<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
F O R M 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended October 27, 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 0-00167
THE VILLAGE GREEN BOOKSTORE, INC.
---------------------------------------------------------------
(Exact name of Small Business Issuer as specified in its charter)
New York 16-1181167
----------------------------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) I.D. number)
1357 Monroe Avenue
Rochester, New York 14618
---------------------------------------
(Address of principal executive offices)
(716) 442-1151
----------------------------------------------
(Issuer's telephone number, including area code)
Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock outstanding as of October 27, 1996 was
3,741,355.
<PAGE> 2
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1 Financial Statements
Consolidated Statement of Operations
for the three and nine months ended
October 27, 1996 and October 29, 1995..........................3
Consolidated Balance Sheets as of
October 27, 1996 and January 28, 1996..........................4
Consolidated Statement of Cash Flows
for the nine months ended
October 27, 1996 and October 29, 1995..........................6
Notes to Consolidated Financial Statements.....................8
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations.........................................10
PART II OTHER INFORMATION
Item 1. Legal Proceedings............................................n/a
Item 2. Changes in Securities........................................n/a
Item 3. Defaults Upon Senior Securities...............................14
Item 4. Submission of Matter of a Vote of
Security Holders.............................................n/a
Item 5. Other Information............................................n/a
Item 6. Exhibits and Reports on Form 8-K..............................14
Index to Exhibits.......................................................16
- 2 -
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS.
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
OCTOBER 27, 1996 AND OCTOBER 29, 1995
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 27, October 29, October 27, October 29,
1996 1995 1996 1995
---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Net Sales $ 1,435,285 $ 2,390,224 $ 5,993,233 $ 7,367,374
Cost of Goods Sold 895,322 1,499,722 3,796,449 4,588,936
----------- ----------- ----------- -----------
Gross Profit $ 539,963 $ 890,502 $ 2,196,784 $ 2,778,438
Selling, General, and
Administrative Expenses 789,371 1,205,921 3,164,356 3,323,469
----------- ----------- ----------- -----------
Loss from Operations $ (249,408) $ (315,419) $ (967,572) $ (545,031)
Other Income (Expense)
Interest Expense (43,476) (24,233) (91,476) (86,697)
Amortization of Offering Costs 0 (23,781) (23,781) (147,718)
Other Income 206 16,202 8,351 61,664
Gain on Disposal of Assets 0 1,500 0 1,500
Restructuring Costs (199,525) 0 (542,285) 0
--------- ------- --------- --------
Total Other Income (Expense) $ (242,795) $ (30,312) $ (649,191) (171,251)
------------ ------------- ------------- -----------
Loss before Income taxes $ (492,203) $ (345,731) $(1,616,763) $ (716,282)
Income Tax (5,551) 0 (6,058) (850)
------------ ----------- ------------ -----------
Net Loss $ (497,754) $ (345,731) $(1,622,821) $ (717,132)
============ ============ ============ ===========
Per Share Amounts
Net Loss $ (0.14) $ (0.09) $ (0.44) $ (0.22)
======== ======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
- 3 -
<PAGE> 4
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 27, 1996 AND JANUARY 28, 1996
ASSETS
<TABLE>
<CAPTION>
October 27, January 28,
Current Assets 1996 1996
- -------------- ------------ -----------
<S> <C> <C>
Cash and Cash Equivalents $ 58,794 $ 383,918
Receivables 120,879 130,974
Merchandise Inventories 4,187,968 6,306,808
Prepaid Expenses 143,360 290,141
----------- -----------
Total Current Assets $ 4,511,001 $ 7,111,841
Property & Equipment, net
of Accumulated Depreciation 1,505,544 1,933,838
Other Assets 96,250 161,585
Total Assets $ 6,112,795 $ 9,207,264
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
- 4 -
<PAGE> 5
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 27, 1996 AND JANUARY 28, 1996
LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
<TABLE>
<CAPTION>
October 27, January 28,
Current Liabilities 1996 1996
- ------------------- ---------- ----------
<S> <C> <C>
Accounts Payable $ 2,027,145 $ 3,332,642
Current Portion of Debt 1,224,822 1,231,227
Accrued Payroll Expense 45,831 77,565
Accrued Taxes Payable 32,587 81,442
Other Current Liabilities 323,953 468,115
---------- ----------
Total Current Liabilities $ 3,654,338 $ 5,190,991
