UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
       ACT OF 1934

For the fiscal year ended June 30, 2004

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
       EXCHANGE ACT OF 1934

Commission file number 0-9040

                               DRYCLEAN USA, Inc.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

                Delaware                                       11-2014231
----------------------------------------                  --------------------
    (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                        Identification No.)
  290 N.E. 68th Street, Miami, Florida                            33138
----------------------------------------                  --------------------
(Address of principal executive offices)                       (Zip Code)

Issuer's telephone number, including area code: 305-754-4551

Securities  registered  under Section  12(b) of the Exchange Act:  Common Stock,
$.025 par value

Securities registered under Section 12(g) of the Exchange Act: None

         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 [
]

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         The Company's  revenues from continuing  operations for its fiscal year
ended June 30, 2004 were $14,672,265.

         The aggregate market value as at September 24, 2004 of the Common Stock
of the  issuer,  its only  class of voting  stock,  held by  non-affiliates  was
approximately  $4,930,000  based on the closing  price of the  Company's  Common
Stock on the American  Stock  Exchange on that date.  Such market value excludes
shares owned by all executive  officers and directors (and their spouses).  This
should not be construed as indicating that all such persons are affiliates.

         The number of shares  outstanding  of the  issuer's  Common Stock as at
September 24, 2004 was 7,024,450.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the issuer's Proxy Statement  relating to its 2004 Annual Meeting of
Stockholders  are incorporated by reference into Items 10, 11, 12 and 14 in Part
III of this Report.

Transitional Small Business Disclosure Format   Yes [  ]   No  [X]



<PAGE>


                           FORWARD LOOKING STATEMENTS

         Certain  statements  in this  Report are  "forward-looking  statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. When
used in this Report, words such as "may," "should," "seek," "believe," "expect,"
anticipate," "estimate," "project," "intend," "strategy" and similar expressions
are intended to identify forward-looking statements regarding events, conditions
and  financial  trends that may affect the Company's  future plans,  operations,
business strategies,  operating results and financial position.  Forward-looking
statements are subject to a number of known and unknown risks and  uncertainties
that may cause  actual  results,  trends,  performance  or  achievements  of the
Company,  or industry trends and results,  to differ  materially from the future
results,  trends,  performance  or  achievements  expressed  or  implied by such
forward-looking  statements. Such risks and uncertainties include, among others:
general  economic  and  business  conditions  in the  United  States  and  other
countries in which the Company's  customers and suppliers are located;  industry
conditions and trends;  technology changes;  competition and other factors which
may affect  prices  which the Company may charge for its products and its profit
margins;  the availability  and cost of the equipment  purchased by the Company;
relative  values of the United States currency to currencies in the countries in
which the Company's  customers,  suppliers and competitors are located;  changes
in,  or  the  failure  to  comply  with,  government   regulation,   principally
environmental regulations;  and the Company's ability to successfully introduce,
market  and  sell  at   acceptable   profit   margins   its  new  Green   Jet(R)
dry-wetcleaning(TM)   machine  and  Multi-Jet(TM)  dry  cleaning  machine;   the
Company's  ability  to  implement   changes  in  its  business   strategies  and
development plans; and the availability, terms and deployment of debt and equity
capital if needed for  expansion.  These and certain other factors are discussed
in this  Report and from time to time in other  Company  reports  filed with the
Securities and Exchange Commission. The Company does not assume an obligation to
update the factors discussed in this Report or such other reports.

PART I

ITEM 1.  DESCRIPTION OF BUSINESS.
         -----------------------

GENERAL

         The Company was incorporated under the laws of the State of Delaware on
June 30, 1963 under the name  Metro-Tel  Corp.  and changed its name to DRYCLEAN
USA, Inc. on November 7, 1999.  Since  November 1, 1998,  when  Steiner-Atlantic
Corp. ("Steiner") was merged with and into, and therefore became, a wholly-owned
subsidiary of the Company (the "Merger"),  the Company's  principal business has
been as a supplier of commercial and industrial dry cleaning equipment,  laundry
equipment and steam boilers and related activities. Effective July 31, 2002, the
Company sold, to an unaffiliated third party, substantially all of the operating
assets of its Metro-Tel  telecommunications segment (which manufactured and sold
telephone test and customer premise  equipment),  the Company's primary business
until the Merger.

         Unless the context  otherwise  requires,  as used in this  Report,  the
"Company" includes DRYCLEAN USA, Inc. and its subsidiaries.

         The Company,  through Steiner,  supplies  commercial and industrial dry
cleaning  equipment,  laundry  equipment and steam boilers in the United States,
the Caribbean and Latin American markets.  This aspect of the Company's business
services includes:

         o        distributing   commercial  and  industrial   laundry  and  dry
                  cleaning machines and steam boilers manufactured by others;

         o        selling its own proprietary  lines of laundry and dry cleaning
                  machines  under  its  Aero-Tech(R),  Multi-Jet(TM)  and  Green
                  Jet(R) brand names;



                                       2
<PAGE>

         o        designing and planning  "turn-key" laundry and/or dry cleaning
                  systems  to meet the  layout,  volume  and  budget  needs of a
                  variety of institutional and retail customers;

         o        supplying replacement equipment and parts to its customers;

         o        providing  warranty  and  preventative   maintenance   through
                  factory-trained technicians and service managers; and

         o        selling process steam systems and boilers.

         In  March  1999,  the  Company  formed a  subsidiary,  Steiner-Atlantic
Brokerage  Corp.  ("Steiner  Brokerage"),  to act as a business broker to assist
others  seeking to buy or sell  existing  dry  cleaning  stores and coin laundry
businesses.  Some  of the  Company's  existing  customers  have  become  Steiner
Brokerage  clients,  utilizing the Company's staff and ability to assist them in
the sale of their businesses and associated real property.

         In July 1999,  the  Company,  through its  DRYCLEAN  USA LICENSE  CORP.
subsidiary, acquired certain assets of DRYCLEAN USA Franchise Company ("DRYCLEAN
USA Franchise"), including, among other things, the worldwide rights to the name
DRYCLEAN USA, along with existing franchise and license agreements. DRYCLEAN USA
is one of the largest  franchise  and  license  operations  in the dry  cleaning
industry,  currently consisting of over 400 franchised and licensed locations in
the United States, the Caribbean and Latin America.

         In February  2001, the Company formed  DRYCLEAN USA  Development  Corp.
("DRYCLEAN  USA  Development")  as a new  subsidiary to develop new turn-key dry
cleaning establishments for resale to third parties.

AVAILABLE INFORMATION

         The Company files Annual Reports on Form 10-K and Quarterly  Reports on
Form 10-Q,  files or furnishes  Current  Reports on Form 8-K, files or furnishes
amendments to those reports, and files proxy and information statements with the
Securities and Exchange Commission (the "SEC"). These reports and statements may
be read and copied at the SEC's Public  Reference Room at 450 Fifth Street,  NW,
Washington,  DC 20549. You may obtain information on the operation of the Public
Reference  Room  by  calling  the  SEC  at  1-800-SEC-0330.  These  reports  and
statements,  as well as  beneficial  ownership  reports  filed by the  Company's
officers,  directors  and  beneficial  owners of more than 10% of the  Company's
common stock, may be obtained without charge through the Company's Internet site
http://www.drycleanusa.com   as  soon  as  reasonably   practicable  after  such
materials are filed with, or furnished to, the SEC.

PRODUCT LINES

         The Company sells a broad line of commercial and industrial laundry and
dry  cleaning  equipment  and steam  boilers,  as well as parts and  accessories
therefor.

         The  commercial  and industrial  laundry  equipment  distributed by the
Company features washers and dryers, including coin-operated machines,  boilers,
water  reuse  and heat  reclamation  systems,  flatwork  ironers  and  automatic
folders.  The Company's dry cleaning equipment includes  commercial dry cleaning
machines sold primarily under the  Aero-Tech(R),  Multi-Jet(TM) and Green Jet(R)
names,  as well as garment  presses,  finishing  equipment,  sorting and storage
conveyors and accessories distributed for others.

         In  December  2001,   the  Company  began   shipping  its   proprietary
environmentally  friendly  Green Jet(R)  dry-wetcleaning(TM)  machine.  This new
machine not only cleans garments efficiently,  but it also eliminates the use of
perchloroethylene  (Perc) in the dry cleaning process,  thereby  eliminating the
health and  environmental  concerns  that Perc poses to our  customers and their
landlords.  It also  alleviates



                                       3
<PAGE>

flammability, odor and cost issues inherent in alternative solvents and cleaning
processes.  Patents have been applied for to protect this innovative approach to
garment cleaning.  In August 2003, the Company  introduced its Multi-Jet(TM) dry
cleaning  machine  which can use a number of  environmentally  safe solvents and
will replace certain existing products.

         The products sold by the Company are positioned and priced to appeal to
customers in each of the  high-end,  mid-range and value priced  markets.  These
products are offered  under a wide range of price points to address the needs of
a diverse  customer base.  Suggested  prices for most of the Company's  products
range from approximately $5,000 to $50,000. The products supplied by the Company
afford the Company's  customers a "one-stop  shop" for commercial and industrial
laundry  and dry  cleaning  machines,  boilers  and  accessories.  By  providing
"one-stop"  shopping,  the  Company  believes  it is better  able to attract and
support  potential  customers  who can choose from the  Company's  broad product
line.  Product sales accounted for approximately 95% and 94% of fiscal year 2004
and 2003 revenues, respectively.

         The Company seeks to establish customer satisfaction by offering:

         o        an  on-site  training  and  preventive   maintenance   program
                  performed by factory trained technicians and service managers;

         o        design and layout assistance;

         o        maintenance of a comprehensive parts and accessories inventory
                  and same day or overnight availability;

         o        competitive pricing; and

         o        a toll-free support line to resolve customer service problems.

         In  addition,  the  Company,  under the name  DRYCLEAN  USA,  currently
franchises and licenses over 400 retail drycleaning stores in the United States,
the Caribbean and Latin America, making it one of the largest retail drycleaning
license and  franchise  operations in the dry cleaning  industry.  During fiscal
2004  and  2003,  the  Company's  license  and  franchise  segment   contributed
approximately  1.9% and  2.4%,  respectively,  of the  Company's  revenues  from
continuing operations and 20.5% and 12.9%, respectively of operating income from
continuing operations.

         Through  its  Steiner  Brokerage  subsidiary,  the  Company  acts  as a
business  broker to assist  others  seeking to buy or sell existing dry cleaning
and laundry  businesses.  Some of the Company's  existing  customers have become
Steiner Brokerage  clients,  utilizing the Company's staff and ability to assist
them in the sale of their businesses and associated real property. This business
contributed  0.7% and 1.3% of revenue from continuing  operations  during fiscal
2004 and 2003, respectively.

         The Company, through its DRYCLEAN USA Development subsidiary,  develops
new turn-key dry cleaning  establishments  for resale to third  parties.  During
each of fiscal 2004 and 2003, DRYCLEAN USA Development contributed approximately
1% of revenues from continuing operations.

SALES, MARKETING AND CUSTOMER SUPPORT

         The laundry and dry cleaning equipment products marketed by the Company
are sold by it to its  customers in the United  States,  the Caribbean and Latin
America,  as well as customers of its DRYCLEAN  USA  licensing  subsidiary.  The
Company  employs sales  executives  to market its  proprietary  and  distributed
products,  including its Aero-Tech(R),  Multi-Jet(TM) and Green Jet(R) products,
in the United States and in international  markets. The Company supports product
sales by advertising  in trade  publications,  participating  in trade shows and
engaging in regional  promotions  and sales  incentive  programs.  A substantial
portion of equipment  and parts sales orders are obtained by  telephone,  e-mail


                                       4
<PAGE>

and fax  inquiries  originated  by the  customer  or by  representatives  of the
Company, and significant repeat sales are derived from existing customers.

         Additionally,  the  Company's  Aero-Tech(R)  machines  are sold through
distributors and dealers  throughout the United States,  the Caribbean and Latin
America.  The Company  continues to develop  distributor  relationships in North
America for the distribution of its Green Jet(R) dry-wetcleaning(TM) machine and
its   Multi-Jet(TM)   drycleaning   machine.   To  date,  it  has  entered  into
distributoRship  arrangements for its Green Jet(R) dry-wetcleaning(TM)  machines
with approximately 12 distributors in North America.

         The Company trains its sales and service  employees to provide  service
and  customer  support.   The  Company  uses  specialized   classroom  training,
instructional  videos and vendor sponsored  seminars to educate  employees about
product  information.  In addition,  the Company's  technical staff has prepared
comprehensive  training  manuals,  written in English and  Spanish,  relating to
specific training procedures. The Company's technical personnel are continuously
retrained  as  new  technology  is  developed.   The  Company  monitors  service
technicians' continued educational experience and fulfillment of requirements in
order to evaluate their  competence.  All of the Company's  service  technicians
receive service  bulletins,  service  technicians'  tips and continued  training
seminars.

CUSTOMERS AND MARKETS

         The Company's  customer base consists of approximately 500 customers in
the United States,  the Caribbean and Latin America,  including  independent and
franchise  dry  cleaning  stores  and  chains,  hotels,  motels,  cruise  lines,
hospitals,  nursing homes,  government  institutions and  distributors.  In June
2004,  as  another  distributor  ceased  operations,  the  Company  obtained  an
expansion of the territory in which it acts as a distributor for certain laundry
products   manufactured  by  certain  manufacturers  from  southern  Florida  to
encompass most of Florida,  the Company's principal domestic market. No customer
accounted  for more than 10% of the  Company's  revenues  during the years ended
June 30, 2004 or June 30, 2003.

FOREIGN SALES

         Export sales of laundry and dry cleaning  equipment were  approximately
$2,209,000  and  $2,596,000  during the years  ended June 30,  2004 and June 30,
2003,  respectively,  and  were  made  principally  to  Latin  America  and  the
Caribbean. See "Customers and Markets".

         All of the Company's  export sales require the customer to make payment
in United  States  dollars.  Accordingly,  foreign  sales may be affected by the
strength of the United States dollar relative to the currencies of the countries
in which their customers and competitors are located, as well as the strength of
the economies of the countries in which the Company's customers are located.

