AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MAY 31, 2007APRIL 15, 2014REGISTRATION NO.
________ ================================================================================333-UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
-----------FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------ELITE PHARMACEUTICALS, INC.
(Exact(Exact name of
Registrantregistrant as specified in its charter)- -------------------------------------------------------------------------------- DELAWARE 2834 22-3542636 (State
| Nevada | 22-3542636 | |
(State or incorporation or organization) | (I.R.S. Employer Identification No.) |
165 Ludlow Avenue
Northvale, NJ 07647
201-750-2646
(Address including zip code, and telephone number, including
area code of Classification Code Number) Identification
incorporation or Number)
organization)
- --------------------------------------------------------------------------------
BERNARD BERK, CHIEF EXECUTIVE OFFICER
ELITE PHARMACEUTICALS, INC.
principal executive offices)
Nasrat Hakim
Chief Executive Officer
165 LUDLOW AVENUE
NORTHVALE, NEW JERSEYLudlow Avenue
Northvale, NJ 07647
(201) 750-2646
(Name,
201-750-2646
(Name, address including zip code, and telephone number,
including area code of registrant's principal executive offices
and agent for service)
With copies
Copies to:
SCOTT H. ROSENBLATT, ESQ.
GARY M. EMMANUEL, ESQ.
REITLER BROWN & ROSENBLATT, LLC
800 THIRD AVENUE, 21ST FLOOR
NEW YORK, NEW YORK 10022-4611
(212) 209-3050
Richard Feiner, Esq
381 Park Avenue South, 16th Floor
New York, NY 10016
212-779-8600
917-720-0863 (fax)
Approximate date of commencement of proposed sale to the public: As
soon as practicable From time to time after the effective date of this Registration Statement.
registration statement.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_|
¨
If any of the securities being registered on this Formform are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |X|
¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act Registration Statementregistration statement number of the earlier effective Registration Statementregistration statement for the same offering. |_|
¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statementregistration statement number of the earlier effective Registration
Statementregistration statement for the same offering. |_|
¨
If this formForm is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. |-|
¨
(COVER CONTINUES ON FOLLOWING PAGE)
If this formForm is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. |_|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “non-accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
¨Large accelerated filer
¨Accelerated filer
¨Non-accelerated filer
xSmaller reporting company
CALCULATION OF REGISTRATION FEE
| Title of each class of securities to be registered(1) | Proposed Maximum Aggregate Offering Price(1) | Amount Of Registration Fee(2) | ||||||
| Common Stock, $0.001 par value per share | ||||||||
| Total | $ | 41,600,000 | $ | 5,358 | ||||
| (1) | Includes shares that may be purchased by Lincoln Park under the Lincoln Park Purchase Agreement and shares issued to |
| (2) | The registration fee |
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Rule 416Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, DATED April 15, 2014
PROSPECTUS
ELITE PHARMACEUTICALS, INC.
$41,600,000
Common Stock
This prospectus relates to the offer and sale of up to $41,600,000 worth of our shares of common stock, par value $0.001, of Elite Pharmaceuticals, Inc., a Nevada corporation, by Lincoln Park Capital Fund, LLC, or Lincoln Park or the selling shareholder.
The shares of common stock being offered by the selling shareholder have been or may be issued pursuant to the purchase agreement dated April 10, 2014 that we entered into with Lincoln Park. See “The Lincoln Park Transaction” in “Selling Shareholder” for a description of that agreement and “Selling Shareholder” for additional information regarding Lincoln Park. The prices at which Lincoln Park may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions.
We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares by the selling shareholder.
The selling shareholder may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. See “Plan of Distribution” for more information about how the selling shareholder may sell the shares of common stock being registered pursuant to this prospectus. The selling shareholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended, this registration statement also registersamended.
We will pay the resale byexpenses incurred in registering the selling stockholdersshares, including legal and accounting fees. See “Plan of any additional shares of our common stock which
become issuable in connection with such shares because of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an
increase in the number of outstanding shares of our common stock.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as
amended, and based on the average of the high and low sale price per
share of shares of the common stock on the American Stock Exchange on
May 24, 2007.
(3) Consists of (i) 957,396 shares of Common Stock; (ii) 478,698 shares of
Common Stock issuable upon the exercise of warrants; and (iii)
1,750,000 shares of Common Stock issuable upon the exercise of options.
-----------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING
OFFERS TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE OF THESE
SECURITIES IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION, DATED MAY 31, 2007
ELITE PHARMACEUTICALS INC.
COMMON STOCK
----------------------
This is an offering (the "OFFERING") of the following shares of common
stock, par value $.01 per share, of Elite Pharmaceuticals, Inc. (the "COMPANY",
"ELITE", "WE", "US" or "OUR"), by the selling stockholders named in this
prospectus or by pledgees, donees, transferees or other successors in interest
to the selling stockholders (the "SELLING STOCKHOLDERS"):
(i) 957,396 shares of Common Stock;
(ii) 478,698 shares of Common Stock issuable upon the exercise of warrants;
and
(iii) 1,750,000 shares of Common Stock issuable upon the exercise of options.
TheDistribution”.
Our common stock is listedcurrently quoted on the American Stock ExchangeOver-the-Counter Bulletin Board, or the OTCBB, under the symbol "ELI."“ELTP”. On May 30, 2007,April 8, 2014, the closing saleslast reported sale price of our common stock on the AmericanOTCBB was $0.32.
Investment in the Common Stock Exchange was $2.25 per share.
SEE "RISK FACTORS" BEGINNING ON 3 FOR A DISCUSSION OF FACTORS THAT YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Other than receiptinvolves a high degree of risk. You should consider carefully the cash exercise price upon exerciserisk factors beginning on page 4 of this prospectusrisks and in the warrantssections entitled “Risk Factors” in our most recent annual report on Form 10-K and options, we will receive no proceeds from the salein any quarterly report on Form 10-Q, as well as in any prospectus supplement related to these specific offerings before purchasing any of the shares offered by this prospectus.
We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of common stock sold bythese securities or determined if this prospectus is truthful or complete. Any representation to the Selling Stockholders.
----------------------
contrary is a criminal offense.
The date of this prospectus is May ___, 2007.
ELITE PHARMACEUTICALS, INC.
TABLE OF CONTENTS
Page
WHERE YOU CAN FIND MORE INFORMATION
| Page | |
| About This Prospectus | 1 |
| Prospectus Summary | 1 |
| Risk Factors | 4 |
| Forward-Looking Statements | 16 |
| Use of Proceeds | 16 |
| Determination of Offering Price | 16 |
| Selling Shareholder | 16 |
| Plan of Distribution | 21 |
| Legal Matters | 22 |
| Experts | 22 |
| Limitation On Liability And Disclosure Of Commission Position On Indemnification For Securities Act Liabilities | 23 |
| Where You Can Find More Information | 23 |
| Information Incorporated By Reference | 23 |
ABOUT US...................................1THIS PROSPECTUS SUMMARY.............................................................1
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION.....................2
RISK FACTORS...................................................................3
USE OF PROCEEDS...............................................................11
SELLING STOCKHOLDERS..........................................................11
PLAN OF DISTRIBUTION..........................................................13
LEGAL MATTERS.................................................................14
EXPERTS.......................................................................14
INCORPORATION BY REFERENCE....................................................14
INFORMATION NOT REQUIRED IN PROSPECTUS......................................II-1
SIGNATURES..................................................................II-4
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file reports, proxy statements, information statements and other
information with the Securities and Exchange Commission (the "SEC").
You may readonly rely on the information contained or incorporated by reference in this prospectus and copy this information, for a copying fee, at the SEC's Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for more information in its public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services, from the American Stock Exchange and at the web site maintained by the
SEC at http://www.sec.gov.any prospectus supplement. We have not authorized anyone to giveprovide you with different information. The selling stockholder is not making an offer of these securities in any informationjurisdiction where the offer or make any
representation about the Offeringsale is not permitted. You should assume that differs from, or adds to, the information in this prospectus or in our documentsany prospectus supplement is accurate only as of the date on the front of that are publicly filed with the SECdocument and that areany information we have incorporated in this prospectus. Therefore, if anyone does give you
different or additional information, you should not rely on it. The deliveryby reference is accurate only as of
this prospectus does not mean that there have not been any changes in our
condition since the date of this prospectus. If you arethe document incorporated by reference. Our business, financial condition, results of operations and prospects may have changed materially since those dates.
PROSPECTUS SUMMARY
This prospectus summary highlights certain information about our company and other information contained elsewhere in a jurisdiction where
it is unlawful to offer the securities offered by this prospectus or if you are
a person to whom it is unlawful to direct such activities, then the offer
presentedin documents incorporated by this prospectusreference. This summary does not extend to you. Thiscontain all of the information that you should consider before making an investment decision. You should carefully read the entire prospectus, speaks only
as of its date except where it indicates that another date applies. Documents
that areany prospectus supplement, including the section entitled “Risk Factors” and the documents incorporated by reference ininto this prospectus, speak only as of their
date, except where they specify that other dates apply.
THIS PROSPECTUS IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM, OR
INCORPORATED BY REFERENCE INTO, THIS PROSPECTUS AND MAY NOT CONTAIN ALL THE
INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND OUR BUSINESS AND THIS
OFFERING FULLY, YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE
CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES AND THE DOCUMENTS
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. REFERENCES IN THIS PROSPECTUS TO
THE "COMPANY," "ELITE," "ELITE PHARMACEUTICALS," "WE," "OUR," AND "US" REFER TO
ELITE PHARMACEUTICALS, INC.before making an investment decision.
About Us
Elite Pharmaceuticals, Inc., A DELAWARE CORPORATION, TOGETHER WITH OUR
SUBSIDIARIES. PLEASE SEE "INCORPORATION BY REFERENCE" FOR A DESCRIPTION OF
PUBLIC FILINGS DEEMED INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
THE COMPANY
OVERVIEWa Nevada corporation (the “Company”, “Elite”, “we”, “us” or “our”), through its wholly-owned subsidiaries, is a specialty pharmaceutical company We are a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled release products. We develop
oral, controlled releasecontrolled-release products, using proprietary know-how and technology, and license theseparticularly as it relates to abuse resistant products. Our strategy includes improving off-patent drug products for life cycle management and developing generic versions of controlled releasecontrolled-release drug products with high barriers to entry. Our technology is applicable to develop
delayed, sustained
We own, license or targeted release pellets, capsules, tablets, granules and
powders.
We have twocontract manufacture eight products Lodrane 24(R) and Lodrane 24D(R), currently being sold commercially, as follows:
| · | Phentermine 37.5mg tablets (“Phentermine 37.5mg”) |
| · | Lodrane D® Immediate Release capsules (“Lodrane D”) |
| · | Methadone 10mg tablets (“Methadone 10mg”) |
| · | Hydromorphone Hydrochloride 8mg tablets (“Hydromorphone 8mg”) |
| · | Phendimetrazine tartrate 35mg tablets |
| · | Phentermine 15mg capsules (“Phentermine 15mg”) |
| · | Phentermine 30mg capsules (“Phentermine 30mg”) |
| · | Naltrexone HCl 50mg tablets (“Naltrexone 50mg”) |
In October 2013, we acquired approved Abbreviated New Drug Applications (“ANDAs”) for 12 products and one ANDA that is under active review with the FDA from Mikah Pharma, and we executed a Manufacturing and License Agreement with Epic Pharma LLC to manufacture, market and sell in the United States and Puerto Rico 12 generic products owned by Elite.
Elite has a license agreement with Precision Dose, Inc. (the “Precision Dose License Agreement”) and a manufacturing agreement with The PharmaNetwork LLC (now Ascend Laboratories LLC) (the “TPN Agreement”).
The Precision Dose License Agreement provides for the marketing and distribution, in the United States, Puerto Rico and Canada, of Phentermine 37.5mg, Phentermine Capsules, Hydromorphone 8mg, Naltrexone Generic, and certain additional products that require approval from the FDA. Phentermine 37.5mg tablets were launched in April 2011. Hydromorphone 8mg was launched in March 2012. Phentermine 15mg and Phentermine 30mg were launched in April 2013. Naltrexone 50mg was launched in September 2013.
The TPN Agreement provides for the manufacture and packaging by the Company of Ascend’s methadone hydrochloride, 10mg tablets (“Methadone 10mg”), with the Methadone 10mg to be marketed by Ascend. The FDA has approved the manufacturing of Methadone 10mg at the Northvale Facility and the initial shipment of Methadone 10mg occurred during January 2012.
In addition, Elite also has an undisclosed generic product filed with the FDA that is awaiting review and for which Elite retains all rights.
The Company also has a pipeline of sevenadditional generic drug candidates under developmentactive development.
Additionally, the Company is developing abuse resistant opioid products, and once-daily opioid products.
On May 22, 2012, the United States Patent and Trademark Office (“USPTO”) issued U.S. Patent No. 8,182,836, entitled “Abuse-Resistant Oral Dosage Forms and Method of Use Thereof, with such patent providing further protection for the Company’s Abuse Resistant Technology.
On April 23, 2013, the USPTO issued U.S. Patent No. 8,425,933, entitled “Abuse-Resistant Oral Dosage Forms and Method of User Thereof”, with such patent providing further protection for the Company’s Abuse Resistant Technology.
On December 16, 2013, the USPTO issued a Notice of Allowance for Elite’s application number 13/863,764 entitled “Abuse-Resistant Oral Dosage Forms and Method of Use Thereof”. As of the date of filing of this Quarterly Report on Form 10-Q, Elite has not been notified of the issuance of a patent in the therapeutic areas that include pain management, allergy and infection. Of
the productsrelation to this allowance.
The Northvale Facility operates under development, ELI-216, an abuse deterrent oxycodone product
and ELI-154, a once daily oxycodone product are in clinical trials and we have
two generic product candidates that are undergoing pivotal studies. The
addressable market for our pipeline of products exceeds $6 billion. Our facility
in Northvale, New Jersey also is aCurrent Good Manufacturing Practice (GMP) and DEAis a United States Drug Enforcement Agency (“DEA”) registered facility for research, development and manufacturing.
At the end of 2006, we formed, together with VGS Pharma, LLC, Novel
Laboratories, Inc. ("NOVEL"), a Delaware corporation as a separate specialty
pharmaceutical company for the research, development, manufacturing, licensing
and acquisition of specialty generic pharmaceuticals.
1
We believe that our business strategy enables us to reduce our risk by
having a diverse product portfolio that includes both branded and generic
products in various therapeutic categories and build collaborations and
establish licensing agreements with companies with greater resources thereby
allowing us to share costs of development and to improve cash-flow.
CORPORATE INFORMATION
Elite Pharmaceuticals, Inc. was incorporated on October 1,1997 under
the laws of Delaware, and our wholly-owned subsidiaries, Elite Laboratories,
Inc. ("ELITE LABS") and Elite Research, Inc. ("ELITE RESEARCH") were
incorporated on August 23, 1990 and December 20, 2002, respectively, under the
laws of Delaware.
