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 December 31, 1996
[ ] 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 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 February 14, 1997: 3,049,294 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 - December 31, 1996................................... 3
Statements of Operations -
Six months ended December 31, 1996 and 1995......................... 4
Three months ended December 31, 1996 and 1995....................... 5
Statements of Cash Flows -
Six months ended December 31, 1996 and 1995......................... 6
Notes to Consolidated Financial Statements -
December 31, 1996................................................... 7
Item 2. Management's Discussion and Analysis or Plan of Operation...... 16
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities................................ 21
Item 6. Exhibits and Reports on Form 8-K................................ 21
SIGNATURES............................................................... 23
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED BALANCE SHEET
December 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 167,145
Accounts receivable, less allowance
for doubtful accounts of $150,000 558,117
Costs and estimated earnings in excess of
billings on uncompleted contracts (Note 2) 1,035,622
Inventories 2,073,472
Prepaid expenses and other current assets 76,509
----------
Total current assets 3,910,865
Equipment and fixtures (Note 3) 464,672
Deferred financing costs 220,875
Other assets 20,300
----------
TOTAL ASSETS $4,616,712
==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and other accrued expenses $3,090,813
Customer advances 536,295
Accrued warranty expense 150,000
Current portion of long-term debt (Note 4) 3,745,792
- ---------
Total current liabilities 7,522,900
LONG-TERM DEBT (Note 4) 75,969
- --------
TOTAL LIABILITIES 7,598,869
---------
COMMITMENTS
STOCKHOLDERS' DEFICIENCY (Note 5)
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, 3,049,294 shares 30,493
Additional paid-in capital 1,836,061
Accumulated deficit (6,699,559)
Stock subscriptions receivable (162,950)
-----------
TOTAL STOCKHOLDERS' DEFICIENCY (2,982,157)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $4,616,712
==========
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended December 31,
-----------------------------------------
1996 1995
Net revenues $3,157,664 $2,578,858
Cost and expenses:
Cost of revenues (Note 2) 3,673,468 3,170,617
Selling, general and
administrative expenses 1,132,287 770,371
--------- -------
(Loss) from operations (1,648,091) (1,362,130)
Interest expense 346,374 163,028
------- -------
(Loss) before income taxes (1,994,465) (1,525,158)
(Benefit) provision for income taxes - (299,000)
---------- ----------
Net (loss) (1,994,465) (1,226,158)
Preferred stock dividends 110,422 -
------- ----------
Net (loss) available
to common shareholders $(2,104,887) $(1,226,158)
=========== ===========
(Loss) per common
share (Note 6) $ (.71) $ (.43)
(Loss) per fully diluted
share (Note 6) $ (.71) $ (.43)
Weighted average number of common
shares and equivalents outstanding 2,964,183 2,860,614
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended December 31,
-------------------------------------------------
1996 1995
Net revenues $ 1,263,802 $ 276,054
Cost and expenses:
Cost of revenues (Note 2) 1,855,407 1,428,314
Selling, general and
administrative expenses 517,985 366,587
----------- ----------
(Loss) from operations (1,109,590) (1,518,847)
Interest expense 174,920 80,666
---------- ----------
(Loss) before income taxes (1,284,510) (1,599,513)
(Benefit) provision for income taxes - (324,000)
--------- -----------
Net (loss) (1,284,510) (1,275,513)
Preferred stock dividends 55,961 -
--------- ----------
Net (loss) available
to common shareholders $ (1,340,471) $ (1,275,513)
============= =============
(Loss) per common -
share (Note 6) $ (.45) $ (.45)
(Loss) per fully diluted
share (Note 6) $ (.45) $ (.45)
Weighted average number of common
shares and equivalents outstanding 2,973,412 2,860,614
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended December 31,
---------------------------------------------
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) available to
common shareholders $(2,104,887) $(1,226,158)
----------- -----------
Adjustments to reconcile net (loss) to
net cash used in operating activities:
Depreciation and amortization 200,211 49,761
Deferred income tax (benefit) - (299,000)
Preferred stock dividends payable 110,422 -
Changes in operating assets
and liabilities:
(Increase) decrease in assets:
Accounts receivable 624,996 757,496
Cost and estimated earnings
in excess of billings on
uncompleted contracts (33,859) 822,740
Inventories 197,981 (302,160)
Prepaid expenses and other
current assets 111,977 (42,501)
Other assets 425 (18,500)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 918,408 291,295
Income taxes payable - current -- --
--------- ---------
Total adjustments 2,130,561 1,259,131
--------- ---------
Net cash provided by operating activities 25,674 32,973
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (18,144) (71,883)
--------- --------
Net cash used in investing activities (18,144) (71,883)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of debt and warrant issuance - net - 394,936
Proceeds from exercise of warrants 943 -
Decrease in stock subscriptions receivable 1,250
Repayment of debt (86,849) (366,077)
-------- --------
Net cash (used in) provided by financing
activities (84,656) 28,859
-------- ------
NET INCREASE (DECREASE) IN CASH (77,126) (10,051)
CASH and CASH EQUIVALENTS, beginning
of period 244,271 40,858
----------- ------
CASH AND CASH EQUIVALENTS, end of period $ 167,145 $ 30,807
========== =========
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statements
The accompanying consolidated financial statements include the accounts of
LogiMetrics, Inc. and its wholly owned subsidiary (collectively, the "Company").
