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 March 31,September 30, 1998
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,September 30,1998, their were 3,412,0593,382,859 shares of common stock
outstanding.
LOGITEK, INC.
Quarterly Report on Form 10-QSB
INDEX
Page #
Part 1:FINANCIAL INFORMATION
Item 1.Financial1. Financial Statements
Balance Sheets as of March 31,September 30, 1998 and
June 30, 19971998 3
Statements of Operations and Retained Earnings
for the Nine
and Three Months Ended March 31,September 30, 1998 and 1997 4
Statements of Cash Flows for the Nine and Three Months
Ended March 31,September 30, 1998 and 1997 5
Notes to Financial Statements 6
Item 2.Management's2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II:OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders
Item 6.Exhibits6. 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 March 31,1998September30,1998 June 30,199730,1998
Current Assets: (Unaudited)
Cash $547,806 $393,797$424,833 $429,713
Accounts Receivable 560,962 422,549receivable, 604,899 676,704
Inventories (Note 2) 1,025,793 1,046,0821,058,604 1,061,103
Prepaid expenses and other 19,315 34,292
Due from officer 30,500 30,50011,857 15,332
Total Current Assets 2,184,376 1,927,2202,100,193 2,182,852
Property and equipment,less
accumulated depreciation 625,103 668,861658,234 680,134
Other Assets:
Deferred Income Taxes,State 7,000 7,000
Goodwill 34,441 34,441
Other 39,656 36,32347,649 48,695
Total Assets 2,883,576 2,666,8452,847,517 2,953,122
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current portion of long-term debt $122,597 $145,182$81,220 $90,525
Capitalized lease obligation, 12,951 11,783current 22,802 22,123
Accounts payable 281,818 385,882301,991 324,736
Accrued expenses 264,460 154,50785,610 194,398
Total current liabilities 681,826 697,354491,623 631,782
Capitalized lease obligation,less
current portion 32,169 50,119Lease Obligation,
Less Current Portion 70,099 75,350
Long-term debt, less current maturities 311,439 398,596288,018 300,360
Deferred income taxes 65,380 15,38052,000 52,000
Total Liabilities 1,090,814 1,161,449901,740 1,059,492
STOCKHOLDERS' EQUITY
Common stock$.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 1,484,059 1,196,6931,649,630 1,597,483
Sub-total 1,800,414 1,513,0481,965,985 1,913,838
Less:
Treasury shares,at cost, 176,000cost,187,941 shares (7,652) (7,652)(20,208) (20,208)
Total stockholders' equity 1,792,762 1,505,3961,945,777 1,893,630
Total liabilities and stockholders'equity $2,883,576 $2,666,845stockholders'equit $2,847,517 $2,953,122
See notes to the financial statements.
LOGITEK, INC
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
For the Three and Nine Months Ended March 31,September 30, 1998 and 1997
(Unaudited)
Three Months Ended
Nine Months Ended
March 31, March 31,
1998 1997September 30,
1998 1997
Net sales $1,249,888 $1,181,406 $3,560,150 $2,974,449$1,089,905 $1,100,862
Cost of goods sold 703,348 676,210 2,112,834 1,787,002708,642 652,133
Gross profit 546,540 505,196 1,447,316 1,187,447381,263 448,729
Operating expenses:
Selling 84,928 74,884 249,841 214,86078,108 91,916
General and
administrative 203,770 249,362 554,889 502,258161,921 198,356
Research and development 52,834 61,953 130,754 157,63955,305 37,699
Total operating expenses 341,532 386,199 935,484 874,757295,334 327,971
Income (loss) from operations 205,008 118,997 511,832 312,690
Other (income) expense:85,929 120,758
Interest expense,net 11,899 19,991 40,464 61,436
Legal settlement (Note 4) 0 (50,000) 0 (50,000)
Total other (income) expense 11,899 (30,009) 40,464 11,43613,782 16,320
Income (loss) before
provision for income taxes 193,109 149,006 471,368 301,25472,147 104,438
Provision for income taxes (Note 3) 70,000 29,550 184,000 60,00020,000 44,000
Net income (loss) 123,109 119,456 287,368 241,25452,147 60,438
Retained earnings,beginning of period 740,826 568,165 612,152 517,9191,597,483 1,196,693
Retained earnings,end of period 1,484,059 1,113,381 1,484,059 1,113,381$1,649,630 $1,257,131
Per share amounts
Net income (loss) $0.03 $0.03 $0.08 $0.07$.02 $.02
Weighted average shares
outstanding 3,382,859 3,412,059
3,424,000 3,412,059 3,424,000
See notesNotes to financial statements.
