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Akorn, Inc. (AMEX:AKN) today reported net sales of $14.5 million for the
third quarter 2006, an increase of 32% vs. third quarter 2005 net sales
of $11.0 million. Gross profit of $6.0 million or 41% of third quarter
2006 net sales, represents an increase of 62% vs. gross profit of $3.7
million or 33% of net sales for the third quarter 2005. Net loss
available to common stockholders for the third quarter 2006 was $(1.2)
million, or $(0.02) per diluted share vs. a $(3.6) million net loss
available to common stockholders for the third quarter 2005, or $(0.14)
per diluted share. During the third quarter of 2006, net loss available
to common stockholders was adversely impacted by stock option expense of
$0.3 million as compared to zero in the third quarter of 2005, and
product development milestone expenses of $371,000 for the Akten
(AK-1015) clinical trial and the Sofgen Pharmaceuticals development and
supply agreement.
For the nine months ended September 30, 2006 as compared to the nine
months ended September 30, 2005, net sales were $56.7 million vs. $33.7
million, an increase of 68%. Gross profit was $22.6 million or 40% of
net sales, vs. $11.9 million or 35% of net sales. Net loss available to
common shareholders was $(0.6) million vs. a net loss of $(8.0) million.
For the first nine months of 2006, net income was adversely impacted by
stock option expense of $1.0 million as compared to zero in the first
nine months of 2005, product development milestone expenses of $613,000,
and one-time non-recurring interest expense of $1.1 million recorded
upon the early retirement of convertible debt.
Highlights for the Third Quarter 2006 include:
One new business development agreement was signed, with Sofgen
Pharmaceuticals, which adds one new generic drug to Akorn's product
development pipeline. Combined with Fidia, Natco (2), and Cipla, this
brings our total to five new business development agreements signed in
2006.
Two new contract manufacturing supply agreements were signed, one with
GeneraMedix, Inc. and one with Advanced Vision Research, Inc. As
previously announced, we believe that these two supply agreements will
increase Contract Manufacturing sales by approximately 50% on an
annualized basis beginning in 2007. Both supply agreements are
expected to contribute revenue in the fourth quarter of 2006.
Two product approvals were received from the FDA: Bal-in-Oil injection
and BSS Ophthalmic Solution, and three products were launched:
Bal-in-Oil, Sufenta, and Sublimaze. To date, Akorn has received 10
ANDA product approvals in 2006.
Clinical trials began for Akten (AK-1015), Akorn’s
internally developed new drug indicated for use in ocular anesthesia.
Of the 200 patients that are necessary to complete the clinical trial,
104 patients have been enrolled. We expect to file the 505(b)(2) NDA
in the first half of 2007.
Eight ANDA’s were submitted to the FDA. For
the year, Akorn has submitted 19 ANDA’s and
has a total of 27 ANDA’s under review with
the FDA.
A $3.5 million purchase order for the procurement of Ca-DTPA and
Zn-DTPA was received from the Department of Health and Human Services
(HHS). This was the first purchase order that accessed the one million
unit purchase option provided for in our 2005 contract award with HHS.
Akorn expects to ship this order in the fourth quarter of 2006.
A $3.56 million equity investment was received from the Serum
Institute of India, Ltd, one of Akorn’s
long term strategic partners. Akorn expects to use these proceeds to
begin the development of its biologics product pipeline.
Arthur S. Przybyl, President and Chief Executive Officer stated, "Our
third quarter results continue to reflect our commitment to achieve our
2006 stated objectives: 50% year-over-year revenue increase, 40% gross
margin, positive net income, 20 ANDA regulatory filings, 10 product
approvals, and the completion of our lyophilization validation efforts.
