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 March 31, 1995
Commission File Number 33-7693
___________________________________________________________________________
VTX ELECTRONICS CORP.
(Exact name of registrant as specified in its charter)
___________________________________________________________________________
Delaware 11-2816128
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
61 Executive Boulevard, Farmingdale, New York 11735
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (516) 293-9880
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 _______
On May 1, 1995, 12,652,000 shares of common stock, $.10 par value were
outstanding.
Note: This is Page 1 of a document consisting of 15 pages.
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS:
Balance Sheets - March 31, 1995 and June 30, 1994................... 3
Statements of Operations - Nine Months Ended
March 31, 1995 and 1994........................................... 4
Statements of Operations - Quarter Ended
March 31, 1995 and 1994........................................... 5
Statements of Cash Flows - Nine Months Ended
March 31, 1995 and 1994........................................... 6
Notes to Consolidated Financial Statements........................... 7-11
ITEM 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 12-13
PART II- OTHER INFORMATION............................................. 14
SIGNATURES............................................................. 15
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1995 1994
(Unaudited) (Audited)
ASSETS ----------- -----------
- ------
CURRENT ASSETS:
Cash....................................... $ 345,641 $ 593,438
Accounts receivable, net of allowance
for doubtful accounts of $324,000 and
$394,000 as of March 31, 1995 and
June 30, 1994, respectively.............. 5,218,774 6,061,826
Inventories, net........................... 3,602,925 3,628,949
Prepaid expenses and other current
assets................................... 555,924 295,151
Prepaid income taxes....................... 14,166 13,040
----------- -----------
TOTAL CURRENT ASSETS....................... 9,737,430 10,592,404
PROPERTY, PLANT AND EQUIPMENT, net........... 3,316,323 3,558,540
DEFERRED CHARGES AND OTHER ASSETS, net....... 230,195 280,525
----------- -----------
TOTAL ASSET.................................. $13,283,948 $14,431,469
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt.......... $ 170,154 $ 75,815
Accounts payable and accrued expenses...... 4,773,268 5,196,455
----------- -----------
TOTAL CURRENT LIABILITIES.................. 4,943,422 5,272,270
LONG-TERM DEBT............................... 5,668,004 6,338,355
MINORITY INTEREST IN SUBSIDIARY.............. - 12,534
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share,
authorized 5,000,000 shares, none issued
and outstanding.......................... - -
Common stock, par value $.10 per share;
Authorized 40,000,000 and 20,000,000 shares
at March 31, 1995 and June 30, 1994,
respectively; issued and outstanding
12,652,000 shares at March 31, 1995
and June 30, 1994........................ 1,265,200 1,183,750
Paid-in capital............................ 8,591,476 8,275,676
Retained earnings (deficiency)............. (7,029,978) (6,389,506)
Deferred compensation...................... (112,497) (154,687)
Note receivable from officer............... (50,000) (100,000)
Cumulative foreign currency translation
adjustment............................... 8,320 (6,923)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,672,521 2,808,310
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,283,948 $14,431,469
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended
March 31,
1995 1994
(Unaudited) (Audited)
----------- -----------
Net sales.................................... $26,770,375 $33,097,581
Cost of goods sold........................... 20,831,564 25,942,120
----------- -----------
Gross profit................................. 5,938,811 7,155,461
Selling, general and administrative expenses. 5,981,845 8,038,216
Restructuring charge......................... - 939,000
Interest expense............................. 606,054 652,242
Foreign currency (gains)..................... (8,622) (4,578)
------------ ------------
Loss before extraordinary item............... (640,466) (2,469,419)
Extraordinary item:
Gain on elimination of debt, net.......... - 747,422
------------ ------------
Net loss..................................... $ (640,466) $(1,721,997)
============ ============
Share Information
Net loss before extraordinary item........... $ (.05) $ (.45)
Extraordinary item........................... - .14
------------ ------------
Loss per share............................... $ (.05) $ (.31)
============ ============
Weighted average number of common shares
outstanding................................. 12,128,558 5,518,842
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended
March 31,
1995 1994
----------- -----------
Net sales.................................... $ 8,157,813 $ 9,899,912
Cost of goods sold........................... 6,468,829 7,804,088
----------- -----------
Gross profit................................. 1,688,984 2,095,824
Selling, general and administrative expenses. 1,905,088 3,136,466
Restructuring charge......................... - 939,000
Interest expense............................. 203,428 147,440
Foreign currency (gains)..................... 2,672 (17,497)
------------ -----------
Loss before extraordinary items.............. (422,204) (2,109,585)
Extraordinary item:
Gain on elimination of debt, net.......... - 747,422
Net loss..................................... $ (422,204) $(1,362,163)
============ ============
Share Information
Net loss before extraordinary item........... $ (.03) $ (.38)
Extraordinary item........................... - .14
