U.S. Securities and Exchange Commission
Washington, D.C 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from __________to__________
Commission file number 1-13856
Sel-Leb Marketing, Inc.
(Exact name of small business issuer as
specified in its charter)
New York 11-3180295
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1435 51st Street, North Bergen, NJ 07047
(Address of principal executive offices)
201-864-3316
(Issuer's telephone number)
(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 report(s)), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 8,161,177 shares of common
stock as of November 11, 1996.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
SEL-LEB MARKETING, INC.
TABLE OF CONTENTS
Page No.
Part I Financial Information
Item 1. Financial Statements (Unaudited)
Balance sheet at December 31, 1995 1
Balance sheet at September 30, 1996 2
Statements of Income for the three months 3
ending September 30, 1996 and 1995
Statements of Income for the nine months 4
ending September 30, 1996 and 1995
Statements of Cash Flows for the nine months
ending September 30, 1996 and 1995 5
Statement of Shareholders' Equity at September 30, 6
1996.
Notes to Financial Statements 7-10
Item 2. Management's Discussion and Analysis or Plan
Of Operation 11-13
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
<PAGE>
SEL-LEB MARKETING, INC.
AUDITED BALANCE SHEET
DECEMBER 31, 1995
ASSETS
Current Assets:
Cash and cash equivalents $ 832,970
Accounts receivable - net 2,175,813
Inventory 2,470,086
Prepaid expenses and other
current assets 353,557
Deferred income tax asset,
net of valuation allowance 52,000
----------
Total current assets 5,884,426
Property and equipment - net 270,703
Goodwill 280,823
Other assets 3,611
----------
Total assets $6,439,563
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 941,242
Due to affiliates 118,310
Income taxes payable 269,525
----------
Total current liabilities 1,329,077
Long-term debt related
parties 469,000
----------
Total liabilities 1,798,077
----------
Common Stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 7,440,000 shares (Note 1) 74,400
Additional paid-in capital 4,136,563
Retained earnings 430,523
----------
Shareholders' equity 4,641,486
----------
Total Liabilities and Shareholders' Equity $6,439,563
==========
See Notes to Financial Statements
1
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED BALANCE SHEET
SEPTEMBER 30, 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 193,294
Accounts receivable - net 3,153,036
Due from affiliates 42,940
Inventory 3,558,422
Prepaid expenses and other
current assets 382,840
Deferred income tax asset,
net of valuation allowance 52,000
----------
Total current assets 7, 382,532
Property and equipment - net 312,103
Goodwill 260,939
Other assets 3,611
----------
Total assets $7,959,185
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $1,547,959
Due to affiliates 70,040
Income taxes payable 369,036
----------
Total current liabilities 1,987,035
----------
Total liabilities 1,987,035
----------
Common Stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 7,879,977 shares (Note 1) 78,800
Additional paid-in capital 4,988,547
Retained earnings 904,803
----------
Shareholders' equity 5,972,150
----------
Total Liabilities and Shareholders' Equity $7,959,185
==========
See Notes to Financial Statements
2
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF INCOME
THREE MONTHS ENDED
------------------
(Notes 1 & 4)
SEPT. 30, SEPT. 30,
--------- ---------
1996 1995
---- ----
Revenue:
Net Sales (Note 5) $ 3,620,437 $ 3,255,065
Operating Expenses:
Cost of sales 2,405,059 2,375,435
Selling, general and administrative expenses 705,782 428,315
----------- -----------
Total operating expenses 3,110,841 2,803,750
Operating income 509,596 451,315
Interest income 1,334 19,414
Interest expense (10,622) (18,139)
----------- -----------
Income before provision for
income taxes 500,308 452,590
Provision for income taxes (Note 4) 217,205 194,614
----------- -----------
Net income $ 283,103 $ 257,976
=========== ===========
Primary earnings per share (Note 2) $ .02 $ .04
=========== ===========
Fully diluted earnings per share (Note 2) $ .02 $ .04
=========== ===========
See Notes to Financial Statements
3
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF INCOME
NINE MONTHS ENDED
-----------------
(Notes 1 & 4)
SEPT. 30, SEPT. 30,
--------- ---------
1996 1995
---- ----
Pro Forma
Revenue:
Net Sales (Note 5) $ 10,030,482 $ 8,298,440
Operating Expenses:
Cost of sales 7,185,668 6,134,150
Selling, general and administrative expenses 2,014,068 1,392,210
