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, 1997 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 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 3, 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 September 30, 1997 and June 30, 1997 3 Statements of Operations and Retained Earnings for the Three Months Ended September 30, 1997 and 1996 4 Statements of Cash Flows for the Three Months Ended September 30, 1997 and 1996 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LOGITEK, INC BALANCE SHEETS ASSETS September 30,1997 June 30,1997 Current Assets: (unaudited) Cash $444,509 $393,797 Accounts receivable, 374,059 422,549 Inventories 1,000,792 1,046,082 Prepaid expenses and other 5,430 34,292 Due from officer 30,500 30,500 Total Current Assets 1,855,290 1,927,220 Property and equipment, less accumulated depreciation 645,611 668,861 Other Assets: Goodwill 34,441 34,441 Other 36,551 36,323 Total Assets $2,571,893 $2,666,845 LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Current portion of long-term debt $142,760 $145,182 Capitalized lease obligation,current 12,079 11,783 Accounts payable 315,891 385,882 Accrued expenses 99,115 154,507 Total current liabilities 569,845 697,354 Capitalized Lease Obligation, Less Current Portion 46,725 50,119 Long-term debt, less current maturities 364,109 398,596 Deferred income taxes 25,380 15,380 Total Liabilities 1,006,059 1,161,449 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 1,257,131 1,196,693 Sub-total 1,573,486 1,513,048 Less:Treasury shares, at cost, 187,941 shares (7,652) (7,652) Total stockholders' equity 1,565,834 1,505,396 Total liabilities and stockholders' equity $2,571,893 $2,666,845 See notes to the financial statements. LOGITEK, INC STATEMENTS OF OPERATIONS AND RETAINED EARNINGS For the Three Months Ended September 30, 1997 and 1996 (Unaudited) Three Months Ended September 30, 1997 1996 Net sales $1,100,862 $708,113 Cost of goods sold 652,133 469,135 Gross profit 448,729 238,978 Operating expenses: Selling 91,916 65,691 General and administrative 198,356 104,705 Research and development 37,699 47,340 Total operating expenses 327,971 217,736 Income (loss) from operations 120,758 21,242 Interest expense, net 16,320 19,943 Income (loss) before provision for income taxes 104,438 1,299 Provision for income taxes 44,000 260 Net income (loss) 60,438 1,039 Retained earnings,beginning of period 1,196,693 872,127 Retained earnings, end of period $1,257,131 $873,166 Per share amounts Net income (loss) $.02 $.00 Weighted average shares outstanding 3,412,059 3,424,000 See Notes to financial statements LOGITEK INC. STATEMENTS OF CASH FLOWS For the Three Months ended September 30, 1997 and 1996 (Unaudited) Three Months Ended September 30, 1997 1996 Net income (loss) $60,438 $1,039 Adjustments to reconcile net income (loss) to cash provided by operations: Depreciation 23,250 27,525 Accounts receivable 48,490 (46,436) Inventories 45,290 (90,000) Prepaid expenses and other 28,862 (25,570) Other assets (228) (2,034) Accounts payable (69,991) 62,315 Accrued expenses (55,392) (113,757) Deferred Taxes 10,000 0 Total adjustments 30,281 (187,957) Net cash provided by (used in) operating activities 90,719 (186,918) Cash flows from financing activities: Long-term debt (40,007) (36,675) Purchase of Property, Plant and Equipment 0 (11,873) Net cash (used in) financing activities (40,007) (48,548) Net increase (decrease) in cash 50,712 (235,466) Cash, beginning of period 393,797 348,979 Cash, end of period $444,509 $113,513 Supplemental disclosures: Cash paid for: Interest 16,320 19,943 See notes to financial 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. The results of operations for the three months ended September 30, 1997 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, June 30, 1997 1997 Raw materials $510,404 $505,280 Work-in-process 250,198 326,954 Finished goods 240,190 213,848 Total $1,000,792 $1,046,082 For the three months ended September 30, 1997 the Company used the gross profit method to calculate ending inventory values. Note 3 - Provision for Income Taxes The provision for income taxes differs from the amounts computed by applying the federalincome tax rate to the income before income taxes due to the following: September 30, % 1997 1996 Statutory rate 34.0 34.0 State income taxes, net of federal tax benefit 2.0 2.0 Utilization of tax credit (6.0) (16.0) Other 12.0 0.0 Effective tax rate 42.0 20.0 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents selected financial information for the periods September 30, 1997 and 1996. Three Months Ended September 30, 1997 1996 Net sales $1,100,862 $708,113 Gross profit $448,729 $238,978 Gross margin 40.8% 33.7% Net income (loss) $60,438 $1,039 Net income (loss), per share $0.02 $0.00 General Logitek, Inc. (the "Company") reported net income of $60,438 for the three months ended September 30, 1997 versus $1,039 for the prior year period. The Company's sales backlog is aproximately $2,500,000 at September 30, 1997 versus$2,200,000 at September 30, 1996. This reflects a $300,000 increase, which the Company is hopeful will continue to grow. Results of Operations Net sales for the three months ended September 30,1997 were $1,100,862 compared to $708,113 or an increase of $392,749, or 55%, from the prior year period, however this comparative increase will likely not be as large in future quarters as the 55% increase achieved in this first quarter., Gross profit increases to 40.8% in the quarter ended September 30, 1997 compared to 33.7% for the prior year quarter. This increase in gross profit is a result of the increased sales with only minimal additional manufacturing overhead. Operating expenses for the three months ended September 30, 1997 increased $110,235 or 50% This occurred as a result of additional general & administrative overhead incurred as the company plans for greater sales volume based on increased bookings and increased sales activity. Liquidity As of September 30 and June 30, 1997 the Company had cash on hand of $444,509 and $393,797, respectively; and, as of September 30, 1997 the Company's current ratio was 3.3 compared to 2.76 at June 30, 1997 Total borrowings were $565,673 at September 30, 1997 and $605,680 at June 30, 1997 for a decrease of $40,007 while accounts payable and accrued expenses decreased $125,383. The Company does not anticipate any new borrowings, however, if the need arises to purchase equipment in its continuing effort to increase its manufacturing capability it is the Company's intention to lease such equipment on more favorable terms than an outright purchase. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (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: 11/ 10/ 97 By: /s/ Herbert L. Fischer Herbert L. Fischer President and Chief Executive Officer Date: 11/ 10/ 97 By: /s/ Herbert L. Fischer Herbert L.Fischer Chief Financial Officer