Delaware | 13-3673965 |
State or other jurisdiction of | (I.R.S. Employer |
corporation or organization) | Identification Number) |
75 Adams Avenue, Hauppauge, New York | 11788 |
(Address of principal executive offices) | (Zip Code) |
PART
I
|
Financial
Information
|
Page
|
|
Item
1.
|
Financial
Statements & Notes
|
1-20
|
|
Item
2.
|
Managements
Discussion & Analysis of Financial Condition and Results of
Operations
|
21-29
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
29
|
|
Item
4.
|
Controls
and Procedures
|
30
|
|
PART II | Other Information Required in Report | ||
Item
6
|
Exhibits
|
31
|
|
Forward
Looking Statements and Associated Risks
|
32
|
||
Signatures
Page
|
33
|
||
Exhibits/Certifications
|
34-37
|
March
31,
2006
|
June
30,
2005
|
||||||
CURRENT
ASSETS
|
(Unaudited)
|
||||||
Cash
and cash equivalents
|
$
|
254
|
$
|
537
|
|||
Accounts
receivable, net
|
9,910
|
7,664
|
|||||
Inventories
|
9,287
|
8,941
|
|||||
Prepaid
expenses and other current assets
|
1,791
|
1,156
|
|||||
Deferred
tax assets
|
87
|
87
|
|||||
Total
Current Assets
|
21,329
|
18,385
|
|||||
Land,
building and equipment, net
|
28,289
|
21,872
|
|||||
Deferred
tax assets
|
5,126
|
4,326
|
|||||
Investment
in APR, LLC
|
1,022
|
1,022
|
|||||
Deposits
|
650
|
785
|
|||||
Deferred
financing costs
|
274
|
--
|
|||||
TOTAL
ASSETS
|
$
|
56,690
|
$
|
46,390
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Current
maturities of long-term debt
|
$
|
4,826
|
$
|
10,340
|
|||
Accounts
payable, accrued expenses and other liabilities
|
12,822
|
6,233
|
|||||
Deferred
revenue
|
2,296
|
--
|
|||||
Total
Current Liabilities
|
19,944
|
16,573
|
|||||
OTHER
LIABILITIES
|
|||||||
Long-term
debt, less current maturities
|
13,883
|
6,691
|
|||||
Other
liabilities
|
199
|
15
|
|||||
TOTAL
LIABILITIES
|
34,026
|
23,279
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS’
EQUITY
|
|||||||
Preferred
stock, 10,000,000 shares authorized; issued and
outstanding
- 6,607,561 and 6,608,233 at March 31, 2006 and
June
30, 2005, respectively; aggregate liquidation preference of
$4,365,591
and $4,366,263 at March 31, 2006 and June 30,
2005,
respectively
|
343
|
343
|
|||||
Common
stock, $0.01 par value, 70,000,000 shares authorized;
shares
issued - 32,463,607 at March 31, 2006 and 32,338,607
at
June 30, 2005
|
325
|
324
|
|||||
Additional
paid-in capital
|
22,500
|
19,104
|
|||||
Stock
subscription receivable
|
(112
|
)
|
--
|
||||
Accumulated
other comprehensive loss
|
(12
|
)
|
--
|
||||
Unearned
stock based compensation
|
(2,260
|
)
|
--
|
||||
Retained
earnings
|
1,880
|
3,340
|
|||||
TOTAL
STOCKHOLDERS’ EQUITY
|
22,664
|
23,111
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ |
56,690
|
$ |
46,390
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
SALES,
Net
|
$
|
16,110
|
$
|
10,670
|
$
|
46,869
|
$
|
28,561
|
|||||
|
|||||||||||||
COST
OF SALES
(including related party rent expense of $102 and $306 for the three
and
nine months ended March 31, 2006 and 2005, respectively)
|
12,111
|
8,398
|
33,708
|
21,755
|
|||||||||
GROSS
PROFIT
|
3,999
|
2,272
|
13,161
|
6,806
|
|||||||||
|
|||||||||||||
OPERATING
EXPENSES
|
|||||||||||||
Selling,
general and administrative
|
3,263
|
1,580
|
7,901
|
3,893
|
|||||||||
Related
party rent
|
18
|
18
|
54
|
54
|
|||||||||
Research
and development
|
2,975
|
1,659
|
7,006
|
2,198
|
|||||||||
TOTAL
OPERATING EXPENSES
