U.S. Securities and Exchange Commission
Washington, D.C. 20549
CONFORMED
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File Number 0-15545
Logitek, Incorporated
(Name of small business issuer in its charter)
New York No. 11-2203507
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Christopher St., Ronkonkoma, N.Y. 11779
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code 516-467-4200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment
to this Form 10-KSB
[ X ]
Issuer's revenues for its most recent fiscal year: $3,461,412
The aggregate market value of voting common stock held by non-affiliates,
computed based upon the average of the closing bid and asked prices on
September 16, 1996 was $1,917,440. As of September 16, 1996, there were
3,424,000 shares of common stock outstanding (of which 1,925,753 shares were
held by non-affiliates).
Documents Incorporated by Reference: 1995 Proxy Statement
<PAGE>
LOGITEK, INC.
FORM 10-KSB - Year Ended June 30, 1996
TABLE OF CONTENTS
PART I Page
Item 1.Business 3
Item 2.Properties 6
Item 3.Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security
Holders 6
PART II
Item 5.Market for Registrant's Common Equity
and Related Stockholder Matters 7
Item 6.Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Item 7.Financial Statements and
Supplementary Data 10
Item 8.Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure 10
PART III
Item 9.Directors and Executive Officers of
the Registrant 11
Item 10.Executive Compensation 11
Item 11.Security Ownership of Certain
Beneficial Owners and Management 11
Item 12.Certain Relationships and Related
Transactions 11
Item 13 Exhibits and Reports on Form 8-K 11
Signature Page 12
Report of Independent Certified Public
Accountants 13
Financial Statements 14
Notes to Financial Statements 17
<PAGE>
PART I
ITEM 1. BUSINESS
General
Logitek, Inc. (the "Company"), a New York
corporation, organized in 1969, is engaged
in the design, development and production
of electronic monitors and controls which
include electronic time delays, flashers, and
voltage, frequency, phase and power
monitors and switch mode power supplies.
Power monitors are generally used to
continuously and automatically monitor the
characteristics of electrical power systems
for conformance to design limits in order to
insure proper and safe operation of
equipment which utilize the monitored
power. These devices provide for timed
control of system shutdown and transfer in
addition to visual fault annunciation.
Although the Company manufactures
products "built to specifications" most of its
sales are for its standard products.
The Company developed and manufactures
a line of time delay relays designed to cause
a system to perform or not to perform a
specific function for, during or after a
precise interval of time. The time delay
relay is used in those instances, among
others, where a system must be turned on
for a specific period of time after application
of power and then shut down; where it is
necessary to operate a system for an interval
of time after the complete loss of power; or
to regulate the precise time interval between
various functions. Among its practical
applications, time delay relays are used in
navigation systems of missiles and in radar
equipment as well as to sequence aircraft
functions. When the navigation system in a
missile or projectile determines that the
missile or projectile is off course, a signal
may be applied to a time delay relay. If the
missile returns to course prior to the
expiration of the preset time delay, the
signal is removed and the timer does not
operate. If the missile remains off course
for a period of time greater than the preset
interval of the time delay relay, the time
delay relay will actuate causing the missile
to self destruct. Some elements of certain
types of radar equipment can be damaged if
high voltage is applied prior to sufficient
warm-up time. These elements can be
protected by the use of time delay relays
which provide an automatic time delay
between the application of warm-up voltage
and high voltage. These devices may also
be used to sequence the time interval
between the ejection of external fuel pods
on fighter aircraft. The relays vary in price
from approximately $100 to $700 depending
on the type of function and complexity
required; however, most time delay relays
sell for $150 to $300.
The Company has also developed and
produces solid state flashers designed to
cause an alternating electrical impulse. The
flasher may be used to cause aircraft
position lights to flash on and off as well as
to sense and indicate a malfunction in certain
systems by causing a warning light to
flash/or activate an alarm device. The
flasher varies in price from $100 to $500
depending on the type of function and
complexity required with most types of
flashers selling in the $125 to $225 range.
The Company has also designed and markets
equipment to monitor the characteristics of
the phase, voltage and frequency elements of
electric power. These devices are connected
to electric power lines to monitor each of the
aforesaid input elements for deviation from
acceptable limits and can find application in
most electrical systems, machinery and
equipment where power source performance
is questionable and/or where equipment
damage may result from inadequate or
improper power. The acceptable limits of
deviation of each element are pre-determined
and built into the monitor. The Company
has also developed and manufactures power
monitors used to sense all three of the
aforesaid power elements. In the event that
any element is not within pre-determined
specifications, the monitor shuts down the
system, transfers to another system and/or
operates an alarm. The Company also
manufactures each of the aforesaid types of
monitors with time delay features. These
types of monitors allow a deviation beyond
specified limits for a specified pre-set period
before initiating appropriate action. The
internal time delay thereby prevents
unnecessary system response. In the event
the system is activated, the element must
return to normal limits for a minimum pre-
set period before the power will resume
normal flow. This equipment is presently in
use in auxiliary generating systems in planes
and ships to prevent damage to the
equipment operated by such systems. Phase,
voltage and frequency sensors vary in price
from $300 to $900 and the power monitors
from $900 to $7,000 depending on the type
of function and complexity required.
The Company has designed and markets
switch mode power supplies for military,
industrial and commercial applications.
These power supplies are used to convert
AC voltage to DC voltage or to convert DC
voltage to a different level of DC voltage for
use by various types of electronic
equipment. Power supplies vary in price
from $400 to $3,000 depending on the
function, complexity and power levels
involved. The Company markets 13 basic
models within this product line and
approximately 424 different sub-models. In
addition, the Company will modify these
power supplies to customer specification for
an additional cost.
