Honolulu-based biopharmaceutical company Cardax Inc., struggling with its top customer General Nutrition Corp. in Chapter 11 bankruptcy, posted a wider loss of $1.7 million in the second quarter.
Cardax, which produces the anti-inflammatory product ZanthoSyn, said in a recent filing with the Securities and Exchange Commission that it recorded an allowance in the quarter of $66,261 for “doubtful collections” from GNC.
GNC, a health and wellness company, filed for reorganization in U.S. Bankruptcy Court in Delaware on June 23 to allow the retailer to keep operating while it explored either selling the company or reorganizing it. A bankruptcy judge on Wednesday approved Harbin Pharmaceutical Group Holding Co.’s initial bid of $760 million, plus the assumption of certain debt, as a minimum purchase price for GNC’s assets. Harbin’s bid will be the starting point at a Sept. 15 auction that is open to other bidders.
GNC filed for bankruptcy with about $900 million in funded debt and $111 million in unsecured liabilities. The company identified 726 stores throughout the U.S. and Canada that it may close.
Cardax, which began selling ZanthoSyn to GNC in 2017, said revenue nearly tripled last quarter to $134,521 from $45,391 primarily due to differences in GNC promotional incentives and ordering patterns related to ZanthoSyn. Cardax, which has never made a profit, lost $1.1 million in the year-earlier quarter.
The company reported in its filing that it had interest expense during the quarter of just over $1 mil- lion compared with $49.7 million in the year-earlier quarter. The interest expense was primarily attributed to amortization of noncash discounts associated with debt issuances.
Cardax also said in the filing it will require additional financing to continue to fund its operations and to pay existing and future liabilities and other obligations. The company had $30,349 in cash as of June 30.
During the first half of this year, Cardax raised $1.46 million in gross proceeds through the issuance of debt securities. Cardax also said it received a Paycheck Protection Program loan under the U.S. Small Business Administration for $211,300 on April 22.
2ND-QUARTER LOSS
$1.7 million
YEAR-EARLIER LOSS
$1.1 million
