<PAGE>
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                       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 [FEE REQUIRED]
  For the Fiscal Year Ended March 31, 1997
 
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
  For the Transition Period from                 To
 
                        COMMISSION FILE NUMBER 0 - 18064
 
                            ------------------------
 
                                YES CLOTHING CO.
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                     <C>
              CALIFORNIA                              95-3768671
   (State or other jurisdiction of       (I.R.S. Employer Identification No.)
    incorporation or organization)
 
    1380 WEST WASHINGTON BOULEVARD                      90007
       LOS ANGELES, CALIFORNIA                        (Zip Code)
   (Address of principal executive
               offices)
</TABLE>
 
       Registrant's telephone number, including area code: (213) 765-7800
 
                            ------------------------
 
          Securities registered pursuant to Section 12 (b) of the Act:
 
<TABLE>
<S>                       <C>
  TITLE OF EACH CLASS      NAME OF EXCHANGE ON
                             WHICH REGISTERED
          NONE                     NONE
</TABLE>
 
    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 _X_ NO ____
 
    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. _X_
 
    The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant on June 27, 1997 based on the average bid and
asked price on such date was $1,548,028.
 
    Number of shares of Common Stock outstanding as of June 27, 1997: 7,036,492
 
    DOCUMENTS INCORPORATED BY REFERENCE: The information required by Part III of
Form 10-K is incorporated herein by reference to the registrant's definitive
Proxy Statement relating to its 1997 Annual Meeting of Stockholders which will
be filed with the Commission within 120 days after the end of the registrant's
fiscal year.
 
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<PAGE>
                              YES CLOTHING COMPANY
                      INDEX TO ANNUAL REPORT ON FORM 10-K
 
<TABLE>
<CAPTION>
                                                                                                           PAGE NO.
                                                                                                         -------------
<S>            <C>                                                                                       <C>
PART I.
  Item 1.      Business................................................................................            3
  Item 2.      Properties..............................................................................            6
  Item 3.      Legal Proceedings.......................................................................            6
  Item 4.      Submission of Matters to a Vote of Security Holders.....................................            6
PART II.
  Item 5.      Market for the Registrant's Common Equity and Related Stockholder Matters...............            7
  Item 6.      Selected Financial Data.................................................................            8
  Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations...            9
  Item 8.      Financial Statements and Supplementary Data.............................................           11
  Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....           27
 
PART III.
  Item 10.     Directors and Executive Officers of the Registrant......................................           27
  Item 11.     Executive Compensation..................................................................           27
  Item 12.     Security Ownership of Certain Beneficial Owners and Management..........................           27
  Item 13.     Certain Relationships and Related Transactions..........................................           27
 
PART IV.
  Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................           27
</TABLE>
 
                                       2
<PAGE>
                                     PART I
 
ITEM 1.  BUSINESS
 
    YES Clothing Co.-Registered Trademark- (the "Company") designs, contracts
for the manufacture of and markets diversified lines of apparel for women in
junior sizes, and for young men. The Company's garments are manufactured
predominantly in the United States, and are sold to retail department stores and
specialty chains and stores throughout North America. The Company's apparel is
distinguished by its fashionable look, youthful style and quality workmanship.
 
    The Company was incorporated in California in 1982. Its principal executive
offices are located at 1380 West Washington Boulevard, Los Angeles, California
90007, and its telephone number at that address is (213) 765-7800.
 
SALE TRANSACTION
 
    On June 4, 1996, Georges Marciano and affiliates sold to Guy Anthome
3,515,000 shares of common stock at a purchase price of $0.01 per share. Mr.
Marciano resigned as a director and Chairman of the Board and agreed to cancel
the option and warrant issued in his favor. Mr. Anthome agreed to become
Chairman of the Board and Chief Executive Officer. This transaction is known
herein as the Sale Transaction.
 
BUSINESS STRATEGY
 
    Prior to the Sale Transaction, the Company licensed a number of trademarks
and designs (including the GM SURF and MISFITS brands) from Marble Sportswear,
Inc., a company controlled by Mr. Marciano. These licenses were terminated on
May 1, 1996. Upon the close of the Sale Transaction, the Company reformulated
its design and merchandising strategy. The Company's strategy now is to increase
sales by reintroducing the YES-Registered Trademark- label into the junior
market, by shifting its product focus from shirts, pants, shorts, vests,
T-shirts and sweatshirts made principally with denim and knit/woven cotton, to
production of dresses, skirts, pants, jackets and tank tops made primarily with
cotton/spandex knits and cotton jersey.
 
APPAREL AND APPAREL DESIGN
 
    The Company offers clothing for the women's "junior" market and young men's
markets. The Company's business is generally divided among five retail selling
seasons: Spring, Summer, Fall, Back-to-School, and Holiday. For each selling
season, the Company introduces a separate apparel collection each year. Seasonal
factors can cause some variance in production and sales levels among fiscal
quarters in any fiscal year, but the Company does not regard its overall
business as highly seasonal.
 
    JUNIOR'S.  The Company's clothing for the "junior" market incorporates
current styles, fabrics and colors with a look that is designed to appeal to a
broad cross-section of young women. Clothing for the junior market is
characterized by sizes tailored for youthful figured women. Prior to the Sale
Transaction, the Company used primarily denim and, to a lesser degree, twill,
for shirts, pants, shorts, vests, jackets and dresses and knit and woven cotton
for T-shirts, sweatshirts and other types of shirts. Following the Sale
Transaction, the Company returned to using classic junior fabrics, primarily
cotton and spandex knit, cotton jersey and denim, in the production of dresses,
skirts, pants, tank tops and jackets. The Company had previously sought to
diversify by licensing branded lines of apparel, such as AUDIENCE and INTO
REALITY. The AUDIENCE license was terminated by the Company on April 11, 1997,
and the INTO REALITY license was terminated effective as of July 31, 1997.
 
    YOUNG MEN'S.  The company markets casual apparel for young men under the
BODY GLOVE label. The young men's line, with its distinctive and contemporary
look, uses corduroy, cotton and rayon twill and nylon in the production of
T-shirts, sweatshirts, shirts, shorts and pants. The Company terminated its BODY
GLOVE license on May 9, 1997.
 
                                       3
<PAGE>
PRODUCTION
 
    MANUFACTURING.  The Company manufactures its garments using independent
cutting and sewing contractors located principally in the Los Angeles area. The
Company seeks to produce high quality garments through the use of quality
fabrics, insistence on quality workmanship and use of comprehensive fabric and
garment inspection programs.
 
    The Company acquires fabric from suppliers and supplies such fabric,
together with the garment pattern, to an independent contractor for cutting. The
cut fabric and any buttons, zippers and other trim to be used on the garments
are then delivered to independent sewing contractors. Under the Company's
supervision, these contractors assemble and sew the fabric and add trim in
accordance with production samples. The Company also employs a production
coordinator and two full-time production assistants who regularly visit the
Company's contractors to review the quality of the work in progress. Prior to
distribution, the garments are delivered to the Company's warehouse for final
inspection in the Quality Control Department.
 
    The lead time to fill new orders placed by the Company with its
manufacturing contractors generally ranges from three to six weeks for
domestically produced garments. The Company generally schedules the manufacture
of apparel based on orders received to reduce the risk of obsolescence of its
garment inventory. The Company continuously monitors for obsolete and damaged
inventory. Such inventory is usually sold to customers who specialize in
merchandising off-price clothing.
 
    The Company has long-standing relationships with its cutting contractors and
many of its sewing production contractors but does not have written agreements
with any of its contractors. For its domestically produced garments, the Company
currently utilizes two cutting contractors and approximately seven sewing
contractors (all of whom are located in the Los Angeles area).
 
    The Company believes that its relationships with its cutting and sewing
contractors are satisfactory. The Company does not believe that the loss of any
contractor would have a material adverse effect on the Company's operations as
there are a number of domestic and foreign cutting and sewing contractors who
can manufacture the Company's garments.
 
    FABRICS.  The fabrics primarily used by the Company are novelty
nylon/spandex, cotton/spandex and stretch laces, all of which are purchased
domestically.
 
    The Company believes that during the fiscal year ended March 31, 1997, its
total (100%) expenditures for fabrics used in its domestically produced garments
were paid to suppliers located in the United States. For the fiscal year ended
March 31, 1997, approximately 6% of the Company's expenditures for domestically
purchased fabrics was accounted for by its largest domestic fabric supplier,
approximately 21% of such expenditures was accounted for by the Company's four
largest domestic suppliers and approximately 35% of such expenditures was
accounted for by the Company's ten largest domestic suppliers.
 
    The Company does not have any long-term arrangements with any of its fabric
suppliers. To date, the Company has not experienced any difficulty in satisfying
its fabric requirements and it believes that the large number and diversity of
potential suppliers minimizes the risk of the loss of any one supplier. The
Company believes that the effect of the loss of one or a few of its fabric
suppliers on the Company's operations would be minimal due to the large number
and diversity of potential suppliers and the relative ease with which new
supplier relationships may be established.
 
