<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the quarterly period ended: February 29, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the transition period from to
-------------- --------------
Commission File Number 0-13851
NITCHES, INC.
(Exact name of registrant as specified in its charter)
California 95-2848021
(State of Incorporation) (I.R.S. Employer Identification No.)
10280 Camino Santa Fe, San Diego, California 92121
(Address of principal executive offices)
Registrant's telephone number, including area code: (619) 625-2633
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
--- ---
As of April 11, 1996, 1,210,296 shares of the Registrant's common stock were
outstanding.
Page 1 of 16
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NITCHES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
February 29, August 31,
1996 1995
(Unaudited)
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,578 $10,485,189
Receivables:
Trade accounts, less allowance
for doubtful accounts ($441,000
at February 29, 1996 and
$333,000 at August 31, 1995) 8,883,874 10,240,864
Income taxes receivable 458,789
Due from affiliates and employees 17,891 19,006
----------- -----------
8,901,765 10,718,659
Inventories 8,082,034 6,679,522
Deferred income taxes 1,805,152 1,479,673
Other current assets 343,480 608,126
----------- -----------
Total current assets 19,137,009 29,971,169
Furniture, fixtures and equipment 373,742 407,217
Other assets 510,468 587,193
----------- -----------
$20,021,219 $30,965,579
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable 656,749
Accounts payable and
accrued expenses $ 5,675,031 $8,433,214
Income taxes payable 65,477
----------- -----------
Total current liabilities 6,397,257 8,433,214
Deferred income taxes 1,095,858 1,095,858
Shareholders' equity:
Preferred stock, no par value,
25,000,000 shares authorized
Common stock, no par value,
50,000,000 shares authorized;
issued and outstanding (1,210,296
at February 29, 1996 and
2,398,224 at August 31, 1995) 2,660,039 12,586,793
Retained earnings 9,868,065 8,849,714
----------- -----------
Total shareholders' equity 12,528,104 21,436,507
----------- -----------
$20,021,219 $30,965,579
=========== ===========
</TABLE>
2
<PAGE> 3
NITCHES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Second quarter ended Six months ended
---------------------------- ----------------------------
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $16,032,039 $21,227,142 $29,365,723 $41,038,962
Cost of goods sold 11,203,344 15,547,802 21,433,212 30,774,219
----------- ----------- ----------- -----------
Gross profit 4,828,695 5,679,340 7,932,511 10,264,743
Expenses:
Selling, general
and administrative 3,396,507 4,966,878 6,826,634 9,815,942
----------- ----------- ----------- -----------
Income (loss) from
operations 1,432,188 712,462 1,105,877 448,801
Interest income 48,764 62,490 145,590 104,742
Interest expense (9,575) (9,575) (2,221)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 1,471,377 774,952 1,241,892 551,322
Provision (benefit)
for income taxes 301,566 307,185 223,541 213,794
----------- ----------- ----------- -----------
Net income (loss)
before minority
interest 1,169,811 467,767 1,018,351 337,528
Minority interest in
loss of subsidiary (55,100)
----------- ----------- ----------- -----------
Net income (loss) $ 1,169,811 $ 467,767 $ 1,018,351 392,628
=========== =========== =========== ===========
Net income (loss)
per common share $.97 $.19 $.84 $.16
=========== =========== =========== ===========
Weighted average
number of shares
outstanding 1,210,296 2,445,224 1,210,296 2,470,197
=========== =========== =========== ===========
</TABLE>
3
<PAGE> 4
NITCHES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended February 29 and 28
-----------------------------------
1996 1995
------------ ----------
<S> <C> <C>
Net cash provided (used) by
operating activities $(1,155,450) $3,820,064
------------ ----------
Cash flows from investing activities:
Capital expenditures ( 55,156) (223,689)
------------ ----------
Net cash (used) by
investing activities ( 55,156) (223,689)
------------ ----------
Cash flows from financing activities:
Net borrowings (repayments) under
line of credit and short-term
loan agreements 656,749 (3,000,000)
Proceeds from exercise of
stock options 5,152
Purchases and retirement of
subsidiary shares by subsidiary (17,684) (4,628,855)
Purchases of subsidiary
shares by parent (250,000) (385,099)
Purchases and retirement of
parent common stock (9,664,222) (292,180)
------------ ----------
Net cash used by financing
activities (9,270,005) (8,306,134)
------------ ----------
Net (decrease) in cash and
cash equivalents (10,480,611) (4,709,759)
Cash and cash equivalents
at beginning of period 10,485,189 6,565,813
----------- ----------
Cash and cash equivalents
at end of period $ 4,578 $1,856,054
=========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $ 9,300 $ 17,750
Income taxes $ 8,988 $ 23,401
</TABLE>
4
<PAGE> 5
NITCHES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Effective December 21, 1995, the Company amended its Articles of
Incorporation to change the Company's name from Beeba's Creations, Inc. to
Nitches, Inc. Effective December 22, 1995, the Company's stock symbol on NASDAQ
was changed to "NICH".
