<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-13732
COMTREX SYSTEMS CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2353604
- --------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 Executive Drive, Moorestown, NJ 08057-4224
- ----------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
(609) 778-0090
----------------
(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 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 24, 1998
----- ----------------------------
Common Stock, par value $.001 3,591,572
<PAGE>
COMTREX SYSTEMS CORPORATION
TABLE OF CONTENTS
FORM 10-QSB
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements, Unaudited
Unaudited Consolidated Balance Sheets
at June 30, 1998 and March 31, 1998
Unaudited Consolidated Statement of Operations
for the three months ended June 30, 1998 and 1997
Unaudited Consolidated Statement of Cash Flow for
the three months ended June 30, 1998 and 1997
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II
OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
<PAGE>
Item 1.
Financial Statements
COMTREX SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
---------------------------
(These statements are unaudited.)
<TABLE>
<CAPTION>
ASSETS
------
June 30, 1998 March 31, 1998
--------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 226,292 $ 313,617
Accounts receivable, net of reserve of
$144,540 and $131,488 as of 06/30/1998
and 3/31/1998, respectively 1,613,340 1,679,136
Note receivable and accrued interest 13,940 14,495
Inventories 1,326,546 1,180,783
Due from officers 16,015 17,523
Prepaid expenses and other 147,363 106,334
----------- -----------
Total current assets 3,343,496 3,311,888
----------- -----------
Property and equipment:
Machinery, equipment, furniture and leasehold 1,433,776 1,426,107
Less - accum depreciation (1,151,783) (1,133,616)
----------- -----------
Net property and equipment 281,993 292,491
----------- -----------
Land and building:
Land and building 468,900 468,900
Less - accum depreciation (11,618) (8,313)
---------- -----------
Net land and building 457,282 460,587
----------- -----------
Other assets:
Purchased and capitalized software and design 1,086,241 1,068,980
Less - accum amortization and depreciation (772,350) (759,411)
----------- -----------
Total other assets 313,891 309,569
----------- -----------
Goodwill, net of amortization 423,498 428,998
----------- -----------
TOTAL ASSETS $ 4,820,160 $ 4,803,533
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 889,227 $ 842,352
Accrued expenses 195,931 200,671
Note payable 16,250 32,500
Customer deposits 53,535 31,901
Current portion, debt and notes payable 56,824 56,136
Deferred revenue 196,753 277,970
----------- -----------
Total current liabilities 1,408,520 1,441,530
----------- -----------
Long term liabilities:
Long term debt, net of current 289,905 296,563
Convertible debentures payable 300,000 300,000
----------- -----------
Total long term liabilities 589,905 596,563
----------- -----------
Deferred income taxes 10,418 10,418
----------- -----------
Shareholders' equity:
Preferred stock, $1 par value, 1,000,000
shares authorized, none outstanding - -
Common stock, $.001 par value, 5,000,000
shares authorized, 3,591,572 and 3,583,572
issued and outstanding as of
6/30/1998 and 3/31/1998, respectively 3,592 3,584
Additional paid-in capital 5,564,125 5,557,092
Foreign currency translation adjustment 32,408 34,912
Accumulated deficit (2,788,808) (2,840,566)
----------- -----------
Total shareholders' equity 2,811,317 2,755,022
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,820,160 $ 4,803,533
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE>
COMTREX SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(These statements are unaudited.)
<TABLE>
<CAPTION>
Three months ended
June 30,
1998 1997
-------------------------------
<S> <C> <C>
Net sales $ 1,964,727 $ 1,254,592
Costs and expenses
Cost of sales 1,075,012 777,270
Administrative 258,423 162,042
Research and development 33,343 46,325
Sales and marketing 181,319 133,457
Customer support 294,272 58,550
Depreciation and amortization 39,911 30,350
---------- -----------
1,882,280 1,207,994
---------- -----------
Income from operations 82,447 46,598
Interest income, net (15,953) (1,187)
---------- -----------
Income before
income taxes and extraordinary credit 66,494 45,411
Provision for income taxes (14,854) (18,165)
---------- -----------
Income before extraordinary credit 51,640 27,246
Extraordinary credit, reduction of income
taxes arising from carryforward
of prior years' operating losses 118 18,165
---------- -----------
Net income $ 51,758 $ 45,411
========== ===========
Basic earnings per share:
Income before extraordinary credit $ .01 $ .01
Extraordinary credit $ - $ -
---------- -----------
Net income $ .01 $ .01
========== ===========
Diluted earnings per share:
Income before extraordinary credit $ .01 $ .01
Extraordinary credit $ - $ -
---------- -----------
Net income $ .01 $ .01
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
COMTREX SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(These statements are unaudited.)
