Form 10-QSB
CONFORMED
Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 19971998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File Number 0-15545
Logitek, Incorporated
(Exact name of registrant as specified in its charter)
New York No. 11-2203507
State or other jurisdiction of (I.R.S Employer
incorporation or organization Identification No.)
101 Christopher St., Ronkonkoma, N.Y. 11779
(Address of principal executive offices and ZIP Code)
Registrant's Telephone Number, including area code 516-467-4200
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001, par value None
Title of Class Name of each exchange on which registered
Check whether the issuer (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 November 1, 1997,1,1997, their were 3,412,059 shares of common stock outstanding.
LOGITEK, INC.
Quarterly Report on Form 10-QSB
INDEX
Page #
Part 1:FINANCIAL INFORMATION
Item 1.Financial Statements
Balance Sheets as of DecemberMarch 31, 19971998 and June 30, 1997 3
Statements of Operations and Retained Earnings for the SixNine
and Three Months Ended DecemberMarch 31, 19971998 and 19961997 4
Statements of Cash Flows for the SixNine and Three Months
Ended DecemberMarch 31, 19971998 and 19961997 5
Notes to Financial Statements 6
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 67
Part II:OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders 9
Item 6.Exhibits and Reports on Form 8-K
a) Exhibits 9
b) Reports on Form 8-K 9
Signatures 10
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LOGITEK, INC
BALANCE SHEETS
ASSETS December 31,March 31,1998 June 30,
1997 199730,1997
Current Assets:
(unaudited)
Cash $261,944$547,806 $393,797
Accounts Receivable 711,943560,962 422,549
Inventories (Note 2) 1,056,2931,025,793 1,046,082
Prepaid expenses and other 32,83319,315 34,292
Due from officer 30,500 30,500
Total Current Assets 2,093,5132,184,376 1,927,220
Property and equipment, less
accumulated depreciation 622,361625,103 668,861
Other Assets:
Goodwill 34,441 34,441
Other 35,41539,656 36,323
Total Assets $2,785,730 $2,666,8452,883,576 2,666,845
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current portion of long-term debt $135,229$122,597 $145,182
Capitalized lease obligation current 12,69312,951 11,783
Accounts payable 357,857281,818 385,882
Accrued expenses 179,303264,460 154,507
Total current liabilities 685,082681,826 697,354
Capitalized lease obligation,less
current portion 38,67232,169 50,119
Long-term debt, less current maturities 336,941311,439 398,596
Deferred income taxes 55,38065,380 15,380
Total Liabilities 1,116,0751,090,814 1,161,449
STOCKHOLDERS' EQUITY
Common stock, $.01stock$.01 par value; authorized
10,000,000 shares;issued 3,600,000 shares 36,000 36,000
Capital in excess of par value 280,355 280,355
Retained earnings 1,360,9521,484,059 1,196,693
Sub-total 1,677,3071,800,414 1,513,048
Less:
Treasury shares, at cost, 187,941176,000 shares (7,652) (7,652)
Total stockholders' equity 1,669,6551,792,762 1,505,396
Total liabilities and stockholders'equity $2,785,730$2,883,576 $2,666,845
See notes to the financial statements.
LOGITEK, INC
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
For the Three and SixNine Months Ended DecemberMarch 31, 19971998 and 19961997
(Unaudited)
Three Months Ended SixNine Months Ended
DecemberMarch 31, DecemberMarch 31,
1998 1997 19961998 1997 1996
Net sales $1,209,400 $1,084,930 $2,310,262 $1,793,043$1,249,888 $1,181,406 $3,560,150 $2,974,449
Cost of goods sold 757,353 641,657 1,409,486 1,110,792703,348 676,210 2,112,834 1,787,002
Gross profit 452,047 443,273 900,776 682,251546,540 505,196 1,447,316 1,187,447
Operating expenses:
Selling 72,997 74,285 164,913 139,97684,928 74,884 249,841 214,860
General and
administrative 152,763 148,191 351,119 252,896203,770 249,362 554,889 502,258
Research and development 40,221 48,346 77,920 95,68652,834 61,953 130,754 157,639
Total operating expenses 265,981 270,822 593,952 488,558341,532 386,199 935,484 874,757
Income (loss) from operations 186,066 172,451 306,824 193,693205,008 118,997 511,832 312,690
Other (income) expense:
Interest expense,net 12,245 21,502 28,565 41,44511,899 19,991 40,464 61,436
Legal settlement (Note 4) 0 (50,000) 0 (50,000)
Total other (income) expense 12,245 21,502 28,565 41,44511,899 (30,009) 40,464 11,436
Income (loss) before
provision for income taxes 173,821 150,949 278,259 152,248193,109 149,006 471,368 301,254
Provision for income taxes (Note 3) 70,000 30,190 114,000 30,45029,550 184,000 60,000
Net Income (Loss) 103,821 120,759 164,259 121,798income (loss) 123,109 119,456 287,368 241,254
Retained earnings, ,
beginning of period 1,257,131 873,166 1,196,693 872,127740,826 568,165 612,152 517,919
Retained earnings,
end of period $1,360,952 $993,925 $1,360,952 $993,9251,484,059 1,113,381 1,484,059 1,113,381
Per share amounts
Net Incomeincome (loss) $0.03 $0.04 $0.05 $0.04$0.03 $0.08 $0.07
Weighted average shares
outstanding 3,412,059 3,424,000 3,412,059 3,424,000
See notes to financial statements.