SALES AND MARKETING
 
    The Company sells its apparel throughout the United States and to a lesser
extent in Mexico and Canada. Its customers are retail department stores,
specialty chains and specialty stores. For the fiscal year ended March 31, 1997,
the Company sold its apparel to over two hundred retailing customers.
Approximately 98% of sales were made to the Company's one hundred largest
customers.
 
                                       4
<PAGE>
    Sales of the Company's garments are made through independent sales
organizations and directly by the Company's sales staff. The Company maintains
showrooms in New York City and Los Angeles for women's and men's apparel. The
Company also engages the services of independent sales organizations in Los
Angeles, New York and Miami which operate showrooms displaying the Company's
products. Sales representatives at each showroom are responsible for marketing
the Company's apparel within an assigned territory. Each sales representative
meets with customers in the showroom, makes sales calls to customers and
represents the Company at trade shows within the assigned territory. The sales
organizations are retained on a non-exclusive basis. The Company's independent
sales organizations are compensated on a commission basis on terms consistent
with industry practice. The Company does not sell its garments on consignment.
 
    The Company's backlog consists of purchase orders that have been received
but not shipped, and amounted to approximately $650,000, $1,100,000 and
$3,200,000 as of June 20, 1997, June 20, 1996 and June 20, 1995, respectively.
The Company expects to ship all of the orders comprising the backlog prior to
September 30, 1997.
 
    While the failure to fill orders on a timely basis could have a material
adverse effect on the Company's sales, the Company has generally not experienced
difficulty in shipping orders by the dates requested by its customers. The
company does not generally accept returns except for damaged or defective
garments or with respect to late deliveries. However, the Company does grant
markdown money for slow moving goods.
 
ADVERTISING AND PROMOTION
 
    The Company's advertising strategy is to promote an image associated with a
fashionable look and youthful style and to promote the YES Clothing
Co.-Registered Trademark- brands. The Company did not advertise extensively in
1997 and does not anticipate increasing its advertising budget in 1998. The
Company had no cooperative advertising program for its retailers although it
did, with advance approval, reimburse its customers for advertising the
Company's products. The Company's expenditures for advertising and promotion
were approximately $6,000 during fiscal 1997 (0.2% of net sales), $155,000
during fiscal 1996 (2.0% of net sales) and $442,000 during fiscal 1995 (1.5% of
net sales).
 
BRANDS AND TRADEMARKS
 
    The Company's principal trademarks, YES Clothing Co.-Registered Trademark-,
YES-Registered Trademark-, YES Men-Registered Trademark-, YES
Kids-Registered Trademark- and YES Jeans-Registered Trademark- are registered
with the United States Patent and Trademark Office. The Company also has
registered or has trademark applications pending, for these trademarks in other
countries. The Company believes that these trademarks have significant value in
the marketing of its apparel. There are other companies in the apparel and
apparel-related industries that incorporate the word "yes" in their trademarks,
and there can be no assurance that these or future trademarks which may be
granted will not diminish the value of the Company's "YES Clothing
Co.-Registered Trademark-" or "YES-Registered Trademark-" trademarks.
 
    Guess Inc. previously filed oppositions and cancellations to certain of the
Company's trademarks, and has since withdrawn the same.
 
COMPETITION
 
    The segments of the apparel industry in which the Company competes are
highly fragmented. The Company competes with numerous other apparel
manufacturers, which vary in size and in the products they design and
manufacture. In addition, department stores, including some of the Company's
customers, sell competing apparel under their own labels. Many of the Company's
competitors are larger and have greater financial resources than the Company.
 
                                       5
<PAGE>
    The marketing of apparel is highly competitive. The Company believes that
the ability to gauge effectively and to respond to changes in consumer demands
and tastes as well as the ability to produce and deliver its products on a
timely basis are necessary to compete successfully in the apparel industry. The
Company believes that consumer acceptance depends on the image, design, quality
and price of its garments, and that its continuity will depend on its ability to
remain competitive in these areas. The failure to design garments that meet with
acceptance in the marketplace in the future could result in the material
deterioration of customer loyalty and the Company's image and could adversely
affect the Company's business.
 
EMPLOYEES
 
    As of March 31, 1997, the Company employed thirty-nine persons. None of the
Company's employees are represented by a labor union. The Company considers its
relations with employees to be satisfactory.
 
ENVIRONMENTAL REGULATION
 
    The cost and effect of complying with environmental regulations are not
material due to the nature of the Company's business.
 
ITEM 2.  PROPERTIES
 
    Effective May 1, 1992, the Company's executive offices, merchandising,
production, shipping and warehousing facilities became located in a facility in
Los Angeles totaling approximately 75,000 square feet. This real property is
occupied pursuant to a lease originally due to expire in May 1997, and later
amended to expire upon the earlier occurrence of either the expiration of sixty
days' written notice of the sale of the building, or December 31, 1997. The
Company also leases the following showrooms pursuant to leases expiring as
indicated: Los Angeles (November 2001) and New York City (December 1999).
Management expects that in the normal course of business, such leases will be
renewed or replaced by other leases. The Company believes its current facilities
are generally in good operating condition and are suitable and adequate for its
foreseeable needs. The Company does not believe the loss of any of these
facilities would have a material adverse effect on its operations as equivalent
facilities are readily available. In January 1997, the Company ceased operating
its Outlet Store located in Park City, Utah.
 
ITEM 3.  LEGAL PROCEEDINGS
 
    The Company is not involved in any legal proceedings the outcome of which
could have a material effect on the company.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    There were no matters submitted during the fourth quarter of fiscal year
1997 to a vote of security holders.
 
                                       6
<PAGE>
                                    PART II
 
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
       STOCKHOLDER MATTERS
 
PRICE RANGE OF COMMON STOCK
 
    The Company's common stock began trading on the Over-the-Counter (OTC)
Bulletin Board on September 23, 1996, after the Company was delisted from the
NASDAQ SmallCap Market on September 20, 1996. The Company's stock trades under
the symbol YSCO. The following table sets forth the range of high and low sales
prices of the common stock, as reported by NASDAQ for each quarterly period
during the past three fiscal years:
 
MARKET PRICES
 
<TABLE>
<CAPTION>
                                                                                             QUARTERS ENDING
                                                                            --------------------------------------------------
                                                                             MARCH 31      DEC. 31     SEPT. 30      JUNE 30
                                                                            -----------  -----------  -----------  -----------
<S>                                                                         <C>          <C>          <C>          <C>
Fiscal 1997
  Low.....................................................................   $    0.07    $    0.07    $    0.38    $    0.75
  High....................................................................        0.13         0.62         1.50         2.13
Fiscal 1996
  Low.....................................................................   $    1.06    $    1.13    $    2.50    $    1.00
  High....................................................................        2.38         3.13         4.88         8.75
Fiscal 1995
  Low.....................................................................   $    3.25    $    1.75    $    1.37    $    1.12
  High....................................................................       10.50         4.12         3.00         1.75
</TABLE>
 
APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK SECURITIES
 
    The Company had approximately 51 holders of record of Common stock as of
March 31, 1997.
 
DIVIDENDS
 
    The Company has never paid cash dividends on its common equity. The Company
is not restricted from making any cash dividend payments under its current
credit agreement with its factor. However, the Company intends to retain any
earnings within the Company for the foreseeable future.
 
                                       7
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA
 
    The following selected financial data of the Company as of and for each of
the five years in the period ended March 31, 1997, are derived from the audited
Financial Statements of the Company and should be read in conjunction with such
Financial Statements and related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this report.
 
<TABLE>
<CAPTION>
                                                                             (000'S OMITTED)
                                                                           YEAR ENDED MARCH 31
                                                        ----------------------------------------------------------
                                                           1997        1996        1995        1994        1993
                                                        ----------  ----------  ----------  ----------  ----------
<S>                                                     <C>         <C>         <C>         <C>         <C>
INCOME STATEMENT DATA
  Net Sales...........................................  $    3,416  $    7,551  $   28,580  $   27,883  $   37,940
  Gross profit........................................         471      (1,519)      3,370       3,673       8,052
  Income (loss) before income taxes...................      (2,656)     (7,835)     (4,652)     (2,784)     (1,430)
  Net income (loss)...................................      (1,685)     (7,835)     (4,652)     (2,934)       (998)
  Earnings (loss) per share...........................       (0.24)      (1.28)      (1.22)      (0.77)      (0.26)
  Dividends per share.................................      --          --          --          --          --
  Weighted average number of shares used in
    computation (a)...................................       7,036       6,144       3,821       3,821       3,821
 
BALANCE SHEET DATA
  Inventory...........................................         644       1,398       2,158       3,213       3,243
  Working capital.....................................      (1,804)     (3,233)        866       5,250       8,171
  Long-term liabilities...............................      --          --             657         171         214
  Total assets........................................       1,459       2,652       4,630       9,077      12,784
  Total liabilities...................................       2,649       4,892       3,095       2,805       3,578
  Shareholders' equity................................      (1,190)     (2,240)      1,535       6,272       9,206
</TABLE>
 
------------------------
 
(a) Weighted average number of shares have been computed based on the number of
    shares outstanding each period. The effect of options granted but not
    exercised has not been included as the effect would have either been
    immaterial or antidilutive.
 
