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 August 31, 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 0-4465
Sirco International Corp.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
New York 13-2511270
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
24 Richmond Hill Avenue, Stamford Connecticut 06901
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 203-359-4100
------------
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 3,875,400 shares of
Common Stock, par value $.10 per share, as of October 13, 1997.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
August 31, 1997 Nov. 30, 1996
--------------- --------------
(Unaudited) (See note)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................................ $ 399,429 $ 390,043
Accounts receivable ...................................... 4,349,840 2,825,764
Inventories .............................................. 6,983,964 4,406,066
Prepaid expenses ......................................... 575,490 256,134
Other current assets ..................................... 7,276 123,245
------------ ------------
Total current assets ......................................... 12,315,999 8,001,252
------------ ------------
Property and equipment at cost ............................... 1,729,651 1,867,167
Less accumulated depreciation ................................ 904,466 979,457
------------ ------------
Net property and equipment ................................... 825,185 887,710
------------ ------------
Other assets ................................................. 231,881 147,402
Investment in and advances to subsidiary ..................... 519,352 540,497
------------ ------------
Total assets ................................................. $ 13,892,417 $ 9,576,861
============ ============
Liabilities and stockholders' equity Current liabilities:
Loans payable to financial institutions .................. $ 5,748,665 $ 1,071,000
Short-term loans payable - other ......................... 13,961 529,821
Current maturities of long-term debt ..................... 7,002 6,735
Accounts payable ......................................... 2,874,206 2,919,511
Accrued expenses ......................................... 1,307,686 1,920,897
------------ ------------
Total current liabilities .................................... 9,951,520 6,447,964
------------ ------------
Long-term debt, less current maturities ...................... 332,921 348,401
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(continued)
August 31, 1997 Nov. 30, 1996
--------------- --------------
(Unaudited) (See note)
<S> <C> <C>
Stockholders' equity:
Common stock, $.10 par value; 10,000,000 shares authorized,
3,795,400 issued (1997), 1,315,200 issued (1996) ......... 379,540 131,520
(1996 unadjusted for two-for-one stock split)
Preferred stock, $.10 par value; 1,000,000 authorized
none issued
Capital in excess of par value ........................... 6,171,673 4,267,534
Retained earnings (deficit) .............................. (2,299,056) (1,019,367)
Treasury stock at cost ................................... (27,500) (27,500)
Accumulated foreign translation adjustment ............... (616,681) (571,691)
------------ ------------
Total stockholders' equity ................................... 3,607,976 2,780,496
------------ ------------
Total liabilities and stockholders' equity ................... $ 13,892,417 $ 9,576,861
============ ============
See notes to the condensed consolidated financial statements.
Note:The balance sheet at November 30, 1996 has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by generally accepted accounting principles.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
For The Nine Months Ended For The Three Months Ended
------------------------------ ------------------------------
Aug. 31, 1997 Aug. 31, 1996 Aug. 31, 1997 Aug. 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales ........................... $ 12,112,360 $ 21,894,376 $ 5,936,534 $ 7,678,165
Cost of goods sold .................. 9,756,035 16,275,046 4,813,371 5,916,856
------------ ------------ ------------ ------------
Gross profit ........................ 2,356,325 5,619,330 1,123,163 1,761,309
Selling, warehouse, general and
administrative expenses ........ 3,590,880 4,508,019 1,360,511 1,523,249
------------ ------------ ------------ ------------
(1,234,555) (1,111,311 (237,348) 238,060
Other (income) expense:
Interest expense..................... 378,828 598,067 136,352 212,526
Interest income...................... (47,775) (44,094) (16,029) (12,612)
Miscellaneous income, net ........... (280,919) (218,279) (106,600) (119,932)
------------ ------------ ------------ ------------
Net income (loss) before income taxes (1,279,689) 775,587 (251,071) 158,078
Provision for income taxes........... -- 258,964 -- 85,208
------------ ------------ ------------ ------------
Net income (loss) ................... $ (1,279,689) $ 516,623 $ (251,071) $ 72,780
============ ============ ============ ============
Net income (loss) per share of
common stock: .................. $ (0.43) $ 0.20 $ (0.07) $ 0.03
============ ============ ============ ============
Shares used in computing earnings
(loss) per common and comon
equivalent shares * ............ 2,985,061 2,570,672 3,361,107 2,619,400
============ ============ ============ ============
</TABLE>
* Restated to give effect to 2-for-1 stock split in 1997.
