As filed with the Securities and Exchange Commission on May 28, 1999.
Registration No. 333-75991
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BRADLEY PHARMACEUTICALS, INC.
(exact name of registrant as specified in its charter)
Delaware 2834 22-2581418
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation
or organization)
383 Route 46 West
Fairfield, New Jersey 07004
(973) 882-1505
(Address, including zip code, and telephone number, including
area code, of registrant's principal offices)
DANIEL GLASSMAN
Chairman of the Board
Bradley Pharmaceuticals, Inc.
383 Route 46 West
Fairfield, New Jersey 07004
(973) 882-1505
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
W. RAYMOND FELTON, ESQ.
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP
Metro Corporate Campus I
Post Office Box 5600
Woodbridge, New Jersey 07095
(732) 549-5600
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
___
If any of the securities being registered on this Form are to be
offered on a delay or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. ___
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of each Class of to be Price per Offering Registration
Securities to be Registered Registered1 Share2 Price2 Fee
<S> <C> <C> <C> <C>
Class A Common Stock, 2,270,000 $1.1875 $2,695,625 $749.38
par value $.01 per share
</TABLE>
<PAGE>
___________________________
1 Includes an indeterminate number of shares of common stock issuable to
prevent dilution resulting from stock splits, stock dividends or similar
transactions pursuant to Rule 416 under the Securities Act of 1933, as amended.
2 Estimated pursuant to Rule 457 based upon the closing price of the common
stock on April 5, 1999 as reported on The Nasdaq Stock Market(TM) solely for the
purpose of computing the registration fee.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 28, 1999
PROSPECTUS
2,270,000 SHARES
BRADLEY PHARMACEUTICALS, INC.
COMMON STOCK
Berlex Laboratories, Inc. and Stern, Stewart & Co., Inc. will sell their
shares from time to time with this prospectus. We will not receive any of the
proceeds from the sale of those shares. We will bear the expenses of this
offering except for brokerage commissions and selling expenses, which Berlex and
Stern Stewart will pay. See "Selling Shareholders" and "Plan of Distribution."
Our common stock is quoted on the Nasdaq Stock Market(TM) under the symbol
"BPRX." On May 11, 1999, the closing price for the common stock was $1.4063 as
reported by Nasdaq. An investment in the shares is speculative and only those
purchasers who can afford to lose their entire investment should purchase
shares.
See " Risk Factors" beginning on page 4 for factors to be considered in
connection with purchasing shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
<PAGE>
The date of this prospectus is May , 1999.
TABLE OF CONTENTS
Page
Prospectus Summary 3
Recent Financing Transaction 4
Risk Factors 5
Where You Can Find
More Information 12
Incorporation of Certain
Information by Reference 12
Use of Proceeds 13
Selling Shareholders 13
Plan of Distribution 14
Indemnification 15
Legal Matters 16
Experts 16
No dealer, salesperson or other person is authorized to give any
information or to make any representation not contained in this prospectus, and,
if given or made, you may not rely on such information or representation as
having been authorized by us. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the shares to any person in any
jurisdiction in which it is unlawful to make such an offer or solicitation to
such person. Neither the delivery of this prospectus nor any sale made hereunder
shall under any circumstances create any implication that the information
contained herein is correct as of any date subsequent to the date hereof.
<PAGE>
PROSPECTUS SUMMARY
The Company
The following summary contains basic information about Bradley
Pharmaceuticals, Inc. and its subsidiaries, and this offering. It may not
contain all the information that may be important to you. You should read this
entire prospectus, the documents incorporated by reference, including the
financial data and related notes, and the documents to which we have referred
you before making an investment decision. The references to "we," "us" and "our"
mean Bradley Pharmaceuticals, Inc. and its subsidiaries, except where it is
clear the context indicates otherwise.
We market over-the-counter and prescription pharmaceutical and
health-related products. Our product line currently includes dermatological
brands, marketed by our wholly-owned subsidiary, Doak Dermatologics, Inc., and
nutritional, respiratory, personal hygiene and internal medicine brands,
marketed by our Kenwood Therapeutics division. All of our product lines are
manufactured and supplied by independent contractors under our quality control
standards and marketed primarily to wholesalers. The wholesalers, in turn,
distribute our products to retail outlets and healthcare institutions throughout
the United States and to distributors in selected international markets.
Our growth strategy has been to make acquisitions of established
products from major pharmaceutical organizations that we believe require
intensified marketing and promotional attention. We believe that significant
growth opportunities exist in this market niche as a result of the divestiture
by major pharmaceutical companies of certain established product lines that have
become less profitable in relation to their other products. As a result, we have
acquired, and intend to continue to acquire, rights to manufacture and market
pharmaceutical and health related products which are effective and for which a
demonstrated market exists, but which are not actively promoted. We generally
acquire products where the surrounding competitive environment does not
necessarily include major pharmaceutical companies.
Our ability to make further product acquisitions will depend, among
other things, on the availability of appropriate acquisition opportunities, the
ability to obtain appropriate financing and our ability to consummate
acquisitions on favorable terms. There can be no assurance that we will be able
to consummate in a timely way attractive acquisitions on favorable terms.
