As filed with the Securities and Exchange Commission on January ___, 1997.
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------
PHARMACEUTICAL FORMULATIONS, INC.
(Exact name of registrant as specified in its Charter)
DELAWARE 22-2367644
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
460 PLAINFIELD AVE., EDISON, NJ 08818; TEL: 908-985-7100
(Address Including Zip Code, and Telephone Number of Registrant's
Principal Executive Offices)
FRANK MARCHESE, SECRETARY
PHARMACEUTICAL FORMULATIONS, INC.
460 PLAINFIELD AVE.
EDISON, NJ 08818
(908) 985-7100
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
----------------------
Copies of all correspondence to:
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038
Attn: David W. Lowden, Esq.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
-----------------------
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. |X|
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof, pursuant to
Item 11 (a)(1) of this form, check the following box | |
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. | |
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. | |
-----------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Title of Shares to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered Aggregate Price per Aggregate Offering Registration Fee
Unit(1) Price(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.08 par value 400,000 $.9685 $387,400 $117.36
==================================================================================================================
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c), based on the average of the bid and asked
price of the Common Stock on January 29, 1997 as reported by
North American Quotation, Inc.
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED __________, 1997
PROSPECTUS
400,000 Shares
----------------------
PHARMACEUTICAL FORMULATIONS, INC.
----------------------
This Prospectus relates to up to 400,000 shares (the "Shares")
of Common Stock, par value $.08 (the "Common Stock") of Pharmaceutical
Formulations, Inc. (the "Company"), which may be offered from time to time by
the selling shareholder named herein (the "Selling Shareholder"). See "Selling
Shareholder." The Company will receive no part of the proceeds from this
offering.
-----------------
The Common Stock of the Company is traded on the over-the-
counter market. On January 29, 1997 the bid and ask prices for the
Company's Common Stock, as reported by North America Quotations, Inc., were
$.9370 and $1.00 respectively (OTC Bulletin Board Symbol: PHFR).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
Sales of the Shares by the Selling Shareholder may be made
from time to time, pursuant to this Prospectus or Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"), (or any other applicable
exemption from registration under the Securities Act), in one or more
transactions, including block transactions, in the over-the-counter market, on
any exchange or quotation system on which the Common Stock may be admitted for
trading (collectively, "Exchanges"), pursuant to and in accordance with the
applicable rules of the Exchanges, in negotiated transactions or in a
combination of any such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Shares may be offered
directly, to or through agents designated from time to time, or to or through
brokers or dealers, or through any combination of such methods of sale. Such
agents, brokers or dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholder and/or the purchasers of
the Shares for whom such broker-dealers may act as agents or to whom they sell
as principals, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). A member firm of an Exchange may
be engaged to act as a Selling Shareholder's agent in the sale of Shares by such
Selling Shareholder. To the extent required, specific information regarding the
Shares will be set forth in an accompanying Prospectus Supplement. The Selling
Shareholder and any broker, dealer, agent or other person that participates with
the Selling Shareholder in the distribution of the Shares may be deemed to be
'underwriters within the meaning of the Securities Act, and any commissions
received by such persons and any profit on the resale of the Shares purchased by
such persons may be deemed to be underwriting commissions or discounts under the
Securities Act. All expenses of registration incurred in connection with this
offering are being borne by the Company, but all brokerage commissions and other
expenses incurred by a Selling Shareholder will be borne by such Selling
Shareholder. See "Plan of Distribution."
---------------------------
The date of this Prospectus is __________, 1997
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES TO ANY PERSON OR BY ANY PERSON, IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR THE OFFERING OF THE COMPANY TO THE DATE
HEREOF.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") in Washington, D.C., a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act, with respect
to the shares of Common Stock offered by this Prospectus. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement for further information with respect to the Company
and the securities offered hereby.
The Company is subject to the informational reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the Commission's public reference facilities, maintained
by the Commission in Washington D.C., and at certain of its Regional Offices,
during business hours. The current address of each such facility is set forth
below. Copies of such material can be obtained from the Public Reference Section
of the Commission, Washington D.C. 20549, at prescribed rates. Furthermore, the
Commission maintains a Web site that contains reports, proxy statements and
other information filed electronically by the Company with the Commission. The
address of such Web site is http://www.sec.gov.
Current Addresses of SEC Public Reference Facilities
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth St., NW 7 World Trade Center Northwestern Atrium Center
Room 1024 13th Floor 500 West Madison Street,
Washington D.C. 20549 New York, NY 10048 Suite 1400
Chicago, Illinois 60661
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the
Commission are delivered herewith and incorporated herein by reference: (i)
Annual Report on Form 10-K for the fiscal year ended June 30, 1996 and (ii)
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.