2. Condensed Consolidated Financial Statements:
The consolidated balance sheet as of February 29, 1996, and the
consolidated statements of operations for the three and six months ended
February 29, 1996 and February 28, 1995 and the condensed consolidated cash flow
statements for the six months ended February 29, 1996 and February 28, 1995 have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations and
cash flows at February 29, 1996 and for all periods presented have been made.
The results of operations for the periods ended February 29, 1996 and February
28, 1995 are not necessarily indicative of the operating results for the full
years.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's August 31, 1995 audited financial statements.
3. Earnings Per Share:
At February 29, 1996 and February 28, 1995, outstanding options were either
antidilutive or diluted earnings per share by less than 3%, and, accordingly,
were not included in the weighted average number of shares outstanding for these
periods.
4. Inventories:
<TABLE>
<CAPTION>
February 29, August 31,
1996 1995
------------ -----------
<S> <C> <C>
Fabric and trims $1,704,136 $1,316,292
Finished goods 6,377,898 5,363,230
---------- ----------
$8,082,034 $6,679,522
========== ==========
</TABLE>
5
<PAGE> 6
NITCHES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
5. Notes Payable:
At February 29, 1996, the Company had agreements with a financial
institution pursuant to which the Company sells substantially all of its trade
accounts receivable to the financial institution on a pre-approved non-recourse
basis. The Company can request advances in anticipation of customer collections
at the lender's prime rate plus one percent or LIBOR plus two percent, borrow on
an acceptance basis at rates which vary in accordance with the prevailing market
rate for such acceptances and open letters of credit through the lender, all of
which are collateralized by all of the Company's assets. Notes payable and
contingent liabilities for irrevocable letters of credit outstanding are as
follows:
<TABLE>
<CAPTION>
February 29, August 31,
1996 1995
------------ ----------
<S> <C> <C>
Notes payable $ 656,749
Contingent liabilities for
irrevocable letters of credit $ 6,225,306 $10,746,558
</TABLE>
6. Litigation:
On August 8, 1994, a class action lawsuit was filed in the San Diego
Superior Court against the Company, its Body Drama subsidiary and certain former
and present directors and officers of Body Drama seeking to enjoin Body Drama's
tender offer for its shares and to recover certain unspecified damages on the
basis of alleged breaches of fiduciary duty by the defendants. The court denied
the plaintiffs' claim for injunctive relief and the tender offer closed on
September 21, 1994. On January 20, 1995, the court dismissed two of the four
causes of action claimed by the plaintiff in the lawsuit.
Although management believes that the remaining allegations of the
complaint are without merit, a settlement has been reached for an amount less
than the projected reasonable cost of defense. A stipulation for the settlement
has been filed with the court. The plaintiff class is being notified, after
which a hearing will be set for final approval of the settlement terms.