Therefore, we have and will continue to focus on developing and extending our
existing product lines.
Our most significant acquisition to date was in December 1993, when we
purchased the Deconamine(R) cold/flu/allergy product line from Berlex, a
subsidiary of Schering AG. In satisfaction of all outstanding obligations then
owed to Berlex in 1997 (of approximately $2,500,000), and in consideration of
Berlex's release of its lien covering our accounts receivable, we:
<PAGE>
paid to Berlex $1,150,000 in cash, plus accrued interest;
issued to Berlex 450,000 shares of our Class A common stock in addition to
the 1,000,000 shares previously issued to Berlex; and
agreed to issue Berlex, when permissible in accordance with applicable
state corporate law, warrants entitling Berlex to purchase, up to an additional
750,000 shares of Class A common stock at an exercise price of $1.25 per share.
These warrants are subject to anti-dilution provisions and expire two years
after issuance, subject to possible extension.
We were incorporated in New Jersey in January 1985 and subsequently
reincorporated in Delaware in July 1998. Our principal executive offices are
located at 383 Route 46 West, Fairfield, New Jersey 07004, telephone number
(973) 882-1505.
RECENT FINANCING TRANSACTION
On April 7, 1999, we entered into a loan agreement with LaSalle
Business Credit, Inc. 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, we paid in
full the outstanding loan balance and early termination penalties to The CIT
Group/Credit Finance, Inc. 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
our then "eligible" accounts receivable and inventory levels. Advances under the
$2.5 million acquisition note are pursuant to having a potential acquisition and
LaSalle's final approval. This new loan agreement has an initial term of three
years, requires an annual facility 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, from time to time,
announced by LaSalle National Bank plus 1% for the revolving credit facility and
plus 2% for the amount outstanding for the acquisition note. Our obligations
under this new loan have been collateralized by our grant to LaSalle of a
security interest in all of our inventory, accounts receivable, intangible
assets and other assets. This new loan agreement contains certain covenants and
restrictions.
<PAGE>
RISK FACTORS
Before you invest in the shares you should be aware that the value of
the shares in the secondary market is subject to various risks, including those
described below. You should consider carefully these risk factors together with
all of the other information included in this prospectus before you decide to
purchase the shares.
We depend on Deconamine(R) product line sales and cannot be certain of our
ability to market Deconamine(R) in the future due to FDA regulations.
For the fiscal years ended December 31, 1997 and 1998, sales of our
Deconamine(R) product line accounted for approximately 45% and 37%,
respectively, of our net sales. As such, our operations can be deemed to be
dependent on our ability to market and sell the Deconamine(R) product line. We
cannot assure you that we can continue to successfully promote and market our
Deconamine(R) product line.
All over-the-counter cough/cold products are regulated by the United
States Food and Drug Administration pursuant to monographs which specify
permissible active ingredients, labeling and indications. FDA regulations also
establish when specific drug products, such as the Deconamine(R) line of
products, change from prescription to non-prescription or over-the-counter
status. Our Deconamine(R) product line, which currently has prescription status,
falls under these monographs. Once a final monograph is issued by the FDA with
respect to a product, the product historically can remain as a prescription
product for up to one additional year. We anticipate that final monographs for
our Deconamine(R) product line, thereby converting the product line to
over-the-counter status, will be issued by the FDA at some time in the future.
We intend to continue to market and distribute our Deconamine(R) line of
products as prescription products for as long as we may lawfully continue to do
so. We are exploring our marketing and distribution strategy relating to the
Deconamine(R) product line after final monographs covering these products are
issued. We cannot currently predict how our operations and financial condition
will be affected, or whether we will have resources sufficient to aggressively
market the Deconamine(R) line of products, if and when this product line is
converted to over-the-counter status.
Further, we must file an Abbreviated New Drug Application (an "ANDA")
with the FDA for our Deconamine(R) SR product to comply with the regulation that
all controlled release products, like Deconamine(R) SR, be the subject of an
ANDA. The cost of this ANDA is approximately $900,000. We entered into an
agreement with Phoenix International to perform the clinical studies required
for the issuance of the ANDA. As of the date of this prospectus, we have paid
approximately $350,000 with respect to this project. This project is being
deferred until regulatory and competitive circumstances warrant completion and
submission to the FDA. Completion of this research and development project is
subject, however, to our 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, we cannot at this time reasonably
anticipate the timing of the expenditure of funds for these purposes. If we are
unable to further develop or file the necessary ANDA for Deconamine(R) SR , it
would have a material adverse effect on our business.
We are dependent on a limited number of manufacturers and suppliers who are
subject to rigorous FDA regulatory requirements.
We do not own or operate any manufacturing or production facilities.
Rather, all of our products are manufactured and supplied by independent
companies, many of which also manufacture and supply products for some of our
competitors. We do not generally have any licensing or other supply agreements
with manufacturers or suppliers for our products and are currently dependent
upon a limited number of potential suppliers. Any of these suppliers could
terminate their relationship with us at any time. From time to time we have
experienced delays in shipments from some of our vendors. Although we believe we
can obtain replacement manufacturing arrangements, the absence of such
agreements with our present suppliers may, in certain instances, have an adverse
effect upon our sales and marketing efforts. To date, we have not encountered
any problems, or experienced delays, in locating alternative manufacturers and
suppliers. Further, all of our pharmaceutical suppliers must be authorized under
FDA regulations or specific approvals and must manufacture our products in
authorized facilities pursuant to federally regulated current good manufacturing
practices ("CGMP'S"). There can be no assurance that in the event we were to
experience difficulties with our present manufacturers or suppliers, we would
not experience delays in obtaining products which could materially adversely
affect our operations.
