<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended: December 31, 1997
Commission File Number: 1-9605
Media Logic, Inc.
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2772354
- ----------------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
310 South Street, P.O. Box 2258, Plainville, MA 02762
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(508) 695-2006
-------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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.
X Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.01 par value per share--11,081,076 shares issued and
outstanding as of February 9, 1998.
<PAGE>
INDEX
MEDIA LOGIC, INC.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements (Unaudited)
Consolidated condensed balance sheets--December 31, 1997 and March 31, 1997
Consolidated condensed statements of operations--three and nine months ended
December 31, 1997 and 1996
Consolidated condensed statements of cash flows--nine months ended December
31, 1997 and 1996
Notes to consolidated condensed financial statements--December 31, 1997
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
MEDIA LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1997
------------ -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................................... $1,357,739 $ 2,382,875
Accounts receivable, net...................................... 382,259 813,993
Inventories................................................... 3,772,088 3,563,482
Prepaid expenses and other current assets..................... 4,230 1,000
----------- -------------
Total current assets....................................... 5,516,316 6,761,350
PROPERTY AND EQUIPMENT, net.................................... 318,170 469,080
DEFERRED FINANCING COSTS....................................... 1,451,659 1,711,829
OTHER ASSETS................................................... 31,364 30,696
----------- -------------
$7,317,509 $ 8,972,955
----------- -------------
----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.............................................. $482,423 $ 1,107,732
Accrued expenses.............................................. 166,728 293,238
----------- -------------
Total current liabilities.................................. 649,151 1,400,970
CONVERTIBLE SUBORDINATED DEBENTURES............................ 1,009,232 3,266,663
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share; 20,000,000 shares
authorized; 10,253,660 and 6,320,909 shares issued and
outstanding as of December 31, 1997 and March 31, 1997,
respectively................................................. 102,537 63,209
Additional paid-in capital..................................... 24,941,168 20,577,945
Accumulated deficit............................................(19,384,579) (16,335,832)
----------- -------------
Total stockholders' equity................................. 5,659,126 4,305,322
----------- -------------
$7,317,509 $ 8,972,955
------------ -------------
------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<PAGE>
PART I. FINANCIAL INFORMATION
MEDIA LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
----------- ------------- ------------- -------------
NET SALES............................................... $ 450,749 $ 897,376 $ 1,218,375 $ 2,972,809
COSTS AND EXPENSES:
Cost of products sold.................................. 261,818 739,535 753,110 2,017,060
Selling, general and administrative expenses........... 644,210 883,465 1,926,134 2,820,786
Research and development expenses...................... 279,824 463,436 959,076 1,316,292
----------- ------------- ------------- -------------
LOSS FROM OPERATIONS.................................... $ (735,103) $ (1,189,060) $ (2,419,945) $ (3,181,329)
OTHER INCOME (EXPENSE):
Interest income........................................ 0 -- 18,897 73,035
Interest expense-convertible debentures................ (215,993) -- (653,278) --
Other.................................................. 979 1,273 5,579 (4,808)
----------- ------------- ------------- -------------
LOSS BEFORE INCOME TAXES................................ $ (950,117) $ (1,187,787) $ (3,048,747) $ (3,113,102)
PROVISION FOR INCOME TAXES.............................. -- -- -- 46,122
----------- ------------- ------------- -------------
NET LOSS................................................ $ (950,117) $ (1,187,787) $ (3,048,747) $ (3,159,224)
----------- ------------- ------------- -------------
----------- ------------- ------------- -------------
BASIC AND DILUTED LOSS PER SHARE (NOTE 3)............... $ (.11) $ (.19) $ (.42) $ (.50)
----------- ------------- ------------- -------------
----------- ------------- ------------- -------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING.... 8,330,927 6,315,439 7,236,279 6,255,950
----------- ------------- ------------- -------------
----------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<PAGE>
PART I. FINANCIAL INFORMATION
MEDIA LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
----------------------------
<S> <C> <C>
1997 1996
------------- -------------
CASH (USED) BY OPERATING ACTIVITIES................................................. $ (2,812,318) $ (3,239,991)
------------- -------------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES:
Sale (purchase) of property and equipment, net...................................... (9,663) (115,100)
(Increase) in other assets.......................................................... (668) --
------------- -------------
(10,331) (115,100)
------------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES:
Exercise of stock options........................................................... 1,200 117,277
Net proceeds from issuance of convertible debentures................................ 607,342 --
Net proceeds from issuance of common stock.......................................... 1,188,971 --
Issuance of common stock upon conversion of debentures.............................. 2,919,806 --
Decrease in debentures upon conversion.............................................. (2,919,806) --
------------- -------------
1,797,513 117,277
------------- -------------
NET INCREASE (DECREASE) IN CASH..................................................... (1,025,136) (3,237,814)
CASH BALANCE, BEGINNING OF PERIOD................................................... 2,382,875 3,545,477
------------- -------------
CASH BALANCE, END OF PERIOD......................................................... $ 1,357,739 $ 307,663
------------- -------------
------------- -------------
</TABLE>
<PAGE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
PART I. FINANCIAL INFORMATION
MEDIA LOGIC, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 1997
(1) OPERATIONS AND BASIS OF PRESENTATION
Media Logic, Inc. (the "Company") designs and manufactures tape-based data
storage libraries targeted at the information needs of small to mid-sized
businesses. The Company also supplies evaluation equipment for flexible computer
disks and tape, and manufactures and sells industrial duplication equipment for
high volume and high reliability applications.