All intercompany balances and transactions have been eliminated.
As discussed in the opinion of the Company's independent auditors for the fiscal
year ended June 30, 1996, the Company's losses from operations and the
stockholders' capital deficiency raise 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 December 31, 1996, the statements of operations for the
six-month and three-month periods ended December 31, 1996 and 1995, and the
statements of cash flows for the six-month periods ended December 31, 1996 and
1995, 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 six months and three
months ended December 31, 1996 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. 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 December 31, 1996:
Costs and estimated earnings $1,570,568
Less: Estimated loss upon completion (339,167)
Progress billings (195,779)
--------
$1,035,622
==========
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. Equipment and Fixtures
Equipment and fixtures, at cost, are summarized as follows at
December 31, 1996:
Machinery and equipment $2,151,874
Furniture and fixtures 131,129
Leasehold improvements 149,198
----------
2,432,201
Less: accumulated depreciation and amortization (1,967,529)
----------
$ 464,672
==========
4. Long-Term Debt
Long-term debt consists of the following at December 31, 1996:
Notes payable to North Fork Bank $ 2,218,864
Senior Subordinated Debentures 1,500,000
Less: discount at issuance (457,628)
Plus: amortization of discount 128,709
Subordinated Debentures 300,000
Capital lease obligations and other debt 131,816
---------
3,821,761
Less: current portion 3,745,792
------------
$ 75,969
===========
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
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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.
The Subordinated Debentures are convertible into an aggregate of 1,200,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), at $.25
per share, subject to adjustment in certain circumstances. As of February 14,
1997, the Company was in default with respect to the payment of interest under
the Subordinated Debentures; accrued and unpaid interest totaled $58,826.
Therefore, the Company has reclassified the Subordinated Debentures as current
liabilities. 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 Fifth Restated and Amended Revolving Credit Note (the
"Revolver") and the Further Restated, Increased 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 Series A and Series B Warrants may be
exercised at any time until July 15, 2002. As of February 14, 1997, the Company
had not filed a registration statement effecting the Series A and 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)
As of February 14, 1997, the Company had not paid interest accrued since June
16, 1996 on the Senior Debentures, 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, and was not in
compliance with the financial covenants described below. Therefore, the Company
has reclassified the Senior Debentures as current liabilities.
Accrued and unpaid interest on the Senior Debentures totaled $151,908 as of
February 14, 1997. Interest is currently payable at the rate of 16.5% per annum
on the outstanding principal and at the rate of 16.5% 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 16.5% per annum
on February 3, 1997. Until the Company files a registration statement effecting
the Senior Debentures and Series C Warrant holder's registration rights, the
interest rate will increase by 0.5% per annum for each ensuing 30 day period, to
a maximum interest 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.
The Senior Debentures contain certain financial covenants, which the Company
failed to meet as of December 31, 1996. The covenants have five components: (i)
a minimum tangible net worth of $4.5 million, (ii) a current ratio of at least
2.75 to 1.0, (iii) a minimum working capital level of $5.5 million, (iv) a
maximum ratio of total liabilities to tangible net worth of 1.25 to 1.0, and (v)
a minimum debt service coverage ratio of 1.05 to 1.0. On October 31, 1996, the
Company issued a note to Cerberus in the amount of $15,000 (which increased to
$22,500 in accordance with its terms), and in exchange Cerberus waived the
requirements for the Company to comply with the financial covenants described
above through the end of the Company's fiscal year ending June 30, 1997 and
waived its right to declare an event of default with respect to the late
interest payment until December 15, 1996.