<PAGE>
<TABLE>
<CAPTION>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
August 31,1997 August 31, 1996
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities: .............. ($1,279,689) $ 516,623
Net income (loss)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization ................. 78,523 63,060
Provision for losses in accounts receivable ... 54,033 17,172
Loss in sale of property and equipment ........ 7,104 (313)
Changes in operating assets and liabilities:
Accounts receivable .......................... (1,597,555) (665,127)
Inventories .................................. (2,587,150) 986,561
Prepaid expenses ............................. (319,780) (246,832)
Other current assets ......................... 115,969 137,104
Other assets ................................. (84,616) 46,393
Accounts payable and accrued expenses ........ (648,561) 375,887
----------- -----------
Net cash (used in) provided by operating activities: (6,261,722) 1,230,528
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment ................. (36,277) (65,517)
Proceeds from sale of property and equipment ....... 3,655 3,000
Cash in flow from agreement to sell subsidiary ..... 21,145 --
----------- -----------
Net cash used in investing activities .............. (11,477) (62,517)
----------- -----------
Cash flows from financing activities:
Increase (decrease) in loans payable to
financial institutions and short-term
loans payable-other ............................ 4,162,212 (927,996)
Proceeds from exercise of stock options ............ 195,567 250,000
Proceeds from private equity placement ............. 609,000 --
Proceeds from exercise of stock warrants ........... 1,347,592
Repayment of long-term debt ........................ (8,537) (222,862)
----------- -----------
Net cash provided by (used in) financing activities 6,305,834 (900,858)
----------- -----------
Effect of exchange rate changes on cash ............ (23,249) 244
----------- -----------
Increase in cash and cash equivalents .............. 9,386 267,397
Cash and cash equivalents at beginning of period ... 390,043 176,241
----------- -----------
Cash and cash equivalents at the end of period ..... $ 399,429 $ 443,638
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sirco International Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
August 31,1997 August 31, 1996
-------------- ---------------
<S> <C> <C>
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest ....................................... $ 369,194 $ 530,219
Income taxes ................................... $ 300,015 $ --
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE>
SIRCO INTERNATIONAL CORP.
Notes To Condensed Consolidated Financial Statements (Unaudited)
Note 1-Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended August 31, 1997
are not necessarily indicative of the results that may be expected for the year
ended November 30, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended November 30, 1996.
Note 2-Financing Arrangements
On December 17, 1996, the Company's factoring agreement with Rosenthal &
Rosenthal Inc. was terminated and replaced with a financing agreement with Coast
Business Credit, a division of Southern Pacific Thrift and Loan Association
("Coast"), that provides for revolving loans and letter of credit financing in
the amount of the lesser of $7,000,000 or the sum of (a) 80% of eligible
accounts receivable (as defined) and (b) 50% of eligible inventory (as defined)
up to a maximum inventory loan of $3,000,000 less 50% of letter of credit
financing outstanding. The amount of the facility available for letter of credit
financing is limited to $2,500,000. The loan bears interest at 2% above the
prime rate, matures on December 17, 1998, and is guaranteed by the Company's
Chairman and Chief Executive Officer. The Company has granted Coast a security
interest in substantially all of the Company's assets. The agreement with Coast
contains various restrictive covenants, including among others, a restriction on
the payment or declaration of any cash dividends, a restriction on the
acquisition of any assets other than in the ordinary course of business in
excess of $100,000, restrictions related to mergers, borrowing and debt
guarantees, and a $100,000 annual limitation on the acquisition or retirement of
the Company's common and preferred stock, which acquisitions or retirements are
limited to transactions with employees, directors and consultants pursuant to
the terms of employment, consulting or other stock restriction agreements with
such persons. The agreement also requires the Company to maintain a minimum
tangible net worth of $1,400,000. As of August 31, 1997, the Company owed Coast
approximately $5,749,000 and had outstanding letters of credit amounting to
approximately $537,000. At August 31, 1997, the prime rate was 8.50%.
In January 1997, the Company's Canadian subsidiary, Sirco International (Canada)
Ltd. ("Sirco Canada"), was advised by its bank, National Bank of Canada, that it
would no longer provide Sirco Canada a revolving line of credit but would
continue to provide the real property mortgage loan on Sirco Canada's office and
warehouse facility. The mortgage loan is payable in monthly installments of
approximately $3,500, including interest at 10.25%, with a balloon payment of
approximately $325,000 in the year 2000. At August 31, 1997, the principal
amount of the mortgage loan was approximately $340,000.
<PAGE>
In March 1995, the Company entered into an agreement with Yashiro Company, Inc.
