<PAGE>

================================================================================

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

                                   ----------

                                    FORM 10-Q

                                   ----------

                   QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999


                                   ----------

                         Commission File Number 0-28174

                             The Lamaur Corporation
             (Exact name of registrant as specified in its charter)


              Delaware                                  68-0301547
   (State or other jurisdiction of                    (I.R.S. Employer
    incorporation of organization)                   Identification No.)


                     One Lovell Avenue, Mill Valley CA 94941
               (Address of principal executive offices) (Zip Code)

                                 (415) 380-8200
              (Registrant's telephone number, including area code)

                                   ----------





Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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 [ ]


At November 1, 1999, there were 7,332,571 shares of the Registrant's $.01 par
value Common Stock outstanding.

================================================================================
<PAGE>

================================================================================

This quarterly report on Form 10-Q contains historical information and
forward-looking statements. Statements looking forward in time are included in
this Form 10-Q pursuant to the "safe harbor" provision of the Private Securities
Litigation Reform Act of 1995. This Form 10-Q includes forward-looking
statements including but not limited to those regarding future performance of
the retail brands, the Company's ability to attain any particular level of sales
or to be profitable in the future, the Company's ability to meet working capital
requirements, the Company's ability to be in compliance with its loan agreement,
and the Company's expectations regarding the sale of assets or its ability to
achieve other strategic initiatives. These statements involve known and unknown
risks and uncertainties that may cause the Company's actual results in future
periods to be materially different from any future performance suggested herein.
Actual results are particularly dependent upon management's ability to (i) close
the sale of the manufacturing facility and (ii) continue to work with creditors
until they are being timely paid. Further, the Company operates in an industry
sector where securities values may be volatile and may be influenced by economic
and other factors beyond the Company's control. In the context of the
forward-looking information provided in this Form 10-Q and in other reports,
please refer to the discussions of risk factors and investment considerations
detailed in, as well as the other information contained in, the Company's
filings with the Securities and Exchange Commission.

================================================================================

                                       2
<PAGE>

                             THE LAMAUR CORPORATION
                               Index to Form 10-Q
                               September 30, 1999


                                                                            Page
                                                                            ----
Part I - Financial Information

    Item 1. Condensed Financial Statements (Unaudited)

        Balance Sheets as of September 30, 1999 and December 31, 1998         4

        Statements of Operations for the Three and Nine Months Ended
              September 30, 1999 and 1998                                     5

        Statements of Cash Flows for the Nine Months Ended
              September 30, 1999 and 1998                                     6

        Notes to Condensed Financial Statements for the Three
              and Nine Months Ended September 30, 1999 and 1998               7

    Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations for the Three and
            Nine Months Ended September 30, 1999 and 1998                     10


Part II - Other Information

    Item 1.    Legal Proceedings                                              13
    Item 2.    Changes in Securities                                          13
    Item 3.    Defaults Upon Senior Securities                                13
    Item 4.    Submission of Matters to a Vote of Security Holders            13
    Item 5.    Other Information                                              13
    Item 6.    Exhibits and Reports on Form 8-K                               13
    Signature                                                                 14

                                       3
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. CONDENSED FINANCIAL STATEMENTS

                             THE LAMAUR CORPORATION
                            CONDENSED BALANCE SHEETS
                 (In thousands, except share and per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          September 30,   December 31,
                                                                               1999          1998
                                                                             --------      --------
<S>                                                                          <C>           <C>
ASSETS

Current Assets:
     Cash and cash equivalents                                               $    497      $    568
     Accounts receivable, net                                                   6,892        10,244
     Inventories                                                                6,716         7,969
     Prepaid expenses and other current assets                                    570           511
                                                                             --------      --------

       Total current assets                                                    14,675        19,292

Property, Plant and Equipment, Net                                             16,107        17,392

Other Assets                                                                      355            28
                                                                             --------      --------

     Total Assets                                                            $ 31,137      $ 36,712
                                                                             ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable                                                        $  8,046      $ 10,056
     Accrued expenses                                                           2,627         2,623
     Accrued salaries, wages and employee-related expenses                      1,120         1,147
     Current portion of long-term debt                                          1,504         3,350
                                                                             --------      --------

       Total current liabilities                                               13,297        17,176

Long-Term Debt                                                                 11,682         8,290

Stockholders' Equity
     Preferred stock, $.01 par value, 4,000,000 shares authorized:
       Series A Preferred stock, $.01 par value, 1,000,000 shares issued
         and outstanding at September 30, 1999 and December 31, 1998
         ($10.0 million liquidation preference)                                 8,500         8,500
       Series B Preferred stock, $.01 par value, 763,500 shares issued
         and outstanding at September 30, 1999 and December 31, 1998
         ($5.0 million liquidation preference)                                  5,000         5,000
     Common stock, $.01 par value, 12,000,000 shares authorized,
       7,332,571 and 5,939,761 shares issued and outstanding at
       September 30, 1999 and December 31, 1998, respectively                      73            59
     Additional paid-in-capital                                                20,213        20,356
     Stock subscriptions receivable                                               (50)          (50)
     Accumulated deficit                                                      (27,578)      (22,619)
                                                                             --------      --------

           Total Stockholders' Equity                                           6,158        11,246
                                                                             --------      --------

     Total Liabilities and Stockholders' Equity                              $ 31,137      $ 36,712
                                                                             ========      ========
</TABLE>

                       See notes to financial statements.

                                       4
<PAGE>

                             THE LAMAUR CORPORATION
                       CONDENSED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        Three Months Ended       Nine Months Ended
                                                          September 30,           September 30,
                                                       --------------------    --------------------
                                                         1999        1998        1999        1998
                                                       --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>
Net Sales                                              $ 10,131    $ 15,004    $ 39,929    $ 57,481

Cost of Goods Sold                                        7,822       8,966      28,772      33,433
                                                       --------    --------    --------    --------

Gross Margin                                              2,309       6,038      11,157      24,048

Selling, General and Administrative Expenses              4,817       7,120      15,223      24,865
                                                       --------    --------    --------    --------

Operating Loss                                           (2,508)     (1,082)     (4,066)       (817)

Interest Expense                                           (351)       (418)     (1,061)     (1,821)

Other Income                                                 50          89         168         133

Gain on sale of professional salon brands                  --         5,446        --         5,446
                                                       --------    --------    --------    --------

Net (Loss) Income                                        (2,809)      4,035      (4,959)      2,941

Dividends on Series B Preferred Stock                      (100)       (100)       (300)       (300)
                                                       --------    --------    --------    --------

Net (Loss) Income Available to Common Shareholders     $ (2,909)   $  3,935    $ (5,259)   $  2,641
                                                       ========    ========    ========    ========

Basic (Loss) Income per Common Share                   $  (0.40)   $   0.67    $  (0.74)   $   0.45
                                                       ========    ========    ========    ========

Weighted Average Common Shares Outstanding - Basic        7,333       5,888       7,112       5,839
                                                       ========    ========    ========    ========

Diluted (Loss) Income per Common Share                 $  (0.40)   $   0.57    $  (0.74)   $   0.41
                                                       ========    ========    ========    ========

Weighted Average Common Shares Outstanding - Diluted      7,333       7,052       7,112       6,499
                                                       ========    ========    ========    ========
</TABLE>

                       See notes to financial statements.

