<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the securities
exchange act of 1934
For the quarterly period ended September 30, 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 No. 0-15551
DATAFLEX CORPORATION
--------------------
(Exact name of Registrant as specified in its charter)
FLORIDA 22-2163376
------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2145 CALUMET STREET
CLEARWATER, FLORIDA 33765
------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 562-2200
N/A
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
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 twelve 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
----- -----
As of November 3, 1997, there were 5,961,169 shares of the Registrant's Common
Stock outstanding.
<PAGE> 2
DATAFLEX CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1997
(unaudited) and March 31, 1997 1
Consolidated Statements of Operations - Three
months and six months ended September 30, 1997
and 1996 (unaudited) 2
Consolidated Statements of Cash Flows - Six months
ended September 30, 1997 and 1996 (unaudited) 3
Notes to Consolidated Financial Statements
September 30, 1997 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Exhibit Index 13
</TABLE>
<PAGE> 3
DATAFLEX CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31,
1997 1997
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 351,746 $ 1,721,922
Restricted Cash -- 3,875,202
Accounts Receivable, Net 20,075,829 21,719,863
Inventory, Net 6,429,499 5,489,153
Net Assets Held for Sale -- 3,800,063
Income Taxes Receivable 1,093,910 1,908,222
Other Current Assets 1,917,730 2,979,125
------------ ------------
Total Current Assets 29,868,714 41,493,550
Property and Equipment, Net 3,184,747 2,708,408
Other Assets 847,138 853,228
Deferred Tax Asset 6,183,780 6,183,780
Assets Held for Sale - Long Term -- 1,150,000
Goodwill 10,090,604 8,685,745
------------ ------------
Total Assets $ 50,174,983 $ 61,074,711
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-Term Debt $ 1,571,049 $ 1,730,362
Short-Term Debt 16,093,837 $ 20,374,713
Accounts Payable 2,001,132 5,938,021
Accrued Expenses and Other Payables 2,184,158 4,735,576
------------ ------------
Total Current Liabilities 21,850,176 32,778,672
Long-Term Debt 2,362,776 3,141,701
------------ ------------
Total Liabilities 24,212,952 35,920,373
------------ ------------
Commitments and Contingencies
Shareholders' Equity:
Common Stock - No Par Value;
Authorized 20,000,000 Shares; Issued
5,961,169 Shares at September 30, 1997
and March 31, 1997 24,039,057 24,017,343
Less: Loans Receivable for Exercised
Stock Options (203,170) (194,269)
Retained Earnings 2,729,622 1,934,742
------------ ------------
Less: Treasury Stock - At Cost;
115,382 shares at September 30, 1997
and March 31, 1997 (603,478) (603,478)
------------ ------------
Total Shareholders' Equity 25,962,031 25,154,338
------------ ------------
Total Liabilities and Shareholders' Equity $ 50,174,983 $ 61,074,711
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE> 4
DATAFLEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Equipment $ 31,951,721 $ 73,760,571 $ 63,288,793 $ 149,712,566
Services 3,043,467 10,114,016 6,284,537 20,193,413
------------- ------------- ------------- -------------
34,995,188 83,874,587 69,573,330 169,905,979
------------- ------------- ------------- -------------
Cost of Revenue
Equipment 28,116,320 66,397,101 55,874,405 133,773,732
Services 2,740,250 7,946,876 5,651,070 16,232,787
------------- ------------- ------------- -------------
30,856,570 74,343,977 61,525,475 150,006,519
------------- ------------- ------------- -------------
Gross Profit 4,138,618 9,530,610 8,047,855 19,899,460
Selling, General and Administrative Expenses 3,176,548 7,791,181 6,260,229 17,221,744
Amortization of Goodwill 103,200 190,710 208,054 381,420
------------- ------------- ------------- -------------
Operating Income 858,870 1,548,719 1,579,572 2,296,296
Interest Expense, Net 164,475 1,651,945 258,632 3,335,633
Loss on Dispositions of Businesses 6,229,975 -- 6,229,975 --
------------- ------------- ------------- -------------
(Loss) Income Before Income Taxes 694,395 (6,333,201) 1,320,940 (7,269,312)
(Benefit from) Provision for Income Taxes 277,758 (2,188,359) 525,910 (2,590,886)