<TABLE>
<CAPTION>
Three months ended
June 30,
1998 1997
-------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 51,758 $ 45,411
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities -
Depreciation and amortization 39,911 30,350
Deferred income tax - -
Provisions for losses on accounts
receivable 10,274 12,613
Provisions for losses on inventories 9,000 8,500
Foreign currency translation adjustment (2,504) -
(Increase) decrease in -
Accounts receivable 55,522 (155,965)
Note receivable 555 300
Inventories (154,763) 169,722
Due from officers 1,508 -
Prepaid expenses and other (41,029) (3,734)
Increase (decrease) in -
Accounts payable 46,875 (163,015)
Accrued expenses (4,740) (32,387)
Customer deposits 21,634 (4,167)
Deferred revenue (81,217) -
Notes payable, current (16,250) -
--------- -----------
Net cash provided by (used in)
operating activities (63,466) (92,372)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale (purchases) of property and equipment:
Purchases of property and equipment (7,669) (1,261)
Purchases of software and capitalized
software and design (17,261) -
Proceeds from disposals of property,
plant and equipment - -
Capitalized acquisition costs - -
--------- -----------
Net cash provided by (used in)
investing activities (24,930) (1,261)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of borrowings under credit facilities 273,586 160,000
Repayments under credit facilities (273,586) -
Payments on notes and other loans 688 -
Payments on long-term debt (6,658) -
Proceeds from issuing equity securities 7,041 -
--------- -----------
Net cash provided by (used in)
financing activities 1,071 160,000
--------- -----------
Net increase (decrease) in cash (87,325) 66,367
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 313,617 142,886
--------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 226,292 $ 209,253
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
<PAGE>
COMTREX SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. Interim financial reporting:
The accompanying financial statements should be read in conjunction
with the financial statements and notes included in the Company's latest
Annual Report on Form 10-KSB.
These interim financial statements reflect all adjustments, of a
normal and recurring nature, which are, in the opinion of management,
necessary for a fair statement of the results for the interim period(s)
presented. The results for the period(s) herein presented are not necessarily
indicative of the results for the entire fiscal year.
2. Inventories:
June 30, March 31,
1998 1998
----------- --------
Raw materials $ 479,529 $ 706,342
Work-in-process 365,054 91,398
Finished goods 551,387 443,467
Reserve for excess and obsolete inventory (69,424) (60,424)
----------- -----------
$ 1,326,546 $ 1,180,783
=========== ===========
3. Income taxes:
The consolidated statement of operations reflects a provision for
United States income taxes at the rate of 40 percent, which represents the
federal statutory rate of 34 percent plus an effective state tax rate of 6
percent, plus a 21 percent provision for U.K. income taxes. The United States
provision for income taxes is offset by an extraordinary credit which arises
from the utilization of prior years' operating losses.
The Company has net operating loss carryforwards of approximately
$3,100,000 for financial reporting and for federal income tax purposes, which
begin to expire in 2004. The Company has tax credit carryforwards for federal
income tax purposes of approximately $148,000. Net operating loss
carryforwards are also available for state income tax purposes.
4. Earnings per share disclosure:
<TABLE>
<CAPTION>
Three months ended
June 30, 1998
-------------
Income Shares Per Share
------ ------ ---------
<S> <C> <C> <C>
Income before extraordinary item $ 51,640
Basic EPS:
Income available to common shareholders $ 51,640 3,583,660 $ 0.01
Effect of dilutive securities, options 93,396
Effect of dilutive convertible debenture 62,790
Diluted EPS:
Income available to common shareholders $ 57,640 3,739,846 $ 0.01
</TABLE>
For purposes of computing diluted per share data, $6,000 of interest
related to the convertible debenture was added to net income.
