SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31,1997
Commission file number 33-72880
GLENGATE APPAREL, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-3266971
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
207 Sheffield Street, Mountainside, New Jersey 07092
(Address of principal executive offices)
Registrant's telephone No. including area code: (908) 518-0006
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 and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report), and (2) has been subject to such filing
requirement for the past 90 days. Yes X No __
As of March 31,1997 there were 8,113,932 shares of Common Stock, par value $.001
per share, outstanding.
Transitional Small Business Disclosure format Yes __ No X
<PAGE>
GlenGate Apparel, Inc.
Quarterly Report on Form 10-QSB
Table Of Contents
Part I FINANCIAL INFORMATION
Page
Item 1 Financial Statements
Balance Sheets as of March 31,1997 (Unaudited)
and September 30,1996........................................... 3
Statements of Operations for the three and
six months ended March 31, 1997 and March 31,1996 (Unaudited)... 4
Statements of Cash Flows for the three and six months ended March
31,1997 and March 31,1996 (Unaudited)........................... 5
Notes to Financial Statements (Unaudited)....................... 6
Item 2 Management's Discussion and Analysis............................. 8
Part II OTHER INFORMATION
Item 6 Exhibits and Reports ........................................... 10
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 - Financial Statements
GLENGATE APPAREL, INC.
BALANCE SHEETS
================
<TABLE>
<CAPTION>
March 31,1997 September 30,
(Unaudited) 1996
ASSETS ( Note 3 )
<S> <C> <C>
Current:
Cash and cash equivalents $ 70,518 $ 34,917
Accounts receivable ( less allowance for doubtful accounts
of $34,468 and $173,515, respectively) 2,317,734 1,848,507
Inventories 1,593,215 1,206,000
Prepaid expenses and other current assets 441,770 314,968
----------- ------------
TOTAL CURRENT ASSETS 4,423,237 3,404,392
Property and equipment, ( net of accumulated depreciation
and amortization of $163,002 and $106,000 respectively) 447,056 257,530
Organizational costs, (net of accumulated amortization of
$6,976 and $5,945, respectively) 3,426 4,457
Security deposits and other assets 7,710 31,460
----------- ------------
TOTAL ASSETS $ 4,881,429 $ 3,697,839
............ ............
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Note payable-bank (Note 3) $ 2,248,083 $ 1,597,918
Current portion of equipment notes payable (Note 3) 31,731 5,127
Accounts payable and accrued expenses 1,526,707 490,915
Subordinated notes payable (Note 4) 440,000 190,000
------------- ------------
TOTAL CURRENT LIABILITIES 4,246,521 2,283,960
Commitments and contingencies ( Note 5)
Equipment notes payable less current portion 159,095 10,617
-------------- ------------
4,405,616 2,294,577
STOCKHOLDERS EQUITY (Note 6)
Common stock at cost $.001 par value - 10,000,000 shares authorized;
8,113,932 and 8,113,932 issued and outstanding 8,114 8,114
Additional paid-in capital 4,668,139 4,668,139
Accumulated deficit (4,200,440) (3,272,991)
-------------- ------------
TOTAL STOCKHOLDERS' EQUITY 475,813 1,403,262
.............. ............
TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES $ 4,881,429 $ 3,697,839
.............. ............
</TABLE>
See accompanying notes to financial statements ( Unaudited)
<PAGE>
GLENGATE APPAREL, INC.