SOURCES OF SUPPLY

         The Company  purchases laundry and dry cleaning  machines,  boilers and
the other products supplied by it from a number of manufacturers,  none of which
accounted for more than 20% of the Company's  purchases for the years ended June
30,  2004 or June  30,  2003.  Historically,  the  Company  has not  experienced
difficulty in purchasing  products it distributes for others and believes it has
good working  relationships with its suppliers.  The Company's proprietary Green
Jet(R)  dry-wetcleaning(TM)  machines are currentLy manufactured exclusively for
the Company by one manufacturer in the United States.  Substantially  all of the
Company's dry cleaning  equipment sold under the Aero-Tech(R) and  Multi-Jet(TM)
labels  is   currently   manufactured   exclusively   for  the  Company  by  two
manufactureRs in Italy. The Company has established long-standing  relationships
with  these  manufacturers.  The  Company's  management  believes  its  supplier
relationships  for the products it  distributes  for others and its  proprietary
products provide the Company with a substantial competitive advantage, including
exclusivity  for certain  products and certain  areas and  favorable  prices and
terms.  Therefore,  the loss of  certain  of these  vendor  relationships  could
adversely affect the Company's business.



                                       5
<PAGE>

         The Company has a formal contract with a few of its equipment suppliers
and manufacturers  and relies on its  long-standing  relationship with its other
suppliers and manufacturers.  The Company collaborates in the design and closely
monitors  the quality of its  manufactured  product.  The Company must place its
orders   with   its   United   States   manufacturer   of   the   Green   Jet(R)
dry-wetcleaning(TM)   machine  and  with  its  Italian   manufacturers   of  its
Aero-Tech(R)  and  Multi-Jet(TM)  dry  cleaning  machines  prior to the time the
Company has received all of its orders and, in certain instances,  places orders
for products it distributes in advance of its receipt of sales orders.  However,
because of the  Company's  close  working  relationship  with its  suppliers and
manufacturers,  the Company can usually adjust orders rapidly and efficiently to
reflect a change in  customer  demands.  The Company  believes  that if, for any
reason, its arrangements with the manufacturers of its proprietary products were
to  cease,  or in the  event  the cost of these  products  were to be  adversely
affected,  it  will  be  able  to have  these  products  manufactured  by  other
suppliers.

         Under  its  arrangement  with  one of its  Italian  manufacturers,  the
Company  purchases dry cleaning  machines in Euros.  The Company's  current bank
revolving credit facility  includes a $250,000 foreign exchange  subfacility for
the  purpose of  enabling  the  Company to  mitigate  its  currency  exposure in
connection with its import activities  through spot foreign exchange and forward
exchange contracts. There were no open foreign exchange contracts at either June
30, 2004 or 2003.

         Imports  into  the  United  States  are  also  affected  by the cost of
transportation,  the imposition of import duties and increased  competition from
greater  production  demands abroad.  The United States,  Italy and the European
Union  may,  from  time  to  time,  impose  quotas,  duties,  tariffs  or  other
restrictions or adjust prevailing quotas,  duties or tariff levels,  which could
affect the Company's  margins on its  Aero-Tech(R) and  Multi-Jet(TM)  machines.
Customs duties,  imposed by the United States, were less than 1% of invoice cost
for the Company's  imported dry cleaning machines during each of fiscal 2004 and
2003.

COMPETITION

         The  commercial  and  industrial  laundry  and dry  cleaning  equipment
distribution  business  is  highly  competitive  and  fragmented  with  over 100
full-line or  partial-line  equipment  distributors  in the United  States.  The
Company's  management  believes that no one distributor has a major share of the
market and that substantially all distributors are independently owned and, with
the  exception  of several  regional  distributors,  operate  primarily in local
markets.  Competition is based primarily on price, product quality, delivery and
support services provided to the customer.  In Florida,  the Company's principal
domestic market,  the Company's primary  competition is derived from a number of
full line distributors,  which operate throughout Florida. In the export market,
the  Company  competes  with  several  distributors  and  anticipates  increased
competition as the export market grows.  The Company's  proprietary dry cleaning
equipment  competes with over a dozen  manufacturers  of dry cleaning  equipment
whose products are distributed nationally.  In all geographic areas, the Company
competes by offering an extensive product selection,  value-added services, such
as product inspection and quality assurance,  a toll-free customer support line,
reliability,  warehouse location,  price, competitive special features and, with
respect  to  certain  products,  as to which the  Company  acts as  distributor,
exclusivity.

         As a  franchisor/licensor  of retail dry cleaning stores,  DRYCLEAN USA
competes with several other  franchisors and turn-key  suppliers of dry cleaning
stores  primarily on the basis of trademark  recognition  and  reputation.  As a
broker in the purchase  and sale of retail dry cleaning  stores and coin laundry
businesses,  Steiner Brokerage competes with business brokers generally, as well
as with other  professionals  with  contacts in the retail dry cleaning and coin
laundry  business.  Competition  in this  latter  area  is  primarily  based  on
reputation, advertising and, to a lesser degree, on the level of fees charged.

RESEARCH AND DEVELOPMENT

         The  Company  has  designed  and   introduced   its  new  Green  Jet(R)
dry-wetcleaning(TM)  and  Multi-Jet(TM)  drycleaning  machines and  continues to
improve these products. The amounts of research and development expenses for the
years ended June 30, 2004 and 2003 were $41,184 and $44,009, respectively.



                                       6
<PAGE>

PATENTS AND TRADEMARKS

         The Company is the owner of United  States  service mark  registrations
for the names  Aero-Tech(R) and Green Jet(R),  which are used in connection with
its  laundry  and dry  cleaning  equipment,  and of  DRYCLEAN  USA(R),  which is
licensed by it to retail dry  cleaning  establishments.  The Company has applied
for registration of its Multi-Jet(TM)  tradename. The Company intends to use and
protect these or related service marks, as necessary.  The Company  believes its
trademarks and service marks have significant  value and are an important factor
in the marketing of its  products.  Patents have been applied for to protect the
Company's new Green Jet(R) dry-wetcleaning(TM)  machine in the United States and
certain foreign countries.

COMPLIANCE WITH ENVIRONMENTAL AND OTHER GOVERNMENT LAWS AND REGULATIONS

         Over the past several decades in the United States,  federal, state and
local  governments  have enacted  environmental  protection  laws in response to
public   concerns   about   the   environment,   including   with   respect   to
perchloroethylene  (Perc),  the  primary  cleaning  agent  historically  used in
commercial  and  industrial  dry  cleaning  process.  A  number  of  industries,
including  the  commercial  and  industrial  dry cleaning and laundry  equipment
industries, are subject to these evolving laws and implementing regulations.  As
a supplier to the  industry,  the Company  serves  customers  who are  primarily
responsible for compliance  with  environmental  regulations.  Among the federal
laws  that  the  Company  believes  are  applicable  to  the  industry  are  the
Comprehensive  Environmental  Response,  Compensation  and Liability Act of 1980
("CERCLA"),  which provides for the  investigation  and remediation of hazardous
waste sites;  the  Resource  Conservation  and Recovery Act of 1976,  as amended
("RCRA"),  which regulates  generation and  transportation of hazardous waste as
well as its  treatment,  storage and  disposal;  and the  Occupation  Safety and
Health Administration Act ("OSHA"), which regulates exposure to toxic substances
and other health and safety hazards in the  workplace.  Most states and a number
of  localities  have laws that  regulate the  environment  which are at least as
stringent as the federal laws. In Florida,  for example,  in which a significant
amount of the  Company's  dry  cleaning  and laundry  equipment  sales are made,
environmental  matters are regulated by the Florida  Department of Environmental
Protection which generally follows the Environmental Protection Agency's ("EPA")
policy in the EPA's  implementation  of CERCLA and RCRA and  closely  adheres to
OSHA's standards.

         The Company believes its  Aero-Tech(R),  Multi-Jet(TM) and Green Jet(R)
dry cleaning machines exceed  environmental  regulation  standards set by safety
and environmental regulatory agencies.

         The Company does not believe that  compliance  with Federal,  state and
local  environmental and other laws and regulations which have been adopted have
had, or will have, a material  effect on its capital  expenditures,  earnings or
competitive position.

         The Company is also  subject to Federal  Trade  Commission  (the "FTC")
regulations  and various state laws regulating the offer and sale of franchises.
The FTC and various  state laws  require the  Company  to,  among other  things,
furnish to  prospective  franchisees a franchise  offering  circular  containing
prescribed  information.  Certain states in the United States  require  separate
filings  in order to offer and sell  franchises  in those  states.  The  Company
believes that it is in compliance in all material respects with these laws.

EMPLOYEES

         The Company  currently  employs 34 employees on a full-time  basis,  of
whom 4 serve in  executive  management  capacities,  12 are engaged in sales and
marketing,  11  are  administrative  and  clerical  personnel,  and 7  serve  as
warehouse support.  None of the Company's  employees are subject to a collective
bargaining  agreement,  nor has the Company experienced any work stoppages.  The
Company believes that its relations with employees are satisfactory.



                                       7
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES.
         -------------------------

         The Company's  executive offices and the main  distribution  center for
its  products  are  housed  in  three  leased   adjacent   facilities   totaling
approximately  45,000 square feet in Miami,  Florida.  The Company  believes its
facilities  are  adequate  for its present and  anticipated  future  needs.  The
following  table sets forth certain  information  concerning the leases at these
facilities:

                                        Approximate
               Facility                   Sq. Ft.                   Expiration
               --------                   -------                   ----------
         Miami, Florida (1)                  27,000               October 2004
         Miami, Florida                       8,000               March 2006 (2)
         Miami, Florida                      10,000               December 2005
---------------

(1)      Leased from William K.  Steiner,  a director of the Company.  The lease
         includes an option to renew the lease for a ten-year  term at a rent to
         be  agreed  upon by the  parties.  The  Company  is in the  process  of
         negotiating a renewal of this lease.

(2)      The Company has a two-year renewal option.

ITEM 3.  LEGAL PROCEEDINGS.
         -----------------

         The Company is not a party to any material pending legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
         ---------------------------------------------------

         Not applicable.



                                       8
<PAGE>

                                    PART II

ITEM 5.  MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
         ------------------------------------------------------------

         The  Company's  Common Stock is traded on the American  Stock  Exchange
(the "Amex") and on the Chicago Stock Exchange, each under the symbol "DCU." The
following  table sets forth,  for the Company's  Common Stock,  the high and low
sales prices on the Amex, as reported by Amex, for the periods reflected below.

                                            HIGH              LOW
                                            ----              ---
         Fiscal 2003
         -----------
         First Quarter                 $       .65     $       .35
         Second Quarter                        .62             .31
         Third Quarter                         .97             .55
         Fourth Quarter                        .79             .57

         Fiscal 2004
         -----------

         First Quarter                 $      1.46     $       .60
         Second Quarter                       2.04            1.03
         Third Quarter                        2.10            1.50
         Fourth Quarter                       1.95            1.55

         As of September 24, 2004 there were approximately 490 holders of record
of the Company's Common Stock.

         The Company paid a $.05 per share  annual  dividend on October 31, 2003
to  stockholders  of record on October 17, 2003.  No dividends  were paid on the
Company's  Common Stock during fiscal 2003. On September 27, 2004, the Company's
Board of  Directors  declared an annual  dividend of $.06 per share,  payable on
November 1, 2004 to holders of the  Company's  Common Stock of record on October
15,  2004.  The  Company  is a party to a Loan  and  Security  Agreement  with a
commercial  bank,  which,  among  other  things,  provides  that the Company may
declare or pay dividends only to the extent that the dividend  payment would not
reasonably  likely  result in a failure  by the  Company to  maintain  specified
consolidated debt service or short-term debt to equity ratios.

         The  Company did not sell any equity  securities  during the year ended
June 30, 2004 that were not  registered  under the  Securities  Act of 1933,  as
amended.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
         ---------------------------------------------------------

GENERAL

         The  following  discussion  should  be read  in  conjunction  with  the
Consolidated  Financial  Statements  and Notes thereto which appear in Item 7 of
this Report.

OVERVIEW

         The Company's net earnings  from  continuing  operations in fiscal 2004
approximated  fiscal 2003  levels.  However,  primarily as a result of a $67,659
gain on the disposal of the Company's  discontinued  telecommunications  segment
recognized in fiscal 2003, net earnings for fiscal 2003 were $57,576 higher than
in fiscal 2004.



                                       9
<PAGE>

         Although  aggregate  revenues  increased by  approximately 1% in fiscal
2004 over fiscal 2003 as a result of a 2.6% increase in product  sales,  overall
costs also increased  slightly.  While the Company was able to increase domestic
sales of  laundry  equipment,  steam  boilers  and spare  parts,  foreign  sales
continued to be adversely  impacted by the continuing  unstable economy in Latin
America,  a principal  market for the Company's  products.  The Company does not
foresee an  improvement  in the near future in the economy of Latin  America and
has, therefore, been focusing its efforts on the United States market.

         In this regard, the Company:

               o  hired a new  Executive  Vice  President  and  Chief  Operating
          Officer in May 2004,  who  acquired  a 21.5%  equity  position  in the
          Company from the Company's two principal stockholders in July 2004;

               o obtained an expansion of the  territory  beginning in June 2004
          in which it acts as a  distributor  for  certain  laundry  products to
          cover most of Florida as another distributor ceased operations; and

               o  added  two  experienced   sales  engineers  in  June  2004  to
          adequately  cover the  expanded  territory  and to expand sales of the
          other products marketed by the Company in that geographic area.

         While  expenses  are  expected  increase  in fiscal 2005 as a result of
these actions,  the Company believes these investments should generate increased
sales and profitability over the long-term.

         As a result of the increased sales in June 2004, accounts  receivables,
as well as inventories, increased significantly toward the end of fiscal 2004. A
significant portion of the increase in receivables relates to invoices for sales
made in June 2004 that had not yet become  due.  The Company  believes  that the
level of receivables will stabilize as collections are received but nevertheless
will continue to be higher than  historical  levels.  Inventories  are likely to
further increase in fiscal 2005 to support this expansion.

         Despite the use of cash to support this expansion and to pay a $.05 per
share, or an aggregate of $350,723,  annual cash dividend, the Company increased
its cash  position in the fiscal 2004 by $128,110.  On September  27, 2004,  the
Company declared an annual cash dividend of $.06 per share (which will result in
the expenditure of an aggregate of approximately $421,500),  payable on November
1, 2004 to stockholders of record on October 15, 2004.

         With the  pre-payment  of its term loan in fiscal 2003, the Company has
been debt free. The Company does not presently  anticipate borrowing to fund its
expansion.

