Form 10-QSB
CONFORMED
Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File Number 0-15545
Logitek, Incorporated
(Exact name of registrant as specified in its charter)
New York No. 11-2203507
State or other jurisdiction of (I.R.S Employer
incorporation or organization Identification No.)
101 Christopher St., Ronkonkoma, N.Y. 11779
(Address of principal executive offices and ZIP Code)
Registrant's Telephone Number, including area code 516-467-4200
Securitie s registered pursuant to Section 12(g) of the Act:
Common Stock, $.001, par value None
Title of Class Name of each exchange on which registered
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2)has been subject to such filing
requirements for the past 90 days. Yes X No
As of November 1, 1998, their were 3,375,731 shares of common stock
outstanding.
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LOGITEK, INC.
Quarterly Report on Form 10-QSB
INDEX
Page #
Part 1:
FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of December 31, 1998
and June 30, 1998 3
Statements of Operations and Retained Earnings
for the Six and Three Months Ended
December 31, 1998 and 1997 4
Statements of Cash Flows for the Six and
Three Months Ended December 31, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Part II:OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders 9
Item 6.Exhibits and Reports on Form 8-K
a) Exhibits 9
b) Reports on Form 8-K
Signatures 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LOGITEK, INC
BALANCE SHEETS
ASSETS December 31,1998 June 30, 1998
Current Assets: (unaudited)
Cash $491,851 $429,713
Accounts Receivable 625,835 676,704
Inventories (Note 2) 1,121,104 1,061,103
Prepaid expenses and other 33,025 15,332
Total Current Assets 2,271,815 2,182,852
Property and equipment, less
accumulated depreciation 636,334 680,134
Other Assets:
Deferred Income Taxes, State 7,000 7,000
Goodwill 34,441 34,441
Other 47,550 48,695
Total Assets $2,997,140 $2,953,122
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current portion of long-term debt $58,452 $90,525
Capitalized lease obligation, current 23,879 22,123
Accounts payable 367,284 324,736
Accrued expenses 139,603 194,398
Total current liabilities 589,218 631,782
Capitalized lease obligation,
less current portion 59,878 75,350
Long-term debt, less current maturities 278,776 300,360
Deferred income taxes 52,000 52,000
Total Liabilities 979,872 1,059,492
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized
10,000,000 shares; issued 3,600,000 shares 36,000 36,000
Capital in excess of par value 280,355 280,355
Retained earnings 1,721,121 1,597,483
Sub-total 2,037,476 1,913,838
Less:
Treasury shares,at cost,187,941 shares (20,208) (20,208)
Total stockholders' equity 2,017,268 1,893,630
Total liabilities and stockholders' equity $2,997,140 $2,953,122
See notes to the financial statements.
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LOGITEK, INC
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
For the Three and Six Months Ended December 31, 1998 and 1997
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
Net sales $1,220,949 $1,209,400 $2,310,854 $2,310,262
Cost of goods sold 719,298 757,353 1,427,940 1,409,486
Gross profit 501,651 452,047 882,914 900,776
Operating expenses:
Selling 114,536 72,997 192,644 164,913
General and
administrative 187,494 152,763 349,415 351,119
Research and development 95,805 40,221 151,110 77,920
Total operating expenses 397,835 265,981 693,169 593,952
Income (loss) from operations 103,816 186,066 189,745 306,824
Other (income) expense:
Interest expense, net 17,325 12,245 31,107 28,565
Total other (income) expense 17,325 12,245 31,107 28,565
Income (loss) before
provision for income taxes 86,491 173,821 158,638 278,259
Provision for income taxes 15,000 70,000 35,000 114,000
Net Income (Loss) 71,491 103,821 123,638 164,259
Retained earnings ,
beginning of period 1,649,630 1,257,131 1,597,483 1,196,693
Retained earnings,
end of period $1,721,121 $1,360,952 $1,721,121 $1,360,952
Per share amounts
Net Income (loss) $0.02 $0.03 $0.04 $0.05
Weighted average shares
outstanding 3,375,731 3,412,059 3,375,731 3,412,059
See notes to financial statements.
<PAGE>
LOGITEK INC.
STATEMENTS OF CASH FLOWS
For the Three and Six Months Ended December 31,1998 and 1997
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
Net income (loss) $71,491 $103,821 $123,638 $164,259
Adjustments to reconcile net
income (loss) to cash provided
(used) by operations:
Depreciation 21,900 23,250 43,800 46,500
Accounts Receivable (20,936) (337,884) 50,869 (289,394)
Inventories (62,500) (55,501) (60,001) (10,211)
Prepaid expenses and other (21,168) (27,409) (17,693) 1,459
Other assets 99 1,136 1,145 908
Accounts Payable 65,293 41,966 42,548 (28,025)
Accrued Expenses 53,993 80,194 (54,795) 24,983
Deferred taxes 0 30,000 0 40,000
Total adjustments 36,681 (244,248) 5,873 (213,780)
Net cash provided(used) by
operating activities 108,172 (140,427) 129,511 (49,521)
Cash flows from investing activities:
Purchase of equipment 0 0 0 0
Net cash provided by
investing activities 0 0 0 0
Cash flows from financing activities:
Repayment of long term debt (32,010) (34,699) (53,657) (71,795)
Capitalized lease obligation (9,144) (7,439) (13,716) (10,537)
Net cash (used) by
financing activities (41,154) (42,138) (67,373) (82,332)
Net increase (decrease) in cash 67,018 (182,565) 62,138 (131,853)
Cash, beginning of period 424,833 444,509 429,713 393,797
Cash,end of period 491,851 261,944 491,851 261,944
Supplemental disclosures:
Cash paid for :
Interest $16,503 $18,546 $30,285 $35,510
See notes to financial statements
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
LOGITEK, INC.