“Late last week, our new liquid fill
injectable/lyophilization product fill line was granted clearance by the
FDA to manufacture and commercialize liquid injectable products. This
action will allow us to further upgrade and automate our Decatur
manufacturing facility. We expect to complete validation efforts on our
lyophilizers prior to year end. Commercialization of the new
lyophilizers will require a successful prior approval inspection (PAI)
to be conducted by the FDA. Also in the third quarter, we retired our
operating lease and purchased our two lyophilizers for $1.5 million,
resulting in cash savings of approximately $613,000.
“We continue to develop four important
products for anticipated product launches in 2008. Two proprietary
products are being developed internally. AK-1015, now named Akten, is
indicated for ocular anesthesia, continues to undergo clinical trials,
and we expect to file our 505(b)(2) NDA in the first half of 2007.
Formulation work continues on Minolok, our licensed patent from the
University of Texas M.D. Anderson Cancer Center, and we expect to file a
510(k) in the first half of 2007. Two undisclosed generic products are
being developed externally through Cipla and Sofgen, respectively, and
we remain confident and on track for anticipated product launches in
2008. For these two products, the recent FDA announcement that specific
generic drugs could be eligible for priority review is an additional
benefit, potentially reducing the regulatory approval time for these two
products. Akorn applauds this effort by the FDA to continue to help
lower U.S. healthcare costs.
“Finally, although not immediately apparent,
Serum Institute of India’s equity investment
in Akorn is expected to be the beginning of a long term strategic
partnership to expand our portfolio of products to eventually include
biologics and vaccines.”
Conference Call
Akorn will host a conference call on Monday October 30, 2006, beginning
at 5:00 p.m. Eastern Time to discuss third quarter 2006 operating
results. The dial-in numbers are (800) 289-0508 for domestic callers and
(913) 981-5550 for international callers. Alternatively, analysts,
investors and other interested parties are invited to participate by
visiting the Company's website, www.akorn.com,
and clicking on the live webcast icon located on the home page, or http://www.videonewswire.com/event.asp?id=35878.
Please plan to log on at least ten minutes prior to the designated start
time so management may begin promptly.
About Akorn, Inc.
Akorn, Inc. manufactures and markets sterile specialty pharmaceuticals.
Akorn has manufacturing facilities located in Decatur, Illinois and
Somerset, New Jersey and markets and distributes an extensive line of
hospital and ophthalmic pharmaceuticals. Additional information is
available at the Company's website at www.akorn.com.
Materials in this press release may contain information that includes or
is based upon forward-looking statements within the meaning of the
Securities Litigation Reform Act of 1995. Forward-looking statements
give our expectations or forecasts of future events. You can identify
these statements by the fact that they do not relate strictly to
historical or current facts. They use words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe," and other
words and terms of similar meaning in connection with a discussion of
future operating or financial performance. In particular, these include
statements relating to future steps we may take, prospective products,
future performance or results of current and anticipated products, sales
efforts, expenses, the outcome of contingencies such as legal
proceedings, and financial results.
Any or all of our forward-looking statements here or in other
publications may turn out to be wrong. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties.
Many such factors will be important in determining our actual future
results. Consequently, no forward-looking statement can be guaranteed.
Our actual results may vary materially, and there are not guarantees
about the performance of our stock.
Any forward-looking statements represent our expectations or forecasts
only as of the date they were made and should not be relied upon as
representing our expectations or forecasts as of any subsequent date. We
undertake no obligation to correct or update any forward-looking
statements, whether as a result of new information, future events or
otherwise, even if our expectations or forecasts change. You are
advised, however, to consult any further disclosures we make on related
subjects in our reports filed with the SEC. In particular, you should
read the discussion in the section entitled "Cautionary Statement
Regarding Forward-Looking Statements" in our most recent Annual Report
on Form 10-K, as it may be updated in subsequent reports filed with the
SEC. That discussion covers certain risks, uncertainties and possibly
inaccurate assumptions that could cause our actual results to differ
materially from expected and historical results. Other factors besides
those listed there could also adversely affect our results.
