SCOLR, Inc. Reports First Quarter Financials; First Results Since Completing Transition to Specialty Pharma / Drug Delivery Company

Business Wire, May 18, 2004

Business Editors/Health/Medical Writers

BELLEVUE, Wash.--(BUSINESS WIRE)--May 18, 2004

SCOLR, Inc. (AMEX:DDD) reported today financial results for the first quarter ended March 31, 2004. As previously announced, the Company completed the sale of its probiotics business effective December 31, 2003. The results for the first quarter reflect the transition to SCOLR's specialty pharma / drug delivery business model and the completed sale of the probiotics division which historically had generated substantially all of the Company's revenues. In addition, the Company completed a private placement which raised approximately $10.4 million through the issuance of equity securities during the quarter. This transaction significantly enhanced the Company's balance sheet and enabled the Company to eliminate outstanding indebtedness. The Company is now positioned to accelerate its oral drug delivery development.

For the quarter, the Company reported revenues of $133,294, a decrease of $1,571,967 or 92 percent, an operating loss of ($910,201), and a net loss of ($914,603), or ($0.03) per share (basic and diluted) as compared with revenues of $1,705,261, an operating loss of ($259,376), and a net loss of ($367,129), or ($0.02) per share (basic and diluted), for the quarter ended 2003.

SCOLR is currently generating increasing oral drug delivery royalty revenues (based on its patented Controlled Delivery Technology, CDT(R), platform) from its dietary supplement products currently available in more than 8,000 retail outlets, including Wal-Mart, Rite Aid, GNC and Trader Joe's.

Royalty revenues for the quarter ended March 31, 2004 rose to $133,294 as compared with $108,278 for the same period ended 2003. This amount does not include $66,186 paid by the buyer of SCOLR's former probiotics business for sales during Q1 which will be accounted for in Q2 as an offset to the note receivable in connection with the sale of the probiotics division.

Gross profit of $133,294 equaled royalty revenues in 2004 as there was no direct cost of sales related to these revenues. Expenses for sales & marketing, and general & administrative decreased as compared with 2003 as a result of the sale of the probiotics business. Those expenses, along with research & development costs are all expected to increase significantly this year, consistent with the Company's plan to develop its technology, expand operations and develop systems that support commercialization of the CDT platform.

Daniel O. Wilds, President and CEO, said that, "As expected, the losses are primarily attributable to the costs of developing our specialty pharma/drug delivery business. Licensing royalty revenues, albeit modest, are growing.

"Subsequent to raising $10.4 million in a private placement in February, we targeted the first four CDT formulations which we will develop internally -- two prescription formulations (Tramadol and Niacin) and two OTC (Ibuprofen and Pseudoephedrine) formulations. These four compounds collectively address a $3.5 billion U.S. marketplace," continued Wilds.

"Having our own product development portfolio provides three primary benefits for SCOLR. First, it frees us from having a partner control the timing of product development. Second, it allows us to do the work necessary to bring selected CDT formulations closer to market on our own timetable. And third, the progress made in that process will allow us to negotiate higher royalties and up-front payments than we could if we had not made that progress," added Wilds.

Based in Bellevue, Washington, SCOLR, Inc. is a specialty pharmaceutical company leveraging formulation expertise and its patented CDT(R) platform to introduce distinctive and novel OTC products, prescription drugs and dietary supplements. SCOLR's CDT drug delivery platform provides distinctive products with tangible benefits for the consumer and competitive commercial advantages for licensees. Partnerships with pharmaceutical, OTC and natural products industry companies will enable SCOLR to co-develop new products and to add value and protection to existing product franchises. For more information on SCOLR, please call 425-373-0171 or visit http://www.SCOLR.com/.> This press release contains forward-looking statements (statements which are not historical facts) within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including activities, events or developments that the company expects, believes or anticipates will or may occur in the future. A number of factors could cause actual results to differ from those indicated in the forward-looking statements, including the Company's ability to continue to successfully develop new formulations, initiate and complete successful human studies and clinical trials, obtain regulatory approval, to market and to provide its products and services and maintain their effectiveness, the continuation of arrangements with the Company's product development partners and customers, competition, government regulation, and general economic conditions. Such statements are subject to a number of assumptions, risks and uncertainties which are described in detail in our registration statements, reports and other filings with the Securities and Exchange Commission. Such filings are available on our website or at www.sec.gov. Readers are cautioned that such statements are not guarantees of future performance and that actual results or developments may differ materially from those set forth in the forward-looking statements. The Company undertakes no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances.