PROSPECTUS
2,270,000 SHARES
BRADLEY PHARMACEUTICALS, INC.
COMMON STOCK
<PAGE>
Berlex Laboratories, Inc. and Stern, Stewart & Co., Inc. will sell their
shares from time to time with this prospectus. See "Selling Shareholders" and
"Plan of Distribution."
Our common stock is quoted on the Nasdaq Stock Market(TM) under the symbol
"BPRX." On July 28, 1999, the closing price for the common stock was $1.125 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 5 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.
The date of this prospectus is July 29, 1999.
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TABLE OF CONTENTS
Page
Prospectus Summary 3
Risk Factors 5
Recent Financing Transaction 12
Where You Can Find
More Information 13
Incorporation of Certain
Information by Reference 13
Use of Proceeds 14
Selling Shareholders 14
Plan of Distribution 15
Indemnification 16
Legal Matters 17
Experts 17
We have not authorized dealers, salespersons or other persons to give
any information or to make any representation not contained in this prospectus.
If any such information is given or any such representation 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. The information contained
in this prospectus may not be correct as of any date subsequent to the date of
this prospectus.
<PAGE>
PROSPECTUS SUMMARY
Bradley Pharmaceuticals
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.
We market over-the-counter and prescription pharmaceutical and
health-related products. Our product line currently includes dermatological
brands, which our wholly-owned subsidiary, Doak Dermatologics, Inc., markets,
and nutritional, respiratory, personal hygiene and internal medicine brands,
which our Kenwood Therapeutics division markets. Independent contractors
manufacture and supply all of our product lines under our quality control
standards and markets those lines 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 acquire of established products from
major pharmaceutical organizations that we believe require intensified marketing
and promotional attention. We believe that there are significant growth
opportunities in this market niche due to 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 the owner does not actively promote. 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, our
ability to obtain appropriate financing and our ability to consummate
acquisitions on favorable terms. We cannot assure you that we will be able to
consummate in a timely way attractive acquisitions on favorable terms.
Therefore, we have focused 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.
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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.
<PAGE>
Failure to maintain Deconamine(R) as a significant portion of revenue could
adversely affect our profitability.
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. Thus, we depend on our ability to market and
sell the Deconamine(R) product line. The concentration of our net sales in a
single product line makes us particularly dependent on that line. If demand for
the Deconamine(R) product line decreases and we fail to replace those sales, our
revenues and profitability would decrease.
If our Deconamine(R) line is converted to over-the-counter status, we may not
have the resources to compete.
The United States Food and Drug Administration regulates all
over-the-counter cough and cold products 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. These monographs apply to our Deconamine(R) product line, which
currently has prescription status. Once the FDA issues a final monograph with
respect to a product, the product historically can remain as a prescription
product for up to one additional year. We anticipate that the FDA will issue
final monographs for our Deconamine(R) product line, thereby converting it to
over-the-counter status, 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 the FDA issues final monographs covering these products. 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 the FDA converts this product line
to over-the-counter status.
We may not be able to afford the FDA filing necessary for the continued
marketing of Deconamine(R).
We must file an Abbreviated New Drug Application 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. We deferred this project 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 , we would not be able to market
that product.
Since we rely on independent manufacturers for our products, any regulatory or
production problems could adversely affect our product supply.
We do not own or operate any manufacturing or production facilities.
Rather, independent companies manufacture and supply all of our products. Many
of these companies 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 currently depend 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, adversely effect our sales and
marketing efforts. To date, we have not had problems or delays in locating
alternative manufacturers and suppliers. Further, the FDA must authorize all of
our pharmaceutical suppliers, which must manufacture our products in authorized
facilities pursuant to federally regulated current good manufacturing practices.
In the event of problems complying with CGMPs or difficulties with our present
manufacturers or suppliers, we would experience delays in obtaining products
which would reduce our sales and profitability.
Failure to comply to FDA and foreign regulations could restrict our ability to
conduct our business.
There are extensive federal and state regulations that apply to all
pharmaceutical companies, including us. We cannot predict the extent to which
future legislative and other regulatory developments concerning our products may
affect us. In the United States, the FDA regulates the drug products we sell, as
do 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 reduce our sales and profitability.