LIQUIDITY AND CAPITAL RESOURCES

         During  fiscal  2004,  the Company  continued  to add to its  financial
strength with cash  increasing by $128,110 (after the payment of a $350,722 cash
dividend)  and by $349,784  in fiscal  2003  (after the payment of the  $800,000
balance of the  Company's  term loan  enabling the Company to become debt free).
The following  table  summarizes  the Company's  Consolidated  Statement of Cash
Flows:

                                                     Years Ended June 30,
                                               2004                      2003
        ------------------------------------------------------------------------
        Net cash provided (used) by:
             Operating activities             $391,611                $787,620
             Investing activities               69,221                 362,164
             Financing activities             (332,722)               (800,000)

         Cash provided by operating  activities  decreased by $396,009 in fiscal
2004 compared to cash provided by operating activities in fiscal 2003. Among the
primary components of the change was a significant reduction in bad debt expense
($42,782 in fiscal 2004  compared to $126,210 in fiscal  2003)



                                       10
<PAGE>

attributable  to  tighter  controls  on  accounts  receivable  coupled  with  an
improving  economy.  Above average sales at year end resulting from sales in the
additional territory in Florida added in June 2004 accounted for the increase in
accounts and lease  receivables  of $251,761  during  fiscal 2004  compared to a
decrease  of $18,172 in fiscal  2003.  In  addition,  inventories  increased  by
$394,865  during  fiscal  2004 as the  Company  geared  up to  supply  a  larger
geographical sales territory.  Commensurate with the higher inventory levels was
an increase in accounts  payable and accrued  expenses of $161,212 during fiscal
2004. These components of operating  activities are expected to stabilize during
fiscal  2005.  However,  receivables  are expected to continue to be higher than
historical  levels and  inventories are expected to further  increase.  Customer
deposits  increased  by  $214,836  in fiscal 2004 from a decrease of $204,280 in
fiscal 2003  reflecting the increase in the number of customers  associated with
the larger territory.  Income taxes payable decreased by $111,054 as the Company
increased its tax deposits during the year.

         Investing  activities  provided cash of $69,221 in fiscal 2004 compared
to $362,164  provided in fiscal 2003.  Payments  received on an outstanding note
associated with the sale of the  telecommunications  segment were less in fiscal
2004 due to a $50,000  pre-payment  in fiscal 2003.  All monthly  payments  were
current at fiscal  2004 year end.  In  addition,  in fiscal  2004,  the  Company
increased its capital spending for equipment and patents to $74,826 from $28,788
in fiscal 2003.  Patent protection is shortly expected covering our Green-Jet(R)
innovations.

         Financing   activities   used  cash  of   $332,723   in  fiscal   2004,
substantially  less then the $800,000 used in fiscal 2003.  In fiscal 2004,  the
Company  declared  and  paid a  dividend  of $.05 per  share  (an  aggregate  of
$350,722),  while in fiscal 2003,  the Company  prepaid its bank term loan using
$800,000 to become debt free.  The  expenditures  in fiscal 2004 were  partially
offset by $18,000 from the proceeds of the exercise of stock options to purchase
18,000 shares of Common Stock by two employees.

         On September 27, 2004, the Company's Board of Directors declared a $.06
per share annual  dividend (or an aggregate of $422,000)  payable on November 1,
2004 to shareholders of record on October 15, 2004.

         The Company has a $2,250,000  revolving line of credit  facility which,
as extended in October 2002 and October 2003,  is presently  scheduled to expire
on October 30, 2004.  Revolving credit borrowings,  which bear interest at 2.50%
per annum above the Adjusted LIBOR Market Index Rate, are limited by a borrowing
base of 60% of  eligible  accounts  receivable  and 60% of  certain,  and 50% of
other, eligible inventories. As of June 30, 2004, the Company had no outstanding
borrowings  under the line of credit.  The  Company  believes it will be able to
renew this facility with the same lender on similar terms.

         The  Company  believes  that its  present  cash  position,  the cash it
expects to generate from operations and cash borrowings available under its line
of credit will be  sufficient  to meet its  presently  contemplated  operational
needs.

OFF-BALANCE SHEET FINANCING

         The Company has no off-balance sheet financing  arrangements within the
meaning of item 303(c) of Regulation S-B.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             Year Ended June 30,
                                                           2004             2003
         --------------------------------------------------------------------------------------------
<S>                                                      <C>             <C>                   <C>
           Net sales                                     $14,020,703     $13,671,187          +2.6%
           Development fees, franchise and license
            fees, commissions and other                      651,562         846,280         -23.0%
         --------------------------------------------------------------------------------------------
           Total revenues                                $14,672,265     $14,517,467          +1.0%
         --------------------------------------------------------------------------------------------
</TABLE>




                                       11
<PAGE>

         Revenues for the year ended June 30, 2004 increased by $154,798  (1.0%)
over fiscal 2003. Net sales of the commercial  laundry and dry cleaning  segment
increased  by  $349,516  (2.6%) due  primarily  to an increase of 13.1% in parts
sales  as a  result  of more  equipment  being  in  service,  combined  with the
Company's  expansion  into  most  of  Florida  beginning  in June  2004  under a
distribution  arrangement for certain products.  In fiscal 2004, the Company had
increased  sales  of 1.6%  and  4.0% of  laundry  equipment  and  boiler  sales,
respectively,  which were offset, in part, by a decrease of 2.1% in sales of dry
cleaning  equipment.  A 14.9%  decrease  in foreign  sales  attributable  to the
continuing  unstable  economy in Latin  America was offset by the  increases  in
domestic sales.

         Development  fees,  franchise and license fees and commission  revenues
decreased  by  $194,711  (23.0%),  principally  due to an 18.0%  decrease in the
License and Franchise segment caused by the troubled Latin American economy. The
revenues of each of the Steiner Development  division and the Brokerage division
are less than 1% of total Company revenues.

         Overall expenses of the Company,  including costs of sales,  were 94.3%
of total revenues in fiscal 2004,  compared to 94.0% in fiscal 2003,  reflecting
relatively stable overall costs.


<TABLE>
<CAPTION>
                                                                       Year Ended June 30,
                                                                    2004                 2003
         -------------------------------------------------------------------------------------------
<S>                                                                  <C>                  <C>
         As a percentage of net sales:
              Cost of sales                                          72.3%                72.2%
         As a percentage of revenues:
              Selling, general and administrative expenses           25.0%                25.6%
              Research and development                                 .3%                  .3%
              Total expenses                                         94.3%                94.0%
         -------------------------------------------------------------------------------------------
</TABLE>

         Cost  of  sales,  expressed  as a  percentage  of net  sales,  remained
essentially  flat. The slight  fluctuation was the result of the relative mix of
products sold in the periods.

         Selling,  general  and  administrative  expenses  decreased  by $56,763
(1.5%) and  improved  as a  percentage  of revenues to 25.0% in fiscal 2004 from
25.6% in fiscal  2003. A  significant  reduction in bad debt expense of $83,428,
due to  tighter  controls  on  accounts  receivable  coupled  with an  improving
economy,  was  partially  offset by  increased  commission  expense  of  $93,323
primarily related to an independent sales  representative,  who served until May
2004,  related to the distribution of the Company's  Green-Jet(R)  machine.  All
other expenses in this category  experienced slight year to year fluctuations in
the normal course of business.

         Research and development  expenses  declined by $2,825 (6.4%) in fiscal
2004 from fiscal 2003.  These expenses were associated with on going research on
the  Company's  Green-Jet(R)  dry-wetcleaning(TM)  machine and the Company's new
Multi-Jet(R) dry cleaning machine.

         Interest income decreased by $4,915 (17.1%), primarily due to the lower
outstanding principal balance of the note received by the Company as part of the
consideration for the sale of the Metro-Tel  telecommunications  segment in July
2002.

         There was no interest  expense during fiscal 2004 as the Company's bank
term loan was prepaid in full in May 2003 and there were no borrowings under the
Company's  line of credit  during  the  period.  Interest  expense of $24,562 in
fiscal 2003 related to the then outstanding term loan.

         The  Company's  effective  income  tax  rate of 37.2%  in  fiscal  2004
approximated its effective income tax rate of 37.9% in fiscal 2003.



                                       12
<PAGE>

         Effective  July 31,  2002,  the Company sold  substantially  all of the
operating assets of its Metro Tel telecommunications  segment to an unaffiliated
third party.  This discontinued  operation  provided a non-cash gain of $57,659,
net of taxes,  for fiscal year 2003 as a result of the  settlement  of estimated
liabilities  accrued in fiscal  2002 for the sale of the assets of the  segment.
Savings were realized  principally in lease termination expenses and transaction
costs.

INFLATION

         Inflation has not had a significant effect on the Company's  operations
during any of the reported periods.

TRANSACTIONS WITH RELATED PARTIES

         The Company  leases  27,000  square feet of warehouse  and office space
from  William K.  Steiner,  a  principal  shareholder,  Chairman of the Board of
Directors  and a director of the  Company,  under a lease which is  scheduled to
expire in October 2004. Annual rental under this lease is approximately $83,200.
The Company  believes  that the terms of the lease are  comparable to terms that
would be obtained  from an  unaffiliated  third party for similar  property in a
similar  locale.  The Company is in the process of negotiating a renewal of this
lease.

CRITICAL ACCOUNTING POLICIES

         Securities and Exchange  Commission  Financial Reporting Release No. 60
encourages all companies to include a discussion of critical accounting policies
or methods used in the preparation of financial statements.  Management believes
the following critical accounting policies affect the significant  judgments and
estimates used in the preparation of the Company's financial statements:

REVENUE RECOGNITION AND ACCOUNTS AND NOTES RECEIVABLE

         Sales  of  products  are  generally   recorded  as  they  are  shipped.
Commissions  and development  fees are recorded when earned,  generally when the
services  are  performed  or the  transaction  is closed.  Individual  franchise
arrangements  include a license and provide for payment of initial fees, as well
as continuing  service fees.  Initial franchise fees are generally recorded upon
the opening of the franchised  store,  which is evidenced by a certificate  from
the franchisee,  indicating that such store has opened,  and  collectibility  is
reasonably  assured.  Continuing  services fees  represent  regular  contractual
payments received for the use of the "Dryclean USA" marks,  which are recognized
as revenue when earned, generally on a straight line basis.

         Accounts and trade notes receivable are customer  obligations due under
normal trade terms.  The Company  sells its  products  primarily to  independent
dryclean and laundry stores. Note receivable represents the amounts due from the
sale of the telecommunications  business. The Company performs continuing credit
evaluations of its customers'  financial  condition and depending on the term of
credit,  the amount of the credit granted and  management's  past history with a
customer,  the Company may require the debtor to pledge the purchased  equipment
as collateral for the receivable.  Senior management  reviews accounts and notes
receivable on a regular basis to determine if any such amounts will  potentially
be  uncollectible.  The Company  includes any balances that are determined to be
uncollectible,  along with a general reserve based on older aged amounts, in its
overall  allowance  for  doubtful  accounts.  After all  attempts  to  collect a
receivable have failed,  the receivable is written off. The Company's  non-trade
notes  receivable  are  collateralized  by the  assets  sold and are  subject to
personal  guarantees by the principals of the debtor. All payments on such notes
are current.  Based on the information available to management,  it believes the
Company's  allowance  for  doubtful  accounts  as of June  30,  2004 and 2003 is
adequate. However, actual write-offs might exceed the recorded allowance.



                                       13
<PAGE>

FRANCHISE LICENSE TRADEMARK AND OTHER INTANGIBLE ASSETS

         The franchise license, trademark,  patents and trade name are stated at
cost  less   accumulated   amortization.   Those  assets  are   amortized  on  a
straight-line  basis over the estimated  future  periods to be benefited  (10-15
years).  The patents are amortized over the shorter of the patents'  useful life
or legal life from the date such  patents are granted.  The Company  reviews the
recoverability  of  intangible  assets  based  primarily  upon  an  analysis  of
undiscounted  cash flows from the intangible  assets.  In the event the expected
future net cash flows should become less than the carrying amount of the assets,
an  impairment  loss will be recorded in the period such  determination  is made
based on the fair value of the related assets.

USE OF ESTIMATES

         The  preparation of financial  statements  requires  management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.   On  an  ongoing  basis,  management  evaluates  these  estimates,
including  those related to allowances  for doubtful  accounts  receivable,  the
carrying  value of  inventories  and  long-lived  assets,  the timing of revenue
recognition  for initial  license  and  franchise  fees from sales of  franchise
arrangements and continuing license and franchise service fees, as well as sales
returns.  Management  bases these  estimates  on  historical  experience  and on
various  other  assumptions  that  are  believed  to  be  reasonable  under  the
circumstances,  the results of which form the basis for making  judgments  about
the  recognition  of revenues and expenses and the carrying  value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

NEW ACCOUNTING PRONOUNCEMENTS

         During May 2003,  the FASB  issued  SFAS 150,  "Accounting  for Certain
Financial  Instruments  with  Characteristics  of both  Liabilities and Equity,"
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise  effective at the beginning of the first interim period  beginning
after June 15, 2003.  This  Statement  establishes  standards  for how an issuer
classifies and measures certain financial  instruments with  characteristics  of
both liabilities and equity.  It requires that an issuer classify a freestanding
financial  instrument  that is within its scope as a  liability  (or an asset in
some  circumstances).  Many of those  instruments were previously  classified as
equity or in a separate  category  between  debt and equity in a balance  sheet.
Some of the  provisions  of this  Statement  are  consistent  with  the  current
definition  of  liabilities  in FASB  Concepts  Statement  No. 6,  "Elements  of
Financial Statements". The Company does not participate in such transactions.

         In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest  Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated  Financial Statements," to
certain entities in which equity investors do not have the  characteristics of a
controlling  financial interest or do not have sufficient equity at risk for the
entity to finance  its  activities  without  additional  subordinated  financial
support from other  parties.  FIN 46 applies  immediately  to variable  interest
entities  ("VIE's")  created  after  January 31, 2003,  and to VIE's in which an
enterprise  obtains an interest  after that date.  On October 9, 2003,  the FASB
issued FASB Staff Position No. FIN 46-6 "Effective  Date of FASB  Interpretation
No.  46  Consolidation  of  Variable   Interest   Entities,"  which  defers  the
implementation  date for public  entities  that hold an  interest  in a variable
interest entity or potential variable interest entity from the first fiscal year
or interim period  beginning after June 15, 2003 to the end of the first interim
or annual period ending after December 15, 2003.  This deferral  applies only if
(i) the variable  interest  entity was created before  February 1, 2003 and (ii)
the public entity has not issued  financial  statements  reporting that variable
interest  entity in accordance with FIN 46, other than  disclosures  required by
paragraph 26 of FIN 46. The adoption of FIN 46 did not have a material impact on
the Company's financial position, liquidity or results of operations.



