Elite Pharmaceuticals, Inc. Reports Financial Results for the Third Quarter of Fiscal 2012

Elite Pharmaceuticals, Inc. ELTP -0.86% , a specialty pharmaceutical company dedicated to developing and commercializing generic and branded oral controlled release products announced results for the fiscal third quarter ended December 31, 2011.Consolidated revenues for the quarter ended December 31, 2011 increased by 86% as compared with revenues from the prior quarter ending September 31, 2011. This increase is the result of the continued growth of the phentermine product launched earlier this year and the launch of the Lodrane D(R) products during this quarter. The company achieved a 117% increase in manufacturing revenues and a 234% increase in contract product development fees, but offset by an 80% decrease in royalty revenues which resulted from the removal of the extended release Lodrane products from the market in August 2011. Loss from operations decreased to $430k this quarter from a loss of $592k the previous quarter.On a year to date basis, consolidated revenues through the first 3 fiscal quarters decreased by 42%, from $3.1 million last year to $1.8 million for the first nine months of this fiscal year. Revenue streams, while expanding, have not yet offset the revenues earned last year from the extended release Lodrane(R) products discontinued at the beginning of this fiscal year. The loss of this revenue stream has been the primary factor in the increased operating losses sustained by Elite this year. Last year, Elite achieved an operating profit of $72k for the 3rd quarter, and a nine month operating loss of $155k. This year, Elite's operating losses for the 3rd quarter and nine months were $430k and $1.4million, respectively.Elite expects revenues from the products launched this year to continue to grow and its contract product development activities to continue at current levels. Elite anticipates an expansion in revenues from the contract manufacture of generic methadone, first shipped in January 2012, and from the launch of Elite's recently approved Hydromorphone product.GAAP net income, including non-cash revenues and expenses relating to the accounting treatment of preferred share derivatives and the fair value of warrant derivatives, was $8.8 million, or $0.03 basic net income per share and $0.02 fully diluted net income per share.Cash flow from operations for the first nine months of fiscal 2012 was a negative $789k, compared to a positive operating cash flow of $318k for the comparable period last year. Net cash flow for the first nine months, inclusive of cash used in investing and financing activities, was a negative $1.3million. Cash as of December 31, 2011 was $569k.Chairman & CEO Jerry Treppel states that "our business and strategic plans as we discussed in our prior earnings calls are proceeding as expected. Our revenues from our newly launched products will continue to grow aided by the launch of additional new products. Beginning to utilize our new manufacturing space, increased batch size production, and start up of our packaging line, should all increase profitability in the coming quarters. It remains our corporate goal to achieve positive cash flow on an operating basis as soon as practicable. Additionally, we are working diligently to complete the Socius capital raise transaction so we can aggressively pursue our R&D objectives."The Company will host a conference call to discuss the results of operations and provide an update on recent business developments on Wednesday, February 15, 2011 at 2:00 PM EST. Company executives will also conduct a question and answer session following their remarks.To access the conference call:Domestic callers: (800) 346-7359International callers: (973) 528-0008Conference Entry Code: 98840A digital telephone replay will be available approximately one hour after the conclusion of the call for two weeks until February 29, 2012 by dialing:Domestic callers: (800) 332-6854International callers: (973) 528-0005Conference entry code: 98840Financial Statements ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS December 31, 201 March 31, 201 (Unaudited) (Audited) ------------- ------------- CURRENT ASSETS Cash and cash equivalents $568,691 $1,825,858 