<PAGE>

<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

     [X]           ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934

     [ ]           TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                            SECURITIES EXCHANGE ACT OF 1934

         For the Fiscal Year Ended                Commission File No. 0-14674
             November 30, 1996

                               ANDOVER TOGS, INC.
             (Exact name of Registrant as specified in its charter)

                 Delaware                                13-5677957
         (State or other jurisdic-                      (IRS Employer
         tion of incorporation or                   Identification Number)
               organization)

        1333 Broadway, New York, New York                  10018
     (Address of Principal Executive Offices)           (Zip Code)

       Registrant's telephone number, including area code: (212) 244-0700

           Securities registered pursuant to Section 12(b) of the Act:

                                                 Name of Each Exchange
       Title of Each Class                        on Which Registered
       -------------------                         -------------------
              None                                       None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

      TITLE OF CLASS:  COMMON STOCK, $.10 PAR VALUE

               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 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 [ ]       NO [X]



<PAGE>

<PAGE>




               Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

               The aggregate market value at August 8, 1997 of shares of the
Registrant's Common Stock, $.10 par value (based upon the mean between the bid
and asked price of such stock as reflected in the over-the-counter market on
such date), held by non-affiliates of the Registrant was approximately $765,865.
Solely for the purposes of this calculation, shares held by directors and
officers of the Registrant have been excluded. Such exclusion should not be
deemed a determination or an admission by the Registrant that such individuals
are, in fact, affiliates of the Registrant.

               Indicate by checkmark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.

Yes [ ]      No  [X]

               Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: At August 8, 1997,
there were outstanding 4,470,815 shares of the Registrant's Common Stock, $.10
par value.

                    Documents Incorporated by Reference: None





<PAGE>

<PAGE>



                               ANDOVER TOGS, INC.

                               INDEX TO FORM 10-K

ITEM NUMBER                                                              PAGE
-----------                                                              ----
                                     PART I

Item 1.  Business......................................................... 1
Item 2.  Properties....................................................... 7
Item 3.  Legal Proceedings................................................ 8
Item 4.  Submission of Matters to a Vote of Security Holders.............. 8


                                     PART II

Item 5.  Market for Registrant's Common Equity and
                 Related Stockholder Matters.............................. 9

Item 6.  Selected Financial Data..........................................11
Item 7.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations......................12

Item 7A. Quantitative and Qualitative Disclosure About Market Risk........16
Item 8.  Financial Statements and Supplementary Data......................16
Item 9.  Changes in and Disagreements With Accountants on
                 Accounting and Financial Disclosure......................16

                                    PART III

Item 10. Directors and Executive Officers of the Registrant...............17
Item 11. Executive Compensation...........................................20
Item 12. Security Ownership of Certain Beneficial Owners and Management...24
Item 13. Certain Relationships and Related Transactions...................28


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..29





<PAGE>

<PAGE>



                                     PART I

ITEM 1.  BUSINESS.

Proceedings in Bankruptcy

        In the year ended November 30, 1995, the Company sustained a loss of
$4,279,000. The loss caused the Company to cease to be in compliance with many
of the financial covenants in its various credit agreements, resulting in
defaults under those agreements. Negotiations with the Company's lenders to
obtain waivers in connection with such defaults were unsuccessful. Negotiations
with such lenders and other prospective lenders to obtain more permanent
financing facilities were also unsuccessful. As a result of the ensuing severe
liquidity crisis, on March 19, 1996, the Company filed for protection under
Chapter 11, Title 11 of the United States Code ("Bankruptcy Code"). The
Company's shares of Common Stock were removed from listing on the NASDAQ
National Market and now trade in the over-the-counter market in what are
commonly referred to as the "pink sheets."

        The deterioration of the Company's business occurred over a period of
years and resulted from a number of factors, principally the following:

        The Company's customer base deteriorated as a result of an extremely
        weak retail environment, a consolidation among retailers and severe
        financial instability in the retail community.

        The Company experienced continuing erosion of margins due to pressure
        from customers and competitors. Competition from imports had a severe
        impact on the Company's commodity or base products.

        With excess domestic manufacturing capacity, the Company accepted some
        low margin business in order to keep its manufacturing facilities busy
        and maintain market share.

        In February 1995, the Company acquired certain assets of Dobie
        Industries, Inc. ("Dobie"), a manufacturer of childrens and ladies
        apparel. Substantial difficulties were encountered in implementing the
        acquisition. The Company phased out its ladies apparel division and was
        not successful in expanding its business with Dobie's former customers.
        A loss of $3,195,000 in the fourth quarter of fiscal 1995 included sales
        allowances and markdowns attributable to the Dobie business and an
        $832,000 write-off of cost in excess of net assets acquired from Dobie.

        The filing for protection under the Bankruptcy Code itself exacerbated
        the Company's problems by reducing customer confidence.




<PAGE>

<PAGE>



        The Company obtained debtor-in-possession financing and conducted
operations as a debtor-in-possession from March 19, 1996 to May 12, 1997 when it
emerged from bankruptcy. During that period, the Company reorganized its
business in a number of significant respects, including the following:

        An approximately 200,000 square foot leased facility in Scottsboro,
        Alabama used for finishing, warehousing, distribution and office space
        has been closed. A 65,300 square foot leased facility in Springdale,
        North Carolina, previously used for sewing, finishing, warehouse and
        distribution, has also been closed. A 15,000 square foot owned facility
        in Stevenson, Alabama used for sewing has been closed and is being held
        for sale. Prior to the bankruptcy proceedings, in early 1996, the
        Company had closed a sewing facility located in Pisgah, Alabama. Many of
        the operations previously conducted at Scottsboro, Springdale and
        Stevenson have been consolidated at the Company's remaining facilities
        in Pisgah, Alabama or New York City, and many of the operations
        conducted in those facilities are or will be contracted out to
        unaffiliated manufacturers. (See "Item 2. Properties," for a fuller
        description of the foregoing facilities).

        The Company moved its executive offices and showrooms from a 34,500
        square foot space located at One Penn Plaza, leased at an annual cost
        ranging from $766,000 to $932,200 to a 15,700 square foot space at 1333
        Broadway, leased at an annual cost ranging from $224,000 to $267,000.

        Historically, the Company's products were manufactured in girls' sizes
        infant through 14 and boys' sizes infant through 20. The Company
        discontinued its big boys and import division leaving it with girls'
        sizes infant through 14 and boys' sizes infant through toddler. In
        addition, historically, products were primarily manufactured in the
        Company's domestic facilities and in the Company's facilities in the
        Dominican Republic. In addition, some items were imported or
        manufactured by outside contractors. During the bankruptcy proceedings,
        the Company's import division was discontinued and greater reliance is
        being placed on the Company's facilities in the Dominican Republic and
        on outside contractors. In fiscal 1997, the Company commenced the
        design, manufacture and sale of girls' nightshirts. The Company has also
        entered the business of designing and marketing big boys' sportswear and
        entered the business of manufacturing and marketing girls' slips and
        marketing girls' underwear.

        Prior to the bankruptcy filing, the Company had 1155 employees. The
        Company currently has approximately 420 employees.


                                        2




<PAGE>

<PAGE>



        Senior management has been reorganized. William L. Cohen continues as
        Chairman and Chief Executive Officer and has had his duties expanded to
        include sales and merchandising administration. Alan Kanis continues as
        Chief Financial Officer. Stephen L. Fenyves, Senior Vice President,
        previously in charge of administration, has had his duties expanded to
        include administration, manufacturing and sourcing. Finally, Harold
        Drachman, formerly Vice President, Sales, left the Company as of July 1,
        1996.

        For the year ended November 30, 1996, the Company had net sales of
$43,057,300, compared with $80,552,300 in the fiscal year ended November 30,
1995, and a loss of $9,811,900 compared to a loss of $4,278,600 in the prior
year. Included in the loss for the fiscal year ended November 30, 1996 were
restructuring costs of approximately $6,375,000 consisting of professional fees
of $2,448,000, the write off of property and equipment relating to facility
closings and moving of $1,908,000, accrual of the lease rejection claim for the
office space at One Penn Plaza of $1,000,000 and $1,019,000 representing
severance pay, termination of employment agreements and various other claims.
Also included in such loss were interest expense of $992,000, which included
financing and facility fees of $385,000.

        In February 1997, property, plant, equipment having a book value of
approximately $2,261,000 and restricted cash of $360,000 relating to the
Scottsboro, Alabama facility and the Industrial Revenue Bond issued in
connection with the construction of that facility were exchanged for the release
of claims relating to such Bond and facility in the amount of $3,055,000. The
resulting gain of $434,000 was credited to restructuring costs in February 1997.

        On April 10, 1997, the U.S. Bankruptcy Court confirmed the Company's
Joint Plan of Reorganization and Disclosure Statement ("Plan"). The Plan became
effective on May 12, 1997 (the "Effective Date") on which date the Company
emerged from bankruptcy. On that date, the Company entered into a new two year
financing agreement with CIT Group/Commercial Services, Inc. for a credit
facility of up to $10,500,000 of which $3,000,000 is available for letters of
credit (the "CIT Facility"). The CIT Facility is secured by all of the Company's
assets other than its real estate.

        On the Effective Date, allowed and disputed general unsecured claims
("Class 4 Claims") totalled approximately $5,636,000. Each holder of an Allowed
Class 4 Claim has received or will receive (i) a pro-rata share of $786,000
being paid in cash by the Company and (ii) a beneficial interest in a note
("Class 4 Note") in principal amount equal to the amount by which the sum of all
Allowed Class 4 Claims exceeds $786,000. The Class 4 Note is payable quarterly,
with interest at the rate of 6% per annum on the unpaid balance, commencing on
June 30, 1997 based on a ten-year amortization schedule with the balance payable
on the fifth anniversary of the Effective Date. The Class 4 Note also requires
prepayments annually commencing in March 1998 in amounts aggregating 50% of the
Company's excess cash flow (as defined) for the preceding fiscal year. The Class
4 Note is secured by a second lien on the same assets which secure the CIT
Facility. The payee under


                                        3




<PAGE>

<PAGE>



the Class 4 Note is M.J. Sherman & Associates (the "Collateral Trustee") which
acts as such payee and as trustee for the collateral securing the Class 4 Note
pursuant to a Note and Collateral Trust Agreement dated May 12, 1997 between the
Company and its subsidiaries and the Collateral Trustee. Each holder of an
allowed Class 4 Claim has received or will receive a Certificate of Beneficial
Interest in Class 4 Note ("Certificate of Beneficial Interest") evidencing such
holders' beneficial interest in the Class 4 Note to the extent of such holder's
ratable interest therein.

        On May 12, 1997, the Class 4 Note was issued in the principal amount of
$3,316,088.15. On that date, there were also approximately $1,782,800 of
disputed claims. The principal amount of the Class 4 Note will be increased as
disputed claims become allowed claims. The most significant disputed Class 4
Claim relates to a lease rejection claim (and related pre-petition rental
claim), in the aggregate amount of approximately $1,552,000, asserted by the
owner of the Company's former office space at One Penn Plaza. This claim is
currently under litigation in the U.S. Bankruptcy Court. The Company has
included in liabilities subject to compromise, approximately $1,519,500 as a
reserve for all disputed claims.

General

        The Company was formed in 1986 under the laws of the State of Delaware.
The Company was previously incorporated in New York in 1949. The Company and its
subsidiaries are referred to collectively herein as the "Company".

Products and Product Design

        The Company designs, manufacturers and sells popular-priced children's
active sportswear, including separate tops, dresses, slack sets, short sets,
three-piece sets, warm-up sets, pants, jeans, skirts, coordinates and related
separates. Such products are manufactured in girls' sizes infant through 14 and
boys' sizes infant through toddler. The Company also designs, manufactures and
sells girls' nightshirts and slips and markets and sells imported girls'
underwear.

        The majority of the Company's products are everyday garments required in
the wardrobe of the age group serviced. The garments are sold as non-branded
merchandise, under store labels.

        The Company's childrens' products are designed and marketed for two
principal selling seasons: Spring/Summer and Fall/Holiday. Retail prices for
items in the Company's 1997 Spring/Summer collection of children's sportswear
generally range from $4 to $20 and range from $6 to $25 for items in the
Company's Fall/Holiday Collection.

        The Company's product lines of sportswear for each season typically
consist of a variety of clothing items sold as separates as well as in
coordinated sets. Each seasonal


                                        4




<PAGE>

<PAGE>



offering of separates contain items designed to enable customers to assemble
coordinated outfits consisting of separate items within a product line. The
Company's products are designed by an in-house staff which studies such
indicators as prior years' product performance and current fashions as
represented in other apparel markets. Designers meet frequently with suppliers
and customers to assess market reaction to the Company's product lines, to
accommodate individual design requirements and to anticipate future retail
demand.

Sales

        The Company's principal customers during the 1995 and 1996 fiscal years
were Wal-Mart Stores, Inc., K-Mart Corp., and Hills Department Stores. Sales
during fiscal 1995 and fiscal 1996 were made to approximately 150 and 100
customers, respectively, although the Company's 10 largest customers accounted
for approximately 90% of the Company's sales in each of such years. Wal-Mart
Stores, Inc., the Company's largest customer, accounted for approximately 30%
and 36%, respectively, of the Company's 1995 and 1996 sales, K-Mart Corp.
approximately 29% in each such year and Hills Department Stores approximately
10% and 13%, respectively. Wal-Mart Stores, Inc. currently accounts for
approximately 87% of the Company's booked orders. Accordingly, the Company is
dependent upon the continued support of this customer, and it is essential that
the Company expands its customer base in order to reduce its reliance on
Wal-Mart Stores, Inc. At various times during the year the Company has
substantial credit exposure to its major customers.

        At November 30, 1995, the Company's products were sold through a direct
employee sales force of 15 persons. The Company currently has a direct sales
force of four persons. In addition, the Company retains four commission sales
representatives.

