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, 1998
[ ] 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.)
50 Orville Drive, Bohemia, New York 11716
(Address of principal executive offices)
Issuer's telephone number: (516) 784-4110
(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 April 15, 1998:
$.01 per share 25,932,414 shares
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, 1998................................... 3
Statements of Operations -
Nine months ended March 31, 1998 and 1997......................... 4
Statements of Operations -
Three months ended March 31, 1998 and 1997........................ 5
Statements of Cash Flows -
Nine months ended March 31, 1998 and 1997......................... 6
Notes to Consolidated Financial Statements....................... 7-9
Item 2. Management's Discussion and Analysis or Plan of Operation...10-14
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities............................. 15
Item 6. Exhibits and Reports on Form 8-K............................ 15
SIGNATURES........................................................... 16
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED BALANCE SHEET
March 31, 1998
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 930,518
Accounts receivable, less allowance
for doubtful accounts of $505,875 1,990,914
Inventories (Note 2) 3,728,386
Prepaid expenses and other current assets 36,257
---------
Total current assets 6,686,075
Equipment and fixtures (net) 594,504
Deferred financing costs 91,290
Other assets 37,477
-----------
TOTAL ASSETS $ 7,409,346
===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and other accrued expenses $ 3,073,383
Advance payments 885,631
Income taxes payable 283,948
Current portion of long-term debt (Note 3) 2,310,467
---------
Total current liabilities 6,553,429
Long term debt (Note 3) 5,070,596
-----------
TOTAL LIABILITIES $ 11,624,025
-----------
COMMITMENTS
STOCKHOLDERS' DEFICIENCY (Note 3 and 4)
Preferred Stock:
Series A, stated value $50,000 per share;
authorized, 200 shares; issued and
outstanding, 28 shares 924,526
Common Stock:
Par value $.01; authorized,
100,000,000 shares; issued and
outstanding, 25,892,414 shares 258,924
Additional paid-in capital 4,324,978
Deficit (8,858,657)
Stock subscriptions receivable (Note 4) (864,450)
-------------
TOTAL STOCKHOLDERS' DEFICIENCY $ (4,214,679)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 7,409,346
===========
See Notes to Consolidated Financial Statements
-3-
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LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended March 31,
1998 1997
Restated (Note 1)
Net revenues (Note 5) $ 6,865,193 $ 8,420,252
Costs and expenses:
Cost of revenues 4,076,584 6,539,726
Selling, general and
administrative expenses 3,157,326 2,400,290
Research and development 352,416 559,606
---------- -----------
Loss from operations (721,133) (1,079,370)
Interest expense 709,450 552,207
----------- -----------
Loss before income taxes (1,430,583) (1,631,577)
Provision (benefit) for
income taxes (132,615) 356,542
----------- ------------
Net loss (1,297,968) (1,988,119)
Preferred stock dividends 159,238 171,079
---------- ------------
Net loss attributable
to common stockholders $(1,457,206) $ (2,159,198)
========== ============
Loss per common share (Note 6) $ (0.06) $ (0.10)
Weighted average number of
common shares outstanding 25,336,207 22,246,137
=========== ============
See Notes to Consolidated Financial Statements
-4-
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
1998 1997
Restated (Note 1)
Net revenues $ 1,552,849 $ 3,828,920
Costs and expenses:
Cost of revenues 1,232,146 2,495,722
Selling, general and
administrative expenses 862,838 695,906
Research and development 123,636 162,620
--------- -----------
Income (loss) from operations (665,771) 474,672
Interest expense 231,880 191,134
--------- -----------
Income (loss) before income taxes (897,651) 283,538
Provision (benefit) for income taxes (207,329) 329,451
-------- -----------
Net loss (690,322) (45,913)
Preferred stock dividends 58,685 60,657
-------- -----------
Net loss attributable
to common stockholders $ (749,007) $ (106,570)
=========== ============
Loss per common share (Note 6) $ (0.03) $ (0.00)
Weighted average number of
common shares outstanding: 25,791,828 22,322,730
========== ==========
See Notes to Consolidated Financial Statements
-5-
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended March 31,
1998 1997
Restated (Note 1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,297,968) $ (1,988,119)
------------ ------------
Adjustments to reconcile net loss to
net cash (used for) provided by
operating activities:
Depreciation and amortization 399,031 366,242
Allowance for doubtful accounts 355,875 75,000
Accrued interest expense paid by
issuance of debentures 387,917 --
Increase (decrease) in cash from:
Accounts receivable (182,624) 224,131
Costs and estimated earnings
in excess of billings on
uncompleted contracts 785,013 266,887
Inventories (379,350) (112,635)
