==============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995.
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO
____________.
COMMISSION FILE NO. 0-9036
LANNETT COMPANY, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
STATE OF DELAWARE 23-0787-699
(STATE OF INCORPORATION) (I.R.S. EMPLOYER I.D. NO.)
9000 STATE ROAD
PHILADELPHIA, PA 19136
(215) 333-9000
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND TELEPHONE NUMBER)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES __X__ NO _____
As of November 3, 1995, there were 5,206,128 shares of the issuer's common
stock, $.001 par value, outstanding.
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Page 1 of 16 pages
Exhibit Index on Page 15
<PAGE>
INDEX
Page No.
-------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1995 (unaudited) and
June 30, 1995................................... 3
Consolidated Statements of Earnings
for the three months ended September 30, 1995
and 1994 (unaudited)............................ 4
Consolidated Statements of Cash Flows
for the three months ended September 30, 1995
and 1994 (unaudited)............................ 5
Notes to Consolidated Financial
Statements (unaudited).......................... 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................... 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings............................... 13
ITEM 6. Exhibits and Reports on Form 8-K................ 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
LANNETT COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS 09/30/95 06/30/95
------ ---------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash $ 12,121 $ 38,975
Trade accounts receivable 718,981 609,708
Inventories 437,277 420,907
Prepaid expenses 43,141 43,376
---------- ----------
Total current assets 1,211,520 1,112,966
---------- ----------
PROPERTY, PLANT AND EQUIPMENT
Land 33,414 33,414
Building and improvements 1,344,099 1,340,414
Machinery and equipment 1,313,435 1,231,649
Furniture and fixtures 64,510 64,511
---------- ----------
2,755,458 2,669,988
Less accumulated depreciation (833,768) (784,684)
---------- ----------
Net 1,921,690 1,885,304
---------- ----------
OTHER ASSETS 9,941 10,824
---------- ----------
Total assets $ 3,143,151 $ 3,009,094
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES
Line of credit $ 374,047 $ 307,000
Current maturities of long-term debt 46,665 52,665
Accounts payable 246,222 227,861
Accrued interest payable - shareholder 284,948 370,432
Accrued liabilities 58,602 135,604
---------- ----------
Total current liabilities 1,010,484 1,093,562
---------- ----------
LONG-TERM DEBT, LESS CURRENT MATURITIES 388,889 397,222
---------- ----------
NOTE PAYABLE AND ACCRUED INTEREST - SHAREHOLDER 2,091,500 2,045,500
---------- ----------
LINE OF CREDIT AND ACCRUED INTEREST - SHAREHOLDER 3,601,175 3,513,595
---------- ----------
SHAREHOLDERS' DEFICIENCY
Common stock
Authorized: 50,000,000 shares, par
value $.001; 5,206,128 shares
issued and outstanding 5,206 5,206
Additional paid-in capital 320,575 320,575
Accumulated deficit (4,274,678) (4,366,566)
---------- ----------
Total shareholders' deficiency (3,948,897) (4,040,785)
---------- ----------
Total liabilities and shareholders'
deficiency $ 3,143,151 $ 3,009,094
=========== ===========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
LANNETT COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
--------------------------
9/30/95 9/30/94
------------ ------------
<S> <C> <C>
NET SALES $ 933,782 $ 1,613,302
COST OF SALES 429,437 687,154
----------- -----------
Gross profit 504,345 926,148
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 264,519 356,275
----------- -----------
Operating profit 239,826 569,873
----------- -----------
OTHER EXPENSES, NET
Other 5,436 (8,897)
Interest expense (153,374) (149,218)
----------- -----------
(147,938) (158,115)
----------- -----------
NET INCOME BEFORE INCOME TAXES 91,888 411,758
STATE INCOME TAXES - CURRENT -- 50,000
----------- -----------
NET INCOME $ 91,888 $ 361,758
=========== ===========
PRIMARY INCOME PER SHARE $ 0.02 $ 0.07
FULLY DILUTED INCOME PER SHARE $ 0.01 $ 0.03
PRIMARY WEIGHTED AVERAGE NUMBER OF SHARES 5,206,128 5,206,128
FULLY DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES 13,206,128 13,206,128
