SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
DATE OF REPORT: May 23, 2002
CCA Industries, Inc.
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State or other jurisdiction of incorporation or
organization)
2-85538-B
(Commission File Number)
04-2795439
(IRS Employer Identification Number)
200 Murray Hill Parkway, East Rutherford, New Jersey 07073
(Address of principal executive offices, zip code)
(201) 330-1400
(Registrant's telephone number including area code)
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Item 3.
The Company has been named as a defendant in three lawsuits
alleging that the plaintiffs were injured as result of their
purchasing and ingesting our diet suppressant product
containing phenylpropanolamine ("PPA"), which the Company
utilized as its active ingredient in its products prior to
November 2000. The Company's current products do not
contain PPA.
The lawsuits brought against CCA Industries, Inc. are for an
unspecified amount of compensatory and exemplary damages.
PPA has been utilized in both decongestion and dietary
products for approximately 52 years. The FDA, in its
monograph prior to November 2000, recommended PPA as an
appetite suppressant. The Company believes that it followed
the monograph's suggestion for the information that it
placed on the products' package.
The Company is insured for product liability covering all
three outstanding cases. The Company is also named as a
named insured under a similar policy provided by the
supplier that sold the PPA to the Company. Although the
Company had product liability insurance for the three
outstanding lawsuits, there can be no assurance that such
coverage and the counter claim against the supplier will be
sufficient to satisfy such claims.
The Company's policy, covering the products using PPA as the
active ingredient, expired on May 1, 2002 and has not been
renewed by the Company. The Company is no longer selling
any products utilizing PPA and has not done so since October
2000. The policy was not renewed because the insurance
premium to obtain the coverage was, in the opinion of the
Board of Directors, excessive and did not provide feasible
economic coverage. The Company is still seeking what is
referred to as a "catastrophic loss" policy in the event
that a possible catastrophic damage may be incurred in the
future. There can be no assurance that the insurance can be
obtained or that the premium might be excessive and not
deemed economically practicable.
Background:
In 1994 the Nonprescription Drug Manufacturers Association
(now the Consumer Healthcare Products Association) ("CHPA")
initiated a large-scale study in conjunction with the Yale
University School of Medicine to investigate a possible
association, if any, of stroke in women aged 18 to 49 using
PPA which, until November 2000, was the active ingredient in
certain of the Permathene products (the "Yale Study"). PPA
is also used in other over-the-counter medications which
were also part of the Yale Study. In May 2000, the results
of the Yale Study were filed with the Food and Drug
Administration ("FDA"). The investigators concluded that the
results of the Yale Study suggest that PPA increases the
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risks of hemorrhagic stroke. The FDA indicated at that time
that no immediate action was required and scheduled an FDA
advisory panel to meet in October 2000 to discuss the
results of the study. The CHPA has questioned the execution
of the Yale Study and disagreed with its conclusions.
On October 19, 2000 a Nonprescription Drugs Advisory
Committee ("NDAC"), commissioned by the FDA to review the
safety of PPA, determined that there is an association
between PPA and hemorrhagic stroke and recommended that PPA
not be considered generally recognized as safe for OTC use
as a nasal decongestant or for weight control. In response
to a general request from the FDA to the industry, the
Company voluntarily ceased marketing Permathene and Mega 16
with PPA, The Company announced on November 7, 2000 its
decision to immediately cease shipping the products with PPA
and to accept product returns from any retailers who decide
to discontinue marketing the products with PPA. To date,
the FDA has not issued any final determinations concerning
the ingredient, PPA or products containing PPA.
Contingencies
The Company intends to vigorously defend the three current
lawsuits and any possible litigations. The issue is being
defended by many of the major pharmaceutical companies such
as, the Bayer Corporation, American Home Products
Corporation, Novartis Pharmaceutical Company, Ciba Consumer
Pharmaceuticals, Glaxosmith Klein, Bristol Myers Squibb
Company, Chattem, Inc., et al, that sold famous products,
for example, Alka Seltzer, Robitussin, Chlor-Trimiton,
Dimetapp, Dexotrim, etc., using PPA as the active ingredient
in cough and cold, decongestion and diet suppressant
products. Because the litigation has just begun, it is not
possible to determine how the outcome of these matters or
the effect that these or any possible lawsuits could effect
the Company's financial position or operating results.
The major pharmaceutical companies, as well as this
Company's principal competitor in the diet products market,
believe that there is merit to the defense of the lawsuits.
In addition, because the Company has not sold any product
containing PPA since October 2000, there may be an
additional defense, the Statute of Limitations of any future
litigation.
Management believes that the Company's defenses have merit.
However, there can be no assurance that the Company will be
successful in its defense, that its current insurance and
cross claim over against its supplier will be adequate and/
or successful and that the lawsuits will not have a material
adverse effect on the Company's results of operations for
any period or on the Company's financial position.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: May 23, 2002
CCA Industries, Inc.
Registrant
By:
Ira W. Berman, Secretary
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