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)
|
Page
|
||
PART
I
|
Financial
Information
|
|
Item
1.
|
Financial
Statements & Notes
|
1-26
|
Item
2.
|
Managements
Discussion & Analysis of Financial Condition and Results of
Operations
|
27-37
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
37
|
Item
4.
|
Controls
and Procedures
|
38
|
PART II |
Other
Information Required in Report
|
|
Item
1.
|
Legal
Proceedings
|
39
|
Item
6.
|
Exhibits
|
40
|
Signatures
Page
|
41
|
|
Exhibits/Certifications
|
42-45
|
ASSETS
|
|||||||
March
31,
2007
|
June
30,
2006
|
||||||
(Unaudited)
|
|||||||
|
|||||||
CURRENT
ASSETS
|
|||||||
Cash
|
$
|
184
|
$
|
1,438
|
|||
Accounts
receivable, net
|
14,109
|
14,212
|
|||||
Inventories
|
12,117
|
8,706
|
|||||
Prepaid
expenses and other current assets
|
1,564
|
1,316
|
|||||
Assets
held for sale
|
538
|
—
|
|||||
Deferred
tax assets
|
83
|
1,321
|
|||||
Total
Current Assets
|
28,595
|
26,993
|
|||||
Land,
building and equipment, net
|
32,385
|
29,069
|
|||||
Deferred
tax assets
|
7,744
|
4,849
|
|||||
Investment
in APR, LLC
|
1,023
|
1,023
|
|||||
Other
assets
|
1,168
|
933
|
|||||
TOTAL
ASSETS
|
$
|
70,915
|
$
|
62,867
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
March
31,
2007
|
June
30,
2006
|
||||||
(Unaudited)
|
|||||||
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Current
maturities of long-term debt
|
$
|
2,090
|
$
|
1,686
|
|||
Accounts
payable, accrued expenses and other liabilities
|
15,027
|
12,650
|
|||||
Liabilities
held for sale
|
377
|
—
|
|||||
Deferred
revenue
|
—
|
3,399
|
|||||
Total
Current Liabilities
|
17,494
|
17,735
|
|||||
OTHER
LIABILITIES
|
|||||||
Long-term
debt, less current maturities
|
14,585
|
13,952
|
|||||
Contract
termination liability
|
1,330
|
—
|
|||||
Other
liabilities
|
—
|
125
|
|||||
Total
Other Liabilities
|
15,915
|
14,077
|
|||||
TOTAL
LIABILITIES
|
33,409
|
31,812
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
Series
B-1 Redeemable Convertible Preferred Stock:
15
shares authorized; issued and outstanding - 10 at March 31, 2007
and
June 30, 2006; liquidation preference of $10,000
|
8,155
|
8,225
|
|||||
Series
C-1 Redeemable Convertible Preferred Stock:
10
shares authorized; issued and outstanding - 10 at March
31, 2007; liquidation preference of $10,000
|
8,352
|
—
|
|||||
STOCKHOLDERS’
EQUITY
|
|||||||
Preferred
stocks, 10,000 shares authorized; issued and outstanding
- 5,132 and 5,141 at March 31, 2007 and June 30, 2006, respectively;
aggregate liquidation preference of $3,588 and $4,291 at March
31, 2007 and June 30, 2006, respectively
|
51
|
51
|
|||||
Common
stock, $0.01 par value, 150,000 and 65,569 shares authorized and
issued, respectively, at March 31, 2007, and 70,000 and 64,537
shares
authorized and issued, respectively, at June 30, 2006.
