<PAGE> 1
FORM 10-Q
Securities and Exchange Commission
Washington D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended: NOVEMBER 30, 1996
Commission file number: 0-21161
Q.E.P. CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2983807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1081 Holland Drive
Boca Raton, Florida 33487
(Address of principal executive offices)
(Zip Code)
(561) 994-5550
(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
----- -----
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of January 10, 1997: 2,654,894 shares of common
stock, par value $.001 per share.
<PAGE> 2
Q.E.P. CO., INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets -
November 30, 1996 and February 29, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income -
For the Nine and Three Months Ended November 30, 1996 and 1995 . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
For the Nine Months Ended November 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . 8
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<PAGE> 3
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1996 AND FEBRUARY 29, 1996
<TABLE>
<CAPTION>
November 30, 1996 February 29, 1996
----------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . $ 5,596,239 $ 179,138
Accounts receivable, less allowance
for doubtful accounts of $54,500 at
November 30, 1996 and February 29,
1996 . . . . . . . . . . . . . . . 4,845,031 3,580,554
Inventories . . . . . . . . . . . . . 4,255,573 3,138,681
835,918 350,443
Other current assets . . . . . . . . ----------- -----------
Total current assets . . . . . . . 15,532,761 7,248,816
PROPERTY AND EQUIPMENT - net . . . . . . . 305,975 266,610
DEFERRED INCOME TAXES . . . . . . . . . . . 88,500 84,000
251,169 280,538
OTHER ASSETS . . . . . . . . . . . . . . . ----------- -----------
$16,178,405 $ 7,879,964
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities . . . . . . . . . . . . $ 2,929,523 $ 1,820,555
Loans payable . . . . . . . . . . . . 9,447 2,447,887
Other current liabilities . . . . . . 64,979 49,109
----------- -----------
Total current liabilities . . . . 3,003,949 4,317,551
OTHER LIABILITIES . . . . . . . . . . . . . 150,137 137,088
COMMITMENTS . . . . . . . . . . . . . . . .
STOCKHOLDERS' EQUITY:
Preferred stock, 2,500,000 shares
authorized, $1.00 par value;
336,660 and 503,047 shares issued
and outstanding at November 30,
and February 29, 1996, respectively
336,660 503,047
Common stock, 10,000,000 shares
authorized, $.001 par value;
2,654,894 and 1,500,000 issued and
outstanding at November 30, and
February 29, 1996, respectively . 2,655 1,500
Additional paid-in capital . . . . . 8,489,425 30,762
Retained earnings . . . . . . . . . . 4,253,479 2,947,916
(57,900) (57,900)
Cost of stock held in treasury . . . ----------- -----------
$16,178,405 $ 7,879,964
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 4
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE AND THREE MONTHS ENDED NOVEMBER 30,
1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
------------------------------ -------------------------------
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . $24,562,804 $18,392,990 $8,619,166 $6,356,528
Costs of goods sold . . . . . . . 15,583,232 11,797,883 5,475,564 3,924,654
----------- ----------- ---------- ----------
Gross profit . . . . . . . 8,979,572 6,595,107 3,143,602 2,431,874
Costs and expenses
Shipping . . . . . . . . . 1,714,685 1,084,741 599,362 417,103
General and administrative 2,594,772 2,268,300 992,585 825,725
Selling and marketing . . . 2,454,307 1,824,053 838,842 638,254
Foreign exchange losses, net 11,620 9,398
----------- ----------- ---------- ----------
Operating income . . . . . 2,204,188 1,418,013 703,415 550,792
Interest expense (income) . . . . 61,723 143,463 (15,785) 45,149
----------- ----------- ---------- ----------
Income before provision for
income taxes . . . . . . . 2,142,465 1,274,550 719,200 505,643
Provision for income taxes . . . 824,800 500,900 285,600 172,500
----------- ----------- ---------- ----------
NET INCOME . . . . . . . . $ 1,317,665 $ 773,650 $ 433,600 $ 333,143
=========== =========== ========== ==========
Primary and fully diluted
net income per common
share . . . . . . . . . . . $ 0.70 $ 0.51 $ 0.18 $ 0.22
Weighted average number
of shares outstanding . . . 1,871,000 1,510,000 2,390,000 1,500,000
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 5
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1996
AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------------
November 30, November 30,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . $1,317,665 $ 773,650
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities
Depreciation and amortization . . . . . . . 91,432 76,148
Amortization of fair market value in
excess of cost of business acquired . . . . (22,500)