AKORN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
IN THOUSANDS
SEPTEMBER 30,
DECEMBER 31,
2006
2005
(UNAUDITED)
(AUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
19,523
$
791
Trade accounts receivable (less allowance for doubtful accounts of
$1 and $13, respectively)
6,939
3,222
Inventories
10,421
10,279
Prepaid expenses and other current assets
1,206
1,402
TOTAL CURRENT ASSETS
38,089
15,694
PROPERTY, PLANT AND EQUIPMENT, NET
33,244
31,071
OTHER LONG-TERM ASSETS
Intangibles, net
9,164
10,210
Other
98
120
TOTAL OTHER LONG-TERM ASSETS
9,262
10,330
TOTAL ASSETS
$
80,595
$
57,095
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current installments of debt
$
387
$
7,044
Trade accounts payable
2,039
3,046
Accrued compensation
1,674
1,519
Customer accrued liabilities
538
135
Accrued interest payable
-
2,514
Accrued expenses and other liabilities
1,126
1,202
TOTAL CURRENT LIABILITIES
5,764
15,460
LONG-TERM LIABILITIES
Long-term debt, less current installments
309
602
Product warranty
1,131
-
TOTAL LONG-TERM LIABILITIES
1,440
602
TOTAL LIABILITIES
7,204
16,062
SHAREHOLDERS’ EQUITY
Common stock, no par value — 150,000,000
shares authorized; 81,000,130 and 27,618,745 shares issued and
outstanding at September 30, 2006 and December 31, 2005, respectively
136,863
67,339
Series A Preferred Stock, $1.00 par value, 257,172 shares authorized
and issued, 241,122 shares outstanding at December 31, 2005
-
27,232
Series B Preferred Stock, $1.00 par value, 170,000 shares
authorized, 141,000 shares issued, 74,195 outstanding at September
30, 2006 and 106,600 outstanding at December 31, 2005
7,854
10,758
Warrants to acquire common stock
7,312
13,696
Accumulated deficit
(78,638)
(77,992)
TOTAL SHAREHOLDERS’ EQUITY
73,391
41,033
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
80,595
$
57,095
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS, EXCEPT PER SHARE DATA
(UNAUDITED)
THREE MONTHS ENDED
NINE MONTHS ENDED
SEPTEMBER 30,
SEPTEMBER 30,
2006
2005
2006
2005
Revenues
$
14,490
$
10,985
$
56,695
$
33,744
Cost of sales
8,539
7,317
34,056
21,881
GROSS PROFIT
5,951
3,668
22,639
11,863
Selling, general and administrative expenses
4,226
3,894
13,379
10,961
Amortization and write-down of intangibles
345
353
1,046
1,157
Research and development expenses
2,649
1,438
6,815
4,203
TOTAL OPERATING EXPENSES
7,220
5,685
21,240
16,321
OPERATING INCOME (LOSS)
(1,269)
(2,017)
1,399
(4,458)
Interest income/(expense) - net
230
(595)
(855)
(1,705)
Debt Retirement Gain/(Expense)
-
-
(391)
1,212
Other Expense
(28)
-
(57)
-
INCOME/(LOSS) BEFORE INCOME TAXES
(1,067)
(2,612)
96
(4,951)
Income tax provision
-
2
-
17
NET INCOME/(LOSS)
(1,067)
(2,614)
96
(4,968)
Preferred stock dividends and adjustments
(182)
(1,015)
(742)
(2,991)
NET INCOME/(LOSS) AVAILABLE TO COMMON STOCKHOLDERS
$
(1,249)
$
(3,629)
$
(646)
$
(7,959)
NET INCOME/(LOSS) PER SHARE:
BASIC
$
(0.02)
$
(0.14)
$
(0.01)
$
(0.31)
DILUTED
$
(0.02)
$
(0.14)
$
(0.01)
$
(0.31)
SHARES USED IN COMPUTING NET INCOME/(LOSS) PER SHARE:
BASIC
76,420
26,203
71,050
25,804
DILUTED
76,420
26,203
71,050
25,804
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
NINE MONTHS
ENDED SEPTEMBER 30
2006
2005
OPERATING ACTIVITIES
Net income (loss)
$
96
$
(4,968)
Adjustments to reconcile net income/(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization
2,444
4,927
Amortization of deferred financing costs
-
72
Amortization of debt discounts
1,059
876
Advances to Strides Arcolab Limited
-
(1,500)
Gain on Retirement of Debt
-
(1,212)
Non-cash stock compensation expense
1,524
273
Changes in operating assets and liabilities:
Trade accounts receivable