STATEMENT OF OPERATIONS ( Unaudited)
===================================
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, 1997 March 31, 1996 March 31, 1997 March 31, 1996
<S> <C> <C> <C> <C>
Sales $ 2,800,522 $ 1,957,058 $ 3,986,124 $ 2,664,170
Cost of sales 2,043,063 1,190,657 2,843,501 1,642,841
-------------- -------------- ------------ -------------
Gross Profit 757,459 766,401 1,142,623 1,021,329
-------------- -------------- ------------ -------------
Operating Expenses
Warehousing 169,523 92,474 252,550 159,260
Design 69,029 51,368 120,515 96,277
Selling 505,320 299,507 837,836 557,052
General and administrative 436,678 286,929 742,568 556,537
-------------- -------------- ------------ ------------
TOTAL OPERATING EXPENSES 1,180,550 730,278 1,953,469 1,369,126
-------------- -------------- ------------ ------------
Operating Income ( Loss) (423,091) 36,123 (810,846) (347,797)
Interest Income
Interest ( Expense) (63,792) (44,921) (116,603) (71,763)
-------------- -------------- ------------- ------------
Net (Loss) $ (486,883) $ (8,798) $ (927,449) $ (419,560)
.............. .............. ............. .............
( Loss per share) $ (0.06) $ - $ (0.11) $ (0.07)
.............. .............. ............. .............
Weighted number of common
shares outstanding 8,113,932 6,414,325 8,113,932 6,357,469
.............. .............. ............. .............
</TABLE>
See accompanying notes to financial statements ( Unaudited)
<PAGE>
GLENGATE APPAREL, INC.
STATEMENTS OF CASH FLOWS ( Unaudited)
=====================================
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31,1997 March 31,1996 March 31,1997 March 31,1996
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (486,883) $ (8,798) $ (927,449) $ (419,560)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 29,016 18,514 58,031 37,028
Provision for doubtful accounts 12,676 (4,505) 18,256 (845)
Changes in assets and liabilities:
Inventories (124,100) (40,350) (387,215) (359,190)
Accounts receivable (1,034,994) (1,026,136) (487,481) (842,108)
Prepaid and other current assets (79,167) (85,721) (126,802) (134,543)
Accounts payable and accruals 708,504 139,854 1,035,792 439,866
-------------- -------------- ------------ --------------
Net cash provided by (used in)
operating activities (974,948) (1,007,142) (816,868) (1,279,352)
-------------- ------------- ------------ --------------
Cash flow from investing activities:
Purchases of property and equipment (223,602) (23,091) (246,528) (61,174)
Security deposits and other assets 23,750
-------------- ------------- ------------ --------------
Net cash provided by (used in) investing
activities (223,602) (23,091) (222,778) (61,174)
-------------- ------------- ------------ --------------
Cash flows from financing activities:
Payment of offering and other costs - (18,187) - (18,187)
Equipment notes 176,396 (3,384) 175,082 (6,764)
Notes payable - bank 842,372 1,032,221 650,165 1,056,156
Borrowing from (repayments to) stockholders 250,000 29,583 250,000 309,583
-------------- ------------- ------------ -------------
Net Cash provided by (used in) financing
activities 1,268,768 1,040,233 1,075,247 1,340,788
-------------- ------------- ------------ -------------
Net increase (decrease) in cash and
cash equivalents 70,218 10,000 35,601 262
Cash and cash equivalents beginning
of period 300 300 34,917 10,038
-------------- ------------- ------------ -------------
Cash and cash equivalents end of period $ 70,518 $ 10,300 $ 70,518 $ 10,300
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 58,481 $ 44,318 $ 106,357 $ 60,861
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements ( Unaudited)
<PAGE>
GLENGATE APPAREL, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-ORGANIZATION
GlenGate Apparel, Inc. (the "Company") was incorporated in the State of New
Jersey on November 8, 1993, and commenced operations with the first sales of its
products in March 1995. The Company designs, contracts to have made and markets
men's golf apparel. The Company's primary products consist of men's knit cotton
shirts, sweaters and woven cotton slacks, shorts and headwear. Customers of the
Company are primarily public and private golf course pro shops and resorts.
In order for the Company to sustain its current growth patterns, it will require
additional funding in 1997, including the replacement of its banking facility to
be more consistent with the capital needs during its initial period of growth.
Management has initiated discussions for additional growth capital to coincide
with its current needs. In the event that additional capital is not acquired,
revenues and operating results will be adversely affected.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
Inventories
Inventories are valued at the lower of cost or market with cost determined by
the first-in, first-out (FIFO) method. Inventories as of March 31,1997 consisted
substantially of finished goods.