                                       14
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS.
         --------------------

                                             DRYCLEAN USA, Inc. and Subsidiaries

                                      Index to Consolidated Financial Statements



Report of Independent Registered Public Accounting Firm                      16

Consolidated Balance Sheets at June 30, 2004 and 2003                        17

Consolidated Statements of Operations for the years ended
   June 30, 2004 and 2003                                                    18

Consolidated Statements of Shareholders' Equity for the years ended
   June 30, 2004 and 2003                                                    19

Consolidated Statements of Cash Flows for the years ended
   June 30, 2004 and 2003                                                    20

Summary of Accounting Policies                                               21

Notes to Consolidated Financial Statements                                   25



















                                       15
<PAGE>


Report of Independent Registered Public Accounting Firm


Board of Directors and Shareholders
DRYCLEAN USA, Inc.
Miami, Florida


We have audited the  accompanying  consolidated  balance sheets of DRYCLEAN USA,
Inc. and subsidiaries as of June 30, 2004 and 2003, and the related consolidated
statements of operations, shareholders' equity and cash flows for the years then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
DRYCLEAN  USA,  Inc.  and  subsidiaries  as of June 30,  2004 and 2003,  and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting  principles generally accepted in the United
States of America.

Miami,  Florida                                                 BDO Seidman, LLP
September 1, 2004, except for
Note 11 as to which the date
is September 27, 2004









                                       16
<PAGE>


                                             DRYCLEAN USA, Inc. and Subsidiaries

                                                     Consolidated Balance Sheets

<TABLE>
<CAPTION>
June 30,                                                                    2004              2003
-----------------------------------------------------------------------------------------------------------

ASSETS (Note 5)

CURRENT ASSETS
<S>                                                                 <C>                 <C>
   Cash and cash equivalents                                        $        1,742,251  $     1,614,141

   Accounts and trade notes receivable, net of allowance for
       doubtful accounts of $130,000 and $205,000, respectively              1,600,087        1,382,386
   Lease receivables (Note 2)                                                   35,172           53,894
   Inventories                                                               2,971,803        2,576,938
   Deferred income taxes (Note 4)                                               97,618          118,525
   Note receivable-current (Note 13)                                           157,143          157,143
   Other current assets                                                        112,375          169,094
-----------------------------------------------------------------------------------------------------------

Total current assets                                                         6,716,449        6,072,121

LEASE RECEIVABLES - due after one year (Note 2)                                 10,000                -

NOTE RECEIVABLE, LESS CURRENT PORTION (Note 13)                                 67,857          211,905


EQUIPMENT AND IMPROVEMENTS, net (Note 3)                                       217,200          233,767

FRANCHISE, TRADEMARKS AND OTHER INTANGIBLE ASSETS, net
   (Note 1)                                                                    385,756          409,308

DEFERRED INCOME TAXES (Note 4)                                                  26,859           28,541
-----------------------------------------------------------------------------------------------------------
                                                                    $        7,424,121  $     6,955,642
===========================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued expenses                            $        1,228,062        1,066,860
                                                                                       $
   Income taxes payable                                                          1,871          112,925
   Customer deposits and other                                                 550,042          335,206

-----------------------------------------------------------------------------------------------------------
Total current liabilities                                                    1,779,975        1,514,991

-----------------------------------------------------------------------------------------------------------
Total liabilities                                                            1,779,975        1,514,991
-----------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES (Notes 6, 8 and 9)
-----------------------------------------------------------------------------------------------------------

SHAREHOLDERS' EQUITY (Notes 11 and 12)
   Common stock, $0.025 par value:
     Authorized shares - 15,000,000; 7,045,500 and
      7,027,500, shares issued and outstanding, at 2004 and 2003,
         respectively, including  shares held in treasury                      176,138          175,688
   Additional paid-in capital                                                2,066,120        2,048,570
   Retained earnings                                                         3,404,908        3,219,413
   Treasury stock, 31,050  shares at cost                                       (3,020 )         (3,020 )
-----------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                   5,644,146        5,440,651
-----------------------------------------------------------------------------------------------------------
                                                                    $        7,424,121  $     6,955,642
===========================================================================================================
</TABLE>

See  accompanying  summary  of  significant  accounting  policies  and  notes to
consolidated financial statements.


                                       17
<PAGE>


                                             DRYCLEAN USA, Inc. and Subsidiaries

                                           Consolidated Statements of Operations

<TABLE>
<CAPTION>
Year ended June 30,                                                               2004               2003
-------------------------------------------------------------------------------------------------------------

<S>                                                                     <C>                <C>
REVENUES:
    Net sales                                                           $   14,020,703     $   13,671,187
    Development fees, franchise and license fees, commissions
       and other                                                               651,562            846,280
-------------------------------------------------------------------------------------------------------------

Total                                                                       14,672,265         14,517,467
-------------------------------------------------------------------------------------------------------------

COST OF SALES                                                               10,137,623          9,876,994
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 8 and 9)                 3,663,641          3,720,404
RESEARCH AND DEVELOPMENT EXPENSES                                               41,184             44,009
-------------------------------------------------------------------------------------------------------------

Total                                                                       13,842,448         13,641,407
-------------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                               829,817            876,060
-------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE):
    Interest income                                                             23,810             28,725
    Interest expense                                                                 -            (24,562 )
-------------------------------------------------------------------------------------------------------------

Earnings from continuing operations before income taxes                        853,627            880,223
Provision for income taxes (Note 4)                                            317,410            334,089
-------------------------------------------------------------------------------------------------------------

EARNINGS FROM CONTINUING OPERATIONS                                            536,217            546,134

Estimated gain on disposal of discontinued operations, net of income
tax expense of $34,788  (Note 13)                                                    -             57,659
-------------------------------------------------------------------------------------------------------------


Net earnings                                                            $      536,217     $      603,793
-------------------------------------------------------------------------------------------------------------

Earnings per share from continuing operations, basic and diluted        $          .08     $          .08
Earnings per share from discontinued operations, net of taxes, basic
    and diluted                                                                      -                .01
-------------------------------------------------------------------------------------------------------------
Net earnings per share, basic and diluted (Note 10)                     $          .08     $          .09
=============================================================================================================

Weighted average number of shares of common stock outstanding:
       Basic                                                                 7,009,188          6,996,450
       Diluted                                                               7,032,060          6,996,450
=============================================================================================================
</TABLE>

See  accompanying  summary  of  significant  accounting  policies  and  notes to
consolidated financial statements.




                                       18
<PAGE>


                                             DRYCLEAN USA, Inc. and Subsidiaries


                                 Consolidated Statements of Shareholders' Equity


<TABLE>
<CAPTION>
                                         Common Stock        Additional       Treasury Stock
                                     ----------------------   Paid-in    -----------------------    Retained
                                      Shares      Amount      Capital       Share       Cost        Earnings           Total
---------------------------------------------------------------------------------------------------------------------------------

<S>                                   <C>                   <C>              <C>     <C>        <C>              <C>
Balance at July 1, 2002               7,027,500$   175,688  $ 2,048,570      31,050  $  (3,020) $    2,615,620   $    4,836,858

     Net earnings                                                                                      603,793          603,793

---------------------------------------------------------------------------------------------------------------------------------

Balance at June 30, 2003              7,027,500    175,688    2,048,570      31,050     (3,020)      3,219,413        5,440,651

   Stock options exercised               18,000        450       17,550                                                  18,000
   Dividends paid ($.05 per share)                                                                    (350,722)        (350,722)
   Net earnings                               -          -           -            -          -         536,217          536,217
---------------------------------------------------------------------------------------------------------------------------------

BALANCE AT JUNE 30, 2004              7,045,500$   176,138 $ 2,066,120       31,050  $  (3,020) $    3,404,908   $    5,644,146
=================================================================================================================================

See  accompanying  summary  of  significant  accounting  policies  and  notes to
consolidated financial statements.
</TABLE>


























                                       19
<PAGE>


                                             DRYCLEAN USA, Inc. and Subsidiaries

                                           Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,                                                          2004                2003
----------------------------------------------------------------------------------------------------------------

<S>                                                                        <C>                 <C>
OPERATING ACTIVITIES:
   Net earnings from continuing operations                                 $    536,217        $      546,134
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                                            114,946               114,941
       Bad debt expense                                                          42,782               126,210
       Provision for deferred income taxes                                       22,589               102,154
       (Increase) decrease in operating assets:
         Accounts, notes and lease receivables                                 (251,761)               18,172
         Inventories                                                           (394,865)              341,534
         Refundable income taxes                                                      -               225,167
         Other current assets                                                    56,719                16,537
       Increase (decrease) in operating liabilities:
         Accounts payable and accrued expenses                                  161,202              (577,086)
         Income taxes payable                                                  (111,054)               78,137
         Customer deposits and other                                            214,836              (204,280)
----------------------------------------------------------------------------------------------------------------

Net cash provided by continuing operations                                      391,611               787,620
----------------------------------------------------------------------------------------------------------------

Net income from discontinued operations                                               -                57,659
   Adjustments:
       Estimated gain on disposal of assets                                           -               (92,447)
       Decrease in net operating assets                                               -                34,788
----------------------------------------------------------------------------------------------------------------

Net cash provided by discontinued operations                                          -                     -
----------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                                       391,611               787,620
----------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:

   Net proceeds upon disposal of business                                                             210,000
   Payments received on note receivable                                         144,048               180,952
    Capital expenditures                                                        (40,905)              (15,634)
   Patent expenditures                                                          (33,922)              (13,154)
----------------------------------------------------------------------------------------------------------------

Net cash provided by investing activities                                        69,221               362,164
----------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
   Payments on term loan                                                              -              (800,000)
   Proceeds from exercise of stock options                                       18,000                     -
    Dividends paid                                                             (350,722)
----------------------------------------------------------------------------------------------------------------

Net cash used in financing activities                                          (332,722)             (800,000)
================================================================================================================

Net increase in cash and cash equivalents                                       128,110               349,784
Cash and cash equivalents at beginning of year                                1,614,141             1,264,357
----------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of year                                   $  1,742,251        $    1,614,141
================================================================================================================

Supplemental Information:
   Cash paid for:
     Interest                                                              $          -        $       24,562
     Income taxes                                                               406,000                24,000
================================================================================================================
</TABLE>




                                       20
<PAGE>


                       DRYCLEAN USA, Inc. and Subsidiaries
                         Summary of Accounting Policies

NATURE OF BUSINESS       DRYCLEAN USA, Inc. and subsidiaries (collectively,  the
                         "Company") sell  commercial and industrial  laundry and
                         dry cleaning equipment,  boilers and replacement parts;
                         sell individual and area franchises  under the DRYCLEAN
                         USA name;  and act as a business  broker in  connection
                         with the  purchase  and  sale of  retail  dry  cleaning
                         stores and coin laundries.  The Company primarily sells
                         to  customers   located  in  the  United  States,   the
                         Caribbean and Latin America.

PRINCIPLES OF            The  accompanying   consolidated  financial  statements
CONSOLIDATION            include  the  accounts of DRYCLEAN  USA,  Inc.  and its
                         wholly-owned  subsidiaries.  Intercompany  transactions
                         and balances have been eliminated in consolidation.


REVENUE RECOGNITION      Sales of products  are  generally  recorded as they are
                         shipped.  Shipping,  delivering and handling fee income
                         of  approximately  $245,000  and $317,000 for the years
                         ended  June  30,  2004  and  2003,  respectively,   are
                         included   as  sales   and   other   revenues   in  the
                         consolidated financial statements. Shipping, delivering
                         and  handling  costs  are  included  in cost of  sales.
                         Commissions  and  development  fees are  recorded  when
                         earned.  Individual  franchise  arrangements  include a
                         license and provide for the payment of initial fees, as
                         well as continuing royalty fees. Initial franchise fees
                         are   generally   recorded  upon  the  opening  of  the
                         franchise store.  Continuing  royalty fees are recorded
                         when  earned.  Customer  deposits  represent  primarily
                         amounts  received from customers for future delivery of
                         equipment or services.

ACCOUNTS AND NOTES       Accounts  and  trade  notes   receivable  are  customer
RECEIVABLE               obligations  due under normal trade terms.  The Company
                         sells its products primarily to independent drycleaning
                         and  laundry  stores.  The  non-trade  note  receivable
                         represents  the  amounts  due  from  the  sale  of  the
                         telecommunications   segment.   The  Company   performs
                         continuing   credit   evaluations   of  its  customers'
                         financial  condition  and  depending  on the  terms  of
                         credit,   the   amount  of  the  credit   granted   and
                         management's  history with a customer,  the Company may
                         require the customer to pledge the purchased  equipment
                         as collateral  for the  receivable.  Senior  management
                         reviews  accounts  and  notes  receivable  on a regular
                         basis to determine if any such amounts will potentially
                         be  uncollectible.  The Company  includes  any balances
                         that are determined to be  uncollectible,  along with a
                         general reserve,  in its overall allowance for doubtful
                         accounts.  After all  attempts to collect a  receivable
                         have  failed,   the  receivable  is  written  off.  The
                         Company's  non-trade note receivable is  collateralized
                         by  the  assets  sold  and  is  supported  by  personal
                         guarantees  by  the  principals  of  the  debtor.   All
                         payments  on  such  note  are  current.  Based  on  the
                         information   available,    management   believes   the
                         Company's  allowance  for doubtful  accounts as of June
                         30,  2004  and  2003  is  adequate.   However,   actual
                         write-offs might exceed the recorded allowance.


INVENTORIES              Inventories  consist  principally of finished goods and
                         are valued at the lower of cost or market determined on
                         the first-in first-out method.



                                       21
<PAGE>

                       DRYCLEAN USA, Inc. and Subsidiaries
                         Summary of Accounting Policies

EQUIPMENT,               Property and equipment are stated at cost. Depreciation
IMPROVEMENTS  AND        and  amortization  are  calculated on  accelerated  and
DEPRECIATION             straight-line methods over lives of five to seven years
                         for  furniture  and equipment and the life of the lease
                         for leasehold improvements for both financial reporting
                         and  income  tax   purposes,   except  that   leasehold
                         improvements are amortized over 31 years for income tax
                         purposes.


ASSET IMPAIRMENTS        The  Company   accounts   for   long-lived   assets  in
                         accordance   with  the   provisions  of  the  Financial
                         Accounting   Standards  Board  ("FASB")   Statement  of
                         Financial   Accounting   Standard   ("SFAS")  No.  144,
                         "Accounting   for  the   Impairment   or   Disposal  of
                         Long-Lived   Assets."  This  statement   requires  that
                         long-lived assets and certain identifiable  intangibles
                         be reviewed for impairment  whenever  events or changes
                         in  circumstances  indicate that the carrying amount of
                         an  asset  may not be  recoverable.  Recoverability  of
                         assets to be held and used is measured by a  comparison
                         of the  carrying  amount of an asset to future net cash
                         flows  expected to be generated  by the asset.  If such
                         assets are considered to be impaired, the impairment to
                         be  recognized  is  measured by the amount by which the
                         carrying amount of the assets exceeds the fair value of
                         the assets.  Assets to be  disposed of are  reported at
                         the lower of the  carrying  amount or fair  value  less
                         estimated  costs to sell.  The Company  has  determined
                         that no assets had been  impaired  as of June 30,  2004
                         and 2003.

