10QSB 1 0001.txt FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ Commission file number 0-10696 LogiMetrics, Inc. (Name of small business issuer in its charter) Delaware 11-2171701 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 435 Moreland Road, Hauppauge, New York 11788 (Address of principal executive offices) Issuer's telephone number: (631) 231-1700 50 Orville Drive, Bohemia, New York 11716 (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] No [X] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Common Stock, par value Outstanding at September 15, 2000: $.01 per share 169,586,137 shares Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] LOGIMETRICS, INC. INDEX PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements (Unaudited) Consolidated Balance Sheet - September 30, 1999.................... 3 Consolidated Statements of Operations - Three months ended September 30, 1999 and 1998..................... 4 Consolidated Statements of Cash Flows - Three months ended September 30, 1999 and 1998..................... 5 Notes to Consolidated Financial Statements......................... 6-15 Item 2. Management's Discussion and Analysis or Plan of Operation..... 16-24 PART II - OTHER INFORMATION Item 3. Defaults Upon Senior Securities............................... 25 Item 6. Exhibits and Reports on Form 8-K.............................. 25 SIGNATURES............................................................. 26 2 LOGIMETRICS, INC. CONSOLIDATED BALANCE SHEET September 30, 1999 (Unaudited) ASSETS Current Assets: Cash $ 408,049 Accounts receivable, less allowance for doubtful accounts of $50,070 324,671 Inventories (Note 2) 1,597,484 Prepaid expenses and other current assets 26,969 ------ Total current assets 2,357,173 Equipment and fixtures, net 1,255,131 Other assets 75,536 ------ TOTAL ASSETS $ 3,687,840 ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current Liabilities: Accounts payable and other accrued expenses (Note 3) $ 4,567,103 Current portion of long-term debt (Note 4) 12,006,543 ---------- Total current liabilities 16,573,646 Long-term debt (Note 4) 2,299,352 --------- TOTAL LIABILITIES 18,872,998 ---------- Commitments and Contingencies STOCKHOLDERS' DEFICIENCY Preferred Stock: Series A, stated value $50,000 per share; authorized, 200 shares; issued and outstanding, 28 shares 924,525 Common Stock: Par value $.01; authorized 100,000,000 shares; issued and outstanding, 28,672,245 shares 286,723 Additional paid-in capital 4,808,703 Accumulated deficit (21,015,659) Stock subscriptions receivable (Note 5) (189,450) -------- TOTAL STOCKHOLDERS' DEFICIENCY (15,185,158) ----------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 3,687,840 ============ See Notes to Consolidated Financial Statements 3 LOGIMETRICS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended September 30, 1999 1998 Revenues $ 537,315 $ 2,618,712 Costs and expenses: Cost of revenues 1,215,383 1,875,719 Selling, general and administrative expenses 2,012,679 1,106,336 Research and development 554,356 239,425 ------- ------- Loss from operations (3,245,103) (602,768) Interest expense 472,179 364,336 ------- ------- Loss before income taxes (3,717,282) (967,104) Income tax benefit -- (19,497) ------- ------- Net loss (3,717,282) (947,607) Preferred stock dividends 59,989 59,989 ------ ------ Net loss attributable to common stockholders $ (3,777,271) $ (1,007,596) ============ ============ Basic and diluted loss per common share (Note 6) $ (0.13) $ (0.04) ============ ============ Basic and diluted weighted average number of common shares (Note 6) 28,672,245 28,461,671 ========== ========== See Notes to Consolidated Financial Statements 4 LOGIMETRICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended September 30, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss before preferred stock dividends $ (3,717,282) $ (947,607) ------------- ----------- Adjustments to reconcile net loss before preferred stock dividends to net cash used in operating activities: Depreciation and amortization 266,879 129,100 Provision for doubtful accounts 175,000 -- Accrued interest expense 407,208 251,879 Financing fee 764,678 -- Stock compensation expense -- 11,363 Increase (decrease) in cash from: Accounts receivable 708,382 11,202 Inventories 255,507 (203,350) Prepaid expenses and other current assets (310) (31,648) Accounts payable and accrued expenses 254,650 519,591 Other assets/liabilities (2,348) (44,086) ------ ------- Total adjustments 2,829,646 644,051 --------- ------- Net cash used in operating activities (887,636) (303,556) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment and fixtures (50,023) (12,219) ------- ------- Net cash used in investing activities (50,023) (12,219) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt issuance 1,000,000 416,667 Proceeds from warrant issuance -- 83,333 Repayment of loans from stockholders (33,339) -- Proceeds from exercise of warrants -- 15,000 Repayment of debt (21,713) (156,864) ------- -------- Net cash provided by financing activities 944,948 358,136 ------- ------- NET INCREASE IN CASH 7,289 42,361 CASH, beginning of period 400,760 432,250 ------- ------- CASH, end of period $ 408,049 $ 474,611 =========== ===========
