SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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
(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 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_____
The number of common equity shares outstanding as of July 23, 1996,
was 2,444,737 shares of Common Stock, $.002 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. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
- 2 -
<PAGE>
ACTIVE APPAREL GROUP, INC.
BALANCE SHEETS
June 30, December 31,
1 9 9 6 1 9 9 5
----------- -----------
(Unaudited)
Current assets:
Cash and cash equivalents $ 184,401 $ 134,344
Due from factor 3,243,668 3,287,499
Inventory 1,813,307 1,776,583
Prepaid royalties 97,557 97,675
Prepaid expenses and other current assets 295,471 134,019
Deferred tax asset -- 63,664
---------- ----------
Total current assets 5,634,404 5,493,784
Property and equipment, net 204,584 140,581
Security deposits and other assets 119,399 90,550
---------- ----------
$5,958,387 $5,724,915
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 477,424 471,915
Accrued expenses and other current liabilities 101,983 266,614
---------- ----------
Total current liabilities 579,407 738,529
---------- ----------
Stockholders' equity:
9% cumulative redeemable convertible preferred
stock, par value $.25; 3,000 shares authorized,
issued and outstanding (1996); 4,000 shares
authorized, issued and outstanding (1995) 750 1,000
Common stock, par value $.002; 10,000,000 shares
authorized, 2,617,237 issued, 2,444,737 out-
standing (1996); 3,750,000 shares authorized,
2,611,937 issued, 2,439,437 outstanding (1995) 5,234 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 6,053,291 6,057,764
Retained earnings (accumulated deficit) 44,330 (352,977)
---------- ----------
6,104,605 5,712,011
Less treasury stock, at cost (172,500 common
shares) (725,625) (725,625)
---------- ----------
5,378,980 4,986,386
---------- ----------
$5,958,387 $5,724,915
========== ==========
See accompanying notes to financial statements.
- 3 -
<PAGE>
ACTIVE APPAREL GROUP, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 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 $7,164,593 $6,314,243 $3,217,744 $2,977,651
Cost of goods sold 4,379,244 4,108,549 1,950,568 1,898,392
---------- ---------- ---------- ----------
Gross profit 2,785,349 2,205,694 1,267,176 1,079,259
---------- ---------- ---------- ----------
Operating expenses:
Selling and shipping 1,330,689 984,310 582,634 507,406
General and administrative 820,628 653,310 432,578 339,415
Financial expenses, including
interest expense of $7,558 and
$211,556 for the six months ended
June 30, 1996 and 1995 144,075 309,352 64,896 129,913
---------- ---------- ---------- ----------
2,295,392 1,946,972 1,080,108 976,734
---------- ---------- ---------- ----------
Income from operations 489,957 258,722 187,068 102,525
Other income 17,383 102,196 13,239 102,196
---------- ---------- ---------- ----------
Income before provision
for income taxes 507,340 360,918 200,307 204,721
Provision for income taxes 110,033 8,310 33,502 5,310
---------- ---------- ---------- ----------
Net income $ 397,307 $ 352,608 $ 166,805 $ 199,411
========== ========== ========== ==========
Primary earnings per share $ .15 $ .18 $ .06 $ .09
========== ========== ========== ==========
Fully diluted earnings per share $ .15 $ .16 $ .06 $ .08
========== ========== ========== ==========
</TABLE>
*Certain items have been reclassified to conform to 1996 presentation.
See accompanying notes to financial statements.
- 4 -
<PAGE>
ACTIVE APPAREL GROUP, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 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>
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
Net income, six months ended
June 30, 1995 - - - - - -
------- -------- --------- ------ ------- ------
Balance, June 30, 1995 600,000 $150,000 1,824,375 $3,994 100,000 $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 - - - - - -
Net income, six months ended
June 30, 1996 - - - - - -
------- -------- --------- ------ ------- ------
Balance, June 30, 1996 3,000 $ 750 2,444,737 $5,234 100,000 $1,000
======= ======== ========= ====== ======= ======
<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 (274,664) - - - (274,664)
Issuance of Class A common
stock in exchange for
common stock 702,125 - 112,500 (703,125) -
Net income, six months ended
June 30, 1995 - 352,608 - - 352,608
---------- ----------- ------- --------- ----------
Balance, June 30, 1995 $5,800,310 $ (845,448) 172,500 $(725,625) $4,384,231
========== =========== ======= ========= ==========
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)
Net income, six months ended
June 30, 1996 - 397,307 - - 397,307
--------- ----------- ------- --------- ----------
Balance, June 30, 1996 $6,053,291 $ 44,330 172,500 $(725,625) $5,378,980
========== =========== ======= ========= ==========
</TABLE>
See accompanying notes to financial statements.