Prepaid expenses and other
current assets 44,254 74,323
Accounts payable and accrued expenses (2,293,851) 840,829
Other assets/liabilities (131,649) 357,847
---------- ---------
Total adjustments (1,015,384) 2,092,624
---------- ---------
Net cash (used for) propvided by operating
activities (2,313,352) 104,505
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and fixtures (110,411) (113,888)
---------- ----------
Net cash used for investing activities (110,411) (113,888)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt issuance - net 2,750,000 --
Proceeds from warrant issuance 567,500 --
Proceeds from sale of stock 32,500 --
Repayment of loan from stockholder - net (175,489) (63,558)
Proceeds from exercise of warrants 16,131 1,887
Stock subscriptions received 8,500 1,250
Repayment of debt - net (213,188) (93,630)
--------- ---------
Net cash (used for) provided by
financing activities 2,985,954 (154,051)
--------- ---------
NET INCREASE (DECREASE) IN CASH 562,191 (163,434)
CASH AND CASH EQUIVALENTS, beginning
of period 368,327 269,248
---------- --------
CASH AND CASH EQUIVALENTS, end of period $ 930,518 $ 105,814
========== ========
See Notes to Consolidated Financial Statements
-6-
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statements
The accompanying consolidated financial statements include the accounts of
LogiMetrics, Inc. ("LogiMetrics") and its wholly owned subsidiaries, mmTech,
Inc. ("mmTech") and LogiMetrics FSC, Inc. (collectively, the "Company"). All
intercompany balances and transactions have been eliminated. The consolidated
financial statements have been prepared to give retroactive effect to the
business combination with mmTech which occurred on April 25, 1997 and which has
been accounted for as a pooling of interests.
The Company's financial statements have been prepared assuming that the Company
will continue as a going concern. The independent auditors' report on the
Company's financial statements for the fiscal year ended June 30, 1997 included
an emphasis paragraph concerning the Company's 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, 1998, the statements of operations for the
three-month and nine-month periods ended March 31, 1998 and 1997, and the
statements of cash flows for the nine-month periods ended March 31, 1998 and
1997, are unaudited. Such 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 recurring accruals
considered necessary for a fair presentation, have been included. Results for
the three and nine months ended March 31, 1998 are not necessarily indicative of
the results that may be achieved for any other interim period or for the fiscal
year ending June 30, 1998. 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, 1997.
2. Inventories
Inventory consists of the following at March 31, 1998:
Raw material and components $ 1,407,401
Work-in-progress 2,091,312
Finished goods 229,673
---------
$ 3,728,386
===========
-7-
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
3. Long-Term Debt
Long-term debt consists of the following at March 31, 1998:
Notes payable to Bank $ 2,208,249
Class A Debenture 3,001,921
Class B Debenture 1,635,996
Less: Discount at issuance (457,628)
Plus: Amortization of discount 343,224
Notes payable - stockholder 447,598
Notes payable - other 45,000
Capital lease obligations 156,703
---------
Sub-total 7,381,063
Less: current portion 2,310,467
---------
Total long-term debt $ 5,070,596
=========
Principal payments due on all long-term
debt consist of the following:
Fiscal year ending June 30, 1998 $ 150,003
Fiscal year ending June 30, 1999 2,173,944
Fiscal year ending June 30, 2000 5,045,578
Thereafter 11,538
---------
$ 7,381,063
==========
4. Stockholders' Deficiency
Stock subscriptions receivable consists of the following at March 31, 1998:
Notes from former officers $ 154,450
Notes from two employees 675,000
Note from a director 35,000
-------
$ 864,450
========
5. Revenue Recognition
In December 1997, CellularVision of New York, L.P. ("CVNY") entered into a
letter agreement with the Company pursuant to which CVNY agreed to pay on behalf
of CellularVision Technology & Telecommunications L.P. ("CT&T") approximately
$3.0 million of the amounts owed by CT&T . Under the terms of the letter
agreement, CVNY paid $350,000 to the Company, and delivered to the Company a
secured promissory note in the principal amount of approximately $2.6 million
(the "CVNY Note"). The debt assumed by CVNY related to equipment, substantially
all of which had been ordered by CT&T and CVNY in prior periods, and which was
being held at the Company's premises at CVNY's request. In addition, CVNY has
assumed ownership rights and risk of loss. CVNY has committed to accept delivery
of all such equipment by June 30, 1998. As of December 28, 1997, CVNY had paid
approximately $50,000 pursuant to the CVNY Note. On December 31, 1997, the
Company sold the CVNY Note without recourse for approximately $2.4 million. The
Company recorded approximately $3.0 million of sales in its second fiscal
quarter of 1998 related to these transactions.