                                       8
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
 
RESULTS OF OPERATIONS
 
    The following table sets forth, for the periods indicated, the percentage of
net sales represented by certain items in the Company's statements of
operations.
 
<TABLE>
<CAPTION>
                           PERCENTAGE OF NET
                                 SALES
                          YEAR ENDED MARCH 31,
                          --------------------
                          1997    1996   1995
                          -----  ------  -----
<S>                       <C>    <C>     <C>
Net sales...............  100.0   100.0  100.0
Cost of sales...........   86.2   120.0   88.2
                          -----  ------  -----
Gross profit/(loss).....   13.8   (20.0)  11.8
Commission income.......    0.0     0.4    1.3
Royalty income..........    0.0     0.0    0.2
                          -----  ------  -----
Gross operating
  income/(loss).........   13.8   (19.6)  13.3
Selling, general and
  administrative
  expenses..............   88.9    80.0   27.9
                          -----  ------  -----
Loss from operations....  (75.1)  (99.6) (14.6)
Other
  income--insurance.....    0.0     0.0    0.2
Other expense...........   (4.2)   (4.1)  (0.9)
License reacquisition...    0.0     0.0   (1.0)
Gain on sale of
  assets................    1.6     0.0    0.0
                          -----  ------  -----
Loss before income taxes
  (benefit).............  (77.7) (103.7) (16.3)
Income taxes
  (benefit).............  (28.4)    0.0    0.0
                          -----  ------  -----
Net loss................  (49.3)% (103.7)% (16.3)%
                          -----  ------  -----
                          -----  ------  -----
</TABLE>
 
FISCAL YEARS 1997, 1996 AND 1995
 
    NET SALES decreased by $4,135,000 (54.8%) to $3,416,000 in fiscal 1997 as a
result of the lag caused by the Company's reintroduction of the
YES-Registered Trademark- label into the junior market.
 
    In fiscal 1996, net sales decreased by $21,029,000 (73.5%) to $7,551,000 due
to a lack of market acceptance of the Company's then marketing and design
direction.
 
    GROSS PROFIT as a percentage of net sales increased to 13.8% in fiscal 1997
from (20.0)% in fiscal 1996 as a result of controls on manufacturing costs and
design and production overhead. Gross profit as a percentage of net sales
decreased significantly to (20.0)% in fiscal 1996 from 11.8% in fiscal 1995 due
to a number of factors, including decreased sales volume, increased materials
costs and markdown of inventory as a result of poor sales and an excessive
inventory level.
 
    The Company had no COMMISSION INCOME in fiscal 1997. In fiscal 1996,
commission income decreased by $352,000 (91.9%) to $31,000 from $383,000 in
fiscal 1995, due to the discontinuation of commission transactions. Commission
income is generated from shipments of goods manufactured in the Orient to
domestic and overseas customers.
 
    The Company had no ROYALTY INCOME in fiscal 1997 or fiscal 1996. Royalty
income decreased by $9,000 to $51,000 in fiscal 1995.
 
    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") decreased to
$3,039,000 in fiscal 1997 from $6,039,000 in fiscal 1996, which represented
88.9% and 80.0% of net sales, respectively. (When commission and royalty income
is added to net sales, the percentage of SG&A is reduced to 88.9% and 79.6%,
respectively).
 
                                       9
<PAGE>
    The main factors reducing SG&A in fiscal 1997 were as follows:
 
     1) Payroll and payroll tax decreased to $1,804,000 in fiscal 1997 from
        $2,928,000 in fiscal 1996 due to a reduction in the number of employees.
 
     2) Rent and insurance expense decreased to $545,000 in fiscal 1997 from
        $1,099,000 in fiscal 1996 due to renegotiation of Company leases and a
        reduction in insurance rates and coverages.
 
     3) Advertising and travel expenses were reduced to $78,000 in fiscal 1997
        from $351,000 in fiscal 1996 in order to conserve working capital.
 
     4) Legal, accounting and professional fees decreased to $227,000 in fiscal
        1997 from $653,000 in fiscal 1996 primarily due to a reduction in
        trademark, legal, public relations and accounting fees.
 
    SG&A expenses decreased to $6,039,000 in fiscal 1996 from $7,972,000 in
fiscal 1995 primarily due to decreases in insurance, advertising, travel,
payroll, payroll tax and profit sharing expenses.
 
    INTEREST INCOME increased to $12,000 in fiscal 1997 from $1,000 in fiscal
1996, and decreased to $1,000 in fiscal 1996 from $3,000 in fiscal 1995.
 
    INTEREST EXPENSE decreased to $183,000 in fiscal 1997 from $284,000 in
fiscal 1996 due to reduced working capital requirements and borrowings from the
Company's factor. Interest expense increased to $284,000 in fiscal 1996 from
$255,000 in fiscal 1995 due to increased borrowings from the factor.
 
    INCOME TAXES in fiscal 1997 includes a valuation allowance of $5,845,000
which is equal to 100% of the net deferred tax asset. This valuation allowance
is considered appropriate since the Company cannot conclude that it is more
likely than not that the net deferred tax asset will be realized.
 
CAPITAL RESOURCES AND LIQUIDITY
 
    The Company entered into a factoring agreement with Republic Factors and a
letter of credit facility with Republic National Bank of New York on May 15,
1994 (the "financing bank") effective through March 31, 1998, and which are
renewable annually thereafter. The agreements are non-recourse (in other words,
the factor purchases the Company's accounts receivable that it has preapproved,
without recourse, except in cases where there are merchandise disputes in the
normal course of business).
 
    Under the factoring agreement, the Company sells substantially all of its
trade accounts receivable, without recourse, and may request advances on the net
sales factored at any time before their maturity date. The factor is responsible
for the accounting and collection of all accounts receivable sold to it by the
Company and receives a commission on purchased net receivables. Prior to June 5,
1997, the factor advanced up to 80% of the Company's net sales, for which the
factor received a commission of 0.75% of total invoices factored.
 
    On June 5, 1997, the Company and the factor amended the factoring agreement,
raising to 2.0% the commission payable to the factor, and also entered into a
supplemental security agreement whereby the factor was granted a security
interest in all of the Company's inventory and receivables (both factored and
unfactored). This security interest is evidenced by a financing statement which
was recorded pursuant to the California Uniform Commercial Code. The factor also
agreed, on June 5, 1997, to increase to 100% of the Company's net sales the
amount of the advances the Company may request from the factor.
 
    Under the letter of credit facility, the financing bank provides a credit
line for letters of credit, ledger debt and factor guaranties up to the amount
of the advance rate provided under the factoring agreement. There were no
letters of credit outstanding as of either March 31, 1997 or March 31, 1996.
 
    The agreements are collateralized by all of the Company's accounts
receivable and inventory. The Company or the factor may terminate the factoring
agreement on the anniversary date of the agreement with at least 60 days' prior
written notice.
 
                                       10
<PAGE>
    On June 4, 1996, as part of the Sale Transaction, Mr. Marciano, through an
affiliated company, agreed to advance to the Company $3,100,000 to pay off
liabilities associated with three $1,000,000 letters of credit issued on behalf
of the Company in favor of Republic Factors and to purchase certain assets
approximating $1,463,000 in value. Mr. Marciano also agreed to cancel debts owed
to him and his affiliates by the Company totaling $2,767,000 in exchange for a
payment of $250,000 on June 4, 1996 and a note payable of $250,000 due on
January 31, 1997. The principal amounts of both of the foregoing notes have been
paid by the Company.
 
    In June 1996, the Company entered into an agreement with Imperial Bank which
supplied the Company with a $1,200,000 credit facility secured by a standby
letter of credit provided by an unaffiliated third party. The referenced credit
facility will be paid off and extinguished upon negotiation of the letter of
credit by Imperial Bank. The Company and the unaffiliated third party are
currently negotiating the terms of a replacement obligation.
 
    As of March 31, 1997, the Company had a net working capital deficit of
$1,804,000, as compared to a deficit of $3,233,000 as of March 31, 1996. The
Company's current ratio was (0.3) as of both March 31, 1997, and March 31, 1996.
The increase in working capital is primarily due to the reduction in operating
losses in fiscal 1997. The factoring position had a positive balance of $49,000
as of March 31, 1997, as compared to a net overadvance of $3,232,000 as of March
31, 1996. This change in the factoring position is due to decreased borrowings
as a result of decreased working capital requirements.
 
    Inventories at March 31, 1997 were $644,000 as compared to $1,398,000 at
March 31, 1996, a decrease of $754,000. The decrease in inventory levels is
consistent with the reduced open order backlog.
 
