<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
- ------- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-------------------------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
- ------- EXCHANGE ACT OF 1934
For the transition period from to
------------- ------------
Commission File Number 0-13324
---------------------------------
QUESTRON TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 23-2257354
- -------------------------------- -----------------------------------------
(State or other jurisdiction of (I. R. S. Employer Identification Number)
incorporation or organization)
6400 Congress Avenue, Suite 2000, Boca Raton, FL 33487
- ------------------------------------------------ ---------------------------
(Address of principal executive offices) (Zip Code)
(561) 241 - 5251
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 past 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
--------- ---------
As of May 9, 2000, there were 8,620,311 shares of the issuer's Common Stock
outstanding.
<PAGE>
QUESTRON TECHNOLOGY, INC.
INDEX
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WHICH
INVOLVES CERTAIN RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS IN FUTURE
PERIODS MAY BE MATERIALLY DIFFERENT FROM ANY FUTURE PERFORMANCE ANTICIPATED
HEREIN. EACH FORWARD-LOOKING STATEMENT THAT THE COMPANY BELIEVES IS MATERIAL IS
ACCOMPANIED BY A CAUTIONARY STATEMENT OR STATEMENTS IDENTIFYING IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
DESCRIBED IN THE FORWARD-LOOKING STATEMENT. IN THE CONTEXT OF FORWARD-LOOKING
INFORMATION PROVIDED IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OTHER REPORTS,
PLEASE REFER TO THE DISCUSSION OF RISK FACTORS DETAILED IN, AS WELL AS THE OTHER
INFORMATION CONTAINED IN, THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION DURING THE PAST 12 MONTHS.
<TABLE>
<CAPTION>
Page No.
--------------
PART I. Financial Information
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheet -
At March 31, 2000 (unaudited) and December 31, 1999 3
Consolidated Statement of Income (unaudited) -
Three Months Ended March 31, 2000 and 1999 4
Consolidated Statement of Cash Flows (unaudited) -
Three Months Ended March 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9 - 11
Item 3. Quantitative and Qualitative Disclosure About Market Risk 12
PART II. Other Information 13
Signature Page 14
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
<S> <C> <C>
Current assets:
Cash ......................................................................... $ 398,967 $ 111,102
Accounts receivable, less allowances for
doubtful accounts of $283,666 in 2000 and 1999 ............................ 21,515,508 16,827,678
Other receivables ............................................................ 253,057 253,057
Inventories .................................................................. 41,890,092 38,301,589
Other current assets ......................................................... 633,139 515,705
------------- -------------
Total current assets ...................................................... 64,690,763 56,009,131
Property and equipment - net .................................................... 3,327,997 2,898,919
Cost in excess of net assets of businesses acquired,
less accumulated amortization of $3,131,166 in 2000 and $2,699,305 in 1999 ... 74,429,018 71,650,585
Deferred income taxes ........................................................... 3,345,438 3,431,438
Other assets .................................................................... 4,313,020 4,007,768
------------- -------------
Total assets .............................................................. $ 150,106,236 $ 137,997,841
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................. $ 12,587,977 $ 9,668,171
Accrued expenses ............................................................. 2,527,220 1,958,596
Income taxes payable ......................................................... 1,115,239 750,333
Current portion of long-term debt ............................................ 486,598 1,746,598
------------- -------------
Total current liabilities ................................................. 16,717,034 14,123,698
Deferred income taxes payable ................................................... 952,435 993,048
Long-term debt .................................................................. 86,393,783 87,808,934
------------- -------------
Total liabilities ......................................................... 104,063,252 102,925,680
------------- -------------
Commitments and contingencies:
Common stock subject to put option agreement ................................. 607,072 622,170
Stockholders' equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares ................ -- --
Common stock, $.001 par value; authorized 20,000,000
shares; issued 8,649,003 shares in 2000 and 7,164,522 in 1999 .............. 8,650 7,165
Additional paid-in capital ................................................... 54,939,541 45,678,802
Accumulated deficit .......................................................... (9,156,801) (10,880,498)
------------- -------------
45,791,390 34,805,469
Less: treasury stock at cost, 11,849 shares .................................. (355,478) (355,478)
------------- -------------
Total stockholders' equity ................................................... 45,435,912 34,449,991
------------- -------------
Total liabilities and stockholders' equity ................................... $ 150,106,236 $ 137,997,841
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
------------ -----------
<S> <C> <C>
Sales ............................................................ $36,478,902 $19,304,486
Cost of goods sold ............................................... 21,760,309 11,815,652
----------- -----------
Gross profit ..................................................... 14,718,593 7,488,834
Selling, general & administrative expenses ....................... 9,079,154 4,676,636
Depreciation and amortization .................................... 620,478 368,948
----------- -----------
Total operating expenses ......................................... 9,699,632 5,045,584
----------- -----------
Operating income ................................................. 5,018,961 2,443,250
Interest expense ................................................. 2,858,529 1,251,952
----------- -----------
Income before income taxes and extraordinary gain ................ 2,160,432 1,191,298
Provision for income taxes ....................................... 896,579 488,432
----------- -----------
Income before extraordinary gain ................................. 1,263,853 702,866
Extraordinary gain in connection with the early extinguishments of
debt (less applicable income taxes of $326,214) ............... 459,844 --
----------- -----------
Net income ....................................................... $ 1,723,697 $ 702,866
=========== ===========
PER COMMON SHARE:
Income per common share before extraordinary gain ................ $ .16 $ .14
Extraordinary gain ............................................... .06 --
----------- -----------
Net income per common share ...................................... $ .22 $ .14
=========== ===========
PER DILUTED COMMON SHARE:
