-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IvwlP56KYUo4Dah0EUeiRW4OsSnjTNkq9fBrcodKZPIO48UaZo15R5oRrJ1HmiE/ MtYAhDHflplpMgTmIW8lkg== 0000802851-99-000006.txt : 19990503 0000802851-99-000006.hdr.sgml : 19990503 ACCESSION NUMBER: 0000802851-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOGIC DEVICES INC CENTRAL INDEX KEY: 0000802851 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942893789 STATE OF INCORPORATION: CA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17187 FILM NUMBER: 99606305 BUSINESS ADDRESS: STREET 1: 1320 ORLEANS DR CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 4085425400 MAIL ADDRESS: STREET 1: 1320 ORLEANS DRIVE CITY: SUNNYVALE STATE: CA ZIP: 94089 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1999 Commission File Number 0-17187 Logic Devices Incorporated (Exact name of registrant as specified in its charter) California 94-2893789 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1320 Orleans Drive, Sunnyvale, California 94089 (Address of principal executive offices) (Zip Code) (408) 542-5400 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of the issuer's classes of common stock, as of the latest practicable date. On April 30, 1999, 6,632,388 shares of Common Stock, without par value, were outstanding. Logic Devices Incorporated INDEX Page Number Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 1999 and September 30, 1998 3 Consolidated Statements of Income for the three months ended March 31, 1999 and 1998 4 Consolidated Statements of Income for the six months ended March 31, 1999 and 1998 5 Consolidated Statements of Cash Flows for the six months ended March 31, 1999 and 1998 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 15 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17 Exhibit 10.1 19 Exhibit 10.2 23 Exhibit 10.3 27 Exhibit 11 28 Exhibit 27 29 Part I - FINANCIAL INFORMATION Item 1. Financial Statements Logic Devices Incorporated Consolidated Balance Sheets
March 31, September 30, 1999 1998 (unaudited) Assets Current assets: Cash and cash equivalents $ 170,300 $ 142,900 Accounts receivable, net of allowance 4,217,500 4,553,400 Inventories 12,188,500 12,535,600 Prepaid expenses 488,100 372,100 Income taxes receivable 90,000 90,000 Total current assets 17,154,400 17,694,000 Equipment and leasehold improvements,net 4,253,100 4,935,500 Other Assets 680,400 969,400 $22,087,900 $23,598,900 Liabilities and Shareholders' Equity Current liabilities: Bank borrowings 4,250,000 5,350,000 Notes payable 252,000 - Current portion of long-term debt obligations 361,900 562,400 Accounts payable 1,350,200 1,585,400 Accrued expenses 403,300 565,700 Total current liabilities 6,617,400 8,063,500 Long-term debt obligations, less current portion 280,300 392,100 Total liabilities 6,897,700 8,455,600 Shareholders' equity: Common stock 18,091,900 18,091,900 Common stock subscribed (307,500) (307,500) Retained earnings (2,594,200) (2,641,100) Total shareholders' equity 15,190,200 15,143,300 $22,087,900 $23,598,900
Logic Devices Incorporated Consolidated Statements of Income Three months ended March 31, 1999 and 1998 (unaudited)
1999 1998 Net sales $ 3,256,100 $ 3,245,000 Cost of sales 1,812,500 1,869,900 Gross margin 1,443,600 1,375,100 Operating expenses: Research and development 359,900 383,200 Selling, general and administrative 910,900 876,500 Operating expenses 1,270,800 1,259,700 Income from operations 172,800 115,400 Other expense (income), net 132,600 110,600 Income before taxes 40,200 4,800 Income taxes - 800 Net income $ 40,200 $ 4,000 Net income per common share $ 0.01 $ 0.00 Weighted average common share 6,632,388 6,121,750 equivalents outstanding
Logic Devices Incorporated Consolidated Statements of Income Six months ended March 31, 1999 and 1998 (unaudited)
1999 1998 Net sales $ 6,327,000 $ 6,757,100 Cost of sales 3,492,800 4,073,000 Gross margin 2,834,200 2,684,100 Operating expenses: Research and development 729,000 641,100 Selling, general and administrative 1,794,900 1,770,900 Operating expenses 2,523,900 2,412,000 Income from operations 310,300 272,100 Other expense (income), net 262,600 344,300 Income (loss) before taxes 47,700 (72,200) Income taxes (benefit) 800 (84,200) Net income $ 46,900 $ 12,000 Net income per common share $ 0.01 $ 0.01 Weighted average common share equivalents outstanding 6,632,388 6,121,750
Logic Devices Incorporated Consolidated Statements of Cash Flows Six months ended March 31, 1999 and 1998 (unaudited)
1999 1998 Cash flows from operating activities: Net income $ 46,900 $ 12,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 900,200 853,000 Change in operating assets and liabilities: Accounts receivable, net 335,900 (1,816,700) Inventories 347,100 357,900 Prepaid expenses and other assets (116,000) 549,100 Income taxes receivable - (522,000) Deferred income taxes - 299,000 Accounts payable (235,200) 798,600 Accrued expenses (162,400) 33,200 Net cash provided by operating activities 1,116,500 564,100 Cash flows from investing activities: Capital expenditures (202,500) (1,363,100) Decrease (increase) in other assets 273,700 (710,700) Net cash provided by (used in) investing activities 71,200 (2,073,800) Cash flows from financing activities: Bank borrowing, net (1,100,000) 1,225,000 Notes payable 252,000 - Repayment of long-term obligations (312,300) (59,000) Net cash (used in) provided by financing activities (1,160,300) 1,166,000 Net increase (decrease) in cash and cash equivalents 27,400 (343,700) Cash and cash equivalents at beginning of period $ 142,900 $ 365,700 Cash and cash equivalents at end of period $ 170,300 $ 22,000
Logic Devices Incorporated Notes to Consolidated Financial Statements March 31, 1999 and September 30, 1998 (unaudited) (A) Basis of Presentation The accompanying unaudited interim consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the consolidated financial position, results of operations and cash flows for the periods indicated. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, and cash flows, in conformity with generally accepted accounting principles. The Company has filed audited financial statements which include all information and footnotes necessary for such a presentation of the financial position, results of operations and cash flows for the years ended September 30, 1998 and December 31, 1997, with the Securities and Exchange Commission. It is suggested that the accompanying unaudited interim financial statements be read in conjunction with the aforementioned audited financial statements. The unaudited interim financial statements contain all normal and recurring entries. The results of operations for the interim period ended March 31, 1999 are not necessarily indicative of the results to be expected for the full year. (B) Inventories A summary of inventories follows:
