-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RLm9OmfzUcTSvGvSOO/oG5fEr7kf1bd7jR12aCCK4ePQ49qXypcjeVWiwPLbzd/B MovZT1GNEjOdFumpyOJ/yw== 0000889697-98-000341.txt : 19981116 0000889697-98-000341.hdr.sgml : 19981116 ACCESSION NUMBER: 0000889697-98-000341 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANNETT CO INC CENTRAL INDEX KEY: 0000057725 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 230787699 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09036 FILM NUMBER: 98747665 BUSINESS ADDRESS: STREET 1: 9000 STATE RD CITY: PHILADELPHIA STATE: PA ZIP: 19136 BUSINESS PHONE: 2153339000 MAIL ADDRESS: STREET 1: 9000 STATE ROAD STREET 2: 9000 STATE ROAD CITY: PHLADELPHIA STATE: PA ZIP: 19136 FORMER COMPANY: FORMER CONFORMED NAME: NETHERLANDS SECURITIES INC DATE OF NAME CHANGE: 19660629 10-Q 1 ============================================================================= UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB /x/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998. / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________. Commission File No. 0-9036 LANNETT COMPANY, INC. (Exact Name of Small Business Issuer as Specified in its Charter) State of Delaware 23-0787-699 (State of Incorporation) (I.R.S. Employer I.D. No.) 9000 State Road Philadelphia, PA 19136 (215) 333-9000 (Address of principal executive offices and telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __ x __ No _______ As of November 6, 1998, there were 5,206,128 shares of the issuer's common stock, $.001 par value, outstanding. Page 1 of 20 pages Exhibit Index on Page 15 ============================================================================= INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 1998 (unaudited) and June 30, 1998....................................... 3 Consolidated Statements of Operations for the three months ended September 30, 1998 and 1997 (unaudited)................................ 4 Consolidated Statements of Cash Flows for the three months ended September 30, 1998 and 1997 (unaudited)................................ 5 Notes to Consolidated Financial Statements (unaudited).......................... 6 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 8 - 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings...................................... 12 Item 2. Changes in Securities and Use of Proceeds.............. 12 Item 3. Defaults upon Senior Securities........................ 12 Item 4. Submission of Matters to a Vote of Security Holders.... 12 Item 5. Other Information...................................... 13 Item 6. Exhibits and Reports on Form 8-K....................... 13 2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS
LANNETT COMPANY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS 09/30/98 06/30/98 - ------ -------- -------- CURRENT ASSETS: Cash $ 0 $ 16,695 Trade accounts receivable (net of allowance of $65,000 and $50,000) 1,824,224 1,357,131 Inventories 2,249,515 2,071,946 Prepaid expenses 77,896 67,304 ----------- ----------- Total current assets 4,151,635 3,513,076 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT 6,175,693 5,811,863 Less accumulated depreciation (1,617,550) (1,502,199) ----------- ----------- 4,558,143 4,309,664 ----------- ----------- OTHER ASSETS 44,211 143,864 DEFERRED TAX ASSET 150,000 150,000 ----------- ----------- Total assets $ 8,903,989 $ 8,116,604 =========== =========== LIABILITIES AND SHAREHOLDERS' DEFICIENCY CURRENT LIABILITIES: Line of credit $ 1,500,000 $ 1,250,000 Accounts payable 674,755 631,249 Deferred interest payable - shareholder (including convertible deferred interest payable of $444,750 and $262,250) 1,294,083 749,357 Accrued expenses 257,533 180,941 Current portion of long-term debt 854,743 863,207 ----------- ----------- Total current liabilities 4,581,114 3,674,754 ----------- ----------- LONG-TERM DEBT, LESS CURRENT PORTION 1,277,324 1,357,548 ----------- ----------- LINE OF CREDIT AND DEFERRED INTEREST - SHAREHOLDER 4,517,313 4,477,889 ----------- ----------- CONVERTIBLE NOTE PAYABLE AND DEFERRED INTEREST - SHAREHOLDER, LESS CURRENT PORTION 2,137,250 2,273,750 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' DEFICIENCY: Common stock - authorized 50,000,000 shares par value $.001: issued and outstanding, 5,206,128 shares 5,206 5,206 Additional paid-in capital 320,575 320,575 Accumulated deficit (3,934,793) (3,993,118) ----------- ----------- Total shareholders' deficiency (3,609,212) (3,667,337) ----------- ----------- Total liabilities and shareholders' deficiency $ 8,903,989 $ 8,116,604 =========== =========== See notes to consolidated financial statements
3
