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 September 30,December 31, 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
SecuritiesSecuritie s 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 September 30,1998,November 1, 1998, their were 3,382,8593,375,731 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 September 30,December 31, 1998
and June 30, 1998 3
Statements of Operations and Retained Earnings
for the Six and Three Months Ended
September 30,December 31, 1998 and 1997 4
Statements of Cash Flows for the Six and
Three Months Ended September 30,December 31, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 76
Part II:OTHER INFORMATION
Item 6. Exhibits4.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
Signatures 10
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LOGITEK, INC
BALANCE SHEETS
ASSETS September30,1998December 31,1998 June 30,199830, 1998
Current Assets: (Unaudited)(unaudited)
Cash $424,833$491,851 $429,713
Accounts receivable, 604,899Receivable 625,835 676,704
Inventories 1,058,604(Note 2) 1,121,104 1,061,103
Prepaid expenses and other 11,85733,025 15,332
Total Current Assets 2,100,1932,271,815 2,182,852
Property and equipment,less
accumulated depreciation 658,234636,334 680,134
Other Assets:
Deferred Income Taxes,State 7,000 7,000
Goodwill 34,441 34,441
Other 47,64947,550 48,695
Total Assets 2,847,517 2,953,122$2,997,140 $2,953,122
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current portion of long-term debt $81,220$58,452 $90,525
Capitalized lease obligation,current 22,80223,879 22,123
Accounts payable 301,991367,284 324,736
Accrued expenses 85,610139,603 194,398
Total current liabilities 491,623589,218 631,782
Capitalized Lease Obligation,
Less Current Portion 70,099lease obligation,
less current portion 59,878 75,350
Long-term debt, less current maturities 288,018278,776 300,360
Deferred income taxes 52,000 52,000
Total Liabilities 901,740979,872 1,059,492
STOCKHOLDERS' EQUITY
Common stock, $.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 1,649,6301,721,121 1,597,483
Sub-total 1,965,9852,037,476 1,913,838
Less:
Treasury shares,at cost,187,941 shares (20,208) (20,208)
Total stockholders' equity 1,945,7772,017,268 1,893,630
Total liabilities and stockholders'equit $2,847,517stockholders' equity $2,997,140 $2,953,122
See notes to the financial statements.
LOGITEK, INC
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
For the Three and Six Months Ended September 30,December 31, 1998 and 1997
(Unaudited)
Three Months Ended September 30,Six Months Ended
December 31, December 31,
1998 1997 1998 1997
Net sales $1,089,905 $1,100,862$1,220,949 $1,209,400 $2,310,854 $2,310,262
Cost of goods sold 708,642 652,133719,298 757,353 1,427,940 1,409,486
Gross profit 381,263 448,729501,651 452,047 882,914 900,776
Operating expenses:
Selling 78,108 91,916114,536 72,997 192,644 164,913
General and
administrative 161,921 198,356187,494 152,763 349,415 351,119
Research and development 55,305 37,69995,805 40,221 151,110 77,920
Total operating expenses 295,334 327,971397,835 265,981 693,169 593,952
Income (loss) from operations 85,929 120,758103,816 186,066 189,745 306,824
Other (income) expense:
Interest expense,net 13,782 16,32017,325 12,245 31,107 28,565
Total other (income) expense 17,325 12,245 31,107 28,565
Income (loss) before
provision for income taxes 72,147 104,43886,491 173,821 158,638 278,259
Provision for income taxes 20,000 44,00015,000 70,000 35,000 114,000
Net income (loss) 52,147 60,438Income (Loss) 71,491 103,821 123,638 164,259
Retained earnings ,
beginning of period 1,649,630 1,257,131 1,597,483 1,196,693
Retained earnings,end of period $1,649,630 $1,257,131$1,721,121 $1,360,952 $1,721,121 $1,360,952
Per share amounts
Net incomeIncome (loss) $.02 $.02$0.02 $0.03 $0.04 $0.05
Weighted average shares
outstanding 3,382,8593,375,731 3,412,059 3,375,731 3,412,059
See Notesnotes to financial statementsstatements.