Price controls set by the U.S. and foreign governments could adversely
affect our profit margins.
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. The Omnibus Budget
Reconciliation Act of 1990 made major changes in the Medicaid program. 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 we market and sell our products, 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 may change, and current political and public interest in
pharmaceutical products may lead to changes in federal and state law that may
affect us and our business. We cannot anticipate what effect, if any, such
legislation may have on our operations.
Since we rely on a few wholesalers for the majority of our sales, any further
consolidation among wholesalers could adversely affect our pricing.
The pharmaceutical distribution industry has recently experienced a
significant consolidation among wholesalers and chain stores. As a consequence,
there are fewer channels for wholesale and retail pharmaceutical distribution
than were historically available. Thus, we depend on fewer distributors for our
products and we are less able to negotiate price terms with distributors. 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, we
cannot assure you that the continued or future consolidation among
pharmaceutical distributors will not materially adversely affect our ability to
compete effectively.
We may not be able to implement our business strategy because of government
regulations, lack of financing, inability to acquire profitable products, or
inability to retain key management.
Our principal strategy is to continue to expand our business by
acquiring 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:
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We would not purchase any products that are found to be subject to
adverse FDA rulings;
We may not have the financing to acquire an available product, in part
because LaSalle Business Credit, Inc. has a security interest on all of our
assets;
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.
We cannot guarantee that sales of newly acquired products will be
profitable or that we will achieve anticipated sales levels for such products.
Moreover, while we anticipate making future acquisitions in accordance with our
strategic plan, we cannot assure you 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 acquired product. 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, we cannot assure you 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, we cannot
assure you 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 the growth of our sales and profitability, and on our
operations.
To implement our expansion strategy, we will need to finance new
product acquisitions from the new acquisition loan from LaSalle, existing
working capital, positive cash flow from operations and new borrowings. While we
are not currently prohibited from other borrowings of money, our loan agreement
with LaSalle restricts our ability to grant liens upon, and security interests
in, our assets. LaSalle's security interest could adversely affect our ability
to secure new asset-based borrowings if necessary. Accordingly, we cannot assure
you that we will be able to borrow, on commercially reasonable terms or
otherwise, any additional funds necessary to finance further acquisitions or
support operations.
Competing products and technologies may make some or all of our products
non-competitive or obsolete.
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 compete based on targeted
marketing and promotional programs, lower prices and better service. We cannot
assure you that we will be successful in this regard. Moreover, we cannot assure
you 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, our competitors could manufacture and
distribute products similar in composition and intended use. Most of our
competitors possess substantially greater financial, technical and other
resources than we do.
If we become subject to a product liability claim, we may not have adequate
insurance coverage.
Pharmaceutical and health related products, such as those we market,
may carry certain health risks. Consequently, consumers may bring product
liability claims against us. We maintain a product liability insurance policy
providing direct coverage in the aggregate amount of $3,000,000 and our
manufacturers' policies also insure us. Our present insurance may not be
adequate in the event of an adverse judgment against us. If insurance does not
fully fund any product liability claim, or if we are unable to recover damages
from the manufacturer of a product that may have caused such injury, we must pay
such claims from our own funds. Any such payment could have a material adverse
affect on our financial condition. In addition, we cannot assure you 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 which may reduce our future
profit margins.
Chargebacks and rebates are the difference between the prices at which
we sell our products to wholesalers and the sales price the end-users ultimately
pay, 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 pharmaceutical industry in general has accepted the
managed care system of chargebacks and rebates. 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 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 than the amounts we accrue and if so would
reduce our profit margins.
Our officers and directors control our business and can authorize certain
corporate transactions without the concurrence of our other stockholders.
Our executive officers and directors beneficially own 1,654,178 shares
of common stock and 407,821 shares of Class B common stock. The Class B common
stock has five votes per share except for the election of directors. Provided
there are at least 325,000 shares of Class B common stock issued and
outstanding, the 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 we anticipate that 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.
Loss of our Chairman and CEO could adversely affect how we operate.
