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, 1999
------------------
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-18881
-------
BRADLEY PHARMACEUTICALS, INC.
-----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 22-2581418
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
383 Route 46 West, Fairfield, NJ
--------------------------------
(Address of principal executive offices)
(973) 882-1505
--------------
N/A
---
(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 November 2, 1999
------------------- ----------------------------
Common Stock, $.01 Par Value 8,199,683
Class B, $.01 Par Value 431,552
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
BRADLEY PHARMACEUTICALS, INC.
INDEX TO FORM 10-QSB
September 30, 1999
Page
Number
------
Part I - Financial Information
Financial Statements (unaudited):
Condensed Consolidated Balance Sheet -
September 30, 1999 3
Condensed Consolidated Statements of
Operations - three and nine months ended September 30,
1999 and 1998 4
Condensed Consolidated Statements of Cash
Flows - nine months ended September 30, 1999
and 1998 5
Condensed Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis 10
Part II - Other Information
Item 1. Legal Proceedings 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
BALANCE SHEET
September 30, 1999
(UNAUDITED)
ASSETS
Current assets
- --------------
Cash and cash equivalents $ 442,415
Accounts receivable - net 4,335,022
Finished goods inventory 1,732,453
Prepaid samples and materials 953,355
Prepaid expenses and other 80,220
------------
Total current assets 7,543,465
Property and equipment - net 281,207
Intangibles - net 12,981,997
Other assets 172,695
------------
Total Assets $ 20,979,364
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
- -------------------
Current maturities of long-term debt $ 1,246,077
Revolving credit line 666,891
Accounts payable 2,269,965
Accrued expenses 2,546,218
Accrued income taxes 214,896
------------
Total current liabilities 6,944,047
Long-term debt, less current maturities 149,146
Commitments & contingencies
Stockholders' equity
- --------------------
Preferred stock, $.01 par value;
authorized, 2,000,000 shares; issued, none -
Common stock, $.01 par value, authorized
26,400,000; issued 8,199,683 shares at
September 30, 1999 14,757,851
Common, Class B, $.01 par value, authorized
900,000 shares, issued and outstanding,
431,552 shares at September 30, 1999 845,448
Treasury stock, at cost (733,018 shares at
September 30, 1999) (1,107,507)
Accumulated deficit (609,621)
-------------
13,886,171
-------------
Total Liabilities & Stockholders' Equity $ 20,979,364
=============
See Notes to Condensed Consolidated Financial Statements
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ---------------------------
1999 1998 1999 1998
------------------------- ---------------------------
Net sales $ 4,128,173 $ 2,463,228 $ 13,544,105 $ 10,392,630
Cost of sales 1,070,773 882,061 3,725,770 3,216,464
----------- ----------- ----------- ------------
3,057,400 1,581,167 9,818,335 7,176,166
----------- ----------- ----------- ------------
Selling, general and
administrative
expenses 2,880,761 2,023,555 7,851,404 6,072,006
Depreciation and
amortization 257,305 265,612 896,355 803,759
Interest expense - net 51,014 31,187 173,088 114,857
---------- ------------ ----------- ------------
3,189,080 2,320,354 8,920,847 6,990,622
---------- ------------ ----------- ------------
Income (loss) before
income taxes (131,680) (739,187) 897,488 185,544
Income tax provision
(benefit) (48,000) (274,000) 332,000 68,000
---------- ------------ ----------- ------------
Net income (loss) $ (83,680) $ (465,187) $ 565,488 $ 117,544
========== ============ =========== ============
Net income (loss)
per common share
Basic & Diluted $ (0.01) $ (0.06) $ 0.07 $ 0.01
========== ============ =========== ============
Weighted average number
of common shares
Basic 7,900,000 8,420,000 8,010,000 8,430,000
=========== =========== =========== ============
Diluted 7,930,000 8,420,000 8,070,000 9,160,000
=========== =========== =========== ============
See Notes to Condensed Consolidated Financial Statements
4
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
-----------------------
1999 1998
----------- ----------
Cash flows from operating activities:
Net income $ 565,488 $ 117,544
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation & amortization 896,355 803,759
Loss on sale of fixed assets 6,905 -
Writeoff of deferred loan costs 90,000 -