The Company hereby undertakes to provide without charge to
each person to whom a copy of this Prospectus is delivered, upon written or oral
request of any such person, a copy of any and all of the information that has
been or may be incorporated by reference in this Prospectus, other than exhibits
to such documents. Written requests should be directed to Frank Marchese at the
Company, 460 Plainfield Avenue, Edison, NJ 08818. The Company's telephone number
at that location is 908-985-7100.
THE COMPANY
The Company was incorporated in Delaware on June 3, 1981. It
is primarily engaged in the manufacture and distribution of nonprescription
("over the-counter" or "OTC") solid dosage pharmaceutical products in tablet,
caplet and capsule form (collectively, "Generic OTC Products"), which are sold
under its customers' store brands or other private labels. The Company also
manufactures products for national brand pharmaceutical companies. To a limited
extent, the Company also sells Generic OTC Products under its own trade name,
Health+Cross(TM).
The Company's principal executive offices are located at
460 Plainfield Avenue, Edison, NJ 08818 and its phone number is 908-985-7100.
SELLING SHAREHOLDER
The Selling Shareholder, Patricia Cohen, currently
beneficially owns 400,000 shares of Common Stock, consisting of shares which she
may acquire upon the exercise of outstanding warrants (in the aggregate,
approximately 1.3% of the outstanding shares). Ms Cohen is offering for sale
all of such shares, to the extent that the warrants therefore are exercised. If
all of such shares are sold, she will thereafter beneficially own no shares of
Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares offered hereby. The Company will, however, receive approximately
$125,000 upon exercise of the outstanding warrants currently held by the Selling
Shareholder, which proceeds will be used for general working capital.
DESCRIPTION OF COMMON STOCK
The following description of the common stock of the Company
is subject to the Delaware General Corporation Law (the "GCL") and to provisions
contained in the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and By-Laws, copies of which have been filed
as exhibits to documents previously filed by the Company with the Commission and
are incorporated by reference into the Registration Statement. Reference is made
to such exhibits for a detailed description of the provisions thereof summarized
below.
COMMON STOCK
The Company's Certificate of Incorporation presently
authorizes 40,000,000 shares of Common Stock, $.08 par value per share. The
Shares of Common Stock have no preemptive or other subscription rights, have no
conversion rights, and are not subject to redemption. All shares of Common Stock
now outstanding are, and the shares of Common Stock issuable upon payment of
interest on outstanding debentures, upon conversion of outstanding debentures or
upon exercise of outstanding warrants and options, will be, when issued, fully
paid and non-assessable and not subject to other call or assessment. No personal
liability will attach to the ownership thereof.
The holders of the Common Stock are entitled to one vote for
each share held. The Common Stock has noncumulative voting rights, which means
that holders of more than 50% of the shares voting for the election of directors
can elect all of the directors and take any other action, if they so determine.
As of January 29, 1997, ICC Industries Inc. ("ICC") owned approximately 67% of
the Company's Common Stock. Accordingly, ICC can elect all directors and take
any other action, and the holders of the remaining shares are not able to elect
any directors or take any action.
In the event of the liquidation, dissolution or winding up of
the Company, either voluntarily or involuntarily, the holders of the outstanding
shares of Common Stock are entitled to receive a pro rata portion of such net
assets of the Company as are subject to distribution after payment of all
liabilities including principal of and interest on the Company's 8% Debentures
and the 8.25% Debentures and Series A Cumulative Redeemable Convertible
Preferred Stock. There are no liquidation rights with respect to the warrants or
stock options now outstanding.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is
Continental Stock Transfer and Trust Co., 2 Broadway, New York, New York 10004.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation law of the State of Delaware
provides for indemnification as set forth in Section 145 thereof. The effect of
such provisions is to indemnify the directors and officers of the Company
against all costs, expenses and amounts of liability incurred by them in
connection with any action, suit or proceeding in which they are involved by
reason of their affiliation with the Company, to the fullest extent permitted by
law. Article EIGHTH of the Company's Certificate of Incorporation also
eliminates the potential monetary liability of directors for unintentional
errors in their deliberations or judgments. In addition, Article NINTH of the
Company's Certificate of Incorporation provides the following:
"NINTH: The Corporation shall, to the fullest extent permitted
by Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify
any and all persons whom it shall have power to indemnify under
said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be
deemed exclusive of any other rights to which those indemnified
may be entitled under any By-Law, agreement, vote of stockholders
or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such
a person. The Corporation shall provide for the advance payment
of all indemnified expenses."