Income per common share before extraordinary gain ................ $ .12 $ .14
Extraordinary gain ............................................... .04 --
----------- -----------
Net income per diluted common share .............................. $ .16 $ .14
=========== ===========
Average number of common shares outstanding ...................... 7,761,419 5,008,172
=========== ===========
Average number of diluted common shares outstanding .............. 10,804,000 5,080,338
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................... $ 1,723,697 $ 702,866
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ............................ 620,478 368,948
Recognition of current year income tax benefit of net
operating loss carryforward ............................ 86,000 86,113
Extraordinary gain in connection with the early
extinguishment of debt (less applicable income
taxes of $326,214) ..................................... (459,844) --
Change in assets and liabilities:
Increase in accounts receivable ........................... (4,172,198) (721,894)
Increase in other receivables ............................. -- (173,198)
Increase in inventories ................................... (2,819,648) (2,239,625)
Increase in accounts payable .............................. 2,829,450 264,923
Increase (decrease) in accrued expenses ................... 255,149 (92,095)
Increase (decrease) in income taxes payable ............... 364,906 (1,565,462)
Decrease in deferred income taxes ......................... (40,613) (46,749)
Increase in other assets .................................. (422,686) (506,504)
----------- -----------
Net cash used by operating activities ..................... (2,035,309) (3,922,677)
----------- -----------
Cash flows from investing activities:
Net cash consideration paid for acquired business ............ (238,399) (373,479)
Acquisition of property and equipment ........................ (478,441) (54,541)
----------- -----------
Net cash used for investing activities .................... (716,840) (428,020)
----------- -----------
Cash flows from financing activities:
Proceeds from borrowings under revolving facility ............ 1,979,774 5,656,412
Repayment of long-term debt .................................. (199,541) (200,000)
Fees and expenses associated with loan amendments ............ (233,083) --
Extraordinary gain in connection with the early extinguishment
of debt (less applicable income taxes of $326,214) ....... 459,844 --
Proceeds from exercise of options and warrants ............... 1,213,201 --
Payments on capital leases ................................... (23,756) (33,330)
Payments in respect of exercise of put options ............... -- (22,646)
Payments on note issued for acquired business ................ (156,425) (47,438)
----------- -----------
Net cash provided by financing activities ................. 3,040,014 5,352,998
----------- -----------
Increase in cash and cash equivalents .......................... 287,865 1,002,301
Cash and cash equivalents at beginning of period ............... 111,102 229,285
----------- -----------
Cash and cash equivalents at end of period ..................... $ 398,967 $ 1,231,586
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
QUESTRON TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 1. BASIS OF PRESENTATION.
The accompanying unaudited consolidated financial statements include
the accounts of Questron Technology, Inc. (the "Company") and its subsidiaries.
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with the Securities and Exchange Commission's instructions for
Form 10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.
Management believes that all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. The consolidated balance sheet as of December 31, 1999
reflects the audited balance sheet at that date. For further information, refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1999.
NOTE 2. EARNINGS PER SHARE.
The following table sets forth the calculation of net income per common share
and net income per diluted common share:
<TABLE>
<CAPTION>
For the three months ended
-------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Numerator:
Income before extraordinary item ............. $ 1,263,853 $ 702,866
=========== ===========
Denominator:
Denominator for net income per common share -
Weighted-average shares ................... 7,761,419 5,008,172
----------- -----------
Effect of dilutive securities:
Options ................................... 1,477,814 7,247
Warrants .................................. 1,564,767 896
Contingent shares - deferred purchase price -- 64,023
----------- -----------
Dilutive potential common shares ............. 3,042,581 72,166
----------- -----------
Denominator for net income per diluted common
share .................................... $10,804,000 $ 5,080,338
=========== ===========
Income per common share before extraordinary
item .................................... $ .16 $ .14
=========== ===========
Income per diluted common share before
extraordinary item ...................... $ .12 $ .14
=========== ===========
</TABLE>
6
<PAGE>
QUESTRON TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 3. ACQUISITION OF RSD SALES CO., INC.
Effective March 31, 2000, the Company acquired 100% of the issued and
outstanding stock of RSD Sales Company, Inc., a New York corporation ("RSD"), a
privately owned company.
The purchase price for RSD consisted of 394,619 shares of the Company's
common stock valued at $3,300,000.
The Company has accounted for such acquisition using the purchase
method of accounting. In connection with this acquisition, the Company recorded
$2,026,786 of cost in excess of net assets of the business acquired.
NOTE 4. ACQUISITIONS - PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma information for the three month
periods ended March 31, 2000 and 1999 presents the combined operating results of
the Company, Action, Capital, Olympic, B&G and RSD as though each of the
acquisitions had been made on January 1, 1999. The unaudited pro forma combined
summary of operations includes the additional interest expense on debt incurred
in connection with the acquisitions as if the debt had been outstanding since
January 1, 1999. The pro forma net income per common share and diluted common
share assume that all shares of common stock of the Company outstanding as of
March 31, 2000 were outstanding as of January 1, 1999. This pro forma
information does not purport to be indicative of what would have occurred had
the acquisitions been completed as of January 1, 1999 or results which may occur
in the future:
<TABLE>
<CAPTION>
Three months ended,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Sales ......................................... $37,174,000 $29,833,000
----------- -----------
Operating income .............................. 5,122,000 3,497,000
----------- -----------
Net income .................................... $ 1,324,000 $ 551,000
=========== ===========
Pro forma net income per diluted common
share .............................. $ .12 $ .08
=========== ===========
Average number of diluted
common shares outstanding .......... 11,194,283 7,143,369
=========== ===========
</TABLE>
7
<PAGE>
QUESTRON TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 5. EARLY EXTINGUISHMENT OF DEBT.