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
LANNETT COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
--------------------------
9/30/95 9/30/94
---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 91,888 $ 361,758
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities
Depreciation and amortization 49,967 46,722
Loss on sale of property, plant
and equipment -- 9,000
Increase in trade accounts receivable (109,273) (657,385)
Increase in inventories (16,370) (5,557)
Decrease in prepaid expenses 235 2,461
Increase in accounts payable 18,361 114,785
(Decrease) increase in accrued liabilities (77,002) 7,315
Increase (decrease) in accrued interest 48,096 (2,042)
--------- ---------
Net cash provided by (used in)
operating activities 5,902 (122,943)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and
equipment, net (85,470) (39,071)
Proceeds from sale of property,
plant and equipment -- 4,000
--------- ---------
Net cash used in investing activities (85,470) (35,071)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under equipment line of credit 67,047 --
Repayments of debt (14,333) (14,334)
Collection of shareholder note receivable -- 67,500
--------- ---------
Net cash provided from financing activities 52,714 53,166
--------- ---------
NET DECREASE IN CASH (26,854) (104,848)
CASH AT BEGINNING OF PERIOD 38,975 133,626
--------- ---------
CASH AT END OF PERIOD $ 12,121 $ 28,778
========= ==========
</TABLE>
5
<PAGE>
LANNETT COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position and
the results of operations and cash flows.
The results of operations for the three months ended September 30, 1995 and
1994 are not necessarily indicative of results for the full year.
While the Company believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and the notes included in the Company's Annual Report on Form
10-KSB for the year ended June 30, 1995.
NOTE 2.
Primary per share data is based on the weighted average number of common
shares outstanding of 5,206,128 for the periods ending September 30, 1995 and
1994. Fully diluted per share data includes shares issuable pursuant to
currently exercisable options and a convertible debenture.
NOTE 3.
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------ ----------
(unaudited)
<S> <C> <C>
Raw materials $ 166,211 $ 115,875
Work-in-process 244,310 236,345
Finished goods 12,498 24,945
Packaging supplies 14,258 43,742
------------ ----------
$ 437,277 $ 420,907
============ ==========
</TABLE>
6
<PAGE>
NOTE 4.
The Company uses the liability method specified by SFAS No. 109, "Accounting
for Income Taxes." Deferred tax assets and liabilities are determined based on
the difference between the financial statement and tax basis of assets and
liabilities as measured by the enacted tax rates which will be in effect when
these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities. The principal types of differences
between assets and liabilities for financial statement and tax return purposes
are net operating loss carryforwards and accumulated depreciation. A deferred
tax asset is recorded for net operating losses being carried forward for tax
purposes. At June 30, 1995, the net deferred tax asset has been reduced to
zero by a valuation allowance.
The Company's deferred tax asset as of June 30, 1995 consists of the
following:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 2,134,140
Tax depreciation over book depreciation (123,192)
Vacation payable 4,696
Other 1,260
-----------
2,016,904
Valuation allowance (2,016,904)
-----------
$ --
===========
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations.
In August 1991, the Company temporarily suspended manufacturing
operations in order to upgrade its facilities and operations and to
systematically review its abbreviated new drug applications, systems and
procedures. The Company completed the modernization of its facilities and
operations, instituted inventory and quality control programs, and implemented
a multi-pronged remedial action plan to assure compliance with applicable
governmental regulations and industry standards. The Company resumed
manufacturing and distribution on a limited product basis in October 1992.
Three months ended September 30, 1995 compared with three months ended
September 30, 1994.