The components of the Company's products
include integrated circuits,transistors,diodes,
relays, resistors, capacitors and metal
casings which are purchased from a variety
of readily available sources on an as needed
basis. The Company has not experienced
delays in obtaining any required materials.
The widest application of the Company's
products is in systems such as aircraft and
space vehicles, aboard ships, vehicular
mobile communications,radar systems,and
data processing and telecommunication
systems. The Company's products are sold
to major system manufacturers and to the
United States Government. Customers
include General Dynamics Falstrom,
Boeing, Lockheed, McDonnel Douglas, E-
Systems, Westinghouse and Hughes Aircraft.
In terms of competition in the product line
of power monitors, to the best of the
Company's knowledge there are companies
similar to Logitek and the Company is aware
of four or five of these companies. In the
product line of power supplies there are
many competitors in the broad scope, but in
Logitek's niche market the field is
significantly narrowed. Logitek has a
trademark on its name but does not have any
patents.
The Company's backlog as of June 30, 1996
was approximately $ 2,000,000 as compared
to $1,600,000 as of June 30 1995.
Sales made directly to government agencies
are effected primarily through competitive
bidding and to a lesser extent are a result of
negotiated contracts. Other sales arise
principally through personal solicitations by
the Company's personnel and also through
independent sales representatives who are
compensated solely on a commission basis.
During the past two fiscal years ended June
30, 1996 and 1995 sales to Boeing Aircraft
accounted for approximately 12% and 21%,
respectively, of the Company's net sales. In
addition, during the past two fiscal years
ended June 30, 1996 and 1995 sales to the
U.S. Government and its agencies were
approximately 11 % and 15%, respectively.
While it is possible that Boeing and the
Government might someday choose another
vendor, the Company feels this is unlikely.
However, should this ever happen, the
impact on the financial statements would be
a decrease in sales of 23%.
All government contracts or subcontracts are
subject to cancellation by the government or
subcontractor at or for the convenience of
the government. In the event of contract
termination, the Company would ordinarily
be entitled to recover payment for its costs
and a reasonable pro rata share of profit
based on work completed prior to
termination.
Current research is focused on the
continuous development of switch mode
power supplies, a high density power supply
and a digital power monitor. During the
two fiscal years ended June 30, 1996 and
1995, the Company expensed approximately
$194,000 and $82,000, respectively, on
research and development.
As of June 30, 1996 the Company had
approximately 42 employees, of which two
were part time employees.
The following table sets forth the
approximate percentage each of the
Company's product lines contributed to total
sales for the periods indicated:<PAGE>
BREAKDOWN OF GROSS SALES
For the years ended June 30,
1996 1995
% %
Time delay relays 10.0 19.3
Flashers 4.0 5.2
Power supplies 23.7 30.9
Voltage, frequency and
phase sensor relays
and power monitors 60.7 43.5
Contract manufacturing & Other 1.6 1.1
Company Totals 100.0 100.0
<PAGE>
ITEM 2. PROPERTIES
The Company's executive offices and
production facilities are located in a one
story free standing building comprising
approximately 20,000 square feet, such
building is owned by the Company. The
building is located on approximately one and
one-half acres of land in Ronkonkoma, New
York. The property is subject to a mortgage
held by the New York Job Development
Authority ("JDA"), payable in monthly
installments as of June 30, 1996 of
approximately $2,656, including interest at
8.25% through June 2004 and a subordinate
mortgage to Long Island Development
Corp., payable in monthly installments of
$4,427 including interest at 13.57% through
June 2004. As of June 30, 1996 the JDA
mortgage had a balance of $170,309 and the
subordinate mortgage had a balance of
$247,755.
Located at the Company's facilities are
testing apparatus, machinery and equipment
including oscilloscopes, differential
voltmeters,,spray painting equipment,
production electrical test fixtures auto test
and manufacturing equipment, environmental
and vibrations test equipment and other
items. Certain of this equipment is pledged
as collateral for two notes payable in
monthly principal installments of $1,806 and
$ 1,319 through June 1998 and December
1998, plus interest at prime plus 1 1/2%
with an outstanding balance as of June 30,
1996 of $81,597. In addition, the Company
has given a security interest to a lender
covering all fixed assets, accounts receivable
and inventory on $182,750 of debt with
monthly payments of $5,750, plus interest at
10.25% as of June 30, 1996.
ITEM 3. LEGAL PROCEEDINGS
None. (See Note 12)
ITEM 4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of
security holders through the solicitation of
proxies or otherwise during the fourth
quarter of fiscal 1996.<PAGE>
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock, $.01 par
value (the "Common Stock"), was traded on
the National Association of Securities
Dealers Automated Quotation System
("NASDAQ") under the symbol "LGTK"
until May, 1992. The Common Stock was
delisted when NASDAQ increased its
minimum capital, surplus and stock price
requirements and the Company was unable
to meet such requirements. The Common
Stock currently trades in the over-the-
counter market. The table which appears
below sets forth the quarterly range of high
ask and low bid prices for the Common
Stock for the periods indicated, as reported
by The National Quotation Bureau, Inc.
The figures shown represent "inter-dealer"
prices without adjustment for markups,
markdowns or commissions and may not
necessarily represent actual transactions.<PAGE>
On September 16, 1996 the closing bid and
asked prices for the Common Stock
were $.50 and $.63 per share, respectively.
