<TABLE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
-----------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended to
Commission File Number: 333-45241
ELITE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
<CAPTION>
<S> <C>
Delaware 22-3542636
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
165 Ludlow Avenue, Northvale, New Jersey 07647
(Address of principal executive offices) (Zip Code)
(201)750-2646
(Registrant's telephone number, including area code)
(Former name,former address and former fiscal year,if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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 []
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the issuer has filed all documents and reports required to be
filed by Sections 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's common stock as of June 30, 1998 is 8,512,615
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ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
INDEX
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Page No.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 1999 and
June 30, 1998 (unaudited) 3
Consolidated Statements of Operations for the three months
ended June 30, 1999 and June 30, 1998 (unaudited) 4
Consolidated Statements of Cash Flows for the three months
ended June 30, 1999 and June 30, 1998 (unaudited) 5
Notes to Form 10-QSB 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II OTHER INFORMATION 10
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security-Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
SIGNATURES 11
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-2-
<PAGE>
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ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<S> <C> <C>
June 30,
1999 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $4,681,864 $3,116,877
Stock subscription receivable 43,750 --
Prepaid expenses and other current assets 33,003 39,048
------ ------
Total current assets 4,758,617 3,155,925
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 1,643,452 1,173,554
INTANGIBLE ASSETS - net of accumulated amortization 17,408 17,892
OTHER ASSETS:
Deposits 196,538 9,000
------- -----
$6,616,015 $4,356,371
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capitalized lease obligation $35,725 $42,331
Accounts payable and accrued expenses 57,641 45,734
------ ------
Total current liabilities 93,366 88,065
------ ------
CAPITALIZED LEASE OBLIGATION - net of current portion --- 47,021
Total liabilities 93,366 135,086
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value;
Authorized - 25,000,000 shares
Issued and outstanding - 8,512,615 and
7,237,613 shares, respectively 85,126 72,376
Additional paid-in capital 11,265,113 6,833,405
Accumulated deficit (4,827,590) (2,684,496)
----------- -----------
Total stockholders' equity 6,522,649 4,221,285
--------- ---------
$6,616,015 $4,356,371
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-3-
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<CAPTION>
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<S> <C> <C>
THREE MONTHS ENDED
JUNE 30,
1999 1998
REVENUES:
Consulting and test fees $ 693 $ 4,222
------------ ----------------
Total revenues 693 4,222
----------- ----------------
OPERATING EXPENSES:
Research and development 394,476 208,238
General and administrative 376,237 129,316
Depreciation and amortization 17,449 6,324
------ -----
788,162 343,878
======= =======
LOSS FROM OPERATIONS (787,469) (339,656)
--------- ---------
OTHER INCOME (EXPENSES):
Interest income 19,519 52,040
Interest expense (999) (121)
----- -----
18,520 51,919
------ ------
LOSS BEFORE PROVISION FOR INCOME TAXES ( 768,949) (287,737)
PROVISION FOR INCOME TAXES --- ---
--- ---
NET LOSS $ (768,949) $ (287,737)
============= =============
NET LOSS PER COMMON SHARE $ (0.10) $ (0.04)
=============== ===============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,447,778 7,237,613
========= ==========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-4-
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ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<S> <C> <C>
THREE MONTHS ENDED
JUNE 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (768,949) $ (287,737)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation 17,098 6,000
Amortization of intangibles 351 324
Changes in assets and liabilities:
Consulting and test fees receivable --- 25,000
Prepaid expenses and other current assets 19,602 (27,081)
Accounts payable (42,779) 5,240
Accrued expenses and other current liabilities (111,339) --
--------- -----------
NET CASH USED IN OPERATING ACTIVITIES (886,016) (278,254)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (410,313) (949,016)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (410,313) (949,016)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from of notes payable - related parties --- ---
Proceeds from issuance of common stock and warrants 4,418,750 ---
Payments of offering costs in connection with private placement ---
----------- ------
(3,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,418,75 (3,000)
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,122,421 (1,230,270)
CASH AND CASH EQUIVALENTS - beginning 1,559,443 4,347,147
---------- ---------
CASH AND CASH EQUIVALENTS - ending $ 4,681,864 $ 3,116,877
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 1,142 $ 120
Cash paid for income taxes --- ---
NONCASH FINANCING ACTIVITIES
Issuance of Stock Subscriptions $ 43,750 ---
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-5-
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO FORM 10-QSB
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The information in this Form 10-QSB includes the results of operations
of Elite Pharmaceuticals, Inc. ("the Company") and its wholly-owned
subsidiary, Elite Laboratories, Inc. ("Elite"), for the three months
ended June 30, 1999 and 1998. The data is unaudited, but includes all
adjustments including the elimination of intercompany accounts and
transactions which are, in the opinion of management, necessary for a
fair presentation of the interim periods presented.