-8-
<PAGE>
LOGIMETRICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
6. Loss Per Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". SFAS No.
128 specifies the computation, presentation and disclosure requirements for
earnings per share ("EPS") and became effective for both interim and annual
periods ending after December 15, 1997. In accordance with SFAS No. 128, basic
earnings per common share are computed based on the weighted-average number of
common shares outstanding during each period. The loss per share calculations
for the three- and nine-month periods ended March 31, 1998 and March 31, 1997 do
not give effect to common stock equivalents because they would have an
antidilutive effect.
-9-
<PAGE>
LOGIMETRICS, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Net revenues for the three months ended March 31, 1998 decreased $2.2 million,
or 59%, to $1.6 million from $3.8 million for the comparable period of 1997. The
decrease in revenues resulted from decreased sales of Local Multipoint
Distribution Service ("LMDS") equipment as well as lower revenues from traveling
wave tube amplifiers ("TWTAs") and related equipment. The decline in LMDS
revenues resulted primarily from decreases in shipments to CellularVision
Technology & Telecommunications, L.P. ("CT&T"). Sales of LMDS equipment to CT&T
are expected to be substantially lower for the remainder of fiscal 1998. During
the three months ended March 31, 1997, the Company had a higher level of
longer-term projects for which it recognized revenues prior to shipment under
the percentage-of-completion method of accounting. During the comparable period
in fiscal 1998, a higher proportion of the Company's sales was comprised of
equipment sales for which revenues are recognized only upon shipment.
Accordingly, the decline in TWTA revenues resulted primarily from these
differences in the timing of the recognition of revenues.
Cost of revenues for the three months ended March 31, 1998 decreased $1.3
million, or 51%, to $1.2 million from $2.5 million for the comparable period of
1997. As a percentage of net revenues, cost of revenues was 79% for the quarter
ended March 31, 1998, compared to 65% for the quarter ended March 31, 1997. The
decline in cost of revenues primarily resulted from reduced sales levels during
the 1998 period. The increase in cost of revenues as a percentage of sales
during the 1998 period primarily resulted from the allocation of manufacturing
overhead costs over a lower revenue base.
SG&A expenses for the three months ended March 31, 1998 increased $167,000, or
24%, to $863,000, from $696,000 for the comparable period of 1997, primarily as
a result of higher consulting expenses and the addition of certain key
personnel. As a percentage of net revenues, SG&A expenses increased to 56% for
the quarter ended March 31, 1998 from 18% for the comparable period of 1997,
primarily as a result of fixed compensation and other SG&A expenses in
conjunction with a lower revenue base.
Research and development expenses for the three months ended March 31, 1998
decreased $39,000, or 24%, to $124,000 from $163,000 for the comparable period
of 1997, as a result of the Company's efforts to streamline its operations and
deploy its resources more efficiently.
For the reasons discussed above, the Company recorded an operating loss for the
three months ended March 31, 1998 of $666,000 compared to an operating profit of
$475,000 for the comparable period in 1997.
Interest expense for the three months ended March 31, 1998 increased $41,000, or
21%, to $232,000 from $191,000 for the comparable period of 1997, primarily as a
result of a higher level of average outstanding indebtedness.
