-----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, WQyNoWxuW2Ba3a17UMaUpvOpKZ6sfq+ObEvkoXrlRSNoPm3sc4uhB5J01e1Qs/24 TwitJ857Hdn5iXYkSpV1pA== 0000950009-97-000077.txt : 19970222 0000950009-97-000077.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950009-97-000077 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09036 FILM NUMBER: 97533870 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 10QSB 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 DECEMBER 31, 1996. o 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 February 7, 1997, there were 5,206,128 shares of the issuer's common stock, $.001 par value, outstanding. Page 1 of 18 pages Exhibit Index on Page 14
INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of December 31, 1996 (unaudited) and June 30, 1996...........................................................3 Consolidated Statements of Operations for the three months and six months ended December 31, 1996 and 1995 (unaudited)..................................4 Consolidated Statements of Cash Flows for the six months ended December 31, 1996 and 1995 (unaudited)....................................................5 Notes to Consolidated Financial Statements (unaudited)..................................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................................8 PART II. OTHER INFORMATION Item 1. Legal Proceedings.....................................................12 Item 6. Exhibits and Reports on Form 8-K......................................12
2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS
LANNETT COMPANY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ASSETS 12/31/96 06/30/96 ------ -------- -------- (UNAUDITED) CURRENT ASSETS Cash $ 0 $ 25,258 Trade accounts receivable 790,207 892,081 Inventories 1,098,483 874,219 Prepaid expenses 44,490 46,395 ------------ ------------ Total current assets 1,933,180 1,837,953 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT Land 33,414 33,414 Building and improvements 1,406,627 1,406,627 Machinery and equipment 1,499,673 1,317,458 Furniture and fixtures 64,511 64,511 ------------ ------------ 3,004,225 2,822,010 Less accumulated depreciation (1,061,211) (961,738) ------------ ------------ Net 1,943,014 1,860,272 ------------ ------------ OTHER ASSETS 6,691 7,958 ------------ ------------ Total assets $ 3,882,885 $ 3,706,183 ============ ============ LIABILITIES AND SHAREHOLDERS' DEFICIENCY ---------------------------------------- CURRENT LIABILITIES Line of credit $ 661,620 $ 548,092 Current maturities of long-term debt 54,009 61,356 Accounts payable 275,824 260,591 Accrued interest payable - shareholder 324,363 325,827 Accrued liabilities 49,810 136,357 ------------ ------------ Total current liabilities 1,365,626 1,332,223 ------------ ----------- LONG-TERM DEBT, LESS CURRENT MATURITIES 406,786 426,285 ------------ ------------ NOTE PAYABLE AND ACCRUED INTEREST - SHAREHOLDER 2,206,000 2,123,500 ------------ ------------ LINE OF CREDIT AND ACCRUED INTEREST - SHAREHOLDER 4,033,247 3,727,894 ------------ ------------ SHAREHOLDERS' DEFICIENCY Common stock Authorized: 50,000,000 shares, par value $.001; 5,206,128 shares issued and outstanding 5,206 5,206 Additional paid-in capital 320,575 320,575 Accumulated deficit (4,454,555) (4,229,500) ------------ ------------ Total shareholders' deficiency (4,128,774) (3,903,719) ------------ ------------ Total liabilities and shareholders'deficiency $ 3,882,885 $ 3,706,183 ============ ============
3
LANNETT COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED -------------------------- ------------------------ 12/31/96 12/31/95 12/31/96 12/31/95 -------- -------- -------- -------- NET SALES $ 997,754 $ 924,907 $ 1,649,115 $ 1,858,689 COST OF SALES 596,005 471,271 1,017,832 900,708 ----------- ----------- ----------- ----------- Gross profit 401,749 453,636 631,283 957,981 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 220,660 274,974 535,140 539,493 ----------- ----------- ----------- ----------- Operating profit 181,089 178,662 96,143 418,488 ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSES), NET Other 1,289 25,219 (1,899) 30,655 Interest expense (163,063) (151,646) (319,299) (305,020) ----------- ----------- ----------- ----------- (161,774) (126,427) (321,198) (274,365) ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 19,315 $ 52,235 $ (225,055) $ 144,123 ============ =========== ============ =========== PRIMARY INCOME (LOSS) PER SHARE $ -- $ 0.01 $ (0.04) $ 0.03 FULLY DILUTED INCOME PER SHARE $ -- $ 0.01 $ -- $ 0.02 PRIMARY WEIGHTED AVERAGE NUMBER OF SHARES 5,206,128 5,206,128 5,206,128 5,206,128 FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES 13,206,128 13,206,128 13,206,128 13,206,128
4
