SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to _______
Commission file number 0-10696
LogiMetrics, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2171701
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
121-03 Dupont Street, Plainview, New York 11803
(Address of principal executive offices)
Issuer's telephone number: (516) 349-1700
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, par value Outstanding at May 5, 1997: 22,391,434 shares
$.01 per share
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
LOGIMETRICS, INC.
INDEX
Page
Part I - Financial Information
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet - March 31, 1997...................................... 3
Statements of Operations -
Nine months ended March 31, 1997 and 1996........................... 4
Three months ended March 31, 1997 and 1996.......................... 5
Statements of Cash Flows -
Nine months ended March 31, 1997 and 1996........................... 6
Notes to Consolidated Financial Statements ......................... 7
Item 2. Management's Discussion and Analysis or Plan of Operation...... 15
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities................................ 20
Item 6. Exhibits and Reports on Form 8-K............................... 20
SIGNATURES.............................................................. 21
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 100,762
Accounts receivable, less allowance
for doubtful accounts of $150,000 932,626
Costs and estimated earnings in excess of
billings on uncompleted contracts (Note 3) 734,876
Inventories 2,151,411
Prepaid expenses and other current assets 102,790
---------
Total current assets 4,022,465
Equipment and fixtures (Note 4) 440,401
Deferred financing costs 187,344
Other assets 20,300
-----------
TOTAL ASSETS $ 4,670,510
===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and other accrued expenses $4,116,042
Customer advances 59,620
Accrued warranty expense 150,000
Current portion of long-term debt (Note 5) 705,076
---------
Total current liabilities 5,030,738
LONG-TERM DEBT (Note 5) 3,130,097
----------
TOTAL LIABILITIES 8,160,835
----------
COMMITMENTS
STOCKHOLDERS' DEFICIENCY (Note 6)
Preferred Stock:
Series A, stated value $50,000 per share;
authorized, 200 shares; issued and
outstanding, 30 shares 990,564
Warrants 1,023,234
Common Stock:
Par value $.01; authorized,
35,000,000 shares; issued and
outstanding, 3,143,634 shares 31,436
Additional paid-in capital 1,836,061
Accumulated deficit (7,208,670)
Stock subscriptions receivable (162,950)
-----------
TOTAL STOCKHOLDERS' DEFICIENCY (3,490,325)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $4,670,510
==========
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended March 31,
1997 1996
---- ----
Net revenues $ 5,246,353 $ 3,526,633
Cost and expenses:
Cost of revenues (Note 3) 5,546,086 5,614,233
Selling, general and
administrative expenses 1,617,835 1,564,848
--------- ---------
Loss from operations 1,917,568 3,652,448
--------- ---------
Interest expense 525,350 250,678
--------- ---------
Loss before income taxes 2,442,918 3,903,126
--------- ---------
Provision (benefit) for income taxes - (299,000)
--------- ----------
Net loss 2,442,918 3,604,126
Preferred stock dividends 171,079 -
--------- ---------
Net loss available
to common shareholders $ 2,613,997 $ 3,604,126
=========== ==========
Loss per common
share (Note 7) $ .87 $ 1.26
Loss per fully diluted
share (Note 7) $ .87 $ 1.26
Weighted average number of common
shares and equivalents outstanding 3,004,191 2,860,602
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
1997 1996
----- ----
Net revenues $ 2,088,689 $ 947,775
Cost and expenses:
Cost of revenues (Note 3) 1,872,618 2,443,616
Selling, general and
administrative expenses 485,548 794,477
----------- ---------
Loss from operations 269,477 2,290,318
----------- ---------
Interest expense 178,976 87,650
----------- ---------
Loss before income taxes 448,453 2,377,968
----------- ---------
Provision for income taxes - -
----------- ---------
Net loss 448,453 2,377,968
Preferred stock dividends 60,657 -
----------- ---------
Net loss available
to common shareholders $ 509,110 $2,377,968
=========== ==========
Loss per common
share (Note 7) $ .17 $ .83
Loss per fully diluted
share (Note 7) $ .17 $ .83
Weighted average number of common
shares and equivalents outstanding 3,084,935 2,860,602
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended March 31,
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ 2,442,918 $3,604,126
---------- ----------
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:
Depreciation and amortization 302,343 69,381
Non-cash expenses 22,500 -
Allowance for doubtful accounts 75,000 -
Deferred income tax (benefit) - (299,000)
Increase (decrease) in cash from:
Accounts receivable 175,487 1,014,876
Costs and estimated earnings
in excess of billings on
uncompleted contracts 266,887 2,119,726
Inventories 120,042 (86,967)
Prepaid expenses and other
current assets 85,696 (120,056)
Other assets 425 (298,342)
Accounts payable and accrued expenses 1,406,303 (388,774)
--------- ----------
Total adjustments 2,454,683 2,010,844
--------- ----------
Net cash provided by (used for) operating activities 11,765 (1,593,282)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and fixtures (19,572) (77,148)
---------- ----------
Net cash (used for) investing activities (19,572) (77,148)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of debt and warrant issuance - net - 1,894,936
Proceeds of preferred stock issuance - 1,145,595
Repayment of loans from stockholders - (60,000)
Proceeds from exercise of warrants 1,887 -
Decrease in stock subscriptions receivable 1,250 -
Repayment of debt (138,839) (393,093)
---------- ------------
Net cash provided by (used for) financing
activities (135,702) 2,587,438
---------- ------------
NET INCREASE (DECREASE) IN CASH (143,509) 917,008
CASH and CASH EQUIVALENTS, beginning
of period 244,271 40,858
-------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 100,762 $ 957,866
=========== ===========
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Financial Statements
The accompanying consolidated financial statements include the accounts of
LogiMetrics, Inc. and its wholly owned subsidiary, LogiMetrics FSC, Inc.