                                       5
<PAGE>

                             THE LAMAUR CORPORATION
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      Nine Months Ended
                                                                        September 30,
                                                                     --------------------
                                                                       1999        1998
                                                                     --------    --------
<S>                                                                  <C>         <C>
Cash Flows From Operating Activities:
Net (loss) income                                                    $ (4,959)   $  2,941
     Adjustments to reconcile net (loss) income to net cash
     (used in) provided by operating activities:
         Gain on sale of professional salon brands                       --        (5,446)
         (Gain) loss on disposal of assets                                (44)          6
         Non-cash compensation expense                                    168        --
         Depreciation and amortization                                  1,572       1,537
         Effect of changes in:
              Receivables                                               3,352       6,630
              Inventories                                               1,253       1,675
              Prepaid expenses and other assets                           (59)       (153)
              Payables                                                 (2,310)     (3,227)
              Accrued expenses                                            184      (2,668)
                                                                     --------    --------

         Net cash (used in) provided by operating activities             (843)      1,295

Cash Flows From Investing Activities:
     Additions to property, plant and equipment                          (223)       (575)
     Proceeds from sale of assets                                          47      10,505
                                                                     --------    --------

         Net cash (used in) provided by investing activities             (176)      9,930

Cash Flows From Financing Activities:
     Borrowings (repayments) under revolving credit agreement, net      1,742     (10,822)
     Repayments of long-term debt                                        (637)     (6,007)
     Payment of loan fees                                                (160)       --
     Proceeds from sales of common stock, net                               3          25
                                                                     --------    --------

         Net cash provided by (used in) financing activities              948     (16,804)
                                                                     --------    --------

Net Decrease in Cash and Cash Equivalents                                 (71)     (5,579)
Cash and Cash Equivalents at Beginning of Period                          568       6,465
                                                                     --------    --------

Cash and Cash Equivalents at End of Period                           $    497    $    886
                                                                     ========    ========
</TABLE>

                       See notes to financial statements.

                                       6
<PAGE>

                             THE LAMAUR CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (Unaudited)
--------------------------------------------------------------------------------

1.    ORGANIZATION AND OPERATIONS

      The Lamaur Corporation ("the Company") develops, formulates, manufactures,
and markets personal hair care products, consisting of shampoos, conditioners,
hair sprays, and other styling aids, for the consumer market and, until July
1998, the professional hair care market. In addition, the Company develops,
formulates, and manufactures hair care, personal care, and household products
for third parties. In July 1998, the Company sold its professional salon brands
and related inventory to Zotos International, Inc., a subsidiary of Shiseido
Co., Ltd., Tokyo, Japan ("Zotos") for net proceeds of $10.0 million. Proceeds
were used primarily to pay down borrowings under the credit agreement with
Norwest Business Credit and to pay down extended accounts payable.

      On September 28, 1999, the Company entered into a Purchase and Sale
Agreement and Asset Purchase Agreement with Tiro Industries, Inc., subject to
stockholder approval. Assuming the stockholders approve that transaction and the
other closing conditions are satisfied, on the effective date of the sale of
assets (the "Closing Date"), the Company will sell and Tiro will acquire the
Company's manufacturing facility at 5601 East River Road, Fridley, Minnesota,
including real and personal property, for $13,250,000 in cash and the assumption
of approximately $745,000 in lease obligations. After the Closing Date, the
Company will continue its sales and marketing operations in a portion of the
facility at 5601 East River Road as a tenant of Tiro for a term of two years
pursuant to a lease agreement entered into with Tiro. The Company will retain
ownership of personal property necessary for sales and marketing operations.
Tiro will manufacture products for the Company for three years after the Closing
Date pursuant to a Manufacturing Agreement entered into with Tiro.


2.    SIGNIFICANT ACCOUNTING POLICIES

      The accompanying condensed financial statements are unaudited and include
all adjustments, consisting of only normal recurring accruals, that management
considers necessary to fairly present the results for such periods. These
financial statements should be read in conjunction with the financial statements
and notes contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998. Results for interim periods are not necessarily
indicative of results for the full year.

                                       7
<PAGE>

                             THE LAMAUR CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (continued)
                                   (Unaudited)
--------------------------------------------------------------------------------

      Earnings Per Share - Basic EPS is calculated using income available to
common shareholders divided by the weighted average number of common shares
outstanding during the year. Diluted EPS is similar to basic EPS except that the
weighted average number of common shares outstanding is increased to include the
number of additional common shares that would have been outstanding if the
dilutive potential common shares, such as options, had been issued. The treasury
stock method is used to calculate the number of dilutive shares, which reduces
the gross number of dilutive shares by the number of shares purchasable from the
proceeds of the options assumed to be exercised. The following table sets forth
the calculations of basic and diluted EPS for the three and nine months ended
September 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                       Three Months Ended     Nine Months Ended
                                                          September 30,         September 30,
                                                       ----------------------------------------
                                                         1999       1998       1999       1998
                                                       -------    -------    -------    -------
                                                         (In thousands, except per share data)
<S>                                                    <C>        <C>        <C>        <C>
Basic Earnings per Share:
Net (Loss) Income                                      $(2,809)   $ 4,035    $(4,959)   $ 2,941
Less: Dividends on Series B Preferred Stock               (100)      (100)      (300)      (300)
                                                       -------    -------    -------    -------

Net (Loss) Income Available to Common Shareholders     $(2,909)   $ 3,935    $(5,259)   $ 2,641
                                                       =======    =======    =======    =======

Weighted Average Common Shares Outstanding - Basic       7,333      5,888      7,112      5,839
                                                       -------    -------    -------    -------

Basic (Loss) Income per Common Share                   $ (0.40)   $  0.67    $ (0.74)   $  0.45
                                                       =======    =======    =======    =======

Diluted Earnings per Share:
Net (Loss) Income                                      $(2,809)   $ 4,035    $(4,959)   $ 2,941
Less: Dividends on Series B Preferred Stock               (100)      --         (300)      (300)
                                                       -------    -------    -------    -------

Net (Loss) Income Available to Common Shareholders     $(2,909)   $ 4,035    $(5,259)   $ 2,641
                                                       =======    =======    =======    =======

Weighted Average Common Shares Outstanding               7,333      5,888      7,112      5,839
    Dilutive Shares Issuable in Connection with:
        Conversion of Series A Preferred Stock            --          660       --          660
        Conversion of Series B Preferred Stock            --          504       --         --
                                                       -------    -------    -------    -------

Weighted Average Common Shares Outstanding - Diluted     7,333      7,052      7,112      6,499
                                                       -------    -------    -------    -------

Diluted (Loss) Income per Common Share                 $ (0.40)   $  0.57    $ (0.74)   $  0.41
                                                       =======    =======    =======    =======
</TABLE>

      Comprehensive Income - Comprehensive income equals net income.

      Reclassifications - Certain prior year amounts have been reclassified in
the accompanying financial statements in order to conform with the 1999
presentation.


3.    STOCK OPTION PLANS

      In January 1999, the Company issued 1,369,800 shares of its Common Stock
to certain employees and directors. The stock grants were made in conjunction
with the cancellation of outstanding options held by employees and directors.
These shares have vesting schedules ranging from two years to two and one-half
years. The Company recorded compensation expense of approximately $168,000 in
connection with these stock grants. The Company has the right under certain
conditions to repurchase unvested shares at the market price on the date of
grant. 1,129,800 of the shares were issued pursuant to the Company's 1997 Stock
Plan.

                                       8
<PAGE>

                             THE LAMAUR CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (continued)
                                   (Unaudited)
--------------------------------------------------------------------------------

4.    DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

      The Company's operating segments include the Retail Group, Salon Group,
and the Custom Manufacturing Group. As the Retail and Salon Groups have similar
economic characteristics, they have been aggregated into one reportable segment
called the Retail and Salon Group. The Company evaluates performance based on
contribution before fixed expenses. The accounting policies of the segments are
the same as those of the Company.

      The Company does not allocate fixed expenses by segment for internal
reporting or decision making purposes and therefore has not disclosed operating
profit by segment. The majority of the Company's fixed expenses are shared
expenses of both reporting segments and consist principally of administration
and manufacturing overhead. The Company's products are manufactured on common
production lines and therefore the Company does not analyze fixed assets or
capital expenditures by segment.

      The Company's reportable segments have separate sales departments, and
although the products are similar, they are sold and marketed differently. The
Retail and Salon Group sells hair care products including shampoos,
conditioners, hair sprays, and other styling aids. These products are
distributed to consumer retail outlets and until July 1998, professional salon
and specialty shops. Products sold by the Retail and Salon Group require
substantial marketing support to maintain their sales. The Custom Manufacturing
Group develops and formulates hair care, personal care, and household products
for third parties. This group is service oriented and no significant marketing
is required to support its sales.

