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 September 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 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 November 8, 1996
Class A, No Par Value 6,692,267
Class B, No Par Value 431,552
Transitional Small Business Disclosure Format (check one):
Yes No
BRADLEY PHARMACEUTICALS, INC.
INDEX TO FORM 10 - QSB
September 30, 1996
Page
Number
Part I - Financial Information
Financial Statements (unaudited):
Condensed Consolidated Balance Sheet -
September 30, 1996 3
Condensed Consolidated Statements of Operations -
three and nine months ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
nine months ended September 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
SEPTEMBER 30, 1996
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 11522
Accounts receivable - net 716905
Settlement receivable - net of expenses 1645132
Finished goods inventory 1466345
Prepaid samples and materials 1925446
Prepaid expenses and other receivables 79296
Due from affiliate 50417
Total current assets 5895063
Property and equipment - net 406006
Intangibles - net 17607638
Total Assets $ 23908707
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank overdraft $ 1467418
Current maturities of long-term debt 2939999
Accounts payable and accrued expenses 4415611
Total current liabilities 8823028
Long-term debt, less current maturities 4743031
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,
6,692,267 shares at September 30, 1996 12770365
Common, Class B, no par value, authorized
900,000 shares, issued and outstanding,
431,552 shares at September 30, 1996 845448
Accumulated deficit -3273165
10342648
Total Liabilities & Stockholders' Equity $ 23908707
See Notes to Condensed Consolidated Financial Statements
3
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Net sales $ 2144441 $ 587611 $ 9052940 $ 8005382
Cost of sales 627579 830427 2308619 2969339
1516862 -242816 6744321 5036043
Selling, general and
administrative expenses 1510164 3907537 5047148 9382191
Depreciation and amortization 478001 425061 1390180 1270098
Other income - litigation settlement
(net of expenses) -1768155 - -1645132 -
Interest expense - net 135548 143295 476297 398544
355558 4475893 5268493 11050833
Income (loss) before
income taxes 1161304 -4718709 1475828 -6014790
Income tax (expense) benefit -150000 1361000 -150000 1900000
Net income (loss) $ 1011304 $ -3357709 $ 1325828 $ -4114790
Net income (loss)
per common share (1) $ 0.14 $ -0.45 $ 0.18 $ -0.56
Weighted average number
of common shares 7100000 7500000 7200000 7300000
See Notes to Condensed Consolidated Financial Statements
(1) Computation of net income per common share for the three and nine months
ended September 30, 1996 and net loss per common share for the three and
nine months ended September 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)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net income (loss) $ 1325828 $ -4114790
Depreciation & amortization 1390180 1270098
Effects on cash from changes in operating
assets & liabilities
Decrease (increase) in assets:
Accounts receivable 1533352 2689827
Settlement receivable -1645132 -
Finished goods inventory 205622 -589643
Prepaid samples and materials 330151 -861820
Refundable/accrued income taxes 1969069 -1746950
Prepaid expenses and other receivables 32080 75062
Due from affiliate -50417 -144570
(Decrease) increase in liabilities:
Accounts payable and accrued expenses -4255648 2293757
Net cash provided by (used in) operating activities 835085 -1129029
Cash flows from investing activities:
Investment in Doak Pharmacal Co., Inc. - net
of cash acquired -6190 -301916
Acquisition of trademarks, patents and
other assets -324790 -92281
Acquisition/disposition of common stock (and
distribution agreement with) of
ITG Laboratories, Inc. 28500 -565625
Sale (purchase) of temporary investments - net 1950 55830
Purchase of property & equipment - net -13955 -149319
Net cash used in investing activities -314485 -1053311
Cash flows from financing activities:
Repayment of shareholders' loan - -15000
Repayment of notes payable -2530610 -430298
Proceeds from conversion of warrants and options - 1590942
Bank overdraft 1467418 -
Net cash (used in) provided by financing activities -1063192 1145644
Decrease in cash and cash equivalents -542592 -1036696
Cash and cash equivalents at beginning of period 554114 1196092
Cash and cash equivalents at end of period $ 11522 $ 159396
(Continued)
5
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1996 1995
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 207790 $ 84739
Income taxes $ - $ 953095
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 September 30, 1996 and the results of
operations for the three