Interim Financial statements
The interim financial statements as of and for the three and six months ended
March 31,1997 and for the three and six months ended March 31,1996 are unaudited
. The interim financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results for such
periods. The results of operations for the three and six months ended March
31,1997 are not necessarily indicative of the results to be expected for the
year ending September 30,1997.
NOTE 3 - NOTES PAYABLE - BANK
In September 1996, the Company entered into a two year revolving loan and
security agreement (the "Agreement") with a financial institution. Availability
under the Agreement is limited by a collateral formula calculated as the lesser
of $3,000,000 or 85% of qualified accounts receivable. The lender also agreed to
advance additional funds to the Company between October 1, 1996 and April 30,
1997 based on a collateral formula calculated as the lesser of $750,000 or 50%
of eligible Finished Goods Inventory. Interest accrues at a variable rate equal
to 11/2% in excess of the bank's prime lending rate ( 81/2% as of March 31, 1997
). Outstanding borrowings are collateralized by substantially all the assets of
the Company. Under the terms of the Agreement, the Company is also required to
meet various financial covenants as defined. The lender and the Company have
mutually agreed that the Agreement will terminate as of May 30, 1997. The
Company is in the process of obtaining replacement financing under similar
terms.
Additionally, the Company has outstanding borrowings under several equipment
notes payable aggregating $190,826 as of March 31,1997. Annual maturities of the
equipment notes are $53,511 per year through September 30,1998 and $54,437 in
the fiscal year ending September 30,1999.
NOTE 4 - NOTES PAYABLE TO RELATED PARTIES
The Company has currently outstanding $190,000 in subordinated notes and $11,600
in related accrued interest in favor of an officer and director and a former
officer. The funds were advanced at varying times during the developmental
stages to satisfy working capital needs. The notes are subordinate to all
creditors of the Company. The notes mature with interest at a rate per annum of
11/2% over Prime to be paid April 15, 1997. Principal and interest of $100,000
in subordinated notes was repaid to a former officer in April, 1997.
In addition, in January, 1997 an officer and director and a director advanced
the Company a total of $250,000 to satisfy working capital needs during the
Company's continued growth. The notes are subordinate to all creditors of the
Company. The notes are payable upon demand and bear interest at a rate of 12%,
payable monthly.
<PAGE>
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Through March 31,1997, the Company had purchase commitments for merchandise of
approximately $2,860,000
On February 14, 1997 the Company entered into a Consignment Agreement with Sun
Ice Ltd. and Sun Ice USA, Inc. to sell certain apparel inventory of Sun Ice on a
consignment basis whereby the Company agreed to sell such inventory and pay Sun
Ice for the cost of the goods sold and return, dispose of or purchase any unsold
goods upon the termination of the agreement on November 14, 1997. In addition,
on February 14, 1997 the Company entered into a Trademark License Agreement with
Sun Ice Ltd. and Sun Ice USA under which the Company was granted a license to
use the Sun Ice and Aureus trademarks within the United States. The Company has
agreed to pay a royalty based on a percentage of licensed net sales with the
annual minimum royalty ranging up to approximately $200,000 during the five year
term commencing December 1, 1997. The Sun Ice label consists of mens and ladies
golf outerwear and the Aureus label consists of mens golf apparel.
NOTE 6 - STOCKHOLDERS' EQUITY
Common Stock Options
In December 1994, the Company's Board of Directors approved the adoption of the
1994 Stock Option Plan (the "Plan") to provide incentives for selected persons
to promote the financial success and progress of the Company. The Plan provides
for the Compensation Committee or such other committee that the Board may
appoint to administer the Plan. The Plan provides for the reservation of
2,500,000 shares of Common Stock for issuance upon the exercise of granted
options.