|
656
|
645
|
|||||
Additional
paid-in capital
|
28,885
|
24,196
|
|||||
Stock
subscription receivable
|
—
|
(90
|
)
|
||||
Accumulated
other comprehensive income
|
114
|
98
|
|||||
Accumulated
deficit
|
(8,707
|
)
|
(2,070
|
)
|
|||
TOTAL
STOCKHOLDERS’ EQUITY
|
20,999
|
22,830
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
70,915
|
$
|
62,867
|
Three
Months Ended
March
31,
|
|
Nine
Months Ended
March
31,
|
|||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||||
SALES,
Net
|
$
|
19,910
|
$
|
16,110
|
$
|
60,215
|
$
|
46,869
|
|||||
|
|||||||||||||
COST
OF SALES
(including related-party rent expense of $204 and $446 for the
three and
nine months ended March 31, 2007 and $102 and $306 for the three
and nine
months ended March 31, 2006, respectively)
|
13,535
|
12,111
|
40,828
|
33,708
|
|||||||||
GROSS
PROFIT
|
6,375
|
3,999
|
19,387
|
13,161
|
|||||||||
|
|||||||||||||
OPERATING
EXPENSES
|
|||||||||||||
Selling,
general and administrative
|
3,882
|
3,263
|
9,675
|
7,901
|
|||||||||
Related
party rent
|
36
|
18
|
79
|
54
|
|||||||||
Research
and development
|
4,711
|
2,975
|
13,001
|
7,006
|
|||||||||
TOTAL
OPERATING EXPENSES
|
8,629
|
6,256
|
22,755
|
14,961
|
|||||||||
OPERATING
LOSS
|
(2,254
|
)
|
(2,257
|
)
|
(3,368
|
)
|
(1,800
|
)
|
|||||
OTHER
(EXPENSE) INCOME
|
|||||||||||||
Contract
termination expense
|
—
|
—
|
(1,655
|
)
|
—
|
||||||||
Interest
expense, net
|
(289
|
)
|
(170
|
)
|
(816
|
)
|
(359
|
)
|
|||||
Asset
impairment
|
(101
|
)
|
—
|
(101
|
)
|
—
|
|||||||
Other
|
46
|
2
|
(75
|
)
|
(5
|
)
|
|||||||
TOTAL
OTHER EXPENSE
|
(344
|
)
|
(168
|
)
|
(2,647
|
)
|
(364
|
)
|
|||||
LOSS
BEFORE INCOME TAXES
|
(2,598
|
)
|
(2,425
|
)
|
(6,015
|
)
|
(2,164
|
)
|
|||||
BENEFIT
FROM INCOME TAXES
|
(746
|
)
|
(926
|
)
|
(1,668
|
)
|
(828
|
)
|
|||||
NET
LOSS
|
(1,852
|
)
|
(1,499
|
)
|
(4,347
|
)
|
(1,336
|
)
|
|||||
Series
C-1 preferred stock beneficial conversion feature
|
—
|
—
|
1,094
|
—
|
|||||||||
Preferred
stock dividends
|
454
|
98
|
1,196
|
181
|
|||||||||
NET
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(2,306
|
)
|
$
|
(1,597
|
)
|
$
|
(6,637
|
)
|
$
|
(1,517
|
)
|
|
EARNINGS
(LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
|||||||||||||
Basic
and diluted loss per share
|
$
|
(0.04
|
)
|
$
|
(0.05
|
)
|
$
|
(0.10
|
)
|
$
|
(0.05
|
)
|
|
Basic
and diluted weighted average shares and equivalent shares outstanding
|
65,380
|
32,464
|
65,052
|
32,423
|
Preferred
Stock
|
Common
Stock
|
Paid-In
|
Subscription
|
Accumulated
Other Comprehensive |
Accumulated
|
Stockholders’
|
||||||||||||||||||||||
Shares | Amount |
Shares
|
Amount
|
Capital | Receivable | Income |
Deficit
|
Equity
|
||||||||||||||||||||
BALANCE-
July 1, 2006
|
5,141
|
$
|
51
|
64,537
|
$
|
645
|
$
|
24,196
|
$
|
(90
|
)
|
$
|
98
|
$
|
(2,070
|
)
|
$
|
22,830
|
||||||||||
Accrued
dividends - Series B-1
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(206
|
)
|
(206
|
)
|
|||||||||||||||||
Accrued
dividends - Series C-1
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(206
|
)
|
(206
|
)
|
|||||||||||||||||
Series
C-1 Preferred beneficial conversion feature
|
—
|
—
|
—
|
—
|
1,094
|
—
|
—
|
(1,094
|
)
|
—
|