------------ ------------
Loss per share............................... $ (.03) $ (.24)
============ ============
Weighted average number of common shares
outstanding................................. 12,635,889 5,759,144
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
March 31,
1995 1994
(Unaudited) (Audited)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss)......................................... $ (640,466) $(1,721,997)
Adjustments to reconcile net income (loss) to net
Cash provided by/(used in) operating activities:
Depreciation and amortization................... 441,280 532,263
Gain on sale of assets.......................... - (11,500)
Non-cash compensation........................... - 581,563
Extinguishment of debt.......................... - (780,496)
Provision for losses on accounts receivable..... - 415,000
Provision for slow moving and obsolete
inventories.................................... 65,000 23,749
Change in operating assets and liabilities:
Decrease in accounts receivable.................. 843,052 819,252
(Increase) Decrease in inventories............... (38,976) 35,892
(Increase) in prepaid expenses and other
current assets................................. (260,773) (56,700)
(Increase) Decrease in prepaid income taxes...... (1,126) (11,123)
(Increase) Decrease in other assets.............. (40,811) 28,850
(Decrease) Increase in accounts payable and
accrued expenses............................... (435,727) 599,309
Net cash provided by/(used in) operating ------------ -----------
activities...................................... (68,547) 454,062
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.............................. (65,732) (27,005)
------------ -----------
Net cash (used in) investing activities.......... (65,732) (27,005)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under debt agreements.................. 30,249,572 57,452,364
Debt repayments................................... (30,825,583) (58,762,804)
Issuance of warrants.............................. - 175,781
Issuance of common stock.......................... 397,250 1,000,000
Decrease in note receivable from officer.......... 50,000 -
------------ ------------
Net cash (used in) financing activities.......... (128,761) (134,659)
Effect of exchange rate changes on cash............ 15,243 6,709
------------ ------------
NET (DECREASE) INCREASE IN CASH.................... (247,797) 299,107
CASH, at beginning of period....................... 593,438 80,125
------------ ------------
CASH, at end of period............................. $ 345,641 $ 379,232
============ ============
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 606,054 $ 639,069
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
a. The accompanying consolidated financial statements include the accounts of
VTX Electronics Corp. and its wholly-owned subsidiaries, Vertex
Technologies, Inc., Vertex Data Systems, Inc. [inactive], and its foreign
subsidiary, Vertex Electronics UK, LTD. Operations of Vertex Electronics
UK Ltd. commenced July 1992. All significant intercompany transactions
and balances have been eliminated in consolidation.
The consolidated balance sheet as of March 31, 1995, the consolidated
statements of operations for the three months ended March 31, 1995 and
1994, and the nine months ended March 31, 1995, and the consolidated
statements of cash flows for the nine months ended March 31, 1995 have
been prepared by the Company without audit. The consolidated Balance
sheet as of March 31, 1994, the consolidated statement of operations
for the nine months ended March 31, 1994, and the consolidated statement
of cash flows for the nine months ended March 31, 1994 were audited. In
the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in cash flows at March 31,
1995 and for all periods presented have been made. Results of operations
for the three and nine month periods are not necessarily indicative of
results of operations for the corresponding years.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1994.
2. LONG-TERM DEBT
Long-term debt consists of the following:
March 31, June 30,
1995 1994
----------- ----------
Revolving asset-based loan (a).............. $ 4,599,939 $4,713,180
First mortgage loan, net of imputed
interest (b)............................... 1,025,408 1,024,496
Subordinated mortgage loan, net of imputed
interest (b)............................... 42,781 77,208
Machinery and equipment loan (c)............ 105,250 500,000
Capitalized lease obligations (d)........... 64,781 99,286
----------- ----------
5,838,159 6,414,170
Less current portion of long-term debt...... 170,154 75,815
----------- ----------
$ 5,668,004 $6,338,355
=========== ==========
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a. On December 31, 1992, the Company entered into a three-year long-term
revolving credit facility, providing a maximum availability of $12,500,000
bearing interest at prime plus 2 3/4% and expiring on December 31, 1995. The
Company is required to pay a commitment fee of 1/2% per annum on the daily
average unused portion of the credit. In connection with this financing, the
Company incurred in fiscal 1993 costs approximating $405,000 which have been
accounted for as deferred charges. Under the terms of this credit facility,
borrowings are limited to 80% of eligible accounts receivable (constituting
those amounts outstanding 90 days or less), 50% of eligible accounts
receivable outstanding between 91 and 120 days, 40% of regular inventories
and 20% of slow moving inventory. As of March 31, 1995, the Company had
$5,259,000 of availability under the terms of the facility, of which
$4,600,000 was outstanding on such date. This loan is collateralized by
substantially all of the assets of the Company not otherwise collateralized.