On October 24, 1997, Elite Pharmaceuticals merged with and into our
predecessor company, Prologica International, Inc. ("PROLOGICA"), an inactive
publicly held corporation formed under the laws of Pennsylvania. At the same
time, Elite Labs merged with a wholly-owned subsidiary of Prologica. Following
these mergers, Elite Pharmaceuticals survived as the parent of its wholly-owned
subsidiary, Elite Labs.
On September 30, 2002, we acquired from Elan Corporation, plc and Elan
International Services, Ltd. (together "ELAN") Elan's 19.9% interest in Elite
Research, Ltd., a Bermuda corporation ("ERL"), a joint venture formed between
Elite and Elan in which our initial interest was 100% of the outstanding common
stock which represented 80.1% of the outstanding capital stock. As a result of
the termination of the joint venture, we owned 100% of ERL's capital stock. On
December 31, 2002, ERL was merged into Elite Research, our wholly-owned
subsidiary.
Our common stock is traded on the American Stock Exchange under the
symbol "ELI". The market for our stock has historically been characterized
generally by low volume and broad range of prices and volume volatility. We
cannot give any assurance that a stable trading market will develop for our
stock.
Ourprincipal executive offices are located at 165 Ludlow Avenue, Northvale, New Jersey 07647. Phone No.:07647, and our telephone number is (201) 750-2646; Facsimile No.: (201) 750-2755.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Certain information750-2646. We maintain a website at “http://www.elitepharma.com.” Information contained in oron our website is not considered to be a part of, nor incorporated by reference in, this Prospectus.
Elite’s facility in Northvale, New Jersey operates under Good Manufacturing Practice (“GMP”) and is a United States DEA registered facility for research, development and manufacturing.
About This Offering
On April 10, 2014, we entered into a purchase agreement with Lincoln Park, which we refer to in this prospectus as the Purchase Agreement, pursuant to which Lincoln Park has agreed to purchase from us up to $40,000,000 of our common stock (subject to certain limitations) from time to time over a 36-month period. Also, on April 10, 2014, we entered into a Registration Rights Agreement, or the Registration Rights Agreement, with Lincoln Park, pursuant to which we have filed with the SEC the registration statement that includes forward-looking statements (as defined in Section 27A ofthis prospectus to register for resale under the Securities Act of 1933, and Section 21Eas amended (the “Securities Act”), or the Securities Act, the shares that have been or may be issued to Lincoln Park under the Purchase Agreement.
Other than 1,928,641shares of our common stock that we have already issued to Lincoln Park pursuant to the terms of the Purchase Agreement as consideration for its commitment to purchase shares of our common stock under the Purchase Agreement, we do not have the right to commence any sales to Lincoln Park under the Purchase Agreement until the SEC has declared effective the registration statement of which this prospectus forms a part. Thereafter, we may, from time to time and at our sole discretion, direct Lincoln Park to purchase up to 500,000 shares of our common stock on any business day, provided that at least one business day has passed since the most recent purchase. However, in no event shall Lincoln Park purchase more than $760,000 worth of our common stock on any single business day, plus an additional “accelerated amount” under certain circumstances. Except as described in this prospectus, there are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Lincoln Park. The purchase price of the up to 500,000 shares that may be sold to Lincoln Park under the Purchase Agreement on any business day will be based on the market price of our common stock immediately preceding the time of sale as computed under the Purchase Agreement without any fixed discount; provided that in no event will such shares be sold to Lincoln Park when our closing sale price is less than $0.10 per share, subject to adjustment as provided in the Purchase Agreement. The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the business days used to compute such price. We may at any time in our sole discretion terminate the Purchase Agreement without fee, penalty or cost upon one business day’s notice. Lincoln Park may not assign or transfer its rights and obligations under the Purchase Agreement.
The Purchase Agreement provides that we may sell up to $40,000,000 of our common stock to Lincoln Park. This prospectus covers the offer and sale by Lincoln Park of allshares of our common stock issuable to Lincoln Park under the Purchase Agreement and includes shares issued to and issuable to Lincoln Park as commitment shares. Assuming a sales price of $0.33 (the closing price of the common stock on April 8, 2014, a total of 125,069,403 shares would be offered by Lincoln Park under this prospectus. If such shares were issued and outstanding as of April 8, 2014, such shares would represent approximately 18% of the total number of shares of our common stock outstanding and 22% of the total number of outstanding shares held by non-affiliates, in each case as of April 8, 2014. The number of shares ultimately offered for resale by Lincoln Park is dependent upon the number of shares we sell to Lincoln Park under the Purchase Agreement.
Issuances of our common stock in this offering will not affect the rights or privileges of our existing shareholders, except that the economic and voting interests of each of our existing shareholders will be diluted as a result of any such issuance. Although the number of shares of common stock that our existing shareholders own will not decrease, the shares owned by our existing shareholders will represent a smaller percentage of our total outstanding shares after any such issuance to Lincoln Park.
For more detailed information on the transaction with Lincoln Park, please see “The Lincoln Park Transaction” in “Selling Shareholder” below.
Securities ExchangeOffered
| Common stock to be offered by the selling shareholder | $41,600,000 of shares | |
| Common stock outstanding prior to this offering | 560,342,420 shares | |
| Common stock to be outstanding after giving effect to the issuance of 125,069,403 shares under the Purchase Agreement | 685,411,823 shares(1) | |
| Use of Proceeds | We will receive no proceeds from the sale of shares of common stock by Lincoln Park in this offering. However, we may receive up to $40,000,000 under the Purchase Agreement with Lincoln Park. Any proceeds that we receive from sales to Lincoln Park under the Purchase Agreement will be used to fund the production development and commercial activities of the Company, for general and administrative expenses, to pay down liabilities and for working capital. See “Use of Proceeds.” |
| Risk factors | This investment involves a high degree of risk. See “Risk Factors” for a discussion of factors you should consider carefully before making an investment decision. | |
| Symbol on OTCBB | ELTP |
(1) Assumes a sales price of $0.33 (the closing price of the common stock on April 8, 2014) and includes all shares of our common stock issued and issuable to Lincoln Park under the Purchase Agreement as commitment shares. The actual sales prices will differ. In the event that the Company needs to sells more than 25,000,000 shares to Lincoln Park, it will need to obtain shareholder approval to increase the number of its authorized shares of common stock. Such a proposal will be voted upon at the Company’s Annual Shareholders’ Meeting scheduled for May 21, 2014.
RISK FACTORS
An investment in our company involves a high degree of risk. In addition to the other information included in this prospectus, you should carefully consider the following risk factors described in this prospectus and the risk factors that may be described in any applicable prospectus supplement and the documents incorporated by reference in this prospectus. You should also consider the risks, uncertainties and assumptions discussed under the heading "Risk Factors" included in our most recent Annual Report on Form 10-K, as revised or supplemented by our most recent Quarterly Report on Form 10-Q, each of which are on file with the SEC and are incorporated herein by reference, and which may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. You should consider these matters in conjunction with the other information included or incorporated by reference in this prospectus. The risks and uncertainties described in this prospectus, any applicable prospectus supplement and the documents incorporated by reference herein are not the only ones facing us. Additional risks and uncertainties that we do not presently know about or that we currently believe are not material may also adversely affect our business. Our business, results of operations or financial condition could be seriously harmed, and the trading price of our common stock may decline due to any of these or other risks.
This prospectus contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1934)
that reflect1995. These statements appear in a number of places in this prospectus and include statements regarding the intent, belief or current expectations of our current viewsmanagement, directors or officers primarily with respect to our future eventsoperating performance. Prospective purchasers of our securities are cautioned that these forward-looking statements are not guarantees of future performance and financial
performance. Certain factors, such as unanticipated technological difficulties,
the volatileinvolve risks and competitive environment for drug delivery products and the
development of generic drug products, changes in domestic and foreign economic,
market and regulatory conditions, the inherent uncertainty of financial
estimates and projections, the degree of success, if any, in concluding business
partnerships or licenses with viable pharmaceutical companies, instabilities
arising from terrorist actions and responses thereto, and other considerations
described as "RISK FACTORS" in this prospectus could cause actualuncertainties. Actual results tomay differ materially from those in the forward-looking statements. When usedstatements due to various factors. The accompanying information contained in this registration statement, statementsprospectus, including the information set forth below, identifies important factors that are not statements of current or
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "plan", "intend", "may," "will," "expect," "believe",
"could," "anticipate," "estimate," or "continue" or similar expressions or other
variations or comparable terminology are intended to identify such
forward-looking statements. Readers are cautioned not to place undue reliance oncould cause these forward-looking statements, which speak only as of the date hereof. Except
as required by law, we undertake no obligation to update any forward-looking
statements, whether as a result of new information, future events or otherwise.
2
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
INCLUDING THE OTHER DOCUMENTS INCORPORATED HEREIN BY REFERENCE AND REFERRED
BELOW, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING
AN INVESTMENT IN US AND IN ANALYZING OUR FORWARD-LOOKING STATEMENTS.
differences. See “Forward-Looking Statements” below.
RISKS RELATED TO OUR BUSINESS
WE HAVE A RELATIVELY LIMITED OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO
EVALUATE OUR FUTURE PROSPECTS.
We have a relatively limited operating history, which makes it difficult to evaluate our future prospects.
Although we have been in operation since 1990, we have a relatively short operating history and limited financial data upon which you may evaluate our business and prospects. In addition, our business model is likely to continue to evolve as we attempt to expand our product offerings and our presence in the generic pharmaceutical market. As a result, our potential for future profitability must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies that are attempting to move into new markets and continuing to innovate with new and unproven technologies. Some of these risks relate to our potential inability to:
o develop new products;
o obtain regulatory approval of our products;
o manage our growth, control expenditures and align costs with
revenues;
o attract, retain and motivate qualified personnel; and
o respond to competitive developments.
| · | develop new products; |
| · | obtain regulatory approval of our products; |
| · | manage our growth, control expenditures and align costs with revenues; |
| · | attract, retain and motivate qualified personnel; and respond to competitive developments. |
If we do not effectively address the risks we face, our business model may become unworkable and we may not achieve or sustain profitability or successfully develop any products.
WE HAVE NOT BEEN PROFITABLE AND EXPECT FUTURE LOSSES.
We have not been profitable and expect future losses.
To date, we have not been profitable and since our inception in 1990,
we have not generated any significant revenues. We may never be profitable or, if we become profitable, we may be unable to sustain profitability. We have sustained losses from operations in each year since our incorporation in 1990. We incurred net
losses of $7,750,174, $6,883,914, $5,906,890, $6,514,217 and $4,061,422, forDuring the nine months ended December 31, 20062013 and the years ended March 31, 2006, 2005,
2004 and 2003, respectively. We expect to realize significant losses for the current yearpast two fiscal years, we incurred net losses from operations of operation$2,899,322, $1,563,133 and $1,966,138, respectively We expect to continue to incur losses until we are able to generate sufficient revenues to support our operations and offset operating costs.
IF WE ARE UNABLE TO OBTAIN ADDITIONAL FINANCING NEEDED FOR THE EXPENDITURES FOR
THE DEVELOPMENT AND COMMERCIALIZATION OF OUR DRUG PRODUCTS, IT WOULD IMPAIR OUR
ABILITY TO CONTINUE TO MEET OUR BUSINESS OBJECTIVES.
We continue tomay require additional financing to ensuremeet our business objectives and to continue as a going concern.
The independent auditor’s report for the year ended March 31, 2013, includes an explanatory paragraph to their audit opinion stating that our recurring losses from operations and working capital deficiency raise substantial doubt about our ability to continue as a going concern. As of December 31, 2013, we had cash reserves of approximately $1.9 million and a working capital deficit of $8.6 million, and we had losses from operations totaling $2.9 million for the nine months ended December 31, 2013, net other expenses totaling $6.9 million for the nine months then ended and a net loss of $ 9.8 million for the nine months ended December 31, 2013. In addition, as discussed below in “Even after regulatory approval, we will be subject to ongoing significant regulatory obligations and oversight as evidenced by the FDA’s removal from the market of our Lodrane® extended release product line”, in March 2011. The Lodrane® extended release products constituted approximately 97% of our revenues at the time of FDA’s directive.
Over the past year, we raised approximately $10 million from the sale of shares to Lincoln Park pursuant to a prior April 19, 2013 purchase agreement. That agreement terminated in March 2014 with the sale of all shares covered by that agreement. In addition, both Nasrat Hakim, our CEO, and Jerry Treppel, our Chairman, have each provided Elite with a revolving bridge credit line of up to $1,000,000.
Pursuant to the Purchase Agreement with Lincoln Park, we may direct Lincoln Park to purchase up to $40,000,000 worth of shares of our common stock under our agreement over a 36 month period generally in amounts up to 500,000 shares on any such business day. However, Lincoln Park shall not be required to purchase more than $760,000 worth of stock on any business day and cannot purchase any shares of our common stock on any business day that the closing sale price of our common stock is less than $0.10 per share, subject to adjustment as set forth in the Purchase Agreement. Assuming a purchase price of $0.33 per share (the closing sale price of the common stock on April 8, 2014) and only 25,000,000 shares available for purchase, the purchase by Lincoln Park of all of the shares registered herein for sale to Lincoln Park under the Purchase Agreement, proceeds to us would be $7,494,304.
The extent we rely on Lincoln Park as a source of funding will depend on a number of factors including, the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient funding from Lincoln Park were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working capital needs. Even if we sell all $40,000,000 under the Purchase Agreement to Lincoln Park, we may still need additional capital to fully implement our business, operating and development plans.
Our ability to raise additional funds from the sale of equity securities to Lincoln Park or others is limited. In this regard, we only have approximately 25,000,000 shares authorized but unissued and unreserved. At our upcoming annual shareholders’ meeting scheduled to be held on May 21, 2014 we are seeking to amend our Articles of Incorporation to increase the number of authorized shares of Common Stock. If we are unable to obtain approval for this increase, the amount of proceeds we may receive from the sale of our remaining Common Stock is limited.
We are anticipating that, with the growth of the current generic product line consisting of generic phentermine tablets and capsules, hydromorphone, naltrexone, methadone, phendimetrazine and immediate release Lodrane D®, combined with the successful transfer of manufacturing site and commercial launch of the 12 approved generic products licensed to Epic Pharma LLC and other opportunities in our pipeline, Elite eventually could be profitable. However, there can be no assurances that we will be able to timely raise additional funds on acceptable terms through the Purchase Agreement or otherwise, that the sales of the current generic product line will continue, that the 12 approved generic products licensed to Epic Pharma LLC will be successfully commercialization and generate future revenues or that the other opportunities in our pipeline will be successfully commercialized. There can also be no assurances of Elite becoming profitable
To sustain operations and meet our expenditures to develop and commercialize our products. In
particular,business objectives we have committed to make a substantial investment in our joint
venture, Novel, of up to $25,000,000 upon Novel meeting certain milestones and
if we fail to meet this obligation, VGS Pharma, LLC, our co-venturer in Novel,
may exercise a purchase right that would result in either the elimination or
significant dilution of our interest in Novel.