    The Company filed for and received, on November 20, 1996, a federal income
tax refund of $971,000. On April 15, 1997, the Internal Revenue Service notified
the Company that it would audit the Company's net operating loss carryback claim
for fiscal 1996. The audit is still pending.
 
    The Company has funded its business activities principally from factor
advances, the referenced tax refund and the Imperial Bank credit facility. The
Company believes that the financial sources available to it will not provide
sufficient resources to finance the Company's currently anticipated working
capital needs and capital expenditures beyond the end of the summer of 1997. The
Company will require additional borrowings and infusions of capital to avoid a
negative impact on the Company's continued future operations after that time
period.
 
    The Company has continued to cut its payroll and reduce its operating costs.
Notwithstanding the foregoing measures, the Company anticipates that it will not
be profitable for the fiscal year ending March 31, 1998.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                                       11
<PAGE>
                     REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
 
Board of Directors
 
Yes Clothing Co.
 
    We have audited the accompanying balance sheet of Yes Clothing Co. as of
March 31, 1997 and the related statements of operations, changes in
shareholders' deficit and cash flows for the year then ended. We have also
audited the financial statement schedule for the year ended March 31, 1997,
listed under item 14. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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 financial statements referred to above present fairly,
in all material respects, the financial position of Yes Clothing Co. as of March
31, 1997, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles. In our
opinion, the schedule for the year ended March 31, 1997 presents fairly, in all
material respects, the information set forth therein.
 
    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred operating losses, has a deficit
of working capital and tangible net worth, and other adverse financial
indicators. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters also are
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
 
Grobstein, Horwath & Company LLP
 
GROBSTEIN, HORWATH & COMPANY LLP
 
Sherman Oaks, California
 
June 2, 1997 (except for Note 14
 
which is as of June 5, 1997)
 
                                       12
<PAGE>
                     REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
 
Board of Directors
 
Yes Clothing Co.
 
    We have audited the accompanying balance sheet of Yes Clothing Co. as of
March 31, 1996 and the related statements of operations, changes in
shareholders' equity and cash flows for the years ended March 31, 1996 and 1995.
We have also audited the financial statement schedule for the years ended March
31, 1996 and 1995, listed under item 14. These financial statements and schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and 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 audit provides a reasonable basis for our opinion.
 
    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Yes Clothing Co. as of March
31, 1996, and the results of its operations and its cash flows for the years
ended March 31, 1996 and 1995, in conformity with generally accepted accounting
principles. In our opinion, the schedule for the year ended March 31, 1996 and
1995 presents fairly, in all material respects, the information set forth
therein.
 
    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred operating losses, has a deficit
of working capital and tangible net worth, and other adverse financial
indicators. These conditions raise substantial doubt about its ability to
continue as a going concern. Management(9)s plans regarding those matters also
are described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
 
MOSS ADAMS LLP
 
Los Angeles, California
 
May 30, 1996 (except for Note 12,
 
as to which the date is June 4, 1996)
 
                                       13
<PAGE>
                                YES CLOTHING CO.
                                 BALANCE SHEETS
                            MARCH 31, 1997 AND 1996
 
<TABLE>
<CAPTION>
                                                                                         1997            1996
                                                                                    --------------  --------------
<S>                                                                                 <C>             <C>
                                                      ASSETS
CURRENT ASSETS
  Cash............................................................................  $       80,000  $      103,000
  Due from factor                                                                           49,000        --
  Accounts receivable, non-factored--net..........................................           1,000           1,000
  Due from officers                                                                          4,000        --
  Other receivables...............................................................           7,000           2,000
  Inventories.....................................................................         644,000       1,398,000
  Prepaid expenses................................................................          34,000          94,000
                                                                                    --------------  --------------
Total Current Assets..............................................................         819,000       1,598,000
PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation and
  amortization....................................................................         447,000         978,000
DUE FROM OFFICERS, net of current portion                                                  120,000        --
OTHER ASSETS......................................................................          73,000          76,000
                                                                                    --------------  --------------
TOTAL ASSETS......................................................................  $    1,459,000  $    2,652,000
                                                                                    --------------  --------------
                                                                                    --------------  --------------
 
                                      LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
  Due to factor...................................................................  $     --        $    3,232,000
  Note payable to bank............................................................       1,175,000        --
  Accounts payable................................................................         954,000         881,000
  Accrued expenses................................................................         345,000         292,000
  Contracts payable...............................................................          84,000          57,000
  Due to related party............................................................          65,000         369,000
                                                                                    --------------  --------------
Total Current Liabilities.........................................................       2,623,000       4,831,000
                                                                                    --------------  --------------
CONTRACTS PAYABLE, net of current portion.........................................          26,000          61,000
                                                                                    --------------  --------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT
  Preferred stock, no par; 2,000,000 shares authorized;
    no shares issued..............................................................        --              --
  Common stock, no par; 20,000,000 shares authorized;
    7,036,000 shares issued and outstanding.......................................      11,308,000       8,573,000
  Accumulated deficit.............................................................     (12,498,000)    (10,813,000)
                                                                                    --------------  --------------
Total Shareholders' Deficit.......................................................      (1,190,000)     (2,240,000)
                                                                                    --------------  --------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT.......................................  $    1,459,000  $    2,652,000
                                                                                    --------------  --------------
                                                                                    --------------  --------------
</TABLE>
 
See accompanying reports of certified public accountants and notes to financial
                                  statements.
 
                                       14
<PAGE>
                                YES CLOTHING CO.
                            STATEMENTS OF OPERATIONS
                   YEARS ENDED MARCH 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                           1997           1996           1995
                                                                       -------------  -------------  -------------
<S>                                                                    <C>            <C>            <C>
NET SALES............................................................  $   3,416,000  $   7,551,000  $  28,580,000
COST OF SALES........................................................      2,945,000      9,070,000     25,210,000
                                                                       -------------  -------------  -------------
  Gross profit (loss)................................................        471,000     (1,519,000)     3,370,000
COMMISSION INCOME....................................................       --               31,000        383,000
ROYALTY INCOME.......................................................       --             --               51,000
                                                                       -------------  -------------  -------------
  Operating income (loss)............................................        471,000     (1,488,000)     3,804,000
                                                                       -------------  -------------  -------------
OPERATING EXPENSES
  Selling............................................................        655,000      1,894,000      3,345,000
  General and administrative.........................................      2,384,000      4,145,000      4,627,000
                                                                       -------------  -------------  -------------
                                                                           3,039,000      6,039,000      7,972,000
                                                                       -------------  -------------  -------------
  Loss from operations...............................................     (2,568,000)    (7,527,000)    (4,168,000)
                                                                       -------------  -------------  -------------
OTHER INCOME (EXPENSE)
  Interest expense...................................................       (183,000)      (285,000)      (258,000)
  Interest income....................................................         12,000          1,000          3,000
  License acquisition................................................       --             --             (295,000)
  Gain on sale of assets.............................................         54,000       --             --
  Other..............................................................         29,000        (24,000)        66,000
                                                                       -------------  -------------  -------------
                                                                             (88,000)      (308,000)      (484,000)
                                                                       -------------  -------------  -------------
LOSS BEFORE INCOME TAXES.............................................     (2,656,000)    (7,835,000)    (4,652,000)
INCOME TAX BENEFIT...................................................        971,000       --             --
                                                                       -------------  -------------  -------------
NET LOSS.............................................................  $  (1,685,000) $  (7,835,000) $  (4,652,000)
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
NET LOSS PER SHARE...................................................  $        (.24) $       (1.28) $       (1.22)
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING........................      7,036,000      6,144,000      3,821,000
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
</TABLE>
 
See accompanying reports of certified public accountants and notes to financial
                                   statments.
 
                                       15
<PAGE>
                                YES CLOTHING CO.
 
                 STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
 
                   YEARS ENDED MARCH 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                              COMMON STOCK            RETAINED
                                                        -------------------------     EARNINGS
                                                          SHARES       AMOUNT        (DEFICIT)         TOTAL
                                                        ----------  -------------  --------------  -------------
<S>                                                     <C>         <C>            <C>             <C>
 
BALANCE, March 31, 1994...............................   3,821,000  $   4,598,000  $    1,674,000  $   6,272,000
 
  Repurchase of stock options.........................      --           (330,000)       --             (330,000)
 
  Capital contribution................................      --            245,000        --              245,000
 
  Net loss............................................      --           --            (4,652,000)    (4,652,000)
                                                        ----------  -------------  --------------  -------------
 
BALANCE, March 31, 1995...............................   3,821,000      4,513,000      (2,978,000)     1,535,000
 
  Exercise of stock options...........................      30,000         80,000        --               80,000
 
  Capital contribution................................   3,185,000      3,980,000        --            3,980,000
 
  Net loss............................................      --           --            (7,835,000)    (7,835,000)
                                                        ----------  -------------  --------------  -------------
 
BALANCE, March 31, 1996...............................   7,036,000      8,573,000     (10,813,000)    (2,240,000)
 
  Capital contribution................................      --          2,735,000        --            2,735,000
 
  Net loss............................................      --           --            (1,685,000)    (1,685,000)
                                                        ----------  -------------  --------------  -------------
 
BALANCE, March 31, 1997...............................   7,036,000  $  11,308,000  $  (12,498,000) $  (1,190,000)
                                                        ----------  -------------  --------------  -------------
                                                        ----------  -------------  --------------  -------------
</TABLE>
 
See accompanying reports of certified public accountants and notes to financial
                                  statements.
 
