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 September 30, 1996
/ / 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 0-25918
ACTIVE APPAREL GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 13-3672716
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1350 Broadway
Suite 2300
New York, NY 10018
(Address of Principal Executive Offices)
(212) 239-0990
(Issuer's telephone number)
Not Applicable
(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 / /
The number of common equity shares outstanding as of October 24, 1996,
was 2,447,737 shares of Common Stock, $.002 par value and 100,000 shares of
Class A Common Stock, $.01 par value.
Transitional Small Business Disclosure Format (check one):
Yes / / No / X /
Form 10-QSB
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Page
----
Balance Sheets 3
Statements of Income 4
Statements of Changes in Stockholders' Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9-12
PART II. OTHER INFORMATION
Item 6. (a) Exhibit and Reports on Form 8-K 13
SIGNATURE 14
- 2 -
<PAGE>
ACTIVE APPAREL GROUP, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1 9 9 6 1 9 9 5
------- -------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 126,252 $ 134,344
Due from factor 2,937,268 3,287,499
Inventory 2,685,836 1,776,583
Prepaid royalties 80,013 97,675
Prepaid expenses and other current assets 378,884 134,019
Deferred tax asset - 63,664
---------- ----------
Total current assets 6,208,253 5,493,784
Property and equipment, net 208,822 140,581
Security deposits and other assets 101,255 90,550
---------- ----------
$6,518,330 $5,724,915
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 633,175 471,915
Accrued expenses and other current liabilities 303,441 266,614
---------- ----------
Total current liabilities 936,616 738,529
---------- ----------
Commitments and Contingencies
Stockholders' equity:
9% cumulative redeemable convertible preferred
stock, par value $.25; 0 shares
authorized, issued and outstanding (1996); 4,000
shares authorized, issued and outstanding (1995) - 1,000
Common stock, par value $.002; 10,000,000 shares
authorized, 2,620,237 issued, 2,447,737 out-
standing (1996); 3,750,000 shares authorized,
2,611,937 issued, 2,439,437 outstanding (1995) 5,240 5,224
Class A common stock, par value $.01; 100,000 shares
authorized; 100,000 shares issued and outstanding 1,000 1,000
Paid-in capital 6,054,035 6,057,764
Retained earnings (deficit) 247,064 (352,977)
----------- ----------
6,307,339 5,712,011
Less treasury stock, at cost (172,500 common
shares) (725,625) (725,625)
----------- ----------
5,581,714 4,986,386
---------- ----------
$6,518,330 $5,724,915
========== ==========
</TABLE>
*Certain items have been reclassified to conform to 1996 presentation.
- 3 -
See accompanying notes to financial statements.
<PAGE>
ACTIVE APPAREL GROUP, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
-------------------------- ----------------------------
1 9 9 6 1 9 9 5* 1 9 9 6 1 9 9 5*
---------- ---------- ---------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $11,807,476 $10,616,298 $4,642,883 $4,302,055
Cost of goods sold 7,286,057 7,118,273 2,906,813 3,009,724
---------- ---------- ---------- ----------
Gross profit 4,521,419 3,498,025 1,736,070 1,292,331
---------- ---------- ---------- ----------
Operating expenses:
Selling and shipping 2,226,006 1,595,242 895,317 610,932
General and administrative 1,274,320 998,940 453,692 345,630
Financial expenses, including
interest expense of $31,199 and
$252,449 for the nine months
ended Sept.30, 1996 and 1995;
$23,641 and $40,893 for the three months
ended June 30, 1996 and 1995.
210,700 418,497 66,625 109,145
---------- ---------- ---------- ----------
3,711,026 3,012,679 1,415,634 1,065,707
---------- ---------- ---------- ------------
Income from operations 810,393 485,346 320,436 226,624
Other income 19,859 131,553 2,476 29,357
---------- ---------- --------- ---------
Income before provision
for income taxes 830,252 616,899 322,912 255,981
Provision for income taxes 230,211 13,085 120,178 4,775
---------- ----------- ----------- ----------
Net income $ 600,041 $ 603,814 $ 202,734 $ 251,206
========= ========= ========= =========
Primary earnings per share $.22 $.28 $.08 $.10
==== ==== ==== ====
Fully diluted earnings per share $.22 $.25 $.08 $.10
==== ==== ==== ====
*Certain items have been reclassified to conform to 1996 presentation.
</TABLE>
- 4 -
See accompanying notes to financial statements.