We do not have committed external sources of funding and may notmust be able to commercialize our products and other products or pipeline opportunities. If we are unable to timely obtain any additional funding, especially if volatile market conditions
persist for biotechnology companies. We believefinancing and we are unable to timely generate greater revenues from our existing cash resources,
including the $15 million raised in the private placement ofoperations, we will be required to reduce and, possibly, cease operations and liquidate our Series C
Preferred Stock that closed on April 24, 2007, is sufficient to meet our cash
requirements for the next 14 months.
Other possible sources of the required financing are income from
product sales or sales of market rights, distributions from Novel, income from
co-development or partnering arrangements and the cash exercise of warrants and
options that are currently outstanding.assets. No representationassurance can be madegiven that we will be able to obtaincommercialize the new opportunities, or consummate such revenue or additional
3
if obtained it will bestrategic alternative in the time necessary to avoid the cessation of our operations and liquidation of our assets.
We are in default on favorable terms,our obligations under the NJEDA Bonds. If we are unable to work out an arrangement to delay payment, repay or at all. No assurance
can be given that any offering if undertaken will be successfully concludedotherwise cure or that if concluded the proceeds will be material. Our inability to obtain
additional financing when needed would impairsettle this default, our ability to continue our
business.
If anyoperate in the future financing involves the further salewill be materially and adversely affected.
We are in default of our securities,obligations on a loan through tax-exempt bonds from the New Jersey Economic Development Authority (“NJEDA”). Our liability under this obligation as of March 31, 2014 was approximately $3.4 million. Our real property and the improvements thereon are encumbered by a mortgage in favor of as security for a loan through the NJEDA Bonds. We have received Notices of Default from the Trustee in relation to the utilization of the debt service reserve fund for of semi-annual interest payments from March 2009 to the present and for the non-payment of principal amounts due on September 1, 2010, 2011, 2012 and 2013. While the Company has replenished all amounts withdrawn from the debt service reserve fund in accordance with the terms of the bond agreement, there can be no assurances of the Company being able to make future semi-annual interest payments without utilizing the debt service reserve fund, nor can there be assurances of the Company being able to replenish the debt service reserve fund in the future. In addition, there can be no assurances of the Company being able to pay the principal payments currently due as well as those which are due in the future
Resolution of our then-existing stockholders' equitydefault under the NJED Bonds will have a significant effect on our ability to operate in the future. For more information on the NJEDA Bonds.
Elite’s pipeline consists of products in various stages of development, including products in early development.
Elite’s product pipeline, including its abuse deterrent opioid products, are in various stages of development. Prior to commercialization, product development must be completed that could include scale-up, clinical studies, regulatory filing, regulatory review, approval by the FDA, and/or other development steps. Additionally, Elite has 12 approved generic products for which a site transfer must be substantially diluted. On the
other hand, if we incurred debt, we would becompleted prior to product launches. For these generic products, Elite must complete site transfer studies, file a changes being effective in 30 days (CBE 30) and await FDA review and approval. Development is subject to risks associated with
indebtedness, including the riskrisks. We cannot assure you that interest ratesdevelopment will be successful, or that during development unexpected delays might fluctuate and cash
flow wouldoccur or additional costs might be insufficientincurred.
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If we are unable to pay principal and interest on such indebtedness.
SUBSTANTIALLY ALL OF OUR PRODUCT CANDIDATES ARE AT AN EARLY STAGE OF DEVELOPMENT
AND ONLY A PORTION OF THESE ARE IN CLINICAL DEVELOPMENT.
Other than ELI-216 and ELI-254, which are in clinical trial
development, our five other product candidates are still at an early stage of
development. We dosatisfy regulatory requirements, we may not have any products that are commercially available other
than Lodrane 24(R) and Lodrane 24D(R). We will needbe able to perform additional
development work for all ofcommercialize our product candidates in our pipeline before we can
seek the regulatory approvals necessary to begin commercial sales.
IF WE ARE UNABLE TO SATISFY REGULATORY REQUIREMENTS, WE MAY NOT BE ABLE TO
COMMERCIALIZE OUR PRODUCT CANDIDATES.
candidates.
We need FDA approval prior to marketing our product candidates in the United States of America. If we fail to obtain FDA approval to market our product candidates, we will be unable to sell our product candidates in the United States of America and we will not generate any revenue from the sale of such products.
This regulatory review and approval process, which includes evaluation of preclinical studies and clinical trials of our product candidates, is lengthy, expensive and uncertain. To receive approval, we must, among other things, demonstrate with substantial evidence from well-controlled clinical trials that our product candidates are both safe and effective for each indication where approval is sought. Satisfaction of these requirements typically takes several years and the time needed to satisfy them may vary substantially, based on the type, complexity and novelty of the pharmaceutical product. We cannot predict if or when we might submit for regulatory approval any of our product candidates currently under development. Any approvals we may obtain may not cover all of the clinical indications for which we are seeking approval. Also, an approval might contain significant limitations in the form of narrow indications, warnings, precautions, or contra-indications with respect to conditions of use.
The FDA has substantial discretion in the approval process and may either refuse to file ouraccept an application for substantive review or may form the opinion after review of our dataan application that ourthe application is insufficient to allow approval of oura product candidates.candidate. If the FDA does not fileaccept our application for review or approve our application, it may require that we conduct additional clinical, preclinical or manufacturing validation studies and submit thatthe data before it will reconsider our application. Depending on the extent of these or any other studies that might be required, approval of any applications that we submit may be delayed by several years, or we may require usbe required to expend more resources than we have available. It is also possible that any such additional studies, if performed and completed, may not be considered sufficient by the FDA to make our applications approvable. If any of these outcomes occur, we may be forced to abandon our applications for approval, which
might cause us to cease operations.
approval.
We will also be subject to a wide variety of foreign regulations governing the development, manufacture and marketing of our products. Whether or not an FDA approval has been obtained, approval of a product by the comparable regulatory authorities of foreign countries must still be obtained prior to manufacturing or marketing the product in those countries. The approval process varies from country to country and the time needed to secure approval may be longer or shorter than that required for FDA approval. We cannot assure you that clinical trials conducted in one country will be accepted by other countries or that approval of our product in one country will result in approval in any other country.
BEFORE WE CAN OBTAIN REGULATORY APPROVAL, WE NEED TO SUCCESSFULLY COMPLETE
CLINICAL TRIALS, OUTCOMES OF WHICH ARE UNCERTAIN.
Before we can obtain regulatory approval, we need to successfully complete clinical trials, outcomes of which are uncertain.
In order to obtain FDA approval to market a new drug product, we must demonstrate proof of safety and effectiveness in humans. To meet these requirements, we must conduct extensive preclinical testing and "adequate“adequate and well-controlled"well-controlled” clinical trials. Conducting clinical trials is a lengthy, time
consuming,time-consuming, and expensive process. Completion of necessary clinical trials may take several years or more. Delays associated with products for which we
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o ineffectiveness of our product candidate or perceptions by
physicians that the product candidate is not safe or effective
for a particular indication;
o inability to manufacture sufficient quantities of the product
candidate for use in clinical trials;
o delay or failure in obtaining approval of our clinical trial
protocols from the FDA or institutional review boards;
o slower than expected rate of patient recruitment and
enrollment;
o inability to adequately follow and monitor patients after
treatment;
o difficulty in managing multiple clinical sites;
o unforeseen safety issues;
o government or regulatory delays; and
o clinical trial costs that are greater than we currently
anticipate.
| · | ineffectiveness of our product candidate or perceptions by physicians that the product candidate is not safe or effective for a particular indication; |
| · | inability to manufacture sufficient quantities of the product candidate for use in clinical trials; |
| · | delay or failure in obtaining approval of our clinical trial protocols from the FDA or institutional review boards; |
| · | slower than expected rate of patient recruitment and enrollment; inability to adequately follow and monitor patients after treatment; difficulty in managing multiple clinical sites; |
| · | unforeseen safety issues; |
| · | government or regulatory delays; and |
| · | clinical trial costs that are greater than we currently anticipate. |
Even if we achieve positive interim results in clinical trials, these results do not necessarily predict final results, and positive results in early trials may not be indicative of success in later trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after achieving promising results in earlier trials. Negative or inconclusive results or adverse medical events during a clinical trial could cause us to repeat or terminate a clinical trial or require us to conduct additional trials. We do not know whether our existing or any future clinical trials will demonstrate safety and efficacy sufficiently to result in marketable products. Our clinical trials may be suspended at any time for a variety of reasons, including if the FDA or we believe the patients participating in our trials are exposed to unacceptable health risks or if the FDA finds deficiencies in the conduct of these trials.
Failures or perceived failures in our clinical trials will directly delay our product development and regulatory approval process, damage our business prospects, make it difficult for us to establish collaboration and partnership relationships, and negatively affect our reputation and competitive position in the pharmaceutical community.
Because of these risks, our research and development efforts may not result in any commercially viable products. Any delay in, or termination of, our preclinical or clinical trials will delay the filing of our drug applications for
approval with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues. If a significant portion of these development efforts are not successfully completed, required regulatory approvals are not obtained, or any approved products are not commercially successfully,successful, our business, financial condition, and results of operations may be materially harmed.
IF OUR COLLABORATION OR LICENSE ARRANGEMENTS ARE UNSUCCESSFUL, OUR REVENUES AND
PRODUCT DEVELOPMENT MAY BE LIMITED.
If our collaboration or licensing arrangements are unsuccessful, our revenues and product development may be limited.
We have entered into several collaborationcollaborations and licensing arrangements for the development of generic products. However, there can be no assurance that any of these agreements will result in FDA approvals, or that we will be able to market any such finished products at a profit. Collaboration and licensing arrangements pose the following risks:
o collaborations and licensee arrangements may be terminated, in
which case we will experience increased operating expenses and
capital requirements if we elect to pursue further development
of the product candidate;
o collaborators and licensees may delay clinical trials and
prolong clinical development, under-fund a clinical trial
program, stop a clinical trial or abandon a product candidate;
o expected revenue might not be generated because milestones may
not be achieved and product candidates may not be developed;
5
o collaborators and licensees could independently develop, or
develop with third parties, products that could compete with
our future products;
o the terms of our contracts with current or future
collaborators and licensees may not be favorable to us in the
future;
o
| · | collaborations and licensing arrangements may be terminated, in which case we will experience increased operating expenses and capital requirements if we elect to pursue further development of the related product candidate; |
| · | collaborators and licensees may delay clinical trials and prolong clinical development, under-fund a clinical trial program, stop a clinical trial or abandon a product candidate; |
| · | expected revenue might not be generated because milestones may not be achieved and product candidates may not be developed; |
| · | collaborators and licensees could independently develop, or develop with third parties, products that could compete with our future products; |
| · | the terms of our contracts with current or future collaborators and licensees may not be favorable to us in the future; |
| · | a collaborator or licensee with marketing and distribution rights to one or more of our products may not commit enough resources to the marketing and distribution of our products, limiting our potential revenues from the commercialization of a product; |
| · | disputes may arise delaying or terminating the research, development or commercialization of our product candidates, or result in significant and costly litigation or arbitration; and |
| · | one or more third-party developers could obtain approval for a similar product prior to the collaborator or licensee resulting in unforeseen price competition in connection with the development product. |
We have been dependent on one or a few major customers. If we are unable to develop more customers our business most likely will be adversely affected
Each year we have had one or a few customers that have accounted for a large percentage of our limited revenues therefore the termination of a contract with a customer may result in the loss of substantially all of our revenues. We are constantly working to develop new relationships with existing or new customers, but despite these efforts we may not, at the time that any of our current contracts expire, have other contracts in place generating similar or material revenue. We have agreements with ECR and Precision Dose for the sales and distribution of our products limiting our potentialthat we manufacture. We receive revenues to manufacture these products and also receive a profit split or royalties based on in-market sales of the products.
In April 2011, we ceased production of the Lodrane Extended Release Products, which are the subject of the agreements with ECR, pursuant to the FDA’s announcement of its intention to remove approximately 500 cough/cold and allergy related products from the commercializationUS market, including the Lodrane Extended Release Products. After this announcement by the FDA, the Company’s customer for the Lodrane Extended Release Products cancelled all outstanding orders and manufacturing of the Lodrane Extended Release Products has ceased. The Lodrane Extended Release Products for which production has ceased were responsible for 97% of the Company’s revenues during the fiscal year ended March 31, 2011. The cessation of production of the Lodrane Extended Release Products has had a product; and
o disputesmaterial adverse effect on Elite’s revenues for all periods beginning after March 31, 2011.
If we are unable to protect our intellectual property rights or avoid claims that we infringed on the intellectual property rights of others, our ability to conduct business may arise delaying or terminating the research,
development or commercialization of our product candidates, or
result in significant and costly litigation or arbitration.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND AVOID CLAIMS
THAT WE INFRINGED ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, OUR ABILITY TO
CONDUCT BUSINESS MAY BE IMPAIRED.
be impaired.
Our success depends on our ability to protect our current and future products and to defend our intellectual property rights. If we fail to protect our intellectual property adequately, competitors may manufacture and market products similar to ours.
We currently hold fivenine patents have two patents pending and we have six patents pending. We intend to file further patent applications in the future. With respect to our pending
patents, weWe cannot be certain that theseour pending patent applications will result in the issuance of patents. If patents are issued, third parties may sue us to challenge suchour patent protection, and although we know of no reason why they should prevail, it is possible that they could. It is likewise possible that our patent rights may not prevent or limit our present and future competitors from developing, using or commercializing products that are similar or functionally equivalent to our products.
In addition, we may be required to obtain licenses to patents, or other proprietary rights of third parties, in connection with the development and use of our products and technologies as they relate to other persons'persons’ technologies. At such time as we discover a need to obtain any such license, we will need to establish whether we will be able to obtain such a license on favorable terms.terms, if at all. The failure to obtain the necessary licenses or other rights could preclude the sale, manufacture or distribution of our products.
We rely particularly on trade secrets, unpatented proprietary expertise and continuing innovation that we seek to protect, in part, by entering into confidentiality agreements with licensees, suppliers, employees and consultants. We cannot provide assurance that these agreements will not be breached or circumvented. We also cannot be certain that there will be adequate remedies in the event of a breach. Disputes may arise concerning the ownership of intellectual property or the applicability of confidentiality agreements. We cannot be sure that our trade secrets and proprietary technology will not otherwise become known or be independently developed by our competitors or, if patents are not issued with respect to products arising from research, that we will be able to maintain the confidentiality of information relating to these products. In addition, efforts to ensure our intellectual property rights can be costly, time-consuming and/or ultimately unsuccessful.