statements
LOGITEK INC.
STATEMENTS OF CASH FLOWS
For the Nine and Three Months Ended March 31,ended September 30, 1998 and 1997
(Unaudited)
Three Months Ended
Nine Months Ended
March 31, March 31,September 30,
1998 1997
1998 1997Cash Flows from Operating Activities
Net income (loss) $123,109 $119,456 $287,368 $241,254$52,147 $60,438
Adjustments to reconcile net
income (loss) to cash provided
(used) by operations:operating activiities:
Depreciation 21,900 23,250 34,075 69,750 82,575
Accounts receivable 150,981 65,538 (138,413)(131,369)71,805 48,490
Inventories 30,500 4,500 20,289 (90,890)2,499 45,290
Prepaid expenses and other 13,517 13,193 14,973 31,5543,475 28,862
Other assets (4,241) (1,775) (3,333) (2,181)1,046 (228)
Accounts payable (76,039) (92,502) (104,064) (70,282)(22,745) (69,991)
Accrued expenses 85,159 54,486 109,955 (29,581)(108,788) (55,392)
Deferred taxesTaxes 0 10,000 (4,086) 50,000 0
Total adjustments 233,127 73,429 19,157 (210,174)
Net cash provided (used) by
operating activities 356,236 192,885 306,525 31,080
Cash flows from investing activities:
Acquisition of equipment (25,992) (31,550) (25,992) (36,873)(30,808) 30,281
Net cash provided by investing(used in) operating
activities (25,992) (31,550) (25,992) (36,873)21,339 90,719
Cash flowsFlows from financing activities:Financing Activities:
Repayment of long-term debt (38,137) (34,911) (109,742)(104,652)
Capitalized lease obligation (6,245) 21,964 (16,782) 19,706Long Term Debt (26,219) (40,007)
Purchase of Property, Plant and Equipment 0 0
Net cash (used) by(used in) financing activities (44,382) (12,937) (126,524) (84,946)
Netincrease(decrease)(26,219) (40,007)
Net increase (decrease) in cash 285,862 148,398 154,009 (90,739)(4,880) 50,712
Cash, beginning of period 261,944 109,842429,713 393,797 348,979
Cash, end of period $547,806 $258,240 $547,806 $258,240$424,833 $444,509
Supplemental disclosures:
Cash paid for:
Interest $9,697 $19,911 $45,207 $61,43613,782 16,320
See notes to financial statements.statements
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, 1997.1998.
The results of operations for the three and nine months ended March 31,September 30, 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:
March 31,September 30, June 30,
1998 1997
Materials $484,991 $505,2801998
Raw materials $545,828 $547,117
Work-in-process 326,954 326,954346,941 347,760
Finished goods 213,848 213,848165,835 166,226
Total $1,025,793 $1,046,082$1,058,604 $1,061,103
For the three and nine months ended March 31,1998September 30, 1998 the Company used the gross
profit method to calculate ending inventory values.