LANNETT COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED ------------------------ 12/31/96 12/31/95 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income $ (225,055) $ 144,123 Adjustments to reconcile net (loss) income to net cash (used in) operating activities Depreciation and amortization 100,740 101,062 (Decrease) increase in trade accounts receivable 101,874 (81,194) Increase in inventories (224,264) (41,811) Decrease in prepaid expenses 1,905 7,930 Increase (decrease) in accounts payable 15,233 (152,544) (Decrease) in accrued liabilities (86,547) (90,829) Increase in accrued interest 236,390 92,904 ------------ ---------- Net cash (used in) operating activities (79,724) (20,359) -------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (182,215) (127,193) ------------ ---------- Net cash used in investing activities (182,215) (127,193) ------------ ---------- CASH FLOWS FROM FINANCING ACTIVITIES Net Borrowings under lines of credit 263,527 153,880 Repayments of debt (26,846) (26,666) ------------ ---------- Net cash provided from financing activities 236,681 127,214 ------------ ---------- NET (DECREASE) IN CASH (25,258) (20,338) CASH AT BEGINNING OF PERIOD 25,258 38,975 ------------ ---------- CASH AT END OF PERIOD $ 0 $ 18,637 ============ ===========
5 LANNETT COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. 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 six months ended December 31, 1996 and 1995 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, 1996. Note 2. Primary per share data is based on the weighted average number of common shares outstanding of 5,206,128 for the periods ending December 31, 1996 and 1995. Fully diluted per share data includes shares issuable pursuant to currently exercisable options and a convertible debenture. Note 3. Inventories consist of the following: December 31, June 30, 1996 1996 ------------ -------- (unaudited) Raw materials $ 383,652 $309,051 Work-in-process 295,203 253,887 Finished goods 359,868 260,816 Packaging supplies 59,760 50,465 ----------- -------- $ 1,098,483 $874,219 =========== ========
Note 4. The Company uses the liability method specified by SFAS No. 109, "Accounting for Income Taxes." Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities. The principal types of differences between assets and liabilities for financial statement and tax return purposes are net operating loss carryforwards and accumulated depreciation. A deferred tax asset is recorded for net operating losses being carried forward for tax purposes. At June 30, 1996 and December 31, 1996, the net deferred tax asset has been reduced to zero by a valuation allowance. 6 The Company's deferred tax asset as of June 30, 1996 consists of the following: Net operating loss carryforwards $ 2,083,750 Tax depreciation over book depreciation (137,058) Vacation payable 7,509 Other 2,520 ------------ 1,956,721 Valuation allowance (1,956,721) ------------ $ -- ============
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations. Three months ended December 31, 1996 compared with three months ended December 31, 1995 Net sales for the three months ended December 31, 1996 (Second Quarter 1997) increased by 7.9% to $997,754 from net sales of $924,907 for the three months ended December 31, 1995 (Second Quarter 1996). Sales increased during Second Quarter 1997 due to increased sales of one of the Company's products and due to contract packaging performed during Second Quarter 1997. Cost of sales increased by 26.5%, to $596,005 in Second Quarter 1997 from $471,271 in Second Quarter 1996. Cost of sales increased due to higher sales volumes, new products with higher raw material and labor costs, and the hiring of additional employees to work on new product introductions and new product approvals. Gross profit margins for Second Quarter 1997 and Second Quarter 1996 were 40.3% and 49.0%, respectively. The decrease in the gross profit percentage is primarily due to more competitive pricing for one of the Company's products resulting in decreasing margins. In addition the Company introduced Prednisone 5mg and Prednisone 20mg during the quarter ended June 30, 1996, which have lower gross profit margins than the Company's other products. Selling, general and administrative expenses decreased by 19.8%, to $220,660 in Second Quarter 1997 from $274,974 in Second Quarter 1996. The decrease is primarily due to decreased legal expenses and a decrease in administrative payroll costs. As a result of the foregoing, the Company reported an operating profit of $181,089 for Second Quarter 1997, as compared to an operating profit of $178,662 for Second Quarter 1996. The Company's interest expense increased to $163,063 in Second Quarter 1997 from $151,646 in Second Quarter 1996 primarily due to increased borrowings on the Company's lines of credit. See Liquidity and Capital Resources