(3,717)
4,761
Inventories
(142)
(330)
Prepaid expenses and other current assets
218
480
Trade accounts payable
(1,007)
(3,279)
Product warranty
1,131
-
Accrued customer liability
403
-
Accrued expenses and other liabilities
(137)
502
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
1,872
602
INVESTING ACTIVITIES
Purchases of property, plant and equipment
(3,571)
(744)
Purchase of intangible assets
-
(75)
NET CASH USED IN INVESTING ACTIVITIES
(3,571)
(819)
FINANCING ACTIVITIES (See Note 1 below)
Repayment of long-term debt
(3,009)
(253)
Repayment of NeoPharm Debt
-
(2,500)
Net borrowings under lines of credit
-
-
Proceeds from common stock and warrant offerings
21,621
-
Proceeds from warrants exercised
1,213
150
Proceeds under stock option and stock purchase plans
606
734
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
20,431
(1,869)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
18,732
(2,086)
Cash and cash equivalents at beginning of period
791
4,110
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
19,523
$
2,024
Amount paid for interest
$
577
$
397
Amount paid for income taxes
$
2
$
72
Note 1: In March 2006, $7,298 in principal and interest related
to convertible notes was retired by conversion to the common stock
of Akorn, Inc.
Akorn, Inc. (AMEX:AKN) today reported net sales of $14.5 million
for the third quarter 2006, an increase of 32% vs. third quarter 2005
net sales of $11.0 million. Gross profit of $6.0 million or 41% of
third quarter 2006 net sales, represents an increase of 62% vs. gross
profit of $3.7 million or 33% of net sales for the third quarter 2005.
Net loss available to common stockholders for the third quarter 2006
was $(1.2) million, or $(0.02) per diluted share vs. a $(3.6) million
net loss available to common stockholders for the third quarter 2005,
or $(0.14) per diluted share. During the third quarter of 2006, net
loss available to common stockholders was adversely impacted by stock
option expense of $0.3 million as compared to zero in the third
quarter of 2005, and product development milestone expenses of
$371,000 for the Akten (AK-1015) clinical trial and the Sofgen
Pharmaceuticals development and supply agreement.
For the nine months ended September 30, 2006 as compared to the
nine months ended September 30, 2005, net sales were $56.7 million vs.
$33.7 million, an increase of 68%. Gross profit was $22.6 million or
40% of net sales, vs. $11.9 million or 35% of net sales. Net loss
available to common shareholders was $(0.6) million vs. a net loss of
$(8.0) million. For the first nine months of 2006, net income was
adversely impacted by stock option expense of $1.0 million as compared
to zero in the first nine months of 2005, product development
milestone expenses of $613,000, and one-time non-recurring interest
expense of $1.1 million recorded upon the early retirement of
convertible debt.
Highlights for the Third Quarter 2006 include:
-- One new business development agreement was signed, with Sofgen
Pharmaceuticals, which adds one new generic drug to Akorn's
product development pipeline. Combined with Fidia, Natco (2),
and Cipla, this brings our total to five new business
development agreements signed in 2006.
-- Two new contract manufacturing supply agreements were signed,
one with GeneraMedix, Inc. and one with Advanced Vision
Research, Inc. As previously announced, we believe that these
two supply agreements will increase Contract Manufacturing
sales by approximately 50% on an annualized basis beginning in
2007. Both supply agreements are expected to contribute
revenue in the fourth quarter of 2006.