7. Restructuring Reserve:
In the fourth quarter of fiscal 1995, the Company recorded a
6
<PAGE> 7
restructuring charge of $1.8 million, of which approximately $1.5 million was
accrued in trade accounts and other payables at August 31, 1995. Amounts charged
against this liability during the six months ended February 29, 1996 include
employee severance payments ($685,000), lease and related facility payments
($158,000) and other miscellaneous items ($12,000). Payment of the remaining
lease liability and related payments for the Company's former office and
warehouse facility will extend through August 1996. The balance of this
restructuring reserve was approximately $690,000 at February 29, 1996.
8. Tender Offer:
On September 1, 1995, the Company purchased and retired 1,200,000 shares of
its common stock at $8 per share in connection with a tender offer by the
Company. The aggregate cost of the shares, including legal and other costs
associated with the tender offer, was approximately $9.7 million.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
SIX MONTHS ENDED FEBRUARY 29, 1996 COMPARED TO THE SIX MONTHS ENDED FEBRUARY 28,
1995.
Net sales for the six months ended February 29, 1996 decreased
approximately $11.7 million (28.4%) as compared to the six months ended February
28, 1995. In August 1995, the Company sold various assets and licensed certain
tradenames associated with its junior, girls and maternity product lines. On
October 31, 1995 the Company ceased purchasing garments which had previously
been sold under the tradenames licensed to the buyer. The Company's sales of
these products amounted to $3.0 million in the six months ended February 29,
1996 and $10.8 million in the quarter ended February 28, 1995. Overall, sales
decreased in the current quarter due to a 42.2% decrease in the number of
garments offset by a 22.1% increase in the average selling price per garment.
Gross margins increased from 25% for the six months ended February 28, 1995
to 27% for the current six month period as a result of the sale of the lower
gross margin business described above.
The Company's product mix constantly changes to reflect customer mix,
fashion trends and changing seasons. Consequently, gross margins are likely to
vary on a quarter-to-quarter basis and in comparison to gross margins generated
in the same period of prior fiscal years.
7
<PAGE> 8
Selling, general and administrative expenses decreased in dollar amount
from $9.8 million for the first six months of last year to $6.8 million for the
first six months of fiscal 1996, and decreased as a percent of net sales from
23.9% last year to 23.2% for the current period. The decrease in dollar amount
reflects the Company's recent restructuring.
Interest expense increased in the current period compared to the first six
months of last year due to the Company's increased usage of its short term line
of credit. Interest income increased in the current period due to increases in
the average daily cash balances.
In the first quarter of fiscal 1995, the Company's Body Drama subsidiary
completed a tender offer and retired 92% of its publicly owned shares. The
Company subsequently purchased the remaining outstanding shares of Body Drama
and thereafter owned 100% of Body Drama. Consequently, there is no minority
interest through the second quarter of fiscal 1996.
THREE MONTHS ENDED FEBRUARY 29, 1996 COMPARED TO THE THREE MONTHS ENDED FEBRUARY
28, 1995.
Net sales for the second quarter of fiscal 1996 decreased approximately
$5.2 million (24.5%) compared to the net sales for the same quarter last year.
In August 1995, the Company sold various assets and licensed certain tradenames
associated with its junior, girls and maternity product lines. On October 31,
1995 the Company ceased purchasing garments which had previously been sold under
the tradenames licensed to the buyer. The Company's sales of these products
amounted to $65,000 in the quarter ended February 29, 1996 and $4.8 million in
the quarter ended February 28, 1995. Overall, sales decreased in the current
quarter due to a 39.8% decrease in the number of garments offset by a 28.2%
increase in the average selling price per garment.
Gross margins increased from 26.8% for the three months ended February 28,
1995 to 30.1% for the current quarter as a result of the sale of the lower gross
margin business described above.