As of March 31, 1997, 1,736,000 stock options were outstanding. Of the options
outstanding, 1,021,850 are exercisable at $1.00, 218,834 at $1.25, and 154,000
at prices between $1.125 and $2.50. In fiscal 1997 and 1998 281,984 and 59,332
options respectively, become exercisable at prices between $1.00 and $2.00. The
options expire at various dates through fiscal 2005. All options were granted
with exercise prices at quoted market value.
NOTE 7 - SUBSEQUENT EVENT - ISSUANCE OF DEBT
In April 1997 the Company completed a private placement of $750,000 in debt with
a lending group which includes a stockholder in the Company. In addition, the
lending group made available another $150,000 in connection with a letter of
credit. The debt bears interest at 21/2% above the prime rate quoted in the Wall
Street Journal (81/2% as of March 31,1997) and is collateralized by a second
lien on the Company's inventory, accounts receivable and trademarks. Principal
and any outstanding interest is due and payable on December 31, 1997.
As part of the transaction, an officer of the Company sold 135,000 shares of his
common stock to the lending group for $.20 per share and the Company agreed to
grant to the lending group, upon the occurrence of certain conditions, warrants
to acquire up to 270,000 shares of common stock with an exercise price equal to
60% of the common stock market value (as defined) during the thirty day period
prior to exercise of the warrants. Such warrants will be exercisable starting on
August 8, 1997 for a period of 3 years. In addition, if the debt is not repaid
by August 8, 1997, the officer has agreed to grant to the lending group options
to acquire an additional 90,000 shares of his common stock exercisable from
August 8, 1997 to August 18,1997 at $.20 per share, and the Company has agreed
to grant the lending group warrants to acquire an additional 180,000 shares of
common stock on the same terms as the warrants described above.
The estimated market value of the shares sold to the lending group by the
officer, less the proceeds received, along with the estimated market value of
the warrants to acquire 270,000 shares of common stock amounted to approximately
$140,000. This amount will be amortized as interest expense over the nine month
period ended December 31, 1997. The estimated market value of the 90,000 options
and the 180,000 warrants that may be granted on August 8, 1997 amounted to
approximately $92,000. This amount will be amortized to interest expense over
the period from August 8, 1997 to December 31, 1997 if such options and warrants
are granted.
As part of the debt agreement described above, the Company agreed to use its
best efforts to convene a special meeting of stockholders to approve an
amendment to the Company's Certificate of Incorporation to increase the
authorized level of common stock, and to provide for the issuance of Preferred
Stock.
<PAGE>
ITEM - 2 Management's Discussion and Analysis
Results of Operations
On February 14, 1997 the Company entered into a Consignment Agreement with Sun
Ice Ltd. and Sun Ice USA, Inc. to sell certain apparel inventory of Sun Ice on a
consignment basis whereby the Company agreed to sell such inventory and pay Sun
Ice for the cost of the goods sold and return, dispose of or purchase any unsold
goods upon the termination of the agreement on November 14, 1997. In addition,
on February 14, 1997 the Company entered into a Trademark License Agreement with
Sun Ice Ltd. and Sun Ice USA under which the Company was granted a license to
use the Sun Ice and Aureus trademarks within the United States. The Company has
agreed to pay a royalty based on a percentage of licensed net sales with the
annual minimum royalty ranging up to approximately $200,000 during the five year
term commencing December 1, 1997. The Sun Ice label consists of mens and ladies
golf outerwear and the Aureus label consists of mens golf apparel.
During the three months ended March 31, 1997, the Company had sales of
approximately $2,800,000 to an account base that exceeded 1,700 active accounts.
Comparatively, sales for the three months ended March 1996 were approximately
$1,957,000 to an account base that exceeded 1,100 active accounts. The resulting
increase in sales was 43% to an expanded account base that grew by over 54% . In
addition, sales made pursuant to the Sun Ice Consignment Agreement contributed
approximately $459,000 to the sales increase.
Sales for the six months ended March 31,1997 were approximately $3,986,000.
Sales for the six months ended March 31,1996 were approximately $2,664,000. The
resulting increase in sales was 50%.