|
6,256
|
3,257
|
14,961
|
6,145
|
|||||||||
OPERATING
(LOSS) INCOME
|
(2,257
|
)
|
(985
|
)
|
(1,800
|
)
|
661
|
||||||
OTHER
(EXPENSE) INCOME
|
|||||||||||||
Interest
expense, net
|
(170
|
)
|
(22
|
)
|
(359
|
)
|
(25
|
)
|
|||||
Gain (loss) on disposal of fixed assets | 2 | -- | (5 | ) | -- | ||||||||
Gain
on sale of marketable securities
|
--
|
--
|
--
|
9
|
|||||||||
TOTAL
OTHER EXPENSE
|
(168
|
)
|
(22
|
)
|
(364
|
)
|
(16
|
)
|
|||||
(LOSS)
INCOME BEFORE INCOME TAXES
|
(2,425
|
)
|
(1,007
|
)
|
(2,164
|
)
|
645
|
||||||
(BENEFIT
FROM) PROVISION FOR INCOME TAXES
|
(926
|
)
|
(373
|
)
|
(828
|
)
|
240
|
||||||
NET
(LOSS) INCOME
|
(1,499
|
)
|
(634
|
)
|
(1,336
|
)
|
405
|
||||||
INCOME
ATTRIBUTABLE TO PREFERRED STOCKHOLDERS
|
98
|
41
|
181
|
143
|
|||||||||
NET
(LOSS) INCOME ATTRIBUTABLE TO
COMMON
STOCKHOLDERS
|
$
|
(1,597
|
)
|
$
|
(675
|
)
|
$
|
(1,517
|
)
|
$
|
262
|
||
EARNINGS
PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
|||||||||||||
Basic
(loss) earnings per share
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
0.01
|
||
Diluted
(loss) earnings per share
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
0.00
|
||
Basic
weighted average shares outstanding
|
32,464
|
24,967
|
32,423
|
24,967
|
|||||||||
Diluted
weighted average shares and equivalent shares outstanding
|
32,464
|
24,967
|
32,423
|
67,702
|
Additional
Paid-In
Capital
|
Stock
Subscription
Receivable
|
Accumulated
Other
Comprehensive
Loss
|
Unearned
Stock
Based
Compensation
|
Retained
Earnings
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||||||||||||
BALANCE
-
July 1, 2005
|
6,608
|
$
|
343
|
32,339
|
$
|
324
|
$
|
19,104
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
3,340
|
$
|
23,111
|
|||||||||||||
Dividends
Declared - Series A-1
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(124
|
)
|
(124
|
)
|
|||||||||||||||||||
Fair
value of unvested stock options upon adoption of FAS 123
(R)
|
--
|
--
|
--
|
--
|
2,739
|
--
|
--
|
(2,739
|
)
|
--
|
--
|
||||||||||||||||||||
Fair
value of stock options issued during the nine month period ended
March 31,
2006
|
--
|
--
|
--
|
--
|
323
|
--
|
--
|
(323
|
)
|
--
|
--
|
||||||||||||||||||||
Modification
of previously issued
stock option award
|
--
|
--
|
--
|
--
|
202
|
--
|
--
|
(202
|
)
|
--
|
--
|
||||||||||||||||||||
Amortization
of unearned stock based compensation
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
1,004
|
--
|
1,004
|
|||||||||||||||||||||
Common
stock subscribed
|
--
|
--
|
125
|
1
|
132
|
(133
|
)
|
--
|
--
|
--
|
--
|
||||||||||||||||||||
Collections
on stock subscription
receivable
|
--
|
--
|
--
|
--
|
--
|
21
|
--
|
--
|
--
|
21
|
|||||||||||||||||||||
Change
in fair value of interest rate swap
|
--
|
--
|
--
|
--
|
--
|
--
|
(12
|
)
|
--
|
--
|
(12
|
)
|
|||||||||||||||||||
Net
loss
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(1,336
|
)
|
(1,336
|
)
|
|||||||||||||||||||
BALANCE
-
March 31, 2006
|
6,608
|
$
|
343
|
32,464
|
$
|
325
|
$
|
22,500
|
$
|
(112
|
)
|
$
|
(12
|
)
|
$
|
(2,260
|
)
|
$
|
1,880
|
$
|
22,664
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
NET
(LOSS) INCOME
|
$
|
(1,499
|
)
|
$
|
(634
|
)
|
$
|
(1,336
|
)
|
$
|
405
|
||
OTHER
COMPREHENSIVE LOSS
|
|||||||||||||
Change
in fair value of interest rate swap
|
(12
|
)
|
--
|
(12
|
)
|
--
|
|||||||
TOTAL
COMPREHENSIVE (LOSS) INCOME
|
$
|
(1,511
|
)
|
$
|