Notes to Financial Statements
Note 1 - Basis of Presentation
The financial statements included herein have been prepared by the Company,
without audit,pursuant to the rules and regulations of the Securities and
Exchange Commission and reflect all adjustments which are, in the opinion of
management, necessary to present fairly the information required therein.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations, although management believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-KSB filed with the Securities
and Exchange Commission for the year ended June 30, 1998.
The results of operations for the three and six months ended December 31,
1998 are not necessarily indicative of the results of operations to be
expected for the full year.
NOTE 2 - Inventories
Inventories consisted of the following:
December 31,1998 June 30,1998
Raw materials $579,118 $547,117
Work-in-process 355,760 347,760
Finished goods 186,226 166,226
Total $1,121,104 $1,061,103
For the six months ended December 31, 1998 the Company used the gross
profit method to calculate ending inventory values.
Note 3 - Provision for Income Taxes
Income taxes were different from the amounts computed by applying the
federal income tax rate to the income before taxes due to the following:
Three Months Ended Six Months Ended
12/31/98 12/31/97 12/31/98 12/31/97
Statutory rate 34% 34% 34% 34%
State income taxes, net of
federal tax benefit 2 4 2 4
General Business Credit (19) (6) (14) (6)
Deferred Tax Provision 0 8 0 8
Effective Tax Rate 17% 40% 22% 40%
CONDITION AND RESULTS OF OPERATIONS
The following table presents selected financial information for the periods
December 31,1998 and 1997, respectively.
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
Net sales $1,220,949 $1,209,400 $2,310,854 $2,310,262
Gross profit $501,651 $452,047 $882,914 $900,776
Gross margin 41.1% 37.4% 38.2% 38.9%
Operating expenses $397,835 $265,981 $693,169 $593,952
Net income $71,491 $103,821 $123,638 $164,259
Net income per share $0.02 $0.03 $0.04 $0.05
General
Logitek, Inc. (the "Company") reported a profit of $123,638 for the six
months ended December 31, 1998 versus a profit of $164,259 for the prior
year period.For the quarter ended December 31, 1998 the Company reported a
profit of $71,491 compared to a profit of $103,821 for the prior year
quarter. The Company's sales backlog is approximately $2,000,000 at
December 31,1998.This represents a decrease from prior periods. The Company
is awaiting orders from customers that have been delayed until completion
of special designs for several significant programs. The Company believes
that ongoing repeat business for these prograams will materialize in the near
term. Other programs in which the special designs have already been completed
are also experiencing delay in order placement.It is expected that these
situations will be cleared during the third quarter at which time backlog
should return to expected levels.In the meantime, the Comapny expects lower
sales levels during the third and possibly fourth quarters.
Results of Operations
Net sales for the first six months of fiscal 1998 were $2,310,854 compared
to $2,310,262, or an increase of $592. Net sales for the quarter ended
December 31, 1998 were $1,220,949 compared to $1,209,400 or an increase of
$11,549.
Gross profit decreased to 38.2% in the current six month period compared to
38.9% for the prior year. This decrease is considered minor and the Company
believes its margins will remain strong in the future.
Operating expenses for the six months ended December 31, 1998 increased
$99,217.This occurred as a result of additional selling and research and
development costs. The selling expense is primarily advertising costs.
The research costs are being incurred as the Company is undertaking product
modifications , for major customers specifications. These are the orders
discussed above which the Company believes will be coming in the near term.
While it is generally management's policy not to undertake special design
efforts, the significance of these programs warrants these efforts.
Liquidity
As of December 31, 1998 and June 30, 1998 the Company had cash on hand of
$491,851 and $429,713 respectively; and, as of December 31, 1998 the
Company's current ratio was 3.86 compared to 3.46 as of June 30, 1998.
Total borrowings were $420,985 at December 31, 1998, $488,358 at June 30,
1998 and $516,084 at December 31, 1997.
The Company does not anticipate any new borrowings, however, if the need
arises to purchase equipment in its continuing effort to modernize its
manufacturing capability it is he Company's intention to lease such
equipment rather than purchase in order to conserve as much cash as possible.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's regularly scheduled Annual Meeting held on November 30,1998
the following votes were recorded:
1.To elect a board of three directors, each to serve for a term of one year
or until his successor shall have been duly elected and qualified:
Votes Cast
For Against Abstained
Herbert L. Fischer 3,112,945 500 0
Howard Fein 3,112,945 500 0
Francis Vuccii 3,112,945 500 0
2. To elect Marcum & Kliegman, Certified Public Accountants as the Company's
independent certified accountants:
Votes Cast
For Against Abstained
3,112,945 500 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - There are no exhibits being filed with this report.
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of The Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOGITEK, INC.
Registrant
Date: 2/16/99 By: /s/ Herbert L. Fischer
Herbert L. Fischer
President and
Chief Executive Officer
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<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
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<SECURITIES> 0
<RECEIVABLES> 625,835
<ALLOWANCES> 0
<INVENTORY> 1,121,104
<CURRENT-ASSETS> 2,271,815
<PP&E> 636,334
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,997,140
<CURRENT-LIABILITIES> 589,218
<BONDS> 0
0
0
<COMMON> 36,000
<OTHER-SE> 1,981,268
<TOTAL-LIABILITY-AND-EQUITY> 2,997,140
<SALES> 2,310,854
<TOTAL-REVENUES> 2,310,854
<CGS> 1,427,940
<TOTAL-COSTS> 693,169
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,107
<INCOME-PRETAX> 158,638
<INCOME-TAX> 35,000
<INCOME-CONTINUING> 123,638
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123,638
<EPS-PRIMARY> .04
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