PLAN OF DISTRIBUTION
Shares of Common Stock covered hereby may be offered and sold
from time to time by the Selling Shareholder, pursuant to this Prospectus or
Rule 144 under the Securities Act (or any other applicable exemption from
registration under the Securities Act). The Selling Shareholder will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Shareholder may sell the Shares being
offered hereby in one or more transactions, including block transactions, in the
over-the-counter market, on any Exchange pursuant to and in accordance with the
applicable rules of such Exchanges, in negotiated transactions or in a
combination of any such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
The Shares may be offered directly, to or through agents
designated from time to time or through brokers or dealers, or through any
combination of these methods of sale. Such agent, broker or dealer may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholder and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). A member firm of an Exchange may be engaged to act as
the Selling Shareholder's agent in the sale of Shares by the Selling
Shareholder. Brokerage fees will be paid by the Selling Shareholder. The Selling
Shareholder and any underwriter, dealer or agent who participate in the
distribution of such shares may be deemed to be "underwriters" under the
Securities Act, and any discount, commission or concession received by such
persons might be deemed to be an underwriting discount or commission under the
Securities Act. All expenses of registration incurred in connection with this
offering are being borne by the Company, but all brokerage commissions and other
expenses incurred by individual Selling Shareholder will be borne by such
Selling Shareholder.
The Selling Shareholder may indemnify any broker-dealer or
other person that participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under the Securities
Act. Any commissions paid or any discounts or concessions allowed to any such
broker-dealers, and any profits received on the resale of such shares, may be
deemed to be underwriting discounts and commissions under the Securities Act if
any such broker-dealers purchase shares as principal.
At the time a particular offer of the shares of Common Stock
registered hereunder is made, if required, a Prospectus Supplement will be
distributed that will set forth the number of shares being offered and the terms
of the offering including the name of any underwriter, dealer or agent, the
purchase price paid by any underwriter for securities purchased, any discount,
commission and other item constituting compensation and any discount, commission
or concession allowed or reallowed or paid to any dealer, and the proposed
selling price to the public.
There can be no assurance that the Selling Shareholder will
sell all or any of the shares of Common Stock offered hereunder.
LEGAL MATTERS
The validity of the securities offered hereby has been
passed upon for the Company by Stroock & Stroock & Lavan LLP, 180 Maiden Lane,
New York, New York 10038. Stroock & Stroock & Lavan LLP has generally
represented, and may continue to represent, the Company and its affiliates in
connection with certain legal matters.
EXPERTS
The financial statements and schedule incorporated by reference in this
Prospectus and in the Registration Statement have been audited by BDO Seidman,
LLP, independent certified public accountants to the extent and for the periods
set forth in their reports, incorporated herein by reference, and are
incorporated herein in reliance upon the authority of said firm as experts in
auditing and accounting.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of Common Stock being registered hereby (all amounts are estimated
except the registration fee):
Registration Fee............................................... $ 117
Legal Fees and Expenses........................................ 5,000
Accounting Fees and Expenses................................... 1,500
Blue Sky Fees and Expenses..................................... 5,000
Miscellaneous Expenses......................................... 3,383
Total................................................ $15,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation law of the State of Delaware provides for
indemnification as set forth in Section 145 thereof. The effect of such
provisions is to indemnify the directors and officers of the Company against all
costs, expenses and amounts of liability incurred by them in connection with any
action, suit or proceeding in which they are involved by reason of their
affiliation with the Company, to the fullest extent permitted by law. Article
EIGHTH of the Company's Certificate of Incorporation also eliminates the
potential monetary liability of directors for unintentional errors in their
deliberations or judgments. In addition, Article NINTH of the Company's
Certificate of Incorporation provides the following:
"NINTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented, indemnify any and all persons
whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters
referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested Directors or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has
ceased to be director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person. The Corporation shall provide for the advance payment of all
indemnified expenses."
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions referred to in Item 15 of this
registration statement, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit No. Description
4.1 Specimen Common Stock Certificate of the Registrant.*
5.1 Opinion of Stroock & Stroock & Lavan LLP with respect to
the shares of Common Stock registered hereunder.*
10.1 Employment Agreement with Max A. Tesler, as extended(1)**
10.2 Employment Agreement with Anthony Cantaffa, as extended
(1)**
10.3 Employment Agreement with Charles E. LaRosa(2)**
10.4 Loan and Security Agreement between Fidelcor Business
Credit Corporation and the Registrant (formerly known as
PharmaControl Corp.)(3)
10.5 Agreement dated September 6, 1991 among the Registrant
(formerly known as PharmaControl Corp.), Private
Formulations, Inc. and ICC Industries Inc.(4)
10.6 Agreement dated September 24, 1992 among the Registrant
(formerly known as PharmaControl Corp.), Private
Formulations, Inc. and ICC Industries Inc.(5)
10.7 Agreement dated March 29, 1993 among the Registrant
(formerly known as PharmaControl Corp.), Private
Formulations, Inc. and ICC Industries Inc. (6)
10.8 Agreement dated May 8, 1992, among the Registrant
(formerly known as PharmaControl Corp.), Private
Formulations, Inc. and ICC Industries Inc. (5)
10.9 Agreement dated May 28, 1992, among the Registrant
(formerly known as PharmaControl Corp.), Private
Formulations, Inc. and ICC Industries Inc. (5)
10.10 Agreement dated May 24, 1993, among the Registrant
(formerly known as PharmaControl Corp.), Private
Formulations, Inc. and ICC Industries Inc. (6)
10.11 Agreement dated September 26, 1996 between the Registrant
and ICC Chemical Corporation (7)
10.12 Agreement dated September 29, 1992 among Materials
Processing Technology, Inc. and the Registrant
(formerly known as PharmaControl Corp.)(5)
10.13 Form of Warrant Agreement dated October 1, 1992 between
the Registrant (formerly known as PharmaControl Corp.)
