<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 28, 1997
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, 1997, 1,210,296 shares of the Registrant's common stock were
outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NITCHES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
February 28, August 31,
1997 1996
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 17,399 $2,197,015
Receivables:
Trade accounts, less allowances
($571,000 at February 28, 1997 and
$425,000 at August 31, 1996) 7,494,251 6,081,880
Income taxes receivable 54,598 261,462
Due from affiliates and employees 86,838 140,418
----------- -----------
7,635,687 6,483,760
Inventories, net 7,275,833 7,044,498
Deferred income taxes 1,500,102 1,500,102
Other current assets 567,569 342,229
Total current assets 16,996,590 17,567,604
Furniture, fixtures and equipment, net 267,869 314,473
Other assets 165,166 296,608
----------- -----------
$17,429,625 $18,178,685
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses $4,061,737 $5,359,050
Notes payable 485,241
----------- -----------
Total current liabilities 4,546,978 5,359,050
Deferred income taxes 1,021,098 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;
1,210,296 issued and outstanding 2,657,818 2,658,400
Retained earnings 9,203,731 9,065,377
----------- -----------
Total shareholders' equity 11,861,549 11,723,777
----------- -----------
$17,429,625 $18,178,685
=========== ===========
</TABLE>
2
<PAGE> 3
NITCHES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Second quarter ended Six months ended
------------------------- -------------------------
February 28, February 29, February 28, February 29,
1997 1996 1997 1996
----------- ------------ ------------ ------------
<S> <C>
Net sales $11,295,458 $16,032,039 $24,961,704 $29,365,723
Cost of goods sold 8,263,702 11,203,344 19,035,416 21,433,212
---------- ---------- ---------- ----------
Gross profit 3,031,756 4,828,695 5,926,288 7,932,511
Expenses:
Selling, general
and administrative 2,840,746 3,396,507 5,689,295 6,826,634
---------- ---------- ---------- ----------
Income from operations 191,010 1,432,188 236,993 1,105,877
Interest income 34,296 48,764 57,964 145,590
Interest expense (84,358) (9,575) (85,332) (9,575)
---------- ---------- ---------- ----------
Income before income
taxes 140,948 1,471,377 209,625 1,241,892
Provision for income
taxes 47,924 301,566 71,271 223,541
---------- ---------- ---------- ----------
Net income $ 93,024 $1,169,811 $ 138,354 $1,018,351
========== ========== ========== ==========
Earnings per
common share $.07 $.97 $.11 $.84
========== ========== ========== ==========
Weighted average
shares outstanding 1,246,544 1,210,296 1,258,958 1,210,296
========== ========== ========== ==========
</TABLE>
3
<PAGE> 4
NITCHES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended February 28 and 29
-----------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net cash used by
operating activities $(1,418,865) $(1,155,450)
----------- -----------
Cash flows from investing activities:
Capital expenditures ( 35,114) ( 55,156)
----------- -----------
Net cash used by investing
activities ( 35,114) ( 55,156)
----------- -----------
Cash flows from financing activities:
Dividends paid (1,210,296)
Net borrowings under line of
credit and short-term loan
agreements 485,241 656,749
Proceed from exercise of stock
options 5,152
Purchases and retirement of
subsidiary shares (582) (267,684)
Purchases and retirement of
parent common stock (9,664,222)
----------- -----------
Net cash used by financing
activities ( 725,637) (9,270,005)
----------- -----------
Net decrease in cash and
cash equivalents ( 2,179,616) (10,480,611)
Cash and cash equivalents
at beginning of period 2,197,015 10,485,189
----------- -----------
Cash and cash equivalents
at end of period $ 17,399 $ 4,578
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $86,087 $ 9,300
Income taxes $89,160 $ 8,988
</TABLE>
4
<PAGE> 5
NITCHES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. Effective December 1, 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 28, 1997, and the
consolidated statements of operations for the three and six months ended
February 28, 1997 and February 29, 1996 and the condensed consolidated cash
flow statements for the six months ended February 28, 1997 and February 29,
1996 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 28, 1997 and for all periods presented
have been made. The results of operations for the periods ended February 28,
1997 and February 29, 1996 are not necessarily indicative of the operating
results for the full years.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The following methods and assumptions were used to estimate fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and cash equivalents, accounts receivable, and accounts payable
The carrying amount approximates fair value because of the short maturity of
those instruments.