As a pharmaceutical company, we are subject to substantial FDA and
international government regulation.
Like all pharmaceutical companies, we are subject to extensive federal and
state regulations. We cannot predict the extent to which we may be affected in
the future by legislative and other regulatory developments concerning our
products. In the United States, drug products we sell are subject to regulation
by the FDA, as well as by other federal and state agencies. The FDA regulates
all aspects of the testing, manufacture, safety, labeling, storage, record
keeping, advertising and promotion of all drugs, including the monitoring of
compliance with CGMP'S. Non-compliance with applicable requirements can result
in fines and other sanctions, including the initiation of product seizures,
injunction actions and criminal prosecutions based on practices that violate
statutory requirements. In addition, administrative remedies can involve
voluntary recall of products, as well as the withdrawal of approval of products
in accordance with due process procedures. There are similar regulations in most
foreign countries in which our products are distributed or sold. Any restriction
or prohibition of our sales of products could also materially and adversely
affect our business.
Our products are subject to U.S. and international, country-specific
government price controls. U.S. Federal and state governments continue to seek
means to reduce costs of Medicare and Medicaid programs, including placement of
restrictions on reimbursement for, or access to, certain drug products. Major
changes were made in the Medicaid program under the Omnibus Budget
Reconciliation Act of 1990. As a result, we entered into a Medicaid Rebate
Agreement with the U.S. Government. Pursuant to the Rebate Agreement, in order
for federal reimbursement to be available for prescription drugs under state
Medicaid plans, we must pay certain statutorily prescribed rebates on Medicaid
purchases. In most other developed markets in which our products are marketed
and sold, governments exert controls over pharmaceutical prices either directly
or indirectly or by controlling admission to, or levels for, reimbursement by
government health programs. The nature of such controls and their effect on the
pharmaceutical industry varies greatly from country to country. The statutes and
regulations that govern our business and activities are subject to change, and
current political and public interest in pharmaceutical products may lead to
changes in federal and state law may affect us and the way we do business. We
cannot anticipate what effect, if any, such legislation may have on our
operations.
We have less ability to negotiate our selling prices as a result of
industry consolidation among wholesaler and chain store distributors.
The pharmaceutical distribution industry has recently experienced a
significant consolidation among wholesalers and chain stores. As a consequence,
channels for wholesale and retail pharmaceutical distribution are less abundant
than historically available. As a consequence, we are dependent on fewer
distributors for our products and our ability to negotiate price terms with such
distributors has been eroded. While we believe that this consolidation among
distributors will ultimately reduce our distribution costs, our inability to
aggressively negotiate price terms with them, over the long term, could inhibit
our efforts to achieve targeted profit margins or sales levels. Notwithstanding
our ability to by-pass the wholesale distribution network by distributing our
products to end-users directly, there can be no assurance that the continued or
future consolidation among pharmaceutical distributors will not materially
adversely affect our operations or financial condition.
There are several factors that could negatively effect our ability to
implement our expansion strategy.
Our principal strategy is to continue to expand our business through the
acquisition of businesses and new products, as well as product line extensions,
and increased marketing and distribution activities. We seek products that we
believe can be profitable under our management and which are not subject to
adverse FDA rulings. There are several factors which could limit or restrict our
ability to implement this strategy:
<PAGE>
Products that we might potentially acquire may be found to subject to
adverse FDA rulings, in which case we would not purchase such a product;
We may not have the financing available to acquire an available product, in
part because all of our assets are subject to a security interest in favor of
LaSalle;
We may not be able to achieve our targeted profit margins with certain
products available for acquisition;
We may not be able to attract and retain additional qualified personnel to
expand our marketing and distribution activities to accommodate additional
products;
We may not successfully integrate any newly acquired product into our
operation.
There is no guarantee that sales of newly acquired products will be
profitable to us or that such products will meet anticipated sales levels.
Moreover, while we anticipate making future acquisitions in accordance with our
strategic plan, no assurance can be given that we will consummate any future
acquisitions or that we will be able to achieve the same rates of return and
historical sales levels of any product acquired. In addition, expansion of our
marketing and distribution activities will require us to attract and retain
additional qualified personnel. Although, to date, we have attracted and
retained qualified personnel, there is no assurance that we will be able to
continue to recruit or retain personnel of the requisite caliber or in adequate
numbers to enable us to implement our business strategy. Moreover, no assurance
can be given that we will be able to successfully integrate any newly acquired
product or business into our operations. The failure to do so could have a
material adverse effect on our financial condition and operations.