------------- ------------- ------------- -------------
Net (Loss) Income $ 416,637 $ (4,144,842) $ 795,030 $ (4,678,426)
============= ============= ============= =============
(Loss) Earnings Per Common Share $ .07 $ (0.75) $ .13 $ (0.85)
============= ============= ============= =============
Weighted Average Common
Shares Outstanding 6,147,779 5,525,079 6,148,440 5,503,601
============= ============= ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 5
DATAFLEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
1997 1996
---- ----
<S> <C> <C>
Operating Activities:
Net Income $ 795,030 $ (4,678,426)
Adjustments to Reconcile Net Income to Net Cash:
Depreciation and Amortization 525,952 1,624,341
Amortization of Restricted Stock Grants 21,714 62,164
Interest on Loans Receivable for
Excercised Stock Options (8,901) --
Deferred Taxes -- 467,915
Loss on Disposition of Businesses -- 6,229,975
Changes in Assets and Liabilities:
Restricted Cash 3,875,202 --
Accounts Receivable 1,643,884 35,107,631
Inventory (940,346) 17,798,426
Other Current Assets 1,061,395 (370,394)
Income Taxes Receivable 814,310 (2,836,180)
Other Assets (4,410) 372,721
Accounts Payable (3,936,889) (26,911,354)
Accrued Expenses and Other Payables (2,551,418) (1,082,852)
Other Long-Term Liabilities -- (32,291)
------------ ------------
Net Cash - Operating 1,282,710 25,689,512
------------ ------------
Investing Activities:
Capital Expenditures (784,038) (1,161,766)
Net Assets Held for Sale 261,974 6,272,894
Proceeds from disposals of land, buildings
and Equipment 4,688,089 --
Contingent purchase price on previous
acquisition of a business (1,612,613) --
------------ ------------
Net Cash - Investing 2,553,412 5,111,128
------------ ------------
Financing Activities:
Payments of Notes Payable/Short Term Debt (4,344,073) (31,022,336)
Payments on Long-Term Borrowings (875,038) (43,998)
Proceeds from Common Stock and Options -- 288,853
Sale of Treasury Stock -- (8,333)
Payments on Officers Loans Receivable
for Exercised Stock Options -- 235,290
------------ ------------
Net Cash - Financing (5,206,298) (30,488,360)
------------ ------------
Net Increase (Decrease) in Cash (1,370,176) 312,280
Cash - Beginning of Year 1,721,922 499,144
------------ ------------
Cash - End of Year $ 351,746 $ 811,424
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 6
DATAFLEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
for reporting on Form 10-Q. Certain information and footnote disclosures
normally included in consolidated financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.
These consolidated financial statements should be read in conjunction with the
summary of accounting policies and notes to consolidated financial statements
included in the Company's Annual Report on Form 10-K, as amended, for the
fiscal year ended March 31, 1997.
In the opinion of management, the consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial condition, results of operations and cash
flows for such periods. However, these results are not necessarily indicative of
the results for any other interim period or the full year.
B) ACQUISITIONS OF BUSINESSES
In September 1997, the Company paid $1.6 million to National Data Products Inc.
("NDP"), formerly a computer reseller that was acquired by the Company in
January 1995. The payment settled a contingency agreement between the Company
and NDP.
C) DISPOSITION OF BUSINESSES
On April 18, 1997, the Company completed the sale of certain assets of its
Kindergarten through 12th Grade Education division (the "Education Division") to
Computer Plus, Inc. for approximately $4,400,000, including a $150,000 escrow
pending the future settlement of contingencies as described in the agreement.
The estimated fair market value of the net assets were included in "Assets Held
for Sale" in the March 31, 1997 Consolidated Balance Sheet. The proceeds from
the sale were used to reduce the Company's short term debt. The Company recorded
a loss on impairment of $2,941,185 related to this transaction primarily due to
the write off of Goodwill of $5,864,000 attributable to the Education Division.
The loss was recorded in the Consolidated Statement of Operations for the year
ended March 31, 1997. The Education Division recorded revenues of $5,188,439
for the quarter ended September 30, 1996.
