<TABLE>
<CAPTION>
<S> <C>
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 DECEMBER 31, 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)
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
</TABLE>
(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 DECEMBER 31,1999 IS 8,560,355
<PAGE>
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
<S> <C>
Page No.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1999 and
March 31, 1999 (unaudited) 3
Consolidated Statements of Operations for the nine months
ended December 31, 1999 and December 31, 1998 (unaudited) 4
Consolidated Statements of Cash Flows for the nine months
ended December 31, 1999 and December 31, 1998 (unaudited) 5
Notes to Form 10-QSB 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II OTHER INFORMATION 11
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 or Form 8-K
SIGNATURES 12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
DECEMBER 31, MARCH 31
1999 1999
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,132,331 $ 1,559,443
Consulting and test fees receivable --- ---
Prepaid expenses and other current assets 18,912 52,605
--------- ----------
Total current assets 4,151,243 1,612,048
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 2,385,843 1,250,237
INTANGIBLE ASSETS, net of accumulated
amortization 16,706 17,759
OTHER ASSETS:
Deposits and other assets 340,538 196,538
Restricted Cash 1,201,353 ---
EDA bond offering costs, net of accumulated amortization 189,259 ---
------- -------
$ 8,284,942 $ 3,076,582
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capitalized lease obligation $ 8,184 $ 47,021
Accounts payable 34,396 100,420
Accrued Expenses and other current liaiblites 4,076 100,043
Current portion of EDA Bond 115,000 ---
------- --------
Total current liabilities 161,655 247,484
EDA Bond - net of current portion 2,885,000 ---
--------- ------
TOTAL LIABILITIES 3,046,655 247,484
--------- ------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value;
Authorized - 25,000,000 shares
Issued and outstanding - 8,560,355 and 7,237,613
shares, respectively 85,603 72,376
Additional paid-in capital 11,378,622 6,815,362
Accumulated Deficit (6,225,938) (4,058,640)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 5,238,287 2,829,098
----------- -----------
$ 8,284,942 $ 3,076,582
================ ===============
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
REVENUES:
Licensing fees $ --- $ 150,000 $ --- $ 150,000
Contract research and development --- --- 615 ---
Consulting and Test Fees 6,000 --- 6,293 4,222
----- ------- ----- -----
TOTAL REVENUES 6,000 150,000 6,908 154,222
----- ------- ----- -------
OPERATING EXPENSES:
Research and development 595,970 281,526 1,532,925 763,200
General and administrative 146,505 174,987 721,057 474,107
Depreciation and Amortization 20,674 6,324 56,646 18,972
------ ----- ------ ------
763,149 462,837 2,310,628 1,256,279
------- ------- --------- ---------
LOSS FROM OPERATIONS (757,149) (312,837) (2,303,720) (1,102,057)
--------- --------- ----------- -----------
OTHER INCOME (EXPENSES):
Interest income 76,615 30,742 139,046 119,527
Interest Expense (428) (1,720) (2,623) (6,313)
-------- --------- ------- ----------
76,187 29,022 136,423 113,214
------- -------- ------- ----------
LOSS BEFORE PROVISION FOR INCOME TAXES (680,962) (283,815) (2,167,297) (988,843)
------- ------- ----------- ---------
PROVISION FOR INCOME TAXES --- --- --- ---
-------- ------- ---------- ---------
NET LOSS $ (680,962) $ (283,815) $(2,167,297) $ (988,843)
=============== =========== ============ ==============
BASIC LOSS PER COMMON SHARE $ (.08) $ (.04) $ (.27) $ (.14)
======= ======== ======= ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 8,556,800 7,237,613 8,177,515 7,237,613
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
DECEMBER 31,
1999 1998
----- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,167,297) $ (988,843)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and Amortization 56,646 18,972
Changes in assets and liabilities:
Consulting and test fees receivable --- 25,000
Prepaid expenses and other current assets 33,693 (9,969)
Accounts payable (66,025) (13,670)
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (95,967) (21,034)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (2,238,950) (989,544)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,186,898) (1,219,495)
Payment for deposit on property and equipment (144,000) ---
Payments for Patent Filings --- (8,286)
Proceeds from Security Deposits --- 9,000
RESTRICTED CASH (1,201,353)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES (2,532,251) (1,218,781)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of NJ Economic Development Authority (EDA Bonds) 3,000,000 ---
Payments of offering costs in connection with issuance of EDA Bonds (193,560) ---
Proceeds from issuance of common stock and warrants in connection with private
Placement 4,462,500 ---
Payments of offering costs in connection with private placement (10,000) (19,203)
Payments of registration costs in connection with private placement (7,878) ---
Proceeds from issuance of common stock and warrants 131,864 ---
Principal Payments on Capital Lease Obligation (38,837) (31,328)
---------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,344,089 (50,531)
--------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,572,888 (2,258,856)
CASH AND CASH EQUIVALENTS - BEGINNING 1,559,443 4,347,147
--------- ---------
CASH AND CASH EQUIVALENTS - ENDING $ 4,132,331 $ 2,088,291
============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 2,623 $ 6,313
Cash paid for income taxes 200 200
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO FORM 10-QSB
NINE MONTHS ENDED DECEMBER 31, 1999AND 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 nine months ended December 31, 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 two-for-one stock split on August 21, 1997 and 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 nine months ended December 31, 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.