March 31, September 30, 1999 1998 Raw materials $ 3,666,900 $ 2,599,900 Work-in-process 5,482,200 5,373,600 Finished goods 3,039,400 4,562,100 $ 12,188,500 $ 12,535,600
Based on forecasted 1999 sales levels, the Company has on hand inventories aggregating approximately twelve months of sales. Logic Devices Incorporated Notes to Consolidated Financial Statements March 31, 1999 and September 30, 1998 (unaudited) (C) Financing Until March 11, 1999, the Company had a $6,000,000 revolving line of credit with Sanwa Bank, which had a maturity date of May 31, 1999. The line of credit bore interest at the Bank's prime rate plus 1.00% and was secured by all the assets of the Company. The line of credit required the Company to maintain a minimum tangible net worth of $20,000,000, a maximum ratio of debt to tangible net worth of not more than 0.50 to 1.00, a minimum current ratio of not less than 2.00 to 1.00, a minimum quick ratio of not less than 1.10 to 1.00 increasing to 1.20 to 1.00 at September 30, 1998 and increasing again to 1.35 to 1.00 at December 31, 1998 and thereafter, and profitability on a quarterly basis. As of December 31, 1998 and September 30, 1998, the Company was not in compliance with certain covenants under the borrowings. The Company was not in compliance with the then existing net worth (minimum of $20,000,000), net after tax profit (minimum $1.00 per quarter), or quick ratio (1.20 to 1.00 at September 30, 1998 and 1.35 to 1.00 at December 31, 1998) covenants as of September 30, 1998 and December 31, 1998 or the debt to net worth ratio (0.50 to 1.00) as of September 30, 1998. The Company has received waivers from the Bank for these covenants as of such dates. On March 11, 1999, the Company accepted a proposal from the Bank to amend the terms of its revolving line of credit facility. This agreement now expires on August 1, 1999. Under the amendment, the maximum borrowing amount was $4,500,000 and is reduced at future dates prior to maturity. The maximum borrowing amount was $4,500,000 from March 11, 1999 through March 30, 1999, reduced to $4,250,000 from March 31, 1999 through June 29, 1999, and will be reduced to $3,000,000 from June 30, 1999 through August 1, 1999. The line of credit now bears interest at the Bank's prime rate (7.75% at March 31, 1999) plus 2.00%. The line of credit requires the Company to maintain a minimum tangible net worth of $14,000,000 and a minimum quick ratio of not less than 0.55 to 1.00 through and including March 31, 1999, and at June 30, 1999 and thereafter a ratio of not less than 0.65 to 1.00. The Company is required to have a minimum net profit after tax of not less than $250,000 at the fiscal quarter ending June 30, 1999. The Company is required to have total inventory of not more than $10,000,000 on June 30, 1999. All other material terms of the facility remained unchanged. As of March 31, 1999, the Company was in compliance with current financial covenants under the borrowings, although it did borrow funds from third parties (as discussed below), which was not in compliance with a covenant which restricts the ability of the Company to incur additional indebtedness. Under the terms of its line of credit facility, the Company is precluded from paying any cash dividends without the consent of the lender even if the Company is in compliance with all of the financial covenants but is allowed to pay stock dividends whether or not there was any other covenant violation. Regardless of any such restrictions in its bank loan agreements, the Company does not intend to pay cash dividends in the near future and anticipates reinvesting its cash flow back into operations. On February 24, 1999, the Company received loans in the aggregate principal amount of $250,000 from William J. Volz, President and a director of the Company, and The Holding Company. The president of The Holding Company is Burton W. Kanter, a director of the Company. Mr. Kanter does not have any beneficial ownership interest in The Holding Company although certain of his family members do have beneficial ownership interests through various trusts. The loans are unsecured and bear interest to maturity at the rate which is the reference or equivalent rate of interest quoted, published or announced by the Bank plus 2.00%. The loans had an original maturity of March 31, 1999, but the holders of the loans have extended the maturity date to May 31, 1999. The proceeds from these loans were applied to the Company's working capital needs. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Revenues Net revenues were $3,256,100 for the three months ended March 31, 1999, an increase of 1% from $3,245,000 for the three months ended March 31, 1998. The increase in revenues for the period was attributed to an increase in sales on the Company's digital signal processing (DSP) products. Expenses Cost of revenues decreased 3%, from $1,869,900 in the three months ended March 31, 1998 to $1,812,500 in the three months ended March 31, 1999. Gross profit increased by 5%, from $1,375,100 in 1998 to $1,443,600 in 1999. This increase was the result of a change in the sales mix to higher margin proprietary products. As a percentage of net revenues, gross profit margin increased from 43% in the three months ended March 31, 1998 to 45% in the three months ended March 31, 1999. Research and development expense decreased slightly during the period from $383,200 (12% of net revenues) in the 1998 period to $359,900 (11% of net revenues) in the 1999 period. The Company plans to continue its substantial investments in new product research and development throughout 1999. Selling, general and administrative expense increased from $876,500 (27% of net revenues) in the 1998 period to $910,900 (28% of net revenues) in the 1999 period. This was the result of increased expenditures for marketing and field sales activities. The Company had income from operations for the 1999 