Long-Term Debt 65,042 13,965
Stockholders' Equity
- --------------------
Common Stock, $.001 par
Authorized 10,000,000 shares
Issued and Outstanding
3,741,355 shares and 3,741,255
shares at October 27, 1996 and
January 28, 1996, respectively 3,742 3,741
Additional Paid-In Capital 8,117,453 8,117,154
Retained Deficit (5,727,780) (4,118,587)
------------ ------------
Total Stockholders' Equity $ 2,393,415 $ 4,002,308
---------- ---------
Total Liabilities and
Stockholders' Equity $ 6,112,795 $ 9,207,264
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
- 5 -
<PAGE> 6
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 27, 1996 AND OCTOBER 29, 1995
<TABLE>
<CAPTION>
Nine Months Ended
October 27, October 29,
1996 1995
--------- -------
<S> <C> <C>
Operating Activities:
Net Loss $(1,622,821) $ (717,132)
Adjustments to reconcile Net Loss
to Net Cash Used in Operating Activities:
Depreciation 306,915 205,490
Amortized Debt Offering Costs 23,781 147,718
Restructuring Costs 542,285 0
Gain on Disposal of Property
and Equipment 0 1,500
Changes in Operating Assets and Liabilities:
Accounts Receivable 4,942 5,178
Inventory and Prepaid Expenses 2,265,621 (1,771,774)
Accounts Payable and Accrued Expenses (1,530,248) (760,006)
----------- -----------
Net Cash Used In Operating Activities $ (9,525) $(2,889,026)
Investing Activities:
Purchase of Property and Equipment (355,012) (686,473)
Notes Receivable 0 68,000
Security Deposits 65,335 0
---------- ---------
Net Cash Used In Investing Activities $ (289,677) $ (618,473)
Financing Activities:
Payments on Credit Lines, Long-Term
Debt and Capital Lease Obligations (1,285,059) (1,823,757)
Stock Offering Costs 0 (1,288,650)
Proceeds from Issuance of Common Stock 300 6,650,325
Purchase of Treasury Stock 0 (186,500)
Debt Issuing Costs (25,000) 0
Proceeds from Borrowings 1,278,654 0
Cash from Officers 5,183 14,206
---------- ---------
Net Cash Provided by
Financing Activities (25,922) 3,365,624
---------- ----------
</TABLE>
- 6 -
<PAGE> 7
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 27, 1996 AND OCTOBER 29, 1995 CONT'D.
<TABLE>
<CAPTION>
<S> <C> <C>
Net Change In Cash (325,124) (141,875)
Balance at Beginning of Year 383,918 519,470
---------- ----------
Cash Balance at End of Period $ 58,794 $ 377,595
========== ==========
Cash Paid For:
Interest $ 91,476 $ 86,697
Income Taxes $ 6,058 $ 850
</TABLE>
See Notes to Consolidated Financial Statements
- 7 -
<PAGE> 8
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The consolidated balance sheet as of October 27, 1996, the
consolidated statements of income for the three and nine months ended
October 27, 1996 and October 29, 1995, and the consolidated statements
of cash flows for the nine months ended October 27, 1996 and October
29, 1995 have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal
adjustments) necessary to present fairly the financial position,
results of operations and changes in financial position at those dates
have been made. The operating results for the quarter ended October
27, 1996 are not necessarily indicative of the results that may be
expected for the fiscal period ending January 27, 1997, as the
Company's sales volume is seasonal.
Note 2. On April 28, 1994, the Company consummated a private placement
with respect to an aggregate of $1.2 million principal amount 7%
Convertible Senior Subordinated Debentures (the "Debentures") of the
Company due two years from the date of issuance, convertible into
shares of the Company's Common Stock at any time prior to maturity,
unless previously redeemed, at an initial conversion price of $5.00
per share. The Debentures became due and payable on April 28, 1996.
The Company has entered into a Credit Agreement with VGBS Acquisition
Corporation, an affiliate of H.J. Meyers & Co., Inc., a market maker
in the Companies securities, to repay the principal amount owed to the
Debenture holders. See "Item 2 - Management's Discussion and Analysis
of Financial Conditions and Results of Operations" for a discussion
regarding the Credit Agreement.
The Debentures are subordinated in right of payment to any
future bank indebtedness up to $1 million and are expressly senior in
right of payment to all other Company obligations (but subordinated to
the payment of any future bank or institutional indebtedness up to $1
million). The Debentures are redeemable, in whole only, from time to
time at the option of the Company at a redemption price equal to 100%
of the principal amount thereof plus accrued interest, provided that
the Debentures may not be redeemed prior to maturity unless, during
any period of 20 consecutive trading days ending within 30 days prior
to the giving of the notice of redemption, the market price for the
Common Stock is at least 125% of the conversion price.