LITIGATION IS COMMON IN OUR INDUSTRY, PARTICULARLY THE GENERIC PHARMACEUTICAL
INDUSTRY, AND CAN BE PROTRACTED AND EXPENSIVE AND COULD DELAY AND/OR PREVENT
ENTRY OF OUR PRODUCTS INTO THE MARKET, WHICH, IN TURN, COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS.
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Litigation is common in the pharmaceutical industry, and can be protracted and expensive and could delay and/or prevent entry of our products into the market, which, in turn, could have a material adverse effect on our business.
Litigation concerning patents and proprietary rights can be protracted and expensive. With our expansion into the generic pharmaceutical market through
our joint venture, Novel, our risk of litigation has increased. Companies that
produce brand pharmaceutical products routinely bring litigation against applicants that seek FDA approval to manufacture and market generic forms of
their branded products. These companies allege patent infringement or other violations of intellectual property rights as the basis for filing suit against an applicant. Likewise, other patent holdersElite develops, owns and/or manufactures generic and branded pharmaceutical products and such drug products may bring patent infringement suits
against us alleging that our products, product candidates and technologies
infringe upon intellectual property rights.be subject to such litigation. Litigation often involves significant expense and can delay or prevent introduction or sale of our products.
There may also be situations where we use our business judgment and decide to market and sell products, notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts. The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement include, among other
6
common stockCommon Stock to decline.
THE PHARMACEUTICAL INDUSTRY IS HIGHLY COMPETITIVE AND SUBJECT TO RAPID AND
SIGNIFICANT TECHNOLOGICAL CHANGE, WHICH COULD IMPAIR OUR ABILITY TO IMPLEMENT
OUR BUSINESS MODEL.
The pharmaceutical industry is highly competitive and subject to rapid and significant technological change, which could impair our ability to implement our business model.
The pharmaceutical industry is highly competitive, and we may be unable to compete effectively. In addition, itthe pharmaceutical industry is undergoing rapid and significant technological change, and we expect competition to intensify as technical advances in each field are made and become more widely known. An increasing number of pharmaceutical companies have been or are becoming interested in the development and commercialization of products incorporating advanced or novel drug delivery systems. We expect that competition in the field of drug delivery will increase in the future as other specialized research and development companies begin to concentrate on this aspect of the business. Some of the major pharmaceutical companies have invested and are continuing to invest significant resources in the development of their own drug delivery systems and technologies and some have invested funds in such specialized drug delivery companies. Many of our competitors have longer operating histories and greater financial, research and development, marketing and other resources than we do. Such companies may develop new formulations and products, or may improve existing ones, more efficiently than we can. Our success, if any, will depend in part on our ability to keep pace with the changing technology in the fields in which we operate.
As we expand our presence in the generic pharmaceuticals market through
our joint venture, Novel, its product candidates may face intense competition from brand-name companies that have taken aggressive steps to thwart competition from generic companies. In particular, brand-name companies continue to sell or license their products directly or through licensing arrangements or strategic alliances with generic pharmaceutical companies (so-called "authorized
generics"“authorized generics”). No significant regulatory approvals are required for a brand-name company to sell directly or through a third party to the generic market, and brand-name companies do not face any other significant barriers to entry into such market. In addition, such companies continually seek to delay generic introductions and to decrease the impact of generic competition, using tactics which include:
o obtaining new patents on drugs whose original patent
protection is about to expire;
o filing patent applications that are more complex and costly to
challenge;
o filing suits for patent infringement that automatically delay
approval of the FDA;
o filing citizens' petitions with the FDA contesting approval of
the generic versions of products due to alleged health and
safety issues;
o developing controlled-release or other "next-generation"
products, which often reduce demand for the generic version of
the existing product for which we may be seeking approval;
o changing product claims and product labeling;
o developing and marketing as over-the-counter products those
branded products which are about to face generic competition;
and
o making arrangements with managed care companies and insurers
to reduce the economic incentives to purchase generic
pharmaceuticals.
| · | obtaining new patents on drugs whose original patent protection is about to expire; |
| · | filing patent applications that are more complex and costly to challenge; |
| · | filing suits for patent infringement that automatically delay approval from the FDA; |
| · | filing citizens’ petitions with the FDA contesting approval of the generic versions of products due to alleged health and safety issues; developing controlled-release or other “next-generation” products, which often reduce demand for the generic version of the existing product for which we may be seeking approval; |
| · | changing product claims and product labeling; |
| · | developing and marketing as over-the-counter products those branded products which are about to face generic competition; and |
| · | making arrangements with managed care companies and insurers to reduce the economic incentives to purchase generic pharmaceuticals. |
These strategies may increase the costs and risks associated with our efforts to introduce our generic products under development and may delay or prevent such introduction altogether.
IF OUR PRODUCT CANDIDATES DO NOT ACHIEVE MARKET ACCEPTANCE AMONG PHYSICIANS,
PATIENTS, HEALTH CARE PAYORS AND THE MEDICAL COMMUNITY, THEY WILL NOT BE
COMMERCIALLY SUCCESSFUL AND OUR BUSINESS WILL BE ADVERSELY AFFECTED.
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If our product candidates do not achieve market acceptance among physicians, patients, health care payors and the medical community, they will not be commercially successful and our business will be adversely affected.
The degree of market acceptance of any of our approved product candidates among physicians, patients, health care payors and the medical community will depend on a number of factors, including:
o acceptable evidence of safety and efficacy;
o relative convenience and ease of administration;
o the prevalence and severity of any adverse side effects;
o availability of alternative treatments;
o pricing and cost effectiveness;
o effectiveness of sales and marketing strategies; and
o ability to obtain sufficient third-party coverage or
reimbursement.
| · | acceptable evidence of safety and efficacy; |
| · | relative convenience and ease of administration; |
| · | the prevalence and severity of any adverse side effects; |
| · | availability of alternative treatments; |
| · | pricing and cost effectiveness; |
| · | effectiveness of sales and marketing strategies; and |
| · | ability to obtain sufficient third-party coverage or reimbursement. |
If we are unable to achieve market acceptance for our product candidates, then such product candidates will not be commercially successful and our business will be adversely affected.
WE ARE DEPENDENT ON A SMALL NUMBER OF SUPPLIERS FOR OUR RAW MATERIALS, AND ANY
DELAY OR UNAVAILABILITY OF RAW MATERIALS CAN MATERIALLY ADVERSELY AFFECT OUR
ABILITY TO PRODUCE PRODUCTS.
We are dependent on a small number of suppliers for our raw materials and any delay or unavailability of raw materials can materially adversely affect our ability to produce products.
The FDA requires identification of raw material suppliers in applications for approval of drug products. If raw materials were unavailable from a specified supplier, FDA approval of a new supplier could delay the manufacture of the drug involved.
In addition, some materials used in our products are currently available from only one supplier or a limited number of suppliers.
suppliers and there is a risk of a sole approved supplier significantly raising prices. Please note that such an occurrence has taken place recently, wherein significant price increases from a sole supplier greatly reduced profit margins, sales and delayed product launches. These occurrences were ultimately resolved by the successful FDA approval of an alternate supplier, with such approval process being lengthy and costly.
Further, a significant portion of our raw materials may be available only from foreign sources. Foreign sources can be subject to the special risks of doing business abroad, including:
o greater possibility for disruption due to transportation or
communication problems;
o the relative instability of some foreign governments and
economies;
o interim price volatility based on labor unrest, materials or
equipment shortages, export duties, restrictions on the
transfer of funds, or fluctuations in currency exchange rates;
and
o uncertainty regarding recourse to a dependable legal system
for the enforcement of contracts and other rights.
including, without limitation:
| · | greater possibility for disruption due to transportation or communication problems; |
| · | the relative instability of some foreign governments and economies; |
| · | interim price volatility based on labor unrest, materials or equipment shortages, export duties, restrictions on the transfer of funds, or fluctuations in currency exchange rates; and |
| · | uncertainty regarding recourse to a dependable legal system for the enforcement of contracts and other rights. |
In addition, recent changes in patent laws in certain foreign jurisdictions (primarily in Europe) may make it increasingly difficult to obtain raw materials for research and development prior to expiration of applicable United States or foreign patents. Any delay or inability to obtain raw materials on a timely basis, or any significant price increases that cannot be passed on to customers, could have a material adverse effect on us.
The delay or unavailability of raw materials can materially adversely affect our ability to produce products. This can materially adversely affect our business and operations.
EVEN AFTER REGULATORY APPROVAL, WE WILL BE SUBJECT TO ONGOING SIGNIFICANT
REGULATORY OBLIGATIONS AND OVERSIGHT.
Even after regulatory approval, we will be subject to ongoing significant regulatory obligations and oversight as evidenced by the FDA’s removal from the market of our Lodrane® extended release product line. In addition, although Lodrane D® is marketed under the Over-the-Counter Monograph and, accordingly, can be lawfully marketed in the US without prior regulatory approval, the FDA has revised its enforcement policies during the past few years, significantly limiting the circumstances under which unapproved products may be marketed.
Even if regulatory approval is obtained for a particular product candidate, the FDA and foreign regulatory authorities may, nevertheless, impose significant restrictions on the indicated uses or marketing of such products, or impose ongoing requirements for post-approval studies. Following any regulatory approval of our product candidates, we will be subject to continuing regulatory obligations, such as safety reporting requirements, and additional post-marketing obligations, including regulatory oversight of the promotion and marketing of our products. If we become aware of previously unknown problems with any of our product candidates here or overseas or at our contract manufacturers'manufacturers’ facilities, a regulatory agency may impose restrictions on our products, our contract manufacturers or on us,
8
manufacturers'manufacturers’ facilities or withdraw the product from the market. In addition, we may experience a significant drop in the sales of the affected products, our reputation in the marketplace may suffer and we may become the target of lawsuits, including class action suits. Moreover, if we fail to comply with applicable regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Any of these events could harm or prevent sales of the affected products or could substantially increase the costs and expenses of commercializing and marketing these products.
IF KEY PERSONNEL WERE TO LEAVE
On March 4, 2011, the FDA issued a directive removing from the market approximately 500 cough/cold and allergy products, including our Lodrane® extended release product line. The Lodrane® extended release products constituted approximately 97% of our revenues at the time of FDA’s directive.
Lodrane D® is marketed under the Over-the-Counter Monograph (the “OTC Monograph”) and accordingly, under the Code of Federal Regulations can be lawfully marketed in the US OR IF WE ARE UNSUCCESSFUL IN ATTRACTING
QUALIFIED PERSONNEL, OUR ABILITY TO DEVELOP PRODUCTS COULD BE MATERIALLY HARMED.
without prior approval. Under the Federal Food Drug and Cosmetic Act (“FDCA”), FDA regulations and statements of FDA policy, certain drug products are permitted to be marketed in the U.S. without prior approval. Within the past few years, the FDA has revised its enforcement policies, significantly limiting the circumstances under which these unapproved products may be marketed. If the FDA determines that a company is distributing an unapproved product that requires approval, the FDA may take enforcement action in a variety of ways, including, without limitation, product seizures and seeking a judicial injunction against distribution.
If key personnel were to leave us or if we are unsuccessful in attracting qualified personnel, our ability to develop products could be materially harmed.
Our success depends in large part on our ability to attract and retain highly qualified scientific, technical and business personnel experienced in the development, manufacture and marketing of oral, controlled releasecontrolled-release drug delivery systems and generic products. Our business and financial results could be materially harmed by the inability to attract or retain qualified personnel.
IF WE WERE SUED ON A PRODUCT LIABILITY CLAIM, AN AWARD COULD EXCEED OUR
INSURANCE COVERAGE AND COST US SIGNIFICANTLY.
| 12 |
If we were sued on a product liability claim, an award could exceed our insurance coverage and cost us significantly.
The design, development and manufacture of our products involve an inherent risk of product liability claims. We have procured product liability insurance; however, a successful claim against us in excess of the policy limits could be very expensive to us, damaging our financial position. The amount of our insurance coverage, which has been limited due to our limited financial resources, may be materially below the coverage maintained by many of the other companies engaged in similar activities. To the best of our knowledge, no product liability claim has been made against us as of March 31, 2007.
the date hereof.
If Novel Laboratories issues additional equity in the future our equity interest in Novel may be diluted, resulting in a decrease in our share of any dividends or other distributions which Novel may issue in the future.
At the end of 2006, Elite entered into a joint venture with VGS Pharma, LLC (“VGS”) and created Novel Laboratories, Inc. (“Novel”), a privately-held company specializing in pharmaceutical research, development, manufacturing, licensing, acquisition and marketing of specialty generic pharmaceuticals. Novel's business strategy is to focus on its core strength in identifying and timely executing niche business opportunities in the generic pharmaceutical area. Elite owns less than 10% of the outstanding shares of Class A Voting Common Stock of Novel. To date, Elite has received no distributions or dividends from this investment.
As a result of our determination not to fund our remaining contributions to Novel at the valuation set forth in the Novel Alliance Agreement and the resulting purchase from us of a portion of our shares of Class A Voting Common Stock of Novel by VGS Pharma, LLC, our remaining ownership interest in equity of Novel was reduced to approximately 10% of the outstanding shares of Novel. Novel may seek to raise additional operating capital in the future and may do so by the issuance of equity. If Novel issues additional equity, our future equity interest in Novel will decrease and we will be entitled to a decreased portion of any dividends or other distributions which Novel may issue in the future. Novel also has a company sponsored stock option plan and any equity issued from this stock plan will also reduce Elite’s equity interest in Novel.
RISKS RELATED TO OUR COMMON STOCK
FUTURE SALES OF OUR COMMON STOCK COULD LOWER THE MARKET PRICE OF OUR COMMON
STOCK.
Sales
Our stock price has been volatile and may fluctuate in the future.
The market price for the publicly traded stock of substantial amountspharmaceutical companies is generally characterized by high volatility. There has been significant volatility in the market prices for our Common Stock. For the twelve months ended March 31, 2014, the closing sale price on the OTC Bulletin Board (“OTC-BB”) of our sharesCommon Stock fluctuated from a high of $0.9379 per share to a low of $0.07 per share. The price per share of our Common Stock may not exceed or even remain at current levels in the publicfuture. The market price of our Common Stock may be affected by a number of factors, including, without limitation:
| · | Results of our clinical trials; |
| · | Approval or disapproval of our ANDAs or NDAs; |
| · | Announcements of innovations, new products or new patents by us or by our competitors; |
| · | Governmental regulation; |
| · | Patent or proprietary rights developments; |
| · | Proxy contests or litigation; |
| · | News regarding the efficacy of, safety of or demand for drugs or drug technologies; |
| · | Economic and market conditions, generally and related to the pharmaceutical industry; |
| · | Healthcare legislation; |
| · | Changes in third-party reimbursement policies for drugs; and |
| · | Fluctuations in our operating results. |
| 13 |
The sale or issuance of our common stock to Lincoln Park or upon conversion of outstanding preferred stock or exercise of outstanding warrants may cause dilution and the sale of the shares of common stock acquired by Lincoln Park or the issuance of shares upon conversion or exercise of outstanding preferred stock and warrants, or the perception that such sales and issuances may occur, could harmcause the market price of our common stock even ifto fall.