      Following is the financial information related to the Company's segments
for the three and nine months ended September 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                              Three Months Ended       Nine Months Ended
                                                September 30,            September 30,
                                             --------------------    --------------------
                                               1999        1998        1999        1998
                                             --------    --------    --------    --------
                                                             (In thousands)
<S>                                          <C>         <C>         <C>         <C>
Net sales
     Retail and Salon Group                  $  6,417    $ 11,390    $ 22,531    $ 47,375
     Custom Manufacturing Group                 3,714       3,614      17,398      10,106
                                             --------    --------    --------    --------
        Total net sales                        10,131      15,004      39,929      57,481
Profit before fixed expenses
     Retail and Salon Group                       956       2,746       4,040      12,260
     Custom Manufacturing Group                   856         952       4,374       2,797
                                             --------    --------    --------    --------
        Total profit before fixed expenses      1,812       3,698       8,414      15,057

Fixed expenses                                  4,320       4,780      12,480      15,874
                                             --------    --------    --------    --------
Operating loss                                 (2,508)     (1,082)     (4,066)       (817)
Interest expense                                 (351)       (418)     (1,061)     (1,821)
Other income                                       50          89         168         133
Gain on sale of professional salon brands        --         5,446        --         5,446
                                             --------    --------    --------    --------
Net (loss) income                            $ (2,809)   $  4,035    $ (4,959)   $  2,941
                                             ========    ========    ========    ========
</TABLE>

                                       9
<PAGE>

Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE NINE MONTHS AND THREE MONTHS ENDED
           SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS AND THREE MONTHS ENDED
           SEPTEMBER 30, 1998

Historical Results of Operations

      Net sales for the nine months ended September 30, 1999 were $39.9 million
compared with $57.5 million for the same period in 1998, a decrease of $17.6
million or 30.6%. Net sales for the three months ended September 30, 1999 were
$10.1 million, compared with $15.0 million for the same period in 1998, a
decrease of $4.9 million or 32.7%. The decreases in net sales for the nine
months and three months ended September 30, 1999 are due to the decline in sales
of the Company's retail brands and to the disposition of the Company's salon
brands in July of 1998. Willow Lake(R), Style(R), Perma Soft(R), Color Soft(TM),
and Style Natural Reflections(TM) (retail brands) and the salon brands had sales
declines of $24.3 million during the nine months ended September 30, 1999, and
declines of $5.3 million during the three months ended September 30, 1999 as
compared with the same periods in 1998. Sales of Style(R) and Perma Soft(R) have
continued to decline since management began its turnaround efforts in the first
quarter of 1996. Management believes that sales of these and the Company's other
retail brands are likely to continue to decline. There were no sales of the
professional salon brands for the nine months and three months ended September
30, 1999 as a result of the sale of these brands to Zotos on July 31, 1998. The
Company continues to manufacture certain of these professional salon brands for
Zotos which are sold by the Custom Manufacturing Group at a lower markup over
cost.

      Partially offsetting the net sales declines incurred by the Company's
retail and salon brands was an increase in net sales of the Custom Manufacturing
Group. Net sales of the Custom Manufacturing Group increased $7.8 million and
$0.6 million for the nine months and three months ended September 30, 1999,
respectively, as compared with the same periods in 1998. The increase in sales
for the nine months ended September 30, 1999 is primarily due to increased
production of aerosol products in the second quarter of 1999. Management
believes that sales by the Custom Manufacturing Group for the nine months ended
September 30, 1999 are not indicative of future sales in 1999 as the increases
in net sales were due mainly to customers building inventory of their aerosol
products in response to new regulations taking effect on June 1, 1999 in
California limiting the amounts of volatile organic compounds allowed in aerosol
products. Aerosol products produced before the June 1, 1999 deadline are
permitted to be sold in California despite being produced under the less
restrictive guidelines.

      Gross margin as a percentage of net sales was 27.9% for the nine months
ended September 30, 1999, as compared with 41.8% for the same period in 1998.
Gross margin as a percentage of net sales was 22.8% for the three months ended
September 30, 1999, as compared with 40.2% for the same period in 1998. The
decline in the gross margin as a percentage of net sales for the nine months and
three months ended September 30, 1999 is principally due to Custom Manufacturing
Group sales, which are lower-margin sales, representing a greater percentage of
net sales in 1999. The Custom Manufacturing Group sales increased percentage is
a result of the sale of the professional salon brands to Zotos, the decrease in
the sales of the Company's retail brands, and the increase in Custom
Manufacturing aerosol sales.

      Selling, general and administrative expenses (SG&A) were $15.2 million or
38.1% of net sales for the nine months ended September 30, 1999, as compared
with $24.9 million or 43.3% of net sales for the same period in 1998, a decrease
of $9.7 million. SG&A expenses were $4.8 million or 47.5% of net sales for the
three months ended September 30, 1999 as compared with $7.1 million or 47.5% of
net sales for the same period in 1998, a decrease of $2.3 million. The decreases
are principally attributable to reduced marketing expenses of $5.3 million and
$1.2 million for the nine months and three months ended September 30, 1999,
respectively, and reduced freight and brokerage as a result of the decrease in
sales. In addition, personnel, travel and other expenses declined as a result of
the Company's cost cutting efforts and the sale of the professional salon brands
to Zotos. The Company's strategy in 1999 is to focus its limited resources to
support the Willow Lake(R) brand with consumer and retail trade promotions and
also to provide limited promotional support for the other retail brands. There
can be no assurance concerning the future performance of Willow Lake(R) and
other brands or the Company's ability to attain any particular level of sales or
to be profitable in the future with the lower level of marketing support.

      Interest expense decreased to $1.1 million for the nine months ended
September 30, 1999, as compared with $1.8 million in the same period in 1998.
Interest expense decreased to $0.3 million for the three months ended September
30, 1999 as compared with $0.4 million in the same period in 1998. The decrease
in interest expense is principally attributable to lower borrowings and lower
interest rates under the Company's revolving line of credit and term loans.

      On July 31, 1998, the Company sold its professional salon brands,
including inventory ($4.3 million) and trade names for net proceeds of $10.0
million to Zotos International Inc. This transaction resulted in a pretax gain
of approximately $5.4 million.

                                       10
<PAGE>

      As a result of the foregoing factors, the net loss for the nine months and
three months ended September 30, 1999 was $5.0 million and $2.8 million,
respectively, compared with net income of $2.9 million and $4.0 million,
respectively, for the same periods in 1998.


Liquidity and Capital Resources

      In May 1999, the Company entered into a three-year Loan and Security
Agreement with Congress Financial Corporation ("Congress") for a $20 million
loan facility. This facility consists of a revolving loan of up to $10.3 million
and term loans of $3.0 million and $6.7 million each. The $6.7 million term loan
is amortized over five years with monthly principal payments of $111,667. The
revolving loan and the term loans are payable in full in May 2002. The Company
incurred a closing fee of $200,000 in conjunction with the loan agreement,
$100,000 of which was paid at the loan closing, and $100,000 which is payable in
May 2000. Approximately $13.8 million of the proceeds from the Congress loans
were used to pay off the outstanding revolving line of credit and term loans
with the Company's former lender, Norwest Business Credit ("Norwest").

      As of September 30, 1999, the amounts outstanding under the Company's
revolving and two term loan facilities were $3.0 million, $3.0 million, and $6.4
million, respectively, as compared with $7.4 million under the revolving loan
and $3.1 million under the term loan with Norwest as of December 31, 1998. The
interest rates on the loans with Congress are variable and are tied to the prime
rate which at September 30, 1999 was 8.25%. At September 30, 1999, the interest
rate on the revolving loan and the $3.0 million term loan was 9.0% and the
interest rate on the $6.4 million term loan was 9.25%.

      The revolving loan and the term loans with Congress are secured by
virtually all of the assets of the Company. Additionally, the loan agreement
restricts the payment of dividends other than on the Company's Series B
Preferred Stock, restricts the Company's ability to incur additional
indebtedness and requires the Company to comply with certain financial loan
covenants. As of September 30, 1999, the Company was not in compliance with the
net worth covenant in its credit facility. The Company has obtained a waiver
from the lender. The Company anticipates it will be out of compliance with its
net worth loan covenant in October and is currently discussing this matter with
Congress to obtain a waiver. No assurance can be given that Congress will agree
to a waiver and therefore the obligations with Congress could be declared
immediately due and payable.

