<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended February 28, 1998
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: 0-19121
PDK LABS INC.
(Exact name of Registrant as specified in its charter)
New York 11-2590436
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation of organization) Number)
145 Ricefield Lane
Hauppauge, New York
(Address of principal executive offices)
11788
(Zip Code)
(516) 273-2630
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has 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 and (2) has been subject to such filing requirements for
the past 90 days.
Yes /X/ No / /
Class Outstanding at April 2, 1998
------------ ----------------------------
Common Stock 3,557,153
<PAGE>
PDK LABS INC.
FORM 10-Q
QUARTERLY REPORT
FOR THE THREE MONTHS ENDED FEBRUARY 28, 1998
TABLE OF CONTENTS
Page to Page
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements:
Balance sheets........................................................... 1
Statements of operations................................................. 2
Statements of cash flows................................................. 3
Notes to financial statements............................................ 4-8
Item 2.
Management's discussion and analysis
of financial condition and results
operations.................................................... 9-11
PART 11. OTHER INFORMATION
Item 1. Legal proceedings............................................. 12
Item 6. Exhibits and reports on Form 8-K.............................. 12
SIGNATURES............................................................... 13
<PAGE>
PDK LABS INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, November 30,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,483,595 $ 3,733,652
Investment in marketable securities, at fair value (Note 4) 389,962 2,375,570
Accounts receivable - less allowance
for doubtful accounts of $54,000, respectively 9,509,076 8,927,236
Inventories (Note 5) 26,349,525 26,061,702
Prepaid income taxes 153,667 153,617
Prepaid expenses and other current assets 2,967,152 1,428,020
Due from supplier 991,725 864,758
Deferred tax asset (Note 7) 1,057,130 608,630
----------- -----------
Total current assets 43,901,832 44,153,185
INVESTMENTS IN MARKETABLE SECURITIES (Note 4) 839,000 836,114
PROPERTY, PLANT AND EQUIPMENT, net of
accumulated depreciation and amortization of
$5,650,044 and $5,353,453, respectively 4,903,356 4,667,439
INTANGIBLE ASSETS, net of accumulated amortization
of $3,497,212 and $2,567,509, respectively 1,290,715 1,447,237
INVESTMENT IN COMPARE GENERIKS, INC. 500,000 500,000
OTHER ASSETS 3,120,892 2,617,488
----------- -----------
$54,555,795 $54,221,463
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,309,602 $ 4,159,670
Dividends payable (Note 6) 93,396 29,885
Income taxes payable (Note 7) 286,935 498,735
Current portion of long-term debt (Note 8) 1,519,680 1,300,338
----------- -----------
Total current liabilities $ 5,209,613 $ 5,988,628
----------- -----------
LONG-TERM DEBT (Note 8) 15,955,266 15,433,614
DEFERRED INCOME TAX LIABILITY (Note 7) 952,656 739,656
INTERESTS OF MINORITY HOLDERS IN SUBSIDIARY 3,702,322 3,754,670
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY: (Note 6)
Common stock, $.01 par value; authorized 30,000,000
shares; 3,557,153 issued and outstanding 35,572 35,572
Preferred stock, $.01 par value; authorized
5,000,000 shares; 498,110 issued and outstanding 4,981 4,981
Additional paid-in capital 27,952,354 27,950,622
Unrealized loss in marketable securities (2,257) (1,633)
Unearned compensation (3,523,105) (3,782,811)
Retained earnings 5,961,109 5,716,648
Treasury stock, at cost; 289,000 and 280,000 shares,
respectively (1,692,716) (1,618,484)
----------- -----------
28,735,938 28,304,895
----------- -----------
$54,555,795 $54,221,463
=========== ===========
</TABLE>
1
<PAGE>
PDK LABS INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
February 28 February 28,
1998 1997
---- ----
<S> <C> <C>
NET SALES $13,889,102 $ 9,761,944
COSTS AND EXPENSES:
Cost of sales 7,844,572 5,661,836
Selling, general and administrative 5,485,471 3,452,529
----------- -----------
13,330,043 9,114,365
----------- -----------
OPERATING INCOME 559,059 647,579
----------- -----------
OTHER:
Interest income (73,905) (136,003)
Interest expense 346,501 297,811
Dividend Income (15,185) (10,000)
Other income (17,665) -
----------- ------------
239,746 151,808
----------- ------------
EARNINGS BEFORE PROVISION
FOR INCOME TAXES 319,313 495,771
PROVISION FOR INCOME
TAXES 98,500 207,000
----------- -----------
EARNINGS BEFORE MINORITY
INTEREST 220,813 288,771
MINORITY INTEREST IN NET LOSS
OF SUBSIDIARY (87,159) (52,379)
----------- -----------
NET EARNINGS $ 307,972 $ 341,150
=========== ===========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
BASIC $ .08 $ .08
----------- -----------
DILUTIVE $ .07 $ .08
----------- -----------
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING:
