<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
-------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- --------------------------------
Commission file number 1-7335
-------------------------------------------------------
LEE PHARMACEUTICALS
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 95-2680312
- -------------------------------------------- --------------------------------
State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
1444 Santa Anita Avenue, South El Monte, California 91733
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(818)442-3141
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 June 30, 1995 there were outstanding 4,135,162 shares of common stock
of the registrant.
Transitional Small Business Disclosure Format (check one):
Yes No X
-------- --------
<PAGE>
FORM 10-QSB
LEE PHARMACEUTICALS
BALANCE SHEET
JUNE 30, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Cash $ 15
Accounts and notes receivable (net of allowances: $498) 1,215
Inventories:
Raw materials $2,272
Work in process 518
Finished goods 467
-------
Total inventories 3,257
Other current assets 831
---------
Total current assets 5,318
Property, plant and equipment (less
accumulated depreciation and
amortization: $6,668) 598
Goodwill and other assets, net of
accumulated amortization 1,435
---------
TOTAL $ 7,351
---------
---------
</TABLE>
See notes to financial statements.
<PAGE>
FORM 10-QSB
LEE PHARMACEUTICALS
BALANCE SHEET
JUNE 30, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Bank overdraft $ 82
Accounts payable 1,222
Accounts payable, related party 335
Notes payable, other 100
Customer advances and deposits 110
Accrued salaries and wages 43
Other accrued liabilities 626
Deferred income 65
----------
Total current liabilities 2,583
----------
Long term notes payable to related parties 3,381
----------
Other long term notes payable 383
----------
Deferred income 289
----------
STOCKHOLDERS' EQUITY
Common stock---authorized, 7,500,00 shares of
$.10 par value each; issued and outstanding,
4,135,162 shares. 413
Additional paid-in capital 4,222
Retained deficit (3,920)
----------
Total stockholders' equity 715
----------
TOTAL $ 7,351
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
FORM 10-QSB
LEE PHARMACEUTICALS
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Gross revenues $ 2,302 $ 3,276 $ 7,688 $ 9,509
Less: Sales returns (93) (189) (775) (827)
Cash discounts and others (22) (27) (63) (66)
----------- ---------- ----------- -----------
Net revenues 2,187 3,060 6,850 8,616
----------- ---------- ----------- -----------
Costs and expenses:
Cost of sales 968 1,260 3,052 3,782
Selling and advertising expense 934 1,443 3,123 4,051
General and administrative expense 346 358 1,138 1,217
----------- ---------- ----------- -----------
Total costs and expenses 2,248 3,061 7,313 9,050
----------- ---------- ----------- -----------
Loss from operations (61) (1) (463) (434)
Other income 18 19 66 67
----------- ---------- ----------- -----------
Net (loss) income $ (43) $ 18 $ (397) $ (367)
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
Per share:
Net (loss) income $ (.01) $ .00 $ (.10) $ (.09)
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>
See notes to financial statements.
<PAGE>
FORM 10-QSB
LEE PHARMACEUTICALS
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED JUNE 30,
1995 1994
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (397) $ (367)
---------- ----------
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 308
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 84
Amortization of deferred income . . . . . . . . . . . . . . . . . . . . . . (49) (49)
(Gain) on disposal of property, plant, and equipment . . . . . . . . . . . . (11) -
(Increase) in accounts receivable . . . . . . . . . . . . . . . . . . . . . (283) (338)
Decrease in inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . 259 209
Decrease (increase) in other current assets. . . . . . . . . . . . . . . . . 58 (202)
(Increase) in other assets . . . . . . . . . . . . . . . . . . . . . . . . . (417) -
(Decrease) increase in accounts payable . . . . . . . . . . . . . . . . . . (56) 418
Increase (decrease) in accounts payable related party. . . . . . . . . . . . 170 (297)
Increase (decrease) in customer advances and deposits. . . . . . . . . . . . 84 (103)
(Decrease) in accrued salaries and wages . . . . . . . . . . . . . . . . . . (5) (25)
Increase (decrease) in other accrued liabilities . . . . . . . . . . . . . . 1 (32)
Increase in deferred income. . . . . . . . . . . . . . . . . . . . . . . . . - 88
---------- ----------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 61
---------- ----------
Net cash (used in) operating activities. . . . . . . . . . . . . . . . . . . (257) (306)
---------- ----------
Cash flows from investing activities:
Purchase of certain assets from The Fleetwood Company . . . . . . . . . . . (66) -
Purchase of certain assets from Alivio Products Inc. . . . . . . . . . . . . (28) -
Purchase of certain assets from Medtech Laboratories, Inc. . . . . . . . . . - (100)