To implement our expansion strategy, we will need to finance new product
acquisitions from the new acquisition note to LaSalle, existing working capital,
positive cash flow from operations and new borrowings. While we are not
currently prohibited from other borrowings of money, our ability to grant liens
upon, and security interests in, our assets is restricted by the terms of our
loan agreement with LaSalle, which holds a security interest in substantially
all of our assets. This security interest could adversely affect our ability to
secure new asset-based borrowings if necessary. Accordingly, there can be no
assurance that we will be able to borrow, on commercially reasonable terms or
otherwise, any additional funds necessary to finance further acquisitions or
support operations.
Competition could have a material adverse effect on our business.
The business of distributing pharmaceutical and health related products is
highly competitive. We compete primarily against established pharmaceutical and
consumer product companies which currently market products that are equivalent
or functionally similar to those we market. We focus our marketing efforts on
products for which the major competition are products sold by companies that are
not major pharmaceutical firms. We seek to compete based on targeted marketing
and promotional programs, lower prices and better service. There can be no
assurance that we will be successful in this regard. Moreover, there can be no
assurance that major pharmaceutical companies will not develop and market new
and innovative products competitive with any of our products. Further, since
most of our products are not protected by patents, products similar in
composition and intended use could be manufactured and distributed by our
competitors. Most of our competitors possess substantially greater financial,
technical and other resources than we do.
We are subject to product liability claims.
Pharmaceutical and health related products, such as those we market, may
carry certain health risks. Consequently, we may be exposed to potential product
liability claims by consumers. We maintain a product liability insurance policy
providing direct coverage in the aggregate amount of $3,000,000 and we are an
additional insured under our manufacturers' policies. Our present insurance may
not be adequate in the event of an adverse judgment against us. In the event
that any product liability claim is not fully funded by insurance, or if we are
unable to recover damages from the manufacturer of a product that may have
caused such injury, we will be required to pay such claims from our own funds.
Any such payment could have a material adverse affect on our financial
condition. In addition, there is no assurance that we will be able to maintain
our liability insurance in effect in the future at reasonable premium rates, if
at all.
We are subject to chargebacks and rebates when our products are re-sold to
governmental agencies and managed care buying groups.
Chargebacks and rebates are the difference between the prices at which we
sell our products to wholesalers and the sales price ultimately paid by the
end-users, such as governmental agencies and managed care buying groups,
pursuant to fixed price contracts. We record an estimate of the amount either to
be charged back to us or rebated to the end-users at the time of sale to the
wholesaler. Over recent years, the managed care system of chargebacks and
rebates gained greater acceptance by the pharmaceutical industry in general.
Managed care organizations increasingly began using these chargebacks and
rebates as a method to reduce overall costs in drug procurement. Levels of
chargebacks and rebates have increased momentum and have caused a greater need
for more sophisticated tracking and data gathering to confirm sales at contract
prices to end-users with respect to related sales to wholesalers. We have
implemented new procedures, systems and policies which we believe more closely
monitor the managed care and government sales areas of our business. We record
an accrual for chargebacks and rebates based upon factors including current
contract prices, historical chargeback rates and actual chargebacks claimed. The
amount of actual chargebacks claimed could, however, be either higher or lower
than the amounts we accrue and could materially impact our financial condition.
Our officers and directors control a majority of our voting shares.
Our executive officers and directors beneficially own 1,654,178 shares of
Class A common stock and 407,821 shares of Class B common stock. The Class B
common stock has five votes per share other than with respect to the election of
directors. At all times while there are at least 325,000 shares of Class B
common stock issued and outstanding, holders of the Class B common stock, voting
as a separate class, have the right to elect a majority of our board of
directors. Accordingly, our executive officers and directors currently have the
ability, and it is anticipated that in the future they will continue to have the
ability, to elect a majority of directors and thereby otherwise authorize
certain corporate transactions without concurrence of our other stockholders.
Our business is dependent on the efforts of Daniel Glassman.
Our day-to-day operations are managed by our President, Chief Executive
Officer and Chairman, Daniel Glassman. Mr. Glassman does not currently have an
employment agreement with us. The loss of the services of Mr. Glassman would
materially adversely affect the conduct of our business.
The exercise of outstanding warrants and options or the issuance of additional
shares could adversely affect the market price of our stock.
There are currently outstanding a substantial number of options and
warrants entitling the holders thereof to purchase shares of Class A common
stock. In addition, the holders of shares of Class B common stock have the
unilateral right, exercisable at any time, to convert their shares of Class B
common stock into shares of Class A common stock. If all outstanding warrants
and options were exercised and all shares of Class B common stock converted into
shares of Class A common stock, approximately an additional 2,560,000 shares of
Class A common stock would be issued and be outstanding. The sale, or
availability for sale, of such substantial amounts of additional shares of Class
A common stock in the public marketplace could adversely affect the prevailing
market price of our securities and otherwise impair our ability to raise
additional capital through the sale of equity securities.
Because we will most likely not pay dividends, you will only profit from your
investment if the stock price appreciates.
Our credit facility with LaSalle currently prohibits us from paying any
cash dividends at any time while amounts remain outstanding under the LaSalle
credit facility. Moreover, and without giving effect to the terms of the LaSalle
credit facility, we currently do not intend to declare or pay cash dividends in
the foreseeable future. Earnings, if any, are expected to be retained to finance
and used to invest in our business.
Our systems and business are subject to Year 2000 risks.
