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, 1997
[ ] 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 of (IRS Employer
incorporation or organization) Identification No.)
383 Route 46 W., Fairfield, NJ
(Address of principal executive offices)
973-882-1505
(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 6, 1997
Class A, No Par Value 7,628,623
Class B, No Par Value 431,552
Transitional Small Business Disclosure Format (check one):
Yes No X
BRADLEY PHARMACEUTICALS, INC.
INDEX TO FORM 10 - QSB
June 30, 1997
Page
Number
Part I - Financial Information
Financial Statements (unaudited):
Condensed Consolidated Balance Sheet - June 30, 1997 3
Condensed Consolidated Statements of Operations -
three and six months ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash
Flows - six months ended June 30, 1997 and 1996 5
Condensed Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis 8
Part II - Other Information
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 650,903
Accounts receivable - net 1,974,632
Finished goods inventory 958,823
Prepaid samples and materials 1,400,019
Prepaid expenses and other 177,216
Total current assets 5,161,593
Property and equipment - net 280,405
Intangibles - net 14,164,980
Total Assets $ 19,606,978
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 2,998,569
Accounts payable and accrued expenses 3,901,521
Accrued income taxes 301,441
Total current liabilities 7,201,531
Long-term debt, less current maturities 326,292
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,
7,692,267 shares at June 30, 1997 13,970,240
Common, Class B, no par value, authorized
900,000 shares, issued and outstanding,
431,552 shares at June 30, 1997 845,448
Treasury Stock, at cost (57,336 shares at
June 30, 1997) (78,416)
Accumulated deficit (2,658,117)
12,079,155
Total Liabilities & Stockholders' Equity $ 19,606,978
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,
1997 1996 1997 1996
Net sales $ 3,702,321 $ 3,516,956 $ 7,373,970 $ 6,908,499
Cost of sales 952,859 871,697 1,807,376 1,681,040
2,749,462 2,645,259 5,566,594 5,227,459
Selling, general and
administrative expenses 2,065,661 1,815,531 4,011,810 3,660,007
Depreciation and amortization 400,376 450,325 806,064 912,179
Interest expense - net 70,738 168,457 182,600 340,749
2,536,775 2,434,313 5,000,474 4,912,935
Income before
income taxes 212,687 210,946 566,120 314,524
Income tax expense 82,750 - 223,750 -
Net income $ 129,937 $ 210,946 $ 342,370 $ 314,524
Net income
per common share (1) $ 0.02 $ 0.03 $ 0.04 $ 0.04
Weighted average number
of common shares 8,090,212 7,215,329 8,098,251 7,183,354
See Notes to Condensed Consolidated Financial Statements
(1) Computation of net income per common share for the three and six months
ended June 30, 1997 and 1996 do not include the effect of the stock equi-
valents because the inclusion of such stock equivalents would be anti-
dilutive or not materially diluted.
4
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net income $ 342,370 $ 314,524
Depreciation & amortization 806,064 912,179
Effects on cash from changes in operating
assets & liabilities
Decrease (increase) in assets:
Accounts receivable 761,405 720,064
Inventory and prepaid samples and materials 380,342 447,335
Prepaid expenses and other (124,233) 16,459
(Decrease) increase in liabilities:
Income taxes payable/refundable 108,165 1,810,383
Accounts payable and accrued expenses (817,638) (2,152,526)
Due to affiliate - (71,666)
Net cash provided by operating activities 1,456,475 1,996,752
Cash flows from investing activities:
Investment in Doak Pharmacal Co., Inc - net
of cash acquired (2,372) (6,190)
Acquisition of trademarks, patents and
other assets (55,890) (301,802)
Acquisition/disposition of common stock (and
distribution agreement with) of
ITG Laboratories, Inc. - 24,000
Redemption of temporary investments - 1,950
Purchase of property & equipment - net (18,223) (10,773)
Net cash used in investing activities (76,485) (292,815)
Cash flows from financing activities:
Proceeds from shareholders' loan - 100,000
Repayment of notes payable (650,671) (2,324,548)
Purchase of treasury shares (78,416) -
Net cash used in financing activities (729,087) (2,224,548)
Increase (decrease) in cash and cash equivalents 650,903 (520,611)
Cash and cash equivalents at beginning of period - 554,114
Cash and cash equivalents at end of period $ 650,903 $ 33,503
(Continued)
5
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1997 1996
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 66,000 $ 109,000
