U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-36120
BRADLEY PHARMACEUTICALS, INC.
(Exact name of small business issuer as
specified in its charter)
New Jersey 22-2581418
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
383 Route 46 W., Fairfield, NJ
(Address of principal executive offices)
201-882-1505
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) 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
State the number of shares outstanding of each of the issuer's classes of
common equity, as
of the latest practicable date:
Title of Each Class Number of Shares Outstanding
of Common Stock as of August 9, 1996
Class A, No Par Value 6,680,267
Class B, No Par Value 431,552
Transitional Small Business Disclosure Format (check one):
Yes No X INDEX TO FORM 10 - QSB
June 30, 1996
Page
Number
Part I - Financial Information
Financial Statements (unaudited):
Condensed Consolidated Balance Sheet -
June 30, 1996 3
Condensed Consolidated Statements of Operations -
three and six months ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
six months ended June 30, 1996 and 1995 5
Condensed Notes to Consolidated Financial
Statements 7
Management's Discussion and Analysis 8
Part II - Other Information 13
Item 1. Legal Proceedings 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 33503
Accounts receivable - net of reserves 1534693
Finished goods inventory 1389301
Prepaid samples and materials 2090928
Prepaid expenses and other receivables 94917
Due from affiliate 71666
Total current assets 5215008
Property and equipment - net 460710
Intangibles - net 18004765
Total Assets $ 23680483
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 2987811
Accounts payable 2796739
Accrued expenses 3563308
Loans from shareholders 100000
Total current liabilities 9447858
Long-term debt, less current maturities 4901281
Commitments & contingencies
Stockholders' equity
Preferred stock, no par value;
authorized, 2,000,000 shares; issued, none -
Common, Class A, no par value, authorized
26,400,000; issued and outstanding,
6,680,267 shares at June 30, 1996 12770365
Common, Class B, no par value, authorized
900,000 shares, issued and outstanding,
431,552 shares at June 30, 1996 845448
Accumulated deficit -4284469
9331344
Total Liabilities & Stockholders' Equity $ 23680483
See Notes to Condensed Consolidated Financial Statements
3
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Net sales $ 3516956 $ 4461041 $ 6908499 $ 7417771
Cost of sales 871697 979623 1681040 2138912
2645259 3481418 5227459 5278859
Selling, general and
administrative expenses 1815531 2640218 3660007 5474654
Deprec and amortization 450325 424315 912179 845037
Interest expense - net 168457 107593 340749 255249
2434313 3172126 4912935 6574940
Income (loss) before
income taxes 210946 309292 314524 -1296081
Income tax (expense) benefit - -103149 - 539000
Net income (loss) $ 210946 $ 206143 $ 314524 $ -757081
Net income (loss)
per common share (1) $ 0.03 $ 0.02 $ 0.04 $ (0.11)
Weighted average number
of common shares 7000000 17000000 7000000 7000000
See Notes to Condensed Consolidated Financial Statements
(1) Computation of net income per common share for the three months ended
June 30, 1995 was computed using the modified treasury stock method.
Computation of net income per common share for the three and six months
ended June 30, 1996 and the net loss per common share for the six months
ended June 30, 1995 do not include the effect of the stock equivalents
because the inclusion of such stock equivalents would be antidilutive.
4
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Net income (loss) $ 314524 $ -757081
Depreciation & amortization 912179 845037
Deferred tax benefit - 89000
Effects on cash from changes in operating
assets & liabilities
Decrease (increase) in assets:
Accounts receivable 720064 717349
Finished goods inventory 282666 -287460
Prepaid samples and materials 164669 -668180
Refundable/accrued income taxes 1810383 -
Prepaid expenses and other receivables 16459 -432620
Due from affiliate -71666 -105581
(Decrease) increase in liabilities:
Accounts payable & accrued expense -2152526 108812
Net cash provided by (used in) operating activities 1996752 -490724
Cash flows from investing activities:
Investment in Doak Pharmacal Co., Inc. -
net of cash acquired -6190 -301916
Acquisition of trademarks, patents
and other assets -301802 -47970
Acquisition/disposition of common stock
(and distribution agreement with) of
ITG Laboratories, Inc. 24000 -565625
Sale (purchase) of temporary investments - net 1950 -844653
Purchase of property & equipment - net -10773 -112065
Net cash used in investing activities -292815 -1872229
Cash flows from financing activities:
Proceeds from (repayment of) shareholders' loan 100000 -15000
Repayment of notes payable -2324548 -256814
Proceeds from conversion of warrants and options - 1470787
Net cash (used in) provided by financing activities -2224548 1198973
Decrease in cash and cash equivalents -520611 -1163980
Cash and cash equivalents at beginning of period 554114 1196092
Cash and cash equivalents at end of period $ 33503 $ 32112
(Continued)
5
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1996 1995
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 185232 $ 47212
Income taxes $ - $ 952313
See Notes to Condensed Consolidated Financial Statements
6
BRADLEY PHARMACEUTICALS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - Summary of Accounting Policies
The unaudited interim financial statements of Bradley Pharmaceuticals,
Inc.
