U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended April 30, 1996
Transition Report pursuant to Section 13 or 15(d) of the Exchange
Act
For the transition period from ___________________ to ___________________
Commission file Number 0-10593
CANDIE'S, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2481903
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2975 Westchester Avenue, Purchase, New York 10577
(Address of principal executive offices)
(914)694-8600
(Issuer's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
As of July 15, 1996, 9,817,939 shares of Common Stock, par value $.001 per share
were outstanding.
Transitional small business disclosure format (check one):
YES _______ NO X
<PAGE>
CANDIE'S, INC. AND SUBSIDIARIES
INDEX TO FORM 10-QSB
FOR THE PERIOD ENDED APRIL 30, 1996
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets at April 30, 1996 3-4
and January 31, 1996 (unaudited)
Condensed Consolidated Statements of Operations for the 5
Three Months Ended April 30, 1996 and 1995 (unaudited)
Condensed Consolidated Statements of Stockholders Equity 6
for the Three Months Ended April 30, 1996 (unaudited)
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended April 30, 1996 and 1995 (unaudited) 7-8
Notes to Condensed Consolidated Financial Statements 9-14
ITEM 2.
Management's Discussion and Analysis of Financial 15-16
Condition and Results of Operations
PART II. OTHER INFORMATION 17
SIGNATURES 18
2
<PAGE>
Candie's, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
PART I.
ITEM 1.
April 30, January 31,
1996 1996
--------------------------
Assets
Current assets:
Cash and cash equivalents $ 133,877 $ 204,996
Accounts receivable, net of allowances of
$97,000 (April) and $64,000 (January) 807,853 1,228,812
Inventories 4,559,278 3,999,946
Prepaid expenses 694,315 534,909
--------------------------
Total current assets 6,195,323 5,968,663
--------------------------
Property and equipment -net 157,204 121,068
--------------------------
Other assets:
Noncompetition agreements 364,524 374.466
Trademark 4,760,762 4,831,466
Other 440,964 450.150
--------------------------
Total other assets 5,566,250 5,656,082
--------------------------
Total assets $11,918,777 $11,745,813
==========================
See accompanying notes to consolidated financial statements.
3
<PAGE>
Candie's, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
April 30, January 31,
1996 1996
----------------------------
<S> <C> <C>
Liabilities and stockholders' equity Current liabilities:
Accounts payable-trade $ 3,233,784 $ 1,874,412
Due to factor 778,135 1,299,096
Accrued expenses 890,143 1,183,515
Accounts payable-trade, expected to be
refinanced with common stock (Note 12) 1,680,000 1,680,000
----------------------------
Total current liabilities 6,582,062 6,037,023
Long-term liabilities 123,748 122,436
----------------------------
Total liabilities 6,705,810 6,159,459
----------------------------
Commitments, contingencies and other matters
Stockholders' equity:
Preferred stock, $.01 par value--shares authorized
5,000,000; none issued or outstanding
Common stock, $.001 par value--shares authorized
30,000,000; shares issued: 8,767,939 and
8,745,738 at April 30, 1996 and January 31, 1996 8,768 8,746
Additional paid-in capital 10,093,230 10,043,301
Deficit, since February 28, 1993, (deficit eliminated
$27,696,007) (4,889,031) (4,465,693)
----------------------------
Total stockholders' equity 5,212,967 5,586,354
----------------------------
Total liabilities and stockholders' equity $ 11,918,777 $ 11,745,813
============================
</TABLE>
4
<PAGE>
Candie's, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30, April 30,
1996 1995
--------------------------
<S> <C> <C>
Net revenues $ 6,258,373 $ 5,752,603
Cost of goods sold 4,627,699 4,241,435
--------------------------
Gross profit 1,630,674 1,511,168
--------------------------
Operating expenses:
Selling expenses 1,142,328 1,163,203
General and administrative expenses 771,791 802,516
--------------------------
1,914,119 1,965,719
--------------------------
Operating loss (283,445) (454,551)
Other deductions:
Interest expense - net (139,893) (174,447)
--------------------------
(139,893) (174,447)
Loss before provision for income taxes (423,338) (628,998)
Provision for income taxes -- 721
--------------------------
Net loss $ (423,338) $ (629,719)
==========================
Net loss per share $ (.05) $ (.07)
==========================
Weighted average number of common shares outstanding 8,750,424 8,531,205
==========================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Candie's, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
April 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained
Shares Amount Capital Deficit Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 31, 1996 8,745,738 $ 8,746 $10,043,301 $(4,465,693) $ 5,586,354
Issuance of common stock in
connection with retirement plan 22,201 22 49,929 -- 49,951
Net loss for the period ended
April 30, 1996 -- -- -- (423,338) (423,338)
-------------------------------------------------------------------------------
Balance at April 30, 1996 8,767,939 $ 8,768 $10,093,230 $(4,889,031) $ 5,212,967
===============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
Candie's, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
April 30, April 30,
1996 1995
---------------------------
Cash flows from operating activities:
Net loss $ (423,338) $ (629,719)
Items in net loss affecting cash:
Depreciation and amortization 103,718 104,795
Provision for allowances and bad debts expense 198 --
Changes in operating assets and liabilities:
Accounts receivable 420,761 170,514
Inventories (559,332) (680,325)
Prepaid expenses (159,406) (348,597)
Other assets -- (57,247)
Due to factor (520.961) 1,280,837
Accounts payable - trade 1,409,323 231,472
Accrued expenses (293,372) (341,271)
Long term liabilities 1,312 (51,047)
---------------------------
Net cash used in operating activities (21,097) (320,588)
---------------------------
See accompanying notes to consolidated financial statements.