North Fork Bank Credit Facilities
The Company has two credit facilities available to it from the Bank. The
facilities, as amended in October 1995 and March 1996, provide the Company with
the Revolver, which allows up to $2,200,000 in borrowings and matures October
31, 1997, and the Term Loan in the principal amount of $800,000 which matures
December 31, 1998. The Revolver bears interest at the rate of 2% per annum in
excess of the Bank's prime rate; the Term Loan bears interest at the rate of
1.5% per annum in excess of the Bank's prime rate. On February 14, 1997, the
Bank's prime rate was 8.25% per annum.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 contain certain financial covenants, which the Company
failed to meet as of December 31, 1996. The covenants have five components: (i)
a minimum tangible net worth of $4.5 million, (ii) a current ratio of at least
2.75 to 1.0, (iii) a minimum working capital level of $5.5 million, (iv) a
maximum ratio of total liabilities to tangible net worth of 1.25 to 1.0, and (v)
a minimum debt service coverage ratio of 1.05 to 1.0. Pursuant to a Forbearance
Agreement, by and between the Company and the Bank, dated as of October 31, 1996
(the "Forbearance Agreement"), the Bank has agreed to forbear any rights it may
have under the Revolver or Term Loan in connection with the Company's failure to
comply with the financial covenants of the Revolver and Term Loan until the
earlier of February 28, 1997, or the date on which the Bank receives the
Company's December 31, 1996 interim financial statements. Therefore, the Company
has reclassified the Revolver and the Term Loan as current liabilities.
Under the Term Loan and the Revolver, the Company is required to maintain an
aggregate average monthly ledger balance of $175,000 in non-interest deposit
accounts with the Bank (the "Compensating Balance Requirement"). For the six
months ended December 31, 1996, the Company's aggregate average monthly ledger
balance was less than the required amount. Accordingly, the Company paid fees
totaling approximately $3,000 to the Bank, which represent (a) the difference
between $175,000 and the aggregate average monthly ledger balance maintained,
multiplied by (b) a fixed rate (the "Deficiency Rate") equal to four percent
(4%) in excess of the Bank's prime rate, based on a 360-day year and actual
number of days elapsed. The Deficiency Rate is established on the first day of
each January and July and is applicable for the immediately ensuing six month
period.
The Company is currently negotiating with the Bank to modify the terms of the
Revolver and the Term Loan to cure the existing defaults thereunder. However, no
assurance can be given that the Bank will agree to amend the Revolver and the
Term Loan or as to the terms of any such agreement.
Principal payments due on all long-term debt consist of the following:
Fiscal year ending June 30, 1997 $3,720,309
Fiscal year ending June 30, 1998 50,965
Thereafter 50,487
----------
$3,821,761
==========
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. Stockholders' Deficiency
(a) Common and Preferred Stock
In March 1996, the Company's Certificate of Incorporation was amended. Among
other things, the authorized Common Stock of the Company was increased from
7,000,000 shares of Class A Common Stock, par value $.10 per share, to
35,000,000 shares of Common stock, par value $.01 per share. The appellation
"Class A" was eliminated from the Common Stock, since there were no longer any
shares of Class B Common Stock outstanding. In addition, the Company's
Certificate of Incorporation was amended to authorize 200 shares of Preferred
Stock, par value $.01 per share.
During the year ended June 30, 1996, the Company granted stock options to two
officers. Richard K. Laird, the former President and Chief Executive Officer of
the Company, effectively received options to purchase 225,000 shares of Common
Stock at an exercise price of $.40 per share, subject to adjustment in certain
circumstances. Russell J. Reardon, the Company's Senior Vice President of
Finance and Administration, received options to purchase 250,000 shares of
Common Stock at an exercise price of $.50 per share, subject to adjustment in
certain circumstances.
In June 1996, 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 2,954,954 shares.
In December 1996, one Series D Warrant was exercised. As a result, the number of
shares of Common Stock increased by 94,340 to 3,049,294 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.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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.