INCOME TAXES             The Company  utilizes  the asset and  liability  method
                         wherein  deferred taxes are recognized for  differences
                         between consolidated financial statement and income tax
                         bases of assets and liabilities.

CASH EQUIVALENTS         Cash equivalents  include all highly liquid investments
                         with original maturities of three months or less.

ESTIMATES                The preparation of consolidated financial statements in
                         conformity   with   accounting   principles   generally
                         accepted  in the  United  States  of  America  requires
                         management  to  make  estimates  and  assumptions  that
                         affect the reported  amounts of assets and  liabilities
                         and disclosure of contingent  assets and liabilities at
                         the date of the consolidated  financial  statements and
                         the reported  amounts of revenues  and expenses  during
                         the reporting period.  Actual results could differ from
                         those estimates.

STOCK BASED              SFAS   No.    123,    "Accounting    for    Stock-Based
COMPENSATION             Compensation," as amended by SFAS No. 148,  "Accounting
                         for   Stock-Based   Compensation   -   Transition   and
                         Disclosure - An Amendment of FASB  Statement  No. 123."
                         requires  the Company to provide pro forma  information
                         regarding net earnings and net earnings per share as if
                         compensation  cost for the Company's  stock options had
                         been determined in accordance with the fair value based
                         method   prescribed   in  SFAS  No.  123.  The  Company
                         estimates  the fair value of each  stock  option at the
                         grant  date by using the  Black-Scholes  option-pricing
                         model.  No options  were granted in fiscal year 2004 or
                         2003. Based on these assumptions,  under the accounting
                         provisions  of SFAS No. 123, the Company's net earnings
                         and net  earnings  per common  share would have been as
                         follows:


                                       22
<PAGE>
                       DRYCLEAN USA, Inc. and Subsidiaries
                         Summary of Accounting Policies

<TABLE>
<CAPTION>
                         Year ended June 30,                                          2004         2003
                         ---------------------------------------------------------------------------------

<S>                                                                            <C>            <C>
                         Earnings from  continuing operations, as reported     $   536,217    $ 546,134
                         Less: Total stock-based employee compensation
                         expense determined under fair value based method
                         for all awards                                            (4,500)      (14,377)
                         ---------------------------------------------------------------------------------
                         Pro forma earnings from continuing operations         $   531,717    $ 531,757
                         ---------------------------------------------------------------------------------

                         Earnings  per  common  share  from   continuing
                         operations:

                             Basic -   As reported                             $       .08    $     .08
                                       Pro forma                                       .08          .08
                             Diluted - As reported                                     .08          .08
                                       Pro forma                                       .08          .08
                         ---------------------------------------------------------------------------------

                         Earnings per common share:
                             Basic -   As reported                             $       .08    $     .09
                                       Pro forma                                       .08          .08
                             Diluted - As reported                                     .08          .09
                                       Pro forma                                       .08          .08
                         ---------------------------------------------------------------------------------
</TABLE>

EARNINGS PER SHARE       Basic  earnings  per share are computed on the basis of
                         the   weighted   average   number  of   common   shares
                         outstanding  during  each year.  Diluted  earnings  per
                         share are computed on the basis of the weighted average
                         number  of  common   shares  and  dilutive   securities
                         outstanding  during  each  year.  Securities  having an
                         anti-dilutive effect on earnings per share are excluded
                         from the calculations.

ADVERTISING COSTS        The Company  expenses the cost of advertising as of the
                         first  date  the  advertisement  is  run.  The  Company
                         expensed   approximately   $157,000   and  $179,000  of
                         advertising costs for the years ended June 30, 2004 and
                         2003, respectively.

FAIR VALUE OF FINANCIAL  The Company's financial instruments consist principally
INSTRUMENTS              of cash  and  cash  equivalents,  accounts  receivable,
                         lease receivables,  notes receivable,  accounts payable
                         and accrued  expenses and debt. Due to their relatively
                         short-term  nature  or  variable  rates,  the  carrying
                         amounts of such financial instruments,  as reflected in
                         the   accompanying    consolidated    balance   sheets,
                         approximate their estimated fair value. Their estimated
                         fair value is not necessarily indicative of the amounts
                         the Company could realize in a current market  exchange
                         or of future earnings or cash flows.



                                       23
<PAGE>

                       DRYCLEAN USA, Inc. and Subsidiaries
                         Summary of Accounting Policies

FRANCHISE LICENSE,       Franchise  license,  trademark,  and  other  intangible
TRADEMARK AND OTHER      assets   are   stated   at   cost   less    accumulated
INTANGIBLE  ASSETS       amortization.   These   assets  are   amortized   on  a
                         straight-line  basis over the estimated  future periods
                         to be benefited  (10-15  years).  Patents are amortized
                         over the shorter of the  patents'  useful life or legal
                         life  from the  date  such  patents  are  granted.  The
                         Company reviews the recoverability of intangible assets
                         based primarily upon an analysis of  undiscounted  cash
                         flows  expected  to  be  generated  from  the  acquired
                         assets. In the event the expected future net cash flows
                         should  become  less  than the  carrying  amount of the
                         assets,  an  impairment  loss will be  recorded  in the
                         period  such  determination  is made  based on the fair
                         value of the related assets.

NEW ACCOUNTING           During May 2003, the FASB issued SFAS 150,  "Accounting
PRONOUNCEMENTS           for Certain Financial  Instruments with Characteristics
                         of  both   Liabilities   and  Equity,"   effective  for
                         financial  instruments  entered into or modified  after
                         May 31, 2003, and otherwise  effective at the beginning
                         of the first interim  period  beginning  after June 15,
                         2003. This Statement  establishes  standards for how an
                         issuer   classifies  and  measures  certain   financial
                         instruments  with  characteristics  of both liabilities
                         and  equity.  It  requires  that an issuer  classify  a
                         freestanding  financial  instrument  that is within its
                         scope   as  a   liability   (or  an   asset   in   some
                         circumstances).   Many  of   those   instruments   were
                         previously  classified  as  equity  or  in  a  separate
                         category  between  debt and equity in a balance  sheet.
                         Some of the provisions of this Statement are consistent
                         with the  current  definition  of  liabilities  in FASB
                         Concepts   Statement  No.  6,  "Elements  of  Financial
                         Statements".  The Company does not  participate in such
                         transactions.

                         In January  2003,  the FASB issued FASB  Interpretation
                         No. 46 ("FIN 46"),  "Consolidation of Variable Interest
                         Entities."   FIN  46  clarifies  the   application   of
                         Accounting  Research  Bulletin  No.  51,  "Consolidated
                         Financial  Statements,"  to certain  entities  in which
                         equity investors do not have the  characteristics  of a
                         controlling   financial   interest   or  do  not   have
                         sufficient equity at risk for the entity to finance its
                         activities  without additional  subordinated  financial
                         support from other parties.  FIN 46 applies immediately
                         to variable interest  entities  ("VIE's") created after
                         January 31, 2003,  and to VIE's in which an  enterprise
                         obtains an  interest  after  that  date.  On October 9,
                         2003,  the FASB issued FASB Staff Position No. FIN 46-6
                         "Effective   Date  of  FASB   Interpretation   No.   46
                         Consolidation  of Variable  Interest  Entities,"  which
                         defers the implementation date for public entities that
                         hold an  interest  in a  variable  interest  entity  or
                         potential  variable  interest  entity  from  the  first
                         fiscal year or interim period  beginning after June 15,
                         2003 to the end of the first  interim or annual  period
                         ending after December 15, 2003.  This deferral  applies
                         only if (i) the  variable  interest  entity was created
                         before  February 1, 2003 and (ii) the public entity has
                         not issued financial statements reporting that variable
                         interest  entity in accordance  with FIN 46, other than
                         disclosures  required  by  paragraph  26 of FIN 46. The
                         adoption  of FIN 46 did not have a  material  impact on
                         the Company's financial position,  liquidity or results
                         of operations.



                                       24
<PAGE>


                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

1. INTANGIBLE ASSETS     Franchise,   trademark  and  other  intangible   assets
                         consist of the following:

<TABLE>
<CAPTION>
                         ---------------------------------------------------------------------------------
                                                                Estimated
                                                             Useful Lives       JUNE 30,      June 30,
                                                               (in years)           2004          2003
                         ---------------------------------------------------------------------------------

<S>                                                                    <C>   <C>           <C>
                         Franchise license agreements                  10    $   529,500   $   529,500
                         Trademarks, patents and
                           tradename                                10-15        139,864       105,944
                         ---------------------------------------------------------------------------------
                         ---------------------------------------------------------------------------------
                                                                                 669,364       635,444
                         Less accumulated amortization                         (283,608)     (226,136)
                         ---------------------------------------------------------------------------------
                                                                             $   385,756   $   409,308
                         ---------------------------------------------------------------------------------
</TABLE>

                         Amortization  expense  amounted  to $57,472 in 2004 and
                         $55,951 in 2003.  Amortization  expense is  expected to
                         remain  relatively  consistent  during  the  next  five
                         years.

2. LEASE RECEIVABLES     Lease  receivables   result  from  customer  leases  of
                         equipment   under   arrangements   which   qualify   as
                         sales-type  leases.  At June 30, 2004 and 2003,  future
                         lease  payments,  net of  deferred  interest  ($891 and
                         $3,212 at June 30,  2004 and 2003,  respectively),  due
                         under these  leases  amounted  to $45,172 and  $53,894,
                         respectively.

3. EQUIPMENT AND         Major classes of equipment and improvements  consist of
   IMPROVEMENTS          the following:


<TABLE>
<CAPTION>
                         June 30,                                                    2004              2003
                         ------------------------------------------------------------------------------------

<S>                                                                        <C>              <C>
                         Furniture and equipment                           $      695,836   $       670,262
                         Leasehold improvements                                   330,914           322,514
                         ------------------------------------------------------------------------------------
                                                                                1,026,750           992,776
                         Less accumulated depreciation and
                             amortization                                       (809,550)         (759,009)
                         ------------------------------------------------------------------------------------
                                                                           $      217,200   $       233,767
                         ------------------------------------------------------------------------------------
</TABLE>

                         Depreciation   and   amortization   of  equipment   and
                         improvements  amounted  to $57,474  and $55,991 for the
                         years ended June 30, 2004 and 2003, respectively.

4.  INCOME TAXES         Income taxes included in the consolidated statements of
                         operations is as follows:

<TABLE>
<CAPTION>
                         Year ended June 30,                                        2004              2003
                         ------------------------------------------------------------------------------------

<S>                                                                       <C>               <C>
                         Continuing operations                            $      317,410    $      334,089
                         Gain on discontinued operations                               -            34,788
                         ------------------------------------------------------------------------------------
                                                                          $      317,410    $      368,877
                         ------------------------------------------------------------------------------------
</TABLE>



                                       25
<PAGE>

                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

                         The  following  are  the  components  of  income  taxes
                         (benefit):

<TABLE>
<CAPTION>
                         Year ended June 30,                                      2004                2003
                         -------------------------------------------------------------------------------------

<S>                                                                 <C>                              <C>
                         Current
                             Federal                                $         252,183                $ 227,828
                             State                                             42,638                   38,895
                         -------------------------------------------------------------------------------------
                                                                              294,821                  266,723
                         -------------------------------------------------------------------------------------

                         Deferred
                             Federal                                           19,309                   87,134
                             State                                              3,280                   15,020
                         -------------------------------------------------------------------------------------
                                                                               22,589                  102,154
                         -------------------------------------------------------------------------------------
                                                                    $         317,410                $ 368,877
                         -------------------------------------------------------------------------------------
</TABLE>

                         The  reconciliation  of income tax expense  computed at
                         the Federal  statutory  tax rate of 34% to income taxes
                         (benefit) is as follows:

<TABLE>
<CAPTION>
                         Year ended June 30,                                     2004               2003
                         ------------------------------------------------------------------------------------

<S>                                                                     <C>                 <C>
                         Tax at the statutory rate                      $     290,233       $    330,708
                         State income taxes,
                            net of federal benefit                             31,086             35,584
                         Other                                                 (3,909)             2,585
                         ------------------------------------------------------------------------------------
                                                                        $     317,410       $    368,877
                         ------------------------------------------------------------------------------------
</TABLE>

                         Deferred  income  taxes  reflect  the net tax effect of
                         temporary  differences  between the bases of assets and
                         liabilities  for financial  reporting  purposes and the
                         bases  used  for  income  tax   purposes.   Significant
                         components  of the  Company's  current  and  noncurrent
                         deferred tax assets and liabilities are as follows:


<TABLE>
<CAPTION>
                          Year ended June 30,                                       2004                2003
                          -----------------------------------------------------------------------------------

<S>                                                                        <C>              <C>
                          Current deferred tax asset (liability):
                              Allowance for doubtful accounts              $       48,919   $         77,142
                              Inventory capitalization                             63,742             47,454
                              Loss on sale of assets                                    -                753
                              Other                                               (15,043)            (6,824)
                          -----------------------------------------------------------------------------------
                                                                                   97,618            118,525
                          -----------------------------------------------------------------------------------

                          Noncurrent deferred tax asset (liability):
                              Depreciation                                        (12,825)            (5,075)
                              Amortization                                         39,684             33,616
                          -----------------------------------------------------------------------------------
                                                                                   26,859             28,541
                          -----------------------------------------------------------------------------------
                          Total net deferred income tax asset              $      124,477   $        147,066
                          -----------------------------------------------------------------------------------
</TABLE>




                                       26
<PAGE>

                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

5.  CREDIT AGREEMENT AND In December 2001, the Company  entered into a bank loan
    TERM                 agreement  with a facility  LOAN  consisting  of a term
                         loan of  $960,000  and a revolving  credit  facility of
                         $2,250,000,  including  a  $1,000,000  letter of credit
                         subfacility and $250,000 foreign exchange  subfacility.
                         At June 30, 2002,  the Company owed $800,000  under the
                         term loan.  In May 2003,  the Company  prepaid the then
                         outstanding   balance  ($533,333)  of  its  term  loan.
                         Revolving credit  borrowings are limited by a borrowing
                         base of 60% of eligible accounts  receivable and 60% of
                         certain,  and  50%  of  other,   eligible  inventories.
                         Borrowings  under the  revolving  credit  facility bear
                         interest  at 2.50% per annum above the  Adjusted  LIBOR
                         Market  Index  Rate,  are  guaranteed  by  all  of  the
                         Company's   subsidiaries  and  are   collateralized  by
                         substantially    all   of   the   Company's   and   its
                         subsidiaries'  assets.  The revolving  credit  facility
                         matures  October 30,  2004.  At June 30, 2004 and 2003,
                         there were no outstanding  borrowings under the line of
                         credit.  The loan  agreement  requires  maintenance  of
                         certain  earnings based and other financial  ratios and
                         contains   other   restrictive   covenants.   The  loan
                         agreement  also contains  limitations  on the extent to
                         which  the  Company  and  its  subsidiaries  may  incur
                         additional  indebtedness,   pay  dividends,   guarantee
                         indebtedness  of others,  grant liens,  sell assets and
                         make  investments.

