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, 1996 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 _X___ No ______
To the Company's knowledge, only a limited public market for its
securities existed as of December 31, 1996 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
$2,288,275
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,
1997)
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 September 30, 1996
Purchase and Sale Agreement dated July 22, 1994 regarding the
Sale of Imaging System Assets
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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
35% of all Company revenue in 1996, 49% in 1995 and 63% in 1994.
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 3% of all company revenue in 1996, 4% in
1995 and 4% in 1994. 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 10% of total company revenue in 1996, 17% in
1995 and 10% in 1994.
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The Company developed and announced Building Watch in 1990.
Initial product shipments began in December 1990. Building Watch
revenues approximated 14% of total company revenue in 1996, 21% in
1995, and 8% in 1994. 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
1996, 1% in 1995 and 2% in 1994.
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 1996, 2% in 1995 and
3% in 1994.
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 $34,864 in 1996, $51,825 in 1995 and $77,938 in 1994.
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, 1996,
December 31, 1995 and December 31, 1994.
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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 1% of total
revenue in 1996, 4% in 1995 and 1% in 1994.
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, 1996, the Company had twenty one (21) 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 19% of total revenue in 1996, 22% in
1995 and 29% in 1994. 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 1996, 1995 and 1994:
Unaudited Percentage of Exports By Sector 1996 1995 1994
Middle East including Turkey 28% 30% 20%
Canada 12% 15% 18%
South/Central America and Mexico 14% 36% 37%
South Pacific and Far East 7% 6% 5%
Grand Total 61% 87% 79%
ITEM 2. PROPERTIES
The Company currently leases approximately 7,160 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 $3,580. 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 1996.
ITEM 5. MARKET OF THE COMPANY'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
As of December 31, 1996, 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
1996 Compared to 1995
Revenues for 1996 were $2,288,275, an increase of $14,628 compared
with 1995.
Cost of Sales as a percentage of revenue increased to 63.07% from
54.26% and selling expenses for 1996 increased by $87,774 when
compared to 1995. The increase in Cost of Sales was due to necessary
product enhancement expenditures. Increases in Sales & Marketing
expenses relate to the Company's development of new promotional materials
and an aggressive advertising campaign.
At December 31, 1996, current assets exceeded current liablilities
by $427,802 including cash in commerical checking and money market
accounts of $101,550.
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 were 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 reduction of 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.
LIQUIDITY AND CAPITAL RESOURCES
During 1996, 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, 1996 and 1995
Independent Auditors' Report - March 14, 1997 11
Balance Sheets as of December 31, 1996 and 12
December 31, 1995
Statements of Operations for years ended 13
December 31, 1996 and 1995
Statements of Stockholders' Equity 14
for years ended December 31, 1996 and 1995
Statements of Cash Flows for years ended 15
December 31, 1996 and 1995
Notes to Financial Statements 16-22
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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, 1996 and 1995, 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, 1996 and 1995, and the
results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
Wellesley, Massachusetts
March 14, 1997
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SYNERGISTICS, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
1996 1995
CURRENT ASSETS
Cash and equivalents $ 101,550 $ 332,151
Trade accounts receivable, net of
reserves of $20,000 and $35,000 in
1996 and 1995, respectively 492,559 346,795
Inventories 239,818 201,546
Prepaid expenses 20,710 23,180
------- -------
TOTAL CURRENT ASSETS 854,637 903,672
EQUIPMENT 122,652 98,495
Less depreciation and amortization 60,363 45,700
------ ------
62,289 52,795
DEFERRED TAXES 817,776 817,776
--------- ---------
$1,734,702 $1,774,243
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 220,275 $ 163,774
Accrued expenses and
other current liabilities 65,263 67,633
Amounts due stockholder 141,297 196,296
---------- --------
TOTAL CURRENT LIABILITIES 426,835 427,703
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) (5,320,211) (5,281,538)
----------- -----------
1,315,002 1,353,675
Cost of Common Stock held in Treasury (7,135) (7,135)
----------- ----------
1,307,867 1,346,540
---------- ----------
$1,734,702 $1,774,243
========== ==========
See accompanying notes to the financial statements.
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SYNERGISTICS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
Revenues:
Sales $2,288,275 $2,273,647
Interest income 584 8,418
--------- ---------
2,288,859 2,282,065
Costs and expenses:
Costs of sales 1,443,412 1,233,770
General and administrative expenses 421,561 387,206
Selling expenses 458,619 370,845
Bad debt expense 3,940 54,315
--------- ---------
2,327,532 2,046,136
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (38,673) 235,929
Income taxes - deferred - 110,000
---------- --------
NET INCOME (LOSS) $ (38,673) $ 125,929
========== ==========
INCOME (LOSS) PER COMMON SHARE $(0.004) $0.013
======= ======
See accompanying notes to the financial statements.