- 5 -
<PAGE>
ACTIVE APPAREL GROUP, INC.
STATEMENTS OF CASH FLOWS
Six months ended
June 30,
-------------------------
1996 1995*
----------- -----------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 397,307 $ 352,608
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 22,975 14,890
Provision for bad debts -- 32,450
Deferred tax provision 63,664 --
Loss on disposal of property and equipment 252 --
Changes in assets (increase) decrease:
Due from factor 43,831 (749,969)
Inventory (36,724) (1,973,702)
Prepaid expenses and other current assets (161,452) (256,156)
Prepaid royalties 118 9,764
Security deposits and other assets (28,849) 3,255
Changes in liabilities increase (decrease):
Accounts payable 5,509 (293,719)
Accrued expenses and other current liabilities (164,631) (17,683)
---------- ----------
Net cash provided (used) by
operating activities 142,000 (2,878,262)
---------- ----------
Cash flows used by investing activities:
Acquisition of property and equipment (87,230) (15,633)
---------- ----------
Cash flows from financing activities:
Proceeds from initial public offering -- 4,000,000
Initial public offering costs (4,200) (134,589)
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) 3,076,836
---------- ----------
Net increase in cash and cash equivalents 50,057 182,941
Cash and cash equivalents, beginning of period 134,344 22,026
---------- ----------
Cash and cash equivalents, end of period $ 184,401 $ 204,967
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 7,558 $ 224,244
Income taxes 37,082 5,520
Supplemental disclosures of noncash financing activity:
Class A common stock issued in exchange for
common stock $ -- $ 703,125
*Certain items have been reclassified to conform to 1996 presentation.
See accompanying notes to financial statements.
- 6 -
<PAGE>
ACTIVE APPAREL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
1. The Company and basis of presentation:
The financial statements presented herein as of June 30, 1996 and for
the six month periods ended June 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 six and
three month periods ended June 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 2,698,248 and 1,602,965
at June 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
JUNE 30, 1996 AND 1995
4. Fully diluted earnings per share: (Continued)
proceeds at the market price of the Company's stock on June 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 2,705,448 and 2,272,127 at June 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 and
Converse All Star brand names through exclusive licensing arrangements, and in
June 1996, the Company entered into an agreement with MTV Networks, a division
of Viacom International, under which it obtained an exclusive license to use
MTV's The Grind and The Grind trademarks in its principal product categories.
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 June 30, 1996 compared to quarter ended June 30, 1995
Net sales increased to $3,217,744 for the three months ended June 30, 1996
from $2,977,651 for the three months ended June 30, 1995, an increase of
$240,093 or 8.1%. This increase was principally attributable to increased sales
volume of the Company's products, continued market penetration and acceptance of
the Company's products and increased orders from established accounts.
Gross profit increased to $1,267,176 for the three months ended June 30, 1996
from $1,079,259 for the three months ended June 30, 1995, an increase of
$187,917 or 17.4%. Gross profit increased as a percentage of net sales to 39.4%
from 36.2%. 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 $582,634 for the three months
ended June 30, 1996 from $507,406 for the three months ended June 30, 1995, an
increase of $75,228, or 14.8%. Selling and shipping expenses as a percentage of
net sales increased to 18.1% from 17.0%. This increase as a percentage of net
sales was primarily attributable to an increase in advertising and promotional
expenditures.
