,813 for the nine months ended
September 30, 2002 versus $73,454 for the nine months ended September 30, 2001.
The increase for the three- and nine- month periods ending September 30, 2002 as
compared to the same periods in 2001 is due to the clinical work conducted in
the 3rd quarter of 2002 on our SATIETROL technology as discussed above. We
anticipate research and development expenses will increase as additional
clinical trials and studies are conducted on all of our products as we continue
to seek out additional patents and claims for our products.
10
(c) Liquidity and Capital Resources
At September 30, 2002, the Company's current assets exceeded its
current liabilities by approximately $2.8 million with a ratio of current assets
to current liabilities of approximately 5.8 to 1. Cash decreased $960,288 from
December 31, 2001 primarily because of our net loss for the first nine months of
2002 as well as an increase of $497,411 in accounts receivable from December 31,
2001 which was offset by an increase in accounts payable/accrued expenses of
$240,704. Inventory levels decreased by $970,612 at September 30, 2002 as
compared to December 31, 2001, predominantly because of the write down of excess
SATIETROL inventory as discussed above.
At our current level of operations, the Company expects to be able to
operate without additional cash. However, we may seek to raise additional cash
to fund the launch of the ACCELERADE ready-to-drink product.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. Based on their evaluation of
the Company's disclosure controls and procedures (as defined in Rules 13a-14(c)
and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of a date within 90 days of the filing date of this
Quarterly Report on Form 10-QSB, the Company's chief executive officer and chief
financial officer have concluded that the Company's disclosure controls and
procedures are designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms and are operating in an effective manner.
Changes in internal controls. There were no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their most recent evaluation.
II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
(a), (b) Changes in Securities:
None.
(c) Recent Sales of Unregistered Securities:
None.
11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
99.1 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
1. On August 14, 2002, the Company filed a Current Report on Form 8-K,
reporting, under Item 9, the certifications of the Company's Form 10-QSB for the
fiscal quarter ended June 30, 2002 by Robert Portman, Chief Executive Officer,
and Stephen P. Kuchen, Chief Financial Officer.
2. On October 7, 2002, the Company filed a Current Report on Form 8-K,
reporting, under Item 5, the termination of a licensing agreement with
GlaxoSmithKline.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PACIFICHEALTH LABORATORIES, INC.
By: /S/ STEPHEN P. KUCHEN
------------------------------
STEPHEN P. KUCHEN
Vice President - Finance & CFO
(Principal Financial Officer and
Principal Accounting Officer)
Date: NOVEMBER 12, 2002
12
I, Robert Portman, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of PacificHealth
Laboratories, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002
/s/ Robert Portman
--------------------------------------------
Robert Portman, Chief Executive Officer and President
13
I, Stephen P. Kuchen, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of PacificHealth
Laboratories, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002
/s/ Stephen P. Kuchen
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Stephen P. Kuchen, Chief Financial Officer
and Vice President, Finance
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