7
<PAGE>
Candie's, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)
(unaudited)
Three Months Ended
April 30, April 30,
1996 1995
----------------------
Cash flows used in investing activities:
Capital expenditures $ (50,022) $ (2,811)
----------------------
Net cash used in investing activities (50,022) (2,811)
----------------------
Cash flows from financing activities:
Proceeds from notes payable -- 598,763
----------------------
Net cash provided by financing activities -- 598,763
----------------------
Net (decrease) increase in cash and cash equivalents (71,119) 275,364
Cash and cash equivalents, beginning of year 204,996 --
----------------------
Cash and cash equivalents, end of year $ 133,877 $ 275,364
======================
Supplemental cash flow information:
Cash paid during the period for interest $ 139,893 $ 160,273
======================
Cash paid during the period for income taxes $ 42,301 $ 41,421
======================
Supplemental disclosures of non cash activities:
Issuance of 22,201 shares of common stock for the three months ended April 30,
1996 as a matching contribution in connection with the Company's retirement
plan. The matching contribution of $49,951 was accrued at January 31, 1996.
8
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
April 30, 1996
1. Basis of Presentation and Description of Business
Candie's, Inc., the Registrant, together with its subsidiaries is referred to
herein as Candie's or the "Company."
The condensed consolidated financial statements included herein are
unaudited and include all adjustments (consisting of normal recurring accruals)
which are, in the opinion of management, necessary for a fair presentation of
the results of operations of the interim period pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included under generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures in such
financial statements are adequate to make the information presented not
misleading. These condensed consolidated statements should be read in
conjunction with the Company's financial statement and the notes thereto
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
January 31, 1996.
The consolidated financial statements include the accounts of Candie's,
Inc. and its wholly owned subsidiaries, Bright Star Footwear, Inc. ("Bright
Star"), Ponca, Ltd. ("Ponca"), Yulong Co., Ltd. ("Yulong"), and the Company's
60% owned subsidiary Intercontinental Trading Group, Inc. ("ITG"),
(collectively, the "Company"). Yulong was formed on July 21, 1995. Ponca was
formed March 15, 1994. All intercompany transactions and balances have been
eliminated from the consolidated financial statements for all periods presented.
The Company designs, markets, imports and distributes a variety of
moderately-priced, leisure and fashion footwear for women and girls under the
trademarks CANDIE'S(R), BONGO(R), ASPEN(R) and certain others. The Company is a
licensee of the BONGO and ASPEN trademarks. The Company's product line also
includes a wide variety of workboots, hiking shoes and men's leisure shoes
designed, marketed and distributed by Bright Star. The Company sells to
retailers throughout the United States.
2. Summary of Significant Accounting Policies
Use of Estimates
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 reported periods.
Actual results could differ from those estimates.
Inventories
Inventories, which consist entirely of finished goods, are valued at the lower
of cost or market. Cost is determined by the first-in, first-out ("FIFO")
method.
Property, Equipment and Depreciation
Property and equipment are stated at cost. Depreciation is computed over the
estimated useful lives of the assets (5-10 years) using accelerated methods.
9
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Goodwill and Candies Trademark
Goodwill in the amount of $551,093, represents the excess amount paid over the
fair value of assets acquired related to the acquisition of Bright Star and is
being amortized over fifteen years. Accumulated amortization at April 30, 1996
and January 31, 1996 was approximately $217,186 and $208,000, respectively.
