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, 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 W., 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 August 6, 1999
------------------- ----------------------------
Common Stock, $.01 Par Value 8,198,883
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
June 30, 1999
Page
Number
------
Part I - Financial Information
Financial Statements (unaudited):
Condensed Consolidated Balance Sheet -
June 30, 1999 3
Condensed Consolidated Statements of
Operations - three and six months ended June 30,
1999 and 1998 4
Condensed Consolidated Statements of Cash
Flows - six months ended June 30, 1999
and 1998 5
Condensed Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis 8
Part II - Other Information
Item 1. Legal Proceedings 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
BALANCE SHEET
June 30, 1999
(UNAUDITED)
ASSETS
Current assets
- --------------
Cash and cash equivalents $ 780,714
Accounts receivable - net 3,240,754
Finished goods inventory 1,346,455
Prepaid samples and materials 1,107,869
Prepaid expenses and other 55,800
-----------
Total current assets 6,531,592
Property and equipment - net 297,864
Intangibles - net 13,262,039
Other assets 270,837
-----------
Total Assets $ 20,362,332
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
- -------------------
Current maturities of long-term debt $ 1,166,809
Revolving credit line 683,794
Accounts payable 1,898,187
Accrued expenses 2,133,991
Accrued income taxes 268,960
-----------
Total current liabilities 6,151,741
Long-term debt, less current maturities 227,906
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 8,198,883 shares at
June 30, 1999 14,757,851
Common, Class B, $.01 par value, authorized
900,000 shares, issued and outstanding,
431,552 shares at June 30, 1999 845,448
Treasury stock, at cost (725,457 shares at
June 30, 1999) (1,094,673)
Accumulated deficit (525,941)
-----------
13,982,685
-----------
Total Liabilities & Stockholders' Equity $ 20,362,332
===========
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,
-------------------- -------------------
1999 1998 1999 1998
-------------------- -------------------
Net sales $ 4,287,462 $ 3,688,121 $ 9,415,932 $ 7,929,402
Cost of sales 1,345,770 1,019,606 2,654,997 2,334,403
---------- ---------- ---------- ----------
2,941,692 2,668,515 6,760,935 5,594,999
---------- ---------- ---------- ----------
Selling, general and
administrative expenses 2,432,459 2,078,124 4,970,643 4,048,451
Depreciation and
amortization 316,044 264,713 639,050 538,147
Interest expense - net 47,346 41,503 122,074 83,670
---------- ---------- ---------- ----------
2,795,849 2,384,340 5,731,767 4,670,268
---------- ---------- ---------- ----------
Income before
income taxes 145,843 284,175 1,029,168 924,731
Income taxes 53,000 105,000 380,000 342,000
---------- ---------- ---------- ----------
Net income $ 92,843 $ 179,175 $ 649,168 $ 582,731
========== ========== ========== ==========
Net income
per common share
Basic $ 0.01 $ 0.02 $ 0.08 $ 0.07
========== ========== ========== ==========
Diluted $ 0.01 $ 0.02 $ 0.08 $ 0.06
========== ========== ========== ==========
Weighted average number
of common shares
Basic 7,970,000 8,420,000 8,050,000 8,440,000
========== ========== ========== ==========
Diluted 8,070,000 9,420,000 8,130,000 9,350,000
========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements
4
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
----------------
1999 1998
Cash flows from operating activities:
Net income $ 649,168 $ 582,731
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities
Depreciation & amortization 639,050 538,147
Loss on sale of fixed assets 6,905 -
Writeoff of deferred loan costs 90,000 -
Noncash compensation and consulting services 14,992 8,533
Changes in operating assets and liabilities
Accounts receivable 974,549 (1,625,085)
Inventory and prepaid samples and materials 197,319 269,961
Prepaid expenses and other (272,956) (146,245)
Accounts payable 55,890 843,048
Accrued expenses (819,953) (169,443)
Income taxes payable 184,428 177,621
---------- ----------
Net cash provided by operating activities 1,719,392 479,268
---------- ----------
Cash flows from investing activities:
Investments in trademarks, and
other intangible assets (50,979) (22,342)
Purchase of property & equipment (128,901) (135,677)
Proceeds from sale of fixed assets 109,910 -
---------- ----------
Net cash used in investing activities (69,970) (158,019)
---------- ----------
Cash flows from financing activities:
Payment of long-term debt (21,667) (100,697)
Revolving credit line, net (1,711,909) (563,085)
Proceeds from exercise of stock options - 11,388
Purchase of treasury shares (552,878) (143,539)
---------- ----------
Net cash used in financing activities (2,286,454) (795,933)
---------- ----------
Decrease in cash and cash equivalents (637,032) (474,684)
Cash and cash equivalents at beginning of period 1,417,746 513,971
---------- ----------
Cash and cash equivalents at end of period $ 780,714 $ 39,287
========== ==========
(Continued)
5
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
----------------
1999 1998
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 97,000 $ 78,000
========= ========
Income taxes $ 196,000 $ 164,000
========= ========
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 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, 1999 and the results of
operations for the three and six month periods ended June 30, 1999 and 1998 and
cash flows for the six months ended June 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 six month periods ended June 30, 1999
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
------------------------------------
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 June 30, 1999, the Company had working capital of $380,000 a decrease of
$491,000 over the December 31, 1998 working capital of $871,000. The decrease
in the Company's working capital position at June 30, 1999 was primarily due to
the promissory note of $1,084,000 relating to the BRONTEX(r) acquisition with
a due date of February 2000 moving from long term to current maturities of long
term debt, which was partially offset by positive cash flow from operations.
