Elite Pharmaceuticals Inc (ELTP)

[no2koolaid]

In a manner of speaking, SunGen is already public by virtue of its parent company. Let me explain...

The idea that Elite would have to be acquired or merge with another firm has long been discussed on this board and it, as we know, remains the single best means for all to benefit. It is how Nasrat is able to cash out and ride off into the sunset to be a great charitable giver. Or, how he might fund Mikah and continue with that effort.

But, frankly, I could care less what his decision is post-Elite. I only wish him well with this fortune to the extent that he enables Elite to provide shareholders with theirs. Since this is my one and done, before expanding on this idea let me address a couple things that should be moot points…

The first is easy...Elite's conference calls do not involve shareholder questions live because when they did the questions asked often were more observations and took up valuable time. Since there are no institutional analysts, being live is unnecessary. But to allow investors to ask questions upfront is an excellent decision. OBTW: There are a number of companies, including those in biotech and pharma that DO NOT even have a CC update. So, enough on that BS.

Next?

No shareholders believe Elite will conduct a reverse split at this point in time. It would make no sense for a couple of reasons and chief among them is there would be no point in asking for an increase in authorized shares if a reverse was to happen under the current circumstances and the reason is simple…

A REVERSE SPLIT CHANGES THE OUTSTANDING SHARES BUT IT DOES NOT CHANGE THE AUTHORIZED SHARES!

To illustrate the point…at the 995 Million authorized shares and the roughly 820 Million outstanding shares, a one to ten split would put the O/S at 82 Million but the Authorized shares would remain the same. So to either pay for the Series J conversion or uplist to the Nasdaq the simplest and least complicated method would be to reverse split instead of increasing the A/S. So…NO REVERSE SPLIT RIGHT NOW. Could it happen in the future? Only if Elite is merged with a privately held firm and then based upon the combined value.

With brings me back around to the thought that Elite could or would merge with SunGen. On its face that makes a lot of sense. However, that would be true if SunGen were a stand alone company. But it is not.

I posted the following before and it is why a SunGen-Elite merger is not simple…

In July 2016, HUNAN JINGFENG PHARMA acquired New Jersey-based Sungen Pharma LLC through its subsidiary and invested $4 million into the target company. Sungen Pharma, a maker of generic pharmaceutical products, had jointly established DBA Peterson Pharmaceuticals with Buffalo-based Peterson Pharmaceuticals LLC in September 2016. The DBA joint venture became the marketing and sales arm of Sungen Pharma. SunGen has a partnership with Athenex; which has produced two FDA approved drugs (injectables).

Hunan Jingfeng is a publicly traded company in China but has no presence on the US big boards and this is where the matter gets interesting. Hunan does have the financial wherewithal to acquire Elite at a range (based on my reading of their information) up to $1.5 Billion; without party (in effect government) approval. Since they are a successful Chinese company with party affiliations, they have unquestioned ability to access capital necessary to do whatever the party approves. I can see the value of their approving the acquisition of Elite and the merger of it with SunGen. I am not sure how they would choose to play it, but Elite cannot simply merge with SunGen without the approval of the parent firm – Hunan Jingfeng - and, the truth is, that usually involves the SBU buying the company to be merged with. And then there is the SEC and US government that have a say in the process.

Here is a bit of background on Hunan Jingfeng and it does offer logic as to how Elite would fit in their portfolio, including the merging of Elite with SunGen.

Hunan Jingfeng Pharmaceutical Co.,Ltd., formerly Hunan Tianyi Science and Technology Co., Ltd, is a China-based company principally engaged in the research, development, manufacture and sale of chemical drugs, biochemical drugs and traditional Chinese patent drugs. The Company's main products includes cardio and cerebrovascular drugs, antihypertensive and hypolipidemic drugs, orthopedic drugs, anti-tumor products, endocrine drugs, digestive system drugs, antiviral drugs and anti-infective drugs, among others. The Company is also involved in commodity import and export trading, business management and consulting, as well as medical technology consulting business. The Company distributes its products in the domestic market.

There is more at play and it is best that I leave the above unencumbered by additional discussions that might best left for another time. If there are questions, that's good and it means one is paying attention.