<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 March 31, 1996
----------------------------------------
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
or organization) Identification 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 March 31, 1996 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
MARCH 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Cash $ 13
Accounts and notes receivable (net of allowances: $376) 1,484
Inventories:
Raw materials $ 1,811
Work in process 283
Finished goods 387
------
Total inventories 2,481
Other current assets 1,091
--------
Total current assets 5,069
Property, plant and equipment (less
accumulated depreciation and
amortization: $6,552) 507
Goodwill and other assets, net of
accumulated amortization 2,726
--------
TOTAL $ 8,302
--------
--------
</TABLE>
See notes to financial statements.
<PAGE>
Form 10-QSB
LEE PHARMACEUTICALS
BALANCE SHEET
MARCH 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Bank overdraft $ 168
Note payable to bank 285
Notes payable, other 341
Current portion - royalty agreements 743
Accounts payable 1,398
Other accrued liabilities 768
Due to related parties 301
Deferred income 65
--------
Total current liabilities 4,069
--------
Long-term notes payable to related parties 3,368
--------
Long-term notes payable, other 8
--------
Long-term payable--royalty agreements, less current portion $743 1,145
--------
Deferred income 240
--------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock, $.10 par value; authorized, 7,500,00 shares;
issued and outstanding, 4,135,162 shares 413
Additional paid-in capital 4,222
Accumulated deficit (5,163)
--------
Total stockholders' deficiency (528)
--------
TOTAL $ 8,302
--------
--------
</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 SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1996 1995 1996 1995
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Gross revenues $ 2,170 $ 2,885 $ 4,140 $ 5,386
Less: Sales returns (380) (597) (547) (682)
Cash discounts and others (12) (21) (30) (41)
-------- -------- -------- --------
Net revenues 1,778 2,267 3,563 4,663
-------- -------- -------- --------
Costs and expenses:
Cost of sales 744 1,160 1,473 2,084
Selling and advertising expense 927 1,182 1,701 2,189
General and administrative expense 439 412 786 792
-------- -------- -------- --------
Total costs and expenses 2,110 2,754 3,960 5,065
-------- -------- -------- --------
Loss from operations (332) (487) (397) (402)
Other income 22 30 38 48
-------- -------- -------- --------
Net loss $ (310) $ (457) $ (359) $ (354)
-------- -------- -------- --------
-------- -------- -------- --------
Per share:
Net loss $ (.08) $ (.11) $ (.09) $ (.09)
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See notes to financial statements.
<PAGE>
Form 10-QSB
LEE PHARMACEUTICALS
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
1996 1995
-------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net (loss). . . . . . . . . . . . . . . . . . . $ (359) $ (354)
------- --------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation. . . . . . . . . . . . . . . . . . 93 137
Amortization of intangibles . . . . . . . . . . 135 143
(Gain) on disposal of property,
plant and equipment . . . . . . . . . . . . . (9) (11)
Change in operating assets and liabilities:
(Increase) in accounts receivable . . . . . . . (153) (710)
(Increase) decrease in inventories . . . . . . (21) 254
(Increase) decrease in other current assets . . (4) 86
(Decrease) increase in accounts payable . . . . (238) 302
(Decrease) increase in accounts payable
related party. . . . . . . . . . . . . . . . . (87) 156
(Decrease) in note payable bank . . . . . . . . (4) --
Increase in notes payable - other . . . . . . . 176 --
Increase in other accrued liabilities . . . . . 312 133
(Decrease) in deferred income . . . . . . . . . (33) (32)
------- --------
Total adjustments . . . . . . . . . . . . . . . 167 458
------- --------
Net cash (used in) provided by
operating activities . . . . . . . . . . . . . (192) 104
------- --------
Cash flows from investing activities:
Additions to property, plant, and equipment . . (11) (52)
Acquisition of product brands . . . . . . . . . (114) (466)
Proceeds from sale of equipment . . . . . . . . 9 11
------- --------
Net cash (used in) investing activities . . . . (116) (507)
------- --------
Cash flows from financing activities:
Increase in bank overdraft. . . . . . . . . . . 168 46
Proceeds from notes payable to related parties. 22 288
Proceeds from (payments on) notes payable, other 8 (4)
------- --------
Net cash provided by financing activities . . 198 330
------- --------
Net (decrease) in cash. . . . . . . . . . . . . . (110) (73)
Cash, beginning of year . . . . . . . . . . . . . 123 106
------- --------
Cash, end of period . . . . . . . . . . . . . . . $ 13 $ 33
------- --------
------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest. . . . . . . . . . . . . . . . . . . . $ 112 $ 87
------- --------
------- --------
</TABLE>
See notes to financial statements.