LANNETT COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED -------------------------- 9/30/98 9/30/97 ------- ------- NET SALES $ 2,033,485 $ 2,437,864 COST OF SALES 1,330,333 1,520,641 ----------- ----------- Gross profit 703,152 917,223 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 415,439 362,755 ----------- ----------- Operating profit 287,713 554,468 ----------- ----------- OTHER INCOME (EXPENSES), NET: Other Income -- 5,397 Interest expense, including $147,650 and $144,450 to shareholder (229,388) (193,155) ----------- ----------- (229,388) (187,758) ----------- ----------- NET INCOME $ 58,325 $ 366,710 =========== =========== BASIC EARNINGS PER COMMON SHARE $ 0.01 $ 0.07 DILUTED EARNINGS PER COMMON SHARE $ 0.007 $ 0.03 See notes to the consolidated financial statements
4
LANNETT COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED -------------------------- 09/30/98 09/30/97 -------- -------- OPERATING ACTIVITIES: Net income $ 58,325 $ 366,710 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 116,344 64,619 Changes in assets and liabilities which provided (used) cash: Trade accounts receivable (467,093) (466,706) Inventories (177,569) (29,069) Prepaid expenses and other assets 88,068 9,508 Accounts payable 43,506 23,394 Deferred interest payable - shareholder 76,592 (23,462) Accrued interest 147,650 144,774 --------- --------- Net cash (used in ) provided by operating activities (114,177) 89,768 --------- --------- INVESTING ACTIVITIES: Purchases of property, plant and equipment (363,830) (507,541) --------- --------- Net cash used in investing activities (363,830) (507,541) --------- --------- FINANCING ACTIVITIES: Borrowings under line of credit - shareholder 300,000 50,000 Borrowings under line of credit 250,000 -- Repayments of debt (88,688) (26,881) Proceeds from debt 400,000 --------- --------- Net cash provided by financing activities 461,312 423,119 --------- --------- NET (DECREASE) INCREASE IN CASH (16,695) 5,346 CASH, BEGINNING OF YEAR 16,695 15,509 --------- --------- CASH, END OF PERIOD $ 0 $ 20,855 ========= ========= See notes to the consolidated financial statements
5 LANNETT COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Consolidated Financial Statements In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position and the results of operations and cash flows. The results of operations for the three months ended September 30, 1998 and 1997 are not necessarily indicative of results for the full year. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes included in the Company's Annual Report on Form 10-KSB for the year ended June 30, 1998. Note 2. New Accounting Standards In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income. This statement establishes standards for the reporting and display of comprehensive income and its components in a full set of financial statements. This standard is effective for fiscal years beginning after December 15, 1997. The Company adopted SFAS No. 130 effective July 1, 1998. There was no effect of implementing this standard, as comprehensive income is the same as net income. In March 1998, the AICPA issued Statement of Position ("SOP") 98-1. Accounting For the Costs of Computer Software Developed or Obtained for Internal Use. The SOP is effective for fiscal years beginning after December 15, 1998. The SOP will require the capitalization of certain costs incurred after the date of adoption in connection with developing or obtaining software for internal use. The Company has not yet assessed what the impact of the SOP will be on the Company's future earnings or financial position. Note 3. Inventories Inventories consist of the following:
September 30, June 30, 1998 1998 ------------ -------- (unaudited) Raw materials $ 725,357 $ 652,825 Work-in-process 718,575 406,442 Finished goods 571,028 778,246 Packaging supplies 234,555 234,433 ----------- ----------- $ 2,249,515 $ 2,071,946 =========== ===========
6 Note 4. Income Taxes The provision for income taxes for the three months ended September 30, 1998 and 1997 was eliminated by the utilization of federal and state net operating loss carryforwards. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations. In addition to historical information, this Form 10-QSB contains forward-looking information. The forward-looking information contained herein is subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Important factors that might cause such a difference include, but are not limited to, those discussed in the following section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition." Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this Form 10-QSB. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances which arise later. Readers should carefully review the risk factors described in other documents the Corporation files from time to time with the Securities and Exchange Commission, including the Annual report on Form 10-KSB filed by the Corporation in Fiscal 1998, and any Current Reports on Form 8-K filed by the corporation. Results of Operations - First Quarter Fiscal 1999 to First Quarter Fiscal 1998. Net sales for the three months ended September 1998 ("First Quarter Fiscal 1999") decreased by 17% to $2,033,485 from net sales of $2,437,864 in the three months ended September 1997 ("First Quarter Fiscal 1998). Sales decreased during First Quarter Fiscal 1999 mainly due to increased competition for the Company's product line. The Company's private label supply agreements accounted for approximately $1.4 million and $1.8 million of First Quarter Fiscal 1999 and 1998 net sales, respectively. Cost of sales decreased by 13%, to $1,330,333 in First Quarter Fiscal 1999 from $1,520,641 in First Quarter Fiscal 1998. The cost of sales percentage decrease was substantially less than the percentage decrease in First Quarter Fiscal 1999 sales over First Quarter Fiscal 1998 sales primarily due to the increase in production and quality assurance personnel costs. These costs increased as a result of the growth of the Company experienced during Fiscal 1998 and anticipated growth for Fiscal 1999. Cost of sales for the private label supply agreements is consistent with the overall cost of sales except for discounts allowed. Gross profit margins for First Quarter Fiscal 1999 and First Quarter Fiscal 1998 were 35% and 38%, respectively. The decrease in the gross profit percentage is primarily due to the increase in production and quality assurance costs in anticipation of increased sales volumes. Selling, general and administrative expenses increased by 15% to $415,439 in First Quarter Fiscal 1999 from $362,755 in First Quarter Fiscal 1998. This increase is due to increases in research and development costs for an expanded product line and increases in various administration costs as a result of the growth of the Company experienced during Fiscal 1998 and anticipated growth for Fiscal 1999. As a result of the foregoing, the Company reported an operating profit of $287,713 for First Quarter Fiscal 1999, as compared to an operating profit of $554,468 for First Quarter Fiscal 1998. The Company's interest expense increased to $229,388 in Fiscal First Quarter Fiscal 1999 from $193,155 in First Quarter Fiscal 1998 primarily due to increased borrowings on the Company's lines of credit and term loans. See Liquidity and Capital Resources below. 8 The Company reported net income of $58,325 for First Quarter Fiscal 1999, $0.01 basic income per share, $0.007 on a diluted basis, compared to net income of $366,710 for First Quarter Fiscal 1998, $0.07 basic income per share, $0.03 on a diluted basis. Liquidity and Capital Resources - The Company used $114,177 and generated $89,768 of cash in operations during First Quarter Fiscal 1999 and 1998, respectively. Net cash used in operations increased from First Quarter Fiscal 1999 to First Quarter Fiscal 1998 as a result of lower net income. Accounts receivable increased as a result of increased sales levels during the latter part of First Quarter Fiscal 1999 due to customer quarterly buy-ins. Inventory levels increased to support anticipated continued increases in sales and production levels. Other assets decreased due to equipment received for which deposits had previously been made. Accrued liabilities increased as a result of an increase in the payroll accrual. Accrued interest increased as a result of the Company continuing to defer interest payments on the shareholder debt. The Company expended $363,830 for property, plant and equipment during First Quarter Fiscal 1999 compared to $507,541 expended during First Quarter Fiscal, 1998, The Company has budgeted for $650,000 in capital expenditures in Fiscal 1999 and is currently negotiating to obtain the necessary financing. Net cash provided by financing activities increased to $461,312 during First Quarter Fiscal 1999 from $423,119 provided by financing activities during First Quarter Fiscal 1998. This increase in cash provided by financing activities was primarily used to finance capital expenditures and working capital requirements. As a result of the foregoing, the Company experienced a $16,695 decrease in cash available from the beginning to the end of First Quarter Fiscal 1999, resulting in $0 cash available at the end of First Quarter Fiscal 1999. Except as set forth in this report, the Company is not aware of any known trends, events or uncertainties