Deferred income taxes . . . . . . . . . . . (4,500)
Accounts receivable . . . . . . . . . . . . (1,264,477) (637,016)
Inventories . . . . . . . . . . . . . . . . (1,116,892) (436,905)
Other current assets . . . . . . . . . . . . (485,475) (275,928)
Other assets . . . . . . . . . . . . . . . . 51,869 32,412
Accounts payable and accrued liabilities . . 460,909 (518,754)
----------- ----------
Net cash (used in) operating activities . . (971,969) (986,393)
Cash flows from investing activities
Capital expenditures . . . . . . . . . . . . . . . . (130,797) (7,845)
Net cash (used in) investment ----------- ----------
activities . . . . . . . . . . . . . . . . . (130,797) (7,845)
Cash flow from financing activities
Redemption of preferred stock . . . . . . . (166,387) (64,500)
Net borrowings under line of credit . . . . (2,438,440) 1,047,820
Net borrowings (payments) of debt . . . . . (7,173) 315
Cash overdraft . . . . . . . . . . . . . . . 684,151
Issuance of Common Stock . . . . . . . . . . 8,459,818
Dividends . . . . . . . . . . . . . . . . . (12,102) (16,653)
Purchase of treasury stock . . . . . . . . . (57,900)
Net cash provided by financing ----------- ----------
activities . . . . . . . . . . . . . . . . 6,519,867 909,082
NET INCREASE IN CASH . . . . . . . . . . . $5,417,101 $ (85,156)
Cash and cash equivalents at beginning of period 179,138 114,767
----------- ----------
Cash and cash equivalents at end of period . . . . . $5,596,239 $ 29,611
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 6
Q.E.P. CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIODS ENDED NOVEMBER 30, 1996 AND 1995
Note 1. Basis of Presentation.
The accompanying financial statements for the interim periods are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the periods
presented. These financial statements should be read in conjunction with the
financial statements and notes thereto, together with Management's Discussion
and Analysis of Financial Condition and Results of Operations, contained in
Amendment 3 to the Registration Statement on Form S-1 of Q.E.P. Co., Inc. (the
"Company") (Registration No. 333-7477), filed with the Securities and Exchange
Commission on September 16, 1996. The results of operations for the nine and
three months ended November 30, 1996 are not necessarily indicative of the
results for the full fiscal year ending February 28, 1997.
The Company invests cash in excess of anticipated current operational
requirements in commercial paper with a maturity of 90 days or less and rated
AA or higher. The Company states the value of such investments at market price
and classifies them as cash equivalents on its balance sheet.
This report contains forward looking statements which involve risks and
uncertainties and are made pursuant to the safe harbor provisions of the
Securities Litigation Reform Act of 1995. The Company's actual results may
differ significantly from the results discussed in the forward looking
statements.
Note 2. Initial Public Offering.
On September 17, 1996 the Company completed an initial public offering of
1,000,000 shares of its common stock, par value $.001 per share ("Common
Stock"), at an initial offering price of $8.50 per share and 120,000 warrants
to purchase Common Stock at an exercise price of $10.20 per share with an
offering price of $.001 per warrant (the "Offering"). On November 6, 1996 the
underwriters exercised their over-allotment rights and purchased an additional
150,000 shares of Common Stock of the Company at a price of $8.50 per share.
The net proceeds from the Offering and the exercise of the over-allotment
option were approximately $8,459,000. The Company used $2,287,000 of the
proceeds from the Offering to retire existing bank debt. The Company intends
to use the remaining net proceeds to finance inventory purchases and accounts
receivable, for capital improvements for the expansion and upgrading of
existing facilities, to purchase or lease additional manufacturing equipment,
and for general corporate purposes and the possible investment in, strategic
acquisition of, or joint venture with, other businesses, as well as possible
acquisition of other product lines. There can be no assurance that any
acquisition will become available on terms acceptable to the Company. The
Company does not have any agreements for such investments, acquisitions, joint
ventures or product line acquisitions in place at this time.
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<PAGE> 7
Note 3. Inventories.
The major classes of inventories are as follows:
<TABLE>
<CAPTION>
November 30, 1996 February 29, 1996
----------------- -----------------
(Unaudited)
<S> <C> <C>
Raw materials and work-in-process $ 739,679 $ 376,433
Finished goods 3,515,894 2,762,248
---------- ----------
$4,255,573 $3,138,681
========== ==========
</TABLE>
Note 4. Net Income per Common Share.