<PAGE>
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO FORM 10-QSB
NINE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
NOTE 5 - COMMITMENTS
On October 1, 1998, the Company entered into a consulting
agreement with an investment banking firm ("Consultant"). The
terms of the agreement provide for the consultant to render
various services to the Company relating to financial and
investment activities for a term of twenty four months.
As compensation for the consultant's services, the Company shall
grant warrants to purchase 300,000 shares of the Company's common
stock at an exercise price of $6 per share. The warrants shall
vest at the rate of 50,000 warrants every ninety days after the
commencement of the agreement.
The agreement may be terminated by the Company at any time after
ninety days following the commencement date, upon thirty days
written notice.
NOTE 6 - 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 7 - BOND FINANCING OFFERING
On September 2, 1999, the Company completed the issuance of tax
exempt bonds by the New Jersey Economic Development Authority.
The aggregate principal proceeds of the fifteen year term bonds
were $3,000,000. The proceeds, net of offering costs of $60,000,
are being 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.
Offering costs in connection with the bond issuance totaled
$193,560, including the $60,000 mentioned above which were paid
from bond proceeds. Offering costs included underwriter fees
equal to $90,000 (three percent (3%) of the par amount of the
bonds).
The bonds are collateralized by a first lien on the
building which includes property and euipment.
Several restricted cash accounts are maintained in connection
with the issuance of these bonds. These include amounts
restricted for payments of bond principal and interest, for the
refinancing of the land and building the Company currently owns,
for the purchase of certain manufacturing equipment and related
building improvements as well as for the maintenance of a
$300,000 Debt Service Reserve. All restricted amounts other
than the $300,000 Debt Service Reserve are expected to be
expended within twelve months and are therefore categorized as
current assets.
<PAGE>
ELITE PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NINE MONTH PERIOD ENDED DECEMBER 31, 1999 COMPARED TO
THE NINE MONTH PERIOD ENDED DECEMBER 31, 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 DECEMBER 31, 1999 VS. PERIOD ENDED DECEMBER 31, 1998
Elite's revenues for the period ended December 31, 1999 were $6,908, a
decrease of $147,314 or approximately 96% over the comparable period of the
prior year. Net revenues primarily consisted of consulting and tests fees of
$6,293 and contract research and development fees of $615 (compared with
$150,000 of licensing fees and $4,222 of consulting and test fees for the
comparable period of the prior year).
General and administrative expenses for the period ended December 31,
1999 were $721,057, an increase of $246,950, or approximately 52% from the
comparable period of the prior year. The increase in general and administrative
expenses was substantially due to legal and consulting fees. General and
administrative expenses expressed as a percentage of revenues was approximately
10,438% for the period ended December 31, 1999 as compared to 307% for the
comparable period of the prior year.
Research and development costs for the period ended December 31, 1999,
were $1,532,925, an increase of $769,725 or approximately 101% 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 incurring debt in connection with the issuance of New
Jersey Economic Development Authority (NJ EDA) Bonds, and reflects increased
efforts to develop drug release products and technology in accordance with
management's plan of operations.
ELITE PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NINE MONTH PERIOD ENDED DECEMBER 31, 1999 COMPARED TO
THE NINE MONTH PERIOD ENDED DECEMBER 31, 1998
(CONTINUED)
PERIOD ENDED DECEMBER 31, 1999 VS. PERIOD ENDED DECEMBER 31, 1998 (Continued)
Elite's net loss for period ended December 31, 1999 was $2,167,297 as
compared to $988,843 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.
MATERIAL CHANGES IN FINANCIAL CONDITION
The Company's working capital (total curent assets less total current
liabilities), which was $1,364,564 as of March 31, 1999, increased to
$4,890,941 as of December 31, 1999. The increase in working capital was
primarily due to the Company raising equity in its May 1999 private placement
offering and incurring debt in connection with the issuance of NJ EDA Bonds.
The Company experienced negative cash flow from operations of $2,238,950
for the period ended December 31, 1999 due to the Company's net loss of
$2,167,297.
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.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
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-K
(a) Exhibits:
10.7 - None
27 - Financial Data Schedule
(b) Reports on Form8-K No report on Form 8-K has been filed
during quarter ending December 31,1999.
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: February 14, 2000 By: /s/Atul M. Mehta
-----------------------------------
Atul M. Mehta
President & Chief Executive Officer
(Principal Executive Officer)
Date: February 14, 2000 By: /s/Mark I. Gittelman
-----------------------------------
Mark I. Gittelman
Treasurer
(Principal Financial & Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001053369
<NAME> ELITE PHARMACEUTICALS INC
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 4,132,331
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,151,242
<PP&E> 2,755,309
<DEPRECIATION> 369,466
<TOTAL-ASSETS> 8,284,942
<CURRENT-LIABILITIES> 161,655
<BONDS> 2,885,000
0
0
<COMMON> 85,603
<OTHER-SE> 5,152,684
<TOTAL-LIABILITY-AND-EQUITY> 8,284,942
<SALES> 6,908
<TOTAL-REVENUES> 6,908
<CGS> 0
<TOTAL-COSTS> 2,310,628
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,623
<INCOME-PRETAX> (2,167,297)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,167,297)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,167,297)
<EPS-BASIC> (.27)
<EPS-DILUTED> (.27)
</TABLE>