As permitted by the rules of the Securities and Exchange Commission
applicable to quarterly reports on Form 10-Q, these notes are condensed and
do not contain all disclosures required by generally accepted accounting
principles. Reference should be made to the consolidated financial statements
and related notes included in the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1997 and the Company's Quarterly Reports on
Form 10-Q for the quarterly periods ended June 30, 1997 and September 30,
1997.
In the opinion of the Company's management, the accompanying consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring items) necessary to present fairly the Company's financial
position at December 31, 1997, and the results of its operations and its cash
flows for the nine months ended December 31, 1997 and December 31, 1996.
(2) INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Raw materials................................................................. $ 1,873,399 $ 1,808,917
Work in process............................................................... 160,082 168,762
Finished goods................................................................ 1,738,607 1,585,803
----------------- --------------
$ 3,772,088 $ 3,563,482
----------------- --------------
----------------- --------------
</TABLE>
(3) LOSS PER SHARE
Net loss per share is computed by dividing the net loss by the weighted
average number of shares of common stock outstanding during the period. Common
stock equivalents were not considered in the determination of net loss per share
as their inclusion would be anti-dilutive.
(4) CONVERTIBLE DEBENTURES
On March 24, 1997, the Company issued 7% convertible subordinated debentures
(the "Debentures") with gross proceeds of $3,530,000. Each debenture has a face
amount of $10,000 and bears interest at 7% per annum. Interest is payable upon
conversion or redemption of the Debentures and is payable in either cash or
shares of common stock at the average market price of common stock over the five
days preceding the conversion dates, at the option of the Company.
<PAGE>
The Debentures are convertible at the option of the holder into common stock
of the Company. In connection with the Company's private placement of common
stock in December 1997, on December 29, 1997, all of the remaining holders of
the Debentures and the Company agreed to set a fixed conversion price for the
Debentures of $.90 per share of common stock until January 28, 1998 and
thereafter of the lower of (i) $2.805, which amount is 120% of the average
closing bid price of the common stock as calculated over the five trading-day
period ending on March 21, 1997 and (ii) 80% of the average closing bid price of
the common stock as calculated over the five trading-day period immediately
preceding the date of conversion, subject to a $.90 per share minimum conversion
price. The Debentures mature on March 24, 2000 and automatically convert on that
date at the then current conversion price.
In connection with the issuance of the Debentures, the Company issued
warrants to purchase 1,550,870 shares of common stock at $3.00 per share and
200,000 shares of common stock at $2.00 per share. 650,870 of the warrants to
purchase shares of common stock at an exercise price of $3.00 per share are
exercisable at any time prior to September 22, 2001 and 900,000 of such warrants
are exercisable at any time on or prior to March 24, 2002.
The Company recognized the estimated fair value of the warrants based on the
Black-Scholes valuation model and the guaranteed return conversion feature
attributable to the Debentures as deferred financing costs with an increase to
additional paid-in capital. These amounted to $1,228,000 along with actual cash
financing costs of approximately $484,000. Deferred financing costs are being
amortized over three years, the stated term of the Debentures, and are included
in "Interest expense-convertible debentures", which is a non-cash expense, in
the accompanying Consolidated Condensed Statements of Operations. To the extent
that the Debentures are converted, any unamortized deferred financing costs will
be charged against additional paid-in capital.