BASIC 3,273,353 3,036,986
=========== ===========
DILUTIVE 3,434,104 3,170,532
=========== ===========
</TABLE>
2
<PAGE>
PDK LABS INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
February 28, February 28,
1998 1997
---- ----
<S> <S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 307,972 $ 341,150
---------- ----------
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization 777,487 1,235,452
Minority interest in (loss) of subsidiary (87,159) (52,379)
Deferred income tax benefit (235,500) (179,857)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (581,840) 797,851
Inventories (287,823) (551,087)
Prepaid income taxes (50) 52,620
Prepaid expenses and other current assets (1,539,132) (819,105)
Due from supplier (126,967) -
Other assets (332,468) (420,601)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (850,068) (3,791,815)
Income taxes payable (211,800) (100,328)
---------- -----------
Total adjustments (3,475,320) (3,829,249)
---------- -----------
Net cash used in operating activities (3,167,348) (3,488,099)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in investments in marketable securities 1,982,098 3,222,891
Purchase of property, plant and equipment (560,633) (481,823)
Acquisition of intangible assets - (67,640)
---------- -----------
Net cash provided by investing activities 1,421,465 2,673,428
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of notes payable 4,000,000 2,000,000
Repayment of debt (4,359,006) (417,425)
Proceeds from term loan 1,100,000 -
Net increase in stockholder loans (170,936) -
Purchase of treasury stock (74,232) (318,614)
---------- ----------
Net cash provided by financing activities 495,826 1,263,961
---------- ----------
Net (decrease) increase of cash and cash equivalents (1,250,057) 449,290
Cash and cash equivalents at beginning of period 3,733,652 2,885,517
---------- ----------
Cash and cash equivalents at end of period $2,483,595 $3,334,807
========== ==========
</TABLE>
3
<PAGE>
PDK LABS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 28, 1998
1. Basis of Presentation:
The interim condensed consolidated financial statements
furnished reflect all adjustments which are, in the opinion of management,
necessary to present a fair statement of the financial position, as of February
28, 1998 and the results of operations and statements of cash flows for the
three month periods ended February 28, 1998 and 1997. The balance sheet as of
November 30, 1997 has been derived from the audited balance sheet as of that
date. This report should be read in conjunction with the Company's annual report
filed on Form 10-K for the fiscal year ended November 30, 1997. The results of
operations and cash flows for the three month periods ended February 28, 1998
are not necessarily indicative of the results to be expected for the full year.
2. Principles of Consolidation:
The accompanying consolidated financial statements include the
accounts of PDK Labs Inc. ("PDK") and its subsidiary, Futurebiotics, Inc.
("Futurebiotics") (collectively the "Company"). All intercompany balances and
transactions have been eliminated.
3. Concentration or Credit Risk:
Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Statement of Accounting Standards
No. 105, consist primarily of trade accounts receivable and marketable
securities. Investments in marketable securities consist primarily of
government-backed debt securities and are held by high quality financial
institutions, which mitigates the risk associated with this concentration.
4. Investment in Marketable Securities:
Investments in debt and equity securities are designated as trading,
held-to-maturity or available-for-sale. Management considers the Company's
marketable securities, consisting principally of government and
government-backed debt securities, to be available-for-sale. Available-for-sale
securities are reported at amounts which approximate fair value. A decline in
the market value of any available-for-sale security below cost that is deemed
other than temporary is charged to earnings resulting in the establishment of a
new cost basis for the security.
5. Inventories:
Inventories have been estimated by using the gross profit method
for the interim periods. The components of the inventories are as follows:
February 28, 1998 November 30, 1997
----------------- -----------------
(Unaudited)
Raw materials $ 8,195,343 $ 5,068,408
Work-in-process 8,154,858 10,883,990
Finished goods 9,999,324 10,109,304
----------- ------------
$26,349,525 $26,061,702
=========== ===========
4
<PAGE>
PDK LABS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 28, 1998
(Continued)
6. Stockholders' Equity:
The Company has adopted Financial Accounting Standards Board ("FASB")
Statement No. 128, "Earnings Per Share." Basic earnings per common share is
computed by dividing the net earnings after dividends on preferred shares by the
weighted average number of shares of common stock outstanding during the period.
