-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SzPrpwW3tus2z9W/FkX14AL67bFDj9A52Yrd8AonYuhmz9UZQWqhly89R3tJ8L/8 sJQOFcBrFVNjFnecaHCMLA== 0000912057-00-024622.txt : 20000516 0000912057-00-024622.hdr.sgml : 20000516 ACCESSION NUMBER: 0000912057-00-024622 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUESTRON TECHNOLOGY INC CENTRAL INDEX KEY: 0000732152 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 232257354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13324 FILM NUMBER: 633622 BUSINESS ADDRESS: STREET 1: 6400 CONGRESS AVENUE STREET 2: SUITE 200A CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 4072415251 MAIL ADDRESS: STREET 1: 6400 CONGRESS AVENUE STREET 2: SUITE 200A CITY: BOCA RATON STATE: FL ZIP: 33487 FORMER COMPANY: FORMER CONFORMED NAME: JUDICATE INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q 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. 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.
Page No. -------------- PART I. Financial Information 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
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 ASSETS
March 31, December 31, 2000 1999 ------------- ------------- 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 ============= =============
See Notes to Consolidated Financial Statements. 3 QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2000 AND 1999
THREE MONTHS ENDED MARCH 31, ------------------------- 2000 1999 ------------ ----------- 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 =========== ===========
See Notes to Consolidated Financial Statements. 4 QUESTRON TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2000 AND 1999
MARCH 31, MARCH 31, 2000 1999 ----------- ----------- 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 =========== ===========
See Notes to Consolidated Financial Statements. 5 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:
For the three months ended ------------------------------- March 31, 2000 March 31, 1999 -------------- -------------- 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 =========== ===========
6 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:
Three months ended, ------------------------- 2000 1999 ----------- ----------- 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 =========== ===========
7 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 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 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 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 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 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 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 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 *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 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 *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 *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 *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 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 EX-21.1 2 EXHIBIT 21.1 Exhibit 21.1 QUESTRON TECHNOLOGY, INC. EXHIBIT 21.1 - SUBSIDIARIES OF THE REGISTRANT AT MARCH 31, 2000
Name of Subsidiary Date of State of Incorporation Incorporation --------------------------------------------------------- -------------------------- ------------------------- 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
EX-27 3 EXHIBIT 27
5 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. 9-MOS DEC-31-2000 MAR-31-2000 398,967 0 21,515,508 283,666 41,890,092 64,690,763 3,327,997 1,598,116 150,106,236 16,717,034 0 0 0 8,650 45,427,262 150,106,236 36,478,902 36,478,902 21,760,309 30,839,463 620,478 0 2,858,529 2,160,432 896,579 1,263,853 0 459,844 0 1,723,697 .22 .16
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