On April 10, 2014, we entered into the Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park has committed to purchase up to $40,000,000 of our business is doing well. A
significant numbercommon stock. Concurrently with the execution of the Purchase Agreement, we issued 1,928,641 shares of our common stock are eligibleto Lincoln Park as a fee for its commitment to purchase shares of our common stock under the Purchase Agreement. The purchase shares that may be sold pursuant to the Purchase Agreement may be sold by us to Lincoln Park at our discretion from time to time over a 36-month period commencing after the SEC has declared effective the registration statement that includes this prospectus. The purchase price for the shares that we may sell to Lincoln Park under the Purchase Agreement will fluctuate based on the price of our common stock. Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.
We generally have the right to control the timing and amount of any sales of our shares to Lincoln Park, except that, pursuant to the terms of our agreements with Lincoln Park, we would be unable to sell shares to Lincoln Park if and when the closing sale price of our common stock is below $0.10 per share, subject to adjustment as set forth in the publicPurchase Agreement, and in no event would Lincoln Park purchase more than $760,000 worth of our common stock on any single business day, plus an additional “accelerated amount” under certain circumstances. Additional sales of our common stock, if any, to Lincoln Park will depend upon market under SEC Rule 144 subject in some cases to volumeconditions and other limitations. factors to be determined by us. Lincoln Park may ultimately purchase all, some or none of the shares of our common stock that may be sold pursuant to the Purchase Agreement and, after it has acquired shares, Lincoln Park may sell all, some or none of those shares.
In addition, pursuant hereto, we are registering the resale of:
o 957,396as of April 8, 2014, there were outstanding shares of Common Stock;
o 478,698preferred stock convertible into approximately 148.9 million shares of Common Stock issuable upon the exerciseand warrants to purchase an aggregate of warrants; and
o 1,750,000approximately 102.1 million shares of Common Stock at exercise prices that range from $0.625 per share to $0.25 per share. Additional shares of Common Stock may be issuable uponas a result of anti-dilution provisions in the exerciseoutstanding preferred stock and warrants
As a result of options.
Duethe above discussed potential issuance of securities, such issuances by us could result in substantial dilution to the foregoing factors, salesinterests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park or pursuant to the conversion or exercise of outstanding shares of preferred stock and warrants, or the anticipation of such issuances, could make it more difficult for us to sell equity or equity-related securities in the public marketfuture at a time and at a price that we might otherwise wish to effect sales.
Raising of additional funding through sales of our securities could occur at any time. These sales,
or the perception in the market that thecause existing holders of a large number of shares
intendour Common Stock to sell shares, could reduceexperience substantial dilution.
Any additional financing that involves the market pricefurther sale of our common stock.
OUR STOCK PRICE HAS BEEN VOLATILE AND MAY FLUCTUATE IN THE FUTURE.
There has been significant volatility in the market prices for publicly
traded shares of pharmaceutical companies, including ours. For the twelve months
ended May 21, 2007, the closing sale price on the American Stock Exchangesecurities could cause existing holders of our common stock fluctuated from a high of $2.60 per shareCommon Stock to a low of $1.75 per
share. The per share price of our common stock may not remain at or exceed
current levels. The market price for our common stock, and forexperience substantial dilution. On the stock of
pharmaceutical companies generally, has been highly volatile. The market price
of our common stock mayother hand, if we incurred debt, we would be affected by:
o Results of our clinical trials;
o Approval or disapproval of abbreviated new drug applications
or new drug applications;
o Announcements of innovations, new products or new patents by
us or by our competitors;
9
o Governmental regulation;
o Patent or proprietary rights developments;
o Proxy contests or litigation;
o News regarding the efficacy of, safety of or demand for drugs
or drug technologies;
o Economic and market conditions, generally and related to the
pharmaceutical industry;
o Healthcare legislation;
o Changes in third-party reimbursement policies for drugs; and
o Fluctuations in our operating results.
THE FAILURE TO MAINTAIN THE AMERICAN STOCK EXCHANGE LISTING OF THE COMMON STOCK
WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE MARKET FOR OUR COMMON STOCK AND OUR
MARKET PRICE.
On January 4, 2006, we received a letter from the American Stock
Exchange ("AMEX") notifying us that, based on our unaudited financial statements
as of September 30, 2005, we were not in compliance with the continued listing
standards set forth in the AMEX Company Guide in that under one listing standard
our shareholders' equity is less than $4,000,000 and we had losses from
continuing operations and/or net losses in three of our four most recent fiscal
years and under another listing standard our shareholders' equity is less than
$6,000,000 and we had losses from continuing operations and/or net losses in our
five most recent fiscal years. At the request of AMEX, we submitted a plan on
February 3, 2006 advising AMEX of action, we had taken, and will take, to bring
ourselves in compliance with the continued listing standards within a maximum of
18 months from January 4, 2006. On March 15, 2006, we completed a private
placement of our Series B Preferred Stock and warrants to purchase common stock.
We received $10,000,000 in gross proceeds from the private placement. On March
21, 2006, we submitted an update to the plan we had previously submitted on
February 6, 2006. Upon notice of the March 2006 private placement and the
acceptance of the updated plan. AMEX allowed us to maintain our AMEX listing, subject to periodic review ofrisks associated with indebtedness, including the our progress by the AMEX staff. If we are not
in compliance with the continued listing standards, AMEX may then initiate
delisting proceedings. The failurerisk that interest rates might fluctuate and cash flow would be insufficient to maintain listing of our common stockpay principal and interest on AMEX will have an adverse effect on the market and the market price for our
common stock.
THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK OR OUR PREFERRED STOCK
COULD MAKE A CHANGE OF CONTROL MORE DIFFICULT TO ACHIEVE.
such indebtedness.
The issuance of additional shares of our commonCommon Stock or our preferred stock could make a change of control more difficult to achieve.
The issuance of additional shares of our Common Stock or the issuance of shares of an additional series of preferred stock could be used to make a change of control of us more difficult and expensive. Under certain circumstances, such shares could be used to create impediments to, or frustrate persons seeking to cause, a takeover or to gain control of us. Such shares could be sold to purchasers who might side with theour Board of Directors in opposing a takeover bid that the Board of Directors determines not to be in the best interests of our stockholders.shareholders. It might also have the effect of discouraging an attempt by another person or entity through the acquisition of a substantial number of shares of our common
stockCommon Stock to acquire control of us with a view to consummating a merger, sale of all or part of our assets, or a similar transaction, since the issuance of new shares could be used to dilute the stock ownership of such person or entity.
IF PENNY STOCK REGULATIONS BECOME APPLICABLE TO OUR COMMON STOCK THEY WILL
IMPOSE RESTRICTIONS ON THE MARKETABILITY OF OUR COMMON STOCK AND THE ABILITY OF
OUR STOCKHOLDERS TO SELL SHARES OF OUR STOCK COULD BE IMPAIRED.
Our Common Stock is considered a “penny stock”. The SEC has adopted regulations that generally define a "penny stock"application of the “penny stock” rules to be an equity security that has aour Common Stock could limit the trading and liquidity of our Common Stock, adversely affect the market price of less than $5.00 per share or
an exercise priceour Common Stock and increase the transaction costs to sell shares of less than $5.00 per share subject to certain exceptions.
Exceptions include equity securities issued by an issuer that has (i) net
tangible assets of at least $2,000,000, if such issuer has been in continuous
operation for more than three years, or (ii) net tangible assets of at least
$5,000,000, if such issuer has been in continuous operation for less than three
years, or (iii) average revenue of at least $6,000,000 for the preceding three
years. Unless an exception is available, the regulations require that prior to
any transaction involving a
10
penny stock, a risk of disclosure schedule must be delivered to the buyer
explaining the penny stock market and its risks. our Common Stock.
Our common stock is currently
trading ata “low-priced” security or “penny stock” under $5.00 per share. Although we currently fallrules promulgated under onethe Securities Exchange Act of 1934, as amended. In accordance with these rules, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document which describes the exceptions, if atrisks associated with such stocks, the broker-dealers duties in selling the stock, the customer’s rights and remedies and certain market and other information. Furthermore, the broker-dealer must make a later time we fail to meet one ofsuitability determination approving the exceptions, our commoncustomer for low- priced stock will be considered a penny stock. As suchtransactions based on the market liquidity for our
common stock will be limitedcustomer’s financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the abilitycustomer, obtain specific written consent from the customer, and provide monthly account statements to the customer. The effect of these restrictions will likely decrease the willingness of broker-dealers to make a market in our Common Stock, will decrease liquidity of our Common Stock and will increase transaction costs for sales and purchases of our Common Stock as compared to other securities.
We voluntarily delisted our Common Stock from NYSE Amex in May 2009. Our Common Stock is now quoted on the Over-the- Counter Bulletin Board. The Over-the-Counter Bulletin Board is a quotation system, not an issuer listing service, market or exchange, therefore, buying and selling stock on the Over-the-Counter Bulletin Board is not as efficient as buying and selling stock through an exchange. As a result, it may be difficult to sell itour Common Stock for an optimum trading price or at all.
The Over-the-Counter Bulletin Board (the “OTCBB”) is a regulated quotation service that displays real-time quotes, last sale prices and volume limitations in complianceover-the-counter securities. Because trades and quotations on the OTCBB involve a manual process, the market information for such securities cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available. The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit order to execute or the execution of a market order at a significantly different price. Execution of trades, execution reporting and the delivery of legal trade confirmations may be delayed significantly. Consequently, one may not be able to sell shares of our Common Stock at the optimum trading prices.
When fewer shares of a security are being traded on the OTCBB, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Lower trading volumes in a security may result in a lower likelihood of an individual’s orders being executed, and current prices may differ significantly from the price one was quoted by the OTCBB at the time of the order entry. Orders for OTCBB securities may be canceled or edited like orders for other securities. All requests to change or cancel an order must be submitted to, received and processed by the OTCBB. Due to the manual order processing involved in handling OTCBB trades, order processing and reporting may be delayed, and an individual may not be able to cancel or edit his order. Consequently, one may not be able to sell shares of Common Stock at the optimum trading prices.
The dealer’s spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller of securities on the OTCBB if the Common Stock or other security must be sold immediately. Further, purchasers of securities may incur an immediate “paper” loss due to the price spread. Moreover, dealers trading on the OTCBB may not have a bid price for securities bought and sold through the OTCBB. Due to the foregoing, demand for securities that are traded through the OTCBB may be decreased or eliminated.
FORWARD-LOOKING STATEMENTS
This prospectus contains “forward-looking statements”. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this prospectus, statements that are not statements of current or historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “plan”, “intend”, “may,” “will,” “expect,” “believe”, “could,” “anticipate,” “estimate,” or “continue” or similar expressions or other variations or comparable terminology are intended to identify such forward-looking statements. All statements other than statements of historical fact included in this prospectus regarding our financial position, business strategy and plans or objectives for future operations are forward-looking statements. Without limiting the broader description of forward-looking statements above, we specifically note, without limitation, that statements regarding the preliminary nature of the clinical program results and the potential for further product development, that involve known and unknown risks, delays, uncertainties and other factors not under our control, the requirement of substantial future testing, clinical trials, regulatory reviews and approvals by the Food and Drug Administration and other regulatory authorities prior to the commercialization of products under development, and our ability to manufacture and sell any products, gain market acceptance earn a profit from sales or licenses of any drugs or our ability to discover new drugs in the future are all forward-looking in nature. These risks and other factors are identified under “Risk Factors” and from time to time in our other filings with the above-mentioned disclosure requirements.
You should be aware that, accordingSecurities and Exchange Commission. Readers are cautioned not to the SEC, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include:
o Control of the market for the security by one or a few
broker-dealers;
o "Boiler room" practices involving high-pressure sales tactics;
o Manipulation of prices through prearranged matching of
purchases and sales;
o The release of misleading information;
o Excessive and undisclosed bid-ask differentials and markups by
selling broker-dealers; and
o Dumping of securities by broker-dealers after prices have been
manipulated to a desired level,place undue reliance on these forward-looking statements, which hurts the price of the
stock and causes investors to suffer loss.
We are aware of the abuses that have occurred in the penny stock
market. Although we do not expect to be in a position to dictate the behavior of
the market or of broker-dealers who participate in the market, we will strive
within the confines of practical limitations to prevent such abuses with respect
to our common stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW MAY DETER A THIRD PARTY FROM
ACQUIRING US.
Section 203 of the Delaware General Corporation Law prohibits a merger
with a 15% shareholder within three yearsspeak only as of the date such shareholder acquired
15%, unlesshereof. Except as required by law, the merger meets oneCompany undertakes no obligation to update any forward-looking statements, whether as a result of several exceptions. The exceptions include,
for example, approval by the holders of two-thirds of the outstanding shares
(not counting the 15% shareholder),new information, future events or approval by the Board priorotherwise.
USE OF PROCEEDS
This prospectus relates to the 15%
shareholder acquiring its 15% ownership. This provision makes it difficult for a
potential acquirer to force a merger with or takeover of us, and could thus
limit the price that certain investors might be willing to pay in the future for shares of our common stock.
USE OF PROCEEDSstock that may be offered and sold from time to time by Lincoln Park. We will not receive any of theno proceeds from the sale of shares of common stock by Lincoln Park in this offering. However, we may receive gross proceeds of up to $40,000,000 under the Selling Stockholders pursuantPurchase Agreement. See “Plan of Distribution” elsewhere in this prospectus for more information.
We expect to this prospectus.
A portionuse any proceeds that we receive under the Purchase Agreement to fund the product development and commercial activities of the Company, for general and administrative expenses, to pay down liabilities and for working capital.
DETERMINATION OF OFFERING PRICE
The selling shareholder may offer and sell the shares of common stock covered by this prospectus are issuable upon
exerciseat prevailing market prices or privately negotiated prices. See “Plan of warrants and optionsDistribution.”
SELLING SHAREHOLDER
This prospectus relates to purchase ourthe possible resale by the selling shareholder, Lincoln Park, of shares of common stock. Upon any exercise
of the warrants and options for cash, the Selling Stockholders would pay us the
exercise price of the warrants and options, as applicable. Any proceeds from the
exercise of the warrants and options willstock that have been or may be used for working capital.