Noncash compensation and consulting
services 14,992 84,923
Changes in operating assets and liabilities
Accounts receivable (119,719) (983,033)
Inventory and prepaid samples and
materials (34,165) (142,524)
Prepaid expenses and other (199,234) (122,902)
Accounts payable 427,668 1,036,320
Accrued expenses (407,726) (211,861)
Income taxes payable 130,364 (99,179)
------------ ------------
Net cash provided by operating activities 1,370,928 483,047
------------ ------------
Cash flows from investing activities:
Investments in trademarks, and
other intangible assets (484) (27,665)
Purchase of property & equipment (48,074) (225,204)
Proceeds from sale of fixed assets 109,910 65,000
------------ -----------
Net cash provided by (used in) investing
activities 61,352 (187,869)
------------ -----------
Cash flows from financing activities:
Payment of long-term debt (113,087) (100,697)
Revolving credit line, net (1,728,812) (98,376)
Proceeds from exercise of stock options - 11,388
Purchase of treasury shares (565,712) (160,969)
------------ -----------
Net cash used in financing activities (2,407,611) (348,654)
------------ -----------
Decrease in cash and cash equivalents (975,331) (53,476)
Cash and cash equivalents at beginning
of period 1,417,746 513,971
------------ -----------
Cash and cash equivalents at end of period $ 442,415 $ 460,495
============ ===========
(Continued)
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
-----------------------
1999 1998
---------- -----------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 105,000 $ 102,000
========== ==========
Income taxes $ 202,000 $ 167,000
========== ==========
Supplemental disclosures of cash flow
non-cash financing activities:
Acquisition of fixed assets
under capital leases $ 92,000 $ -
========== ===========
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 and rules and regulations of the Securities and Exchange
Commission 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 September 30, 1999 and
the results of operations for the three and nine month periods ended September
30, 1999 and 1998 and cash flows for the nine months ended September 30, 1999
and 1998, 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, 1998 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, reserved 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 nine month periods ended
September 30, 1999 are not necessarily indicative of the results of operations
which may be expected for a full year.
NOTE B - Revolving Credit Facility
-------------------------
On April 7, 1999, the Company entered into a loan agreement with
LaSalle Business Credit, Inc. ("LaSalle") that is comprised of a $5 million
revolving asset-based credit facility and a $2.5 million acquisition note for
future product acquisitions. In order to close this new loan agreement with
LaSalle, the Company paid in full the outstanding loan balance and early
termination penalties to The CIT Group/ Credit Finance, Inc. ("CIT") of approxi-
mately $1.6 million, using a portion of the availability from the new revolving
credit facility. Advances under this new revolving credit facility are cal-
culated pursuant to a formula, which is based on the Company's then "eligible"
accounts receivable and inventory levels. Advances under the $2.5 million
acquisition note are pursuant to the Company finding a potential acquisition
and receiving LaSalle's final approval. This new loan agreement has an initial
term of three years, requires an annual fee, and is subject to an unused credit
line percentage fee. Interest accrues on amounts outstanding under this new
loan agreement at the rate equal to the prime rate of interest, announced from
time to time, by LaSalle National Bank plus 1% for the revolving credit facility
and plus 2% for the amount outstanding for the acquisition note. The Company's
obligations under this new loan have been collateralized by the Company's
grant to LaSalle of a lien upon, and the pledge of a security interest to
the Company's prior lien with CIT, which consists of substantially all assets
of the Company.
NOTE C - Net Income (Loss) Per Common Share
----------------------------------
The Company computes income per share in accordance with Statement of
Financial Accounting Standards No. 128 Earnings per Share (SFAS 128) which
specifies the compilation, presentation and disclosure requirements for income
per share for entities with publicly held common stock or instruments which are
potentially common stock.