- 5 -
<PAGE>
COMTREX SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------
4. Earnings per share disclosure: (continued)
<TABLE>
<CAPTION>
Three months ended
June 30, 1997
-------------
Income Shares Per Share
------ ------ ---------
<S> <C> <C> <C>
Income before extraordinary item $ 27,246
Basic EPS:
Income available to common shareholders $ 27,246 3,164,022 $ 0.01
Effect of dilutive securities, options 6,605
Diluted EPS:
Income available to common shareholders $ 27,246 3,170,627 $ 0.01
</TABLE>
5. Stock purchase transaction
On October 2, 1997, the Company acquired from Norman Roberts
("Norman"), Shirley Roberts ("Shirley"), and Steven Roberts ("Steven"
together, with Norman and Shirley, the "Sellers") all the issued and
outstanding capital stock (the "Stock") of Data Systems Terminals Limited, a
corporation formed and existing under the laws of England ("DSTL"). DSTL is a
distributor of the Company's products in the United Kingdom, which business
the Company intends to continue.
The following consideration was paid by the Company for such
acquisition of the Stock:
(a) 400,000 restricted shares of the Common Stock of the Company, par
value $.001 per share, were delivered by the Company to Steven. These shares
of the Company's Common Stock are not transferable by Steven on or before
October 2, 1999.
(b) A Subordinated Convertible Debenture, in the original principal
amount of $300,000 (the "Debenture"), was delivered by the Company to Norman
and Shirley. The Debenture accrues interest at the rate of eight percent (8%)
per annum, which is payable monthly. No principal is payable pursuant to the
terms of the Debenture for the first three (3) years following its delivery.
The Debenture is convertible into shares of the Company's Common Stock (in
blocks of 20,000 shares), at any time on or before October 2, 2000, at the
rate of $1.00 per share. The Company may prepay all amounts outstanding under
the Debenture at any time on or before October 2, 2000 if (i) the shares of
the Company's Common Stock have closed at $1.50, or higher, for each trading
day for a thirty (30) day period, and (ii) the Company has provided the
holders of the Debenture with at least sixty (60) days prior written notice of
the prepayment. Any principal outstanding of the Debenture on October 2, 2000
shall be paid by the Company in twelve (12) equal quarterly installments. The
Company anticipates that internal funds will be utilized to make all interest
and principal payments due under the Debenture.
(c) A promissory note, in the original principal amount of $65,000
(the "Note"), was delivered to Norman and Shirley. The Note bears interest at
the rate of six percent (6%) per annum. The outstanding principal balance of
the Note, and all interest accrued thereon, is repayable in twelve (12) equal
monthly installments, commencing on November 1, 1997. The Company anticipates
that internal funds will be utilized to make such payments due under the Note.
The business combination will be accounted for using the purchase
method.
- 6 -
<PAGE>
COMTREX SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------
5. Stock purchase transaction: (continued)
The cost of the acquired enterprise was $681,204, which represents
400,000 shares of Comtrex Common Stock with an assigned value of $233,600, the
$300,000 Debenture, the $65,000 Note and legal and accounting fees associated
with the transaction of $82,604.
Acquired goodwill will be amortized over twenty (20) years, using the
straight line method.
6. Pro forma financial data (unaudited):
As outlined in Footnote 5, the Company acquired all the issued and
outstanding capital stock of DSTL, effective October 2, 1997. The following
pro forma financial data, unaudited, reflects revenue, income from continuing
operations, net income and income per share for the three month period ended
June 30, 1997, as though the transaction occurred as of April 1, 1997.