Our President, Chief Executive Officer and Chairman, Daniel Glassman,
manages our day-to-day operations. Mr. Glassman does not currently have an
employment agreement with us. The loss of Mr. Glassman's services would
adversely affect how we operate our business.
The exercise of outstanding warrants and options or the issuance of additional
shares could adversely affect the market price of our stock.
We currently have outstanding a substantial number of options and warrants
to purchase shares of our 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 the holders of all outstanding warrants and options exercised them and
the holders of all shares of Class B common stock convert them into shares of
common stock, we would have approximately an additional 2,560,000 shares of
Class A common stock issued and 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 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 LaSalle credit
facility, we currently do not intend to declare or pay cash dividends in the
foreseeable future. We expect to retain any earnings to finance and to invest in
our business.
Failure to successfully address the Year 2000 issue could adversely affect our
business.
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
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our inability to source inventory;
the malfunctioning of our service processes,
our inability to receive orders, properly bill and collect payments
from out customers; and
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, we cannot guarantee that other companies, including our vendors,
utilities and customers, will convert their systems in a timely manner, or that
another company's failure to convert 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.
Since our charter includes issuing preferred stock and super-voting rights held
by the Chairman & CEO, it is unlikely we can be acquired by anyone without the
consent of our Board of Directors, even if it is in your interest.
Our charter authorizes us to issue up to 2,000,000 shares of preferred
stock with such designations, rights and preferences as the board of directors
may determine from time to time. This authority 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. The issuance of
such preferred stock could, under certain circumstances, discourage, delay or
prevent a change of control. To date, we have not issued any shares of preferred
stock. In addition, we are and will continue to be, subject to the anti-takeover
provisions of the Delaware General Corporation Law, which could delay or prevent
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, and Daniel Glassman,
our President, Chief Executive Officer and Chairman of the Board beneficially
owns 316,736 of those shares. As such, Mr. Glassman effectively controls us and
the existence of these shares of Class B common stock could prevent a change of
control.
Our stock price has fluctuated considerably and may depreciate in value.
Stock prices of emerging growth pharmaceutical and micro-cap companies
such as ours fluctuate significantly. A variety of factors that could cause the
price of our common stock to fluctuate, perhaps substantially, include:
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 there have been extreme fluctuations in the stock
market in general and the market for shares for small capitalization and
emerging growth pharmaceutical companies in particular. These fluctuations were
sometimes unrelated to the operating performance of the affected companies. Any
such fluctuations in the future could adversely affect the market price of our
common stock. We cannot assure 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 above. These
risks and uncertainties include those relating to regulatory action, capital
requirements and competing products. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
RECENT FINANCING TRANSACTION
On April 7, 1999, we entered into a loan agreement with LaSalle that is
comprised of a $5 million revolving asset-based credit facility and a $2.5
million acquisition note for future product acquisitions. 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
subject 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. We collateralized our obligations under this new loan by
granting to LaSalle a security interest in all of our inventory, accounts
receivable, intangible assets and other assets.
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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 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. 0-18881) 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 8-K 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 does not, 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). You should direct requests for such copies 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 percent (1%) 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. Berlex and Stern
Stewart have advised us that they 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
of 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:
<PAGE>
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. Berlex and
Stern Stewart may pay commissions or grant discounts to such brokers and dealers
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 agreed that prior to it offering for sale,
transfer or assignment any of the shares in a private sale under certain
conditions, Berlex shall provide us with the opportunity to purchase the shares
at the sales price. We may exercise such opportunity by making a cash payment 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:
the purchase of the shares by us will not constitute a purchase
in violation of applicable corporate or other applicable law; and
there will not occur certain events of insolvency or bankruptcy
within 91 days after the date of such payment .
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
Berlex must sell the shares, in an open market sale, on Nasdaq or on a national
securities exchange and in the event of an agreed upon sale, 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:
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
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, the Commission's opinion is that such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a director, officer or controlling person
asserts 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) in connection with the shares, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and we will be governed by the final adjudication of such issue.
LEGAL MATTERS
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP, Woodbridge, New
Jersey, has passed upon the legality of the Shares offered by this prospectus.
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
JULY 29, 1999
Until August 23, 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.
