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 JUNE 30,1997
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 June 30,1997 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
Page
Part I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets as of June 30,1997 (Unaudited)
and September 30,1996 ......................................... 3
Statements of Operations for the three and nine
months ended June 30,1997 and June 30,1996 (Unaudited)......... 4
Statements of Cash Flows for the three and nine
months ended June 30,1997 and June 30,1996 (Unaudited)......... 5
Notes to Financial Statements (Unaudited)..................... 6
Item 2 Management's Discussion and Analysis........................... 8
Part II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security-Holders........... 10
Item 6 Exhibits and Reports on Form 8-K.............................. 10
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 - Financial Statements
<TABLE>
<CAPTION>
GLENGATE APPAREL, INC.
BALANCE SHEETS
================
June 30,1997 September 30,
(Unaudited) 1996
<S> <C> <C>
ASSETS ( Note 3 )
Current:
Cash and cash equivalents $ 314,656 $ 34,917
Accounts receivable ( less allowance for doubtful accounts
of $36,322 and $173,515, respectively) 2,079,485 1,848,507
Inventories
1,602,963 1,206,000
Prepaid expenses and other current assets 372,737 314,968
-------------- -------------
TOTAL CURRENT ASSETS 4,369,841 3,404,392
Property and equipment, ( net of accumulated depreciation
and amortization of $191,502 and $106,000 respectively) 474,524 257,530
Organizational costs, (net of accumulated amortization of
$7,491 and $5,945, respectively) 2,911 4,457
Deferred financing cost 93,333 -
Security deposits and other assets 7,710 31,460
-------------- -------------
TOTAL ASSETS $ 4,948,319 $ 3,697,839
.............. .............
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Note payable-bank (Note 3) $ 1,976,149 1,597,918
Current portion of equipment notes payable (Note 3) 31,731 5,127
Accounts payable and accrued expenses 846,457 490,915
Notes payable to related parties (Note 4) 350,000 190,000
Subordinated notes payable (Note 5) 1,500,000 -
-------------- -------------
TOTAL CURRENT LIABILITIES 4,704,337 2,283,960
Commitments and contingencies ( Note 6)
Equipment notes payable less current portion 169,897 10,617
-------------- -------------
4,874,234 2,294,577
STOCKHOLDERS EQUITY (Note 7)
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 ( Note 5 ) 4,808,139 4,668,139
Accumulated deficit (4,742,168) (3,272,991)
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 74,085 1,403,262
.............. .............
TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES $ 4,948,319 $ 3,697,839
.............. .............
</TABLE>
See accompanying notes to financial statements ( Unaudited)
<PAGE>
<TABLE>
<CAPTION>
GLENGATE APPAREL, INC.
STATEMENT OF OPERATIONS ( Unaudited)
===================================
Three Months Ended Nine Months Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
<S> <C> <C> <C> <C>
Sales 2,604,887 2,213,544 6,591,011 4,877,713
Cost of sales 1,750,288 1,387,975 4,593,789 3,030,816
-------------- -------------- ------------- ---------------
Gross Profit 854,599 825,569 1,997,222 1,846,897
-------------- -------------- ------------- ---------------
Operating Expenses
Warehousing 123,016 84,881 375,566 244,140
Design 61,472 53,230 181,987 149,507
Selling 579,039 378,226 1,416,875 935,278
General and administrative 474,406 304,745 1,216,974 861,384
-------------- -------------- ------------- ---------------
TOTAL OPERATING EXPENSES 1,237,933 821,082 3,191,402 2,190,309
-------------- -------------- ------------- ---------------
Operating Income ( Loss) (383,334) 4,487 (1,194,180) (343,412)
Interest Income
Interest ( Expense) (158,327) (53,056) (274,930) (124,717)
-------------- -------------- ------------- ---------------
Net (Loss) $ (541,661) $ (48,569) $ (1,469,110) (468,129)
.............. .............. ............. ...............
( Loss per share) $ (0.07) (0.01) (0.18) (0.07)
.............. .............. ............. ...............