(collectively, the "Company"). All intercompany balances and transactions have
been eliminated.
The Company's financial statements have been prepared assuming that the Company
will continue as a going concern. The Company's independent auditors' report on
the Company's financial statements for the fiscal year ended June 30, 1996 made
reference to the Company's losses from operations and the stockholders' capital
deficiency, which, in their opinion, raised substantial doubt about its ability
to continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
The balance sheet as of March 31, 1997, the statements of operations for the
nine- month and three-month periods ended March 31, 1997 and 1996, and the
statements of cash flows for the nine-month periods ended March 31, 1997 and
1996, have been prepared by the Company without audit. Such accompanying
unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial reporting
and with the instructions to Form 10-QSB. Accordingly, they do not include all
of the information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments, consisting of normal occurring accruals considered necessary for a
fair presentation, have been included. Results for the nine months and three
months ended March 31, 1997 are not necessarily indicative of the results that
may be achieved for any other interim period or for the year ending June 30,
1997. These statements should be read in conjunction with the financial
statements and related notes included in the Company's Annual Report on Form
10-KSB for the year ended June 30, 1996.
2. Subsequent Events - Acquisition of mmTech, Inc.
On April 25, 1997, the Company completed the acquisition of mmTech, Inc.
("mmTech"). Under the terms of the acquisition, to be accounted for as a pooling
of interests, the Company exchanged 19,247,800 shares of common stock, par value
$.01 per share (the "Common Stock") for all of mmTech's outstanding shares of
common stock (the "Merger").
mmTech designs, develops and manufactures a complete line of equipment for the
local multi-point distribution service marketplace.
The financial position and results of operations of the Company and mmTech will
be combined in fiscal 1997 retroactive to July 1, 1996 and the fiscal year of
mmTech will be conformed to the Company's fiscal year. In addition, all prior
periods presented will be restated to give effect to the Merger.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Presented below are condensed combined pro forma financial statements as of and
for the nine months ended March 31, 1997, giving effect to the acquisition.