Notes payable
The carrying amount approximates fair value as the related interest rate is
variable and is comparable to interest rates available to the Company for
similar notes.
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, 1996 audited financial
statements.
5
<PAGE> 6
NITCHES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(Unaudited)
3. Earnings Per Share:
For the three and six months ended February 28, 1997, 36,248 and 48,662
common stock equivalents for options were included in the weighted average
number of shares outstanding, respectively. At February 29, 1996, no common
stock equivalents for options were included in the weighted average number of
shares outstanding because outstanding options were either antidilutive or
diluted earnings per share by less than 3%.
In February of 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share (EPS). This statement requires the presentation of earnings per share to
reflect both "Basic EPS" as well as "Diluted EPS" on the face of the income
statement. In general, Basic EPS excludes dilution created by stock
equivalents and is a function of the weighted average number of common shares
outstanding for the period. Diluted EPS does reflect the potential dilution
created by stock equivalents as if such equivalents are converted into common
stock and is calculated in substantially the same manner as Fully Diluted EPS
illustrated in Accounting Principles Board Opinion No. 15 "Earnings Per Share"
("APB No. 15").
The Company will be required to adopt the new method of reporting EPS
for the fiscal year ending August 31, 1997. Based on the Company's capital
structure, the anticipated results of implementing SFAS No. 128 would reflect
EPS in materially the same manner as currently reported.
4. Inventories:
<TABLE>
<CAPTION>
February 28, August 31,
1997 1996
------------- -----------
<S> <C> <C>
Fabric and trims $ 871,952 $ 818,502
Finished goods 6,403,881 6,225,996
---------- ----------
$7,275,833 $7,044,498
========== ==========
</TABLE>
5. Notes Payable and Contingent Liabilities:
At February 28, 1997, the Company had agreements with a financial
institution pursuant to which the Company sold a majority of its trade accounts
receivable to the financial institution on a pre-approved non-recourse basis.
The Company may request advances in anticipation of customer collections at the
financial institution's prime rate less one half percent and open letters of
credit through the lender, all of which are
6
<PAGE> 7
NITCHES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(Unaudited)
collateralized by all of the Company's assets. Notes payable and contingent
liabilities for irrevocable letters of credit outstanding with the financial
institution are as follows:
<TABLE>
<CAPTION>
February 28, August 31,
1997 1996
------------ -----------
<S> <C> <C>
Contingent liabilities for
irrevocable letters of credit $ 5,799,640 $ 5,849,134
Notes payable $ 485,241
</TABLE>
6. Major Customers:
One major customer accounted for 12.3% and 16.7% of the Company's net
sales in the quarter and six months ended February 28, 1997, respectively. No
customer accounted for 10% or more of total sales in the quarter ended February
29, 1996. Two customers accounted for 11.8% and 11.4%, respectively, of net
sales in the six months ended February 29, 1996.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Six Months Ended February 28, 1997 Compared to the Six Months
Ended February 29, 1996.
Net sales for the six months ended February 28, 1997 decreased
approximately $4.4 million (15.0%) as compared to the six months ended February
29, 1996. Overall, sales decreased due to a 24.2% decrease in the number of
garments sold offset by a 13.2% increase in the average selling price per
garment. The higher selling price per garment is a result of the Company's
shifting product mix to higher priced and higher cost niche products such as
the Activewear Division which markets jog suits.
Gross margins decreased from 27.0% for the six months ended February 29,
1996 to 23.7% for the current six month period. The decrease was attributable
to a 17.4% increase in the average cost per garment as a result of the
Company's shifting product mix. Furthermore, the above decrease in the number
of garments sold was primarily in dresses, which in the past contributed a
higher than average gross margin to the product mix.
7
<PAGE> 8
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.
Selling, general and administrative expenses decreased in dollar amount
from $6.8 million for the first six months of last year to $5.7 million for the
first six months of fiscal 1997, and decreased as a percent of net sales from
23.2% last year to 22.8% for the current period. The decrease in dollar amount
and as a percentage of sales is a result of the Company's restructuring to
decrease overhead which resulted in lower salary, commission and rent expense.