(634
|
)
|
$
|
(1,348
|
)
|
$
|
405
|
Nine
Months Ended
March
31,
|
|||||||
|
2006
|
2005
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
(loss) income
|
$
|
(1,336
|
)
|
$
|
405
|
||
Adjustments
to reconcile net (loss) income to net
|
|||||||
cash
provided by operating activities:
|
|||||||
Gain
on sale of marketable securities
|
--
|
(9
|
)
|
||||
Loss
on disposal of fixed asset
|
5
|
--
|
|||||
Bad
debt expense
|
11
|
||||||
Depreciation
and amortization
|
1,062
|
908
|
|||||
Amortization
of unearned compensation
|
1,004
|
--
|
|||||
Deferred
tax expense
|
(800
|
)
|
210
|
||||
Changes
in operating assets and liabilities
|
|||||||
Accounts
receivable
|
(2,258
|
)
|
337
|
||||
Inventories
|
(346
|
)
|
(3,064
|
)
|
|||
Prepaid
expenses and other current assets
|
(635
|
)
|
(85
|
)
|
|||
Accounts
payable, accrued expenses and other liabilities
|
6,803
|
2,634
|
|||||
Deferred
revenue
|
2,296
|
--
|
|||||
TOTAL
ADJUSTMENTS
|
7,142
|
931
|
|||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
5,806
|
1,336
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchases
of building and equipment
|
(6,621
|
)
|
(5,844
|
)
|
|||
Investment
in APR, LLC
|
--
|
(773
|
)
|
||||
Deposits
and other long-term assets
|
(604
|
)
|
(96
|
)
|
|||
NET
CASH USED IN INVESTING ACTIVITIES
|
(7,225
|
)
|
(6,713
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Repayments
of bank line of credit, net
|
(6,728
|
)
|
(425
|
)
|
|||
Proceeds
from long-term debt
|
8,654
|
5,970
|
|||||
Payment
of Series A-1 preferred stock dividends
|
(165
|
)
|
(179
|
)
|
|||
Collections
on stock subscription receivable
|
21
|
--
|
|||||
Payment
of deferred financing costs
|
(270
|
) |
--
|
||||
Repayments
of long-term debt
|
(376
|
)
|
(246
|
)
|
|||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
1,136
|
5,120
|
|||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(283
|
)
|
(257
|
)
|
|||
CASH
AND CASH EQUIVALENTS
-
Beginning
|
537
|
2,885
|
|||||
|
|||||||
CASH
AND CASH EQUIVALENTS
-
Ending
|
$
|
254
|
$
|
2,628
|
Nine
Months Ended
March
31,
|
|||||||
2006
|
2005
|
||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|||||||
Cash
paid during the periods for:
|
|||||||
Interest
|
$
|
273
|
$
|
201
|
|||
Income
taxes
|
$
|
15
|
$
|
31
|
|||
|
|||||||
Non-Cash
Investing or Financing Transactions:
|
|||||||
Conversion
of Series C preferred stock to common stock
|
$
|
--
|
$
|
2
|
|||
Issuance
of common stock in exchange for subscription receivable
|
$
|
133
|
$
|
--
|
|||
Acquisition
of machinery and equipment in exchange for capital lease
payable
|
$
|
128
|
$
|
--
|
|||
Reclassification
of equipment deposits to building and equipment
|
$
|
771
|
$
|
--
|
|||
Declaration
of Series A-1 preferred dividends
|
$
|
124
|
$
|
--
|
|||
Repayment
of debt with proceeds from new credit facility
|
$
|
20,445
|
$
|
--
|
|||
Retirement
of Treasury Stock
|
$
|
--
|
$
|
798
|
|||
Change
in fair value of interest rate swap
|
$
|
12
|
$
|
--
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||
2005
|
2005
|
||||||
Net
(loss) income, as reported
|
$
|
(634
|
)
|
$
|
405
|
||
|
|||||||
Less:
Stock-based employee
compensation
expense
determined
under fair value-based
method
for all awards, net of income tax
|
9,270
|
10,583
|
|||||
Pro
forma net loss
|
$
|
(9,904
|
)
|
$
|
(10,178
|
)
|
|
Basic
net (loss) income per share
|
|||||||
As
reported
|
$
|
(0.03
|
)