Condensed Combined Pro Forma Balance Sheet at March 31, 1997
<TABLE>
<CAPTION>
LogiMetrics mmTech Combined
<S> <C> <C> <C>
Assets
Current assets $4,022,465 2,353,738 $ 6,376,203
Equipment and fixtures 440,401 150,459 590,860
Other non-current assets 207,644 2,648 210,292
---------- --------- -----------
Total assets $4,670,510 2,506,845 $ 7,177,355
---------- --------- -----------
Liabilities
Current liabilities $5,030,738 2,237,934 $ 7,268,672
Long-term obligations 3,130,097 36,310 3,166,407
---------- --------- ----------
Total liabilities 8,160,835 2,274,244 10,435,079
Stockholders' equity ---------- --------- ----------
(deficiency) (3,490,325) 232,601 (3,257,724)
Total liabilities and ---------- --------- ----------
stockholders' equity
(deficiency) $4,670,510 2,506,845 $ 7,177,355
---------- --------- -----------
Condensed Combined Pro Forma Statement of Operations -
Nine Months Ended March 31, 1997
LogiMetrics mmTech Combined
Net revenues $5,246,353 3,635,388 $ 8,881,741
Operating costs and expenses 7,163,921 3,144,230 10,308,151
---------- --------- ----------
Income (loss) from operations (1,917,568) 491,158 (1,426,410)
---------- --------- ----------
Interest expense 525,350 26,855 552,205
Income taxes -- 161,526 161,526
---------- ------- ----------
Net income (loss) (2,442,918) 302,777 (2,140,141)
---------- ------- ----------
Preferred stock dividends 171,079 -- 171,079
Net income (loss) available ----------- ------- ----------
to common shareholders $(2,613,997) 302,777 $ (2,311,220)
============ ======= ============
Net (loss) per common share $( .77)
</TABLE>
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
3. Costs and Estimated Earnings in Excess of Billings on Uncompleted
Contracts
Costs and estimated earnings in excess of billings on uncompleted contracts
consist of the following at March 31, 1997:
Costs and estimated earnings $1,632,963
Less: Estimated loss upon completion (544,708)
Progress billings (353,379)
----------
$ 734,876
==========
4. Equipment and Fixtures
Equipment and fixtures, at cost, are summarized as follows at March 31, 1997:
Machinery and equipment $2,153,302
Furniture and fixtures 131,129
Leasehold improvements 149,198
----------
2,433,629
Less: accumulated depreciation and amortization (1,993,228)
----------
$ 440,401
==========
5. Long-Term Debt
Long-term debt consists of the following at March 31, 1997:
Notes payable to North Fork Bank $2,179,786
Senior subordinated debentures 1,500,000
Less: unamortized discount (286,016)
Subordinated debentures 300,000
Capital lease obligations and other debt 141,403
----------
3,835,173
Less: current portion 705,076
----------
$3,130,097
==========
Subordinated Debentures and Series A and Series B Warrants
On July 14, 1995, the Company completed a private offering of 15 units of its
securities at a price of $20,800 per unit. Each unit consisted of one $20,000
12% Convertible Subordinated Debenture (the "Old Debentures") and one Common
Stock Purchase Warrant, Series A (the "Old Series A Warrants"). For managing the
financing, Common Stock Purchase Warrants, Series B (the "Old Series B
Warrants") to purchase 1,500,000 shares of Common Stock, par value $.10 per
share (the "Class A Common Stock"), were sold to SFM Group, Ltd. ("SFM") at a
price of $.02 per warrant.
Subsequently, on March 7, 1996, in connection with the recapitalization and
change in control of the Company (the "Recapitalization"), all of the holders of
the Old Debentures, Old Series A Warrants and Old Series B Warrants exchanged
such debentures and warrants for Amended and Restated 12% Convertible
Subordinated Debentures (the "Subordinated Debentures"), Amended and Restated
Series A Warrants (the "Series A Warrants") and Amended and Restated Series B
Warrants (the "Series B Warrants"), respectively.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
The Subordinated Debentures are convertible into an aggregate of 1,200,000
shares of Common Stock, at $.25 per share, subject to adjustment in certain
circumstances. As of May 5, 1997, the Company was in default with respect to the
payment of interest under the Subordinated Debentures; accrued and unpaid
interest totaled $68,631. Interest accrues at the rate of 15% per annum on
unpaid interest and 12% per annum on the outstanding principal. The principal is
payable in one balloon payment on July 14, 1997. The Subordinated Debentures are
subordinated in right of payment to the 12% Convertible Senior Subordinated
Debentures (the "Senior Debentures"), the Sixth Restated and Amended Revolving
Credit Note (the "Revolver") and the Further Restated and Amended Term Loan Note
(the "Term Loan") with the Company's senior lender, North Fork Bank (the
"Bank"), and capital lease obligations.
The Series A Warrants may be exercised at a price of $.25 per share, subject to
adjustment in certain circumstances, for an aggregate of 600,000 shares of
Common Stock. The Series B Warrants may be exercised at a price of $.25 per
share, subject to adjustment in certain circumstances, for an aggregate of
1,500,000 shares of Common Stock. Both the Series A and the Series B Warrants
may be exercised at any time until July 15, 2002. As of May 5, 1997, the Company
had not filed a registration statement effecting the Series A and the Series B
Warrant holders' registration rights as required by the terms thereof.
Senior Debentures and Series C Warrants
In connection with the Recapitalization, the Company sold to Cerberus Partners,
L.P. ("Cerberus"), 30 units for an aggregate purchase price of $1,500,000. Each
unit consisted of one $50,000 Senior Debenture and one Common Stock Purchase
Warrant, Series C (the "Series C Warrants") entitling the holder thereof to
purchase 84,746 shares of Common Stock for $.01 per share, subject to adjustment
in certain circumstances, at any time prior to March 7, 2003.