Selling, general and administrative expenses decreased in dollar amount
from $5.0 million for the second quarter of last year to $3.4 million for the
second quarter of fiscal 1996, and decreased as a percent of net sales from
23.3% last year to 21.2% for the current quarter. The decrease in dollar amount
reflects the Company's recent restructuring.
The Company utilized its short-term line of credit during the second
quarter of fiscal 1996 and therefore incurred interest expense in the current
quarter. Interest income decreased in the current quarter due to the decrease in
the average daily cash
8
<PAGE> 9
balances.
Liquidity and Capital Resources
Except as described under "Other Information - Future Customer Credit
Risk", at February 29, 1996, the Company had agreements with a financial
institution pursuant to which the Company generally sells and assigns
substantially all of its trade accounts receivable to the financial institution
on a pre-approved non-recourse basis. Occasionally, the Company ships
merchandise to customers and does not sell the resulting receivables to the
financial institution. Such shipments are generally made on a COD basis or are
backed by a commercial or standby letter of credit issued by the customer's
bank. The amount of the Company's receivables which were not sold to the
financial institution and were not made on a COD basis or supported by
commercial or standby letters of credit at February 29, 1996 was approximately
$1,025,000 of which $407,000 has been collected through April 11, 1996.
Payment for receivables which are sold to the financial institution is made
at the time customers make payment to the financial institution or, if a
customer is financially unable to make payment, within approximately 180 days of
the invoice due date. The Company may request advances in anticipation of
customer collections at the lender's prime rate plus one percent or LIBOR plus
two percent, borrow on an acceptance basis at rates which vary in accordance
with the prevailing market rate for such acceptances and open letters of credit
through the lender. The amount of such borrowings, including a portion of
outstanding letters of credit, are limited to certain percentages of outstanding
accounts receivable and finished goods inventory owned by the Company and are
collateralized by all of the assets of the Company. At February 29, 1996, the
Company had outstanding letters of credit of $6,225,306 which had been opened
through the financial institution. Under these agreements, the Company is
required to maintain certain levels of net worth and working capital.
On September 1, 1995, the Company purchased and retired 1,200,000 shares of
its common stock at $8 per share in connection with a tender offer by the
Company. The aggregate cost of the shares, including legal and other costs
associated with the tender offer, was approximately $9.7 million, which was
funded entirely from the Company's existing cash balances.
In fiscal 1995, the Company's Body Drama subsidiary acquired 1,446,921
shares of its stock at $2.93 per share. The total cost of these shares was $4.9
million, which includes expenses specifically associated with the tender offer,
including the estimated costs of defense for a related class action suit filed
against Body Drama, the Company and several of its officers and
9
<PAGE> 10
directors. Approximately $250,000 and $18,000, respectively, of estimated legal
costs were paid by the Company and its subsidiary, respectively, during the six
months ended February 29, 1996. On November 30, 1994, the Company acquired the
remaining 128,079 outstanding shares of Body Drama at $2.93 per share. The
aggregate cost of these shares incurred in connection with the purchase was
$385,000.
The Company is not aware of any trends or other matters which will, or are
reasonably likely to, result in its liquidity materially increasing or
decreasing.
Other Information
INVENTORY
The experience of the Company demonstrates that, in its ordinary course of
operations, a portion of the Company's sales may be made below its normal
selling prices or below cost subsequent to February 29, 1996. However, the
amount of such sales depends on several factors, including general economic
conditions, market conditions within the apparel industry, the desirability of
the styles held in inventory and competitive pressures from other garment
suppliers.
The Company's inventory decreased from $11.5 million at February 28, 1995
to $8.1 million at February 29, 1996. The Company has established an inventory
markdown reserve as of February 29, 1996 which management believes will be
sufficient for current inventory that is expected to be sold below cost in the
future. There can be no assurance that the Company will realize its expected
selling prices, or that the inventory markdown reserve will be adequate, for
items in inventory as of February 29, 1996 for which customer sales orders have
not yet been received.