General and administrative expenses increased to $432,578 for the three
months ended June 30, 1996 from $339,415 for the three months ended June 30,
1995, an increase of $93,163, or 27.4%. General and administrative expenses as a
percentage of net sales increased to 13.4% from 11.4%. The increase as a
percentage of net sales was primarily attributable to an increased number of
employees and office space for the three months ended June 30, 1996 versus the
comparable period in 1995 in order to facilitate the Company's continued and
anticipated growth. Also, costs associated with existing as a public entity
contributed to the increase in expenses.
Financial expenses decreased to $64,896 for the three months ended June 30,
1996 from $129,913 for the three months ended June 30, 1995, a decrease of
$65,017 or 50%. Of the total financial expenses, interest expense was $130 for
the three months ended June 30, 1996 compared
- 9 -
<PAGE>
to $79,809, a decrease of $79,679, for the three months ended June 30, 1995.
Such decreases were primarily attributable to the decrease in the Company's net
borrowings for the three months ended June 30, 1996 versus the comparable period
in 1995.
Operating income increased to $187,068 for the three months ended June 30,
1996 from $102,525 for the three months ended June 30, 1995, an increase of
$84,543, or 82.5% for the reasons stated above. Operating income as a percentage
of net sales was 5.8% for the three months ended June 30, 1996 as compared to
3.4% for the three months ended June 30, 1995.
The Company earned $13,239 in other income for the three month period ending
June 30, 1996 compared to $102,196 for the three months ended June 30, 1995, a
decrease of $88,957. Other income as of June 30, 1995 represents an insurance
claim relating to the theft of certain merchandise at its Canadian branch.
The Company incurred a tax provision of $33,502 for the three months ended
June 30, 1996 as compared to $5,310 for the three months ended June 30, 1995, an
increase of $28,192. The Company offset $38,000 of income before taxes with a
net operating loss carryforward in the quarter ended June 30, 1996 whereas all
income before taxes in the quarter ended June 30, 1995 was offset by net
operating loss carryforwards.
The Company had net income of $166,805 for the three months ended June 30,
1996 as compared to $199,411 for the three months ended June 30, 1995, a
decrease of $32,606, or 16.4% for the reasons stated above.
Six Months June 30, 1996 compared to six months ended June 30, 1995
Net sales increased to $7,164,593 for the six months ended June 30, 1996 from
$6,314,243 for the six months ended June 30, 1995, an increase of $850,350 or
13.5%. This increase was principally attributable to increased sales volume of
the Company's products, continued market penetration and acceptance of the
Company's products, and increased orders from established accounts.
Gross profit increased to $2,785,349 for the six months ended June 30, 1996
from $2,205,694 for the six months ended June 30, 1995, an increase of $579,655
or 26.3%. Gross profit increased as a percentage of net sales to 38.9% from
34.9%. 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 $1,330,689 for the six months
ended June 30, 1996 from $984,310 for the six months ended June 30, 1995, an
increase of $346,379 or 35.2%. Selling and shipping expenses as a percentage of
net sales increased to 18.6% from 15.6%. This increase as a percentage of net
sales was primarily attributable to an increase in advertising and promotional
expenditures.
General and administrative expenses increased to $820,628 for the six months
ended June 30, 1996 from $653,310 for the six months ended June 30, 1995, an
increase of $167,318 or 25.6%. General and administrative expenses as a
percentage of net sales increased to 11.5% from 10.4%. 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 six
months ended June 30,
- 10 -
<PAGE>
1996 versus the comparable period in 1995.
Financial expenses decreased to $144,075 for the six months ended June 30,
1996 from $309,352 for the six months ended June 30, 1995, a decrease of
$165,277 or 53.4%. Of the total financial expenses, interest expense decreased
to $7,558 for the six months ended June 30, 1996 from $211,556 for the six
months ended June 30, 1995. Such decreases were primarily attributable to the
decrease in the Company's net borrowings for the six months ended June 30, 1996
versus the comparable period in 1995.
Operating income increased to $489,957 for the six months ended June 30, 1996
from $258,722 for the six months ended June 30, 1995, an increase of $231,235,
or 89.4% for the reasons stated above. Operating income as a percentage of net
sales was 6.8% for the six months ended June 30, 1996 as compared to 4.1% for
the six months ended June 30, 1995.