<PAGE>
Form 10-QSB
NOTES TO FINANCIAL INFORMATION
1. Basis of presentation:
The accompanying balance sheet as of March 31, 1996, and the statements of
operations and cash flows for the periods ended March 31, 1996, and 1995,
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 six
months ended March 31, 1996, are not necessarily indicative of results to
be expected for the year ending September 30, 1996.
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, 1995.
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, 1995. The
ultimate outcome of these matters cannot presently be determined.
Environmental expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. The Company's proportionate share of the
liabilities are recorded when environmental remediation and/or cleanups are
probable, and the costs can be reasonably estimated.
2. Net loss per share:
Net loss per share is based on the weighted average number of shares of
common stock outstanding during the periods presented. Common stock
equivalents (common stock options) are not included in these calculations
where their effect on net loss per share is anti-dilutive. The weighted
average number of shares was 4,135,162 for all periods presented.
3. Change in accounting policy:
The Company has changed its method of accounting for royalty agreements in
connection with brand acquisitions. Minimum royalty obligations that are
fixed and certain in amount are "grossed up" and recorded as liabilities.
The related intangible assets acquired are amortized over the life of the
royalty agreement. This change which is a grossing up of assets and
liabilities, in equal amounts, has no effect on the statements of
operations.
Certain reclassifications have been made in the Statement of Cash Flows for
the six months ending March 31, 1995, to make the statement comparable to
the March 31, 1996 presentation.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996, AND MARCH 31, 1995
Gross revenues declined by 25% from $2,885,000 in the quarter ended March
31, 1995, to $2,170,000 in the quarter ended March 31, 1996. The lower
gross revenues were attributed to a decrease in the Company's nail extender
products and depilatories. The reduced sales volume was the result of
customer consolidations by the retailers and the continued overall decline
in the nail extender market. The reduction in gross revenues was
marginally offset by sales of the newly acquired over-the-counter brands
such as; XS-Registered Trademark-, Baby Gasz-TM-, Baby Gumz-TM-, and
Brush'n Floss-Registered Trademark-.
<PAGE>
Form 10-QSB
Net revenues decreased by approximately $489,000 or 22% for the three
months ended March 31, 1996, as compared to the three months ended March
31, 1995. The decline in net revenue was due to the same reasons noted
above regarding gross revenues. The sales returns level decreased $217,000
or 36% when comparing the three months ended March 31, 1996, and 1995. The
sales returns during the quarters ending March 31, 1996 and March 31, 1995,
were abnormally high. The increased returns were partially due to the
shrinking of the shelf space, by our major retail customers, and year end
planogram changes. The Company's percentage of sales returns to gross
sales varies from quarter to quarter, but the overall average is
approximately 9 - 13%.
Cost of sales was 34% of gross revenues for the quarter ended March 31,
1996 and 40% for the quarter ended March 31, 1995. The lower percentage
was the result of the product mix, utilization of less direct labor
manpower and the Company's ability to consolidate its production facilities
(reducing overall occupied facility square footage by 25%) since August
1995.
Selling and advertising expenses declined approximately $255,000 or 22%
when comparing the three months ended March 31, 1996, with three months
ended March 31, 1995. The reduction of expenses was basically due to the
following factors; 1) lower payroll and related fringe benefits, 2) decline
in media and cooperative advertising, 3) lower manufacturer representative
commissions (due to lower sales volume) and 4) lower freight and
amortization expenses.
General and administrative expenses remained relatively constant when
comparing the quarters ended March 31, 1996, and 1995.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996, AND MARCH 31, 1995
Gross revenues for the six months ended March 31, 1996, were $4,140,000, a
decrease of approximately $1,246,000 or 23% from the comparable six month
period ended March 31, 1995. The decline in gross revenues was due to
lower sales of the Company's nail extender products and depilatories.