During the quarter ended March 31, 1998, the Company had an income tax benefit
of $207,000, compared to an income tax expense of $329,000 for the quarter ended
March 31, 1997. The Company and mmTech currently file separate federal and state
tax returns. The tax expense recorded in the three months ended March 31, 1997
relates to pre-tax income generated by mmTech in that period.
During the quarters ended March 31, 1998 and 1997, the Company accrued dividends
on its outstanding preferred stock of $59,000, and $61,000, respectively. For
the reasons discussed above, the Company recorded a net loss attributable to
common stockholders of $749,000 for the quarter ended March 31, 1998 compared to
a net loss attributable to common stockholders of $107,000 for the comparable
period in 1997.
-10-
<PAGE>
LOGIMETRICS, INC.
Nine Months Ended March 31, 1998 Compared to Nine Months Ended March 31, 1997
Net revenues for the nine months ended March 31, 1998 decreased $1.5 million, or
18%, to $6.9 million from $8.4 million for the comparable period of 1997. The
decrease in revenues resulted primarily from lower revenues from TWTAs and
related equipment which more than offset a slight increase in sales of LMDS
equipment. During the nine months ended March 31, 1997, the Company had a higher
level of longer-term projects for which it recognized revenues prior to shipment
under the percentage-of-completion method of accounting. During the comparable
period in fiscal 1998, a higher proportion of the Company's sales was comprised
of equipment sales for which revenues are recognized only upon shipment.
Accordingly, the decline in TWTA revenues resulted primarily from these
differences in the timing of the recognition of revenues. As described in Note 5
to the accompanying consolidated financial statements, during the quarter ended
December 31, 1997, the Company recognized approximately $3.0 million in revenues
from the sale of LMDS equipment to CT&T and certain of its affiliates. Sales of
LMDS equipment to CT&T are expected to be substantially lower for the remainder
of fiscal 1998.
Cost of revenues for the nine months ended March 31, 1998 decreased $2.4
million, or 38%, to $4.1 million from $6.5 million for the comparable period of
1997. As a percentage of net revenues, cost of revenues was 59% for the nine
months ended March 31, 1998, compared to 78% for the nine months ended March 31,
1997. The decline in cost of revenues primarily resulted from a decrease in
sales during the 1998 period, certain production inefficiencies during the 1997
period and the completion of several large projects during the nine months ended
March 31, 1997 which had significantly higher associated costs.
SG&A expenses for the nine months ended March 31, 1998 increased $757,000, or
32%, to $3.2 million from $2.4 million for the comparable period of 1997,
primarily as a result of the recording of a $356,000 allowance for doubtful
accounts relating to amounts owed to the Company by CT&T, increased commission
expense relating to the sale of certain LMDS equipment during the nine months
ended March 31, 1998 and the addition of certain key personnel. As a percentage
of net revenues, SG&A expenses increased to 46% of net revenues for the nine
months ended March 31, 1998 from 29% for the comparable period of 1997 primarily
as a result of fixed compensation and other SG&A expenses in conjunction with a
lower revenue base.
Research and development expenses for the nine months ended March 31, 1998
decreased $207,000, or 37%, to $352,000 from $560,000 for the comparable period
of 1997 as a result of the Company's efforts to streamline its operations and
deploy its resources more efficiently.
For the reasons discussed above, the Company recorded an operating loss of
$721,000 for the nine months ended March 31, 1998, compared to an operating loss
of $1.1 million for the comparable period in 1997.
Interest expense for the nine months ended March 31, 1998 increased $157,000, or
28%, to $709,000 from $552,000 for the comparable period of 1997, primarily as a
result of a higher level of average outstanding indebtedness.
During the nine months ended March 31, 1998, the Company had an income tax
benefit of $133,000, compared to an income tax expense of $357,000 for the nine
months ended March 31, 1997. The Company and mmTech currently file separate
federal and state tax returns. The tax expense recorded in the nine months ended
March 31, 1997 relates to pre-tax income generated by mmTech in that period.
During the nine months ended March 31, 1998 and 1997, the Company accrued
dividends on its outstanding preferred stock of $159,000, and $171,000,
respectively.