The accumulated amount of dividends due on the Preferred Stock as of February
14, 1997 was $196,579. 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 16.5% per annum on February 6, 1997. Until the Company files the
registration statement, the dividend rate will increase monthly by 0.5% per
annum to 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 Acting 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 February 14, 1997, the Company had not
filed a registration statement effecting the Series E Warrant holders'
registration rights as required by the terms thereof.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 February 6,
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
February 14, 1997, the Company has not filed such a registration statement
within the required time.
(b) Stock Options
Non-Qualified Stock Options
On May 16, 1994, the Board of Directors granted non-qualified stock options to
two former officers, Murray H. Feigenbaum and Jerome Deutsch, to each purchase
300,000 shares of Common Stock at the fair market value of $.10 per share. These
options are exercisable in whole or in part at any time until December 31, 1998.
During the year ended June 30, 1995, each of the former officers exercised
options for 100,000 shares of Common Stock. During the year ended June 30, 1996,
each of the former officers agreed to terminate options for 100,000 shares of
Common Stock. At December 31, 1996, the balance of these exercisable options
equaled 100,000 shares of Common Stock for each of the two former officers.
On March 7, 1996, the Board of Directors granted non-qualified stock options to
Richard K. Laird, the Company's former Chief Executive Officer, to purchase
1,000,000 shares of Common Stock at exercise prices ranging from $.40 per share
to $3.40 per share. Subsequently, on September 14, 1996, pursuant to a
settlement agreement with Mr. Laird, the grant was effectively reduced,
entitling Mr. Laird to purchase a total of 225,000 shares of Common Stock at
$.40 per share, subject to adjustment in certain circumstances.
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The options are exercisable in accordance with the following vesting schedule:
Date Vested Exercise Price Number of Shares
March 7, 1996 $.40 125,000
September 14, 1996 $.40 100,000
-------
Total 225,000
=======
On May 1, 1996, the Board of Directors granted non-qualified stock options to
Mr. Reardon to purchase 250,000 shares of Common Stock at an exercise price of
$.50 per share, subject to adjustment in certain circumstances, exercisable at
any time on or prior to March 7, 2003.
(c) Stock Subscription Receivable
As of December 31, 1996, two former officers of the Company, Murray H.
Feigenbaum and Jerome Deutsch, were indebted to the Company in the amounts of
$106,350 and $56,600, respectively, for Common Stock purchased from the Company.
By agreement, such amounts are payable at the rate of $.25 per common share as
shares are sold. Interest accrues on the unpaid balance at the rate of 4% per
annum, and is payable annually.
6. (Loss) Per Share
(Loss) per common share was computed by dividing net (loss) by the weighted
average number of shares of Common Stock and equivalents outstanding during each
of the periods presented. For the six-month and three-month periods ended
December 31, 1996, 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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 (the "Merger Agreement") to acquire
mm-Tech, Inc., a major customer of the Company ("mm-Tech"), for an aggregate of
19,247,800 shares of Common Stock (the "Merger"). The Merger is subject to the
satisfaction of a number of conditions, including negotiation of acceptable
amendments to the Revolver and the Term Loan.
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 December 31, 1996, the Company had not paid all amounts due under the
Subordinated Debentures, the Senior Debentures and the Preferred Stock. The
Company was also in default in respect of certain financial covenants contained
in the Revolver, the Term Loan and the Senior Debentures. However, as described
in Note 4 to the Company's Notes to Consolidated Financial Statements above, the
holder of the Senior Debentures has waived compliance with certain financial
covenants through June 30, 1997 and to date, has taken no actions as a result of
the Company's failure to make payments due under the Senior Debentures. Pursuant
to the Forbearance Agreement, the Bank has agreed to forbear any rights it may
have under the Revolver or Term Loan in connection with the Company's failure to
comply with the financial covenants of the Revolver and Term Loan until the
earlier of February 28, 1997, or the date on which the Bank receives the
Company's December 31, 1996, interim financial statements.
The Company is currently negotiating with the Bank to modify the terms of the
Revolver and the Term Loan to cure the existing defaults thereunder. However, no
assurance can be given that the Bank will agree to amend the Revolver and the
Term Loan or as to the terms of any such amendment. As described above, the
Company is in default under certain of its payment obligations. Although to date
neither the Bank, Cerberus nor the holders of the Subordinated Debentures have
taken any actions as a result of the Company's defaults thereunder, there can be
no assurance that such entities will not take any such actions in the future.
