Veltex Corporation (VLXC)

[Growth And Value]

The notes disclosed that due to SFAS 94, the foreign subsidiaries were not allowed to be consolidated as of 12/31/2003. This could be caused by two things in VLXC's case:

1) Temporary majority ownership or control of the corporation by interest unrelated to the parent.

and/or

2) Subsidiaries whose operations are severely limited by foreign governments.

Since the assets of Velvet Textile Mills were used as collateral to buy the semi trucks in 2003, I can only speculate that this could be a reason why the auditor declared a lack of absolute control.

This doesn't mean that things could not be cleared to be consolidated in 2004. Time will tell. In the mean time, I'm focusing on the large new sales contracts and expansion into Canada.