In October 1996, the Company completed the sale of substantially all the assets
and the transfer of certain liabilities of its Eastern and Midwestern regional
operations (located in Edison, New Jersey, New York, New York, Bensenville,
Illinois and Milwaukee, Wisconsin) to Ameridata of New Jersey, Inc. for
$42,300,000 in cash, after reconciliation
4
<PAGE> 7
in accordance with the asset purchase agreement, and $1,900,000 in accounts
receivable from the Midwestern and Eastern regional operations. The cash
proceeds were used to reduce the Company's line of credit with NationsCredit
Commercial Corporation of America ("NationsCredit") and NationsBank, N.A.
(South)("NationsBank")(the "Line of Credit"). The loss on this transaction of
$8,978,970 is included in the Consolidated Statement of Operations for the year
ended March 31, 1997. The Eastern and Midwestern regions had combined revenues
of $45,285,715 for the three months ended September 30, 1996.
In July 1996, the Company completed the sale of substantially all the assets and
the transfer of substantially all the liabilities of its Valtron division for
$2,900,000 in cash, $750,000 in forgiveness of a note payable and the receipt of
a three-year note of $850,000, bearing interest at 9% per annum. No revenues
were recorded for the Valtron division for the quarter ended September 30, 1996.
In May 1996, the Company completed the sale of substantially all the assets and
the transfer of substantially all the liabilities of its Western region to
Vanstar Corporation (primarily its Alameda, California and Tempe, Arizona
locations) for approximately $38,100,000 and $400,000 in vendor receivables,
after the settlement of contingencies in accordance with the asset purchase
agreement. The cash proceeds were used to reduce the Company's accounts payable
and interest-bearing obligations under its credit facility. The loss on
disposition of $4,631,820 was recorded in the Consolidated Statement of
Operations for the year ended March 31, 1996.
D) LOSS ON IMPAIRMENT OF ASSETS
The Company also recorded a loss on impairment of $339,040 on the proposed sale
of certain land and buildings. In August 1997, the Company completed the sale of
its headquarters located in Clearwater, Florida for approximately $1.0 million
dollars and $150,000 in deferred rent expense. The $1.0 million was used to
retire the Company's existing mortgage on the property. The estimated fair
market value of the net assets to be disposed was included in the "Assets Held
for Sale - Long Term" at March 31, 1997. The loss on impairment was included in
Consolidated Statement of Operations for the year ended March 31, 1997.
E) CREDIT FACILITY
In December 1996, the Company entered into a two year $38,000,000 credit
facility with NationsCredit and NationsBank which replaces its former
$120,000,000 credit facility with another bank. The new facility reduces
interest rates the Company is paying for its working capital loans. The
structure of the short-term debt includes a revolving line of credit and an
inventory financing agreement.
F) CONTINGENCIES
In August 1996, the Company and Richard C. Rose were named as defendants in a
suit filed in state court in New Jersey, by Gordon McLenithan, a former
executive officer of the Company. Mr. McLenithan alleges that the Company failed
to pay him an amount
5
<PAGE> 8
allegedly owed to Mr. McLenithan upon a change in control of the Company. Mr.
McLenithan also charges Mr. Rose with defamation and interference with
contractual relations. The lawsuit is in the initial stages of litigation and
the Company has denied Mr. McLenithan's allegations and intends to vigorously
contest the suit. The Company is currently unable to predict the outcome of this
lawsuit.
In December 1996, the Company filed suit in state court in Florida against a
former vendor of the Company alleging a breach of contract. The vendor
counterclaimed against the Company alleging that the Company failed to pay an
invoice for products delivered. The vendor also filed suit in state court in
Massachusetts which has been stayed pending the outcome of the suit in Florida.
If the Florida suit is resolved, the Massachusetts suit will be dismissed. The
Company intends to diligently pursue suit against the vendor and contest the
counterclaim against the Company.
In May 1997, the Company was named as a defendant in a suit filed in state court
in New Jersey alleging breach of contract. The plaintiff claims that the Company
owes him additional amounts of money pursuant to the contract. The Company has
denied the allegation and intends to diligently contest the suit.