Net sales for the three months ended September 30, 1995 (First Quarter
1996) were $933,782 compared to $1,613,302 for the three months ended
September 30, 1994 (First Quarter 1995). The Company's net sales for First
Quarter 1996 and First Quarter 1995 were derived primarily from the sale of
Primidone, a generic version of Wyeth Ayerst's Mysoline(R), an
anti-convulsant; Butalbital Compound Capsules ("BCC"), a generic version of
Sandoz's Fiorinal(R); and Dicyclomine Hydrochloride USP, 10mg Capsules
("Dicyclomine"), a generic version of Marion Merrell Dow's Bentyl(R), an
antispasmodic and anticholinergic agent, which the Company began manufacturing
and distributing in July 1994. In addition, during First Quarter 1995, the
Company performed a limited amount of contract repackaging for other
manufacturing companies. The introduction of Dicyclomine in July 1994, caused
First Quarter 1995 sales to be high as customers began filling their
distribution channels with this new product. In addition sales were also
impacted by the contract repackaging performed in First Quarter 1995.
Cost of sales decreased by 37.5% to $429,437 in First Quarter 1996 from
$687,154 in First Quarter 1995. The large decrease in cost of sales is due to
lower raw material and production costs in First Quarter 1996 as a result of
lower sales. In addition, no contract repackaging costs were incurred during
First Quarter 1996. Gross profit margins for First Quarter 1996 and First
Quarter 1995 were 54.0% and 57.4%, respectively. The decrease in the gross
profit percentage is primarily due to the decrease in sales during First
Quarter 1996 compared to First Quarter 1995, as the Company absorbed more
fixed costs during First Quarter 1995.
8
<PAGE>
Selling, general and administrative expenses decreased by 25.8% to
$264,519 in First Quarter 1996 from $356,275 in First Quarter 1995. This
decrease is primarily due to the decrease in legal expenses and research and
development expenses. Legal expenses decreased as a result of the Gratz case
(refer to June 30, 1995 10-KSB - Legal Proceedings) being settled during the
year ended June 30, 1995 (Fiscal 1995); and therefore no legal costs are being
incurred on the Gratz case during First Quarter 1996. Research and development
expenses decreased due to the Company incurring costs for a bio-equivalency
study of Dicyclomine in First Quarter 1995. No similar costs were incurred
during First Quarter 1996.
The Company reported an operating profit of $239,826 for First Quarter
1996 compared to an operating profit of $569,873 for First Quarter 1995.
The Company's interest expense increased to $153,374 in First Quarter
1996 from $149,218 in First Quarter 1995 primarily due to increased borrowings
on the Company's lines of credit.
During First Quarter 1995, the Company had provided for Pennsylvania
corporate income tax of approximately 11% of taxable income. Due to tax law
changes, the Company could not utilize its net operating loss carryforward
deduction for Pennsylvania corporate income tax during Fiscal 1995. The 1993
Pennsylvania Tax Act reactivated the net operating loss carryforward deduction
for taxable fiscal years after 1995; therefore, no provision for Pennsylvania
corporate income tax was made during First Quarter 1996.
The Company reported net income of $91,888 for First Quarter 1996, or
$.02 per share, $.01 on a fully diluted basis, compared to net income of
$361,758, or $.07 per share, $.03 on a fully diluted basis, for First Quarter
1995.
Liquidity and Capital Resources.
The Company generated $5,902 and used $122,943 of cash in operations
during First Quarter 1996 and First Quarter 1995, respectively. Net cash used
in operations decreased from First Quarter 1995 to First Quarter 1996 largely
due to the high sales during First Quarter 1995 being financed internally
through increased accounts receivable and due to the increase in accrued
interest during First Quarter 1996, as a result of the Company deferring
accrued interest from April 1, 1995 to June 30, 1996, which is payable in
twenty-four equal monthly installments, commencing August 15, 1996. Accrued
liabilities decreased because during First Quarter 1996 the Company did not
have the expenditures for state tax expenses or extraordinary legal
expenditure which incurred in First Quarter 1995.
9
<PAGE>
The Company expended $85,470 for property, plant and equipment during
First Quarter 1996 compared to $39,071 expended during First Quarter 1995.