As has been widely reported, many computer systems process dates based on
two digits for the year of transaction and may be unable to process dates in the
year 2000 and beyond. There are many risks associated with the year 2000
compliance issue, including but not limited to the possible failure of our
systems and hardware with embedded applications. Any such failure could result
in (1) our inability to source inventory; (2) the malfunctioning of our service
processes, (3) our inability to properly bill and collect payments from out
customers; and (4) errors or omissions in accounting and financial data, any of
which could have a material adverse effect on our results of operations and
financial condition. In addition, there can be no guarantee that the systems of
other companies, including our vendors, utilities and customers, will be
converted in a timely manner, or that a failure to convert by another company,
or a conversion that is incompatible with our systems, would not have a material
adverse effect on us. We have not yet developed any contingency plans.
We are subject to certain provisions which make it unlikely we can be acquired
by anyone without the approval of our Board of Directors.
Our charter authorizes us to issue of up to 2,000,000 shares of preferred
stock with such designations, rights and preferences as may be determined from
time to time by the board of directors. The authorization of such preferred
stock empowers the board of directors, without further stockholder approval, to
issue preferred shares with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of our common stock. In the event of issuance, such preferred stock
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change of control. To date, no shares of preferred
stock have been issued. In addition, we are and will continue to be, subject to
the anti-takeover provisions of the Delaware General Corporation Law, which
could have the effect of delaying or preventing a change of control.
Our charter also provides that at all times while there are at least
325,000 shares of Class B common stock issued and outstanding, the holders of
the Class B common stock have the right, voting as a separate class, to elect a
majority of our Board of Directors. As of the date of this Prospectus, 431,552
shares of Class B common stock are issued and outstanding, 316,736 shares of
which are beneficially owned by Daniel Glassman, our President, Chief Executive
Officer and Chairman of the Board. As such, Mr. Glassman effectively controls us
and the existence of these shares of Class B common stock could have the effect
of preventing a change of control.
Our stock price is subject to fluctuations.
Stock prices of emerging growth pharmaceutical and micro-cap companies such
as ours are subject to significant fluctuations. The stock price may be affected
by a variety of factors that could cause the price of our common stock to
fluctuate, perhaps substantially, including: announcements of developments
related to our business; quarterly fluctuations in our actual or anticipated
operating results; general conditions in the pharmaceutical and health care
industries; new products or product enhancements by us or our competitors;
developments in patents or other intellectual property rights and litigation;
and developments in our relationships with our customers and suppliers. In
addition, in recent years the stock market in general and the market for shares
for small capitalization and emerging growth pharmaceutical companies in
particular, have experienced extreme price fluctuations which may or may not
have been related to the operating performance of affected companies. Any such
fluctuations in the future could adversely affect the market price of our common
stock. There can be no assurance that the market price of our common stock will
not decline.
This prospectus includes forward-looking statements. All statements other
than statements of historical facts included in this prospectus, including
certain statements under the "Prospectus Summary", may constitute
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events. Although we
believe that our assumptions made in connection with the forward-looking
statements are reasonable, we cannot assure you that our assumptions and
expectations will prove to have been correct. Important factors that could cause
our actual results to differ from our expectations are disclosed below. These
risks and uncertainties include those relating to regulatory action, capital
requirements and competing products are described in the following section. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and we therefore file reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy
statements and other information can be inspected and copies at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
500 West Madison Street, Chicago, Illinois 60601 and 7 World Trade Center, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Our common stock is quoted on Nasdaq, and such
reports, proxy statements and other information can also be inspected at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. Such
material may also be accessed electronically by means of the Securities and
Exchange Commission's home page on the Internet (http://www.sec.gov).
We have filed with the Commission a registration statement on Form S-3 with
respect to the shares being offered hereby. You may obtain copies of the
registration statement from the Commission at the addresses in the previous
paragraph. This prospectus does not contain all of the information set forth in
the registration statement and its exhibits. We refer you to the registration
statement for further information about us and the shares. While we believe this
prospectus provides the material information regarding the contracts and
documents described herein, the statements contained in this prospectus as to
the contents of any contract or any other documents are not necessarily complete
and, in each such instance, you should refer to the copy of such contract or
document filed as an exhibit to the registration statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents we filed with the Commission pursuant to the
Exchange Act (File No. 0-15810) are hereby incorporated by reference in this
prospectus, except as otherwise superseded or modified by this prospectus:
The Company's Annual Report on Form 10-KSB/A for the fiscal year ended
December 31, 1998, Quarterly Report on Form 10-QSB for the quarter ended March
31, 1999 and Form 8K filed April 16, 1999.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering
shall be deemed to be incorporated by reference into this Prospectus.
Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed documents which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
We will furnish without charge to each person, including any beneficial
owner to whom this prospectus is delivered, upon his written or oral request, a
copy of any or all of the documents referred to above which have been
incorporated into this prospectus by reference (other than exhibits to such
documents). Requests for such copies should be directed to:
BRADLEY PHARMACEUTICALS, INC.
383 Route 46 West
Fairfield, New Jersey 07004
Attention: Daniel Glassman, Chairman of the Board
(973) 883-1505
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by
Berlex and Stern Stewart.
