<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended: Commission File No.:
December 31, 1995 0-6421
SYNERGISTICS, INC.
Massachusetts 04-2283157
(State of Incorporation) (IRS Employer I.D.
Number)
9 Tech Circle, Natick, MA 01760
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number,
including area code (508) 655-1340
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $0.01 Par Value
(Title of Class)
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 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 ____ No ___X___
To the Company's knowledge, only a limited public market for its
securities existed as of December 31, 1995 and there was no
aggregate market value of registrant's securities as of that
date.
State issuer's revenues for its most recent fiscal year
$2,282,065
Indicate the number of shares outstanding of each of the
registrant's classes of Common Stock, as of the last practical
date.
Common Stock, $0.01 Par Value 9,297,561
(Title of Class) (Shares Outstanding at March 1,
1996)
Exhibit Index is located on pages 11 and 38 of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Form 10-QSB filed with the Commission by the Company for period
ending
June 30, 1996
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PART I-FINANCIAL INFORMATION
ITEM 1. DESCRIPTION OF BUSINESS
(a) General Development of Business
Synergistics, Inc. a Massachusetts corporation (the "Company")
organized on May 13, 1960 is located at 9 Tech Circle, Natick,
Massachusetts 01760, telephone (508) 655-1340. The Company's
principal activity consists of manufacturing and marketing access
control systems, which it sells to banks, and other commercial
customers.
Current Products:
MSLR1 - ATM Vestibule Access Control: The MSLR1 product line
continues to be the largest revenue producer for the Company. It
is an access control system utilizing a single reader and
controller to regulate access to one door or area. The principal
market for this product has been to control access to automatic
teller machines (ATM's). The Company currently sells to over
20,000 bank installations worldwide.
ATM-III - ATM Vestibule Access Control: This product controls
access to ATM vestibule installations similar to the MSLR1
product. It offers high security to the installations and is
sold mainly overseas to countries where small banking groups are
popular.
ATM Access - ATM Vestibule Access Control: ATM Access is a
distributed processing access control system developed in 1994 to
meet the requirements for New York Cities Local Law 70, a law
passed to increase security in ATM installations. The ATM Access
system meets the requirements of the law by using a database
supplied to the banks by NYCE which allows only bank cards to
gain entrance to ATM vestibule installations. Today, with over
1,000 installations in and around New York City, the product is
expanding beyond New York City into Long Island, New Jersey, Ohio
and New York State.
PC-PAC - Central Processing Access Control System: The PC-PAC
system provides alarm security and monitoring capability for
complete facility management. It has the capability of
controlling 256 access controlled areas, supporting over 35,000
authorized persons, while providing monitoring capability for
1,600 alarm points in the system. PC-PAC utilizes a desk top PC
as a central processing unit. It is available in a single
computer version or with a redundant computer running in hot
standby. PC-PAC is packaged as a system. The computer makes all
access decisions, processes reports, and is used for editing and
logging functions in an on-line environment.
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WA-PAC - Distributed Processing Building Management System:
WA-PAC is an access control system which supports a network of
buildings or sites from a desk top PC host computer over dial-up
or direct voice grade telephone lines or fiber optics
communications. WA-PAC operates as a distributed intelligent
network of card access readers and controllers which control
access to buildings or sites in the network as well as monitoring
perimeter security. Each building or site can have up to 64 card
access readers and over 4,000 alarm input and output points. It
will support databases of over 50,000 users. Additional security
can be added to each site in the form of input/output controllers
which are programmed to control elevators, appliances or report
breaches of perimeter security or fire/flood alarms, etc. at each
secured site.
BUILDING WATCH - Distributed Processing Access Control System:
Building Watch is a distributed processing access control product
designed for securing commercial or industrial facilities at low
cost. This system shares a personal computer with other
programs, thereby making it a very cost effective security system
that is easy to implement and expand. Building Watch offers
direct local access control and remote access management over
dial-up phone lines. It also supports input point monitoring and
reporting capabilities. Building Watch supports all popular card
technologies.
DOOR WATCH - 2 Door, Full Featured Access Control System: Door
Watch is a stand alone, 2 door access control system. This
product is sold mainly to small, industrial and commercial users
who require only one or two doors of access control, but wish to
control doors with time zones and keep a printed record of system
activity. Door Watch supports all popular card reader
technologies.
MINI-PAC - 2 Door, Low Cost Access Control System: Mini-PAC is a
low cost, two door stand alone access control system designed to
provide access control to small businesses or industrial
facilities where time zones are not required, but printed records
of system activity are desired. MINI-PAC supports Mag Stripe
technology only.
The Company designs all of its products. The Company's computer
based products use personal computers and standard peripherals to
provide access control and building management to secured sites.
These products are acquired from a variety of third party
sources. Components are procured from electronics distributors.
Board and assembly houses manufacture and assemble circuit
boards. Final assembly, test and shipping functions are
performed by Company personnel. The Company solicits bids for
components, sub-assemblies and outside assembly. The Company has
not experienced difficulty obtaining components for its products.
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(b) Financial Information About Industry Segments
The Company has been in a single business segment for the past
year: The manufacturing and marketing of access control and
facility management systems. All of the Company's revenue,
operating profit or loss and identifiable assets are attributable
to one industry segment.
(c) Narrative Description of Business
Description of Products
The Company has been marketing bank ATM access control products
since 1977. These products consisted of MSLR1, ATM III, and ATM
Access. Bank ATM access control revenue represented approximately
49% of all Company revenue in 1995, 63% in 1994 and 38% in 1993.
The Company has sold ATM access control products to over 20,000
bank installations and believes that there are over 100,000 ATM
installations worldwide.
PC-PAC was introduced in 1984. PC-PAC provides hard copy for
permanent records, provides instantaneous check of personnel in a
given area and retains a record of those cards which have been
used to attempt access to an area where the cardholder was not
authorized. Product options include zoned anti-passback; alarm,
elevator and relay control; as well as disk logging. PC-PAC
revenue approximated 4% of all company revenue in 1995, 4% in
1994 and 9% in 1993. The Company believes that a PC-PAC system
is appealing to wide variety of business, government and
institutional users. For example, in a defense plant, where
access to facilities is restricted and record retention required,
a multi-functional PC-PAC can be used to control access to both
general and particular areas by various categories of personnel
according to specific government security clearances. A hospital
can use PC-PAC to monitor, record and restrict access to various
employee service and supply areas by appropriate coding of access
cards. Large commercial and institutional users can use PC-PAC
to regulate access to research areas, computer facilities or
elevators. The Government has found PC-PAC very effective in
many areas. PC-PAC sales are on a declining curve due to the
WA-PAC and Building Watch products which are taking its place in
many installations.
The Company introduced WA-PAC in 1988 as a network access control
system which controls multiple sites/buildings through the use of
a single host computer. Network communications could be direct
connect or dial-up telephone lines. The sites could be a building
complex such as an office park/university or remote
decentralized facilities controlled from a single central site.
Product shipments began in the third quarter of 1988. WA-PAC
revenue approximated 17% of total company revenue in 1995, 10% in
1994 and 10% in 1993.
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The Company developed and announced Building Watch in 1990.
Initial product shipments began in December 1990. Building Watch
revenues approximated 21% of total company revenue in 1995, 8% in
1994, and 12% in 1993. The Company expects a significant revenue
contribution from this product design in 1996 and beyond.
The Company announced MINI-PAC II in the Fourth Quarter of 1988
and began shipping the product in the First Quarter of 1989.
MINI PAC II revenues approximated 1% of total company revenue in
1995, 2% in 1994 and 3% in 1993.
The Company announced Door Watch in December of 1992 and began
shipping the product December of that year. Door Watch revenues
approximated 2% of total company revenue in 1995, 3% in 1994 and
3% in 1993.
MARKETS
The primary market for the ATM access control product line is
banks with automatic teller machine (ATM) vestibules. The
Company believes that its access control and building management
product lines are applicable to a wide variety of commercial,
government and institutional markets; i.e., military bases,
hospitals, colleges and universities, research and computer
facilities, office buildings, and office or manufacturing
complexes.
RAW MATERIAL
The Company purchases components for its products from
electronics distributors. The Company designed printed circuit
boards are purchased from board manufacturers and outside
assembly houses manufacture the completed printed circuit boards.
Third parties are also used to assemble card readers and other
assemblies. Final assembly, test and shipping as well as any
customization is performed by the Company. The Company is not
dependent upon any one firm for components or assembly work and
duel sourcing is a company policy. The Company solicits bids for
its work and awards business based upon quality of workmanship,
price and lead time. The Company has not experienced difficulty
obtaining parts or outside assemblers for its products.
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MARKETING AND CUSTOMERS
The company sells its products through the efforts of district
sales managers who market the product through independent
security dealers and locksmiths world wide. The Company markets
its products primarily through trade shows, advertising in
selected industry and bank journals and magazines, government
supply contracts, selected direct mailings, the Internet and
supporting dealer bids and proposals.
The Company continues to expand its base of distribution by
increasing the number of dealers authorized to sell the Company's
products. The Company sells direct to certain large banks and
government agencies.
The Company's business is not seasonal in any material respect.