<PAGE>
ACTIVE APPAREL GROUP, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1995
<TABLE>
<CAPTION>
9% cumulative
convertible
preferred Class A
stock Common stock common stock
--------------- ---------------- -----------------
Shares Amount Shares Amount Shares Amount
------- -------- --------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 600,000 $150,000 1,296,875 $2,714 - $ -
Initial public offering - - 640,000 1,280 - -
Public offering costs - - - - - -
Issuance of Class A common
stock in exchange for
common stock - - (112,500) - 100,000 1,000
Conversion of notes payable - - 19,062 38 - -
Conversion of preferred stock (540,000) (135,000) 540,000 1,080 - -
Net income, nine months ended
September 30, 1995 - - - - - -
-------- -------- --------- ------ ------- ------
Balance, September 30, 1995 60,000 $15,000 2,383,437 $5,112 100,000 $1,000
======== ======= ========= ====== ======= ======
Balance, December 31, 1995 4,000 $ 1,000 2,439,437 $5,224 100,000 $1,000
Stock options exercised - - 5,300 10 - -
Redemption of preferred stock (1,000) (250) - - - -
Public offering costs - - - - - -
Conversion of preferred stock (3,000) (750) - - - -
Issuance of common stock - - 3,000 6 - -
Net income, nine months ended
September 30, 1996 - - - - - -
------- -------- --------- ----- ----- -----
Balance, September 30, 1996 - $ - 2,447,737 $5,240 100,000 $1,000
======= ======== ========= ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
Retained
earnings Treasury stock
Paid-in (accumulated ---------------
capital deficit) Shares Amount Total
--------- ------------ ------- --------- -------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $1,374,129 $(1,198,056) 60,000 $ (22,500) $ 306,287
Initial public offering 3,998,720 - - - 4,000,000
Public offering costs (278,859) - - - (278,859)
Issuance of Class A common
stock in exchange for
common stock 702,125 - 112,500 (703,125) -
Conversion of notes payable 149,962 - - - 150,000
Conversion of preferred stock 133,920 - - -
Net income, nine months ended
September 30, 1995 - 603,814 - - 603,814
---------- ----------- ------- --------- ----------
Balance, September 30, 1995 $6,079,997 $ (594,242) 172,500 $(725,625) $4,781,242
========== =========== ======= ========= ==========
Balance, December 31, 1995 $6,057,764 $ (352,977) 172,500 $(725,625) $4,986,386
Stock options exercised 1,977 - - - 1,987
Redemption of preferred stock (2,250) - - - (2,500)
Public offering costs (4,200) - - - (4,200)
Conversion of preferred stock (6,750) - - - (7,500)
Issuance of common stock 7,494 - - - 7,500
Net income, nine months ended
September 30, 1996 - 600,041 - - 600,041
--------- ----------- ------- --------- ----------
Balance, September 30, 1996 $6,054,035 $ 247,064 172,500 $(725,625) $5,581,714
========== ============ ======= ========= ==========
</TABLE>
- 5 -
See accompanying notes to financial statements.
<PAGE>
ACTIVE APPAREL GROUP, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
September 30,
-----------------------------
1 9 9 6 1 9 9 5*
---------- ---------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $600,041 $ 603,814
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 36,404 22,341
Provision for bad debts 14,142 32,450
Deferred tax provision 63,664 -
Loss on disposal of property and equipment 252 -
Changes in assets (increase) decrease:
Due from factor 350,231 (2,630,553)
Inventory (909,253) (235,300)
Prepaid expenses and other current assets (259,007) (139,500)
Prepaid royalties 17,662 31,913
Security deposits and other assets (10,705) 4,882
Changes in liabilities increase (decrease):
Accounts payable 161,260 (681,502)
Accrued expenses and other current liabilities (36,827) 80,046
------- ----------
Net cash provided (used) by
operating activities 101,518 (2,911,409)
-------- -----------
Cash flows used by investing activities:
Acquisition of property and equipment (104,897) (19,585)
--------- ----------
Cash flows from financing activities:
Proceeds from initial public offering - 4,000,000
Initial public offering costs (4,200) (138,784)
Repayment of convertible notes - (50,000)
Due to factor - (738,575)
Redemption of preferred stock (2,500) -
Proceeds from stock options exercised 1,987 -
-------- -------
Net cash provided (used) by
financing activities (4,713) 3,072,641
--------- ----------
Net increase in cash and cash equivalents (8,092) 141,647
Cash and cash equivalents, beginning of period 134,344 22,026
-------- ----------
Cash and cash equivalents, end of period $126,252 $ 163,673
======== =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 31,199 $ 264,601
Income taxes 37,082 13,085
Supplemental disclosures of noncash financing activity:
Class A common stock issued in exchange for
common stock $ - $ 703,125
Notes payable converted to common stock - 150,000
Preferred stock converted to common stock 7,500 135,000
</TABLE>
*Certain items have been reclassified to conform to 1996 presentation.