6. RELATED PARTY         The Company  leases  warehouse  and office space from a
   TRANSACTIONS          principal shareholder of the Company under an operating
                         lease  which  expires in October  2004.  Annual  rental
                         expense  under this  lease  approximates  $83,200.  The
                         lease is renewable  for a ten-year term at an amount to
                         be agreed  upon by the  parties.  The Company is in the
                         process of renegotiating this lease.

                         In  addition,  in fiscal  2004,  the Company paid a law
                         firm,  in which a director is of  counsel,  $43,500 for
                         legal services performed.

7. CONCENTRATIONS OF     The  Company   places  its  excess  cash  in  overnight
   CREDIT  RISK          deposits with a large national bank.  Concentration  of
                         credit risk with respect to trade and lease receivables
                         is  limited  due to a large  customer  base.  Trade and
                         lease  receivables  are generally  collateralized  with
                         equipment sold. The note  receivable is  collateralized
                         by the assets sold and  subject to personal  guarantees
                         by the principals of the debtor. From time to time, the
                         Company  purchases   inventory  from  manufacturers  in
                         Europe. As a result,  the Company is exposed to foreign
                         currency  risk in Europe.  To mitigate  such risk,  the
                         Company  may  enter  into  foreign   exchange   forward
                         contracts to reduce its risk to foreign exchange losses
                         associated  with  commitments  to  purchase   equipment
                         denominated  in Euros.  The Company does not  designate
                         such contracts as hedges and, accordingly,  all changes
                         in fair value associated with its forward contracts are
                         recorded  in cost of sales.  At June 30, 2004 and 2003,
                         the Company had no outstanding  commitments to purchase
                         foreign  currency.


                                       27
<PAGE>

                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

8.  COMMITMENTS          In addition to the  warehouse  and office  space leased
                         from a principal  shareholder (see Note 6), the Company
                         leases two additional office and warehouse spaces under
                         operating  leases  expiring in December  2005 and March
                         2006.  As  of  June  30,  2004,  the  Company  is  also
                         obligated  under seven  leases for future dry  cleaning
                         stores  that  aggregate  $252,000 to $275,000 in annual
                         base rent per year for the next five years. The Company
                         anticipates  assigning  such  leases  to  dry  cleaning
                         franchisees   or  other   customers   when  the  leased
                         facilities are available for occupancy.  Minimum future
                         rental  commitments  for  leases  in effect at June 30,
                         2004 approximates the following:


<TABLE>
<CAPTION>
                         Years ending June 30,
                         ---------------------------------------------------------------------------------

<S>                      <C>                                                          <C>
                         2005                                                         $        343,000
                         2006                                                                  296,000
                         2007                                                                  262,000
                         2008                                                                  269,000
                         2009                                                                  275,000
                         Thereafter                                                             12,000
                         ------------------------------------------------------------------------------
                            Total                                                            1,457,000
                         ---------------------------------------------------------------------------------
</TABLE>

                         Rent expense  aggregated  $157,387 and $153,841 for the
                         years ended June 2004 and 2003, respectively.

                         As of June 30,  2004,  the Company  had no  outstanding
                         letters of credit.

                         The Company, through its manufacturers,  provides parts
                         warranties for products sold.  These warranties are the
                         responsibility of the manufacturer.  As such,  warranty
                         related expenses are  insignificant to the consolidated
                         financial statements.

9.  DEFERRED             The Company has a participatory  deferred  compensation
    COMPENSATION PLAN    plan wherein it matches employee contributions up to 1%
                         of  an   eligible   employee's   yearly   compensation.
                         Employees are eligible to participate in the plan after
                         three  months  of  service.   The  Company  contributed
                         approximately  $9,000 and  $10,000  to the Plan  during
                         2004 and 2003,  respectively.  The plan is tax deferred
                         under Section 401(k) of the Internal Revenue Code.



                                       28
<PAGE>
                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

10. EARNINGS PER SHARE   The following reconciles the components of the earnings
                         per share computation:

<TABLE>
<CAPTION>
                         YEAR ENDED JUNE 30,                                                       2004
                         ---------------------------------------------------------------------------------

                                                                                                    PER
                                                                     INCOME         SHARES        SHARE
                                                                (NUMERATOR)  (DENOMINATOR)       AMOUNT
                         ---------------------------------------------------------------------------------

<S>                                                            <C>           <C>               <C>
                         Earnings from continuing operations   $    536,217  $   7,009,188     $    .08

                         Effect of dilutive securities:
                            Stock options                                 -         22,872            -
                         ---------------------------------------------------------------------------------

                         Earnings plus assumed dilution        $    536,217  $   7,032,060     $    .08
                         ---------------------------------------------------------------------------------

                         YEAR ENDED JUNE 30,                                                       2003
                         ---------------------------------------------------------------------------------

                                                                                                    PER
                                                                     INCOME         SHARES        SHARE
                                                                (NUMERATOR)  (DENOMINATOR)       AMOUNT
                         ---------------------------------------------------------------------------------

                         Earnings from continuing operations   $    546,134  $   6,996,450     $    .08

                         Effect of dilutive securities:
                            Stock options                                 -              -            -
                         ---------------------------------------------------------------------------------

                         Earnings plus assumed dilution        $    546,134  $   6,996,450     $    .08
                         ---------------------------------------------------------------------------------
</TABLE>

                         There were outstanding stock options to purchase 20,000
                         and 439,000,  shares of the  Company's  common stock at
                         June  30,  2004  and  2003,  respectively,   that  were
                         excluded in the  computation  of earnings per share for
                         such years  because the exercise  prices of the options
                         were at least the average market price of the Company's
                         common stock for that year.

11.  DIVIDENDS           The Company  paid a $.05 per share  annual  dividend on
                         October 31, 2003 to  shareholders  of record on October
                         17,  2003.  No  dividends  were  paid on the  Company's
                         Common Stock during fiscal 2003. On September 27, 2004,
                         the Company's Board of Directors declared a dividend of
                         $.06 per share,  payable on November 1, 2004 to holders
                         of the Company's  Common Stock of record on October 15,
                         2004

12.  STOCK OPTIONS       The Company has stock option plans that  authorize  the
                         grant of  options  to  purchase  up to  500,000  shares
                         (until  May  2010)  of the  Company's  common  stock to
                         employees  and  consultants  and  options  to  purchase
                         100,000  shares  (until  August 2004) of the  Company's
                         common stock to new directors of the Company.

                         The Company applies APB Opinion No. 25, "Accounting for
                         Stock Issued to Employees," and related interpretations
                         in  accounting  for  stock  options  to  employees  and
                         directors.  Under  APB  Opinion  No.  25,  because  the
                         exercise  price of the stock options  equals or exceeds
                         the market price of the underlying stock on the date of
                         grant, no  compensation  cost has been  recognized.  No
                         options have been granted to consultants.



                                       29
<PAGE>
                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

                         Pursuant to the plans,  the Company may grant incentive
                         stock  options  and  nonqualified  stock  options.  All
                         options under the director plan are nonqualified  stock
                         options.  Options may have a maximum  term of 10 years,
                         are not transferable and must be granted at an exercise
                         price  of at  least  100% of the  market  value  of the
                         common  stock on the  date of  grant.  Incentive  stock
                         options  granted to an individual  owning more than 10%
                         of the total  combined  voting  power of all classes of
                         stock issued by the Company must have an exercise price
                         of at least 110% of the fair market value of the shares
                         issuable  on the date of the  grant  and may not have a
                         term of more than five years.  Incentive  stock options
                         granted  under the  employee  plan are  subject  to the
                         limitation   that  the  aggregate   fair  market  value
                         (determined  as of the date of grant) of those  options
                         which may first become exercisable in any calendar year
                         cannot exceed $100,000.  Generally,  options  terminate
                         three months  following  termination of service (except
                         generally  one  year  in the  case  of  termination  of
                         service by reason of death or disability).

                         Generally,   options   granted   to  date   have   been
                         exercisable, on a cumulative basis, as to one-fourth of
                         the shares covered thereby on the first  anniversary of
                         grant and one-fourth on the next three anniversaries of
                         grant.  There were no stock  options  granted in fiscal
                         2004.  Options granted under the plans terminate upon a
                         merger  in  which  the  Company  is not  the  surviving
                         corporation or in which shareholders  before the merger
                         cease to own at least 50% of the combined  voting power
                         in  the   elections  of  directors  of  the   surviving
                         corporation,  the  sale  of  substantially  all  of the
                         Company's  assets or the  liquidation or dissolution of
                         the  Company,  unless  other  provision  is made by the
                         board of directors.

                         A summary of options under the  Company's  stock option
                         plans as of June 30, 2004,  and changes during the year
                         then ended is presented below:

<TABLE>
<CAPTION>
                                                                                              WEIGHTED
                                                                                               AVERAGE
                                                                                              EXERCISE
                                                                                SHARES           PRICE
                         --------------------------------------------------------------------------------

<S>                                                                            <C>           <C>
                         Outstanding at beginning of year                      439,000       $    1.02
                         Granted                                                     -               -
                         Exercised                                              18,000            1.00
                         Expired                                              (371,000)           1.00
                         --------------------------------------------------------------------------------
                         Outstanding at end of year                             50,000       $    1.36
                         Options exercisable at year-end                        50,000       $    1.36
                         Options available for future grant at year-end (a)    500,000
                         --------------------------------------------------------------------------------
</TABLE>
                         (a)  Excludes  shares  subject to Stock Option Plan
                              which expired as to future grants in August 2004.






                                       30
<PAGE>

                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

                         A summary of options under the  Company's  stock option
                         plans as of June 30, 2003,  and changes during the year
                         then ended is presented below:

<TABLE>
<CAPTION>
                                                                                               WEIGHTED
                                                                                               AVERAGE
                                                                                               EXERCISE
                                                                                SHARES           PRICE
                         --------------------------------------------------------------------------------

<S>                                                                            <C>           <C>
                         Outstanding at beginning of year                      522,750       $    1.04
                         Granted                                                     -               -
                         Expired                                               (83,750)           1.05
                         --------------------------------------------------------------------------------

                         Outstanding at end of year                            439,000       $    1.02
                         --------------------------------------------------------------------------------

                         Options exercisable at year-end                       436,500       $    1.02
                         --------------------------------------------------------------------------------
</TABLE>

                         The following table summarizes  information about stock
                         option plan and non-plan  options  outstanding  at June
                         30, 2004:

<TABLE>
<CAPTION>
                                                          Weighted
                                             Number        Average      Weighted        Number    Weighted
                             Range of   Outstanding      Remaining      Average    Exercisable    Average
                             Exercise            at    Contractual      Exercise            at    Exercise
                               Prices       6/30/04           Life        Price        6/30/04      Price
                         -----------------------------------------------------------------------------------

<S>                        <C>   <C>         <C>         <C>          <C>               <C>     <C>
                           $ .91-$1.00       30,000      .57 YEARS    $     .94         30,000  $     .94
                           $     2.00        20,000      .35 YEARS    $    2.00         20,000  $    2.00
                         -----------------------------------------------------------------------------------
</TABLE>

13. DISCONTINUED         In May  2002,  the  Company  initiated  a plan  to sell
    OPERATIONS           substantially all of the operating assets  (principally
                         inventory,  equipment  and  intangible  assets)  of its
                         Metro-Tel segment, which was engaged in the manufacture
                         and sale of telephone test equipment.

                         The sale, to an unaffiliated purchaser, closed July 31,
                         2002. The purchase price was $800,000 which was payable
                         $250,000  in  cash  and  a  $550,000  promissory  note,
                         bearing  interest  at  prime + 1%,  (5.25%  at June 30,
                         2004) and  payable  monthly  over 42 months  commencing
                         October 1, 2002.  Transaction costs were  approximately
                         $40,000.  The promissory  note is guaranteed by certain
                         companies   affiliated   with  the  purchaser  and  the
                         purchaser's and the affiliates' principal  shareholders
                         and is  collateralized  by the operating  assets of the
                         purchaser and the affiliated companies. The Company has
                         agreed to subordinate  payment of the promissory  note,
                         obligations   of  the   affiliated   companies  of  the
                         purchaser  under their  guarantees  and the  collateral
                         granted by the purchaser and the  affiliated  companies
                         to the  obligations of the purchaser and the affiliated
                         companies to two bank lenders.  The  purchaser  prepaid
                         $50,000 of the note in 2003. As of June 30, 2004, there
                         was  $225,000  outstanding  under this note.  Principal
                         payments on this note are  scheduled to be collected as
                         follows:






                                       31
<PAGE>
                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

<TABLE>
<CAPTION>
                          Years ending June 30
                          ---------------------------------------------------------------------------------
<S>                       <C>                                                                    <C>
                          2005                                                                   $ 157,143
                          2006                                                                      67,857
                          ---------------------------------------------------------------------------------
                                                                                                 $ 225,000
                          ---------------------------------------------------------------------------------
</TABLE>

                         The  Company  retained  all of the  segment's  accounts
                         receivable,  cash and liabilities  existing at the time
                         of closing and agreed to a  three-year  covenant not to
                         compete with the purchaser.

                         In connection with the sale, the Company accrued costs,
                         including    estimated   lease    termination    costs,
                         aggregating  approximately  $184,000 at June 30,  2002.
                         Additionally,  the  Company  recorded  a  provision  of
                         $718,000 to reduce the carrying value of assets sold to
                         their estimated net realizable  value at June 30, 2002.
                         The  estimated   loss  on  sale  of  the   discontinued
                         operation,  net of income tax  benefit,  recorded as of
                         June 30, 2002 was $555,000.

                         During  the year  ended  June  30,  2003,  the  Company
                         settled  certain of these  estimated  costs,  including
                         lease   termination  fees  and  professional  fees  for
                         amounts less than  previously  estimated.  Accordingly,
                         the   Company   recognized   a  gain  on   disposal  of
                         approximately $58,000, net of taxes in fiscal 2003.


14. SEGMENT INFORMATION  The   Company's   reportable   segments  are  strategic
                         businesses that offer different  products and services.
                         They  are  managed  separately  because  each  business
                         requires different technology and marketing strategies.