period of $172,800 versus income of $115,400 in the 1998 period, due to the above mentioned factors. For the 1999 period, the Company incurred $132,600 in other expense consisting of interest expense versus other expense of $110,600 in the 1998 period. As a result of the foregoing, the Company enjoyed net income of $40,200 in the 1999 period versus a net income of $4,000 in the 1998 period. Liquidity and Capital Resources Cash Flows For the six months ended March 31, 1999, the Company had after-tax cash earnings (defined as net income plus non- cash depreciation charges) of $947,100 versus $865,000 for the 1998 period. Although the Company has historically relied on after-tax earnings as the Company's primary source of financing for working capital needs and for capital expenditures, the Company also used borrowings during both the 1998 and 1999 periods. During the 1999 period, after-tax cash earnings of $947,100 plus an increase in notes payable of $252,000, decreases in accounts receivable of $335,900 and decreases in inventories of $347,100 funded decreases in accounts payable of $235,200 and accrued expenses of $162,400. This resulted in total net cash provided by operations of $1,116,500. The Company invested $202,500 in capital expenditures, decreased other assets by $273,700 and reduced bank indebtedness by $1,100,000 and other long-term obligations by $312,300 during the period. The Company received an income tax refund of approximately $90,000 in the third fiscal quarter of 1999. During the 1998 period, after-tax cash earnings of $865,000, increases in bank borrowings of $1,225,000, increases in accounts payable of $798,600, increases in accrued expenses of $33,200, and decreases in accounts receivable of $1,816,700, funded increases in inventory of $357,900 and prepaid expenses of $549,100. This resulted in total net cash provided by operations of $564,100. The Company invested $2,073,800 in capital expenditures and other assets during the period. The Company had an income tax receivable of $522,000 for which the Company received a refund in the second quarter of 1998. Working Capital The Company's investment in inventories and accounts receivable has been significant and will continue to be significant in the future. Over prior periods, the Company, as a nature of its business, has maintained these high levels of inventories and accounts receivable. The Company relies on third party suppliers for raw materials and as a result maintains substantial inventory levels to protect against disruption in supplies. The Company has historically maintained inventory turn over of approximately 225 days to 365 days, since 1990. The low point in inventory levels came in 1992 and 1993 when the Company had supply disruptions from one of its major suppliers. The Company is shifting its product offerings to higher margin proprietary products and reducing the total number of products which it offers. As this transition progresses, the Company expects to improve its sales to inventory ratio. The Company provides reserves for product material that is over one year old with no backlog or sales activity, and reserves for future obsolescence. The Company also takes physical inventory write-downs for obsolescence. The Company has been actively reducing inventory levels over the past several quarters. The Company's accounts receivable level has been consistently correlated to the Company's previous quarter revenue level. Because of the Company's customer scheduled backlog requirements, up to 80% of the quarterly revenues are shipped in the last month of the quarter. This has the effect of making a large portion of the quarterly shipments reflected in accounts receivable not due by the end of such quarter because of the Company's net 30 day terms. This, combined with the fact that the Company's distributor customers (which make up 66% and 52% of the Company revenues in 1999 and 1998, respectively) generally pay 90 days and beyond, results in the accounts receivable balance at the end of the quarterly period being at its highest point for the period. The Company is reducing its dependence on distributors to accelerate accounts receivable collections. Although current levels of inventory and accounts receivable impact the Company's liquidity, the Company believes that these items are a cost of doing business given the Company's fabless operation. The Company is in the process of restructuring its sales channels to reduce the levels of accounts receivable and inventory which it must carry. Financing Until March 11, 1999, the Company had a $6,000,000 revolving line of credit with Sanwa Bank, which had a maturity date of May 31, 1999. The line of credit bore interest at the Bank's prime rate plus 1.00% and was secured by all the assets of the Company. The line of credit required the Company to maintain a minimum tangible net worth of $20,000,000, a maximum ratio of debt to tangible net worth of not more than 0.50 to 1.00, a minimum current ratio of not less than 2.00 to 1.00, a minimum quick ratio of not less than 1.10 to 1.00 increasing to 1.20 to 1.00 at September 30, 1998 and increasing again to 1.35 to 1.00 at December 31, 1998 and thereafter, and profitability on a quarterly basis. As of December 31, 1998 and September 30, 1998, the Company was not in compliance with certain covenants under the borrowings. The Company was not in compliance with the then existing net worth (minimum of $20,000,000), net after tax profit (minimum $1.00 per quarter), or quick ratio (1.20 to 1.00 at September 30, 1998 and 1.35 to 1.00 at December 31, 1998) covenants as of September 30, 1998 and December 31, 1998 or the debt to net worth ratio (0.50 to 1.00) as of September 30, 1998. The Company has received waivers from the Bank of these covenants as of such dates. On March 11, 1999, the Company accepted a proposal from the Bank to amend the terms of its revolving line of credit facility. This agreement now expires on August 1, 1999. Under the amendment, the maximum borrowing amount was $4,500,000 and is reduced at future dates prior to maturity. The maximum borrowing amount was $4,500,000 from March 11, 1999 through March 30, 1999, reduced to $4,250,000 from March 31, 1999 through June 29, 1999, and will be reduced to $3,000,000 from June 30, 1999 through August 1, 1999. The line of credit now bears interest at the