On March 7, 2000, the Company reached agreements with the former
shareholders of Action, Capital and Olympic whereby notes payable aggregating
$5,000,000, plus accrued interest of $286,058 were settled in exchange for
450,000 shares of the Company's common stock. In connection with the early
extinguishment of these notes, the Company realized an extraordinary gain in an
amount equal to the difference between the fair market value of the common stock
issued and the face amount of the notes plus accrued interest. The amount of the
extraordinary gain was $459,844, net of applicable income taxes of $326,214.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000.
The Company's results of operations through March 31, 2000 include
the operating results of the Company's inventory logistics management business,
Questron Distribution Logistics, Inc. ("QDL"), its master distribution of
fasteners business, Integrated Material Systems, Inc. ("IMS") and its battery
distribution business, Power Components, Inc. ("PCI"). QDL (formerly Quest
Electronic Hardware, Inc.) includes the operating results of Webb Distribution
("Webb"), and California Fasteners, Inc. ("Calfast"), which were acquired in
1997; the operating results of Fas-Tronics, Inc. ("Fas-Tronics"), Fortune
Industries, Inc. ("Fortune") and AFCOM, which were acquired in 1998; and the
operating results of Action Threaded Products, Inc. ("Action"), Capital
Fasteners, Inc. ("Capital"), Olympic Fasteners ("Olympic") and B & G Supply
Company, Inc. ("B&G"), which were acquired in 1999. In 1999 the operations of
Fas-Tronics and Fortune began to operate as Questron Aerospace Logistics
("QAL"), a division of QDL dedicated to providing inventory logistics management
services to aerospace manufacturers.
The Company's revenues for the three months ended March 31, 2000
amounted to $36,478,902, compared with $19,304,486 for the three months ended
March 31, 1999. The significant growth in the Company's revenues is due to
the growth of QDL, which had revenues of $33,055,132 during the three months
ended March 31, 2000, compared with $18,138,915 for the prior year period.
The significant growth in QDL's revenues for the period ended March 31, 2000
is a result of the acquisitions of Action, Capital, Olympic and B&G, as well
as 17.5% internal growth of the other QDL branches. Revenues from Action,
Capital, Olympic and B&G for the three months ended March 31, 2000 amounted
to $11,750,292.
The Company's operating income was $5,018,961 for the three months
ended March 31, 2000, compared with operating income of $2,443,250 for the prior
year period. Operating income as a percentage of sales for the three months
ended March 31, 2000 amounted to 13.8% compared with 12.7% for comparable prior
year period. This improvement in operating income as a percentage of sales is
the result of increased gross profit margins, as well as the elimination of some
of the redundant costs realized by the integration of certain of the acquired
businesses.
Interest expense, which reflects the cost of incremental borrowings
associated with acquisitions and QDL's working capital needs, amounted to
$2,858,529 for the three months ended March 31, 2000 compared with $1,251,952
for the comparable prior year period. The increase in interest expense
principally reflects the costs of increased borrowings to complete the
acquisitions of Action, Capital and Olympic.
The provision for income taxes for the three months ended March 31,
2000 reflects a federal income tax provision at an effective rate of 36.25% and
a state income tax provision at an effective rate of 5.25% for the states in
which the Company does business. The provision for income taxes for the three
months ended March 31, 1999 reflects a federal income tax
9
<PAGE>
provision at an effective rate of 35% and a state income tax provision at an
effective rate of 6%.
On March 7, 2000, the Company entered into an agreement with the former
shareholders of Action, Capital and Olympic to exchange $5,000,000 of debt, plus
accrued interest of $286,058 for 450,000 shares of the Company's common stock.
This exchange resulted in an extraordinary gain of $459,844, net of $326,214 in
applicable income taxes. Income for the three months ended March 31, 2000,
before the extraordinary gain in connection with the early extinguishments of
debt, amounted to $1,263,853, compared with net income of $702,866 for the
comparable prior year period. After the extraordinary gain, the net income for
the three months ended March 31, 2000 amounted to $1,723,697. The increase in
income before extraordinary gain is due to the acquisitions of Action, Capital
and Olympic, as well as the internal growth of the other QDL branches.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had $398,967 in cash, compared to
$111,102 as of December 31, 1999. As of March 31, 2000, the Company had working
capital of $47,973,729, compared with working capital of $41,885,433 as of
December 31, 1999.
For the three months ended March 31, 2000, the net cash used by the
Company's operating activities amounted to $2,035,309, principally reflecting
increases in inventories, receivables and other assets, offset in part by
profits of the Company and increases in accounts payable, accured expenses and
income taxes payable.
For the three months ended March 31, 2000, the net cash used in the
Company's investing activities amounted to $716,840, including $238,399 of net
cash consideration paid for RSD and $478,441 of capital expenditures for the
acquisition of fixed assets. The Company does not have significant commitments
for capital expenditures as of March 31, 2000 and no significant commitments are
anticipated for the remainder of 2000, other than the expansion of the Company's
computer system to complete the integration of Fortune, Fas-Tronics, Action, B&G
and RSD.
For the three months ended March 31, 2000, the net cash provided by the
Company's financing activities amounted to $3,040,014, consisting principally of
$1,979,774 of bank borrowings under the Company's revolving credit facility and
$1,213,201 of proceeds from the exercise of options and warrants.
In connection with the acquisitions of Action, Capital and Olympic, the
Company entered into a $75,000,000 senior secured credit facility with Ableco
Finance L.L.C. and Congress Financial Corporation (Florida). Also in connection
with the above acquisitions, the Company completed a $20,000,000 senior
subordinated debt private placement. The senior subordinated notes were placed
with affiliates of Albion Alliance LLC and Alliance Capital Management LP, The
Equitable Life Assurance Society of the United States and IBJ Whitehall
Financial Group.