                         Steiner-Atlantic  Corp.,   Steiner-Atlantic   Brokerage
                         Corp. and DRYCLEAN USA Development Corp.,  wholly-owned
                         subsidiaries  of the Company,  comprise the  commercial
                         and  industrial  laundry  and  dry  cleaning  equipment
                         segment.  Steiner-Atlantic  Corp.  is a supplier of dry
                         cleaning  equipment,  industrial  laundry equipment and
                         steam  boilers to customers in the United  States,  the
                         Caribbean and Latin American markets.  Steiner-Atlantic
                         Brokerage  Corp.  acts as a  business  broker to assist
                         others seeking to buy or sell existing dry cleaning and
                         coin laundry businesses. DRYCLEAN USA Development Corp.
                         develops  turn-key  dry  cleaning   establishments  for
                         resale to third parties.

                         DRYCLEAN USA License Corp. is the license and franchise
                         operations segment.

                         The   Company   primarily   evaluates   the   operating
                         performance  of its  segments  based on the  categories
                         noted in the  table  below.  The  Company  has no sales
                         between segments.



                                       32
<PAGE>
                       DRYCLEAN USA, Inc. and Subsidiaries
                         Notes to Consolidated Statement

                         Financial   information  for  the  Company's   business
                         segments is as follows:

<TABLE>
<CAPTION>
                         Year ended June 30,                                         2004            2003
                         ----------------------------------------------------------------------------------
<S>                                                                       <C>              <C>
                         Revenues:
                            Commercial and industrial laundry and dry
                              cleaning equipment                          $    14,396,031  $   14,180,799
                            License and franchise operations                      276,234         336,668
                         ---------------------------------------------------------------------------------
                         Total revenues                                   $    14,672,265  $   14,517,467
                         ----------------------------------------------------------------------------------

                         Operating income (loss):
                            Commercial and industrial laundry
                              and dry cleaning equipment                  $       904,640  $    1,013,611
                           License and franchise operations                       170,207         112,893
                           Corporate                                             (245,030 )      (250,444 )
                         ----------------------------------------------------------------------------------
                         Total operating income                           $       829,817  $      876,060
                         ----------------------------------------------------------------------------------

                         Identifiable assets:
                            Commercial and industrial laundry
                              and dry cleaning equipment                  $     6,325,915  $    5,498,438
                            License and franchise operations                      655,744         759,750
                            Corporate                                             442,462         737,454
                         ----------------------------------------------------------------------------------
                         Total assets                                     $     7,424,121  $    6,995,642
                         ---------------------------------------------------------------------------------
</TABLE>

                         For the years  ended  June 30,  2004 and  2003,  export
                         revenues,   principally  to  the  Caribbean  and  Latin
                         America,   aggregated   approximately   $2,340,000  and
                         $2,720,000,   respectively,   of  which   approximately
                         $2,209,000 and $2,596,000, respectively, related to the
                         commercial  and  industrial  laundry  and dry  cleaning
                         equipment  segment.  All such sales are  denominated in
                         U.S.  Dollars  and,  accordingly,  the  Company  is not
                         exposed to risks of foreign currency  fluctuations as a
                         result of such sales.

                         No single  customer  accounted for more than 10% of the
                         Company's revenues in fiscal 2004 or 2003.








                                       33
<PAGE>




ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.
         --------------------------------------------------

         Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES.
         -----------------------

         As of the end of the period  covered by this report,  management of the
Company, with the participation of the Company's principal executive officer and
the Company's  principal  financial officer,  evaluated the effectiveness of the
Company's  "disclosure  controls and  procedures,"  as defined in Rule 13a-15(e)
under the  Securities  Exchange  Act of 1934.  Based on that  evaluation,  these
officers  concluded  that,  as of the date of their  evaluation,  the  Company's
disclosure   controls  and  procedures  were  effective  to  provide  reasonable
assurance that  information  required to be disclosed in the Company's  periodic
filings  under  the  Securities   Exchange  Act  of  1934  is  accumulated   and
communicated to the Company's  management,  including  those officers,  to allow
timely decisions regarding required disclosure.

         During the period covered by this Report,  there were no changes in the
Company's  internal  control  over  financial  reporting  that  have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
         -------------------------------------------------------------

         The following  information  is presented with respect to the background
of each of the directors and executive officers of the Company:

         Michael S. Steiner, 48, has been President, Chief Executive Officer and
a director of the Company since the  effectiveness  of the Merger on November 1,
1998 and of Steiner since 1988.

         Alan I.  Greenstein,  48, has been  Executive  Vice President and Chief
Operating  Officer of the  Company  since May 2004.  Since  February  2001,  Mr.
Greenstein has been Vice President and a principal  shareholder of South Florida
Transport,  Inc., a south Florida  Thrifty Car rental  franchisee.  From October
1995 until it was sold in 2000, he was President  and principal  stockholder  of
Professional Cleaners, Inc., an operator of a south Florida chain of drycleaning
and laundry  stores,  and, since August 2003, has been President and a principal
shareholders of AIGTC, Inc., which reacquired this business. Since he joined the
Company, Mr. Greenstein has been a full time employee of the Company.

         William K.  Steiner,  74, has been a director of the Company  since the
effectiveness  of the Merger on  November  1, 1998 and  Chairman of the Board of
Steiner since he founded Steiner in 1960.

         Venerando J. Indelicato, 71, was President of the Company from December
1967  until the  effectiveness  of the Merger on  November  1, 1998 and has been
Treasurer and Chief Financial Officer of the Company since December 1969.

         Lloyd  Frank,  79, has been a director of the Company  since 1977.  Mr.
Frank was a member of the law firm of Jenkens & Gilchrist  Parker Chapin LLP and
its predecessor  from 1977 until the end of 2003 and has been of counsel to that
firm since January 2004. The Company  retained Jenkens & Gilchrist Parker Chapin
LLP during the Company's  last fiscal year and is retaining that firm during the
Company's   current   fiscal  year.  Mr.  Frank  is  also  a  director  of  Park
Electrochemical Corp. and Volt Information Sciences, Inc.

         David  Blyer,  44, has served as a director  of the  Company  since the
effectiveness  of the Merger on November 1, 1998. Mr. Blyer was Chief  Executive
Officer and President of Vento Software, a developer



                                       34
<PAGE>

of software for specialized business applications, from 1994, when he co-founded
that company, until mid-2002. Since that time, Mr. Blyer has been an independent
consultant.

         Alan M. Grunspan, 44, has served as a director of the Company since May
1999.  Mr.  Grunspan  has been a member of the law firm of Kaufman  Dickstein  &
Grunspan P. A. since 1991.

         Stuart  Wagner,  72, has served as a director of the Company  since the
effectiveness  of the Merger on November 1, 1998.  From 1975 to 1997, Mr. Wagner
served as President of Wagner Products Corp., a manufacturer  and distributor of
products  in the HVAC  industry,  a company  which he  founded,  and served as a
consultant to Diversified Corp., which acquired Wagner Products Corp., from 1997
until 1999 .

         Mr. Michael S. Steiner is the son of Mr. William K. Steiner.  There are
no other family  relationships among any of the directors and executive officers
of  the  Company.   All  directors  serve  until  the  next  annual  meeting  of
stockholders  and until  the  election  and  qualification  of their  respective
successors. All officers serve at the pleasure of the Board of Directors.

         The following  information  is presented with respect to the background
of each person who is not an  executive  officer but who is expected to continue
to make a significant contribution to the Company:

         Osvaldo  Rubio,  41, has served as Vice President and Director of Sales
for the Export Department of Steiner since joining Steiner in May 1993.

         Ronald London,  71, has served as Vice  President,  primarily  oversees
sales of the retail Dry Cleaning  Equipment  Department of Steiner since joining
Steiner in September 1992.

         The  balance  of the  information  called  for by  this  Item  will  be
contained  in the  Company's  definitive  Proxy  Statement  with  respect to the
Company's 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation
14A under the  Securities  Exchange Act of 1934, and is  incorporated  herein by
reference to such information.

ITEM 10. EXECUTIVE COMPENSATION.
         ----------------------

         The  information  called  for by this  Item  will be  contained  in the
Company's  definitive  Proxy Statement with respect to the Company's 2004 Annual
Meeting  of  Stockholders  to be filed  pursuant  to  Regulation  14A  under the
Securities Exchange Act of 1934, and is incorporated herein by reference to such
information.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         AND RELATED STOCKHOLDER MATTERS.
         --------------------------------------------------------------

         The  following  table sets forth  certain  information,  as at June 30,
2004, with respect to the Company's equity compensation plans:



                                       35
<PAGE>

<TABLE>
<CAPTION>
                                                                                             NUMBER OF SECURITIES
                                    NUMBER OF SECURITIES TO BE     WEIGHTED-AVERAGE         REMAINING AVAILABLE FOR
                                     ISSUED UPON EXERCISE OF       EXERCISE PRICE OF           FUTURE ISSUANCE
                                       OUTSTANDING OPTIONS,       OUTSTANDING OPTIONS,    UNDER EQUITY COMPENSATION
        PLAN CATEGORY                  WARRANTS AND RIGHTS        WARRANTS AND RIGHTS               PLANS
        -------------                  -------------------        -------------------               -----
<S>                                               <C>                    <C>                        <C>
Equity compensation plans
approved by security holders.                     50,000 (a)             $1.36                      560,000 (b)

Equity compensation plans
not approved by security
holders......................                          0                    --                            0
                                   -----------------------------------------------------------------------------------
  Total......................       50,000                               $1.36            560,000
                                   ===================================================================================
</TABLE>

(a)      Includes  10,000 and 40,000 (10,000 of which have been exercised  since
         June 30, 2004) shares  subject to options  granted  under the Company's
         1991 Stock Option Plan under which no future options may be granted and
         the Company's 1994  Non-Employee  Director Stock Option Plan (the "1994
         Plan"), respectively.

(b)      Includes  500,000 shares available for future grant under the Company's
         2000 Stock Option Plan (the "2000  Plan"),  which  permits the grant of
         options to employees and directors of, and consultants to, the Company,
         and 60,000 shares available for grant to future non-employee  directors
         under the 1994 Plan. Upon the  expiration,  cancellation or termination
         of  unexercised  options,  shares subject to options under the 2000 and
         1994 Plans will again be available  for the grant of options  under the
         applicable plan.

The balance of the information  called for by this Item will be contained in the
Company's  definitive  Proxy Statement with respect to the Company's 2004 Annual
Meeting  of  Stockholders  to be filed  pursuant  to  Regulation  14A  under the
Securities Exchange Act of 1934, and is incorporated herein by reference to such
information.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
         ----------------------------------------------

The  information  called  for by this Item will be  contained  in the  Company's
definitive  Proxy Statement with respect to the Company's 2004 Annual Meeting of
Stockholders  to be filed  pursuant  to  Regulation  14A  under  the  Securities
Exchange  Act  of  1934,  and  is  incorporated  herein  by  reference  to  such
information.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
         --------------------------------

         (a)      Exhibits

2(a)           Agreement  of Merger  dated as of July 1, 1998 among the Company,
               Metro-Tel Acquisition Corp.,  Steiner-Atlantic  Corp., William K.
               Steiner  and  Michael S.  Steiner.  (Exhibit A of the  definitive
               Proxy Statement of the Company filed on October 5, 1998, File No.
               0-9040.)


3(a)(1)        Certificate of  Incorporation  of the Company,  as filed with the
               Secretary  of State of the State of  Delaware  on June 30,  1963.
               (Exhibit 4.1(a) to the Company's Current Report on Form 8-K dated
               (date of earliest  event  reported)  October 29,  1998,  File No.
               0-9040.)



                                       36
<PAGE>

3(a)(2)        Certificate of Amendment to the Certificate of  Incorporation  of
               the Company, as filed with the Secretary of State of the State of
               Delaware  on March 27,  1968.  (Exhibit  4.1(b) to the  Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(3)        Certificate of Amendment to the Certificate of  Incorporation  of
               the Company, as filed with the Secretary of State of the State of
               Delaware on November 4, 1983.  (Exhibit  4.1(c) to the  Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(4)        Certificate of Amendment to the Certificate of  Incorporation  of
               the Company, as filed with the Secretary of State of the State of
               Delaware on November 5, 1986.  (Exhibit  4.1(d) to the  Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(5)        Certificate  of Change of  Location of  Registered  Office and of
               Agent,  as filed  with  the  Secretary  of State of the  State of
               Delaware on December 31, 1986.  (Exhibit  4.1(e) to the Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(6)        Certificate  of  Ownership  and  Merger  of  Design   Development
               Incorporated  into the  Company,  as filed with the  Secretary of
               State of the State of Delaware on June 30, 1998.  (Exhibit 4.1(f)
               to the  Company's  Current  Report  on Form  8-K  dated  (date of
               earliest event reported) October 29, 1998, File No. 0-9040.)

3(a)(7)        Certificate   of  Amendment  to  the  Company's   Certificate  of
               Incorporation  as filed with the  Secretary of State of the State
               of Delaware on October 30, 1998. (Exhibit 4.1(g) to the Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(8)        Certificate   of  Amendment  to  the  Company's   Certificate  of
               Incorporation,  as filed with the Secretary of State of the State
               of Delaware on November 5, 1999.  (Exhibit  4.1 to the  Company's
               Quarterly  Report on Form 10-QSB for the quarter ended  September
               30, 1999, File No. 0-9040.)

3(b)           By-Laws of the Company, as amended. (Exhibit 4.2 to the Company's
               Quarterly  Report on Form 10-QSB for the quarter ended  September
               30, 1999, File No. 0-9040.)

4(a)(1)(A)     Loan and Security Agreement,  dated as of December 19, 2001, from
               the  Company  in favor of First  Union  National  Bank.  (Exhibit
               4.1(a) to the Company's  Quarterly  Report on Form 10-QSB for the
               quarter ended December 31, 2001, File No. 0-9040).

4(a)(1)(B)     Letter agreement dated September 23, 2002 between the Company and
               First Union  National Bank  (Exhibit  4(a)(1)(B) to the Company's
               Annual  Report on Form  10-KSB for the year ended June 30,  2002,
               File No. 0-0904.).

4(a)(1)(C)     Letter  agreement  dated October 11, 2002 between the Company and
               Wachovia (Exhibit 4.01 to the Company's  Quarterly Report on Form
               10-QSB  for the  quarter  ended  September  30,  2002,  File  No.
               0-9040).

4(a)(1)(D)     Letter  agreement  dated October 22, 2003 between the Company and
               First  Union   National  Bank  (Exhibit  4.01  to  the  Company's
               Quarterly  Report on Form 10-QSB for the quarter ended  September
               30, 2003. file No. 0-9040.)



                                       37
<PAGE>

4(a)(2)        Term Note,  dated as of December  19,  2001,  from the Company in
               favor  of First  Union  National  Bank.  (Exhibit  4.1(b)  to the
               Company's  Quarterly  Report on Form 10-QSB for the quarter ended
               December 31, 2001, File No. 0-9040).