||||||||||||||||||
Series
B-1 dividends paid with common stock
|
—
|
—
|
299
|
3
|
488
|
—
|
—
|
(413
|
)
|
78
|
||||||||||||||||||
Series
C-1 dividends paid with common stock
|
122
|
2
|
245
|
—
|
—
|
(247
|
)
|
—
|
||||||||||||||||||||
Dividends
declared - Series A-1
|
—
|
—
|
—
|
—
|
—
|
—
|
(124
|
)
|
(124
|
)
|
||||||||||||||||||
Shares
issued for options exercised
|
—
|
—
|
602
|
6
|
387
|
—
|
—
|
—
|
393
|
|||||||||||||||||||
Conversion
of Series A preferred stock
|
(7
|
)
|
—
|
7
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Conversion
of Series B preferred stock
|
(2
|
)
|
—
|
2
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Fair
value of warrants issued
|
—
|
—
|
—
|
—
|
1,641
|
—
|
—
|
—
|
1,641
|
|||||||||||||||||||
Stock
based compensation and modification expense
|
—
|
—
|
—
|
—
|
834
|
—
|
—
|
—
|
834
|
|||||||||||||||||||
Collections
on stock subscription receivable
|
—
|
—
|
—
|
—
|
—
|
90
|
—
|
—
|
90
|
|||||||||||||||||||
Change
in fair value of interest rate swap
|
—
|
—
|
—
|
—
|
—
|
—
|
16
|
—
|
16
|
|||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(4,347
|
)
|
(4,347
|
)
|
|||||||||||||||||
BALANCE
-
March 31, 2007
|
5,132
|
$
|
51
|
65,569
|
$
|
656
|
$
|
28,885
|
$
|
—
|
$
|
114
|
$
|
(8,707
|
)
|
$
|
20,999
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
NET
LOSS
|
$
|
(1,852
|
)
|
$
|
(1,499
|
)
|
$
|
(4,347
|
)
|
$
|
(1,336
|
)
|
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|||||||||||||
Change
in fair value of interest rate swap
|
31
|
(12
|
)
|
16
|
(12
|
)
|
|||||||
TOTAL
COMPREHENSIVE LOSS
|
$
|
(1,821
|
)
|
$
|
(1,511
|
)
|
$
|
(4,331
|
)
|
$
|
(1,348
|
)
|
Nine
Months Ended
March
31,
|
|||||||
|
2007
|
2006
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
loss from continuing operations
|
$
|
(4,347
|
)
|
$
|
(1,336
|
)
|
|
Adjustments
to reconcile net loss to net cash (used in) provided by operating
activities:
|
|||||||
Bad
debt expense
|
55
|
11
|
|||||
Asset
impairment
|
101
|
—
|
|||||
Accreted
non-cash interest expense
|
54
|
—
|
|||||
Depreciation
and amortization
|
1,671
|
1,062
|
|||||
Stock
based compensation expense
|
834
|
1,004
|
|||||
Contract
termination expense
|
1,655
|
—
|
|||||
Deferred
tax benefit
|
(1,657
|
)
|
(800
|
)
|
|||
Loss
on disposal of fixed assets
|
75
|
5
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
49
|
(2,258
|
)
|
||||
Inventories
|
(3,412
|
)
|
(346
|
)
|
|||
Prepaid
expenses and other current assets
|
(272
|
)
|
(635
|
)
|
|||
Accounts
payable, accrued expenses and other liabilities
|
1,743
|
6,803
|
|||||
Deferred
revenue
|
(3,399
|
)
|
2,296
|
||||
Total
adjustments
|
(2,503
|
)
|
7,142
|
||||
NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
(6,850
|
)
|
5,806
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchases
of building and equipment, net
|
(4,992
|
)
|
(6,621
|
)
|
|||
Proceeds
from sale of equipment
|
129
|
—
|
|||||
Deposits
and other long-term assets
|
(706
|
)
|
(604
|
)
|
|||
NET
CASH USED IN INVESTING ACTIVITIES
|
(5,569
|
)
|
(7,225
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Proceeds
from sale of Series C-1 preferred stock and warrants, net
|
9,993
|
—
|
|||||