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. The reduction in gross revenues was marginally offset by sales of
the newly acquired over-the-counter brands such as; XS, Baby Gasz, Baby
Gumz, and Brush'n Floss. Net revenues for the six months ended March 31,
1996 were $3,563,000, a decrease of $1,100,000 or 24%, from the comparable
six month period ended March 31, 1995.
Cost of sales as a percentage of gross revenues for the six months ended
March 31, 1996, as compared to the six month period ended March 31, 1995,
was 36% versus 39% respectively. The reduced cost of sales percentage when
comparing the six months period ended March 31, 1996, and 1995 is
principally due to the reasons stated above when comparing the current
quarter March 31, 1996, and 1995.
Selling and advertising expenses decreased $488,000 or 22% when comparing
the six months ended March 31, 1996, with the six months ended March 31,
1995. The lower expenses when comparing the six month period ended March
31, 1996, and 1995 is basically due to the reasons stated above when
comparing the current quarter March 31, 1996, and 1995.
General and administrative expenses remained relatively constant when
comparing the six months ended March 31, 1996, and March 31,1995.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended March 31, 1996, working capital decreased to
$1,000,000 from $1,260,000 at September 30, 1995. The Company's current
ratio was 1.3 to 1 at March 31, 1996, and September 30, 1995.
The Company has taken steps to conserve cash by reducing its occupied
facility square footage by 25% since August 1995. The six month advance
rent buyout and subleases associated with two vacated facilities will have
an annualized economic savings of approximately $133,000. The Company is
continuing a review of its inventory and is diligently working to reduce
the amount of working capital tied up in inventory.
<PAGE>
Form 10-QSB
The Company has an accumulated deficit of $5,163,000. The Company's
recurring losses from operations and inability to generate sufficient cash
flow from normal operations to meet its obligations as they came due raise
substantial doubt about the Company's ability to continue as a going
concern. The Company's ability to continue in existence is dependent upon
future developments, including obtaining additional financing and achieving
a level of profitable operations sufficient to enable it to meet its
obligations as they become due.
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 groundwater 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 groundwater 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 onsite, 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 Company and nearby property owners are in the process of engaging a
consultant to perform a site investigation with respect to soil and shallow
groundwater contamination. Based upon proposals received to date, the
Company currently estimates the cost to perform the site investigation to
be $175,000. Accordingly, while recognizing it may be jointly and
severally liable for the entire cost, the financial statements as of
September 30, 1995, recognized the proportionate amount ($87,500) which the
Company believes is its liability for a site investigation.
The tenants of nearby properties upgradient have sued the Company alleging
that hazardous materials from the Company's property caused contamination
on the properties leased by the tenants. The case name is DEL RAY
INDUSTRIAL ENTERPRISES, INC. v. ROBERT MALONE, ET AL., Los Angeles County
Superior Court, Northwest District, commenced August 21, 1991. In this
action, the plaintiff alleges environmental contamination by defendants of
its property, and seeks a court order preventing further contamination and
monetary damages. 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 been notified that
it is a potentially responsible party ("PRP") for the contamination. The
cost of 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 groundwater 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.
In August 1995, the Company was informed that the EPA entered into an
Administrative Order on Consent with Cardinal Industrial Finishes
("Cardinal") for a PRP lead remedial investigation and feasibility study
(the "Study") which, the EPA states, will both characterize the extent of
groundwater contamination in South El Monte and analyze alternatives to
control the spread of contamination. The Company and others have entered
into the South El Monte Operable Unit Site Participation Agreement with
Cardinal pursuant to which, among other things, Cardinal will contract with
an environmental firm to conduct the Study. The Study is anticipated to
take eighteen to twenty-four months. The Company's share of the cost of
the Study is currently $15,000 and was accrued for in the financial
statements as of September 30, 1995.
<PAGE>
Form 10-QSB
The City of South El Monte, the city in which the Company has it's
manufacturing facility, is located in the San Gabriel Valley. The San
Gabriel Valley has been declared a Superfund site. The 1995 Water Quality
Control Plan issued by the California Regional Water Quality Control Board
states that the primary groundwater basin pollutants in the San Gabriel
Valley are volatile organic compounds from industry, nitrates from
subsurface sewage disposal and past agricultural activities. In addition,
the Plan noted that hundreds of underground storage tanks leaking gasoline
and other toxic chemicals have existed in the San Gabriel Valley. The
California Department of Toxic Substance Control have declared large areas
of the San Gabriel Valley to be environmentally hazardous and subject to
cleanup work.