LOGITEK INC.
STATEMENTS OF CASH FLOWS
For the Three and Six Months ended September 30, 1998Ended December 31,1998 and 1997
(Unaudited)
Three Months Ended September 30,Six Months Ended
December 31, December 31,
1998 1997 Cash Flows from Operating Activities1998 1997
Net income (loss) $52,147 $60,438$71,491 $103,821 $123,638 $164,259
Adjustments to reconcile net
income (loss) to cash provided
(used) by operating activiities:operations:
Depreciation 21,900 23,250 43,800 46,500
Accounts receivable 71,805 48,490Receivable (20,936) (337,884) 50,869 (289,394)
Inventories 2,499 45,290(62,500) (55,501) (60,001) (10,211)
Prepaid expenses and other 3,475 28,862(21,168) (27,409) (17,693) 1,459
Other assets 1,046 (228)99 1,136 1,145 908
Accounts payable (22,745) (69,991)Payable 65,293 41,966 42,548 (28,025)
Accrued expenses (108,788) (55,392)Expenses 53,993 80,194 (54,795) 24,983
Deferred Taxestaxes 0 10,00030,000 0 40,000
Total adjustments (30,808) 30,28136,681 (244,248) 5,873 (213,780)
Net cash provided(used) by
operating activities 108,172 (140,427) 129,511 (49,521)
Cash flows from investing activities:
Purchase of equipment 0 0 0 0
Net cash provided by
(used in) operatinginvesting activities 21,339 90,7190 0 0 0
Cash Flowsflows from Financing Activities:financing activities:
Repayment of Long Term Debt (26,219) (40,007)
Purchase of Property, Plant and Equipment 0 0long term debt (32,010) (34,699) (53,657) (71,795)
Capitalized lease obligation (9,144) (7,439) (13,716) (10,537)
Net cash (used in)(used) by
financing activities (26,219) (40,007)(41,154) (42,138) (67,373) (82,332)
Net increase (decrease) in cash (4,880) 50,71267,018 (182,565) 62,138 (131,853)
Cash, beginning of period 424,833 444,509 429,713 393,797
Cash,end of period $424,833 $444,509491,851 261,944 491,851 261,944
Supplemental disclosures:
Cash paid for:for :
Interest 13,782 16,320$16,503 $18,546 $30,285 $35,510
See notes to financial statements
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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, 1998.
The results of operations for the three and six months ended September 30,December 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:
September 30,December 31,1998 June 30,
1998 199830,1998
Raw materials $545,828$579,118 $547,117
Work-in-process 346,941355,760 347,760
Finished goods 165,835186,226 166,226
Total $1,058,604$1,121,104 $1,061,103
For the threesix months ended September 30,December 31, 1998 the Company used the gross
profit method to calculate ending inventory values.
Note 3 - Provision for Income Taxes
The provision for incomeIncome taxes differswere different from the amounts computed by applying the
federal income tax rate to the income before income taxes due to the following:
September 30,
%
1998 1997Three Months Ended Six Months Ended
12/31/98 12/31/97 12/31/98 12/31/97
Statutory rate 34.0 34.034% 34% 34% 34%
State income taxes, net of
federal tax benefit 2.0 2.0
Utilization of tax credit (10.3) (6.0)
Other 2.0 12.02 4 2 4
General Business Credit (19) (6) (14) (6)
Deferred Tax Provision 0 8 0 8
Effective tax rate 27.7 42.0
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALTax Rate 17% 40% 22% 40%
CONDITION AND RESULTS OF OPERATIONS
The following table presents selected financial information for the periods
September 30, 1998December 31,1998 and 1997.1997, respectively.