      Total accounts payable exceeding their normal payment terms were
approximately $4.9 million as of September 30, 1999. Because the Company
announced its intent to obtain financing through a new credit facility and/or
the sale of its manufacturing operations and related assets, major trade
creditors and other creditors have extended their "normal" terms to allow the
Company additional time to make payments. The Company is operating its business
to preserve working capital in order to pay the Company's current and extended
obligations. To date the Company has been able to make timely shipments to its
customers.

      In January 1999, the Company issued 1,369,800 shares of its Common Stock
to certain employees and directors. The stock grants were made in conjunction
with the cancellation of outstanding options held by employees and directors.
These shares have vesting schedules ranging from two years to two and one-half
years. The Company recorded compensation expense of approximately $168,000 in
connection with these stock grants. The Company has the right under certain
conditions to repurchase unvested shares at the market price on the date of
grant. 1,129,800 of the shares were issued pursuant to the Company's 1997 Stock
Plan. Management and the Board of Directors believed it was essential to offer
such a package in order to retain employees and preserve the value of the
enterprise while the Company evaluated and pursued alternatives.

      As of September 30, 1999, the Company was $900,000 in arrears on the
payment of dividends on its Series B Preferred Stock. The preferred stock
provides for an annual dividend of $400,000, payable in quarterly installments.

      On September 28, 1999, the Company entered into a Purchase and Sale
Agreement and Asset Purchase Agreement with Tiro Industries, Inc., subject to
stockholder approval. Assuming the stockholders approve that transaction and the
other closing conditions are satisfied, on the effective date of the sale of
assets (the "Closing Date"), the Company will sell and Tiro will acquire the
Company's manufacturing facility at 5601 East River Road, Fridley, Minnesota,
including real and personal property, for $13,250,000 in cash and the assumption
of approximately $745,000 in lease obligations. After the Closing Date, the
Company will continue its sales and marketing operations in a portion of the
facility at 5601 East River Road as a tenant of Tiro for a term of two years
pursuant to a lease agreement entered into with Tiro. The Company will retain
ownership of personal property necessary for sales and marketing operations.
Tiro will manufacture products for the Company for three years after the Closing
Date pursuant to a Manufacturing Agreement entered into with Tiro.

                                       11
<PAGE>

      Proceeds from the sale will be used exclusively to pay obligations to
Congress and to other creditors and for working capital. The proceeds from the
sale may not be sufficient to permit the Company to manage or satisfy its
existing obligations. The Company believes the reduction of expenses from
transferring manufacturing to a third party and the generation of cash from the
sale of the manufacturing facility present an opportunity for the Company to
bring liabilities in line with ongoing operations. However, the Company may not
be able to sustain operations following the sale.

      The Company's ability to continue operations is dependent on its ability
to generate sufficient cash flow to meet its obligations as they become due, to
comply with the terms and conditions of its loan agreement with Congress, to
complete the sale of its manufacturing facility, to reduce aged payables, to
reduce its cost structure, and attain sales and operating levels to be
profitable.


Year 2000

      Many computer systems were not designed to properly handle dates beyond
the year 1999. Additionally, these systems may not properly handle certain dates
in 1999. Failure to process dates properly could result in failure or disruption
of the Company's information systems and/or processing equipment. To be Year
2000 compliant, computer systems must correctly process dates before and after
the Year 2000, recognize the Year 2000 as a leap year, accept and display dates
unambiguously and correctly process dates for non-date functions such as
archiving.

      Disruptions to the Company's operations may also occur if key suppliers or
customers experience disruptions in their ability to purchase, supply or
transact with the Company due to Year 2000 issues. The Year 2000 readiness of
infrastructure suppliers (utilities, government agencies such as customs, and
shipping organizations) will be critical to the Company's ability to avoid
disruption of its operations.

      The Company installed an enterprise-wide software solution in December
1996. At that time, some modules of the system were not Year 2000 compliant. A
newer release of the same software is certified to be compliant by the software
vendor. During the third quarter of 1999, the Company completed its upgrade to
this newer release and tested the functionality and made the necessary
Company-specific modifications to the software. Final testing of the system will
be completed in the fourth quarter of 1999. The Company's contingency plan would
be to use the certified-compliant software without Company-specific
modifications. The computer operating system is certified to be Year 2000
compliant by the vendor.

      The Company is also reviewing its computer-dependent manufacturing
activities to determine the necessary hardware and software changes. For all
non-mainframe applications such as personal computers, production-related
equipment, etc., an inventory has been taken of the hardware and software
involved. The Company has researched the status of these items and determined a
course of action to assure compliance. This process is substantially complete as
of the end of the third quarter of 1999. The Company's electronic data
interchange system, which receives orders from its customers, has been certified
to be Year 2000 compliant by the software vendor.

      The Company will perform remediation procedures concurrently with its
assessment planning. The Company intends to use internal and external resources
to implement, replace and test software and related assets affected by the Year
2000 issue. The Company currently believes that the remediation costs of the
Year 2000 issue will not be material to the Company's results of operations or
financial position and will be absorbed by the Company through normal operating
budgets. The Company does not expect any incremental costs associated with its
Year 2000 remediation activities to be significant. Through September 30, 1999,
the Company has not incurred a material amount of remediation costs.

      The Company is working with key suppliers and customers to determine
whether the suppliers' operations and the products and services that they
provide are Year 2000 capable or to monitor their progress toward Year 2000
compliance. The Company has sent questionnaires to its suppliers who furnish
product or services to the Company. The Company may choose to identify those
suppliers it deems critical and pursue other methods of assuring readiness. The
Company is also in the process of surveying customers to determine the status of
their Year 2000 efforts.

      While the Company currently expects that the Year 2000 issue will not pose
significant operational problems, delays in adequately addressing Year 2000
issues, or a failure to fully identify all Year 2000 dependencies in the
Company's systems and in the systems of its suppliers, customers and financial
institutions could have material adverse consequences, including delays in the
production, delivery or sale of products. In addition, time and cost estimates
are based on currently available information and are management's best
estimates. However, no assurance can be given that these estimates will be
achieved, and actual results may differ materially from those anticipated.

                                       12
<PAGE>

                           PART II - OTHER INFORMATION



Item 1. LEGAL PROCEEDINGS

      On November 2, 1998, a class action and derivative lawsuit was filed by
the stockholders (on behalf of themselves and the Company) in the Delaware Court
of Chancery in and for New Castle County alleging that the defendant Board of
Directors breached their fiduciary duties to the Company and failed to disclose
certain information in the Company's 1998 Proxy Statement. Plaintiffs seek
injunctive relief, damages, and a recision of all actions approved at the
November 2, 1998 Annual Meeting. In addition, the plaintiffs are seeking the
appointment of a receiver for the Company and changes in the disclosures to
correct what they allege are errors as well as costs and attorney's fees. The
Company believes the lawsuit is without merit and will defend the action in the
best interest of the stockholders. No discovery has been commenced against the
Company, only minimal discovery has been conducted by plaintiffs, and no
significant dates have been set in the litigation.


Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

      In January 1999, the Company issued 1,369,800 shares of its Common Stock
to certain employees and directors. The stock grants were made in conjunction
with the cancellation of outstanding options held by employees and directors.
These shares have vesting schedules ranging from two years to two and one-half
years. The Company recorded compensation expense of approximately $168,000 in
connection with these stock grants. The Company has the right under certain
conditions to repurchase unvested shares at the market price on the date of
grant. 1,129,800 of the shares were issued pursuant to the Company's 1997 Stock
Plan. Management and the Board of Directors believed it was essential to offer
such a package in order to retain employees and preserve the value of the
enterprise while the Company evaluated and pursued alternatives.


Item 3. DEFAULTS UPON SENIOR SECURITIES

      On September 30, 1999, the Company failed to pay a dividend of $100,000 on
its Series B Preferred Stock and is in arrears in the aggregate amount of
$900,000.


Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.


Item 5. OTHER INFORMATION

      None.