Working capital as of June 30, 1999 included (i) a decrease of $637,000 in cash
and cash equivalents principally due to net repayments of the revolving credit
line and purchases of treasury stock; (ii) a decrease in accounts receivable of
approximately $975,000 reflecting seasonality of business; (iii) a decrease in
inventory and prepaid samples and materials of $197,000; (iv) an increase in
prepaid expenses and other of $183,000 principally due to deferred financing
costs associated with bank financing; (v) a decrease in accrued expenses of
$820,000 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
(vi) an increase in income taxes payable of $184,000.
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 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 con-
verted 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 pro-
ject. The project is being 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 announced the completion of the repurchase program
of 400,000 shares and additionally announced another program of repurchasing an
additional 600,000 shares of the outstanding common stock in open market
transactions or 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. As of August 1, 1999,
the Company has repurchased 797,000 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 June 30, 1999, the Company has accrued for approximately
$236,000 for this program.
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 miscalcu-
lations, 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
is being corrected or reprogrammed for Year 2000 compliance. As such,
Management believes the Year 2000 issues with respect to its internal systems
can 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, customer 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 inquiries were sent for any critically
dependent third parties not responding. A further assessment of the potential
impact of the Year 2000 issue on the Company's business and operations will be
made as this information is received and evaluated. The Company is not cur-
rently aware of any third party issues that would cause a significant disruption
of its business or operations. If the follow-up assessment of any significant
third party responses indicates that they will not be Year 2000 compliant, it
may be necessary to develop contingency plans to minimize the negative impact
on the Company.
However, given the complexity of the Year 2000 issue, there can be no assur-
ance 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 not finalized its contingency plans for possible Year
2000 issues. After the completion of the assessment and review of the results
of monitoring the compliance efforts and status of third parties, the Company
will finalize such contingency plans based on its assessment of outside risks.
The Company anticipates that final contingency plans, as necessary, will be in
place by September 30, 1999. The total costs incurred to date in the assess-
ment, evaluation and remediation of the Year 2000 compliance matters have been
nominal and management estimates that total future third party, 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 six months ended
June 30, 1999 were $4,287,000 and $9,416,000, respectively, representing an
increase of $599,000 for the three months, and an increase of $1,487,000 for
the six months ended. This increase primarily reflects gains resulting from
Doak Dermatologics' products CARMOL(r), ACID MANTLE(r), and Kenwood
Therapeutics' products TYZINE(r), PAMINE(r), GLUTOFAC(r) and new product sales
of BRONTEX(r) totaling $476,000 and $1,147,000 for the three and six months
ended, respectively. The increase in net sales 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 Second Quarter of
1999 and 1998, resulting in increased net sales and profits of $348,000 and
$235,000, respectively. 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 six months ended June 30, 1999 were $1,346,000
and $2,655,000, respectively, representing an increase from the three and six
months ended June 30, 1998 of $326,000 and $321,000. The Company's gross profit
margin for the three and six months ended June 30, 1999 were 69% and 72%,
respectively, as compared to 72% and 71% during the three and six months ended
June 30, 1998. The decrease in the gross profit margin for the three months
ended June 30, 1999 reflects a decrease in gross profit margin for Kenwood
Therapeutics primarily due to a reduction of inventory that had no economic
value, which was partially offset by an increase in gross profit margin for
Doak Dermatologics. The improvement in the gross profit margin for the six
months ended June 30, 1999 reflects a change in the Company's sales mix with
greater sales of products that carry a higher gross profit percentage and cost
savings from outsourcing.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES were $2,432,000 and $4,971,000,
respectively, for the three and six months ended June 30, 1999, representing
an increase of $354,000 and $922,000 over the three and six months ended June
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, samples and promotional
materials expensed were increased in the Second Quarter 1999 be approximately
$75,000 giving total of $150,000 for the First Half of 1999 reflecting direct
expensing of expenditures not yielding future benefits. The Company also
initiated the EVA(r) Financial Management System, which represented an increase
for the bonus accrual of $110,000 and $236,000, for the three and six months
ended June 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 six months ended June
30, 1999 were $316,000 and $639,000, respectively, representing an increase of
$51,000 and $101,000 as compared to the three and six months ended June 30,
1998. The increase 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 six months ended June 30, 1999 were
$47,000 and $122,000, respectively, representing an increase of $6,000 and
$38,000 from the three and six months ended June 30, 1998. This increase was
principally due to the increase in interest on borrowings related to the
BRONTEX(r) acquisition.