and Max A. Tesler, Anthony Cantaffa, George Chin and
Sandra J. Brown (5)**
10.14 1994 Stock Option Plan(8)**
11.1 Statement re computation of per share earnings: not
applicable
13.1 Form 10-Q for the quarter ended September 30, 1996.
24.1 Consent of Counsel to be named in the Registration
Statement. Reference is made to Exhibit 5.1 to this
Registration Statement which contains a copy of this
consent.
24.2 Consent of BDO Seidman, LLP to be named in the
Registration Statement.*
25.1 Power of Attorney. Reference is made to the signature
pages, which contain such power of attorney.
- ----------------
* Filed herewith.
** Management contracts or compensatory plans.
(1) Filed with Registrant's Annual Report on Form 10-K for
the year ended June 30, 1993 and incorporated herein by
reference.
(2) Filed with the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996 and incorporated
herein by reference.
(3) Filed with the Registrant's Current Report on Form 8-K
dated August 2, 1989 and incorporated herein by
reference.
(4) Filed with the Registrant's Current Report on Form 8-K
dated September 6, 1991 and incorporated herein by
reference.
(5) Filed with the Registrant's Annual Report on Form 10-K
for the year ended June 30, 1992 and incorporated herein
by reference.
(6) Filed with the Registrant's Annual Repordt on Form 10-K
for the year ended June 30, 1994 and incorporated herein
by reference.
(7) Filed with the Registrant's Annual Report on Form 10-K
for the year ended June 30, 1996 and incorporated herein
by reference.
(8) Filed with the Registrant's Annual Report on Form 10-K
for the year ended June 30, 1989 and incorporated herein
by reference.
ITEM 17. UNDERTAKINGS
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set fort in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Edison, State of New Jersey, on the 28th day of
January, 1997.
PHARMACEUTICAL FORMULATIONS, INC.
By:/s/ Charles E. LaRosa
Charles E. LaRosa, President
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated. Each person whose signature appears below does hereby make,
constitute and appoint Charles E. LaRosa and Frank Marchese, and each of them,
his true and lawful attorneys or attorney and agents or agent with full power
and authority on his behalf to execute and file with the Securities and Exchange
Commission any amendment or amendments, including post-effective amendments, to
this registration statement, and he does hereby ratify and confirm all that his
said attorneys or attorney and agents or agent may do or cause to be done by
virtue hereof.
Signature Title Date
/s/ Charles E. LaRosa President (Principal Executive January 28, 1997
Charles E. LaRosa Officer), Chief Executive
Officer, and Director
/s/ Frank Marchese Vice President-Finance, January 28, 1997
Frank Marchese Chief Financial Officer
(Principal Financial Officer),
Secretary and Treasurer
/s/ John Oram Chairman of the Board January 28, 1997
John Oram
/s/ Ray Cheesman Director January 28, 1997
Ray Cheesman
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Specimen Common Stock Certificate of the Registrant.
5.1 Opinion of Stroock & Stroock & Lavan LLP with respect to
the shares of Common Stock registered hereunder.
13.1 Form 10-Q for the quarter ended September 30, 1996.
24.1 Consent of Counsel to be named in the Registration
Statement. Reference is made to Exhibit 5.1 to this
Registration Statement, which contains a copy of this
consent. ---
24.2 Consent of BDO Seidman, LLP to be named in the
Registration Statement.
25.1 Power of Attorney. Reference is made to the
signature page, which contains such power of attorney ---
EXHIBIT 4.1
PC
SPECIMEN
PHARMACONTROL CORP. COMMON STOCK
Incorporated under the laws of the State of Delaware
SEE REVERSE FOR
CERTAIN DEFINITIONS
This
Certifies CUSIP 716932 10 8
that
SPECIMEN
is the
owner of
FULLY PAID AND NON-ASSESSACBLE SHARES OF THE COMMON STOCK OF THE PAR
VALUE OF $.08 PER SHARE OF
PHARMACONTROL CORP.
(HEREINAFTER CALLED THE "CORPORATION") TRANSFERABLE IN THE BOOKS OF THE
CORPORATION IN PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS
CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE IS NOT VALID UNLESS
COUNTERSIGNED BY THE TRANSFER AGENT.*
WITNESS THE FACSIMILE SCALE OF THE CORPORATION AND THE FACSIMILE
SIGNATURES OF ITS DULY AUTHORIZED OFFICERS.