In June 1997, the Company was named as a defendant in a suit filed in state
court in New Jersey by a former employee. The employee alleges that his
employment was wrongfully terminated. The lawsuit is in the initial stages of
discovery. The Company denies the allegation and intends to contest the suit.
Other claims, suits and complaints arise in the ordinary course of the Company's
business. In the opinion of Company management, such pending matters are without
merit or are of such kind, or involve such amounts, as would not have a material
adverse effect on the financial position or results of operations of the
Company.
6
<PAGE> 9
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements,
particularly with respect to the Liquidity and Capital Resources section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Additional written or oral forward-looking statements may be made
by the Company from time to time, in filings with the Securities and Exchange
Commission or otherwise. Such forward-looking statements are within the
meaning of that term in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such statements may include, but
not be limited to, projections of revenue, income, losses, cash flow, capital
expenditures, plans for future operations, financing needs or plans, plans
relating to products or services of the Company, estimates concerning the
effects of litigation or other disputes, as well as assumptions to any of the
foregoing.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted. Future events and actual results could
differ materially from those set forth in or underlying the forward-looking
statements.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship to total revenues of the items listed in the Company's Consolidated
Statement of Operations:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
--------------------- ---------------------
<S> <C> <C> <C> <C>
Revenue 100.0% 100.0 % 100.0% 100.0 %
Cost of Revenue 88.2 88.6 88.4 88.3
----- ----- ----- -----
Gross Profit 11.8 11.4 11.6 11.7
Selling, General and Administrative Expenses 9.1 9.3 9.1 10.1
Amortization of Goodwill 0.3 0.2 0.3 0.2
----- ----- ----- -----
Operating Income 2.5 1.8 2.2 1.4
Interest Expense, Net 0.5 2.0 0.4 2.0
Loss on Disposition of Businesses 0.0 7.4 0.0 3.7
----- ----- ----- -----
(Loss) Income Before Income Taxes 2.0 (7.5) 1.9 (4.3)
Income Taxes 0.8 (2.6) 0.8 (1.5)
----- ----- ----- -----
Net (Loss) Income 1.2% (4.9)% 1.1% (2.8)%
----- ----- ----- -----
</TABLE>
Revenues decreased by $48,879,399 or 58.3%, to $34,995,188 for the three months
ended September 30, 1997 as compared to $83,874,587 for the three months ended
September 30, 1996. For the six months ended September 30,1997, revenues
decreased by $100,332,649 or 59.1% to $69,573,330, as compared with $169,905,979
for the six months ended September 30, 1996. The decrease in revenues is due
primarily to the sale of the Midwestern and Eastern region's operations in
October 1996 and the sale of the Education Division in April 1997. On a
comparable basis, excluding revenues for the Midwestern and Eastern regions and
the Education Division, revenues increased by $1,594,757, or 4.8% for the three
months ended September 30, 1997, and revenues decreased by $1,616,690 or 2.3%
for the six months September 30, 1997 as compared to the same period in 1996
primarily due to the Company's decision to concentrate on business opportunities
that offer a higher gross profit return.
Gross Profit decreased by $5,391,992, or 56.6%, to $4,138,618 for the three
months ended September 30, 1997 as compared to $9,530,610 for the three months
ended 1996. For the six months ended September 30, 1997, gross
profit decreased by $11,851,605 or 59.6% to $8,047,855 as compared to
$19,899,460 for the six months ended September 30, 1996. This decrease relates
primarily to the exclusion of gross profit contribution of the Midwestern and
Eastern regions and the Education Division for the three and six month periods.
On a comparable basis, excluding the Midwestern and Eastern regions and the
Education Division, gross profit increased by $173,156, or 4.4%
7
<PAGE> 10
for the three month period ended September 30, 1997 and by $26,346 or 0.3% for
the six months ended September 30, 1997.