The Company has no dependence upon a single customer or a few
customers.
PATENTS AND TRADEMARKS
The Company holds no patents on any of its current products.
WORKING CAPITAL ITEMS
Manufacturing cycle time approximates 6 weeks. The Company feels
that this is not unusual for a company that uses outside
contractors for manufacturing and assembly.
The Company provides a one year warranty after a product is
shipped. Normal payment terms are 30 days. Terms have been
extended for sales to dealers in order to allow sufficient
installation time before payment is required.
Since the elimination of the video imaging product line and the
election of new President and Vice President in 1994, the Company
has operated profitably without the necessity of borrowing
operating capital.
BACKLOG
The ending backlog was $51,825 in 1995, $77,938 in 1994 and
$247,091 in 1993.
RESEARCH AND DEVELOPMENT
The Company expends monies on technical support and the
enhancement of existing products. Such expenditures are
consistent with the Company's overall product maintenance and
enhancement strategies. No research and development expenses
have been incurred for the years ended December 31, 1995,
December 31, 1994 and December 31, 1993.
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GOVERNMENT CONTRACTS
The Company does not actively pursue government contracts, but
does have a GSA contract and sells to the government whenever it
is advantageous. Government revenue approximated 4% of total
revenue in 1995, 1% in 1994 and 3% in 1993.
None of the Company's sales under government contracts are
subject to re-negotiation of profits or termination of contracts
or subcontracts, to the best of the Company's knowledge.
COMPETITORS
Over 150 companies compete in the card based access control
marketplace. The principle Company competitors include Cardkey
Systems, Sensormatic, Westinghouse, CASI-RUSCO, Corby Industries,
and Northern Computers. The Company believes its sales volume is
a small fraction of the combined sales of the Company's major
competitors..
A competitor that chooses to devote substantial economic
resources toward acquiring a dominant position in the access
control devices market might seriously injure the Company's
market position and jeopardize its viability, but the product
line has proven to be reliable and competitive over the years and
should survive this type of competition. The Company believes
that competition in our marketplace is based upon reliability,
price, service, and product capability. The Company believes
that it can compete on such terms.
ENVIRONMENTAL MATTERS
The nature of the Company's manufacturing operation is such that
no materials are discharged into the environment. Under the
terms of the Company's lease for its operating facility, it is
obligated for the normal maintenance and repair of building
systems. No additional capital expenditures are anticipated by
the Company.
PERSONNEL
At December 31, 1995, the Company had nineteen (19) full time
employees.
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(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
OPERATIONS AND EXPORT REVENUE
The Company operates exclusively from a headquarters facility
located in Natick, Massachusetts.
Export revenue approximated 22% of total revenue in 1995, 29% in
1994 and 35% in 1993. The Company sells to American brokers
doing business abroad and directly to end users and foreign
dealers. The currency used for all sales to foreign firms is the
U.S. Dollar. Below is a percentage summary of total revenues by
foreign sector for the years 1995, 1994 and 1993:
Unaudited Percentage of Exports By Sector 1995 1994 1993
Middle East including Turkey 30% 20% 19%
Canada 15% 18% 20%
South/Central America and Mexico 36% 37% 50%
South Pacific and Far East 6% 4% 1%
Grand Total 87% 79% 90%
ITEM 2. PROPERTIES
The Company currently leases approximately 6,000 square feet of
office and manufacturing space in a one story brick and masonry
building located at 9 Tech Circle, Natick, Massachusetts under
the terms of a five year lease which expires June 1, 1999. The
current monthly base rate is $3,298. Additionally the Company is
required to pay utility charges and insurance costs as well as
the Company's portion of taxes and common space charges.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings are pending to which the Company is
a party or to which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the security holders during
the Fourth Quarter of 1995.
ITEM 5. MARKET OF THE COMPANY'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
As of December 31, 1995, to the Company's knowledge, only a
limited public market for its Common Stock existed. The Common
Stock is not presently registered on any stock exchange. The
Company is not aware of any over-the-counter trading in its stock
the past two years.
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Prior to December 31, 1993, the Company had 656 stockholders of
record of Common Stock and 13 stockholders of Preferred Stock.
Due to the Company's inability to pay the required semi-annual
dividends, this Preferred Stock and the accumulated unpaid
dividends were converted to 1,367,040 shares of Common Stock.
Immediately after this conversion, additional shares of common
stock were issued to a principal shareholder and director in
payment of certain demand notes and accrued interest.
PART 11
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
1995 Compared to 1994
Revenues for 1995 were $2,273,647 or declining when compared to
1994. This net decline of $505,146 was mainly due to the
expected decline of the ATMA product line sales when the New York
City installations were completed. System sales increased as
expected by $212,000 for 1995 due to enhanced advertising and
sales personnel while stand alone systems declined by $64,000.
Cost of Sales as a percentage of revenue decreased to 54.26% from
55.50% when compared to 1994. In 1995, certain manufacturing
operations previously done by outside assemblers was converted to
an in house operation. This increase in labor is offset by the
reduction in subcontractor expense. Selling expenses for 1995
decreased by $82,970 due to the additional salaries and expenses
necessary to support the video imaging product line. General and
administrative expense declined approximately $10,000 due to
reduced occupancy costs.
At December 31, 1995, current assets exceeded current
liabilities by $475,969 including cash in commercial checking
and money market accounts of $332,151.
Inflation effects were not significant in during 1995.
1994 Compared to 1993
Revenues for 1994 were $2,778,793 or an increase of $776,079 over
1993. This increase was mainly due to the sale of the ATMA
product to the banks of New York City and sales of ATM III
products to banks in Mexico in 1994. The access control systems
product line experienced a decline of approximately $100,000 in
comparison with 1993. The Company believes that the systems
revenue decline was the result of a decreased advertising budget
and reduced sales personnel.
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Cost of Sales as a percentage of revenue rose to 55.5% from 44.3%
when compared to 1993. This cost increase was mainly the result
of an excessive material costs associated with the video imaging
product line. General and administrative expense grew to
$470,176 as a result of increased labor and occupancy costs.
Sales and marketing expense decreased $290,927 due to the sale of
the Video Imaging group in August, 1994.
At December 31, 1994, current assets exceeded current
liabilities by $269,642 including cash in commercial checking
and money market accounts of $149,909.
Inflation effects were not significant during 1994.
1993 Compared to 1992
Revenues for 1993 were $1,994,007 which is a decrease of $138,503
when compared to 1992 revenues. Management believes that the
revenue decline for 1993 was mainly due to a management change
which brought about strategy changes in access control product
sales and marketing. General and administrative declined $62,845
as a result of reduced legal and audit fees, and travel expenses.
Interest expense in 1993 declined by $6,576 due to a reduction in
interest rates. Sales and marketing expense declined
approximately $127,103 in 1993 as result of reductions in the
access control sales force as a result of attrition.
At December 31, 1993, current liabilities exceeded current
assets by approximately $111,000 including cash in commercial
checking, money market and certificate of deposits accounts of
$50,721. During 1993, the Company sold 1,005,000 shares of
common stock to certain directors . Proceeds from this sale of
stock were used to fund the company's visual imaging product
line.
Inflation effects were not significant in 1993.
LIQUIDITY AND CAPITAL RESOURCES
During 1995, the Company operated on it own cash flow without any
additional outside capital requirements.
In January, 1994, the Company sold an additional 143,000 shares
of common stock at $1.00 per share to certain holders of common
stock. Proceeds of this sale were used to fund the acquisition
of certain hardware components required to build the ATMA product
for New York City banks. No other outside capital requirements
were necessary for the year.
During 1993 the Company raised $1,005,000 by selling 1,005,000
shares of its common stock to certain shareholder directors. The
proceeds from these sales were used to fund the Company's
continued product development efforts and investments in sales,
and marketing activities necessary to achieve a revenue volume
sufficient to attain profitability. Since mid 1994, the Company
has operated on its own cash flow with no other requirement for
outside capital.
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ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements years ended Page
Number
December 31, 1995 and 1994
Independent Auditors' Report - June 1, 1996 11
Balance Sheets as of December 31, 1995 and 12
December 31, 1994
Statements of Operations for years ended 13
December 31, 1995 and 1994
Statements of Stockholders' Equity 14
for years ended December 31, 1995 and 1994
Statements of Cash Flows for years ended 15
December 31, 1995 and 1994
Notes to Financial Statements 17-25
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Synergistics, Inc.
Natick, Massachusetts
We have audited the accompanying balance sheets of Synergistics,
Inc. as of December 31, 1995 and 1994, and the related statements of
operations, stockholders' equity 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
Synergistics, Inc. as of December 31, 1995 and 1994, and the results
of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/S/ LIVINGSTON & HAYNES, P.C.