Basic net income per common share is determined by dividing the net
income by the weighted average number of shares of common stock outstanding.
Diluted net income per common share is determined by dividing the net income
by the weighted number of shares outstanding and dilutive common equivalent
shares from stock options and warrants. A reconciliation of the weighted
average basic common shares outstanding to weighted average diluted common
shares outstanding follows:
Three Months Ended Three Months Ended
September 30, 1999 September 30, 1998
Basic Shares 7,900,000 8,420,000
Dilution: Stock Options
and Warrants 30,000 -0-
------ ------
Diluted Shares 7,930,000 8,420,000
========= =========
Loss available to
Common shareholders $(83,680) $(465,187)
Basic loss
per share $(0.01) $(0.06)
Diluted loss
per share $(0.01) $(0.06)
Nine Months Ended Nine Months Ended
September 30, 1999 September 30, 1998
Basic Shares 8,010,000 8,430,000
Dilution: Stock Options
and Warrants 60,000 730,000
------ -------
Diluted Shares 8,070,000 9,160,000
========= =========
Income available
to Common shareholders $ 565,488 $ 117,544
Basic earnings
per share $ 0.07 $ 0.01
Diluted earnings
per share $ 0.07 $ 0.01
Note D - Business Segment Information
----------------------------
The Company's two reportable segments are Kenwood Therapeutics
(nutritional, respiratory, personal hygiene and internal medicine brands) and
Doak Dermatologics, Inc. (dermatological brands).
The accounting policies used to develop segment information
correspond to those described in the 1998 10-KSB's summary of significant
accounting policies. Segment profit or loss is based on profit or loss from
operations before income taxes. The segments are distinct business units
operating in different therapeutic markets. The following information about
the two segments is for the nine months ended September 30, 1999 and 1998.
1999 1998
---- ----
Net sales:
Kenwood Therapeutics $7,600,000 $5,728,000
Doak Dermatologics, Inc. 5,944,000 4,665,000
--------- ---------
$13,544,000 $10,393,000
=========== ===========
Depreciation and
amortization:
Kenwood Therapeutics $712,000 $619,000
Doak Dermatologics, Inc. 184,000 185,000
------- -------
$896,000 $804,000
======== ========
Net income (loss):
Kenwood Therapeutics ($221,000) $373,000
Doak Dermatologics, Inc. 786,000 (255,000)
------- -------
$565,000 $118,000
======== ========
Segment assets:
Kenwood Therapeutics $18,103,000 $15,216,000
Doak Dermatologics, Inc. 2,876,000 3,545,000
--------- ---------
$20,979,000 $18,761,000
=========== ===========
Geographic information
(revenues):
Kenwood Therapeutics
United States $7,284,000 $5,313,000
Other countries 316,000 415,000
------- -------
$7,600,000 $5,728,000
========== ==========
Doak Dermatologics, Inc.
United States $4,955,000 $3,628,000
Other countries 989,000 1,037,000
------- ---------
$5,944,000 $4,665,000
========== ==========
The basis of accounting that is used by the Company to allocate
expenses that relate to both segments are based upon the proportionate quarterly
net sales of each segment. Accordingly, the allocation percentage used can
differ between quarters and years depending on the segments proportionate net
sales over total net sales.
BRADLEY PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
This document may contain forward-looking statements, which reflect
management's current views of future events and operations. These
forward-looking statements are based on assumptions and external factors,
including assumptions relating to regulatory action, capital requirements and
competing products. Any changes in such assumptions or external factors
could produce significantly different results.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On September 30, 1999, the Company had working capital of
$599,000 a decrease of $272,000 over the December 31, 1998 working
capital of $871,000. The decrease in the Company's working capital position
at September 30, 1999 was primarily due to the movement of the
BRONTEX(R) acquisition note from long-term to short-term, which was
partially offset by positive cash flow from operations.