Three months ended
June 30, 1997
------------------
Revenue $ 1,861,710
Income from continuing operations 54,774
Net income 43,346
Income per share 0.01
7. Capital structure disclosure:
In connection with the acquisition of DSTL, outlined in Footnote 5, a
Subordinated Convertible Debenture, in the original principal amount of
$300,000 (the "Debenture"), was delivered by the Company to Norman and
Shirley. The Debenture accrues interest at the rate of eight percent (8%) per
annum, which is payable monthly. No principal is payable pursuant to the terms
of the Debenture for the first three (3) years following its delivery. The
Debenture is convertible into shares of the Company's Common Stock (in blocks
of 20,000 shares), at any time on or before October 2, 2000, at the rate of
$1.00 per share. The Company may prepay all amounts outstanding under the
Debenture at any time on or before October 2, 2000 if (i) the shares of the
Company's Common Stock have closed at $1.50, or higher, for each trading day
for a thirty (30) day period, and (ii) the Company has provided the holders of
the Debenture with at least sixty (60) days prior written notice of the
prepayment. Any principal outstanding of the Debenture on October 2, 2000
shall be paid by the Company in twelve (12) equal quarterly installments. The
Company anticipates that internal funds will be utilized to make all interest
and principal payments due under the Debenture.
- 7 -
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of June 30, 1998, the Company had total current assets of
$3,343,496, including cash and cash equivalents of $226,292, as compared to
$3,311,888 of total current assets and $313,617 of cash and cash equivalents
as of March 31, 1998. The Company had current liabilities of $1,408,520,
resulting in a current ratio of 2.4 as of June 30, 1998, compared to
$1,441,530 and 2.3, respectively, as of March 31, 1998.
Cash and cash equivalents decreased by $87,325 during the first three
months of fiscal year 1999. Operating activities consumed $63,466 of cash, as
compared with cash consumption of $92,372 for the corresponding prior year
period. The combination of investing and financing activities consumed an
additional $23,859 during the current period.
The Company reported net income of $51,758 for the three month period
ended June 30, 1998. The Company has net operating loss carryforwards of
approximately $3,100,000 for federal income tax purposes, which do not begin
to expire until 2004, and tax credit carryforwards of approximately $145,000.
In addition to net income, the primary positive contributions to cash
flow from operating activities were an accounts receivable decrease of
$65,796, net of reserves, and depreciation and amortization of $39,911, along
with an increase in accounts payable of $46,875. Both the receivables decrease
and the increase in payables are largely a result of timing, and are not
necessarily indicative of any trends. The quarterly depreciation and
amortization contribution is expected to continue throughout the current
fiscal year.
The primary negative contributions to cash flow from operating
activities were an increase in inventories and a decrease in deferred revenue.
Deferred revenue is principally comprised of prepayments on maintenance
contracts in the Company's U.K. subsidiary and its Atlanta District Office.
The decrease is largely a result of timing, and not necessarily indicative of
any trend in maintenance revenues or billings. Inventories increased during
the three month period by $145,763, net of reserves. While the raw materials
component of inventory decreased by $226,813, the finished goods and
work-in-process components increased by $107,920 and $273,656, respectively.
The raw materials component decrease is due primarily to the planned, gradual
phase-out of the Company's proprietary Sprint and SuperSprint product lines,
which are being replaced by the open architecture PCS/5000 product series. The
PCS/5000 is configured principally with completed circuit boards and
assemblies which are generally available, often with off-the-shelf delivery to
the Company. The Company is able to maintain a lower level of raw material,
component inventory than is required with a proprietary product series, such
as the Sprint and SuperSprint, while maintaining the same delivery schedule,
at comparable sales levels. The increase in finished goods inventories is a
result of the combination of a more efficient assembly process, resulting in
an increased level of finished goods, and the stocking levels necessary to
fulfill immediate installation and service requirements in both the Company's
U.K. subsidiary and its Atlanta District Office.
Investing activities consumed $24,930 of cash during the three month
period ended June 30, 1998, through a combination of purchased property and
equipment and capitalized software and design. Financing activities generated
a negligible amount of cash, $1,071, as exercises of options offset payments
on long term debt during the three month period. The Company's U.K. subsidiary
borrowed a total of $273,586 under its credit facility at various times during
the course of the three month period, and repaid each such borrowing.