Weighted number of common
shares outstanding 8,113,932 6,813,831 8,113,932 6,509,034
.............. .............. ............. ...............
</TABLE>
See accompanying notes to financial statements ( Unaudited)
<PAGE>
<TABLE>
<CAPTION>
GLENGATE APPAREL, INC.
STATEMENTS OF CASH FLOWS ( Unaudited)
=====================================
Three Months Ended Nine Months Ended
June 30,1997 June 30, 1996 June 30,1997 June 30,1996
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss (541,727) (48,569) (1,469,176) (468,129)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 75,683 18,514 133,714 55,542
Provision for doubtful accounts 13,896 5,381 32,152 4,536
Changes in assets and liabilities:
Inventories (9,748) (281,975) (396,963) (641,165)
Accounts receivable 224,351 (439,777) (263,130) (1,281,885)
Prepaid and other current assets 69,033 (12,627) (57,769) (147,170)
Accounts payable and accruals (680,250) 202,588 355,542 642,454
-------------- -------------- ------------- ------------
Net cash provided by (used in)
operating (848,762) (556,465) (1,665,630) (1,835,817)
-------------- -------------- ------------- ------------
Cash flow from investing activities:
Purchases of property and equipment (55,968) (21,511) (302,496) (82,685)
Security deposits and other assets - - 23,750 -
-------------- -------------- ------------- ------------
Net cash provided by (used in) investing
activities (55,968) (21,511) (278,746) (82,685)
-------------- -------------- ------------- ------------
Cash flows from financing activities:
Proceeds from options exercised - 25,000 - 85,000
Payment of offering and other costs - (52,938) - (71,125)
Equipment notes 10,802 (4,478) 185,884 (11,242)
Notes payable - bank (271,934) 566,800 378,231 1,622,539
Borrowings from (repayments to)
stockholders (90,000) 90,000 160,000 340,000
Subordinated notes borrowings
(repayments) 1,500,000 - 1,500,000 -
-------------- -------------- ------------- ------------
Net Cash provided by (used in) financing
activities 1,148,868 624,384 2,224,115 1,965,172
------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 244,138 46,408 279,739 46,670
Cash and cash equivalents
beginning of period 70,518 10,300 34,917 10,038
-------------- -------------- ------------- ------------
Cash and cash equivalents
end of period $ 314,656 $ 56,708 $ 314,656 $ 56,708
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 104,053 $ 53,056 $ 210,410 $ 124,717
========= ========= ========= =========
</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.
On June 22, 1997 the Company signed an agreement for the issuance of 2,500,000
shares of common stock and certain stock options for $2,500,000 with American
Marketing Industries, Inc. American Marketing Industries, Inc. provided the
Company with a $600,000 short term bridge loan in June, 1997, which loan was
paid on July 11, 1997 at the time of issuance of the common stock and options.
In addition, effective July 1, 1997 the Company also agreed to amend its
existing revolving loan and security agreement through September, 1998.
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 June 30,1997 consisted
substantially of finished goods.
Interim Financial statements
The interim financial statements as of and for the three and nine months ended
June 30,1997 and for the three and nine months ended June 30,1996 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 nine months ended June
30,1997 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 was originally 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 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 June 30, 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 had mutually agreed that the
Agreement would terminate as of May 30, 1997. On July 25, 1997 the lender and
the Company agreed to amend the Agreement to increase the collateral formula to
be calculated as the lesser of $4,000,000 or 85% of qualified accounts
receivable and 50% of inventory with a sublimit of $1,200,000, to increase the
interest rate to 21/4% in excess of the bank's prime lending rate, and to
continue the Agreement until September, 1998.
Additionally, the Company has outstanding borrowings under several equipment
notes payable aggregating $201,628 as of June 30,1997. Annual maturities of the
equipment notes are $60,705 per year through September 30,1998 and $62,955 in
the fiscal year ending September 30,1999.
NOTE 4 - NOTES PAYABLE TO RELATED PARTIES
The Company has currently outstanding $100,000 in a note and $5,800 in related
accrued interest in favor of an officer and director. The funds were advanced
during the developmental stages to satisfy working capital needs. The note has
matured and has been converted to a demand note with interest at a rate per
annum of 11/2% over Prime due on January 15, and July 15 until the note is paid.