On October 29, 1997, the Company issued 7% convertible debentures ("the
October Debentures") with gross proceeds of $750,000. The October Debentures
mature on October 29, 2000 and are convertible into the Company's common
stock prior to that date at the option of the holder at a conversion price
equal to $.90 per share until January 28, 1998 and thereafter equal to the
lower of (i) 80% of the average closing bid price for the common stock for
the five days prior to the conversion date and (ii) $1.95 per share, subject
to a $.90 per share minimum conversion price. In connection with the issuance
of the October Debentures, the Company issued warrants to purchase 500,000
shares of common stock at $2.00 per share, with an expiration date of January
25, 2003. The Company recognized the estimated fair value of the warrants
based on the Black-Scholes valuation model and the guaranteed return
conversion feature as deferred financing costs with an increase to additional
paid-in capital. These amounted to approximately $342,000, with actual cash
financing costs of approximately $142,000, and are being amortized over three
years, the stated term of the October Debentures, and are included in
"Interest expense-convertible debentures", which are a non-cash expense, in
the accompanying Consolidated Condensed Statements of Operations. Unamortized
deferred financing costs will be charged against additional paid-in capital
to the extent that the October Debentures are converted.
<PAGE>
(5) COMMON STOCK
On December 29, 1997, the Company sold 1,700,000 shares of common stock (the
"December Private Placement") with gross proceeds of $1,530,000. Costs
associated with this financing of approximately $340,000 were charged to
additional paid-in capital. In connection with the December Private Placement,
the Company issued warrants to purchase 1,000,000 shares of common stock at an
exercise price of $3.00 per share and warrants to purchase 1,000,000 shares of
common stock at an exercise price of $1.50 per share. The Company is also
obligated to issue warrants to purchase an aggregate of 500,000 shares of common
stock at an exercise price of $2.00 per share to the placement agents for the
December Private Placement.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Three and Nine Months Ended December 31, 1997 Compared to Three and
Nine Months Ended December 31, 1996
Results of Operations
Sales:
Sales for the three and nine month periods ended December 31, 1997 were
$450,749 and $1,218,375 as compared with $897,376 and $2,972,809 for the three
and nine month periods ended December 31, 1996, representing sales decreases
from the three and nine month periods ended December 31, 1996 of 49.8%
and 59.0%, respectively. Demand for the Company's traditional products continues
to decline, while increasing sales of the Company's Automated Data Library
("ADL") line have not been sufficient to offset this decline.
The Company is primarily focused on the sale of its ADL products. The
Company is also continuing to pursue its traditional product lines, which
includes not only the sale of new certification, test and duplication equipment
but also upgrades, spare parts and maintenance for previously sold units.
Gross Profit:
Gross profit for the three and nine months ended December 31, 1997 was
$188,931 (41.9%) and $465,265 (38.2%) as compared with $157,841 (17.6%) and
$955,749 (32.1%) for the three and nine months ended December 31, 1996.
Expenses:
Selling, general and administrative ("SG&A") expenses for the three and nine
months ended December 31, 1997 were $644,210 (142.9% of sales) and $1,926,134
(158.1% of sales) as compared with $883,465 (98.4% of sales) and $2,820,786
(94.9% of sales) for the three and nine months ended December 31, 1996. The
Company's total SG&A expenses have been significantly reduced by the Company's
consolidation of all ADL operations in Plainville, MA.
Research and development ("R&D") expenses for the three and nine month
periods ended December 31, 1997 were $279,824 (62.1% of sales) and $959,076
(78.7% of sales) as compared to $463,436 (51.6% of sales) and $1,316,292 (44.3%
of sales) for the three and nine month periods ended December 31, 1996. All of
the Company's R&D expenses for the three and nine months ended December 31, 1997
were related to the development of the ADL product line. During the quarter
ended September 30, 1997, all R&D operations were consolidated in Plainville,
resulting in a decline in R&D expenses.
Interest expense-convertible debentures, a non-cash item, represents the
amortization of assigned deferred costs in accordance with generally accepted
accounting principles in conjunction with the issuance of the Company's 7%
Convertible Subordinated Debentures and 7% Convertible Debentures. See Note 4
of Notes to Consolidated Condensed Financial Statements (Unaudited).
<PAGE>
Liquidity and Capital Resources:
At December 31, 1997, the Company had working capital of $4.7 million
compared to $5.4 million at March 31, 1997. The current ratio was 8.5 to 1 as of
December 31, 1997 and 4.8 to 1 as of March 31, 1997. The decrease in working
capital is principally due to significant operating losses and funding of the
development and introduction to the marketplace of the ADL family of products.