The Candie's trademark is stated at cost, net of amortization, as determined by
its fair value relative to other assets and liabilities at the time of a quasi
reorganization. The quasi reorganization was approved by the Company's
stockholders effective February 28, 1993. In connection with the quasi
reorganization, the Company's assets, liabilities and capital accounts were
adjusted to eliminate the stockholders' deficiency. The trademark is being
amortized over twenty years.
The Company believes that the goodwill and trademark have continuing value, as
evidenced by sales and expected profitability of the related products, which
will be realized over the course of its useful life.
Revenue Recognition
Revenue, which include product sales and commissions, on an agency basis, is
recognized when the related goods have been shipped and legal title has passed
to the customer. Commissions received amounted to $476,834 and $375,353 for the
three months ended April 30, 1996 and 1995 respectively.
Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123, " Accounting for
Stock-Based Compensation" ("SFAS 123"). SFAS 123 is effective for fiscal years
beginning after December 31, 1995 and prescribes accounting and reporting
standards for all stock-based compensation plans, including employee stock
options, restricted stock, employee stock purchase plans and stock appreciation
rights.
10
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Stock-Based Compensation (continued)
SFAS 123 requires compensation expense to be recorded (i) using the new
fair value method or (ii) using existing accounting rules prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") and related interpretations with pro forma disclosure of
what net income and earnings per share would have been had the Company adopted
the new fair value method. The Company continues to account for its stock based
compensation plans in accordance with the provisions of APB 25.
Taxes on Income
The Company uses the liability method of accounting for income taxes under
Financial Accounting Statement No. 109 "Accounting for Income Taxes" ("FASB
109").
Earnings Per Share
Net income (loss) per common share is computed on the basis of the weighted
average number of shares of common stock and common stock equivalents
outstanding during each year, retroactively adjusted to give effect to all stock
splits. Common stock equivalents include stock options and warrants and the
computation of net income (loss) per common share includes the dilutive effect
of stock options and warrants, as appropriate, adjusted for treasury shares
assumed to be purchased from the proceeds using the modified treasury stock
method. Fully diluted net income (loss) per common share is not materially
different from primary net income (loss) per common share.
Reclassifications
Certain amounts from the April 30, 1995 financial statements have been
reclassified to conform to the current year's presentation.
Cash Flows
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with an initial maturity of three months or
less to be cash equivalents.
3. Acquisition of Bright Star Footwear, Inc.
In connection with the acquisition of Bright Star in 1991, the Company entered
into noncompete agreements with Bright Star's former Chairman and President
whereby the Company paid $1,225,000 and issued $2,275,000 of notes to such
individuals. At February 23, 1993, in connection with a quasi-reorganization,
the Company wrote down this asset by $1,718,000. The agreements are being
amortized over their respective terms. Accumulated amortization related to these
agreements was $1,418,000 and $1,408,000 at April 30, 1996 and January 31, 1996,
respectively.
11
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Prepaid Expenses
Prepaid expenses consist of the following:
April 30, January 31,
1996 1996
-------- --------
Advertising and marketing $383,071 $236,087
Royalties 64,118 113,185
Trade shows 154,022 94,340
Other 93,104 91,297
-------- --------
Totals $694,315 $534,909
======== ========
The Company records national advertising campaign costs as an expense upon the
first showing of the related advertising and other advertising costs when
incurred. Advertising expenses for the three months ended April 30, 1996 and
1995 amounted to $188,000 and $129,000, respectively.
5. Property and Equipment
Major classes of property and equipment consist of the following:
April 30, January 31,
1996 1996
-------- --------
Furniture, fixtures and equipment $857,897 $807,875
Transportation equipment 20,750 20,750
-------- --------
878,647 828,625
Less: accumulated depreciation 721,443 707,557
-------- --------
Net property and equipment $157,204 $121,068
======== ========
6. Factor Agreement
On April 2, 1993, the Company entered into an accounts receivable factoring
agreement. The agreement provides the Company with the ability to borrow funds
from the factor, limited to 80% of eligible accounts receivable and 50% of
eligible finished goods inventory (to a maximum of $6 million in inventory) in
which the factor has a security interest. The agreement also provides for the
opening of documentary letters of credit (up to a maximum of $2.5 million) to
suppliers, on behalf of the Company. The total credit facility is limited to $10
million. The factor requires a deposit equal to 43% of the amount of the letter
of credit to be opened. Borrowings bear interest at the rate of one and one-half
percent (1-1/2%) over the existing prime rate established by the Philadelphia
National Bank. The Company's President has personally guaranteed any and all
borrowings with the factor.