As a percentage of revenues, gross profit was 11.8% and 11.6% respectively, for
the three and six months ended September 30, 1997 as compared to 11.4% and
11.7% for the three and six months ended September 30, 1996. The increase in
gross profit, as a percentage of sales, reflects a higher percentage return on
equipment sales, primarily due to manufacturer's rebates. On a comparable
basis, excluding the Midwestern and Eastern regions and the Education Division,
the gross profit percentage was 11.8% and 11.4% respectively, for the three and
six months ended September 30, 1997 as compared to 11.9% and 10.8% for the
three and six months ended September 30, 1996.
Selling, general and administrative expenses decreased by $4,614,633 or 59.2%
and $10,961,515 or 63.6% to $3,176,548 and $6,260,229 respectively, for the
three and six months ended September 30, 1997 as compared to $7,791,181 and
$17,221,744 for the three and six months ended September 30, 1996. This decrease
primarily relates to the sale of the Midwestern and Eastern regions in October
1996 and the sale of the Education Division in April 1997. As a percentage of
revenues, selling, general and administrative expenses were 9.1% and 9.0%
respectively, for the three and six months ended September 30, 1997, as compared
to 9.3% and 10.1% for the three and six months ended September 30, 1996. The
decrease in selling, general and administrative expenses as a percentage of
revenues for the three months ended September 30, 1997, as compared to the three
months ended September 30, 1996, reflects lower corporate overhead due to the
sales of the Midwestern and Eastern regions and the Education Division.
Amortization of goodwill decreased by $87,510 or 45.9% and $173,366 or 45.5% to
$103,200 and $208,054 respectively, for the three and six months ended September
30, 1997 as compared to $190,710 and $381,420 for the three and six months ended
September 30, 1996, due to the dispositions of the Midwestern region and the
Education Division.
Net interest expense decreased by $1,487,470 or 90% and $3,077,001 or 92.2% to
$164,475 and $258,632 respectively, for the three and six months ended September
30, 1997 as compared to $1,651,945 and $3,335,633 for the three and six months
ended September 30, 1996. The decrease primarily relates to reduced average
borrowings resulting from the reduction of debt from the use of the proceeds of
the sales of the Midwestern and Eastern regions and the Education Division and a
reduction in interest rates.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was funded primarily by the receipt of
restricted cash associated with the disposition of the Midwestern and Eastern
regions and the Education Division and cash flow from operations.
Investing activities provided $4.1 million, net, from the sale of the
Education Division. The funds were received in April 1997 and were used to
further reduce the
8
<PAGE> 11
balance under the Line of Credit. The Company retained and collected
approximately $2.8 million in accounts receivable in connection with the sale.
Cash used in investing activities of $1.6 million reflects cash used for the
payment of contingent purchase price on a previous acquisition of a business
and $784,000 for capital expenditures in support of the Company's growth. The
Company has no material commitments for capital expenditures for the year
ending March 31, 1998.
Net cash used in financing activities primarily reflects a net decrease in short
term debt of $4.3 million resulting from the use of proceeds from the
dispositions of the Company's Education Division and the Midwestern and Eastern
operating regions. In April 1997, the Company received approximately $4.2
million in cash from the disposition of the Education division. In March 1997,
the Company had $5.0 million in escrow from the sale of its Midwestern and
Eastern regions. In May 1997, the Company reconciled amounts due under the
agreement with the buyer and received approximately $3.8 of the $5.0 million
held in escrow. The funds were used to decrease amounts outstanding under the
Line of Credit. In connection with this reconciliation, the Company also
received $1.9 million in past due accounts receivable generated by the former
Midwestern and Eastern regions. In August 1997, the Company completed the sale
of its headquarters in Clearwater, Florida for approximately $1.0 million in
cash and $150,000 in credit for future rent expense. The cash was used to
retire the Company's existing mortgage on the property.
The Company believes that the cash flow from operations, the Line of Credit and
trade credit from its vendors will be sufficient to satisfy its working capital
and capital expenditure requirements through March 31, 1998. At September 30,
1997, the Company had approximately $16.0 million outstanding under its $38.0
million Line of Credit.
9
<PAGE> 12
DATAFLEX CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On September 18, 1997 the Company held its Annual Meeting of
Shareholders ("Annual Meeting").