Expenditures
relating to sale of Series B-1 preferred stock and
warrants
|
(70
|
)
|
—
|
||||
Proceeds
from options exercised
|
393
|
—
|
|||||
Proceeds
from long-term debt
|
2,240
|
8,654
|
|||||
Payment
of Series A-1 dividends
|
(124
|
)
|
(165
|
)
|
|||
Payment
of deferred financing costs
|
—
|
(270
|
)
|
||||
Collections
on stock subscription receivable
|
90
|
21
|
|||||
Repayment
of bank line of credit, net
|
—
|
(6,728
|
)
|
||||
Repayments
of long-term debt
|
(1,357
|
)
|
(376
|
)
|
|||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
11,165
|
1,136
|
|||||
NET
DECREASE IN CASH
|
(1,254
|
)
|
(283
|
)
|
|||
CASH
-
Beginning
|
1,438
|
537
|
|||||
CASH
-
Ending
|
$
|
184
|
$
|
254
|
Nine
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|||||||
Cash
paid during the periods for:
|
|||||||
Interest
|
$
|
934
|
$
|
273
|
|||
Income
taxes
|
$
|
—
|
$
|
15
|
|||
Non-Cash
Investing or Financing Transactions:
|
|||||||
Issuance
of common stock in exchange for subscription receivable
|
$
|
—
|
$
|
133
|
|||
Acquisition
of machinery and equipment in exchange for capital lease
payable
|
$
|
156
|
$
|
128
|
|||
Reclassification
of equipment deposits to building and equipment
|
$
|
410
|
$
|
771
|
|||
Series
B-1 dividends paid with common stock
|
$
|
491
|
$
|
—
|
|||
Series
C-1 dividends paid with common stock
|
$
|
247
|
$
|
—
|
|||
Accrual
of Series B-1 dividends
|
$
|
206
|
$
|
—
|
|||
Accrual
of Series C-1 dividends
|
$
|
206
|
$
|
—
|
|||
Change
in fair value of interest rate swap
|
$
|
16
|
$
|
12
|
|||
Repayment
of debt with proceeds from new credit facility
|
$
|
—
|
$
|
20,445
|
|||
Declaration
of preferred dividends
|
$
|
—
|
$
|
124
|
|
Nine
Months Ended March
31, |
||||||
|
2007
|
2006
|
|||||
Reserve
balance - beginning
|
$
|
2,315
|
$
|
425
|
|||
|
|||||||
Actual
chargebacks, discounts and other credits taken in the current period
(a)
|
(8,359
|
)
|
(3,620
|
)
|
|||
|
|||||||
Current
provision related to current period sales
|
9,354
|
5,105
|
|||||
Reserve
balance - ending
|
$
|
3,310
|
$
|
1,910
|
(a) |
Actual
chargebacks discounts and other credits are determined based upon
the
customer’s application of amounts taken against the accounts receivable
balance.
|
March
31,
2007
|
June
30,
2006
|
||||||
(Unaudited)
|
|||||||
Finished
goods
|
$
|
2,124
|
$
|
1,781
|
|||
Work
in process
|
5,618
|
3,685
|
|||||
Raw
materials
|
3,952
|
2,928
|
|||||
Packaging
materials
|
423
|
312
|
|||||
Total
|
$
|
12,117
|
$
|
8,706
|
|
|
March
31, 2007 |
|
June
30, 2006 |
|
Estimated
Useful Lives |
|
|||
|
|
(Unaudited)
|
|
|
|
|
||||
Land
|
$
|
4,924
|
$
|
4,924
|
—
|
|||||
Building
|
12,460
|
12,460
|
39
Years
|
|||||||
Machinery
and equipment
|
15,560
|
12,657
|
5-7
Years
|
|||||||
Computer
equipment
|
1,228
|
151
|
5
Years
|
|||||||
Construction
in Progress
|
243
|
587
|
—
|
|||||||
Furniture
and fixtures
|
765
|
660
|
5
Years
|
|||||||
Leasehold
improvements
|
3,913
|
3,206
|
5-15
Years
|
|||||||
39,093
|
34,645
|
|||||||||
Less:
accumulated depreciation and amortization
|
6,708
|
5,576
|
||||||||
|
||||||||||
Land,
Building and Equipment, net
|
$
|
32,385
|
$
|
29,069
|
March
31,
2007
|
June
30,
2006
|
||||||
(Unaudited)
|
