IPA Interpharm Holdings, Inc.

Interpharm Holdings, Inc. (Amex:IPA), a manufacturer and distributor of generic pharmaceutical drugs, today announced its financial results for the fiscal quarter ended December 31, 2005. -0- *T Fiscal Quarter Ended ------------------------------------------ December 31, Increase/ Percentage ---------------------------- Decrease Change 2005 2004 ---------------------------------------------------- Revenue Increased 83.45% $16,213,000 $8,838,000 Gross Profit Increased 99.73% $5,179,000 $2,593,000 Research and Development Expenses Increased 417.86% $1,885,000 $364,000 Net Income Decreased 2.56% $609,000 $625,000 *T Interpharm's near doubling of its revenue for the three months ended December 31, 2005 is the result of the implementation of a new marketing strategy pursuant to which Interpharm is obtaining a broader customer base and making more direct sales. Interpharm has also introduced new and more profitable products, including a female hormone therapy product and Sulfamethoxazole - Trimethoprim (commonly referred to as Bactrim(R)). These products added more than $3.5 million in revenues for the quarter and helped raise Interpharm's gross margin to 31.9%, as compared to 29.3% for the quarter ended December 31, 2004. As part of its expansion plan, Interpharm intends to file at least 25 ANDAs from the period July 1, 2005 through June 30, 2007. In furtherance of this objective, Interpharm increased, over five-fold, its research and development expenditures, as compared to the same period last year. In order for Interpharm to continue to meet its product development initiatives, it will be required to spend on research and development at an even more accelerated pace than it has been spending over the past few quarters. That increased spending will be supported by a secured credit facility of up to $41.5 million with Wells Fargo Bank which Interpharm obtained on February 9, 2006. Interpharm used approximately $21 million of the proceeds received from Wells Fargo to pay off its previous credit facility with its previous bank. Cameron Reid, Chief Executive Officer of Interpharm Holdings, stated: "Our record revenues and gross margins are a direct result of the execution of the beginning stages of our expansion plan. Through research and development and infrastructure investments, we have built a solid foundation for our future growth and to meet our goal of filing more than 25 ANDAs by June 30, 2007. Our new credit facility with Wells Fargo helps ensure that we can stay on track and significantly increase research and development spending to achieve our product development initiatives. I am very proud of the efforts of the Interpharm Team over the past year in implementing our expansion plan, and believe that with their ongoing efforts we will achieve solid results and increase shareholder value." About Interpharm Holdings Inc. Interpharm currently develops, manufactures and distributes generic prescription strength and over-the-counter drugs. Interpharm will continue to focus on growing organically through internal product development and leveraging its strength in efficient and cost effective manufacturing. In addition, Interpharm will also continue to seek consummation of mutually beneficial strategic alliances and collaborations. Headquartered on Long Island, New York, Interpharm presently employs nearly 500 people. FORWARD-LOOKING STATEMENTS Statements made in this news release, contain forward-looking statements concerning Interpharm's business and products involving risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. The actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, and additional competition from existing and new competitors, changes in technology, and various other factors beyond Interpharm's control. Other risks inherent in Interpharm's business are set forth in its filings with the SEC, including, but not limited to, its Form 10-K, filed on September 28, 2005 and Forms 10-Q filed on November 21, 2005 and February 14, 2006. All information in this release is as of February 14, 2006. Interpharm undertakes no duty to update any forward-looking statements to conform the release to actual results or changes in its circumstances or expectations after the