below. The Company reported net income of $19,315 for Second Quarter 1997, compared to net income of $52,235 or $0.01 per share, $.01 on a fully diluted basis, for Second Quarter 1996. Net income decreased from Second Quarter 1997 as compared to Second Quarter 1996, largely due to an increase in interest costs during Second Quarter 1997 and due to insurance proceeds being received during Second Quarter 1996. Six months ended December 31, 1996 compared with six months ended December 31, 1995. Net sales for the six months ended December 31, 1996 decreased by 11.3% to $1,649,115 from net sales of $1,858,689 for the six months ended December 31, 1995 . Sales decreased during the six months ended December 31, 1996 due to increased competition and due to more competitive pricing. Cost of sales increased by 13.0%, to $1,017,832 in the six months ended December 31, 1996 from $900,708 in the six months ended December 31, 1995. Cost of sales increased due to new products with higher raw material and labor costs, and the hiring of additional employees to work on new product introductions and new product approvals. Gross profit margins for the six months ended December 31, 1996 and December 31, 1995 were 38.2% and 51.5%, respectively. The decrease in the gross profit percentage is primarily due to more competitive pricing for one of the Company's products resulting in decreasing margins. In addition the Company introduced Prednisone 5mg and Prednisone 20mg during the quarter ended June 30, 1996, which have lower gross profit margins than the Company's other products. Selling, general and administrative expenses were $535,140 in the six months ended December 31, 1996, which 8 remained constant compared to similar expenses of $539,493 during the six months ended December 31, 1995. As a result of the foregoing, the Company reported an operating profit of $96,143 for the six months ended December 31, 1996 as compared to an operating profit of $418,488 for the six months ended December 31, 1995. The Company's interest expense increased to $319,299 in the six months ended December 31, 1996 from $305,020 in the six months ended December 31, 1995 due to increased borrowings on the Company's lines of credit. The Company reported a net loss of $225,055 for the six months ended December 31, 1996, or ($.04) per share, compared to net income of $144,123, or $.03 per share, $.02 on a fully diluted basis, for the six months ended December 31, 1995. Liquidity and Capital Resources The Company used $79,724 and $20,359 of cash in operations during the six months ended December 31, 1996 and 1995, respectively. Net cash used in operations increased during the six months ended December 31, 1996 due to lower net income and an increase in inventory as a result of new product introductions and due to the Company maintaining higher inventory levels of its current products in order to allow for increased research and development activities. Accounts receivable decreased as a result of the lower sales levels in the six months ended December 31, 1996. Accrued liabilities decreased due to the costs of a biostudy accrued at June 30, 1996 being paid during the six months ended December 31, 1996 and as a result of lower legal fees being incurred. Accrued interest increased due to the Company deferring interest payments for Fiscal 1997 on the shareholder line of credit and note. The Company expended $182,215 for property, plant and equipment during the six months ended December 31, 1996 compared to $127,193 expended during the six months ended December 31, 1995. The Company has budgeted up to $500,000, for capital expenditures in Fiscal 1997 and expects to obtain the necessary financing. Net cash provided from financing activities increased to $236,681 during the six months ended December 31, 1996 from $127,214 provided by financing activities during the six months ended December 31, 1995 due to increased borrowings under both the shareholder and equipment lines, to finance working capital and equipment needs. As a result of the foregoing, the Company experienced a $25,258 decrease in cash available from the beginning to the end of the six months ended December 31, 1996, resulting in a zero cash balance at the end of the period. Except as set forth herein, the Company is not aware of any known trends, events or uncertainties that have or are reasonably likely to have a material impact on the Company's net sales or income from continuing operations. From Fiscal 1987 through Fiscal 1994, the Company incurred operating losses and suffered cash flow restraints. The Company obtained the needed capital to renovate its manufacturing facility, to acquire new equipment, to remove hazardous waste materials, to retain new management and to provide working capital, primarily from a financing facility made available to the Company by William Farber, a principal shareholder and Chairman of the Board of Directors, in August 1991. This investment has resulted in an operating profit for the Company for the Fiscal years 1996 and 1995. 