- 6 -
See accompanying notes to financial statements.
<PAGE>
ACTIVE APPAREL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
1. The Company and basis of presentation:
The financial statements presented herein as of September 30, 1996 and for
the nine month and three month periods ended September 30, 1996 and 1995
are unaudited and, in the opinion of management, include all adjustments
(consisting only of normal and recurring adjustments) necessary for a fair
presentation of financial position and results of operations. Such
financial statements do not include all of the information and footnote
disclosures normally included in audited financial statements prepared in
accordance with generally accepted accounting principles. The accompanying
unaudited financial statements have been prepared in accordance with the
instructions to Form 10-QSB. The results of operations for the nine and
three month periods ended September 30, 1996 are not necessarily
indicative of the results that may be expected for any other interim
period or the full year ending December 31, 1996.
2. Initial public offering:
On May 4, 1995, the Company completed an initial public offering of
640,000 shares of common stock at $6.25 per share. Proceeds to the
Company, after deducting initial public offering costs of $319,180, were
$3,680,820.
3. Primary earnings per share:
Primary earnings per share amounts are computed based on the weighted
average number of shares actually outstanding plus the shares that would
be outstanding assuming the exercise of dilutive stock options, all of
which are considered to be common stock equivalents. The number of shares
that would be issued from the exercise of stock options has been reduced
by the number of shares that could have been purchased from the proceeds
at the average market price of the Company's stock. Net income has been
adjusted for dividends on the convertible preferred stock. The number of
shares used in the computations were 2,699,949 and 1,821,327 at September
30, 1996 and 1995, respectively.
4. Fully diluted earnings per share:
Fully diluted earnings per share amounts are based on an increased number
of shares that would be outstanding assuming conversion of convertible
preferred stock and convertible notes payable. For purposes of the fully
diluted computations, the number of shares that would be issued from the
exercise of stock options has been reduced by the number of shares which
could have been purchased from the
- 7 -
<PAGE>
ACTIVE APPAREL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
4. Fully diluted earnings per share: (Continued)
proceeds at the market price of the Company's stock on September 30, 1996
and 1995 because those prices were higher than the average market prices
during the period. Net income has been adjusted for dividends on the
convertible preferred stock and interest expense on the convertible debt.
The number of shares used in the computations of fully diluted earning per
share were 2,706,094 and 2,420,967 at September 30, 1996 and 1995,
respectively.
- 8 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Active Apparel Group, Inc. (the "Company") is a designer, marketer and supplier
of women's, girl's and unisex activewear, sportswear and accessories. The
Company sells its product collections under the Everlast, Converse, Converse All
Star, and MTV's The Grind and The Grind brand names through exclusive licensing
arrangements. The Company's products are manufactured by third party independent
manufacturing contractors and are sold to over 500 separate accounts,
representing over 20,000 retail locations throughout the United States and
Canada, including a variety of department stores, specialty stores, catalog
operations and better mass merchandisers.
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1996 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1995
Net sales increased to $4,642,883 for the three months ended September 30,
1996 from $4,302,055 for the three months ended September 30, 1995, an increase
of $340,828 or 7.9%. This increase was principally attributable to increased
sales volume of the Company's products through continued market penetration,
acceptance of the Company's products and increased orders from established
accounts.
Gross profit increased to $1,736,070 for the three months ended September 30,
1996 from $1,292,331 for the three months ended September 30, 1995, an increase
of $443,739 or 34.3%. Gross profit increased as a percentage of net sales to
37.4% from 30%. This increase as a percentage of net sales was primarily due to
the Company's ability to maintain normal gross profit margins on sales of its
products.
Selling and shipping expenses increased to $895,317 for the three months ended
September 30, 1996 from $610,932 for the three months ended September 30, 1995,
an increase of $284,385, or 46.5%. Selling and shipping expenses as a percentage
of net sales increased to 19.3% from 14.2%. This increase as a percentage of net
sales was primarily attributable to an increase in advertising and promotional
expenditures in order to facilitate the Company's continued and anticipated
growth.
General and administrative expenses increased to $453,692 for the three months
ended September 30, 1996 from $345,630 for the three months ended September 30,
1995, an increase of $108,062, or 31.3%. General and administrative expenses as
a percentage of net sales increased to 9.8% from 8.0%. The increase as a
percentage of net sales was primarily attributable to an increased number of
employees for the three months ended September 30, 1996 versus the comparable
period in 1995 in order to facilitate the Company's continued and anticipated
growth.