Proceeds from sale of equipment. . . . . . . . . . . . . . . . . . . . . . . 11 -
Purchase of property, plant and equipment. . . . . . . . . . . . . . . . . . (52) (248)
---------- ----------
Net cash (used in) investing activities. . . . . . . . . . . . . . . . . . . (135) (348)
---------- ----------
Cash flows from financing activities:
Payments on other notes payable. . . . . . . . . . . . . . . . . . . . . . . (9) (6)
Proceeds from bank loan. . . . . . . . . . . . . . . . . . . . . . . . . . . - 4
Increase in bank overdraft . . . . . . . . . . . . . . . . . . . . . . . . . 82 -
Proceeds from notes payable to related parties . . . . . . . . . . . . . . . 288 410
Payments on notes payable to related parties . . . . . . . . . . . . . . . . (60) -
---------- ----------
Net cash provided by financing activities. . . . . . . . . . . . . . . . . . 301 408
---------- ----------
Net (decrease) in cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . (91) (246)
Cash at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 106 292
---------- ----------
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15 $ 46
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 104 $ 126
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
<PAGE>
FORM 10-QSB
NOTES TO FINANCIAL INFORMATION
1. Basis of presentation:
The accompanying balance sheet as of June 30, 1995, and the statements of
operations and cash flows for the periods ended June 30, 1995, and 1994,
have not been audited by independent accountants but reflect all
adjustments, consisting of any normal recurring adjustments, which are, in
the opinion of management, necessary to a fair statement of the results for
such periods. The results of operations for the three months and nine
months ended June 30, 1995, are not necessarily indicative of results to be
expected for the year ending September 30, 1995.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to the requirements of the Securities
and Exchange Commission, although the Company believes that the disclosures
included in these financial statements are adequate to make the information
not misleading.
The financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's annual report on
Form 10-KSB for the fiscal year ended September 30, 1994.
The Company is involved in various matters involving environmental cleanup
issues. SEE "Item 2. Management's Discussion and Analysis or Plan of
Operations" and Note 10 of Notes to Financial Statements included in the
Company's Form 10-KSB for the fiscal year ended September 30, 1994. The
ultimate outcome of these matters cannot presently be determined.
Accordingly, no provision for any loss that may result from the resolution
of these matters has been made in the accompanying financial statements.
2. Net income (loss) per share:
Net income (loss) per share is based on the weighted average number of
shares of common stock outstanding during the periods presented. Common
stock equivalents are included in these calculations where their effect on
net income per share is dilutive. The weighted average number of shares
was 4,135,162 for all periods presented.
3. Acquisition:
In October, 1994, the Company finalized the agreement reached on August 31,
1994, to purchase certain assets of the "WATE-ON -Registered Trademark-"
and "SUPER WATE-ON -Registered Trademark-" line of nutritional products
from The Fleetwood Company for approximately $67,000 in cash. In addition,
the Company remitted $100,000 to the seller which was due upon closing. A
royalty agreement was entered into whereby the Company is required to remit
approximately $6,900 per month for thirty-six months. The royalty amount
is to be expensed over the length of the agreement which expires on August
31, 1999.
In October, 1994, the Company finalized the agreement reached on August 31,
1994, to purchase certain assets of the Aloe E and Aloe 99 line of aloe
vera products from Alivio Products, Inc. for approximately $50,000 in cash.
A royalty agreement was entered into whereby the Company is required to
remit $120,000 payable over twelve (12) months commencing on September 30,
1994.
<PAGE>
FORM 10-QSB
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995, AND JUNE 30, 1994
Gross revenues decreased by 30% from $3,276,000 in the quarter ended June
30, 1994, to $2,302,000 in the quarter ended June 30, 1995. The decline in
gross revenues was attributed to lower sales of the Company's nail
products. The reduced sales volume was due to contracting inventory levels
by the retailers and an overall decline in the nail extender market. The
reduction in gross revenues was partially offset by sales of the newly
acquired over-the-counter brand WATE-ON -Registered Trademark- and SUPER
WATE-ON -Registered Trademark- plus increased sales volume in one of our
previously acquired personal care brands.
Net revenues declined by approximately $873,000 or 29% for the three months
ended June 30, 1995, as compared to the three months ended June 30, 1994.
The decline in net revenues was due to the same reasons mentioned above
regarding gross revenues.