Bank's prime rate (7.75% at March 31, 1999) plus 2.00%. The line of credit requires the Company to maintain a minimum tangible net worth of $14,000,000 and a minimum quick ratio of not less than 0.55 to 1.00 through and including March 31, 1999, and at June 30, 1999 and thereafter a ratio of not less than 0.65 to 1.00. The Company is required to have a minimum net profit after tax of not less than $250,000 at the fiscal quarter ending June 30, 1999. The Company is required to have total inventory of not more than $10,000,000 on June 30, 1999. All other material terms of the facility remained unchanged. As of March 31, 1999, the Company was in compliance with revised financial covenants under the borrowings, although it did borrow funds from third parties (as discussed below), which was not in compliance with a covenant which restricts the ability of the Company to incur additional indebtedness. Under the terms of its line of credit facility, the Company is precluded from paying any cash dividends without the consent of the lender even if the Company is in compliance with all of the financial covenants but is allowed to pay stock dividends whether or not there was any other covenant violation. Regardless of any such restrictions in its bank loan agreements, the Company does not intend to pay cash dividends in the near future and anticipates reinvesting its cash flow back into operations. On February 24, 1999, the Company received loans in the aggregate principal amount of $250,000 from William J. Volz, President and a director of the Company, and The Holding Company. The president of The Holding Company is Burton W. Kanter, a director of the Company. Mr. Kanter does not have any beneficial ownership interest in The Holding Company although certain of his family members do have beneficial ownership interests through various trusts. The loans are unsecured and bear interest to maturity at the rate which is the reference or equivalent rate of interest quoted, published or announced by the Bank plus 2.00%. The loans had an original maturity of March 31, 1999, but the holders of the loans have extended the maturity date to May 31, 1999. The proceeds from these loans were applied to the Company's working capital needs. The reduced maximum borrowing amounts under the Company's revolving line of credit with the Bank, as well as the maturity of the facility on August 1, 1999 will require the Company to repay principal amounts under the line of credit, and the Company may not have sufficient funds from operations to make those repayments. Furthermore, the loans in aggregate principal amounts of $250,000 mature on May 31, 1999. Additional financing may be necessary to make some or all of such repayments. Such financing has not been identified as of the date of this report. Year 2000 Compliance The year 2000 creates the potential for date related data to cause computer processing errors or system shut- downs because computer-controlled systems have historically used two digits rather than four to define years. For example, computer programs that contain time data sensitive software may recognize a date using two digits of "00" as the year 1900 rather than the year 2000. The miscalculations and systems failures that may be caused by such date misrecognition could disrupt the operations of the Company. Since the risk relates to computer-controlled systems, the year 2000 issue affects computer software, computer hardware, and any other equipment with imbedded technology that involves date sensitive functions. The Company has determined to assess the scope of its Year 2000 problems, to remediate the problem, and to plan for the contingency of remediation failure separately for each of its internal computer software programs, its computer hardware, its machinery which includes imbedded computer technology, its suppliers and its products. The Company completed its assessment of all aspects of its operations other than its customers and suppliers prior to the beginning of the fiscal quarter ending December 31, 1998. As a result of its assessment, the Company has determined that none of its products have date sensitive functions and, accordingly, that no products will require modification or replacement. The Company is still in the process of determining the extent to which its customers and suppliers may be impacted by year 2000 computer processing problems. This assessment has been slower than the Company's other assessment efforts since it necessarily involves obtaining information from third parties, and the Company's suppliers are foreign operations which may have local customs or attitudes regarding disclosure which differ from those in the United States. Conversely, because the Company relies on third parties to manufacture its chips and assemble its products, the Company's production may be slowed or other of its operations may be adversely impacted by the Year 2000 problems of its suppliers. The Company has received assurances from its major suppliers, including the silicon foundaries supplying the Company with silicon wafers, that they are Year 2000 compliant. The Company does not believe it has any technological interfaces with customers that will be affected by the Year 2000 issue. The Company completed remediation of its computer hardware, internal computer software programs and equipment with imbedded technology in March 1998. Through December 31, 1998, the Company has spent approximately $50,000 modifying or replacing its internal computer software programs, its computer hardware, and machinery with embedded computer technology, primarily to upgrade software and to modify maintenance agreements. Since it believes remediation of such systems has been completed, the Company does not expect to expend any material amounts on such remediation in the future. However, if the Company has failed to properly assess any of the year 2000 problems or failed to fully remedy any identified year 2000 problems of its computer hardware, computer software programs, or machinery with embedded technology, the Company may be forced to spend more than anticipated on such remediation in the future. Until its assessment efforts are complete, the Company will not be able to reasonably estimate the future costs of eliminating problems caused by the Year 2000 problems of its suppliers, whether by investing in