Cost of goods sold as a percentage of sales for the three and six months ended
March 31,1997 were almost 73% and 71% respectively. Cost of goods sold for the
three and six months ended March 31,1996 was approximately 61%. The increase
primarily reflects the Company's decision to sell certain prior seasons
inventories at reduced prices.
Warehousing, design, selling and administrative expenses as a percentage of
sales for the three months ended March 31,1997 were approximately 42% and for
the six months ended March 31, 1997 were approximately 49%. Comparable costs for
the three months ended March 31,1996 were approximately 37% and for the six
months ended March 31, 1996 were approximately 51%. Such expenses increased due
to continued sales growth and costs related to acquiring rights to the Sun Ice
and Aureus trademarks and the infusion of additional funds.
Interest expenses for the three months and six ended March 31, 1997 were
$63,792 and $116,603 respectively compared to $44,921 and $71,763 for the same
periods ended March 31, 1996. These increases resulted from higher borrowings
required to fund the Company's net losses and to support the increased levels of
inventory and accounts receivable resulting from of the Company's growth.
The net loss for the three and six months ended March 31, 1997 were $486,883 and
$927,449 respectively compared to net losses of $8,798 and $419,560 for the same
periods ended March 31, 1996 as a result of the factors described above. As
demonstrated by the growth in sales, the Company is moving towards its plan with
a continued focus on improving operating results for fiscal 1997.
Liquidity and Capital Resources
The Company had cash used in operating activities during the quarter ended March
31, 1997 of $974,948. The cash was used to fund the Company's net loss and to
support increases in accounts receivable, inventories and prepaid expenses and
other current assets resulting from an expanding sales volume and was funded
primarily by borrowings under the Company's credit facilities and loans from an
officer and a director.
<PAGE>
While the Company currently anticipates having net positive cash flow from
operations for fiscal 1997, interim working capital requirements are expected to
be funded utilizing availability under the credit facility agreement signed in
September 1996 and a replacement facility which the Company is currently
pursuing, together with additional borrowings made in April 1997, as described
below. The Company's current credit facility provides availability limited by a
collateral formula calculated as the overall lesser of $3,000,000 or 85% of
qualified accounts receivable together with interim temporary financing
available between October 1, 1996 and April 30, 1997 of 50% of eligible finished
goods inventory to a maximum of $750,000 of availability. Interest accrues at a
variable rate equal to 11/2% in excess of the lender's prime lending rate (81/2%
as of March 3, 1997). On February 24, 1997, the lender notified the Company that
it intended to terminate the credit arrangement effective April 30, 1997. In
April 1997, the lender extended the date of termination of the credit
arrangement to May 30, 1997. Prior to such notification, the Company had
initiated discussions to replace the existing lender. Management continues such
discussions as part of its pursuit of additional growth capital to coincide with
its current needs. No assurances can be made that the Company will be able to
obtain alternate financing or that it will be available on terms acceptable to
the Company.
The Company further expects to fund interim working capital requirements
utilizing the funds obtained under a financing agreement with a separate lending
group signed in April 1997. The financing agreement provided for a loan to the
Company of $750,000, secured by a second lien on the Company's inventory,
receivables and trademarks. The lending group also made available $150,000 to
the Company in the form of a letter of credit. The debt is subordinated to the
credit facility lender and any replacement credit facility lender. The notes
mature on December 31, 1997 and bear interest at the prime rate plus 21/2% per
annum, payable monthly. In conjunction with this financing arrangement, an
officer of the Company agreed to sell shares and grant options to members of the
lending group and the Company agreed to issue warrants to the members of the
lending group upon the occurrence of certain events. Additionally, the Company
agreed to use its best efforts to make certain amendments to its Certificate of
Incorporation.