Costs associated with this debt, totalling $190,250, have
been included in Deferred Debt Issuance Costs and have been amortized
over the life of the debt, which is two years.
Interest on the Debentures is payable semi-annually.
Note 3. On March 23, 1995, the Company consummated a public offering
of 2,000,000 Units through Thomas James Associates, Inc., a
predecessor to H.J. Meyers & Co., Inc., as Representative of the
- 8 -
<PAGE> 9
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONT'D.
Underwriters. Each Unit consists of one share of the Company's Common
Stock, par value $.001 per share, and one Redeemable Common Stock
Purchase Warrant. The public offering price of the Units was $3.00 per
Unit. The net proceeds of the public offering was approximately $4.7
million, giving effect to expenses related to the offering.
Note 4. On April 30, 1995, the Company received net proceeds of
approximately $569,000 pursuant to the Underwriting Agreement
signed in relation to the transaction described in Note 3. The
proceeds were received through the partial exercise of the
over-allotment option.
Note 5. On July 28, 1996, the Company expended against earnings a
restructuring charge of $342,760. In the third quarter, the Company
expended against earnings an additional restructuring charge of
$199,525. The restructuring charges represent provisions for lease
settlement and leasehold improvements in connection with the early
termination of three leases which occurred during the second quarter
and at the beginning of the third quarter.
- 9 -
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
- --------
The Company competes with a diverse group of national book retailers,
including WaldenBooks, Borders Bookshop, Barnes & Noble, B. Dalton, Crown Books,
Encore Books and Books-A-Million. In recent years, many competing national
chains have expanded in size and number of outlets, and have developed and
opened superstores within many of the Company's existing markets. As a result of
these competitive conditions, the Company closed one store in the third quarter
of 1996. The Company has altered its strategic objectives to address these
competitive conditions by introducing the Kideology(TM) retail concept. The
Company's strategic objective is to continue to operate retail bookstores in the
areas in which it currently competes while maintaining Kideology(TM) stores in
existing locations.
The outstanding principal owed under the Company's 7% Convertible Senior
Subordinated Debentures (the "Debentures") became due and payable on April 28,
1996. On October 11, 1996 the Company and VGBS Acquisition Corporation ("VGBS")
consummated a Credit Agreement dated as of September 25, 1996, whereby VGBS
agreed to loan up to $1.2 million to the Company pursuant to a Senior Secured
Promissory Grid Note dated September 25, 1996 (the "Note"). The Note bears
interest at the rate of 9% per annum with principal and interest due in arrears
in quarterly installments commencing June 30, 1997. Pursuant to the Credit
Agreement, the Company has agreed that the $1.2 million loan amount to be
provided by VGBS pursuant to the Note will be used by the Company solely to
repay the entire principal amount owned by the Company to the holders of the
Company's Debentures.
Concurrent with the consummation of the Credit Agreement, the Company
executed a Warrant to purchase up to 2,400,000 shares of the Company's Common
Stock, par value $.001 per share (the "Common Stock") at a purchase price of
$.50 per share in favor of VGBS (the "Warrant"). The Warrant is presently
exercisable and may be exercised through September 15, 2001. The Warrant is
subject to anti-dilution provisions and will not be registered under the
Securities Act of 1933, as amended.
The Company has also entered into a Security Agreement with VGBS pursuant
to which the Company has granted VGBS a security interest on the indebtedness
incurred by the Company pursuant to the Credit Agreement and Note. The Security
Agreement is senior in right of payment and in collateral except for up to
$500,000 of inventory financing for working capital. VGBS has agreed to
subordinate its security interest under the Security Agreement to the holders of
the Debentures in the event VGBS breaches its obligation to fund any installment
due to the Company under the Credit Agreement and Note.
Additionally, to induce VGBS to enter into the Credit Agreement, certain
of the Company's shareholders have granted an irrevocable proxy to VGBS pursuant
to a Shareholders' Agreement and Irrevocable Proxy to vote such shareholders'
shares of
- 10 -
<PAGE> 11
Common Stock (the "Shareholders Agreement"). The total number of shares of
Common Stock subject to the Shareholders Agreement is 225,000.