-- Two product approvals were received from the FDA: Bal-in-Oil
injection and BSS Ophthalmic Solution, and three products were
launched: Bal-in-Oil, Sufenta, and Sublimaze. To date, Akorn
has received 10 ANDA product approvals in 2006.
-- Clinical trials began for Akten (AK-1015), Akorn's internally
developed new drug indicated for use in ocular anesthesia. Of
the 200 patients that are necessary to complete the clinical
trial, 104 patients have been enrolled. We expect to file the
505(b)(2) NDA in the first half of 2007.
-- Eight ANDA's were submitted to the FDA. For the year, Akorn
has submitted 19 ANDA's and has a total of 27 ANDA's under
review with the FDA.
-- A $3.5 million purchase order for the procurement of Ca-DTPA
and Zn-DTPA was received from the Department of Health and
Human Services (HHS). This was the first purchase order that
accessed the one million unit purchase option provided for in
our 2005 contract award with HHS. Akorn expects to ship this
order in the fourth quarter of 2006.
-- A $3.56 million equity investment was received from the Serum
Institute of India, Ltd, one of Akorn's long term strategic
partners. Akorn expects to use these proceeds to begin the
development of its biologics product pipeline.
Arthur S. Przybyl, President and Chief Executive Officer stated,
"Our third quarter results continue to reflect our commitment to
achieve our 2006 stated objectives: 50% year-over-year revenue
increase, 40% gross margin, positive net income, 20 ANDA regulatory
filings, 10 product approvals, and the completion of our
lyophilization validation efforts.
"Late last week, our new liquid fill injectable/lyophilization
product fill line was granted clearance by the FDA to manufacture and
commercialize liquid injectable products. This action will allow us to
further upgrade and automate our Decatur manufacturing facility. We
expect to complete validation efforts on our lyophilizers prior to
year end. Commercialization of the new lyophilizers will require a
successful prior approval inspection (PAI) to be conducted by the FDA.
Also in the third quarter, we retired our operating lease and
purchased our two lyophilizers for $1.5 million, resulting in cash
savings of approximately $613,000.
"We continue to develop four important products for anticipated
product launches in 2008. Two proprietary products are being developed
internally. AK-1015, now named Akten, is indicated for ocular
anesthesia, continues to undergo clinical trials, and we expect to
file our 505(b)(2) NDA in the first half of 2007. Formulation work
continues on Minolok, our licensed patent from the University of Texas
M.D. Anderson Cancer Center, and we expect to file a 510(k) in the
first half of 2007. Two undisclosed generic products are being
developed externally through Cipla and Sofgen, respectively, and we
remain confident and on track for anticipated product launches in
2008. For these two products, the recent FDA announcement that
specific generic drugs could be eligible for priority review is an
additional benefit, potentially reducing the regulatory approval time
for these two products. Akorn applauds this effort by the FDA to
continue to help lower U.S. healthcare costs.
"Finally, although not immediately apparent, Serum Institute of
India's equity investment in Akorn is expected to be the beginning of
a long term strategic partnership to expand our portfolio of products
to eventually include biologics and vaccines."
Conference Call
Akorn will host a conference call on Monday October 30, 2006,
beginning at 5:00 p.m. Eastern Time to discuss third quarter 2006
operating results. The dial-in numbers are (800) 289-0508 for domestic
callers and (913) 981-5550 for international callers. Alternatively,
analysts, investors and other interested parties are invited to
participate by visiting the Company's website, www.akorn.com, and
clicking on the live webcast icon located on the home page, or
http://www.videonewswire.com/event.asp?id=35878. Please plan to log on
at least ten minutes prior to the designated start time so management
may begin promptly.
About Akorn, Inc.
Akorn, Inc. manufactures and markets sterile specialty
pharmaceuticals. Akorn has manufacturing facilities located in
Decatur, Illinois and Somerset, New Jersey and markets and distributes
an extensive line of hospital and ophthalmic pharmaceuticals.