Income taxes $ 74,000 $ -
See Notes to Condensed Consolidated Financial Statements
6
<TABLE> <S> <C>
<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>
<CIK> 0000864268
<NAME> FDS2Q97
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 650,903
<SECURITIES> 0
<RECEIVABLES> 2,038,976
<ALLOWANCES> 64,344
<INVENTORY> 958,823
<CURRENT-ASSETS> 5,161,593
<PP&E> 1,261,774
<DEPRECIATION> 981,369
<TOTAL-ASSETS> 19,606,978
<CURRENT-LIABILITIES> 7,201,531
<BONDS> 326,292
0
0
<COMMON> 14,815,688
<OTHER-SE> (2,736,533)
<TOTAL-LIABILITY-AND-EQUITY> 19,606,978
<SALES> 7,373,970
<TOTAL-REVENUES> 7,373,970
<CGS> 1,807,376
<TOTAL-COSTS> 1,807,376
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 182,600
<INCOME-PRETAX> 566,120
<INCOME-TAX> 223,750
<INCOME-CONTINUING> 342,370
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 342,370
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
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 of 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,
1997 and the results of operations for the three and six month periods
ended June 30, 1997 and 1996 and cash flows for the six months ended
June 30, 1997 and 1996, respectively.
The accounting policies followed by the Company are set forth in
Note A of the Company's financial statements as contained in the Form
10-KSB for the year ended December 31, 1996 filed with the Securities
and Exchange Commission. The Form 10-KSB contains additional data and
information with respect to long-term debt, intangible assets, stock
agreements, stock option plans, private placement of securities and
reserved shares, escrow shares, chargebacks and rebates, related party
transactions, income taxes, commitments, economic dependency and
other items and is incorporated by reference.
The results reported for the three and six month periods ended June
30, 1997 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, 1997, the Company had negative working capital of
($2,039,938) a positive increase of $788,862 over December 31, 1996
negative working capital of ($2,828,800). Improvement in the Company's
working capital position at June 30, 1997 was primarily due to operating
profit and positive cash flow from operations during both the three months
ended March 31, 1997 ("First Quarter 1997") and the three months ended
June 30, 1997 ("Second Quarter 1997") and the Company's reversal
in Second Quarter 1997 of $229,000 of reserves previously recorded for
chargebacks and rebates.
During the Second Quarter 1997, the Company announced the final
restructuring of its obligations to Berlex Laboratories, Inc. ("Berlex")
resulting from the Company's 1993 acquisition of the DECONAMINE (R)
brand of cough and cold products. Subject to the execution of a definitive
restructuring agreement, Berlex and the Company have agreed that the
Company's remaining approximate $2.5 million obligation to Berlex will be
satisfied by the Company's (i) paying to Berlex, on or before September
30, 1997, $1.15 million plus accrued interest, (ii) issuing to Berlex
approximately 500,000 shares of the Company's Class A Common Stock
(which, when added with other shares of Class A Common Stock
previously issued to Berlex, will provide Berlex with an approximate
19% interest in the Company) and (iii) issuing to Berlex warrants to
purchase up to 700,000 additional shares of Class A Common Stock of
the Company at an exercise price of $1.25 per share, exercisable upon
conditions.
While the Company is in the process of finalizing third party
financing with The CIT Group to raise the funds necessary to satisfy the
remaining cash obligation to Berlex, there can be no assurance that the
Company can successfully obtain this financing prior to the scheduled
payment date. Due to the uncertainties surrounding the Company's ability
to satisfy its remaining cash obligation to Berlex and the resulting impact
such failure would have on the Company's future financial condition, if the
Company cannot satisfy its obligation to Berlex, there can be no assurance
that the Company can continue as a going concern. The financial
statements of the Company included elsewhere in this Quarterly Report on
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 remaining cash
obligation to Berlex.
To secure its obligations to Berlex, the Company has warranted to
Berlex that until such time as all obligations to Berlex have been satisfied,
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. In addition, the Company has granted Berlex a security interest
covering all of the Company's accounts receivables.