The senior secured credit facility consists of a four and one-quarter
year term loan for $52,500,000 and a $22,500,000 revolving credit facility. The
term loan is divided into two notes: Note A for $25,000,000 and Note B for
$27,500,000. The loan agreement
10
<PAGE>
includes a provision for the calculation of a borrowing base, which determines
the amount of borrowings available under the revolving credit facility. At March
31, 2000, $13,790,372 was borrowed and outstanding under the revolving credit
facility. Of the remaining amount of the $22,500,000 revolving credit facility,
$8,709,628 was available at March 31, 2000 for future working capital needs.
Interest on the revolving credit facility is payable monthly at the prime rate
plus 1.5%, with a minimum rate of interest of 9.25% per annum. The Company can
elect a LIBOR Rate Election for amounts borrowed and outstanding under the
revolving facility. During all times that a LIBOR Rate Election is in effect,
the interest due on the principal amount of the LIBOR revolving credit portion
outstanding is at an interest rate of LIBOR plus 2.75%. At March 31, 2000,
$8,000,000 of the $13,790,372 outstanding under the revolving credit facility
was subject to the LIBOR Rate Election. Interest on Note A is payable monthly at
the prime rate plus 2.0% with a minimum rate of interest of 9.75% per annum.
Interest on Note B is payable monthly at the prime rate plus 2.5% with a minimum
rate of interest of 10.25% per annum.
Interest on the $20,000,000 senior subordinated debt is payable
quarterly in arrears at an annual fixed rate of 12.5% in cash and 2.00% in kind
or cash, at the Company's option. Principal on the senior subordinated debt is
payable in full on June 30, 2005. In connection with the financing, the Company
issued 680,000 shares of the Company's common stock to the senior subordinated
lenders. These shares were valued at $1,190,000 and were treated as original
issue discount.
In order to secure the obligations of the Company and its subsidiaries
under the revolving credit facility and the related term loan facility under the
loan and security agreement with the lender, the Company entered into a stock
pledge agreement with the lender whereby the Company pledged to the lender the
shares of capital stock of each of its subsidiaries at the date of such
agreement and any shares of its subsidiaries in which the Company may thereafter
acquire an interest. In addition, the Company and its subsidiaries granted to
the lender a security interest in substantially all of their assets.
The Company intends to continue to identify and evaluate potential
merger and acquisition candidates engaged in businesses complementary to its
business. While certain of such additional potential acquisition opportunities
are at various stages of consideration and evaluation, none is at any definitive
stage at this time. Management believes that its working capital, funds
available under its credit agreement, and funds generated from operations will
be sufficient to meet its obligations through 2000, exclusive of cash
requirements associated with any business acquisitions.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's interest expense is sensitive to changes in the general
level of U.S. interest rates. In this regard, changes in the U.S. rates may
effect the interest paid on a portion of its debt. The Company does not enter
into derivative financial instruments.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Effective March 31, 2000, the Company acquired all of the issued and
outstanding stock of RSD Sales Company, Inc. a privately owned New
York Corporation ("RSD"). RSD is a distributor of C inventory items
to the aerospace industry, primarily focused on European customers.
The consideration paid to RSD's former stockholders for the
aquisition of RSD stock consisted of 394,619 shares of Company's
common stock with an aggregate value of $3,300,000. The Company has
registered for resale the shares issued to the former RSD
stockholders with the Securities and Exchange Commission, and the
registration statement is currently pending. The shares were issued
to the stockholders of RSD in the acquisition in a transaction not
involving a public offering.
On March 7, 2000, the Company reached agreements with former
shareholders of Action, Capital and Olympic to exchange notes payable
aggregating $5,000,000, plus accrued interest of $286,058, for 450,000
shares of the Company's common stock. The former shareholders had
obtained the notes in connection with the purchase of the three
companies effective April 1, 1999. The Company has registered for
resale the shares issued to the former shareholders of Action,
Capital and Olympic with the Securities and Exchange Commission, and
the registration statement is currently pending. The shares were
issued to the former shareholders of Action, Capital and Olympic in
a transaction not involving a public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
The exhibits listed on the Exhibit Index immediately following
the signature page are filed as part of this Quarterly Report
on Form 10-Q.
b) Reports on Form 8-K:
None.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
QUESTRON TECHNOLOGY, INC.
(1) Principal Executive Officer:
Date: MAY 15, 2000 /S/ DOMINIC A. POLIMENI
-------------- -----------------------
Dominic A. Polimeni
Chairman and Chief Executive Officer
(2) Principal Financial and Accounting
Officer:
Date: MAY 15, 2000 /S/ ROBERT V. GUBITOSI
------------- ----------------------
Robert V. Gubitosi
President and Chief Financial Officer
14
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed as part of this Quarterly Report on
Form 10-Q:
*3.0 Certificate of Incorporation, incorporated by reference to
Exhibit 3(i) to the Company's Form 10-KSB filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1987 (File
No. 0-13324).
*3.1 Certificate of Amendment, dated March 20, 1985, to Certificate of
Incorporation of the Company, incorporated by reference to Exhibit 4.1
to Amendment No. 1 of the Company's Registration Statement on Form S-3
filed with the Securities and Exchange Commission on March 9, 1995
(File No. 33-44331).
*3.2 Certificate of Amendment, dated June 9, 1989, to Certificate of
Incorporation of the Company, incorporated by reference to Exhibit 4.1
to Amendment No. 1 of the Company's Registration Statement on Form S-3
filed with the Securities and Exchange Commission on March 9, 1995
(File No. 33-44331).
*3.3 Certificate of Correction, dated May 17, 1991, to Certificate of
Incorporation of the Company, incorporated by reference to Exhibit 4.1
to Amendment No. 1 of the Company's Registration Statement on Form S-3
filed with the Securities and Exchange Commission on March 9, 1995
(File No. 33-44331).