(the
"Company") have been prepared in accordance with generally accepted
accounting principles for
interim financial information. Accordingly, they do not include all of the
information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of the Company, the accompanying unaudited financial
statements contain
all adjustments (consisting of normal recurring entries) necessary to present
fairly
the financial
position as of June 30, 1996 and the results of operations and cash flows
for the
six month periods
ended June 30, 1996 and 1995, respectively.
The accounting policies followed by the Company are set forth in Note A
of
the
Company's financial statements as contained in its Annual Report on Form
10-KSB
for the year
ended December 31, 1995 filed with the Securities and Exchange
Commission.
The Form
10-KSB contains additional data and information with respect to long term
debt,
intangibles,
stock
agreements, stock option plans, private placement of securities and reserved
shares, related party
transactions, income taxes, commitments and contingencies, economic
dependency and is
incorporated by reference.
The results reported for the three and six month periods ended June 30,
1996
are not
necessarily indicative of the results of operations which may be expected
for a full
year.
7
BRADLEY PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 1996, the Company had negative working capital of
($4,232,850), a positive
increase of $695,214 over the December 31, 1995 negative working capital
of
($4,928,064).
Improvement in the Company's working capital position at June 30, 1996
was
primarily due to
an operating profit and positive cash flows from operations. In an effort to
improve the
Company's financial position, the Company has and will continue to
implement
steps to reduce
its expenses (including, advertising and promotions as well as curtailing
research
and development
efforts) and its reliance on managed care sales. Net cash used in investing
activities during the
six months ended June 30, 1995 was impacted by the expenditure of cash
in
connection with the
Doak Dermatologics merger with the Company and the consideration paid in
connection with the
ITG Laboratories, Inc. transaction. These events did not have a similar
material
impact on net
cash used in investing activities for the six months ended June 30, 1996.
The Company's working capital position for the year ended December
31,
1995 ("Fiscal
1995") was adversely affected by the recognition of a $2.67 million delayed
payment due to
Berlex Laboratories, Inc. ("Berlex") in December 1995, of which $800,000
was
paid during
February 1996 with the balance paid during June 1996, and the recognition
as a
current liability
of the next installment payment of $2.67 million payment due to Berlex in
December 1996. The
Company satisfied its aggregate $2.67 million payment to Berlex utilizing
funds
primarily from
operations including approximately $1.8 million in Federal tax refunds. In
satisfying this
obligation, the Company reduced funds used for finished goods inventory
and
samples and
materials as well as extending payment terms to its suppliers. In addition,
concurrently with the
June 1996 payment, Berlex released its lien on the Company's accounts
receivable and inventory.
In the event the Company does not have funds from operations to
satisfy the
$2.67 million
obligation due in December 1996 to Berlex, the Company will be required to
seek
outside
financing to satisfy this obligation. The Company is currently uncertain as
to
whether it will have
sufficient funds from operations to satisfy this liability. Moreover, the
Company
has no
agreements to obtain such additional financing. There can be no assurance
that
the Company will
be able to obtain such additional financing, or that if such additional
financing is
available, the
terms of such additional financing will be on terms acceptable to the
Company.
Failure by the
Company to satisfy its obligations to Berlex would have a material adverse
effect
on the
Company's operations.
The Company has further agreed to pay Berlex, commencing on January
31,
1998, and
continuing on the last day of each month thereafter until such monthly
payments
aggregate $2
million, $84,000 per month unless on or before the last day of each such
month
commencing
January 1996 until December 1997 (i) the effective date (plus the grace
period for
compliance,
if any,) announced in the FDA publication with respect to the final
monograph for
DECONAMINE SR has occurred and (ii) the Company has, prior to or during
such
month,
expended funds for the purpose of preserving the prescription drug status of
DECONAMINE
SR.