The accounting policies utilized in the preparation of this Form 10-QSB
are the same as those set forth in the Company's Form 10K-SB at March
31, 1999 and should be read in conjunction with the disclosures
presented therein.
All information in this Form 10-QSB has been adjusted to reflect a
one-for-two reverse stock split on March 30, 1998.
The Company does not anticipate being profitable for fiscal year 2000,
therefore a provision for income tax was not established for the three
months ended June 30, 1999.
This quarterly report may contain forward-looking statements which
involve certain risks and uncertainties. Important factors could arise
which could cause the Company's operating results to differ materially
from those contained in any forward looking statement.
NOTE 2 - EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares
outstanding during each period presented. The Company has adopted FAS
128, "Earnings Per Share" and has restated prior periods to comply with
the provisions of this pronouncement. Common stock equivalents have not
been included as their effect would be antidilutive.
NOTE 3 - PURCHASE OF BUILDING
In May 1998, the Company closed on a contract to purchase a 15,000
square foot building to house its new office, laboratory and
manufacturing facility in Northvale, New Jersey. The purchase price was
$1,050,000 plus closing costs of $22,123.
NOTE 4 - CHANGES IN AUTHORIZED COMMON SHARES
In May 1998, the Company increased the authorized common shares, par
value $ .01 to 25,000,000.
-6-
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO FORM 10-QSB
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
NOTE 5 - STOCKHOLDER=S EQUITY
Private Placement Offering
In a private placement offering dated May 17, 1999, the Company raised
$4,462,500 consisting of 12.75 units; each unit consisting of 100,000
shares of common stock of the Company and 50,000 warrants, each warrant
entitling the holder to purchase one share of common stock at an
exercise price of $5.00 per share during the five year period
commencing with the date of closing of the private placement memorandum
(June 16, 1999). The price per unit was $350,000. The Company issued
1,275,000 shares of common stock and 637,500 warrants to purchase
common stock, at an exercise price of $5.00 per share.
The Company raised net proceeds of $4,452,500 from the private
placement after legal fees of $10,000.
NOTE 6 - PROPOSED BOND FINANCING OFFERING
On May 14, 1999, the Company entered into an underwriter/private
placement agreement with an investment banking firm for the issuance of
tax exempt bonds by the New Jersey Economic Development Authority. The
aggregate principal proceeds of the fifteen year term bonds are
expected to be a minimum of $2,000,000 and up to a maximum of
$3,000,000. The proceeds, net of offering costs expected to be a
minimum of $270,000 and up to a maximum of $300,000, are to be used by
the Company to refinance the land and building it currently owns, and
for the purchase of certain manufacturing equipment and related
building improvements. The expected closing date of the offering is
August 28, 1999.
The Company will be subject to underwriting fees equal to three percent
(3%) of the par amount of the bonds.
The bonds will be collateralized by a first mortgage lien on the
building which includes property and equipment.
-7-
ELITE PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 30, 1999 COMPARED TO
THE THREE MONTH PERIOD ENDED JUNE 30, 1998
Introduction
The Company has developed nine oral controlled release pharmaceutical
products to varying states of the development process.
Elite Labs has also conducted several research and development projects
on behalf of several large pharmaceuticals companies. These activities have
generated only limited revenue for Elite Labs to date.
Results of Consolidated Operations
The Company plans to focus its efforts on the following areas: (i) to
receive FDA approval for one or all nine of the oral controlled release
pharmaceutical products already developed, either directly or through other
companies; (ii) to commercially exploit these drugs either by licensure and the
collection of royalties, or through the manufacturing of tablets and capsules
using the formulations developed by the Company, and (iii) to continue the
development of new products and the expansion of its licensing agreements with
other large multinational pharmaceutical companies including contract research
and development projects.