Note 3 - Provision for Income Taxes
IncomeThe provision for income taxes were differentdiffers from the amounts computed by applying
the federal income tax rate to the income before income taxes due to the
following:
Three Months Ended Nine Months Ended
3/31/98 3/31/97 3/31/98 3/31/97September 30,
%
1998 1997
Statutory rate 34% 34% 34% 34%34.0 34.0
State income taxes,net of federal tax benefit 4 2 4 2
Deferred Tax Provision 6 10
General business2.0 2.0
Utilization of tax credit (8) (16) (9 ) (16)(10.3) (6.0)
Other 2.0 12.0
Effective tax rate 36% 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 31,1997.27.7 42.0
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table presents selected financial information for the periods
March 31,September 30, 1998 and 1997, respectively.1997.
Three Months Ended
Nine Months Ended
March 31, March 31,
1998 1997September 30,
1998 1997
Net sales $1,249,889 $1,181,406 $3,560,150 $2,974,449$1,089,905 $1,100,862
Gross profit $546,540 $505,196 $1,447,316 $1,187,447$381,263 $448,729
Gross margin 43.7% 42.8% 40.7% 39.9%
Operating expenses $341,532 $386,199 $935,484 $874,757
Legal settlement income $50,000 $50,00035.0% 40.8%
Net income (loss) $123,109 $119,456 $287,368 $241,254$52,147 $60,438
Net income (loss), per share $0.02 $0.02
General
Logitek, Inc. (the "Company") reported a profitnet income of $287,368$52,147 for the ninethree
months ended March 31,September 30, 1998 versus a profit of $241,254$60,438 for the prior year period.For the quarter ended March 31,period.
The Company's sales backlog is aproximately $1,750,000 at September 30, 1998
the Company reported a profit of
$123,109 compared to a profit of $119,456 for the prior year quarter.versus $2,500,000 at September 30, 1997.
Results of Operations
Net sales for the first ninethree months of fiscal 1998ended September 30,1998 were $3,560,150$1,089,905
compared to $2,974,449$1,100,862 or an increasedecrease of $585,701. Net sales for$10,957, or 1%, from the prior year
period. This decrease is the result of certain jobs being delayed awaiting
engineering release. These releases are expected to occur early in the
second quarter.
Gross profit decreased to 35.0% in the quarter ended March 31,September 30, 1998 were $1,249,889
compared to $1,181,406 or an increase of
$68,483.
Gross profit increased to 40.7% in the current nine month period compared
to 39.9%40.8% for the prior year.year quarter. This increasedecrease in gross profit
is attributablea result of the Company's committment to increased
sales with only minimal additional manufacturing overhead.labor in the
engineering and quality control areas. The Company belieives this investment
will pay off in the near term.
Operating expenses for the ninethree months ended March 31,September 30, 1998 increased $60,727.decreased
$32,637 or 10% This occurred as a result of additionalthe Company continuing to
maintain tight cost controls over its general and administrative overhead
incurredexpenses
as the Company plans for greater sales volume based on increased
bookings and increased sales activity.well as its general overhead.
Liquidity
As of March 31, 1998September 30 and June 30, 19971998 the Company had cash on hand of $547,806$424,833
and $393,797,$429,713, respectively; and, as of March 31,September 30, 1998 the Company's
current ratio was 3.204.27 compared to 2.76 as of3.46 at June 30, 1997.1998. Total borrowings
were $479,156$462,139 at March 31,September 30, 1998and $ 605,680$488,358 at June 30, 1997 .
This represents1998 for a
decrease of $126,524.$26,219 while accounts payable and accrued expenses decreased
$138,533.
The Company does not anticipate any new borrowings, however, if the need
arises to purchase equipment in its continuing effort to modernizeincrease its
manufacturing capability it is the Company's intention to lease such
equipment ratheron more favorable terms than purchase in order to conserve as much cash as possible.an outright purchase.
PART II - OTHER INFORMATION
Item 4.6. Exhibits and Reports on Form 8-K
a) Exhibits- There are no exhibits being filed with this report
b)(a) Exhibits - None
(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: 4/28/11/ 5/ 98 By: /s/ Herbert L. Fischer
Herbert L. Fischer
President and
Chief Executive Officer
Date: 11/ 5/ 98 By: /s/ Herbert L. Fischer
Herbert L.Fischer
Chief Financial Officer