Working capital as of June 30, 1997 included an increase of
$650,903 in cash and cash equivalents. Additionally, current liabilities
decreased $1,155,474 from balances at December 31, 1996 as Accounts
Payable and Accrued Expenses were reduced. Accounts Receivable
decreased $761,405, inventories have decreased $99,162, and prepaid
samples/materials have decreased $281,180 for the six month period ending
June 30, 1997, reflecting the normal seasonality of our Second Quarter 1997
sales.
The United States Food and Drug Administration (the "FDA") is
currently reviewing cough and cold products for its Over-the-Counter
"OTC") monograph, and could designate the formula that is in
DECONAMINE (R) as an OTC formulation. It is not currently possible for the
Company to predict how its operations and financial condition will be
affected if the DECONAMINE (R) product line is converted from prescription
status to over-the-counter status.
The Company's DECONAMINE (R) SR product requires the Company
to file an Abbreviated New Drug Application ("ANDA") with the FDA to be
in compliance with the regulation that all controlled release products
require an ANDA. To date, this law has not been enforced on
grandfathered (pre-1962) products with established safety and efficacy
profiles. 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 through Fiscal 1996. This project is expected to be completed and
submitted to the FDA during 1998. 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 (R) SR would have a material adverse effect on the
Company's business.
Provided the Company can successfully raise the capital necessary
to satisfy its remaining cash obligation to Berlex and to continue research
and development projects with respect to DECONAMINE (R) SR, the
Company believes that it has sufficient cash flow from operations to
support its working capital requirements over the next twelve months.
RESULTS OF OPERATIONS
Chargebacks and rebates are the difference between prices at which
the Company sells its products (principally DECONAMINE (R) 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, 1997 were
$4,486,537 and $10,527,070 respectively. These sales results
represented a $1,544,687 decrease from the three months ended June
30, 1996, and a $763,020 decrease from the six months ended June 30,
1996. These decreases were primarily due to decreases in the volume of
the DECONAMINE (R) product line sales during the Second Quarter of 1997.
There were also a combination of several factors including
the Company's reduction of sales to unprofitable accounts.
Increased sales of Doak Dermatologics products, especially FORMULA 405 (R)/
A.H.A, ACID MANTLE (R) and TRANS-VER-SAL (R) helped offset the decline in
DECONAMINE (R) sales. Gross sales for the Company's DECONAMINE (R) product
line accounted for approximately 47% and 59% respectively, of gross
sales for the three and six months ended June 30, 1997 versus 66% and
68% respectively, for the three and six months ended June 30, 1996.
NET SALES (net of all adjustments to sales) for the three and six
months ended June 30, 1997 were $3,702,321 and $7,373,970,
respectively, representing an increase of $185,365 for the three months,
and an increase of $465,471 for the six months ended June 30, 1997.
The net sales increase for the three and six month periods primarily
reflects increases in the sales of the Doak Dermatologics products of
$486,628 (39%) and $839,009 (40%) respectively. The Company's analysis of
the trend in actual chargebacks and rebates resulted in a decrease in the
percentage used to adjust gross sales to net sales for the Second Quarter of
1997, resulting in increased net sales and profits of $45,000. Additionally,
during the Second Quarter 1997, net sales were positively impacted by
the Company's reversal of previously established reserves of $229,000
($143,000 from 1997 and $86,000 from prior years). The release of these
reserves reflects improvements in processing chargebacks and rebates as
well as less reliance on managed care sales. This reserve reversal is
is based on a reduction of a trend commencing in 1995. Any future
reversals will reflect continuing and future analysis of this trend.
There can be no assurance that this trend will continue.
COST OF SALES for the three and six months ended June 30, 1997
were $952,859 and $1,807,376, respectively, representing an increase
from the three and six months ended June 30, 1996 of $81,162 and
$126,336. The Company's gross profit margin for the three and six
months ended June 30, 1996 was 74% and 75%, respectively, as
compared to 75% and 76% during the three and six months ended June
30, 1996. This reflects a change in the mix of the Company's sales with
greater sales of Doak products which traditionally carry a lower gross
profit percentage.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES were
$2,065,661 and $4,011,810, respectively, for the three and six months
ended June 30, 1997, representing an increase of $250,130 (14%) and
$351,803 (10%) over the three and six months ended June 30, 1996.