|||||||
Inventory
purchases
|
$
|
7,141
|
$
|
5,734
|
|||
Research
and development expenses
|
1,978
|
2,068
|
|||||
Other
|
5,908
|
4,848
|
|||||
|
|||||||
Total
|
$
|
15,027
|
$
|
12,650
|
March
31,
2007
|
June
30,
2006
|
||||||
(Unaudited)
|
|||||||
Revolving
credit facility
|
$
|
—
|
$
|
—
|
|||
Real
estate term loan
|
11,133
|
11,734
|
|||||
Machinery
and equipment term loans
|
5,386
|
3,833
|
|||||
Capital
leases
|
197
|
72
|
|||||
16,716
|
15,639
|
||||||
Less:
amount representing interest on capital leases
|
41
|
1
|
|||||
Total
long-term debt
|
16,675
|
15,638
|
|||||
|
|||||||
Less:
current maturities
|
2,090
|
1,686
|
|||||
|
|||||||
Long-term
debt, less current maturities
|
$
|
14,585
|
$
|
13,952
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Numerator:
|
|||||||||||||
Net
loss
|
$
|
(1,852
|
)
|
$
|
(1,499
|
)
|
$
|
(4,347
|
)
|
$
|
(1,336
|
)
|
|
Less:
Preferred stock dividends
|
|||||||||||||
Series
A-1
|
(42
|
)
|
(98
|
)
|
(124
|
)
|
(181
|
)
|
|||||
Series
B-1
|
(206
|
)
|
—
|
(619
|
)
|
—
|
|||||||
Series
C-1
|
(206
|
)
|
—
|
(453
|
)
|
—
|
|||||||
Less:
Series C-1 beneficial conversion feature
|
—
|
—
|
(1,094
|
)
|
—
|
||||||||
Net
loss attributable to
common stock stockholders
|
|
(2,306
|
)
|
|
(1,597
|
)
|
$
|
(6,637
|
)
|
$
|
(1,517
|
)
|
Denominator:
|
|||||||||||||
Denominator
for basic and diluted EPS weighted
average shares outstanding
|
65,380
|
32,464
|
65,052
|
32,423
|
|||||||||
Basic
and diluted loss per share:
|
$
|
(0.04
|
)
|
$
|
(0.05
|
)
|
$
|
(0.10
|
)
|
$
|
(0.05
|
)
|
Common
stock outstanding
|
65,569
|
|||
Stock
options outstanding
|
12,636
|
|||
Warrants
outstanding
|
4,564
|
|||
Common
stock issuable upon conversion of preferred stocks:
|
||||
Series
C
|
6
|
|||
Series
A-1 (maximum contingent conversion) (a)
|
4,855
|
|||
Series
B-1
|
6,520
|
|||
Series
C-1
|
6,520
|
|||
Total
(b)
|
100,670
|
(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) |
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 November
16, 2016
(the end of the current vesting and conversion
periods).
|
|
Shares
Issued
|
|
|
|||
Shares
|
And
|
Par
Value
|
Liquidation
|
|||
Authorized
|
Outstanding
|
Per
Share
|
Preference
|
|||
15
|
10
|
$100
|
$10,000
|
|
Shares
Issued
|
|
|
|||
Shares
|
And
|
Par
Value
|
Liquidation
|
|||
Authorized
|
Outstanding
|
Per
Share
|
Preference
|
|||
10
|
10
|
$100
|
$10,000
|
· |
602
shares, resulting in $393 proceeds, in connection with exercises
of
options to purchase the Company’s common
stock;
|
· |
299
and 122 shares were issued to Series B-1 and C-1 preferred stock
shareholders, respectively, in settlement of dividends earned through
December 31, 2006;
|
· |
7
and 2 shares were issued to Series A and B shareholders, respectively,
in
connection with the conversion of Series A and B resulting from the
July
18, 2006, amendment to the Company’s Article of
Incorporation.
|
· |
the
Company recognized approximately $24 as an expense in connection
with 100
previously issued stock appreciation rights (“SARs”). The SARs must be
exercised between July 1, 2008 and December 31, 2008. The SARs are
recorded at fair value and are marked to market at each reporting
period.