("Yashiro"), pursuant to which Yashiro agreed to issue or cause to be issued,
until March 20, 1997, unsecured trade letters of credit in an aggregate amount
of up to the lesser of $1,200,000 or 35% of the book value of the Company's
inventory. On August 28,1996, the agreement was amended to, among other things,
reduce the aggregate amount of letters of credit to be issued to the lesser of
$1,000,000 or 35% of the book value of the Company's inventory. Yashiro charged
the Company a handling fee of 3% for each letter of credit that was opened. All
amounts borrowed from Yashiro under the agreement were due and payable on June
30, 1997. Interest was payable to Yashiro monthly at 2% above the prime rate. On
June 20,1997, the Company repaid the entire obligation to Yashiro under the
Letter of Credit Agreement.
<PAGE>
Item 2. Management's Analysis and Discussion of Financial Condition and Results
of Operations
The following discussion and analysis contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such a difference include, among others, general economic and
business conditions; industry trends; the loss of major customers; changes in
demand for the Company's product; the timing of orders received from customers;
dependence on foreign sources of supply; the loss of licenses; availability of
management; availability, terms and deployment of capital; and the seasonal
nature of the Company's business.
Three and Nine Months Ended August 31, 1997 vs. August 31, 1996
Net sales for the three and nine months ended August 31, 1997 decreased by
approximately $1,742,000 and $9,782,000, respectively, to approximately
$5,937,000 for the three months ended August 31, 1997 and approximately
$12,112,000 for the nine months ended August 31, 1997, as compared to
approximately $7,678,000 and $21,894,000, respectively, reported for the
comparable periods in 1996. Net sales for the Company's U.S. operations
decreased by approximately $646,000 and $6,318,000 for the three and nine months
ended August 31, 1997. This decrease in net sales is attributable to the loss by
the Company in fiscal 1996 of the license from FILA Sport S.P.A. ("FILA") (see
below). The sale of FILA product accounted for approximately $2,445,000 and
$8,179,000 for the three and nine months ended August 31, 1996. The Company had
no sales of FILA product in fiscal 1997. Net sales for the Company's Canadian
subsidiary decreased by $1,096,000 and $3,464,000 for the three and nine months
ended August 31, 1997. This decrease in net sales is primarily attributable to
the loss by Sirco Canada in fiscal 1996 of the license from Airway Industries
Inc. ("Airway") to sell "Atlantic" luggage (see below). For the three months
ended August 31, 1997, Sirco Canada had no sales of Airway product as compared
to approximately $1,165,000 in fiscal 1996. For the nine months ended August 31,
1997, Sirco Canada sold approximately $514,000 (partially in liquidation of its
remaining inventories) of Airway product as compared to approximately $4,036,000
during the same period in fiscal 1996. The Company's gross profit for the three
and nine months ended August 31, 1997 decreased by approximately $638,000 and
$3,263,000, respectively, to approximately $1,123,000 and $2,356,000,
respectively, from approximately $1,761,000 and $5,619,000 reported in the
period fiscal periods. The gross profit percentage for the three and nine months
ended August 31, 1997 decreased to approximately 18.9% and 19.5%, respectively,
from approximately 22.9% and 25.7% reported in the prior fiscal year. The
decrease in gross profit percentage is primarily attributable to the lack of a
sufficiently large revenue base over which to spread fixed costs and change in
product mix to a lower percentage of sales of licensed products that
traditionally have a higher gross profit margin than the Company's other product
lines.
After extensive negotiations in February 1996, the Company and FILA entered into
an agreement pursuant to which the Company ceased shipping products under the
FILA license on June 30, 1996, subject to certain rights with respect to
remaining inventory. The Company sold approximately $2,445,000 and $8,179,000 of
FILA product in the three and nine months ended August 31, 1996 and
approximately $8,584,000 of FILA product in fiscal 1996. The loss of the FILA
trademark had an adverse impact on the Company's results of operations for the
three and nine months ended August 31, 1997 and will have an adverse impact on
the Company's results of operations for the fiscal quarter ending November 30,
1997. While the Company originally expected that a significant portion of the
<PAGE>
net sales of FILA product would be replaced by sales of Perry Ellis and Hedgren
product, sales of such products to the Company's retail customers has been
significantly lower than anticipated. The Company started shipping product under
these licenses in the fourth quarter of fiscal 1996 and has recorded net sales
of approximately $2,430,000 since the inception of these licenses. Future net
sales will be negatively impacted if sales from these licenses or increases in
sales under other existing licenses do not grow to the sales volume levels
obtained by FILA product.