The Company's sales returns for the quarter decreased $96,000 or 51% in the
quarter ended June 30, 1995, when compared to the quarter ended June 30,
1994.
Cost of sales was 42% of gross revenues for the quarter ended June 30,
1995, and 39% for the quarter ended June 30, 1994. The increase is
attributed to two factors; 1) start-up costs associated with the learning
curve of newer brands folded into the production scheme and 2)
inefficiencies related to the movement and consolidation of certain
production departments within fewer facilities. This should allow the
Company to operate more efficiently while utilizing reduced facilities.
Selling and advertising expenses declined $509,000 when comparing the three
months ended June 30, 1995, with the three months ended June 30, 1994. The
reduction of expenses were mainly due to the following factors; 1) lower
payroll and related fringe benefits due to a cutback in staff personnel 2)
lower manufacture representative commissions 3) decrease in amortization
expense and 4) decline in co-operative advertising expenditures.
General and administrative expenses decreased when comparing the quarters
ended June 30, 1995, and 1994. The decrease was primarily due to the
reduction in staff personnel and related fringe benefits. This decrease
was basically offset by an increase in interest expense due to an increase
in the average debt outstanding and higher (over 2%) average monthly
interest rates.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1995, AND JUNE 30, 1994
Gross revenues for the nine months ended June 30, 1995, were $7,688,000, a
decrease of approximately $1,821,000 or 19% from the comparable nine month
period ended June 30, 1994. The decline in gross revenues was due to lower
sales of the Company's nail extender products. Contracting inventory
levels by the retailers and a decline in the overall marketplace for nail
extender items is the cause for the reduced sales volume. Net revenues for
the nine months ended June 30, 1995, were $6,850,000, a decrease of
$1,766,000 or 20%, from the comparable nine month period ended June 30,
1994.
Cost of sales as a percentage of gross revenues for the nine months ended
June 30, 1995, as compared to the nine month period ended June 30, 1994,
was constant, 40% versus 40%, respectively.
Selling and administrative expenses decreased $928,000 or 23% when
comparing the nine months ended June 30, 1995, with the nine months ended
June 30, 1994. The lower expenses were part of the Company cost
containment program. The cost reductions occurred in several major expense
classifications, namely; 1) decrease in payroll and related fringe
benefits due to cutbacks of staff personnel 2) decline in
advertising/promotion costs 3) lower manufacturer representative
commissions (lower sales volume) and 4) lower consulting and amortization
expenses.
<PAGE>
FORM 10-QSB
General and administrative expenses decreased $79,000 (6%) to $1,138,000
for the nine month period ended June 30, 1995, as compared to $1,217,000
for the nine month period ended June 30, 1994. A reduction in staff
personnel and related fringe benefit costs explains the reduction in
expenditures. This decrease was partially offset by an increase in
interest expense due to higher average monthly interest rates and an
increase in the average debt outstanding.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended June 30, 1995, working capital decreased to
$2,735,000 from $3,042,000 at September 30, 1994. The Company's current
ratio at June 30, 1995, was 2.1 to 1 compared to 2.3 to 1 at September 30,
1994.
Management believes that for the next six months, anticipated level of
sales and working capital will allow it to meet short term obligations on a
current basis. Thereafter, it is unclear whether additional financing
sources may be required which could include, but not limited to, additional
loans from affiliates.
ENVIRONMENTAL MATTERS
The Company owns a manufacturing facility located in South El Monte,
California. The California Regional Water Quality Control Board (The
"RWQCB"), has alleged that the soil and shallow ground water at the site
are contaminated. On August 12, 1991, the Board issued a "Cleanup and
Abatement Order" directing the Company to conduct further testing and
cleanup the site. The Company did not complete the testing, and in June,
1992, the RWQCB requested that the EPA evaluate the contamination and take
appropriate action. At the EPA's request, Ecology & Environment, Inc.
conducted an investigation of soil and ground water on the Company's
property. Ecology & Environment Inc.'s Final Site Assessment Report, which
was submitted to the EPA in June, 1994, did not rule out the possibility
that some of the contamination originated on-site, and resulted from either
past or current operations on the property. While the Company may be
liable for all or part of the costs of remediating the contamination on its
property, the remediation cost is not known at this time. The EPA has not
taken any further action in this matter, but may do so in the future.
The tenants of nearby properties upgradient have sued the Company alleging
that hazardous material from the Company's property caused contamination on
the properties leased by the tenants. The Company does not believe there
is any basis for the allegations and is vigorously defending the lawsuit.