This increase in capital expenditures is in line with the Company's plans to
acquire the necessary equipment to support the Company's growth. The Company
has not made any material commitments for capital expenditures and does not
expect to incur any material capital expenditures during Fiscal 1996.
Net cash provided by financing activities remained constant from First
Quarter 1995 to First Quarter 1996.
As a result of the foregoing, the Company experienced a $26,854 decrease
in cash available from the beginning to the end of First Quarter 1996,
resulting in $12,121 of cash available at the end of the period.
Except as set forth in this report, the Company is not aware of any known
trends, events or uncertainties that have or are reasonably likely to have a
material impact on the Company's net sales or income from continuing
operations. The Company is unable to anticipate what effect, if any, any
health care reform legislation may have on the Company's business.
From Fiscal 1987 through Fiscal 1994, the Company incurred operating
losses and suffered cash flow restraints. The Company suspended manufacturing
operations from August 1991 through October 1992. In August 1991, the Company
obtained the needed capital to renovate its manufacturing facility, to acquire
new equipment, to remove hazardous waste materials, to retain new management
and to provide working capital primarily from a financing facility made
available to the Company by William Farber, a principal shareholder and
Chairman of the Board of Directors. For First Quarter 1996 the Company
reported an operating profit of $239,826. For First Quarter 1995 the Company
reported an operating profit of $569,873.
This financing facility originally consisted of a $2,000,000 revolving
line of credit and a $2,000,000, 9% convertible debenture. The revolving line
of credit and the debenture are secured by substantially all of the Company's
assets and are subordinated to the bank lines of credit and mortgage term loan
payable. In March 1993, at the Company's request, William Farber increased the
aggregate credit available under the revolving line of credit to $3,500,000.
The Company requested the additional financing to provide working capital
while the Company reformulated products and obtained supplemental approvals
from the Food and Drug Administration ("FDA").
10
<PAGE>
The line of credit bears interest at the prime rate published by Michigan
National Bank plus 1% per annum. The principal is due in full on December 31,
1996. Accrued interest through June 30, 1994 is payable in twenty-four equal
monthly installments, commencing August 15, 1994 and continuing on the
fifteenth day of each month until paid in full. Accrued interest from April 1,
1995 to June 30, 1996 is payable in twenty-four equal monthly installments,
commencing August 15, 1996 and continuing on the fifteenth day of each month
thereafter, with the balance due December 1996. At September 30, 1995, accrued
interest was approximately $285,000, of which approximately $174,000 is
included in the long-term outstanding balance. At September 30, 1995,
approximately $111,000 was classified as currently due.
The debenture bears interest at 9% per annum. The debenture is due
December 23, 1998 and is convertible at any time prior to payment in full at
the conversion rate of 4,000 shares of common stock for each $1,000 of
outstanding indebtedness (adjusted for the Company's 4 for 1 stock splits in
April 1992 and March 1993). Accrued interest through June 30, 1994 is payable
in twenty-four equal monthly installments, commencing August 15, 1994 and
continuing on the fifteenth day of each month thereafter. Accrued interest
from April 1, 1995 to June 30, 1996 is payable in twenty-four equal monthly
installments, commencing August 15, 1996 and continuing on the fifteenth day
of each month thereafter until paid in full. At September 30, 1995, accrued
interest was approximately $265,500, of which approximately $91,500 is
included in the long-term outstanding balance. At September 30, 1995,
approximately $174,000 was classified as currently due.
At September 30, 1995, $73,071 was available under the shareholder
revolving line of credit. Management expects to have sufficient operating
income during Fiscal 1996 to make the required monthly interest payments.
In May 1993, the Company obtained a $500,000 mortgage term loan from
Meridian Bank which provides for monthly principal installments of
approximately $2,800 plus interest at 9.25% per annum. A final balloon payment
of $302,778 is due May 2000. The Company also obtained a $500,000 line of
credit from Meridian Bank which bears interest at a rate of 1.5% per annum
over Meridian's National Commercial Rate. The line of credit is limited to 80%
of qualified accounts receivable. At September 30, 1995, $193,000 was
available under the line of credit. Both loans are secured by substantially
all of the Company's assets and the mortgage term loan is guarantied by Mr.