BACKLOG
At February 29, 1996, the Company had unfilled customer orders of $17.9
million compared to $30.9 million of such orders at February 28, 1995, with such
orders generally scheduled for delivery by August 1996 and 1995, respectively.
These amounts include both confirmed orders and unconfirmed orders which the
Company believes, based on industry practice and past experience, will be
confirmed. The amount of unfilled orders at a particular time is affected by a
number of factors, including the scheduling of the production and shipment of
garments, which in some instances may be delayed or accelerated by customer
request. Accordingly, a comparison of unfilled orders from period to period is
not necessarily meaningful and may not be indicative of eventual actual
shipments. While cancellations, rejections and
10
<PAGE> 11
returns have generally not been material in the past, there can be no assurance
that cancellations, rejections and returns will not reduce the amount of sales
realized from the backlog of orders at February 29, 1996.
Future Quarterly Net Sales
As a result of the Company's efforts to reduce sales of unprofitable
product lines and the sale of its junior, girls and maternity product lines
discussed above, net sales in each of the remaining quarters of fiscal 1996 are
likely to be significantly lower than the quarterly net sales reported in fiscal
1995. The junior, girls and maternity product lines generated $4.9 million and
$5.2 million of net sales in the third and fourth quarters of fiscal 1995,
respectively.
Future Customer Credit Risk
As of April 11, 1996, the Company had inventory on hand or in process
having an estimated sales value of approximately $1.5 million which is expected
to be shipped within the next three months to one of the Company's largest
customers. As of April 11, 1996, the Company also has a receivable due from this
customer of approximately $546,000 which has not been purchased by the Company's
financial institution. This customer is currently experiencing financial
difficulties and, except as noted below, it is unlikely that the Company's
financial institution will purchase the resulting receivables from this customer
when the inventory on hand and in process is shipped to the customer.
The Company's Board of Directors has authorized management to ship
merchandise to this customer at the Company's credit risk without approval from
the Company's financial institution. The Company's financial institution has
indicated that, if the customer files for protection under Chapter 11, and
receivable outstanding at that time may have a value of fifty to sixty percent
of its face value, though realization of this amount cannot be assured.
Subsequent to such a filing, the Company expects that the customer would honor
its existing purchase orders with the Company and that the Company's financial
institution would purchase the resulting receivables at full face value.
Related Party Transaction
In October 1995, the Company began renting warehouse and office facilities
from Kuma Sport, Inc., which is 40% owned by Mr. Arjun C. Waney, the Chairman of
Nitches. Mr. Waney has also guaranteed payments on an SBA loan which encumbers
the Kuma Sport building. The Company pays, on a month-to-month basis, rent of
$15,000, which it believes is consistent with the fair market
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<PAGE> 12
value of the facility. Nitches is also purchasing labor and administrative items
from Kuma Sport on a monthly, as needed, basis at rates it believes are
consistent with fair market rates.
PART II. OTHER INFORMATION
Item 1. Litigation.
On August 8, 1994, a class action lawsuit was filed in the San Diego
Superior Court against the Company, its Body Drama subsidiary and certain former
and present directors and officers of Body Drama seeking to enjoin Body Drama's
tender offer for its shares and to recover certain unspecified damages on the
basis of alleged breaches of fiduciary duty by the defendants. The court denied
the plaintiffs' claim for injunctive relief and the tender offer closed on
September 21, 1994. On January 20, 1995, the court dismissed two of the four
causes of action claimed by the plaintiff in the lawsuit.
Although management believes that the remaining allegations of the
complaint are without merit, a settlement has been reached for an amount less
that the projected reasonable cost of defense. A stipulation for the settlement
has been filed with the court. The plaintiff class is being notified, after
which a hearing will be set for final approval of the settlement terms.
Item 4. Submission of Matters to a Vote of Security Holders.