Wellesley Hills, Massachusetts
June 1, 1996
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SYNERGISTICS, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<S> <C> <C>
1995 1994
CURRENT ASSETS
Cash and equivalents $ 332,151 $ 149,909
Trade accounts receivable, net of
reserves of $35,000 346,795 490,306
Inventories 201,546 226,810
Prepaid expenses 23,180 26,355
---------- ----------
TOTAL CURRENT ASSETS 903,672 893,380
EQUIPMENT 98,495 57,853
Less depreciation and amortization 45,700 34,082
---------- ----------
52,795 23,771
DEFERRED TAXES 817,776 927,776
---------- ----------
$1,774,243 $1,844,927
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 163,774 $ 230,236
Accrued expenses and other
current liabilities 67,633 191,438
Amounts due stockholder 196,296 202,642
---------- ----------
TOTAL CURRENT LIABILITIES 427,703 624,316
COMMITMENTS AND CONTINGENT LIABILITIES - -
STOCKHOLDERS' EQUITY
Common Stock (authorized 12,000,000 shares;
issued 9,297,561 shares, including
16,445 shares held in Treasury) 92,976 92,976
Additional paid-in capital 6,542,237 6,542,237
Retained earnings (deficit) (5,281,538) (5,407,467)
--------- ---------
1,353,675 1,227,746
Cost of Common Stock held in Treasury (7,135) (7,135)
--------- ---------
1,346,540 1,220,611
---------- ----------
$1,774,243 $1,844,927
========== ==========
</TABLE>
See accompanying notes to the financial statements.
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SYNERGISTICS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994
Unaudited
<TABLE>
<S> <C> <C>
1995 1994
Revenues:
Sales $2,273,647 $2,778,793
Interest income 8,418 2,400
Loss on sale of assets - (145,675)
---------- ----------
2,282,065 2,635,518
Costs and expenses:
Costs of sales 1,233,770 1,542,281
General and administrative expenses 387,206 470,176
Selling expenses 370,845 381,876
Bad debt expense 54,315 33,180
2,046,136 2,427,513
---------- ----------
INCOME BEFORE INCOME TAXES 235,929 208,005
Income taxes - deferred 110,000 81,676
---------- ----------
NET INCOME $ 125,929 $ 126,329
========== ==========
INCOME PER COMMON SHARE $0.013 $0.013
====== ======
See accompanying notes to the financial statements.
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SYNERGISTICS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
</TABLE>
<TABLE>
<S> <C> <C>
COMMON STOCK
SHARES AMOUNT
Balances at January 1, 1994 9,297,561 $92,976
Net income - -
Balances at December 31, 1994 9,297,561 92,976
Net income - -
--------- -------
BALANCES AT DECEMBER 31, 1995 9,297,561 $92,976
========= =======
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
<C>
ADDITIONAL RETAINED
PAID-IN EARNINGS TREASURY
STOCK
CAPITAL (DEFICIT) SHARES
AMOUNT TOTAL
Balances at January 1, 1994 $6,542,237 $(5,533,796) 16,445 $
7,135 $ 1,094,282
Net Income - 126,329 -
- - 126,329
Balances at December 31, 1994 6,542,237 (5,407,467) 16,445
7,135 1,220,611
Net income - 125,929 -
- - 125,929
---------- ----------- ------
- ------- -----------
$6,542,237 $(5,281,538) 16,445 $
7,135 $ 1,346,540
========== =========== =======
======= ===========
</TABLE>
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SYNERGISTICS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Net income $ 125,929 $ 126,329
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Deferred taxes 110,000 81,676
Depreciation and amortization 11,618 19,024
Loss on sale of assets - 145,675
Decrease (increase) in trade
accounts receivable 143,511 (148,929)
Decrease (increase) in inventories 25,264 (100,641)
Decrease (increase) in prepaid
expenses and other current assets 3,175 (13,293)
(Decrease) in trade accounts payable (66,462) (189,431)
(Decrease) increase in accrued expenses
and other current liabilities (123,805) 36,809
(Decrease) increase in amounts
due stockholder (6,346) 3,912
-------- ---------
TOTAL ADJUSTMENTS 96,955 (165,198)
NET CASH PROVIDED (USED) BY OPERATING -------- ---------
ACTIVITIES 222,884 (38,869)
Cash flows from investing activities:
Capital expenditures (40,642) (5,000)
-------- --------
NET CASH (USED) BY INVESTING ACTIVITIES (40,642) (5,000)
Cash flows from financing activities:
Proceeds of stock subscription - 143,000
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 143,000
-------- --------
NET CHANGE IN CASH 182,242 99,131
Cash at beginning of year 149,909 50,778
--------- ---------
CASH AT END OF YEAR $ 332,151 $ 149,909
========= =========
</TABLE>
See accompanying notes to the financial statements.
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SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied by
management of the Company in the preparation of the accompanying
financial statements follows.
Nature of Operations
Synergistics, Inc. is engaged in the manufacturing and
marketing of card access systems, which are sold to banks and
other commercial customers.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principals requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Equivalents
Cash and equivalents consist of cash on hand, demand
deposits with commercial banks, and money market securities with
initial maturities of less than 90 days.
Inventories
Inventories are stated at the lower of first-in, first-out
cost or aggregate market.
Equipment
Equipment is stated at cost. Normal maintenance and repair
costs are expensed as incurred. Gains and losses on sales or
retirements are included in operations. Depreciation and
amortization are provided using straight-line and accelerated
methods over the estimated useful lives of the assets (5-12
years).
Common Stock Held in Treasury
When Common Stock held in Treasury is issued, Common Stock
held in Treasury is credited for the average cost of the issued
securities.
Revenue
The company recognizes revenue from sales at the time
products are shipped to customers.
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SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)
Advertising Costs
The Company expenses advertising costs as incurred.
Sales Commissions
The Company pays sales commissions to various agents only
upon the collection of the accounts receivable generated by the
sales. The Company accounts for these sales commissions at the
time products are shipped to customers.
Income Taxes
The Company accounts for income taxes using Statement of
Financial Accounting Standards (SFAS) 109, Accounting for Income
Taxes, which requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
Under this method, deferred tax liabilities and assets are
determined based upon the difference between the financial
statement and tax basis of assets. Tax benefits arising from the
utilization of carryforward net operating losses, investment and
research and development tax credits are valued based upon the
expected future benefit to be recognized. (Refer to Note H)
Income Per Share of Common Stock
The weighted average number of shares of Common Stock
outstanding used in computing income per share does not include
the effect of the conversion of the stock options as the exercise
price exceeds the current market value of the security. (Refer to
Note E)
NOTE B - INVENTORIES
Inventories consist of the following at December 31, 1995
and 1994:
1995 1994
Finished goods and work-in-process
at aggregate market $149,298 $153,412
Raw materials 52,248 73,398
-------- --------
$201,546 $226,810
======== ========
-17 -
<PAGE>
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE C - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of
the following at December 31, 1995 and 1994:
1995 1994
Accrued compensation and benefits $38,474 $ 96,595
Accrued commissions 7,922 31,536
Customer deposits - 14,504
Accrued audit fees 20,000 45,000
Other 1,237 3,803
------- --------
$67,633 $191,438
======= ========
NOTE D - AMOUNTS DUE STOCKHOLDER
Amounts due stockholder consist of the following at
December 31, 1995 and 1994:
1995 1994
Amount due majority stockholder for wages
in arrears; payable, without interest,
on demand $107,596 $113,942
Amount due majority stockholder for costs
and expenses incurred by majority
stockholder on Company's behalf; payable,
without interest on demand 88,700 88,700
-------- --------
$196,296 $202,642
======== ========
NOTE E - STOCKHOLDERS' EQUITY
Redeemable Preferred Stock
On October 30, 1984, the Company issued 187,333 shares as
Series A Preferred Stock for consideration of $1,405,000 ($7.50
per share). During September 1985, the Company issued an
additional 80,000 shares of the Series A Preferred Stock for
consideration of $600,000 ($7.50 per share). During October 1986,
the Company received $465,000 from the holders of the Preferred
Stock. As
- 18 -
PAGE
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE E - STOCKHOLDERS' EQUITY (Continued)
Redeemable Preferred Stock (Continued)
consideration for the amount received, the Company issued 87,999
shares of Common Stock held in its Treasury for $220,000 and
issued 32,667 shares of the Series A Preferred Stock for $245,000
($7.50 per share). Each share of the Series A Preferred Stock was
entitled to receive cumulative cash dividends of $.45 per year
when declared by the Board of Directors, participate in any Common
Stock dividends, and was convertible into three shares of Common
Stock. On December 31, 1993, the Preferred Stock and accumulated
unpaid dividends of $1,167,600 were converted to 1,367,040 shares
of Common Stock.
Common Stock
At December 31, 1995, the Company is authorized to issue
12,000,000 shares of $.01 par value Common Stock. At December 31,
1995, 9,297,561 shares of such stock had been issued, including
16,445 shares held in the form of Treasury Stock. At December 31,
1995, 850,000 shares were reserved for issuance in connection with
the stock option plans discussed below.
Stock Option Plans
At December 31, 1995, the Company has three qualified
incentive stock option plans (the "1983 Plan", the "1987 Plan" and
the "1988 Plan"), which have been approved by the Company's
stockholders. The 1983 and 1987 Plans provide that options can be
granted for the purchase of 275,000 shares of Common Stock each
through June 1995 and December 1996, respectively, with the
options expiring ten years from the date they are granted, except
for options issued to holders of more than ten percent of the
Company's Common Stock, which expire five years from the date they
are granted. Options previously granted under a 1982 Plan expired
and were reissued under the 1983 Plan. The 1988 Plan provides
that options can be granted for the purchase of 300,000 shares of
Common Stock through 1998 under terms similar to the 1983 Plan.