The Company's South El Monte manufacturing facility is also located over a
large area of possibly contaminated regional groundwater which is part of
the San Gabriel Valley Superfund site. The Company has not been notified
that it is a potentially responsible party ("PRP") for the contamination,
but may be in the future. The cost of any cleanup of the groundwater is
not known at this time. In September, 1992, EPA announced that the levels
of contamination in the Whittier Narrows area of the Superfund site were
sufficiently low and that it was not planning a cleanup at this time, but
rather would continue to monitor the ground water for an indefinite period.
The Company's property is adjacent to the Whittier Narrows area. Except as
described above, it is not clear what action the EPA will take with respect
to the Company's property.
The City of South El Monte, the city in which the Company has its
manufacturing facility, is located in the San Gabriel Valley. The San
Gabriel Valley has been declared a Superfund site, chiefly because of
chlorinated solvents released onto and into the vadose soil and ground
water by various manufacturing companies during World War II and in
subsequent decades, until the presence and persistence of these solvents
was recognized and they were declared to be environmentally hazardous and
subject to cleanup work.
The Company believes that the City of South El Monte does not appear to be
located over any of the major plumes. However, the EPA recently announced
it is studying the possibility that, although the vadose soil and ground
water, while presenting cleanup problems, there may be a contamination by
DNAPs (dense non-aqueous phase liquids), i.e., "sinkers", usually
chlorinated organic cleaning solvents. The EPA has proposed to drill six
"deep wells" throughout the City of South El Monte at an estimated cost of
$1,400,000. The EPA is conferring with SEMPOA (South El Monte Property
Owners Association) as to cost sharing on this project. SEMPOA has
obtained much lower preliminary cost estimates. The outcome cost and exact
scope of this are unclear at this time.
<PAGE>
FORM 10-QSB
The Securities and Exchange Commission has issued a formal order of
investigation concerning certain matters, including the Company's
environmental liabilities. The Company is cooperating with the
investigation.
At this time, the company does not have any reliable information on the
likely cleanup costs of either its property or the properties that are the
subject of the lawsuit described above. Thus, it cannot determine the
extent, if any, of its share of liability for any such costs. The Company
has been seeking reimbursement of costs from its insurance carriers who
have denied reimbursement of costs, based on their review and analysis of
the insurance policies, the history of the site, the nature of the claims
and current court decisions in such cases.
PART II - OTHER INFORMATION
Item 1.Legal Proceedings
The information set forth under Part I, Item 2, "Management's Discussion and
Analysis or Plan of Operations - Environmental Matters" is incorporated herein
by reference. SEE ALSO "Legal Proceedings" in the Company's Form 10-KSB for the
fiscal year ended September 30, 1994.
Item 4.Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the registrant occurred on May 9, 1995.
At that meeting, the following directors were elected:
<TABLE>
<CAPTION>
VOTES
-----------------------
Director FOR WITHHELD
--- --------
<S> <C> <C>
Dr. Henry L. Lee 3,538,290 125,905
Ronald G. Lee 3,539,340 124,855
Theo. H. Dettlaff 3,548,127 116,068
Dennis F. Holt 3,546,647 117,548
Dr. Charles R. Plott 3,546,377 117,818
William M. Caldwell IV 3,545,897 118,298
</TABLE>
The appointment of Meir & Meir as independent auditors of the registrant was
also approved by a vote of 3,579,850 shares "FOR", 56,050 shares "AGAINST" and
28,295 shares "ABSTAIN".