(c) The following matters were voted upon at the Annual Meeting:
(1) the election of directors and (2) the reincorporation of
the Company from New Jersey to Florida. The results of voting
for each matter, as reported by the Inspector of Elections,
are as follows:
Proposal One: Election of Directors
<TABLE>
<CAPTION>
Votes for Withheld Broker Non-votes
<S> <C> <C> <C>
Anthony G. Lembo 4,988,930 80,489 --
Richard Rose 4,986,903 82,516 --
Keith Schilit 4,986,905 82,514 --
Phil Doganiero 4,988,928 80,491 --
Barry N. Alpert 4,987,930 81,489 --
</TABLE>
Proposal Two: Reincorporation of the Company from New Jersey to Florida.
Votes for 2,557,342
Against 70,452
Abstain 40,484
Broker Non-Votes 2,419,785
ITEM 5. OTHER INFORMATION
On October 29, 1997, the Company issued the press release
filed as exhibit 99 hereto announcing that the Company is
engaged in disscussions regarding a possible strategic
combination.
10
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
99 Press Release
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter for which
this report is filed.
11
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 10, 1997
DATAFLEX CORPORATION
By: /s/Richard C. Rose
------------------
Richard C. Rose
Chief Executive Officer
By: /s/Anthony G. Lembo
-------------------
Anthony G. Lembo
President, Chief Operating Officer
And Chief Financial Officer
12
<PAGE> 15
EXHIBIT INDEX
DESCRIPTION
EXHIBIT
NUMBER
27 Financial Data Schedule
99 Press Release
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 351,746
<SECURITIES> 0
<RECEIVABLES> 20,075,829
<ALLOWANCES> 1,905,112
<INVENTORY> 6,429,499
<CURRENT-ASSETS> 29,868,714
<PP&E> 3,184,747
<DEPRECIATION> 2,220,784
<TOTAL-ASSETS> 50,174,983
<CURRENT-LIABILITIES> 21,850,176
<BONDS> 299,736
0
0
<COMMON> 24,039,057
<OTHER-SE> 1,922,974
<TOTAL-LIABILITY-AND-EQUITY> 50,174,983
<SALES> 63,288,793
<TOTAL-REVENUES> 69,573,330
<CGS> 55,874,405
<TOTAL-COSTS> 61,525,475
<OTHER-EXPENSES> 6,468,283
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 258,632
<INCOME-PRETAX> 1,320,940
<INCOME-TAX> 525,910
<INCOME-CONTINUING> 1,579,572
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 795,030
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
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EXHIBIT 99
CONTACT: Anthony Lembo
President, COO, CFO
Dataflex Corporation
FOR IMMEDIATE RELEASE (813) 562-2200
Wednesday, October 29, 1997
DATAFLEX CORPORATION ANNOUNCES NEGOTIATIONS
Dataflex Corporation (NASDAQ: DFLX) announced today that it is engaged
in discussions regarding a possible strategic combination. Dataflex declined
to identify the other parties to the discussions. Dataflex stated that no
agreement has been reached, that there was no assurances that an agreement
would be reached and that it will have no further comment unless and until a
definitive agreement is reached.
Certain of the above statements contained in this press release, are
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements are within the meaning of that term in Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended. Factors that could cause actual results to
differ materially include the following: business conditions and growth in the
Company's industry and in the general economy; competitive factors, risks due
to shifts in market demand; and the risk factors listed from time to time in
the Company's reports filed with the Securities and Exchange Commission as well
as assumptions regarding the foregoing. The words "believe," "estimate,"
"expect," "intend," "anticipate" and similar expressions and variations thereof
identify certain of such forward-looking statements, which speak only as of the
dates on which they were made. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise. Readers are cautioned that
any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may differ
materially from those indicated in the forward-looking statements as a result
of various factors. Readers are cautioned not to place undue reliance on these
forward-looking statements.
Dataflex provides computer products and services to corporations and
government organizations through its centralized, Telesales facility in
Clearwater, Florida. In addition, Dataflex maintains offices in Orlando, Miami
and Tallahassee, Florida and Atlanta, Georgia. Dataflex offers systems
integration consulting, temporary technical personnel placement through its
FlexStaff program, customized technical training, project implementation
services and hardware and software product acquisition.