Item 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits:

            27    Financial Data Schedule


      (b)   Reports on Form 8-K:

            None

                                       13
<PAGE>

                                    SIGNATURE


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                    THE LAMAUR CORPORATION
                                         (Registrant)




                                    /s/    John D. Hellmann
                                    --------------------------------------------
   DATE:  November 15, 1999         JOHN D. HELLMANN
                                    Vice President - Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

                                       14
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 49011}]
{"company-data": {"conformed-name": "LAMAUR CORP", "cik": "0001011154", "assigned-sic": "2844", "irs-number": "680301547", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-28174", "film-number": "99752454"}, "business-address": {"street1": "ONE LOVELL AVE", "city": "MILL VALLEY", "state": "CA", "zip": "94941", "phone": "4153808200"}, "mail-address": {"street1": "ONE LOVELL AVE", "city": "MILL VALLEY", "state": "CA", "zip": "94941"}, "former-company": {"former-conformed-name": "ELECTRONIC HAIR STYLING INC", "date-changed": "19960325"}}
================================================================================

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

                                   ----------

                                    FORM 10-Q

                                   ----------

                   QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

                                   ----------

                         Commission File Number 0-28174

                             The Lamaur Corporation
             (Exact name of registrant as specified in its charter)

              Delaware                                  68-0301547
   (State or other jurisdiction of                    (I.R.S. Employer
    incorporation of organization)                   Identification No.)

                     One Lovell Avenue, Mill Valley CA 94941
               (Address of principal executive offices) (Zip Code)

                                 (415) 380-8200
              (Registrant's telephone number, including area code)

                                   ----------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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 [ ]

At November 1, 1999, there were 7,332,571 shares of the Registrant's $.01 par
value Common Stock outstanding.

================================================================================
================================================================================

This quarterly report on Form 10-Q contains historical information and
forward-looking statements. Statements looking forward in time are included in
this Form 10-Q pursuant to the "safe harbor" provision of the Private Securities
Litigation Reform Act of 1995. This Form 10-Q includes forward-looking
statements including but not limited to those regarding future performance of
the retail brands, the Company's ability to attain any particular level of sales
or to be profitable in the future, the Company's ability to meet working capital
requirements, the Company's ability to be in compliance with its loan agreement,
and the Company's expectations regarding the sale of assets or its ability to
achieve other strategic initiatives. These statements involve known and unknown
risks and uncertainties that may cause the Company's actual results in future
periods to be materially different from any future performance suggested herein.
Actual results are particularly dependent upon management's ability to (i) close
the sale of the manufacturing facility and (ii) continue to work with creditors
until they are being timely paid. Further, the Company operates in an industry
sector where securities values may be volatile and may be influenced by economic
and other factors beyond the Company's control. In the context of the
forward-looking information provided in this Form 10-Q and in other reports,
please refer to the discussions of risk factors and investment considerations
detailed in, as well as the other information contained in, the Company's
filings with the Securities and Exchange Commission.

================================================================================

                                       2
THE LAMAUR CORPORATION
                               Index to Form 10-Q
                               September 30, 1999

                                                                            Page
                                                                            ----
Part I - Financial Information

    Item 1. Condensed Financial Statements (Unaudited)

        Balance Sheets as of September 30, 1999 and December 31, 1998         4

        Statements of Operations for the Three and Nine Months Ended
              September 30, 1999 and 1998                                     5

        Statements of Cash Flows for the Nine Months Ended
              September 30, 1999 and 1998                                     6

        Notes to Condensed Financial Statements for the Three
              and Nine Months Ended September 30, 1999 and 1998               7

    Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations for the Three and
            Nine Months Ended September 30, 1999 and 1998                     10

Part II - Other Information

    Item 1.    Legal Proceedings                                              13
    Item 2.    Changes in Securities                                          13
    Item 3.    Defaults Upon Senior Securities                                13
    Item 4.    Submission of Matters to a Vote of Security Holders            13
    Item 5.    Other Information                                              13
    Item 6.    Exhibits and Reports on Form 8-K                               13
    Signature                                                                 14

                                       3
PART I. FINANCIAL INFORMATION

Item 1. CONDENSED FINANCIAL STATEMENTS

                             THE LAMAUR CORPORATION
                            CONDENSED BALANCE SHEETS
                 (In thousands, except share and per share data)
                                   (Unaudited)
September 30,   December 31,
                                                                               1999          1998
                                                                             --------      --------
ASSETS

Current Assets:
     Cash and cash equivalents                                               $    497      $    568
     Accounts receivable, net                                                   6,892        10,244
     Inventories                                                                6,716         7,969
     Prepaid expenses and other current assets                                    570           511
                                                                             --------      --------

       Total current assets                                                    14,675        19,292

Property, Plant and Equipment, Net                                             16,107        17,392

Other Assets                                                                      355            28
                                                                             --------      --------

     Total Assets                                                            $ 31,137      $ 36,712
                                                                             ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable                                                        $  8,046      $ 10,056
     Accrued expenses                                                           2,627         2,623
     Accrued salaries, wages and employee-related expenses                      1,120         1,147
     Current portion of long-term debt                                          1,504         3,350
                                                                             --------      --------

       Total current liabilities                                               13,297        17,176

Long-Term Debt                                                                 11,682         8,290

Stockholders' Equity
     Preferred stock, $.01 par value, 4,000,000 shares authorized:
       Series A Preferred stock, $.01 par value, 1,000,000 shares issued
         and outstanding at September 30, 1999 and December 31, 1998
         ($10.0 million liquidation preference)                                 8,500         8,500
       Series B Preferred stock, $.01 par value, 763,500 shares issued
         and outstanding at September 30, 1999 and December 31, 1998
         ($5.0 million liquidation preference)                                  5,000         5,000
     Common stock, $.01 par value, 12,000,000 shares authorized,
       7,332,571 and 5,939,761 shares issued and outstanding at
       September 30, 1999 and December 31, 1998, respectively                      73            59
     Additional paid-in-capital                                                20,213        20,356
     Stock subscriptions receivable                                               (50)          (50)
     Accumulated deficit                                                      (27,578)      (22,619)
                                                                             --------      --------

           Total Stockholders' Equity                                           6,158        11,246
                                                                             --------      --------

     Total Liabilities and Stockholders' Equity                              $ 31,137      $ 36,712
                                                                             ========      ========
See notes to financial statements.

                                       4
THE LAMAUR CORPORATION
                       CONDENSED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)
Three Months Ended       Nine Months Ended
                                                          September 30,           September 30,
                                                       --------------------    --------------------
                                                         1999        1998        1999        1998
                                                       --------    --------    --------    --------
Net Sales                                              $ 10,131    $ 15,004    $ 39,929    $ 57,481

Cost of Goods Sold                                        7,822       8,966      28,772      33,433
                                                       --------    --------    --------    --------

Gross Margin                                              2,309       6,038      11,157      24,048

Selling, General and Administrative Expenses              4,817       7,120      15,223      24,865
                                                       --------    --------    --------    --------

Operating Loss                                           (2,508)     (1,082)     (4,066)       (817)

Interest Expense                                           (351)       (418)     (1,061)     (1,821)

Other Income                                                 50          89         168         133

Gain on sale of professional salon brands                  --         5,446        --         5,446
                                                       --------    --------    --------    --------

Net (Loss) Income                                        (2,809)      4,035      (4,959)      2,941

Dividends on Series B Preferred Stock                      (100)       (100)       (300)       (300)
                                                       --------    --------    --------    --------

Net (Loss) Income Available to Common Shareholders     $ (2,909)   $  3,935    $ (5,259)   $  2,641
                                                       ========    ========    ========    ========

Basic (Loss) Income per Common Share                   $  (0.40)   $   0.67    $  (0.74)   $   0.45
                                                       ========    ========    ========    ========

Weighted Average Common Shares Outstanding - Basic        7,333       5,888       7,112       5,839
                                                       ========    ========    ========    ========

Diluted (Loss) Income per Common Share                 $  (0.40)   $   0.57    $  (0.74)   $   0.41
                                                       ========    ========    ========    ========

Weighted Average Common Shares Outstanding - Diluted      7,333       7,052       7,112       6,499
                                                       ========    ========    ========    ========
See notes to financial statements.