------------ ------------
Total operating expenses 9,199,736 7,526,360
Operating income 830,746 772,080
Interest income 10,419 19,414
Interest expense (24,608) (99,400)
Income before provision for
income taxes 816,557 692,094
Provision for income taxes (Note 4) 342,277 297,600
------------ ------------
Net income $ 474,280 $ 394,494
============ ============
Primary earnings per share (Note 2) $ .04 $ .07
============ ============
Fully diluted earnings per share (Note 2) $ .04 $ .07
============ ============
See Notes to Financial Statements
4
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
1996 1995
---- ----
(Note 1)
<S> <C> <C>
Cash flow from operating activities:
Net income (Note 6) $ 474,280 $ 471,106
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Imputed interest on noninterest bearing loans 0 4,226
Depreciation 88,105 4,244
Changes in operating assets and liabilities:
(Increase) in accounts receivable (977,223) (1,758,184)
(Increase) in due from affiliates (42,940) 0
(Increase) in inventories (1,088,335) (1,007,349)
Decrease (Increase) in prepaid expenses and
other current assets (29,284) 110,463
Increase in accounts payable, accrued expenses and
income taxes payable 706,228 1,254,646
(Decrease) in due to affiliates (48,270) (176,305)
----------- -----------
Net cash used in operating
activities ($ 917,439) ($1,097,153)
----------- -----------
Cash flow from investing activities:
Expenditures for capital equipment (109,621) (126,221)
----------- -----------
Cash flow from financing activities:
S- Corporation distribution from retained earning 0 (59,902)
S- Corp distribution accrued from retained earnings 0 (96,341)
Net repayment of notes to bank 0 (800,000)
Common stock issued in connection with IPO 0 (10,100)
Net repayment of long term debt to related parties (422,099) (300,000)
Proceeds from exercise of options, and warrants 809,483 0
Net proceeds from receivables in connection with stock 0 23,000
Deferred offering costs paid from IPO 0 (113,550)
Minority interest in earnings of subsidiary not reflected
in September 1995 balance sheet 0 (102,718)
Election from S-Corporation to C-Corporation status 0 (263,609)
Net proceeds from additional paid in capital 0 4,220 ,683
----------- -----------
Net cash provided by (used in) financing activities $ 387,384 $ 2,497,463
Net increase (decrease) in cash $ (639,676) $ 1,274,089
=========== ===========
Cash at beginning of period $ 832,970 $ 177,394
=========== ===========
Cash at end of period $ 193,294 $ 1,451,483
=========== ===========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
SEL-LEB MARKETING, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Shares Paid-In Retained Shareholders'
Shares Amount Capital Earnings Equity
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 7,440,000 $ 74,400 $4,136,563 $ 430,523 $4,641,486
Discount in connection
with repayment of
related party debt -- 46,901 -- 46,901
Shares issued in connection
with the exercise of options,
and warrants 439,977 4,400 805,083 809,483
Net income -- -- 474,280 474,280
---------- ---------- ---------- ---------- ----------
Balance at September 30, 1996 7,879,977 $ 78,800 $4,988,547 $ 904,803 $5,972,150
========== ========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
SEL-LEB MARKETING, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(The information pertaining to the nine month periods
ended September 30, 1995 and 1996 are unaudited)
1. Basis of Presentation, Events, and Initial Public Offering
The financial statements of Sel-Leb Marketing, Inc., (the "Company")
included herein have been prepared pursuant to generally accepted
accounting principles and have not been examined by independent public
accountants. In the opinion of management all adjustments which are
of a normal recurring nature necessary to present fairly the results of
operation have been made. Pursuant to Securities and Exchange Commission
("SEC") rules and regulations, certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
from these statements unless significant changes have taken place since the
end of the most recent fiscal year. The disclosures contained herein should
be read in conjunction with the financial statements and notes included in
the Company's Form 10-KSB filed with the SEC on March 31, 1996 and its
Registration Statement on Form SB-2, Registration No. 333- 6057, declared
effective on July 12, 1996 by the SEC. The results of operations for the
nine month period ended September 30, 1996 are not necessarily indicative
of the results to be expected for the full year.