and nine months ended September 30, 1996 and 1995 and cash flows
for the nine months
ended September 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 nine month periods ended
September 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 September 30, 1996, the Company had negative working capital
of
($2,927,965), a positive increase of $2,000,099 over the December 31,
1995 negative
working capital of ($4,928,064). Improvement in the Company's
working capital position
at September 30, 1996 was due to a legal settlement with the
Company's distributor in
Canada (see "Item 1. Legal Proceedings - Trans CanaDerm Settlement")
netting
approximately $1.7 million. These settlement proceeds were primarily
used by the
Company to satisfy existing obligations including accounts payable and
current maturities
of long term debt. The Company, in anticipation of its settlement with
its distributor in
Canada, and in an effort to quickly satisfy past due obligations with its
suppliers and
vendors, incurred a bank overdraft of $1,467,418. The overdraft
represented checks
which were mailed prior to the actual cash settlement being received by
the Company,
which settlement proceeds were received two days later and the
corresponding bank
overdraft was eliminated. 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 nine
months ended September 30, 1995 was impacted by the expenditure of
cash in connection
with the Doak Dermatologics merger and consideration paid in
connection with the ITG
Laboratories, Inc. transaction which has since been terminated. These
events did not have
a similar material impact on net cash used in investing activities for the
nine months ended
September 30, 1996.
During December 1996, the Company has a $2.67 million payment
due to Berlex
Laboratories, Inc. relating to the Company's acquisition of DECONAMINE
. The
Company is currently negotiating with Berlex Laboratories to extend its
current portion
of long term debt due Berlex. 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 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 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.
LIQUIDITY AND CAPITAL RESOURCES
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 (approximately
$6,100,000) 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, 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 Abbreviated New Drug
Application (ANDA) with
the FDA. The cost of 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.
Product Acquisition
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. To date
the Company
has not acquired any other products during Fiscal 1996.
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.
Net Sales (net of adjustments to sales including chargebacks,
rebates and discounts
for the current periods and for 1995 includes a change in estimate
recorded during 1995
for prior period rebates and chargebacks) for the three and nine months
ended September
30, 1996 were $2,144,441 and $9,052,940, respectively, compared to
$587,611 and
$8,005,382, respectively, for the three and nine months ended
September 30, 1995. Net
sales for the three and nine months ended September 30, 1995 include a
change in estimate
recorded in the third quarter of 1995 for chargebacks and rebates
relating principally to
government and managed care sales of DECONAMINE SR Capsules
made in prior
periods resulting in a reduction in net sales during the third quarter of
1995 of $2,591,455
and a $1,300,000 reduction in net sales for the nine months ended
September 30, 1995.
Net sales for 1996 were favorably impacted by the conclusion of certain
managed care
contract renegotiations which resulted in an increase in net sales of
approximately
$300,000 for the third quarter of 1996 and also resulted in contracts at
higher prices, the
affect of which the Company has recognized and will continue to
recognize in future
periods.
Net Sales (net of adjustments to sales including chargebacks, rebates
and discounts
for the current periods and for 1995 prior to a change in estimate
recorded during 1995
for prior period rebates and chargebacks) for the three and nine months
ending September
30, 1996 were $2,144,441 and $9,052,940, respectively, representing
a decrease of
$1,034,625 (33%) and a decrease of $252,442 (3%) from the three and
nine months ended
September 30, 1995 of $3,179,066 and $9,305,382, respectively. This
decrease for the
three months and nine months ended September 30, 1996 was primarily
due to a decrease
in the volume of DECONAMINE SR sales resulting from the Company's
decision in the
fourth quarter of 1995 to cancel certain contracts with managed care
organizations, buying
groups and the United States Government which fell below targeted
profit contributions.