Financial expenses decreased to $66,625 for the three months ended September
30, 1996 from $109,145 for the three months ended September 30, 1995, a decrease
of $42,520 or 39%. Of the total financial expenses, interest expense was $23,641
for the three months ended September 30, 1996 compared to $40,893, a decrease of
$17,252, for the three months ended September 30, 1995. Such decreases were
primarily attributable to the decrease in the Company's net borrowings for the
three months ended September 30, 1996 versus the comparable period in 1995.
9
<PAGE>
Operating income increased to $320,436 for the three months ended September
30, 1996 from $226,624 for the three months ended September 30, 1995, an
increase of $93,812, or 41.4% for the reasons stated above. Operating income as
a percentage of net sales was 6.9% for the three months ended September 30, 1996
as compared to 5.3% for the three months ended September 30, 1995.
The Company earned $2,476 in other income for the three month period ending
September 30, 1996 compared to $29,357 for the three months ended September 30,
1995, a decrease of $26,881. Other income as of September 30, 1995 represents an
insurance claim relating to the theft of certain merchandise at its Canadian
branch.
The Company incurred a tax provision of $120,178 for the three months ended
September 30, 1996 as compared to $4,775 for the three months ended September
30, 1995, an increase of $115,403. In 1995 the Company was able to utilize a net
operating loss carryforward to completely offset income before taxes whereas in
1996 such carryforward was limited to $338,000.
The Company had net income of $202,734 for the three months ended September
30, 1996 as compared to $251,206 for the three months ended September 30, 1995,
a decrease of $48,472, or 19.3% for the reasons stated above.
NINE MONTHS SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1995
Net sales increased to $11,807,476 for the nine months ended September 30,
1996 from $10,616,298 for the nine months ended September 30, 1995, an increase
of $1,191,178 or 11.2%. This increase was principally attributable to increased
sales volume of the Company's products through continued market penetration,
acceptance of the Company's products and increased orders from established
accounts.
Gross profit increased to $4,521,419 for the nine months ended September 30,
1996 from $3,498,025 for the nine months ended September 30, 1995, an increase
of $1,023,394 or 29.3%. Gross profit increased as a percentage of net sales to
38.3% from 32.9%. This increase as a percentage of net sales was primarily due
to the Company's ability to maintain normal gross profit margins on sales of its
products.
Selling and shipping expenses increased to $2,226,006 for the nine months
ended September 30, 1996 from $1,595,242 for the nine months ended September 30,
1995, an increase of $630,764 or 39.5%. Selling and shipping expenses as a
percentage of net sales increased to 18.9% from 15.0%. This increase as a
percentage of net sales was primarily attributable to an increase in advertising
and promotional expenditures in order to facilitate the Company's continued and
anticipated growth.
General and administrative expenses increased to $1,274,320 for the nine
months ended September 30, 1996 from $998,940 for the nine months ended
September 30, 1995, an increase of $275,380 or 27.6%. General and administrative
expenses as a percentage of net sales increased to 10.8% from 9.4%. The increase
as a percentage of net sales was primarily attributable to an increased number
of employees and costs associated with existing as a public entity for the nine
months ended September 30, 1996 versus the comparable period in 1995 in order to
facilitate the Company's continued and anticipated growth.
Financial expenses decreased to $210,700 for the nine months ended September
30, 1996 from $418,497 for the nine months ended September 30, 1995, a decrease
of $207,797 or 49.7%. Of the total financial
10
<PAGE>
expenses, interest expense decreased to $31,199 for the nine months ended
September 30, 1996 from $252,449 for the nine months ended September 30, 1995.
Such decreases were primarily attributable to the decrease in the Company's net
borrowings for the nine months ended September 30, 1996 versus the comparable
period in 1995 based on the Company's receipt of the proceeds of its initial
public offering, which was completed in May, 1995.
Operating income increased to $810,393 for the nine months ended September 30,
1996 from $485,346 for the nine months ended September 30, 1995, an increase of
$325,047, or 67% for the reasons stated above. Operating income as a percentage
of net sales was 6.9% for the nine months ended September 30, 1996 as compared
to 4.6% for the nine months ended September 30, 1995.
The Company earned $19,859 in other income for the nine month period ending
September 30, 1996 compared to $131,553 for the nine months ended September 30,
1995, a decrease of $111,694. Other income as of September 30, 1995 represents
an insurance claim relating to the theft of certain merchandise at its Canadian
branch.