As of September 16, 1996 there were
3,424,000 shares of Common Stock
outstanding and approximately 150 record
holders of Common Stock, which includes
stock being held by brokers in street name.
The Company has never paid cash dividends
on its Common Stock and does not intend to
do so for the foreseeable future. It is
anticipated that earnings, if any, will be
retained to finance the Company's growth.
Future payments of cash dividends, if any,
will be determined by the Board of Directors
based upon circumstances then existing,
including contractual restrictions, financial
condition, capital requirements and business
outlook of the Company.<PAGE>
<PAGE>
Quarter Ended Ask Price - High Bid Price - Low
September 30, 1994 3/4 1/8
December 31, 1994 1/2 1/16
March 31, 1995 1/2 1/32
June 30, 1995 17/32 1/16
September 30, 1995 1/2 1/4
December 31, 1995 3/4 3/8
March 31, 1996 5/8 3/8
June 30 , 1996 1 1/4 1/2
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company ("Logitek, Inc.") reported a
net profit after tax of $259,975 for the year
ended June 30, 1996 compared to a $94,233
profit for the year ended June 30, 1995.
Results of Operations
Comparison of Fiscal Years Ended June 30,
1996 and 1995
Sales for fiscal 1996 were $3,461,412
compared to $2,970,922, or a 17% increase
of $490,490. The increase was due primarily
to additional sales as a result of new product
lines. The company has also begun to utilize
fully automated test and automatic assembly
equipment and has redesigned certain of its
products to take advantage of the more cost
effective surface mount manufacturing
technologies.
Gross profit margins were 40.9 % and
35.0% for the twelve month periods ended
June 30, 1996 and 1995. This reflects the
company's committment to manufacturing its
products in a more efficient manner, as well
as close cost containment.
Operating expenses for fiscal 1996 were
approximately $1,054,000 compared to
$873,000 or a increase of $181,000. Of this
increase,research and development expenses
accounted for approximately $112,000. This
increase is a reflection of the company's
efforts to develope the digital power monitor
and a high density power supply, both of
which will be unique in the marketplace and
will differentiate the company in the
marketplace.
Interest expense decreased approximately 5%
due to decreased borrowing levels. During the
past twelve month period the Company has
reduced total debt by $29,555. By December
1994 all then existing equipment loans had
been satisfied. The Company will now be
required to service its two mortgages on the
building and a term loan with a balance of
$182,750 as of June 30, 1996 (see Notes 7 and
8). In June 1995 and October 1995 the
Company decided to borrow $ 65,000 and
$47,500 in order to pay off its remaining
equipment leases and to purchase additional
new equipment as part of its plan to
streamline its operations and to make more of
the manufacturing an automatic process
rather than labor intensive.
The legal expenses of $10,000 for the twelve
month period ended June 30, 1996 were for
normal ongoing legal matters, compared to
$10,000 for the year ended June 30,1995. The
company has made a settlement on a
trademark infringement suit. The settlement
is for $105,000 of which $55,000 was collected
in the year ended June 30,1996. The
remaining $50,000 will be collected during the
year ended June 30,1997.
The Company's effective tax rate of 22.6%
differs from the statutory tax rate of 34% due
principally to the impact of a deferred tax
benefit, utilization of federal tax credits and
a state income tax provision.
Liquidity and Capital Resources
Total borrowings were $728,964 and $758,519,
at June 30, 1996 and1995 , respectively, which
represent decreases of $29,555, or 4%, and
$58,132, or 7%, for the latest two twelve
month periods. As of June 30, 1996 the
Company has increased total debt, accounts
payable and accrued expenses by
approximately $195,398 .As of June 30,1995
the Company had reduced total debt,accounts
payable and accrued expenses by $211,300.
During this two year period the Company has
built its cash reserves to approximately
$349,000 as of June 30, 1996.
During the year ended June 30,1996, the
Company increased its cash by about $402,000
through its operating activities primarily from
its net income and depreciation.The Company
used its cash to purchase manufacturing
equipment of $89,000 and paid down debt by
about $124,000.
In terms of significant changes on the
Company's assets, the primary change has
been in the inventory where the Company has
made an investment in the components
necessary to compete effectively in the power
supply business. This has resulted in slightly
higher than normal accounts payable. The
current portion of Long Term Debt has been
significantly reduced as a result of the
reclassification of a term loan from cuurent to
long term.
The Company is not aware of any
committments or contingencies that are likely
to have a material impact on the financial
statements.
Term Loan
In January 1996 the lender agreed to extend
the loan to March 1999. Therefore the loan
of $182,750 was classified partially as current
and partially as long term as of the date of the
June 30,1996 report.
Due to the Company's current cash resources
of $349,000 and it's continued profitability the
Company does not anticipate a need for
additional outside financing. <PAGE>
The Company has
recorded a valuation allowance against its deferred
tax asset due to the fact that the deferred tax asset
consists of state credits and it is management's judgement
that a portion of these credits may expire
prior to the Company's utilization of the
credits.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's financial statements, notes thereto, and supplementary
schedules are included in this Report on Form 10-KSB as follows:
Index
Item Page
Number
Report of Independent Certified Public Accountants 13
Balance Sheets as of June 30, 1996 and 1995 14
Statements of Income and Retained Earnings
for the Years Ended June 30, 1996 and 1995 15
Statements of Cash Flows for the Years
Ended June 30, 1996 and 1995 16
Notes to Financial Statements 17
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Please refer to Company's 1996 Proxy statement at item 14.