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 payable upon demand and bear interest
at a rate of 12%, payable monthly.
<PAGE>
NOTE 5 - SUBORDINATED NOTES PAYABLE
In April 1997 the Company entered into a financing agreement with a lending
group which includes The Koffman Group Inc., a stockholder in the Company,
Lyonshare Venture Capital and Linden Nelson, whereby the lending group made a
loan of $750,000 to the Company. In addition, this 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
June 30,1997) 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. On July 13, 1997, the Company repaid the
$750,000 in debt with interest and deposited $150,000 in substitution of the
collateral securing the letter of credit.
As part of the private placement transaction, George Gatesy, President and CEO
of the Company was required to sell 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.
The estimated market value of the shares sold to the lending group by Mr.
Gatesy, 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. Approximately $46,667 of this total financing cost was amortized as
interest expense in the quarter ended June 30, 1997. The balance will be charged
to expense in the fourth quarter ending September 30, 1997 as a result of the
repayment of the related debt.
As part of the financing agreement described above, the Company convened a
special meeting of stockholders to approve an amendment to the Company's
Certificate of Incorporation to increase the authorized level of common stock.
In June 1997, the Company received a $600,000 bridge loan which was repaid in
July, 1997 upon completion of the equity infusion (see Note 8).
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Through June 30,1997, the Company had purchase commitments for merchandise of
approximately $1,932,000.
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 7 - 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 June 30, 1997, 1,586,000 stock options were outstanding. Of the options
outstanding, 1,136,000 are exercisable at $1.00, 238,000 at $1.25, and 212,000
at prices between $1.06 and $2.50. In fiscal 1997 and 1998 314,145 and 94,333
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.
<PAGE>
NOTE 8 - SUBSEQUENT EVENTS
INCREASE IN AUTHORIZED SHARES
On July 11, 1997, the holders of common stock of the Company approved an
amendment to the Company's Certificate of Incorporation increasing the number of
authorized shares of common stock from 10,000,000 to 17,000,000.
EQUITY INFUSION
On July 11, 1997 the Company issued 2,500,000 shares of common stock and certain
stock options to American Marketing Industries, Inc. for an aggregate purchase
price of $2,500,000. This purchase of stock represents approximately 23% of the
now outstanding shares of GlenGate Apparel, Inc. In addition to the
capitalization agreement, a separate license agreement has been signed whereby,
on April 1, 1998, AMI, through its Swingster division, will become the exclusive
domestic marketer of GlenGate product to the corporate catalog marketplace. AMI
provided $600,000 in June, 1997 in the form of a short term bridge loan which
loan was repaid on July 11, 1997.
REPAYMENT OF DEBT
On July 13, 1997, the Company repaid a lending group which includes The Koffman
Group, Inc., a stockholder in the Company, Lyonshare Venture Capital and Linden
Nelson the $750,000 in debt with interest and made a $150,000 payment in
substitution of the collateral securing the letter of credit made available by
the lending group. Proceeds for the repayment of debt were available from the
equity infusion.
ITEM - 2 Management's Discussion and Analysis
Results of Operations
During the three months ended June 30, 1997, the Company had sales of
approximately $2,605,000 to an account base that exceeded 2,000 active accounts.
Comparatively, sales for the three months ended June 1996 were approximately
$2,213,500 to an account base that exceeded 1,200 active accounts. The increase
in sales of 18% resulted from the expanded account base, and sales made pursuant
to the Sun Ice Consignment Agreement.
Sales for the nine months ended June 30,1997 were approximately $6,591,000.
Sales for the nine months ended June 30,1996 were approximately $4,878,000. The
increase in sales of 35% resulted from the continually expanding customer base
and sales made pursuant to the Sun Ice Consignment Agreement.
Cost of goods sold as a percentage of sales for the three and nine months ended
June 30,1997 were 67% and almost 70% respectively. Cost of goods sold for the
three and nine months ended June 30,1996 were almost 63% and 62% respectively.