The Company currently estimates, based on recent discussions with the
FDA, that
DECONAMINE SR will remain a prescription product until October 1997. It
therefore has
included in long-term debt, payments of $84,000 per month for 21 months
(to be
paid to Berlex
beginning in January 1998).
8
BRADLEY PHARMACEUTICALS, INC.
To secure its payment obligations to Berlex, the Company has warranted
to
Berlex that
until such time as all obligations to Berlex have been paid, the Company,
generally,
without
Berlex's consent, will not grant any person a security interest in, or create a
lien
upon, any of
the Company's assets, other than certain permitted liens, including liens to
institutional lenders,
banks and insurance companies.
If the Company does not generate sufficient funds from operations or
cannot
obtain
sufficient funds to make any of the aforementioned payments to Berlex,
Berlex
may declare the
remaining unpaid amount due to it (arising from the Company's acquisition
of
DECONAMINE
and currently approximately $5,800,000) immediately due and payable and
seek
other remedies,
including the return of the DECONAMINE trademarks. In such event, the
Company would be
forced to cease sales of DECONAMINE , which would have a material
adverse
effect on the
Company's business. Because of the uncertainties surrounding the
Company's
ability to satisfy
its obligations to Berlex during Fiscal 1996 and the resulting impact such
failure
would have on
the Company's future financial condition if the Company cannot satisfy its
obligations to Berlex
during Fiscal 1996, there can be no assurance that the Company can
continue as
a going concern.
The financial statements of the Company in this Form 10-QSB have been
prepared
assuming that
the Company will continue as a going concern and do not include any
adjustments
that might
result from the Company's failure to satisfy its obligations to Berlex during
Fiscal
1996.
It is not currently possible for the Company to predict how its operations
and
financial
condition will be affected if the DECONAMINE product line is converted
from
prescription
status to over-the-counter status. The Company's DECONAMINE SR
product
requires the
Company to file an over-the-counter Abbreviated New Drug Application
(ANDA)
with the FDA.
The cost of developing the necessary studies for this application is
approximately
$900,000. The
Company has entered into an agreement to complete the first phase of
these
studies at a cost of
approximately $100,000, of which $48,000 was paid during Fiscal 1995
and the
balance of
$52,000 has been satisfied utilizing funds previously paid during Fiscal
1995 for
projects canceled
during 1996. The project is expected to be completed and submitted to the
FDA
during 1997.
Completion of the research and development project is subject,
however, to
the Company's
either generating sufficient cash flow from operations to fund the same or
obtaining requisite
financing from outside sources, of which there can be no assurance.
Therefore,
the Company
cannot at this time reasonably anticipate the timing of the expenditure of
funds for
these purposes.
The inability of the Company to further develop and/or file the necessary
ANDA for
DECONAMINE SR would have a material adverse effect on the Company's
business.
Provided the Company can successfully raise the capital necessary to
satisfy
its obligations
to Berlex, its other creditors and to continue its research and development
project
with respect to
DECONAMINE SR, the Company believes that it has sufficient cash flow
from
operations to
support its working capital requirements over the next twelve months.
9
BRADLEY PHARMACEUTICALS, INC.
LIQUIDITY AND CAPITAL RESOURCES
Product Acquisitions and Other Agreements
On May 9, 1996, the Company acquired the trademark rights to the
ACID
MANTLE skin
treatment line from Sandoz Pharmaceuticals Corporation ("Sandoz"), and the
exclusive ACID
MANTLE manufacturing, marketing and distribution rights for the United
States
and Puerto
Rico. In consideration therefore, the Company agreed to pay Sandoz
$900,000,
$250,000 of
which was paid during May 1996. An additional $250,000 is required to be
paid
on May 8, 1997,
with the remaining $400,000 payable in equal annual installments of
$100,000
commencing May
8, 1998. The Company also purchased Sandoz's entire inventory of ACID
MANTLE saleable
products and raw materials. Based upon information provided to the
Company by
Sandoz,
Sandoz's 1995 revenues for the ACID MANTLE product line were
approximately
$600,000.
Pursuant to correspondence dated April 1996, the Company
discontinued its
exclusive
Stock Purchase and Distribution Agreement with ITG Laboratories, Inc. The
Company will
continue to distribute ITG products on a non-exclusive basis. The effect of
this
transaction is not
material to the Company's operations.