ITEM 10. EXECUTIVE COMPENSATION
Please refer to Company's 1996 Proxy statement at item 14.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Please refer to Company's 1996 Proxy statement at item 14.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Please refer to Company's 1996 Proxy statement at item 14.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on form 8-K
None.
<PAGE>
ITEM 14. PROXY STATEMENT
LOGITEK, INC.
101 Christopher Street
Ronkonkoma, N.Y. 11779
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25,1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Logitek,Inc. (the "Company") will be held at the principal offices of the
Company, 101 Christopher St., Ronkonkoma, N.Y. 11779, on November 25,1996 at
6:00 P.M., New York time, for the following purposes:
1. To elect a board of three directors, each to serve for a term of
one year and until his successor shall have been duly elected and
qualified.
2. To elect Marcum & Kliegman, Certified Public Accountants ,130 Crossways
Park Drive, Woodbury N.Y. 11797 as the Company's independent certified
public accountants.
3. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Shareholders of record at the close of business on October 25,1996 will be
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Herbert L. Fischer, Chairman
Dated : October 28,1996
Ronkonkoma, N.Y.
- -----------------------------------------------------------------------
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR
SHARES TO BE VOTED, PLEASE DATE , SIGN AND MAIL THE ACCOMPANYING
FORM OF PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
LOGITEK INC.
101 Christopher St.
Ronkonkoma, N.Y. 11779
------------------------------------------
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Logitek, Inc.,a New York corporation( the "Company"), for use
at the Annual Meeting of Shareholders to be held at the office of the
Company, 101 Christopher St. Ronkonkoma, N.Y. 11779 on November 25,1996 at
6:00 P.M. , New York time( the "Meeting") or any adjournments therof.
Shareholders of record at the close of business on October 25,1996 will be
entitled to vote at the meeting.
The Company will solicit proxies by mail. Arrangements will be made with
brokerage houses and other custodians,nominees,and fiduciaries to forward
solicitation material to the beneficial owners of the shares held of record
by such persons, and the Company will reimburse them for the reasonable out
of pocket expenses incurred by them in so doing.
The shares represented by the accompanying proxy will be voted as directed
with respect to all matters or, if no direction is indicated ,will be voted
in favor of all matters as listed below.
Each proxy executed and returned by a shareholder may be revoked at any time
hereafter by giving written notice of such revocation to the Secretary of
the Company, except as to any matter or matters upon which ,prior to such
revocation ,a vote shall have been cast pursuant to the authority conferred
by such proxy.
The Annual Report to Shareholders for the fiscal year ended June30,1996
including financial statements, is being sent to shareholders on or before
the date of this Proxy statement. The date of this Proxy Statement is the
approximate date on which the Proxy Statement and form of proxy are first
being sent or given to shareholders.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
On October 1,1996, the Company had outstanding 3,424,000 shares of common
stock, par value $ .01 per share ( "Common Shares "), each of which entitled
the holder to one vote. Voting is not cumulative.
The table on the following pages sets forth information as of October 1,1996,
with respect to all shareholders known by the Company to be the beneficial
owners of more than 5% of the outstanding Common Shares, all directors, and
all directors and executive officers as a group. Except as noted below, each
shareholder has sole voting and investment power with respect to the shares
shown.
Name and Address of Number of Common Shares
Beneficial Owner Beneficially Owned %
Logitek Employee Stock Ownership 628,566 18.4
Plan ("ESOP")
101 Christopher St.
Ronkonkoma N.Y. 11779
Herbert L. Fischer (1) 1,254,689 36.6
President & CEO
101 Christopher St.
Ronkonkoma N.Y. 11779
Howard Fein, Director (2) 11,000 .3
101 Christopher St.
Ronkonkoma N.Y. 11779
Francis Vucci, Director (2) 10,000 .3
101 Christopher St.
Ronkonkoma N.Y. 11779
(1) 882,080 owned outright by Mr. Fischer, 250,000 shares subject to
stock option exercise and 122,609 shares vested in the Company's ESOP
(2) Shares subject to stock option exercise.
(3) Includes shares owned by the Company's ESOP, shares included in
items(1) and (2) above 125,000 shares subject to option to another
officer and 10,000 shares subject to option by another director.
I. ELECTION OF DIRECTORS
A board of three directors is proposed to be elected at the meeting to
hold office for a term of one year and until their respected successors
shall have been duly elected and shall have qualified. The proxy will vote
all proxies received "FOR" the election of all matters listed below if no
direction to the contrary is given. In the event that any nominee is unable
to serve, the proxy solicited herewith may be voted, in the discretion of
the proxy, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate that this will occur.
The following information with respect to business experience, age and
directorship for the past five years has been furnished to the Company as of
October 1,1996 by each person nominated for election as a director.
Principal Occupation Director
Name Age and Experience Continuosly Since
Herbert L. Fischer 62 Chairman of the Board
President and CEO 1970
Howard Fein 54 President of Fein & Fein
Certified Public Accountants
for the past 25 years 1986
Francis Vucci 44 Executive V.P. Treasurer
& Board member of the
Falstrom Company 1995
All directors were elected at the annual meeting of shareholders held on
November 27,1995,to hold office for a term of one year and until their
successors are elected and qualified. The Board does not have any committees.