Backlog

        At July 3, 1997, the amount of the Company's booked orders believed to
be firm and expected to be filled during the current fiscal year was
approximately $8,737,000. This compares with approximately $12,429,000 of such
orders at July 5, 1996. The decrease in backlog from July 5, 1996 to July 3,
1997 reflects elimination of the big boys' division, and a decline in sales in
the Company's infant and girls' business as well as elimination of the import
division. The Company anticipates that annual sales for fiscal 1997 will be
substantially less than 1996 sales.

        Shipments are made against customer delivery schedules, generally from
three to seven months after booking. The Company's customers have been reducing
the lead time between the time when an order is firm and its scheduled delivery
time. This has forced the Company in some instances to order piece goods based
upon less than firm orders and increased the risk and extent of markdowns. More
than 90% of the Company's garments are made to fill orders.


                                        5




<PAGE>

<PAGE>



Production

        Products accounting for approximately 36% and 29%, respectively, of the
Company's net sales in fiscal 1995 and 1996 were manufactured in the Company's
domestic facilities, and approximately 24% and 40%, respectively, in the
Company's facility located in the Dominican Republic. The balance of the
Company's sales was derived from imported goods and outside contractors. As a
result of the closing of the import division, closing of the Company's
facilities in Scottsboro, Springdale and Stevenson, the consolidation of
operations in Pisgah and New York City and the reorganization of the Company's
manufacturing operations, there will be greater reliance placed on the Company's
facilities in the Dominican Republic and on contractors.

        The Company's products are made from a variety of natural and synthetic
fabrics and blends such as cotton, poly-cottons and acrylics, in such forms as
knits, fleeces, corduroy and twills purchased from unaffiliated suppliers. The
Company does not have any long-term, formal arrangements with any of its
suppliers of raw materials. The fabric and accessories market in which the
Company purchases its raw materials is composed of a substantial number of
suppliers with similar products, and is characterized by a high degree of
competition. The Company has experienced little difficulty in satisfying its
requirements for raw materials, considers its sources of supply to be adequate
and believes that it would be able to obtain sufficient raw materials of
comparable quality should the products of any one of its suppliers become
unavailable.

Competition

        The apparel industry, including children's active sportswear, is
fragmented and highly competitive. The Company competes with both domestic and
foreign manufacturers on the basis of quality, reliability and price. In
addition, the Company's customers have steadily increased the products they
import directly. Because of the bankruptcy proceedings, some of the Company's
customers lost confidence in the Company and turned to the Company's
competitors. The Company is seeking to control costs and improve its competitive
position by conducting the bulk of its manufacturing in the Dominican Republic.

Employees

        In order to reduce costs, the Company has reduced the workforce by more
than 60% since November 30, 1994. At November 30, 1996, the Company employed
approximately 550 persons, of whom approximately 500 persons were engaged in
manufacturing, and the balance were engaged in managerial, sales and
administrative functions. The Company currently employs approximately 420
persons. Reflecting its reduced sales volume, the Company is continuously
evaluating its staffing requirements.


                                        6




<PAGE>

<PAGE>



ITEM 2. PROPERTIES.

        The following table sets forth in summary fashion the location of each
of the Company's principal production facilities, its principal use, approximate
floor space and the lease expiration date where leased.

<TABLE>
<CAPTION>

                                                 Approximate      Year of
                                                 Floor Space       Lease
Location           Description                     (sq. ft.)     Expiration(1)
---------          -----------                   -----------     ------------
<S>                <C>                             <C>              <C>    
New York,
 New York          Executive offices,
                   showrooms                       15,700           2001(2)
Pisgah,
 Alabama           Cutting and silk-screen
                   printing                       120,000            --
                   Finishing and distribution
                   center                          80,000
                   Warehouse                       10,000            --
                   Warehouse                       15,000            --

Stevenson,
 Alabama                 (3)                       15,000            --

Springdale,
 North
 Carolina                (4)                       65,300           1997

La Romana,
 Dominican
  Republic         Manufacturing plant             40,000           1999(5)

</TABLE>

----------------
(1)     Facility is owned if no lease expiration date is set forth.

(2)     The Company has an option to terminate the lease effective December 31,
        1997.

(3)     Previously a manufacturing facility, the Stevenson plant has been closed
        and is being held for sale.

(4)     Previously a manufacturing facility, the Springdale plant has been
        closed. The Company has vacated the premises, and its lease expired on
        July 31, 1997.

(5)     The lease provides for an option to construct an additional section of
        20,000 square feet of space.


                                        7




<PAGE>

<PAGE>



        The 1333 Broadway space is utilized for design, costing and procurement
functions in addition to housing the Company's executive offices and showrooms.
The Company believes that the space will be suitable and adequate for these
needs for the foreseeable future.

        The Pisgah, Alabama facility consists of four separate buildings on
approximately 22 acres of property. In addition to functions already conducted
at Pisgah, some of which are being moved to New York or are being outsourced,
many of the Company's operations previously conducted at the Stevenson,
Scottsboro and Springdale facilities have been consolidated into the Pisgah
facility. The facility is relatively old with high maintenance costs. Its
location requires additional ground transportation costs from ports of entry for
products manufactured in the Dominican Republic and import goods. Expansion of
services at the facility is limited by the availability of labor. The Company
intends in the future to analyze alternative locations to serve as warehousing
and distribution centers in place of Pisgah in order to reduce transportation
costs and manufacturing times. At some time in the further future, the Company
may analyze alternative facilities in place of Pisgah for the provision of
manufacturing services.

        The Company believes that its Dominican Republic facility is suitable
and adequate for its needs at this time. Expansion of the facility may become
necessary in the future and for that purpose, the Company has an option to
construct an additional 20,000 feet.

ITEM 3.  LEGAL PROCEEDINGS.

        On March 19, 1996 the Company, together with its wholly owned
subsidiaries Springdale Fashions, Inc., Tortoni Manufacturing Corp., and
Stonehenge Financial Corp. filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York. The Company and such subsidiaries operated their
respective businesses as debtors-in-possession pursuant to the Bankruptcy Code
until May 12, 1997 when they emerged from bankruptcy pursuant to the Plan (See
"Item 1. Business -- Proceedings in Bankruptcy").

        The Company is litigating in the U.S. Bankruptcy Court various claims
asserted against it in the bankruptcy proceedings, principally a lease rejection
claim (and related pre-petition rental claim) in the total amount of
approximately $1,552,000 relating to the Company's former executive offices and
showroom at One Penn Plaza in New York City. The Company believes that the
amount allowed for such lease and rental claims as a result of the litigation
will be less than the $1,552,000 claimed. The amount so allowed will be treated
as an allowed Class 4 Claim in the manner described under "Item 1. Business --
Proceedings in Bankruptcy."

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

        None.


                                        8




<PAGE>

<PAGE>



                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON
        EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

        Until May 1, 1996, the Company's Common Stock, $.10 par value, was
traded in the over-the-counter market on the NASDAQ National Market (ticker
symbol: ATOG). The following table sets forth, for the fiscal years ended
November 30, 1994 and 1995 and thereafter until May 1, 1996, the quarterly high
and low bid prices for the Common Stock, as reported by Nasdaq.

<TABLE>
<CAPTION>
                                                        Bid Prices
        Fiscal Year Ended                          -------------------
        November 30, 1994                          High            Low
        -----------------                          ----            ----
<S>                                               <C>            <C>   
          First Quarter                           $2.500         $2.000
          Second Quarter                           2.500          1.750
          Third Quarter                            1.812          1.250
          Fourth Quarter                           2.500          1.375

<CAPTION>

         Fiscal Year Ended
         November 30, 1995
         -----------------
          First Quarter                           $3.375         $1.250
          Second Quarter                           2.750          2.125
          Third Quarter                            2.250          1.625
          Fourth Quarter                           2.250          1.375

<CAPTION>

         Fiscal Year Ended
         November 30, 1996
         -----------------
          First Quarter                           $1.625         $1.375
          Second Quarter 
          (through May 1, 1996)                   $1.375         $0.500
</TABLE>



        On May 2, 1996, the shares of the Company's Common Stock were delisted
from the NASDAQ National Market and began trading in the over-the-counter market
in what are commonly referred to as the "pink sheets." The following table sets
forth the high and low bid prices for the Common Stock as reported in the pink
sheets, according to National Quotation Bureau, LLC and IDD Information Services
Tradeline on-line information services, by quarters for the period from May 2,
1996 to August 8, 1997.


                                        9




<PAGE>

<PAGE>



<TABLE>
<CAPTION>

                                                                      Bid Prices
                                                                      ----------
            Fiscal Year Ended November 30, 1996                     High       Low
            -----------------------------------                     ----       ---
<S>                      <C>                                      <C>         <C>   
Second Quarter (from May 2, 1996)                                 $0.625      $0.500
Third Quarter                                                        --          --
Fourth Quarter                                                    $0.625      $0.125

<CAPTION>

           Fiscal Year Ended November 30, 1997
           -----------------------------------
First Quarter                                                     $0.375      $0.375
Second Quarter                                                    $0.375      $0.375
Third Quarter (through August 8, 1997)                            $0.625      $0.375

</TABLE>

        All over-the-counter market quotations reflect inter-dealer prices
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.

Number of Stockholders

        On July 8, 1997, there were approximately 133 holders of record of the
Company's Common Stock. A substantial number of shares of the Company's Common
Stock is held of record by brokers and depositories. Accordingly, the Company
believes that the actual number of holders of the Company's Common Stock may be
substantially higher.

Dividends

        The Company has not paid cash dividends on its Common Stock for the past
five years. The CIT Facility prohibits the declaration or payment of dividends
of any kind on the Company's Common Stock.

Recent Sales of Unregistered Securities

        On May 12, 1997, the Company issued the Class 4 Note to the Collateral
Trustee in the initial principal amount of $3,316,088.15, subject to adjustment.
A like principal amount of Certificates of Beneficial Interest have been issued
to 139 holders of allowed Class 4 Claims pursuant to the Plan (See "Item 1.
Business -- Proceedings in Bankruptcy"). The Class 4 Note and Certificates of
Beneficial Interest are exempt from the registration requirements of the
Securities Act of 1933, as amended, by reason of the provisions of Section 1145
of Chapter 11 of the Bankruptcy Code.


                                       10




<PAGE>

<PAGE>



ITEM 6. SELECTED FINANCIAL DATA.

        The following information has been derived from the audited Consolidated
Financial Statements of the Company included elsewhere herein and in other
filings of the Company on Form 10-K and should be read in conjunction with the
audited Consolidated Financial Statements included herein and in other filings
of the Company on Form 10-K.

<TABLE>
<CAPTION>

                                                                       Fiscal Year Ended November 30,
                                                                       ------------------------------
                                                   1996           1995             1994        1993       1992            1991
                                                   ----           ----             ----        ----       ----            ----
                                                                   (in thousands, except per share data)
Income Statement Data

<S>                                             <C>             <C>             <C>         <C>         <C>             <C>     
Net sales                                       $ 43,057        $ 80,552        $ 73,767    $ 89,289    $ 96,323        $ 92,089
Cost of goods sold                                37,363          70,582          60,138      72,298      75,181          70,586
Gross profit                                       5,694           9,970          13,629      16,991      21,142          21,503
Selling, general and
  administrative expenses                          8,129          13,619          12,481      15,106      16,812          16,935

Write-off of cost in excess
  of net assets acquired                            --               832(4)         --          --          --              --
Loss on sale of subsidiary                          --              --              --          --          --               268(1)
Restructuring costs                                6,375(5)         --              --          --          --              --
Operating (loss) income                           (8,810)         (4,481)          1,148       1,885       4,330           4,300
Interest expense, net                                992           1,435           1,006       1,455       1,803           2,138

(Loss) income before
  income tax provision
  (benefit)                                       (9,802)         (5,916)            142         430       2,527           2,162
Income tax provision
  (benefit)                                           10          (1,637)             17         169       1,052             960
Net (loss) income                                ($9,812)        ($4,279)           $125        $261      $1,475          $1,202(1)

Net (loss) income
  per common share                                ($2.19)          ($.96)           $.03        $.06        $.34(2)         $.27(2)

Weighted average common
  shares outstanding                               4,471           4,435           4,358       4,372       4,402           4,421(2)

Balance Sheet Data

Working capital                                    6,523          10,161          16,086      15,920      16,729(3)       16,324(3)

Total assets                                      17,689          33,981          36,880      35,276      44,445(3)       47,013(3)
Long-term debt,
  excluding current portion                        4,527           4,002           5,238       6,531       8,028           9,191

Stockholders' equity                               5,160          14,972          18,955      18,831      18,794          17,278
</TABLE>

-------------
(1)     Effective April 30, 1991, the Company sold its 80% interest to the
        minority shareholder.


                                       11




<PAGE>

<PAGE>




(2)     Restated to reflect the 1.25-for-1 stock split effective in 1993.

(3)     Restated to reflect current portion of deferred income taxes.

(4)     Write-off of cost in excess of net assets acquired related to the Dobie
        acquisition.

(5)     Costs relating to proceedings in Chapter 11.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS.

Bankruptcy

        On March 19, 1996, the Company filed for bankruptcy under Chapter 11 of
the Bankruptcy Code. On May 12, 1997, the Company emerged from Chapter 11. See
"Item 1. Business -- Proceedings in Bankruptcy." During the bankruptcy, the
Company continued to operate as a debtor-in-possession.