                                       16
<PAGE>
                                YES CLOTHING CO.
 
                            STATEMENTS OF CASH FLOWS
 
                         MARCH 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                           1997           1996           1995
                                                                       -------------  -------------  -------------
<S>                                                                    <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss...........................................................  $  (1,685,000) $  (7,835,000) $  (4,652,000)
  Reconciliation of net loss to net cash
    flows used in operating activities:
    Depreciation and amortization....................................        329,000        504,000        341,000
    Increase (decrease) in credits due customers
      and allowance for doubtful accounts............................       (219,000)      (258,000)       364,000
    Gain on sale of property and equipment...........................        (54,000)      --             --
    Increase (decrease) in cash due to changes
      in operating assets and liabilities:
      Due from factor................................................       (150,000)     3,748,000       (887,000)
      Accounts receivable............................................         46,000        339,000         77,000
      Other receivables..............................................         (5,000)       147,000        413,000
      Inventories....................................................        754,000        761,000      1,055,000
      Prepaid expenses...............................................         61,000        (11,000)        23,000
      Accounts payable...............................................         73,000     (1,264,000)      (161,000)
      Accrued expenses...............................................         53,000         49,000        (41,000)
                                                                       -------------  -------------  -------------
 
NET CASH USED IN OPERATING ACTIVITIES................................       (797,000)    (3,820,000)    (3,468,000)
                                                                       -------------  -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Due from officers..................................................       (124,000)      --             --
  Proceeds from sale of property and equipment.......................        317,000       --             --
  Purchases of property and equipment................................        (62,000)      (441,000)      (276,000)
  Decrease in other assets...........................................          3,000          1,000         10,000
                                                                       -------------  -------------  -------------
 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES..................        134,000       (440,000)      (266,000)
                                                                       -------------  -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Advances from factor, net..........................................     (2,958,000)       291,000      3,116,000
  Note payable to bank...............................................      1,175,000       --             --
  Payments on contracts payable......................................         (8,000)       (52,000)       (47,000)
  Borrowing (repayment) from/to related party........................       (304,000)      (168,000)       538,000
  Contribution to capital............................................      2,735,000      3,980,000        245,000
  Exercise (repurchase) of stock options.............................       --               80,000       (330,000)
                                                                       -------------  -------------  -------------
 
NET CASH PROVIDED BY FINANCING ACTIVITIES............................        640,000      4,131,000      3,522,000
                                                                       -------------  -------------  -------------
 
NET DECREASE IN CASH.................................................        (23,000)      (129,000)      (212,000)
CASH BALANCE
  Beginning of year..................................................        103,000        232,000        444,000
                                                                       -------------  -------------  -------------
  End of year........................................................  $      80,000  $     103,000  $     232,000
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid for:
    Interest.........................................................  $     183,000  $     284,000  $     255,000
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
    Income taxes.....................................................  $    --        $    --        $    --
                                                                       -------------  -------------  -------------
                                                                       -------------  -------------  -------------
</TABLE>
 
    See accompanying reports of certified public accountants and notes to
financial statements.
 
                                       17
<PAGE>
                                YES CLOTHING CO.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                            MARCH 31, 1997 AND 1996
 
NOTE 1--ORGANIZATION AND FINANCIAL CONDITION
 
    ORGANIZATION--Yes Clothing Co. (the "Company") was incorporated on July 1,
1982, in the State of California. The Company designs, manufactures and markets
a diversified line of apparel primarily for women and young men. The Company
sells its garments throughout the United States and Canada to retail department
stores, specialty chains and specialty stores.
 
    The Company also arranged for the manufacture, in the Orient, of certain of
its styles, which are shipped directly from the manufacturer to customers in the
United States, Europe and Japan. The Company received a percentage of the sales
price charged by the manufacturer and recognized this amount as commission
income in the accompanying statements of operations. Subsequent to the
acquisition transaction described below, the Company discontinued these
commission transactions.
 
    In January 1995, control of the Company changed when its two principal
shareholders sold all of their shares, amounting to approximately 80% of the
Company's outstanding stock, to affiliates of an individual. This transaction is
herein referred to as the "Acquisition Transaction" and the collective new
majority interest as the "Principal Shareholder." At the date of the
"Acquisition Transaction," the principal shareholder held approximately 88% of
the Company's outstanding stock.
 
    In June 1996, the Company's principal shareholder sold approximately 50% of
the Company's outstanding shares to an individual who has assumed the position
of Chairman and Chief Executive Officer of the Company. This transaction is
herein referred to as the "Sale Transaction," and is discussed in Note 12.
 
    FINANCIAL CONDITION--The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles, which
contemplates continuation of the Company as a going concern. The Company has
experienced operating and net losses each year since 1992. The operating results
for the three months ended June 30, 1997 are anticipated to reflect continued
net losses.
 
    Under new management, the Company has made significant reductions in payroll
and operating expenses while increasing its gross margin. The Company has the
following plans to return to profitability and continue as a going concern:
 
    - Actively seek additional equity funding.
 
    - Increase sales by focusing the Company's marketing on the "YES" brand
      label.
 
    - Increase gross margin through the use of controls on manufacturing costs
      and design and production overhead.
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    INVENTORIES--Inventories are stated at the lower of cost (first-in,
first-out basis) or market.
 
    DEPRECIATION AND AMORTIZATION--Depreciation and amortization of property and
equipment are provided principally by the straight-line method over the
following estimated useful lives:
 
<TABLE>
<S>                                                             <C>
Furniture and fixtures........................................      5 years
Machinery and equipment.......................................     10 years
                                                                    Life of
Leasehold improvements........................................        lease
</TABLE>
 
                                       18
<PAGE>
                                YES CLOTHING CO.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                            MARCH 31, 1997 AND 1996
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    Based upon management's assessment, the carrying values of property and
equipment at March 31, 1997 was not impaired.
 
    INCOME TAXES--Income taxes are accounted for using an asset and liability
approach. Deferred income taxes are provided for temporary differences between
the financial reporting basis and the tax basis of the Company's assets and
liabilities. Income taxes are further explained in Note 11.
 
    LOSS PER SHARE--Loss per share is based on the weighted average number of
shares of common stock outstanding during each period. Stock options have not
been considered in the loss per share calculations since the effect would be
antidilutive.
 
    The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share." This
standard will become effective for the quarter ending December 31, 1997, with
earlier application not permitted. Management believes the effect of the new
accounting standard will not be significant.
 
    STATEMENT OF CASH FLOWS--For purposes of cash flows, the Company considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
 
    FINANCIAL INSTRUMENTS AND RISK CONCENTRATION--Financial instruments include
cash, receivables and debt instruments. The Company considers the carrying
amounts in the financial statements to approximate fair value for these
financial instruments and their expected realization.
 
    Financial instruments which potentially subject the Company to
concentrations of credit risk consist of accounts receivable. Concentrations of
credit risk with respect to receivables are limited due to the use of a factor.
 
    USE OF ESTIMATES--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
 
    STOCK-BASED COMPENSATION--The Financial Accounting Standards Board has
recently issued Statement of Financial Accounting Standards No. 123 (SFAS 123),
Accounting for Stock-Based Compensation. This standard is effective for the year
ended March 31, 1997. Under SFAS 123, a fair value method is used to determine
compensation cost for stock options or similar equity instruments. Compensation
is measured at the grant date and is recognized over the service or vesting
period. Under the prior accounting standard, compensation cost is the excess, if
any, of the quoted market price of the stock at the measurement date over the
amount that must be paid to acquire the stock.
 
    The new standard allows the Company to continue to account for stock-based
compensation under the prior standard, with disclosure of the effects of the new
standard, or adopt a fair value based method of accounting. The Company has
determined to continue to account for stock-based compensation under the prior
standard, as management believes the effect of the new accounting standard will
not be significant.
 
NOTE 3--TRANSACTIONS WITH FACTOR AND BANK BORROWINGS (ALSO SEE NOTE 14)
 
    The Company has an agreement with a factor through March 1998. Under the
factoring agreement, the Company sells substantially all of its trade accounts
receivable, without recourse, and may request
 
                                       19
<PAGE>
                                YES CLOTHING CO.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                            MARCH 31, 1997 AND 1996
 
NOTE 3--TRANSACTIONS WITH FACTOR AND BANK BORROWINGS (ALSO SEE NOTE 14)
(CONTINUED)
advances, up to 80%, on the net sales factored at any time before their maturity
date. The factor charges a commission on the net sales factored and interest on
advances at prime plus a negotiated rate. The agreement is collateralized by
accounts receivable and inventory imported under letters of credit. Included in
accounts payable at March 31, 1997 is $95,000 due to the factor for raw
materials purchases. There are no outstanding open letters of credit at March
31, 1997.
 