Primary and fully diluted net income per common share is computed using
the weighted average number of common shares outstanding adjusted for the
dilutive effects of common share equivalents, where applicable. The
computation reduces the net income available per common share by the amount of
preferred stock dividends.
On September 17, 1996, the Company used a portion of the net proceeds from
the Offering (see Note 2) to retire $2,287,000 of bank debt. Had the
retirement of debt occurred on March 1, 1996, net income per common share for
the nine months ended November 30, 1996, would have been $.66.
Note 5. Supplemental Cash Flows.
Supplemental cash flow information for the periods is as follows:
<TABLE>
<CAPTION>
Nine months ended November 30,
--------------------------------
(Unaudited)
1996 1995
<S> <C> <C>
Interest Paid . . . . . . . . . . . . . . . . . $ 84,235 $147,261
Income taxes paid . . . . . . . . . . . . . . . 681,026 682,352
</TABLE>
Note 6. Subsequent Events
Stock Option Plan. The Company's 1996 Incentive Stock Option Plan (the
"Plan") provides for the grant of options to purchase Common Stock to
employees, consultants, and directors of the Company, as authorized by the
Board of Directors. The aggregate number of shares which may be issued under
the Plan may not exceed 250,000 shares of Common Stock. As of November 30,
1996, the Company had granted options to purchase an aggregate of 175,550
shares of Common Stock pursuant to the Plan.
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<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company manufactures, markets and distributes a broad line of
specialty tools and related products for the home improvement market. The
Company markets over 4,000 products primarily used for surface preparation and
installation of ceramic tile, carpet, marble, masonry, drywall and paint. The
Company's products are sold through home improvement retailers, specialty
distributors, original equipment manufacturers and chain or independent
hardware, tile, carpet and painting retailers for use by the do-it-yourself
consumer as well as the construction or remodeling professional.
RESULTS OF OPERATIONS
Nine months ended November 30, 1996 compared to nine months ended November
30, 1995
Net sales for the nine months ended November 30, 1996 (the "fiscal
1997 period") were approximately $24,563,000, compared to $18,393,000 for the
nine months ended November 30, 1995 (the "fiscal 1996 period"), an increase of
$6,170,000 or 33.5%. The increase is primarily the result of increased sales
to home centers, specialty retailers and independent distributors, resulting
from increased market penetration, new store openings by major home center
chain customers and new product activity.
Gross profit for the fiscal 1997 period was approximately $8,980,000,
compared to $6,595,000 for the fiscal 1996 period, an increase of $2,385,000 or
36.2%. As a percentage of net sales, gross profit increased to 36.6% in the
fiscal 1997 period from 35.9% in the fiscal 1996 period. The increase in gross
profit margin was due primarily to the Company's ability to secure
comparatively lower cost foreign suppliers, achieve volume discounts from
existing suppliers and manufacture certain items at a lower cost than what was
historically paid to outside suppliers.
Shipping expenses for the fiscal 1997 period were approximately
$1,715,000, compared to $1,085,000 for the fiscal 1996 period, an increase of
$630,000 or 58.1%. As a percentage of net sales these expenses increased to
7.0% in the fiscal 1997 period from 5.9% in the fiscal 1996 period. The
increase in these expenses was primarily due to higher staff levels and
increased freight and shipping supply costs to support the higher sales levels.
General and administrative expenses for the fiscal 1997 period were
approximately $2,595,000, compared with $2,268,000 for the fiscal 1996 period,
an increase of $327,000 or 14.4%. As a percentage of net sales, these
expenses decreased to 10.6% in the fiscal 1997 period from 12.3% in the fiscal
1996 period. The increase in expenses was primarily attributable to higher
administrative costs associated with the Company's growth. The decrease in the
percentage is a result of efficiencies obtained from the consolidation of
operations. During the quarter the Company began the process of consolidating
its operations located in Carson City, Nevada, Pompano Beach, Florida and the
two locations in Boca Raton, Florida, into one facility in Boca Raton. While
these relocations were substantially completed by November 30, 1996, the
Company still occupied one of the old facilities in Boca Raton.
Selling and marketing costs for the fiscal 1997 period were
approximately $2,454,000, compared to $1,824,000 for the fiscal 1996 period, an
increase of $630,000 or 34.5%. As a percentage of net sales, these expenses
increased to 10.0% in the fiscal 1997 period from 9.9% in the fiscal 1996
period. The increase was primarily attributable to greater customer
participation in the Company's co-op advertising program and higher sales
administrative expenses related to the Company's participation in electronic
ordering and invoicing (EDI) programs of certain of its home center customers.