The following are the executive officers of the Company: indicating their
position with the Company, their age and their five year background:
Francis J. Vucci, is currently President and a member of the Board of
Directors of the Falstrom Company, a manufacturer of electronic equipment
and enclosures and has been at that company for the past 18 years. Mr. Vucci
brings a wealth of direct experience to Logitek including manufacturing,
finance, sales and customer relations.
Herbert Fischer has been Chairman of the Board , President and Chief
Executive Officer of the Company since 1969. Mr. Fischer is not affiliated
with any other public companies.
Matthew Angelos, age 35, was appointed Vice President-Engineering in
December 1992. From July 1992 to December 1992 he was the Company's
Engineering Manager and from August 1990 to July 1992 was project manager
with the Company. From March 1987 to August 1990 Mr.Angelos was aproject
manager with Tempo Instruments Inc.
COMPENSATION
The tables on the following pages set forth the executive compensation paid
by the Company for each executive officer/director of the Company whose cash
compensation exceeded $100,000 during the past three fiscal years.
SUMMARY COMPENSATION TABLE
Name & Principal
Position Year Salary Bonus Other Stock
Herbert Fischer 1996 225,000
President & CEO 1995 218,890
1994 162,500 50,000
(1)Herbert Fischer has a one year employment agreement with the Company
which is renewable annually. The agreement provides for a base annual
salary of $275,000 plus a cost of living increase, such increase has
never been received. In June 1992, Mr Fischer voluntarily reduced
his salary to $125,000 and in October 1993 the Board of Directors
increased his salary to $175,000.
Options/SAR Grants in Last Fiscal Year
Individuals Grants
Name Options Granted % of Total Options Exercise Expiration
Granted in Fiscal Year Price Date
Francis Vucci
Director 10,000 2.5% .25 N/A
Aggregated Option/SARExercises in LastFiscal Yearand FY End Option SAR Values
Number Value
of Unexercised of Unexercised
Options /SARS InThe Money
Options SAR's
Shares Acquired Value Exercisable/ Exercisable
Name on Exercise Realized Unexercisable Unexercisable
Herbert Fischer 250,000 125,000
President & CEO
Matthew Angelos 125,000 62,500
Vice President
Howard Fein 11,000 5,500
Director
Francis Vucci 10,000 5,000
Director
(1) Based on the average bid and asked prices of $.50 for the quarter
ended June 30, 1996.
(2) All directors of the Company are non-salaried and no director
has received any fees associated with outside services during the three
year period ended June 30, 1996.
II. OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the Board of
Directors intends to present, and knows that others will present, at the
Meeting is that hereinabove set forth. If any other matter or matters are
properly brought before the Meeting, or any adjournments thereof, it is the
intention of the persons named in the accompanying form proxy to vote the
proxy on such matters in accordance with their judgement.
ACCOUNTANTS
For the fiscal year ended June 30, 1996 the accounting firm of Marcum &
Kliegman served as the Company's principal accountants. Representatives of
Marcum & Kliegman are expected to be present at the Annual Meeting and will
have the oppurtunity to make a statement if they desire and will be
available to respond to questions.
SHAREHOLDER PROPOSALS
The annual Meeting of the Company for the year ending June 30,1997 is
scheduled to be held in November 1997. In order to have any proposal
presented at the Company's shareholder meeting the proposal must be received
at the Company's executive offices no later than June 15,1997 for inclusion
in the proxy statement and form of proxy related to that meeting.
By the Order of the Board of Directors,
Herbert L. Fischer, Chairman
Dated October 28,1996
Ronkonkoma N.Y.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
LOGITEK INC.
By: /s Herbert L.Fischer
Herbert L. Fischer
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates
indicated.
/s/ Herbert L.Fischer
Herbert L. Fischer
President and
Principal Executive Officer
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders of Logitek,Inc.
We have audited the accompanying balance sheets of Logitek, Inc. as of June
30,1996 and 1995,and the related statements of income and retained earnings
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining,on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects,the financial position of Logitek, Inc. as of June
30,1996 and 1995, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
Marcum & Kliegman LLP
Woodbury, New York
August 22,1996
LOGITEK, INC.
BALANCE SHEETS
June 30,
ASSETS (Note 7) 1996 1995
Current Assets:
Cash and cash equivalents (Note 1) $348,979 $139,751
Accounts receivable (Note 11) 328,801 341,777
Inventories (Note 2) 1,018,074 811,036
Prepaid expenses and other current assets 33,941 38,764
Due from officer (Note 4) 30,500 3,500
Total Current Assets 1,760,295 1,334,828
Property, Plant, and Equipment, net
(Notes 3 and 7 ) 720,929 694,378
Deferred income taxes,state (Note 9) 7,000 7,000
Goodwill (Note 1) 34,441 34,441
Other Assets (Note 5) 33,111 29,756
TOTAL ASSETS $2,555,776 2,100,403
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of
long-term debt (Note 7) 140,491 $297,254
Capitalized lease obligation, current (Note6) 7,150 0
Accounts payable 463,889 312,952
Accrued expenses and taxes 166,561 92,545
Total Current Liabilities 778,091 702,751
Capitalized lease obligation,
less current portion (Note 6) 39,402 0
Long-term debt, net of
current portion (Note 7 ) 541,921 461,265
Deferred income taxes payable,
federal (Note 9) 13,380 13,380
TOTAL LIABILITIES 1,372,794 1,177,396
COMMITMENTS AND CONTINGENCIES
(Notes 6, 8 and 10)
STOCKHOLDERS' EQUITY (Note 10)
Common stock, $.01 par value; authorized
10,000,000 shares; issued 3,600,000 shares,
of which 176,000 shares are held in treasury 36,000 36,000
Capital in excess of par value 280,355 280,355
Retained earnings 872,127 612,152
Less: Treasury Stock at cost 1,188,482 928,507
5,500 5,500
Total Stockholders' Equity 1,182,982 923,007
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,555,776 $2,100,403
The accompanying notes are an integral part of the financial statements.