    Due to/from factor consists of the following:
 
<TABLE>
<CAPTION>
                                                                       1997          1996
                                                                    -----------  -------------
<S>                                                                 <C>          <C>
Unmatured receivables
  Without recourse................................................  $   759,000  $     561,000
  With recourse...................................................       51,000         99,000
                                                                    -----------  -------------
                                                                        810,000        660,000
Advances..........................................................     (448,000)    (3,406,000)
Open credits......................................................     (313,000)      (486,000)
                                                                    -----------  -------------
                                                                    $    49,000  $  (3,232,000)
                                                                    -----------  -------------
                                                                    -----------  -------------
</TABLE>
 
    During the year ended March 31, 1997, the maximum amount of factor advances
outstanding was approximately $3,488,000. The average advances based upon
month-end balances was approximately $659,000. The average cost of borrowing,
which includes factoring commissions and interest, was approximately 10.2%
during 1997.
 
    The Company also has a credit facility with a bank, consisting of a
$1,200,000 note payable secured by a standby letter of credit provided by RSH
Marketing, a major customer. This note bears interest at the prime rate plus
1.5% per annum (10% at March 31, 1997), and is due in June 1997 (see Note 14).
 
NOTE 4--DUE FROM OFFICERS
 
    Due from officers consists of the following:
 
<TABLE>
<S>                                                                 <C>
Unsecured note receivable bearing interest at 8% per annum, unpaid
  principal due in June 2001......................................  $  98,000
Unsecured note receivable bearing interest at 8% per annum, with
  monthly principal and interest payments of $500 through July
  2002............................................................     26,000
                                                                    ---------
                                                                    $ 124,000
                                                                    ---------
                                                                    ---------
</TABLE>
 
NOTE 5--INVENTORIES
 
<TABLE>
<CAPTION>
                                                                         1997         1996
                                                                      ----------  ------------
<S>                                                                   <C>         <C>
Raw materials.......................................................  $  176,000  $    401,000
Work-in-progress....................................................     277,000        82,000
Finished goods......................................................     191,000       915,000
                                                                      ----------  ------------
                                                                      $  644,000  $  1,398,000
                                                                      ----------  ------------
                                                                      ----------  ------------
</TABLE>
 
                                       20
<PAGE>
                                YES CLOTHING CO.
 
                         NOTES TO FINANCIAL STATEMENTS
 
NOTE 6--PROPERTY AND EQUIPMENT
 
<TABLE>
<CAPTION>
                                                                      1997           1996
                                                                  -------------  -------------
<S>                                                               <C>            <C>
Furniture and fixtures..........................................  $     207,000  $     427,000
Machinery and equipment.........................................      1,364,000      1,400,000
Leasehold improvements..........................................        950,000        950,000
                                                                  -------------  -------------
                                                                      2,521,000      2,777,000
Less accumulated depreciation and amortization..................     (2,074,000)    (1,799,000)
                                                                  -------------  -------------
                                                                  $     447,000  $     978,000
                                                                  -------------  -------------
                                                                  -------------  -------------
</TABLE>
 
NOTE 7--CONTRACTS PAYABLE
 
    The Company has acquired equipment under capital leases and purchase
contracts which expire on various dates through August 2000. The remaining
obligations under these capital leases and purchase contracts for future years
ended March 31 are as follows:
 
<TABLE>
<S>                                                                 <C>
1998..............................................................  $  87,000
1999..............................................................     16,000
2000..............................................................     10,000
2001..............................................................      3,000
                                                                    ---------
                                                                      116,000
Amount representing interest......................................     (6,000)
                                                                    ---------
Present value of minimum lease payments...........................    110,000
 
Less current portion..............................................    (84,000)
                                                                    ---------
Long-term portion.................................................  $  26,000
                                                                    ---------
                                                                    ---------
</TABLE>
 
    Equipment under capital leases and related accumulated depreciation as of
March 31, 1997 amounts to $279,000 and $171,000, respectively.
 
NOTE 8--DUE TO RELATED PARTY
 
    A $369,000 unsecured note payable to the principal shareholder bears
interest at the lesser of 8% or the prime rate of interest less 1%. This note
was terminated in connection with the Sale Transaction described in Note 12. A
new note was created in the amount of $500,000 bearing interest at 8% per annum.
The interest rate increased to 10% per annum as the note was not paid by its
maturity date of January 31, 1997. The $65,000 balance as of March 31, 1997 was
paid in April 1997.
 
NOTE 9--MAJOR CUSTOMERS
 
    Customers comprising 10% or greater of the Company's net sales are
summarized as follows:
 
<TABLE>
<CAPTION>
                                                                            1997       1996       1995
                                                                          ---------  ---------  ---------
<S>                                                                       <C>        <C>        <C>
GO USA Streetware, Inc..................................................         29%       4.1%    --
RSH Marketing...........................................................         22%    --         --
</TABLE>
 
                                       21
<PAGE>
                                YES CLOTHING CO.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 10--COMMITMENTS AND CONTINGENCIES
 
    The Company leases its office, warehouse and showrooms under various
operating leases expiring through November 2001. The Company subleases a portion
of its warehouse facilities on a month to month basis through the term of the
Company's lease. Minimum payments under noncancelable operating leases for
future years ending March 31 are as follows:
 
<TABLE>
<S>                                                                 <C>
1998..............................................................  $ 129,000
1999..............................................................     53,000
2000..............................................................     41,000
2001..............................................................     14,000
2002..............................................................     10,000
                                                                    ---------
                                                                    $ 247,000
                                                                    ---------
                                                                    ---------
</TABLE>
 
    Rent expense for the years ended March 31, 1997, 1996 and 1995 was
approximately $364,000 (net of $66,000 sublease income), $656,000 (net of
$96,000 of sublease income), and $609,000, respectively.
 
    During the year ended March 31, 1997, the Company entered into several
royalty agreements with apparel companies for the use of their brand names.
Royalty rates range from 3% - 9% of net sales with one agreement requiring a
minimum monthly royalty payment of $30,000. Subsequent to March 31, 1997, the
agreement requiring the minimum monthly royalty payment was terminated. Based on
the termination agreement, the Company is committed to pay a minimum royalty
payment of $30,000 for each of the four months ending July 31, 1997.
 
    The Company has been named as a defendant in lawsuits incident to the
ordinary course of business. Management believes that the probable outcome of
these contingencies will not have a material effect on the Company's financial
position or results of operations.
 
NOTE 11--INCOME TAXES
 
    Income taxes are summarized as follows:
 
<TABLE>
<CAPTION>
                                                            1997         1996         1995
                                                         -----------  -----------  -----------
<S>                                                      <C>          <C>          <C>
Currently payable
  Federal benefit (Note 14)............................  $  (971,000) $   --       $   --
  State................................................      --           --           --
                                                         -----------  -----------  -----------
                                                            (971,000)     --           --
                                                         -----------  -----------  -----------
Deferred
  Federal..............................................      --           --           --
                                                         -----------  -----------  -----------
                                                         $  (971,000) $   --       $   --
                                                         -----------  -----------  -----------
                                                         -----------  -----------  -----------
</TABLE>
 
    The primary difference between the income tax benefit or expense computed at
the U.S. statutory corporate income tax rate and the effective income tax rate
is due to the limitations on the utilization of net operating losses and the
valuation allowance established due to the uncertainty of realization of a
future tax benefit.
 
                                       22
<PAGE>
                                YES CLOTHING CO.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 11--INCOME TAXES (CONTINUED)
    Deferred income taxes arise from temporary differences between financial and
tax reporting. The effects of these differences on income taxes are as follows:
 
<TABLE>
<CAPTION>
                                                        1997          1996           1995
                                                     -----------  -------------  -------------
<S>                                                  <C>          <C>            <C>
Tax effect of net operating losses.................  $   375,000  $  (3,366,000) $  (1,857,000)
Inventory basis....................................       77,000        (29,000)        32,000
Valuation and other reserves.......................       96,000        104,000       (146,000)
Other, net.........................................      (16,000)        23,000        (14,000)
Valuation allowance................................     (532,000)     3,268,000      1,985,000
                                                     -----------  -------------  -------------
Provision for deferred income taxes................  $   --       $    --        $    --
                                                     -----------  -------------  -------------
                                                     -----------  -------------  -------------
</TABLE>
 
    At March 31, 1997 and 1996, deferred tax assets and liabilities consist of
the following elements:
 
<TABLE>
<CAPTION>
                                                                      1997           1996
                                                                  -------------  -------------
<S>                                                               <C>            <C>
Gross deferred assets
  Reserve for chargebacks.......................................  $     117,000  $     194,000
  Provision for doubtful accounts...............................         16,000         35,000
  Inventory basis...............................................         17,000         94,000
  Accrued expenses..............................................         11,000         12,000
  Tax effect of net operating losses............................      5,715,000      6,090,000
                                                                  -------------  -------------
    Gross deferred asset........................................      5,876,000      6,425,000
                                                                  -------------  -------------
Deferred liability
  Accumulated depreciation......................................        (31,000)       (48,000)
                                                                  -------------  -------------
Net deferred asset before valuation allowance...................      5,845,000      6,377,000
Valuation allowance.............................................     (5,845,000)    (6,377,000)
                                                                  -------------  -------------
                                                                  $    --        $    --
                                                                  -------------  -------------
                                                                  -------------  -------------
</TABLE>
 
                                       23
<PAGE>
                                YES CLOTHING CO.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 11--INCOME TAXES (CONTINUED)
 
    The Federal and state net operating loss carryforwards of approximately
$14,510,000 and $14,369,000, respectively, expire during the years 2007 through
2011. Because ownership of the Company changed control during 1996, utilization
of a substantial portion of the net operating loss carryforwards may be limited.
 