The Company allocated the $1,500,000 received between the Senior Debentures and
the Series C Warrants based on their estimated fair value as of March 7, 1996.
Each Senior Debenture is convertible into 84,746 shares of Common Stock, subject
to adjustment in certain circumstances. The Senior Debentures are senior in
right of payment to the Subordinated Debentures, but are subordinate to the Term
Loan and the Revolver. The principal is payable on the Senior Debentures in one
balloon payment due December 31, 1998.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
As of May 5, 1997, the Company had not paid interest accrued since June 16, 1996
on the Senior Debentures, and had not filed in a timely manner the registration
statement effecting the Senior Debentures and Series C Warrant holder's
registration rights as required by the terms thereof.
Accrued and unpaid interest on the Senior Debentures totaled $213,350 as of May
5, 1997. Interest is currently payable at the rate of 17% per annum on the
outstanding principal and at the rate of 17% on the past-due interest. Interest
accrued on the unpaid principal at the rate of 12% per annum until June 5, 1996.
On June 6, 1996, the interest rate increased to 13.5% per annum for the ensuing
three-month period, due to the Company's failure to file a registration
statement effecting the Senior Debentures and Series C Warrant holder's
registration rights as required by the terms thereof. Thereafter, the interest
rate increased each 30-day period by 0.5% per annum, to a rate of 17% per annum
on May 5, 1997. Until the Company files a registration statement effecting the
Senior Debentures and Series C Warrant holder's registration rights, the
interest rate will remain at a maximum rate on unpaid principal and interest of
17% per annum. Upon the filing of the registration statement and the payment of
the past due interest, the interest rate will revert to 12% per annum.
In connection with the Merger and the amendment of the Company's credit
facilities with the Bank, the holder of the Senior Debentures agreed to amend
certain of the provisions of the Senior Debentures to, among other things, cure
any defaults under the financial covenants contained therein by conforming them
to the financial covenants contained in the new Bank facility. In addition, the
holder of the Senior Debentures waived until May 15, 1997 its right to declare
an event of default and to exercise its remedies as a result of, among other
things, the Company's failure to pay amounts due and owing on the Senior
Debentures (and certain related indebtedness). The holder of the Senior
Debentures also agreed to waive until August 31, 1997 any event of default
resulting from the Company's failure to register the shares of Common Stock
issuable to such holder upon the conversion of the Senior Debentures and the
exercise of the Series C Warrants. In connection with such waivers, the Company
deposited with an escrow agent a $22,500 12% senior subordinated note due
December 31, 1998, which is issuable to the holder of the Senior Debentures in
the event that the Company has not made all payments due and owing to such
holder on or before May 15, 1997, which date may be extended to May 31, 1997 in
certain circumstances. The Company does not anticipate that it will be able to
pay all amounts due under the Senior Debentures by May 15, 1997. There can be no
assurance that the Company will be able to pay amounts due to the holder of the
Senior Debentures in a timely manner or that such holder will continue to
forbear from exercising its remedies if the Company fails to pay amounts owed to
such holder when due.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
North Fork Bank Credit Facilities
The Company has two credit facilities available to it from the Bank. The
facilities, amended as of April 25, 1997, provide the Company with (i) the
Revolver, which allows up to $2,200,000 in borrowings and matures April 30,
1998, and (ii) the Term Loan, in the principal amount of $640,000, which matures
December 31, 1998. The Revolver and the Term Loan bear interest at the rate of
2% per annum in excess of the Bank's prime rate. On May 5, 1997, the Bank's
prime rate was 8.50% per annum.
The Company is current with respect to its interest payments on the Revolver and
its interest and principal payments on the Term Loan. However, the credit
facilities with the Bank contained certain financial covenants, which the
Company failed to meet as of March 31, 1997. Subsequently, on April 25, 1997,
the Company consummated a restructuring of the Revolver and the Term Loan,
pursuant to which the financial convenants have been modified to cure all
previously existing defaults thereunder.
Principal payments due on all long-term debt consist of the following:
Fiscal year ending June 30, 1997 $ 92,376
Fiscal year ending June 30, 1998 2,259,954
Thereafter 1,482,843
----------
$3,835,173
==========
6. Stockholders' Deficiency
Common Stock
In February 1997, one Common Stock Purchase Warrant, Series D (the "Series D
Warrants") was exercised. As a result, the number of shares of Common Stock
increased by 94,340 to 3,143,634 shares.