Adjustments resulting from translating foreign functional currency
financial statements into U.S. dollars are included in the consolidated
statements of cash flows as an adjustment to reconcile net income to cash used
in operating activities. For the period ended June 30, 1998, these adjustments
had a negligible impact of $2,504 on the consolidated cash flows. On the
Balance Sheet, these adjustments are recorded in a currency translation
adjustment in shareholders' equity.
- 8 -
<PAGE>
Liquidity and Capital Resources (continued)
In March of 1998, the Company's wholly owned subsidiary in the U.K.,
Comtrex Systems Corporation LTD, entered into a line of credit agreement with
Barclays Bank PLC. The agreement calls for borrowings of up to (pound)150,000,
and expires on March 30, 1999. Borrowings bear interest at the rate of three
percent in excess of the bank's base rate and are collateralized by
substantially all assets of the subsidiary. The parent Company is not a
guarantor on this line of credit.
In June of 1998, the Company and PNC Bank N.A. entered into a
$700,000 credit facility which expires on July 31, 1999. The agreement with
PNC Bank provides for borrowings of up to $650,000, and for the issuance by
the bank of up to $50,000 of Irrevocable Letters of Credit. This agreement
replaces a line of credit agreement with Fleet Bank N.A., entered into in
October of 1997 and which extended through July of 1998. The agreement with
Fleet Bank provided for borrowings of up to $750,000, with a limitation
depending on the eligible receivables, as defined in the agreement. Both the
new and previous facility provide for interest at the banks' prime rate, and
for collateral assignment of substantially all assets of the Company. The
facility with PNC Bank N.A., however, contains no provisions limiting the
borrowings amount depending on eligible receivables, such as were contained in
the agreement with Fleet Bank N.A.
The Company believes that its cash balance, together with its lines
of credit, provides the Company with adequate liquidity to finance its
projected operations. As of June 30, 1998, the Company had no material
commitments for capital expenditures.
Results of Operation
Net sales during the first quarter of fiscal year 1999 increased by
57%, to $1,964,727, as compared with corresponding sales of $1,254,592 during
the first quarter of fiscal year 1998. The primary contributing factor to the
increase in sales was the acquisition, outlined in Note 5 to the Notes to
Consolidated Financial Statements, of the Company's U.K. distributor, as of
October 2, 1997, and the resulting consolidation of sales.
The Company's subsidiary in the U.K., Comtrex Systems Corporation LTD
("Comtrex U.K.") operates essentially autonomously, maintaining its own
accounting system, clerical and administrative staff. While the accounting
function within Comtrex U.K. has day-to-day reporting responsibility to the
parent Company, the sales, support and service departments operate within the
reporting structure of the subsidiary. Comtrex U.K. also provides sales and
service support for the Company's distribution network in Europe.
The Company reported net income of $51,758 for the current three
month period, or $.01 per share, as compared with net income of $45,411, or
$.01 per share, for the comparable prior year period.
Administrative expenses increased from $162,042 during the first
quarter of fiscal year 1998, to $258,423 for the first quarter of fiscal year
1999, although both amounts represent 13% of net sales. Sales, marketing and
customer support expenses increased from $192,007, or 15% of net sales, during
the period ended June 30, 1997, to $475,591, or 24% of net sales, during the
current fiscal year period. Substantially all of the operating activities of
Comtrex U.K., like the Company's District Office in Atlanta, relate to the
direct sale, installation and service of products to end-users. The selling
and customer support expense required for such direct sales activities
generally represents a higher percentage of sales than is associated with
sales through a dealer or distribution channel.
Cost of sales during the quarter of fiscal year 1999 were $1,075,012,
or 55% net sales, as compared to $777,270, or 62% of net sales, for the first
quarter of the prior fiscal year. The significant reduction in cost of sales
and increase in gross margin is a result of the consolidation of sales of
Comtrex U.K. While selling and support expenses represent a higher percentage
of direct sales than sales through a distribution network, the gross margin on
such product sales is significantly greater. In addition to product sales,
approximately 38% of the net sales of Comtrex U.K. consist of maintenance and
repairs, installation, training and implementation services. Such service
related revenue is at a greater gross margin than product sales.