NOTE 12--SHAREHOLDERS' EQUITY
 
    STOCK OPTION PLAN--The Company has a stock option plan (the "Plan") for key
employees, directors, officers and consultants of the Company. The Plan provides
for the issuance of up to 1,000,000 shares of common stock. Outstanding options
are exercisable for a period of up to ten years and one week from the date of
grant. The weighted-average remaining contractual life of options outstanding
and exercisable as of March 31, 1997 was 9.84 years. Activity under this plan
for 1995 through 1997 is as follows:
 
<TABLE>
<CAPTION>
                                                                                    RANGE OF
                                                                                    EXERCISE     WEIGHTED-AVERAGE
                                                                       SHARES        PRICES       EXERCISE PRICE
                                                                     ----------  --------------  -----------------
<S>                                                                  <C>         <C>             <C>
Outstanding and exercisable, March 31, 1994........................     370,000  $ 1.88 - $8.75      $    2.84
  Granted..........................................................      15,000            6.00           6.00
  Repurchased and canceled.........................................    (260,000)   2.00 -  8.75           2.81
                                                                     ----------  --------------
Outstanding and exercisable, March 31, 1995........................     125,000    1.88 -  6.00           3.11
  Granted..........................................................      80,000    2.13 -  3.38           2.28
  Exercised........................................................     (30,000)   1.88 -  3.00           2.63
  Repurchased and canceled.........................................    (145,000)   2.13 -  6.00           2.87
                                                                     ----------  --------------
Outstanding and exercisable, March 31, 1996........................      30,000    2.13 -  3.38           2.60
  Granted..........................................................     610,000            0.07           0.07
  Expired..........................................................     (20,000)           2.13           2.13
                                                                     ----------  --------------
Outstanding and exercisable, March 31, 1997........................     620,000  $ 0.07 - $3.38           0.12
                                                                     ----------  --------------
                                                                     ----------  --------------
</TABLE>
 
    The Company has not presented the pro forma impact on net loss and net loss
per share for each of the years in the three year period ended March 31, 1997,
as if the fair value of the stock options granted were measured under SFAS 123,
as substantially all of the options granted in prior years have been
repurchased, canceled or expired. In addition, options granted during the year
ended March 31, 1997 have a nominal value and are subject to significant
uncertainty due to the Company's current financial condition.
 
    REPURCHASE OF STOCK OPTIONS--In conjunction with the change of principal
ownership in February 1995, the Company repurchased various stock options for a
total of $330,000. Funds for this transaction were provided by the principal
shareholder.
 
    REPURCHASE OF LICENSE AGREEMENTS--In connection with the change in principal
ownership in 1995, the Company reacquired certain licenses for a total of
$295,000. This amount is reflected as an "other expense" in the statement of
operations.
 
    SIGNIFICANT CAPITAL TRANSACTION--Effective June 4, 1996, the Company's
principal shareholder sold approximately 50% of the Company's outstanding shares
in a private transaction. Concurrent with this transaction, a Company affiliated
through substantially common ownership advanced $3,100,000 to the Company, which
was used to pay off liabilities associated with three $1,000,000 letters of
credit and related
 
                                       24
<PAGE>
                                YES CLOTHING CO.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 12--SHAREHOLDERS' EQUITY (CONTINUED)
party debt. In addition, the affiliate purchased certain inventory and equipment
from the Company for $1,463,000. The excess of the affiliate's purchase price
over the asset's net book value of $421,000 was treated as a contribution to
capital.
 
    The affiliate which advanced the funds agreed to forgive payment on all but
$500,000 (including $369,000 which was owed as of March 31, 1996), which was
subsequently repaid in two installments of $250,000 each. The balance of the
advances of approximately $2,314,000 was treated as a contribution to capital.
 
    The selling shareholder returned to the Company for cancellation options to
purchase 2,000,000 shares of common stock and warrants to purchase 2,000,000
shares of common stock of the Company. In addition, the Company surrendered its
right and licenses to use certain trademarks and names associated with the
selling shareholder and the affiliated company.
 
    CAPITAL STRUCTURE--The Financial Accounting Standards Board has recently
issued Statement of Financial Accounting Standards No. 129 (SFAS 129),
"Disclosure of Information about Capital Structure." This standard will become
effective for the quarter ending December 31, 1997. Management believes the
effect of the new disclosure standard will not be significant, as the Company is
already required to provide such disclosures.
 
NOTE 13--OTHER RELATED PARTY TRANSACTIONS
 
    A law firm in which one member of the Board of Directors is a partner, was
paid $93,000 for legal services for the year ended March 31, 1995. This Board
member resigned effective May 16, 1995.
 
    One former member of the Board of Directors served as a consultant to the
Company and was paid $6,000 for the year ended March 31, 1995.
 
NOTE 14--SUBSEQUENT EVENTS
 
    The standby letter of credit provided by RSH Marketing will be drawn upon to
repay the Company's note payable to bank. The Company and RSH Marketing are
currently negotiating the terms of the replacement obligation.
 
    On April 15, 1997, the Company was notified by the Internal Revenue Service
that it will be auditing the Company's net operating loss carryback claim.
 
    On June 5, 1997, the Company and its factor amended the terms of the
factoring agreement by increasing the advance rate to 100% of net sales
factored. The Company has also granted the factor a security interest in all of
the Company's inventories and receivables (both factored and unfactored).
 
                                       25
<PAGE>
                                YES CLOTHING CO.
 
                       VALUATION AND QUALIFYING ACCOUNTS
 
                   YEARS ENDED MARCH 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                             BALANCE AT  CHARGED TO
                                                             BEGINNING    COSTS AND    ADDITIONS     BALANCE AT
                                                             OF PERIOD    EXPENSES    (DEDUCTIONS)  END OF PERIOD
                                                             ----------  -----------  ------------  -------------
<S>                                                          <C>         <C>          <C>           <C>
Year ended March 31, 1997:
  Allowance for doubtful accounts on nonfactored accounts
    receivable.............................................  $   87,000  $   (46,000)  $   --        $    41,000
                                                             ----------  -----------  ------------  -------------
                                                             ----------  -----------  ------------  -------------
  Reserve for estimated returns, allowances and discounts
    on factored accounts...................................  $  486,000  $   --        $ (173,000)(a)  $   313,000
                                                             ----------  -----------  ------------  -------------
                                                             ----------  -----------  ------------  -------------
 
Year ended March 31, 1996:
  Allowance for doubtful accounts on nonfactored accounts
    receivable.............................................  $  216,000  $   (90,000)  $  (39,000)(a)  $    87,000
                                                             ----------  -----------  ------------  -------------
                                                             ----------  -----------  ------------  -------------
  Reserve for estimated returns, allowances and discounts
    on factored accounts...................................  $  615,000  $  (129,000)  $   --        $   486,000
                                                             ----------  -----------  ------------  -------------
                                                             ----------  -----------  ------------  -------------
 
Year ended March 31, 1995:
  Allowance for doubtful accounts on nonfactored accounts
    receivable.............................................  $  221,000  $   158,000   $ (163,000)(a)  $   216,000
                                                             ----------  -----------  ------------  -------------
                                                             ----------  -----------  ------------  -------------
  Reserve for estimated returns, allowances and discounts
    on factored accounts...................................  $  247,000  $   368,000   $   --        $   615,000
                                                             ----------  -----------  ------------  -------------
                                                             ----------  -----------  ------------  -------------
</TABLE>
 
------------------------
 
(a) Represents net writeoffs of uncollectible accounts against the allowance.
 
                                       26
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
 
    The Company filed a report on Form 8K on December 23, 1996 reporting a
change in its independent accounting firm.
 
    There are no disagreements with respect to accounting or financial
disclosure between the Company and either its predecessor or current accounting
firms.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Information required by this item is hereby incorporated by reference to the
Company's proxy statement to be filed pursuant to Regulation 14A which involves
the election of Directors.
 