SELLING STOCKHOLDERS
On December 6, 2006, we entered into a strategic alliance agreement
with Veerappan Subramanian and VGS Pharmaissued to Lincoln Park pursuant to which we issued to VGS
Pharma LLC ("VGS Pharma") 957,396 shares of our common stock and a warrant to
acquire 478,698 shares of our common stock. In addition, on December 6, 2006,
we entered into an advisory agreement with Veerappan Subramanian pursuant to
which we granted him a stock option to purchase 1,750,000 shares of our common
stock. Pursuant to the registration rights agreement related to such
transactions, we agreed to file, at our expense, aPurchase Agreement. We are filing the registration statement of which this prospectus isforms a part with the Securities Exchange Commission to
register for resale, from time to time, the 957,396 shares of common stock and
the 478,698 shares of common stock issuable upon the exercise of warrants
issued to VGS Pharma pursuant to the strategic alliance agreement and 1,750,000
shares of
11
common stock issuable upon exercise of options issued to Veerappan Subramanian
pursuant to the advisory agreement. The termsprovisions of the strategic alliance
agreement, advisory agreement andRegistration Rights Agreement, which we entered into with Lincoln Park on April 10, 2014 concurrently with our execution of the Purchase Agreement, in which we agreed to provide certain registration rights agreement were disclosed
in our Current Report on Form 8-K which we filed with the Securities Exchange
Commission on December 12, 2006 and which is incorporatedrespect to sales by reference herein.
As a resultLincoln Park of entering into the strategic alliance agreement,
Veerappan Subramanian was appointed to our Board of Directors and became Chief
Executive Officer of Novel Laboratories, Inc., our newly established joint
venture with VGS Pharma. In addition, on February 14, 2007, Veerappan
Subramanian was appointed as our new Chief Scientific Officer. VGS Pharma is a
wholly-owned subsidiary of Kali Capital, L.P., which is controlled by Kali
Management, LLC ("KALI MANAGEMENT"), its general partner, and Kali Management is
controlled by Anu Subramanian, its managing member and daughter of Veerappan
Subramanian.
We are registering the shares to permit the Selling Stockholders to
offer these shares for resale from time to time. The Selling Stockholders may
sell all, some or none of the shares covered by this prospectus. For more
information, see the section of this prospectus entitled "PLAN OF DISTRIBUTION."
The table below presents information as of May 25, 2007, regarding the
Selling Stockholders and the shares of our common stock that theyhave been or may be issued to Lincoln Park under the Purchase Agreement.
Lincoln Park, as the selling shareholder, may, from time to time, offer and sell pursuant to this prospectus any or all of the shares that we have sold or may sell to Lincoln Park under the Purchase Agreement. The selling shareholder may sell some, all or none of its shares. We do not know how long the selling shareholder will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the selling shareholder regarding the sale of any of the shares.
The following table presents information regarding the selling shareholder and the shares that it may offer and sell from time to time under this prospectus. The informationtable is prepared based on information providedsupplied to us by or on behalfthe selling shareholder, and reflects its holdings as of the Selling Stockholders. Except as
noted above, no Selling StockholderApril 8, 2014. Neither Lincoln Park nor any of its affiliates has had, within the past three years, anyheld a position or office, or had any other material relationship, with us or any of our predecessors or affiliates. The table has been prepared on the assumption that all shares
offered underAs used in this prospectus, will be sold to parties unaffiliated with the Selling Stockholders. Except as indicated below the Selling Stockholders have
sole votingterm “selling shareholder” includes Lincoln Park and investment power with their respective shares.
| Selling Shareholder | Shares Beneficially Owned Before this Offering | Percentage of Outstanding Shares Beneficially Owned Before this Offering | No. of Shares to be Sold in this Offering | Percentage of Outstanding Shares Beneficially Owned After this Offering | ||||||||||||
| Lincoln Park Capital Fund, LLC (1) | 1,928,641 | (2) | * | (3) | 125,069,403 | (4) | * | |||||||||
* Less than 1%
| (1) | Josh Scheinfeld and Jonathan Cope, the Managing Members of Lincoln Park Capital, LLC, are deemed to be beneficial owners of all of the shares of common stock owned by Lincoln Park Capital Fund, LLC. Messrs. Cope and Scheinfeld have shared voting and investment power over the shares being offered under the prospectus filed with the SEC in connection with the transactions contemplated under the Purchase Agreement. Lincoln Park Capital, LLC is not a licensed broker dealer or an affiliate of a licensed broker dealer. |
| (2) | Represents 1,928,641 shares of our common stock issued to Lincoln Park on or about April 10, 2014 as a fee for its commitment to purchase additional shares of our common stock under the Purchase Agreement, all of which shares are covered by the registration statement that includes this prospectus. See the description under the heading “The Lincoln Park Transaction” for more information about the Purchase Agreement. |
| (3) | Based on 562,271,061 outstanding shares of our common stock as of April 8, 2014, with the above mentioned commitment shares deemed issued as of that date. |
| (4) | Based upon $0.33, the closing price of our stock on April 8, 2014. Although the Purchase Agreement provides that we may sell up to $40,000,000 of our common stock to Lincoln Park, we have initially reserved approximately 25,000,000 shares for sale to Lincoln Park under the Purchase Agreement. See “We may require additional financing to meet our business objectives and to continue as a going concern” in “Risk Factors”. |
The Lincoln Park Transaction
General
On April 10, 2014, we entered into the Purchase Agreement and the Registration Rights Agreement with Lincoln Park. Pursuant to the terms of the Purchase Agreement, Lincoln Park has agreed to purchase from us up to $40,000,000 of our common stock (subject to certain limitations) from time to time over a 36-month period. Pursuant to the terms of the Registration Rights Agreement, we have filed with the SEC the registration statement that includes this prospectus to register for resale under the Selling Stockholders dispose of allSecurities Act the shares that have been or may be issued to Lincoln Park under the Purchase Agreement.
Pursuant to the Purchase Agreement we have issued 1,928,641 shares of our common stock covered by this prospectus and do not acquire or disposeto Lincoln Park pursuant to the terms of anythe Purchase Agreement as consideration for its commitment to purchase additional shares of common stock. The Selling Stockholders are
not representing, however, that any of the shares covered by this
prospectus will be offered for sale, and the Selling Stockholders
reserve the right to accept or reject, in whole or in part, any
proposed sale of shares.
(3) The percentage ofour common stock beneficially owned is based on
20,820,048under the Purchase Agreement and we are obligated to issue up to an additional 1,928,641 commitment shares to Lincoln Park pro rata as up to $40,000,000 of our common stock (excluding 100,000 treasury shares)
outstanding on May 25, 2007.
(4) Represents 957,396 shares of common stock and 478,698 shares of common
stock issuable upon the exercise of warrants.
(5) Represents 26,800 shares of common stock and 1,750,000 shares of
common stock issuable upon exercise of options.
12
PLAN OF DISTRIBUTION
OFFER AND SALE OF SHARES
Each Selling Stockholder has or its pledgees, assignees and
successors-in-interestis purchased by Lincoln Park.
We may, from time to time sell any or alland at our sole discretion but no more frequently than every other business day, direct Lincoln Park to purchase up to 500,000 shares of their shares
ofour common stock on any such business day, provided that in no event shall Lincoln Park purchase more than $760,000 worth of our common stock on any single business day, plus an additional “accelerated amount” under certain circumstances, at a purchase price per share based on the American Stock Exchange ormarket price of our common stock immediately preceding the time of sale as computed under the Purchase Agreement without any otherfixed discount.
Purchase of Shares Under the Purchase Agreement
Under the Purchase Agreement, on any business day selected by us, we may direct Lincoln Park to purchase up to 500,000 shares of our common stock exchange,
market or trading facilityon any such business day. On any day that the closing sale price of our common stock is not below $.65 the purchase amount may be increased, at our sole discretion, to up to 600,000 shares per purchase, on any day that the closing sale price of our common stock is not below $.80 the purchase amount may be increased, at our sole discretion, to up to 700,000 shares per purchase, on any day that the closing sale price of our common stock is not below $.95 the purchase amount may be increased, at our sole discretion, to up to 800,000 shares per purchase. Notwithstanding the foregoing, in no event shall Lincoln Park purchase more than $760,000 worth of our common stock on any single business day. Such purchases are hereinafter referred to as “Regular Purchases”. The purchase price per share for each such Regular Purchase will be equal to the lower of:
| · | the lowest sale price for our common stock on the purchase date of such shares; or |
| · | the arithmetic average of the three lowest closing sale prices for our common stock during the 10 consecutive business days ending on the business day immediately preceding the purchase date of such shares. |
In addition to Regular Purchases described above, we may also direct Lincoln Park, on any business day on which we have properly submitted a Regular Purchase notice and the closing sale price is not below $0.15, to purchase an additional amount of our common stock, which we refer to as an Accelerated Purchase, not to exceed the lesser of:
| · | three times the number of purchase shares purchased pursuant to the corresponding Regular Purchase; and |
| · | 30% of the aggregate shares of our common stock traded during normal trading hours on the purchase date. |
The purchase price per share for each such Accelerated Purchase will be equal to the lower of:
| · | 97% of the volume weighted average price during (i) the entire trading day on the purchase date, if the volume of shares of our common stock traded on the purchase date has not exceeded a volume maximum calculated in accordance with the Purchase Agreement, or (ii) the portion of the trading day of the purchase date (calculated starting at the beginning of normal trading hours) until such time at which the volume of shares of our common stock traded has exceeded such volume maximum; or |
| · | the closing sale price of our common stock on the purchase date. |
In the case of both Regular Purchases and Accelerated Purchases, the purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price.
Other than as set forth above, there are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Lincoln Park.
Minimum Purchase Price
Under the Purchase Agreement, we have set a floor price of $0.10 per share. Lincoln Park shall not purchase any shares of our common stock on any day that the closing sale price of our common stock is below the floor price. The floor price will be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction and, effective upon the consummation of any such event, the floor price will be the lower of (i) the adjusted price and (ii) $1.00.
Events of Default
Events of default under the Purchase Agreement include the following:
| · | the effectiveness of the registration statement of which this prospectus forms a part lapses for any reason (including, without limitation, the issuance of a stop order), or any required prospectus supplement and accompanying prospectus are unavailable for the resale by Lincoln Park of our common stock offered hereby, and such lapse or unavailability continues for a period of 10 consecutive business days or for more than an aggregate of 30 business days in any 365-day period; |
| · | suspension by our principal market of our common stock from trading for a period of three consecutive business days; |
| · | the de-listing of our common stock from our principal market, provided our common stock is not immediately thereafter trading on the New York Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the NYSE MKT, the NYSE Arca or the OTC Bulletin Board (or nationally recognized successor thereto); |
| · | the transfer agent’s failure for five business days to issue to Lincoln Park shares of our common stock which Lincoln Park is entitled to receive under the Purchase Agreement; |
| · | any breach of the representations or warranties or covenants contained in the Purchase Agreement or any related agreement which has or which could have a material adverse effect on us subject to a cure period of five business days; |
| · | any voluntary or involuntary participation or threatened participation in insolvency or bankruptcy proceedings by or against us; or |
| · | if at any time we are not eligible to transfer our common stock electronically or a material adverse change in our business, financial condition, operations or prospects has occurred. |
Lincoln Park does not have the right to terminate the Purchase Agreement upon any of the events of default set forth above. During an event of default, all of which are outside of Lincoln Park’s control, shares of our common stock cannot be sold by us or purchased by Lincoln Park under the Purchase Agreement.
Our Termination Rights
We have the unconditional right, at any time, for any reason and without any payment or liability to us, to give notice to Lincoln Park to terminate the Purchase Agreement. In the event of bankruptcy proceedings by or against us, the Purchase Agreement will automatically terminate without action of any party.
No Short-Selling or Hedging by Lincoln Park
Lincoln Park has agreed that neither it nor any of its affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time prior to the termination of the Purchase Agreement.
Effect of Performance of the Purchase Agreement on Our Shareholders
All of the shares are traded orof our common stock registered in private
transactions. These salesthis offering which may be sold by us to Lincoln Park under the Purchase Agreement are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period of up to 36 months commencing on the date that the registration statement including this prospectus becomes effective. The sale by Lincoln Park of a significant amount of shares registered in this offering at any given time could cause the market price of our common stock to decline and to be highly volatile. Lincoln Park may sell all, some or none of the shares it has purchased or will purchase under the Purchase Agreement. Therefore, sales to Lincoln Park by us under the Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. In addition, if we sell a substantial number of shares to Lincoln Park under the Purchase Agreement, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with Lincoln Park may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales. However, we have the right to control the timing and amount of any sales of our shares to Lincoln Park and the Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.
Pursuant to the terms of the Purchase Agreement, we have the right, but not the obligation, to direct Lincoln Park to purchase up to $40,000,000 of our common stock exclusive of the shares issued to Lincoln Park as a commitment fee. Depending on the price per share at which we sell our common stock to Lincoln Park, we may be authorized to issue and sell to Lincoln Park under the Purchase Agreement more shares of our common stock than are offered under this prospectus. If we choose to do so, we must first register for resale under the Securities Act any such additional shares, which could cause additional substantial dilution to our shareholders. The number of shares ultimately offered for resale by Lincoln Park under this prospectus is dependent upon the number of shares we direct Lincoln Park to purchase under the Purchase Agreement.
The following table sets forth the amount of gross proceeds we would receive from Lincoln Park from our sale of shares to Lincoln Park under the Purchase Agreement at varying purchase prices:
| Assumed Average Purchase Price Per Share | Number of Registered Shares to be Issued if Full Purchase | Percentage of Outstanding Shares After Giving Effect to the Issuance to Lincoln Park (1) | Proceeds from the Sale of Shares to Lincoln Park Under the Purchase Agreement (2) | |||||||||||
| $ | 0.10 | (2) | 120,000,000 | (4) | 21.9 | % | $ | 12,000,000 | ||||||
| $ | 0.33 | (3) | 120,000,000 | (4) | 22.1 | % | $ | 39,600,000 | ||||||
| $ | 0.45 | 88,888,889 | (4) | 16.6 | % | $ | 40,000,000 | |||||||
| $ | 0.55 | 72,727,273 | (4) | 13.7 | % | $ | 40,000,000 | |||||||
| $ | 0.65 | 61,538,462 | (4) | 11.7 | % | $ | 40,000,000 | |||||||
| (1) | The denominator is based on the number of shares outstanding as of April 8, 2014, with 1,928,641 commitment shares deemed issued as of that date. |
| (2) | Under the Purchase Agreement, we may not sell and Lincoln Park may not purchase any shares on a day in which the closing sale price of our common stock is below $0.10, as may be adjusted in accordance with the Purchase Agreement. |
| (3) | The closing sale price of our shares on April 8, 2014. |
| (4) | Although the Purchase Agreement provides that we may sell up to $40,000,000 of our common stock to Lincoln Park, we have initially reserved approximately 25,000,000 shares for sale to Lincoln Park under the Purchase Agreement. See “We may require additional financing to meet our business objectives and to continue as a going concern.” in “Risk Factors”. |
PLAN OF DISTRIBUTION
The common stock offered by this prospectus is being offered by the selling shareholder, Lincoln Park. The common stock may be sold or distributed from time to time by the selling shareholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed or negotiated prices. A Selling
Stockholderprices, which may use anybe changed. The sale of the common stock offered by this prospectus could be effected in one or more of the following methods when selling
shares:
o ordinary brokerage transactions and transactions in whichmethods:
| · | ordinary brokers’ transactions; |
| · | transactions involving cross or block trades; |
| · | through brokers, dealers, or underwriters who may act solely as agents |
| · | “at the market” into an existing market for the common stock; |
| · | in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents; |
| · | in privately negotiated transactions; or |
| · | any combination of the foregoing. |
In order to comply with the broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sellsecurities laws of certain states, if applicable, the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o broker-dealers may agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per
share;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or
otherwise;
o a combination of any such methods of sale; or
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), if available, rather
than under this prospectus.