Results of Operations

        The following table sets forth, for the periods indicated, certain items
from the Company's Statements of Operations expressed as a percentage of sales:


<TABLE>
<CAPTION>

                                                                    Fiscal Year Ended November 30,
                                                    ------------------------------------------------------------
                                                    1996               1995               1994              1993
                                                    ----               ----               ----              ----
<S>                                                <C>                <C>                <C>               <C>   
Net sales ...................................      100.0%             100.0%             100.0%            100.0%
Cost of goods sold ..........................       86.8               87.6               81.5              81.0
                                                   -----              -----              -----             -----
Gross profit ................................       13.2               12.4               18.5              19.0
Selling, general and
  administrative expenses ...................       18.9               16.9               16.9              16.9
Restructuring costs .........................       14.8               --                 --                --
Write-off of cost in excess of
  assets acquired ...........................       --                  1.0               --                --
                                                   -----              -----              -----             -----
Operating (loss) income .....................      (20.5)              (5.5)               1.6               2.1
Interest expense, net .......................        2.3                1.8                1.4               1.6
                                                   -----              -----              -----             -----
(Loss) income before
  income tax provision (benefit) ............      (22.8)              (7.3)                .2                .5
Income tax provision (benefit) ..............       --                 (2.0)              --                  .2
                                                   -----              -----              -----             -----
Net (loss) income ...........................      (22.8%)             (5.3%)               .2%               .3%
                                                   =====              =====              =====             =====

</TABLE>




                                       12






<PAGE>

<PAGE>





1996 VS. 1995

               Sales for the 1996 fiscal year were $43,057,300 as compared to
$80,552,300 in fiscal 1995, a decrease of $37,495,000 or 46.5%. The decrease is
attributable to a number of factors. The Company discontinued its import and big
boys divisions, leaving it with girls' sizes infant through 14 and boys sizes
infant through toddler. The Company discontinued its import business because it
was unable to finance letters of credit. The Company's resulting inability to
meet orders for imported merchandise affected the Company's credibility, and the
Company therefore lost programs for merchandise manufactured domestically and in
the Dominican Republic. The Company sustained large sales and markdown
allowances attributable to the Dobie division which was phased out and
discontinued in 1995. Import division sales decreased approximately $6,650,000
in 1996 compared to 1995. Dobie and big boys division sales decreased $9,400,000
and $7,900,000, respectively, in 1996 compared to 1995. The remaining decrease
represents the deterioration of the Company's customer base as many customers
lost confidence in the Company's ability to deliver goods due to the bankruptcy
proceedings.

               The Company's gross profit as a percentage of net sales increased
to 13.2% from 12.4% in 1995. Margin erosion over the past two years has been
attributable to sales and markdown allowances to close out inventory,
discontinued divisions and inefficient manufacturing facilities. The Company
attempted to combat further margin erosion by the termination of employees and
the closing of inefficient facilities.

               Selling, general and administrative expenses decreased $5,490,400
to $8,128,900 in 1996 from $13,619,300 in 1995. As a percentage of net sales,
the expenses increased from 16.9% to 18.9%. The Company reduced its salaries and
related fringe benefits by approximately $3,409,000. The Company reduced outside
design expense by approximately $334,000, and related selling and shipping
expenses including travel and entertainment in the amount of approximately
$809,000. Rent and utilities decreased by approximately $463,000. The provision
for doubtful accounts decreased by approximately $247,000. The increase in
expenses as a percentage of net sales is indicative of the severe reduction in
sales volume.

               The write off of cost in excess of net assets acquired of
$832,400 in fiscal 1995 pertain to the Dobie acquisition.

               Restructuring costs relate to the bankruptcy proceedings (See
"Item 1. Business -- Proceedings in Bankruptcy").

               Interest expense decreased $443,100 to $992,200 in 1996 from
$1,435,300 in 1995. The decrease was due to the payment of all bank debt in
fiscal 1996 and the release of interest payments relating to the Industrial
Revenue Bond on the Scottsboro facility. Interest expense in fiscal 1996
included $385,000 of facility fees relating to the various financings.
There were no facility fees included in fiscal 1995.


                                       13


<PAGE>

<PAGE>



1995 VS. 1994

        Sales for the 1995 fiscal year were $80,552,300 as compared to
$73,766,700 in fiscal 1994, an increase of $6,785,600 at 9.2%. The increase was
attributable to the shipments of orders acquired from Dobie as well as an
increase in imports. The remaining areas decreased as a result of generally
depressed conditions in the retail apparel industry and continued price
competition.

        The Company's gross profit as a percentage of net sales decreased to
12.4% from 18.5% in 1994. Pricing pressures were intense, and the Company was
unable to pass through cost increases to its customers. The Company accepted
business at lower margins in order to maintain market share. Margins continued
to be adversely affected due to competition. The Company suffered difficulties
in implementing the Dobie acquisition relating to production. The Company found
it necessary to phase out Dobie's ladies division and was not successful in
expanding its own business with Dobie's former customers. The Company sustained
large sales and markdown allowances.

        Selling, general and administrative expenses increased $1,138,600 to
$13,619,300 in 1995 from $12,480,700 in 1994. As a percentage of net sales, they
remained constant at 16.9%. The increase was primarily attributable to the Dobie
acquisition, including certain transition expenses.

        Write-off of cost in excess of net assets acquired totalling $832,400
pertains to the acquisition of certain Dobie assets.

        The increase in interest expense of $429,000 is a reflection of higher
short term borrowing levels due to increased inventory levels and higher
interest rates, which were offset in part by the reduction of long term debt.

Liquidity

        On May 12, 1997, the Company emerged from Chapter 11 of the Bankruptcy
Code and entered into the CIT Facility. The CIT Facility provides for a
$10,500,000 revolving credit line of which $3,000,000 is available for letters
of credit. Advances under the revolver bear interest at prime plus .85%. The
advances are based on 85% of eligible accounts receivable plus 50% of eligible
inventory and are collateralized by all of the Company's assets other than its
real estate. Under the CIT Facility, the Company is prohibited, among other
restrictions, from pledging assets, creating additional indebtedness or paying
dividends. In addition, the Company is required to comply with certain financial
covenants, including minimum levels of EBITDA, working capital, tangible net
worth and limits on capital expenditures.

        As indicated under "Item 1. Business -- Proceedings in Bankruptcy", the
Company has $5,636,000 of allowed and disputed Class 4 Claims. Approximately
$1,782,800 of such claims


                                       14


<PAGE>

<PAGE>



are being disputed. Under the Plan, Allowed Class 4 Claims receive $786,000 in
cash with the balance payable in five years on a ten year amortization schedule.

     The Company believes that cash generated from operations and available
borrowings will be sufficient to meet working capital needs for the remainder of
the current fiscal year.

New Accounting Standards

        During the fiscal year ended November 30, 1996, the Company adopted SFAS
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." The effect of the adoption of SFAS No. 121 on the
Company's Consolidated Financial Statements in fiscal 1996 was not material.

        The Company also adopted SFAS No. 123 "Accounting for Stock-Based
Compensation". The new standard defines a fair value method of accounting for
stock options and other equity instruments. Under the fair value method,
compensation cost is measured at the grant date based on the fair value of the
award and is recognized over the vesting period. Alternatively, SFAS No. 123
allows entities to continue to apply the provisions of APB No. 25 and provide
pro forma net income (loss) and pro forma net income (loss) per share
disclosures for employee stock option grants. The Company has elected to adopt
the disclosure only provision of SFAS No. 123 and will continue to apply APB No.
25 to account for stock options. There were no employee stock options granted in
fiscal 1996. See "Item 11. -- Executive Compensation."

Current Uncertainties

        The Company anticipates a substantial decrease in volume for fiscal
1997. While the Company's overhead has been reduced in anticipation of a lower
sales volume, the Company continues to incur restructuring costs in 1997
relating to the bankruptcy and losses from operations. The Company, therefore,
anticipates that it will report a loss for fiscal 1997. In addition, as
indicated under "Item 1. Business -- Sales", Wal-Mart Stores, Inc. currently
accounts for approximately 87% of the Company's orders. Accordingly, resumption
of stable and profitable operations will require the Company to both increase
its total sales and expand its customer base.

Forward-Looking Statements

        This Annual Report on Form 10-K contains certain forward-looking
statements that involve risks and uncertainties. Discussion containing such
forward-looking statements may be found in the materials set forth under
"Business" and in "Management's Discussion and Analysis of Financial Condition
and Results of Operations". The Company's actual results could differ materially
from those anticipated in the forward-looking statements.


                                       15




<PAGE>

<PAGE>



ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

               Not applicable.

ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

               See Item 14.

ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

               ACCOUNTING AND FINANCIAL DISCLOSURE.

        The information required by this item was previously reported on
Registrant's Current Report, Form 8-K, dated March 7, 1997.


                                       16




<PAGE>

<PAGE>



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

(a)     Identification of Directors.

        The following table sets forth the names and ages and principal
occupations of each of the Company's directors and the year in which each was
first elected director.

<TABLE>
<CAPTION>

Director                                  Principal                           Director
Name and Age                             Occupation (1)                        Since
------------                             --------------                       ---------
<S>                                     <C>                                   <C> 
George S. Blumenthal (53)                Chairman of the Board and              1991
                                         Treasurer of OCOM
                                         Corporation and NTL
                                         Incorporated and the
                                         Chairman of the Board, CEO
                                         and Treasurer of CoreComm
                                         Incorporated (2)

Peter A. Cohen (50)                      Managing Director of Ramius            1981
                                         Capital Corporation (3)(4)(5)

William L. Cohen (55)                    Chairman of the Board,                 1979
                                         President and Chief Executive
                                         Officer (4)

Donald D. Shack (68)                     Attorney, director and                 1986
                                         shareholder of law firm of
                                         Shack & Siegel, P.C., general
                                         counsel to the Company (6)

Monte Wolfson (71)                       President of Monte Wolfson             1994
                                         Associates, Inc., a retail and
                                         marketing consultant (7)
</TABLE>
---------------
(1)     Unless otherwise indicated, the directors' principal occupations have
        been their respective principal occupations for at least five years.

(2)     Mr. Blumenthal was President of Blumenthal Securities, Inc., a New York
        Stock Exchange member firm for in excess of five years prior to November
        15, 1992. Mr. Blumenthal was the Chairman and Treasurer of Cellular
        Communications International, Inc. until April 1994. He was the Chairman
        and Treasurer of Cellular Communications, Inc. until August 1996, when
        such company merged into AirTouch


                                       17




<PAGE>

<PAGE>



        Communications, Inc. He is a director of CoreComm Incorporated (f/k/a
        Cellular Communications of Puerto Rico, Inc.), OCOM Corporation and NTL
        Incorporated (f/k/a International CableTel Incorporated).

(3)     Prior to January 1990, Mr. Cohen was employed in various senior
        executive capacities by Shearson Lehman Hutton Inc., an investment
        banking firm, including as its Chief Operating Officer from 1979 to 1984
        and as its Chairman and Chief Executive Officer from 1984 to January
        1990. From May 1991 through December 1992 Mr. Cohen was President of
        Andrew Lauren & Co., Inc., an investment consulting firm. From December
        1992 through May 1994, Mr. Cohen was the Chairman of Republic New York
        Securities Corp. and Vice Chairman of Republic New York Corp. From
        August 1994 until July 1997 he was a partner in Palladin Partners, a
        private investment management firm. Since August 1994, Mr. Cohen has
        been Managing Director of Ramius Capital Corporation, a private
        investment firm. He is also a director of Presidential Life Corporation,
        `21' International Holdings, Inc., GRC International, Inc. and Olivetti
        SpA.

(4)     Messrs. William L. Cohen and Peter A. Cohen are siblings.

(5)     Peter A. Cohen renders financial and management consulting services to
        the Company. Until March 19, 1996, he was paid a fee at the annual rate
        of $75,000 plus certain benefits. Effective March 19, 1996 his
        consulting fee was eliminated. Mr. Cohen received $18,750 in consulting
        fees during fiscal 1996. He has continued to render services without
        charge.

(6)     Mr. Shack has served as Secretary of the Company since 1986. Mr. Shack
        is a director and shareholder of the law firm of Shack & Siegel, P.C.
        which has served as general counsel to the Company since April 1993.
        Prior to April 1993, Mr. Shack was a member of Whitman & Ransom which
        served as general counsel to the Company from January 1990 through March
        1993. Prior to January 1990, Mr. Shack was a member of the law firm of
        Golenbock and Barell which served as general counsel to the Company from
        1986 through 1989. Mr. Shack is a director of Ark Restaurants Corp.,
        International Citrus Corporation and Just Toys, Inc.

(7)     Mr. Wolfson has been a United States Government advisor on the retail
        textile industry for over 25 years. From 1975 until his retirement in
        1986, Mr. Wolfson was employed as President of Netco, Inc., the New York
        subsidiary of Zayre Group, an apparel retailer. Prior thereto he served
        as Chairman and CEO of Diana Stores, Corp., an apparel retailer. Mr.
        Wolfson is a director of Kennebunk Inc. and Techknits, Inc., misses
        apparel manufacturers and a consultant to various apparel companies.

        Each director holds office until the next annual meeting of
stockholders and until his successor is elected and qualifies.


                                       18




<PAGE>

<PAGE>




(b)     Identification of Executive Officers.

        The following table sets forth the names and ages of executive officers
of the Company and all offices held by each person during the fiscal years ended
November 30, 1995 and November 30, 1996.


<TABLE>
<CAPTION>

Name                                       Age                 Position with the Company
----                                       ---                 --------------------------
<S>                                         <C>                <C>
William L. Cohen                            55                 Chairman of the Board, President
                                                                  and Chief Executive Officer

Stephen Fenyves                             52                 Senior Vice President
                                                                  Administration and Operations

Harold Drachman                             70                 Vice President - Sales

Alan Kanis                                  47                 Treasurer and Chief Financial
                                                                  and Chief Accounting Officer

Stanley F. Schmoller                        58                 Vice President - Manufacturing

Donald D. Shack                             68                 Secretary
</TABLE>

        William L. Cohen has been principally employed in senior managerial
positions with the Company since 1965, as its Vice President-Administration from
1970 to 1983 and as its President and Chief Executive Officer since 1983. Mr.
Cohen was elected to the office of Chairman of the Board of Directors in 1987.

        Mr. Drachman was employed by the Company since 1970. In November 1987,
Mr. Drachman was elected Vice President - Sales. Mr. Drachman's association with
the Company terminated on July 1, 1996.

        Mr. Fenyves has been employed by the Company since 1969 in various
executive capacities, including Vice President-Administration from 1983 to 1988,
Senior Vice-President-Administration, from 1988 to 1996 and in his present
capacity since 1996.