Working capital as of September 30, 1999 included (i) a decrease of
$975,000 in cash and cash equivalents principally due to net repayments of
the revolving credit line and purchases of treasury stock; (ii) an increase in
accounts receivable of approximately $120,000, primarily due to wholesale
stocking programs in September 1999, which was prompted by offering
slight discounts. This event, which also occurred in September 1998, may
have the effect of reducing revenue in the Fourth Quarter 1999 and may
have reduced revenue in the Fourth Quarter 1998; (iii) an increase in
inventory and prepaid samples and materials of $34,000; (iv) an increase in
prepaid expenses and other of $199,000 principally due to deferred financing
costs associated with bank financing; (v) an increase in accounts payable of
$428,000 primarily due to an increase in promotional and advertising
activities in the Third Quarter 1999; (vi) a decrease in accrued expenses of
$408,000 due to a decrease in the chargeback and rebate accruals, which
was prompted by higher volume sales for products that historically have
lower charges against sales and the reduction of the accruals as discussed
below; and (vii) an increase in income taxes payable of $130,000.
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 comprises
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.
Further, the Company is required to file and Abbreviated New Drug
Application "ANDA" with the FDA for its DECONAMINE(R) SR product, which
is expected to maintain the prescription status of this product beyond the
final monograph. The cost of this application is approximately $900,000.
The Company has entered into non-binding agreement with Phoenix
International to perform clinical studies required for the issuance of the
ANDA. As of the date of this 10-QSB, the Company has paid approximately
$350,000 with respect to this project. The project is being further deferred
until regulatory and competitive circumstances warrant completion and
submission to the FDA. 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 may
have material adverse effect on the Company's business.
In January 1999, the Company completed the repurchase program of
400,000 shares and also initiated the repurchasing of an additional 600,000
shares in open market transactions resulting in a cumulative repurchase of
12% of the outstanding common stock over the next 36 months. These
shares will be held in Treasury by the Company to be used for purposes
deemed necessary by the Board of Directors, including funding the Company's
401(k) Plan matching contribution. Through November 1, 1999, the Company
has repurchased 812,000 shares of common stock.
On January 1, 1999, the Company initiated Stern Stewart's EVA(R)
Financial Management System. The EVA(R) program is based upon the
Company's creation of economic value added during 1999. The economic
value added is a financial calculation based upon the Company's net income
less a charge for capital. Depending upon the Company's improvement in
EVA(R), a bonus to employees may be distributed. As of September 30,
1999, the Company has expensed for approximately $242,000 and
distributed $95,000 for this program.
The Company believes that cash flow from operations, funds available
from the revolving credit facility and the acquisition note will be sufficient
to satisfy the working capital requirements for at least the next 12 months.
YEAR 2000 ISSUE
- ---------------
The Company is aware of the issues associated with the programming
code in many existing computer systems and devices with embedded
technology as the millenium approaches. The "Year 2000" problem
concerns the inability of information and technology-based operating systems
to properly recognize and process date-sensitive information beyond
December 31, 1999. The Year 2000 problem is potentially pervasive;
virtually every computer operation or business system that utilizes embedded
computer technology may be affected in some way by the rollover of the
two-digit year value to 00. The risk is that computer systems will not
properly recognize date sensitive information when the year changes to
2000, which can result in system failures or miscalculations, resulting in a
serious threat of business disruption.
In response to the potential impact of the Year 2000 issue on the
Company's business and operations, the Management has purchased and
converted its own in-house system. In the process, the Company
determined that the new systems and hardware were substantially Year
2000 compliant. Certain other software was corrected or reprogrammed for
Year 2000 compliance. As such, Management believes the Year 2000
issues with respect to its internal systems will be mitigated without a
significant potential effect on the Company's financial position or operations.
In addition, to ensure external Year 2000 readiness, the Company has
made written inquiries concerning the Year 2000 readiness of all of its
vendors, suppliers, customers and others with whom the Company has
significant business relationships. Responses have been received from many
of those contacted, although some of the responses have been inconclusive
with respect to Year 2000 compliance. As a result, follow up inquires were
sent for any critically dependent third parties not responding. As of the date
of this 10-QSB, the Company has completed the third party inquiry and is
not currently aware of any issues that would cause a significant disruption of
its business or operations.