The increases in selling, general and administrative expenses principally
reflect increased investment in the Sales and Marketing areas, partially
offset by savings in R&D. The Company, however, continues to implement
steps designed to reduce expenses and maintain cost controls.
DEPRECIATION and AMORTIZATION EXPENSES for the three and
six months ended June 30, 1997 were $400,376 and $806,064,
respectively, representing a decrease of $49,949 and $106,115 as
compared to the three and six months ended June 30, 1996. These
decreases reflect lower amortization expenses on product acquisitions,
principally due to debt reduction associated with the restructuring of the
Company's obligations to Berlex.
INTEREST EXPENSE - NET for the three and six months ended June
30, 1997 decreased by $97,719 and $158,159 as compared to the three
and six months ended June 30, 1996. The decrease was principally due
to debt reduction associated with the DECONAMINE (R) product acquisition.
NET INCOME for the three and six months ended June 30, 1997
was $129,937 and $342,370, respectively, representing a decrease of
$81,009 (38%) for the three months ended June 30, 1997 as compared to the
comparable period during 1996, and an increase of $27,846 (9%) for the
six months ended June 30, 1997 as compared to the comparable period
during 1996. The increase in net income gives effect to
income taxes of $223,750 for the six months ending June 30, 1997 and
the reversal of the aforementioned reserves of $229,000. No income
taxes were provided for in the first six months of 1996 because of tax
loss carryforwards from prior years.
NET INCOME PER COMMON SHARE for the three and six months
ended June 30, 1997 was $.02 and $.04, respectively, representing a
decrease of $.01 for three months, and the same $.04 earnings for six
months versus last year. Computations of net income per common share
for the three months and the six months ending June 30, 1997 and 1996
do not include the effect of stock equivalents because the inclusion of
such stock equivalents would be antidilutive.
Part II - Item 5. Other Information
Recent Developments
On July 2, 1997 the Company announced that it had received a
commitment for a line of credit of up to three million dollars with The
CIT Group, Chicago, IL. The amount of credit to be advanced will be
dependent upon the Company's then existing accounts receivable and
inventory balances. The credit commitment is subject to satisfaction of
certain conditions, including the execution of appropriate credit and
security documents upon closing on or before September 30, 1997.
The Company intends to utilize a portion of The CIT Group credit
advance, when made, along with funds from Bradley operations, to satisfy,
in its entirety, the cash obligation of the previously disclosed Berlex debt.
In addition, this potential credit availability provides the Company with
access to funding for future acquisitions to the extent that they can be
supported by applicable assets.
On June 2, 1997, the Board of Directors of the Company authorized
the issuance of 254,311 shares of Class B Common Stock (the "Reissued
Class B Stock") to Daniel Glassman, the Company's President and Chief
Executive Officer. The Reissued Class B Stock was issued to Mr.
Glassman in consideration for, among other things, Mr. Glassman's
delivery to the Company, for cancellation, of 254,311 shares of Class
A Common Stock of the Company. The issuance of the Reissued Class B
Stock to Mr. Glassman was the result of the Board of Directors' decision to
restore management status quo following the Board's recently learning that
Mr. Glassman had pledged (the "Pledge"), in April 1995, 254,311 shares
of Class B Common Stock then owned by Mr. Glassman (the "Pledged
Shares") to secure certain obligations of Mr. Glassman to an unaffiliated
third party lender. Mr. Glassman has delivered to the Company a letter in
which he states that the Pledge was an inadvertent error on his part and
that had he been aware of the potential ramifications of the Pledge, he
would have pledged other collateral to secure the obligations in question.
