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Microcap & Penny Stocks : PHFR Pharmaceutical Formulations, Inc -- Ignore unavailable to you. Want to Upgrade?

To: arriba who wrote (1)	6/24/1998 8:10:00 PM
From: Charlie	Respond to of 11

This is interesting - In September 1991, the Company entered into an option agreement with ICC Industries Inc. ICC Industries Inc. purchased an aggregate of 19,559,968 shares of Common Stock, representing 66.7% of the Company's outstanding Common Stock. ICC is a major international manufacturer and marketer of chemical, plastic and pharmaceutical products which had 1994 sales of approximately $880 million. ICC and its subsidiaries have offices in key business centers around the world and owns numerous manufacturing plants. In order to manufacture Generic OTC Products, the Company acquires raw materials from suppliers located in the United States and abroad, including ICC, an affiliate of the Company. Since January 1992, the Company has entered into various subleases of equipment from companies affiliated with ICC, for which the Company pays such affiliates fixed monthly fees. Such leases have various terms, expiring at different times between 1995 and 2000. Upon expiration of the term of each lease, the Company is entitled to purchase the equipment for a price of $1.00. ICC's affiliates purchased such equipment for approximately $5,848,000. The Company is currently negotiating with ICC with respect to additional capital leases having an aggregate purchase value of $2,000,000. The Company leased manufacturing equipment through ICC in the past because it had been unable to lease such equipment directly on acceptable terms. See "Certain Relationships and Related Transactions."

To: arriba who wrote (1)	6/24/1998 8:18:00 PM
From: Charlie	Respond to of 11

Customers - as of last 10K The Company's customers consist of over 50 retailers (including major national and regional drugstore, supermarkets and mass-merchandise chains), wholesalers, distributors, and brand-name pharmaceutical companies. For fiscal 1997, 1996 and 1995, respectively, sales to retail drug and supermarket chains and mass merchandisers accounted for approximately 84%, 85% and 80% of the Company's sales, bulk sales to wholesalers and distributors accounted for approximately 10%, 13% and 14%, of the Company's sales and sales to brand-name pharmaceutical companies accounted for approximately 6%, 2% and 6%, of the Company's sales. All of these sales consisted of products which the Company's customers sell under their own store brand or other labels. Sales to Revco accounted for $12,950,000 (17%), $11,078,000 (20%) and $14,536,000 (25%) of the Company's net sales for fiscal 1997, 1996 and 1995, respectively. (In May 1997, Revco merged with CVS.) Sales to Walgreens were $10,685,000 (14%), $7,609,000 (14%) and $8,373,000 (14%) for fiscal 1997, 1996 and 1995, respectively. Sales to Costco were $9,162,000 (12%), $6,508,000 (12%)and $6,892,000 (12%) for fiscal 1997, 1996 and 1995, respectively. Other retail customers include American Stores, a grocery chain; AmeriSource, a drug wholesaler; BJ Wholesale Club, a warehouse discounter; Eckerd, a drug store chain; Family Dollar, a discount chain; Fleming Cos., a food wholesaler; H.E. Butt, a food chain; Kmart, a mass merchandise chain; Pathmark Stores, a grocery store chain; Rite Aid, a drug store chain; Super Valu, a food wholesaler; Wakefern/Shoprite, a grocery store co-op; and Winn-Dixie, a grocery store chain.

To: arriba who wrote (1)	6/24/1998 8:21:00 PM
From: Charlie	Respond to of 11

Sales and Marketing as of last 10K - The Company has 13 employees in sales and customer service. This staff and 25 independent brokers sell the generic OTC pharmaceutical products and the marketing services of the Company to current and potential customers. There currently are five account teams servicing different geographic areas of the U.S., each headed by a sales director who works with a marketing director, a customer service representative and a management information systems specialist. A team is assigned to each retail account to service that account, including making marketing recommendations to help those customers build their store brand business. The Company has 12 employees in marketing and graphic design who work with custom rs to develop and execute customized marketing programs directed at selling consumers on the therapeutic benefits of the OTC pharmaceutical store brands products.