        Mr. Kanis joined the Company as Treasurer and Chief Financial and Chief
Accounting Officer effective September 1, 1990. Prior to his employment by the
Company, Mr. Kanis had been Vice President-Finance of Shelburne Shirt Co. Inc.
for over five years.

        Mr. Schmoller has been employed by the Company in various production
capacities since 1958 and in his present capacity for in excess of 16 years.

        Mr. Shack has served as Secretary to the Company since 1986. See
"Identification of Directors" above.


                                       19




<PAGE>

<PAGE>



        Each executive officer holds office at the pleasure of the Board of
Directors or until his successor has been duly elected and qualifies.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

        Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Such reporting persons are required by regulation to furnish the company with
copies of all Section 16(a) reports that they file.

        Based solely on its review of the copies of such reports received by it,
or written representations from certain reporting persons that no Form 5 was
required for those persons, the Company believes that, during the period from
December 1, 1995 through November 30, 1996, all filing requirements applicable
to its officers, directors and greater than 10 percent beneficial owners were
complied with, except that each of Messrs. Blumenthal, Shack and Wolfson filed
one late report on Form 5, in each case relating to one transaction.

ITEM 11.        EXECUTIVE COMPENSATION.

        The Summary Compensation Table below sets forth all compensation paid or
accrued to the chief executive officer and the next four most highly compensated
persons who were executive officers or who performed services equivalent to that
of executive officers for services rendered to the Company and its subsidiaries
during the last four fiscal years.

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                                              LONG-TERM
                                                  ANNUAL COMPENSATION                        COMPENSATION
                                                  -------------------                        ------------
NAME & PRINCIPAL POSITION                        YEAR         SALARY(a)        BONUS        OPTIONS AWARDED
-------------------------                        ----         --------         -----        ---------------
<S>                                              <C>         <C>             <C>                  <C>
William L. Cohen,                                1996        $433,077(b)            --              --
     Chairman of the Board, President            1995         500,000               --            20,000
     and Chief Executive Officer                 1994         500,000               --  (b)         --
                                                 1993         500,000           $ 22,705            --


Stephen Fenyves,                                 1996        $175,000               --              --
     Senior Vice President -                     1995         179,609           $ 30,000          10,000
     Administration and Operations               1994         168,846             40,000            --
                                                 1993         159,039             40,000            --


Alan Kanis,                                      1996        $166,000               --              --
     Treasurer and Chief Financial and           1995         169,680             35,000          15,000
     Chief Accounting Officer                    1994         163,269             35,000            --
                                                 1993         150,000             15,000            --
</TABLE>




                                       20




<PAGE>

<PAGE>




<TABLE>

<S>                                              <C>         <C>                 <C>             <C>
Stanley F. Schmoller,                            1996        $132,807               --              --
     Vice President - Manufacturing              1995         138,540            $25,000          10,000
                                                 1994         131,200             25,000            --
                                                 1993         130,739             50,000            --

Harold Drachman,                                 1996        $150,384(c)            --              --
     Vice President - Sales                      1995         150,000               --             4,000
                                                 1994         150,000               --              --
                                                 1993         150,000             20,000            --
</TABLE>

----------------
        (a) Does not include car allowances, medical, disability, life insurance
and other benefits which are, in the aggregate, below reportable thresholds.

        (b) Pursuant to the employment agreement between the Company and Mr.
Cohen, more fully described below, Mr. Cohen was entitled to receive a bonus in
an amount equal to 5% of the Company's pretax income up to $3,000,000 and 6% of
the Company's pretax income in excess of $3,000,000. For fiscal year 1994, Mr.
Cohen waived his right to receive such bonus payment. Pursuant to such
employment agreement, Mr. Cohen was entitled to be paid a base salary of
$500,000. Effective March 19, 1996, Mr. Cohen voluntarily reduced his base
salary by 20% to $400,000. Effective December 1, 1996, Mr. Cohen further
voluntarily reduced his base salary to $200,000.

        (c) Includes salary of $75,384 and severance pay of $75,000. Mr.
Drachman left the Company effective July 1, 1996.

        The following table sets forth certain information with respect to
options to purchase the Company's Common Stock granted in fiscal year 1995 under
the Company's Non-Qualified Stock Option Plan for the persons named in the
Summary Compensation Table above. No options were granted to such persons in the
fiscal year ended November 30, 1996.



              OPTION GRANTS IN FISCAL YEAR ENDED NOVEMBER 30, 1995


<TABLE>
<CAPTION>

                               INDIVIDUAL GRANTS
                                                                                POTENTIAL REALIZABLE VALUE AT
                                       PERCENT OF TOTAL                           ASSUMED ANNUAL RATES OF
                                       OPTIONS GRANTED  EXERCISE                  STOCK PRICE APPRECIATION FOR
                           OPTIONS     TO EMPLOYEES IN   PRICE      EXPIRATION         OPTION TERM (a)
         NAME              GRANTED (#)       1995       ($/SHARE)      DATE           5% ($)      10% ($)
        ------           -----------        ------      ---------     ------       ---------------------------
<S>                          <C>              <C>        <C>         <C> <C>         <C>          <C>    
William L. Cohen             20,000           14.4%      1.875       2/9/00          $10,361      $22,894
Harold Drachman               4,000            2.9%      1.875       2/9/00            2,072        4,579
Steven Fenyves               10,000            7.2%      1.875       2/9/00            5,180       11,447
Alan Kanis                   15,000           10.8%      1.875       2/9/00            7,770       17,171
Stanley F. Schmoller         10,000            7.2%      1.875       2/9/00            5,180       11,447
</TABLE>

--------------
(a)     Based on the closing price of the Company's common stock on February 10,
        1995. The options have been out-of-the-money since the end of fiscal
        1995.


                                       21




<PAGE>

<PAGE>



        The following table details the total number of securities underlying
unexercised options held at the end of the fiscal year ended November 30, 1995,
separately identifying the exercisable and unexercisable options of the persons
named in the Summary Compensation Table above.

<TABLE>
<CAPTION>

                AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED
                   NOVEMBER 30, 1995 AND FY-END OPTION VALUES

                                       Shares                                  Number of Unexercised Options
                                      Acquired                Value                at November 30, 1995
           Name                      on Exercise             Realized            Exercisable Unexercisable
          ------                     -----------             --------            -------------------------
<S>                                   <C>                    <C>                 <C>              <C>
William L. Cohen                          --                     --               34,375           20,000
Harold Drachman                           --                     --               13,750            4,000
Stephen Fenyves                           --                     --               24,750           10,000
Alan Kanis                                --                     --                5,500           15,000
Stanley F. Schmoller                      --                     --               26,812           10,000

</TABLE>


        The following table details the total number of securities underlying
unexercised options held at the end of the fiscal year ended November 30, 1996,
separately identifying the exercisable and unexercisable options of the persons
named in the summary compensation table above.

                AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED
                   NOVEMBER 30, 1996 AND FY-END OPTION VALUES

<TABLE>
<CAPTION>

                                       Shares                                    Number of Unexercised Options
                                      Acquired                Value                   at November 30, 1996
          Name                       on Exercise            Realized              Exercisable Unexercisable
          ----                      -----------             --------               -------------------------
<S>                                 <C>                     <C>                 <C>               <C>   
William L. Cohen                         --                     --                 5,000             15,000
Harold Drachman                          --                     --                    --                 --
Stephen Fenyves                          --                     --                 2,500              7,500
Alan Kanis                               --                     --                 3,750             11,250
Stanley F. Schmoller                     --                     --                 2,500              7,500
</TABLE>


Stock Options

        At the Annual Meeting of the Company's stockholders on June 13, 1995,
the stockholders ratified a new 1995 Stock Option Plan (the "1995 Plan"), which
replaced the Company's two existing plans, an Incentive Stock Option Plan ("ISO
Plan") and a Non- Qualified Stock Option Plan ("NQ Plan"), which plans were
terminated, although 106,500 options granted under the NQ Plan remain
outstanding, 59,500 of which are currently exercisable. The 1995 Plan permits
the grant of both non-qualified and incentive stock options. The 1995 Plan makes
available for issuance to its participants, options to purchase up to an
aggregate of 225,000 shares of Common Stock. 15,000 of such options have been
granted to date, of which 1,875 are exercisable.


                                       22




<PAGE>

<PAGE>



        Prior to the adoption of the 1995 Plan, under the ISO Plan, key
employees were eligible for options to purchase shares of Common Stock of the
Company. An aggregate of 103,125 shares of Common Stock was reserved for
issuance under the ISO Plan. No options were ever granted under the ISO Plan.
Officers, directors, employees and independent sales representatives were
eligible for option grants to purchase shares of Common Stock under the NQ Plan.
There were no in-the-money options at November 30, 1995 or November 30, 1996.

Director Compensation

        During each of the Company's past two fiscal years, a fee of $10,000 was
paid to each of Messrs. Blumenthal and Wolfson in consideration of their acting
as directors of the Company, except that in fiscal 1996, Mr. Blumenthal received
$7,500. Due to the Bankruptcy proceedings, Mr. Blumenthal's remaining $2,500
will be paid to him over a five year period as an unsecured creditor.

        The NQ Plan provided, and the 1995 Plan provides, for the annual grant
of options to purchase 2,500 shares of Common Stock to members of the Company's
Stock Option Committee (the "Committee") and outside directors who are not
members of the Committee. During fiscal 1995 and 1996, Messrs. Blumenthal, Shack
and Wolfson were each granted such options under the NQ Plan and the 1995 Plan,
respectively. These options are exercisable with respect to 25% of the shares
covered thereby commencing one year from the date of grant and as to an
additional 25% of the shares covered by the option upon each of the three
succeeding anniversary dates of the date of grant.

Employment Agreement

        William L. Cohen was employed under an agreement which expired in June
1996. The agreement provided for a base salary of $500,000 per annum, or such
greater amount from time to time determined by the Board of Directors of the
Company, and incentive compensation in an amount equal to 5% of the Company's
pretax income up to $3,000,000 and 6% of the Company's pretax income in excess
of $3,000,000. Compensation at the above rate was also payable under the
agreement for one year if Mr. Cohen became "Disabled" (as defined in the
agreement) and at one-half such rate for a further one-year period, but in no
event was such compensation payable in respect of any period subsequent to the
stated expiration date of the agreement. The agreement further provided for the
payment of a benefit over a five-year period to Mr. Cohen's beneficiary, in the
event of his death while employed, in the amount of one year's compensation
based upon the average compensation paid over the three most recently concluded
fiscal years of the Company, less any amounts paid to Mr. Cohen while Disabled.
The Company maintained life insurance on Mr. Cohen for an amount in excess of
this obligation. Effective March 19, 1996, Mr. Cohen voluntarily reduced his
base salary by 20% to $400,000, and effective December 1, 1996, Mr. Cohen
further reduced his base salary to $200,000.


                                       23




<PAGE>

<PAGE>



Other Officer Compensation Arrangements

        The Company maintains a $4,000,000 split dollar life insurance policy on
Mr. Cohen. Annual premiums for the policy are approximately $122,600. The
Company currently pays approximately $115,900 of the premiums, and the William
L. Cohen Irrevocable Life Insurance Trust (the "Trust") pays the balance. Upon
Mr. Cohen's death, the Corporation will receive an amount approximately equal to
all premium payments made by it, and the Trust will receive the balance of the
$4,000,000 death benefit. The trustees of the Trust have assigned the policy to
the Corporation to secure such payment. In addition, the Company may borrow
against the policy.

        The Company and Mr. Stephen Fenyves are parties to an agreement pursuant
to which the Company has agreed to pay Mr. Fenyves a retirement benefit in the
form of salary continuation for 15 years after his retirement in annual amounts
ranging from $27,500 to $55,000 per year depending upon the age between 55 and
65 at which Mr. Fenyves retires. In the event of his death prior to attaining
age 65, but while he is employed by the Company, the Company will pay a death
benefit of $55,000 per year until Mr. Fenyves would have attained age 65 but in
any event for a minimum of 10 years. The Company currently maintains insurance
coverage to fund the death obligation.

        During the bankruptcy, the Company established an enhanced severance
program to induce officers and key employees to remain with the Company. Stephen
Fenyves, Alan Kanis, Stanley Schmoller and certain other employees were included
in this program. The program entitles the individuals to up to six months of
additional severance if they are terminated without cause during the 12 or 18
month period that commenced on January 16, 1997.

Compensation Committee Interlocks and Insider Participation

        The Company does not have a compensation committee. Compensation
decisions are made by the Board of Directors. The members of the Board include
William L. Cohen, Peter A. Cohen and Donald D. Shack. William L. Cohen is
Chairman of the Board and President of the Company. Peter A. Cohen is his
brother. Mr. Shack is Secretary of the Company and a shareholder and director of
the law firm of Shack & Siegel, P.C., the Company's general counsel.

ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Beneficial Owners of More Than Five Percent of Common Stock.

        The following table sets forth certain information at July 31, 1997 with
respect to the beneficial owners of more than five percent of the Company's
Common Stock.


                                       24




<PAGE>

<PAGE>

<TABLE>
<CAPTION>


     Name and Address                          Amount and Nature of                Percent
   of Beneficial Owner                         Beneficial Ownership                of Class
   -------------------                         --------------------                --------
<S>                                           <C>                                   <C>  
William L. Cohen (1)                             1,395,697 (2)(3)(4)                31.1%
c/o Andover Togs, Inc.
1333 Broadway
New York, New York 10118

Peter A. Cohen (1)                               1,304,407 (2)(3)                   29.2%
c/o Andover Togs, Inc.
1333 Broadway
New York, New York 10118

Carolyn Cohen Zelikovic (1)                        436,142 (5)                       9.8%
c/o Andover Togs, Inc.
1333 Broadway
New York, New York 10118

Herbert Rosenstock,                                230,787 (6)                       5.2%
  Stanley Rosenstock and
General Sportswear Co., Inc.
23 Market Street
Ellenville, New York  12428

</TABLE>

(1)     William L. Cohen, Peter A. Cohen and Carolyn Cohen Zelikovic (the
        "Principal Stockholders") are parties to a stockholders agreement which
        provides, among other things, that (i) the shares owned by the Principal
        Stockholders are to be voted as jointly determined by William L. Cohen
        and Peter A. Cohen; (ii) William L. Cohen and Peter A. Cohen are to have
        a joint and several right of first refusal with respect to the
        disposition of shares owned by Carolyn Cohen Zelikovic; (iii) William L.
        Cohen and Peter A. Cohen each are to have a right of first refusal with
        respect to disposition of the shares owned by the other; (iv) upon the
        death of Carolyn Cohen Zelikovic, William L. Cohen and Peter A. Cohen
        are to have the joint and several right to purchase the shares held by
        her at her death; and (v) upon the death of William L. Cohen, Peter A.
        Cohen is to have the right, and upon the death of Peter A. Cohen,
        William L. Cohen is to have the right, to purchase the shares held by
        the other at his death. The purchase of shares held by a deceased
        Principal Stockholder, as set forth above, is to be mandatory to the
        extent of the proceeds of insurance policies on the life of the deceased
        Principal Stockholder held by the other Principal Stockholders.