For the reasons discussed above, the Company recorded a net loss attributable to
common stockholders for the nine months ended March 31, 1998 of $1.5 million,
compared to a net loss attributable to common stockholders of $2.2 million for
the comparable period in 1997.
-11-
<PAGE>
LOGIMETRICS, INC.
Liquidity and Capital Resources
At March 31, 1998, the Company had cash and cash equivalents of $931,000. At
such date, the Company had total current assets of $6.7 million and total
current liabilities of $6.6 million.
Net cash used for operating activities was $2.3 million for the nine months
ended March 31, 1998, compared to net cash provided by operating activities of
$105,000 for the comparable period in 1997. Net cash used for operating
activities during the nine months ended March 31, 1998 resulted primarily from a
net loss of $1.3 million, the repayment of $2.3 million in accounts payable and
increases in inventory of $379,000, offset in part by a $785,000 decrease in
costs and estimated earnings in excess of billings or uncompleted contracts, an
increase in accrued interest expense of $388,000 and an allowance for doubtful
accounts of $356,000. Net cash provided by operating activities during the nine
months ended March 31, 1997 resulted primarily from a $841,000 increase in
accounts payable, $366,000 of depreciation and amortization expense and a
$358,000 net increase in other assets and liabilities, offset in part by a net
loss of $2.0 million.
Net cash used for investing activities was $110,000 for the nine months ended
March 31, 1998, and $114,000 for the comparable period in 1997. Net cash used
for investing activities in each period resulted from the purchase of equipment
to support the Company's operations.
Net cash provided by financing activities was $3.0 million for the nine months
ended March 31, 1998, while net cash used for financing activities was $154,000
for the nine months ended March 31, 1997. Net cash provided by financing
activities during the 1998 period resulted primarily from the proceeds of
certain debt and warrant issuances by the Company, offset in part by the
repayment of certain outstanding indebtedness as well as the repayment of loans
from a stockholder of the Company. Net cash used for financing activities during
the 1997 period resulted primarily from the repayment of certain outstanding
indebtedness as well as the repayment of loans from a stockholder of the
Company.
Since January 1, 1996, the Company has raised approximately $6.1 million from
private sales of convertible debentures, convertible preferred stock and
warrants to fund a portion of its cash flow needs. To the extent that the
Company is unable to meet its working capital requirements by generating
positive cash flow from operations, the Company intends to continue to fund a
portion of its working capital requirements through the sale of its securities.
There can be no assurance that the Company can continue to finance its
operations through the sale of securities or as to the terms of any such sales
that may occur in the future. If the Company is unable to generate sufficient
cash flows from operations or other sources, the Company may not be able to
achieve its growth objectives, may have to curtail further its marketing,
development or operations, and may be unable to continue as a going concern.
The Company is a party to a Restated and Amended Term Loan Note, dated as of
April 25, 1997, and a Sixth Restated and Amended Revolving Credit Note, dated as
of April 25, 1997, pursuant to which North Fork Bank (the "Bank") has provided
the Company with a $640,000 term loan (the "Term Loan") which matures December
31, 1998 and a revolving credit facility (the "Revolver") which, by its terms,
matured on April 30, 1998. The Bank has extended the maturity date of the
Revolver until January 2, 1999, which may be further extended to July 1, 1999
under certain circumstances. Pursuant to the terms of the Revolver, the Company
is entitled to draw up to $2.2 million assuming sufficient eligible inventory
and accounts receivable (the Term Loan and the Revolver are referred to herein
collectively as the "Facility"). Outstanding amounts under the Facility bear
interest at the rate of 2% per annum in excess of the Bank's prime rate. At
March 31, 1998, the Bank's prime rate was 8.5%. At March 31, 1998, the Company
was in violation of a covenant contained in the Facility that the Company report
net income of at least $1.00 for each fiscal quarter (the "Net Income
Covenant"). The Bank has waived the Net Income Covenant default for the quarter
ended March 31, 1998.
-12-
<PAGE>
LOGIMETRICS, INC.