Pursuant to the Company's Certificate of Incorporation, as amended
(the "Charter"), the Pledged Shares automatically converted into shares of
Class A Common Stock upon the Pledge by Mr. Glassman. Consequently,
the number of outstanding shares of Class B Common Stock following the
Pledge was reduced by 254,311 shares. Pursuant to the Charter, holders
of the Company's Class B Common Stock are entitled to elect a majority of
the Company's directors so long as there are at least 325,000 shares of
Class B Common Stock issued and outstanding; otherwise, all holders of
Class A and Class B Common Stock, voting as a single class, are entitled
to elect all of the Company's directors. During November 1995, and
pursuant to matters unrelated to the Pledge, an aggregate of 428,358
other shares of Class B Common Stock were returned to, and retired by,
the Company. As a result thereof, the number of outstanding shares of
Class B Common Stock fell below the aforementioned 325,000 share
threshold. In light of the Company's being unaware of the Pledge, holders
of the Company's Class A and Class B Common Stock, voting as separate
classes, elected two directors and three directors, respectively, at the
Company's Annual Stockholders' Meeting held May 1996 (the "1996
Annual Meeting"), rather than voting together as a single class to elect all
of the Company's directors. Accordingly, since the 1996 Annual Meeting,
only the two directors of the Company elected by the holders of the Class
A Common Stock (the "Class A Directors") have been duly and validly
elected. Prior to June 3, 1997, the Company's By-Laws stated that the
Company shall have three directors. Since their election by stockholders
at the 1996 Annual Meeting, the two Class A Directors, each of whom
was an independent director, voted in favor of all matters approved by the
Board of Directors. Prior to the authorization of the issuance of the
Reissued Class B Stock to Mr. Glassman, the Class A Directors appointed
David Hillman, Secretary of the Company, as the third director of the
Company.
Since the issuance of the Reissued Class B Stock to Mr. Glassman
caused the number of issued and outstanding shares of Class B Common
Stock to increase to 431,552 shares (above the 325,000 share threshold
set forth in the Company's Charter), the holders of Class B Common Stock
became entitled to elect a majority (consisting of three) of the Company's
directors. Following the issuance to Mr. Glassman of the Reissued Class B
Stock, the directors of the Company amended the Company's By-Laws to
provide that the Board of Directors shall be comprised of five persons and
the holders of the outstanding Class B Common Stock, acting separately
as a class in accordance with the Company's Charter, elected, by majority
written consent in lieu of a meeting, Daniel Glassman and Iris S. Glassman
as directors of the Company and David Hillman was designated as a
director elected by the holders of the Class B Common Stock.
At a Special Meeting of Stockholders held in August 1996, it was
reported that an amendment (the "Option Plan Amendment") to the
Company's 1990 Stock Option Plan, as amended (the "Plan"), had been
approved by stockholders increasing, from 1,500,000 shares to 2,600,000
shares, the number of shares of Class A Common Stock authorized for
issuance under the Plan. Given the ramifications of the Pledge, and in
particular, that the 254,311 Class B shares voted in favor of the Option
Plan Amendment by Mr. Glassman were counted as 1,271,555 votes
(giving effect to the 5:1 voting power attributable to Class B shares) but
should have been counted as only 254,311 shares of Class A Common
Stock voting in favor of the Option Plan Amendment, there was an
insufficient number of shares of Common Stock of the Company voting to
approve the Option Plan Amendment. Accordingly, the Board of Directors
has determined to treat the Option Plan Amendment as having been
rejected by the Company's stockholders. Options under the Plan to
acquire an aggregate of 140,000 shares of Class A Common Stock
granted by the Company in reliance upon the Option Plan Amendment
having been approved by stockholders have been returned voluntarily to
the Company by the relevant optionees for cancellation. As a
consequence of believing, in good faith, that the Option Plan Amendment
had been approved by stockholders, between August 15, 1996 and
December 31, 1996, there were outstanding options to acquire under the
Plan in excess of 1,500,000 shares of Class A Common Stock. As a
result of options to acquire an aggregate of 423,354 shares of Class A
Common Stock under the Plan being canceled during 1996 due to
optionees leaving the employ of the Company, there are outstanding, as of
the date of this report, options to acquire an aggregate of 1,478,365
shares of Class A Common Stock under the Plan.
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, is located
in the New Cassel Industrial Area, which has 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.
On February 7, 1995, the Company was apprised by the NYSDEC that the
current manufacturing facility will 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 Company's 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. The Company has been advised that NYSDEC
has made a preliminary determination to include the 62 Kinkel Street
portion of the current manufacturing facility on the Registry and that the
67 Sylvester Street portion of the facility will not be included, but those
determinations could change before they are finalized. Thereafter, by
letter dated May 3, 1996 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
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.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
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 14, 1997 /s/ Daniel Glassman
Daniel Glassman
Chairman of The Board, President
and Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 1997 /s/ Lawrence R. Lenz
Lawrence R. Lenz
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
15