As of March 31, 2007, the total liability related to the SARs is
$83;
|
· |
total
unrecognized compensation cost related to stock options granted was
$2,083. The unrecognized stock option compensation cost is expected
to be
recognized over a weighted-average period of approximately 2.56
years;
|
· |
total
options outstanding and total vested options outstanding to purchase
the
Company’s common stock as of March 31, 2007, amounted to
12,636 and
9,516, respectively;
|
· |
162
options to purchase the Company’s common stock were issued to members of
the Company’s Board of Directors at the market price on the date of the
grant and had vesting periods ranging from immediate to one year
from the
date of issuance;
|
· |
in
connection with separation agreements involving two employees, the
Company
extended the exercise period of 155 options, 10 of which were exercised
prior to December 31, 2006; 90 were forfeited as of December 31,
2006, the
balance of 55 has been extended to September 20, 2008. As a result
of
these transactions, the Company recognized $12 expense during the
quarter
ended December 31, 2006.
|
· |
1,243
options to purchase the Company’s common stock were issued to employees of
the Company at the market price on the date of the grant and vest
over
3.28 years from the date of issuance. Of this amount, 445 were
performanced based options.
|
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Customer
“A”
|
22
|
%
|
*
|
17
|
%
|
*
|
|||||||
Customer
“B”
|
13
|
%
|
10
|
%
|
16
|
%
|
12
|
%
|
|||||
Customer
“C”
|
*
|
24
|
%
|
11
|
%
|
14
|
%
|
||||||
Customer
“D”
|
*
|
15
|
%
|
*
|
14
|
%
|
|||||||
Customer
“E”
|
*
|
*
|
*
|
10
|
%
|
* |
Sales
to customer were less than 10%
|
March
31,
2007
|
||||
Customer
“A”
|
$
|
3,113
|
||
Customer
“B”
|
$
|
2,118
|
||
Customer
“C”
|
$
|
488
|
||
Customer
“D”
|
$
|
1,257
|
||
Customer
“E”
|
$
|
1,372
|
Cash
|
$
|
233
|
||
Land
|
305
|
|||
Assets
held for sale
|
$
|
538
|
||
Accrued
expenses
|
$
|
205
|
||
Due
to related party
|
172
|
|||
Liabilities
held for sale
|
$
|
377
|
Three
Month Periods Ended March
|
|||||||||||||
2007
|
2006
|
||||||||||||
Sales
|
%
of
Sales
|
Sales
|
%
of
Sales
|
||||||||||
Ibuprofen
|
$
|
7,014
|
35.2
|
$
|
8,888
|
55.2
|
|||||||
Bactrim®
|
5,595
|
28.1
|
1,496
|
9.3
|
|||||||||
Naproxen
|
3,422
|
17.2
|
2,354
|
14.6
|
|||||||||
Female
hormone product
|
2,584
|
13.0
|
1,569
|
9.7
|
|||||||||
Hydrocodone/Ibuprofen
|
769
|
3.9
|
1,277
|
7.9
|
|||||||||
Hydrocodone/Acetaminophen
|
369
|
1.8
|
0
|
0.0
|
|||||||||
All
Other Products
|
157
|
0.8
|
526
|
3.3
|
|||||||||
Total
|
$
|
19,910
|
100.0
|
%
|
$
|
16,110
|
100.0
|
%
|
Nine
Month Periods Ended March
|
|||||||||||||
2007
|
2006
|
||||||||||||
Sales
|
%
of
Sales
|
Sales
|
%
of
Sales
|
||||||||||
Ibuprofen
|
$
|
24,187
|
40.2
|
$
|
25,566
|
54.5
|
|||||||
Bactrim®
|
14,899
|
24.7
|
3,412
|
7.3
|
|||||||||
Female
hormone product
|
9,374
|
15.5
|
5,471
|
11.7
|
|||||||||
Naproxen
|
8,943
|
14.9
|
5,751
|
12.2
|
|||||||||
Hydrocodone/Ibuprofen
|
1,799
|
3.0
|
2,941
|
6.3
|
|||||||||
Hydrocodone/Acetaminophen
|
369
|
0.6
|
0
|
0.0
|
|||||||||
All
Other Products
|
644
|
1.1
|
3,728
|
8.0
|
|||||||||
Total
|
$
|
60,215
|
100
|
%
|
$
|
46,869
|
100
|
%
|
· |
Net
sales of Ibuprofen for the three month period ended March 2007 decreased
$1,874, or 21.1%, as compared to sales for the three months ended
March
2006. We have been working with our suppliers to obtain adequate
supplies
of Ibuprofen raw material. We are currently attempting to qualify
an
additional source of Ibuprofen, and we are making efforts to ensure
that
our suppliers maintain adequate levels of inventory sufficient to
enable
us to increase our overall production. We believe sales of Ibuprofen
should increase for the balance of this fiscal year, however, there
can be
no assurance that this will occur. Net sales of Ibuprofen products
for the
nine month period ended March 2007 decreased by $1,379, or 5.4%,
when
compared to the nine month period ended March 2006, due largely to
the
material supply issues described
above.