For the quarter ended June 30, 1997 the mix of the sales yielded an overall
higher cost compared to the same quarter ended June 30, 1996. Year-to-date the
increase primarily reflects start-up costs associated with the addition of the
Sun Ice and Aureus labels and 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 and nine months ended June 30, 1997 was approximately
48% and for the three months and nine months ended June 30, 1996 were 37% and
45% respectively. Such expenses increased due to continued sales growth and
costs related to the acquisition of rights to the Sun Ice and Aureus trademarks
and transaction costs associated with the infusion of additional funds.
Interest expenses for the three and nine months ended June 30, 1997 were
$158,327 and $274,930 respectively compared to $53,056 and $124,717 for the same
periods ended June 30, 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. In
addition, interest expense for the three and nine months ended June 30, 1997
reflect $46,667 of amortized financing cost from the estimated market value of
the warrants to be exercised by a lending group, which includes the Koffman
Group, Inc., a stockholder in the Company, Lyonshare Venture Capital and Linden
Nelson and the estimated market value of the shares sold to the lending group by
an officer, less proceeds received.
The net loss for the three and nine months ended June 30, 1997 were $541,661 and
$1,469,110 respectively compared to net losses of $48,569 and $468,129 for the
same periods ended June 30, 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.
<PAGE>
Liquidity and Capital Resources
The Company had cash used in operating activities during the quarter ended June
30, 1997 of $895,429. The cash was used to fund the Company's net loss and to
payoff outstanding accounts payable and was funded primarily by borrowings from
a lending group which includes The Koffman Group, Inc., a stockholder in the
Company, Lyonshare Venture Capital and Linden Nelson and a short-term bridge
loan from American Marketing Industries, Inc.
In July 1997, the holders of the Company's common stock approved an increase in
the number of authorized shares of common stock to 17,000,000 shares, and
American Marketing Industries, Inc. purchased 2,500,000 shares and was granted
certain stock options for an aggregate purchase price of $2,500,000. In
addition, effective July 1, 1997 the Company also agreed to amend its revolving
loan and security agreement and continue with the same lender until September,
1998. These events place GlenGate Apparel, Inc. in the correct position to fund
its current growth.
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.
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 4 - Submission of Matters to a Vote of Security-Holders
The Company held a Special Meeting of Shareholders on July 11, 1997. At the
Special Meeting, the shareholders voted on a proposal to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 10,000,000 to 17,000,000, which proposal was approved by a
vote of 6,485,558 shares of Common Stock for and 45,195 shares against.
<PAGE>
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 July 11, 1997, reporting under
Item 5 thereto that the stockholders of the Company at a special meeting of the
stockholders approved and adopted an amendment to the Company's Certificate of
Incorporation to increase the number of shares of common stock authorized for
issuance thereunder from 10,000,000 to 17,000,000.
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: August 8, 1997 George J. Gatesy, President
(principal executive officer)
/s/ Peter Culbertson
BY:_____________________________
Dated: August 8, 1997 Peter Culbertson, Chief
Operating Officer, Chief
Financial Officer, Secretary
and Treasurer
(principal financial and
accounting officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000916394
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Sep-30-1997
<PERIOD-START> Apr-01-1997
<PERIOD-END> Jun-30-1997
<CASH> 314,656
<SECURITIES> 0
<RECEIVABLES> 2,079,485
<ALLOWANCES> 36,322
<INVENTORY> 1,602,963
<CURRENT-ASSETS> 4,369,841
<PP&E> 474,524
<DEPRECIATION> 191,502
<TOTAL-ASSETS> 4,948,319
<CURRENT-LIABILITIES> 4,704,337
<BONDS> 0
0
0
<COMMON> 8,114
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,948,319
<SALES> 2,604,887
<TOTAL-REVENUES> 2,604,887
<CGS> 1,750,288
<TOTAL-COSTS> 1,750,288
<OTHER-EXPENSES> 1,237,933
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (158,327)
<INCOME-PRETAX> (541,661)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (541,661)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