- 9 -
<PAGE>
Results of Operation (continued)
As of July 24, 1998, the Company's backlog was approximately
$918,000, which includes approximately $452,000 in backlog of Comtrex U.K. for
delivery to end users, and excludes any orders for delivery to the subsidiary
from the parent. The Company's backlog as of July 31, 1997 was approximately
$292,631, which included approximately $139,367 on order from the U.K., when
the current subsidiary was operating as an independent distributor. The
Company expects that substantially all of its current backlog will be shipped
within the next 90 days.
Forward Looking Statements
This Form 10-QSB discusses primarily historical information.
Statements included in this Form 10-QSB, to the extent they are forward
looking, are based on current management expectations that involve a number of
uncertainties and risks. Potential risks and uncertainties include, without
limitation, the impact of economic conditions generally; the competitive
nature of the intelligent point-of-sale terminal industry; the Company's
ability to enhance its existing products and develop and introduce new
products which keep pace with technological developments in the marketplace;
and market demand.
- 10 -
<PAGE>
Item 5.
OTHER INFORMATION
Stockholder Proposals
Stockholder proposals intended to be considered at the 1999 Annual
Meeting of Stockholders and which the proponent would like to have included in
the proxy materials distributed by the Company in connection with such
meeting, pursuant to Rule 14a-8 promulgated under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), must be received at the principal
executive offices of the Company no later than March 19, 1999. Such proposals
may be included in next year's proxy materials if they comply with certain
rules and regulations promulgated by the Securities and Exchange Commission.
Stockholder proposals intended to be considered at the 1999 Annual
Meeting of Stockholders and for which the proponent does not intend to seek
inclusion of the proposal in the proxy materials to be distributed by the
Company in connection with such meeting must be received at the principal
executive offices of the Company no later than June 2, 1999. Any stockholder
proposal received after such date will not be considered to be timely
submitted for purposes of the discretionary voting provisions of Rule 14a-4
promulgated under the 1934 Act. In accordance with Rule 14a-4(c), the holders
of proxies solicited by the Board of Directors of the Company in connection
with the Company's 1999 Annual Meeting of Stockholders may vote such proxies
in their certain matters as more fully described in such Rule, including
without limitation on any matter coming before the meeting as to which the
Company does not have notice on or before June 2, 1999.
Item 6.
EXHIBITS AND REPORTS ON FORM 8-K
List of Exhibits
Exhibit No. Description of Instrument
----------- -------------------------
27 *(1) Financial Data Schedule
*(1) Filed herewith.
Reports on Form 8-K
No Form 8-K's were filed in the quarter ended June 30, 1998.
- 11 -
<PAGE>
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.
COMTREX SYSTEMS CORPORATION
(Registrant)
Date: August 12, 1998 By: /s/
------------------- ---------------------------------------
Jeffrey C. Rice
Chief Executive Officer
Date: August 12, 1998 By: /s/
------------------- ---------------------------------------
Lisa J. Mudrick
Chief Financial &
Chief Accounting Officer
- 12 -
<PAGE>
Exhibit Index
Exhibit
-------
27 Financial Data Schedule
- 13 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 226,292
<SECURITIES> 0
<RECEIVABLES> 1,757,880
<ALLOWANCES> 144,540
<INVENTORY> 1,326,546
<CURRENT-ASSETS> 3,343,496
<PP&E> 1,433,776
<DEPRECIATION> 1,151,783
<TOTAL-ASSETS> 4,820,160
<CURRENT-LIABILITIES> 1,408,520
<BONDS> 0
<COMMON> 3,592
0
0
<OTHER-SE> 5,564,125
<TOTAL-LIABILITY-AND-EQUITY> 4,820,160
<SALES> 1,964,727
<TOTAL-REVENUES> 1,964,727
<CGS> 1,075,012
<TOTAL-COSTS> 1,882,280
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,274
<INTEREST-EXPENSE> 15,953
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