To: arriba who wrote (1)	6/24/1998 8:27:00 PM
From: Charlie	Respond to of 11

RESEARCH AND DEVELOPMENT; PRODUCTS IN DEVELOPMENT, as of last 10K The Company engages in a research and development program which seeks to develop and gain regulatory approval of products which are comparable to national brand products under the FDA OTC Drug Monograph status or the RX/OTC switch status. The Company has also recently engaged in R&D efforts related to certain prescription ("ethical") products and is exploring potential acquisition candidates or joint ventures to facilitate its entry into other drug categories. The Company maintains a staff of five employees in its product development department, as well as other support staff to assist its customers. The Company's research and development activities are primarily related to the determination of the formula and specifications of the product desired by a customer, as well as the potency, dosage, flavor, quality, efficacy, color, hardness, form (I.E. tablet, caplet or capsule) and its packaging, as well as costs related to new products in development including costs associated with regulatory approvals. The Company's research and development expenditures in fiscal 1997, 1996 and 1995 were $867,000, $790,000 and $1,488,000, respectively. The rate of R&D expenditures fluctuates significantly from year to year depending primarily on what generic products are coming off patent in the near future and whether or not such products are appropriate for development by the Company. The decrease of $698,000 between 1995 and 1996 was due to the fact that research projects were not being performed at the same rate as in the prior fiscal year. Expenditures in one year are not necessarily indicative of expenditures in future years. The Company expects to spend in fiscal 1998 nearly double the amount expended in fiscal 1997 on research and development activities consistent with its goal of continually increasing the Company's product line. In October 1993, the Company entered into an agreement with Farmacon, Inc. ("Farmacon"), the owner of certain proprietary information and technology relating to sucralfate tablets used for the treatment of ulcers, pursuant to which Farmacon and the Company agreed to develop sucralfate tablets. The contract grants the Company certain exclusive manufacturing, marketing and distribution rights with respect to such product in both the ethical and OTC markets. The agreement (which expires ten years after approval by the FDA of distribution of the product subject to certain rights to extend the agreement) provides that the cost of all clinical studies and the cost of obtaining regulatory approval will be borne by Farmacon, while the costs of raw materials and components used to produce clinical batches and to produce the product after regulatory approval will be borne by the Company. The Company has agreed, however, to contribute $600,000 (all of which has been contributed through the fiscal year 1997) to the development and approval process based on certain benchmarks as defined in the agreement. The parties further agreed that any "product profit" (as defined in the agreement) will be distributed 75% to Farmacon and 25% to the Company. An ANDA for the product was filed with the FDA in October 1996. This will be the Company's first entry with the generic prescription market if the ANDA is approved. The Company, in connection with ICC, is developing the OTC version of a cimetidine based H2 antagonist, for the relief from heartburn, acid indigestion and sour stomach. An ANDA for this product was filed with the FDA in October 1996. If an ANDA is approved, sales could not commence before June 1998, when the marketing exclusivity on the brand name equivalent expires. Cimetidine and sucralfate will be, if approved, the Company's first major entries into the gastrointestinal category. FDA approvals of ANDA's generally take 18 to 24 months to obtain and there can be no assurance that the Company's ANDA's will be approved.

To: arriba who wrote (1)	6/25/1998 3:37:00 PM
From: Charlie	Read Replies (2) \| Respond to of 11

With recent new developments, I think we are going to see an in crease in revenues, starting with the next quarter (1st), starting on July 1, 1998. 1. With their expansion into the United Kingdom. < Initially, PFI will supply Costco U.K. with analgesic pain relief products under a supply agreement with an unrelated U.K. based manufacturing company. Costco U.K. currently operates seven warehouses in the U.K. with plans for additional openings. > 2. also the addition of OTC Cimetidine, the generic equivalent to SmithKline Beecham's brand, Tagamet(R) HB(TM)200.