The Company completed in July 1995 its initial public offering ("IPO") of
920,000 units (the "IPO Units"), each IPO Unit consisting of one share of
common stock and one warrant entitling the holder to purchase one share of
common stock at an exercise price of $6.00 per share. The warrants are
exercisable for a three year period commencing July 13, 1996. The Company
used a portion of the net proceeds of the IPO to repay bank and bridge
loans outstanding as of the date of the IPO.
On January 4, 1995, the Company increased its authorized number of shares
to 10,000,000 shares of common stock, effected a 17,760.8-for-1 stock split
and changed the par value of its common stock from no par to $.01 par. On
May 18, 1995, the Company effected a .810706 reverse stock split. In
February 1996, the Company increased its authorized number of shares to
40,000,000 shares of common stock and consummated a 3-for-1 stock split,
which was effected as a share distribution pursuant to which each holder of
a share of common stock received two additional shares for each share held.
In connection with the February 1996 3-for-1 stock split, the Company
adjusted the terms of the warrants to provide that each warrant would
thereafter entitle the holder to purchase three shares of common stock at
an exercise price of $2.00 per share. On June 6, 1996, the Company elected
to split the warrants, as a result of which, effective June 20, 1996, each
warrant to purchase three shares of common stock at an exercise price of
$2.00 per share was converted into three warrants, each to purchase one
share of common stock at an exercise price of $2.00 per share. The increase
in authorized shares and the stock splits
7
<PAGE>
SEL-LEB MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
have been given retroactive effect in the accompanying financial
statements.
On May 18, 1995, the Company and Linette Cosmetics, Inc. ("Linette"), two
companies with the same ownership interests, merged, with the Company as
the surviving corporation. In addition, certain shareholders of the Company
contributed their 60% interest in Lea Cosmetics, Inc. ("Lea") to the
Company in connection with the IPO. The Company purchased the remaining 40%
interest in Lea immediately prior to consummation of its IPO and Lea was
subsequently merged into the Company in August 1995. The purchase price for
the 40% interest in Lea consisted of 180,000 shares of common stock, 90,000
of which were issued at the time of the purchase and 90,000 of which were
issued in January 1996 upon Lea's achieving certain sales volume for 1995.
The merger of Linette with and into the Company and the contribution of the
60% interest in Lea to the Company have been reported at historical cost in
a manner similar to a pooling of interests. The purchase of the 40%
interest in Lea by the Company has been accounted for as a purchase. The
accompanying unaudited statements of income for the three and nine month
periods ended September 30, 1995 present the results of operations of the
Company as if these transactions had occurred on January 1, 1995. During
the three month period ended September 30, 1996, the Company issued 439,977
shares of common stock in connection with the exercise of options and
warrants, thereby increasing the total outstanding shares to 7,879,977.
2. Earnings Per Share
Earnings per share amounts are computed based on the weighted average
numbers of shares actually outstanding plus the shares that would be
outstanding assuming exercise of diluted stock options and warrants, all of
which are considered to be common stock equivalents. The number of shares
that would be issued from the exercise of stock options and warrants has
been reduced by the number of shares that could have been purchased from
the proceeds of such exercise at the average market price of the Company's
stock.