Interest expense increased in the six months ended February 28, 1997
due to an assessment imposed by the Internal Revenue Service in connection with
the audit of the Company's federal tax returns for the fiscal years 1992
through 1994. Interest income decreased in the six months ended February 28,
1997 due to the decrease in the average daily cash balances compared to the
same period last year.
Three Months Ended February 28, 1997 Compared to the Three Months
Ended February 29, 1996.
Net sales for the second quarter of fiscal 1997 decreased approximately
$4.7 million (29.5%) compared to the net sales for the same quarter last year.
Overall, sales decreased in the current quarter due to a 25.6% decrease in the
number of garments sold along with a 7.9% decrease in the average selling price
per garment. The lower selling price per garment is a result of the loss in
volume in dresses, which were a significant factor in net sales during the same
period last year.
Gross margins decreased from 30.1% for the three months ended February 29,
1996 to 26.8% for the current quarter. The decrease was attributable to the
loss in volume of dresses as mentioned above along with the Company's shifting
product mix to higher cost niche products such as the Activewear Division which
markets jog suits.
Selling, general and administrative expenses decreased in dollar amount
from $3.4 million for the second quarter of last year to $2.8 million for the
second quarter of fiscal 1997, and increased as a percent of net sales from
21.2% last year to 25.1% for the current quarter. The decrease in dollar
amount is a result of the Company's restructuring to decrease overhead which
resulted in lower salary, commission and rent expense; however, the increase as
a percentage of sales is due to the loss in sales volume as mentioned above.
8
<PAGE> 9
Interest expense increased in the current quarter due to an assessment
imposed by the Internal Revenue Service in connection with the audit of the
Company's federal tax returns for fiscal years 1992 through 1994. Interest
income decreased in the current quarter due to the decrease in the average
daily cash balances compared to the same period last year.
Liquidity and Capital Resources
The Company used approximately $1.2 million and $1.4 million of cash
from operations in the second quarter and six months ended, respectively, in
fiscal 1997, primarily for the normal seasonal purchase of inventory, and on
September 30, 1996, the Company paid a special dividend of $1.00 per share
amounting to approximately $1.2 million. This accounts for the decrease in the
Company's cash balance from $2.2 million at August 31, 1996 to approximately
$17,000 at February 28, 1997.
At February 28, 1997, the Company had agreements with a financial
institution pursuant to which the Company sold a majority of its trade accounts
receivable to the financial institution on a pre-approved non-recourse basis.
The Company ships the non-financed portion of the merchandise to customers and
attempts to make those shipments on a COD basis or ensure that the customer's
payments 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 28, 1997 was approximately
$1.2 million of which approximately $.3 million has been collected through
April 8, 1997.
Payment for receivables which are sold to the financial institution is
received 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 less one half percent and open
letters of credit through the lender up to $20 million. 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 28, 1997, the Company had outstanding letters of
credit of approximately $5.8 million which had been opened through the
financial institution. Cash borrowings from the financial institution were
approximately $.5 million as of February 28, 1997. Under these agreements, the
Company is required to maintain $9 million in net worth and $8.5 million in
working capital.
9
<PAGE> 10
The Company has amended a five-year note associated with the sale of
its junior, girls, and maternity product lines during fiscal 1995. The Company
accounted for the $950,000 note on a cost recovery basis and will record
revenue when the buyer makes payments on the note. In the quarter ended
February 28, 1997, the Company has agreed to reduce the principal amount to
$600,000 and will accept interest only payments until March 15, 2001. No
amounts associated with this note receivable have been recorded in the
accompanying financial statements and no collections on the note were received
through February 28, 1997.
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. However, the Company expects its cash position to increase during
the last two quarters of the fiscal year due to an expected decrease in
purchasing inventory, particularly in dresses. The Company does not anticipate
making any significant capital expenditures.
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 28, 1997. 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 increased from $7.0 million at August 31, 1996 to
$7.3 million at February 28, 1997. The Company has established an inventory
markdown reserve as of February 28, 1997 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 28, 1997 for which customer sales orders have
not yet been received.