On March 24, 1997, the Company issued $3,530,000 aggregate principal
amount of 7% Convertible Subordinated Debentures (the "Debentures"), in a
private placement exempt from registration under Regulation D under the
Securities Act of 1933, as amended, (the "Securities Act"). The Debentures
mature on March 24, 2000 and are convertible into the Company's common stock
prior to that date at the option of the holder. In connection with the
Company's private placement of common stock in December 1997, all of the
remaining holders of the Debentures and the Company agreed to set a fixed
conversion price for the Debentures of $.90 per share of common stock until
January 28, 1998 and thereafter at the lower of (i) $2.805, which amount is
120% of the average closing bid price of the common stock as calculated over
the five trading-day period ending on March 21, 1997 and (ii) 80% of the
average closing bid price of the common stock as calculated over the five
trading-day period immediately preceding the date of conversion, subject to a
$.90 per share minimum conversion price. In connection with the issuance of the
Debentures, the Company issued warrants to purchase 1,550,870 shares of
common stock at an exercise price of $3.00 per share and warrants to purchase
200,000 shares of common stock at $2.00 per share. During the quarter ended
September 30, 1997, Debentures aggregating $1,770,000, plus accrued interest,
were converted into 1,341,788 shares of the Company's common stock. During
the quarter ended December 31, 1997, Debentures aggregating $1,060,000, plus
accrued interest, were converted into 890,363 shares of the Company's common
stock. Subsequent to December 31, 1997, Debentures aggregating $700,000, plus
accrued interest, were converted into 807,416 shares of the Company's common
stock. All of these Debentures have now been converted.
On October 29, 1997, the Company issued $750,000 aggregate principal
amount of 7% Convertible Debentures (the "October Debentures") in a private
placement exempt from registration under Regulation D under the Securities
Act, with gross proceeds of $750,000. The October Debentures mature on
October 29, 2000 and are convertible into the Company's common stock prior to
that date at the option of the holder at a conversion price equal to $.90 per
share until January 28, 1998 and thereafter equal to the lower of (i) 80% of
the average closing bid price for the common stock for the five days prior to
the conversion date, and (ii) $1.95 per share, subject to a $.90 per share
minimum conversion price. In connection with the issuance of the October
Debentures, the Company issued warrants to purchase 500,000 shares of common
stock at an exercise price of $2.00 per share.
On December 29, 1997, the Company sold 1,700,000 shares of common stock in a
private placement (the "December Private Placement") exempt from registration
under Regulation D under the Securities Act, with gross proceeds of $1,530,000.
Costs associated with this financing of approximately $340,000 were charged to
additional paid-in capital. In connection with the
<PAGE>
December Private Placement, the Company issued warrants to purchase 1,000,000
shares of common stock at an exercise price of $3.00 per share and warrants
to purchase 1,000,000 shares of common stock at an exercise price of $1.50
per share. The Company is also obligated to issue warrants to purchase an
aggregate of 500,000 shares of common stock at an exercise price of $2.00 per
share to the placement agents for the December Private Placement.
The Company, because of its continuing losses from operations, anticipates
that, unless revenues increase significantly, it will not have sufficient cash
resources for the next twelve months and it will require additional capital in
order to continue its operations. The Company has no assurance that it will be
able to raise such additional capital, if needed, in a timely manner or on
favorable terms, if at all. If the Company is unable to increase revenues
significantly and/or secure additional financing, the Company could be forced to
curtail or discontinue its operations. The Company does not fully satisfy all of
the American Stock Exchange guidelines for continued listing and there is no
assurance listing will be continued.
The Company continually monitors the changing business conditions and takes
whatever actions it deems necessary to protect and promote the Company's
interests.
Uncertainties
The discussion in this report which express "belief", "anticipation",
"plans", "expectation", "future" or "intention" as well as other statements
which are not historical fact are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and involve a
number of risks and uncertainties. The Company's actual results could differ
significantly from the results discussed in these forward-looking statements.
Factors that could cause future results to differ materially from such
expectations include, but are not limited to: the uncertainty surrounding the
Company's change in product base from floppy disk/magnetic tape certifiers
and evaluators to automated data libraries: the Company's limited experience
in manufacturing, marketing and selling automated data libraries and the risk
that the Company's new products may not be able to be marketed at acceptable
prices or receive commercial acceptance in the markets that the Company
expects to target; the loss of the services of one or more of the Company's
key individuals, which could have a material adverse impact on the Company;
the development of competing or superior technologies and products from
competitors, many of whom have substantially greater financial, technical and
other resources than the Company; the cyclical nature of the computer
industry; the availability of additional capital to fund continued operations
on acceptable terms, if at all; and, general economic conditions in both the
United States and overseas markets. As a result, the Company's future
operations involve a high degree of risk.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
NONE
Item 2. CHANGES IN SECURITIES
During the quarter ended December 31, 1997, 890,363 shares of the Company's
common stock were issued upon the conversion of an aggregate of $1,060,000
principal amount of 7% Convertible Subordinated Debentures, plus interest.