Period Ended June 30, 1999 vs. Period Ended June 30, 1998
EliteAEs revenues for the periods ended June 30, 1999 were $693, a
decrease of $3,529 or approximately 84% over the comparable period of the prior
year. Net revenues primarily consisted of consulting and test fees of $693
(compared with $4,222 for the comparable period of the prior year).
-8-
ELITE PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 30, 1999 COMPARED TO
THE THREE MONTH PERIOD ENDED JUNE 30, 1998
(CONTINUED)
Period Ended June 30, 1999 vs. Period Ended June 30, 1998 (Continued)
General and administrative expenses for the period ended June 30, 1999
were $376,237, an increase of $246,921, or approximately 191% from the
comparable period of the prior year. The increase in general and administrative
expenses was substantially due to legal fees, consulting fees and new hires.
General and administrative expenses expressed as a percentage of revenues was
approximately 54291% for the period ended June 30, 1999 as compared to 3063% for
the comparable period of the prior year.
Research and development costs for the period ended June 30, 1999, were
$394,476, an increase of $186,238 or approximately 89% from the comparable
period of the prior year. The increase in research and development costs can be
attributed to increases in laboratory raw materials, supplies, payments to
clinical organizations for conducting biostudies on drug products developed by
the Company, and new hires. These increases have been made possible principally
because of the Company raising equity in its recent private placement offering,
and reflects increased efforts to develop drug release products and technology
in accordance with management's plan of operations.
Elite's net loss for period ended June 30, 1999 was $768,949 as
compared to $287,737 for the comparable period of the prior year. The increase
in the net loss was primarily due to increased internal research and development
costs, and general and administrative expenses.
Liquidity and Capital Resources
For the period ended June 30, 1999, net cash of $886,016 was used in
operating activities due to the Company's net loss of $768,949. For the period
ended June 30, 1998, net cash of $278,254 was used in operating activities as a
result of the Company's net loss of $287,737.
Forward Looking Statements
This report contains forward-looking statements that describe the Company's
business prospects. These statements involve risks and uncertainties including,
but not limited to, rapid technology changes, regulatory uncertainty, level of
demand for the Company's products and services, product acceptance, industry
wide competitive factors, and political, economic or other conditions.
Furthermore, market trends are subject to changes which could adversely affect
future results. Reference should be made to the Company's Prospectus for its
initial public offering declared effective on August 14, 1998, and the
supplement to the Prospectus dated August 19, 1998, for additional discussion
concerning such risk factors.
-9-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
Subject to a confidential private offering memorandum dated May 17,
1999, the Company offered 13 units ("units") of its securities at $350,000 per
unit. Each unit consists of 100,000 shares of common stock, $.01 par value and
50,000 Class A Redeemable Callable Common Stock Purchase Warrants. Each warrant
entitles the holder to purchase one share of common stock at an exercise price
of $5.00 during the five-year period commencing on the closing date of the
offering. The offering was conducted without registration under SEC exemption
afforded by Section 4(6) of the Securities Act and Rule 506 of regulations
promulgated thereunder. At the close of the offering, the Company accepted
subscriptions for 12.75 units, generating net proceeds of approximately
$4,452,500, after legal and filing fees, of which $4,202,500 will be used to
fund the working capital of the Company and the remaining $250,000 will fund
fees to advisors and consultants of the Company. The Company offered the
securities only to persons it believed after good faith investigation to be
accredited investors.
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-I
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K.
No report on Form 8-K has been filed during the
quarter ending June 30, 1999; however,
the Company has filed a Form 8-K in the period subsequent to the end of such
quarter, and the same is attached hereto for informational purposes.
SIGNATURES
Pursuant to the requirements 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.
ELITE PHARMACEUTICALS, INC.
Date: August 10 1999 By: /s/Atul M. Mehta
---------------------------------------------------
Atul M. Mehta
President & Chief Executive Officer
(Principal Executive Officer)
Date: August 10, 1999 By: /s/Mark I. Gittelman
---------------------------------------------------
Mark I. Gittelman
Treasurer
(Principal Financial & Accounting Officer)
REPORT ON FORM 8-K
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U.S. Securities And Exchange Commission
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
ELITE PHARMACEUTICALS, INC.