Pursuant to the modified treasury stock method, the number of shares
purchased has been limited to 20% of the outstanding shares and the balance
of funds has been hypothetically invested in U.S. government securities or
commercial paper with appropriate recognition of any income tax effect.
For the three and nine month periods ended September 30, 1996, the number
of shares used in the computation of primary earnings per share and fully
diluted earnings per share were 13,886,882 and 13,881,863, respectively.
For the comparable period in 1995 the number of shares used were 6,986,043
for three month and 5,385,766 for the nine month
8
<PAGE>
SEL-LEB MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
periods ended September 30, 1995.
3. Acquisition
In July 1995, the Company purchased the 40% interest in Lea in a business
combination accounted for as a purchase. The purchase price was 180,000
shares of newly issued, unregistered shares of the Company's common stock,
90,000 of which were issued at the time of the purchase and 90,000 of which
were issued in January 1996 upon Lea's achieving certain sales volume for
1995. The accompanying financial statements reflect the issuance of these
shares of common stock as if they were issued on December 31, 1995. The
fair value of the assets acquired, including approximately $281,000
allocated to goodwill, which is being amortized over 10 years, amounted to
approximately $382,000 and liabilities assumed amounted to approximately
$101,000. Amortization expense related to goodwill and charged to
operations amounted to $21,245 for the nine months ended September 30,
1996.
The Company reviews the carrying value of goodwill for impairment
periodically and whenever events or changes in circumstances indicate that
the amount may not be recoverable. The review for recoverability includes
an estimate by the Company of the future undiscounted cash flows expected
to result from the use of the assets acquired and their eventual
disposition. An impairment will be recognized if the carrying value of the
assets exceeds the estimated future undiscounted cash flows of those
assets.
4. Provision for Income Tax and Pro Forma Information
The provision for income tax for the three and nine month periods ended
September 30, 1996 and the pro forma provision for the three and nine month
periods ended September 30, 1995 reflects the Company's earnings taxed for
federal and certain state income tax purposes at statutory rates. Prior to
the merger of Linette with and into the Company, the Company was treated as
an S-Corporation, with its earnings taxed for federal and certain state
income tax purposes directly to its shareholders. In addition, pro forma
net income for the three and nine month periods excludes minority interest
in earnings of subsidiary prior to the Company's IPO which amounted to $0
for the three month period and $102,718 for the nine month period ended
September 30, 1995.
5. Net Sales
Included in the net sales figures for the three and nine month periods
ended September 30, 1996 is commission income of $136,562 and $181,594,
respectively. For the corresponding periods ending September 30, 1995, the
commission income included in net sales was $47,726 and $96,948,
respectively.
9
<PAGE>
SEL-LEB MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
6. Net Income
The 1995 nine month net income historically was $368,388 before adjustments
as provided for in footnote 4. By excluding the minority interest for the
nine month period ending September 30, 1995 of $102,718, the historical net
income excluding minority interest would have been $471,106.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the Company's results of
operations, liquidity and financial condition should be read in conjunction with
the Financial Statements of the Company and related notes thereto. This
Quarterly Report on Form 10-QSB contains certain forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements due to a number of factors, including but not limited
to general trends in the retail industry, the ability of the Company to
successfully implement its expansion plans, consumer acceptance of any products
developed and sold by the Company, the ability of the Company to develop its
"celebrity" product business and other factors set forth herein or in reports
and other documents filed by the Company with the SEC.
Results of Operations: Three and Nine Month Periods Ended September 30, 1996
Compared to the Corresponding Periods Ended September 30, 1995
Net sales for the three months ended September 30, 1996 were $3,620,437
compared to $3,255,065 for the three months ended September 30, 1995,
representing an increase of 11%. For the nine month period ended September 30,
1996 net sales was $10,030,482 compared to $8,298,440 for the corresponding
period in 1995, representing an increase of 21%. This increase in net sales
resulted from increases in both the sales of the Company's own proprietary brand
name line of beauty aids and cosmetics and sales of merchandise acquired in
connection with the Company's opportunistic purchasing business.