Dilutive earnings per share gives effect to stock options which are considered
to be dilutive common stock equivalents. Treasury shares have been excluded from
the weighted average number of shares. Earnings per share was retroactively
restated to reflect FASB No. 128 for the three months ended February 28, 1997.
Preferred stockholders are entitled to cumulative annual dividends of
$.49 per share, payable at the election of the Company in cash, common stock, or
a combination thereof. Such dividends are payable semi-annually on or about
April 15 and October 15 of each year. Dividends earned for the three month
periods ended February 28, 1998 and February 28, 1997 totaled $63,511 and
$90,594, respectively.
In July 1997, the Company's Board of Directors authorized the Company
to repurchase up to an additional $1,000,000 worth of its own common stock, par
value $.01, in the public market. The Company's management has been afforded the
discretion to purchase the shares at such time or times, and at such prices, as
management believes appropriate. As of February 28, 1998, the Company had
authorization to repurchase an additional $607,000 worth of its own stock.
<TABLE>
<CAPTION>
For The Three Months Ended
--------------------------
February 28, 1998 February 28, 1997
----------------- -----------------
Per Share Per Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Earnings $ 307,972 $ 341,150
Less: preferred stock dividends (63,511) (90,594)
--------- ---------
Basic EPS
Earnings available to common
shareholders 244,461 3,273,353 $ .08 250,556 3,036,986 $ .08
Effect of dilutive securities
Options - 160,751 - 133,546
--------- ---------- --------- ----------
Diluted EPS
Earnings available to common
shareholders and
assumed conversions $ 244,461 $3,434,104 $ .07 $ 250,566 $3,170,532 $ .08
========= ========== ========= ==========
</TABLE>
5
<PAGE>
PDK LABS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 28, 1998
(Continued)
7. Income Taxes:
The tax effects of temporary differences that give rise to the deferred tax
liability at February 28, 1998 consist principally of the Company's investment
in subsidiary, depreciation and amortization.
8. Long-Term Debt:
<TABLE>
<CAPTION>
February 28, 1998 November 30, 1997
----------------- -----------------
(Unaudited)
<S> <C> <C>
Long-term debt consists of the following:
Revolving lines of credit (a) (c) $10,500,000 $10,500,000
Term loan, payable in monthly installments
of $105,000, plus interest at prime, through
September 2002; collateralized by the
Company's assets (b) (c) 5,775,000 6,090,000
Term loan, payable in monthly installments
of $18,333, plus interest at prime,
through December 2002; collateralized by the
Company's assets (b) (c) 1,063,334 -
Capital lease obligations, expiring in various
years through 2001 136,612 143,952
----------- -----------
17,474,946 16,733,952
Less current portion 1,519,680 1,300,338
----------- -----------
$15,955,266 $15,433,614
=========== ===========
</TABLE>
(a) Revolving Credit Line
The Company and its subsidiary maintain a revolving credit agreement (the
"Agreement") with a bank which extends through September 2000. The Agreement
provides for aggregate borrowings of up to $15,000,000 for the Company and
$4,000,000 for its subsidiary. Interest is charged monthly on the outstanding
balance at either the bank's prime rate or the Eurodollar rate plus 1.75%, at
the Company's option. The Company and its subsidiary are jointly and severally
liable for the unpaid balance of this credit line.
6
<PAGE>
PDK LABS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 28, 1998
(Continued)
(b) Term Loan Facility
The Company maintains a term loan facility with a bank which provides for
aggregate borrowings of up to $8,500,000 for the Company and its subsidiary. The
term loan aggregating $5,775,000 at February 28, 1998 is payable in monthly
installments of $105,000 plus interest at prime through September 1, 2002 when
the remaining principal is due.
On December 12, 1997, the Company borrowed an additional $1,100,000 on its
term loan facility which is payable in 60 installments of $18,333, plus interest
at prime. Payments commenced on January 1, 1998 and will continue through
December 1, 2002 when the remaining principal and interest are due.
(c) The revolving line of credit and term loan facility contain various
covenants pertaining to the maintenance of certain financial ratio restrictions,
limitations on dividends, and restrictions on borrowings.
The prime rate at February 28, 1998 was 8 1/2%.