that have or are reasonably likely to have a material adverse impact on the Company's net sales or income from continuing operations. At September 30, 1998 the outstanding amount of the Company's indebtedness (other than trade payables and accrued expenses) is $11.6 million, including $7.9 million owed to a majority shareholder. The estimated required principal and interest payments on the bank term loans is approximately $750,000 for the fiscal year ended June 30, 1999. The shareholder debt does not require any payments during Fiscal 1999. Management expects to have sufficient operating cashflow during Fiscal 1999 to make the required monthly principal and interest payments. Management currently believes the balances available under the Company's existing lines of credit and working capital generated by increased sales activity will be adequate to fund the Company's working capital requirements under current sales conditions. The introduction of new products, increased research and development activities, increased sales from contract manufacturing and anticipated capital expenditures, will result in the Company having to increase its lines of credit to provide the necessary working capital and capital expenditure financing to support the Company's growth. The Company has received local approval for a $6,500,000 industrial development revenue bond. Funding is expected to be available during the Quarter ended December 31, 1998. The proceeds are to be used to refinance existing term debt, repay deferred shareholder interest, and to provide additional financing for capital expenditures. The increase in capital expenditures and anticipated additional capital expenditure requirements are necessary to support the growth from the contract manufacturing and private label supply agreements, and to support new product introductions. However there can be no assurance that any of the above will occur. 9 Except as set forth in this report, the Company is not aware of any trends, events or uncertainties that have or are reasonably likely to have a material adverse impact on the Company's short-term or long-term liquidity or financial condition. Prospects for the Future As of September 30, 1998 ten additional products are under development. Four of these products are being developed and manufactured for other companies, while the other six products are being developed as part of the Lannett product line. One of the Lannett products has been redeveloped and submitted to the Federal Drug Administration ("FDA") for supplemental approval. Four additional products represent previously approved Abbreviated New Drug Applications ("ANDA") that the Company is planning to reintroduce. The remaining one product represent a new product introduction, which has completed a bio-study and has been submitted to the FDA for review. Since the Company has no control over the FDA review process, management is unable to anticipate with certainty when it will commence producing and shipping additional products. Year 2000 As in the case with most other businesses, the Company is in the process of evaluating and addressing Year 2000 compliance of both its information technology systems and its non-information technology systems (collectively referred to as "Systems"). Such Year 200 compliance efforts are designed to identify, address, and resolve issues that may be created by programs written to run on microprocessors which reference years as two digit fields rather than four. Any such programs may recognize a date using "00" as the year 1900 rather than 2000. If this situation occurs, the potential exists for System failure or miscalculations by computer programs. The Company continues to make progress in achieving Year 2000 compliance and is on schedule to be fully compliant by the end of Fiscal Year 1999. Nearly all of the Company's business systems were purchased as Commercial Off The- Shelf (COTS) Software and non-programmable electronic systems, which reduces the need for internal workforce dedication to software redesign. The Company has not hired any external consultants or incurred any additional costs thus far in its Year 2000 compliance efforts, other than the employment of an Management Information Systems Supervisor whose job function includes the Year 2000 compliance effort. The Company's use of its own information technology personnel to make the business systems Year 2000 compliant may delay some other strategic information systems development and implementation which would have otherwise benefited the Company in various ways and to varying extents. The Company does not believe that it will be at a competitive disadvantage as a result of