However, given the complexity of the Year 2000 issue, there can be
no assurance that the Company will be able to address these problems
without costs and uncertainties that might affect future financial results or
cause reported financial information not to be necessarily indicative of future
operating results or future financial condition.
To date, the Company has completed its review of the Year 2000
issue. The review included an assessment of all internal systems and the
status of all essential third parties. Based on this assessment, the Company
finalized such contingency plans, as necessary, based on its assessment of
the outside risks. The total costs incurred to date in the assessment,
evaluation and remediation of the Year 2000 compliance matters have been
nominal and management estimates that total future software and equipment
costs, based upon information developed to date are estimated to be less
than $100,000.
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.
NET SALES (net of all adjustments to sales) for the three and nine
months ended September 30, 1999 were $4,128,000 and $13,544,000,
respectively, representing an increase of $1,665,000 for the three months,
and an increase of $3,151,000 for the nine months ended. This increase
primarily reflects gains resulting from Doak Dermatologics' products
CARMOL(R), ACID MANTLE(R), TRANS VER SAL(R), and Kenwood Therapeutics'
products PAMINE(R), GLUTOFAC(R) and new product sales of BRONTEX(R)
totaling $214,000 and $1,361,000 for the three and nine months ended,
respectively. The increase in same product sales for the three months and
nine months ended September 30, 1999 was primarily due to special
promotions to market key brands, an expanding field force, the utilization of
market research data to ensure product messages are received by the most
potentially productive audiences, and the offering of slight discounts to
wholesalers. The increase in net sales for the nine months ended September
30, 1999 was partially reduced by a sales decline in LEPONT(R) Beauty
Enhancer and DECONAMINE(R). 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 Third Quarter of 1999, resulting in
increased net sales and profits of $113,000. The decrease in the percentage
used to adjust gross sales to net sales reflects improvements in processing
chargebacks and rebates as well as less reliance on managed care sales.
Any future reductions of this percentage 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 nine months ended September 30,
1999 were $1,071,000 and $3,726,000, respectively, representing an
increase from the three and nine months ended September 30, 1998 of
$189,000 and $509,000. The Company's gross profit margin for the three
and nine months ended September 30, 1999 was 74% and 73%,
respectively, as compared to 64% and 69% during the three and nine
months ended September 30, 1998. The improvement in the gross profit
margin for the three and nine months ended September 30, 1999 reflects a
change in the Company's sales mix with greater sales of prescription
products that historically carry a higher gross profit percentage. The change
in the sales mix represented an increase in prescription products of
PAMINE(R), CARMOL(R) 40, GLUTOFAC(R) ZX, and new product sales of
BRONTEX(R). Also, the sales mix reflected a decrease in sales for LEPONT(R)
Beauty Enhancer, which historically has a lower gross margin. In addition,
the Company benefited from cost savings from outsourcing previously manufactured
products at a lower cost.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES were
$2,881,000 and $7,851,000, respectively, for the three and nine months
ended September 30, 1999, representing an increase of $857,000 and
$1,779,000 over the three and nine months ended September 30, 1998.
The increases in selling, general and administrative expenses continue to
reflect increased investment in the Company's sales and marketing areas,
with resulting increases in salaries, employee benefits, payroll taxes,
promotional and advertising expenses. Additionally, the Company initiated
the EVA(R) Financial Management System, which represented an increase for
the bonus accrual of $6,000 and $242,000, for the three and nine months
ended September 30, 1999, respectively. Also, the Company incurred a
one-time charge of $90,000 in the Second Quarter 1999 for early
termination penalties associated with changing lending institutions. The
Company, however, continues to implement steps designed to reduce
expenses and maintain cost controls, where applicable.