Subsequent to December 31, 1997, 807,416 shares of the Company's common
stock were issued upon the conversion of an aggregate of $700,000 principal
amount of 7% Convertible Subordinated Debentures, plus interest.
On October 29, 1997, the Company sold $750,000 aggregate principal amount
of 7% Convertible Debentures (the "October Debentures") to an accredited
investor, F.T.S. Worldwide Corporation ("FTS"), in a private placement (the
"October Financing") exempt from registration pursuant to Rule 506 of
Regulation D under the Securities Act of 1993, as amended (the "Securities
Act") for gross proceeds of $750,000. The principal amount of the October
Debentures is convertible into shares of the Company's common stock based on
a predetermined formula. The price at which the October Debentures will
convert will be $.90 per share until January 28, 1998 and thereafter will be
the lower of (i) $1.95 and (ii) 80% of the average closing bid price of the
common stock as calculated over the five trading-day period immediately
preceding the date of conversion, subject to a $.90 per share minimum
conversion price. The October Debentures bear interest at a rate of 7% per
year. Interest is payable only upon conversion of the October Debentures and,
at the Company's option, is payable either in cash or in shares of the
Company's common stock based on the average closing sale price of the common
stock as calculated over the five trading-day period ending on the trading
day immediately preceding the date of conversion. In connection with the
October Financing, the Company issued warrants to purchase 500,000 shares of
common stock which are exercisable at any time during the period commencing
January 26, 1998 and ending January 25, 2003 at an exercise price of $2.00
per share.
On December 29, 1997, the Company sold an aggregate of 1,700,000 shares
of common stock to two accredited investors, Imprimis SB L.P. and Wexford
Spectrum Investors LLC (together,"Wexford"), for gross proceeds of $1,530,000
in a private placement (the "December Financing") exempt from registration
pursuant to Rule 506 of Regulation D under the Securities Act. For so long as
Wexford and its affiliates own at least 5% of the issued and outstanding
common stock of the Company on a fully diluted basis, the Company may not
make any distributions or pay any dividends to its stockholders without the
prior written consent of Wexford. In connection with the December Private
Placement, the Company issued warrants (the
<PAGE>
"Wexford Warrants") to purchase an aggregate of 2,000,000 shares of common
stock. 1,000,000 of such warrants are exercisable at an exercise price of $3.00
per share and 1,000,000 of such warrants are exercisable at an exercise price of
$1.50 per share. The Wexford Warrants may be exercised at any time prior to
December 29, 2002. The Company is also obligated to issue warrants (the
"December Warrants") to purchase an aggregate of 500,000 shares of common stock
at an exercise price of $2.00 per share to the placement agents for the December
Private Placement. The December Warrants will be exercisable at any time during
the period commencing March 29, 1998 and ending March 29, 2003.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial data schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated December 31, 1997 announcing
that (i) on October 29, 1997 the Company had completed the October Financing
in which it raised gross proceeds of $750,000, (ii) on December 29, 1997, the
Company had completed the December Financing in which it raised gross
proceeds of $1,530,000 and (iii) on December 29, 1997, FTS and the Company
signed Amendment No. 1 to Convertible Debentures Due October 29, 2000 in
which FTS and the Company agreed to set a fixed conversion price for the
October Debentures of $0.90 per share of common stock until 30 days after the
closing of the December Financing and thereafter to set a minimum conversion
price of $0.90 per share of common stock.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDIA LOGIC, INC.
Date: February 17, 1998 \s\ Paul M. O'Brien
-------------------
Paul M. O'Brien
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS AND STATEMENTS OF OPERATIONS FOUND
IN THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,357,739
<SECURITIES> 0
<RECEIVABLES> 410,113
<ALLOWANCES> 27,854
<INVENTORY> 3,772,088
<CURRENT-ASSETS> 5,516,316
<PP&E> 1,733,210
<DEPRECIATION> 1,415,040
<TOTAL-ASSETS> 7,317,509
<CURRENT-LIABILITIES> 649,151
<BONDS> 1,009,232
0
0
<COMMON> 102,537
<OTHER-SE> 24,941,168
<TOTAL-LIABILITY-AND-EQUITY> 7,317,509
<SALES> 1,218,375
<TOTAL-REVENUES> 1,218,375
<CGS> 753,110
<TOTAL-COSTS> 3,638,320
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 653,278
<INCOME-PRETAX> (3,048,747)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,048,747)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,048,747)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.42)
</TABLE>