The Company earned $17,383 in other income for the six month period ending
June 30, 1996 compared to $102,196 for the three months ended June 30, 1995, a
decrease of $84,813. Other income as of June 30, 1995 represents an insurance
claim relating to the theft of certain merchandise at its Canadian branch.
Provision for income taxes increased to $110,033 during the six months ended
June 30, 1996 from $8,310 for the six months ended June 30, 1995, an increase of
$101,723. 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 $397,307 for the six months ended June 30, 1996
as compared to $352,608 for the six months ended June 30, 1995, an increase of
$44,699 or 12.7% 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 six months ended
June 30, 1996 was 142,000 compared to ($2,878,262) for the six months ended June
30, 1995. This increase was primarily attributable to net income before income
taxes in 1996. Such increase was partially offset by increases in prepaid
expenses and by decreases in accrued expenses during the six months ended June
30. 1996. Net cash provided by (used for) investing activities for the six
months ended June 30, 1996 was ($87,230) compared to ($15,633) for the six
months ended June 30, 1995. Net cash provided by (used for) financing activities
was ($4,713) for the six months ended June 30, 1996 compared to $3,076,836 for
the six months ended June 30, 1995. This decrease was primarily attributable to
receipt of the proceeds from the Company's initial public offering completed in
the six months ended June 30, 1995.
During the six months ended June 30, 1996, the Company's primary need for
funds was to
- 11 -
<PAGE>
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 expansion. At June 30, 1996,
working capital was $5,054,997 compared to $4,755,255 at December 31, 1995 an
increase of $299,742. This increase was primarily attributable to an increase in
due from factor and the reduction of trade payables.
Due from (to) 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 Agreement. At June 30, 1996 due from (to) factor
was $3,243,668 as compared to $3,287,499 at December 31, 1995. The Company's
inventory increased 2% to $1,813,307 at June 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. Generally, the number of
shares of Common Stock issuable upon any conversion of the Convertible Notes
will be based upon an average of the high and low sales prices of the Common
Stock over a specified period of ten trading days.
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.
- 12 -
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on June 5, 1996 announcing it
had received a fully executed agreement with MTV Networks (MTVN), a division
of Viacom International, dated as of March 28, 1996. MTVN granted the Company
a license to use the trademarks "MTVN's THE GRIND" and/or "THE GRIND", in
MTVN's discretion (the "Marks"), in connection with defined categories of
activewear and accessories for sale in the United States, its possessions and
Canada to all department stores, specialty stores, independent sport stores
and other channels of distribution to which MTVN consents. The license is
exclusive as to all products, except that with respect to t-shirts and caps
it is non-exclusive until MTVN's existing license agreement with another
licensee expires.
The term of the license is from April 30, 1996 through January 31, 1999.
The Company is required to pay MTVN an 8% royalty on "Net Sales", with
certain guaranteed minimum royalty payments provided. Additionally, the
Company guarantees to commit 2% of net sales to an MTVN trade and/or consumer
advertising campaign. The Company has the right to renew the Agreement for an
additional two years, through January 31, 2001, provided that it is in
compliance with its terms and has in excess of $3,500,000 of cumulative Net
Sales prior to January 31, 1999.
- 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: August 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
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 184,401
<SECURITIES> 0
<RECEIVABLES> 3,243,668
<ALLOWANCES> 0
<INVENTORY> 1,813,307
<CURRENT-ASSETS> 5,634,404
<PP&E> 285,336
<DEPRECIATION> 80,752
<TOTAL-ASSETS> 5,958,387
<CURRENT-LIABILITIES> 579,407
<BONDS> 0
0
750
<COMMON> 5,234
<OTHER-SE> 1,000
<TOTAL-LIABILITY-AND-EQUITY> 5,958,387
<SALES> 3,217,744
<TOTAL-REVENUES> 3,217,744
<CGS> 1,950,568
<TOTAL-COSTS> 1,950,568
<OTHER-EXPENSES> 1,080,108
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130
<INCOME-PRETAX> 200,307
<INCOME-TAX> 33,502
<INCOME-CONTINUING> 200,307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 166,805
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