All plans provide that options can be exercised for a value
(per share), as stated by the Company's Board of Directors, as of
the date the option was granted, except for options granted to
holders of more than ten percent of the Company's Common Stock
which are exercisable at 110 percent of such stated value.
- 19 -
PAGE
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE E - STOCKHOLDERS' EQUITY (Continued)
Transactions regarding the options during the years ended
December 31, 1995 and 1994 are shown as follows;
1983 Plan 1987 Plan 1988 Plan
Outstanding at January 1, 1994 253,069 66,000 239,086
Granted at $2.75 per share:
To a ten percent or greater
holder of Common Stock, who
is also an employee director - - -
Granted at $2.50 per share:
To other employee directors - - -
To other employees - - -
Expired because grantee no
longer employed:
Other employees (32,389) - (99,129)
------- ------ -------
Outstanding at December 31, 1994 220,680 66,000 139,957
Granted at $2.75 per share:
to a ten percent or greater
holder of Common Stock, who
is also an employee director - - -
Granted at $2.50 per share:
To non-employee directors - - -
To other employee-directors - - 23,084
To other employees - - 35,652
Expired because grantee no
longer employed:
Other employees (38,279) - (15,995)
-------- ------ -------
Outstanding at December 31, 1995 182,401 66,000 182,698
======= ====== =======
Available for grant at
December 31, 1995 92,599 209,000 92,302
====== ======= ======
Income per Share of Common Stock
Income per share of Common Stock is computed based on the
weighted average number of shares of Common Stock outstanding
(9,297,561 shares for the years ended December 31, 1995 and 1994).
- 20 -
PAGE
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE F - CONCENTRATION OF RISK
From time to time, the Company maintains deposits with
major financial institutions in excess of insurable limits.
NOTE G - RENT AND OPERATING LEASE COMMITMENT
The Company's rent expense during the years ended December
31, 1995 and 1994 approximated $54,800 and $52,400 respectively,
principally under the terms of a lease for its operating facility.
During April 1994, the Company leased new premises for a
period of five years. The lease provides that the Company is
responsible for fifty percent of the real estate taxes and
operating costs of the premises. Future rental payments required
under the lease, exclusive of real estate taxes and operating
costs, are as follows:
Ending December 31, 1996 $ 42,215
Ending December 31, 1997 44,003
Ending December 31, 1998 45,791
Ending December 31, 1999 19,390
$151,399
========
NOTE H - INCOME TAXES
At December 31, 1995, operating loss carryforwards
aggregating approximately $5,499,300 are available to reduce
future federal taxable income, if any. If not utilized, these
carryforwards will expire at various dates between 1999 and 2008.
The carryforwards are subject to examination by the Internal
Revenue Service.
The net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes are
reflected in deferred income taxes. As of December 31, 1995 and
1994, the Company's deferred tax asset consists of:
1995 1994
Net operating loss carryforwards $1,760,868 $1,870,868
Other 66,000 66,000
Valuation allowance (1,009,092)
(1,009,092)
---------- ----------
$ 817,776 $ 927,776
========== ==========
- 21 -
<PAGE> <PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE H - INCOME TAXES (Continued)
At December 31, 1995, the Company has unused investment
tax credit carryovers of approximately $11,000 which are available
to reduce future federal income tax liabilities, if any. If not
utilized, the carryforwards, which are subject to examination by
the Internal Revenue service, will expire on various dates through
2000.
The availability of the carryforwards is also subject to
reduction as a result of the Tax Reform Act of 1986.
At December 31, 1995, the Company has unused carryforwards
of credits for increasing research activities of approximately
$54,000 which are available to reduce future federal income tax
liabilities, if any. If not utilized, the carryforwards, which
are subject to examination by the Internal Revenue Service, will
expire at various dates through 2000.
NOTE I - BUSINESS SEGMENT INFORMATION
The Company's business, which consists principally of a
single segment, is the designing, manufacturing and selling of
single and multifunctional electronic systems which control
access to secure areas. The Company sells to domestic and foreign
customers from its domestic location.
Sales by Major Customer Category 1995 1994
Government Sales 74,799 22,804
Other Domestic Sales 1,655,392 1,996,449
Export Sales 543,456 759,540
---------- ----------
$2,273,647 $2,778,793
========== ==========
Export sales are made directly and through United States
brokers to users in Canada, South and Central America to include
Mexico, the Middle East including Turkey. and the South Pacific
and Far East. No foreign area accounts for more than ten percent
of total sales in 1995.
- 22 -
PAGE
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE J - CONTINGENT SALE OF ASSETS
In July, 1994, the Company sold all of its assets used in
the production and distribution of its imaging product. Under the
terms of the sale, the Company is entitled to receive five percent
(5%) of the buyer's sales in excess of $1,750,000 in each of four
contingent sales years. The maximum amount to be received by the
Company is $400,000. In conjunction with this sale, the Company
reported a loss on the sale of these assets in the amount of
$145,675. Items included in this loss include:
Loss on the sale of inventory $ 53,868
Loss on sale of fixed assets 15,262
Loss on sale of accounts receivable 76,545
--------
Total loss on sale $145,675
========
As part of the sale, the Company entered into an agreement
with the buyer that provided that the Company would act as a
broker for the buyer's products to all agencies covered under the
Company's GSA contract. In exchange for this service the Company
would receive a commission equal to 4% of the gross sale to the
government agency. As of December 31, 1995 the Company had
brockered one sale in the amount of $55,000.
NOTE K - ADVERTISING COSTS
Advertising expense was $46,619 and $8,058 for the years
ended December 31, 1995 and 1994 (unaudited).
-23-
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<PAGE>
ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No Form 8-KSB has been filed within 24 months prior to the date of
the most recent financial statements reporting a change of
accountants and/or reporting disagreement on any matter of
accounting principle or financial statement disclosure.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTOR OTHER POSITION
NAME AGE SINCE WITH COMPANY
David S. Longworth 61 1981 President and COO
Robert Pogorelc 57 N/A Vice President
William M. Tetrick 80 1967 CEO and Chairman of the
Board
J. Thomas Gehman 49 1981 None
Lawrence A. Bishop 51 1984 None
John P. Sanderson 59 1981 None
Robert L. Reis 57 1984 None
Hubert D. Hennessey 44 1986 None
Charles P. Amazeen, Jr 61 1988 None
David S. Longworth, a Director, is President and Chief Operating
Officer since August, 1994. Prior to that he has served as
Executive Vice President and has provided various engineering and
consulting services to the company since 1973 until joining the
Company on a full time basis in 1984. Mr. Longworth was
responsible for Compliance Engineering at Applicon, Inc. of
Burlington, Massachusetts, a Computer Aided Design Systems
manufacturer since January 1983. From 1973 to 1983, he was
employed by Nixdorf Computer Corp. of Burlington, Massachusetts, a
computer manufacturer, where he was employed as an engineer.
William M. Tetrick, a Director, retired as President in August,
1994 but remains Chief Executive Officer and Chairman of the Board
of Directors of the Company since December 1967.
Robert Pogorelc was elected Vice President in 1994. He joined the
Company as Sales Manager in 1986 and currently is manager of Sales
and Marketing. Mr. Pogorelc was a sales manager for a
Synergistics dealer from 1982-1985.
-24-
<PAGE>
<PAGE>
J. Thomas Gehman, a Director, is currently president of On Demand
Imaging of Waltham, MA. Mr Gehman was Director of Engineering for
Amnet, Inc. a Watertown, Massachusetts computer network control
systems manufacturer. Prior to that, he was a design engineer
with Applicon , Inc. from 1981 to 1983 and an engineering manager
at Nixdorf Computer from 1976-1981.
John P. Sanderson. a Director, is President of Mass Mailing
Service, Inc. of Holliston, Massachusetts, a manufacture of
magnetic stripe plastic cards, since 1971.
Robert L. Reis, a Director, is currently President of Hampshire
Capital Corporation, a Weston, MA, acquisition firm. Before that,
he was Chairman/CEO of Kramer Scrap Inc., Greenfield, MA, a scrap
metal processor and recycler; Treasurer of Syntech, Inc.,
Pittsburgh, PA, a specialty metal processor of stainless steel
scrap, a Director of Fairfield Paper Company, Inc., Baltimore, OH,
a recycled container board mill and Mr. Reis has been employed by
IBM, Honeywell, Sanders Associates and Motorola.
Lawrence A. Bishop, a Director, is Executive Vice President of
Gray, Seifert & Co., Inc., an investment and financial advisory
firm, as well as a Director of several privately held firms.
Dr. Hubert D. Hennessey, a Director, has been a professor of
marketing at Babson College, Babson Park, Massachusetts, since
1982. Prior to Babson College, Dr. Hennessey taught at Norwich
University, Fairleigh-Dickenson College and Upsala College. Dr.
Hennessey has considerable consulting and industry experience in
sales and marketing.