Backlog
At February 28, 1997, the Company had unfilled customer orders of $14.4
million compared to $17.9 million of such orders at February 29, 1996, with
such orders generally scheduled for delivery by July 1997 and August 1996,
respectively. These amounts include both confirmed orders and unconfirmed
orders which the Company believes, based on industry practice and past
experience, will be confirmed. While cancellations, rejections
10
<PAGE> 11
and 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 28, 1997.
However, in the present quarter, management believes the decrease in
backlog is primarily attributable to a general trend in the retail industry
toward shorter order lead times and placing merchandise in the stores closer to
the wearing season, particularly in dresses. This shift in ordering policy by
the stores was identified in the quarterly report ending November 30, 1996.
The Company then decided not to produce inventory in anticipation of customer
orders or in an amount equaling last year's sales. Furthermore, the Company
does not expect to receive customer orders in the last two quarters of the year
to offset the shortfall in orders experienced to date. Therefore, the
shortfall in backlog is expected to result in a reduction in sales and profits
for this fiscal year as compared to last fiscal year.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
An annual meeting of shareholders of the Company was held on December 18,
1996. At the meeting, the shareholders approved the following:
(1) the appointment of Deloitte & Touche LLP as the Company's
independent certified public accountants for the fiscal year
ended August 31, 1997 by votes of 1,039,307 for, 2,914 against
and 2,049 abstain, and
(2) the election of directors as follows:
<TABLE>
<CAPTION>
Name Votes For Withheld
---- --------- --------
<S> <C> <C>
Arjun C. Waney 1,037,188 7,087
Steven P. Wyandt 1,037,188 7,087
Luther A. Henderson 1,036,788 7,487
Eugene B. Price II 1,037,088 7,187
William L. Hoese 1,037,188 7,087
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed herewith. Exhibit numbers
refer to Item 601 of Regulation S-K:
Exhibit No. 10.30.1 Amendment to Asset Purchase Agreement and related
agreements between the Company and Design and Source
Holding Company, Ltd. effective February 25, 1997.
11
<PAGE> 12
Exhibit No. 27: Financial Data Schedule.
(b) There were no reports on Form 8-K filed during the quarter
ended February 28, 1997.
12
<PAGE> 13
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 there unto duly authorized.
NITCHES, INC.
--------------------------------
Registrant
April 11, 1997 By: Steven P. Wyandt
-----------------------------
Steven P. Wyandt
As Principal Financial Officer
and on behalf of the Registrant
13
<PAGE> 1
Exhibit 10.30.1
AMENDMENT TO ASSET PURCHASE AGREEMENT
AND
RELATED AGREEMENTS BETWEEN THE COMPANY
AND
DESIGN AND SOURCE HOLDING COMPANY, LTD.
February 25, 1997
Haresh Tharani
Design and Source Holding Company Ltd.
1450 Broadway - 18th Floor
New York, NY
10018
Re: Refinance of Purchase Note
Dear Haresh:
This will confirm that the attached represents the refinance of the
"BCI" purchase note.
In summary, the principal as of February 15, 1997 is $600,000 with
interest at 4% per year. The first three years are at interest only payable
monthly. Principal and interest payments will begin on March 15, 2000 for four
years.