In connection with the Company's satisfaction in June 1996 of the
$1.87
million liability
then owing to Berlex, the Company borrowed $100,000 from various trusts
established for the
benefit of the children of Daniel Glassman, the Chairman of the Board and
President of the
Company and Iris Glassman, Treasurer and a Director of the Company. This
loan
is payable on
demand and bears interest at the rate of 16% per annum, payable monthly
in
cash. Repayment
of the principal amount of this loan may be paid at the option of the trusts
either in
cash or for
92,352 shares (subject to adjustment based upon the terms of any third
party
financing obtained
by the Company) of the Company's Class A Common Stock.
RESULTS OF OPERATIONS
Chargebacks and rebates are the difference between prices at which the
Company sells its
products (principally DECONAMINE SR) to wholesalers and the sales price
ultimately paid by
the end-user (often governmental agencies and managed care buying
groups)
pursuant to fixed
price contracts. The Company records an estimate of the amount either to
be
charged-back to the
Company or rebated to the end-user at the time of sale to the wholesaler.
Gross Sales (sales prior to chargebacks, rebates, returns and discounts)
for the
three and
six months ended June 30, 1996 were $6,031,224 and $11,290,090,
respectively, representing a
decrease of $1,176,333 (16%) from the three months ended June 30, 1995
and
an increase of
$19,760 from the six months ended June 30, 1995. This decrease for the
three
months ended
June
30, 1996 was primarily due to a decrease in the volume of DECONAMINE
SR
sales during the
Second Quarter of 1996 as the Company canceled contracts with managed
care
organizations,
buying groups and the United States Government which fell below targeted
profit
contributions.
The Company also renegotiated many contracts at higher prices, the affect
of
which the Company
has and will continue to recognize in future periods. Gross Sales of the
Company's
DECONAMINE product line accounted for approximately 66% and 68%,
respectively, of gross
sales for the three and six months ended June 30, 1996 versus 74% and
70%,
respectively, of
gross sales for the three and six months ended June 30, 1995. The
Company
continues to
diversify and expand its dermatological product line with the acquisitions of
CARMOL and
ACID MANTLE .
10
BRADLEY PHARMACEUTICALS, INC.
Net Sales (net of all adjustments to sales) for the three and six months
ended
June 30, 1996
were $3,516,956 and $6,908,499, respectively, representing a decrease of
$944,085 (21%) and
a decrease of $509,272 (7%) from the three and six months ended June
30,
1995. The decreases
in net sales are primarily attributable to decreases in DECONAMINE SR
managed
care sales as
contracts with below targeted profit contributions were canceled, partially
offset
by higher
contract
prices on existing contracts, the effect of which the Company has and will
continue to recognize
in future periods. Chargeback and rebates, principally relating to
DECONAMINE ,
were
$2,341,333 and $4,032,829, respectively, for the three and six months
ended
June 30, 1996
versus $2,646,216 and $3,663,576, respectively, for the three and six
months
ended June 30,
1995. Net sales of the Company's DECONAMINE product line accounted
for
approximately
54% and 41% of net sales, respectively, for the three and six months
ended June
30, 1996 versus
62% and 58%, respectively, of net sales for the three and six months
ended June
30, 1995.
Cost of Sales for the three and six months ended June 30, 1996 were
$871,697 and
$1,681,040, respectively, representing a decrease from the three and six
months
ended June 30,
1995 of $107,926 (11%) and $457,872 (21%). The Company's gross
profit
margin for the three
and six months ended June 30, 1996 was 75% and 76%, respectively, as
compared to 78% and
71% during the three and six months ended June 30, 1995.
Selling, General and Administrative Expenses were $1,815,531 and
$3,660,007,
respectively, for the three and six months ended June 30, 1996,
representing a
decrease of
$824,687 (31%) and $1,814,647 (33%) over the three and six months
ended
June 30, 1995.
Based upon recent adverse changes to the Company's financial position, the
Company has taken
steps to reduce selling, general and administrative expenditures (including
reducing
payroll,
advertising and promotional expenses, as well as curtailing research and
development efforts).
The Company has and will continue to institute cost savings initiatives
during
1996.