|
$
|
0.01
|
||
Pro
forma
|
$
|
(0.40
|
)
|
$
|
(0.40
|
)
|
|
Diluted
net (loss) income per share
|
|||||||
As
reported
|
$
|
(0.03
|
)
|
$
|
0.00
|
||
Pro
forma
|
$
|
(0.40
|
)
|
$
|
(0.40
|
)
|
March
31,
2006
|
|
June
30,
2005
|
|
||||
|
|
(Unaudited)
|
|
||||
Finished
goods
|
$
|
912
|
$
|
721
|
|||
Work
in process
|
4,952
|
5,539
|
|||||
Raw
materials
|
3,050
|
2,117
|
|||||
Packaging
materials
|
373
|
564
|
|||||
Total
|
$
|
9,287
|
$
|
8,941
|
March
31,
2006
|
June
30,
2005
|
Estimated
Useful
Lives
|
||||||||
(Unaudited)
|
||||||||||
Land
|
$
|
4,924
|
$
|
4,924
|
||||||
Building,
equipment and construction in progress (a)
|
15,635
|
9,314
|
7-20
Years
|
|||||||
Machinery
and equipment
|
8,907
|
8,289
|
5-7
Years
|
|||||||
Furniture
and fixtures
|
772
|
435
|
5
Years
|
|||||||
Leasehold
improvements
|
3,142
|
2,950
|
5-15
Years
|
|||||||
33,380
|
25,912
|
|||||||||
Less:
accumulated depreciation and amortization
|
5,091
|
4,040
|
||||||||
Land,
Building and Equipment, net
|
$
|
28,289
|
$
|
21,872
|
March
31,
2006
|
|
June
30,
2005
|
|
||||
|
|
(Unaudited)
|
|
|
|||
Advised
credit facility
|
$
|
--
|
$
|
9,970
|
|||
Revolving
credit facility
|
3,241
|
--
|
|||||
Real
estate term loan
|
11,933
|
7,061
|
|||||
Machinery
and equipment term loan
|
3,442
|
--
|
|||||
Capital
lease
|
95
|
--
|
|||||
18,711
|
17,031
|
||||||
Less:
amount representing interest on capital lease
|
2
|
--
|
|||||
Total
long-term debt
|
18,709
|
17,031
|
|||||
Less:
current maturities
|
4,826
|
10,340
|
|||||
Long-term
debt, less current maturities
|
$
|
13,883
|
$
|
6,691
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Numerator:
|
|||||||||||||
Net
(loss) income
|
$
|
(1,499
|
)
|
$
|
(634
|
)
|
$
|
(1,336
|
)
|
$
|
405
|
||
Less:
Preferred stock dividends
|
98
|
41
|
181
|
124
|
|||||||||
Less:
Net income attributable to Series K preferred stockholders
|
N/A
|
N/A
|
N/A
|
19
|
|||||||||
Numerator
for basic EPS
|
(1,597
|
)
|
(675
|
)
|
(1,517
|
)
|
262
|
||||||
Effect
of dilutive securities:
|
|||||||||||||
Net
income attributable to Series K preferred stockholders
|
N/A
|
N/A
|
N/A
|
18
|
|||||||||
Numerator
for diluted EPS
|
$
|
(1,597
|
)
|
$
|
(675
|
)
|
$
|
(1,517
|
)
|
$
|
280
|
||
Denominator:
|
|||||||||||||
Denominator
for basic EPS weighted average
shares
outstanding
|
32,464
|
24,967
|
32,423
|
24,967
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Convertible
Series K preferred stock
|
N/A
|
N/A
|
N/A
|
37,649
|
|||||||||
Convertible
Series A, B, C and J preferred stocks
|
N/A
|
N/A
|
N/A
|
7
|
|||||||||
Stock
options
|
N/A
|
N/A
|
N/A
|
5,079
|
|||||||||
Denominator
for diluted EPS
|
32,464
|
24,967
|
32,423
|
67,702
|
|||||||||
Basic
EPS
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
0.01
|
||
Diluted
EPS
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
0.00
|
Common
stock outstanding - March 31, 2006
|
32,463,607
|
|||
Stock
options and warrants outstanding
|
12,791,870
|
|||
Common
stock issuable upon conversion of preferred stocks:
|
||||
Series
A
|
15,222
|
|||
Series
A-1 (maximum contingent conversion) - (a)
|
4,855,389
|
|||
Series
B
|
292
|
|||
Series
C
|
5,571
|
|||
Series
K - (b)
|
31,373,875
|
|||
Total
- (c)
|
81,505,826
|
(a) |
The
Series A-1 shares are convertible only if the Company reaches $150
million
in annual sales or upon a merger, consolidation, sale of assets or
similar
transaction.