Furthermore, under the terms of the Credit Agreement, VGBS has the right
to reconstitute the entire Board of Directors of the Company, and, as such,
three of the four current directors of the Company have tendered their
resignations from the Board of Directors to the Company, such resignations to be
held by the Company pending acceptance by the Company.
No assurances can be given that VGBS will continue to loan the Company
funds pursuant to the Credit Agreement or that the Company will be successful in
implementing its new business strategy or the Kideology(TM) retail concept.
FINANCIAL POSITION
- ------------------
Cash and cash equivalents amounted to $58,794 at October 27, 1996
as compared to $383,918 at January 28, 1996. Cash decreased as a result of
reduction of accounts payable due to payments made primarily to vendors and
increased operating costs. Inventories decreased by $2,118,840 from $6,306,808
at January 28, 1996 to $4,187,968 at October 27, 1996, primarily as a result of
the closing of five stores. Prepaid expenses decreased by $146,781 as a result
of the closing of five stores. Other current liabilities, accrued payroll and
accrued sales taxes payable decreased, in the aggregate, by $224,751 from
$627,122 at January 28, 1996 to $402,371 at October 27, 1996.
- 11 -
<PAGE> 12
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
Three Months Ended Nine Months Ended
Statement of October 27, October 29, October 27, October 29,
Operations Data 1996 1995 1996 1995
--------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $1,435,285 $2,390,224 $5,993,233 $7,367,374
---------- ---------- ---------- ----------
As a Percentage of Net Sales: % % % %
Same Stores 93.2 72.4 78.3 74.2
New Stores 6.7 0.0 5.5 0.0
Closed Stores 0.1 27.6 16.2 25.8
--- ----- ---- ----
Total Net Sales 100.0 100.0 100.0 100.0
Cost of Sales 62.4 62.7 63.4 62.3
---- ---- ---- ----
Gross Profit 37.6 37.3 36.6 37.7
Selling, General and
Administrative Expenses 55.0 50.5 52.8 45.1
---- ---- ---- ----
Loss from Operations (17.4) (13.2) (16.1) (7.4)
Net Loss (34.7) (14.5) (27.1) (9.7)
====== ====== ====== ======
</TABLE>
Net sales for the three months ended October 27, 1996 were $1,435,285 as
compared with $2,390,224 for the three months ended October 29, 1995, a decrease
of 39.9%. For the nine months ended October 27, 1996, net sales were $5,993,233,
as compared with $7,367,374 for the nine months ended October 29, 1995, a
decrease of 18.6%. Comparable store sales declined by 14.1% for the nine months
ended October 27, 1996. The reduction of net sales for the nine months ended
October 27, 1996 also reflects the closing of five stores during the first nine
months of fiscal year 1996.
Gross profit margin for three months ending October 27, 1996 was 37.6% as
compared to 37.3% for the same period last year. For the nine months ended
October 27, 1996, gross profit margin was 36.6% as compared to 37.7% for the
nine months ended October 29, 1995. In absolute dollars, gross profit decreased
from $890,502 for the three months ended October 29, 1995 to $539,963 for the
three months ended October 27, 1996. For the nine months ended October 27, 1996,
absolute gross profit dollars decreased to $2,196,784 from $2,778,438 for the
nine months ended October 29, 1995. The decrease in absolute gross profit
dollars of $350,539 and $581,654 for the three and nine month periods resulted
from net sales decreases in comparable stores and reduction in sales associated
with store closings.
Selling, general, and administrative expenses for the three months ended
October 27, 1996 decreased by $416,550, or 34.5%. This decrease resulted
primarily from reduction in stores. For the nine months ended October 27, 1996,
selling, general and administrative expenses decreased by $159,113, or 4.8% The
decrease in selling, general and
- 12 -
<PAGE> 13
administrative expenses for the nine months is attributable to the reduction in
stores. On a same store basis, selling, general and administrative expenses
decreased by approximately $130,443 for the three months ended October 27, 1996
over the three months ended October 27, 1995. For the nine months ended October
27, 1996, selling, general and administrative expenses increased on a same store
basis by approximately $94,335 over the nine months ended October 29, 1995.
On October 27, 1996, the Company had expended against earnings a
restructuring charge of $542,285. The restructuring charge represents provisions
for lease settlements and leasehold improvements in connection with the closing
of five stores.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital was $856,663 at October 27, 1996, as compared to
$1,920,850 as of January 28, 1996. The Company's auditors have stated that there
is substantial doubt about the Company's ability to continue as a going concern.
Competitive conditions have adversely affected the Company's liquidity.