In connection with sales of the shares of common stock or otherwise,
the Selling Stockholders may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the shares of common
stock in the course of hedging in positions they assume. The Selling
Stockholders may also sell shares of common stock short and deliver shares of
common stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The Selling
Stockholders may also loan or pledge shares of common stock to broker-dealers
that in turn may sell such shares.
The Selling Stockholders may pledge or grant a security interest in
some or all of the warrants or shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time pursuant
to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended, amending,
if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus. The Selling Stockholders also may transfer and donate the shares of
common stock in other circumstances in which case the transferees, donees,
pledgees or other successors in interest will be the selling beneficial owners.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.
The Selling Stockholders and any broker-dealers or agents involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed us
that it does not have any written or oral agreement or understanding, directly
or
13
indirectly, with any person to distribute the common stock. In no event shall
any broker-dealer receive fees, commissions and markups which, in the aggregate,
would exceed eight percent (8%).
We are required to pay certain fees and expenses incurred by us
incident to the registration of the shares. We have agreed to indemnify the
Selling Stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than under this prospectus. There is no underwriter or coordinating broker
acting in connection with the proposed sale of the resale shares by the Selling
Stockholders.
We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be sold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The shares will be sold only through registered or licensed brokers or dealers if required under applicable
state securities laws.dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the state’s registration or qualification requirement is available and is complied with.
Under applicable rules
Lincoln Park is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.
Lincoln Park has informed us that it intends to use an unaffiliated broker-dealer to effectuate all sales, if any, of the common stock that it may purchase from us pursuant to the Purchase Agreement. Such sales will be made at prices and regulations underat terms then prevailing or at prices related to the Exchange Act,then current market price. Each such unaffiliated broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. Lincoln Park has informed us that each such broker-dealer will receive commissions from Lincoln Park that will not exceed customary brokerage commissions. In compliance with the guidelines of the Financial Industry Regulatory Authority, Inc., or FINRA, the maximum consideration or discount to be received by any person engagedFINRA member or independent broker dealer may not exceed 8% of the aggregate amount of the securities offered pursuant to this prospectus.
Brokers, dealers, underwriters or agents participating in the distribution of the shares as agents may not simultaneously engagereceive compensation in market making activities with respect tothe form of commissions, discounts, or concessions from the selling shareholder and/or purchasers of the common stock for whom the applicable
restricted period,broker-dealers may act as definedagent. The compensation paid to a particular broker-dealer may be less than or in Regulation M,excess of customary commissions. Neither we nor Lincoln Park can presently estimate the amount of compensation that any agent will receive.
We know of no existing arrangements between Lincoln Park or any other shareholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares offered by this prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the names of any agents, underwriters or dealers and any compensation from the selling shareholder, and any other required information.
We will pay the expenses incident to the registration, offering, and sale of the shares to Lincoln Park. We have agreed to indemnify Lincoln Park and certain other persons against certain liabilities in connection with the offering of shares of common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Lincoln Park has agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to us by Lincoln Park specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities.
Lincoln Park has represented to us that at no time prior to the commencementPurchase Agreement has Lincoln Park or its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisionsRegulation SHO of the Exchange Act andAct) of our common stock or any hedging transaction, which establishes a net short position with respect to our common stock. Lincoln Park agreed that during the rules and regulations
thereunder, includingterm of the Purchase Agreement, it, its agents, representatives or affiliates will not enter into or effect, directly or indirectly, any of the foregoing transactions.
We have advised Lincoln Park that it is required to comply with Regulation M promulgated under the Exchange Act. With certain exceptions, Regulation M precludes the selling shareholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which may limitis the timing of purchases and
sales of sharessubject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the securities offered by this prospectus.
This offering will terminate on the date that all shares offered by this prospectus have been sold by Lincoln Park.
Our common stock byis quoted on the Selling Stockholders or any other
person. We will make copies of this prospectus available toOTCBB under the Selling
Stockholders and have informed themsymbol “ELTP”.
LEGAL MATTERS
The validity of the need to deliver a copy ofCommon Stock offered in this prospectus to each purchaser at or prior to the time of the sale (includingProspectus has been passed upon for us by compliance with Rule 172 under the Securities Act).
LEGAL MATTERS
Reitler Brown & Rosenblatt LLC,Richard Feiner, Esq., 381 Park Avenue South, Suite 1601, New York, New York as our counsel will
pass upon whether the shares of common stock which are being registered under
the Securities Act of 1933, as amended, by the registration statement of which
this prospectus is a part are fully paid, nonassessable and validly issued.
10016.
EXPERTS
Miller, Ellin & Company, LLP, independent certified public accountants,
has audited our
The consolidated financial statements includedincorporated in ourthis Prospectus by reference to the Annual Report on Form 10-K for the year ended March 31, 20062013, have been audited by Demetrius Berkower LLC, an independent registered public accounting firm, as set forthstated in their reports,
which arereport incorporated by reference in this prospectusherein, and elsewhere in the
registration statement. Our financial statements arehave been so incorporated by reference in reliance on Miller Ellin'supon such report given on theirand upon the authority of such firm as experts in accounting and auditing.
INCORPORATION BY REFERENCE
The Securities
| 22 |
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our directors and Exchange Commission (the "COMMISSION") allows us to
incorporateofficers are indemnified by reference the information that we file with it, which means that
we can disclose important information to you by referring you to those
documents. The information incorporated by reference into this registration
statement is considered to be partour articles of this registration statement,incorporation and information that we file later with the Commission will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings (including those filed by us priorbylaws to the terminationfullest extent legally permissible under the laws of the offering) we make with the Commission under Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act:
a. our annual report on Form 10-K for the year ended March 31,
2006, filed with the Commission on June 29, 2006;
14
b. our quarterly report on Form 10-Q for the quarter ended June
30, 2006, filed with the Commission on August 11, 2006;
c. our quarterly report on Form 10-Q for the quarter ended
September 30, 2006, filed with the Commission on November 14,
2006;
d. our quarterly report on Form 10-Q for the quarter ended
December 31, 2006, filed with the Commission on February 14,
2007;
e. our current report on Form 8-K filed on July 18, 2006;
f. our current report on Form 8-K filed on August 21, 2006;
g. our current report on Form 8-K filed on September 8, 2006;
h. our current report on Form 8-K filed on September 12, 2006;
i. our current report on Form 8-K filed on October 30, 2006;
j. our current report on Form 8-K filed on November 15, 2006;
k. our current report on Form 8-K filed on December 12, 2006;
l. our current report on Form 8-K filed on February 14, 2007;Nevada against all expenses, liability and m. our current report on Form 8-K filed on April 25, 2007;
n. the description of our capital stock which is contained in our
registration statement on Form 8-A filed on February 16, 2000
including any subsequent amendments and reports filed for the
purpose of updating that description.
You may request a copy of these filings, at no cost,loss, reasonably incurred by written or oral
request to us at the following address:
Mark I. Gittelman
Corporate Secretary
Elite Pharmaceuticals, Inc.
165 Ludlow Avenue
Northvale, New Jersey 07647
(201) 750-2646
No person has been authorized to give any information or to make any
representation other than those contained in this prospectusthem in connection with the offeringdefense of any action, suit or proceeding in which they are a party by reason of being or having been directors or officers of the sharesCompany. Unless our Board determines by a majority vote of a quorum of disinterested directors that, based upon the facts known, such person acted in bad faith and in a manner that such person did not believe to be in or not opposed to our common stockbest interest (or, with respect to any criminal proceeding, that such person believed or had reasonable cause to believe his conduct was unlawful), costs, charges and expenses (including attorneys' fees) incurred by such person in defending a civil or criminal proceeding shall be paid by the Selling Stockholders. If
information or representations other than those containedCompany in this prospectus are
given or made, you must not rely onadvance upon receipt of an undertaking to repay all amounts advanced if it as if we authorized it. Neither the
delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create an implicationis ultimately determined that the information contained or
incorporated by reference herein is correct as of any time subsequent to its
date or that there has been no change in our affairs since such date. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any securities offered hereby in any jurisdiction in which such offer or
solicitationperson is not permitted, orentitled to anyone whom it is unlawful to make such
offer or solicitation. The information in this prospectus is not complete and
may be changed.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of the estimated expenses incurred by us
in connection with the distribution of the securities registered under this
registration statement:
AMOUNT
TO BE PAID *
------------
SEC Registration Fee ........... $ 225.96
Legal Fees and Expenses ........ $ 5,000.00*
Accounting Fees and Expenses ... $ 1,000.00
Printing Expenses .............. $ 2,000.00*
Miscellaneous .................. $ 2,000.00*
----------
Total .......................... $10,225.96*
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to authority conferred by Section 102 of the Delaware General
Corporation Law (the "DGCL"), our Certificate of Incorporation, as amended,
contains a provision providing that the personal liability of a director is
eliminated to the fullest extent providedindemnified by the DGCL. The effect of this
provision is that none of our directors is personally liable to us or our
stockholders for monetary damages for breach of fiduciary dutyCompany as a director,
except for liability for (i) any breach of the director's duty of loyalty to us
or our stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payment of
dividends as provided in Section 174 of the DGCL and (iv) any transaction from
which the director derived an improper personal benefit. This provision is
intended to eliminate the risk that a director might incur personal liability to
us or our stockholders for breach of duty of care. The Certificate of
Incorporation, as amended, also provides that if the Delaware Law is amended to
eliminate or limit further the liability of directors, then the liability of our
directors shall be eliminated or limited, without further stockholder action.
Section 145 of the DGCL contains provisions permitting and, in some
situations, requiring Delaware corporations, such as Elite, to provide
indemnification to their officers and directors for losses and litigation
expenses incurred in connection with their service to the corporation in those
capacities. Our Certificate of Incorporation, as amended, and by-laws contain
such a provision requiring that we indemnify our directors and officers to the
fullest extent permitted by law, as the law may be amended from time to time.
In our registration rights agreement with each of the Selling
Stockholders, we have agreed to indemnify the purchaser against damages or
losses and expenses arising from any losses or expenses incurred in connection
with a loss or alleged loss arising from a material misstatement in or a
material omission from the registration statement or any violation of the
Securities Act except for a material misstatement or omission based on written
information provided to usauthorized by the purchaser.bylaws, and upon satisfaction of other conditions required by current or future legislation. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to oursuch directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, it haswe have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS
4.1 Form
In the event that a claim for indemnification against such liabilities, other than the payment by us of Common Stock certificate,expenses incurred or paid by such director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus and any subsequent prospectus supplements do not contain all of the information in the registration statement. We have omitted from this prospectus some parts of the registration statement as permitted by the rules and regulations of the SEC. Statements in this prospectus concerning any document we have filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified in their entirety by reference to these filings. In addition, we file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any documents that we have filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the operation of the Public Reference Room. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information that we file electronically with the SEC, including us. The SEC’s Internet site can be found at http://www.sec.gov. In addition, we make available on or through our Internet site copies of these reports as soon as reasonably practicable after we electronically file or furnished them to the SEC. Our Internet site can be found at http://www.elitepharma.com. Our website is not a part of this prospectus.
INFORMATION INCORPORATED BY REFERENCE
We have elected to incorporate certain information by reference into this prospectus. By incorporating by reference, we can disclose important information to you by referring you to other documents we have filed or will file with the SEC. The information incorporated by reference is deemed to Exhibit
4.1 to the Registration Statement on Form SB-2, Registration No.
333-90633, made effective on February 28, 2000.
5.1 Opinionbe part of Reitler Brown & Rosenblatt LLC.
10.1 Form of Strategic Alliance Agreement between the Registrant, VGS
Pharma, LLC and Veerappan Subramanian,this prospectus, except for information incorporated by reference that is superseded by information contained in this prospectus. This means that you must look at all of the SEC filings that we incorporate by reference to Exhibit 10A todetermine if any statements in the Current Report on Form 8-K dated December 12, 2006,
2007 andprospectus or any document previously incorporated by reference have been modified or superseded. This prospectus incorporates by reference the documents set forth below that we have previously filed with the CommissionSEC:
| · | Our annual report on Form 10-K for the fiscal year ended March 31, 2013; |
| · | Our Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30, 2013, September 30, 2013 and December 31, 2013; |
| · | Our Current Reports on Form 8-K as filed on April 11, 2013, April 22, 2013, April 23, 2013, May 21, 2013, August 5, 2013, August 6, 2013, August 23, 2013, September 13, 2013, September 18, 2013, October 8, 2013, October 16, 2013, November 26, 2013, February 7, 2014, March 18, 2014 and April 14, 2014; and |
| · | The description of our common stock contained in our registration statement on Form 8-A filed with the SEC on February 16, 2000. |
We also incorporate by reference all documents we file in the future pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of the registration statement that contains this prospectus and prior to the termination of the offering (except in each case the information contained in such document to the extent “furnish” and not “filed”).
You may obtain copies of these documents on December 12, 2006.
10.2 Form of Advisory Agreement between the Registrant and Veerappan
Subramanian,website maintained by the SEC at http://www.sec.gov, or from us without charge (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents) by writing us at Corporate Secretary, 165 Ludlow Avenue, Northvale, New Jersey 07647 or visiting our website at http://www.elitepharma.com.
Any statement contained in a document incorporated or deemed to Exhibit 10B to the Current
Report on Form 8-K dated December 12, 2006, 2007 and filed with the
Commission on December 12, 2006.
10.3 Form of Registration Rights Agreement between the Registrant, VGS
Pharma, LLC and Veerappan Subramanian,be incorporated by reference in this prospectus shall be deemed to Exhibit 10Cbe modified or superseded for the purposes of this prospectus to the Current Report on Form 8-K dated December 12, 2006,
2007 andextent that a statement contained herein or in any other subsequently filed with the Commission on December 12, 2006.