In addition, to date the Company has not paid any dividends on its Preferred
Stock, which have accumulated in the amount of $196,579 through February 14,
1997. The Company was also overdue in payments to vendors in the amount of
approximately $1.9 million as of February 14, 1997.
<PAGE>
LOGIMETRICS, INC.
The Company is currently negotiating with several entities for bridge 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 bridge 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.
(b) Management's Discussion and Analysis of Financial Condition and Results of
Operations
Three Months Ended December 31, 1996 Compared to Three Months Ended December 31,
1995
Net revenues for the three months ended December 31, 1996 increased $987,748, or
357.81%, to $1,263,802 from $276,054 for the comparable period of 1995 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 December 31, 1996 increased
$427,093, or 29.9%, to $1,855,407 from $1,428,314 for the comparable period of
1995 primarily as a result of an increase in net revenues. As a percentage of
net revenues, cost of revenues was 147.0% for the quarter ended December 31,
1996, compared to 517.4% for the quarter ended December 31, 1995. The high level
of costs of revenues reflects certain 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. During the quarter ended December 31,
1996, the Company also recorded a $600,000 inventory charge to write down its
defense-related equipment inventory to estimated fair market value, related to
the shift in the Company's focus away from defense-related applications.
SG&A expenses for the three months ended December 31, 1996 increased $151,398,
or 41.2%, to $517,985 from $366,587 for the comparable period of 1995 primarily
as a result of higher professional fees, increased provisions for bad debts and
amortization of debt issuance costs, offset in part by lower salary expense. As
a percentage of revenues, SG&A expenses decreased to 41.0% for the quarter ended
December 31, 1996 from 132.8% for the comparable period of 1995 primarily as a
result of the lower level of revenues during the 1995 period, offset in part by
the higher professional expenses described above and certain costs incurred in
connection with the Recapitalization. The Company has recently implemented
certain staffing reductions and other measures in an effort to reduce its cost
base so as 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
December 31, 1996 decreased $409,257, or 26.9%, to $1,109,590 from $1,518,847
for the comparable period in 1995.
<PAGE>
LOGIMETRICS, INC.
Interest expense for the three months ended December 31, 1996 increased $94,254,
or 116.8%, to $174,920 from $80,666 for the comparable period of 1995 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 $1,284,510 during the quarter
ended December 31, 1996, 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 December
31, 1995, the Company recognized an income tax benefit of $324,000 due to the
reversal of the Company's deferred tax liability. In addition, during the
quarter ended December 31, 1996, the Company accrued dividends on its
outstanding Preferred Stock of $55,961. The Preferred Stock was issued in March
1996 in connection with the Recapitalization.
For the reasons discussed above, net loss for the quarter ended December 31,
1996 increased $64,958, or 5.1%, to $1,340,471 from $1,275,513 for the
comparable period in 1995.
Six Months Ended December 31, 1996 Compared to Six Months Ended December 31,
1995
Net revenues for the six months ended December 31, 1996 increased $578,806, or
22.4%, to $3,157,664 from $2,578,858 for the comparable period of 1995 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 six months ended December 31, 1996 increased $502,851,
or 15.9%, to $3,673,468 from $3,170,617 for the comparable period of 1995
primarily as a result of an increase in net revenues. As a percentage of net
revenues, cost of revenues was 116.3% for the six months ended December 31,
1996, compared to 122.9% for the six months ended December 31, 1995. As
described above, the high level of costs of revenues reflect certain operational
inefficiencies resulting from a shortage of working capital, as well as the
costs related to the restructuring of the Company's business. During the six
months ended December 31, 1996, the Company also recorded a $600,000 inventory
charge to write down its defense-related equipment inventory to estimated fair
market value, related to the shift in the Company's focus away from
defense-related applications.
