With Design in Mind Expects 4th-Quarter Loss

With Design in Mind International Inc., whose former top two executives have been accused of embezzling $2.1 million from the Chatsworth toy and novelty gift company, said it expects to report a loss for its fiscal fourth quarter that ended Sept. 30.

It did not indicate the size of the expected loss, but the company said the results would include about $200,000 in product write-downs.

In a letter to shareholders, Sheldon F. Morick, With Design’s president and chief executive, said With Design has taken a number of steps to cuts costs, including reducing its work force from 42 as of March to 18.

Morick also said sales activities for With Design’s MicroTheatre--a patented three-dimensional imaging system used in video arcade games and commercial displays--have been temporarily suspended. The product was previously touted by the company as having the potential to revolutionize home entertainment.

But Morick said MicroTheatre has not been successful because “the product is too expensive, it is poorly designed and it is too large for many potential applications.” He said the company expects to introduce a revamped version of MicroTheatre by Jan. 1.

With Design has also developed a new line of children’s products that it will introduce next year, and is seeking potential acquisitions to augment its children’s business or MicroTheatre, Morick said.

As previously reported, With Design has filed a complaint against the former executives--Steve Zuloff, With Design’s former chairman, and Barry R. Benjamin, who was chief financial officer--in Superior Court in Los Angeles in an attempt to recover the funds it alleges the pair embezzled. Neither man has publicly commented on the allegations.

With Design has also been named as a defendant in a class-action lawsuit filed by a shareholder in connection with the alleged wrongdoing.