Depreciation and Amortization Expenses for the three and six months
ended
June 30,
1996 were $450,325 and $912,179, respectively, representing an increase
of
$26,010 (6%) and
$67,142 (8%) as compared to the three and six months ended June 30,
1995.
This increase was
principally due to the Company's upgrading its hardware and software
computer
capacity during
the year ended December 31, 1995, resulting in increased depreciation
expense
and increased
amortization expense on product acquisitions, principally DECONAMINE .
Interest Expense - Net for the three and six months ended June 30,
1996
increased by
$60,864 (57%) and $85,500 (33%) , respectively, from the corresponding
periods
during 1995
due primarily to interest expense relating to renegotiating the DECONAMINE
product
acquisition debt with Berlex, which, effective December 1995, required
monthly
interest payments
at the rate of prime plus 4% on the deferred principal payment of $2.67
million, of
which
$800,000 was paid during February 1996 and the balance of $1.87 million
was
paid during June
1996, without corresponding charges during the three and six months
ended June
30, 1995.
11
BRADLEY PHARMACEUTICALS, INC.
Net Income for the three and six months ended June 30, 1996 was
$210,946
and
$314,524, respectively, representing an increase of $4,803 (2%) and
$1,071,605
(142%) from
the corresponding periods during 1995. These increases in earnings were
primarily attributable
to the Company's cost savings initiatives relating to selling, general and
administrative reductions
and production cost savings. Net income was also positively impacted by
the
Company canceling and renegotiating managed care sales contracts with
below
targeted profit contributions.
Net Income Per Common Share for the three and six months ended June
30,
1996 was
$.03 and $.04 per common share, respectively, representing an increase of
$.01
and $.15, as
compared with net income of $.02 per share during the three months ended
June
30, 1995 and a
net loss per share of ($.11) for the six months ended June 30, 1995. The
computation of net
income per common share for the three and six months ended June 30,
1996 and
net loss per
common share for the six months ended June 30, 1995 does not include
the
effect of stock
equivalents because the inclusion of such stock equivalents would be
antidilutive.
The
computation of net income per common share for the three months ended
June
30, 1995 was
computed using the modified treasury stock method.
12
BRADLEY PHARMACEUTICALS, INC.
Item 1. Legal Proceedings
On June 5, 1996, TransCanaderm, Inc. ("TransCanaderm"), Louis Vogel
("Vogel"),
the former controlling stockholder of TransCanaderm, and other former
stockholders ("Plantiffs") commenced an action against the Company and
its
subsidiary, Doak Dermatologics ("Doak") ("Defendants"), in the United
States
District Court for the Southern District of New York, 96 Civ. 4175 (JFK).
The
complaint alleges that in 1957 Doak and Vogel entered into an agreement
("the
agreement") under which Vogel was given the sole and exclusive right to
distribute
Doak's products in Canada, which agreement was thereafter assigned by
Vogel to
TransCanaderm. In May, 1996 Vogel and the other TransCanaderm
stockholders
sold their stock to Stiefel Canada, Inc. ("Stiefel"). Shortly thereafter
Defendants
terminated the agreement. The complaint alleges (i) that the termination
was
wrongful, (ii) that the Defendants tortiously interfered with the contract
between
the former stockholders and Stiefel, and (iii) that Defendants are equitably
estopped from terminating the agreement. The complaint seeks an
injunction
restraining Defendants from terminating the agreement and compensatory
and
punitive damages in unspecified amounts.
The Company and Doak have filed an answer to the complaint and have
asserted
affirmative defenses and counterclaims against the Plaintiffs. The answer
asserts
that the Defendants had good cause to terminate because Plaintiffs
breached the
agreement in that (i) control of TransCanaderm was transferred to Stiefel, an
entity
which currently competes with Doak on certain products and which may in
the
future compete on other products, (ii) the transfer was accomplished in
secrecy
and without giving notice to, or obtaining the consent of, Doak, (iii) Plantiffs
prevented the sale of certain Doak products in Canada and (iv) certain other
acts
were also breaches of the agreement. In addition, it is claimed that the
transfer of
control of TransCanaderm violated a secrecy agreement under which
TransCanaderm and Vogel personally agreed to hold Doak's secret formulas
and
processes in its and his sole and exclusive custody. The Company and
Doak seek
damages for the Plaintiffs' breach.