DATED:
[SEAL] Secretary Chairman
COUNTERSIGNED:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(JERSEY CITY, N.J.)
TRANSFER AGENT
SPECIMEN
AUTHORIZED OFFICER
___________
* OVERSTRIKE: NAME CHANGED TO PHARMACEUTICAL FORMULATION, INC.
EXHIBIT 5.1
January 28, 1997
Pharmaceutical Formulations, Inc.
460 Plainfield Avenue
Edison, NJ 08818
Ladies & Gentlemen:
We have acted as counsel to Pharmaceutical Formulations, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), of a Registration Statement on
Form S-3 (the "Registration Statement") relating to the proposed issuance of up
to 400,000 (the "Shares") of the Common Stock, $0.08 par value (the "Common
Stock") of the Company, to be sold by a stockholder of the Company as
described under the caption "Selling Stockholder in the Prospectus forming a
part of the Registration Statement."
As such counsel, we have examined copies of the Certificate of
Incorporation and ByLaws of the Company, each as amended to the date hereof, the
Registration Statement, and originals or copies of such other corporate minutes,
records, agreements and other instruments of the Company, certificates of public
officials and other documents, and have made such examinations of law, as we
have deemed necessary to form the basis for the opinion hereinafter expressed.
In our examination of such materials, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of all copies submitted to us. As to
various questions of fact material to such opinion, we have relied, to the
extent we deemed appropriate, upon representations, statements and certificates
of officers and representatives of the Company and others.
Based upon and subject to the foregoing, we are of the opinion
that the Shares are validly issued, fully paid and non-assessable.
<PAGE>
Pharmaceutical Formulations, Inc.
January 28, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the references to this firm under the
caption "Legal Matters" in the Prospectus which forms a part of the Registration
Statement. In giving such consent, we do not admit hereby that we come within
the category of persons whose consent is required under Section 7 of the Act or
the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ Stroock & Stroock & Lavan LLP
STROOCK & STROOCK & LAVAN LLP
SECURITIES AND EXCHANGE COMMISSION EXHIBIT 13.1
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended: September 30, 1996
------------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the Transition Period From _______________
to ________________
Commission File Number 0-11274
PHARMACEUTICAL FORMULATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2367644
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
460 Plainfield Avenue, Edison, NJ 08818
(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including area code): (908) 985-7100
-------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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. |X| Yes |_| No
The number of shares outstanding of common stock, $.08 par value, as of October
31, 1996 was 29,508,814.
<PAGE>
PHARMACEUTICAL FORMULATIONS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
ASSETS (Unaudited) (Note 1)
------ ------------ ---------
CURRENT ASSETS
<S> <C> <C>
Cash $ 346,000 $ 1,284,000
Accounts receivable - net of allowance for doubtful accounts of $360,000
and $300,000 10,341,000 8,511,000
Income tax receivable 1,161,000 1,161,000
Inventories 13,486,000 9,720,000
Prepaid expenses and other current assets 752,000 747,000
Deferred tax asset 400,000 400,000
------------- ------------
Total current assets 26,486,000 21,823,000
PROPERTY, PLANT AND EQUIPMENT
Net of accumulated depreciation and amortization of $12,840,000 and
$12,303,000 16,935,000 16,802,000
OTHER ASSETS
Deferred financing costs 70,000 94,000
Deferred tax asset 640,000 750,000
Other assets 207,000 192,000
$ 44,338,000 $ 39,661,000
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
-----------------------------
CURRENT LIABILITIES
<S> <C> <C>
Current portion of long-term debt $ 542,000 $ 587,000
Current portion of capital lease obligations 1,926,000 1,877,000
Accounts payable 11,849,000 9,441,000
Accrued expenses 2,151,000 1,990,000
Total current liabilities 16,468,000 13,895,000
LONG TERM DEBT 18,708,000 16,284,000
LONG TERM CAPITAL LEASE OBLIGATIONS 8,950,000 9,468,000
DEFERRED GAIN ON SALE/LEASEBACK 412,000 425,000
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock - par value $1.00 per share;
10,000,000 shares authorized; 2,500,000 shares
issued and outstanding 2,500,000 2,500,000
Common stock - par value $.08 per share
Authorized - 40,000,000 shares
Issued and outstanding - 29,508,814 shares 2,361,000 2,361,000
Capital in excess of par value 37,286,000 37,286,000
Accumulated deficit ( 42,347,000) ( 42,558,000)
Total stockholders' equity (deficiency) ( 200,000) ( 411,000)
$ 44,338,000 $ 39,661,000
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
September 30,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
REVENUES
Gross sales 15,825,000 13,395,000
Less: Sales discounts
and allowances 829,000 833,000
---------- ----------
Net sales 14,996,000 12,562,000
COST AND EXPENSES
Cost of goods sold 11,321,000 10,101,000
Selling, general and
administrative 2,302,000 2,187,000
Research and development
215,000 208,000
---------- ----------
13,838,000 12,496,000
PROFIT FROM OPERATIONS 1,158,000 66,000
OTHER INCOME (EXPENSE)