SELLING SHAREHOLDERS
The shares are being registered pursuant to registration rights obligations
we have to Berlex and Stern Stewart. Other than the shares offered hereby,
neither Berlex nor Stern Stewart holds more than one (1%) percent of our common
stock nor have they or their principals ever held any position or office with
us. The shares listed for Berlex include 750,000 shares issuable upon the
exercise of warrants for $1.25 per share. All of Stern Stewart's shares are
issuable upon the exercise of warrants for $3.12 per share. We have been advised
that Berlex and Stern Stewart intend to sell the shares at unspecified times on
a delayed or continuous basis depending upon, among other things, favorable
market conditions.
The following table sets forth certain information with respect to the
beneficial ownership of the shares by Berlex and Stern Stewart:
<TABLE>
<CAPTION>
Beneficial Beneficial
Ownership Number of Ownership
Shares of Shares of of Shares of
Name of Selling Common Stock Common Stock Common Stock
Shareholder Prior to Offering to be Offered After Offering
- ----------------- ----------------- --------------- --------------
<S> <C> <C> <C>
Berlex Laboratories, Inc. 2,200,000 2,200,000 0
Stern, Stewart & Co., Inc. 70,000 70,000 0
</TABLE>
PLAN OF DISTRIBUTION
Berlex and Stern Stewart have advised us that there are presently no
underwriting arrangements with respect to the sale of the shares; however, such
arrangements may exist in the future. Berlex and Stern Stewart, or their
pledges, donees transfers or other successors in interest, may choose to sell
all or a portion of the shares from time to time as market conditions permit in
the over-the-counter market, or otherwise, at prices and terms then prevailing
or at prices related to the then-current market price, or at negotiated prices.
The shares may also be sold by one or more of the following methods,
without limitation:
block trades in which a broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
purchases by a broker or dealer as principal and resale by such broker
and dealer for its account pursuant to this prospectus;
ordinary brokerage transactions, which may include long or short
sales, and transactions in which the broker solicits purchases;
"at the market" to or through market makers and into an existing
market for the shares;
in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through
agents;
through transactions in options, swaps or other derivatives, including
transactions with broker-dealers or other financial institutions that
require the delivery by such broker-dealers or institutions of the shares,
which shares may be resold thereafter pursuant to this prospectus; or
any combination of the foregoing, or by any other legally available
means.
In effecting sales, brokers or dealers engaged by Berlex or Stern Stewart
may arrange for other brokers or dealers to participate. Such broker or dealers
may receive commissions or discounts from Berlex and Stern Stewart in amounts to
be negotiated. Such brokers and dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act in connection with such sales.
Notwithstanding the foregoing, we entered into an agreement with Berlex
pursuant to which Berlex has agreed that prior to it offering for sale, transfer
or assignment any of the shares in a private sale either through an open market
sale on Nasdaq or on a national securities exchange or an agreed upon sale at
which the price per share is determined or to be determined by an agreement,
written or otherwise, between Berlex and the prospective buyer of such shares,
not on Nasdaq or on a national securities exchange, Berlex shall provide us with
the opportunity to purchase the shares at the sales price. We may exercise such
opportunity by making payment of cash to Berlex within five business days from
our receipt of notice from Berlex, provided that we must, at Berlex' request,
provide prior to such payment evidence reasonably satisfactory to Berlex that
(1) the purchase of the shares by us will not constitute a purchase in violation
of applicable corporate or other applicable law; and (2) there will not occur
within 91 days after the date of such payment certain events of insolvency or
bankruptcy.
In the event Berlex makes such a request, such five business day period
shall be extended by such time as is reasonably required for us to comply with
(1) and (2) above, up to two additional business days. If we fail to pay for the
shares within such time, Berlex may sell the shares during the next 30 days, in
the case of an agreed upon sale, or 90 days in the case of an open market sale,
free of our right to purchase the shares; provided however, that the sale of the
shares shall, on an open market sale, be made on Nasdaq or on a national
securities exchange and in the event of an agreed upon sale be made at the price
not less than the offer price. In the event Berlex does not sell the shares
within such 30 or 90 day period, the above-described rights continue to apply to
any proposed private sale by Berlex of the shares.
For purposes hereof, the sales price means (1) in the case of an open
market sale, the price per share which is equal to the average of the bid and
asked price published in the Wall Street Journal on the business day before
notice is sent by Berlex to us, or if there is no bid and asked price on such
business day, on the most recent day on which a bid and asked price had been
published in the Wall Street Journal; or (2) in the case of an agreed upon sale,
the price per share at which Berlex proposes to sell the shares.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant, we have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
express in the Securities Act and will be governed by the final adjudication of
such issue.
LEGAL MATTERS
The legality of the Shares offered by this prospectus has been passed upon
by Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP, Woodbridge, New Jersey.
EXPERTS
The consolidated financial statements as of December 31, 1998 and for the
year then ended incorporated in this prospectus by reference to the Annual
Report on Form 10-KSB/A have been audited by Grant Thornton, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their reports incorporated herein in reliance upon such report given upon the
authority of said firms as experts in auditing and accounting.
<PAGE>
2,270,000 Shares of Common Stock
BRADLEY
PHARMACEUTICALS, INC.
