FOR IMMEDIATE RELEASE

VITAL LIVING, INC. REPORTS FINANCIAL RESULTS
FOR THE FIRST QUARTER OF 2005

Results from Continuing Operations Reflect a 34% Increase In Revenues and a 85% Drop in Net Loss for Quarter

Benefits of the Second Half of 2004 Corporate Restructuring Initiatives Showcase

Phoenix, Ariz - (BusinessWire) ñ May 24, 2005 - Vital Living, Inc. (OTCBB:VTLV) today reported its financial results for the quarter ended March 31, 2005. Revenues were $1,262,000 for the quarter ended March 31, 2005 compared with $943,000 for the quarter ended March 31, 2004, a 34% increase. The net loss was $722,000, or $.01 per basic and fully diluted share, for the 2005 quarter compared with $3,374,000, or $.06 per basic and fully diluted share, for the comparable quarter of 2004.

Commenting on the results, Gregg A. Linn, Chief Financial Officer of the Company, stated, "The dramatic improvement in Vital Living's financial performance during the first quarter demonstrates that our strategy to focus on the development and marketing of our proprietary nutritional and nutraceuticals product mix is working. By disposing of several business interests that were not part of our core competency, eliminating non-core personal and implementing a stringent cost- containment and expense management program, we have reduced our fixed costs, which minimized our cash burn and began to pave the road towards enhanced financial performance."

For the Quarter Ended March 31, 2005 Compared with the Quarter Ended March 31, 2004:

  • Gross profit from continuing operations increased 36% to $591,000 from $435,000;
  • Gross margin percentage from continuing operations increased to 47% from 34%;
  • Net loss from continuing operations decreased 85% to $401,000 from $2,614,000;
  • Net loss before discontinued operations decreased 76% to $722,000 from $3,025,000;

"Looking ahead, we believe that our turnaround strategy will continue to have a positive financial impact. Looking at our reported operating results for the quarter ended March 31, 2005 and adding back all non-cash charges in the quarter, we were marginally cash-flow positive. After consolidating our San Diego operations into our Phoenix facilities and initiating several outsourcing arrangements, we have begun to feel the synergy of these recent initiatives", continued Linn.

About Vital Living, Inc.

Headquartered in Phoenix, Arizona, Vital Living develops or licenses nutraceuticals and markets them for distribution through physicians, medical groups, chiropractic offices and retail outlets. Vital Living develops and tests its nutraceuticals in collaboration with leading medical experts in the nutraceuticals field and has designed them to be incorporated by physicians into a standard physician-patient program in which patients supplement doctor-prescribed pharmaceuticals with its nutraceuticals.

Vital Living is developing unique, safe and naturally derived nutritional products, utilizing advanced drug-delivery technologies, including the Geomatrix® technology through its affiliation with SkyePharma PLC. The Geomatrix® technology has been provided exclusively for Vital Living's pharmaceutical development in China, and the development of nutraceuticals on a global basis.

For more information on the Company, please visit www.vitalliving.com.

Except for any historical information, the matters discussed in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 market and provide its products and services and maintain their effectiveness, the continuation of the arrangements with the Company's product development partners, the ability of the company to meet its financial projections, and general economic conditions. Such statements are subject to a number of assumptions, risks and uncertainties. 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, whether as a result of new information or otherwise.
 
VITAL LIVING, INC.
Consolidated Balance Sheets
March 31, December 31,

2005

2004
Assets

(Unaudited)

(Audited)
Current assets:
Cash and cash equivalents 122,000 466,000
Accounts receivable, trade; net of allowance for doubtful accounts of $38,000 and $37,000, respectively. 547,000 446,000
Accounts receivable, related parties
Inventory, net of reserve of $54,000 for both periods. 57,000 141,000
Marketable securities 173,000 173,000
Prepaid expenses and other current assets 61,000 71,000
Total current assets 960,000 1,297,000
Other assets
Deferred debt issuance costs, net of accumulated amortization of $499,000 and $450,000, respectively. 716,000 766,000
Property and equipment, net 64,000 70,000
Goodwill 3,296,000 3,226,000
License agreement - GEOMATRIXÆ, net 20,177,000 20,784,000
Other intangible assets, net 15,000 15,000
Other non-current assets 28,000 13,000
Total other assets 24,296,000 24,874,000
Total assets 25,256,000 26,171,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable, trade 1,548,000 1,864,000
Accrued and other current liabilities 1,720,000 1,566,000
Current portion of long-term debt 472,000 518,000
Notes payable, related parties 162,000 162,000
Total current liabilities 3,902,000 4,110,000
Long-term debt, net of unamortized debt discount of $2,003,000 and $2,140,000, respectively. 2,283,000 2,146,000
Total liabilities 6,185,000 6,256,000
Commitments and contingencies - -
Stockholders' equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized:
Preferred stock - Series D, $0.001 par value, 1,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding, respectively 1,000 1,000
Additional paid-in capital - preferred 304,000 304,000
Common stock, $0.001 par value, 150,000,000 shares authorized; 101,387,000 shares issued, 98,592,000 outstanding 101,000 99,000
Additional paid-in capital - common 86,848,000 86,733,000
Stock, options, and warrants - unamortized (391,000) (214,000)
Treasury stock, 424,000 shares at cost (72,000) (72,000)
Accumulated other comprehensive income (946,000) (946,000)
Accumulated deficit (66,774,000) (65,990,000)
Total stockholders' equity 19,071,000 19.915,000
Total liabilities and stockholders' equity 25,256,000 26,915,000

VITAL LIVING, INC.
Consolitdated Statements of Operations
Three Months Ended March 31,
2005 2004
Revenue 1,262,000 943,000
Cost of goods sold 671,000 508,000
     Gross profit 591,000 435,000
Administrative expenses
    Salaries and benefits 131,000 855,000
    Professional and consulting fees 102,000 206,000
    Selling, general and administrative 115,000 461,000
    Research and development 30,000 298,000
    Depreciation and amortization 614,000 1,229,000
        Total administrative expenses 992,000 3,049,000
Net loss from operations (401,000) (2,614,000)
Other income (expense)
    Other expense (321,000) (411,000)
Net loss before discontinued operations (722,000) (3,025,000)
Discontinued operations
    Loss from operations - (349,000)
Loss from discontinued operations - (349,000)
Net loss available to common stockholders (722,000) (3,374,000)
Basic and diluted loss per share before discontinued operations ($0.01) ($0.05)
Gain (loss) from discontinued operations $0.00 ($0.01)
Basic and diluted loss per share available to common stockholders ($0.01) ($0.06)
Weighted average basic and diluted common stock outstanding 99,465,000 60,538,000

For more information on the company, please contact:

Gregg A. Linn, CFO, 602-952-9909
or via email at glinn@vitalliving.com