GeoPharma Inc. (GORX) filed Amended Quarterly Report for the period ended 2009-09-30.
GeoPharma, Inc. manufactures, packages, repackages and distributes a wide array of health-related products. GeoPharma, Inc. is comprised of the contract manufacturing entity, Innovative Health Products and its two wholly owned subsidiaries, Belcher Pharmaceuticals and Breakthrough Engineered Nutrition. Geopharma Inc. has a market cap of $11.8 million; its shares were traded at around $0.61 with and P/S ratio of 0.6.
Highlight of Business Operations:
Pharmaceutical gross profit deficit decreased approximately $106,000, or 36.4%, to a gross profit deficit of approximately ($184,000) for the three months ended September 30, 2009, as compared to approximately ($290,000) in gross profit deficit for this business segment for the three months ended September 30, 2008. This was based primarily on the Cephalasporin and Beta-Lactam facilities that have no revenue streams but have costs associated with production and laboratory direct labor costs. The Largo, Florida generic drug plant has continued manufacturing and shipping Vetprofen ™, its branded generic Carprofen, which has assisted in offsetting some of the costs associated with other production and laboratory direct costs related to the pharmaceutical segment. The Largo, Florida Cephalasporin and generic drug plants incurred approximately $317,634 of costs with the Baltimore, Maryland Beta-Lactam facility having incurred approximately $122,767 of costs with revenue offsets of approximately $404,000. The drug revenues derived were generated from our generic drug plant in Largo, Florida. We are awaiting FDA facility approval of both the Baltimore, Maryland Beta-Lactam and the Largo, Florida Cephalosporin drug facility plants and we estimate and anticipate that we will begin to derive revenues during the fourth quarter of the fiscal year ending March 31, 2010.
Selling, general and administrative (“SG&A”) expenses consist of advertising and promotional expenses; stock compensation costs, insurance costs, research and development costs associated with the generic drug segment, personnel costs related to general management functions, finance, accounting and information systems, payroll expenses and sales commissions; professional fees related to legal, audit and tax matters; and non- manufacturing and non-pharmaceutical machinery and equipment depreciation and amortization expenses. Selling, general and administrative expenses, inclusive of stock compensation and depreciation and amortization expenses, decreased approximately $52,000, or 1.2%, to approximately $4.2 million for the three months ended September 30, 2009, as compared to approximately $4.3 million for the three months ended September 30, 2008. A decrease of approximately $52,000 was due to the increase approximately $341,000 increase in the stock compensation expense directly related to the issuance of 3-year restricted stock awards; an increase in accounting and legal fees of $97,000; an increase in bad debts of $50,000; an increase in rent and utilities of $122,000 all of which was offset by a decrease of $210,000 in research and development expenses, a decrease of approximately $196,000 in salaries and consulting fees; a decrease of approximately $27,000 in travel related expenses, a decrease in office expense of $23,000, and a decrease in depreciation of $125,000. As a percentage of sales, selling, general and administrative expenses increased to 125.4% for the three months ended September 30, 2009, from 84.9% for the three months ended September 30, 2008.
Other income (expense), net was approximately $496,000 for the three months ended September 30, 2009, compared to approximately $(422,000) for the three months ended September 30, 2008. Interest income (expense), net, was approximately $(544,000) for the three months ended September 30, 2009, as compared to approximately $(423,000) for the three months ended September 30, 2008. The increase in interest expense was primarily attributable to interest expense associated with our convertible debt in addition to our short-term obligations issued during the current fiscal year. For the three months ended September 30, 2009, other income (expense), net, of approximately $1 million related to the legal settlement of the American Antibiotics lawsuits whereby the Company was granted debt forgiveness related to accrued rent and interest.
Pharmaceutical gross profit deficit decreased approximately $346,000, or 58.4%, to a gross profit deficit of approximately ($246,000) for the six months ended September 30, 2009, as compared to approximately ($592,000) in gross profit deficit for this business segment for the six months ended September 30, 2008. This was based primarily on the Cephalasporin and Beta-Lactam facilities that have no revenue streams but have costs associated with production and laboratory direct labor costs. The Largo, Florida generic drug plant has continued manufacturing and shipping Vetprofen ™ , its branded generic Carprofen, which has assisted in offsetting some of the costs associated with other production and laboratory direct costs related to the pharmaceutical segment. The Largo, Florida Cephalasporin and generic drug plants incurred approximately $765,377 of costs with the Baltimore, Maryland Beta-Lactam facility having incurred approximately $164,773 of costs with revenue offsets of approximately $987,000. The drug revenues derived were generated from our generic drug plant in Largo, Florida. We are awaiting FDA facility approval of both the Baltimore, Maryland Beta-Lactam and the Largo, Florida Cephalosporin drug facility plants and we estimate and anticipate that we will begin to derive revenues during the fourth quarter of the fiscal year ending March 31, 2010.
Selling, general and administrative (“SG&A”) expenses consist of advertising and promotional expenses; stock compensation costs, insurance costs, research and development costs associated with the generic drug segment, personnel costs related to general management functions, finance, accounting and information systems, payroll expenses and sales commissions; professional fees related to legal, audit and tax matters; and non-manufacturing and non-pharmaceutical machinery and equipment depreciation and amortization expenses. Selling, general and administrative expenses, inclusive of stock compensation and depreciation and amortization expenses, remained constant at approximately $8.5 million, for the six months ended September 30, 2009 and 2008, decreases in research and development, depreciation and other selling and general administration costs were offset by increases of approximately $900,000 in the stock compensation expense directly related to the issuance of 3-year restricted stock awards. Various offsetting increases and decreases in selling and general administrative expenses resulted in an increase in accounting and legal fees of $10,000; an increase in bad debts of $50,000; an increase in rent and utilities of $140,000 all of which was offset by a decrease of $484,000 in research and development expenses, a decrease of approximately $327,000 in salaries and consulting fees; a decrease of approximately $70,000 in travel related expenses, a decrease in office expense of $32,000, and a decrease in depreciation of $186,000. As a percentage of sales, selling, general and administrative expenses increased to 98.9% for the six months ended September 30, 2009, from 73.9% for the six months ended September 30, 2008.
We had approximately $259,000 of cash and cash equivalents as of September 30, 2009, a decrease from approximately $90,000 as of March 31, 2009. We had a working capital deficit of approximately $11.5 million as of September 30, 2009, inclusive of current portion of convertible and other long-term obligations. As of March 31, 2009, we had working capital deficit of approximately $9.2 million, inclusive of current portion of long-term obligations. As of September 30, 2009 and March 31, 2009, our liquidity is affected by our certificates of deposit of approximately $5.4 million for both periods which is included in current assets of which $5 million is pledged as collateral for our short-term obligation to First Community Bank of America. On October 6, 2009, the Company fully satisfied its $5 million note with a bank by liquidating the $5 million certificate of deposit.
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