In connection with its revolving credit facility, the Company is subject to
restrictive covenants which impose certain limitations with respect to the
Company's incurrence of indebtedness, capital expenditures, creation or
recurrence of liens, declaration or payment of dividends or other
distributions, mergers, consolidations and sales or purchases of substantial
assets. In general, the Company is not allowed to incur further indebtedness
or create additional liens on its assets except for unsecured current
liabilities incurred in the ordinary course of business or liabilities
incurred in the ordinary course of business secured by purchase money
security interest not to exceed an aggregate of $750,000. The Company is not
allowed to make loans or investments, provide guarantees or to prepay
indebtedness. The Company is prohibited from paying dividends and may not
enter into a merger, consolidation or sale of all or substantially all of its
assets. Additionally, the Company is required to maintain consolidated net
worth of not less than $750,000 and to maintain consolidated working capital,
defined as current assets less current liabilities and debt outstanding under
the credit facility, of not less than a negative $1.5 million.
On February 10, 1995 the Company and its lender agreed to amend its revolving
credit facility to extend the expiration date to December 31, 1997. In
addition, the amendment reduced the maximum availability from $12,500,000 to
$10,000,000, provided for an interest rate reduction of 1/4% should net
income be greater than $500,000 for the year ended June 30, 1995, and
provides for termination fees as a result of default or early termination of
2%, 1% and .5% of the maximum credit if such termination occurs before
December 31, 1995, December 31, 1996 or December 31, 1997, respectively.
b. On March 31, 1994, the Company satisfied its subordinated asset-based term
loans and the Industrial Development Agency Bonds aggregating $2,080,496 on
such date with the $1,200,000 proceeds from a new first mortgage loan
described below and the issuance of a $100,000 non-interest bearing
subordinated mortgage loan which is payable in 24 monthly installments of
$4,167 commencing on March 31, 1994. As a result of this debt refinancing,
the Company recorded an extraordinary gain of $747,422 in the quarter ended
March 31, 1994 net of related expenses of $33,074.
The first mortgage loan is with a group of lenders and is payable over five
years in monthly installments of $15,980, inclusive of principal and interest
at 14%, commencing May 1, 1994, with a final principal payment of $1,033,183
on April 1, 1999 and collateralized by a first mortgage lien on the Company's
corporate headquarters. In connection with such loan, the Company issued to
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
one of the lenders 250,000 purchase warrants to purchase common stock,
exercisable on or before March 31, 2001 at an exercise price at $.50 per
share. A portion of the proceeds of the loan has been allocated to the
warrants based on the Company's Board of Directors' assessment of their fair
value at the time of issuance ($.70 per share). For financial statement
purposes, the fair value ascribed to the warrants ($175,781) has been
deducted from the proceeds of the mortgage loan as additional interest
expense and will be amortized over the term of the mortgage to yield an
effective interest rate of approximately 20% per annum. The loans have
prepayment penalties which are calculated as a percentage of the prepayment
amount. The percentage is determined based upon the date of payment as
follows:
Prepaid Percentage
Within one year 5%
Between one and two years 3%
Between two and three years 1%
Thereafter 0%
The loan contains covenants prohibiting certain types of transactions and
limiting capital expenditures to $250,000 per annum without the prior consent
of the lenders.
c. In connection with the December 1992 restructuring, the Company obtained a
$500,000 loan from VX Capital Partners, L.P. (the "Partnership")
collateralized by certain machinery and equipment (the "Partnership Loan")
which bears interest at the prime lending rate (6.75% at June 30, 1994) plus
1-1/4% and was originally due on September 30, 1994, however, on November
10, 1994, the due date was extended to March 31, 1996. All other terms
remain unchanged.
On December 19, 1994, the Partnership distributed to each of the limited
partners of the Partnership their pro rata portion of the partnership loan.