                                       5
THE LAMAUR CORPORATION
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
Nine Months Ended
                                                                        September 30,
                                                                     --------------------
                                                                       1999        1998
                                                                     --------    --------
Cash Flows From Operating Activities:
Net (loss) income                                                    $ (4,959)   $  2,941
     Adjustments to reconcile net (loss) income to net cash
     (used in) provided by operating activities:
         Gain on sale of professional salon brands                       --        (5,446)
         (Gain) loss on disposal of assets                                (44)          6
         Non-cash compensation expense                                    168        --
         Depreciation and amortization                                  1,572       1,537
         Effect of changes in:
              Receivables                                               3,352       6,630
              Inventories                                               1,253       1,675
              Prepaid expenses and other assets                           (59)       (153)
              Payables                                                 (2,310)     (3,227)
              Accrued expenses                                            184      (2,668)
                                                                     --------    --------

         Net cash (used in) provided by operating activities             (843)      1,295

Cash Flows From Investing Activities:
     Additions to property, plant and equipment                          (223)       (575)
     Proceeds from sale of assets                                          47      10,505
                                                                     --------    --------

         Net cash (used in) provided by investing activities             (176)      9,930

Cash Flows From Financing Activities:
     Borrowings (repayments) under revolving credit agreement, net      1,742     (10,822)
     Repayments of long-term debt                                        (637)     (6,007)
     Payment of loan fees                                                (160)       --
     Proceeds from sales of common stock, net                               3          25
                                                                     --------    --------

         Net cash provided by (used in) financing activities              948     (16,804)
                                                                     --------    --------

Net Decrease in Cash and Cash Equivalents                                 (71)     (5,579)
Cash and Cash Equivalents at Beginning of Period                          568       6,465
                                                                     --------    --------

Cash and Cash Equivalents at End of Period                           $    497    $    886
                                                                     ========    ========
See notes to financial statements.

                                       6
THE LAMAUR CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (Unaudited)
--------------------------------------------------------------------------------

1.    ORGANIZATION AND OPERATIONS

      The Lamaur Corporation ("the Company") develops, formulates, manufactures,
and markets personal hair care products, consisting of shampoos, conditioners,
hair sprays, and other styling aids, for the consumer market and, until July
1998, the professional hair care market. In addition, the Company develops,
formulates, and manufactures hair care, personal care, and household products
for third parties. In July 1998, the Company sold its professional salon brands
and related inventory to Zotos International, Inc., a subsidiary of Shiseido
Co., Ltd., Tokyo, Japan ("Zotos") for net proceeds of $10.0 million. Proceeds
were used primarily to pay down borrowings under the credit agreement with
Norwest Business Credit and to pay down extended accounts payable.

      On September 28, 1999, the Company entered into a Purchase and Sale
Agreement and Asset Purchase Agreement with Tiro Industries, Inc., subject to
stockholder approval. Assuming the stockholders approve that transaction and the
other closing conditions are satisfied, on the effective date of the sale of
assets (the "Closing Date"), the Company will sell and Tiro will acquire the
Company's manufacturing facility at 5601 East River Road, Fridley, Minnesota,
including real and personal property, for $13,250,000 in cash and the assumption
of approximately $745,000 in lease obligations. After the Closing Date, the
Company will continue its sales and marketing operations in a portion of the
facility at 5601 East River Road as a tenant of Tiro for a term of two years
pursuant to a lease agreement entered into with Tiro. The Company will retain
ownership of personal property necessary for sales and marketing operations.
Tiro will manufacture products for the Company for three years after the Closing
Date pursuant to a Manufacturing Agreement entered into with Tiro.

2.    SIGNIFICANT ACCOUNTING POLICIES

      The accompanying condensed financial statements are unaudited and include
all adjustments, consisting of only normal recurring accruals, that management
considers necessary to fairly present the results for such periods. These
financial statements should be read in conjunction with the financial statements
and notes contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998. Results for interim periods are not necessarily
indicative of results for the full year.

                                       7
THE LAMAUR CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (continued)
                                   (Unaudited)
--------------------------------------------------------------------------------

      Earnings Per Share - Basic EPS is calculated using income available to
common shareholders divided by the weighted average number of common shares
outstanding during the year. Diluted EPS is similar to basic EPS except that the
weighted average number of common shares outstanding is increased to include the
number of additional common shares that would have been outstanding if the
dilutive potential common shares, such as options, had been issued. The treasury
stock method is used to calculate the number of dilutive shares, which reduces
the gross number of dilutive shares by the number of shares purchasable from the
proceeds of the options assumed to be exercised. The following table sets forth
the calculations of basic and diluted EPS for the three and nine months ended
September 30, 1999 and 1998:
Three Months Ended     Nine Months Ended
                                                          September 30,         September 30,
                                                       ----------------------------------------
                                                         1999       1998       1999       1998
                                                       -------    -------    -------    -------
                                                         (In thousands, except per share data)
Basic Earnings per Share:
Net (Loss) Income                                      $(2,809)   $ 4,035    $(4,959)   $ 2,941
Less: Dividends on Series B Preferred Stock               (100)      (100)      (300)      (300)
                                                       -------    -------    -------    -------

Net (Loss) Income Available to Common Shareholders     $(2,909)   $ 3,935    $(5,259)   $ 2,641
                                                       =======    =======    =======    =======

Weighted Average Common Shares Outstanding - Basic       7,333      5,888      7,112      5,839
                                                       -------    -------    -------    -------

Basic (Loss) Income per Common Share                   $ (0.40)   $  0.67    $ (0.74)   $  0.45
                                                       =======    =======    =======    =======

Diluted Earnings per Share:
Net (Loss) Income                                      $(2,809)   $ 4,035    $(4,959)   $ 2,941
Less: Dividends on Series B Preferred Stock               (100)      --         (300)      (300)
                                                       -------    -------    -------    -------

Net (Loss) Income Available to Common Shareholders     $(2,909)   $ 4,035    $(5,259)   $ 2,641
                                                       =======    =======    =======    =======

Weighted Average Common Shares Outstanding               7,333      5,888      7,112      5,839
    Dilutive Shares Issuable in Connection with:
        Conversion of Series A Preferred Stock            --          660       --          660
        Conversion of Series B Preferred Stock            --          504       --         --
                                                       -------    -------    -------    -------

Weighted Average Common Shares Outstanding - Diluted     7,333      7,052      7,112      6,499
                                                       -------    -------    -------    -------

Diluted (Loss) Income per Common Share                 $ (0.40)   $  0.57    $ (0.74)   $  0.41
                                                       =======    =======    =======    =======
Comprehensive Income - Comprehensive income equals net income.

      Reclassifications - Certain prior year amounts have been reclassified in
the accompanying financial statements in order to conform with the 1999
presentation.

3.    STOCK OPTION PLANS

      In January 1999, the Company issued 1,369,800 shares of its Common Stock
to certain employees and directors. The stock grants were made in conjunction
with the cancellation of outstanding options held by employees and directors.
These shares have vesting schedules ranging from two years to two and one-half
years. The Company recorded compensation expense of approximately $168,000 in
connection with these stock grants. The Company has the right under certain
conditions to repurchase unvested shares at the market price on the date of
grant. 1,129,800 of the shares were issued pursuant to the Company's 1997 Stock
Plan.

                                       8
THE LAMAUR CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (continued)
                                   (Unaudited)
--------------------------------------------------------------------------------

4.    DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

      The Company's operating segments include the Retail Group, Salon Group,
and the Custom Manufacturing Group. As the Retail and Salon Groups have similar
economic characteristics, they have been aggregated into one reportable segment
called the Retail and Salon Group. The Company evaluates performance based on
contribution before fixed expenses. The accounting policies of the segments are
the same as those of the Company.

      The Company does not allocate fixed expenses by segment for internal
reporting or decision making purposes and therefore has not disclosed operating
profit by segment. The majority of the Company's fixed expenses are shared
expenses of both reporting segments and consist principally of administration
and manufacturing overhead. The Company's products are manufactured on common
production lines and therefore the Company does not analyze fixed assets or
capital expenditures by segment.

      The Company's reportable segments have separate sales departments, and
although the products are similar, they are sold and marketed differently. The
Retail and Salon Group sells hair care products including shampoos,
conditioners, hair sprays, and other styling aids. These products are
distributed to consumer retail outlets and until July 1998, professional salon
and specialty shops. Products sold by the Retail and Salon Group require
substantial marketing support to maintain their sales. The Custom Manufacturing
Group develops and formulates hair care, personal care, and household products
for third parties. This group is service oriented and no significant marketing
is required to support its sales.