Preferred Stock and Series D Warrants
In connection with the Recapitalization, the Company sold in a private placement
30 units for an aggregate purchase price of $1,500,000. Each unit consisted of
one share of Series A 12% Cumulative Convertible Redeemable Preferred Stock (the
"Preferred Stock") and one Series D Warrant. Each share of Preferred Stock is
convertible into 94,340 shares of Common Stock, subject to adjustment in certain
circumstances. Each Series D Warrant entitles the holder thereof to purchase
94,340 shares of Common Stock at $.01 per share, subject to adjustment in
certain circumstances, at any time prior to March 7, 2003. Holders of Preferred
Stock have no voting or pre-emptive rights except as provided by law.
The Company allocated the $1,500,000 received between the Preferred Stock and
the Series D Warrants based on their estimated fair value as of March 7, 1996.
Dividends on the Preferred Stock are payable quarterly, beginning June 15, 1996.
The Company has not paid any dividends on the Preferred Stock. The Company also
has not filed a registration statement effecting the Preferred Stock and Series
D Warrant holders' registration rights as required by the terms thereof.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
The accumulated amount of dividends due on the Preferred Stock as of May 5, 1997
was $252,737. Accumulated dividends were payable at the rate of 12.0% per annum
until June 5, 1996. On June 6, 1996, the dividend rate increased to 13.5% per
annum for the ensuing three-month period because the Company failed to file in a
timely manner the registration statement effecting the Preferred Stock and
Series D Warrant holders' registration rights as required by the terms thereof.
Thereafter, the dividend rate increased monthly by 0.5% per annum to a rate of
17% per annum on May 5, 1997. Until the Company files the registration
statement, the dividend rate will remain at a maximum rate on unpaid accumulated
dividends of 17% per annum. Upon the filing of the registration statement and
the payment of accumulated dividends, the dividend rate will revert to 12% per
annum.
The Preferred Stock is redeemable, at the Company's option, upon the giving of
thirty days prior written notice, unless the price of the Company's Common Stock
fell below $5.00 per share during the 120-day period immediately preceding the
date of the notice. If redeemed by the Company, the Preferred Stock must be
redeemed at stated value plus all accrued and unpaid accumulated dividends.
Series E Warrants
- -----------------
In December 1995, the Company entered into a consulting agreement with two
companies, SFM, whose principals include Alfred Mendelsohn, a director of the
Company, and Lawrence I. Schneider, a former director of the Company, and
Phipps, Teman & Company, L.L.C. ("PTCO"), whose principals include Norman M.
Phipps, the Company's President, and Wade Teman, a Senior Vice President of the
Company, for services to be rendered in connection with the Recapitalization.
Pursuant to the consulting agreement, upon consummation of the Recapitalization,
SFM and PTCO were paid cash fees of $212,500 and received warrants to purchase a
total of 1,000,000 shares of Common Stock at $.50 per share, subject to
adjustment in certain circumstances, any time prior to March 7, 2003 (the
"Series E Warrants"). As of May 5, 1997, the Company had not filed a
registration statement effecting the Series E Warrant holders' registration
rights as required by the terms thereof.
Series F Warrants
- -----------------
On May 1, 1996, the Company issued Common Stock Purchase Warrants, Series F (the
"Series F Warrants") to certain directors, officers and other related parties as
compensation for services performed for the Company. The Series F Warrants are
exercisable at any time prior to March 7, 2003 at $.50 per share, subject to
adjustment in certain circumstances. Specifically, the Company granted: (i) to
Mr. Lawrence I. Schneider, a former director, Series F Warrants to purchase
331,190 shares of Common Stock; (ii) to PTCO, Series F Warrants to purchase
235,850 shares of Common Stock; and (iii) to Alfred Mendelsohn, a director,
Series F Warrants to purchase 100,000 shares of Common Stock. As of May 5, 1997,
the Company had not filed a registration statement effecting the Series F
Warrant holders' registration rights as required by the terms thereof.
Registration Rights
- -------------------
Under the terms of each of the Senior Debentures, the Subordinated Debentures,
the Preferred Stock, the Series A Warrants, the Series B Warrants, the Series C
Warrants, the Series D Warrants, the Series E Warrants and the Series F
Warrants, the Company was obligated to file a registration statement effecting
the respective holders' registration rights within a specified time. As of May
5, 1997, the Company has not filed such a registration statement within the
required time.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
7. Loss Per Share
Loss per common share was computed by dividing the net loss by the weighted
average number of shares of Common Stock and equivalents outstanding during each
of the periods presented. For the nine-month and three-month periods ended March
31, 1997, the fully diluted earnings per share does not give effect to the
contingently issuable shares because they would have an antidilutive effect.