Charles P. Amazeen, Jr., a Director, was Manager, Government
Security Services, NUS Corporation. Mr Amazeen has managed the
Eastern Region of the Communication Manufacturing Company. He has
worked for the Hoppman Corporation, NUSAC Corporation, Cappucci
Associates and Northrop/Page Communications Engineers, Inc. He
was Chief, Physical and Installation Security Division, Office of
the Secretary of Defense, Department of Defense.
Michael G. Kasuba was Treasurer and Clerk through 1995. Since
then he has been replaced and is no longer associated with the
Company in any capacity. He joined the Company in February 1988
as Controller and was elected Treasurer and Clerk in June. Mr.
Kasuba was previously Treasurer and Chief Financial Officer from
1986-87 of Bettex, Inc.,Nashua, New Hampshire, a symbolic
processing computer graphics engineering firm. He was Quadex
Corporation Controller (a Compugraphic Corporation subsidiary),
Cambridge, Massachusetts, from 1980 thru 1985. From 1974 thru 1980
he was employed by Burroughs Corporation (now Unisys).
During the past five years, none of the Company's Directors has
been (1) involved in any petition under the Bankruptcy Act or
Bankruptcy Code or state insolvency proceeding or any criminal
proceeding, (2) the subject of any order, judgment or decree
enjoining him from engaging in or limiting his involvement in any
type of business practice, including securities related
activities, or (3) found by any court or the Securities and
Exchange Commission to have violated any securities law.
-25-
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<PAGE>
ITEM 10. MANAGEMENT REMUNERATION AND TRANSACTIONS
The following is a table of compensation paid to all executive
officers and the sales manager as a group:
CASH COMPENSATION TABLE (1995)
(A) Name of Individual (B) Capacities in which (C) Cash
Or Number in Group Served Compensation
All executive officers (1) President and COO
and sales manager as a (2) Treasurer and Clerk
group (3 persons). (3) Vice President and $203,600
Sales Manager
CERTAIN TRANSACTIONS
As of December 31, 1995, the Company owed Mr. Tetrick
approximately $107,594 in accrued salary for services rendered and
$88,700 for unpaid expenses over the past nineteen years. The
total amount of money owed will be paid over a period of time at a
rate of $55,000 per year, in weekly installments of $1057.69 until
the debt is cleared.
History: Wm. M. Tetrick
The Company and Mr. Tetrick entered into an agreement on December
31, 1981, regarding payment of accrued compensation, which was
amended on September 30, 1983 (the "Agreement"). The Agreement
provided for repayment of $100,000 of accrued salary to Mr.
Tetrick prior to April 15, 1984, (2) an increase in Mr. Tetrick's
salary from $25,000 to $50,000 a year as of the date of the
amendment, and (3) repayment of remaining accrued compensation to
Mr. Tetrick at the rate of $50,000 per year. Pursuant to the
Agreement, Mr. Tetrick converted $116,000 of accrued salary owed
him by the Company into 202,000 shares of Common Stock. On
December 1, 1984, Mr. Tetrick received payment of $88,529 of
accrued salary. Mr. Tetrick accrued his 1984 salary of $50,000.
Beginning January 1, 1985, Mr. Tetrick began drawing his annual
salary on a weekly basis.
As of December 31, 1995, the Company had a note receivable from
its former Treasurer in the amount of $148,541.72 to reimburse the
Company for certain expenses incurred and to formalize various
cash advances. The note is receivable over ten (10) years with
annual interest of 7.5% and weekly payments of $150. The balance
is due at the end of ten years and the loan is secured by a second
mortgage on the borrower's personal residence. As collection of
amounts outstanding on this note is questionable, a reserve has
been established for the full amount of the outstanding loan.
During the years 1989 into 1995, the Company had a third party
business relationship with Mass Mailing, a Holliston,
Massachusetts magnetic stripe card manufacturing company.
Mr.Sanderson, a Director, is the President of Mass Mailing. The
Company has since begun purchasing cards from another source and
performs embossing and encoding of the cards in house.
-26-
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<PAGE>
COMPENSATION PURSUANT TO PLANS
The following table sets forth for each officer who has received
options, the number of options granted under both the 1983 and
1988
stock plans, the year of grant and the option price:
Year of Option Number
Name Grant Price of Shares
William M. Tetrick 1985 $2.75 5,000 Expired in 1995
David S. Longworth 1985 $2.50 5,000 Expired in 1995
William M. Tetrick 1986 $2.75 12,034
David S. Longworth 1986 $2.50 7,776
William M. Tetrick 1987 $2.75 14,697
David S. Longworth 1987 $2.50 9,019
William M. Tetrick 1988 $1.10 74,000
William M. Tetrick 1988 $2.75 6,763
David S. Longworth 1988 $1.00 20,000
David S. Longworth 1988 $2.50 9,805
Michael G. Kasuba 1988 $2.50 10,437
William M. Tetrick 1989 $2.75 11,925
David S. Longworth 1989 $2.50 10,417
Michael G. Kasuba 1989 $2.50 5,000
William M. Tetrick 1990 $2.75 12,210
David S. Longworth 1990 $2.50 10,822
Michael G. Kasuba 1990 $2.50 1,480
William M. Tetrick 1991 $2.75 12,963
David S. Longworth 1991 $2.50 11,643
Michael G. Kasuba 1991 $2.50 2,068
David S. Longworth 1995 $2.50 23,084
Robert Pogorelc 1995 $2.50 4,981
Michael S. Kasuba 1995 $2.50 4,059
As of March 1, 1996, unexercised options for the purchase of an
aggregate of 431,099 shares were held by all employees of the
Company (including those held by Officers and Directors).
No incentive stock option granted by the Company has included any
tandem rights, such as appreciation rights, nor has any incentive
stock option granted by the Company been exercised during 1991.
As of December 31, 1995, the Company had no pension or similar plan.
OTHER COMPENSATION
The Company has no other plan or arrangement whereby any person
will receive remuneration upon the termination of his status as an
employee, officer or director of the Company. The Company had
paid, as of March 1, 1996, no forms of contingent compensation.
Other than the transactions described herein, there were no
material transactions during 1995 to which any of the following
persons has a direct or indirect interest: (1) any director or
officer of the Company, (2) any nominee for election as a
director, (3) any person who, to the Company's knowledge, owns 5%
or more of the Company's stock, or (4) any relative or spouse (or
relative of such spouse) of the foregoing persons.
-27-
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the holdings of Common Stock by
each person who, as of December 31, 1995 held of record or was
known by the Company to own beneficially more that 5% of the
outstanding Common Stock, by each director and by all directors
and officers as a group.
AMOUNT AND NATURE PERCENTAGE OF
OF BENEFICIAL COMMON STOCK
NAME AND ADDRESS OWNERSHIP (1) (10) OUTSTANDING
William M. Tetrick
2 Ridgeway Drive 568,169 (2) (3) (4) 6.11%
Wellesley Hills, MA 02181 (5)
David S. Longworth
65 School Street Ext. 106,141 (6) 1.14%
Natick, MA 01760
J. Thomas Gehman
141 Marked Tree Road 12,000 (8) 0.1%
Needham, MA 02192
John P. Sanderson
c/o/ Mass Mailing
1657 Washington Street 15,100 (8) 0.16%
Holliston, MA 01746
Robert L. Reis
126 Cherry Brook Road 10,000 (8) 0.1%
Weston, MA 02193
Lawrence Bishop
c/o Gray, Seifert & Co. Inc.
380 Madison Avenue 10,000 (8) (11) 0.1%
New York, NY 10017
Hubert D. Hennessey
28 Maple Street 10,000 (8) 0.1%
Lexington, MA 02173
Charles P. Amazeen, Jr.
2108 Penfield Lane 6,000 (9) 0.06%
Bowie, MD 20716
Michael G. Kasuba
13 Cooper Road 19,027 (7) 0.2%
Natick, MA 01760
Legg Mason, Inc.
c/o Gray Seifert & Co., Inc.
380 Madison Ave.
New York, NY 10017 6,018,846 (12) 64.7%
All Directors and Officers
as a Group (10 persons) 756,437 8.1%
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<PAGE>
(1) Unless otherwise indicated in the following footnotes,
ownership is both beneficial and of record.
(2) Excludes 13,350 shares owned of record by Mr. Tetrick's wife
and 4,840 shares owned by his son, Paul Tetrick, who resides with
him, as to which he disclaims beneficial ownership.
(3) Excludes 131,883 shares owned of record by Gary Cramer, Mr.
Tetrick's son-in-law; 3,200 shares owned by Gary and/or
Margaret Cramer, Mr. Tetrick's daughter, and 2,200 shares owned by the
children of Mr. and Mrs. Cramer as to which Mr. Tetrick
disclaims beneficial ownership.
(4) Excludes 18,876 shares owned of record by other children and
grand children of Mr. Tetrick not already disclosed in points
(2) and (3) above as to which Mr. Tetrick disclaims beneficial
ownership.
(5) Includes 149,592 shares of Common Stock acquirable on
exercise of stock options.
(6) Includes 84,482 shares of Common Stock acquirable on exercise
of stock options.
(7) Includes 19,027 shares of Common Stock acquirable on exercise
of stock options.
(8) Includes 10,000 shares of Common Stock acquirable on exercise
of stock options under the 1987 Director Stock Option Plan.