these delays. The inventory phase of all business, manufacturing, quality control and plant systems has been completed and the assessment phase of such systems is nearly complete. Results to date are encouraging The Company believes that some costs will be incurred to make certain quality control systems Year 2000 compliant but those costs should not be material as the equipment was slated to be replaced in Fiscal year 1999. As of September 30, 1998 the Company had incurred approximately $20,000 relating to remediation of the Year 2000 issue. The Company estimates that it will have total expenditures for remediation of approximately $50,000 in Fiscal Year 1999 and $25,000 in Fiscal Year 2000. The future remediation costs to be incurred are based on management's best estimates, which were derived using assumptions of future events including the continued availability of resources and the reliability of third party modification plans. There can be no assurance that this estimate will be achieved and actual results may be materially different. The Company continues to make inquiries of its vendors, professional advisors, customers and other constituents whose Year 2000 compliance is important to its ongoing business. Based on limited preliminary information received by the Company, no significant issues have been disclosed. In the event that any of the Company's 10 significant suppliers, customers or the FDA do not successfully achieve Year 2000 compliance on a timely basis, the Company's business and operations could be materially adversely affected. The Company currently does not have any contingency plans due to the nature of limited supplier availability in the pharmaceutical industry. However it recognizes the need to develop contingency plans and expects to have these plans secured, where applicable by the end of Fiscal 1999. The Company is aware of the potential for claims against it and other companies for damages for products and services that were not Year 2000 compliant. Since the Company is neither a hardware manufacturer nor a software manufacturer developer, the Company believes that any such claims against it will be without merit. While the Company does not believe that the Year 2000 matters discussed above will have a material impact on its business, financial condition or results of operations, it is uncertain whether or to what extent the Company may be affected by such matters. 11 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Regulatory Proceedings. The Company is engaged in an industry, which is subject to considerable government regulation relating to the development, manufacturing and marketing of pharmaceutical products. Accordingly, incidental to its business, the Company periodically responds to inquiries or engages in administrative and judicial proceedings involving regulatory authorities, particularly the FDA and the Drug Enforcement Agency. Employee Claim. A claim of retaliatory discrimination has been filed by a former employee with the Pennsylvania Human Relations Commission ("PHRC"). The Company has denied liability in this matter, which is being investigated by the PHRC pursuant to its normal procedures. Management believes that the outcome will not have a material adverse impact on the financial position of the Company. A claim of sexual harassment and retaliation also has been filed against the Company by another former employee. The claim was cross-filed with the PHRC and with the Equal Employment Opportunity Commission. which already has closed its file on the charge. The Company has filed an answer with the PHRC denying the charge, and the PHRC is investigating the claim pursuant to its normal procedures. Management believes that the outcome of this charge also will not have a material adverse impact on the financial position of the Company. DES Cases. The Company is currently engaged in several civil actions as a co-defendant with many other manufacturers of Diethylstilbestrol ("DES"), a synthetic hormone. Prior litigation established that the Company's pro rata share of any liability is less than one-tenth of one percent. The Company was represented in many of these actions by the insurance company with which the Company maintained coverage during the time period that damages were alleged to have occurred. The insurance company denied coverage of actions filed after January 1, 1992. With respect to these actions, the Company paid nominal damages or stipulated to its pro rata share of any liability. The Company has either settled or is currently defending over 500 such claims. The Company persuaded its insurance carriers to resume defense and indemnification of most DES claims, has recovered from its carriers some of the amounts the Company previously expended in these cases, and is negotiating with its carriers for recovery of the balance of such amounts. Management believes that the outcome will not have a material adverse impact on the financial position of the Company. ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 12 ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) A list of the exhibits required by Item 601 of Regulation S-B to be filed as a part of this Form 10-QSB is shown on the Exhibit Index filed herewith. (b) The Company did not file any reports on Form 8-K during First Quarter Fiscal 1999. 13 SIGNATURE In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LANNETT COMPANY, INC. Dated: November 6, 1998 By: / s / Jeffrey M. Moshal ----------------- Jeffrey M. Moshal Vice President - Finance and Treasurer 14
Exhibit Index Exhibit Number Description Method of Filing Page ------ ----------- ---------------- ---- 3(a) Articles of Incorporation Incorporated by reference to the Proxy Statement - filed with respect to the Annual Meeting of Shareholders held on December 6, 1991 (the "1991 Proxy Statement"). 3(b) By-Laws, as amended Incorporated by reference to the 1991 Proxy - Statement. 4(a) Specimen Certificate for Common Incorporated by reference to Exhibit 4(a) to - Stock Form 8 dated April 23, 1993 (Amendment No. 3 to Form 10-K f/y/e June 30, 1992) ("Form 8") 10(a) Loan Agreement dated August 30, Incorporated by reference to the Annual Report - 1991 between the Company and on Form 10-K f/y/e June 30, 1991 William Farber 10(b) Amendment #1 to Loan Agreement Incorporated by reference to Exhibit 10(b) to - dated March 15, 1993 the Annual Report on Form 10-KSB f/y/e June 30, 1993 ("1993 Form 10-K") 10(c) Amendment #2 to Loan Agreement Incorporated by reference to Exhibit 10(c) to - dated August 1, 1994 the Annual Report on Form 10-KSB f/y/e June 30, 1994 ("1994 Form 10-K") 10(d) Amendment #3 to Loan Agreement Incorporated by reference to Exhibit 10(d) to - dated May 15, 1995 the Annual Report on Form 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(e) Amendment #4 to Loan Agreement Incorporated by reference to Exhibit 10(e) to - dated December 31, 1995 the Annual Report on Form 10-KSB f/y/e June 30, 1996 ("1996 Form 10-K") 10(f) Amendment #5 to Loan Agreement Incorporated by reference to Exhibit 10(f) to - dated June 30, 1996 the Annual Report on Form 10-KSB f/y/e June 30, 1996 ("1996 Form 10-K") 10(g) Amendment #6 to Loan Agreement Incorporated by reference to Exhibit 10(g) to dated November 1, 1996 the Annual Report on Form 10-KSB f/y/e June 30, 1997 ("1997 Form 10-KSB") 10(h) Amendment #7 to Loan Agreement Incorporated by reference to Exhibit 10(h) to dated September 9, 1997 the Annual Report on 1997 Form 10-KSB 10(i) Amendment #8 to Loan Agreement Incorporated by reference to Exhibit 10(i) to dated June 30, 1998 the Annual Report on Form 10-KSB f/y/e June 30, 1998 ("1998 Form 10-KSB") 15 Exhibit Number Description Method of Filing Page ------ ----------- ---------------- ---- 10(j) Loan Agreement dated May 4, 1993 Incorporated by reference to Exhibit 10(c) to - between the Company and Meridian the 1993 Form 10-K Bank 10(k) Amendment to Loan Documents Incorporated by reference to Exhibit 10(e) to - between the Company and Meridian the Annual Report on Form 10-KSB f/y/e June 30, Bank dated as of December 8, 1993 1994 ("1994 Form 10-K") 10(l) Letter Agreement between the Incorporated by reference to Exhibit 10(f) to - Company and Meridian Bank dated the Annual Report on Form 10-KSB f/y/e June 30, December 21, 1993 1994 ("1994 Form 10-K") 10(m) Third Amendment to Loan Incorporated by reference to Exhibit 10(g) to - Agreement dated as of June 9, the Annual Report on Form 10-KSB f/y/e June 30, 1994 1994 ("1994 Form 10-K") 10(n) Fourth Amendment to Loan Incorporated by reference to Exhibit 10(i) to - Documents between the Company the Annual Report on Form 10-KSB f/y/e June 30, and Meridian Bank as of October 1995 ("1995 Form 10-K") 27, 1994 10(o) Letter Agreement between the Incorporated by reference to Exhibit 10(j) to - Company and Meridian Bank dated the Annual Report on Form 10-KSB f/y/e June 30, October 27, 1994 1995 ("1995 Form 10-K") 10(p) Letter Agreement between the Incorporated by reference to Exhibit 10(k) to - Company and Meridian Bank dated the Annual Report on Form 10-KSB f/y/e June 30, July 10, 1995 1995 ("1995 Form 10-K") 10(q) Amendment to Security Agreement Incorporated by reference to Exhibit 10(l) to - between the Company and Meridian the Annual Report on Form 10-KSB f/y/e June 30, Bank dated as of July 31, 1995 1995 ("1995 Form 10-K") 10(r) Line of Credit Note dated July Incorporated by reference to Exhibit 10(m) to - 31, 1995 the Annual Report on Form 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(s) Fifth Amendment to Loan Incorporated by reference to Exhibit 10(n) to - Agreement dated July 31, 1995 the Annual Report on Form 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(t) Amendment to Loan agreement Incorporated by reference to Exhibit 10(q) to - between the Company and Meridian the Annual Report on Form 10-KSB f/y/e June 30, Bank, dated March 5, 1996. 