date of this release. The financial information stated above and in the tables below has been abstracted from the Company's Form 10-Q for the fiscal quarter ended December 31, 2005, filed with the SEC on February 14, 2006, and should be read in conjunction with the information provided therein. -0- *T CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS UNAUDITED (In thousands, except share data) Three Months Ended Six Months Ended December 31, December 31, -------------------------------------------- 2005 2004 2005 2004 -------------------------------------------- SALES, Net $16,213 $8,838 $30,760 $17,891 COST OF SALES (including related party rent expense of $102 and $204 for the three and six months ended December 31, 2005 and 2004, respectively) 11,034 6,245 21,597 13,358 ---------- ---------- ---------- ----------- GROSS PROFIT 5,179 2,593 9,163 4,533 ---------- ---------- ---------- ----------- OPERATING EXPENSES ------------------ Selling, general and administrative 2,201 1,226 4,639 2,313 Related party rent 18 18 36 36 Research and development 1,885 364 4,031 539 ---------- ---------- ---------- ----------- TOTAL OPERATING EXPENSES 4,104 1,608 8,706 2,888 ---------- ---------- ---------- ----------- OPERATING INCOME 1,075 985 457 1,645 ---------- ---------- ---------- ----------- OTHER INCOME (EXPENSE) ---------------------- Interest expense, net (99) -- (190) (3) Loss on disposal of fixed asset (7) -- (7) -- Gain on sale of marketable securities -- 9 -- 9 ---------- ---------- ---------- ----------- TOTAL OTHER INCOME (EXPENSE) (106) 9 (197) 6 ---------- ---------- ---------- ----------- INCOME BEFORE INCOME TAXES 969 994 260 1,651 PROVISION FOR INCOME TAXES 360 369 98 612 ---------- ---------- ---------- ----------- NET INCOME 609 625 162 1,039 INCOME ATTRIBUTABLE TO PREFERRED STOCKHOLDERS 67 79 90 146 ---------- ---------- ---------- ----------- NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $542 $546 $72 $893 ========== ========== ========== =========== EARNINGS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS ----------------------- Basic earnings per share $0.02 $0.02 $0.00 $0.04 ========== ========== ========== =========== Diluted earnings per share $0.01 $0.01 $0.00 $0.01 ========== ========== ========== =========== Basic weighted average shares outstanding 32,463,607 24,967,190 32,463,607 24,967,178 Diluted weighted average shares and equivalent shares outstanding 67,554,471 67,981,462 67,400,750 67,978,433 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) ASSETS ------ December 31, June 30, 2005 2005 ----------------------------- CURRENT ASSETS (Unaudited) -------------- Cash and cash equivalents $6,394 $537 Accounts receivable, net 7,046 7,664 Inventories 9,344 8,941 Prepaid expenses and other current assets 1,479 1,156 Deferred tax assets 87 87 ------------- ------------ Total Current Assets 24,350 18,385 Land, building and equipment, net 26,632 21,872 Deferred tax assets 4,228 4,326 Investment in APR, LLC 1,022 1,022 Deposits 161 785 ------------- ------------ TOTAL ASSETS $56,393 $46,390 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES ------------------- Current maturities of long-term debt $6,561 $10,340 Accounts payable, accrued expenses and other liabilities 10,580 6,233 Deferred revenue 1,637 -- ------------- ------------ Total Current Liabilities 18,778 16,573 OTHER LIABILITIES ----------------- Long-term debt, less current maturities 14,029 6,691 Other liabilities - 15 ------------- ------------ TOTAL LIABILITIES 32,807 23,279 ------------- ------------ COMMITMENTS AND CONTINGENCIES ----------------------------- STOCKHOLDERS' EQUITY -------------------- Preferred stock, 10,000,000 shares authorized; issued and outstanding - 6,608,233; aggregate liquidation preference of $5,483,095 343 343 Common stock, $0.01 par value, 70,000,000 shares authorized; shares issued - 32,463,607 at December 31, 2005 and 32,338,607 at June 30, 2005 325 324 Additional paid-in capital 21,832 19,104 Stock subscription receivable (112) -- Unearned compensation (2,180) -- Retained earnings 3,378 3,340 ------------- ------------ TOTAL STOCKHOLDERS' EQUITY 23,586 23,111 ------------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $56,393 $46,390 ============= ============ *T