Farber, who has subordinated his loans to the Company to those of Meridian.
Meridian's lien against the Company's realty is to be released on payment in
full of the mortgage term loan.
11
<PAGE>
In July 1995, the Company obtained a $300,000 revolving line of credit for
equipment financing from Meridian Bank. This line of credit bears interest at
a rate of prime plus 1.5% per annum. The line is cross-collateralized with the
bank mortgage term loan and line of credit. At September 30, 1995
approximately $232,000 was available under the equipment line of credit.
Management currently believes the balances available under the Company's
existing lines of credit will be adequate to fund the Company's working
capital requirements under current sales conditions. The current development
of new products with high raw material costs may result in the Company having
to increase its lines of credit to provide the working capital necessary to
produce those products and support the increased levels of sales for these new
products.
Except as set forth herein, the Company is not aware of any known trends,
events or uncertainties that have or are reasonably likely to have a material
impact on the Company's short-term or long-term liquidity or financial
condition.
Prospects for the Future.
As of September 30, 1995, the Company was manufacturing and marketing
three products: BCC, Primidone and Dicyclomine. In addition to the three
products marketed by the Company, sixteen additional products are under
development at this time; four of these products have been revalidated and
submitted to the FDA for supplemental approval, ten others are currently
undergoing revalidation and preparation for submission to the agency, and two
represent new product introductions as part of the Company's commitment to a
research and development program. Since the Company has no control over the
FDA review process, management is unable to anticipate when it will commence
production and begin shipping of additional products. Management hopes to
receive the requisite FDA approval for one or more products by the end of
Fiscal 1996.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Regulatory Proceedings.
The Company is engaged in an industry which is subject to considerable
government regulation relating to developing, manufacturing and marketing of
pharmaceutical products. Accordingly, incidental to its business, the Company
periodically responds to inquiries or engages in administrative and judicial
proceedings involving regulatory authorities, particularly the FDA and the
Drug Enforcement Agency.
DES Cases.
The Company is currently engaged in several civil actions as a
co-defendant with many other manufacturers of Diethylstilbestrol ("DES"), a
synthetic hormone. For a discussion of these cases, see the Company's Annual
Report on Form 10-KSB for the Fiscal Year Ended June 30, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) A list of the exhibits required by Item 601 of Regulation S-B to be
filed as a part of this Form 10-QSB is shown on the Exhibit Index
filed herewith.
(b) The Company did not file any reports on Form 8-K during the last
quarter of the fiscal year covered by this report.
13
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LANNETT COMPANY, INC.