10.4 Form of Warrant issueddocument which also is or deemed to VGS Pharma, LLC,be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to Exhibit 3Aconstitute a part of this prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of the common stock by the selling shareholder. The estimated expenses of issuance and distribution are set forth below.
| SEC filing fee | $ | 5,358 | ||
| Legal expenses | $ | 4,000 | * | |
| Accounting expenses | $ | 5,000 | * | |
| Miscellaneous | $ | 3,000 | * | |
| Total | $ | 17,398 | * |
* Estimate
Item 15. Indemnification of Directors and Officers
Our directors and officers are indemnified by our articles of incorporation and bylaws to the Current Report on Form 8-K dated December 12, 2006,
2007fullest extent legally permissible under the laws of Nevada against all expenses, liability and filedloss, reasonably incurred by them in connection with the Commission on December 12, 2006.
II-1
10.5 Formdefense of Non Qualified Stock Option Agreementany action, suit or proceeding in which they are a party by reason of being or having been directors or officers of the Company. Unless our Board determines by a majority vote of a quorum of disinterested directors that, based upon the facts known, such person acted in bad faith and in a manner that such person did not believe to be in or not opposed to our best interest (or, with Veerappan
Subramanian, incorporatedrespect to any criminal proceeding, that such person believed or had reasonable cause to believe his conduct was unlawful), costs, charges and expenses (including attorneys' fees) incurred by referencesuch person in defending a civil or criminal proceeding shall be paid by the Company in advance upon receipt of an undertaking to Exhibit 3Brepay all amounts advanced if it is ultimately determined that the person is not entitled to be indemnified by the Company as authorized by the bylaws, and upon satisfaction of other conditions required by current or future legislation. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to such directors, officers and controlling persons pursuant to the Current
Report on Form 8-K dated December 12, 2006, 2007foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and filedExchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by such director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the Commission on December 12, 2006.
23.1 Consentsecurities being registered, we will, unless in the opinion of Miller, Ellin & Company LLP.
23.2 Consentcounsel the matter has been settled by controlling precedent, submit to a court of Reitler Brown & Rosenblatt LLC (includedappropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in Exhibit 5.1
above).
24.1 Powerthe Securities Act and will be governed by the final adjudication of Attorney (included on Signature page).
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ITEMsuch issue.
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Item 16. Exhibits
The exhibits listed in the index below are filed as part of this report.
Exhibit Number | Description | |
| 2.1 | Agreement and Plan of Merger between Elite Pharmaceuticals, Inc., a Delaware corporation (“Elite-Delaware”) and Elite Pharmaceuticals, Inc., a Nevada corporation (“Elite-Nevada”), incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on January 9, 2012. | |
| 4.1 | Socius Warrant to Purchase Common Stock, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on January 5, 2012. | |
| 4.2 | Form of specimen certificate for Common Stock of the Company, incorporated by reference to Exhibit 4.1 to the Form SB-2. | |
| 4.3 | Warrant to purchase 100,000 shares of Common Stock issued to DH Blair Investment Banking Corp., incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the period ended September 30, 2004.* | |
| 4.4 | Warrant to purchase 50,000 shares of Common Stock issued to Jason Lyons incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the period ended June 30, 2004.* | |
| 4.5 | Form of Warrant to purchase shares of Common Stock issued to designees of lender with respect to financing of an equipment loan incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the period ended June 30, 2004.* | |
| 4.6 | Form of Short Term Warrant to purchase shares of Common Stock issued to purchasers in the private placement which initially closed on October 6, 2004 (the “Series A Financing”), incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K, dated October 6, 2004, and filed with the SEC on October 12, 2004.* | |
| 4.7 | Form of Long Term Warrant to purchase shares of Common Stock issued to purchasers in the Series A Financing, incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K, dated October 6, 2004, and filed with the SEC on October 12, 2004.* | |
| 4.8 | Form of Warrant to purchase shares of Common Stock issued to the Placement Agent, in connection with the Series A Financing, incorporated by reference to Exhibit 4.8 to the Current Report on Form 8-K, dated October 6, 2004, and filed with the SEC on October 12, 2004.* | |
| 4.9 | Form of Replacement Warrant to purchase shares of Common Stock in connection with the offer to holders of Warrants in the Series A Financing (the “Warrant Exchange”), incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated December 14, 2005, and filed with the SEC on December 20, 2005.* | |
| 4.10 | Form of Warrant to purchase shares of Common Stock to the Placement Agent, in connection with the Warrant Exchange, incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated December 14, 2005, and filed with the SEC on December 20, 2005.* | |
| 4.11 | Form of Warrant to purchase shares of Common Stock issued to purchasers in the private placement which closed on March 15, 2006 (the “Series B Financing”), incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated March 15, 2006 and filed with the SEC on March 16, 2006.* | |
| 4.12 | Form of Warrant to purchase shares of Common Stock issued to purchasers in the Series B Financing, incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K, dated March 15, 2006 and filed with the SEC on March 16, 2006.* | |
| 4.13 | Form of Warrant to purchase shares of Common Stock issued to the Placement Agent, in connection with the Series B Financing, incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K, dated March 15, 2006 and filed with the SEC on March 16, 2006.* | |
| 4.14 | Form of Warrant to purchase 600,000 shares of Common Stock issued to Indigo Ventures, LLC, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated July 12, 2006 and filed with the SEC on July 18, 2006.* | |
| 4.15 | Form of Warrant to purchase up to 478,698 shares of Common Stock issued to VGS PHARMA, LLC, incorporated by reference to Exhibit 3(a) to the Current Report on Form 8-K, dated December 6, 2006 and filed with the SEC on December 12, 2006.* | |
| 4.16 | Form of Non-Qualified Stock Option Agreement for 1,750,000 shares of Common Stock granted to Veerappan Subramanian, incorporated by reference to Exhibit 3(b) to the Current Report on Form 8-K, dated December 6, 2006 and filed with the SEC on December 12, 2006.* |
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| 4.17 | Form of Warrant to purchase shares of Common Stock issued to purchasers in the private placement which closed on April 24, 2007 (the “Series C Financing”), incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated April 24, 2007 and filed with the SEC on April 25, 2007.* | |
| 4.18 | Form of Warrant to purchase shares of Common Stock issued to the placement agent in the Series C Financing, incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K, dated April 24, 2007 and filed with the SEC on April 25, 2007.* | |
| 4.19 | Form of Warrant to purchase shares of Common Stock issued to purchasers in the private placement which closed on September 15, 2008 (the “Series D Financing”), incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated September 15, 2008 and filed with the SEC on September 16, 2008.* | |
| 4.20 | Form of Warrant to purchase shares of Common Stock issued to the placement agent in the Series D Financing, incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K, dated September 15, 2008 and filed with the SEC on September 16, 2008.* | |
| 4.21 | Warrant to purchase shares of Common Stock issued to Epic Investments, LLC in the initial closing of the Strategic Alliance Agreement, dated as of March 18, 2009, by and among the Company, Epic Pharma, LLC and Epic Investments, LLC, incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated June 1, 2009, and filed with the SEC on June 5, 2009.* | |
| 4.22 | Rights Agreement, dated as of November 15, 2013, between the Company and American Stock Transfer & Trust Company, LLC., incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013. | |
| 4.23 | Form of Series H Preferred Stock Certificate, incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013. | |
| 4.24 | Form of Series I Preferred Stock Certificate, incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated February 6, 2014 and filed with the SEC on February 7, 2014. | |
| 5.1 | Opinion of Richard Feiner, Esq.** | |
| 23.1 | Consent of Demetrius Berkower LLC, Independent Registered Public Accounting Firm** | |
| 23.2 | Consent of Richard Feiner, Esq. (included in Exhibit 5.1) |
| * | On January 5, 2011, the Company changed its domicile from Delaware to Nevada. All corporate documents from Delaware have been superseded by Nevada corporate documents filed or incorporated by reference herein. All outstanding Delaware securities certificates are now outstanding Nevada securities certificates. |
| ** | Filed herewith. |
Item 17. UNDERTAKINGSUndertakings
a. The undersigned Registrantregistrant hereby undertakes:
(a)(1)
1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
i. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)
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ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;
notwithstandingstatement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange CommissionSEC pursuant to Rule 424(b) if, in the changeaggregate, the changes in volume representsand price represent no more than a 20 percent20% change in the maximum aggregate offering price set forth in the "Calculation“Calculation of Registration Fee"Fee” table in the effective registration statement; and
(iii)statement.
iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided,
Provided however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(ii)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange CommissionSEC by the Registrantregistrant pursuant to Sectionsection 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in thisthe registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2)
2. That, for the purpose of determining any liability under the Securities Act, of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)
4. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
i. Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
ii. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however , that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
5. That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
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ii. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
iii. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
iv. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
b. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant'sregistrant’s annual report pursuant to Sectionsection 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan'splan’s annual report pursuant to Sectionsection 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in thisthe registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(b) INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING
PERSONS OF THE REGISTRANT PURSUANT TO THE FOREGOING PROVISIONS, OR OTHERWISE,
THE REGISTRANT HAS BEEN ADVISED THAT IN THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED
IN THE SECURITIES ACT OF 1933 AND IS, THEREFORE, UNENFORCEABLE. IN THE EVENT
THAT A CLAIM FOR INDEMNIFICATION AGAINST SUCH LIABILITIES (OTHER THAN THE
PAYMENT BY THE REGISTRANT OF EXPENSES INCURRED OR PAID BY A DIRECTOR, OFFICER OR
CONTROLLING PERSON OF THE REGISTRANT IN THE SUCCESSFUL DEFENSE OF ANY ACTION,
SUIT OR PROCEEDING) IS ASSERTED AGAINST THE REGISTRANT BY SUCH DIRECTOR, OFFICER
OR CONTROLLING PERSON IN CONNECTION WITH THE
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SECURITIES BEING REGISTERED, THE REGISTRANT WILL, UNLESS IN THE OPINION OF ITS
COUNSEL THE MATTER HAS BEEN SETTLED BY CONTROLLING PRECEDENT, SUBMIT TO A COURT
OF APPROPRIATE JURISDICTION THE QUESTION WHETHER SUCH INDEMNIFICATION BY IT IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933 AND WILL BE
GOVERNED BY THE FINAL ADJUDICATION OF SUCH ISSUE.
(c)(1) For purposes of determining any liability
c. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the information omitted fromregistrant pursuant to the formforegoing provisions, or otherwise, the registrant has been advised that in the opinion of prospectus filedthe SEC such indemnification is against public policy as part
of this registration statementexpressed in reliance upon Rule 430Athe Act and contained inis, therefore, unenforceable. In the event that a form of prospectus filedclaim for indemnification against such liabilities (other than the payment by the Registrant pursuant to Rule 424(b)(1)registrant of expenses incurred or (4)paid by a director, officer or 497(b) under the Securities Act of 1933 shall be deemed to be part of this
registration statement ascontrolling person of the time it was declared effective.
(2) Forregistrant in the purposesuccessful defense of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating toaction, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities offered therein,being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the offeringfinal adjudication of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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| II - 5 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has duly caused this Registration Statement to be signed on its behalf by the undersigned, and certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Boroughcity of Northvale, State of New Jersey, on May 31, 2007.
ELITE PHARMACEUTICALS, INC.
/s/ Bernard Berk
----------------------------------------
Bernard Berk
PresidentApril 10, 2014.
| ELITE PHARMACEUTICALS, INC. | ||
| (Registrant) | ||
| By: | s/ Nasrat Hakim | |
| Nasrat Hakim, | ||
| Chief Executive Officer |
POWER OF ATTORNEY
We, the undersigned officers and Chief Executive Officer
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KNOW ALL MEN BY THESE PRESENTS, thatdirectors of Elite Pharmaceuticals, Inc. hereby severally constitute and appoint Nasrat Hakim and Carter Ward, and each person whose signature
appears below constitutesof them singly, our true and appoints Bernard Berk and Mark I. Gittelman as his
attorney-in-fact and agent,lawful attorneys, with full power to them and each of substitution and resubstitution,them singly, to sign for him andus in his name, place, and stead,our names in the capacities indicated below, any and all capacities,amendments (including post-effective amendments) to signthis registration statement on Form S-3, and to file Registration Statement(s) and any and all pre- or post-effective
amendments to such Registration Statement(s), with all exhibits thereto and
hereto, and other documentsthe same with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and
authoritygenerally to do all such things in our names and perform eachon our behalf in our capacities as officers and every actdirectors to enable Elite Pharmaceuticals, Inc. to comply with the provisions of the Securities Act, and thing requisite or necessary
to be done inall requirements of the Securities and about the premises, as fully to all intents and purposes as he
might or could do in person,Exchange Commission, hereby ratifying and confirming all thatour signatures as they may be signed by our said attorneys-in-fact and agents,attorneys, or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.
said registration statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Dated: May 31, 2007 /s/ Bernard Berk
--------------------------------------------
Bernard Berk
Chief Executive Officer and
Chairman of the Board of Directors
Dated: May 31, 2007 /s/ Mark Gittelman
--------------------------------------------
Mark I. Gittelman
Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: May 31, 2007 /s/ Edward Neugeboren
--------------------------------------------
Edward Neugeboren
Director
Dated: May 31, 2007 /s/ Barry Dash
--------------------------------------------
Barry Dash
Director
Dated: May 31, 2007 /s/ Melvin Van Woert
--------------------------------------------
Melvin Van Woert
Director
Dated: May 31, 2007 /s/ Veerappan Subramanian
--------------------------------------------
Veerappan Subramanian
Chief Scientific Officer and Director
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| Signature | Title | Date | ||
| s/ Nasrat Hakim | Chief Executive Officer | |||
| Nasrat Hakim | (Principal Executive) and Director | April 10, 2014 | ||
| s/ Carter Ward | Chief Financial Officer (Principal Financial Officer), | |||
| Carter Ward | Treasurer, Secretary and Chief Accounting Officer | April 10, 2014 | ||
| s/ Barry Dash | Director | |||
| Barry Dash | April 10, 2014 | |||
| s/ Jeenarine Narine | Director | |||
| Jeenarine Narine | April 10, 2014 | |||
| s/ Ashok Nigalaye | Director | |||
| Ashok Nigalaye | April 10, 2014 | |||
| s/ Jeffrey Whitnell | Director | |||
| Jeffrey Whitnell | April 10, 2014 |
| II - 6 |
Elite Pharmaceuticals, Inc.
Form S-3
Index to Exhibits
| Exhibit No. | Description | |
| 5.1 | Opinion of Richard Feiner, Esq. | |
| 23.1 | Consent of Demetrius Berkower LLC, independent registered public accounting firm. |
| II - 7 |