Elite Pharmaceuticals Inc (ELTP)

[WeeZuhl]

What Elite paid for was not drugs, but Nasrat's expertise.

No. This was a deal for 13 generics. Salary & bonuses are to pay for expertise, and he gets plenty of salary. So far his expertise has resulted in 2 generics and a CRL. The agreement for 13 generics was and continues to be a terrible deal for shareholders. At the time, it was sold as a reverse merger, but clearly Mikah still exists independent of Elite. It was not reported at the time, even in SEC filings, that Nasrat was a secret member of Epic Investments, who controlled the Elite BOD at the time. Not only did they give a sweetheart deal to their friend, but then they provided cover with the subsequent Epic agreement for 12 generics, which they pretty clearly had no intention of ever marketing most of those drugs. The whole deal was shady, and Nasrat could gain a lot of credibility (and solve a big problem for himself with limited remaining A/S) if he would give those shares back to the ELTP treasury.

My point was that the generics were not worth anywhere close to $10 million at any time, and certainly not worth a full 1/3 of the company. Let's say he can find a buyer for $1 billion ($1/share), then he will receive $140 million for these lame generics. At $2/share he will receive $280 million for these generics. This is money that would otherwise go to shareholders at the buyout. I hope he gets $2, but it's pretty hard to justify this kind of exorbitant payout at the expense of the shareholders. He did not have to require $10 million payment for $3 million in ANDA's, and he did not have to convert the debt to shares at the time he did. One way he could make this right is for Mikah to give back 100 million shares to the ELTP treasury.