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 March 31, 1999
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
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01, 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.
<PAGE>
LOGITEK, INC.
Quarterly Report on Form 10-QSB
INDEX
Page #
Part 1:FINANCIAL INFORMATION
Item 1.Financial Statements
Balance Sheets as of March 31, 1999 and June 30, 1998 3
Statements of Operations and Retained Earnings for the
Nine and Three Months Ended March 31, 1999 and 1998 4
Statements of Cash Flows for the Nine and Three Months
Ended March 31, 1999 and 1998 5
Notes to Financial Statements 6
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II:OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders
Item 6.Exhibits and Reports on Form 8-K
a) Exhibits 9
b) Reports on Form 8-K 9
Signatures 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LOGITEK, INC
BALANCE SHEETS
ASSETS March 31, June 30
1999 1999
(unaudited)
Current Assets:
Cash $393,526 $429,713
Accounts Receivable 599,557 676,704
Inventories (Note 2) 1,123,604 1,061,103
Prepaid expenses and other 37,988 15,332
Total Current Assets 2,154,675 2,182,852
Property and equipment, less
accumulated depreciation 614,434 680,134
Other Assets:
Deferred Income Taxes, State 7,000 7,000
Goodwill 34,441 34,441
Other 41,585 48,695
Total Assets 2,852,135 2,953,122
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current portion of debt $47,395 $90,525
Capitalized lease obligation 24,405 22,123
Accounts payable 265,475 324,736
Accrued expenses 119,829 194,398
Total current liabilities 457,104 631,782
Capitalized lease obligation,less current portion 57,481 75,350
Long-term debt, less current maturities 265,093 300,360
Deferred income taxes 52,000 52,000
Total Liabilities 831,678 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 1,724,310 1,597,483
Sub-total 2,040,665 1,913,838
Less:Treasury shares, at cost, 176,000 shares (20,208) (20,208)
Total stockholders' equity 2,020,457 1,893,630
Total liabilities and stockholders' equity$2,852,135 $2,953,122
See notes to the financial statements.
<PAGE>
LOGITEK, INC
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
For the Three and Nine Months Ended March 31, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
Net sales $1,002,260 $1,249,888 $3,313,114 $3,560,150
Cost of goods sold 678,099 703,348 2,106,039 2,112,834
Gross profit 324,161 546,540 1,207,075 1,447,316
Operating expenses:
Selling 66,575 84,928 259,219 249,841
General and
administrative 183,606 203,770 533,021 554,889
Research and development 53,638 52,834 204,748 130,754
Total operating expenses 303,819 341,532 996,988 935,484
Income (loss) from operations 20,342 205,008 210,087 511,832
Other (income) expense:
Interest expense, net 17,156 11,899 48,263 40,464
Legal settlement (Note 4) 0 0 0 0
Total other (income) expense 17,156 11,899 48,263 40,464
Income (loss) before
provision for income taxes 3,186 193,109 161,824 471,368
Provision for income taxes
(Note 3) 0 70,000 35,000 184,000
Net income (loss) 3,186 123,109 126,824 287,368
Retained earnings,
beginning of period 740,826 568,165 612,152 517,919
Retained earnings,
end of period 1,724,310 1,484,059 1,724,310 1,484,059
Per share amounts
Net income (loss) $0.00 $0.03 $0.04 $0.08
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 Nine and Three Months Ended March 31, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
Net income (loss) $3,186 $123,109 $126,824 $287,368
Adjustments to reconcile net
income (loss) to cash provided
(used) by operations:
Depreciation 21,900 23,250 65,700 69,750
Accounts receivable 26,278 150,981 77,147 (138,413)
Inventories (2,500) 30,500 (62,501) 20,289
Prepaid expenses and other (4,910) 13,517 (22,651) 14,973
Other assets 5,915 (4,241) 7,110 (3,333)
Accounts payable (101,809) (76,039) (59,261)(104,064)
Accrued expenses (19,774) 85,159 (74,569) 109,955
Deferred taxes 0 10,000 0 50,000
Total adjustments (74,900) 233,127 (69,025) 19,157
Net cash provided (used) by
operating activities (71,714) 356,236 57,799 306,525
Cash flows from investing activities:
Acquisition of equipment 0 (25,992) 0 (25,992)
Net cash provided by
investing activities 0 (25,992) 0 (25,992)
Cash flows from financing activities:
Repayment of long-term debt (24,740) (38,137) (78,397)(109,742)
Capitalized lease obligation (1,871) (6,245) (15,589) (16,782)
Net cash (used) by
financing activities (26,611) (44,382) (93,986)(126,524)
Net increase (decrease)in cash (98,325) 285,862 (36,187) 154,009
Cash, beginning of period 491,851 261,944 429,713 393,797
Cash, end of period $393,526 $547,806 $393,526 $547,806
Supplemental disclosures:
Cash paid for:
Interest $17,156 $11,899 $48,263 $40,464
See notes to financial statements.<PAGE>
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 nine months ended March 31, 1999
are not necessarily indicative of the results of operations to be expected
for the full year.