9 This financing facility originally consisted of a $2,000,000 revolving line of credit and a $2,000,000 9% convertible debenture. The revolving line of credit and the debenture are secured by substantially all of the Company's assets and are subordinated to the bank lines of credit and mortgage term loan payable. In March 1993, at the Company's request, William Farber increased the aggregate credit available under the revolving line of credit to $3,500,000. The Company requested the additional financing to provide working capital while the Company reformulated products and obtained supplemental approvals from the FDA. On November 1, 1996 at the Company's request, William Farber increased the aggregate credit available under the revolving line of credit to $3,750,000. The Company requested the additional financing to provide working capital and to support new product development. The line of credit bears interest at the prime rate published by Michigan National Bank plus 1% per annum. Accrued interest from April 1, 1995 to June 30, 1996 is payable in two equal installments, on June 30, 1997 and June 30, 1998. Accrued interest from July 1, 1996 to June 30, 1997 is payable in twenty-four equal installments, commencing August 15, 1997 and continuing on the fifteenth day of each month thereafter, until paid in full. Interest accrued on the outstanding principal balance from and after July 1, 1997 is due and payable quarterly, in arrears, commencing October 1, 1997 and continuing on the first day of each January, April, July and October thereafter until paid in full. The outstanding principle balance of the Revolving Credit Loan, together with accrued interest, is due and payable in full on December 31, 1998. At December 31, 1996 accrued interest was approximately $593,000 of which $383,000 is included in the long-term outstanding balance. At December 31, 1996, $210,000 was classified as currently due. The debenture bears interest at 9% per annum. The debenture is due December 23, 1998 and is convertible at any time prior to payment in full at the conversion rate of 4,000 shares of common stock for each $1,000 of outstanding indebtedness (adjusted for the Company's 4 for 1 stock splits in April 1992 and March 1993). Accrued interest from April 1, 1995 to June 30, 1996 is payable in two equal installments, on June 30, 1997 and June 30, 1998. Accrued interest from July 1, 1996 to June 30, 1997 is payable in twenty-four equal monthly installments, commencing August 15, 1997 and continuing on the fifteenth day of each month thereafter, until paid in full. Interest accrued on the outstanding principal balance from and after July 1, 1997 is due and payable quarterly, in arrears, commencing October 1, 1997 and continuing on the first day of each January, April, July and October thereafter until paid in full. The outstanding principal balance of this Debenture, together with accrued interest, is due and payable in full on December 23, 1998. At December 31, 1996 accrued interest was approximately $320,000, of which $206,000 is included in the long-term outstanding balance. At December 31, 1996 $114,000 was classified as currently due. At December 31, 1996, there was no additional borrowing capacity available under the revolving line of credit. Management expects to have sufficient operating income during Fiscal 1997 to make the required monthly interest payments. In May 1993, the Company obtained from a bank a $500,000 mortgage term loan which provides for monthly principal installments of approximately $2,800 plus interest at 9.25% per annum. A final balloon payment of $302,778 is due in May 2000. The Company also obtained from the bank a $500,000 line of credit which bears interest at prime plus 1.5% per annum. The line of credit is limited to 80% of qualified accounts receivable. At December 31, 1996, no funds were available under the line of credit. Both loans are secured by substantially all of the Company's assets and the mortgage term loan is guaranteed by Mr. Farber, who has subordinated his loans to the Company to those of the bank. The bank's lien against the Company's realty is to be released on payment in full of the mortgage term loan. On July 31, 1995, the Company secured a $300,000 bank revolving line of credit for equipment financing, expiring October 31, 1996. Advances are limited to 80% of equipment costs. On April 1, 1996, $93,881 of borrowings under this line was converted into a secured term loan payable in forty-eight equal monthly installments. This line of credit bears interest at prime plus 1.5%. At December 31, 1996, approximately $45,000 was available to the Company under the revolving line of credit for equipment financing. The line of credit is collateralized by all of the Company's present and future equipment. It is also cross-collateralized with the bank mortgage term loan payable and the line of credit. The Company is currently negotiating to increase its borrowing capacity under the equipment line of credit. 