Interest expense ( 893,000) ( 978,000)
Other 56,000 6,000
------------ -----------
( 837,000) ( 972,000)
INCOME (LOSS) BEFORE INCOME TAXES
321,000 ( 906,000)
INCOME TAXES (BENEFIT) 110,000 ( 300,000)
-------- -----------
NET INCOME (LOSS) $211,000 ( $606,000)
======== ===========
INCOME (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE
$.01 ( $.02)
====== ========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 30,711,000 29,323,000
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
(Unaudited) (Unaudited)
------------------ --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 211,000 ($ 606,000)
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating activities:
Depreciation and amortization of property, plant and
equipment 537,000 399,000
Amortization of bond discount and deferred financing costs
49,000 81,000
Amortization of deferred gain on sale/leaseback ( 13,000) ( 13,000)
Deferred tax 110,000 --
Changes in current assets and liabilities
(Increase) in accounts receivable ( 1,830,000) ( 546,000)
(Increase)/decrease in inventories ( 3,766,000) 296,000
(Increase)in other current assets ( 5,000) ( 491,000)
Increase/(decrease) in accounts payable and accrued
expenses 2,569,000 ( 324,000)
------------ ------------
Net cash (used in) operating activities ( 2,138,000) ( 1,204,000)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) in other assets ( 15,000) -
(Increase) in property, plant and equipment ( 670,000) -
------------- ------------
Net cash (used in) investing activities
( 685,000) -
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in borrowings under line
of credit 2,500,000 686,000
Principal payments of capital lease obligations
( 469,000) ( 382,000)
Principal repayments of long-term debt ( 146,000) ( 145,000)
Increase in long-term debt - 443,000
Issuance of common stock - 19,000
------------ -----------
Net cash provided by financing
activities 1,885,000 621,000
Net (decrease) in cash ( 938,000) ( 583,000)
CASH, beginning of period 1,284,000 655,000
------------ -----------
CASH, end of period $ 346,000 $ 72,000
============= ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PHARMACEUTICAL FORMULATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Interim Financial Reporting:
The consolidated balance sheet as of June 30, 1996 has been
derived from the audited consolidated balance sheet for the fiscal
year then ended and is presented for comparative purposes.
The accompanying financial statements presume that users have read
the audited financial statements for the preceding fiscal year.
Accordingly, footnotes which would substantially duplicate such
disclosure have been omitted.
The interim financial statements reflect all adjustments which
are, in the opinion of management, necessary for a fair statement
of the results for the interim periods presented. Such adjustments
consist solely of normal recurring accruals.
Certain amounts appearing in the September 30, 1995 financial
statements have been reclassified to conform to the September 30,
1996 presentation. There was no effect on net income due to the
reclassification.
The results of operations for the three months ended September 30,
1996 are not necessarily indicative of the results to be expected
for a full year.
Note 2: Contingencies:
Other than described below, no material proceedings to which the
Company is a party, or to which any of its properties are subject,
are pending or are known to be contemplated, and the Company knows
of no material legal proceedings, pending or threatened, or
judgments entered against any director or officer of the Company
in his capacity as such.
In or about October 1991, an action was instituted in the Superior
Court of New Jersey, County of Middlesex, against the Company by
an individual, Marvin Rosenblum, seeking monies claimed to be due
under an alleged employment agreement. The Company believes that
the amount sought, $3,500,000, has been frivolously asserted to
harass the Company and that the allegations are completely
baseless. The Company has interposed counterclaims against
plaintiff for fraud and related claims and seeks damages in the
amount of $5,000,000. As a result of plaintiff's poor physical
condition, in April 1994, he moved to transfer the matter to the
"inactive" trial list which motion has been granted. Accordingly,
no further action will be taken by either party with respect to
the matter unless and until plaintiff seeks to restore the matter
to the active trial calendar.
In or about November 1992, an action was instituted against the
Company in the Supreme Court of New York, County of New York, by
Univest Technologies, alleging that the Company breached its
agreement by refusing to furnish Soluble Aspirin to such entity.
Plaintiff seeks "consequential damages" of $1,500,000. The Company
denies that any such agreement existed and vigorously denies that
any monies are owed to plaintiff. The Company moved to dismiss the
complaint, which motion was granted with leave to replead.
Plaintiff served an amended complaint thereafter and the Company
again moved to dismiss the complaint. The Company is awaiting a
decision from the court with respect to the Company's second
motion. If the complaint is not dismissed, the Company intends to
assert counterclaims against plaintiff for amounts in excess of
the amount sought, on the basis of, among other things,
plaintiff's fraud and misrepresentation.