*3.4 Certificate of Amendment, dated December 20, 1993, to Certificate
of Incorporation of the Company, incorporated by reference to Exhibit
3(i) to the Company's Form 10-KSB filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1993 (File
No. 0-13324).
*3.5 Certificate of Correction, dated December 22, 1993, to
Certificate of Incorporation of the Company, incorporated by reference
to Exhibit 3.3 to the Company's Form 10-KSB filed with the Securities
and Exchange Commission for the fiscal year ended December 31, 1993
(File No. 0-13324).
*3.6 Certificate of Correction, dated July 19, 1994, to Certificate of
Incorporation of the Company, incorporated by reference to Exhibit 4.1
to Amendment No. 1 to the Company's Registration Statement on Form S-3
filed with the Securities and Exchange Commission on March 9, 1995
(File No. 33-44331).
*3.7 Certificate of Amendment, dated April 2, 1996, to Certificate of
Incorporation of the Company, incorporated by reference to Exhibit 3.5
to the Company's Form 10-KSB filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1995 (File No.
0-13324).
*3.8 Certificate of Amendment, filed December 31, 1996, to Certificate
of Incorporation of the Company, incorporated by reference to Exhibit
3.10 to Amendment No. 1 to the Company's Form SB-2 filed with the
Securities and Exchange Commission on February 25, 1997 (File No.
333-18243).
15
<PAGE>
*3.9 By-Laws of the Company, incorporated by reference to Exhibit
3b(ii) to the Company's Form 10-KSB filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1987 (File
No. 0-13324).
*3.10 Amendment to By-Laws of the Company, incorporated by reference to
Exhibit 3.4 of the Company's Form 10-KSB filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1992 (File
No. 0-13324).
*4.0 Specimen Common Stock Certificate, incorporated by reference to
Exhibit 4.0 to Amendment No. 1 to the Company's Form SB-2 filed with
the Securities and Exchange Commission on February 25, 1997 (File No.
333-18243).
*4.1 Form of Series IV Warrant Agreement, incorporated by reference to
Exhibit 4.3 to Amendment No. 1 to the Company's Form SB-2 filed with
the Securities and Exchange Commission on February 25, 1997 (File No.
333-18243).
*4.2 Form of Series III Warrant Agreement, dated as of November 7,
1994, incorporated by reference to Exhibit 10.22 to the Company's Form
10-KSB filed with the Securities and Exchange Commission for the fiscal
year ended December 31, 1994 (File No. 0-13324).
*4.3 Form of Underwriters' Purchase Option, incorporated by reference
to Exhibit 4.5 to Amendment No. 1 to the Company's Form SB-2 filed with
the Securities and Exchange Commission on February 25, 1997 (File No.
333-18243).
*4.4 Stock Purchase Warrant Certificate for Purchase of Common Stock
of Questron Technology, Inc., incorporated by reference to Exhibit 4.6
to Amendment No. 1 to the Company's Form SB-2 filed with the Securities
and Exchange Commission on February 25, 1997 (File No. 333-18243).
*4.5 Amended Certificate of Designation Establishing Series of
Preferred Stock of Questron Technology, Inc., incorporated by reference
to Exhibit 4.7 to the Company's Quarterly Report on Form 10-QSB for the
three month period ended June 30, 1998 filed with the Securities and
Exchange Commission on May 15, 1998 (File No. 0-13324).
*4.6 Registration Rights Agreement, dated as of September 24, 1998, by
and between the Company and the persons listed on Schedule A thereto,
incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Securities and Exchange Commission on October 8, 1998
(File No. 0-13324).
*4.7 Certificate of Designation of Series A Junior Participating
Preferred Stock of Questron Technology, Inc., incorporated by reference
to the Company's Quarterly Report on Form 10-QSB for the three month
period ended September 30, 1998, filed with the Securities and Exchange
Commission on November 16, 1998 (File No. 0-13324).
*10.1 The Company's 1994 Director Non-Qualified Stock Option Plan,
incorporated by reference to Exhibit 10.28 of the Company's Report on
Form 10-KSB filed with the Securities and Exchange Commission for the
fiscal year ended December 31 1993 (File No. 0-13324).
*10.2 Employment Agreement, dated March 29, 1999 between Questron
Technology, Inc. and Dominic A. Polimeni incorporated by reference to
Exhibit 10.2 of the Company's Report on
16
<PAGE>
Form 10-KSB filed with the Securities and Exchange Commission for the
fiscal year ended December 31 1998 (File No. 0-13324).
*10.3 Employment Agreement, dated November 29, 1994, between Quest
Electronic Hardware, Inc. and Phillip D. Schwiebert, incorporated by
reference to Exhibit 10.25 to the Company's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1994 (File No. 0-13324).
*10.4 Employment Agreement dated October 1, 1999 between Questron
Technology, Inc. and Robert v. Gubitosi, incorporated by reference to
Exhibit 10.4 of the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1999 (File No. 0-13324).
*10.5 Non-Statutory Stock Option Agreement between Questron Technology
and Malcolm Tallmon dated Mach 6, 2000, incorporated by reference to
Exhibit 10.5 of the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1999 (File No. 0-13324).
*10.6. Termination of Management Advisory and Consulting Agreement,
dated as of March 1, 1999, between Gulfstream Financial Group, Inc. and
the Company.
*10.7. Purchase of Assets Agreement, dated as of November 29, 1994,
between Quest Electronic Hardware, Inc. and Arrow Electronics, Inc.,
incorporated by reference to Exhibit 10.29 to the Company's Form 10-KSB
filed with the Securities and Exchange Commission for the fiscal year
ended December 31, 1994 (File No. 0-13324).