LOGITEK, INC.
STATEMENTS OF CASH FLOWS
For the ThreeNine and SixThree Months Ended December 31,1997March 31, 1998 and 19961997
(Unaudited)
Three Months Ended SixNine Months Ended
DecemberMarch 31, DecemberMarch 31,
1998 1997 19961998 1997 1996
Net income (loss) $103,821 $120,759 $164,259 $121,798$123,109 $119,456 $287,368 $241,254
Adjustments to reconcile net
income (loss) to cash provided
(used) by operations:
Depreciation 23,250 24,250 46,500 48,50034,075 69,750 82,575
Accounts Receivable (337,884) (150,481) (289,394) (196,917)receivable 150,981 65,538 (138,413)(131,369)
Inventories (55,501) (5,390) (10,211) (95,390)30,500 4,500 20,289 (90,890)
Prepaid expenses and other (27,409) 43,932 1,459 18,36213,517 13,193 14,973 31,554
Other assets 1,136 1,628 908 (406)(4,241) (1,775) (3,333) (2,181)
Accounts Payable 41,966 (40,095) (28,025) 22,220payable (76,039) (92,502) (104,064) (70,282)
Accrued Expenses 80,194 46,576 24,983 (84,057)expenses 85,159 54,486 109,955 (29,581)
Deferred taxes 30,000 910 40,000 4,08610,000 (4,086) 50,000 0
Total adjustments (244,248) (78,670) (213,780) (283,602)233,127 73,429 19,157 (210,174)
Net cash provided(used)provided (used) by
operating activities (140,427) 42,089 (49,521) (161,804)356,236 192,885 306,525 31,080
Cash flows from investing activities:
PurchaseAcquisition of Equipment 0 (3,275) 0 (5,323)equipment (25,992) (31,550) (25,992) (36,873)
Net Cashcash provided by
investing activities 0 (3,275) 0 (5,323)(25,992) (31,550) (25,992) (36,873)
Cash flows from financing activities:
Repayment of long termlong-term debt (34,699) (41,350) (71,795) (69,741)(38,137) (34,911) (109,742)(104,652)
Capitalized lease obligation (7,439) (1,135) (10,537) (2,269)(6,245) 21,964 (16,782) 19,706
Net cash (used) by
financing activities (42,138) (42,485) (82,332) (72,010)
Net increase (decrease) (44,382) (12,937) (126,524) (84,946)
Netincrease(decrease)in cash (182,565) (3,671) (131,853) (239,137)285,862 148,398 154,009 (90,739)
Cash, beginning of period 444,509 113,513261,944 109,842 393,797 348,979
Cash, , end of period 261,944 109,842 261,944 109,842$547,806 $258,240 $547,806 $258,240
Supplemental disclosures:
Cash paid for :for:
Interest $18,546 $26,253 $35,510 $50,267$9,697 $19,911 $45,207 $61,436
See notes to financial statements
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONstatements.
LOGITEK, INC.
Notes to Financial Statements
Note 1 - Basis of Presentation
The financial statements included herein have been prepared by the Company,
without audit,pursuant to the rules and regulations of the Securities and
Exchange Commission and reflect all adjustments which are, in the opinion of
management, necessary to present fairly the information required therein.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations, although management believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-KSB filed with the Securities
and Exchange Commission for the year ended June 30, 1997.
The results of operations for the three and sixnine months ended December 31,1997March 31, 1998
are not necessarily indicative of the results of operations to be expected
for the full year.
NOTE 2 - Inventories
Inventories consisted of the following:
DecemberMarch 31, June 30,
1998 1997
1997
Raw materials $515,492Materials $484,991 $505,280
Work-in-process 326,954 326,954
Finished goods 213,847213,848 213,848
Total $1,056,293$1,025,793 $1,046,082
For the three and nine months ended December 31, 1997March 31,1998 the Company used the gross
profit method to calculate ending inventory values.