In or about July 1994, Puritan Quartz, Inc. ("Puritan") brought
suit against the Company in the U.S. District Court for the
Southern District of New York, alleging breach of (i) the
Company's purported contractual obligations to supply Puritan with
acetaminophen and ibuprofen for resale to an unrelated party and
(ii) related confidentiality obligations. The complaint seeks
damages in the aggregate amount of $3,600,000 plus $300,000 for
each additional month of continuing breach. The Company denies any
liability to Puritan. The Company believes that the clear meaning
of the language of the agreement between the parties was that the
agreement had a one-year term ending on October 16, 1993, prior to
the events of the alleged breach, and that such agreement was
never extended. Accordingly, in the Company's view, it had no
obligation whatsoever to Puritan at the time of the alleged
breach. The Company further believes that Puritan's claims as to
the aggregate amount of its alleged lost profits are overstated.
Discovery is ongoing and the Company intends to move for summary
judgment at the close of discovery.
In March 1996, the Company was named as a defendant in a lawsuit
filed in the United States District Court for the District of New
Jersey by Gary Sherman Investments, Inc., formerly known as
Polystar Corporation ("GSI"). GSI filed this action against the
Company based on a $400,000 promissory note allegedly executed in
GSI's favor in or about March 1991, seeking to recover the full
face amount of the note plus accrued interest. The Company is
contesting the allegations of this complaint, and has filed a
counterclaim alleging, inter alia, breaches of fiduciary duty and
fraud by GSI. The Company intends vigorously to defend against
GSI's claims and to pursue its counterclaims against GSI.
<PAGE>
Note 3: Inventories:
September 30, June 30,
Inventories consist of the 1996 1996
following: ------------- -----------
Raw materials $ 5,287,000 $ 3,849,000
Work in process 707,000 648,000
Finished goods 7,492,000 5,223,000
----------- -----------
$13,486,000 $ 9,720,000
=========== ===========
Note 4: Dividends:
No dividends were declared during any period presented.
Note 5: Earnings per Share:
Earnings per share are based on the weighted average number of
common and common equivalent shares outstanding for the period.
Common equivalent shares consist of the dilutive effect of
unissued shares under options, warrants and in the case of
fully-diluted earnings per share, convertible debentures, computed
using the treasury stock method with the average stock prices for
primary basis and the higher of average or period end stock prices
for fully-diluted basis. Fully-diluted earnings per share are not
presented since the amounts are substantially the same as primary
earnings per share.
In 1996, undeclared dividends on preferred stock totaling $50,000
were deducted from net income to determine net income for common
stockholders.
No effect has been given to shares issuable for common stock
equivalents for the three months ended September 30, 1995 as the
effect would be anti-dilutive.
Note 6: Related Party Transactions:
The following transactions with ICC Industries Inc. ("ICC"), an
affiliated Company, are reflected in the consolidated financial
statements as of or for the three months ended September 30, 1996
and 1995:
1996 1995
---- ----
Inventory purchases from ICC $ 275,000 $ 135,000
Interest expense 122,000 90,000
Accounts payable to ICC 329,000 135,000
Equipment lease obligations due ICC 4,304,000 4,924,000
Other receivables from ICC 213,000 --
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Sales for the three months ended September 30, 1996 were $15,825,000 as compared
to $13,395,000 in the comparable period in the prior fiscal year. The increase
of $2,430,000 or 18% is a result of new customers and increased sales to
existing customers, especially in the private label (store brand) sector of the
business. There was a slight increase in the contract manufacturing sector while
the bulk sector was down as compared to the comparable period in the prior
fiscal year. Four customers presently represent approximately 52% of sales for
the three months ended September 30, 1996. These four customers are Revco D.S.
("Revco"), Walgreen Company ("Walgreen"), Price-Costco, Inc. ("Price-Costco")
and Leiner Health Products ("Leiner"). Sales to these four customers were
$8,265,000 or 52% of sales as, compared to $7,084,000 or 53% of sales in the
comparable period in the prior fiscal year.
Cost of sales as a percentage of net sales was 75% as compared to 80% in the
comparable period in the prior year. The reduction in cost of sales as a
percentage of net sales is a result of the increased sales, manufacturing
efficiencies, lower raw material costs and overall cost containment.
Selling, general and administrative costs were $2,302,000 or 15% of net sales
for the three months ended September 30, 1996 as compared to $2,187,000 or 17%
of net sales in the comparable period in the prior fiscal year. The increase of
$115,000 is a result of increased personnel in both sales and marketing to
increase the Company's customer and product base and increased freight costs due
to the increased sales.
Interest and other expenses were $837,000 for the three months ended September
30, 1996 as compared to $972,000 in the comparable period in the prior fiscal
year. The decrease of $135,000 is a result of lower average borrowing amounts in
the three months ended September 30, 1996 as compared to the comparable period
in the prior fiscal year.