PROSPECTUS
MAY , 1999
Until June , 1999, all dealers that effect transactions
in these securities, whether or not participating in
this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and
with respect to their unsold allotments of
subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The registrant estimates expenses in connection with the offering described in
this Registration Statement will be as follows:
Item
Amount
Securities and Exchange Commission Registration Fee $ 749.38
Printing and Engraving Expenses 500.00
Accountants' Fees and Expenses 4,000.00
Legal Fees and Expenses 4,000.00
NASDAQ Listing Fees --
Placement Agent's Fees and Expenses --
Miscellaneous 750.62
---------
Total
$10,000.00
Item 15. Indemnification of Directors and Officers.
The description set forth under the caption "Indemnification of Directors
and Officers" in the Company's Registration Statement on Form SB-2, filed
October 15, 1997, No. 33-37935, is incorporated herein by reference.
Item 16. Exhibits.
Exhibit
Numbers Description of Documents
3.1 Certificate of Incorporation of the Company, as amended (Incorporated
by reference from the Company's Proxy Statement for the 1998 Annual
Meeting)
3.2 By-laws of the Registrant, as amended (Incorporated by reference from
the Company's Proxy Statement for the 1998 Annual Meeting)
4.1 Placement Agent's Unit Purchase Option (Incorporated by reference
from the Company's Proxy Statement for the 1998 Annual Meeting)
10.1 1990 Stock Option Plan, as amended (Incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1996.
10.2 Form of 11% Subordinated Note dated June 14, 1990 (Incorporated by
reference to Exhibit 10.6 to the Company's Registration Statement on
Form S-1, Registration No. 33-36120)
10.3 Asset Purchase Agreement between the Company and Hoechst Roussel
Pharmaceuticals Incorporated (Incorporated by reference to Exhibit
10.10 to the Company's Registration Statement on Form S-1,
Registration No. 33-36120)
10.4 Asset Purchase Agreement dated December 15, 1992 between the Company,
Upsher Smith and Kenneth Evenstad (Incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K for an event
dated December 15, 1992)
10.5 Manufacturing Agreement dated December 15, 1992 between the Company,
Upsher Smith and Kenneth Evenstad (Incorporated by reference to
Exhibit 10.2 to the Company's Current Report on Form 8-K for an event
dated December 15, 1992)
10.6 Asset Purchase Agreement dated March 30, 1993 between the Company and
Tsumura Medical Inc. (Incorporated by Reference to Exhibit 10.9 to
the Company's Annual Report on Form 10-K for the year ended December
31, 1992
10.7 Trademark Security Agreement dated March 30, 1993 between the Company
and Tsumura International Inc. (Incorporated by reference to Exhibit
10.10 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993
10.8 Purchase Agreement dated November 10, 1993 between Berlex and the
Company, as amended by Amendments Numbers One and Two thereto, dated
November 19, 1993 and December 9, 1993, respectively (Incorporated by
reference to Exhibits 10.1 through 10.3 to the Company's Current
Report on Form 8-K for an event dated December 10, 1993)
10.9 Trademark Security Agreement dated December 9, 1993 between Berlex
and the Company (Incorporated by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K for an event dated December 10,
1993)
10.10 Supply and Distribution Agreement dated December 9, 1993 between
Berlex and the Company (Incorporated by reference to Exhibit 10.5 to
the Company's Current Report on Form 8-K for an event dated December
10, 1993)
10.11 Form of Plan of Merger dated as of January 31, 1994 between Doak and
the Company (Incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K for an event dated February 14,
1994)
10.13 Consulting Agreement dated as of January 31, 1994 between the Company
and Dr. Krafchuk (Incorporated by references to Exhibit 10.3 to the
Company's Current Report on Form 8-K for an event dated February 14,
1994)
10.14 Consulting Agreement dated as of January 31, 1994 between the Company
and Mrs. Krafchuk (Incorporated by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K for an event dated February 14,
1994)
10.15 Lease Modification Agreement dated as of February 1994 between
Dermkraft, Inc. and Doak (Incorporated by reference to Exhibit 10.6
to the Company's Current Report on Form 8-K for an event dated
February 14, 1994)
10.16 Purchase and Assignment Agreement between Upjohn and the Company
(Incorporated by reference to Exhibit 10.21 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993)
10.17 Amendment No. 4 dated January 6, 1996 to the Asset Purchase Agreement
dated November 10, 1993 between Berlex Laboratories, Inc. and the
Company (Incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K for an event dated January 5, 1996)
10.18 Security Agreement dated as of January 5, 1995 between the Company
and Berlex Laboratories, Inc. (Incorporated by reference to Exhibit
10.2 to the Company's Current Report on Form 8-K for an event dated
January 5, 1996)
10.19 Amendment to Trademark Security Agreement dated as of January 5,
1995, between the Company and Berlex Laboratories, Inc. (Incorporated
by reference to Exhibit 10.3 to the Company's Current Report on Form
8-K for an event dated January 5, 1996)
10.20 Settlement Agreement dated as of September 30, 1996 among the
Company, Stiefel Canada, Inc., Trans CanaDerm, Inc. and Louis Vogel
et al. (Incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K for an event dated September 30, 1996)
10.21 Amendment No. 5 dated as of December 23, 1996 to the Asset Purchase
Agreement between the Company and Berlex (Incorporated by reference
to Exhibit 10.1 to the Company's Current Report on Form 8-K for an
event dated December 23, 1996)
10.22 Security Agreement and subsidiary Security Agreement dated as of
December 23, 1996 among Doak Dermatologics, Inc. and Berlex
(Incorporated by reference to Exhibit 10.2 to the Company Current
Report on Form 8-K for an event dated December 23, 1996)