Sincerely,
Steven P. Wyandt
- -----------------
Steven P. Wyandt
Attachment
<PAGE> 2
Loan amount $600,000
Compound Period Monthly
Nominal Annual Rate 4.0000%
Effective Annual Rate 4.0742%
Period Rate 0.3333%
Monthly Payments #1 $2,000 Mar-15-1997 to Feb-15-2000
Monthly Payments #2 $13,547.43 Mar-15-2000 to Feb-15-2004
<TABLE>
<CAPTION>
Date Payment Interest Principal Balance
- ---- ------- -------- --------- -------
<S> <C> <C> <C> <C>
Feb-15-1997 $600,000.00
Mar-15-1997 $2,000.00 $2,000.00 $600,000.00
Apr-15-1997 $2,000.00 $2,000.00 $600,000.00
May-15-1997 $2,000.00 $2,000.00 $600,000.00
Jun-15-1997 $2,000.00 $2,000.00 $600,000.00
Jul-15-1997 $2,000.00 $2,000.00 $600,000.00
Aug-15-1997 $2,000.00 $2,000.00 $600,000.00
Sep-15-1997 $2,000.00 $2,000.00 $600,000.00
Oct-15-1997 $2,000.00 $2,000.00 $600,000.00
Nov-15-1997 $2,000.00 $2,000.00 $600,000.00
Dec-15-1997 $2,000.00 $2,000.00 $600,000.00
Jan-15-1998 $2,000.00 $2,000.00 $600,000.00
Feb-15-1998 $2,000.00 $2,000.00 $600,000.00
Mar-15-1998 $2,000.00 $2,000.00 $600,000.00
Apr-15-1998 $2,000.00 $2,000.00 $600,000.00
May-15-1998 $2,000.00 $2,000.00 $600,000.00
Jun-15-1998 $2,000.00 $2,000.00 $600,000.00
Jul-15-1998 $2,000.00 $2,000.00 $600,000.00
Aug-15-1998 $2,000.00 $2,000.00 $600,000.00
Sep-15-1998 $2,000.00 $2,000.00 $600,000.00
Oct-15-1998 $2,000.00 $2,000.00 $600,000.00
Nov-15-1998 $2,000.00 $2,000.00 $600,000.00
Dec-15-1998 $2,000.00 $2,000.00 $600,000.00
Jan-15-1999 $2,000.00 $2,000.00 $600,000.00
Feb-15-1999 $2,000.00 $2,000.00 $600,000.00
Mar-15-1999 $2,000.00 $2,000.00 $600,000.00
Apr-15-1999 $2,000.00 $2,000.00 $600,000.00
May-15-1999 $2,000.00 $2,000.00 $600,000.00
Jun-15-1999 $2,000.00 $2,000.00 $600,000.00
Jul-15-1999 $2,000.00 $2,000.00 $600,000.00
Aug-15-1999 $2,000.00 $2,000.00 $600,000.00
Sep-15-1999 $2,000.00 $2,000.00 $600,000.00
Oct-15-1999 $2,000.00 $2,000.00 $600,000.00
Nov-15-1999 $2,000.00 $2,000.00 $600,000.00
Dec-15-1999 $2,000.00 $2,000.00 $600,000.00
Jan-15-2000 $2,000.00 $2,000.00 $600,000.00
Feb-15-2000 $2,000.00 $2,000.00 $600,000.00
Mar-15-2000 $13,547.43 $2,000.00 $11,547.43 $588,452.57
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Date Payment Interest Principal Balance
- ---- ------- -------- --------- -------
<S> <C> <C> <C> <C>
Apr-15-2000 $13,547.43 $1,961.51 $11,585.92 $576,866.64
May-15-2000 $13,547.43 $1,922.89 $11,624.54 $565,242.10
Jun-15-2000 $13,547.43 $1,884.14 $11,663.29 $553,578.81
Jul-15-2000 $13,547.43 $1,845.26 $11,702.17 $541,876.64
Aug-15-2000 $13,547.43 $1,806.26 $11,741.18 $530,135.46
Sep-15-2000 $13,547.43 $1,767.12 $11,780.31 $518,355.14
Oct-15-2000 $13,547.43 $1,727.85 $11,819.58 $506,535.56
Nov-15-2000 $13,547.43 $1,688.45 $11,858.98 $494,676.58
Dec-15-2000 $13,547.43 $1,648.92 $11,898.51 $482,778.07
Jan-15-2001 $13,547.43 $1,609.26 $11,938.17 $470,839.90
Feb-15-2001 $13,547.43 $1,569.47 $11,977.97 $458,861.93