<PAGE>
LOGIMETRICS, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(a) General - Plan of Operation
On March 7, 1996, the Recapitalization was completed and new management was
brought in to lead a restructuring of the Company's operations. The primary
objective of the restructuring is to redirect the Company's focus toward the
higher value-added, broadband wireless communications market.
In furtherance of this change in focus, in December 1996 the Company announced
that it had entered into an agreement to acquire mmTech, for an aggregate of
19,247,800 shares of Common Stock.
Subsequently, on April 25, 1997, the Merger was consummated. The Company also
consummated a restructuring of its senior bank facilities with North Fork Bank,
pursuant to which the financial covenants applicable to the Company have been
modified to cure all previously existing defaults thereunder. In connection with
the restructuring, the holder of the Company's Senior Debentures has also agreed
to waive certain outstanding events of default to provide the Company with time
to obtain additional financing.
As a result of this change in focus, as well as operating inefficiencies
resulting from a shortage of working capital, the Company has incurred
significant net losses since the Recapitalization. As a result of these losses,
as of March 31, 1997, the Company had not paid all amounts due under the
Subordinated Debentures, the Senior Debentures and the Preferred Stock. In
addition, to date the Company has not paid any dividends on its Preferred Stock,
which have accumulated in the amount of $252,737 through May 5, 1997. The
Company was also overdue in payments to vendors in the amount of approximately
$2.5 million as of May 5, 1997.
The Company is currently negotiating with several entities for financing to make
required payments to existing creditors, complete projects in process and fund
the planned growth in operations. If, however, the Company is unable to promptly
obtain financing or other cash infusions, the Company may be required to seek
protection from its creditors under the Bankruptcy Code or pursue an insolvency
proceeding. The Company's creditors could also file an involuntary petition
against the Company under the Bankruptcy Code.
<PAGE>
LOGIMETRICS, INC.
(b) Management's Discussion and Analysis of Financial Condition and
Results of Operations
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Net revenues for the three months ended March 31, 1997 increased $1,140,914, or
120.4%, to $2,088,689 from $947,775 for the comparable period of 1996, primarily
due to increased sales of traveling wave tube amplifiers ("TWTAs") and related
equipment resulting from the refocusing of the Company's business as described
above.
Cost of revenues for the three months ended March 31, 1997 decreased $570,998,
or 23.4%, to $1,872,618 from $2,443,616 for the comparable period of 1996,
primarily as a result of improved operating efficiencies. As a percentage of net
revenues, cost of revenues was 89.7% for the quarter ended March 31, 1997,
compared to 257.8% for the quarter ended March 31, 1996. The high levels of cost
of revenues in both periods reflect operational inefficiencies resulting from a
shortage of working capital, as well as costs related to the restructuring of
the Company's business as described above.
SG&A expenses for the three months ended March 31, 1997 decreased $308,929, or
38.9%, to $485,548 from $794,477 for the comparable period of 1996, primarily as
a result of lower staffing expenses, offset in part by higher professional fees
and amortization of debt issuance costs. As a percentage of revenues, SG&A
expenses decreased to 23.2% for the quarter ended March 31, 1997 from 83.8% for
the comparable period of 1996, primarily as a result of the higher level of
revenues during the 1997 period and the reduction in expenses described above.
The Company has implemented certain staffing reductions and other measures in an
effort to reduce its cost base in order to improve profitability. No assurances
can be given, however, that such initiatives will ultimately succeed or as to
the impact, magnitude or duration of any expense savings that may be achieved.
For the reasons discussed above, operating losses for the three months ended
March 31, 1997 decreased $2,020,841, or 88.2%, to $269,477 from $2,290,318 for
the comparable period in 1996.
<PAGE>
LOGIMETRICS, INC.
Interest expense for the three months ended March 31, 1997 increased $91,326, or
104.2%, to $178,976 from $87,650 for the comparable period of 1996, primarily as
a result of a higher level of average outstanding indebtedness incurred in
connection with the Recapitalization. As indicated above, the Company is
currently accruing interest on the Senior Debentures and the Subordinated
Debentures at penalty rates as a result of the failure to meet all of its
obligations thereunder.