Cost of sales increased from $2,375,435 for the three month period in 1995
to $2,405,059 for the same period in 1996. For the nine month period ending
September 30, 1995 and 1996 cost of sales were $6,134,150 and $7,185,668
respectively. The cost of goods sold as a percentage of sales, decreased from
73.7%. for the three month period ending September 30, 1995 to 68.9%. for the
same period in 1996, representing increased profit margins generated by
increased sales of the Company's own proprietary brand name line of cosmetics.
The gross profit margins of the Company are subject to fluctuation due to
varying profit margins applicable to the particular merchandise acquired by the
Company in connection with its opportunistic purchasing business.
Selling, general and administrative ("SG&A") expenses increased from
$428,315 for the three month period ended September 30 1995 compared to $705,782
for the comparable period in 1996. SG&A for the nine month period ending
September 30th was $1,392,210 in 1995 and $2,014,068 in 1996. The principal
components of SG&A are payroll, rent, commissions, insurance, legal, accounting
and travel and promotional expenses. The increase in SG&A expenses in 1996
resulted primarily from the increased costs incurred by the Company in
connection with its status as a public company and increased sales activity
relating to the development of new accounts and product lines.
As a result of the increase in the cost of sales and the increase in SG&A
expenses, total operating expenses increased from $2,803,750 in 1995 to
$3,110,841 in 1996 for the three month period and $7,526,360 in 1995 to
$9,199,736 in 1996 for the nine month period.
Operating income increased for the nine month period from $772,080 in 1995
to $830,746 in 1996. For the three months ended September 30, 1995 the operating
income was $451,315
11
<PAGE>
compared to $509,596 for the three months ended September 30, 1996. The pro
forma net income for the three and nine month periods ended September 30, 1995
reflects an adjustment to the earnings of the Company for income taxes as if the
Company's S corporation status had terminated at the beginning of the period and
does not include minority interest in earnings of subsidiary of $0 for the three
month period and $102,718 for the nine month period.
Liquidity and Capital Resources
During 1995, the Company completed the IPO, in which it sold an aggregate
of 920,000 IPO Units (the "IPO Units"), with each IPO Unit consisting (after
giving effect to the February 1996 3- for-1 stock split and the related
adjustments to and split of the warrants) of three shares of common stock and
three warrants, at a price of $5.00 per IPO Unit for gross proceeds of
$4,600,000.
In May 1995, the Company borrowed, for working capital purposes and to pay
a portion of the expenses of the IPO, an aggregate of $250,000 (the "Bridge
Financing") from an accredited investor unaffiliated with the Company or any of
its executives or directors (the "Bridge Investor"). In connection with the
Bridge Financing, the Company issued to the Bridge Investor (I) a note, which
bore interest at the rate of 8% per annum and was due and payable on the earlier
of the consummation of the IPO or November 23, 1995 (the "Bridge Note") and (ii)
1,000,000 warrants (the "Bridge Warrants"), each of which was exercisable until
November 23, 1995 and entitled the holder thereof to purchase three shares of
common stock at an exercise price of $2.00 per share. Upon the consummation of
the IPO, each Bridge Warrant automatically converted into a warrant having the
same terms as the warrants issued in the IPO. The Company used a portion of the
proceeds of the IPO to repay the entire principal amount of the Bridge Note,
plus accrued interest thereon.
During the nine month period ended September 30, 1996 the Company received
$600,000 from the exercise of certain Underwriter's Warrants granted in the IPO
to the Underwriter retained by the Company in connection with the IPO (the
"Underwriter's Warrants")and $369,954 from the exercise of outstanding warrants,
including warrants held by certain affiliates of the Company. As of November 11,
1996, the Company had received from the exercise of the Underwriter's Warrants
and other outstanding warrants a total of $1,532,354, including $600,000 from
the Underwriter. Subsequent to the end of the period the Company has received an
additional $562,400 from the exercise of warrants.