(2)     Under the stockholders agreement referred to above, each of William L.
        Cohen and Peter A. Cohen exercises shared voting and sole dispositive
        power with respect to the shares owned by him. The shares indicated as
        being owned by each do not include (i) shares


                                       25




<PAGE>

<PAGE>



        owned by the other, or (ii) shares owned by Carolyn Cohen Zelikovic,
        although the Messrs. Cohen exercise shared voting power with respect to
        all such shares.

(3)     Does not include 41,250 shares held by a charitable foundation. Messrs.
        William L. and Peter A. Cohen are two of the five directors of such
        foundation and exercise shared voting power with respect to such shares.

(4)     Includes 10,000 shares of Common Stock which Mr. Cohen has the right to
        acquire upon exercise of a currently exercisable stock option granted
        under the Company's Non-Qualified Stock Option Plan.

(5)     Carolyn Cohen Zelikovic exercises sole dispositive power with respect to
        the shares owned by her.

(6)     Based upon information provided to the Company by the Rosenstocks and
        General Sportswear Co., Inc. on February 20, 1996.

Beneficial Ownership of Common Stock by Directors and Executive Officers.

        The following table sets forth certain information at July 31, 1997 with
respect to Common Stock beneficially owned by all directors, the chief executive
officer, the other persons named in the Summary Compensation Table above and all
directors and executive officers of the Company as a group.


<TABLE>
<CAPTION>

          Name of                               Amount and Nature of               Percent
      Beneficial Owner                          Beneficial Ownership               of Class
      ----------------                          --------------------               ---------
<S>                                              <C>                              <C> 
George S. Blumenthal, Director                         60,285(1)(2)                  1.3%

Peter A. Cohen, Director                            1,304,407(3)                    29.2%

William L. Cohen, Director,                         1,395,697(3)                    31.1%
  Chairman of the Board, President
  and Chief Executive Officer

Harold Drachman, Vice                                       -                        --
  President - Sales

Steven Fenyves, Senior Vice                            10,500(4)                     -- (5)
  President - Manufacturing

Alan Kanis, Treasurer and                               7,500(6)                     -- (5)
  Chief Financial and Chief
  Accounting Officer
</TABLE>


                                       26




<PAGE>

<PAGE>


<TABLE>

<S>                                                    <C>                          <C>
Stanley F. Schmoller, Vice                             13,250(7)                     -- (5)
  President - Manufacturing

Donald D. Shack, Director and                          62,650(2)(8)                  1.4%
  Secretary

Monte Wolfson, Director                                 1,875(9)                     -- (5)

All directors and executive officers                3,292,306(10)                   72.9%
  as a group (9 persons)

</TABLE>

---------------
(1)     Includes 44,110 shares beneficially owned by Mr. Blumenthal as
        co-trustee and income beneficiary under a trust created under the will
        of Clara Blumenthal.

(2)     Includes 8,750 shares of Common Stock which may be acquired upon the
        exercise of currently exercisable stock options.

(3)     See "Securities Ownership of Certain Beneficial Owners and
        Management-Beneficial Owners of More Than Five Percent of Common Stock"
        above for information in respect of shares of Common Stock beneficially
        owned by Mr. Cohen.

(4)     Includes 5,000 shares of Common Stock which Mr. Fenyves has the right to
        acquire upon the exercise of currently exercisable stock options.

(5)     Less than one percent.

(6)     Includes 7,500 shares of Common Stock which Mr. Kanis has the right to
        acquire upon the exercise of currently exercisable stock options.

(7)     Includes 5,000 shares of Common Stock which Mr. Schmoller has the right
        to acquire upon the exercise of currently exercisable stock options.

(8)     Shares owned by Skylark Partners, a partnership of which Mr. Shack is a
        member.

(9)     Includes 1,875 shares of Common Stock which Mr. Wolfson has the right to
        acquire upon the exercise of currently exercisable stock options.

(10)    Includes (i) 436,142 shares owned by Carolyn Cohen Zelikovic, (ii)
        27,500 shares of Common Stock which certain executive officers have the
        right to acquire upon the exercise of currently exercisable stock
        options and (iii) 19,375 shares of Common Stock which certain directors
        may acquire upon the exercise of currently exercisable stock options.


                                       27




<PAGE>

<PAGE>



ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        Peter A. Cohen renders financial and management consulting services to
the Company. Until March 19, 1996, he was paid a fee at the rate of $75,000 plus
certain benefits. Effective March 19, 1996 his consulting fee was eliminated. In
fiscal 1996, Mr. Cohen received $18,750 in consulting fees. He has continued to
render services without charge. Mr. Cohen is William Cohen's brother.

        The firm of Shack & Siegel, P.C. of which Donald D. Shack is a director
and shareholder, has served as general counsel to the Company since January 1,
1990. Prior thereto, the firms of Whitman & Ransom and Golenbock and Barell,
both of which Mr. Shack was a member, served as general counsel.

        On April 9, 1992 the Board of Directors approved a five year consulting
arrangement with Florence Cohen, widow of Sidney B. Cohen the founder of the
Company, expiring in April 1997 which provided for a fee of $60,000 per year.
This arrangement was terminated, effective March 19, 1996.


                                       28




<PAGE>

<PAGE>



                                     PART IV

<TABLE>
<CAPTION>

ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
-------        -----------------------------------------------------------------
<S>            <C>                                                                  <C>
(a)  (1)       Financial Statements.  The following consolidated financial statements of Andover
               Togs, Inc. and its subsidiaries are included herein.

               Report of Independent Accountants                                     F-1

               Independent Auditors' Report                                          F-2

               Consolidated Balance Sheets -
                  As at November 30, 1996 and 1995                                   F-3

               Consolidated Statements of Operations -
                  Years ended November 30, 1996, 1995 and 1994                       F-4

               Consolidated Statements of Stockholders' Equity -
                  Years ended November 30, 1996, 1995 and 1994                       F-5

               Consolidated Statements of Cash Flows -
                  Years ended November 30, 1996, 1995 and 1994                       F-6

               Notes To Consolidated Financial Statements                            F-8

     (2)       Financial Statement Schedule

               Schedule II - Valuation and Qualifying Accounts                       F-17

     (3)       Exhibits:

    3(a)       Certificate of Incorporation of the Company, incorporated by reference to Exhibit
               3(a) to Registration Statement on Form S-1 (SEC File No. 33-5363) of the
               Company (the "Form S-1").

    3(b)       Certificate of Merger of Andover Togs, Inc., a New York corporation, into and
               with Andover Togs, Inc., a Delaware corporation, incorporated by reference to
               Exhibit 3(b) to the Form S-1.

    3(c)       Certificate of Amendment of Certificate of Incorporation, filed June 1, 1987,
               incorporated by reference to Exhibit 3(a) to the Company's quarterly report on
               Form 10-Q dated May 31, 1994 (the "May 1994 10-Q").

</TABLE>



                                       29


<PAGE>

<PAGE>



    3(d)       By-laws of the Company, as amended through November 12, 1986,
               incorporated by reference to Exhibit 3(b) to the May 1994 10-Q.

    4(a)       Specimen of certificate for shares of Common Stock of the
               Company, incorporated by reference to Exhibit 4(a) to the Form
               S-1.

    4(b)       The Company's Non-Qualified Stock Option Plan, as amended May 21,
               1987 and April 9, 1992, incorporated by reference to Exhibit 4(a)
               to the Amendment to the Registration Statement on Form S-8 (SEC
               File No. 33-33963), as filed with the Securities and Exchange
               Commission on November 2, 1992.

    4(c)       Common Stock Purchase Warrant, dated February 27, 1995, issued to
               Dobie Industries, Inc., incorporated by reference to Exhibit 4(d)
               to the Company's Annual Report on Form 10-K for the fiscal year
               ended November 30, 1994 (the "1994 10-K").

    4(d)       Registration Rights Agreement, dated February 27, 1995, by and
               between the Company and Dobie Industries, Inc., incorporated by
               reference to Exhibit 4(e) to the 1994 10-K.

    4(e)       The Company's 1995 Stock Option Plan, incorporated by reference
               to Exhibit 4(f) to the Company's quarterly report on Form 10-Q
               dated May 31, 1995 (the "May 1995 10-Q").

    4(f)       Debtors' Joint Plan of Reorganization under Chapter 11 of the
               Bankruptcy Code dated January 30, 1997, incorporated by reference
               to Exhibit 16 to the Company's current report on Form 8-K dated
               April 10, 1997.

   10(a)       English translation of Lease between Zona Franca Romana, S.A.
               and Tortoni Manufacturing Corp., incorporated by reference to
               Exhibit 10(h) to the May 1994 10-Q.

   10(b)       Form of Indemnity Agreement between the Company and its officers
               and directors, incorporated by reference to Exhibit 10(j) to the
               May 1994 10-Q.

   10(c)       Lease Agreement dated November 10, 1993 among Mary H. Wimbish,
               William M. Johnson, Jr. and wife, Ida L. Johnson and First Union
               National Bank of North Carolina, Trustee under LW&T of Robert J.
               Wimbish and Springdale Fashions, Inc., incorporated by reference
               to Exhibit 10(n) to the May 1994 10-Q.

   10(d)       Amendment to Lease Agreement dated June 1, 1994 among Mary H.
               Wimbish, William M. Johnson, Jr. and wife, Ida L. Johnson and
               First Union National Bank of North Carolina, Trustee under LW&T
               of Robert J. Wimbish and


                                       30




<PAGE>

<PAGE>



               Springdale Fashions, Inc., incorporated by reference to Exhibit
               10(o) to the May 1994 10-Q.

   10(e)       Insurance Agreement dated as of September 1, 1994 by and among
               the Company, William L. Cohen and Peter A. Cohen and Stanley I.
               Schachter, as trustees of the William L. Cohen Irrevocable Life
               Insurance Trust Agreement, dated January 31, 1984, incorporated
               by reference to Exhibit 10(a) to the Company's quarterly report
               on Form 10-Q dated February 28, 1997.

   10(f)       Post-Petition Revolving Credit and Security Agreement among
               Chemical Bank and Fleet Bank, N.A. as lenders, Fleet Bank, N.A.
               as agent and the Company dated May 28, 1996 incorporated by
               reference to Exhibit 10 to the Company's current report on Form
               8-K dated May 28, 1996 (the "May 1996 8-K").

   10(g)       Replacement DIP Financing and Security Agreement between the CIT
               Group/Commercial Services, Inc. and the Company dated as of
               September 19, 1996 incorporated by reference to Exhibit 99(a) to
               the Company's current report on Form 8-K dated September 19, 1996
               (the "September 1996 8-K").

   10(h)       Amended and Restated Financing Security Agreement dated as of May
               12, 1997 between the Registrant and CIT incorporated by reference
               to Exhibit 99(a) to the Company's current report on Form 8-K
               dated May 12, 1997 (the "May 1997 8-K").

   10(i)       Amended and Restated Subsidiary Security Agreement dated as of
               May 12, 1997 made by Springdale, Tortoni and Stonehenge in favor
               of CIT incorporated by reference to Exhibit 99(b) to the May 1997
               8-K.

   10(j)       Amended and Restated Guaranty dated as of May 12, 1997 by
               Springdale in favor of CIT incorporated by reference to Exhibit
               99(c) to the May 1997 8-K.

   10(k)       Amended and Restated Guaranty dated as of May 12, 1997 by Tortoni
               in favor of CIT incorporated by reference to Exhibit 99(d) to the
               May 1997 8-K.

   10(l)       Amended and Restated Guaranty dated as of May 12, 1997 by
               Stonehenge in favor of CIT incorporated by reference to Exhibit
               99(e) to the May 1997 8-K.

   10(m)       Amended and Restated Security Agreement and Mortgage for
               Trademarks and Patents dated as of May 12, 1997 between the
               Registrant and CIT incorporated by reference to Exhibit 99(f) to
               the May 1997 8-K.

   10(n)       Amended and Restated Security Agreement and Mortgage for
               Trademarks and Patents dated as of May 12, 1997 between Tortoni
               and CIT incorporated by reference to Exhibit 99(g) to the May
               1997 8-K.


                                       31




<PAGE>

<PAGE>




   10(o)       Amended and Restated Security Agreement and Mortgage for
               Trademarks and Patents dated as of May 12, 1997 between
               Springdale and CIT incorporated by reference to Exhibit 99(h) to
               the May 1997 8-K.

   10(p)       Amended and Restated Security Agreement and Mortgage for
               Trademarks and Patents dated as of May 12, 1997 between
               Stonehenge and CIT incorporated by reference to Exhibit 99(i) to
               the May 1997 8-K.

   10(q)       Intercreditor Agreement dated as of May 12, 1997 between CIT and
               M.J. Sherman and Associates (the "Collateral Trustee")
               incorporated by reference to Exhibit 99(j) to the May 1997 8-K.

   10(r)       Class 4 Note dated as May 12, 1997 made by the Registrant in
               favor of the Collateral Trustee incorporated by reference to
               Exhibit 99(k) to the May 1997 8-K.