<PAGE>
LOGITEK, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Years Ended June 30,
1996 1995
Net sales (Note 11) $3,461,412 $2,970,922
Cost of goods sold 2,046,622 1,932,054
Gross profit 1,414,790 1, 038,868
Operating expenses:
Selling 256,411 256,444
General and administrative
(Notes 3,6,8 and 12) 603,162 534,747
Research and development (Note 1) 194,488 82,278
Total operating expenses 1,054,061 873,469
Income from operations 360,729 165,399
Other income (expense):
Interest expense (90,496) (95,007)
Interest income 10,742 9,000
Other income (Note 12) 55,000 -
______ ______
Total other expense (24,754) (86,007)
Income before income taxes 335,975 79,392
Income tax expense (benefit) (Note 9) 76,000 (14,841)
Net income 259,975 94,233
Retained earnings, beginning of year 612,152 517,919
Retained earnings, end of year $872,127 $612,152
Per Share Amounts:
Net income $.08 $.03
Weighted average shares
outstanding (Note 1) 3,424,000 3,424,000
The accompanying notes are an integral part of the financial statements.
<PAGE>
LOGITEK, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended June 30,
1996 1995
Cash Flows from Operating Activities:
Net income $259,975 $94,233
Adjustments to reconcile net income
to net cash provided by (used in) operating
activities:
Depreciation 110,037 100,854
(Increase) decrease in operating assets:
Accounts receivable 12,976 (34,619)
Inventories (207,038) 81,743
Deferred income tax asset 0 (7,000)
Prepaid expenses and other current assets 4,823 11,289
Other assets (3,355) (1,779)
Increase (decrease) in operating liabilities:
Accounts payable 150,937 ( 54,473)
Accrued expenses 74,016 (98,562)
Deferred income taxes payable 0 (13,000)
Total adjustments 142,396 (104,694)
Net cash provided by (used in) operating
activities 402,371 (10,461)
Cash Flows from Investing Activities
Purchases of property,plant and equipment (88,942) (73,551
Advances to officer (27,000) 0
Net repayment of officer loan 0 12,824
Net cash used in investing activities (115,942) (60,727)
Cash Flows from Financing Activities:
Repayment of long-term debt (124,701) (58,132)
Proceeds from long-term debt 47,500 0
Repayment of capitalized lease obligation 0 (10,152)
Net cash used in financing activities (77,201) (68,284)
Net increase (decrease) in cash and equivalents 209,228 (139,472)
Cash and cash equivalents, beginning of year 139,751 279,223
Cash and cash equivalents, end of year $348,979 $139,751
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the years for:
Interest $82,801 $84,630
Income taxes $13,270 $5,308
The accompanying notes are an integral part of the financial statements.
<PAGE>
LOGITEK, INC.
Notes to Financial Statements
NOTE 1 - Description of Business and Summary of Significant Accounting
Policies:Description of business:
Logitek, Inc. ("the Company") is engaged in the design, development and
production ofelectronic power monitoring equipment and electronic power
supplies. The Company sells its products and provides services to domestic
customers, and to a lesser extent to international customers, primarily in
the aerospace and defense industries, and to the United States
government.
Revenue recognition:
The Company recognizes sales when merchandise is shipped. For contracts
subject to Department of Defense regulations, the Company recognizes revenue
when the earnings process is deemed completed.
Inventories:
Inventories are carried at the lower of cost (based on a moving average) or
market.
Property,plant and equipment and depreciation:
Property, plant and equipment is recorded at cost. Expenditures for major
renewals and betterments to property and equipment are capitalized, and
expenditures for maintenance and repairs are charged to operations as
incurred. When assets are retired or otherwise disposed of, their cost and
related accumulated depreciation are eliminated from the accounts. Any
resulting gain or loss is reflected in income. Depreciation is provided
using the straight-line method over the estimated useful lives of the
related assets, which are as follows:
Buildings and improvements 15 to 31.5 years
Machinery and equipment 5 to 7 years
Furniture and fixtures 5 to 7 years
Automobiles 5 years
Goodwill:
Goodwill arose from a 1969 acquisition, is considered by management to have
continuing value and , accordingly, is not being amortized.
Income taxes:
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when
LOGITEK,INC.
Notes to Financial Statements
Note 1- Description of Business and Summary of Significant Accounting
Policies Income Taxes, Continued:
necessary to reduce deferred tax assets to the amount expected to be realized
Income tax expense is the tax payable or refundable for the period plus or
minus the change during the period in deferred tax assets and liabilities.
Tax credits are accounted for on the flow-through method.
Research and development costs:
Research and development costs are expensed as incurred.
Cash and cash equivalents:
The Company considers all highly liquid debt instruments purchased with a
maturity date of three months or less to be cash equivalents. At June 30,
1996 and June 30, 1995 the Company has cash deposits in banks in excess of
the maximum amount insured by the Federal Deposit Insurance Corp.
Earnings per share:
Earnings per share for both years have been presented based on the weighted
average number of shares outstanding. Stock options are not included in the
calculation of earnings per share for 1996 and 1995 since their effect would
be anti-dilutive.
