Carlon Colker, M.D., Appointed to Head Scientific Advisory Board; Reports Second Quarter Results and Recaps Recent Developments

Business Wire,  August 23, 2005  

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Total interest expense was $454,000 and $623,000 for the three and six months ended June 30, 2005, respectively, compared with $146,000 and $449,000 during the same periods in 2004, respectively. The increase is mostly due to the amortization of the remaining discount under the beneficial conversion feature of the company's convertible preferred stock and the accrued interest on the convertible debentures that were converted into shares of common stock.

For the three months and six months ended June 30, 2005, the company reported an operating income from continuing operations of $609,000 and an operating loss from continuing operations of ($3,550,000), respectively, which included a pick up of approximately $2,720,000 and $646,000 for the fair value of warrant liability related to its financing activities, compared to an operating loss of ($99,000) and ($789,000) for the same periods in 2004, respectively.

The company reported a net income (loss) attributable to shareholders for the three and six months ended June 30, 2005 of $244,000 and ($3,994,000) or $0.01 and ($0.19) per share (basic and diluted), respectively, compared with a net loss of ($610,000) and ($1,792,000) or (0.04) or ($0.14) per share (basic and diluted) for the same periods in 2004, respectively.

2005 Outlook & Beyond

Management continues to focus on progressively growing revenues during the year, primarily driven by sales of Shugr(TM) and expected sales of Sequestrol(TM). Although actual revenues during the first half of the year have been lackluster, management expects revenues to increase in the balance of the year as the strong demand for Shugr translates into sales and the Sequestrol infomercial airs.

"We are continuing to work on securing distribution agreements with national retail chains, a large coffee house and several food and beverage companies," commented Fred E. Tannous. "We have extended our timeline expectations since large institutional customers typically conduct exhaustive product testing prior to placing a significant order. We are excited about the prospect of closing such deals in the coming months. In addition, we are in the process of negotiating several distribution agreements with large international conglomerates for sales of Shugr(TM) throughout Europe and Asia."

The company is still on track to launching the direct response marketing campaigns for Sequestrol(TM) with expectations for airing a 30-minute infomercial later this year. "We are excited about the progress we have made on the Sequestrol campaign. We believe that, if successful, this infomercial campaign can generate revenues in excess of $40 million," concluded Bill Glaser.

The company expects to continue exploring complementary business acquisitions or the acquisition of proprietary products, intellectual properties or enter into synergistic joint venture arrangements.

About Health Sciences Group, Inc.

Health Sciences Group identifies, develops and commercializes innovative nutritional products and functional ingredients derived from natural sources to provide consumers and medical professionals with preventative healthcare alternatives. The company markets its own line of proprietary products based on novel technologies with clinically-supported, GRAS-certified ingredients under its Swiss Research(TM) and Swiss Diet(TM) brand names. For more information, visit www.HSciences.com, www.SwissDiet.com and www.Shugr.com.