- 13 -
<PAGE> 14
PART II - OTHER INFORMATION
---------------------------
ITEM 3. DEFAULT IN SENIOR SECURITIES.
As discussed in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the Company has entered into a Credit
Agreement with VGBS Acquisition Corporation in order to obtain the funds
necessary to repay the amounts due under its Debentures which became due and
payable on April 28, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
---------
Exhibit 10
Exhibit 11
Exhibit 27
(b) Reports on Form 8-K.
--------------------
A Form 8-K Current Report pursuant to Section 13 or 15(d)
of the Exchange Act dated October 11, 1996 was filed with
the Securities and Exchange Commission on October 24,
1996. The purpose of the Form 8-K was to report on Item 1
and on Item 5 the execution of the Credit Agreement and
related agreements between the Company and VGBS
Acquisition Corporation, as discussed in Management's
Discussion and Analysis of Financial Conditions and
Results of Operations.
- 14 -
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE VILLAGE GREEN BOOKSTORE, INC.
Dated: December 10, 1996
By: /s/ Raymond C. Sparks
---------------------------
Raymond C. Sparks,
President
Treasurer
Chief Operating Officer
Chief Financial Officer
- 15 -
<PAGE> 16
INDEX TO EXHIBITS
Exhibit Page
Number Number
- ------ -------
10 Material Contracts ...........................................17
11 Computation of Earnings per Common Share......................18
27 Financial Data Schedule.......................................19
- 16 -
<PAGE> 1
EXHIBIT 10
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
MATERIAL CONTRACTS
(a) Credit Agreement between the Company and VGBS Acquisition
Corporation ("VGBS") dated as of September 25, 1996, including a
list briefly identifying all contents of all omitted exhibits and
schedules thereto.*
(b) Senior Secured Promissory Grid Note for $1.2 million, executed by
the Company in favor of VGBS and dated September 25, 1996,
including a list briefly identifying all contents of all omitted
exhibits and schedules thereto.*
(c) Warrant to Purchase up to 2,400,000 Shares of Common Stock of the
Company, par value $.001 per share, executed by the Company in
favor of VGBS and dated as of September 25, 1996.*
(d) Shareholders' Agreement and Irrevocable Proxy between certain of
the Company's shareholders and VGBS, dated as of September 25,
1996, including a list briefly identifying all contents of all
omitted exhibits and schedules thereto.*
(e) Security Agreement between the Company and VGBS, dated September
25, 1996, including a list briefly identifying all contents of
all omitted exhibits and schedules thereto.*
- --------
*Included as a part of Exhibit 2 to the Company's Form 8-K Current Report
pursuant to Section 13 or 15(d) of the Exchange Act dated October 11, 1996 and
filed with the Securities and Exchange Commission on October 24, 1996.
- 17 -
<PAGE> 1
EXHIBIT 11
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 27, October 27,
1996 1996
---- ----
Primary Earnings Per Share(2)
- -----------------------------
<S> <C> <C>
Net Loss After Taxes $ (497,754) $(1,622,821)
Weighted Average
Common Shares Outstanding 3,741,355 3,741,328
Primary Loss Per Share $ (0.14) $ (0.44)
</TABLE>
- --------
(2)Warrants and options, which are potentially dilutive, were not
considered in the calculations because these items were anti-dilutive due to
the net losses incurred during the reporting period.
- 18 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS CONTAINED IN ITS OCTOBER 27, 1996 FROM 10-QSB AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-27-1997
<PERIOD-START> JAN-27-1996
<PERIOD-END> OCT-27-1996
<CASH> 58,794
<SECURITIES> 0
<RECEIVABLES> 120,879
<ALLOWANCES> 0
<INVENTORY> 4,187,968
<CURRENT-ASSETS> 4,511,001
<PP&E> 1,505,544
<DEPRECIATION> 1,040,824
<TOTAL-ASSETS> 6,112,795
<CURRENT-LIABILITIES> 3,654,338
<BONDS> 65,042
<COMMON> 3,742
0
0
<OTHER-SE> 2,393,415
<TOTAL-LIABILITY-AND-EQUITY> 6,112,795
<SALES> 5,993,233
<TOTAL-REVENUES> 5,993,233
<CGS> 3,796,449
<TOTAL-COSTS> 3,164,356
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106,906
<INCOME-PRETAX> (1,074,478)
<INCOME-TAX> 6,058
<INCOME-CONTINUING> (1,080,536)
<DISCONTINUED> (542,285)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,622,821)
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
</TABLE>