DEPRECIATION and AMORTIZATION EXPENSES for the three and nine
months ended September 30, 1999 were $257,000 and $896,000,
respectively, representing a decrease of $8,000 and an increase of $93,000
as compared to the three and nine months ended September 30, 1998. The
decrease for the three months ended September 30, 1999 reflects the
elimination of amortization of an intangible asset which became fully
amortized in the Third Quarter of 1999. The increase for the nine months
ended September 30, 1999 was principally due to an increase in
amortization of trademarks resulting from the BRONTEX(R) acquisition, which
occurred in October 1998.
INTEREST EXPENSE - NET for the three and nine months ended
September 30, 1999 were $51,000 and $173,000, respectively,
representing an increase of $20,000 and $58,000 from the three and nine
months ended September 30, 1998. This increase was principally due to the
imputed interest related to the BRONTEX(R) acquisition note.
NET INCOME (LOSS) for the three and nine months ended September
30, 1999 were $(84,000) and $565,000, respectively, representing a
decrease in the net loss of $382,000 and an increase in net income of
$448,000 from the three and nine months ended September 30, 1998. The
decrease in the net loss for the three months ended and the increase in net
income for the nine months ended was principally due to an increase in net
sales and an increase in the gross profit margin. The increase in income tax
is due to a higher pretax income, while the effective rate in both periods
approximate the statutory rate.
Net income (loss) for Kenwood Therapeutics for the nine months
ended September 30, 1999 was $(221,000) representing a decrease of
$594,000 from the nine months ended September 30, 1998. The decrease
was principally due to an increase in selling, general, and administrative
expenses with resulting increases for promotional and advertising activities.
In particular, promotional and advertising increased due to the new product
BRONTEX(R) and other existing cough/cold products, which is in expectation
of the upcoming season.
Net income for Doak Dermatologics for the nine months ended
September 30, 1999 was $786,000 representing an increase of $1,041,000
from the nine months ended September 30, 1998. The increase was
principally due to an increase in net sales and an increase in the gross profit
margin. The products CARMOL(R), ACID MANTLE(R), and TRANS VER SAL(R)
primarily spurred the increase in net sales. While, the increase in the gross
profit margin was primarily due to an increase in sales of the higher margined
CARMOL(R) 40, decrease in sales of the lower margined LEPONT(R) Beauty
Enhancer, and cost savings from outsourcing.
Item 1. Legal Proceedings
- -------------------------
The Company is involved in legal proceedings of various types in the
ordinary course of business. While any such litigation to which the Company
is a party contains an element of uncertainty, management presently believes
that the outcome of each such proceeding or claim which is pending or known
to be threatened, or all of them combined, will not have a material adverse
effect on the Company's consolidated financial position or results from
operations.
Item 5. Other Information
- -------------------------
The Company is subject to claims or threatened claims relating to
environmental matters from its former Doak manufacturing site in Westbury,
New York. The Company believes that none of such claims or threatened
claims made through the date of this 10-QSB, either individually or in the
aggregate, will have a material adverse affect on the Company's business,
financial condition or results from operations.
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: November 4, 1999 /s/ Daniel Glassman
-------------------------------
Daniel Glassman
Chairman of The Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: November 4, 1999 /s/ R. Brent Lenczycki, CPA
-------------------------------
R. Brent Lenczycki, CPA
Director of Finance
(Principal Financial and
Accounting Director)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 442,415
<SECURITIES> 0
<RECEIVABLES> 4,335,022
<INVENTORY> 1,732,453
<CURRENT-ASSETS> 7,543,465
<PP&E> 1,083,831
<DEPRECIATION> 802,624
<TOTAL-ASSETS> 20,979,364
<CURRENT-LIABILITIES> 6,944,047
<LT DEBT> 149,146
0
0
<COMMON> 15,603,299
<OTHER-SE> (1,717,128)
<TOTAL-LIABILITY-AND-EQUITY> 20,979,364
<SALES> 13,544,105
TOTAL-REVENUES> 13,544,105
<CGS> 3,725,770
<TOTAL-COSTS> 3,725,770
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 173,088
<INCOME-PRETAX> 897,488
<INCOME-TAX> 332,000
<INCOME-CONTINUING> 565,488
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 565,488
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>