|
· |
As
a result of our success in increasing the number of major accounts,
sales
of Naproxen continued to increase. Net sales for the three month
period
ended March 2007 increased $1,068, or 45.4%, as compared to sales
for the
three month period ended March 2006. During the nine month period
ended
March 2007, Naproxen net sales increased $3,192, or 55.5%, as compared
to
sales for the same nine month period of the prior fiscal year.
|
· |
Net
sales of our female hormone products in the three months ended March
2007
increased $1,015, or 64.7%, as compared to sales for the three month
period ended March 2006. The supply chain issues that delayed certain
of
our product shipments in the three months ended December 2006 were
corrected in the three months ended March 2007, which enabled the
Company
to satisfy the majority of our open orders in the March 2007 quarter.
Also, as previously reported and as a result of market conditions,
on
October 27, 2006, we amended our agreement with Centrix Pharmaceuticals,
Inc. (“Centrix”). Commencing November 2006, Centrix agreed to purchase
over a twelve month period, 40% more bottles than the initial year
of the
agreement at a discounted price with a provision for profit sharing.
Under
the amended agreement, the parties will share net profits as defined
in
the agreement. The amendment has a one year term, after which time
the original Centrix agreement shall again be in full force and effect.
Net sales of these products in the nine month period ended March
2007
increased $3,903, or 71.3%, as compared to sales for the nine month
period
ended March 2006, due primarily to a higher volume of units shipped
during
the current fiscal year to date period. As a result of the amended
agreement, we believe that net sales for the fiscal year ending June
2007
should exceed sales recorded during the fiscal year ended June 2006;
however, there can be no assurance that this will occur.
|
· |
For
both the three month period and nine month period ended March 2007,
we
significantly increased our market share of Sulfamethoxazole -
Trimethoprim in two strengths 400mg / 80mg commonly referred to as
generic
Bactrim® and 800mg / 160mg or commonly referred to as Bactrim-DS® (both,
“Bactrim”). Sales increased to $5,595 during the three month period ended
March 2007 from $1,496 in the three months ended March 2006, primarily
as
a result of two significant factors: (i) our entering into sales
and
marketing arrangements with two major distributors which include
net
profit sharing arrangements; and (ii) favorable pricing conditions
in the
market. Net sales of Bactrim for the nine month period ended March
2007
increased to $14,899, as compared to $3,412 for the nine month period
ended March 2006. The difficulties experienced in obtaining quantities
of
a key ingredient for these products during the three months ended
December
2006 have been addressed and corrected, and this facilitated the
higher
level of sales in the March 2007 quarter.
|
· |
On
October 3, 2006, we entered into a termination and release agreement
(the
“Termination Agreement”) with Watson terminating the Manufacturing and
Supply Agreement dated as of October 14, 2003 pursuant to which we
manufactured and supplied and Watson distributed and sold generic
Vicoprofen® (7.5 mg hydrocodone bitartrate/200 mg ibuprofen) tablets. As a
result of the Termination Agreement we obtained all rights to market
this
product. Net sales of this product for the three month period ended
March
2007, decreased 39.8% to $769 as compared to $1,277 for the same
period in
2006. Net sales of this product for the nine month period ended March
2007
were $1,799, as compared to $2,941 during the nine month period ended
March 2006. While not a material factor affecting our overall net
sales
recognized during the current quarter, market prices for this product
have
significantly decreased, which will likely affect our net sales and
gross
margins at least until the end of our fiscal year or when market
conditions may change.
|
Cash
|
$
|
233
|
||
Land
|
305
|
|||
Assets
held for sale
|
$
|
538
|
||
Accrued
expenses
|
$
|
205
|
||
Due
to related party
|
172
|
|||
Liabilities
held for sale
|
$
|
377
|