12
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Factor Agreement (continued)
Due to factor is comprised as follows:
April 30, January 31,
1996 1996
----------------------------
Accounts receivable assigned $4,962,321 $4,804,121
Outstanding advances 5,740,456 6,103,217
----------------------------
Due to Factor $ 778,135 $1,299,096
============================
Although the Company obtains credit insurance on the majority of its customers,
the Company may incur losses on accounts receivable as a result of customer
chargebacks and disputes.
7. Long-Term Liabilities
At April 30, 1996 maturities of long term liabilities (principally deferred
rents) are as follows: $19,677 (1998); $47,663 (1999); $52,470 (2000); $3,938
(2001).
8. Related Party Transactions
The Company entered into a Services Allocation Agreement with New Retail
Concepts, Inc. ("NRC"), (a significant shareholder of the Company, and an entity
whose principal shareholder is the Company's President) pursuant to which the
Company will provide NRC with financial, marketing, sales and other business
services for which NRC will be charged an allocation of the Company's expenses,
including employees' salaries associated with such services. Pursuant to such
agreement, NRC paid the Company $12,500 during the three months ended April 30,
1996 and 1995, respectively.
9. Leases
In August 1994, the Company entered into a new lease agreement and relocated its
corporate headquarters to Purchase, NY.
Rent expense was approximately $59,000 for the three months ended April 30, 1996
and 1995, respectively. As of April 30, 1996, future net minimum lease payments
under noncancelable operating lease agreements are as follows:
1997 $ 173,000
1998 255,000
1999 283,000
2000 289,000
2001 48,000
------------
$1,048,000
============
13
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. Retirement Plans
The Company sponsors a 401(k) Savings Plan (the "Savings Plan") which covers all
eligible full-time employees. Participants may elect to make pretax
contributions subject to applicable limits. At its discretion, the Company may
contribute additional amounts to the Savings Plan.
11. Other
On April 3, 1996 the Company entered into an agreement (the "Vendor Agreement")
with Redwood Shoe Co., a principal supplier of footwear products (the "Vendor")
to satisfy in full, certain trade payables (the "Payables") amounting to
$1,680,000. Under the terms of the Vendor Agreement, the Company agreed to; (i)
issue 1,050,000 shares of the Company's Common Stock (the "Vendor Shares") with
certain registration rights; (ii) issue an option to purchase 75,000 shares of
the Company's Common Stock at $1.75 per share; and (iii) make a future payment
of $50,000. The Company has agreed to file a registration statement (the
"Registration") covering the Vendor Shares. The Company's payables will be
released by the Vendor upon the earlier of the date the Registration is declared
effective, the date the Vendor sells all the Vendor Shares or the Vendor
receives an opinion of counsel that the Vendor Shares may be sold under rule
144(k). The Company has issued the Vendor Shares.
14
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table reflects the results of operations for the periods
indicated.
FINANCIAL HIGHLIGHTS
(in thousands except per share data)
Three Months Ended April 30,
--------------------------------
1996 1995
Net Revenues $ 6,258 $ 5,753
Gross Profit 1,631 1,511
Operating loss (283) (455)
Net loss (423) (630)
Net loss
per share (.05) (.07)
Total assets $ 11,919 $ 11,379
Long-term debt 124 192
Stockholders' equity 5,213 3,762
Three Months Ended April 30, 1996 compared to April 30, 1995
Net revenues increased by $505,770 (8.79%) for the three months ended April 30,
1996 compared with the three months ended April 30, 1995. The increase was
primarily due to the Company's sales and marketing efforts, including the
Company's decision to emphasize sales of casual and fashion footwear while
de-emphasizing sales of outdoor footwear products. Additionally, strong sales
increases occurred in the Company's licensed brand, BONGO. The increase in BONGO
sales continues to reflect the continued acceptance of these products in the
marketplace.
Gross margins were 26.05% in 1996 compared with 26.26% in 1995. Although pricing
pressures continue at the wholesale level and cost increases on products
occurred during the 1996 period, the Company was able to maintain margins as a
result of increased selling prices to customers.
Selling expenses were $1,142,328 in 1996 compared to $1,163,203 in 1995, a
decrease of 1.79%. General and administrative expenses were $771,791 in 1996
compared with $802,516 in 1995, a decrease of 3.82%. Operating expenses
decreased principally due to management's efforts to reduce overhead costs
through, among others, a decrease in payroll costs due to a reduction in
commissions paid and certain staff reductions.