Dated: November 13, 1995 By: /S/ Barry Weisberg
-----------------------------
Barry Weisberg,
President and Chief Financial
Officer
Dated: November 13, 1995 By: /S/ Jeffrey M. Moshal
-----------------------------
Jeffrey M. Moshal
Director of Financial
Operations
14
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION METHOD OF FILING
3(a) Articles of Incorporation Incorporated by reference to
the Proxy Statement filed with
respect to the Annual Meeting
of Shareholders held on
December 6, 1991 (the "1991
Proxy Statement")
3(b) Bylaws, as amended Incorporated by reference to
the 1991 Proxy Statement
4(a) Specimen Certificate for Incorporated by reference to
Common Stock Exhibit 4(a) to Form 8 dated
April 23, 1993 (Amendment No. 3
to Form 10-K f/y/e June 30,
1992) ("Form 8")
10(a) Loan Agreement dated Incorporated by reference to
August 30, 1991 between the Annual Report on Form 10-K
the Company and William f/y/e June 30, 1991
Farber
10(b) Amendment #1 to Loan Incorporated by reference to
Agreement dated March 15, Exhibit 10(b) to the Annual
1993 Report on Form 10-KSB f/y/e
June 30, 1993 ("1993 Form 10-K")
10(c) Amendment #2 to Loan Incorporated by reference to
Agreement dated August 1, Exhibit 10(c) to the Annual
1994 Report on Form 10-KSB f/y/e
June 30, 1994 ("1994 Form 10-K")
10(d) Amendment #3 to Loan Incorporated by reference to
Agreement dated May 15, Exhibit 10(d) to the Annual
1995 Report on Form 10-KSB f/y/e
June 30, 1995 ("1995 Form 10-K")
10(e) Loan Agreement dated Incorporated by reference to
May 4, 1993 between the Exhibit 10(c) to the 1993
Company and Meridian Bank Form 10-K
10(f) Amendment to Loan Incorporated by reference to
Documents between the Exhibit 10(e) to the 1994
Company and Meridian Bank Form 10-K
dated as of December 8,
1993
10(g) Letter Agreement between Incorporated by reference to
the Company and Meridian Exhibit 10(f) to the 1994
Bank dated December 21, Form 10-K
1993
10(h) Third Amendment to Loan Incorporated by reference to
Agreement dated as of Exhibit 10(g) to 1994 Form 10-K
June 9, 1994
15
<PAGE>
10(i) Fourth Amendment to Loan Incorporated by reference to
Documents between the Exhibit 10(i) to the Annual
Company and Meridian Bank Report on Form 10-KSB f/y/e
as of October 27, 1994 June 30, 1995 ("1995 Form 10-K")
10(j) Letter Agreement between Incorporated by reference to
the Company and Meridian Exhibit 10(j) to the 1995
Bank dated October 27, Form 10-K
1994
10(k) Letter Agreement between Incorporated by reference to
the Company and Meridian Exhibit 10(k) to the 1995
Bank dated July 10, 1995 Form 10-K
10(l) Amendment to Security Incorporated by reference to
Agreement between the Exhibit 10(l) to the 1995
Company and Meridian Bank Form 10-K
dated July 31, 1995
10(m) Line of Credit Note dated Incorporated by reference to
July 31, 1995 Exhibit 10(m) to the 1995
Form 10-K
10(n) Fifth Amendment to Loan Incorporated by reference to
Agreement dated July 31, Exhibit 10(n) to the 1995
1995 Form 10-K
10(o) Employment Agreement Incorporated by reference to
between the Company and Exhibit 10(b) to Form 8
Barry Weisberg
10(p) Employment Agreement Incorporated by reference to
between the Company and Exhibit 10(i) to the 1995
Vlad Mikijanic Form 10-K
11 Computation of Per Share Incorporated by reference to
Earnings Exhibit 11 to the 1994 Form 10-K
22 Subsidiaries of the Incorporated by reference to
Company the Annual Report on Form 10-K
f/y/e June 30, 1994
23 Consent of Grant Thornton Incorporated by reference to
Exhibit 23 to the 1995 Form 10-K
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEETS AND STATEMENTS OF EARNINGS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> $ 12,121
<SECURITIES> 0
<RECEIVABLES> 718,981
<ALLOWANCES> 0
<INVENTORY> 437,277
<CURRENT-ASSETS> 1,211,520
<PP&E> 2,755,458
<DEPRECIATION> 833,768
<TOTAL-ASSETS> 3,143,151
<CURRENT-LIABILITIES> 1,010,484
<BONDS> 6,081,564
<COMMON> 5,206
0
0
<OTHER-SE> (3,954,073)
<TOTAL-LIABILITY-AND-EQUITY> 3,143,151
<SALES> 933,782
<TOTAL-REVENUES> 933,782
<CGS> 429,437
<TOTAL-COSTS> 693,956
<OTHER-EXPENSES> (5,436)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 153,374
<INCOME-PRETAX> 91,888
<INCOME-TAX> 0
<INCOME-CONTINUING> 91,888
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91,888
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.01
</TABLE>