NET INCOME for the three and six months ended June 30, 1999 were $93,000 and
$649,000, respectively, representing a decrease of $86,000 for the three month
ended June 30, 1998 and an increase of $66,000 for the six month ended June
30, 1998. The decrease for the three months ended June 30, 1999 was
principally due to a decrease in the gross profit margin, increase in the
selling, general and administrative expenses, and an increase depreciation and
amortization. The increase for the six months ended June 30, 1999 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, however
the effective rate in both periods approximate the statutory rate.
NET INCOME PER COMMON SHARE for the three months ended June 30, 1999 on a basic
and diluted basis was $.01 per common share, representing a $.01 decrease over
a comparable period in 1998. Net income per common share for the six months
ended June 30, 1999 on a basic and diluted basis was $.08, representing a $.01
increase on a basic basis and $.02 increase on a diluted basis over a comparable
period in 1998.
Basic per share information is computed based on the weighted average common
shares outstanding during each period. Diluted per share information
additionally considers the shares that may be issued upon exercise or conversion
of stock options and warrants (less the shares that may be repurchased with the
funds received from their exercise).
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations pursuant to SFAS No. 128,
"Earnings Per Share."
Three Months Three Months Six Months Six Months
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
1999 1998 1999 1998
Basic Shares 7,970,000 8,420,000 8,050,000 8,440,000
Dilution: Stock
Options and
Warrants 100,000 1,000,000 80,000 910,000
--------- --------- --------- ---------
Diluted Shares 8,070,000 9,420,000 8,130,000 9,350,000
========= ========= ========= =========
Income available to
Common Shareholders $92,843 $179,175 $649,168 $582,731
Basic earnings per share $ 0.01 $ 0.02 $ 0.08 $ 0.07
Diluted earnings per share $ 0.01 $ 0.02 $ 0.08 $ 0.06
BUSINESS SEGMENT INFORMATION became effective January 1, 1998, the Company
adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." Pursuant to SFAS No. 131, 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 reportable segments are distinct business units operating in different
industries. The following information about the two segments is for the six
month ended June 30, 1999 and 1998.
1999 1998
---- ----
Net sales:
Kenwood Therapeutics $5,145,000 $4,286,000
Doak Dermatologics, Inc. 4,271,000 3,643,000
---------- ----------
$9,416,000 $7,929,000
========== ==========
Interest expense, net:
Kenwood Therapeutics $104,000 $74,000
Doak Dermatologics, Inc. 18,000 10,000
-------- -------
$122,000 $84,000
======== =======
Depreciation and amortization:
Kenwood Therapeutics $485,000 $415,000
Doak Dermatologics, Inc. 154,000 123,000
-------- --------
$639,000 $538,000
======== ========
Net income:
Kenwood Therapeutics ($33,000) $648,000
Doak Dermatologics, Inc. 682,000 (65,000)
-------- --------
$649,000 $583,000
======== ========
Segment assets:
Kenwood Therapeutics $16,491,000 $15,336,000
Doak Dermatologics, Inc. 3,871,000 3,492,000
----------- -----------
$20,362,000 $18,828,000
=========== ===========
Expenditure for segment assets:
Kenwood Therapeutics $253,000 $60,000
Doak Dermatologics, Inc. 97,000 88,000
-------- -------
$350,000 $148,000
======== ========
Geographic information (revenues):
Kenwood Therapeutics
United States $4,920,000 $3,976,000
Other countries 225,000 310,000
---------- ----------
$5,145,000 $4,286,000
========== ==========
Doak Dermatologics, Inc.
United States $3,598,000 $3,020,000
Other countries 673,000 623,000
---------- ----------
$4,271,000 $3,643,000
========== ==========
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.
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.
Item 5. Other Information
- -------------------------
From time to time in the ordinary course of business of its former Doak
manufacturing site in Westbury, New York, the Company is subject to claims or
threatened claims relating to environmental matters. 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 conditions 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
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 approximately $1.6
million, using a portion of the availability from the new revolving credit
facility. Advances under this new revolving credit facility are calculated
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.
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 13, 1999 /s/ Daniel Glassman
-------------------------------
Daniel Glassman
Chairman of The Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: August 13, 1999 /s/ R. Brent Lenczycki, CPA
-------------------------------
R. Brent Lenczycki
Director of Finance
(Principal Financial and
Accounting Director)
15
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 780,714
<SECURITIES> 0
<RECEIVABLES> 3,240,754
<INVENTORY> 1,346,455
<CURRENT-ASSETS> 6,531,592
<PP&E> 1,073,479
<DEPRECIATION> 775,615
<TOTAL-ASSETS> 20,362,332
<CURRENT-LIABILITIES> 6,151,741
<LT DEBT> 227,906
0
0
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<OTHER-SE> (1,620,614)
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<SALES> 9,415,932
<TOTAL-REVENUES> 9,415,932
<CGS> 2,654,997
<TOTAL-COSTS> 2,654,997
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<INTEREST-EXPENSE> 122,074
<INCOME-PRETAX> 1,029,168
<INCOME-TAX> 380,000
<INCOME-CONTINUING> 649,168
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<EPS-BASIC> .08
<EPS-DILUTED> .08
</TABLE>