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SYNERGISTICS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
COMMON STOCK
SHARES AMOUNT
Balances at January 1, 1995 9,297,561 $92,976
Net income - -
--------- --------
Balances at December 31, 1995 9,297,561 92,976
Net loss - -
--------- --------
BALANCES AT DECEMBER 31, 1996 9,297,561 $92,976
========= =======
See accompanying notes to the financial statements.
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ADDITIONAL RETAINED
PAID-IN EARNINGS TREASURY STOCK
CAPITAL (DEFICIT) SHARES AMOUNT TOTAL
$6,542,237 $(5,407,467) 16,445 $ 7,135 $ 1,220,611
- 125,929 - - 125,929
- ---------- ----------- ----- ------- ------------
6,542,237 (5,281,538) 16,445 7,135 1,346,540
- (38,673) - - (38,673)
- ---------- ------------ ------ ------- ------------
$6,542,237 $(5,320,211) 16,445 $ 7,135 $ 1,307,867
========== =========== ======= ======= ===========
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SYNERGISTICS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
Cash flows from operating activities:
Net income (loss) $(38,673) $ 125,929
Adjustments to reconcile net income (loss)
to net cash provided (used) by
operating activities:
Deferred taxes - 110,000
Depreciation and amortization 14,663 11,618
Reserve for bad debts (15,000) -
(Increase) decrease in assets:
Trade accounts receivable (105,764) 143,511
Inventories (38,272) 25,264
Prepaid expenses and other
current assets 2,470 3,175
Increase (decrease) liabilities:
Trade accounts payable 56,501 (66,462)
Accrued expenses and other current
liabilities (2,370) (123,805)
Amounts due stockholder (54,999) (6,346)
-------- --------
TOTAL ADJUSTMENTS (142,771) 96,955
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (181,444) 222,884
--------- --------
Cash flows from investing activities:
Note payable-director (25,000) -
Capital expenditures (24,157) (40,642)
-------- --------
NET CASH (USED) BY INVESTING ACTIVITIES (49,157) (40,642)
--------- --------
NET CHANGE IN CASH (230,601) 182,242
Cash and equivalents at beginning of year 332,151 149,909
-------- ---------
CASH AND EQUIVALENTS AT END OF YEAR $ 101,550 $ 332,151
========= =========
See accompanying notes to the financial statements.
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SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 and 1995
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, 1996 and 1995
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)
Stock Options
The Company accounts for its incentive stock option plans
in accordance with APB No. 25 and does not recognize an expense when
options are issued with an exercise price in excess of market.
Currently there is no public market for this stock and estimates of
future value as required by FASB 123 cannot reasonably be
determined.
NOTE B - INVENTORIES
Inventories consist of the following at December 31, 1996
and 1995:
1996 1995
Finished goods and work-in-process
at aggregate market $177,648 $149,298
Raw materials 62,170 52,248
-------- --------
$239,818 $201,546
======== ========
- 17 -
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 and 1995
NOTE C - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of
the following at December 31, 1996 and 1995:
1996 1995
Accrued compensation and benefits $41,026 $ 38,474
Accrued commissions 6,402 7,922
Accrued audit fees 17,500 20,000
Other 335 1,237
------- --------
$65,263 $ 67,633
======= ========
NOTE D - AMOUNTS DUE STOCKHOLDER
Amounts due stockholder consist of the following at
December 31, 1996 and 1995:
1996 1995
Amount due majority stockholder
for wages in arrears; payable,
without interest, on demand $ 88,701 $107,596
Amount due majority stockholder
for costs and expenses incurred
by majority stockholder on
Company's behalf; payable,
without interest on demand 52,596 88,700
--------- --------
$141,297 $196,296
======== ========
NOTE E - STOCKHOLDERS' EQUITY
Common Stock
At December 31, 1996, the Company is authorized to issue
12,000,000 shares of $.01 par value Common Stock. At December 31,
1996, 9,297,561 shares of such stock had been issued, including
16,445 shares held in the form of Treasury Stock. At December 31,
1996, 850,000 shares were reserved for issuance in connection with
the stock option plans discussed below.
- 18 -
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 and 1995
NOTE E - STOCKHOLDERS' EQUITY (Continued)
Stock Option Plans
At December 31, 1996, 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 1993 and June 1998, 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 275,000 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.
Transactions regarding the options during the years ended
December 31, 1996 and 1995 are shown as follows;
1983 Plan 1987 Plan 1988 Plan
Outstanding at January 1,
1995 220,680 66,000 139,957
Granted at $2.50 per share:
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
Expired because grantee no
longer employed: (15,000) (8,086)
Other employees (21,769) - (43,861)
--------- -------- ---------
Outstanding at
December 31, 1996 145,632 66,000 130,751
======= ====== =======
Available for grant at
December 31, 1996 129,368 209,000 144,249
======= ======= =======
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, 1996 and 1995).