Additional information is available at the Company's website at
www.akorn.com.
Materials in this press release may contain information that
includes or is based upon forward-looking statements within the
meaning of the Securities Litigation Reform Act of 1995.
Forward-looking statements give our expectations or forecasts of
future events. You can identify these statements by the fact that they
do not relate strictly to historical or current facts. They use words
such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe," and other words and terms of similar meaning in
connection with a discussion of future operating or financial
performance. In particular, these include statements relating to
future steps we may take, prospective products, future performance or
results of current and anticipated products, sales efforts, expenses,
the outcome of contingencies such as legal proceedings, and financial
results.
Any or all of our forward-looking statements here or in other
publications may turn out to be wrong. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties.
Many such factors will be important in determining our actual future
results. Consequently, no forward-looking statement can be guaranteed.
Our actual results may vary materially, and there are not guarantees
about the performance of our stock.
Any forward-looking statements represent our expectations or
forecasts only as of the date they were made and should not be relied
upon as representing our expectations or forecasts as of any
subsequent date. We undertake no obligation to correct or update any
forward-looking statements, whether as a result of new information,
future events or otherwise, even if our expectations or forecasts
change. You are advised, however, to consult any further disclosures
we make on related subjects in our reports filed with the SEC. In
particular, you should read the discussion in the section entitled
"Cautionary Statement Regarding Forward-Looking Statements" in our
most recent Annual Report on Form 10-K, as it may be updated in
subsequent reports filed with the SEC. That discussion covers certain
risks, uncertainties and possibly inaccurate assumptions that could
cause our actual results to differ materially from expected and
historical results. Other factors besides those listed there could
also adversely affect our results.
-0-
*T
AKORN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
IN THOUSANDS
SEPTEMBER 30, DECEMBER 31,
2006 2005
------------- -------------
(UNAUDITED) (AUDITED)
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 19,523 $ 791
Trade accounts receivable (less
allowance for doubtful accounts of $1
and $13, respectively) 6,939 3,222
Inventories 10,421 10,279
Prepaid expenses and other current
assets 1,206 1,402
------------- -------------
TOTAL CURRENT ASSETS 38,089 15,694
PROPERTY, PLANT AND EQUIPMENT, NET 33,244 31,071
OTHER LONG-TERM ASSETS
Intangibles, net 9,164 10,210
Other 98 120
------------- -------------
TOTAL OTHER LONG-TERM ASSETS 9,262 10,330
------------- -------------
TOTAL ASSETS $ 80,595 $ 57,095
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of debt $ 387 $ 7,044
Trade accounts payable 2,039 3,046
Accrued compensation 1,674 1,519
Customer accrued liabilities 538 135
Accrued interest payable - 2,514
Accrued expenses and other liabilities 1,126 1,202
------------- -------------
TOTAL CURRENT LIABILITIES 5,764 15,460
LONG-TERM LIABILITIES
Long-term debt, less current
installments 309 602
Product warranty 1,131 -
------------- -------------
TOTAL LONG-TERM LIABILITIES 1,440 602
------------- -------------
TOTAL LIABILITIES 7,204 16,062
------------- -------------
SHAREHOLDERS' EQUITY
Common stock, no par value --
150,000,000 shares authorized;
81,000,130 and 27,618,745 shares issued
and outstanding at September 30, 2006
and December 31, 2005, respectively 136,863 67,339
Series A Preferred Stock, $1.00 par
value, 257,172 shares authorized and
issued, 241,122 shares outstanding at
December 31, 2005 - 27,232
Series B Preferred Stock, $1.00 par
value, 170,000 shares authorized,
141,000 shares issued, 74,195
outstanding at September 30, 2006 and
106,600 outstanding at December 31,