SG&A expenses for the six months ended December 31, 1996 increased $361,916, or
47.0%, to $1,132,287 from $770,371 for the comparable period of 1995 primarily
as a result of higher professional fees, increased provisions for bad debts and
amortization of debt issuance costs, offset in part by lower salary expense. As
a percentage of revenues, SG&A expenses increased to 35.9% for the six months
ended December 31, 1996 from 29.9% for the comparable period of 1995
<PAGE>
LOGIMETRICS, INC.
primarily as a result of the higher professional expenses described above and
certain costs incurred in connection with the Recapitalization. The Company has
recently implemented certain staffing reductions and other measures in an effort
to reduce its cost base so as 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 six months ended
December 31, 1996 increased $285,961, or 21.0%, to $1,648,091 from $1,362,130
for the comparable period in 1995.
Interest expense for the six months ended December 31, 1996 increased $183,346,
or 112.5%, to $346,374 from $163,028 for the comparable period of 1995 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 $1,994,465 during the six months
ended December 31, 1996, 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 six months ended December
31, 1995, 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 six
months ended December 31, 1996, the Company accrued dividends on its outstanding
Preferred Stock of $110,422. The Preferred Stock was issued in March 1996 in
connection with the Recapitalization.
For the reasons discussed above, net loss for the six months ended December 31,
1996 increased $878,729, or 71.7%, to $2,104,887 from $1,226,158 for the
comparable period in 1995.
Financial Condition, Liquidity and Capital Resources
The Company sustained net losses of $5,196,067 for the year ended June 30, 1996
and $2,104,887 for the six months ended December 31, 1996 and had an accumulated
deficit of $6,699,559 at December 31, 1996. Notwithstanding the losses for the
year ended June 30, 1996 and for the six months ended December 31, 1996, the
Company generated a positive cash flow of $126,287 during the eighteen-month
period from July 1, 1995 to December 31, 1996. 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
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
<PAGE>
LOGIMETRICS, INC.
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.
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 $518,120 as of December 31, 1996. 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
bridge 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 bridge 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 six-month period ended December 31, 1996, the Company had capital
expenditures of $18,144 and for the years ended June 30, 1996 and 1995 capital
expenditures were $52,228 and $5,362, respectively. The Company anticipates that
total expenditures will be approximately $50,000 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 bridge
financing or other cash infusions in order to continue operating. See also Note
4 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.
<PAGE>
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
10 Letter Agreement, dated October 23, 1996, by and between the Company and
CellularVision Technology & Telecommunications, L.P.
27 Financial Data Schedule.
<PAGE>
LOGIMETRICS, INC.
(b) Reports on Form 8-K:
On December 27, 1996, the Company filed with the Securities and Exchange
Commission a Current Report on Form 8-K dated December 18, 1996 relating to the
proposed Merger with mm-Tech.
<PAGE>
LOGIMETRICS, INC.
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: February 19, 1997 By:/s/ Norman M. Phipps
____________________________
Norman M. Phipps
Chairman of the Board and Acting President
(Acting Principal Executive Officer)
Dated: February 19, 1997 By:/s/ Russell J. Reardon
____________________________
Russell J. Reardon
Chief Financial Officer
(Principal Accounting Officer)
October 23, 1996
CellularVision Technology
& Communications, L.P.
Suite 12
Dag Hammerskjold Boulevard
Freehold, New Jersey 07728
Attention: Shant Hovnanian, Partner
Dear Shant:
For the last several weeks we have been discussing the terms and conditions
relating to CT&T's purchase order for four LogiMetrics Re-Rads (as defined
below) and certain other equipment (the "Other Equipment"). As used herein,
"Re-Rad" means an enclosed stand-alone unit, described and specified as
LogiMetrics Model PA800/KA, containing an input signal connection for receiving
microwave signals at frequencies between 27.5 and 31.5 GHz from a receiving
antenna, a traveling wave tube amplifier for amplifying those signals to a high
power level, an output signal connection for providing the amplified signals to
an antenna waveguide, and all required heating or cooling equipment, power
supplies, control, monitoring and auxiliary circuitry. The terms and conditions
of such purchase, as agreed to by us during the course of those discussions, are
as follows:
1. CT&T hereby agrees to purchase the Re-Rads and the Other Equipment at
the purchase prices and on the other terms and conditions set forth in Schedule
1 attached hereto. All amounts invoiced to CT&T with respect to such purchases
shall be paid in full as set forth in Schedule 1. No later than the close of
business on the second business day following the execution of a counterpart of
this letter by CT&T (the "Effective Date"), CT&T shall make a progress payment
to LogiMetrics on account of such purchases of $622,120 (the "Advance"). The
Advance shall be credited against the purchase price for the equipment to be
delivered by LogiMetrics hereunder as shown in Schedule 1.