In order for the Company to sustain its current growth patterns and meet its
working capital requirements, it will require additional funding in 1997,
including the replacement of its banking facility to be more consistent with the
capital needs during its initial period of growth. Management has initiated
discussions for additional growth capital and alternate financing arrangements
to coincide with its current needs. In the event that additional capital is not
acquired, revenues and operating results will be adversely affected.
In February 1997, the Company acquired the exclusive right to distribute certain
golf apparel under the Sun Ice and Aureus trademarks in the United States for a
period of five (5) years, renewable at the option of the Company for three (3)
successive five (5) year periods. The product under these labels was initially
provided to the Company on a consignment basis. Although there can be no
assurances, management expects the acquisition of these distribution rights to
have a positive impact on the liquidity and operating results of the Company.
Future events, including the problems, expenses, difficulties and delays
encountered in connection with a new business and the competitive environment in
which the Company operates, may lead to cost overruns that could make the
Company's sources of working capital insufficient to fund the Company's planned
operations. No assurance can be given that the Company will be able to obtain
such funds or that the terms thereof will be acceptable to the Company.
<PAGE>
Important Factors related to forward-Looking Statements
The statements contained in this quarterly report or incorporated by reference
herein that are not purely historical are forward-looking statements and are
based on current expectations that involve a number of risks and uncertainties.
These forward-looking statements were based on assumptions that the Company
would continue to develop and introduce new products on a timely basis, that the
competitive conditions within the golf apparel industry would not change
materially or adversely, that the demand for the Company's golf apparel would
remain strong, that the market would accept the Company's new apparel lines,
that inventory risks due to shifts in market demand would be minimized, that the
Company's forecasts would accurately anticipate market demand, and that there
would be no material adverse change in the Company's operations or business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking information will prove to be
accurate. In addition, the business and operations of the Company are subject to
substantial risks which increase the uncertainty inherent in such
forward-looking statements. Budgeting and other management decisions are
subjective in many respects and thus susceptible in interpretations and periodic
revisions based on actual experience and business developments, the impact of
which may cause the Company to alter its marketing or other budgets, which may
in turn affect the Company's results of operations. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives planned for the Company will be
achieved.
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8 -K
Exhibits
Exhibit No. Description of Exhibit
27 Financial Data Schedule
Reports on form 8-K
The Company filed a Current report on Form 8-K on March 7, 1997, reporting under
Item 5 thereto that the Company received from its lender a notice of termination
of its Security Agreement, effective April 30, 1997. Prior to receipt of such
notice, the Company had determined that, in order to maintain its growth
patterns, it would require additional funding in 1997 ( including the
replacement of its credit facility ) to be more consistent with the capital
needs of the Company during its period of intense growth. As a result, the
Company had already initiated discussions with other potential lenders regarding
additional growth capital and alternate financing arrangements. On April 30,
1997, the lender extended the Security Agreement through May 30, 1997. The
Company believes that it will have implemented a replacement facility on or
before May 30, 1997.
<PAGE>
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GLENGATE APPAREL, INC.
/s/ George J. Gatesy
BY:_____________________________
Dated: May 14, 1997 George J. Gatesy, President
(principal executive officer)
/s/ Peter Culbertson
BY:_____________________________
Dated: May 14, 1997 Peter Culbertson, Chief
Operating Officer, Chief
Financial Officer, Secretary
and Treasurer
(principal financial and
accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000916394
<NAME> GlenGate Apparel, Inc.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1997
<CASH> 70,518
<SECURITIES> 0
<RECEIVABLES> 2,317,734
<ALLOWANCES> 34,468
<INVENTORY> 1,593,215
<CURRENT-ASSETS> 4,423,237
<PP&E> 447,056
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,881,429
<CURRENT-LIABILITIES> 4,246,521
<BONDS> 0
0
0
<COMMON> 8,114
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,881,429
<SALES> 2,800,522
<TOTAL-REVENUES> 2,800,522
<CGS> 2,043,063
<TOTAL-COSTS> 2,043,063
<OTHER-EXPENSES> 1,180,550
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,792
<INCOME-PRETAX> (486,883)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (486,883)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
