Elite Pharmaceuticals Inc (ELTP)

[WeeZuhl]

I am less worried about licensing fees as they are icing on a pretty small cake. I am more worried about the manufacturing revenues as that is the core revenue base.

I definitely agree the decline in manufacturing revenue is the bigger problem. There was zero reassurance in the call, especially when the CFO acts like we're all bunch of idiots. I'm not sure if he is more offensive because of the condescension or because of the lying.

To summarize, the Lincoln Park facility is a variable rate equity line. So that means that Elite has the right to sell shares to Lincoln Park, at a price that's dependent on and closely correlated to the ELTP trading price at the time. Now, I've received some comments regarding the $0.03 minimum price, which is defined in the contract, and that's just a minimum PPS, which is required for legal contractual purposes. It's not the price the shares will be sold. These shares will be sold at a price based on the PPS at the time, and the $0.03 minimum is irrelevant to that calculation.

The agreement, like any agreement has minimum prices, maximum proceeds, effective dates, various other criteria, which are legal requirements of all such agreements. The $0.03 minimum has no bearing on the price of the shares to be sold to Lincoln Park, it's just a number put there to satisfy legal requirements.

Most important thing to keep in mind with Lincoln Park, the most important aspect of the equity line is that, Elite determines when and if we want to sell shares to Lincoln Park. If our PPS is low as it is now, we don't have to and we won't sell shares to Lincoln Park. If we're profitable, cash positive and don't need the extra financing, as we are currently, we don't have to and we won't sell shares to Lincoln Park, no matter what the price is. The main purpose of this facility is to fund product development or product line expansion, which may not be otherwise financed from working capital.

The growing revenues and strengthening financial position today are due to the products we have developed over the past few years. And that was made possible by the financing provided by the Lincoln Park equity lines.

However, our mid to long-term business plan requires the continued expansion of our product lines, either through in-house development or via acquisition. These activities are ongoing.

He acts like the 3 cent floor in LPC III is a legal technicality which has no real significance, without ever referring to LPC II and the fact that the 8 cent floor prevented the company from accessing the capital for nearly half the agreement. All the commitment shares for LPC II were completely wasted on a useless agreement, not to mention the obvious fact that the dilution through LPC II is one of the factors that caused the share price to fall well under the 8 cent minimum needed in order to utilize it.

And he is being completely disingenuous when he acts like the LPC dilution has resulted in any "growing revenues" [sic]. The original 13 ANDA's were purchased with a promissory note and then shares, same with trimipramine. The Adderalls were financed mostly by SunGen, and that is why Mikah now owns half instead of Elite owning 100%. As far as I can think of, every single development project that was financed through LPC I and LPC II has been either abandoned or sold off for pennies on the dollar. Can anyone describe any current source of revenue that was the result of capital from LPC?

Finally, his comment about expansion through acquisition is more like a warning than a promise. It's like he's saying, "Lookout, shareholders, that's Mikah behind you."