|
(b) |
On
June 4, 2006 and on each anniversary date thereon, through June 4,
2010,
292,913 Series K shares will automatically convert into 6,274,775
shares
of the Company’s common stock.
|
(c) |
Assuming
no further issuance of equity instruments, or changes to the equity
structure of the Company, this total represents the maximum number
of
shares of common stock that could be outstanding through February
10, 2016
(the end of the current vesting and conversion
periods).
|
·
|
100,000
performance-based options to employees having exercise prices ranging
from
$1.24 to $1.26 and which vest 25% June 30, 2006 and each subsequent
June
30th
through June 30, 2009;
|
·
|
225,000
non performance-based options to employees having an exercise prices
ranging from $1.24 to $1.40 and which vest ratably over periods
ranging
from three to five years from December 31, 2005 to June 30, 2010;
|
·
|
7,500
fully-vested options to a former Director of the Company, having
an
exercise price of $1.64.
|
·
|
As
consideration for past services provided by a executive officer
of the
Company who suddenly and tragically passed away, the Company’s board of
directors modified a previous grant of 450,000 options, first by
immediately vesting the unvested portion and secondly to extend
the date
upon which they can be exercised to March, 2009. As a result of
this
transaction, the Company recognized as expense approximately $316,000.
The
Company also granted 100,000 SARs exercisable at $1.55 and having
a
maximum cash value of $250,000 payable to the executive officers’ estate.
The SARs are recorded at fair value and are marked to market at
each
reporting period. At March 31, 2006, the Company recognized $75,000
as
expense. The SARs must be exercised between July 1, 2008 and December
31,
2008.
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Customer
“A”
|
24
|
%
|
*
|
14
|
%
|
*
|
|||||||
Customer
“B”
|
15
|
%
|
*
|
14
|
%
|
*
|
|||||||
Customer
“C”
|
10
|
%
|
*
|
12
|
%
|
*
|
|||||||
Customer
“D”
|
*
|
28
|
%
|
10
|
%
|
23
|
%
|
||||||
Customer
“E”
|
*
|
18
|
%
|
*
|
24
|
%
|
|||||||
Customer
“F”
|
*
|
11
|
%
|
*
|
14
|
%
|
March
31, 2006
|
||||
Customer
“A”
|
$
|
2,242
|
||
Customer
“B”
|
1,434
|
|||
Customer
“C”
|
2,228
|
|||
Customer
“D”
|
2,561
|
Three
Months Ended March 31,
|
||||||||||||
2006
Sales
|
|
%
of
Sales
|
2005
Sales
|
%
of
Sales
|
||||||||
Ibuprofen
|
$
|
8,888
|
55
|
$
|
6,188
|
58
|
||||||
Allopurinol
& Atenolol
|
31
|
-0-
|
2,388
|
22
|
||||||||
Naproxen
|
2,354
|
15
|
517
|
5
|
||||||||
Female
hormone product
|
1,569
|
10
|
-0-
|
-0-
|
||||||||
Bactrim
|
1,496
|
9
|
-0-
|
-0-
|
||||||||
All
Other Products
|
1,772
|
11
|
1,577
|
15
|
||||||||
Total
|
$
|
16,110
|
$
|
10,670
|
Nine
Months Ended March 31,
|
||||||||||||
|
2006
Sales
|
%
of
Sales
|
2005
Sales
|
%
of
Sales
|
||||||||
Ibuprofen
|
$
|
25,564
|
55
|
$
|
17,891
|
62
|
||||||
Allopurinol
& Atenolol
|
2,288
|
5
|
5,589
|
20
|
||||||||
Naproxen
|
5,751
|
12
|
1,320
|
5
|
||||||||
Female
hormone product
|
5,471
|
12
|
-0-
|
-0-
|
||||||||
Bactrim
|
2,976
|
6
|
-0-
|
-0-
|
||||||||
All
Other Products
|
4,819
|
10
|
3,761
|
13
|
||||||||
Total
|
$
|
46,869
|
$
|
28,561
|
· |
For
the three and nine month periods ended March 31, 2006, net sales
of
Ibuprofen increased $2.7 million and $7.67 million, respectively,
or 43.6%
and 42.9%, respectively, due, in part to an expanded customer base,
as
well as improvements in production and packaging. We believe sales
of
Ibuprofen should remain at approximately the current level for the
balance
of this fiscal year, however, there can be no assurance that this
will
occur.