On July 19, 1996, the Court denied TransCanaderm's motion for a
preliminary
injunction on the grounds that it had failed to demonstrate irreparable harm
and
that it had not shown a likelihood of success on the merits. The Court
ordered the
parties to conclude discovery by November 19, 1996 and to appear for a
conference on December 5, 1996.
The Company believes that it has meritorious defenses to the claims
asserted
against it.
13
BRADLEY PHARMACEUTICALS, INC.
Item 5. Other Information
On April 8, 1994, the Company was apprised by the New York State
Department of
Environmental Conservation ("NYSDEC") that Doak's current leased
manufacturing
facility,
located on adjoining parcels at 67 Sylvester Street and at 62 Kinkel Street,
Westbury, New York,
and former manufacturing facility located at 128 Magnolia Avenue,
Westbury,
New York, are
located in the New Cassel Industrial Area, which had been designated by
the
NYSDEC on the
Registry of Inactive Hazardous Waste Sites (the "Registry"). The real
property on
which Doak's
current manufacturing facility is situated is owned by and leased to the
Company
by Dermkraft,
Inc. an entity owned by the former controlling shareholders and officers of
Doak.
These
individuals are not affiliated with the Company. On February 7, 1995, the
Company was apprised
by the NYSDEC that the current manufacturing facility would be excluded
from the
Registry.
By letter dated April 21, 1995, the NYSDEC notified the Company that it
intended
to investigate
the Company's current manufacturing facility to determine if hazardous
substances
had previously
been deposited on that property. By letter dated October 24, 1995,
NYSDEC
notified Dermkraft,
Inc. that the current manufacturing facility is included in or near an
inactive hazardous waste site
described as "Kinkel and Sylvester Streets" and that NYSDEC intends to
conduct a
Preliminary
Site Assessment to study the site and immediate vicinity.
Thereafter, by letter dated May 3, 1996 and addressed to Dermkraft,
Inc., the
NYSDEC
notified Dermkraft that the site at 62 Kinkel Street has been listed on the
Registry
due to the
presence of trichloroethylene ("TCE") in soils and groundwater due to the
use of
TCE by LAKA
Tools and Stamping and LAKA Industries, a former tenant from 1971
through
1984. The
NYSDEC documents do not refer to any activities of Doak Dermatologics or
the
Company as a
basis for the listing in the Registry. The Company cannot at this time
determine
whether it will
ultimately be required to contribute to the cost of investigation and
remediation or
whether the
cost
associated with the investigation and required remediation, if any, of the
current
manufacturing
facility will be material. With respect to the former manufacturing facility on
Magnolia Avenue,
which remains designated by the NYSDEC as part of the Registry,
management
believes that
Doak will not be obligated to contribute to any remediation costs, if any are
required.
On June 14, 1996, the Company formed Bradley Pharmaceuticals
(Canada)
Inc., a
corporation incorporated under the Canada Business Corporation Act, for
the
purpose of
distributing and marketing Doak's, Kenwood Laboratories' (a division of the
Company), and the Company's products throughout Canada. Bradley
Pharmaceuticals (Canada)
Inc. is a wholly-owned subsidiary of the Company.
14
BRADLEY PHARMACEUTICALS, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
15
SIGNATURES
In accordance with the requirement of the Exchange Act, the Registrant
caused
this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BRADLEY PHARMACEUTICALS, INC.
(REGISTRANT)
Date: August 9, 1996 /s/ Daniel Glassman
Daniel Glassman
President
(Principal Executive Officer)
Date: August 9, 1996 /s/ Alan V. Gallantar
Alan V. Gallantar
Chief Financial Officer
(Principal Financial Officer)
16
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Cash Flow and Statement of Operations and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 33503
<SECURITIES> 0
<RECEIVABLES> 1623896
<ALLOWANCES> 89203
<INVENTORY> 1389301
<CURRENT-ASSETS> 5215008
<PP&E> 1246650
<DEPRECIATION> 785940
<TOTAL-ASSETS> 23680483
<CURRENT-LIABILITIES> 9447858
<BONDS> 4901281
0
0
<COMMON> 13615813
<OTHER-SE> (4284469)
<TOTAL-LIABILITY-AND-EQUITY> 23680483
<SALES> 6908499
<TOTAL-REVENUES> 6908499
<CGS> 1681040
<TOTAL-COSTS> 1681040
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 355618
<INCOME-PRETAX> 314524
<INCOME-TAX> 0
<INCOME-CONTINUING> 314524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 314524
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