An annual meeting of shareholders of the Company was held on December 20,
1995. At the meeting, the shareholders approved the following:
(1) an amendment to the Company's Articles of Incorporation to change the
Company's name to "Nitches, Inc." by votes of 1,061,509 for, 18,975 against
and 12,643 abstain,
(2) an amendment to the Executive Option Plan to (i) allow Directors to
participate in the Plan, (ii) to increase the number of options to purchase
Common Stock which may be granted under the Plan by adding options to purchase
50,000 shares of Common Stock, and (iii) restrict the exercise price of options
granted under the Plan to not less than the market price of the Company's Common
Stock on the date of grant by votes of 865,537 for, 187,274 against and 40,316
abstain,
(3) the appointment of Deloitte & Touche LLP as the Company's independent
certified public accountants for the fiscal year ended August 31, 1996 by votes
of 1,074,150 for, 14,737 against and 4,240 abstain, and
12
<PAGE> 13
(4) the election of directors as follows:
<TABLE>
<CAPTION>
Name Votes For Withheld
---- --------- --------
<S> <C> <C>
Arjun C. Waney 1,011,869 81,258
Steven P. Wyandt 1,011,869 81,258
Luther A. Henderson 1,011,669 81,458
Eugene B. Price II 1,010,888 82,239
William L. Hoese 1,011,669 81,458
</TABLE>
Item 6. Exhibits and Reports in 8-K.
(a) Exhibits.
The following exhibits are filed herewith. Exhibit numbers refer to Item
601 of Regulation S-K:
3.1 Articles of Incorporation of the Company, as amended.
27. Financial Data Schedule.
(b) There were no reports on Form 8-K filed during this period.
13
<PAGE> 14
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.
NITCHES, INC.
-------------
Registrant
April 11, 1996 By: Steven P. Wyandt
-----------------------------
Steven P. Wyandt
As Principal Financial Officer and
on behalf of the Registrant
14
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
BEEBA'S CREATIONS, INC.
STEVEN P. WYANDT and GAYLE ROGERS certify that:
1. They are the president and assistant secretary, respectively, of Beeba's
Creations, Inc., a California corporation (the "Corporation").
2. We hereby adopt the following amendment of the articles of incorporation of
this corporation:
Article FIRST of the Articles of Incorporation of the Corporation is
amended to read in its entirety as follows:
"The name of the corporation is: Nitches, Inc."
3. The Amendment herein set forth has been duly approved by the Board of
Directors.
4. The foregoing amendment of articles of incorporation has been duly approved
by the required vote of shareholders in accordance with Section 902 of the
Corporations Code. The corporation has only one class of shares and the
number of outstanding shares is 1,210,295. The percentage vote required was
more than 50%.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Date: December 21, 1995
Steven P. Wyandt
---------------------------------
Steven P. Wyandt, President
Gayle Rogers
---------------------------------
Gayle Rogers, Assistant Secretary
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> FEB-29-1996
<EXCHANGE-RATE> 1
<CASH> 4,578
<SECURITIES> 0
<RECEIVABLES> 8,883,874<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 8,082,034
<CURRENT-ASSETS> 19,137,009
<PP&E> 373,742<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 20,021,219
<CURRENT-LIABILITIES> 6,397,257
<BONDS> 0
0
0
<COMMON> 2,660,039
<OTHER-SE> 9,868,065
<TOTAL-LIABILITY-AND-EQUITY> 20,021,219
<SALES> 29,365,723
<TOTAL-REVENUES> 29,365,723
<CGS> 21,433,212
<TOTAL-COSTS> 21,433,212
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,575
<INCOME-PRETAX> 1,241,892
<INCOME-TAX> 223,541
<INCOME-CONTINUING> 1,018,351
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,018,351
<EPS-PRIMARY> .84
<EPS-DILUTED> 0
<FN>
<F1>THE ASSET VALUES FOR RECEIVABLES AND PP&E REPRESENT AMOUNTS NET OF ALLOWANCES
AND DEPRECIATION RESPECTIVELY.
</FN>
</TABLE>