In addition to the Facility, at March 31, 1998 the Company had issued and
outstanding $3.0 million of its Class A 13% Senior Subordinated Convertible
Pay-in-Kind Debentures due July 29, 1999 (the "Class A Debentures"), $1.6
million of its Amended and Restated Class B 13% Senior Subordinated Convertible
Pay-in-Kind Debentures due July 29, 1999 (the "Class B Debentures") and $45,000
of its Senior Subordinated Notes (together with the Class A Debentures and the
Class B Debentures, the "Senior Subordinated Indebtedness"), which contain
financial covenants identical to those contained in the Facility. Accordingly,
at March 31, 1998, the Company was in default of the Net Income Covenant to the
same extent as under the Facility. The holders of the Senior Subordinated
Indebtedness have waived the Net Income Covenant default for the quarter ended
March 31, 1998. Pursuant to the terms of the Class A Debentures and the Class B
Debentures, the Company was required to file a registration statement covering,
among other things, the resale of the shares of Common Stock issuable upon the
conversion of the Class A Debentures and the Class B Debentures on or prior to
October 27, 1997 and to have the registration statement declared effective by
the Securities and Exchange Commission (the "SEC") on or prior to January 25,
1998. As a result of the Company's failure to comply with these registration
obligations, the interest rate on the Class A Debentures and the Class B
Debentures increased to 16% during the quarter ended March 31, 1998. The Company
filed the registration statement with the SEC on April 30, 1998. As a result,
the interest rate on the Class A Debentures and the Class B Debentures decreased
to 15% as of April 30, 1998. Unless the Company completes the required
registration, the interest rate on the Class A Debentures and the Class B
Debentures will increase (subject to a maximum interest rate of 17% per annum).
The holders of the Class A Debentures and the Class B Debentures had the right
to declare all amounts thereunder due and payable if the registration statement
was not declared effective by the SEC on or prior to April 25, 1998. The holders
of the Class A Debentures and the Class B Debentures have waived until June 30,
1998 any default arising as a result of the Company's failure to have the
required registration statement declared effective by the SEC.
At December 12, 1997, CT&T was indebted to the Company in the amount of
approximately $3.4 million, representing amounts due and owing as a result of
equipment purchased by CT&T and certain of its affiliates. In December 1997,
CVNY, an affiliate of CT&T, entered into a letter agreement with the Company
pursuant to which CVNY agreed to pay on behalf of CT&T approximately $3.0
million of the amounts owed by CT&T. Under the terms of the letter agreement,
CVNY paid $350,000 to the Company, and delivered to the Company the CVNY Note in
the principal amount of approximately $2.6 million. In December 1997, CVNY paid
the Company approximately $50,000 pursuant to the terms of the CVNY Note. On
December 31, 1997, the Company sold the CVNY Note without recourse for
approximately $2.4 million. There can be no assurance that the Company will
receive payment of the remaining amounts owed to it by CT&T or as to the timing
of any such payments that are ultimately made.
The Company and mmTech currently file separate federal and state income tax
returns. As of June 30, 1997, the Company had an approximate $6.1 million net
operating loss carry forward available to be used to offset future income.
-13-
<PAGE>
LOGIMETRICS, INC.
Disclosure Regarding Forward Looking Statements
This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that are based on the beliefs of
the Company's management as well as assumptions made by and information
currently available to the Company's management. When used in this Form 10-QSB,
the words "estimate," "project," "believe," "anticipate," intend," "expect,"
"plan," "predict," "may," "should," "will," the negative thereof and similar
expressions are intended to identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future events based on
currently available information and are subject to risks and uncertainties that
could cause actual results to differ materially from those contemplated in such
forward-looking statements. Factors that could cause results to differ
materially from the Company's expectations include, but are not limited to, the
following: general economic and political conditions, as well as conditions in
the markets for the Company's products; the Company's history of losses, cash
constraints and ability to continue as a going concern; the recent shift in the
Company's business focus; the Company's dependence on and the effects of
government regulation; the Company's dependence on the LMDS market and
uncertainties relating to the size and timing of any such market that ultimately
develops; the Company's dependence on large orders and the effects of customer
concentrations; the Company's relationship with CT&T and the resulting
limitations on the Company's ability to sell certain of its products to third
parties; the Company's dependence on the sale of securities to meet its working
capital needs; the Company's dependence on future product development and market
acceptance of the Company's products, particularly in the LMDS market; the
Company's limited proprietary technology; possible fluctuations in quarterly
results; the effects of competition; risks related to international business
operations; the Company's dependence on independent sales representatives; and
the Company's dependence on a limited number of suppliers. Other factors may be
described from time to time by the Company's public filings with the Securities
and Exchange Commission, news releases and other communications. These
forward-looking statements speak only as of the date hereof. The Company does
not undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Year 2000 Issue
The year 2000 issue results from computer programs being written using two
digits rather than four to define the applicable year. Certain computer programs
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business activity.