The Company believes 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
groundwater, 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.
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.
Currently, the Company does not have any reliable information on the likely
cleanup costs of its property. 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.
<PAGE>
Form 10-QSB
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, 1995.
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)
10.1 - Qualified Stock Option Plan including forms of grant (4)
10.2 - 1985 Employee Incentive Stock Option Plan (5)
10.3 - Description of bonus agreements between the Registrant and
its officers (2)
10.4 - Lease dated December 1, 1990, for the premises located at
1470 Santa Anita Avenue, South El Monte, California (6)
10.5 - Lease dated April 16, 1990, for the premises located at 1425
and 1427 Lidcombe Avenue, South El Monte, California (6)
10.6 - Lease dated April 16, 1990, for the premises located at 1434
Santa Anita Avenue, South El Monte, California (6)
10.7 - Lease dated April 16, 1990, for the premises located at 1460
Santa Anita Avenue, South El Monte, California (6)
10.8 - Lease dated April 16, 1990, for the premises located at 1457
Lidcombe, South El Monte, California (6)
10.9 - Lease dated April 16, 1990, for the premises located at 1500
Santa Anita Avenue, South El Monte, California (6)
10.10 - Lease dated April 16, 1990, for the premises located at 1516
Santa Anita Avenue, South El Monte, California (6)
10.11 - Lease dated March 1, 1991, for the premises located at 1444
Santa Anita Avenue, South El Monte, California (6)
10.12 - Lease dated March 1, 1991, for the premises located at 1445
Lidcombe Avenue, South El Monte, California (7)
10.13 - Promissory notes which were amended in September 1992
evidencing advances by the Registrant's officers and
directors (8)
10.14 - Promissory notes which were amended in September 1994
evidencing advances by the Registrant's officers and
directors (9)
10.15 - Promissory notes evidencing advances made by the
Registrant's officers and directors (9)
<PAGE>
Form 10-QSB
10.16 - Promissory notes evidencing advances made to the Registrant
(9)
10.17 - Promissory notes which were amended in January 1995
evidencing advances by the Registrant's officers and
directors (10)
10.18 - Promissory notes evidencing advances made by the
Registrant's officers and directors (10)
10.19 - Promissory notes which were amended in July 1995 evidencing
advances made to the Registrant (10)
10.20 - Royalty agreement dated August 31, 1994, between Lee
Pharmaceuticals and The Fleetwood Company, regarding a brand
acquisition (10)
10.21 - Royalty agreement dated October 4, 1988, between Lee
Pharmaceuticals and Roberts Proprietaries, Inc., regarding a
brand acquisition (10)
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.
(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 Exhibit 13.34 with the Company's Form 10-KSB Annual
Report for the fiscal year ended September 30, 1994, filed with
the Securities and Exchange Commission in December 1994 and
incorporated herein by reference.
(10) Filed as Exhibits 10.17, 10.18, 10.19, 10.20, and 10.21 with the
Company's Form 10-KSB Annual Report for the fiscal year ended
September 30, 1995, filed with the Securities and Exchange
Commission and incorporated herein by reference.
<PAGE>
Form 10-QSB
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: 5/10/96 Ronald G. Lee
---------- --------------------
Ronald G. Lee
President
Date: 5/10/96 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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 13
<SECURITIES> 0
<RECEIVABLES> 1,860
<ALLOWANCES> (376)
<INVENTORY> 2,481
<CURRENT-ASSETS> 5,069
<PP&E> 7,059
<DEPRECIATION> (6,552)
<TOTAL-ASSETS> 8,302
<CURRENT-LIABILITIES> 4,069
<BONDS> 0
0
0
<COMMON> 413
<OTHER-SE> (941)
<TOTAL-LIABILITY-AND-EQUITY> 8,302
<SALES> 3,563
<TOTAL-REVENUES> 4,140
<CGS> 1,473
<TOTAL-COSTS> 3,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185
<INCOME-PRETAX> (359)
<INCOME-TAX> 0
<INCOME-CONTINUING> (359)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (359)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