The Company recorded a provision for income taxes of $110,000 as compared to a
tax benefit of $300,000 in the comparable period in the prior fiscal year.
Net income for the three months ended September 30, 1996 was $211,000 or $.01
per share as compared to a loss of $606,000 or $.02 per share in the comparable
period in the prior fiscal year.
The Company continues to take steps aimed at increasing sales and reducing costs
to reverse the losses incurred in fiscal year ended June 30, 1996. These steps
include: (a) working to add customers and products to the current business to
increase sales volume, (b) efforts to continue to reduce material costs and (c)
other cost-saving measures as well as other actions to improve profitability.
There can be no assurance that such actions will be successful in enabling the
Company to continue to realize profitable results and return the Company to
profitability for the fiscal year ending June 30, 1997.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had working capital of $10,018,000 as
compared to $7,928,000 at June 30, 1996. The increase of $2,090,000 is due to
the net income for the three months ended September 30, 1996 and an increase in
borrowing from the Company's institutional lender to finance the growth in
accounts receivable and inventory. The increase in working capital includes
increases in accounts receivable of $1,830,000 due to the increased sales,
especially in the later part of the quarter. In addition, inventories increased
$3,766,000 to support the sales growth, including expected increases in sales in
the second quarter and the balance of the fiscal year. The increases in accounts
receivable and inventory were offset somewhat by an increase in accounts payable
and accrued expenses of $2,569,000.
Capital expenditures of $670,000 for the three months ended September 30, 1996
were related to the continued efforts to upgrade the manufacturing equipment and
plant facilities. Capital expenditures for the fiscal year ended June 30, 1997
are currently estimated to be approximately $2,500,000.
The Company has a $15,000,000 asset-based line of credit with an institutional
lender. At September 30, 1996, the Company had $1,056,000 of unused availability
under this agreement. The line of credit expires February 4, 1999 and bears
interest at 1 3/4% above the prime lending rate (currently 8 1/4%).
The Company has outstanding 2,500,000 shares of series A cumulative preferred
stock sold to ICC Industries Inc. ("ICC"). Dividends from April 8, 1996 through
September 30, 1996 (approximately $100,000) have accumulated and are in arrears.
There is no intention to pay dividends currently on the preferred stock.
Dividends will continue to accrue at the rate of $50,000 per quarter.
The Company continues to take steps to increase sales and reduce costs to
improve operating results and meet working capital needs. As stated above, the
Company intends to add an estimated $2,500,000 of capital equipment in the
fiscal year ending June 30, 1997 to increase capacity and reduce costs. The
Company intends for these capital expenditures to be financed through capital
leases with either ICC or other parties. While the Company has in the past had
no difficulty in obtaining capital lease financing or meeting working capital
needs, there can be no assurance the Company will obtain the capital lease
financing or meet working capital needs in the future.
<PAGE>
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
See Note 2 to Notes to Consolidated Financial Statements.
Item 2: Changes in Securities
None.
Item 3: Defaults upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Securities Holders
None.
Item 5: Other Information
None.
Item 6: Exhibits and Reports on Form 8-K
(a). Exhibits.
None.
(b). Reports on Form 8-K
None.
<PAGE>
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.
PHARMACEUTICAL FORMULATIONS, INC.
(REGISTRANT)
Date: November 12, 1996 By: /s/ Charles E. LaRosa
Charles E. LaRosa
Chief Executive Officer
and President
(Principal Executive Officer)
Date: November 12, 1996 By: /s/ Frank Marchese
Frank Marchese
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
EXHIBIT 24.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Pharmaceutical Formulations, Inc.
Edison, New Jersey
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated August
26, 1996 relating to the consolidated financial statements and schedule of
Pharmaceutical Formulations, Inc. appearing in the Company's Annual Report on
Form 10-K for the year ended June 30, 1996.
We also consent to the reference to us under the caption "Experts" in
the Prospectus.
Woodbridge, NJ
January 28, 1997
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 346,000
<SECURITIES> 0
<RECEIVABLES> 11,502,000
<ALLOWANCES> 360,000
<INVENTORY> 13,486,000
<CURRENT-ASSETS> 26,486,000
<PP&E> 16,935,000
<DEPRECIATION> 12,840,000
<TOTAL-ASSETS> 44,338,000
<CURRENT-LIABILITIES> 16,468,000
<BONDS> 0
9
2,500,000
<COMMON> 2,361,000
<OTHER-SE> 37,286,000
<TOTAL-LIABILITY-AND-EQUITY> 44,338,000
<SALES> 14,996,000
<TOTAL-REVENUES> 14,996,000
<CGS> 11,321,000
<TOTAL-COSTS> 13,838,000
<OTHER-EXPENSES> 837,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 893,000
<INCOME-PRETAX> 321,000
<INCOME-TAX> 110,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211,000
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