During fiscal 1996, Airway notified the Company that it would not renew its
license agreement with the Company, pursuant to which Sirco Canada was granted
an exclusive license to sell in Canada, luggage and luggage related products
under the trade names "Atlantic" and "Oleg Cassini" through December 31, 1996.
In November 1996, the Company entered into an Asset Purchase Agreement with
Airway, whereby Airway agreed, among other things, to purchase any remaining
Atlantic inventory owned by Sirco Canada on December 31, 1996, to purchase
certain fixed assets and to enter into a two year lease for a substantial
portion of the premises owned by Sirco Canada at fair market value. In November
1996, the Company restructured Sirco Canada, hired a new President to run the
operation and started to market the Company's other licensed products in Canada,
including product incorporating the licensed "Perry Ellis" and "Hedgren" names,
symbols and logos. Sirco Canada sold approximately $514,000 of Airway product in
the first quarter of fiscal 1997 prior to the December 31, 1996 termination
date. Sirco Canada sold approximately $1,165,000 and $4,036,000 of Airway
product for the three and nine months ended August 31, 1996 and sold
approximately $5,782,000 of Airway product in fiscal year 1996. The loss of the
Airway license had an adverse effect on the Company's results of operations for
the three and nine months ended August 31, 1997 and will have an adverse effect
on Sirco Canada's results of operations for the remainder of fiscal year ended
November 30, 1997 and throughout the fiscal year ending November 30, 1998.
The Company is in discussions to terminate its license for Skechers products,
which products have not generated the sales volume that was anticipated, and is
pursuing other licenses which it believes will have more rapid acceptance in the
marketplace.
Selling, warehouse, and general and administrative expenses decreased for the
three and nine months ended August 31, 1997 by approximately $163,000 and
$917,000, respectively, from the comparable periods in fiscal 1996. Selling,
warehouse, and general and administrative expenses decreased by approximately
$4,000 and $379,000 for the three and nine months ended August 31, 1997,
respectively, for the Company's Luggage and Backpack Divisions and approximately
$159,000 and $538,000 for the three and nine months ended August 31, 1997,
respectively, for the Company's Canadian subsidiary. For the three and nine
months ended August 31, 1997, selling expenses expense decreased approximately
$74,000 and $595,000, respectively, and warehouse expenses decreased
approximately $9,000 and $204,000, respectively. Additionally, for the three and
nine months ended August 31, 1997, general and administrative expenses decreased
approximately $79,000 and $117,000, respectively. The decrease in selling
expense is a direct result of the reduction in sales of licensed product while
the reduction in warehouse and general and administrative expense is primarily a
result of the restructuring of the Company's Canadian operation at the end of
fiscal 1996.
Interest expense for the three and nine months ended August 31, 1997 decreased
by approximately $75,000 and $223,000, respectively, from the amounts reported
in the same periods in fiscal 1996 due to lower average borrowings.
Miscellaneous income for the three months ended August 31, 1997 decreased by
approximately $13,000 and increased by approximately $63,000 for the nine months
ended August 31, 1997 over the amounts reported in the same periods in fiscal
1996. The increase for the nine months was due to the increase in commissions
from sales arranged for by the Company for direct shipments from a supplier to a
customer.
<PAGE>
Liquidity and Capital Resources
At August 31, 1997, the Company had cash and cash equivalents of approximately
$399,000, and working capital of approximately $2,364,000.
Net cash (used in) provided by operating activities aggregated approximately
($6,262,000) and $1,231,000 in the nine month fiscal periods ended August 31,
1997 and August 31, 1996, respectively. The increase of approximately $7,492,000
in net cash used in operating activities in fiscal 1997, as compared to fiscal
1996, primarily reflects the net operating loss of $1,280,000 in fiscal 1997 as
compared to net operating income of approximately $517,000 in fiscal 1996, and
an increase in the use of cash of approximately $2,587,000 for inventory,
approximately $1,598,000 for accounts receivable, and approximately $733,000 for
accounts payable and accrued expenses. The increase in inventory levels is
primarily due to accelerating inventory purchases due to fourth quarter quota
shortage constraints and to a lesser extent slower than anticipated demand from
customers in the third quarter of fiscal 1997. The increase in use of cash for
accounts receivable is primarily due to the Company no longer factoring the
receivables with a third party, resulting in a change in the presentation of
accounts receivable on the financial statements. The increase in the use of cash
for accounts payable and accrued expenses is primarily due to the efforts of the
Company to stay current with trade vendors in fiscal 1997.