*10.8. 1996 Stock Option Plan, incorporated by reference to Exhibit
10.19 to Amendment No. 1 to the Company's Form SB-2 filed with the
Securities and Exchange Commission on February 25, 1997
(File No. 333-18243).
*10.9. Exchange Agreement, dated November 8, 1996 by and among the
Company, Gulfstream Financial Group, Inc. and Phillip D. Schwiebert,
incorporated by reference to Exhibit 10.21 to Amendment No. 1 to the
Company's Form SB-2 filed with the Securities and Exchange Commission
on February 25, 1997 (File No. 333-18243).
*10.10. Stock Purchase Agreement dated as of December 16, 1996 relating
to Webb Distribution, Inc., incorporated by reference to Exhibit 2.0 to
Amendment No. 1 to the Company's Form SB-2 filed with the Securities
and Exchange Commission on February 25, 1997 (File No. 333-18243).
*10.11. Form of Underwriting Agreement, incorporated by reference to
Exhibit 2.0 to Amendment No. 1 to the Company's Form SB-2 filed with
the Securities and Exchange Commission on February 25, 1997
(File No. 333-18243).
*10.12. Stock Option Grant Agreement between the Company and Phillip D.
Schwiebert made as of November 8, 1996, incorporated by reference to
Exhibit 10.20 to the Company's Form 10-KSB filed with the Securities
and Exchange Commission for the fiscal year ended December 31, 1996
(File No. 0-13324).
*10.13. Stock Purchase Agreement between Questron Technology, Inc. and
the shareholders of California Fasteners, Inc. dated August 29, 1997,
incorporated by reference to Exhibit 2.0 to the Company's Form 8-K,
filed October 7, 1997 (File No. 0-13324).
*10.14. Serial Put Agreement between Questron Technology, Inc. and
Douglas D. Zadow and Terry Bastian dated September 22, 1997,
incorporated by reference to Exhibit 2.1 to the Company's Form 8-K,
filed October 7, 1997 (File No. 0-13324).
17
<PAGE>
*10.15. Stock Purchase Agreement, dated as of June 12, 1998, by and
between the Company, Fortune Industries, Inc. and the Stockholders of
the Company listed on Schedule 1.1 thereto (the "Fortune Stock Purchase
Agreement"), incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-QSB for the three-month period ended
June 30, 1998 filed with the Securities and Exchange Commission on
August 14, 1998 (File. No. 0-13324).
*10.16. Stock Purchase Agreement, dated as of June 12, 1998, by and
between the Company, Gregory Fitzgerald, Valerie Fitzgerald and
Fas-Tronics, Inc. (the "Fas-Tronics Stock Purchase Agreement"),
incorporated by reference to Exhibit 10.2 to the Company's Quarterly
Report on Form 10-QSB for the three-month period ended June 30, 1998
filed with the Securities and Exchange Commission on August 14, 1998
(File. No. 0-13324).
*10.17. Letter Agreement, dated July 29, 1998, by and between the
Company, Fortune Industries, Inc. and the Stockholders listed on
Schedule 1.1 to the Fortune Stock Purchase Agreement, incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report on Form
10-QSB for the three-month period ended June 30, 1998 filed with the
Securities and Exchange Commission on August 14, 1998
(File. No. 0-13324).
*10.18. Letter Agreement, dated July 29, 1998 by and between the Company,
Gregory Fitzgerald, Valerie Fitzgerald and Fas-Tronics, Inc.,
incorporated by reference to Exhibit 10.4 to the Company's Quarterly
Report on Form 10-QSB filed with the Securities and Exchange Commission
on August 14, 1998 (File No. 0-13324).
*10.19. Second Amendment to the Fas-Tronics Stock Purchase Agreement,
incorporated by reference to the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 8, 1998
(File No. 0-13324).
*10.20. Settlement Agreement dated as of March 1, 2000, by and among
Questron Technology, Inc., a Delaware corporation, Gregory Fitzgerald
and Valerie Fitzgerald, incorporated by reference to Exhibit 10.20 of
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.21. Second Amendment to the Fortune Stock Purchase Agreement,
incorporated by reference to the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 8, 1998
(File No. 0-13324).
*10.22. Rights Agreement, dated as of October 23, 1998, between the
Company and American Stock Transfer & Trust Company, as Rights Agent,
incorporated by reference to the Company's Registration Statement on
Form 8-A filed with the Securities and Exchange Commission on
November 6, 1998 (File No. 0-13324).
*10.23. Loan and Security Agreement, dated as of September 24, 1998, by
and among the Company, Questron Distribution Logistics, Inc.,
Integrated Material Systems, Inc., Power Components, Inc., California
Fasteners, Inc., Comp Ware, Inc., Fas-Tronics, Inc., Fortune
Industries, Inc., each of the signatures which is a signatory thereto,
Congress Financial Corporation (Florida), as administrative agent, and
Madeleine L.L.C., as collateral agent, incorporated by reference to
Exhibit 10.17 to the Company's Quarterly Report on Form 10-QSB for the
three-month period ended September 30, 1998, filed with the Securities
and Exchange Commission on November 16, 1998 (File No. 0-13324).
18
<PAGE>
*10.24. Amendment Number One to the Loan and Security Agreement, dated
November 2, 1998, by and among the Company, Questron Distribution
Logistics, Inc., Integrated Material Systems, Inc., Power Components,
Inc., California Fasteners, Inc., Comp Ware, Inc., Fas-Tronics, Inc.,
Fortune Industries, Inc., each of the signatures which is a signatory
thereto, Congress Financial Corporation (Florida), as administrative
agent and Madeleine L.L.C., as collateral agent, incorporated by
reference to Exhibit 10.18 to the Company's Quarterly Report on Form
10-QSB for the three-month period ended September 30, 1998, filed with
the Securities and Exchange Commission on November 16, 1998 (File No.