(9) Includes 6,000 shares of Common Stock acquirable on exercise
of stock options under the 1987 Director Stock Option Plan.
(10) All options are considered non-dillutive since exercise price
exceeds last known market price.
(11) Excludes 6,018,846 shares of Common Stock owned by customers
of Legg Masson, Inc., the parent company of Gray Seifert & Co., Inc.
Through agreements with such customers, Gray Seifert has discretionary
power
to vote these shares.
(12) Consists of shares of Common Stock owned by customers of Gray
Siefert & Co., Inc., an affilliate of Legg Mason, Inc.;
however, through agreements with these customers, Gray Seifert has the
discretionary power to vote and dispose of all such shares.
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<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NONE
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K
(a)(1) The following financial statements of Synergistics, Inc.
are included in Part II Item 8:
Index to Financial Statements years ended Page
Number
December 31, 1995 and 1994
Independent Auditors' Report - February 26, 1996 12
Balance Sheets as of December 31, 1995 and 13
December 31, 1994
Statements of Operations for years ended 14
December 31, 1995 and 1994
Statements of Stockholders' Equity (Deficit) for 15
years ended December 31, 1995 and 1994
Statements of Cash Flows for years ended 16
December 31, 1995 and 1994
Notes to Financial Statements
17-25
(b) Exhibits Page
Number
3.1 Articles of Organization and amendments thereto, as amended
through December 31, 1985 are incorporated by reference from
Form 10-K for the year ended December 31, 1982
3.2 Amendment to Articles of Organization is incorporated by reference
from Form 10-K for the year ended December 31, 1987
3.3 By-Laws, as amended, are incorporated by reference from
Form 10-K for the year ended December 31, 1982
3.4 Amendment to Articles of Organization is incorporated by reference
from Form 10-K for the year ended December 31, 1988
3.5 Amendment to Articles of Organization is incorporated by reference
from Form 10-K for the year ended December 31, 1990
3.6 Amendment to Articles of Organization is incorporated by reference
from Form 10-K for the year ended December 31, 1991
10.1 Sale of Imaging Assets
10.2 Agreement with William M. Tetrick, dated December 30, 1981, is
incorporated by reference from Form 10-K for the year ended
December 31, 1983
10.3 Forms of Incentive Stock Option Plan of 1982 and Incentive Stock
Option Agreement are incorporated by reference from Form 10-Q for
the period ended March 31, 1983
10.4 Forms of Incentive Stock Option Plan of 1983 and Incentive Stock
Option Agreement are incorporated by reference from Form 10-Q for
the period ended March 31, 1984
10.5 Forms of Directors Stock Option Plan of 1987 and Directors Stock
Option Agreement are incorporated by reference from Form 10-K for
the period ended March 31, 1987
23 Consent of Livingston & Haynes, P.C., Independent Auditors
27 Financial Data Schedule
Supplemental Information
The Company plans to furnish proxy materials and an Annual Report
to Stockholders to its stockholders subsequent to the date of this
Form 10K, at which time copies shall be furnished to the Commission.
SYNERGISTICS, INC.
By ______________________________
David S. Longworth
President and Chief Operations Officer
Date_____________________________
-30-
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<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Synergistics, Inc. has caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
By_/S/DAVID S. LONGWORTH________
David S. Longworth
President, COO and Director
In accordance with the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the registrant and in
the capacities indicated.
By_/S/DAVID S. LONGWORTH________ _/S/WILLIAM M> TETRICK________
David S. Longworth William M. Tetrick
President, COO and Director Director
Date_12/30/96___________________ __12/30/96 __________________
By/S/LAWRENCE BISHOP____________ _/S/JOHN P. SANDERSON________
Lawrence Bishop John P. Sanderson
Director Director
Date_12/30/96___________________ _12/30/96_____________________
By_/S/J. THOMAS GEHMAN___________ _____________________________
J. Thomas Gehman Hubert D. Hennessey
Director Director
Date_12/30/96____________________ _______________________________
By______________________________ _/S/CHARLES P. AMAZEEN, JR._____
Robert L. Reis Charles P. Amazeen, Jr.
Director Director
Date____________________________ _12/30/96_________________________
-31-
<PAGE>
PURCHASE AND SALE AGREEMENT
This Agreement is dated as of July 22, 1994 and is between
Synergistics, Inc., a Massachusetts corporation having its principal
place of business at 9 Tech Circle, Natick, Massachusetts 01760
("Seller") and Imaging Technology Corporation, a Delaware Corporation
having its principal place of business at 428 Main Street, Hudson,
Massachusetts 01749 ("Buyer").
WHEREAS, Seller has been engaged in the development and
marketing of a computerized imaging photo identification card system (the
"Imaging System") over the past several years; and
WHEREAS, Seller has entered into agreements with various
entities to sell and service the Imaging System; and
WHEREAS, in recent years Seller has failed to profit
from the Imaging System and is desirous to sell substantially all of its
assets related to the Imaging System (the "ID Business"); and
WHEREAS, the Buyer is desirous to purchase the ID
Business on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual premises,
covenants, representations and warranties contained herein, Buyer and
Seller hereby agree as follows:
1. SALE AND PURCHASE OF ASSETS. Subject to the terms and
conditions hereof, Seller agrees to sell, convey, transfer, assign, grant
and deliver to Buyer, and Buyer agrees to purchase, acquire and accept
from Seller at the Closing (as defined in Section 7) on the date set
forth in Section 7 (the "Closing Date"), which is occurring
simultaneously with the date of the execution of this Agreement, all of
Seller's right, title and interest in and to all of the following assets
or rights related to the ID Business:
a. The computers, fixtures, machinery, equipment,
furniture, spare parts, supplies, materials and other personal property
used in conjunction with the ID Business, listed on Schedule 1 attached
hereto;
b. all inventories related to the ID Business
including all cameras, printers, computers, boards, and supplies listed
on Schedule 1 attached hereto,
c. all computer programs purchased and associated with
the ID Business and are listed on Schedule 1 attached hereto, and all
computer software developed by Seller associated solely with the ID
Business and the source codes therefor; provided however, the software
server developed by Sellerfor the purpose of networking imaging
computers to access control computers and the source codes therefor
shall be, and continue to be,shared by both Buyer and Seller;
d. all names, titles, copyrights, designs, licenses
and applications with respect to the foregoing, production records,
technical information, manufacturing and system integration know-how,
processes, trade secrets, and other proprietary rights and intangible
assets related to or used by Seller in connection with the ID Business;
-32-
PAGE
<PAGE>
e. all of Seller's right, title and interest in and to
all customer purchase order contracts, license agreements, service
contracts, letters of intent to purchase, pro forma invoices, proposals
to purchase, tradeout or barter agreements, and other contracts and
commitments, written or oral, in effect on the Closing Date relating to
the ID Business;
f. all files, books and records of Seller relating to
the ID Business, including, but not limited to, all customer names,
contacts and addresses, order history, supplier lists, promotional and
advertising materials, records of allformer customers, sales
correspondence and sales promotion lists relating to the ID Business;
g. all artwork related to all advertising and
promotional materials related to the ID Business and all artwork related
to customer ID card layouts; and
h. all customer deposits related to any ID Business
purchase orders which have not been fulfilled prior to the Closing Date
(collectively, the "Purchased Assets").
Notwithstanding the foregoing, it is the express intent
of the Buyer and the Seller that the Purchased Assets do not include any
property of the Seller, including computer hardware, computer software,
inventory, equipment, furniture, fixtures, names, titles, trademarks,
copyrights, patents, contracts, contract rights, files, books, records,
deposits, accounts receivable, and general intangibles, related to and
used in other divisions and aspects of Seller's business, including
without limitation, Seller's entry access control business.
The Purchased Assets shall not include the following:
accounts receivable generated by the ID Business from customers related
to shipments delivered and billed prior to the Closing Date; and cash on
hand or in banks generated by the ID Business.
2. ASSUMPTION OF LIABILITIES.
a. Liabilities Assumed. Buyer shall assume the
responsibility to support existing customers of the ID Business, but
solely on a best efforts basis in accordance with Buyer's policies and
procedures, then in effect, relative to customer support. Support
offered will initially include support to most existing installations,
but Buyer reserves the right, upon reasonable notice to both customer and
Seller, to discontinue support to systems no longer being marketed. Said
notice shall be given not less than ninety (90) days prior to the date
of the support discontinuance. In such cases where support to a
customer's system is being discontinued, Buyer will offer said customer
the opportunity to upgrade or replace their existing system with Buyer's
then current software. In the event that said customer is not satisfied
with alternatives presented by Buyer, Buyer agrees to review the matter
with the Seller, and Buyer and Seller then agree to extend best efforts,
together, to reach a solution acceptable to said customer. Buyer's
responsibility to review said matters with the Seller and to provide said
notices to Seller shall terminate one (1) year from the date of this
Agreement. Buyer reserves the right to charge customers reasonable fees
for aforementioned support services.
b. No Other Liabilities Assumed. Except for the
assumption of the liabilities set forth in Section 2(a), Buyer shall not
and does not assume any other liability or obligation of Seller, fixed
or contingent. Seller shall be responsible for all liabilities not
assumed by the Buyer and shall pay the same when and as they become due.