Net cash used in investing activities aggregated approximately $11,500 and
$63,000 in the nine month fiscal periods ended August 31, 1997 and August 31,
1996, respectively. The principal uses of cash from investing activities in
fiscal 1997 and fiscal 1996 was for the purchase of equipment. The principal
source of cash provided from investing activities in fiscal 1997, was the
proceeds of sale of equipment, and proceeds of a note receivable from a 1992
sale of a subsidiary.
Net cash provided by (used in) financing activities aggregated approximately
$6,306,000 and ($901,000) in the nine month fiscal periods ended August 31, 1997
and August 31, 1996, respectively. In the nine months ended August 31, 1997,
approximately $4,162,000 of net cash was provided by short-term debt,
approximately $196,000 was provided from proceeds from the exercise of stock
options, approximately $1,348,000 was provided from proceeds from the exercise
of stock warrants and $609,000 was provided from a private equity placement. In
the nine months ended August 31, 1996, the Company used net cash to repay
approximately $1,151,000 in short and long-term debt. Also in the 1996 period,
the Company received $250,000 in proceeds from the exercise of stock options.
In March 1995, the Company entered into an agreement with Yashiro, pursuant to
which Yashiro had agreed to issue or cause to be issued, until March 20, 1997,
unsecured trade letters of credit in an aggregate amount of up to the lesser of
$1,200,000 or 35% of the book value of the Company's inventory. See Note 2 to
Notes to Condensed Consolidated Financial Statements (Unaudited). On June 20,
1997, the Company repaid the entire obligation to Yashiro under the Letter of
Credit Agreement.
On December 17, 1996, the Company's factoring agreement with Rosenthal &
Rosenthal Inc. was terminated and replaced with a financing agreement with Coast
Business Credit, a division of Southern Pacific Thrift & Loan Association
("Coast"). See Note 2 to Notes to Condensed Consolidated Financial Statements
(Unaudited). As of August 31, 1997, the Company was indebted to Coast in the
amount of approximately $5,749,000 and had outstanding letters of credit
amounting to approximately $537,000.
<PAGE>
In January 1997, Sirco Canada was advised by its bank, National Bank of Canada,
that it would no longer provide Sirco Canada a revolving line of credit but
would continue to provide the real property mortgage loan on Sirco Canada's
office and warehouse facility. See Note 2 to Notes to Condensed Consolidated
Financial Statements (Unaudited). At August 31, 1997, the principal amount of
the mortgage loan was approximately $340,000. The Company is currently using the
Coast line of credit to provide letter of credit financing that was formerly
provided by National Bank of Canada.
For the period ended August 31, 1997, the Company had approximately $36,000 in
capital expenditures. The Company does not plan to make significant capital
expenditures in fiscal 1997.
The Company believes that its existing cash and cash equivalent balances,
present sources of financing and cash flow from operations will be sufficient to
meet the Company's cash and capital requirements for at least the next twelve
months. However, if the depressed levels of sales do not increase or the Company
is unable to improve its cash position by raising additional capital, the
Company may experience temporary cash shortages, which could have an adverse
effect on its financial condition or results of operations.
<PAGE>
SIRCO INTERNATIONAL CORP.
PART II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
<PAGE>
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 hereunto duly authorized.
Sirco International Corp.
October 15, 1997 By: /s/ Joel Dupre
- ---------------- --------------
Date Joel Dupre
Chairman of the Board and
Chief Executive Officer
October 15, 1997 By: /s/Paul Riss
- ---------------- ------------
Date Paul Riss
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
No. Description
--- -----------
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from the Balance
Sheet and Income Statement and is qualified in its entirety by reference to such
financial statements."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> AUG-31-1997
<CASH> 399,429
<SECURITIES> 0
<RECEIVABLES> 4,792,454
<ALLOWANCES> 442,614
<INVENTORY> 6,983,964
<CURRENT-ASSETS> 12,315,999
<PP&E> 1,729,651
<DEPRECIATION> 904,466
<TOTAL-ASSETS> 13,892,417
<CURRENT-LIABILITIES> 9,951,520
<BONDS> 332,921
0
0
<COMMON> 379,540
<OTHER-SE> 3,228,436
<TOTAL-LIABILITY-AND-EQUITY> 13,892,417
<SALES> 12,112,360
<TOTAL-REVENUES> 12,393,279
<CGS> 9,756,035
<TOTAL-COSTS> 3,590,880
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 373,828
<INCOME-PRETAX> (1,279,689)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,279,689)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,279,689)
<EPS-PRIMARY> (.43)
<EPS-DILUTED> (.43)
</TABLE>