|
·
|
Both
Allopurinol and Atenolol are manufactured for and shipped to one customer
based on quantities ordered by that customer. When comparing net
sales for
three and nine month periods ended March 31, 2006 and 2005 there
was a
decrease of $2.36 million and $3.30 million, respectively. A component
of
our plan was to significantly reduce our dependency on sales from
contract
manufacturing arrangements. We anticipate that revenue derived from
sales
of these two products will continue to decrease during the remainder
of
the current fiscal year. The manufacturing capacity gained from the
decrease in production of these two products is being used for other
products. Additionally, with respect to our agreements with United
Research Laboratories, Inc. and Mutual Pharmaceutical Company, Inc.,
we
manufacture two other products which have nominal
sales.
|
· |
As
a result of our marketing initiatives, we have been successful in
obtaining new customers for our products. As discussed in previous
filings, we were awarded a U.S. Government contract to supply Naproxen
to
various governmental agencies. The contract is for approximately
$3.9
million for the twelve month period beginning September 22, 2005.
As a
result, our sales for Naproxen increased by $1.84 million in the
current
quarter compared to same quarter of the prior year and $4.43 million
when
comparing the nine months ended March 31, 2006, to the same period
in the
last fiscal year. We believe that future net sales of Naproxen should
remain at current sales level for the balance of the fiscal year,
however
there can be no assurance that this will
occur.
|
· |
As
stated above, we began shipping a female hormone therapy product
during
this current fiscal year in accordance with the terms of a multi-year
agreement. Revenue from this product, which is sold in two strengths
to
one customer, aggregated $1.57 million and $5.47 million during the
three
and nine month period ended March 31, 2006, respectively. This product
generates a higher gross margin compared to our other products.
|
· |
We
made our initial shipments of Bactrim during the three month period
ended
December 31, 2005. This quarter we recognized $1.5 million and since
inception, $3.0 million. There is no assurance this level of sales
will
continue.
|
· |
A
significant component of “all other products” is Hydrocodone-7.5
mg/Ibuprofen-200 mg, our generic version of Vicoprofen®. We launched this
product during the three month period ended December 31, 2004. As
this
product, and Reprexain® (Hydrocodone - 5.0 mg/Ibuprofen-200 mg), are sold
to and marketed by, Watson Pharmaceuticals, Inc., it is difficult
to
project future sales. The results for the periods reported include
additional revenue derived from a profit sharing arrangement for
these
products.
|
21.1 |
List
of Subsidiaries.
|
31.1 |
Certification
of Chief Executive Officer pursuant to Rules 13a-14(a) as adopted,
pursuant to Section
302 of the Sarbanes-Oxley
Act of 2002.
|
31.2 |
Certification
of the Chief Financial Officer pursuant to Rules 13a-14(a) as adopted,
pursuant to Section
302 of the Sarbanes-Oxley
Act of 2002.
|
32.2 |
Certifications
of the Chief Executive Officer and the Chief Financial Officer pursuant
to
18 U.S.C. Section
1350 as adopted, pursuant to Section 906 of the Sabanes-Oxley Act
of
2002.
|
INTERPHARM
HOLDINGS, INC.
(Registrant)
|
||
|
|
|
Date: May 15, 2006 | By: | /s/ George Aronson |
George Aronson,
Chief Financial Officer
(Duly authorized to sign on behalf of
registrant)
|
||
Name
of Subsidiary
|
Jurisdiction
|
Ownership
Percentage
|
||
Interpharm,
Inc.
|
New
York
|
100%
|
||
Micro
Computer Store, Inc.
|
New
York
|
100%
|
||
Innovative
Business Micros, Inc.
|
New
York
|
100%
|
||
Logix
Solutions, Inc.
|
Colorado
|
90%
|
||
Saturn
Chemical, LLC
|
New
York
|
100%
|
||
Interpharm
Realty, LLC
|
New
York
|
100%
|
||
Interpharm
Development Private, LTD
|
India
|
100%
|
31.1 |
Certification
of Cameron Reid pursuant to Exchange Act Rules 13(a)-14(a) and 15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002;
|
31.2 |
Certification
of George Aronson pursuant to Exchange Act Rules 13(a)-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of
2002;
|
32.1 |
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002;
|