ITEM 11.  EXECUTIVE COMPENSATION
 
    Information required by this item is hereby incorporated by reference to the
Company's proxy statement to be filed pursuant to Regulation 14A which involves
the election of Directors.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    Information required by this item is hereby incorporated by reference to the
Company's proxy statement to be filed pursuant to Regulation 14A which involves
the election of Directors.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    Information required by this item is hereby incorporated by reference to the
Company's proxy statement to be filed pursuant to Regulation 14A which involves
the election of Directors.
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
FINANCIAL STATEMENTS AND SCHEDULES
 
    The following financial statements of YES Clothing Co.-Registered Trademark-
are included in Item 8:
 
    Balance sheets
    Statements of operations
    Statements of changes in shareholders' equity
    Statements of cash flows
    Notes to financial statements
 
    Financial Statement Schedule:
 
      II--Valuation and qualifying accounts
 
EXHIBITS
 
    See index to exhibits.
 
REPORTS ON FORM 8-K
 
    The Company filed a report on Form 8K on June 18, 1996 with respect to the
June 4, 1996 transaction between Marciano, the Company and Anthome. The Company
also filed a report on Form 8K on December 23, 1996 with respect to a change in
its independent accounting firm.
 
                                       27
<PAGE>
                              REPORT OF MANAGEMENT
 
    The accompanying financial statements have been prepared by management in
conformity with generally accepted accounting principles, and necessarily
include some amounts that are based on management's best estimates and
judgments.
 
    YES Clothing Co.-Registered Trademark- maintains a system of internal
accounting controls designed to provide management with reasonable assurance
that assets are safeguarded against loss from unauthorized use or disposition,
and that transactions are executed in accordance with management's authorization
and recorded properly. The concept of reasonable assurance is based on the
recognition that the cost of a system of internal control should not exceed the
benefits derived and that the evaluation of those factors requires estimates and
judgments by management. Further, because of inherent limitations in any system
of internal accounting control, errors or irregularities may occur and not be
detected. Nevertheless, management believes that a high level of internal
control is maintained by YES Clothing Co.-Registered Trademark- through the
selection and training of qualified personnel, and the establishment and
communication of accounting and business policies.
 
<TABLE>
<S>                                 <C>
         /s/ GUY ANTHOME                   /s/ JEFFREY P. BUSSE
---------------------------------   ---------------------------------
           GUY ANTHOME                       JEFFREY P. BUSSE
             CHAIRMAN                    CHIEF FINANCIAL OFFICER
     CHIEF EXECUTIVE OFFICER
            PRESIDENT
</TABLE>
 
                                       28
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
 
                                YES CLOTHING CO.
 
                                By:               /s/ GUY ANTHOME
                                     -----------------------------------------
                                                    Guy Anthome
                                             CHAIRMAN OF THE BOARD AND
                                              CHIEF EXECUTIVE OFFICER
 
June 30, 1997
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
 
       /s/ GUY ANTHOME
------------------------------  Chairman of the Board
         Guy Anthome              Chief Executive Officer      June 30, 1997
 PRINCIPAL EXECUTIVE OFFICER      President and Director
 
     /s/ JEFFREY P. BUSSE
------------------------------
       Jeffrey P. Busse         Chief Financial Officer        June 30, 1997
   PRINCIPAL FINANCIAL AND        and Director
      ACCOUNTING OFFICER
 
   /s/ KRISTINA ALTAMIRANO
------------------------------  Director                       June 30, 1997
     Kristina Altamirano
 
                                       29
<PAGE>
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
                                                                                                             PAGES
                                                                                                         SEQUENTIALLY
 ITEM NO.    DESCRIPTION                                                                                   NUMBERED
-----------  ------------------------------------------------------------------------------------------  -------------
<C>          <S>                                                                                         <C>
      3.1    Restated Articles of Incorporation of the Company(1)
      3.2    Restated Bylaws of the Company(1)
      4.1    Specimen Common Stock Certificate(1)
     10.1    1989 Stock Option Plan with forms of stock option agreements thereunder(1)*
     10.2    Profit Sharing Plan dated March 22, 1995*(5)
     10.3    Consultant Agreement dated as of April 21, 1989 between the Company and Alexander Menke
               (1)*
     10.4    Employment Agreement dated as of November 1, 1990 between the Company and Daniel V.
               Goodstein(2)*
     10.5    Form of Indemnification Agreement entered into with the Company's Directors and Executive
               Officers(1)
     10.6    Sublease dated May 3, 1989 between the Company and D.G.P. Limited Partnership(1)
     10.7    Lease dated August 15, 1991 between the Company and California Mart(4)
     10.8    Lease dated February 14, 1992 between the Company and Jody Apparel, Inc.(3)
     10.9    Lease dated November 4, 1992 between the Company and California Mart(4)
     10.10   Lease dated May 10, 1993 between the Company and 1466 Broadway Associates(4)
     10.11   Lease dated September 17, 1990 between the Company and Gettinger Associates, as renewed
               pursuant to a letter dated September 22, 1993 from Gettinger Associates to the
               Company(5)
     10.12   Contract for the purchase of assets, including the Sedan trademark, between the Company
               and Camden Place, Ltd. dated March 9, 1992(4)
     10.13   Factoring Agreement dated May 15, 1994 between the Company and Republic Factors Corp., and
               related agreements(5)
     10.14   Form of Continuing Indemnity and Security Agreement between the Company and Republic Bank
               California N.A., and related agreements(5)
     10.15   Promissory Note dated March 9, 1995 between the Company and Georges Marciano(6)
     10.16   Lease Assignment and First Amendment to lease between the Company and R.R. Park City,
               Inc.(6)
     10.17   Lease dated April 3, 1995 between the Company and 1466 Broadway Associates(6)
     10.18   License Agreement dated as of April 1, 1995 between the Company and Marble Sportswear,
               Inc.(6)
     10.19   Amendment to Factoring Agreement dated March 2, 1995 between the Company and Republic
               Factors Corp.(6)
     10.20   Retainer Agreement dated June 17, 1995 between the Company and Houlihan Lokey Howard and
               Zukin(6)
     10.21   Indemnification Agreement dated May 3, 1995 between the Company and Georges Marciano(6)
     10.22   Indemnification Agreement dated May 3, 1995 between the Company and Irving B. Kroll(6)
     10.23   Indemnification Agreement dated May 3, 1995 between the Company and Maurice Schoenholz(6)
</TABLE>
 
                                       30
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             PAGES
                                                                                                         SEQUENTIALLY
 ITEM NO.    DESCRIPTION                                                                                   NUMBERED
-----------  ------------------------------------------------------------------------------------------  -------------
<C>          <S>                                                                                         <C>
     10.24   Indemnification Agreement dated May 18, 1995 between the Company and Guy Anthome(6)
     10.25   Indemnification Agreement dated May 18, 1995 between the Company and Jeffrey P. Busse(6)
     10.26   Employment Agreement dated as of June 17, 1995 between the Company and Georges
               Marciano*(6)
     10.27   Stock Option Agreement dated June 17, 1995 between the Company and Georges Marciano*(6)
     10.28   Warrant Agreement dated June 17, 1995 between the Company and Georges Marciano(6)
     10.29   Three Party Agreement between the Company, Republic Factors Corp. and Georges Marciano
               dated June 12, 1995(6)
     10.30   Three Party Agreement between the Company, Republic Factors Corp. and Georges Marciano
               dated June 21, 1995(6)
     10.31   Agreement among Marciano, the Company and Anthome dated June 4, 1996 incorporated by
               reference to Exhibit A on Form 13D filed with the Securities and Exchange Commission on
               June 6, 1996(7)
     10.32   Body Glove license agreement between Body Glove International and the Company dated June
               25, 1996(7)
     10.33   Audience license agreement between Stephen Resnick and the Company dated February 12, 1997
     10.34   Into Reality license agreement between C.S. Sportswear and the Company dated February 14,
               1997
     10.35   Employment Agreement between Guy Anthome and the Company dated as of June 6, 1996*
     10.36   Non-qualified Stock Option Agreement between Guy Anthome and the Company dated January 28,
               1997*
     10.37   Amendment to Factoring Agreement and Supplemental Security Agreement between the Company,
               Guy Anthome and Republic Business Credit Corporation, both dated June 5, 1997
     27      Financial Data Schedule
     99.1    Valuation and Fairness Opinion of Houlihan Lokey Howard and Zukin dated July 10, 1995(6)
</TABLE>
 
------------------------
 
*   Management contract or executive compensation plan or arrangement.
 
(1) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
    ended March 31, 1990, and incorporated herein by this reference.
 
(2) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
    ended March 31, 1991 and incorporated herein by this reference.
 
(3) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
    ended March 31, 1992, and incorporated herein by this reference.
 
(4) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
    ended March 31, 1993, and incorporated herein by this reference.
 
(5) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
    ended March 31, 1994, and incorporated herein by this reference.
 
(6) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
    ended March 31, 1995, and incorporated herein by this reference.
 
(7) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
    ended March 31, 1996, and incorporated herein by this reference.
 
                                       31