- 19 -
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 and 1995
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, 1996 and 1995 approximated $57,600 and $58,800, 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:
Year Ending December 31,
1997 $ 44,003
1998 45,791
1999 19,390
--------
$109,184
========
NOTE H - INCOME TAXES
At December 31, 1996, 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, 1996 and 1995, the
Company's deferred tax asset consists of:
1996 1995
Net operating loss
carryforwards $1,760,868 $1,760,868
Other 66,000 66,000
Valuation allowance (1,009,092)(1,009,092)
---------- -----------
$ 817,776 $ 817,776
========== ==========
- 20 -
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE H - INCOME TAXES (Continued)
At December 31, 1996, 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, 1996, 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 1996 1995
Government sales $ 21,272 $ 74,799
Other domestic sales 1,827,156 1,655,392
Export sales 439,847 543,456
--------- ---------
$2,288,275 $2,273,647
========== ==========
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 1996.
NOTE J - NOTE RECEIVABLE - DIRECTOR
The Company advanced $25,000 to a director. The note is
payable on demand without interest.
- 21 -
<PAGE>
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE K - 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 sales to the
government agency. As of December 31, 1995 the Company had brokered
one sale in the amount of $55,000.
NOTE L - ADVERTISING COSTS
Advertising expense was $46,404 and $46,619, respectively,
for the years ended December 31, 1996 and 1995.
- 22 -
PAGE
<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.
-23-
<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.
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.
-24-
PAGE
<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 $169,137
Sales Manager
CERTAIN TRANSACTIONS
As of December 31, 1996, the Company owed Mr. Tetrick
approximately $88,701 in accrued salary for services rendered and
$52,596 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.
-25-
PAGE
<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 1986 $2.75 12,034 Expired in 1996
David S. Longworth 1986 $2.50 7,776 Expired in 1996
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 Expired in 1996
David S. Longworth 1988 $1.00 20,000
David S. Longworth 1988 $2.50 9,805
Micheal G. Kasuba 1988 $2.50 10,437 Expired in 1996
William M. Tetrick 1989 $2.75 11,925 Expired in 1996
David S. Longworth 1989 $2.50 10,417
Micheal G. Kasuba 1989 $2.50 5,000 Expired in 1996
William M. Tetrick 1990 $2.75 12,210 Expired in 1996
David S. Longworth 1990 $2.50 10,822
Michael G. Kasuba 1990 $2.50 1,480 Expired in 1996
William M. Tetrick 1991 $2.75 12,963
David S. Longworth 1991 $2.50 11,643
Michael G. Kasuba 1991 $2.50 2,068 Expired in 1996
David S. Longworth 1995 $2.50 23,084
Robert Pogorelc 1995 $2.50 4,981
Michael G. Kasuba 1995 $2.50 4,059 Expired in 1996
As of March 1, 1997, unexercised options for the purchase of an
aggregate of 276,383 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.
The Company has established a 401(k) plan for its employees.
As of December 31, 1996, the Company had contributed $7,000 to that 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, 1997, no forms of contingent compensation.
Other than the transactions described herein, there were no
material transactions during 1996 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.
-26-
PAGE
<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, 1996 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
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%
-27-
PAGE
<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.
-28-
PAGE
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company advanced $25,000 to a director. The note is payable on
demand without interest.
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, 1996 and 1995
Independent Auditors' Report - March 14, 1997 12
Balance Sheets as of December 31, 1996 and 13
December 31, 1995
Statements of Operations for years ended 14
December 31, 1996 and 1995
Statements of Stockholders' Equity (Deficit) for 15
years ended December 31, 1996 and 1995
Statements of Cash Flows for years ended 16
December 31, 1996 and 1995
Notes to Financial Statements 12-22
(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 is incorporated by reference from Form 10-KSB
for the year ended December 31, 1995.
<PAGE>
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., 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-
PAGE
<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>
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, 1996 of our report
dated March 14, 1997, which expresses an unqualified opinion on the balance
sheets of Synergistics, Inc. as of December 31, 1995 and 1996 and the
related statements of operations, stockholders' equity and cash flows for
the years then ended.
/S/LIVINGSTON & HAYNES, P.C.
Wellesley, Massachusetts
May 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 101,550
<SECURITIES> 0
<RECEIVABLES> 512,559
<ALLOWANCES> 20,000
<INVENTORY> 239,818
<CURRENT-ASSETS> 854,637
<PP&E> 122,652
<DEPRECIATION> 60,363
<TOTAL-ASSETS> 1,734,702
<CURRENT-LIABILITIES> 426,835
<BONDS> 0
0
0
<COMMON> 92,976
<OTHER-SE> 1,210,891
<TOTAL-LIABILITY-AND-EQUITY> 1,734,702
<SALES> 2,288,275
<TOTAL-REVENUES> 2,288,859
<CGS> 1,443,412
<TOTAL-COSTS> 1,443,412
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,940
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (38,673)
<INCOME-TAX> 0
<INCOME-CONTINUING> (38,673)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,673)
<EPS-PRIMARY> (0.004)
<EPS-DILUTED> (0.004)
</TABLE>