Although the Company incurred a pre-tax loss of $448,453 during the quarter
ended March 31, 1997, the Company did not recognize an income tax benefit
because under generally accepted accounting principles, the Company may not do
so until future profitability is more certain. During the quarter ended March
31, 1997, the Company accrued dividends on its outstanding Preferred Stock of
$60,657. The Preferred Stock was issued in March 1996 in connection with the
Recapitalization.
For the reasons discussed above, net loss available to common shareholders for
the quarter ended March 31, 1997 decreased $1,868,858, or 78.6%, to $509,110
from $2,377,968 for the comparable period in 1996.
Nine Months Ended March 31, 1997 Compared to Nine Months Ended March 31, 1996
Net revenues for the nine months ended March 31, 1997 increased $1,719,720, or
48.8%, to $5,246,353 from $3,526,633 for the comparable period of 1996,
primarily due to increased sales of TWTAs and related equipment resulting from
the refocusing of the Company's business as described above.
Cost of revenues for the nine months ended March 31, 1997 decreased $68,147, or
1.2%, to $5,546,086 from $5,614,233 for the comparable period of 1996, primarily
as a result of improved operating efficiencies. As a percentage of net revenues,
cost of revenues was 105.7% for the nine months ended March 31, 1997, compared
to 159.2% for the nine months ended March 31, 1996. As described above, the high
level of cost of revenues reflects operational inefficiencies resulting from a
shortage of working capital, as well as the costs related to the restructuring
of the Company's business.
SG&A expenses for the nine months ended March 31, 1997 increased $52,987, or
3.4%, to $1,617,835 from $1,564,848 for the comparable period of 1996, primarily
as a result of higher professional fees, higher insurance costs and amortization
of debt issuance costs, offset in part by lower staffing expenses. As a
percentage of revenues, SG&A expenses decreased to 30.8% for the nine months
ended March 31, 1997 from 44.4% for the comparable period of 1996.
<PAGE>
LOGIMETRICS, INC.
For the reasons discussed above, operating losses for the nine months ended
March 31, 1997 decreased $1,734,880, or 47.5%, to $1,917,568 from $3,652,448 for
the comparable period in 1996.
Interest expense for the nine months ended March 31, 1997 increased $274,672, or
109.6%, to $525,350 from $250,678 for the comparable period of 1996, primarily
as a result of a higher level of indebtedness incurred in connection with the
Recapitalization. As indicated above, the Company is currently accruing interest
on the Senior Debentures and the Subordinated Debentures at penalty rates as a
result of the failure to meet its obligations thereunder.
Although the Company incurred a pre-tax loss of $2,442,918 during the nine
months ended March 31, 1997, the Company did not recognize an income tax benefit
because under generally accepted accounting principles the Company may not do so
until future profitability is more certain. During the nine months ended March
31, 1996, the Company recognized an income tax benefit of $299,000 due to the
reversal of the Company's deferred tax liability. In addition, during the nine
months ended March 31, 1997, the Company accrued dividends on its outstanding
Preferred Stock of $171,079. The Preferred Stock was issued in March 1996 in
connection with the Recapitalization.
For the reasons discussed above, net loss available to common shareholders for
the nine months ended March 31, 1997 decreased $990,129, or 27.5%, to $2,613,997
from $3,604,126 for the comparable period in 1996.
Financial Condition, Liquidity and Capital Resources
The Company sustained net losses of $5,196,067 for the year ended June 30, 1996
and $2,613,997 for the nine months ended March 31, 1997 and had an accumulated
deficit of $7,208,670 at March 31, 1997. Notwithstanding the losses for the year
ended June 30, 1996 and for the nine months ended March 31, 1997, the Company
generated a positive cash flow of $59,904 during the twenty one-month period
from July 1, 1995 to March 31, 1997. Substantial reductions in accounts
receivable and costs and estimated earnings in excess of billings on uncompleted
contracts, as well as a substantial increase in accounts payable and accrued
expenses during that period provided a portion of the working capital
requirements of the Company.
In addition, the Company used the net proceeds from the private offering of the
Subordinated Debentures, Senior Debentures, Preferred Stock and warrants on July
14, 1995 and March 7, 1996 to finance working capital requirements. There can be
no assurance that the Company will be able to continue funding its working
capital needs from the private or public sale of its debt and/or equity
securities. As a result of the Company's history of losses, the per share
trading price of the Common Stock has declined significantly, thereby making it
more difficult to sell sufficient shares to fund the Company's operations. Any
future sales of the Company's securities may be on terms which are dilutive to
existing shareholders.
<PAGE>
LOGIMETRICS, INC.