Each limited partner, except for one limited partner holding a $105,250
portion of the Note, exchanged their pro rata portions of the Note for an
aggregate of 789,500 shares of restricted Common Stock of the Company. The
Company's Board of Directors and Management believe based upon the receipt
of a fairness opinion and other analysis, that the fair value of the shares
exchanged is equal to the carrying amount of the converted portions of the
Partnership Loan. The fairness opinion (from an independent investment
banking firm) stated that the exchange was fair to the stockholders of the
Company from a financial point of view.
d. The Company leases its telephone system under agreements accounted for as
capital leases. The obligation for the telephone system require the Company
to make monthly payments of $1,963 through December 1997.
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of the aggregate annual maturities of long-term debt
and capitalized lease obligations:
Capitalized
Long-term lease
March 31: debt obligations Total
----------- ----------- ------------
1996 $ 146,598 $ 23,557 $ 170,155
1997 - 23,557 23,557
1998 4,599,939 17,667 4,617,606
1999 (6,342) - (6,342)
2000 1,033,183 - 1,033,183
----------- ----------- ------------
$5,773,378 $ 64,781 $ 5,838,159
=========== =========== ============
3.INVENTORIES
Inventory consists principally for products held for sale. The Company regularly
reviews its inventory for obsolete and slow-moving items which includes reviews
of inventory levels of certain product lines and an evaluation of the inventory
based on changes in technology and markets. As of March 31, 1995 and June 30,
1994, the reserve was approximately $638,000 and $903,000, respectively.
4. COMMITMENTS AND CONTINGENCIES
a. Employment Contracts
On March 31, 1994, the Company entered into an employment agreement with its
newly appointed president which requires total annual minimum compensation
of $200,000 through March 1997 plus an annual bonus based on a percent of
specified levels of achieved net profits. No bonus amounts have been accrued
as of March 31, 1995. In addition, the Company's president deposited $50,000
with a lender as cash collateral for a portion of a loan made to an entity
the president previously served as an officer and director. The Company has
agreed, pursuant to the employment agreement, to purchase such cash
collateral from its president for $50,000 in the event such cash collateral
is not released by March 31, 1995 and, in turn, the president agreed to
assign to the Company at such time his rights and privileges with respect to
such cash collateral. The Company has agreed to issue options to its
president to purchase 100,000 shares of the Company's common stock at an
exercise price of $.50 per share in lieu of the purchase of such cash
collateral.
b. Consulting Agreements
On March 28, 1994, the Company entered into a three year nonexclusive
consulting agreement/investment banking agreement which obligates the Company
to pay an underwriter $49,375 upon the completion of the underwriting for
consulting services with respect to securities and finance. Commencing April
1, 1995, the Company is obligated to pay such underwriter an additional
$4,115 per month for 24 months for consulting services related to investment
banking and finance services.
<PAGE>
VTX ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effective April 1, 1994, the Company entered into a three-year consulting
agreement with a director for financial/management services. Under the terms
of the agreement, the director will receive $4,000 per-month.
c. Bonus Agreement
On September 20, 1994 the Company's Board of Directors approved a bonus
agreement for the Company's Chairman of the Board. The agreement provides
for the Chairman to receive a bonus of 5% of the Company's net operating
profits up to a maximum of $100,000 for the fiscal year ended June 30, 1995.
No bonus amounts have been accrued as of March 31, 1995.
d. Leases:
The Company's minimum annual lease commitments under noncancellable operating
leases for premises at March 31, 1995 are as follows:
March 31:
1996 $ 443,546
1997 371,234
1998 181,518
1999 51,317
2000 38,488
----------
$1,086,103
==========
Rent expense, including related real estate taxes and other operating
charges, was approximately $321,908 and $243,644 for nine months ended March
31, 1995, and 1994, respectively.
5. SUBSEQUENT EVENTS
a. In April 1995, the Company entered into a one year non-exclusive consulting
agreement for financial/management services. Under the terms of the
agreement, the Consultant will receive $5,000 per month and five year
options to purchase up to 100,000 shares of the Company's common stock at
a price of $.50 per share which options shall vest at the rate of options
to purchase 8,333 shares of common stock per month.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Nine months Ended March 31, 1995 and 1994
For the nine months ended March 31, 1995, net sales were $26,770,000 as compared
to the nine months ended March 31, 1994 of $33,098,000, a decrease of 19.1%. The
decrease was due turnover of sales people and to recently hired sales people
learning the Company's operation and computer system; and also tight industry
supply of certain cable and wire items. For the nine months ended March 31,
1995, sales from value-added distribution and manufacturing were approximately
$16,062,000 and $10,708,000, respectively, compared to $23,310,000 and
$9,788,000, respectively for the nine months ended March 31, 1994.