Reclassifications:
Certain accounts in the prior year financial statements have been
reclassified for comparative purposes to conform with the presentation in
the current year financial statements. These reclassifications have no
effect on previously reported income.
Use of Estimates in the Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liablilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Advertising Costs
Advertising costs of $ 86,357 were expensed as incurred.
LOGITEK,INC.
Notes to Financial Statements
Statement of Financial Accounting Standards No. 121
The Company has elected to defer adoption of Statements of Financial
Accounting Standards (SFAS) No. 121 "Accounting for the Impairment of Long
Lived Assets to be Disposed of "and No. 123 "Accounting for Stock Based
Compensation" until such adoption is mandatory. The Company will evaluate
its long term assets held for sale,for impairment wherever events or changes
in circumstances indicate the carrying amount of the asset may not be
recoverable. The anticipated future cash flows of an asset used in the
computation under SFAS No. 121 should be undiscounted and without interest
charges.
The Company's current practice with regard to long lived assets to be
disposed is consistent with that required by SFAS No. 121 which requires that
certain assets to be disposed of be measured at the lower of carrying amount
or net realizable value. The Company does not expect any material impact on
its financial position and results of operations from implementation
of SFAS No. 121,123 and 125.
NOTE 2 - Inventories
Inventories consist of the following:
June 30,
1996 1995
Raw materials $479,414 $334,879
Work-in-process 282,155 205,089
Finished goods 256,505 271,068
Total $1,018,074 $811,036
Note 3 - Property, Plant and Equipment
Property, plant and equipment consists of the following:
June 30,
1996 1995
Land $78,000 $78,000
Buildings and improvements 802,850 802,850
Machinery and equipment 1,111,529 974,941
Furniture and fixtures 142,876 142,876
Automobiles 68,988 68,988
Total 2,204,243 2,067,655
Less: accumulated depreciation (1,483,314) (1,373,277)
Property Plant and Equipment,Net $ 720,929 $ 694,378
(a) Depreciation expense charged to operations was $ 110,037 and $ 100,854
for the years ended June 30, 1996 and June 30,1995,
respectively
(b) The cost of equipment under a capital lease and accumulated
depreciation on these assets was $ 47,646 and $ 3,403, respectively,
at June 30,1996.
NOTE 4 - Related Party Transactions
The Company has an uncollateralized loan receivable from its president and
principal stockholder. The loan balance of $30,500 accrues interest at 6%
and is payable on demand.
LOGITEK ,INC.
Notes to Financial Statements
NOTE 5-Other Assets
Included in Other Assets is $32,811 and $29,455 of restricted cash as of
June 30, 1996 and 1995, respectively, which is held as collateral for the
mortgage payable to Long Island
Development Corp. (See Note 7).
NOTE 6 - Leases
Capitalized lease obligation
During the year ended June 30,1996 the Company obtained equipment under a
capital lease expiring in June 2001. The assets and liabilities under
capital leases are recorded at the lower of the present values of the
minimum lease payments or the fair values of the assets. The assets
are included in property and equipment and are depreciated over their
estimated useful lives.As of June 30,1996 , minimum future lease payments
under this capital lease are:
Year ending Amount
June 30,
1997 $ 13,484
1998 13,484
1999 13,484
2000 13,484
2001 11,237
Total minimum lease payments 65,173
Less: amounts representing interest 18,621
Net minimum lease payments $ 46,552
Operating leases
The Company leases certain equipment to support its manufacturing and test
capabilities and certain office equipment. Such leases expire through June
2000. Rent expense for the years ended June 30, 1996 and 1995 was $2,580 and
$7,512 respectively. Future minimum rental payments under noncancelable
operating leases as of June 30,1996 are as follows:
Year Ending
June 30, Amount
1997 $5,252
1998 5,252
1999 5,037
2000 2,672
Total $18,213
LOGITEK, INC.
Notes to Financial Statements
NOTE 7 - Long-Term Debt
Long-term debt consists of the following:
June 30,
1996 1995
Mortgage payable to NY Job Development
Authority (JDA) in monthly installments
of $2,656 including interest (8.25% at
June 30, 1996) through June 2004,
collateralized by restricted cash, building and
improvements with a net book value of
approximately $406,822 (a) $ 170,309 $ 184,668
Mortgage payable to Long Island
Development Corp. (LIDC) in monthly
installments of $4,427, including
interest at 13.5% through June 2004,
subordinate to the JDA mortgage,
collateralized by restricted cash, land,
building and improvements with a net
book value of $406,822 (b) 247,755 263,851
Notes payable to bank in monthly installments
of $ 3,125 plus interest at 1.5% above prime
through November 1998, collateralized by
a secondary lien on all assets
of the Company (a) 81,598 65,000
Term loan payable to bank (c) 182,750 245,000
Total debt 682,412 758,519
Less : current portion (140,491) ( 297,254)
Total Long term debt $541,921 $461,265
<PAGE>
LOGITEK, INC.
Notes to Financial Statements
Note 7 - Long-Term Debt - continued
(a) Interest rate varies in response to market conditions.
(b) This mortgage is personally guaranteed by the Company's president and
principalstockholder. The loan contains restrictive covenants which include,
among others, limiting property, plant and equipment additions in each year,
obtaining written consent of the lender prior to incurring additional
financing obligations and prior to transferring ownership of common
stock belonging to the Company's president and principal stockholder.
(c) The term loan payable to bank requires monthly principal payments of
$5,750 plus interest at 2% above the bank's prime rate ( 8.25% at June 30,
1996) through March 1999. The note is collateralized by accounts receivable
inventory and certain machinery and equipment.