Additionally, net sales for the three months ended September 30, 1996
were negatively
impacted by backorders resulting from a temporary suspension of
international
distribution, primarily in Canada as a result of the litigation involving the
Company's
Canadian distributor and at the Company's U.S. distribution center,
resulting in
backorders of approximately $500,000.
10
BRADLEY PHARMACEUTICALS, INC.
Cost of Sales for the three and nine months ended September 30,
1996 were
$627,579 and $2,308,619, respectively, representing a decrease from
the three and nine
months ended September 30, 1995 of $202,848 (24%) and $660,720
(22%). The
Company's gross profit margin for the three and nine months ended
September 30, 1996
was 71% and 74%, respectively, as compared to 63% during the nine
months ended
September 30, 1995 and a negative gross margin during the three
months ended September
30, 1995. The gross margin for the three and nine months ended 1995
were negatively
impacted by a change in estimate for prior period chargebacks and
rebates recorded during
the third quarter of 1995. After adjusting for the impact of the change in
estimate for the
three and nine months ended September 30, 1995, the gross profit
percentages were
relatively consistent.
Selling, General and Administrative Expenses were $1,510,164 and
$5,047,148,
respectively, for the three and nine months ended September 30, 1996,
representing a
decrease of $2,397,373 (61%) and $4,335,043 (46%) over the three
and nine months
ended September 30, 1995. This reduction was the result of cost saving
initiatives by the
Company in the fourth quarter of 1995 and subsequent quarters in 1996
which included
reducing payroll, advertising and promotional expenses, as well as
curtailing research and
development efforts. In addition, the Company received monetary
concessions from its
vendors and suppliers during the third quarter of 1996 for immediate
payments from the
proceeds of the Company's legal settlement. These monetary
concessions were not
material to the Company. The Company will continue to review and
institute cost savings
in the future.
Depreciation and Amortization Expenses for the three and nine
months ended
September 30, 1996 were $478,001 and $1,390,180, respectively,
representing an increase
of $52,940 (12%) and $120,082 (9%) as compared to the three and
nine months ended
September 30, 1995. This increase was principally the result of
increased amortization
expense on product acquisitions, principally DECONAMINE and ACID
MANTLE , as
well as an increase in depreciation expense due to the Company's
upgrading its hardware
and software computer capability.
Other Income for the three and nine months ended September 30,
1996 was
$1,768,155 and $1,645,132, respectively. This represents a payment
of $2 million, net
of $231,845 of expenses relating to the litigation, for the quarter ended
September 30,
1996 and $354,868 of expenses relating to the litigation for the nine
months ended
September 30, 1996 (see "Item 1 below - Legal Proceedings - Trans
CanaDerm
Settlement").
Interest Expense - Net for the three and nine months ended
September 30, 1996
decreased by $7,747 (5%) and increased $77,753 (20%), respectively,
from the
corresponding periods during 1995. The increase for the nine months
was primarily due
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,
which was
satisfied during June 1996, without corresponding charges during the
three and nine
months ended September 30, 1995.
Net Income for the three and nine months ended September 30,
1996 was
$1,011,304 and $1,325,828, respectively, representing an increase of
$4,369,013 and
$5,440,618 from the corresponding periods during 1995 which were
affected by a change
in estimate for chargebacks and rebates. Net Income was positively
impacted by the
Company recognizing $2 million, during the third quarter of 1996 of
which $1,768,155
and $1,645,132 was realized net of litigation expenses for the three and
nine months ended
September 30, 1996 (see "Item 1 below - Legal Proceedings - Trans
CanaDerm
Settlement").
11
BRADLEY PHARMACEUTICALS, INC.
Net income was also favorably impacted by the conclusion of certain
managed care
contract renegotiations and monetary concessions from the Company's
suppliers which
resulted in an increase in net income of approximately $300,000.
Increases in earnings
were further attributed to the Company's cost savings initiatives relating
to selling, general
and administrative reductions and production cost savings as well as the
positive impact
of canceling and renegotiating certain managed care contracts.