Item 6. Exhibits
The following exhibits have previously been filed by the Company:
3.1 - Articles of Incorporation, as amended (1)
3.4 - By-laws, as amended December 20, 1977 (2)
3.5 - Amendment of By-laws effective March 14, 1978 (2)
3.6 - Amendment to by-laws effective November 1, 1980 (3)
4.1 - Specimen Common Stock Certificates (1)
4.4 - Note payable to related party, dated September 29, 1994,
evidencing advances to the Registrant (9)
10.1 - Description of bonus agreements between the Registrant and
its officers (2)
10.2 - Lease dated December 1, 1990, for the premises located at
1470 Santa Anita Avenue, South El Monte, California (6)
<PAGE>
FORM 10-QSB
10.3 - Lease dated April 16, 1990, for the premises located at 1425
and 1427 Lidcombe Avenue, South El Monte, California (6)
10.4 - Lease dated April 16, 1990, for the premises located at 1434
Santa Anita Avenue, South El Monte, California (6)
10.5 - Lease dated April 16, 1990, for the premises located at 1460
Santa Anita Avenue, South El Monte, California (6)
10.6 - Lease dated April 16, 1990, for the premises located at 1457
Lidcombe, South El Monte, California (6)
10.7 - Lease dated April 16, 1990, for the premises located at 1500
Santa Anita Avenue, South El Monte, California (6)
10.8 - Lease dated April 16, 1990, for the premises located at 1516
Santa Anita Avenue, South El Monte, California (6)
10.9 - Lease dated March 1, 1991, for the premises located at 1444
Santa Anita Avenue, South El Monte, California (6)
10.10 - Lease dated March 1, 1991, for the premises located at 1445
Lidcombe Avenue, South El Monte, California (7)
10.11 - Promissory notes which were amended in September 1992
evidencing advances to the Registrant from its affiliates
(8)
10.12 - Promissory notes which were amended in September 1994
evidencing advances to the Registrant from its affiliates
(9)
10.13 - Promissory notes evidencing advances made to the Registrant
from its affiliates (9)
10.14 - Promissory notes evidencing advances made to the Registrant
(9)
10.15 - Qualified Stock Option Plan including forms of grant (4)
10.16 - 1985 Employee Incentive Stock Option Plan (5)
27 - Financial Data Schedule
(1) Filed as an Exhibit of the same number with the Company's Form
S-1 Registration Statement filed with the Securities and
Exchange Commission on February 5, 1973, (Registrant No. 2-
47005), and incorporated herein by reference.
(2) Filed as Exhibits 3.4, 3.5, and 13.18 with the Company's Form
10-K Annual Report for the fiscal year ended September 30,
1978, filed with the Securities and Exchange Commission and
incorporated herein by reference.
(3) Filed as an Exhibit of the same number with the Company's Form
10-K Annual Report for the fiscal year ended September 30,
1979, filed with the Securities and Exchange Commission and
incorporated herein by reference.
(4) Filed as Exhibit 5.1 with the Company's Form 10-K Annual Report
for the fiscal year ended September 30, 1973, filed with the
Securities and Exchange Commission and incorporated herein by
reference.
(5) Filed as Exhibits 13.27 and 13.28 with the Company's Form 10-K
Annual Report for the fiscal year ended September 30, 1986,
filed with the Securities and Exchange Commission and
incorporated herein by reference.
<PAGE>
FORM 10-QSB
(6) Filed as Exhibit 13.31 with the Company's Form 10-K Annual
Report for the fiscal year ended September 30, 1990, filed with
the Securities and Exchange Commission and incorporated herein
by reference.
(7) Filed as Exhibit 13.32 with the Company's Form 10-K Annual
Report for the fiscal year ended September 30, 1991, filed with
the Securities and Exchange Commission and incorporated herein
by reference.
(8) Filed as Exhibit 13.33 with the Company's Form 10-K Annual
Report for the fiscal year ended September 30, 1992, filed with
the Securities and Exchange Commission and incorporated herein
by reference.
(9) Filed as Exhibits 10.12, 10.13, and 10.14 with the Company's
Form 10-K Annual Report for the fiscal year ended September 30,
1994, filed with the Securities and Exchange Commission and
incorporated herein by reference.
SIGNATURES
In accordance with the requirements of the Securities Exchange Acts of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
LEE PHARMACEUTICALS
-------------------
(Registrant)
Date: August 9, 1995 /s/ Ronald G. Lee
------------------- ----------------------------------
Ronald G. Lee
President
Date: August 9, 1995 /s/ Michael L. Agresti
------------------- ----------------------------------
Michael L. Agresti
Vice President - Finance
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 15
<SECURITIES> 0
<RECEIVABLES> 1,713
<ALLOWANCES> 498
<INVENTORY> 3,257
<CURRENT-ASSETS> 5,318
<PP&E> 7,266
<DEPRECIATION> 6,668
<TOTAL-ASSETS> 7,351
<CURRENT-LIABILITIES> 2,583
<BONDS> 0
<COMMON> 413
0
0
<OTHER-SE> 302
<TOTAL-LIABILITY-AND-EQUITY> 7,351
<SALES> 6,801
<TOTAL-REVENUES> 6,850
<CGS> 3,052
<TOTAL-COSTS> 7,040
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 272
<INCOME-PRETAX> (397)
<INCOME-TAX> 0
<INCOME-CONTINUING> (397)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (397)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