      Following is the financial information related to the Company's segments
for the three and nine months ended September 30, 1999 and 1998:
Three Months Ended       Nine Months Ended
                                                September 30,            September 30,
                                             --------------------    --------------------
                                               1999        1998        1999        1998
                                             --------    --------    --------    --------
                                                             (In thousands)
Net sales
     Retail and Salon Group                  $  6,417    $ 11,390    $ 22,531    $ 47,375
     Custom Manufacturing Group                 3,714       3,614      17,398      10,106
                                             --------    --------    --------    --------
        Total net sales                        10,131      15,004      39,929      57,481
Profit before fixed expenses
     Retail and Salon Group                       956       2,746       4,040      12,260
     Custom Manufacturing Group                   856         952       4,374       2,797
                                             --------    --------    --------    --------
        Total profit before fixed expenses      1,812       3,698       8,414      15,057

Fixed expenses                                  4,320       4,780      12,480      15,874
                                             --------    --------    --------    --------
Operating loss                                 (2,508)     (1,082)     (4,066)       (817)
Interest expense                                 (351)       (418)     (1,061)     (1,821)
Other income                                       50          89         168         133
Gain on sale of professional salon brands        --         5,446        --         5,446
                                             --------    --------    --------    --------
Net (loss) income                            $ (2,809)   $  4,035    $ (4,959)   $  2,941
                                             ========    ========    ========    ========
9
Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE NINE MONTHS AND THREE MONTHS ENDED
           SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS AND THREE MONTHS ENDED
           SEPTEMBER 30, 1998

Historical Results of Operations

      Net sales for the nine months ended September 30, 1999 were $39.9 million
compared with $57.5 million for the same period in 1998, a decrease of $17.6
million or 30.6%. Net sales for the three months ended September 30, 1999 were
$10.1 million, compared with $15.0 million for the same period in 1998, a
decrease of $4.9 million or 32.7%. The decreases in net sales for the nine
months and three months ended September 30, 1999 are due to the decline in sales
of the Company's retail brands and to the disposition of the Company's salon
brands in July of 1998. Willow Lake(R), Style(R), Perma Soft(R), Color Soft(TM),
and Style Natural Reflections(TM) (retail brands) and the salon brands had sales
declines of $24.3 million during the nine months ended September 30, 1999, and
declines of $5.3 million during the three months ended September 30, 1999 as
compared with the same periods in 1998. Sales of Style(R) and Perma Soft(R) have
continued to decline since management began its turnaround efforts in the first
quarter of 1996. Management believes that sales of these and the Company's other
retail brands are likely to continue to decline. There were no sales of the
professional salon brands for the nine months and three months ended September
30, 1999 as a result of the sale of these brands to Zotos on July 31, 1998. The
Company continues to manufacture certain of these professional salon brands for
Zotos which are sold by the Custom Manufacturing Group at a lower markup over
cost.

      Partially offsetting the net sales declines incurred by the Company's
retail and salon brands was an increase in net sales of the Custom Manufacturing
Group. Net sales of the Custom Manufacturing Group increased $7.8 million and
$0.6 million for the nine months and three months ended September 30, 1999,
respectively, as compared with the same periods in 1998. The increase in sales
for the nine months ended September 30, 1999 is primarily due to increased
production of aerosol products in the second quarter of 1999. Management
believes that sales by the Custom Manufacturing Group for the nine months ended
September 30, 1999 are not indicative of future sales in 1999 as the increases
in net sales were due mainly to customers building inventory of their aerosol
products in response to new regulations taking effect on June 1, 1999 in
California limiting the amounts of volatile organic compounds allowed in aerosol
products. Aerosol products produced before the June 1, 1999 deadline are
permitted to be sold in California despite being produced under the less
restrictive guidelines.

      Gross margin as a percentage of net sales was 27.9% for the nine months
ended September 30, 1999, as compared with 41.8% for the same period in 1998.
Gross margin as a percentage of net sales was 22.8% for the three months ended
September 30, 1999, as compared with 40.2% for the same period in 1998. The
decline in the gross margin as a percentage of net sales for the nine months and
three months ended September 30, 1999 is principally due to Custom Manufacturing
Group sales, which are lower-margin sales, representing a greater percentage of
net sales in 1999. The Custom Manufacturing Group sales increased percentage is
a result of the sale of the professional salon brands to Zotos, the decrease in
the sales of the Company's retail brands, and the increase in Custom
Manufacturing aerosol sales.

      Selling, general and administrative expenses (SG&A) were $15.2 million or
38.1% of net sales for the nine months ended September 30, 1999, as compared
with $24.9 million or 43.3% of net sales for the same period in 1998, a decrease
of $9.7 million. SG&A expenses were $4.8 million or 47.5% of net sales for the
three months ended September 30, 1999 as compared with $7.1 million or 47.5% of
net sales for the same period in 1998, a decrease of $2.3 million. The decreases
are principally attributable to reduced marketing expenses of $5.3 million and
$1.2 million for the nine months and three months ended September 30, 1999,
respectively, and reduced freight and brokerage as a result of the decrease in
sales. In addition, personnel, travel and other expenses declined as a result of
the Company's cost cutting efforts and the sale of the professional salon brands
to Zotos. The Company's strategy in 1999 is to focus its limited resources to
support the Willow Lake(R) brand with consumer and retail trade promotions and
also to provide limited promotional support for the other retail brands. There
can be no assurance concerning the future performance of Willow Lake(R) and
other brands or the Company's ability to attain any particular level of sales or
to be profitable in the future with the lower level of marketing support.

      Interest expense decreased to $1.1 million for the nine months ended
September 30, 1999, as compared with $1.8 million in the same period in 1998.
Interest expense decreased to $0.3 million for the three months ended September
30, 1999 as compared with $0.4 million in the same period in 1998. The decrease
in interest expense is principally attributable to lower borrowings and lower
interest rates under the Company's revolving line of credit and term loans.

      On July 31, 1998, the Company sold its professional salon brands,
including inventory ($4.3 million) and trade names for net proceeds of $10.0
million to Zotos International Inc. This transaction resulted in a pretax gain
of approximately $5.4 million.

                                       10
As a result of the foregoing factors, the net loss for the nine months and
three months ended September 30, 1999 was $5.0 million and $2.8 million,
respectively, compared with net income of $2.9 million and $4.0 million,
respectively, for the same periods in 1998.

Liquidity and Capital Resources

      In May 1999, the Company entered into a three-year Loan and Security
Agreement with Congress Financial Corporation ("Congress") for a $20 million
loan facility. This facility consists of a revolving loan of up to $10.3 million
and term loans of $3.0 million and $6.7 million each. The $6.7 million term loan
is amortized over five years with monthly principal payments of $111,667. The
revolving loan and the term loans are payable in full in May 2002. The Company
incurred a closing fee of $200,000 in conjunction with the loan agreement,
$100,000 of which was paid at the loan closing, and $100,000 which is payable in
May 2000. Approximately $13.8 million of the proceeds from the Congress loans
were used to pay off the outstanding revolving line of credit and term loans
with the Company's former lender, Norwest Business Credit ("Norwest").

      As of September 30, 1999, the amounts outstanding under the Company's
revolving and two term loan facilities were $3.0 million, $3.0 million, and $6.4
million, respectively, as compared with $7.4 million under the revolving loan
and $3.1 million under the term loan with Norwest as of December 31, 1998. The
interest rates on the loans with Congress are variable and are tied to the prime
rate which at September 30, 1999 was 8.25%. At September 30, 1999, the interest
rate on the revolving loan and the $3.0 million term loan was 9.0% and the
interest rate on the $6.4 million term loan was 9.25%.

      The revolving loan and the term loans with Congress are secured by
virtually all of the assets of the Company. Additionally, the loan agreement
restricts the payment of dividends other than on the Company's Series B
Preferred Stock, restricts the Company's ability to incur additional
indebtedness and requires the Company to comply with certain financial loan
covenants. As of September 30, 1999, the Company was not in compliance with the
net worth covenant in its credit facility. The Company has obtained a waiver
from the lender. The Company anticipates it will be out of compliance with its
net worth loan covenant in October and is currently discussing this matter with
Congress to obtain a waiver. No assurance can be given that Congress will agree
to a waiver and therefore the obligations with Congress could be declared
immediately due and payable.