Gross profit for the nine months ended March 31, 1995 was $5,939,000 or 22.2% as
compared to the nine months ended March 31, 1994 of $7,155,000 or 21.6%, a
decrease in gross profit of $1,216,000 or 17%. The decrease was due to lower
sales, which was offset by slightly higher margins.
Selling, general and administrative expenses decreased by $2,056,000 or 25.6% to
$5,982,000 for the nine months ended March 31, 1995 from $8,038,000 for the nine
months ended March 31, 1994. The implementation of the Company's Restructuring
Plan decreased expenses in the areas of salary and related expenses from
headcount reductions, by approximately $977,000, bad debt reserves by $415,000,
professional fees by $160,000, depreciation and amortization by $73,000, and
overall general expenses by $431,000.
Interest expense decreased by $46,000 or 7.1% to $606,000 for the nine months
ended March 31, 1995 from $652,000 for the comparable nine months in 1994. The
decrease was due to reduced borrowing levels as a result of equity financing in
prior quarters. The decrease would have been greater as compared to the prior
nine months if prime rate did not increase.
Results of Operations
Quarter Ended March 31, 1995 and 1994
For the quarter ended March 31, 1995, net sales were $8,158,000 as compared to
the quarter ended March 31, 1994 of $9,900,000, a decrease of 17.6%. The
decrease was due to turnover of sales people and recently hired sales people
learning the Company's operation and computer system; and also tight industry
supply of certain cable and wire items. Third quarter sales from value-added
distribution and manufacturing were approximately $4,848,000 and $3,310,000, for
the period ended March 31, 1995 versus $6,374,000 and $3,526,000 for the period
ending March 31, 1994, respectively.
Gross profit for the quarter ended March 31, 1995 was $1,689,000 or 20.7% as
compared to the quarter ended March 31, 1994 of $2,096,000 or 21.2%, a decrease
of $407,000 or 19.4%. The decrease was primarily due to lower sales and slightly
lower margins.
Selling, general and administrative expenses decreased by $1,231,000 or 39.3% to
$1,905,000 for the quarter ended March 31, 1995 from $3,136,000 for the quarter
ended March 31, 1994. The implementation of the Company's Restructuring Plan
decreased expenses in the areas of salary and related expenses from headcount
reductions by approximately $263,000, bad debt reserves by $303,000,
professional fees by $382,000, depreciation and amortization by $32,000, and
overall general expenses by $251,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Quarter Ended March 31, 1995 and 1994 (CONTINUED)
Interest expense increased by $56,000 or 18.9% to $203,000 for the quarter
ending March 31,1995 from $147,000 for the comparable 1994 quarter. The
increase was due to a higher prime rate of interest as compared to the prior
quarter, and the prior quarter having an extinguishment of debt whereby the
interest was discounted as a result of this extinguishment (SEE NOTE 2 b).
Liquidity and Financial Condition
As of March 31, 1995 and 1994
Working capital as of March 31, 1995 was $4,794,000 as compared with $5,320,000
as of June 30, 1994. The $526,000 decrease in working capital was due to a
decrease in accounts receivables, inventory and cash, which was offset by an
increase in prepaid expenses and other current assets, and accounts payable.
Long term debt as of March 31, 1995 was $5,667,000 a decrease of $671,000 or
10.6% from $6,338,000 at June 30, 1994. This was due primarily to the Company's
partial debt conversion of an equipment loan to common stock and the balance of
this loan reclassified to current portion of long term debt (SEE NOTE 2 c),
reduced borrowing levels, and payments of capitalized lease obligations. The
Company's asset based revolving credit facility provides a maximum availability
of $10,000,000 based on eligible accounts receivable and inventory. As of March
31, 1995, $5,259,000 was available under this facility of which $4,600,000 was
drawn down. The Company intends to continue to employ this line of credit to
finance inventory and accounts receivable.
<PAGE>
PART II- OTHER INFORMATION
None
<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.
VTX ELECTRONICS CORP.
By: /s/ Donald W. Rowley
----------------------------
President
By: /s/ Nicholas T. Hutzel
----------------------------
Controller, Secretary and
Principal Accounting Officer
Dated: May 15, 1995