Net Income Per Common Share for the three and nine months ended
September
30, 1996 was $.14 and $.18 per common share, respectively,
representing an increase of
$.59 and $.74, as compared with net loss of ($.45) and ($.56) per
common share during
the three and nine months ended September 30, 1995. The computation
of net income per
common share for the three and nine months ended September 30, 1996
and net loss per
common share for the three and nine months ended September 30, 1995
do not include the
effect of the stock equivalents because the inclusion of such stock
equivalents would be
antidilutive.
12
BRADLEY PHARMACEUTICALS, INC.
Item 1. Legal Proceedings
Trans CanaDerm Settlement
On June 5, 1996, Trans CanaDerm, Inc. ("Trans CanaDerm"), Louis
Vogel
("Vogel"), the former controlling stockholder of Trans CanaDerm, and
other former
stockholders of Trans CanaDerm (collectively, "Plaintiffs") commenced
an action against
the Company and its subsidiary, Doak Dermatologics ("Doak"), in the
United States
District Court for the Southern District of New York, 96 Civ. 4175 (JFK).
The complaint
alleged 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 Trans
CanaDerm. In May
1996, Vogel and the other Trans CanaDerm stockholders sold their stock
in Trans
CanaDerm to Stiefel Canada, Inc. ("Stiefel"), a competitor of the
Company. Shortly
thereafter, the Company and Doak terminated the Agreement. The
complaint alleged (i)
that the termination was wrongful, (ii) that the Company and Doak
tortiously interfered
with the contract between the former stockholders and Stiefel, and (iii)
that the Company
and Doak should be equitably estopped from terminating the Agreement.
The complaint
sought an injunction restraining the Company and Doak from terminating
the Agreement
and compensatory and punitive damages in unspecified amounts.
On September 30, 1996, the Company and Doak entered into a
settlement
agreement with the Plaintiffs. Pursuant to the settlement, the Company
received $2
million relating to the sale of the Company's independent Canadian
distributor, Trans
CanaDerm, Inc., of which the Company did not have an ownership
position, to Stiefel,
a competitor of the Company, and the Company transferred to Trans
CanaDerm all of the
Company's rights, title and interest in and to certain Doak products in
Canada.
Trans CanaDerm currently distributes several Doak products, as well
as other
unrelated brands in Canada, and by virtue of the foregoing transfer and
payment, Trans
CanaDerm will continue to market that Doak product line in Canada.
Trans CanaDerm
also has agreed to continue to purchase certain materials used in
connection with the
manufacture of the transferred Doak products through December 31,
1997.
Settlement of Litigation With Former Director
During May 1995, Melvin Appelbaum, a former director of the
Company,
commenced an action against the Company and others in New Jersey
Superior Court
entitled Melvin Appelbaum vs. Daniel Glassman, Bradley
Pharmaceuticals, Inc. et. al.
Mr. Appelbaum claimed unspecified damages based on his allegations
that (i) the
Company would not nominate him for re-election to the Company's
Board of Directors,
(ii) he is entitled to an unspecified number of stock options to acquire the
Company's Class
A Common Stock and (iii) he has been "oppressed" as a Company
shareholder. The
Company, Mr. Appelbaum and all other interested parties settled this
litigation on
November 5, 1996. The Company included in its results of operations
for the three
months ended September 30, 1996 its portion of the settlement, which
the Company does
not consider to be material.
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 leased 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 refer to Doak
Dermatologics as the
current tenant but 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.
14
BRADLEY PHARMACEUTICALS, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
On October 16, 1996, the Company filed a Current Report on
Form 8-K
reporting the Company's settlement agreement with Stiefel
Canada, Inc.,
Trans CanaDerm, Inc., Louis Vogel and certain other parties.
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: November 13, 1996 /s/ Daniel Glassman
Daniel Glassman
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 1996 /s/ Alan V. Gallantar
Alan V. Gallantar
Corporate Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
16