Based on a recent internal assessment, the Company has determined that the cost
to modify its existing software and/or to convert to new software will not be
significant. However, if customers, suppliers or others with whom the Company
does business experience problems relating to the year 2000 issue, the Company's
business, financial condition or results of operation could be materially
adversely affected.
-14-
<PAGE>
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
For a description of certain defaults under the Company's debt securities, see
Item 2. Management's Discussion and Analysis or Plan of Operation - Liquidity
and Capital Resources.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Number Description
3.1 Certificate of Incorporation of LogiMetrics, Inc. (the "Company"),
as amended (previously filed as Exhibit 3.1 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1997 (file no.
0-10696) and incorporated herein by reference).
3.2 By-laws, as amended, of the Company (previously filed as Exhibit 3.2 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1997 (file no. 0-10696) and incorporated herein by reference).
4.1 Form of the Company's Class A 13% Senior Subordinated Convertible
Pay-in-Kind Debentures due July 29, 1999 (previously filed as Exhibit
4.1 to the Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1997 (file no. 0-10696) and incorporated herein by
reference).
4.2 Form of the Company's Amended and Restated Class B 13% Senior
Subordinated Convertible Pay-in-Kind Debentures due July 29, 19999
(previously filed as Exhibit 4.2 to the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1997 (file no. 0-10696) and
incorporated herein by reference).
10.1 Letter, dated May 14, 1998, from North Fork Bank.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
Not applicable.
-15-
<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 15, 1998 By: /s/ Erik S. Kruger
------------------------------
Erik S. Kruger
Vice President
Finance and Administration and
Principal Accounting Officer
-16-
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
10.1 Letter, dated May 14, 1998, from North Fork Bank.
27 Financial Data Schedule.
-17-
May 14, 1998
Norman M. Phipps
President and Chief Operating Officer
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Dear Mr. Phipps:
Reference is hereby made to the Sixth Restated and Amended Revolving Credit
Note, dated as of April 25, 1997 (the "Note"), pursuant to which North Fork Bank
(the "Bank") has provided to LogiMetrics, Inc. (the "Company") a $2.2 million
revolving credit facility (the "Revolver").
Please be advised that the Bank hereby agrees to extend the maturity date of the
Revolver from April 30, 1998 to January 2, 1999. In addition, the Bank agrees
that the maturity date of the Revolver may be further extended to July 1, 1999
by the Company in the event that the Company receives net cash proceeds of at
least $10 million from the public or private sale of its securities on or prior
to January 2, 1999.
The Bank shall promptly prepare appropriate documentation reflecting the
extension of the Revolver as described above for execution and delivery by the
Company, including a further restatement and amendment of the Note.
The Bank understands and acknowledges that the Company is relying on the
agreements and undertakings contained herein in connection with the preparation
of certain reports to be filed by it with the Securities and Exchange Commission
(the "Commission") and consents to the filing of this letter with the Commission
in connection therewith.
Very truly yours,
/s/ Joseph Walsh
Joseph Walsh
Sr. Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE REGISTRANT'S FORM 10-QSB FOR THE NINE MONTHS ENDED MARCH 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
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<ALLOWANCES> 505,875
<INVENTORY> 3,728,386
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<TOTAL-ASSETS> 7,409,346
<CURRENT-LIABILITIES> 6,553,429
<BONDS> 4,523,513
0
924,526
<COMMON> 258,924
<OTHER-SE> (5,398,129)
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<INTEREST-EXPENSE> 709,450
<INCOME-PRETAX> (1,430,583)
<INCOME-TAX> (132,615)
<INCOME-CONTINUING> (1,297,968)
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