EX-4 6 syn1st02.txt QUARTERLY REPORT MARCH 31, 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-QSB [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____________ to ____________ For the quarterly period ended: 3/31/2002 Commission File No.: 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 (508) 655-1340 Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 each of the registrant's classes of common stock, as of the latest practicable date. Common Stock $0.01 Par Value 10,285,806 shares outstanding as of April 30, 2002 Transitional Small Business Disclosure Format (check one); [ X ] Yes [ ] No PART I - FINANCIAL INFORMATION Item 1. Financial Statements SYNERGISTICS, INC. BALANCE SHEET ASSETS (UNAUDITED) 31-Mar-02 31-Dec-01 CURRENT ASSETS Cash $ 49,872 $ 74,294 Accounts receivable 437,610 367,219 Allowance for doubtful accounts -23,000 -20,000 Inventories 323,376 322,708 Prepaid expenses 15,477 19,127 ------- ------- TOTAL CURRENT ASSETS 803,335 763,348 EQUIPMENT, less allowances of $98,932 and $96,826 for depreciation 23,071 23,497 DEFERRED TAXES 355,500 355,500 --------- --------- TOTAL ASSETS $1,181,906 $1,142,345 ========= ========== LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $ 280,677 $ 229,783 Accrued expenses and other current liabilities 102,495 113,837 Amount due stockholder 100,000 100,000 ------- ------- TOTAL CURRENT LIABILITIES 483,172 443,620 STOCKHOLDERS' EQUITY Common stock (10,285,806 shares issued including shares held in Treasury) 102,858 102,858 Additional paid-in capital 7,567,355 7,567,355 Retained earnings (deficit) -6,964,353 -6,964,353 ------- ------- 705,869 705,860 Cost of Common Stock held in Treasury -7,135 -7,135 ------- ------- 698,734 698,725 ------- ------- TOTAL LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS' EQUITY $1,181,906 $1,142,345 ========= ========= SYNERGISTICS, INC. STATEMENT OF OPERATIONS Three Months Ended March 31 Unaudited 2002 2001 Sales, net $ 739,139 $ 503,009 Interest income b 97 226 ------- ------- 739,236 503,235 Costs and expenses: Cost of sales 504,922 421,586 Selling, general and administrative expenses 234,027 254,761 Interest expense 296 515 ------- ------- 739,245 676,862 ------- ------- Net gain (loss) -9 -173,627 Gain (loss) per share of Common Stock Assuming no dilution $0.00 ($0.02) Assuming full dilution $0.00 ($0.02) SYNERGISTICS, INC. STATEMENT OF CHANGES IN FINANCIAL POSITION Three Months Ended March 31 Unaudited 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 9 $ -173,627 Adjustments to reconcile net loss to net cash (used) provided by operating activities: Depreciation 2,106 4,500 (Increase) decrease in accounts receivable -67,391 125,039 (Increase) decrease in inventories -668 19,154 (Increase) decrease in prepaid expenses and other assets 3,650 -8,265 Increase (decrease) in accounts payable 50,894 -109,463 Increase (decrease) in accrued expenses and other current liabilities -11,342 -18,136 Increase (decrease) in amounts due shareholders 0 150,000 ------- ------- TOTAL ADJUSTMENTS -22,751 162,829 NET CASH USED BY OPERATING ACTIVITIES -22,742 -10,798 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures -1,680 0 ------- ------- NET CASH (USED) BY INVESTING ACTIVITIES -1,680 0 ------- ------- NET CHANGE IN CASH -24,422 -10,798 CASH AT BEGINNING OF YEAR 74,294 64,880 ------- ------- CASH AT END OF PERIOD $ 49,872 $ 54,082 ======= ======= SYNERGISTICS, INC. SELECTED INFORMATION Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report Form 10-KSB. The results of operations for the period ended September 30, 2001 are not necessarily indicative of the operating results for the full year. Basis of Presentation. It is the opinion of management that all significant adjustments which are routine recurring adjustments which are necessary to present fairly such interim financial statements are reflected in the accompanying September 30, 2001 financial statements. Accounting Policy for Revenues and Costs of Sales. Revenues are recognized at the time of product shipment. Cost of sales is computed using the "gross profit" method based upon historical results of operations. Other cost, included in costs of sales, are based upon such costs as actually incurred. Inventories are comprised of the following: 31-Mar-02 31-Dec-01 Raw Materials 50,102 48,406 Finished Goods & WIP 273,274 274,302 ------- ------- Total Inventories 323,376 322,708 *Allocation Based Upon Estimate (Loss) per Common Share The weighted average number of shares of common stock outstanding used in computing (loss) 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. The following schedule sets forth the number of shares used in computing earnings per share: Unaudited Three Months Ended March 31 2002 2001 Assuming no dilution Common Stock Outstanding March 31, 2002 10,285,806 10,285,806 Shares held in Treasury 16,445 16,445 Total Shares Authorized 12,000,000 12,000,000 Item 2. Management's Discussion and Analysis or Plan of Operation. For the three months ended March 31, 2002, the Company recorded sales of $739,139 compared to $503,009 for the three months ended March 31, 2001. In the 1st Quarter of the year 2002 sales increased by 47% compared to the 1st Quarter of the year 2001. The Company believes that this increase in sales was due to an upturn in the National economy and an increase in foreign sales. At March 31, 2002 the Company had a backlog of $62,534 compared to $36,102 at March 31, 2001. Cost of sales as a percentage of sales decreased to 68% from 84% for the three months ended March 31, 2002 and 2001, respectively. This is mainly due to a significant increase in sales with labor and material costs remaining somewhat constant. For the period of three months ended March 31, 2002, selling and general and administrative expenses decreased by $20,734 over the period of three months ended March 31, 2001. This was mainly due to a decrease in payroll and related expenses in the 2nd Quarter of 2001. PART II - OTHER INFORMATION Item 1. 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 2. Changes in Securities and Use of Proceeds There have been no changes in the instruments defining the rights of holders of any class of securities of the Company during the first three months of calendar year 2002. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of the security holders during the 1st Quarter of 2002. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K None. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date April 23, 2002 By: /S/ WILLIAM M. TETRICK___ William M. Tetrick Chairman of the Board Date April 23, 2002 By: /S/ DAVID S. LONGWORTH_ David S. Longworth President and Clerk