Interest expense for the fiscal 1997 period was approximately $62,000,
compared to $143,000 for the fiscal 1996 period, a decrease of $81,000 or
56.6%. As a percentage of net sales, interest expense decreased to 0.3%
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<PAGE> 9
in the fiscal 1997 period from 0.8% in the fiscal 1996 period. The primary
reason for the decrease was the application of a portion of the proceeds from
the Company's initial public offering to the repayment of the Company's bank
debt.
Provision for income taxes was approximately $825,000 in the fiscal
1997 period, compared to $501,000 in the fiscal 1996 period, an increase of
$324,000 or 64.7%. The effective tax rate was approximately 38.5% in the fiscal
1997 period, compared to 39.3% in the fiscal 1996 period. The change in the
effective tax rate reflects a reduction in the provision for income taxes in
the fiscal 1997 period based upon the most recent effective tax rates.
As a result of the above, net income for the fiscal 1997 period
increased to $1,318,000 from $774,000 in the fiscal 1996 period, an increase of
$544,000 or 70.3%. This represents an increase in net income as a percentage
of net sales to 5.4% in the fiscal 1997 period from 4.2% in the fiscal 1996
period.
Three months ended November 30, 1996 compared to three months ended
November 30, 1995
Net sales for the three months ended November 30, 1996 (the "fiscal
1997 period") were approximately $8,619,000, compared to $6,357,000 for the
three months ended November 30, 1995 (the "fiscal 1996 period"), an increase of
$2,262,000 or 35.6%. The increase is primarily attributable to increased sales
to home centers, specialty retailers and independent distributors resulting
from greater market penetration and new store openings by major home center
chain customers.
Gross profit for the fiscal 1997 period was approximately $3,144,000,
compared to $2,432,000 in the fiscal 1996 period, an increase of $712,000 or
29.3%. As a percentage of net sales, gross profit decreased to 36.5% in the
fiscal 1997 period from 38.3% in the fiscal 1996 period. The decrease is
primarily attributable to a higher customer return allowance taken in the
current period as a result of increased market penetration with a major home
center customer.
Shipping expenses for the fiscal 1997 period were approximately $599,000,
compared to $417,000 for the fiscal 1996 period, an increase of $182,000 or
43.6%. As a percentage of net sales, these expenses increased to 6.9% in the
fiscal 1997 period from 6.6% in the fiscal 1996 period. The primary causes for
this increase are higher staff levels and freight costs driven by the increased
sales.
General and administrative expenses for the fiscal 1997 period increased
to $993,000 from $826,000 in the fiscal 1996 period, an increase of $167,000 or
20.2%. The primary cause of the increase was increased staff levels associated
with the Company's growth. As a percentage of net sales, these expenses
decreased to 11.5% in the fiscal 1997 period from 13.0% in the fiscal 1996
period. This improvement is the result of fixed costs being spread over a
greater sales base.
Selling and marketing expenses were approximately $839,000 in the fiscal
1997 period, compared to $638,000 in the fiscal 1996 period, an increase of
$201,000 or 31.5%. The primary reason for the increases are higher staff
levels, sales commissions and related travel costs, along with an increase in
co-op advertising expenses. As a percentage of net sales, these expenses
decreased to 9.7% in the fiscal 1997 period from 10.0% in the fiscal 1996
period. This improvement is the result of the efficiencies now being obtained
from the staff increases which began during the fiscal 1996 period.
Interest income was approximately $16,000 in the fiscal 1997 period,
compared to interest expense of $45,000 in the fiscal 1996 period. The
improvement is primarily the result of the retirement of bank debt and an
increase in the Company's interest earning cash balances resulting from the
receipt of proceeds of its initial public offering.
Provision for income taxes was approximately $286,000 in the fiscal 1997
period, compared to $173,000 in the fiscal 1996 period, an increase of $113,000
or 65.3%. The effective tax rate was approximately 39.8% in the
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<PAGE> 10
fiscal 1997 period compared to 34.2% in the fiscal 1996 period. The change in
the effective tax rate reflects the tax based upon the most recent effective
tax rates available.
As a result of the above, net income for the fiscal 1997 period was
approximately $434,000, compared to $333,000 for the fiscal 1996 period, an
increase of $101,000 or 30.3%. This represents a decrease in net income as a
percentage of net sales to 5.0% in the fiscal 1997 period from 5.2% in the
fiscal 1996 period.