During the first nine months of 1996, the Company used working capital to
pay long term debt to related parties in the amount of $422,099 (the Company
received a discount of $46,901 on the outstanding balance which increased
additional paid in capital by $46,901). The Company also used cash to take
advantage of buying opportunities in order to increase inventory available for
subsequent periods. The payment to related parties, together with the increase
in inventory of $1,088,335 and accounts receivable of $1,020,163 during the
period, offset by increases in accounts payable of $651,958 and cash received
(net of expenses) by the exercise of Underwriter's Warrants, options and other
warrants in the amount of $809,483 , resulted in decreases in cash from $832,970
as of December 31, 1995 to $193,294 on September 30, 1996.
On November 6, 1995, the Company entered into a Loan and Security Agreement
(the "Loan Agreement") with United Jersey Bank (the "Lender") pursuant to which
it obtained a revolving line of credit for general working capital purposes in
an aggregate principal amount up to $2,000,000,
12
<PAGE>
subject to a borrowing base limitation. The line of credit bears interest at
fluctuating rates per annum based on the "Prevailing Base Rate" (as defined in
the Loan Agreement) of the Lender. The Company did not have any borrowings under
such line of credit as of September 30, 1996. As of November 11, 1996, the
Company had outstanding $350,000 under this line of credit Any funds borrowed by
the Company under the Loan Agreement are secured primarily by the inventory and
receivables of the Company. The Loan Agreement terminates on May 31, 1997. There
can be no assurance that the Loan Agreement will be renewed at such time.
At September 30, 1996, the Company had working capital of $5,395,497 and
cash and cash equivalents in the amount of $193,294.
The Company anticipates that its working capital, together with anticipated
cash flow from the Company's operations and proceeds received from the exercise
of warrants, if any, will be sufficient to satisfy the Company's cash
requirements for at least twelve months. In the event the Company's plans change
(due to unanticipated expenses or difficulties or otherwise), or if the working
capital and projected cash flow otherwise prove insufficient to fund operations,
the Company could be required to seek additional financing sooner than currently
anticipated. Except for the Loan Agreement, which expires on May 31, 1997, the
Company has no current arrangements with respect to, or sources of, additional
financing. Accordingly, there can be no assurance that additl financing will be
available to the Company when needed, on commercially reasonable terms, or at
all. The Company's inability to obtain such additional financing could have a
material adverse effect on the Company's long-term liquidity and on the proposed
business expansion plans of the Company.
13
<PAGE>
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K
A. Exhibits
11. Statement re computation of earnings (not required because the
relevant computation can be clearly determined from material contained in the
financial statements).
27. Financial Data Schedule
B. Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized .
SEL-LEB MARKETING, INC.
/s/ Jan S. Mirsky
-----------------
Jan S. Mirsky
Executive Vice President - Finance and
Chief Operating Officer
Dated: November 13, 1996 as both duly authorized officer of the registrant
and as principal financial officer of registrant.
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 193,294
<SECURITIES> 0
<RECEIVABLES> 3,232,036
<ALLOWANCES> 79,000
<INVENTORY> 3,558,422
<CURRENT-ASSETS> 7,382,532
<PP&E> 400,208
<DEPRECIATION> 88,105
<TOTAL-ASSETS> 7,959,185
<CURRENT-LIABILITIES> 1,987,035
<BONDS> 0
0
0
<COMMON> 78,800
<OTHER-SE> 5,893,350
<TOTAL-LIABILITY-AND-EQUITY> 7,959,185
<SALES> 10,030,482
<TOTAL-REVENUES> 10,040,901
<CGS> 7,185,668
<TOTAL-COSTS> 7,185,668
<OTHER-EXPENSES> 2,038,676
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,608
<INCOME-PRETAX> 816,557
<INCOME-TAX> 342,277
<INCOME-CONTINUING> 474,280
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 474,280
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