   10(s)       Note and Collateral Trust Agreement dated as of May 12, 1997
               between the Registrant, Springdale, Tortoni and Stonehenge and
               the Collateral Trustee incorporated by reference to Exhibit 99(l)
               to the May 1997 8-K.

   10(t)       Class 4 Security Agreement dated as of May 12, 1997 by the
               Registrant, Springdale, Tortoni and Stonehenge in favor of the
               Collateral Trustee incorporated by reference to Exhibit 99(m) to
               the May 1997 8-K.

   10(u)       Guaranty dated as of May 12, 1997 by Springdale in favor of the
               Collateral Trustee incorporated by reference to Exhibit 99(n) to
               the May 1997 8-K.

   10(v)       Guaranty dated as of May 12, 1997 by Stonehenge in favor of the
               Collateral Trustee incorporated by reference to Exhibit 99(o) to
               the May 1997 8-K.

   10(w)       Guaranty dated as of May 12, 1997 by Tortoni in favor of the
               Collateral Trustee incorporated by reference to Exhibit 99(p) to
               the May 1997 8-K.

   10(x)       Class 4 Security Agreement and Mortgage for Trademarks and
               Patents dated as of May 12, 1997 between Springdale and the
               Collateral Trustee incorporated by reference to Exhibit 99(q) to
               the May 1997 8-K.

   10(y)       Class 4 Security Agreement and Mortgage for Trademarks and
               Patents dated as of May 12, 1997 between the Registrant and the
               Collateral Trustee incorporated by reference to Exhibit 99(r) to
               the May 1997 8-K.

   10(z)       Class 4 Security Agreement and Mortgage for Trademarks and
               Patents dated as of May 12, 1997 between Stonehenge and the
               Collateral Trustee incorporated by reference to Exhibit 99(s) to
               the May 1997 8-K.


                                       32





<PAGE>

<PAGE>



    10(aa)    Class 4 Security Agreement and Mortgage for Trademarks and Patents
              dated as of May 12, 1997 between Tortoni and the Collateral
              Trustee incorporated by reference to Exhibit 99(t) to the May 1997
              8-K.

    21.1      List of subsidiaries of the Company, incorporated by reference to
              Exhibit 21 to the May 1994 10-Q.

    23.1      Consent of Mahoney Cohen & Company, CPA, P.C.

    27.1      Financial Data Schedule.

   99(a)      Secured Financing Order dated May 21, 1996 Approving
              Debtor-In-Possession Financing Facility approved by the United
              States Bankruptcy Court for the Southern District of New York,
              incorporated by reference to Exhibit 99(a) to the May 1996 8-K.

   99(b)      Order dated September 9, 1996 Approving Debtor-In-Possession
              Financing Facility approved by the United States Bankruptcy Court
              for the Southern District of New York incorporated by reference
              to Exhibit 99(b) to the September 1996 8-K.
----------


(b)     Reports on Form 8-K:

        A report on Form 8-K dated March 19, 1996 was filed by the Registrant to
report that the Registrant filed a petition with the United States Bankruptcy
Court for the Southern District of New York for an arrangement pursuant to
Chapter 11 of the United States Bankruptcy Code.

        A report on Form 8-K dated May 28, 1996 was filed by the Registrant to
report that the Registrant had entered into certain debtor-in-possession
financing arrangements through December 31, 1996.

        A report on Form 8-K dated September 19, 1996 was filed by the
Registrant to report that the Registrant had entered into a two-year revolving
credit facility to replace the financing arrangements scheduled to terminate in
December 1996.

        A report on Form 8-K dated January 31, 1997 was filed by the Registrant
to report that the Registrant had filed a Joint Plan of Reorganization (the
"Plan").

        A report on Form 8-K dated March 7, 1997 was filed by the Registrant to
report a change in independent accountants.


                                       33



<PAGE>

<PAGE>



        A report on Form 8-K dated April 10, 1997 was filed by the Registrant to
report the bankruptcy court had entered an order confirming the Plan.

        A report on Form 8-K dated May 12, 1997 was filed by the Registrant to
report the closing of the Company's financing facility.


                                       34




<PAGE>

<PAGE>



                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and
Board of Directors of
  Andover Togs, Inc. and Subsidiaries

        We have audited the accompanying consolidated balance sheet of Andover
Togs, Inc. and Subsidiaries as of November 30, 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. We have also audited Schedule II. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

        We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Andover
Togs, Inc. and Subsidiaries as of November 30, 1996, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.

                                          /s/MAHONEY COHEN & COMPANY, CPA, P.C.



April 4, 1997, except for Note 17
  as to which the date is May 12, 1997


                                       F-1


<PAGE>

<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Andover Togs, Inc.
New York, New York

We have audited the accompanying consolidated balance sheets of Andover Togs,
Inc. and subsidiaries as of November 30, 1995 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
two years in the period ended November 30, 1995. Our audit also included the
financial statement schedule listed in the index at item 14(a)2. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial statement schedule
present fairly, in all material respects, the financial position of Andover
Togs, Inc. and subsidiaries at November 30, 1995, and the results of their
operations and their cash flows for each of the two years in the period ended
November 30, 1995 in conformity with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP
New York, New York

February 9, 1996
(March 29, 1996 as to Note 8(a)
May 3, 1996 as to Note 6
September 19, 1996 as to Note 5
December 19, 1996 as to Note 8(c)
February 4, 1997 as to Note 8(b)
February 28, 1997 as to Note 2
May 12, 1997 as to Note 17)

                                       F-2


<PAGE>

<PAGE>



ANDOVER TOGS, INC. AND SUBSIDIARIES
(DEBTOR IN POSSESSION)
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1996 AND 1995
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>

ASSETS (Note 5)                                          1996              1995
---------------                                          ----              ----
<S>                                                   <C>             <C>         

CURRENT ASSETS:
  Cash                                                $  4,864,900    $    862,500
  Accounts receivable, net of allowance
  for doubtful accounts of $300,000 in 1996
  and $310,000 in 1995                                   2,870,300       9,696,200
  Inventories (Note 3)                                   3,617,200      13,290,800
  Assets held for sale (Notes 7 and 8)                   2,803,700            --
  Refundable income taxes                                     --           919,700
  Other current assets                                     240,800         257,700
                                                      ------------    ------------
          Total current assets                          14,396,900      25,026,900

PROPERTY, PLANT AND EQUIPMENT -
  Net (Notes 4 and 8)                                    3,158,300       8,229,100

RESTRICTED FUNDS                                              --           360,000

OTHER ASSETS                                               134,000         365,200
                                                      ------------    ------------
TOTAL ASSETS                                          $ 17,689,200    $ 33,981,200
                                                      ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

  Notes payable - bank (Note 6)                       $       --      $  6,200,000
  Accounts payable                                         861,500       4,612,300
  Accrued expenses and other current liabilities
   (Note 9)                                              2,481,800       2,034,100
  Current portion of long-term debt and liabilities
    subject to compromise (Notes 2 and 8)                4,530,300       2,019,300
                                                      ------------    ------------
          Total current liabilities                      7,873,600      14,865,700

OTHER LIABILITIES                                          128,800         142,300

LONG TERM DEBT AND LIABILITIES SUBJECT
  TO COMPROMISE (Notes 2 and 8)                          4,527,100       4,001,600
                                                      ------------    ------------
                                                        12,529,500      19,009,600
                                                      ------------    ------------

COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS' EQUITY (Notes 13 and 14):
  Common stock, $.10 par value per share
    authorized 7,500,000 shares;
    issued 4,655,490 in 1996 and 1995                      465,500         465,500
  Additional paid-in capital                            11,154,200      11,154,200
  Retained earnings (accumulated deficit)               (5,819,600)      3,992,300
  Less treasury shares, at cost (184,675 shares
    in 1996 and 1995)                                     (640,400)       (640,400)
                                                      ------------    ------------
                                                         5,159,700      14,971,600
                                                      ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $ 17,689,200    $ 33,981,200
                                                      ============    ============
</TABLE>

See notes to consolidated financial statements.


                                       F-3


<PAGE>

<PAGE>



ANDOVER TOGS, INC. AND SUBSIDIARIES
(DEBTOR IN POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                               1996                 1995                  1994
                                               ----                 ----                  ----

<S>                                        <C>                   <C>                   <C>         
NET SALES                                  $ 43,057,300          $ 80,552,300          $ 73,766,700

COST OF GOODS SOLD                           37,363,400            70,581,500            60,137,900
                                           ------------          ------------          ------------
GROSS PROFIT                                  5,693,900             9,970,800            13,628,800

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                     8,128,900            13,619,300            12,480,700

RESTRUCTURING COSTS
 (Note 10)                                    6,374,900                  --                    --

WRITE-OFF OF COST IN EXCESS
  OF NET ASSETS ACQUIRED
  (Note 16)                                        --                 832,400                  --
                                           ------------          ------------          ------------
OPERATING (LOSS) INCOME                      (8,809,900)           (4,480,900)            1,148,100

INTEREST EXPENSE, NET OF
 INCOME of $29,000
 IN 1996                                        992,200             1,435,300             1,006,300
                                           ------------          ------------          ------------

(LOSS) INCOME BEFORE INCOME
  TAX PROVISION (BENEFIT)                    (9,802,100)           (5,916,200)              141,800

INCOME TAX PROVISION
(BENEFIT)(Note 11)                                9,800            (1,637,600)               17,300
                                           ------------          ------------          ------------

NET (LOSS) INCOME                          $ (9,811,900)         $ (4,278,600)         $    124,500
                                           ============          ============          ============
NET (LOSS) INCOME PER SHARE                $      (2.19)         $       (.96)         $        .03
                                           ============          ============          ============
WEIGHTED AVERAGE SHARES                       4,470,800             4,435,400             4,358,300
                                           ============          ============          ============

</TABLE>

See notes to consolidated financial statements 


                                       F-4


<PAGE>

<PAGE>



ANDOVER TOGS, INC. AND SUBSIDIARIES
(DEBTOR IN POSSESSION)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                               Retained
                                        Common Stock                           Earnings          Treasury Stock
                                   --------------------        Paid-in        (Accumulated    --------------------
                                   Shares        Amount        Capital          Deficit)      Shares        Amount        Total
                                   ------        ------      -----------     ------------     ------        ------        -----
<S>               <C>              <C>          <C>            <C>           <C>                <C>       <C>            <C>        
BALANCE, DECEMBER 1, 1993          4,542,990    $   454,300    $10,870,400   $ 8,146,400        184,675   $  (640,400)  $18,830,700
  Net income                                                                     124,500                                    124,500
                                 -----------    -----------    -----------   -----------    -----------   -----------   -----------
BALANCE, NOVEMBER 30, 1994         4,542,990        454,300     10,870,400     8,270,900        184,675      (640,400)   18,955,200

  Issuance of stock in
  connection with                    112,500         11,200        283,800                                                  295,000
  acquisition (Note 16)

  Net loss                                                                    (4,278,600)                                (4,278,600)
                                 -----------    -----------    -----------   -----------    -----------   -----------   -----------
BALANCE, NOVEMBER 30, 1995         4,655,490        465,500     11,154,200     3,992,300        184,675      (640,400)   14,971,600
  Net loss                                                                    (9,811,900)                                (9,811,900)
                                 -----------    -----------    -----------   -----------    -----------   -----------   -----------
BALANCE, NOVEMBER 30, 1996         4,655,490    $   465,500    $11,154,200   $(5,819,600)       184,675   $  (640,400)  $ 5,159,700
                                 ===========    ===========    ===========   ===========    ===========   ===========   ===========

</TABLE>

See notes to consolidated financial statements.


                                       F-5


<PAGE>

<PAGE>



ANDOVER TOGS, INC. AND SUBSIDIARIES
(DEBTOR IN POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1996, 1995, AND 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                           1996                     1995                     1994
                                                           ----                     ----                     ----
<S>                                                     <C>                     <C>                     <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net (loss) income                                     $ (9,811,900)           $ (4,278,600)           $    124,500
  Adjustments to reconcile net (loss)
    income to net cash provided by
    (used in) operating activities:

    Depreciation and amortization                          1,194,500               1,318,600               1,365,000
    Write down of net fixed assets
     to restructuring cost                                 1,542,300                    --                      --
  Write off of cost in excess of
    net assets acquired                                         --                   832,000                    --
  Deferred income taxes                                         --                  (777,400)                (79,100)
  Changes in operating assets and
    liabilities net of acquisition:

     Accounts receivable                                   6,825,900               2,962,500              (1,985,200)
     Inventories                                           9,673,600               3,982,000              (2,759,300)
     Refundable income taxes                                 914,900                (919,700)                   --
     Other assets                                            252,900                (119,500)                552,600
     Accounts payable                                     (3,750,800)                 52,300                 655,800
     Liabilities subject to compromise                     5,003,500                    --                      --
     Accrued expenses and
       other liabilities                                     434,200                (259,700)               (171,800)
                                                        ------------            ------------            ------------

          Net cash provided by (used
           in) operating activities                       12,279,100               2,792,500              (2,297,500)
                                                        ------------            ------------            ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Payment for acquisition of business                           --                (3,938,000)                   --
  Capital expenditures - net                                (109,700)               (893,300)               (365,700)
                                                        ------------            ------------            ------------
          Net cash used in investing
           activities                                       (109,700)             (4,831,300)               (365,700)
                                                        ------------            ------------            ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  (Repayment of) proceeds from
    notes payable - bank                                  (6,200,000)              3,800,000               2,400,000
  Increase in long-term borrowings                              --                      --                   250,000
  Repayments of long-term debt                            (1,967,000)             (1,482,600)             (1,497,500)
                                                        ------------            ------------            ------------
          Net cash provided by (used
           in) financing activities                       (8,167,000)              2,317,400               1,152,500
                                                        ------------            ------------            ------------
NET INCREASE (DECREASE) IN CASH                            4,002,400                 278,600              (1,510,700)

CASH, BEGINNING OF YEAR                                      862,500                 583,900               2,094,600
                                                        ------------            ------------            ------------
CASH, END OF YEAR                                       $  4,864,900            $    862,500            $    583,900
                                                        ============            ============            ============
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest                                            $  1,054,800            $  1,406,500            $    907,800
                                                        ============            ============            ============
    Income taxes                                        $     12,300            $    176,400            $    104,800
                                                        ============            ============            ============

</TABLE>

                                                 (continued)


                                              F-6


<PAGE>

<PAGE>



ANDOVER TOGS, INC. AND SUBSIDIARIES
(DEBTOR IN POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1996, 1995, AND 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                   1996         1995      1994
                                                   ----         ----      ----
<S>                                             <C>          <C>          <C> 

The following liabilities which were
outstanding at November 30, 1995 and
still outstanding on March 19, 1996
have been reclassified to "liabilities
subject to compromise":

  Accounts payable                              $     --     $   72,100   $ --
  Accrued expenses and other current                  
   liabilities                                        --        673,900     --
  Long term debt and obligations under
   capital leases                                     --      3,255,600     --
                                                ----------   ----------   ------
                                                $     --     $4,001,600   $ --
                                                ==========   ==========   ======
SCHEDULE OF NON CASH INVESTING ACTIVITIES:

  Acquisition of business:
   Fair value of assets acquired                $     --     $4,233,000   $ --
   Common stock issued                                --        295,000     --
                                                ----------   ----------   ------
          Total cash paid                       $     --     $3,938,000   $ --
                                                ==========   ==========   ======

</TABLE>

 See notes to consolidated financial statements.