0-13324).
*10.25. Asset Purchase Agreement, dated as of January 29, 1999, by and
between the Company, Questron Distribution Logistics, Inc. and AFCOM,
Inc., and each of the persons listed on Schedule 1.1 thereto and
signatory thereto, incorporated by reference to Exhibit 10.19 to the
Company's Quarterly Report on Form 10-Q for the three month period
ended March 31, 1999 (File No. 0-13324).
*10.26. Asset Purchase Agreement, dated as of March 11, 1999, by and
between Questron Technology, Inc., Questron Distribution Logistics,
Inc., and Metro Form Corporation, d.b.a. Olympic Fasteners & Electronic
Hardware, and each of the persons listed on Schedule 1.1 thereto and
signatory thereto (the "Olympic Purchase Agreement"), incorporated by
reference to Exhibit 10.20 to the Company's Quarterly Report on Form
10-Q for the three-month period ended March 31, 1999 (File No.
0-13324).
*10.27. Amendment to the Olympic Purchase Agreement, dated June 28, 1999,
incorporated by reference to Exhibit 2.2 to the Company's Current
Report on Form 8-K, dated June 30, 1999 (File No. 0-13324).
*10.28. Settlement Agreement in Connection with the Acquisition of
Olympic dated as of March 7, 2000, by and among Questron Finance Corp.,
a Delaware corporation (ii) Questron Technology, Inc., a Delaware
corporation and Sheldon Enterprises, Inc (James Mraz as notified
party), incorporated by reference to Exhibit 10.28 of the Company's
Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.29. Settlement Agreement in Connection with the Acquisition of
Olympic dated as of March 7, 2000, by and among Questron Finance Corp.,
a Delaware corporation (ii) Questron Technology, Inc., a Delaware
corporation and Sheldon Enterprises, Inc (Rudolph M. Petric as notified
party), incorporated by reference to Exhibit 10.29 of the Company's
Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.30. Stock Purchase Agreement, dated as of April 26, 1999, between
Questron Distribution Logistics, Inc., Questron Technology, Inc., James
R. Gilchrist and Capital Fasteners, Inc. (the "Capital Purchase
Agreement"), incorporated by reference to Exhibit 2.3 to the Company's
Current Report on Form 8-K, dated June 30, 1999 (File No. 0-13324).
*10.31. Amendment to the Capital Purchase Agreement, dated June 25, 1999,
incorporated by reference to Exhibit 2.4 to the Company's Current
Report on Form 8-K, dated June 30, 1999 (File No. 0-13324).
*10.32. Settlement Agreement in Connection with Capital Acquisition dated
as of March 7, 2000, by and among Questron Finance Corp., a Delaware
corporation, Questron Technology, Inc., a Delaware corporation and
James R. Gilchrist, Trustee of James R. Gilchrist Revocable Trust Under
Agreement Dated June 25, 1999, incorporated by reference to
Exhibit 10.32 of the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission for the fiscal year ended
December 31, 1999 (File No. 0-13324).
19
<PAGE>
*10.33. Settlement Agreement in Connection with Capital Acquisition dated
as of March 7, 2000, by and among Questron Finance Corp., a Delaware
corporation, Questron Technology, Inc., a Delaware corporation and
James R. Gilchrist, incorporated by reference to Exhibit 10.33 of the
Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.34. Letter Agreement, dated as of June 29, 1999, amending the Capital
Purchase Agreement, incorporated by reference to Exhibit 2.5 to the
Company's Current Report on Form 8-K, dated June 30, 1999
(File No. 0-13324).
*10.35. Stock Purchase Agreement, dated as of May 7, 1999, by and between
Questron Technology, Inc, Questron Distribution Logistics, a Delaware
corporation, Action Threaded Products, Inc. and the persons signatory
thereto (the "Action Purchase Agreement"), incorporated by reference to
Exhibit 2.6 to the Company's Current Report on Form 8-K, dated June 30,
1999 (File No. 0-13324).
*10.36. Letter Agreement, dated as of June 29, 1999, amending the Action
Purchase Agreement, incorporated by reference to Exhibit 2.7 to the
Company's Current Report on Form 8-K, dated June 30, 1999
(File No. 0-13324).
*10.37. Settlement Agreement in Connection with the Action Acquisition
dated as of March 7, 2000, by and among Questron Finance Corp., a
Delaware corporation, Questron Technology, Inc., a Delaware corporation
and Gerald H. Ablan, incorporated by reference to Exhibit 10.37 of
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.38. Settlement Agreement in Connection with the Action Acquisition
dated as of March 7, 2000, by and among Questron Finance Corp., a
Delaware corporation, Questron Technology, Inc., a Delaware corporation
and Robert A. Lehman, incorporated by reference to Exhibit 10.38 of
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.39. Settlement Agreement in Connection with the Action Acquisition
dated as of March 7, 2000, by and among Questron Finance Corp., a
Delaware corporation, Questron Technology, Inc., a Delaware corporation
and William P. Hackett, incorporated by reference to Exhibit 10.39 of
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.40. Settlement Agreement in Connection with the Action Acquisition
dated as of March 7, 2000, by and among Questron Finance Corp., a
Delaware corporation, Questron Technology, Inc., a Delaware corporation
and Charles W. Gozder, incorporated by reference to Exhibit 10.40 of
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1999
(File No. 0-13324).