4(a)(3)        Revolving  Credit Note,  dated as of December 19, 2001,  from the
               Company in favor of First Union National Bank. (Exhibit 4.1(c) to
               the  Company's  Quarterly  Report on Form  10-QSB for the quarter
               ended December 31, 2001, File No. 0-9040).

4(a)(4)        Guaranty and Security  Agreement,  dated as of December 19, 2001,
               from Steiner-Atlantic Corp.,  Steiner-Atlantic Brokerage Company,
               DRYCLEAN USA  Development  Corp.  and DRYCLEAN USA License Corp.,
               subsidiaries  of the  Company,  in favor of First Union  National
               Bank.  (Exhibit 4.1(d) to the Company's  Quarterly Report on Form
               10-QSB for the quarter ended December 31, 2001, File No. 0-9040).

10(a)(1)       Lease  dated  October 6, 1995  between  Steiner and  William,  K.
               Steiner  with respect to  Steiner's  facilities  located 290 N.E.
               68th Street, 297 N.E. 67 St. and 277 N.E. 67 St. Miami,  Florida.
               (Exhibit  10(a)(2)  to the  Company's  Transition  Report on Form
               10-KSB for the transition period from January 1, 1998 to June 30,
               1998, File No. 0-9040.)

10(b)(1)(i)+   Employment  Agreement  dated July 1, 1981 between the Company and
               Venerando J.  Indelicato.  (Exhibit  10(b)(1)(i) to the Company's
               Annual  Report on Form  10-KSB for the year  ended June  30,1995,
               File No. 0-9040.)

10(b)(1)(ii)+  Amendment  No. 1 dated July 1, 1983 to the  Employment  Agreement
               dated  July  1,  1981  between  the  Company  and   Venerando  J.
               Indelicato.  (Exhibit 10(b)(l)(ii) to the Company's Annual Report
               on Form  10-KSB  for the  year  ended  June  30,  1995,  File No.
               0-9040.)

10(b)(1)(iii)+ Amendment  No.  2  dated  October  30,  1998  to  the  Employment
               Agreement dated July 1, 1981 between the Company and Venerando J.
               Indelicato.  (Exhibit  10(b)(1)(iii) to the Company's  Transition
               Report on Form 10-KSB for the  transition  period from January 1,
               1998 to June 30, 1998, File No. 0-9040.)

10(c)(l)+      The Company's  1991 Stock Option Plan, as amended.  (Exhibit 99.3
               to the  Company's  Current  Report  on Form  8-K  dated  (date of
               earliest event reported) October 29, 1998, File No. 0-9040.)

10(c)(2)+      The  Company's  1994  Non-Employee  Director  Stock  Option Plan.
               (Exhibit A to the  Company's  Proxy  Statement  dated October 14,
               1994 used in connection with the Company's 1994 Annual Meeting of
               Stockholders, File No. 0-9040.)

10(c)(3)+      The  Company's  2000  Stock  Option  Plan.  (Exhibit  99.1 to the
               Company's   Registration   Statement   on  Form  S-8,   File  No.
               333-37582).

*14            Code  of  Ethics  for  Principal  Executive  Officer  and  Senior
               Financial Officers.

21             Subsidiaries of the Company.  (Exhibit 21 to the Company's Annual
               Report on Form 10-KSB for the year ended June 30, 2001,  File No.
               0-9040.)

*23            Consent  of  BDO  Seidman,  LLP,  Independent  Registered  Public
               Accounting Firm.

*31(a)         Certification of principal  executive officer pursuant to Section
               302 of the  Sarbanes-Oxley  Act of  2002  promulgated  under  the
               Securities Exchange Act of 1934.



                                       38
<PAGE>

*31(b)         Certification of principal  financial officer pursuant to Section
               302 of the  Sarbanes-Oxley  Act of  2002  promulgated  under  the
               Securities Exchange Act of 1934.

*32(a)         Certification of Principal  Executive Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

*32(b)         Certification of Principal  Financial Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

 _______________________

 *        Filed with this Report. All other exhibits are incorporated  herein by
          reference  to the  filing  indicated  in the  parenthetical  reference
          following the exhibit description.

 +        Management contract or compensatory plan or arrangement.

              (b) Reports on Form 8-K

         During the  quarter  ended June 30,  2004,  the Company  furnished  one
report on Form 8-K,  dated  (date of  earliest  event  reported)  May 13,  2004,
reporting  under Item 5, Other  Events and Item 12,  Results of  Operations  and
Financial  Condition.  After the end of the  quarter  ended June 30,  2004,  the
Company filed a report on Form 8-K dated (date of earliest event  reported) July
22, 2004 reporting under Item 5, Other Events, and Item 7, Financial  Statements
and Exhibits. No financial statements were filed with those reports.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The  information  called  for by this  Item  will be  contained  in the
Company's  definitive  Proxy Statement with respect to the Company's 2004 Annual
Meeting  of  Stockholders  to be filed  pursuant  to  Regulation  14A  under the
Securities Exchange Act of 1934, and is incorporated herein by reference to such
information.







                                       39
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange  Act of 1934,  the  Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      DRYCLEAN USA, Inc.

Dated: September 27, 2004
                                      By: /s/ Michael S. Steiner
                                           Michael S. Steiner
                                           President and Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the day of September, 2004.

<TABLE>
<CAPTION>
Signature                           Capacity                                    Date
---------                           --------                                    ----

<S>                                 <C>                                         <C>
/s/ Michael S. Steiner              President, Chief Executive Officer          September 27, 2004
--------------------------------    (Principal Executive Officer) and
Michael S. Steiner                  Director


/s/ Venerando J. Indelicato         Chief Financial Officer                     September 27, 2004
--------------------------------    (Principal Financial and Accounting
Venerando J. Indelicato             Officer) and Director


/s/ David Blyer                     Director                                    September 27, 2004
--------------------------------
David Blyer


/s/ Lloyd Frank                     Director                                    September 27, 2004
--------------------------------
Lloyd Frank


/s/ Alan M. Grunspan                Director                                    September 27, 2004
--------------------------------
Alan M. Grunspan


/s/ William K. Steiner              Director                                    September 27, 2004
--------------------------------
William K. Steiner


/s/ Stuart Wagner                   Director                                    September 27, 2004
--------------------------------
Stuart Wagner

</TABLE>



                                       40
<PAGE>

                                  EXHIBIT INDEX

Exhibit No.    Description
-----------    -----------

2(a)           Agreement  of Merger  dated as of July 1, 1998 among the Company,
               Metro-Tel Acquisition Corp.,  Steiner-Atlantic  Corp., William K.
               Steiner  and  Michael S.  Steiner.  (Exhibit A of the  definitive
               Proxy Statement of the Company filed on October 5, 1998, File No.
               0-9040.)


3(a)(1)        Certificate of  Incorporation  of the Company,  as filed with the
               Secretary  of State of the State of  Delaware  on June 30,  1963.
               (Exhibit 4.1(a) to the Company's Current Report on Form 8-K dated
               (date of earliest  event  reported)  October 29,  1998,  File No.
               0-9040.)

3(a)(2)        Certificate of Amendment to the Certificate of  Incorporation  of
               the Company, as filed with the Secretary of State of the State of
               Delaware  on March 27,  1968.  (Exhibit  4.1(b) to the  Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(3)        Certificate of Amendment to the Certificate of  Incorporation  of
               the Company, as filed with the Secretary of State of the State of
               Delaware on November 4, 1983.  (Exhibit  4.1(c) to the  Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(4)        Certificate of Amendment to the Certificate of  Incorporation  of
               the Company, as filed with the Secretary of State of the State of
               Delaware on November 5, 1986.  (Exhibit  4.1(d) to the  Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(5)        Certificate  of Change of  Location of  Registered  Office and of
               Agent,  as filed  with  the  Secretary  of State of the  State of
               Delaware on December 31, 1986.  (Exhibit  4.1(e) to the Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(6)        Certificate  of  Ownership  and  Merger  of  Design   Development
               Incorporated  into the  Company,  as filed with the  Secretary of
               State of the State of Delaware on June 30, 1998.  (Exhibit 4.1(f)
               to the  Company's  Current  Report  on Form  8-K  dated  (date of
               earliest event reported) October 29, 1998, File No. 0-9040.)

3(a)(7)        Certificate   of  Amendment  to  the  Company's   Certificate  of
               Incorporation  as filed with the  Secretary of State of the State
               of Delaware on October 30, 1998. (Exhibit 4.1(g) to the Company's
               Current  Report  on  Form  8-K  dated  (date  of  earliest  event
               reported) October 29, 1998, File No. 0-9040.)

3(a)(8)        Certificate   of  Amendment  to  the  Company's   Certificate  of
               Incorporation,  as filed with the Secretary of State of the State
               of Delaware on November 5, 1999.  (Exhibit  4.1 to the  Company's
               Quarterly  Report on Form 10-QSB for the quarter ended  September
               30, 1999, File No. 0-9040.)

3(b)           By-Laws of the Company, as amended. (Exhibit 4.2 to the Company's
               Quarterly  Report on Form 10-QSB for the quarter ended  September
               30, 1999, File No. 0-9040.)

4(a)(1)(A)     Loan and Security Agreement,  dated as of December 19, 2001, from
               the  Company  in favor of First  Union  National  Bank.  (Exhibit
               4.1(a) to the Company's  Quarterly  Report on Form 10-QSB for the
               quarter ended December 31, 2001, File No. 0-9040).



                                       41
<PAGE>

4(a)(1)(B)     Letter agreement dated September 23, 2002 between the Company and
               First Union  National Bank  (Exhibit  4(a)(1)(B) to the Company's
               Annual  Report on Form  10-KSB for the year ended June 30,  2002,
               File No. 0-0904.).

4(a)(1)(C)     Letter  agreement  dated October 11, 2002 between the Company and
               Wachovia (Exhibit 4.01 to the Company's  Quarterly Report on Form
               10-QSB  for the  quarter  ended  September  30,  2002,  File  No.
               0-9040).

4(a)(1)(D)     Letter  agreement  dated October 22, 2003 between the Company and
               First  Union   National  Bank  (Exhibit  4.01  to  the  Company's
               Quarterly  Report on Form 10-QSB for the quarter ended  September
               30, 2003. file No. 0-9040.)

4(a)(2)        Term Note,  dated as of December  19,  2001,  from the Company in
               favor  of First  Union  National  Bank.  (Exhibit  4.1(b)  to the
               Company's  Quarterly  Report on Form 10-QSB for the quarter ended
               December 31, 2001, File No. 0-9040).

4(a)(3)        Revolving  Credit Note,  dated as of December 19, 2001,  from the
               Company in favor of First Union National Bank. (Exhibit 4.1(c) to
               the  Company's  Quarterly  Report on Form  10-QSB for the quarter
               ended December 31, 2001, File No. 0-9040).

4(a)(4)        Guaranty and Security  Agreement,  dated as of December 19, 2001,
               from Steiner-Atlantic Corp.,  Steiner-Atlantic Brokerage Company,
               DRYCLEAN USA  Development  Corp.  and DRYCLEAN USA License Corp.,
               subsidiaries  of the  Company,  in favor of First Union  National
               Bank.  (Exhibit 4.1(d) to the Company's  Quarterly Report on Form
               10-QSB for the quarter ended December 31, 2001, File No. 0-9040).

10(a)(1)       Lease  dated  October 6, 1995  between  Steiner and  William,  K.
               Steiner  with respect to  Steiner's  facilities  located 290 N.E.
               68th Street, 297 N.E. 67 St. and 277 N.E. 67 St. Miami,  Florida.
               (Exhibit  10(a)(2)  to the  Company's  Transition  Report on Form
               10-KSB for the transition period from January 1, 1998 to June 30,
               1998, File No. 0-9040.)

10(b)(1)(i)+   Employment  Agreement  dated July 1, 1981 between the Company and
               Venerando J.  Indelicato.  (Exhibit  10(b)(1)(i) to the Company's
               Annual  Report on Form  10-KSB for the year  ended June  30,1995,
               File No. 0-9040.)

10(b)(1)(ii)+  Amendment  No. 1 dated July 1, 1983 to the  Employment  Agreement
               dated  July  1,  1981  between  the  Company  and   Venerando  J.
               Indelicato.  (Exhibit 10(b)(l)(ii) to the Company's Annual Report
               on Form  10-KSB  for the  year  ended  June  30,  1995,  File No.
               0-9040.)

10(b)(1)(iii)+ Amendment  No.  2  dated  October  30,  1998  to  the  Employment
               Agreement dated July 1, 1981 between the Company and Venerando J.
               Indelicato.  (Exhibit  10(b)(1)(iii) to the Company's  Transition
               Report on Form 10-KSB for the  transition  period from January 1,
               1998 to June 30, 1998, File No. 0-9040.)

10(c)(l)+      The Company's  1991 Stock Option Plan, as amended.  (Exhibit 99.3
               to the  Company's  Current  Report  on Form  8-K  dated  (date of
               earliest event reported) October 29, 1998, File No. 0-9040.)

10(c)(2)+      The  Company's  1994  Non-Employee  Director  Stock  Option Plan.
               (Exhibit A to the  Company's  Proxy  Statement  dated October 14,
               1994 used in connection with the Company's 1994 Annual Meeting of
               Stockholders, File No. 0-9040.)

10(c)(3)+      The  Company's  2000  Stock  Option  Plan.  (Exhibit  99.1 to the
               Company's   Registration   Statement   on  Form  S-8,   File  No.
               333-37582).



                                       42
<PAGE>

*14            Code  of  Ethics  for  Principal  Executive  Officer  and  Senior
               Financial Officers.

21             Subsidiaries of the Company.  (Exhibit 21 to the Company's Annual
               Report on Form 10-KSB for the year ended June 30, 2001,  File No.
               0-9040.)

*23            Consent  of  BDO  Seidman,  LLP,  Independent  Registered  Public
               Accounting Firm.

*31(a)         Certification of principal  executive officer pursuant to Section
               302 of the  Sarbanes-Oxley  Act of  2002  promulgated  under  the
               Securities Exchange Act of 1934.

*31(b)         Certification of principal  financial officer pursuant to Section
               302 of the  Sarbanes-Oxley  Act of  2002  promulgated  under  the
               Securities Exchange Act of 1934.

*32(a)         Certification of Principal  Executive Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

*32(b)         Certification of Principal  Financial Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

 _______________________

 *        Filed with this Report. All other exhibits are incorporated  herein by
          reference  to the  filing  indicated  in the  parenthetical  reference
          following the exhibit description.

 +        Management contract or compensatory plan or arrangement.





                                       43