                                                      F-7


<PAGE>

<PAGE>



ANDOVER TOGS, INC. AND SUBSIDIARIES
(DEBTOR IN POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1996, 1995, AND 1994
--------------------------------------------------------------------------------
1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       GENERAL - Andover Togs, Inc. (the "Company") is engaged in the design,
       manufacture, import and sale of active sportswear primarily for infants,
       toddlers, and children, principally to national retail stores.

       The Company is headquartered in New York with manufacturing facilities
       located in Alabama, North Carolina and the Dominican Republic.  The North
       Carolina facility closed in November 1996.

       Basis of Presentation - The consolidated financial statements include the
       accounts of the Company and its wholly owned subsidiaries, Springdale
       Fashions, Inc., Tortoni Manufacturing Corporation, and Stonehenge
       Financial Corporation. All material intercompany profits, transactions
       and balances have been eliminated.

       Fair Value of Financial Instruments - For financial instruments including
       cash, accounts receivable and payable and accruals, it was assumed that
       the carrying amount approximated fair value because of their short
       maturity. The carrying amount of long-term debt, which bears interest at
       floating rates, also approximates fair value. Based on the borrowing
       rates currently available to the Company the estimated fair value of
       liabilities subject to compromise is approximately $3,800,000 as of
       November 30, 1996.

       Concentration of Credit Risk- Financial instruments that potentially
       subject the Company to concentration of credit risk consist primarily of
       trade receivables and cash. The Company extends credit to its customers
       based upon an evaluation of the customer's financial condition and credit
       history and generally does not require collateral. The Company has
       historically incurred minimal trade losses. In years prior to 1995, the
       Company maintained credit insurance on a portion of its receivable
       balances. At November 30, 1996 and 1995, approximately 80% and 69%,
       respectively, of the Company's net accounts receivable balances were due
       from three national retail customers. Sales to these three entities
       comprised approximately 36%, 29%, and 13%, respectively, of net sales for
       the year ended November 30, 1996, and approximately 30%, 29%, and 10%, of
       net sales for the year ended November 30, 1995. The Company maintains
       cash balances at various banks earning interest. Accounts at banks are
       insured up to certain limits. The Company does not anticipate any losses
       with respect to cash.

       Use of Estimates - The preparation of financial statements in conformity
       with generally accepted accounting principles requires management to make
       estimates and assumptions that effect the reported amounts of assets and
       liabilities and disclosure of contingent assets and liabilities at the
       date of the financial statements and the reported amounts of revenues and
       expenses during the reporting period. Actual results could differ from
       those estimates.

       Inventories - Inventories are stated at the lower of cost or market. Cost
       is determined on a first-in, first-out basis.

       Net (loss) income per share - Net (loss) income per share is computed by
       dividing net (loss) income by the weighted average number of shares
       outstanding during the period. For fiscal 1996 and 1995, outstanding


                                       F-8


<PAGE>

<PAGE>



       stock options are not included in the calculation as the effect would
       have been anti-dilutive.

       Long-Lived Assets - In March 1995, the Financial Accounting Standards
       Board issued Statement Number 121, "Accounting for the Impairment of
       Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
       statement is effective for fiscal years beginning after December 15,
       1995. The impact of adopting this statement is discussed in Note 7.

       Property, Plant and Equipment - Property, plant and equipment is stated
       at cost less accumulated depreciation and amortization. Depreciation and
       amortization are provided by the straight-line method over the following
       estimated useful lives:

                                                        Years
                                                        -----
        Buildings                                     30 - 31.5
        Machinery and equipment                        3 - 10
        Leasehold improvements                   Lesser of useful life
                                                    or lease term

        Revenue Recognition - Revenue is recognized at the time the merchandise
        is shipped.

        Income Taxes - Effective December 1, 1993, the Company adopted SFAS 109,
        "Accounting for Income Taxes". SFAS 109 establishes financial accounting
        and reporting standards for the effects of income taxes that result from
        activities during the current and preceding years. SFAS 109 requires an
        asset and liability approach for financial reporting for income taxes.
        It also requires the Company to adjust deferred tax balances in the
        period of enactment for the effect of enacted changes in tax rates and
        to provide a valuation allowance against such deferred tax assets that
        are not more likely than not to be realized.

        Stock Options and Warrants - In October 1995, the financial Accounting
        Standards Board issued Statement of Financial Standards No. 123,
        "Accounting for Stock-based Compensation," which requires adoption of
        the disclosure provisions no later than fiscal years beginning after
        December 15, 1995 and adoption of the measurement and recognition
        provisions for non-employee transactions no later than December 15,
        1995. The new standard defines a fair value method, of accounting for
        stock options and other equity instruments. Under the fair value method
        compensation cost is measured at the grant date based on the fair value
        of the award and is recognized over the service period, which is usually
        the vesting period.

        Pursuant to the new standard, companies are encouraged, but are not
        required, to adopt the fair value method of accounting for employee
        stock- based transactions. Companies are also permitted to continue to
        account for such transactions under Accounting Principles Board Option
        No. 25, "Accounting for Stock Issued to Employees", but would be
        required to disclose in a note to the financial statements pro forma net
        income and pro forma earnings per share as if the company had applied
        the new method of accounting. The new standard also requires increased
        disclosures for stock-based compensation arrangements regardless of the
        method chosen to measure and recognize compensation for employee
        stock-based arrangements.

        The accounting requirements of the new method are effective for all
        transactions entered into during the fiscal year of adoption. The
        Company has elected to adopt the disclosure only provision of SFAS No.
        123 and will continue with APB No. 25 to account for stock options.
        There were no employee stock options granted for fiscal 1996.


                                       F-9


<PAGE>

<PAGE>




2.      CHAPTER 11 FILING

        During the year ended November 30, 1995, the Company incurred net losses
        of $4,278,600 and was unable to comply with certain covenants of its
        existing debt agreements. Negotiations with the Company's lenders to
        obtain waivers in connection with such defaults were unsuccessful.
        Negotiations with such lenders and other prospective lenders to obtain
        more permanent financing were also unsuccessful. As a result of the
        ensuing severe liquidity crisis, on March 19, 1996, the Company filed
        for protection under Chapter 11 of the United States Bankruptcy Code.

        Subsequent to March 19, 1996, the Company obtained debtor-in- possession
        financing with its existing lenders to expire in December 1996. On
        September 19, 1996 the Company obtained debtor-in-possession financing
        ("DIP Facility") which expires in September 1998 and has therefore been
        able to continue operations as a debtor-in-possession (see Note 5).

        The Company has taken the following actions, among others, to reorganize
        the Company's business and enable it to emerge from bankruptcy.

        An approximately 200,000 square foot leased facility in Scottsboro,
        Alabama used for finishing, warehousing, distribution and office space
        has been closed (see Note 7). A 65,300 square foot leased facility in
        Springdale, North Carolina, used for sewing, finishing, warehouse and
        distribution was closed on December 4, 1996. A 15,000 square foot owned
        facility in Stevenson, Alabama used for sewing has been closed and is
        being held for sale (see Note 7). Many of the operations previously
        conducted at Scottsboro, Springdale and Stevenson have been consolidated
        at the Company's remaining facilities in Pisgah, Alabama or New York
        City and many of the operations previously conducted in those facilities
        and in Pisgah are or will be subcontracted out to unaffiliated
        manufacturers.

        The Company moved its executive offices and showrooms from the 34,500
        square foot space located at One Penn Plaza, New York, New York, leased
        at an annual cost ranging from $766,000 to $932,000 to a 15,700 square
        foot space at 1333 Broadway, New York, New York, leased at an annual
        cost ranging from $224,000 to $267,000 (see Note 12). As a result of
        this move the Company wrote off approximately $615,000 of leasehold
        improvements. The new lease expires in 2001.

        Historically, the Company's products were manufactured in girls; sizes
        infant through 14 and boys' sizes infant through 20. The Company
        discontinued its big boys division leaving it with girl sizes infant
        through 14 and boys sizes infant through toddler. Approximately six
        personnel previously employed by the Company whose focus was exclusively
        on the import business have been terminated.

        Prior to the bankruptcy filing, the Company had 1155 employees. As of
        November 30, 1996, approximately 600 have been laid off. It is
        anticipated that additional reductions in work force will be
        accomplished. Through November 30, 1996 severance pay associated with
        these terminations approximated $275,000.

        The Company is endeavoring to sell its non-core assets, consisting
        primarily of manufacturing equipment and discontinued manufacturing
        facilities (see Note 7).

        Senior management has been reorganized, William L. Cohen continues as
        Chairman and Chief Executive Officer and Alan Kanis as Chief Financial
        Officer, Stephen L. Fenyves, Senior Vice President, previously in charge


                                      F-10


<PAGE>

<PAGE>



        of Administration, has had his duties expanded to include
        administration, manufacturing and sourcing.

        Management continues to review its existing overhead structure and is
        working with outside consultants to implement additional overhead
        reductions and operating efficiencies.

        Pre-petition liabilities are subject to being paid or compromised under
        a plan of reorganization to be voted upon by all impaired classes of
        creditors and approved by the Bankruptcy Court. Pre-petition liabilities
        as of November 30, 1996, and 1995 outstanding at November 30, 1995 prior
        to the March 19, 1996 filing are $9,057,400 and $6,020,900,
        respectively.

        On February 28, 1997, the Company filed its Plan of Reorganization under
        Chapter 11 of the Bankruptcy Code. The Plan, among other things,
        classifies the claims in categories for payment. The priority and
        convenience class claims (under $2,000) are to be paid immediately. The
        general unsecured claims are to be paid 100% of their claim with
        interest at 6% per annum, payable in quarterly installments of principal
        and interest commencing on June 30, 1997 based on a ten-year
        amortization schedule with the balance payable on the fifth anniversary.
        The Company has also received a commitment for exit financing (see Note
        17).

3.      INVENTORIES
<TABLE>
<CAPTION>
                                                               November 30,
                                                        --------------------------
                                                             1996          1995
                                                             ----          ----
<S>                                                      <C>           <C>        
         Raw materials                                   $   764,800   $ 2,995,000
         Work-in-process                                     911,400     3,252,800
         Finished goods                                    1,941,000     7,043,000
                                                         -----------   -----------
                                                         $ 3,617,200   $13,290,800
                                                         ===========   ===========
</TABLE>

4.      PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>

                                                               November 30,
                                                         -------------------------
                                                             1996          1995
                                                             ----          ----
<S>                                                      <C>           <C>        
        Land                                             $    14,100   $    14,100
        Buildings                                          3,348,200     6,272,400
        Leasehold improvements                               350,100     2,595,300
        Machinery and equipment                            5,321,100    11,615,800
                                                         -----------   -----------
                                                           9,033,500    20,497,600
        Less accumulated depreciation
         and amortization                                  5,875,200    12,268,500
                                                         -----------   -----------
                                                         $ 3,158,300   $ 8,229,100
                                                         ===========   ===========

</TABLE>


5.      DEBTOR IN POSSESSION FACILITY

        On September 19, 1996 the Company obtained debtor-in-possession
        financing ("DIP Facility") which expires in September 1998 and has
        therefore been able to continue operations as a debtor-in-possession.
        The DIP Facility provided for a $15,000,000 revolving credit line of
        which $5,650,000 is available for letters of credit. Advances under the
        revolver bore interest at prime plus 1%. The advances were based on 85%
        of eligible accounts receivable plus 50% of eligible inventory and were
        collateralized by substantially all of the Company's assets. The debt
        agreement contained restrictive covenants relating to the pledging of
        assets, borrowed funds, additional indebtedness, sale of assets, mergers
        and payment of dividends. In addition, the Company was required to
        comply with certain financial covenants (see Note 17).


                                      F-11


<PAGE>

<PAGE>



6.      NOTES PAYABLE - BANK

        Effective May 31, 1995, the company had a credit agreement which
        provided for a $22,216,000 line of credit and a $7,400,000 letter of
        credit facility, subject to a maximum aggregate borrowings of
        $26,000,000. The outstanding balance as of November 30, 1995 plus
        additional borrowings through March 19, 1996, were repaid on May 3,
        1996.

7.      ASSETS HELD FOR SALE

        Assets held for sale represents property, plant and equipment segregated
        and held for sale. Included in this amount is approximately $2,620,700
        of property, plant, equipment and restricted cash relating to the
        Industrial Revenue Bond at Scottsboro, Alabama. In February 1997, these
        assets were exchanged in connection with the release of claims amounting
        to $3,055,000 pertaining to the Scottsboro facility (see Note 8b). The
        remaining assets, amounting to $183,000, represents assets at other
        closed facilities at November 30, 1996 which have been adjusted by
        approximately $54,500 representing an impairment.