3. CONSIDERATION FOR ASSETS. The consideration for the
Purchased Assets shall consist of the obligations to be assumed by Buyer
as described in Section 2(a) and the following:
a. Purchase Price.
i. Subject to the maximum set forth in Section
3(b), Buyer shall pay to Seller a purchase price ("Purchase Price"),
which shall be paid in up to four installments, each being a contingent
payment ("Contingent Payment"). The Contingent Payments shall be
calculated as an amount equal to five percent (5%) of Buyer's Revenue,
as defined hereinafter, in excess of one million seven hundred and fifty
thousand dollars ($1,750,000) and shall be payable for the first four
years ("Contingent Payment Years"), subject to Section 3(b) below, in
which the Buyer's Revenue exceed $1,750,000. Contingent Payment Years
need not be sequential and need not occur within any predetermined time
frame, but they must be years in which the Buyer's Revenue is at least
$1,750,000. The first $1,750,000 in revenues in a Contingent Payment
Year shall be subtracted from Buyer's Revenue of said year, to yield the
net revenue that will be the basis for the 5% Contingent Payment. For
the purpose of this Section 3(a), the term "Buyer's Revenue" shall mean
the total gross revenue of Buyer, domestic and foreign, net of
commissions and fees paid to agents associated with foreign transactions
of Buyer derived from the operation of the ID Business, for each such
fiscal year, as determined by Buyer in accordance with accrual-based
generally accepted accounting principles consistently applied.
ii. Within one hundred and twenty (120) days after
the end of eachfiscal year of the Buyer, until four Contingent Payment
Years have been achieved or until the maximum as set forth in Section
3(b) has been reached, Buyer shall furnish to Seller a statement of
Buyer's Revenue for each fiscal year, calculated in accordance with
accrual-based generally accepted accounting principles consistently
applied, prepared and signed by Buyer's chief financial officer
certifying that said statement represents Buyer's Revenue for such fiscal
year, and a computation of the contingent Purchase Price due, if any,
with respect to such fiscal year. Each such statement shall be deemed
to be accepted by Seller sixty (60) days after its receipt unless within
such 60-day period Seller gives Buyer written notice ("Seller's Notice")
that Seller exercises its right to audit Buyer in accordance with Section
3(a)(iii). Within five days after the deemed acceptance of the
statement, Buyer shall pay to Seller the Contingent Purchase Price shown
on such statement, if any, by check or in another form acceptable to the
Seller.
iii. If Seller gives Seller's Notice with respect
to any statement of Buyer's revenue, Seller and its independent
accountants shall have the right on reasonable notice during business
hours and for a reasonable period of time not to exceed five business
days to review the books and records of Buyer and supporting work
papers, if any, for the purpose of verifying Buyer's Revenue as
reported on such statement.
iv. In the event Seller objects to any statement
of Buyer's Revenue, the parties shall in good faith attempt to resolve
any dispute. If the parties are unable to resolve such dispute, the
unresolved issues shall be submitted to arbitration.. Any such
arbitration proceeding shall be conducted in Boston, MA in accordance
with the rules of the American Arbitration Association in Boston, MA
then in effect.The decision of the arbitrators shall be binding and
conclusive on both parties. Each such party shall bear its own costs of
such arbitration.
b. Maximum Purchase Price. The maximum Purchase Price
that the Buyer shall pay in the aggregate shall be four hundred thousand
($400,000) dollars. Should the maximum be reached in less than four
years, the Buyer's obligations set forth in Section 3 shall be considered
completely satisfied, upon Seller receiving payment or payments totaling
$400,000.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Buyer as follows:
a. Organization and Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts. Seller has the power and authority
to own it assets and to carry on its business as such business is now
conducted, and to execute,deliver and perform this Agreement and
consummate the transactions contemplated hereby.
b. Authorization. The execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Seller. This Agreement and the agreements and
instruments delivered by Seller in connection herewith constitute the
legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with their terms.
c. Ownership of the Purchased Assets. Seller has
good, clear and marketable title to the Purchased Assets and has the full
and unencumbered right and authority to sell and transfer the same to
Buyer. The Purchased Assets are free and clear of all claims, liens,
charges, security interests and encumbrances of every nature whatsoever.
d. Litigation. There is no claim, notice of claim,
legal action, decree, judgment, order, arbitration or other proceeding,
suit or governmental investigation pending or, to the best of Seller's
knowledge, threatened against Seller with respect to the Purchased Assets
or which would adversely affect the consummation of the transactions
contemplated hereby, including without limitation, any claim or, notice
of claim based on breach of contract or failure of the ID Business
software to perform in accordance with specifications.
e. Compliance with Laws. Seller has complied in all
material respects with all laws, regulations and orders and has obtained
all governmental permits or licenses, if any, required in connection with
the Purchased Assets, the violation of which could have a material
adverse effect on the Purchased Assets, and no notice or warning from any
governmental authority in respect of any failure or alleged failure by
Seller to comply with any such law, regulation or order has been received
by Seller. No permits, licenses, authorizations, variances, orders or
approvals of governmental or administrative authorities are required to
own, lease or operate the Purchased Assets.
f. Software Rights. Seller has and has had all
required rights to sell, copy and distribute versions of the ID Business
software sold, copied and distributed by it, including all graphics and
software modules thereof, through ownership, licenses or existence in the
public domain.
g. No Misrepresentation. No representation or
warranty of Seller contained in this Agreement and no schedule or other
document of Seller attached to this Agreement or furnished by Seller in
connection herewith contains a misstatement of material fact or omits to
state a material fact required to be stated in order to make the
statement contained therein, in the light of circumstances under which
made, not misleading. There is no fact relating to ID Business known to
Seller which Seller has not disclosed to Buyer which materially adversely
affects or, so far as Seller can now reasonably foresee, will materially
adversely affect the Purchased Assets or the Buyer's use thereof.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer
hereby represents and warrants to Seller as follows:
a. Organization and Authority. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has the corporate power and authority to enter
into this Agreement and any related agreements and to consummate the
transactions contemplated hereby.
b. Authorization. The execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Buyer. This Agreement and the agreements and
instruments delivered by Buyer in connection herewith constitute the
legal, valid and binding obligations of Buyer, enforceable against Buyer
in accordance with their terms.
c. Litigation. There is no claim, legal action,
decree, judgment, order, arbitration or other proceeding, suit or
governmental investigation pending or, to Buyer's knowledge, threatened
against Buyer.
d. No Misrepresentation. No representation or
warranty of Buyer contained in this Agreement and no schedule or other
document of Buyer attached to this Agreement or furnished by Buyer in
connection herewith contains a misstatement of material fact or omits to
state a material fact required to be stated in order to make the
statement contained therein, in the light of circumstances under which
made, not misleading.
6. PARTICULAR AGREEMENTS OF THE PARTIES.
a. Business to be Operated in the Ordinary Course.
Seller agrees to carry on the business in the "Ordinary Course" up to the
Closing Date, and to be responsible for all obligations and liabilities
incurred in so doing, except that the Buyer has agreed to be responsible
for all consulting fees associated with Steven Handel's work incurred
after July 1, 1994. Seller shall be responsible for Mr. Handel's fees,
as previously agreed between Seller and Mr. Handel, prior to and through
July 1, 1994.
b. Business Cooperation Where Appropriate. Seller and
Buyer agree to extend best efforts to promote, cooperate with and support
the business activities of the other. Parties agree to team and
cross-sell where possible and to share leads when appropriate.
c. Use of Name. Seller agrees that Buyer may use the
"Synergistics" name for a period of six months following the Closing
solely in a descriptive context and by using the words "Synergistics
Imaging Division, Division of Imaging Technology Corporation".
d. Transition Period. Seller and Buyer recognize that
during the transition period, mail, faxes, and telephone calls including
but not limited to sales inquires, purchase orders, telephone calls, and
checks and other forms of payment, and so forth (collectively "ID
Business Activity"), related to the ID Business, will likely be received
by the Seller, but will be the property of the Buyer. Seller agrees
that when ID Business Activity is received by Seller, Seller will, with
reasonable promptness, forward all such ID Business Activity to the
Buyer. When payments are received by Seller, belonging to Buyer, Seller
agrees that said payments will be delivered to Buyer within three days
of Seller's receipt thereof.
e. Nondisturbance of Employees. Neither party shall
try to hire, or interfere with the employment of, the remaining employees
of the other for a period of three (3) years.
7. CLOSING DATE. The Closing shall occur at the office of
Kathleen A. Foley, Esq., 53 Main Street, Concord, Massachusetts,
simultaneously with the execution of this Agreement, on July 22, 1994 at
11:00 A.M. (the "Closing Date"). The Closing shall constitute the acts
which take place on the Closing Date by which the transactions
contemplated by this Agreement are consummated.