1996 ("1996 Form 10-K") 10(u) Amendment to Loan Incorporated by reference to Exhibit 10(h) to 16 Exhibit Number Description Method of Filing Page ------ ----------- ---------------- ---- agreement between the Company and the Annual Report on 1997 Form 10-KSB Corestates Bank, dated March 20, 1997. 10(v) Amendment to Loan agreement Incorporated by reference to Exhibit 10(h) to between the Company and the Annual Report on 1997 Form 10-KSB Corestates Bank, dated March 20, 1997. 10(w) Amendment to Loan agreement Incorporated by reference to Exhibit 10(h) to between the Company and the Annual Report on 1997 Form 10-KSB Corestates Bank, dated May 23, 1997. 10(x) Amendment to Loan agreement Incorporated by reference to Exhibit 10(h) to between the Company and the Annual Report on 1997 Form 10-KSB Corestates Bank, dated September 24, 1997. 10(y) Amendment to Loan agreement Incorporated by reference to Exhibit 10(h) to between the Company and the Annual Report on 1997 Form 10-KSB Corestates Bank, dated December 10, 1997. 10(z) Amendment to Loan agreement Incorporated by reference to Exhibit 10(h) to between the Company and the Annual Report on 1997 Form 10-KSB Corestates Bank, dated December 10, 1997. 10(aa) Amendment to Loan agreement Incorporated by reference to Exhibit 10(aa) to between the Company and the Annual Report on 1998 Form 10-KSB Corestates Bank, dated June 11, 1998. 10(ab) Amendment to Loan agreement Incorporated by reference to Exhibit 10(ab) to between the Company and the Annual Report on 1998 Form 10-KSB Corestates Bank, dated June 1998. 10(ac) Employment agreement Incorporated by reference to Exhibit 10(i) to between the Company and the Annual Report on Form 10-KSB f/y/e Vlad Mikijanic June 30, 1994 ("1994 Form 10-K") 10(ad) Supply Agreement dated January Incorporated by reference to Exhibit 10(ad) to 14, 1997 the Annual Report on 1998 Form 10-KSB 17 Exhibit Number Description Method of Filing Page ------ ----------- ---------------- ---- 10(ae) Supply Agreement dated January Incorporated by reference to Exhibit 10(ae) to 17, 1997 the Annual Report on 1998 Form 10-KSB 10(af) Supply Agreement dated January Incorporated by reference to Exhibit 10(af) to 17, 1997 the Annual Report on 1998 Form 10-KSB 10(ag) Supply Agreement dated February Incorporated by reference to Exhibit 10(ag) to 11, 1997 the Annual Report on 1998 Form 10-KSB 10(ah) Supply Agreement dated May 27, Incorporated by reference to Exhibit 10(ah) to 1997 the Annual Report on 1998 Form 10-KSB 11 Computation of Per Share Earnings Filed Herewith 22 Subsidiaries of the Company Incorporated by reference to the Annual Report - on Form 10-K f/y/e June 30, 1990 23(a) Consent of Grant Thornton Incorporated by reference to Exhibit 23(a) to the Annual Report on 1998 Form 10-KSB 23(b) Consent of Deloitte & Touche Incorporated by reference to Exhibit 23(B) to the Annual Report on 1998 Form 10-KSB 27 Financial Data Schedule Filed Herewith -
18 EX-11 2 Exhibit 11 Computation of Per Share Earnings 19
Lannett Company, Inc and Subsidiary STATEMENT RE COMPUTATION OF PER SHARE EARNINGS Period ended Sept 30 1998 1998 1997 1997 ------------------------------------------------------------------------ Net Income Shares Net Income Shares Basic earnings per share factors $ 58,325 5,206,128 $ 366,710 5,206,128 Effect of potentially dilutive option plans and debentures: Interest on debentures $ 46,000 $ 46,000 Conversion on debentures 10,328,000 9,824,000 Employee stock options 43,486 ------------------------------------------------------------------------ Diluted earnings per share factors $104,325 15,577,614 $ 412,710 15,030,128 ------- ---------- -------- ---------- Basic earnings per share $ 0.01 $ 0.07 Diluted earnings per share $ 0.007 $ 0.03
20 EX-27 3
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEETS AND STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS JUN-30-1998 SEP-30-1998 $ 0 0 1,889,224 (65,000) 2,249,515 4,151,635 6,175,693 (1,617,550) 8,903,989 4,581,114 7,931,887 5,206 0 0 320,575 8,903,989 2,033,485 2,033,485 1,330,333 1,745,772 0 0 229,388 58,325 0 58,325 0 0 0 58,325 0.01 0.007
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