LIQUIDITY AND CAPITAL RESOURCES
On September 17, 1996 the Company completed an initial public offering
of 1,000,000 shares of its common stock, par value $.001 per share ("Common
Stock") at an initial offering price of $8.50 per share and 120,000 warrants to
purchase Common Stock at an exercise price of $10.20 per share with an offering
price of $.001 per warrant (the "Offering"). On November 6, 1996 the
underwriters exercised their over-allotment rights and purchased an additional
150,000 shares of Common Stock at a price of $8.50 per share. The net proceeds
from the Offering and the exercise of the over-allotment option were
approximately $8,459,000. The Company used $2,287,000 of the proceeds from the
Offering to retire existing bank debt. The Company intends to use the
remaining net proceeds to finance inventory purchases and accounts receivable,
for capital improvements for the expansion and upgrading of existing
facilities, to purchase or lease additional manufacturing equipment, and for
general corporate purposes including the possible investment in, strategic
acquisition of, or joint venture with, other businesses, as well as the
possible acquisition of other product lines. There can be no assurance that
any acquisition will become available on terms acceptable to the Company. The
Company does not have any agreements for such investments, acquisitions, joint
ventures or product line acquisitions in place at this time.
Working capital for the nine month period ended November 30, 1996
increased from approximately $2,931,000 at February 29, 1996 to $12,529,000 at
November 30, 1996, an increase of $9,598,000 or 327.5%, primarily as a result
of the completion of the Offering. The Company invests cash in excess of
anticipated current operational requirements in commercial paper rated AA or
higher. The Company states the value of such investments at market price.
The Company has a bank line of credit facility (the "Facility") which
permits borrowings of up to $3,250,000 as revolving credit against a fixed
percentage of eligible accounts receivable and inventory, as defined in the
Facility. Interest is charged on the outstanding principal at the bank's base
lending rate plus 1/2% or the LIBOR plus 225 basis points. The Company
presently has no outstanding balance under the Facility. The Facility
terminates June 30, 1998.
-10-
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings to which the Company
or any of its subsidiaries is a party, nor are any such proceedings known by
the Company to be contemplated by governmental authorities.
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
3.1 Certificate of Incorporation of the Company*
3.2 By-Laws of the Company*
4.1 Specimen Common Stock Certificate**
27 Financial Data Schedule (SEC use only)
</TABLE>
- ---------------------
* Filed with the Company's Registration Statement on Form S-1
(Registration No. 333-7477), filed on July 2, 1996, and incorporated herein by
reference.
** Filed with Amendment No. 2 to the Company's Registration Statement on
Form S-1 (Registration No. 333-7477), filed on August 5, 1996, and incorporated
herein by reference.
(b) Reports on Form 8-K.
There were no Current Reports on Form 8-K filed by the Company during
its fiscal quarter ended November 30, 1996.
-11-
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Q.E.P. CO., INC
Dated: January 10, 1997 By: /s/Lewis Gould
-----------------------------------
Lewis Gould, President
(Duly Authorized Officer)
Dated: January 10, 1997 By: /s/Patrick L. Daggett
-----------------------------------
Patrick L. Daggett
(Chief Financial Officer)
-12-
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
<S> <C> <C>
3.1 Certification of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . *(1) Exh. 3.1.1
3.2 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *(1) Exh. 3.2.1
4.1 Form of Common Stock Certificate $.001 par value* . . . . . . . . . . . . . . . *(2) Exh. 4.1
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . *(3)
</TABLE>
- ---------------
*(1) Incorporated herein by reference to the exhibit listed above in the
Company's Registration Statement on Form S-1 (File No. 333-7477),
filed on July 2, 1996.
*(2) Incorporated herein by reference to the exhibit listed above in
Amendment No. 2 to the Company's Registration Statement on Form S-1
(File No. 333-7477), filed on August 5, 1996.
*(3) Filed electronically pursuant to Item 401 of Regulation S-T.
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS CONTAINED THEREIN.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 5,596,239
<SECURITIES> 0
<RECEIVABLES> 11,899,531
<ALLOWANCES> 54,500
<INVENTORY> 4,255,573
<CURRENT-ASSETS> 15,532,761
<PP&E> 305,975
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,178,405
<CURRENT-LIABILITIES> 3,003,949
<BONDS> 0
2,655
0
<COMMON> 336,660
<OTHER-SE> 12,685,004
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<TOTAL-REVENUES> 24,562,804
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<INCOME-TAX> 824,800
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<EPS-PRIMARY> .70
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</TABLE>