      Total accounts payable exceeding their normal payment terms were
approximately $4.9 million as of September 30, 1999. Because the Company
announced its intent to obtain financing through a new credit facility and/or
the sale of its manufacturing operations and related assets, major trade
creditors and other creditors have extended their "normal" terms to allow the
Company additional time to make payments. The Company is operating its business
to preserve working capital in order to pay the Company's current and extended
obligations. To date the Company has been able to make timely shipments to its
customers.

      In January 1999, the Company issued 1,369,800 shares of its Common Stock
to certain employees and directors. The stock grants were made in conjunction
with the cancellation of outstanding options held by employees and directors.
These shares have vesting schedules ranging from two years to two and one-half
years. The Company recorded compensation expense of approximately $168,000 in
connection with these stock grants. The Company has the right under certain
conditions to repurchase unvested shares at the market price on the date of
grant. 1,129,800 of the shares were issued pursuant to the Company's 1997 Stock
Plan. Management and the Board of Directors believed it was essential to offer
such a package in order to retain employees and preserve the value of the
enterprise while the Company evaluated and pursued alternatives.

      As of September 30, 1999, the Company was $900,000 in arrears on the
payment of dividends on its Series B Preferred Stock. The preferred stock
provides for an annual dividend of $400,000, payable in quarterly installments.

      On September 28, 1999, the Company entered into a Purchase and Sale
Agreement and Asset Purchase Agreement with Tiro Industries, Inc., subject to
stockholder approval. Assuming the stockholders approve that transaction and the
other closing conditions are satisfied, on the effective date of the sale of
assets (the "Closing Date"), the Company will sell and Tiro will acquire the
Company's manufacturing facility at 5601 East River Road, Fridley, Minnesota,
including real and personal property, for $13,250,000 in cash and the assumption
of approximately $745,000 in lease obligations. After the Closing Date, the
Company will continue its sales and marketing operations in a portion of the
facility at 5601 East River Road as a tenant of Tiro for a term of two years
pursuant to a lease agreement entered into with Tiro. The Company will retain
ownership of personal property necessary for sales and marketing operations.
Tiro will manufacture products for the Company for three years after the Closing
Date pursuant to a Manufacturing Agreement entered into with Tiro.

                                       11
Proceeds from the sale will be used exclusively to pay obligations to
Congress and to other creditors and for working capital. The proceeds from the
sale may not be sufficient to permit the Company to manage or satisfy its
existing obligations. The Company believes the reduction of expenses from
transferring manufacturing to a third party and the generation of cash from the
sale of the manufacturing facility present an opportunity for the Company to
bring liabilities in line with ongoing operations. However, the Company may not
be able to sustain operations following the sale.

      The Company's ability to continue operations is dependent on its ability
to generate sufficient cash flow to meet its obligations as they become due, to
comply with the terms and conditions of its loan agreement with Congress, to
complete the sale of its manufacturing facility, to reduce aged payables, to
reduce its cost structure, and attain sales and operating levels to be
profitable.

Year 2000

      Many computer systems were not designed to properly handle dates beyond
the year 1999. Additionally, these systems may not properly handle certain dates
in 1999. Failure to process dates properly could result in failure or disruption
of the Company's information systems and/or processing equipment. To be Year
2000 compliant, computer systems must correctly process dates before and after
the Year 2000, recognize the Year 2000 as a leap year, accept and display dates
unambiguously and correctly process dates for non-date functions such as
archiving.

      Disruptions to the Company's operations may also occur if key suppliers or
customers experience disruptions in their ability to purchase, supply or
transact with the Company due to Year 2000 issues. The Year 2000 readiness of
infrastructure suppliers (utilities, government agencies such as customs, and
shipping organizations) will be critical to the Company's ability to avoid
disruption of its operations.

      The Company installed an enterprise-wide software solution in December
1996. At that time, some modules of the system were not Year 2000 compliant. A
newer release of the same software is certified to be compliant by the software
vendor. During the third quarter of 1999, the Company completed its upgrade to
this newer release and tested the functionality and made the necessary
Company-specific modifications to the software. Final testing of the system will
be completed in the fourth quarter of 1999. The Company's contingency plan would
be to use the certified-compliant software without Company-specific
modifications. The computer operating system is certified to be Year 2000
compliant by the vendor.

      The Company is also reviewing its computer-dependent manufacturing
activities to determine the necessary hardware and software changes. For all
non-mainframe applications such as personal computers, production-related
equipment, etc., an inventory has been taken of the hardware and software
involved. The Company has researched the status of these items and determined a
course of action to assure compliance. This process is substantially complete as
of the end of the third quarter of 1999. The Company's electronic data
interchange system, which receives orders from its customers, has been certified
to be Year 2000 compliant by the software vendor.

      The Company will perform remediation procedures concurrently with its
assessment planning. The Company intends to use internal and external resources
to implement, replace and test software and related assets affected by the Year
2000 issue. The Company currently believes that the remediation costs of the
Year 2000 issue will not be material to the Company's results of operations or
financial position and will be absorbed by the Company through normal operating
budgets. The Company does not expect any incremental costs associated with its
Year 2000 remediation activities to be significant. Through September 30, 1999,
the Company has not incurred a material amount of remediation costs.

      The Company is working with key suppliers and customers to determine
whether the suppliers' operations and the products and services that they
provide are Year 2000 capable or to monitor their progress toward Year 2000
compliance. The Company has sent questionnaires to its suppliers who furnish
product or services to the Company. The Company may choose to identify those
suppliers it deems critical and pursue other methods of assuring readiness. The
Company is also in the process of surveying customers to determine the status of
their Year 2000 efforts.

      While the Company currently expects that the Year 2000 issue will not pose
significant operational problems, delays in adequately addressing Year 2000
issues, or a failure to fully identify all Year 2000 dependencies in the
Company's systems and in the systems of its suppliers, customers and financial
institutions could have material adverse consequences, including delays in the
production, delivery or sale of products. In addition, time and cost estimates
are based on currently available information and are management's best
estimates. However, no assurance can be given that these estimates will be
achieved, and actual results may differ materially from those anticipated.

                                       12
PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

      On November 2, 1998, a class action and derivative lawsuit was filed by
the stockholders (on behalf of themselves and the Company) in the Delaware Court
of Chancery in and for New Castle County alleging that the defendant Board of
Directors breached their fiduciary duties to the Company and failed to disclose
certain information in the Company's 1998 Proxy Statement. Plaintiffs seek
injunctive relief, damages, and a recision of all actions approved at the
November 2, 1998 Annual Meeting. In addition, the plaintiffs are seeking the
appointment of a receiver for the Company and changes in the disclosures to
correct what they allege are errors as well as costs and attorney's fees. The
Company believes the lawsuit is without merit and will defend the action in the
best interest of the stockholders. No discovery has been commenced against the
Company, only minimal discovery has been conducted by plaintiffs, and no
significant dates have been set in the litigation.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

      In January 1999, the Company issued 1,369,800 shares of its Common Stock
to certain employees and directors. The stock grants were made in conjunction
with the cancellation of outstanding options held by employees and directors.
These shares have vesting schedules ranging from two years to two and one-half
years. The Company recorded compensation expense of approximately $168,000 in
connection with these stock grants. The Company has the right under certain
conditions to repurchase unvested shares at the market price on the date of
grant. 1,129,800 of the shares were issued pursuant to the Company's 1997 Stock
Plan. Management and the Board of Directors believed it was essential to offer
such a package in order to retain employees and preserve the value of the
enterprise while the Company evaluated and pursued alternatives.

Item 3. DEFAULTS UPON SENIOR SECURITIES

      On September 30, 1999, the Company failed to pay a dividend of $100,000 on
its Series B Preferred Stock and is in arrears in the aggregate amount of
$900,000.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

Item 5. OTHER INFORMATION

      None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits:

            27    Financial Data Schedule

      (b)   Reports on Form 8-K:

            None

                                       13
SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    THE LAMAUR CORPORATION
                                         (Registrant)

                                    /s/    John D. Hellmann
                                    --------------------------------------------
   DATE:  November 15, 1999         JOHN D. HELLMANN
                                    Vice President - Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

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