new technology or software to interface with these parties or finding alternative sources of supply. Beginning June 1, 1999, the Company expects to shift production away from suppliers that have not demonstrated Year 2000 compliance to the Company's satisfaction and to the Company's current suppliers that are Year 2000 compliant. If such current suppliers are unable to satisfy increased production burdens, the Company expects to engage new suppliers that are Year 2000 compliant. There can be no assurance that the Company will be able to shift additional production to any of its current suppliers or to new suppliers without additional costs or at all. Shifts to new suppliers typically require capital outlays and increased time requirements for production, either of which may adversely affect the results of operations of the Company. Item 3. Quantitative and Qualitative Disclosures about Market Risk. Not Applicable. Part II - OTHER INFORMATION Item 1. Legal Proceedings. Not Applicable. Item 2. Changes in Securities and Use of Proceeds. Not Applicable. Item 3. Defaults Upon Senior Securities. Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders. The Annual Shareholders' meeting was held on March 31, 1999 at 8:00 a.m. at the Company's headquarters located at 1320 Orleans Drive, Sunnyvale, California. There was one item to be voted on at the meeting, which was the election of the Board of Directors. There were 6,341,807 shares present or represented by proxy at the meeting representing a quorum. Shareholders are permitted to vote cumulatively in the election of directors which allows each shareholder to cast a number of votes equal to the number of directors to be elected by the number of shares owned and to distribute such votes among the candidates in such proportion as such shareholder may determine. In order to vote cumulatively, a shareholder must give notice of this intention by proxy or at the meeting. Thereafter, all shareholders will be entitled to cumulate votes. The votes for each nominee are as set forth in the following table: Votes Votes in Favor Against Abstention Howard L. Farkas 6,341,107 0 700 Burton W. Kanter 6,341,107 0 700 Albert Morrison, Jr. 6,341,107 0 700 William J. Volz 6,341,107 0 700 Bruce B. Lusignan 6,341,107 0 700
Item 5. Other Information. Not Applicable. Item 6. Exhibits and Reports on Form 8-K. Exhibits: See the Index to Exhibits, which appears at page 18 of this report. (a) (1) Exhibit 10.1 - Promissory Note to William J. Volz (2) Exhibit 10.2 - Promissory Note to The Holding Company (3) Exhibit 10.3 - Promissory Note Extension (4) Exhibit 11 - Computation of Earnings Per Common Share (5) Exhibit 27 - Financial Data Schedule Reports on Form 8-k: (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Logic Devices Incorporated (Registrant) Date: April 30, 1999 By /s/ William J. Volz William J. Volz President and Principal Executive Officer Date: April 30, 1999 By /s/ Mary C. deRegt Mary C. deRegt Chief Financial Officer Principal Financial and Accounting Officer INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION 10.1 Note payable to William J. Volz 10.2 Note payable to The Holding Company 10.3 Extension to Notes payable EXHIBIT 10.1 PROMISSORY NOTE $100,000.00 U.S.D. February 24, 1999 Sunnyvale, California FOR VALUE RECEIVED, the undersigned promises to pay to the order of William J. Volz ("Payee"), in lawful money of the United States of America in the manner and at the times provided hereinafter, (i) Principal (as hereinafter defined); (ii) Interest (as hereinafter defined) and Default Interest (as hereinafter defined), if any; and (iii) all other amounts due and payable pursuant to and in accordance with the terms of this Note. A. Definitions. The following terms as used herein shall have the following meanings: 1. "Default Interest" shall mean interest computed at the Reference Rate, as defined below, plus four percent (4%) per annum, on (i) the entire principal balance of this Note from time to time unpaid from and after such amount becomes due and payable (whether by maturity, acceleration or otherwise), and (ii) any and all other unpaid amounts due pursuant to the terms and provisions of this Note (including, but not limited to, accrued but unpaid Interest) from and after the respective date(s) on which those amounts become due and payable, whether by maturity, acceleration, or otherwise; in each case from and after any applicable grace period has expired. Default Interest shall be adjusted concurrently with any change in the Reference Rate. Default Interest shall be computed for the actual number of days elapsed, predicated on a year consisting of three hundred and sixty (360) days, and shall be payable on demand. Notwithstanding anything to the contrary contained herein, for any period in which Default Interest is accruing on the entire unpaid principal balance hereunder, Interest shall not accrue. 2. "Interest" shall mean interest computed at a variable rate equal to the Reference Rate plus two percent (2%) per annum on the entire principal balance of this Note from time to time unpaid. Interest shall be adjusted concurrently with any change in the Reference Rate. Interest shall be computed on the actual number of days elapsed, predicated on a year consisting of three hundred and sixty (360) days. 3. "Maturity Date" shall mean March 31, 1999. 4. "Principal" shall mean One Hundred Thousand Dollars ($100,000.00) or so much thereof as may from time to time be outstanding hereunder. 5. "Reference Rate" shall mean that rate which is quoted, published or announced from time to time by Sanwa Bank California as its reference or equivalent rate of interest. B. Manner of Payment; Maturity. 1. Manner of Payment. Payment of principal, Interest, Default Interest and any other amounts due hereunder shall be made in lawful money of the United States of America. 