10 Management currently believes the balances available under the Company's existing lines of credit, and working capital generated by sales activity, will be adequate to fund the Company's working capital requirements under current sales conditions. The Company anticipates increasing its lines of credit in order to introduce new products and to support increased research and development activities. Except as set forth herein, the Company is not aware of any known trends, events or uncertainties that have or are reasonably likely to have a material impact on the Company's short-term or long-term liquidity or financial condition. Prospects for the Future As of December 31, 1996, the Company was manufacturing and marketing five products, BCC, Primidone, Dicyclomine, Prednisone 5mg and Prednisone 20mg. Ten additional products are under development at this time; of which six are former Lannett products being prepared for reintroduction. One of these products has been redeveloped and submitted to the FDA for supplemental approval; five others are currently in various stages of development, revalidation or preparation for submission to the FDA; and the remaining four represent new product introductions, of which one has completed a bio-study and has recently been submitted to the FDA for review. The Company recently received approval from the FDA for Acetazolamide USP 250mg tablets, a carbonic anhydrase inhibitor, the generic version of American Home Product's, Diamox(R), used in the treatment of some types of convulsive disorders (epilepsy), certain types of glaucoma, and in the treatment of cardiac edema. The Company also recently received approval from the FDA to market Isoniazid USP 300 mg tablets, Isoniazid, is an antibacterial and, in combination with other antituberculars, is indicated in the treatment of, and in certain persons, as a preventative therapy for, tuberculosis. Since the Company has no control over the FDA review process, management is unable to anticipate with certainty when it will commence production and begin shipping of additional products. Lannett is also pursuing key strategic alliances to jointly market its current product base. In addition, the Company is actively pursuing contract manufacturing and contract packaging, resulting in the recent signing of a "supply" agreement, sales from this agreement are expected to exceed one million dollars in its first year. 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 developing, 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. 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. For a discussion of these cases, see the Company's Annual Report on Form 10-KSB for the Fiscal Year Ended June 30, 1996. 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 the last quarter of the period covered by this report. 12 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: February 12, 1997 By: /s/ Jeffrey M. Moshal ----------------------- Jeffrey M. Moshal Vice President - Finance and Treasurer 13
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 Incorporated by reference to Exhibit - Common Stock 4(a) to 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 Incorporated by reference to the - August 30, 1991 between Annual Report on Form 10-K f/y/e June the Company and William 30, 1991 Farber 10(b) Amendment #1 to Loan Incorporated by reference to Exhibit - Agreement dated March 15, 10(b) to the Annual Report on Form 1993 10-KSB f/y/e June 30, 1993 ("1993 Form 10-K") 10(c) Amendment #2 to Loan Incorporated by reference to Exhibit - Agreement dated August 1, 10(c) to the Annual Report on Form 1994 10-KSB f/y/e June 30, 1994 ("1994 Form 10-K") 10(d) Amendment #3 to Loan Incorporated by reference to Exhibit - Agreement dated May 15, 10(d) to the Annual Report on Form 1995 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(e) Amendment #4 to Loan Incorporated by reference to Exhibit - Agreement dated December 10(e) to the Annual Report on Form 31, 1995 10-KSB f/y/e June 30, 1996 ("1996 Form 10-K") 10(f) Amendment #5 to Loan Incorporated by reference to Exhibit - Agreement dated June 30, 10(f) to the Annual Report on Form 1996 10-KSB f/y/e June 30, 1996 ("1996 Form 10-K") 10(g) Amendment #6 to Loan Filed Herewith 17 Agreement dated November 1, 1996 10(h) Loan Agreement dated May Incorporated by reference to Exhibit - 4, 1993 between the 10(c) to the 1993 Form 