NOTE 2 - Inventories
Inventories consisted of the following:
March 31, June 30,
1999 1998
Raw materials $609,618 $547,117
Work-in-process 347,760 347,760
Finished goods 166,226 166,226
Total $1,123,604 $1,061,103
For the three and nine months ended March 31,1999 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 Nine Months Ended
3/31/99 3/31/98 3/31/99 3/31/98
Statutory rate 34% 34% 34% 34%
State income taxes,net of
federal tax benefit 2 4 2 4
Deferred Tax Provision 0 6 0 10
General business credit (36) (8) (14) (9)
Effective tax rate 00% 36% 22% 39%
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table presents selected financial information for the periods
March 31, 1999 and 1998, respectively.
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
Net sales $1,002,260 $1,249,888 $3,313,114 $3,560,150
Gross profit $324,161 $546,540 $1,207,075 $1,447,316
Gross margin 32.3% 43.7% 36.4% 40.7%
Operating expenses $303,819 $341,532 $996,988 $935,484
Legal settlement income - - - -
Net income (loss) $3,186 $123,109 $126,824 $287,368
General
Logitek, Inc. (the "Company") reported a profit of $126,824 for the nine
months ended March 31, 1999 versus a profit of $287,368 for the prior year
period.For the quarter ended March 31, 1999 the Company reported a profit of
$3,186 compared to a profit of $123,109 for the prior year quarter.
Results of Operations
Net sales for the first nine months of fiscal 1999 were $3,313,114 compared
to $3,560,150 or a decrease of $247,036. Net sales for the quarter ended
March 31, 1999 were $1,002,260 compared to $1,249,888 or an decrease of
$247,628.
Gross profit decreased to 36.4% in the current nine month period compared
to 40.7% for the prior year. This decrease is attributable to decreased
sales with similar manufacturing overhead.
Operating expenses for the nine months ended March 31, 1999 increased $61,504.
This occurred as a result of additional general and administrative overhead
incurred.
Liquidity
As of March 31, 1999 and June 30, 1998 the Company had cash on hand of
$393,526 and $429,713, respectively; and, as of March 31, 1999 the Company's
current ratio was 4.71 compared to 3.46 as of June 30, 1998. Total
borrowings were $394,374 at March 31, 1999,and $ 488,358 at June 30, 1998.
This represents a decrease of $93,984.
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 the 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. Exhibits and Reports on Form 8-K
a) Exhibits- There are no exhibits being filed with this report
b) Reports on Form 8-K
On March 30,1999 Logitek announced that it had entered into an
Agreement and Plan of Merger dated March 29,1999(the "Merger Agreement")
with Herbert L. Fischer,solely in his capacity as trustee of, and on behalf
of,the trust forming a part of the Logitek's Employee Stock Ownership Plan,
North Atlantic Instruments, Inc., a New York corporation ("North Atlantic")
and NAI, Inc., a New York corporation and wholly owned subsidiary of North
Atlantic (" Merger Sub").
Pursuant to the Merger Agreement, Merger Sub will be merged
with and into Logitek with Logitek continuing as the surviving corporation
and becoming a wholly owned subsidiary of North Atlantic. Each shareholder
of Logitek, at the effective time of the merger, will receive $.915 per
share,in cash,without interest, subject to adjustment based on the net worth
of Logitek, in accordance with the provisions of the Merger Agreement.
Consumnation of the merger is subject to the approval of the shareholders of
Logitek and to certain specified closing conditions.
<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: 5/12/99 By: Herbert L. Fischer
President and
Chief Executive Officer
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<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 393,526
<SECURITIES> 0
<RECEIVABLES> 599,557
<ALLOWANCES> 0
<INVENTORY> 1,123,604
<CURRENT-ASSETS> 2,154,675
<PP&E> 614,434
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,852,135
<CURRENT-LIABILITIES> 457,104
<BONDS> 0
0
0
<COMMON> 36,000
<OTHER-SE> 2,004,665
<TOTAL-LIABILITY-AND-EQUITY> 2,852,135
<SALES> 3,313,114
<TOTAL-REVENUES> 3,313,114
<CGS> 2,106,039
<TOTAL-COSTS> 996,988
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,263
<INCOME-PRETAX> 161,824
<INCOME-TAX> 35,000
<INCOME-CONTINUING> 126,824
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126,824
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
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