Note 3 - Provision for Income Taxes
Income taxes were different from the amounts computed by applying the federal
income tax rate to the income before taxes due to the following:
Three Months Ended SixNine Months Ended
12/3/31/98 3/31/97 12/3/31/96 12/98 3/31/97 12/31/96
Statutory rate 34% 34% 34% 34%
State income taxes,net of
federal tax benefit 4 2 4 4 4
General Business Credit (6) (18) (6) (18)2
Deferred Tax Provision 8 86 10
General business credit (8) (16) (9 ) (16)
Effective Tax Rate 40%tax rate 36% 20% 40% 20%39% 20 %
Note 4-Legal Settlement
The Company has made a settlement on a trademark infringement suit. The
settlement was for $105,000, of which $55,000 was received in the quarter
ended June 30,1996 and the remaining $50,000 was received in the quarter
ended March 31,1997.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table presents selected financial information for the periods
DecemberMarch 31, 19971998 and 1996,1997, respectively.
Three Months Ended SixNine Months Ended
DecemberMarch 31, DecemberMarch 31,
1998 1997 19961998 1997 1996
Net sales $1,209,400 $1,084,930 $2,310,262 $1,793,043$1,249,889 $1,181,406 $3,560,150 $2,974,449
Gross profit $452,047 $443,273 $900,776 $682,251$546,540 $505,196 $1,447,316 $1,187,447
Gross margin 37.4% 40.8% 38.9% 38.0%43.7% 42.8% 40.7% 39.9%
Operating expenses $265,981 $270,822 $593,952 $488,558$341,532 $386,199 $935,484 $874,757
Legal settlement income $50,000 $50,000
Net income $103,821 $120,759 $164,259 $121,798
Net income per share $0.03 $0.04 $0.05 $0.04(loss) $123,109 $119,456 $287,368 $241,254
General
Logitek, Inc. (the "Company") reported a profit of $164,259$287,368 for the sixnine
months ended DecemberMarch 31, 19971998 versus a profit of $121,798$241,254 for the prior year
period. Forperiod.For the quarter ended DecemberMarch 31, 19971998 the Company reported a profit of
$103,821$123,109 compared to a profit of $120,759$119,456 for the prior year quarter. The Company's sales backlog is approximately $2,500,000 at December
31,1997. This reflects a$ 500,000 increase which the Company hopes will
continue to grow.
Results of Operations
Net sales for the first sixnine months of fiscal 19971998 were $2,310,262$3,560,150 compared
to $1,793,043,$2,974,449 or an increase of $517,219.$585,701. Net sales for the quarter ended
DecemberMarch 31, 19971998 were $1,209,400$1,249,889 compared to $1,084,930$1,181,406 or an increase of
$124,470.$68,483.
Gross profit increased to 38.9%40.7% in the current sixnine month period compared
to 38.0%39.9% for the prior year. This increase is attributable to increased
sales with only minimal additional manufacturing overhead.
Operating expenses for the sixnine months ended DecemberMarch 31, 19961998 increased $105,394.$60,727.
This occurred as a result of additional general and administrative overhead
incurred as the Company plans for greater sales volume based on increased
bookings and increased sales activity.
Liquidity
As of DecemberMarch 31, 19971998 and June 30, 1997 the Company had cash on hand of
$261,944$547,806 and $393,797, respectively; and, as of DecemberMarch 31, 19971998 the Company's
current ratio was 2.813.20 compared to 2.76 as of June 30, 1997. Total
borrowings were $516,084$479,156 at DecemberMarch 31, 1997, $605,6801998,and $ 605,680 at June 30, 1997 and $656,954 at December 31, 1996..
This represents a decrease of $126,524.
The Company does not anticipate any new borrowings, however, if the need
arises to purchase equipment in its continuing effort to modernize its
manufacturing capability it is the Company's intention to lease such
equipment rather than purchase in order to conserve as much cash as possible.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's regularly scheduled Annual Meeting held on November 24, 1997
the following votes were recorded:
1.To elect a board of three directors, each to serve for a term of one year or
until his successor shall have been duly elected and qualified:
Votes Cast
For Against Abstained
Herbert L. Fischer 3,167,675 0 7,400
Howard Fein 3,167,675 0 7,400
Francis Vuccii 3,167,675 0 7,400
2.To elect Marcum & Kliegman, Certified Public Accountants as the Company's
independent certified accountants:
Votes Cast
For Against Abstained
3,169,175 0 5,900
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -a) Exhibits- There are no exhibits being filed with this report.
(b)report
b) Reports on Form 8-K - None
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.
LOGITEK, INC.
Registrant
Date: 2/ 13 / 4/28/98 By: /s/ Herbert L. Fischer
Herbert L. Fischer
President and
Chief Executive Officer