2. In order to secure LogiMetrics' obligation to repay the Advance as set
forth in paragraph 1 above, LogiMetrics hereby grants to CT&T a perfected, first
priority, purchase money security interest in and lien on the four Re-Rads and
the Other Equipment to be delivered hereunder, any specifically designated
components intended to constitute a part thereof and all proceeds therefrom (the
"Collateral"). Not later than the close of business on the Effective Date,
LogiMetrics shall deliver to CT&T fully executed UCC-1s containing an
appropriate description of the Collateral as set forth in Schedule 2.
LogiMetrics hereby consents to the filing of such UCC-1s in such filing
jurisdictions as CT&T may reasonably specify. Upon the final amortization of the
Advance, the security interest granted above shall terminate and be of no
further force and effect. At such time, CT&T shall, promptly following receipt
of a request therefor from LogiMetrics, execute and deliver to LogiMetrics such
UCC-3s as LogiMetrics may reasonably request to evidence the termination of the
security interest as set forth above. LogiMetrics represents and warrants to
CT&T that the granting of the security interest contained in this paragraph 2
will not constitute a breach or violation of, or result in an event of default
under, or event which, with the giving of notice, the lapse of time or both
would constitute an event of default under, LogiMetrics' borrowing arrangements
with its senior lender.
3. (a) LogiMetrics agrees, for a period extending until five years from the
last purchase of Re-Rads under this Agreement, not to disclose to any potential
customer, other than CT&T and its Licensees (as defined below), the
specifications for any product sold or delivered under this Agreement, except to
the extent that such specifications were already made public knowledge as
specifications of a commercial product offered for unrestricted sale. CT&T
acknowledges that from time to time, LogiMetrics publishes a catalog and other
marketing materials that include specifications of the equipment manufactured by
LogiMetrics, including the Other Equipment. Accordingly, notwithstanding the
restrictions contained in the second preceding sentence, LogiMetrics shall have
the right to continue to publish and to update such catalogs and other
materials.
(b) LogiMetrics agrees, for a period extending until five years from the
last purchase of Re-Rads under this Agreement, to sell Re-Rads and/or units
substantially identical to Re-Rads and/or other products including the
intellectual property of CT&T embodied in the Re-Rad (collectively, "Restricted
Products") only to (i) CT&T and its successors and assigns, (ii) persons or
entities designated by CT&T from time to time, (iii) licensees of CT&T and its
successors and assigns ("Licensees"), and (iv) third parties which will use
Restricted Products solely for purposes other than providing local multi-point
distribution service ("LMDS") and for other uses not directly or indirectly
competitive with CT&T and its Licensees. If as a result of an acquisition,
corporate reorganization, consolidation or merger, LogiMetrics shall possess or
acquire information which has not previously been publicly disclosed or
intellectual property rights respecting any other product made or sold
especially for CT&T and its Licensees, then such other products shall be subject
to the same sales restriction as Re-Rads, and the specifications therefor shall
be subject to the disclosure restrictions stated above.
(c) Except as provided in this paragraph 3, LogiMetrics shall have the
right to sell any equipment (including, but not limited to, the Other Equipment)
to any third party, the right to license its intellectual property to any third
parties, and the right to re-design or create products which are derived from
its intellectual property (collectively, "New Products") so long as such New
Products do not include the intellectual property of CT&T. LogiMetrics shall
have the right to sell the New Products to any person or entity for any purpose
whatsoever, including, but not limited to, use in the LMDS market, subject to
any valid patent rights of CT&T, and the provisions of this paragraph 3 and
paragraph 5 shall not apply with respect thereto, except as expressly provided
in paragraph 4 below. Upon the expiration of such five-year period, LogiMetrics
shall have the same rights with respect to Restricted Products that it has with
respect to New Products under the terms hereof.
4. Notwithstanding the provisions of Section 3, if CT&T or any of CT&T's
employees shall make a substantial contribution or improvement to the
intellectual property rights embodied in the Re-Rad or the Other Equipment after
the date hereof (the "CT&T Contribution"), then LogiMetrics agrees not to
license any property rights that include the CT&T Contribution, or to sell New
Products or Restricted Products embodying such CT&T Contribution to parties who
are not Licensees without first obtaining a license from CT&T, and CT&T agrees
to grant such license on reasonable terms and conditions.