Mar-15-2001 $13,547.43 $1,529.54 $12,017.89 $446,844.04
Apr-15-2001 $13,547.43 $1,489.48 $12,057.95 $434,786.09
May-15-2001 $13,547.43 $1,449.29 $12,098.15 $422,687.94
Jun-15-2001 $13,547.43 $1,408.96 $12,138.47 $410,549.47
Jul-15-2001 $13,547.43 $1,368.50 $12,178.93 $398,370.53
Aug-15-2001 $13,547.43 $1,327.90 $12,219.53 $386,151.00
Sep-15-2001 $13,547.43 $1,287.17 $12,260.26 $373,890.74
Oct-15-2001 $13,547.43 $1,246.30 $12,301.13 $361,589.61
Nov-15-2001 $13,547.43 $1,205.30 $12,342.13 $349,247.47
Dec-15-2001 $13,547.43 $1,164.16 $12,383.27 $336,864.20
Jan-15-2002 $13,547.43 $1,122.88 $12,424.55 $324,439.65
Feb-15-2002 $13,547.43 $1,081.47 $12,465.97 $311,973.68
Mar-15-2002 $13,547.43 $1,039.91 $12,507.52 $299,466.16
Apr-15-2002 $13,547.43 $ 998.22 $12,549.21 $286,916.95
May-15-2002 $13,547.43 $ 956.39 $12,591.04 $274,325.90
Jun-15-2002 $13,547.43 $ 914.42 $12,633.01 $261,692.89
Jul-15-2002 $13,547.43 $ 872.31 $12,675.12 $249,017.77
Aug-15-2002 $13,547.43 $ 830.06 $12,717.37 $236,300.39
Sep-15-2002 $13,547.43 $ 787.67 $12,759.76 $223,540.63
Oct-15-2002 $13,547.43 $ 745.14 $12,802.30 $210,738.33
Nov-15-2002 $13,547.43 $ 702.46 $12,844.97 $197,893.36
Dec-15-2002 $13,547.43 $ 659.64 $12,887.79 $185,005.57
Jan-15-2003 $13,547.43 $ 616.69 $12,930.75 $172,074.83
Feb-15-2003 $13,547.43 $ 573.58 $12,973.85 $159,100.98
Mar-15-2003 $13,547.43 $ 530.34 $13,017.10 $146,083.88
Apr-15-2003 $13,547.43 $ 486.95 $13,060.49 $133,023.39
May-15-2003 $13,547.43 $ 443.41 $13,104.02 $119,919.37
Jun-15-2003 $13,547.43 $ 399.73 $13,147.70 $106,771.67
Jul-15-2003 $13,547.43 $ 355.91 $13,191.53 $ 93,580.14
Aug-15-2003 $13,547.43 $ 311.93 $13,235.50 $ 80,344.64
Sep-15-2003 $13,547.43 $ 267.82 $13,279.62 $ 67,065.03
Oct-15-2003 $13,547.43 $ 223.55 $13,323.88 $ 53,741.14
Nov-15-2003 $13,547.43 $ 179.14 $13,368.30 $ 40,372.85
Dec-15-2003 $13,547.43 $ 134.58 $13,412.86 $ 26,959.99
Jan-15-2004 $13,547.43 $ 89.87 $13,457.57 $ 13,502.42
Feb-15-2004 $13,547.43 $ 45.01 $13,502.42 $ 0.00
</TABLE>
<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-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> FEB-28-1997
<EXCHANGE-RATE> 1
<CASH> 17,399
<SECURITIES> 0
<RECEIVABLES> 7,635,687<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 7,275,833
<CURRENT-ASSETS> 16,996,590
<PP&E> 267,869<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 17,429,625
<CURRENT-LIABILITIES> 4,546,978
<BONDS> 0
0
0
<COMMON> 2,657,818
<OTHER-SE> 11,861,549
<TOTAL-LIABILITY-AND-EQUITY> 17,429,625
<SALES> 24,961,704
<TOTAL-REVENUES> 24,961,704
<CGS> 19,035,416
<TOTAL-COSTS> 19,035,416
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,332
<INCOME-PRETAX> 209,625
<INCOME-TAX> 71,271
<INCOME-CONTINUING> 138,354
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,354
<EPS-PRIMARY> .11
<EPS-DILUTED> 0
<FN>
<F1>THE ASSET VALUES FOR RECEIVABLES AND PP&E REPRESENT AMOUNTS NET OF ALLOWANCES
AND DEPRECIATION RESPECTIVELY
</FN>
</TABLE>