8. ADDITIONAL DOCUMENTS. At the Closing, or such other time
as indicated, in addition to this Agreement, the parties shall exchange
documents as follows:
a. Seller shall deliver to Buyer the following:
i. A duly executed Bill of Sale and Assignment
covering all of the Purchased Assets;
ii. Within 10 business days of the Closing, a
certified copy of the resolutions duly adopted by the board of directors
of Seller authorizing and approving the execution, delivery and
performance of this Agreement, and the sale and transfer of the Purchased
Assets to Buyer;
iii. Within 10 business days of the Closing, a
Certificate of Good Standing of Seller; and
iv. Such other documents, instruments and writings
reasonably requested by Buyer at or prior to the Closing;
b. Buyer shall deliver to Seller the following;
i. Within 10 business days of the Closing, a
certified copy of the resolutions duly adopted by the board of directors
of Buyer authorizing and approving the execution, delivery and
performance of this Agreement, and the sale and transfer of the Purchased
Assets to Buyer;
ii. Within 10 business days of the Closing, a
Certificate of Good Standing of Buyer; and
iii. Such other documents, instruments and writings
reasonably requested by Seller at or prior to the Closing.
9. BULK SALES. Seller and Buyer hereby waive compliance
with the provisions of any applicable bulk transfer laws. Seller agrees
to use its best efforts to ensure that all debts, obligations and
liabilities relating to the ID Business and thePurchased Assets which
are not expressly assumed by Buyer under this Agreement, and which if not
paid and discharged will have a materially adverse effect on the ID
Business, will be paid and discharged by Seller.
10.BROKERS. the parties represent that they have not used
or retained any broker, agent, finder or adviser in this transaction.
Seller and Buyer will indemnify and hold the other harmless from and
against any claim for brokerage, finder's fee and other commissions or
compensation arising in connection with its use, if any, of any agent
, broker, finder or advisor in connection with this Agreement and the
transactions contemplated hereby.
11.INDEMNIFICATION.
a. Survival. The parties hereto agree that the
representations and the warranties contained herein shall survive for a
period of two years following the Closing.
b. Indemnification by Seller. Seller agrees to
indemnify, defend and hold harmless Buyer and its stockholders,
directors, employees and affiliates from and against any and all demands,
claims, complaints, actions or causes of action, suits, proceedings,
investigations, arbitrations, assessments, losses, damages, liabilities,
costs and expenses, including, but not limited to, interest, penalties
and reasonable attorneys' and accounting fees and disbursements, asserted
against, imposed upon or incurred by Buyer byreason of or resulting
from (i) any liability notexpressly assumed by Buyer hereunder, (ii) any
liability incurred or created in connection with the ID Business prior
to the Closing resulting from actions or conduct of the Seller, or (iii)
any breach of warranty, non-fulfillment of any agreement or
misrepresentations on the part of Seller contained herein, or any
material misrepresentation in or omission from any certificate, schedule,
exhibit, financial statement, document or other instrument or instruments
furnished to Buyer hereunder; provide that, in the case of
representations and warranties, Buyer has provided notice of a claim to
Seller no later than two years from the Closing. Buyer shall be entitled
to indemnification for Seller only to the extent that the aggregate of
all indemnity payments that would be payable to Buyer hereunder exceeds
$5,000.
<PAGE>
c. Indemnification by Buyer . Buyer agrees to
indemnify, defend and hold harmless Seller and its stockholders,
directors, employees and affiliates from and against any and all demands,
claims, complaints, actions or causes of action , suits, proceedings,
investigations, arbitrations, assessments, losses, damages, liabilities,
costs and expenses, including, but not limited to, interest, penalties
and reasonable attorneys' fees and disbursements, asserted against,
imposed upon or incurred by Seller by reason of or resulting from (i) any
liability expressly assumed by Buyer hereunder, (ii) any liability
incurred or created in connection with the ID Business after the Closing
resulting from actions or conduct of the Buyer, or (iii) any breach of
warranty, non-fulfillment of any agreement or misrepresentations on the
part of Buyer contained herein, or any material misrepresentation in or
omission from any certificate, schedule, exhibit, financial statement,
document or other instrument or instruments furnished to Seller
hereunder; provided that, in the case of representations and warranties,
Seller has provided notice of a claim to Buyer no later that two years
from the Closing. Seller shall be entitled to indemnification from Buyer
only to the extent that the aggregate of all indemnity payments that
would be payable to Seller hereunder exceeds $5,000.
12.FURTHER ASSURANCES . Seller agrees that, at any time
from and after the date hereof it will, upon the request of Buyer,
execute and deliver all such further assignments, transfers, conveyances
and assurances as may be reasonably required for the assigning,
transferring, granting and conveying to Buyer any of the Purchased
Assets. If subsequent to the Closing Seller shall have in his possession
any asset or rights which should have been transferred to Buyer
hereunder, including any mail received after the Closing which relates
to the Purchased Assets, Seller will promptly deliver such assets or
rights to Buyer. In case Buyer receives checks for the payment of
accounts receivable that are the property of Seller and not being sold
or transferred to Buyer hereunder, Buyer will promptly deliver the checks
to Seller.
13.CONFIDENTIAL INFORMATION. From and after the date hereof:
a. Neither party shall directly or indirectly disclose
to any other person or entity, any information relating to any of the
Purchased Assets that is not generally known in the ID Business industry;
and
b. Neither party shall directly or indirectly disclose
to any other person or entity, any information known to that party
relating to any business activities of the other.
<PAGE>
14.EXPENSES. Seller and Buyer shall bear their respective
expenses incurred in the negotiation and consummation of this
Agreement.
15.BENEFIT . Nothing in this Agreement, express or implied,
is intended to nor shall it confer on any person (including but not
limited to any employee of Seller) other than the parties hereto, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement or arising out of the consummation of the transactions
contemplated hereby.
16.NOTICES. Any notice or other communication required or
permitted hereunder shall be sufficiently given if in writing and if
personally delivered or sent bycertified mail, postage prepaid,
addressed as follows:
a. To Seller:
Synergistics, Inc.
9 Tech Circle
Natick, MA 01760
Attn: William Tetrick, President
with a copy to:
William F. Macauley, Esq.
Craig and Macauley Professional Corporation
600 Atlantic Avenue
Boston, MA 02210
tel 617-367-9500
fax 617-742-1788
b. To Buyer:
Imaging Technology Corporation
428 Main Street
Hudson, MA 01749
Attn: Mr. Charles Benz, President
tel 508-568-3600
fax 508-568-1312
with a copy to:
Kathleen A. Foley, Esq.
53 Main Street
Concord, MA 01742
tel 508-369-6468
fax 508-371-2271
or to any party at such other address as such party may
have furnished to the others in writing, and any such notice or
communication shall be deemed to have been given as of the date so
delivered or mailed (except that a notice of a change of address shall
not be deemed to have been given until received by the addressee).
17.PUBLICITY. All publicity relating to the transactions
described in this Agreement will be subject to the mutual approval of
Seller and Buyer and, except as otherwise may be required by law, no
public announcement of the transactions described in this Agreement (or
communication thereof to any third party) will be made by either Seller
or Buyer without the consent of the other.
18.MISCELLANEOUS.
a. This Agreement and the documents referred to herein
or delivered pursuant hereto constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede all
previous agreements and understandings. This Agreement may be modified
only by a subsequentwriting signed on behalf of each party hereto.
b. This Agreement shall be binding upon and inure to
the benefit of Buyer and Seller, their successors and assigns. Without
limiting the generality of the foregoing, Seller's rights to the Purchase
Price shall be binding upon an assignee or subsequent owner of the ID
Business, in substantially the same form and amount as if Buyer had
continued to own the ID Business. This Agreement may not be assigned by
either party without the consent of the other party hereto.
c. No waiver of any breach or default hereunder shall
be valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
d. In case any one or more of the provisions (or
portions of the provisions) of this Agreement shall for any reason be
held to be invalid, illegal or unenforceable, such unenforceability shall
not affect any other provisions (or portions of the provisions) of this
Agreement and this Agreement shall be construed as if the invalid,
illegal or unenforceable provisions (or portions of the provisions) had
never been contained herein.
e. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the day and year above written.
SYNERGISTICS, INC.
By _______________________________
President
IMAGING TECHNOLOGY CORPORATION
By ________________________________
President
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Annual Statement on
Form 10-KSB for the fiscal year ended December 31, 1995 of our report
dated June 1, 1996, which expresses an unqualified opinion on the balance
sheets of Synergistics, Inc. as of December 31, 1994 and 1995 and the
related statements of operations, stockholders' equity and cash flows for
the years then ended.
/S/LIVINGSTON & HAYNES, P.C.
Wellesley, Massachusetts
December 30, 1996
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 332,151
<SECURITIES> 0
<RECEIVABLES> 381,795
<ALLOWANCES> 35,000
<INVENTORY> 201,546
<CURRENT-ASSETS> 903,672
<PP&E> 98,495
<DEPRECIATION> 45,700
<TOTAL-ASSETS> 1,774,243
<CURRENT-LIABILITIES> 427,703
<BONDS> 0
0
0
<COMMON> 92,976
<OTHER-SE> 1,253,564
<TOTAL-LIABILITY-AND-EQUITY> 1,774,243
<SALES> 2,273,647
<TOTAL-REVENUES> 2,282,065
<CGS> 1,233,770
<TOTAL-COSTS> 1,233,770
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 54,315
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 235,929
<INCOME-TAX> 110,000
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<NET-INCOME> 125,929
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