2. Interest Accrual. Interest shall accrue commencing on the date hereof on the Principal and shall be payable on the Maturity Date. 3. Other; Maturity. Default Interest shall be payable on demand. All outstanding and unpaid Principal and Interest shall be due and payable on the Maturity Date, unless otherwise specified herein or unless accelerated in accordance with the terms or provisions hereof. C. Prepayment. This Note may be prepaid, in whole or in part, at any time by the undersigned without premium or penalty. Any prepayment pursuant to this Paragraph C shall be accompanied by payment of any Interest and Default Interest, if any, accrued and unpaid through the date of such prepayment. D. Acceleration. Notwithstanding anything to the contrary contained herein, upon the occurrence of any one or more of: (i) a default in the payment of any amounts due hereunder (without the need for written or other notice of any sort of such default from Payee to the undersigned), occurring on or prior to the Maturity Date, or (ii) any other default hereunder, and the expiration of any grace period applicable to any such default as set forth herein; then at the sole option and discretion of Payee, and without further demand or notice of any kind, the following shall become immediately due and payable: 1. the principal sum remaining unpaid hereunder; 2. unpaid Interest; 3. Default Interest; and 4. all other indebtedness evidenced by this Note. E. Default. The following shall constitute events of default hereunder: (i) a default in the payment of any amounts due hereunder (without the need for written or other notice of any sort of such default from Payee to the undersigned), occurring on or prior to the Maturity Date; (ii) the assignment for the benefit of creditors by the undersigned; (iii) the application for the appointment of a receiver for the undersigned or for property of the undersigned; (iv) the filing of a petition in bankruptcy by or against the undersigned; (v) the issuance of an attachment or the entry of a judgment against the undersigned; (vi) a default by the undersigned with respect to any other indebtedness due to Payee; (vii) the merger, consolidation, termination of existence, dissolution or insolvency of the undersigned; or (viii) the good faith determination by Payee that he deems himself insecure or that a material adverse change in the financial condition of the undersigned has occurred since the date hereof and that Payee's prospect of payment hereunder has been impaired. F. Remedies. If the undersigned fails to pay any amounts when due hereunder, whether by maturity, acceleration or otherwise, or if there occurs any event which entitles Payee to accelerate the indebtedness due under this Note and any grace period applicable to any such failure to pay or event as set forth herein expires, then Payee shall have all of the rights and remedies provided to him at law or in equity. The remedies of Payee, as provided herein, shall be cumulative and concurrent, and may be pursued singularly, successively, or together, at the sole discretion of Payee, and may be exercised as often as occasion therefor shall arise. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy, or recourse as to a subsequent event. Payee may resort for payment hereunder to any of the security for, or any guaranty of, this Note whether or not Payee shall have resorted for payment hereunder to any other security for or guaranty of this Note. No act or omission of Payee, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same, such waiver or release to be effected only through a written document executed by Payee and then only to the extent specifically recited therein. If this Note is placed in the hands of an attorney for collection or is collected on advice of counsel or through any legal proceeding, the undersigned promises to pay, to the extent permitted by law, court costs and reasonable attorneys' fees incurred by Payee. The undersigned hereby waives presentment, demand, notice of dishonor or nonpayment, protest and notice of protest in connection herewith. G. Miscellaneous. 1. If any provision of this Note is unenforceable, invalid or contrary to law, or its inclusion herein would affect the validity, legality or enforcement of this Note, such provision shall be limited to the extent necessary to render the same valid or shall be excised from this Note, as the circumstances require, and this Note shall be construed as if said provision had been incorporated herein as so limited or as if said provision had not been included herein, as the case may be. 2. Time is of the essence of this Note. 3. After the Maturity Date or following the occurrence of an event which entitles Payee to accelerate the indebtedness evidenced hereby, all payments received on account of the indebtedness evidenced hereby shall be applied, in whatever order, combination and amounts as Payee, in his sole and absolute discretion, decides, to all costs, expenses, and other indebtedness, if any, owing to Payee by reason of this Note; Default Interest; Interest; and principal. 4. This Note, and the terms and provisions hereof, shall be binding upon the undersigned and its successors, administrators, and assigns, and shall inure to the benefit of any holder hereof. 5. All amounts due hereunder shall be paid without deduction, set- off or counterclaim, the undersigned expressly waiving any such rights to deduction, set-off or counterclaim. 6. Notwithstanding any provision to the contrary contained in this Note or in any of the other documents or instruments referred to in this Note, if at any time or times the interest and any sums considered for such purpose to be interest, payable under or by reason of this Note or any such other documents or instruments, should exceed the maximum which, by the laws of the State having jurisdiction, may be charged with respect to the loan evidenced hereby, given the nature and all of the pertinent circumstances of such loan, then all such sums in excess of such maximum shall be deemed not to be interest, but rather to be payments on account of principal, and without further agreement of the parties shall be so applied without regard to any other provision of this Note, provided that Payee may elect instead that no sums shall be payable in excess of such maximum, whereupon this Note and such other documents and instruments shall be deemed amended accordingly without further action by any party. 