Elite Pharmaceuticals, Inc. (OTCBB:ELTP) Stumbles After Annual Report

Elite Pharmaceuticals, Inc. (OTCBB:ELTP) looked like it had more or less stabilized in the last two sessions, but once the company filed its latest financial report, it turned red once more.

Truth be told, the 10-K that ELTP filed for the period ended March 31, 2014 doesn’t appear all that bad. A quick glance at the financial columns reveals the following numbers:

• Cash – $6.9 million
• Total Current Assets – $9.9 million   
• Total Current Liabilities – $6.1 million  
• Total Liabilities – $105.5 million
• Total Revenues – $4.6 million
• Cost of revenues – $3.2 million  
• Total Operating Expenses – $6.6 million
• Net loss – $91 MILLION

It was most likely the net loss figure of $91 million that shocked investors away from the company’s stock, and that’s understandable – the sum is outrageously high, to be sure. However, once it becomes clear that $56.5 million of that total can be attributed to “Change in fair value of preferred share derivatives” and $32.9 million is due to “Change in fair value of warrant derivatives”, the picture becomes much more reasonable. That is not to say it is necessarily pretty, but it seems bearable.

As it is, $6.1 million in current liabilities does not seem too much for a company with $9.9 million in assets, especially by the standards of the OTC Markets. 

True, when you draw the final line, it turns out that ELTP has spent the the last year turning $6.6 million into $4.6 million worth of revenues, which resulted in a Gross Profit of $1.3 million. However, ELTP is actually making serious revenues AND it finished the year with nearly $7 million in CASH ON HAND. That’s certainly more than most other OTC Markets pharmaceutical companies can boast – so ELTP certainly has that much going for it.

As it stood, yesterday investors were obviously unimpressed with this state of developments. It seems that today will be different – ELTP is already 4% up in the current trading session.

Another pharmaceutical company that turned red yesterday and appears to be struggling to recover some ground today is Brainstorm Cell Therapeutics Inc (OTCBB:BCLI).