10.23 Confession of Judgment from the Company and Doak Dermatologics, Inc.
with respect to the March 1997 payment (Incorporated by reference to
Exhibit 10.3 to the Company's Current Report on Form 8-K for an event
dated December 23, 1996)
10.24 Amendment No. 6 to Asset Purchase Agreement dated as of September 19,
1997 between the Company and Berlex
10.25 Warrant to Purchase up to 750,000 Shares of Class A Common Stock of
the Company issued to Berlex
10.26 Loan and Security Agreement dated as of September 19, 1997 among CIT,
the Company, Doak, Bradley Pharmaceuticals (Canada), Inc. and Bradley
Pharmaceuticals Overseas, Ltd.
10.27 Assignment, Security Agreement and Mortgage - Trademarks and Patents,
dated as of September 19, 1997 between Doak and CIT
10.28 Assignment, Security Agreement and Mortgage - Trademarks, dated as of
September 19, 1997 between Doak and CIT
10.29 Guaranty dated September 19, 1997 of Daniel Glassman issued to CIT
21.1 Subsidiaries of the Registrant (Incorporated by reference to Exhibit
21.1 to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996)
23.2 Consent of Grant Thornton LLP (page II-9)
24.1 Power of Attorney (page II-6)
Item 17. Undertakings.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as express in the Act and
will be governed by the final adjudication of such issue. The undersigned
registrant hereby undertakes:
<PAGE>
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the Registration Statement is on Form S-3 or
Form S-8 and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable ground to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Fairfield, New Jersey, on the 27th day of May,
1999.
BRADLEY PHARMACEUTICALS, INC.
By: /s/ Daniel Glassman
-----------------------------
DANIEL GLASSMAN
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Daniel Glassman Chairman of the Board May 27, 1999
Daniel Glassman President and Chief
Executive Officer
/s/ * Treasurer and Director May 27, 1999
Iris S. Glassman
/s/ * Secretary and Director May 27, 1999
David H. Hillman
/s/ * Director May 27, 1999
Philip W. McGinn, Jr.
/s/ * Director May 27, 1999
Seymour I. Schlager
/s/ * Director May 27, 1999
Alan G. Wolin
*By: /s/ Daniel Glassman
Daniel Glassman, as
attorney-in-fact
</TABLE>
<PAGE>
Exhibit 5
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP
Metro Corporate Campus One
P.O. Box 5600
Woodbridge, NJ 07095-0988
May , 1999
Bradley Pharmaceuticals, Inc.
383 Route 46 West
Fairfield, New Jersey 07004
Re: Bradley Pharmaceuticals, Inc.
Gentlemen:
We have acted as counsel to Bradley Pharmaceuticals, Inc., a Delaware
Corporation (the "Company"), in connection with the filing by the Company of a
Registration Statement on Form S-3 (Registration No. 333-75991), covering the
registration of 2,270,000 shares of common stock, par value $.01 per share
("Common Stock"). We have been asked to issue an opinion as to whether the
Common Stock being registered will, when sold, be legally issued, fully paid,
non-assessable, and binding obligations of the Company.
As counsel to the Company, we have examined the Certificate of
Incorporation and By-Laws, as amended to date, and other corporate records of
the Company and have made such other investigations as we have deemed necessary
in connection with the opinion hereinafter set forth. We have relied, to the
extent we deem such reliance proper, upon certain factual representations of
officers and directors of the Company given in certificates, in answer to our
written inquiries and otherwise, and, although we have not independently
verified all of the facts contained therein, nothing has come to our attention
that would cause us to believe that any of the statements contained therein are
untrue or misleading.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us. We have assumed that the corporate records of the Company furnished to us
constitute all of the existing corporate records of the Company and include all
corporate proceedings taken by it.
Based solely upon and subject to the foregoing, we are of the opinion that
the shares of Common Stock are duly authorized, issued and full paid and
non-assessable, and the issuance of such shares by the Company is not subject to
any preemptive or similar rights.
We hereby consent to the filing of this opinion as an Exhibit to the
aforesaid Registration Statement and to the reference to our firm under the
caption "Legal Matters" in the Prospectus.
Very truly yours,
Greenbaum, Rowe, Smith,
Ravin, Davis & Himmel LLP
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 9, 1999 accompanying the consolidated
financial statements of Bradley Pharmaceuticals, Inc. appearing in the Annual
Report on Form 10-KSB/A for the year ended December 31, 1998 which is
incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in the Registration Statement of the aforementioned
report and to the use of our name as it appears under the caption "Experts."
GRANT THORNTON LLP
Parsippany, New Jersey
May 24, 1999