9. Commitments:
The Company is party to multi-year supply and packaging agreements with
Superior Supplements, Inc. ("Superior"), which provide for Superior to supply
and package certain products for PDK. In the event that PDK purchases less than
$2,500,000 of product or orders less than 1,000,000 bottles packaged per annum,
Superior will be entitled to up to $200,000 on a pro-rata basis, as liquidated
damages. As of February 28, 1998, the Company exceeded its minimum annual
purchase requirement and ordered approximately 739,000 bottles of products
packaged.
Additionally, Superior is also obligated to PDK under a management
agreement which provides for PDK to provide Superior with certain management
services in consideration for a management fee of $10,000 per month.
The Company maintains a supply agreement with Compare Generiks, Inc.
("CGI"). Under the agreement which expires in 2001, the Company provides CGI
certain products at prices based upon the Company's material cost plus a
specified mark-up. The Company also maintains a second five year supply
agreement with CGI covering the purchase of products in the "Max Brand" and
"Heads Up" product ranges.
In April 1998, the Company amended its Supply Agreement with CGI
covering the purchases of products in the "Max Brand" and "Heads Up" product
ranges. The amendment contains changes to the payment provisions on these
products.
7
<PAGE>
PDK LABS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 28, 1998
(Continued)
In May 1997, the Company entered into an exclusive supply agreement
(the "New Agreement") with a non-affiliated pharmaceutical distributor (the
"distributor") for a three year term. The new agreement supercedes the Company's
exclusive supply and licensing agreement with this distributor dated October 16,
1995. Under the new agreement, the Company was granted exclusive supply rights
to distribute certain products to the distributor's customers. In consideration
for the supply rights, the Company agreed to pay a royalty fee to the
distributor equal to the difference between (i) the purchase price as billed to
the customers and (ii) an amount equal to the material cost of the products
times a fixed percentage. On March 30, 1998, the Company terminated its
Agreement with this distributor.
8
<PAGE>
PDK LABS INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three month periods ended February 28, 1998 and 1997
approximated $13,889,000 and $9,762,000, respectively. Gross profit amounted to
approximately $6,045,000 (44% of net sales) for the three months ended February
28, 1998 and $4,100,000 (42% of net sales ) for the corresponding period in
1997. The increase in sales and gross profit is principally attributable to the
Company renegotiating an Exclusive Supply Agreement (the "New Agreement") with a
non-affiliated pharmaceutical distributor (the "Distributor") in May 1997. Under
the New Agreement, the Company was granted exclusive supply rights to sell
certain products to the Distributor's customers. In consideration for the supply
rights, the Company agreed to pay a royalty fee to the Distributor based upon
the gross profit earned on sales to those customers. On March 30, 1998, the
Company terminated its Agreement with this distributor.
Selling, general and administrative expenses approximated $5,485,000
and $3,453,000 for the three months ended February 28, 1998 and 1997 (39% and
35%, respectively, as a percentage of sales). The overall increase is primarily
attributable to royalty expenses in connection with the Company's Exclusive
Supply Agreement with a non-affiliated pharmaceutical distributor. Royalty
expenses under the supply agreement approximated $2,129,000 and $0 respectively
for the three month periods ended February 28, 1998 and 1997.
The Company is party to multi-year supply and packaging agreements (the
"Agreement") with Superior Supplements, Inc. ("Superior"), which provide for
Superior to supply and package certain products for PDK. In the event that PDK
purchases less than $2,500,000 of product or orders less than 1,000,000 bottles
packaged per annum, Superior will be entitled to up to $200,000 on a pro-rata
basis, as liquidated damages. As of February 28, 1998, the Company exceeded its
minimum annual purchase requirement and ordered approximately 739,000 bottles of
products packaged.
Additionally, Superior is also obligated to PDK under a management
agreement which provides for PDK to provide Superior with certain management
services in consideration for a management fee of $10,000 per month.
The Company maintains a supply agreement with Compare Generiks, Inc.
("CGI"). Under the agreement which expires in 2001, the Company provides CGI
certain products at prices based upon the Company's material cost plus a
specified mark-up. The Company also maintains a second five year supply
agreement with CGI covering the purchase of products in the "Max Brand" and
"Heads Up" product ranges.
In April 1998, the Company amended its Supply Agreement with CGI
covering the purchases of products in the "Max Brand" and "Heads Up" product
ranges. The amendment contains changes to the payment provisions on these
products.
9
<PAGE>
PDK LABS INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Interest expenses, net of interest income, approximated $273,000 and
$162,000 for the three month periods ended February 28, 1998 and 1997. The
increase reflects increased bank borrowings.