Aggregate long-term debt maturities for the five fiscal years subsequent to
June 30, 1996 are:
Year Ending June30, Amount
1997 $140,491
1998 145,482
1999 94,863
2000 48,991
2001 55,163
Thereafter 197,422
Total $682,412
<PAGE>
LOGITEK, INC.
Notes to Financial Statements
Note 8 - Retirement Plan
The Company has a defined contribution plan for all eligible employees under
Internal Revenue Code Section 401(k). The plan states that the Company will
provide a matching contribution of up to 25% of the first 3% of a
participant's compensation as well as a discretionary payment. The Company
has recorded expense associated with the plan of $32,735 and $2,967 for the
years ended June 30, 1996 and 1995, respectively.
Note 9 - Income Taxes
The provision for (benefit from) income taxes is as follows:
Year Ended June 30,
1996 1995
Deferred : Federal $ 0 $ (13,000)
: State 0 (7,000)
: State 6,000 2,159
$76,000 $ (14,841)
Deferred income taxes result from temporary differences in the recognition
of expenses for income tax and financial reporting purposes. Such differences
result principally from the use for income tax purposes of accelerated
depreciation.
The net deferred tax liability in the accompanying balance sheet includes
the following amounts of deferred tax assets and liabilities:
1996 1995
Deferred tax liability $ 13,380 $ 13,380
Deferred tax asset (34,000) (34,000)
Valuation allowance for
deferred tax asset 27,000 27,000
Net deferred tax liability $ 6,380 $ 6,380
Income taxes were different from the amount computed by applying the federal
statutory tax rate to income before income taxes due to the following:
1996 1995
Statutory rate 34.0 34.0
State income taxes 1.8 0.2
Income tax credits 13.2 0.0
Non-deductible items 0.0 5.5
Net change in items giving rise to deferred 0.0 (54.1)
taxes
Benefit of graduated rates 0.0 (4.3)
Effective rate 22.6 (18.7)
LOGITEK,INC.
Notes to Financial Statements
Note 9-Income Taxes-Continued
The company recorded a benefit from income taxes for the year ended June 30,
1995 due to the reduction in the deferred tax liability, as computed in
accordance with the provisions of Statement of Financial Accounting
Standards No. 109"Accounting for Income Taxes".
The components of the deferred taxes are as follows:
Deferred Tax Liability-Consists primarily of income
tax depreciation in excess
of financial reporting depreciation. $ 13,380
Deferred Tax Asset
Consists primarily of income tax credits. ( 34,000)
Valuation Allowance
Consists primarily of a reserve against
the income tax credits. 27,000
Net deferred tax liability 6,380
Note 10 - Stockholders' Equity
The following options were granted and/or terminated during the years ended
June 30, 1996 and June 30,1995. All options outstanding as of June 30, 1996
were exercisable for a total exercise price of $99,880.
SHARES EXERCISE PRICE
Outstanding July 1, 1994 and July
1,1995 386,000 $.25
Granted June 30,1996 10,000 $.25
Outstanding June 30,1996 396,000
The exercise price of the options were set below fair market value on the
date of grant.In the application of APB 25 it was determined that the
compensation expense was immaterial to our financial statements taken as
awhole.
Note 11 - Major Customers
During the year ended June 30,1996 the Company sold a substantial portion of
its merchandise to three customers. Net sales to these customers were
approximately $ 469,000(14%),$417,000 (12%) and $379,000(11%). At June 30,
1996 amounts due from these customers and included in accounts receivable
were 0,$16,638 and $68,115, respectively. During the year ended June
30,1995 two customers accounted for $623,103 (21%) and $445,601 (15%) of net
sales. At June 30,1995 amounts due from these customers were $16,638 and
$68,153, respectively.
Note 12 - Settlement Income and Legal Expenses
The Company incurred legal expenses in 1995 and 1996 as a result of a claim
filed by the Company in which it opposed an application by another company
for the use of Logitek's trade-name. This claim was settled in the year
ended June 30,1996 for $105,000 with $55,000 received during the year ended
June 30,1996 and $50,000 to be received during the year ended June 30,1997.
Note 13- Noncash Investing and Financing Activities
During the year ended June 30,1996, a note payable of $47,646 was incurred
when the Company purchased equipment. <PAGE>
Auditors
Marcum & Kliegman LLP
Certified Public Accountants & Consultants
130 Crossways Park Drive
Woodbury , N.Y. 11797
Transfer Agent
Continental Stock Transfer
& Trust Co.
2 Broadway
New York, N.Y. 10004
Form 10-KSB or additional information about the Company
Stockholders and others interested in obtaining additional information about
the Company may do so by writing or calling Logitek, Inc., 101 Christopher
Street., Ronkonkoma, N.Y. 11725,
(516) 467-4200. The Form 10-KSB Annual Report will be furnished without
charge.
Affirmative Action Policy
It is the policy of Logitek, Inc. that all employees will be judged on the
basis of qualifications and ability, without regard to age, sex, race, creed,
color or national origin, in all personnel actions. No employee or
applicant for employment will receive discriminatory treatment because
of physical or mental handicap in regard to any position for which the
employee or applicant is qualified.
Annual Stockholders' Meeting
The annual meeting of stockholders will be held at offices of Logitek, Inc.,
101 Christopher Street., Ronkonkoma, N.Y. 11725 on November 25, 1996 at
6:00 P.M.