....................................................................................................................
(Exact name of registrant as specified in its charter)
<S> <C>
333-45241 22-3542636
....................................................................................................................
(Commission File Number) (I.R.S. Employer Identification No.)
....................................................................................................................
165 Ludlow Avenue, Northvale, New Jersey 07647
....................................................................................................................
(Address of principal executive office) (Zip Code)
(201) 750-2646
....................................................................................................................
Registrant's telephone number, including area code
....................................................................................................................
(Former Name or Former Address, if Changed Since Last Report)
</TABLE>
................................................................................
Item 5. Other Events
The Company recently concluded a private placement of its securities
resulting in the issuance of 1,275,002 shares of its common stock and 637,501
warrants. The private placement resulted in net proceeds to the Company of
$4,452,500.
The information set forth in the press release issued by Elite
Pharmaceuticals, Inc. attached hereto as Exhibit 99.1, is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) Exhibits
99.1 Press release of Elite Pharmaceuticals, Inc. dated July 8, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ELITE PHARMACEUTICALS, INC.
By:
Mark I. Gittelman, Treasurer
Date: August 4, 1999
EXHIBIT INDEX
Item No.
99.1 Press release of Elite Pharmaceuticals, Inc. dated July 8, 1999.
3
FOR IMMEDIATE RELEASE
ELITE CONCLUDES PRIVATE PLACEMENT OF ITS SECURITIES
July 8, 1999. Northvale, NJ Elite Pharmaceuticals, Inc. (OTC:BB ELIP) recently
raised $4,452,500 in a private placement of its securities. It intends to use
the bulk of the proceeds to fund working capital requirements, including
conducting clinical studies and product development with the object of obtaining
FDA approval. Elite also anticipates completing the issuance of tax-exempt bonds
by the New Jersey Economic Development Authority in the aggregate principal
amount of up to $3,000,000. Elite intends to apply the proceeds of the bond
financing to its new expanded facility in Northvale, New Jersey, to purchase
manufacturing equipment and qualify it to be a GMP facility by the FDA. This is
in keeping with Elite's goal of manufacturing pharmaceutical products in
sufficient quantities to seek FDA approval of drug products.
Elite Pharmaceuticals, Inc. through its wholly owned subsidiary is engaged in
the development of oral controlled release products such as delayed, sustained
or targeted release tablets and capsules. It has developed several products in
cardiovascular, anti-inflammatory and anti-diabetic therapeutic categories and
has undertaken contract development for some major pharmaceutical companies.
All statements other than statements of historical fact contained in this Press
Release are forward looking statements. Forward looking statements in this Press
Release generally are accompanied by words such as "intend," "anticipate,"
"believe," "estimate," "project," or "expect" or similar statements. Although
the Company believes that the expectations reflected in such forward looking
statements are reasonable, no assurance can be given that such expectations will
prove correct. Factors that could cause the Company's results to differ
materially from the results discussed in such forward looking statements include
the risks described in the prospectus of ELIP. All forward looking statements in
this Press Release are expressly qualified in their entirety by the cautionary
statements in this paragraph.
Contact: Sharon Will, Investor Relations at 212-572-0791 or Fax 212-572-0764.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001053369
<NAME> Elite Pharmaceuticals, Inc.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Mar-31-2000
<PERIOD-START> Apr-01-1999
<PERIOD-END> Jun-30-1999
<CASH> 4,681,864
<SECURITIES> 0
<RECEIVABLES> 43,750
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,758,617
<PP&E> 1,978,724
<DEPRECIATION> 335,272
<TOTAL-ASSETS> 6,616,015
<CURRENT-LIABILITIES> 93,366
<BONDS> 0
0
0
<COMMON> 85,126
<OTHER-SE> 6,437,523
<TOTAL-LIABILITY-AND-EQUITY> 6,616,015
<SALES> 693
<TOTAL-REVENUES> 693
<CGS> 0
<TOTAL-COSTS> 788,162
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 999
<INCOME-PRETAX> (768,949)
<INCOME-TAX> 0
<INCOME-CONTINUING> (768,949)
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<NET-INCOME> (768,949)
<EPS-BASIC> (.10)
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