10-K Company and Meridian Bank 10(i) Amendment to Loan Incorporated by reference to Exhibit - Documents between the 10(e) to the Annual Report on Form Company and Meridian Bank 10-KSB f/y/e June 30, 1994 ("1994 Form dated as of December 8, 10-K") 1993 14 Exhibit Number Description Method of Filing Page ------ ----------- ---------------- ---- 10(j) Letter Agreement between Incorporated by reference to Exhibit - the Company and Meridian 10(f) to the Annual Report on Form Bank dated December 21, 10-KSB f/y/e June 30, 1994 ("1994 Form 1993 10-K") 10(k) Third Amendment to Loan Incorporated by reference to Exhibit - Agreement dated as of June 10(g) to the Annual Report on Form 9, 1994 10-KSB f/y/e June 30, 1994 ("1994 Form 10-K") 10(l) Fourth Amendment to Loan Incorporated by reference to Exhibit - Documents between the 10(i) to the Annual Report on Form Company and Meridian Bank 10-KSB f/y/e June 30, 1995 ("1995 Form as of October 27, 1994 10-K") 10(m) Letter Agreement between Incorporated by reference to Exhibit - the Company and Meridian 10(j) to the Annual Report on Form Bank dated October 27, 1994 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(n) Letter Agreement between Incorporated by reference to Exhibit - the Company and Meridian 10(k) to the Annual Report on Form Bank dated July 10, 1995 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(o) Amendment to Security Incorporated by reference to Exhibit - Agreement between the 10(l) to the Annual Report on Form Company and Meridian Bank 10-KSB f/y/e June 30, 1995 ("1995 Form dated as of July 31, 1995 10-K") 10(p) Line of Credit Note dated Incorporated by reference to Exhibit - July 31, 1995 10(m) to the Annual Report on Form 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(q) Fifth Amendment to Loan Incorporated by reference to Exhibit - Agreement dated July 31, 10(n) to the Annual Report on Form 1995 10-KSB f/y/e June 30, 1995 ("1995 Form 10-K") 10(r) Amendment to Loan Incorporated by reference to Exhibit - agreement between the 10(q) to the Annual Report on Form Company and Meridian Bank, 10-KSB f/y/e June 30, 1996 ("1996 Form dated March 5, 1996. 10-K") 10(s) Employment agreement Incorporated by reference to Exhibit between the Company and 10(i) to the Annual Report on Form Vlad Mikijanic 10-KSB f/y/e June 30, 1994 ("1994 Form 10-K") 11 Computation of Per Share Incorporated by reference to Exhibit - Earnings 11 to the Annual Report on Form 10-KSB f/y/e June 30, 1996 ("1996 Form 10-K") 15 Exhibit Number Description Method of Filing Page ------ ----------- ---------------- ---- 22 Subsidiaries of the Company Incorporated by reference to the - Annual Report on Form 10-K f/y/e June 30, 1990 23 Consent of Grant Thornton Incorporated by reference to Exhibit - 23 to the Annual Report on Form 10-KSB f/y/e June 30, 1996 ("1996 Form 10-K")
16 Exhibit 10 (g) Amendment #6 to Loan Agreement dated November 1, 1996 17 EX-10 2 William Farber 32640 Whatley Franklin, Michigan 48025 November 1, 1996 Mr. Jeffrey Moshal Lannett Company, Inc. 9000 State Road Philadelphia, Pennsylvania 19136 Re: Loan Agreement between William Farber ("Lender") and Lannett Company, Inc., a Delaware corporation ("Borrower") dated August 30, 1991, as amended by Amendment #1 to Loan Agreement dated as of March 15, 1993, and by letter agreements dated August 1, 1994, May 15, 1995, December 31, 1995, June 30, 1996 and November 1, 1996. Dear Jeffrey: This letter confirms that the Maturity Date (as defined in the Loan Agreement) for the Revolving Credit Loan is extended to December 31, 1998. This letter also confirms that the Lender will not declare an Event of Default under the Loan Agreement or any promissory note or other document executed and delivered in connection with the Loan Agreement if Borrower fails to pay interest accrued from April 1, 1995 to June 30, 1996 on the Revolving Credit Loan (as defined in the Loan Agreement) or the Term Loan (as defined in the Loan Agreement) in monthly installments as currently provided in the Loan Agreement; provided that (i) Borrower pays such accrued interest in two equal monthly installments, on June 30, 1997, and June 30, 1998. Very Truly Yours, By: /s/ William Farber ------------------- William Farber AGREED TO AND ACCEPTED: LANNETT COMPANY, INC. By: /s/ Jeffrey M. Moshal ---------------------- Jeffrey M Moshal, Vice President - Finance and Treasurer 18 EX-27 3
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEETS AND STATEMENTS OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS JUN-30-1997 Dec-31-1996 $ 0 0 790,207 0 1,098,483 1,933,180 3,004,225 1,061,211 3,882,885 1,365,626 6,646,033 5,206 0 0 (4,133,980) 3,882,885 1,649,115 1,649,115 1,017,832 1,552,972 1,899 0 319,299 (225,055) 0 (225,055) 0 0 0 (225,055) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----