Accounts receivable, (net of allowance for doubtful accounts of zero) 483,311 571,667 Inventories (net of allowance of $93,338 and $ 1,047,456, respectively) 431,400 616,362 Prepaid expenses and other current assets 58,798 133,472 ------------- ------------- Total current assets 1,542,200 3,147,359 ------------- ------------- PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $4,542,590 and $4,189,618, respectively 4,243,604 4,118,274 ------------- ------------- ------------- ------------- INTANGIBLE ASSETS -- net of accumulated amortization of zero 629,963 597,556 ------------- ------------- OTHER ASSETS Investment in Novel Laboratories Inc. 3,329,322 3,329,322 Security deposits 14,913 28,377 Restricted cash -- debt service for EDA bonds 333,246 291,420 EDA Bond offering costs, net of accumulated amortization of $89,497 and $78,898, respectively 264,955 275,554 ------------- ------------- Total other assets 3,942,436 3,924,673 ------------- ------------- TOTAL ASSETS $10,349,203 $11,787,862 ============= ============= LIABILITIES AND STOCKHOLDERS' DEFICIT December 31, March 31, 2011 2011 (Unaudited) (Audited) ------------- ------------- CURRENT LIABILITIES EDA Bonds payable $3,385,000 $3,385,000 Short term loans and current portion of long-term debt 10,257 13,105 Accounts payable and accrued expenses 1,227,152 935,797 Customer Deposits -- 39,400 Deferred Revenues -- Current 13,333 13,333 Preferred share derivative interest payable 86,326 282,680 ------------- ------------- Total Current Liabilities 4,722,068 4,669,315 ------------- ------------- LONG TERM LIABILITIES Deferred Revenues 168,891 178,890 Other long term liabilities 78,379 75,463 Derivative Liability -- Preferred Shares 10,646,711 14,192,329 Derivative Liability -- Warrants 9,043,464 10,543,145 ------------- ------------- Total Long-Term Liabilities 19,937,445 24,989,827 ------------- ------------- ------------- ------------- Total Liabilities 24,659,513 29,659,142 ------------- ------------- COMMITMENTS AND CONTINGENCIES: STOCKHOLDERS' DEFICIT Common Stock -- par value of $0.001, Authorized 355,516,558 Issued and outstanding -- 264,830,735 shares and 180,545,657 shares, respectively 264,831 180,546 Additional paid-in capital 108,645,839 97,116,044 Accumulated deficit (122,914,139) (114,861,029) Treasury stock, at cost (100,000 common shares) (306,841) (306,841) ------------- ------------- Total Stockholders' Deficit (14,310,310) (17,871,280) ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $10,349,203 $11,787,862 ============= ============= ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------ Three Months Ended December 31, ------------------------ 2011 2010 (unaudited) (unaudited) ----------- ----------- REVENUES: Manufacturing Revenues $170,099 $ 901,653 Royalties and Profit Splits 20,127 231,742 Lab Fee Revenues 319,712 92,902 ----------- ----------- Total Revenues 509,938 1,226,297 ----------- ----------- Cost of Revenues 156,590 641,524 ----------- ----------- Gross Profit 353,348 584,773 ----------- ----------- OPERATING EXPENSES Research and Development 386,430 179,525 General and Administrative 288,416 315,537 Non-cash compensation through issuance of stock options and warrants 6,113 7,580 Depreciation and amortization 103,339 9,200 ----------- ----------- Total Operating Expenses 784,298 511,842 ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (430,950) 72,931 ----------- ----------- OTHER INCOME / (EXPENSES): Interest expense (57,138) (58,059) Change in fair value of outstanding warrant derivatives 4,586,076 2,064,745 Change in fair value of preferred share derivatives 4,749,332 4,156,097 Interest expense attributable to dividends accrued to preferred share derivative liabilities (86,325) (306,440) ----------- ----------- Total Other Income / (Expense) 9,191,945 5,856,343 ----------- ----------- ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 8,760,995 5,929,274 Provision for Income Taxes -- 1,062 ----------- ----------- NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 8,760,995 $ 5,928,212 =========== =========== NET INCOME PER SHARE BASIC $ 0.03 $ 0.06 DILUTED $ 0.02 $ 0.02 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDINGS BASIC 262,067,348 96,873,523 DILUTED 427,037,498 307,830,425