2005 7,854 10,758
Warrants to acquire common stock 7,312 13,696
Accumulated deficit (78,638) (77,992)
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 73,391 41,033
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 80,595 $ 57,095
============= =============
*T
-0-
*T
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS, EXCEPT PER SHARE DATA
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
2006 2005 2006 2005
----------- ---------- ----------- -----------
Revenues $ 14,490 $ 10,985 $ 56,695 $ 33,744
Cost of sales 8,539 7,317 34,056 21,881
----------- ---------- ----------- -----------
GROSS PROFIT 5,951 3,668 22,639 11,863
Selling, general and
administrative expenses 4,226 3,894 13,379 10,961
Amortization and write-
down of intangibles 345 353 1,046 1,157
Research and development
expenses 2,649 1,438 6,815 4,203
----------- ---------- ----------- -----------
TOTAL OPERATING
EXPENSES 7,220 5,685 21,240 16,321
----------- ---------- ----------- -----------
OPERATING INCOME
(LOSS) (1,269) (2,017) 1,399 (4,458)
Interest
income/(expense) - net 230 (595) (855) (1,705)
Debt Retirement
Gain/(Expense) - - (391) 1,212
Other Expense (28) - (57) -
------------ ---------- ---------- -----------
INCOME/(LOSS) BEFORE
INCOME TAXES (1,067) (2,612) 96 (4,951)
Income tax provision - 2 - 17
----------- ---------- ----------- -----------
NET INCOME/(LOSS) (1,067) (2,614) 96 (4,968)
Preferred stock
dividends and
adjustments (182) (1,015) (742) (2,991)
----------- ---------- ----------- -----------
NET INCOME/(LOSS)
AVAILABLE TO COMMON
STOCKHOLDERS $ (1,249) $ (3,629) $ (646) $ (7,959)
=========== ========== =========== ===========
NET INCOME/(LOSS) PER
SHARE:
BASIC $ (0.02) $ (0.14) $ (0.01) $ (0.31)
=========== ========== =========== ===========
DILUTED $ (0.02) $ (0.14) $ (0.01) $ (0.31)
=========== ========== =========== ===========
SHARES USED IN COMPUTING
NET INCOME/(LOSS) PER
SHARE:
BASIC 76,420 26,203 71,050 25,804
=========== ========== =========== ===========
DILUTED 76,420 26,203 71,050 25,804
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AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
NINE MONTHS
ENDED SEPTEMBER 30
---------------------
2006 2005
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OPERATING ACTIVITIES
Net income (loss) $ 96 $ (4,968)
Adjustments to reconcile net income/(loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,444 4,927
Amortization of deferred financing costs - 72
Amortization of debt discounts 1,059 876
Advances to Strides Arcolab Limited - (1,500)
Gain on Retirement of Debt - (1,212)
Non-cash stock compensation expense 1,524 273
Changes in operating assets and liabilities:
Trade accounts receivable (3,717) 4,761
Inventories (142) (330)
Prepaid expenses and other current assets 218 480
Trade accounts payable (1,007) (3,279)
Product warranty 1,131 -
Accrued customer liability 403 -
Accrued expenses and other liabilities (137) 502
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NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 1,872 602
INVESTING ACTIVITIES
Purchases of property, plant and equipment (3,571) (744)
Purchase of intangible assets - (75)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (3,571) (819)
FINANCING ACTIVITIES (See Note 1 below)
Repayment of long-term debt (3,009) (253)
Repayment of NeoPharm Debt - (2,500)
Net borrowings under lines of credit - -
Proceeds from common stock and warrant offerings 21,621 -
Proceeds from warrants exercised 1,213 150
Proceeds under stock option and stock purchase
plans 606 734
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NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 20,431 (1,869)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,732 (2,086)
Cash and cash equivalents at beginning of period 791 4,110
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 19,523 $ 2,024
========== ==========
Amount paid for interest $ 577 $ 397
Amount paid for income taxes $ 2 $ 72
Note 1: In March 2006, $7,298 in principal and interest related to
convertible notes was retired by conversion to the common stock of
Akorn, Inc.
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