In order to be valid, any claim that CT&T has made a CT&T Contribution must
be in writing and shall be delivered to LogiMetrics within a reasonable period
of time and in no event more than 90 days after the claimed contribution or
improvement was first disclosed to LogiMetrics. In the event that CT&T does not
comply with the provisions of the preceding sentence, it shall be deemed to have
waived any rights it may have to the subject contribution or improvement. If
LogiMetrics disputes any claim that a CT&T Contribution has been made, the
parties agree to use their best efforts to resolve such dispute in good faith.
In the event that the parties are unable to resolve any such dispute within 30
days, the parties shall submit the dispute to binding arbitration pursuant to
the procedures to be contained in the definitive Vendor Supply Agreement
contemplated by paragraph 6 hereof and shall be bound by the final determination
made thereunder.
5 LogiMetrics shall pay to CT&T a royalty of two and one-half percent
(2.5%) of the net sales price (sales price less freight costs, discounts,
credits, returns, sales taxes, value added taxes and goods and services taxes)
actually received from the sale of Re-Rads and Other Equipment to CT&T or any
Licensee during the period that the selling restrictions described in paragraph
3 remain in effect. LogiMetrics will not be required to pay to CT&T or collect
on CT&T's behalf any royalties with respect to the sale of Re-Rads, New Products
or Other Equipment, except to the extent expressly set forth above. CT&T
acknowledges that LogiMetrics is currently engaged in discussions which may
result in a business combination involving LogiMetrics and another supplier of
CT&T (the "Other Supplier"). Accordingly, notwithstanding the other provisions
of this paragraph 5, CT&T agrees that LogiMetrics shall not be obligated to pay
any royalty to CT&T pursuant to this paragraph 5 with respect to any Re-Rads
sold or otherwise transferred to any Other Supplier for incorporation into any
equipment on which said Other Supplier pays a royalty of at least 2.5% of net
selling price to CT&T (calculated with reference to the net sales price of such
Re-Rad to the Other Supplier). In the event that any Other Supplier pays a
royalty of less than 2.5% of the net selling price of the Re-Rads (calculated as
provided above), then LogiMetrics shall be obligated to pay CT&T an additional
royalty on such Re-Rads in an amount equal to the excess of 2.5% of such net
selling price over the royalty paid by the Other Supplier with respect thereto.
6. Promptly following the execution and delivery of this Agreement by the
parties hereto, CT&T and LogiMetrics shall negotiate in good faith the terms and
conditions of a Vendor Supply Agreement containing mutually acceptable terms,
including certain minimum purchase undertakings by CT&T.
If the foregoing accurately reflects our mutual understanding, please so
indicate by executing a counterpart of this Agreement and returning it to the
undersigned at which time this Agreement shall become the legal and validly
binding agreement of the parties hereto. We look forward to a long and mutually
profitable relationship between our two companies.
Cordially yours,
/s/ Norman M. Phipps
___________________________
Norman M. Phipps
ACCEPTED AND AGREED:
CellularVision Technology & Telecommunications, L.P.
By: /s/ Shant Hovnanian
_________________________
Shant Hovnanian, Partner
Dated: October 23, 1996
<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 DECEMBER 31, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 167,145
<SECURITIES> 0
<RECEIVABLES> 708,117
<ALLOWANCES> (150,000)
<INVENTORY> 2,073,472
<CURRENT-ASSETS> 3,910,865
<PP&E> 2,432,202
<DEPRECIATION> 1,967,530
<TOTAL-ASSETS> 4,616,712
<CURRENT-LIABILITIES> 7,522,900
<BONDS> 75,969
0
990,564
<COMMON> 30,493
<OTHER-SE> (4,003,214)
<TOTAL-LIABILITY-AND-EQUITY> 4,616,712
<SALES> 3,157,664
<TOTAL-REVENUES> 3,157,664
<CGS> 3,673,468
<TOTAL-COSTS> 4,805,755
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 346,374
<INCOME-PRETAX> (1,994,465)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,994,465)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,994,465)
<EPS-PRIMARY> (.71)
<EPS-DILUTED> (.71)
</TABLE>