In October 1996, the Company entered into an agreement (the "CT&T Agreement")
with CellularVision Technology & Telecommunications, L.P. ("CT&T") pursuant to
which CT&T agreed to advance funds to the Company in connection with its
purchase of equipment from the Company. Pursuant to the CT&T Agreement, the
Company received an advance payment of approximately $620,000. The advance is
being amortized against deliveries of equipment to CT&T. The unamortized portion
of the advance equaled $52,120 as of March 31, 1997. The Company has utilized a
portion of the advance to fund its ongoing operations. The Company estimates
that the CT&T Agreement will be fully performed in fiscal 1997. There can be no
assurance that the Company will receive any future orders from CT&T or that CT&T
will be willing to make similar advance payments to the Company in connection
with any future orders.
In recent periods, the Company's material purchasing leverage with respect to
price, terms and service has been negatively impacted by its working capital
constraints. The Company is currently negotiating with several entities for
financing to make required payments to existing creditors, complete projects in
process and fund the planned growth in operations. If, however, the Company is
unable to promptly obtain financing or other cash infusions, the Company may be
required to seek protection from its creditors under the Bankruptcy Code or
pursue an insolvency proceeding. The Company's creditors could also file an
involuntary petition against the Company under the Bankruptcy Code.
During the nine-month period ended March 31, 1997, the Company had capital
expenditures of $19,572 and for the years ended June 30, 1996 and 1995 capital
expenditures were $52,228 and $5,362, respectively. The Company anticipates that
total capital expenditures will be approximately $30,000 for the year ended June
30, 1997.
The Company has tax loss carry-forwards totaling approximately $3,500,000 from
the years ended June 30, 1995 and June 30, 1996 to offset future income.
As more fully discussed under Item 2(a) above, the Company requires financing or
other cash infusions in order to continue operating. See also Note 5 to the
Company's Notes to Consolidated Financial Statements.
<PAGE>
LOGIMETRICS, INC.
Disclosure Regarding Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward looking statements. Certain information contained in this Form
10-QSB includes information that is forward looking, such as the Company's
expectations for future performance, its growth and business strategies, its
anticipated liquidity and capital needs and its future prospects. The matters
referred to in such forward looking statements could be affected by the risks
and uncertainties related to the Company's business. These risks and
uncertainties include, but are not limited to, the effect of economic and market
conditions, the Company's cash constraints and lack of profitable operations,
the Company's ability to continue operations as a going concern, the actions, if
any, taken by the Company's creditors as a result of the Company's defaults and
its present financial condition, the impact of changing governmental regulation
of the telecommunications industry, technological changes occurring in the
Company's business, the impact of competition, the need for financing to support
the Company's operations, as well as certain other risks described elsewhere
herein. Subsequent written and oral forward looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements contained herein and elsewhere in this
Form 10-QSB and in the Company's Annual Report on Form 10-KSB.
PART II - OTHER INFORMATION
Item 3. Defaults Under Senior Securities
For a description of certain defaults under the Company's debt and equity
securities, see "Management's Discussion and Analysis or Plan of Operation."
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Number Description
27 Financial Data Schedule.
(b) Reports on Form 8-K:
Not applicable.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LOGIMETRICS, INC.
Dated: May 14, 1997 By:/s/ Norman M. Phipps
_______________________________
Norman M. Phipps
President and Chief Operating Officer
Dated: May 14, 1997 By:/s/ Russell J. Reardon
______________________________
Russell J. Reardon
Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-QSB FOR THE THREE MONTHS ENDED March 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 100,762
<SECURITIES> 0
<RECEIVABLES> 1,082,626
<ALLOWANCES> (150,000)
<INVENTORY> 2,151,411
<CURRENT-ASSETS> 4,022,465
<PP&E> 2,433,629
<DEPRECIATION> 1,993,228
<TOTAL-ASSETS> 4,670,510
<CURRENT-LIABILITIES> 5,030,738
<BONDS> 3,130,097
0
990,564
<COMMON> 31,436
<OTHER-SE> (4,512,325)
<TOTAL-LIABILITY-AND-EQUITY> 4,670,510
<SALES> 5,246,353
<TOTAL-REVENUES> 5,246,353
<CGS> 5,546,086
<TOTAL-COSTS> 7,088,921
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 75,000
<INTEREST-EXPENSE> 525,350
<INCOME-PRETAX> (2,442,918)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,442,918)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,442,918)
<EPS-PRIMARY> (.87)
<EPS-DILUTED> (.87)
</TABLE>