The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures. Software failures due to
processing errors potentially arising from calculations using the Year 2000 date
are a known risk. The Company is addressing this risk to the availability and
integrity of financial systems and the reliability of operational systems. The
Company has engaged computer consultants and is establishing processes for
evaluating and managing the risks and costs associated with this problem. In the
opinion of management, the costs of addressing this problem will not materially
affect the financial position of the Company.
Liquidity and Capital Resources
The Company had working capital of approximately $38,692,000 at
February 28, 1998.
The Company's statement of cash flows reflects cash used in operations
of approximately $3,167,000. This use of cash includes net earnings of
($308,000), an adjustment for depreciation and amortization ($777,000), offset
by increases in operating assets such as accounts receivable ($582,000),
inventories ($288,000), prepaid expenses and other current assets ($1,539,000),
other assets ($332,000) and decreases in accounts payable and accrued expenses
($850,000) and income taxes payable ($212,000).
Net cash provided by investing activities approximated ($1,421,000)
principally attributable to the sale and maturity of securities ($1,982,000),
offset by the purchase of property, plant and equipment ($561,000).
The statement also reflects net cash provided by financing activities
of approximately ($496,000), representing bank borrowings net of repayments of
($741,000) offset by increase in shareholder loans ($171,000), and the purchase
of treasury stock ($74,000).
During the three month period ended February 28, 1998, the Company
repurchased 9,000 shares of its own stock at an average price of $8.25 per
share. On July 18, 1997, the Company's Board of Directors authorized the Company
to repurchase up to an additional $1,000,000 worth of its own Common stock, par
value $.01, in the public market. As of February 28, 1998, the Company had
authorization to repurchase an additional $607,000 worth of its own stock.
The Company and its subsidiary maintain credit facilities with a bank
which provide for borrowings under a revolving credit agreement (the "Revolving
Agreement") and a term loan (the "Term Agreement").
10
<PAGE>
PDK LABS INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
The Revolving Agreement, which expires in September 2000, provides
for aggregate borrowings of up to $15,000,000 with a sublimit of $11,000,000 for
the Company and $4,000,000 for its subsidiary. Borrowings under the Revolving
Agreement bear interest at the bank's prime rate or Eurodollar rate plus 1.75%,
at the Company's option.
The Term Agreement provides for aggregate borrowings of up to
$8,500,000 for the Company and its subsidiary on a combined basis, the term
loan, aggregating $5,775,000 at November 30, 1997, is payable in monthly
installments of $105,000 plus interest at prime through September 1, 2002 when
the remaining principal is due.
On December 12, 1997 the Company borrowed an additional $1,100,000
on its term loan facility which is payable in 60 installments of $18,333 plus
interest at prime. Payments commenced on January 1,1998 and will continue
through December 1, 2002 when the remaining principal and interest are due.
The Company and its subsidiary are jointly and severally liable
for the unpaid balance under these credit facilities. Borrowings are secured by
the assets of the Company and its subsidiary.
The credit facilities contain various covenants pertaining to the
maintenance of certain financial ratio restrictions, limitations on dividends,
and restrictions on borrowings.
The Company expects to meet its cash requirements from operations,
current cash reserves, and existing financial arrangements.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
Reference is made to Item 3 in the Company's Form 10-K for the year
ended November 30, 1997.
Item 6 - Exhibits and Reports on Form 8-K
The Company filed a report on Form 8-K on March 23, 1998 containing
information on the Company's supply of a List 1 chemical.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PDK LABS INC.
Dated: April 14, 1998 By: /s/ Karine Hollander
-----------------------------
Karine Hollander
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> FEB-28-1998
<CASH> 2,483,595
<SECURITIES> 389,962
<RECEIVABLES> 9,563,076
<ALLOWANCES> 54,000
<INVENTORY> 26,349,525
<CURRENT-ASSETS> 43,901,832
<PP&E> 10,553,400
<DEPRECIATION> 5,650,044
<TOTAL-ASSETS> 54,555,795
<CURRENT-LIABILITIES> 5,209,613
<BONDS> 15,955,266
0
4,981
<COMMON> 35,572
<OTHER-SE> 28,695,385
<TOTAL-LIABILITY-AND-EQUITY> 54,555,795
<SALES> 13,889,102
<TOTAL-REVENUES> 13,889,102
<CGS> 7,844,572
<TOTAL-COSTS> 7,844,572
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 346,501
<INCOME-PRETAX> 319,313
<INCOME-TAX> 98,500
<INCOME-CONTINUING> 307,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 307,972
<EPS-PRIMARY> .08
<EPS-DILUTED> .07
</TABLE>