7. This Note shall inure to the benefit of Payee and his successors and assigns. This Note has been negotiated and delivered at Sunnyvale, California, and shall be governed by and construed in accordance with the internal laws of the State of California without reference to (i) its judicially or statutorily pronounced rules regarding conflict of laws or choice of law; (ii) where any instrument is executed or delivered; (iii) where any payment or other performance required by any such instrument is made or required to be made; (iv) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; (v) where any action or other proceeding is instituted or pending; (vi) the nationality, citizenship, domicile, principal place of business, or jurisdiction or organization or domestication of any party; (vii) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than the State of California; or (viii) any combination of the foregoing. The undersigned will upon demand pay to Payee the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which Payee may incur in connection with (i) the administration of this Note, (ii) the exercise or enforcement of any of the rights of Payee hereunder or (iii) the failure by the undersigned to perform or observe any of the provisions hereof. LOGIC DEVICES INCORPORATED By: /s/ Mary C. deRegt Signature Mary C.deRegt Print Name EXHIBIT 10.2 PROMISSORY NOTE $150,000.00 U.S.D. February 24, 1999 Sunnyvale, California FOR VALUE RECEIVED, the undersigned promises to pay to the order of The Holding Company, a Delaware corporation ("Payee"), in lawful money of the United States of America in the manner and at the times provided hereinafter, (i) Principal (as hereinafter defined); (ii) Interest (as hereinafter defined) and Default Interest (as hereinafter defined), if any; and (iii) all other amounts due and payable pursuant to and in accordance with the terms of this Note. A. Definitions. The following terms as used herein shall have the following meanings: 1. "Default Interest" shall mean interest computed at the Reference Rate, as defined below, plus four percent (4%) per annum, on (i) the entire principal balance of this Note from time to time unpaid from and after such amount becomes due and payable (whether by maturity, acceleration or otherwise), and (ii) any and all other unpaid amounts due pursuant to the terms and provisions of this Note (including, but not limited to, accrued but unpaid Interest) from and after the respective date(s) on which those amounts become due and payable, whether by maturity, acceleration, or otherwise; in each case from and after any applicable grace period has expired. Default Interest shall be adjusted concurrently with any change in the Reference Rate. Default Interest shall be computed for the actual number of days elapsed, predicated on a year consisting of three hundred and sixty (360) days, and shall be payable on demand. Notwithstanding anything to the contrary contained herein, for any period in which Default Interest is accruing on the entire unpaid principal balance hereunder, Interest shall not accrue. 2. "Interest" shall mean interest computed at a variable rate equal to the Reference Rate plus two percent (2%) per annum on the entire principal balance of this Note from time to time unpaid. Interest shall be adjusted concurrently with any change in the Reference Rate. Interest shall be computed on the actual number of days elapsed, predicated on a year consisting of three hundred and sixty (360) days. 3. "Maturity Date" shall mean March 31, 1999. 4. "Principal" shall mean One Hundred Thousand Fifty and no/100 Dollars ($150,000.00) or so much thereof as may from time to time be outstanding hereunder. 5. "Reference Rate" shall mean that rate which is quoted, published or announced from time to time by Sanwa Bank California as its reference or equivalent rate of interest. B. Manner of Payment; Maturity. 1. Manner of Payment. Payment of principal, Interest, Default Interest and any other amounts due hereunder shall be made in lawful money of the United States of America. 2. Interest Accrual. Interest shall accrue commencing on the date hereof on the Principal and shall be payable on the Maturity Date. 3. Other; Maturity. Default Interest shall be payable on demand. All outstanding and unpaid Principal and Interest shall be due and payable on the Maturity Date, unless otherwise specified herein or unless accelerated in accordance with the terms or provisions hereof. C. Prepayment. This Note may be prepaid, in whole or in part, at any time by the undersigned without premium or penalty. Any prepayment pursuant to this Paragraph C shall be accompanied by payment of any Interest and Default Interest, if any, accrued and unpaid through the date of such prepayment. D. Acceleration. Notwithstanding anything to the contrary contained herein, upon the occurrence of any one or more of: (i) a default in the payment of any amounts due hereunder (without the need for written or other notice of any sort of such default from Payee to the undersigned), occurring on or prior to the Maturity Date, or (ii) any other default hereunder, and the expiration of any grace period applicable to any such default as set forth herein; then at the sole option and discretion of Payee, and without further demand or notice of any kind, the following shall become immediately due and payable: 1. the principal sum remaining unpaid hereunder; 2. unpaid Interest; 3. Default Interest; and 4. all other indebtedness evidenced by this Note. E. Default. The following shall constitute events of default hereunder: (i) a default in the payment of any amounts due hereunder (without the need for written or other notice of any sort of such default from Payee to the undersigned), occurring on or prior to the Maturity Date; (ii) the assignment for the benefit of creditors by the undersigned; (iii) the application for the appointment of a receiver for the undersigned or for property of the undersigned; (iv) the filing of a petition in bankruptcy by or against the undersigned; (v) the issuance of an attachment or the entry of a judgment against the undersigned; (vi) a default by the undersigned with respect to any other indebtedness due to Payee; (vii) the merger, consolidation, termination of existence, dissolution or insolvency of the undersigned; or (viii) the good faith determination by Payee that it deems itself insecure or that a material adverse change in the financial condition of the undersigned has occurred since the date hereof and that Payee's prospect of payment hereunder has been impaired. F. Remedies. If the undersigned fails to pay any amounts when due hereunder, whether by maturity, acceleration or otherwise, or if there occurs any event which entitles Payee to accelerate the indebtedness due under this Note and any grace period applicable to any such failure to pay or event as set forth herein expires, then Payee shall have all of the rights and remedies provided to him at law or in equity. The remedies of Payee, as provided herein, shall be cumulative and concurrent, and may be pursued singularly, successively, or together, at the sole discretion of Payee, and may be exercised as often as occasion therefor shall arise. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy, or recourse as to a subsequent event. Payee may resort for payment hereunder to any of the security for, or any guaranty of, this Note whether or not Payee shall have resorted for payment hereunder to any other security for or guaranty of this Note. No act or omission of Payee, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same, such waiver or release to be effected only through a written document executed by Payee and then only to the extent specifically recited therein. If this Note is placed in the hands of an attorney for collection or is collected on advice of counsel or through any legal proceeding, the undersigned promises to pay, to the extent permitted by law, court costs and reasonable attorneys' fees incurred by Payee. The undersigned hereby waives presentment, demand, notice of dishonor or nonpayment, protest and notice of protest in connection herewith. G. Miscellaneous. 1. If any provision of this Note is unenforceable, invalid or contrary to law, or its inclusion herein would affect the validity, legality or enforcement of this Note, such provision shall be limited to the extent necessary to render the same valid or shall be excised from this Note, as the circumstances require, and this Note shall be construed as if said provision had been incorporated herein as so limited or as if said provision had not been included herein, as the case may be. 2. Time is of the essence of this Note. 3. After the Maturity Date or following the occurrence of an event which entitles Payee to accelerate the indebtedness evidenced hereby, all payments received on account of the indebtedness evidenced hereby shall be applied, in whatever order, combination and amounts as Payee, in its sole and absolute discretion, decides, to all costs, expenses, and other indebtedness, if any, owing to Payee by reason of this Note; Default Interest; Interest; and principal. 4. This Note, and the terms and provisions hereof, shall be binding upon the undersigned and its successors, administrators, and assigns, and shall inure to the benefit of any holder hereof. 5. All amounts due hereunder shall be paid without deduction, set- off or counterclaim, the undersigned expressly waiving any such rights to deduction, set-off or counterclaim. 6. Notwithstanding any provision to the contrary contained in this Note or in any of the other documents or instruments referred to in this Note, if at any time or times the interest and any sums considered for such purpose to be interest, payable under or by reason of this Note or any such other documents or instruments, should exceed the maximum which, by the laws of the State having jurisdiction, may be charged with respect to the loan evidenced hereby, given the nature and all of the pertinent circumstances of such loan, then all such sums in excess of such maximum shall be deemed not to be interest, but rather to be payments on account of principal, and without further agreement of the parties shall be so applied without regard to any other provision of this Note, provided that Payee may elect instead that no sums shall be payable in excess of such maximum, whereupon this Note and such other documents and instruments shall be deemed amended accordingly without further action by any party. 7. This Note shall inure to the benefit of Payee and its successors and assigns. This Note has been negotiated and delivered at Sunnyvale, California, and shall be governed by and construed in accordance with the internal laws of the State of California without reference to (i) its judicially or statutorily pronounced rules regarding conflict of laws or choice of law; (ii) where any instrument is executed or delivered; (iii) where any payment or other performance required by any such instrument is made or required to be made; (iv) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; (v) where any action or other proceeding is instituted or pending; (vi) the nationality, citizenship, domicile, principal place of business, or jurisdiction or organization or domestication of any party; (vii) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than the State of California; or (viii) any combination of the foregoing. The undersigned will upon demand pay to Payee the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which Payee may incur in connection with (i) the administration of this Note, (ii) the exercise or enforcement of any of the rights of Payee hereunder or (iii) the failure by the undersigned to perform or observe any of the provisions hereof. LOGIC DEVICES INCORPORATED By: /s/ Mary C. deRegt Signature Mary C.deRegt Print Name EXHIBIT 10.3 PROMISSORY NOTE EXTENSION The undersigned, William J. Volz and The Holding Company, being the holders of promissory notes (the "Notes") from Logic Devices Incorporated dated February 24, 1999 in the principal amounts of $100,000 and $150,000, respectively, hereby agree to the extension of the Maturity Date, as defined in the Notes, to May 31, 1999. April 1, 1999 /s/ William J. Volz William J. Volz The Holding Company By: /s/ Burton W. Kanter EXHIBIT 11 Logic Devices Incorporated Computation of Earnings per Common Share (unaudited) Six months ended March 31, 1999 and 1998
1999 1998 Weighted average shares of common 6,632,388 6,121,750 stock outstanding Dilutive effect of common stock options - - Dilutive effect of common stock warrants - - Weighted average common and common share equivalents 6,632,388 6,121,750 Net income (loss) $ 46,900 $ 12,000 Net income (loss) per common share equivalent $ 0.01 $ 0.01
EX-27 2
5 6-MOS SEP-30-1998 MAR-31-1999 170,300 0 4,412,500 195,000 12,188,500 17,154,400 14,658,800 10,405,700 22,087,900 6,617,400 0 0 0 18,091,900 (307,500) 22,087,900 6,327,000 6,327,000 3,492,800 6,016,700 0 0 262,600 47,700 800 46,900 0 0 0 46,900 0.01 0.01
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