*10.41. Securities Purchase Agreement (identical agreement executed
separately with each of four purchasers), dated as of June 29, 1999, by
and between Questron Technology, Inc., Questron Operating Company,
Inc., and, separately, each of Albion Alliance Mezzanine Fund, L.P.,
Alliance Investment Opportunities Fund, L.L.C., The Equitable Life
Assurance Society of the United States and IBJ Whitehall Bank & Trust
Company, incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K, dated June 30, 1999 (File No. 0-13324).
*10.42. Note Agreement, dated as of June 29, 1999, among Questron
Operating Company, Inc. and Albion Alliance Mezzanine Fund, L.P.,
Alliance Investment Opportunities Fund, L.L.C., The Equitable Life
Assurance Society of the United States and IBJ Whitehall Bank & Trust
Company, incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K, dated June 30, 1999 (File No. 0-13324).
*10.43. Investors Rights Agreement, dated as of June 29, 1999, among
Questron Technology, Inc. and Albion Alliance Mezzanine Fund, L.P.,
Alliance Investment Opportunities Fund, L.L.C., The Equitable Life
Assurance Society of the United States and IBJ Whitehall Bank & Trust
20
<PAGE>
Company, incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K, dated June 30, 1999 (File No. 0-13324).
*10.44. Unconditional Guaranty, dated as of June 30, 1999, by Questron
Technology, Inc., Questron Finance Corp., Questron Distribution
Logistics, Inc., Integrated Material Systems, Inc., Power Components,
Inc., Fortune Industries, Inc., Fas-Tronics, Inc., California
Fasteners, Inc., Comp Ware, Inc., Action Threaded Products, Inc.,
Action Threaded Products of Georgia, Inc., Action Threaded Products of
Minnesota, Inc. and Capital Fasteners, Inc., in favor of each of Albion
Alliance Mezzanine Fund, L.P., Alliance Investment Opportunities Fund,
L.L.C., The Equitable Life Assurance Society of the United States and
IBJ Whitehall Bank & Trust Company, incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K, dated June
30, 1999 (File No. 0-13324).
*10.45. Amended and Restated Loan and Security Agreement, dated as of
June 29, 1999, by and between Questron Technology, Inc. and its
subsidiaries and Congress Financial Corporation (Florida) and Ableco
Finance LLC, incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K, dated June 30, 1999 (File No. 0-13324).
*10.46. Amendment Number One to Amended and Restated Loan and Security
Agreement, dated as of October 1, 1999, by and among Questron
Technology, Inc., certain of its direct and indirect Subsidiaries
identified therein, each of the Lenders signatory thereto, Congress
Financial Corporation and Ableco Finance LLC, "), incorporated by
reference to Exhibit 10.26 to the Company's Quarterly Report on Form
10-Q for the three month period ended September 30, 1999 (File No.
0-13324).
*10.47. Amendment to Note Agreement, dated as of September 29, 1999, by
and among Questron Operating Company, Inc. and Albion Alliance
Mezzanine Fund, L.P., Alliance Investment Opportunities Fund, LLC, The
Equitable Life Assurance Society of the United States and IBJ Whitehall
Bank & Trust Company "), incorporated by reference to Exhibit 10.27 to
the Company's Quarterly Report on Form 10-Q for the three month period
ended September 30, 1999 (File No. 0-13324).
+21.1. Subsidiaries of the Company, as amended.
+27. Financial Data Schedule.
* previously filed
+ filed herewith
21
<PAGE>
Exhibit 21.1
QUESTRON TECHNOLOGY, INC.
EXHIBIT 21.1 - SUBSIDIARIES OF THE REGISTRANT
AT MARCH 31, 2000
<TABLE>
<CAPTION>
Name of Subsidiary Date of State of
Incorporation Incorporation
--------------------------------------------------------- -------------------------- -------------------------
<S> <C> <C>
Questron Distribution Logistics, Inc., formerly
Quest Electronic Hardware, Inc. October 12, 1994 Delaware
Questnet Components, Inc. February 13, 1996 Delaware
CompWare, Inc. d/b/a Webb Distribution November 21, 1994 Delaware
Power Components, Inc. July 17, 1997 Pennsylvania
Integrated Material Systems, Inc. January 14, 1997 Arizona
California Fasteners, Inc. August 17, 1973 California
Fas-Tronics, Inc. February 12, 1985 Texas
Fortune Industries, Inc. March 10, 1964 Texas
Capital Fasteners, Inc. May 29, 1985 North Carolina
Action Threaded Products, Inc. July 12, 1971 Illinois
B&G Supply Company, Inc. October 5, 1989 Texas
RSD Sales Company, Inc. January 1, 1990 New York
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE 3 MONTHS ENDED MARCH 31, 2000 AND THE
CONSOLIDATED BALANCE SHEET FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 398,967
<SECURITIES> 0
<RECEIVABLES> 21,515,508
<ALLOWANCES> 283,666
<INVENTORY> 41,890,092
<CURRENT-ASSETS> 64,690,763
<PP&E> 3,327,997
<DEPRECIATION> 1,598,116
<TOTAL-ASSETS> 150,106,236
<CURRENT-LIABILITIES> 16,717,034
<BONDS> 0
0
0
<COMMON> 8,650
<OTHER-SE> 45,427,262
<TOTAL-LIABILITY-AND-EQUITY> 150,106,236
<SALES> 36,478,902
<TOTAL-REVENUES> 36,478,902
<CGS> 21,760,309
<TOTAL-COSTS> 30,839,463
<OTHER-EXPENSES> 620,478
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,858,529
<INCOME-PRETAX> 2,160,432
<INCOME-TAX> 896,579
<INCOME-CONTINUING> 1,263,853
<DISCONTINUED> 0
<EXTRAORDINARY> 459,844
<CHANGES> 0
<NET-INCOME> 1,723,697
<EPS-BASIC> .22
<EPS-DILUTED> .16
</TABLE>