Three Months Ended September 30,Six Months Ended
December 31, December 31,
1998 1997 1998 1997
Net sales $1,089,905 $1,100,862$1,220,949 $1,209,400 $2,310,854 $2,310,262
Gross profit $381,263 $448,729$501,651 $452,047 $882,914 $900,776
Gross margin 35.0% 40.8%41.1% 37.4% 38.2% 38.9%
Operating expenses $397,835 $265,981 $693,169 $593,952
Net income (loss) $52,147 $60,438$71,491 $103,821 $123,638 $164,259
Net income (loss), per share $0.02 $0.02$0.03 $0.04 $0.05
General
Logitek, Inc. (the "Company") reported net incomea profit of $52,147$123,638 for the threesix
months ended September 30,December 31, 1998 versus $60,438a profit of $164,259 for the prior
year period.period.For the quarter ended December 31, 1998 the Company reported a
profit of $71,491 compared to a profit of $103,821 for the prior year
quarter. The Company's sales backlog is aproximately $1,750,000approximately $2,000,000 at
September 30, 1998
versus $2,500,000December 31,1998.This represents a decrease from prior periods. The Company
is awaiting orders from customers that have been delayed until completion
of special designs for several significant programs. The Company believes
that ongoing repeat business for these prograams will materialize in the near
term. Other programs in which the special designs have already been completed
are also experiencing delay in order placement.It is expected that these
situations will be cleared during the third quarter at September 30, 1997.which time backlog
should return to expected levels.In the meantime, the Comapny expects lower
sales levels during the third and possibly fourth quarters.
Results of Operations
Net sales for the threefirst six months ended September 30,1998of fiscal 1998 were $1,089,905$2,310,854 compared
to $1,100,862$2,310,262, or an decreaseincrease of $10,957,$592. Net sales for the quarter ended
December 31, 1998 were $1,220,949 compared to $1,209,400 or 1%, from the prior year
period. This decrease is the resultan increase of
certain jobs being delayed awaiting
engineering release. These releases are expected to occur early in the
second quarter.
$11,549.
Gross profit decreased to 35.0%38.2% in the quarter ended September 30, 1998current six month period compared to
40.8%38.9% for the prior year quarter.year. This decrease in gross profit
is a result ofconsidered minor and the Company's committment to additional laborCompany
believes its margins will remain strong in the engineering and quality control areas. The Company belieives this investment
will pay off in the near term.future.
Operating expenses for the threesix months ended September 30,December 31, 1998 decreased
$32,637 or 10% Thisincreased
$99,217.This occurred as a result of additional selling and research and
development costs. The selling expense is primarily advertising costs.
The research costs are being incurred as the Company continuingis undertaking product
modifications , for major customers specifications. These are the orders
discussed above which the Company believes will be coming in the near term.
While it is generally management's policy not to maintain tight cost controls over its general and administrative expenses
as well as its general overhead.undertake special design
efforts, the significance of these programs warrants these efforts.
Liquidity
As of September 30December 31, 1998 and June 30, 1998 the Company had cash on hand of
$424,833$491,851 and $429,713 respectively; and, as of September 30,December 31, 1998 the
Company's current ratio was 4.273.86 compared to 3.46 atas of June 30, 1998.
Total borrowings were $462,139$420,985 at September 30,December 31, 1998, and $488,358 at June 30,
1998 for a
decrease of $26,219 while accounts payable and accrued expenses decreased
$138,533.$516,084 at December 31, 1997.
The Company does not anticipate any new borrowings, however, if the need
arises to purchase equipment in its continuing effort to increasemodernize its
manufacturing capability it is thehe Company's intention to lease such
equipment on more favorable termsrather than an outright purchase.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 30,1998
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 3,112,945 500 0
Howard Fein 3,112,945 500 0
Francis Vuccii 3,112,945 500 0
2. To elect Marcum & Kliegman, Certified Public Accountants as the Company's
independent certified accountants:
Votes Cast
For Against Abstained
3,112,945 500 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - NoneThere are no exhibits being filed with this 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: 11/ 5/ 982/16/99 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