Provision for income taxes increased to $230,211 during the nine months ended
September 30, 1996 from $13,085 for the nine months ended September 30, 1995, an
increase of $217,126. In 1995 the Company was able to utilize a net operating
loss carryforward to completely offset income before taxes whereas in 1996 such
carryforward was limited to $338,000.
The Company had net income of $600,041 for the nine months ended September 30,
1996 as compared to $603,814 for the nine months ended September 30, 1995, a
decrease of $3,773 or .6% for the reasons stated above.
LIQUIDITY AND CAPITAL RESOURCES
On May 4, 1995, the Company completed an initial public offering of 640,000
shares of Common Stock at $6.25 per share. Proceeds to the Company, after
deducting initial public offering costs of $319,180 were $3,680,820. Upon
completion of the offering, the Company applied $3,500,000 of the net proceeds
towards its loan balance under the credit facility with Century Business Credit
Corporation (the "Century Facility") while the balance was applied to general
working capital.
Net cash provided by (used for) operating activities for the nine months ended
September 30, 1996 was $101,518 compared to ($2,911,409) for the nine months
ended September 30, 1995. This increase was primarily attributable to income
before taxes in 1996. Such increase was partially offset by increases in
inventory and prepaid expenses during the nine months ended September 30. 1996.
Net cash provided by (used for) investing activities for the nine months ended
September 30, 1996 was ($104,897) compared to ($19,585) for the nine months
ended September 30, 1995. Net cash provided by (used for) financing activities
was ($4,713) for the nine months ended September 30, 1996 compared to $3,072,641
for the nine months ended September 30, 1995. This decrease was primarily
attributable to receipt of the proceeds from the Company's initial public
offering completed in the nine months ended September 30, 1995.
During the nine months ended September 30, 1996, the Company's primary need
for funds was to finance working capital, including inventory, for the
anticipated growth in net sales of the Company's products. The Company has
relied primarily upon cash flow from operations to finance its operations and
11
<PAGE>
expansion. At September 30, 1996, working capital was $5,271,437 compared to
$4,755,255 at December 31, 1995 an increase of $516,182. This increase was
primarily attributable to an increase in inventory, income and prepaid expenses.
Due from factor represents the amount payable to the Company for factored
receivables less the amount of outstanding advances made by Century to the
Company under the Century Facility. At September 30, 1996 due from (to) factor
was $2,937,268 as compared to $3,287,499 at December 31, 1995. The Company's
inventory increased 51% to $2,685,836 at September 30, 1996 from $1,776,583 at
December 31, 1995.
In June 1994, the Company issued Convertible Notes (the "Convertible Notes")
in an aggregate principal amount of $200,000. Noteholders had until May 31, 1995
to elect conversion, subject to a 15 day grace period. As of December 31, 1995,
$50,000 of principal and all accrued interest was repaid to the Noteholders. The
remaining $150,000 was converted to Common Stock, par value $.002.
Management believes that funds provided by operations and available funds at
the factor will provide it with sufficient working capital to support the
anticipated continued growth of the Company's business through 1996 and 1997.
12
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27- Financial Data Schedule
(b) Reports on Form 8-K
None
13
<PAGE>
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 thereunto duly authorized.
ACTIVE APPAREL GROUP, INC.
Date: November 8, 1996 By: /s/ George Q Horowitz
------------------ ----------------------
George Q Horowitz
Chief Executive Officer, President,
Treasurer, and Director
Signing on behalf of the
registrant and as chief
accounting officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-QSB for the quarter ended September 30, 1996 and is qualified
in its entirety by reference to such Financial Statements and Notes, thereto.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 126,252
<SECURITIES> 0
<RECEIVABLES> 3,016,112
<ALLOWANCES> 0
<INVENTORY> 2,685,836
<CURRENT-ASSETS> 6,208,253
<PP&E> 303,004
<DEPRECIATION> 94,182
<TOTAL-ASSETS> 6,518,330
<CURRENT-LIABILITIES> 936,616
<BONDS> 0
0
0
<COMMON> 5,240
<OTHER-SE> 1,000
<TOTAL-LIABILITY-AND-EQUITY> 6,518,330
<SALES> 4,642,883
<TOTAL-REVENUES> 4,642,883
<CGS> 2,906,813
<TOTAL-COSTS> 2,906,813
<OTHER-EXPENSES> 1,415,634
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,641
<INCOME-PRETAX> 322,912
<INCOME-TAX> 120,178
<INCOME-CONTINUING> 322,912
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 203,734
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