8.      LONG-TERM DEBT AND LIABILITIES SUBJECT TO COMPROMISE
<TABLE>
<CAPTION>

                                                                       November 30,
                                                             -----------------------------
                                                                1996               1995
                                                                ----               ----
<S>                                                          <C>               <C>        
        Term note - bank (a)                                 $    --           $ 1,750,000
        Obligation under capital lease (b)                    3,055,000          3,055,000
        Obligation under capital lease (c)                       47,800            239,100
        Liabilities subject to compromise (d)                 5,749,500            746,000
        Other                                                   205,100            230,800
                                                             ----------        -----------
                                                              9,057,400          6,020,900

        Less current portion                                  4,530,300          2,019,300
                                                             ----------        -----------
                                                             $4,527,100        $ 4,001,600
                                                             ==========        ===========
</TABLE>

        (a)   Effective May 31, 1994, the Company and its lenders amended its
              revolving credit facility which contained revised financial
              covenants and extended the maturity date of the term loan to be
              paid in quarterly installments through August 31, 1997. The term
              note was paid on March 29, 1996.

        (b)   During 1989, a municipality issued an Industrial Revenue Bond in
              the principal amount of $3,600,000, the proceeds of which were
              used to finance the construction of a 200,000 square foot
              manufacturing and distribution facility. This transaction has been
              accounted for as a capital lease. The bond was payable in annual
              installments of varying amounts through April, 2004. Interest was
              payable semiannually at 9-7/8% per annum. The bonds were
              collateralized by the building, equipment and restricted cash with
              a net carrying value of $2,620,700 at November 30, 1996. As of
              February 4, 1997 this obligation was deemed satisfied and the
              Company was released in connection of any claim to the Scottsboro
              facility (see Note 7).

        (c)   During fiscal 1985, a municipality issued an Industrial Revenue
              Bond for $2,200,000 for the construction of a distribution center.
              This transaction has been accounted for as a capital lease. The
              bond was payable in quarterly installments of approximately
              $47,800 through December 1996, plus interest at 72% of prime. The
              bond was collateralized by building and equipment with a net
              carrying value of $811,400 at November 30, 1996. Final payment of
              the bond was made on December 19, 1996.



                                      F-12


<PAGE>

<PAGE>



        (d)   On March 19, 1996, the Company filed for protection under Chapter
              11 of the United States Bankruptcy Code (see Note 2). As a result
              of the filing the Company recorded all liabilities prior to the
              filing date as subject to compromise. The current portion of this
              debt was set up based on the Company's Plan of Reorganization (see
              Note 2).

        At November 30, 1996, original repayments terms for the principal
        portion of long-term debt and liabilities subject to compromise were as
        follows:

                                           Year                   Amount
                                           ----                   ------
                                           1997               $4,530,300
                                           1998                  504,300
                                           1999                  508,300
                                           2000                  512,700
                                           2001                  486,700
                                    Thereafter                 2,515,100
                                                               ---------
                                                              $9,057,400
                                                              ==========

9.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

<TABLE>
<CAPTION>

                                                                      November 30,
                                                         ------------------------------
                                                            1996                  1995
                                                            ----                  ----
<S>                                                      <C>                 <C>       
        Accrued payroll                                  $  319,800          $  842,700
        Accrued professional fees                         1,384,100             189,400
        Other                                               777,900           1,002,000
                                                         ----------          ----------
                                                         $2,481,800          $2,034,100
                                                         ==========          ==========
</TABLE>

10.  RESTRUCTURING COSTS -

     Due to the filing for protection under Chapter 11 of the Bankruptcy Court,
     the Company incurred expenses relating to the hiring of professionals, and
     facility closing costs for the year ended November 30, 1996 as follows:
<TABLE>


<S>                                                      <C>       
        Professional fees                                $2,447,700
        Write off of property and
          equipment relating to
          facility closings                               1,542,300
        Moving expenses                                     365,600
        Severance pay                                       274,900
        Lease rejection claim                             1,000,000
        Employment agreement claims                         458,300
        Various other                                       286,100
                                                         ----------
                                                         $6,374,900
                                                         ==========

</TABLE>

11.  INCOME TAXES

   The income tax provision (benefit) consists of the following:

<TABLE>
<CAPTION>

                                              Year Ended November 30,
                                  ----------------------------------------------
                                      1996             1995            1994
                                      ----             ----            ----
<S>                               <C>              <C>              <C>         
Current:
  Federal                         $      --        $  (868,600)     $   (38,200)
  State and local                       9,800            8,400          134,600
                                  -----------      -----------      -----------
         Total Current                  9,800         (860,200)          96,400

Deferred                                 --           (777,400)         (79,100)
                                  -----------      -----------      -----------
                                  $     9,800      $(1,637,600)     $    17,300
                                  ===========      ===========      ===========

</TABLE>


                                      F-13


<PAGE>

<PAGE>



The (benefit) provision for income taxes differs from amounts computed at
statutory rates as follows:

<TABLE>
<CAPTION>

                                                               Year Ended November 30,
                                                  -------------------------------------------------
                                                      1996             1995              1994
                                                      ----             ----              ----
<S>                                               <C>                <C>               <C>        
        Federal income taxes at
          statutory rates                         $(3,332,700)       $(2,011,500)      $    48,200
        Increase (decrease)
          resulting from:
        Valuation allowance                         3,332,700            352,500              --
        State and local taxes,
          net of Federal income
          tax benefit                                    --               30,100            88,700
        Reversal of prior years'
          under (over) provision                         --                8,000           (92,200)
        Effect of adoption of
          SFAS No.109                                    --                 --             (46,500)
        Other                                           9,800            (16,700)           19,100
                                                  -----------        -----------       -----------
                                                  $     9,800        $(1,637,600)      $    17,300
                                                  ===========        ===========       ===========

</TABLE>

The tax effects of significant items comprising the Company's net deferred taxes
as of November 30, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>

                                                November 30,   November 30,
                                                   1996           1995
                                                   ----           ----
<S>                                             <C>            <C>        
     Deferred tax liabilities:
     Difference between book and tax,
        basis of property                       $   588,800    $   870,100
                                                -----------    -----------

     Deferred tax assets:
     Expenses capitalized into inventory        $    42,900    $   157,000
     Expenses not currently deductible              612,200         46,300
     Reserves not currently deductible              166,200        118,400
     Recapture of alternative minimum tax              --           63,300
     Net operating loss                           3,822,900        893,300
     Other                                           19,200         54,400
                                                -----------    -----------
                                                $ 4,663,400    $ 1,332,700
                                                -----------    -----------
     Net deferred tax asset                     $ 4,074,600    $   462,600
     Less valuation allowance                    (4,074,600)      (462,600)
                                                -----------    -----------
     Net deferred tax                           $      --      $      --
                                                ===========    ===========
</TABLE>

At November 30, 1996, the Company has a federal net operating loss carryforward
for income tax purposes of approximately $9,984,000, which will expire through
2011.

12.  COMMITMENTS AND CONTINGENCIES

       a.     Effective September 15, 1996, the Company negotiated a lease for
              its executive office and showroom located in New York. The new
              lease expires on December 31, 2001, and provides for minimum
              annual rental payments ranging from approximately $224,000 to
              $267,000. The Company leases various warehousing, manufacturing
              and office facilities and equipment under operating leases. Future
              minimum rental payments under these leases as of November 30, 1996
              are as follows:

                                           Year                   Amount
                                           ----                   -------
                                           1997                   346,200
                                           1998                   398,000


                                      F-14


<PAGE>

<PAGE>



                                           1999                   379,200
                                           2000                   265,800
                                           2001                   267,100
                                           Thereafter              22,300
                                                               ----------
                                                               $1,678,600
                                                               ==========

             Rental expense was $839,000, $1,350,000 and $1,361,000 for the
             years ended November 30, 1996, 1995, and 1994, respectively.

       b.    At November 30, 1996, the Company was contingently liable for open
             letters of credit of approximately $157,500.

13.  COMMON STOCK

        Certain related stockholders have entered into a stockholders' agreement
        which provides that substantially all of their stock be voted jointly by
        two of these stockholders, grants rights of first refusal regarding
        sales of stock by another related stockholder, and requires the
        mandatory purchase of certain shares by them upon death.

14.     STOCK OPTION PLAN

        The Company adopted a new non-qualified and incentive stock option plan
        in May 1995 (the "1995 Plan") to replace its old non-qualified and
        incentive stock option plans. The 1995 Plan, provides for options to be
        granted for the purchase of up to 225,000 shares of common stock at
        prices not less than 80% for the non-qualified options and 100% for the
        incentive options of the fair market value of the common stock at the
        date of the grant. Options granted under the incentive stock options are
        intended to qualify under Section 422 of the Internal Revenue Code. Once
        the options expire or terminate for any reason, no new options can be
        granted under the old plan. As of November 30, 1996, no incentive stock
        options have been granted.

        A summary of activities for the non-qualified stock options is as
follows:

<TABLE>
<CAPTION>
                                                    Number
                                                      of
                                                    Shares     Price per Share
                                                    ------     ----------------
<S>                                               <C>           <C>   

                Options outstanding,
                  December 1, 1993                  337,100    $2.088 - $5.816
                   Granted                           10,000    $2.125
                   Cancelled                       (102,100)   $2.36 -  $4.64
                                                   --------

                Options outstanding,
                  November 30, 1994                 245,000    $2.088 - $5.816
                   Granted                          146,500    $1.875 - $2.50
                   Cancelled                        (28,600)   $2.125 - $4.40
                                                    -------

                Options outstanding,
                  November 30, 1995                 362,900    $1.875 - $5.816
                    Granted                           7,500    $ .875
                    Cancelled                      (249,200)   $1.875 - $5.816
                                                    -------

                Options outstanding,
               November 30, 1996                    121,200    $ .875 - $4.40
                                                    =======
                Exercisable at November 30, 1996     40,600
                                                    =======
        </TABLE>


        There were 217,500 shares reserved for future grant at November 30,
        1996.

        The options expire beginning April 1997 through April 2003.

15.     DEFINED CONTRIBUTION PLAN

        The Company maintains a defined contribution plan subject to Section
        401(k) of the Internal Revenue Code. All full-time employees who
        complete


                                      F-15


<PAGE>

<PAGE>



        at least one year service and have attained the age of 20-1/2 are
        eligible to participate. The Company may, at its sole discretion, make
        certain matching contributions to this plan. The Company made no
        contributions in 1996, 1995 and 1994.

16.     ACQUISITION

        On February 27, 1995, the Company acquired the inventory, tradenames and
        customer orders of Dobie Industries, Inc., a manufacturer of children's
        and women's apparel ("Dobie"). The purchase price was approximately
        $3,900,000 in cash, including acquisition fees, 112,500 shares of the
        Company's common stock and a warrant to purchase 50,000 additional
        shares of stock at $2.50 per share. The acquisition was accounted for as
        a purchase and gave rise to $832,000 of cost in excess of net assets
        acquired. In November 1995, based on an evaluation of Dobie's projected
        future operations, management wrote-off the cost in excess of net assets
        acquired.

17.     SUBSEQUENT EVENT

        On May 12, 1997, the Company emerged from Chapter 11 and entered into a
        new financing agreement with CIT/Group Commercial Services, Inc. for a
        two year $10.5 million revolving credit facility. This agreement
        replaces the facility discussed in Note 5.

18.     QUARTERLY DATA (UNAUDITED)

        Selected quarterly operating data is as follows (in thousands of
        dollars, except per share amounts):
<TABLE>
<CAPTION>

                                       Net              Gross            Net              Per Share
    Quarter Ended                      Sales            Profit           Loss             Information
    -------------                      -----            ------           ----             -----------
       1996
       ----
<S>                                    <C>              <C>              <C>              <C>    
   February                            $12,810          $ 1,386          $(2,033)         $ (.45)

   May                                  13,618            1,191           (2,291)           (.51)

   August                                9,506            1,742           (1,971)           (.44)

   November                              7,123            1,375           (3,517)           (.79)
                                       -------           ------          --------         -------
                                       $43,057          $ 5,694          $(9,812)         $(2.19)
                                       =======          =======          ========         =======


       1995
       ----

   February                            $15,016          $ 2,738          $  (367)         $ (.08)
                                        
   May                                  18,751            3,602             (231)           (.05)
                                        
   August                               24,616            3,308             (486)           (.11)
                                        
                                        22,169              323           (3,195)           (.72)
   November                            -------          -------          --------         -------
                                       $80,552          $ 9,971          $(4,279)         $ (.96)
                                       =======          =======          ========         =======
</TABLE>



                                   * * * * * *


                                      F-16


<PAGE>

<PAGE>




                                                                     Schedule II

ANDOVER TOGS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Column A                          Column B                        Column C               Column D           Column E
--------                          --------                        --------               --------           --------

                                                                  Additions
                                                      ---------------------------
                                                          (1)              (2)

                                                                         Charged                            Balance
                                  Balance at          Charged to         to Other                           at End
                                  Beginning           Costs and          Accounts        Deductions           of
                                  of Period           Expenses           Describe        Describe           Period
                                  ---------           ---------          --------        ----------         -------
ALLOWANCE FOR
  DOUBTFUL ACCOUNTS:
<S>                               <C>                 <C>                <C>             <C>                <C>

    Year ended
     November 30, 1996            $310,000            $                  $               $10,000(A)         $300,000
                                  ========            ========           =======         =======            ========

    Year ended
     November 30, 1995            $ 43,200            $266,800           $               $                  $310,000
                                  ========            ========           =======         =======            ========

       Year ended
     November 30, 1994            $ 72,400            $                  $               $29,200(A)         $ 43,200
                                  ========            ========           =======         =======            ========
</TABLE>


(A)    Write-off of uncollectible accounts.


                                      F-17


<PAGE>

<PAGE>



                                  EXHIBIT INDEX

Exhibit No.           Description

23.1                  Consent of Mahoney Cohen & Company, CPA, P.C.

27.1                  Financial Data Schedule.


<PAGE>