Interest expense of $139,893 was down in 1996 from the $174,447 reported in the
1995 period. The reduction resulted from reduced average borrowings during the
year and more favorable interest rates.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
As a result of the foregoing, the Company's net loss for the three months ended
April 30, 1996 decreased to $423,338 from $629,719 for the corresponding period
ended April 30, 1995.
Liquidity and Capital Resources
The Company relies primarily upon cash flow from operations and borrowings under
its credit facility with its factor to finance its operations. For the three
months ended April 30, 1996, net cash used in operating activities was $21,097
as compared with $320,588 during the same period in the prior year.
At April 30, 1996, the Company had a working capital deficiency of $386,739
versus a working capital deficiency of $68,360 at January 31, 1996. The decrease
in working capital reflects the Company's investment in inventory for the peak
Fall/back-to- school season.
In May 1996 the Company entered into a lease for retail store space located in
the Galleria Mall in White Plains, New York where the Company intends to open
its first retail store by the end of Summer. The Company anticipates that the
cost to open the store will aggregate approximately $200,000.
Management anticipates it will be able to satisfy its ongoing cash requirements
for the foreseeable future, including the cost required to open the Company's
first retail store, primarily with cash flow from operations, borrowings under
its credit facility and if necessary, funds generated from the sale of
securities.
Seasonality
Demand for the Company's footwear has historically peaked during the months of
June through August (the Fall/back-to-school season). As a result, shipment of
the Company's products have been heavily concentrated in the second and third
fiscal quarters. Therefore, the Company's results of operations typically
fluctuate significantly from quarter to quarter. The Company has sought to
reduce fluctuations in its quarterly operating results by marketing additional
footwear categories during other selling seasons. However, there can be no
assurance that the Company will be able to achieve consistent quarterly
operating results in the future by implementing this strategy. The success of
this strategy depends upon market acceptance of the additional products offered
during selling seasons other than the peak season, of which there can be no
assurance. Accordingly, operating results may continue to fluctuate in the
future.
Inflation
The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on the Company's revenues or
profitability.
16
<PAGE>
PART II. Other Information Page
Item 1. Legal Proceedings
None
Items 2-5 Other
None
Item 6. Exhibits and Reports
Exhibit 10 Agreement dated as of April 3, 1996 between
the Company and Redwood Shoe Corp.
(incorporated by reference to the
comparable exhibit filed with the Company's
annual report on Form 10-KSB for the fiscal
year ended January 31, 1996.
Exhibit 11 Computations of Earnings Per Share 19
Exhibit 27 Financial Data Schedule 20
17
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CANDIE'S, INC.
By: /s/ Neil Cole
-----------------------------
Neil Cole, President,
(Principal Executive
and Accounting Officer)
Dated: June 15, 1996
18
EXHIBIT 11
CANDIE'S, INC. AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS PER SHARE
For the Three Months
Ended April 30,
1996 1995
---- ----
TOTAL EPS LOSS $ (423,338) $ (629,719)
=========== ===========
Weighted average number of
shares outstanding 8,750,424 8,531,205
=========== ===========
NET LOSS PER SHARE $ (.05) $ 0.07
=========== ===========
No additional income (earnings from investing the excess proceeds upon the
exercise of common stock equivalents) nor common stock equivalents were included
in the calculation of net loss per common share. The results would have been
antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM FORM 10-QSB AT APRIL 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FINANCIAL STATEMENTS INCLUDED IN SUCH FORM 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1996
<CASH> 133,877
<SECURITIES> 0
<RECEIVABLES> 807,853
<ALLOWANCES> 97,000
<INVENTORY> 4,559,278
<CURRENT-ASSETS> 6,195,323
<PP&E> 878,647
<DEPRECIATION> 721,443
<TOTAL-ASSETS> 11,918,777
<CURRENT-LIABILITIES> 6,582,062
<BONDS> 0
0
0
<COMMON> 8,768
<OTHER-SE> 5,204,199
<TOTAL-LIABILITY-AND-EQUITY> 11,918,777
<SALES> 6,258,373
<TOTAL-REVENUES> 6,258,373
<CGS> 4,627,699
<TOTAL-COSTS> 4,627,699
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139,893
<INCOME-PRETAX> (423,338)
<INCOME-TAX> 0
<INCOME-CONTINUING> (423,338)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (423,338)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