See Notes to Consolidated Financial Statements 5 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Financial Statements The accompanying consolidated financial statements include the accounts of LogiMetrics, Inc. ("LogiMetrics") and its wholly-owned subsidiaries, mmTech, Inc. ("mmTech") and LogiMetrics FSC, Inc. (collectively, the "Company"). Unless otherwise indicated, all references to the Company include mmTech and all references to LogiMetrics mean the Company excluding mmTech. All intercompany balances and transactions have been eliminated. Certain amounts in the 1999 financial statements have been reclassified to conform with the 2000 presentation. The balance sheet as of September 30, 1999, the statements of operations for the three-month periods ended September 30, 1999 and 1998, and the statements of cash flows for the three-month periods ended September 30, 1999 and 1998, are unaudited. Such unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included. Results for the three months ended September 30, 1999 are not necessarily indicative of the results that may be achieved for any other interim period or for the fiscal year ending June 30, 2000. These statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-KSB for the year ended June 30, 1999. 2. Inventories Inventory consists of the following at September 30, 1999: Raw materials and components $ 577,957 Work-in-progress 1,019,527 ------------ $ 1,597,484 ============ 3. Accounts Payable and Other Accrued Expenses Accounts payable and other accrued expenses consists of the following at September 30, 1999: Accounts payable $ 2,547,053 Preferred stock dividends payable 807,934 Accrued professional fees 284,990 Other accrued expenses 927,126 ------------- $ 4,567,103 ============ 6 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 4. Long-Term Debt Long-term debt consists of the following at September 30, 1999: Notes payable to Bank $ 1,919,249 Class A Debentures 4,932,712 Class B Debentures 2,125,914 Class C Debentures 2,998,889 Bridge Notes 1,008,306 Notes payable - officers 698,324 Capital lease obligations 622,501 ------------ 14,305,895 Less: current portion 12,006,543 ------------ $ 2,299,352 ============ As of September 1, 1999, the Company entered into a Reduced and Extended Revolving Credit Note (the "Replacement Note") and a Recognition and Limited Forebearance Agreement (the "Forebearance Agreement") with North Fork Bank (the "Bank"). Pursuant to the terms of the Replacement Note, the amount available for borrowing was reduced to $1.93 million (the amount outstanding as of such date) and the maturity date of the Replacement Note was extended to December 31, 1999. Under the terms of the Forebearance Agreement, the Bank agreed to forbear, until December 31, 1999, from declaring any event of default or from exercising any remedies under the Replacement Note. See Note 9 for a discussion of the extension of the Replacement Note maturity date. On September 7, 1999, the Company sold an aggregate of $1,000,000 of its Negotiable Secured Senior Subordinated Promissory Notes due March 7, 2000 (the "Bridge Notes") to a group of institutional investors (the "Lenders") for an aggregate cash purchase price of $1,000,000. The Bridge Notes bear interest at a rate of 13% per annum. Pursuant to the terms of the Second Amended and Restated Security Agreement, Intercreditor Agreement, Waiver and Consent (the "Intercreditor Agreement"), the Bridge Notes are secured by a security interest in all of the Company's assets which ranks junior to the Replacement Note entered into by the Company with the Bank, and senior to the Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures, due July 29, 1999 (the "Class A Debentures"), the Amended and Restated 13% Senior Subordinated Convertible Pay-in-Kind Debentures due July 29, 1999 (the "Class B Debentures") and the Class C 13% Senior Subordinated Debentures due September 30, 1999 (the "Class C Debentures"). Pursuant to the terms of the Intercreditor Agreement, each of the holders of the Class A Debentures, the Class B Debentures and the Class C Debentures consented to the issuance of the Bridge Notes and the granting of the security interest described above. As consideration for the purchase of the Bridge Notes, Mr. Charles S. Brand, the Company's Chairman, transferred to the Lenders an aggregate of 3,000,000 shares of the Company's common stock, par value $0.01 per share (the "Common Stock") owned by him. Accordingly, a financing fee of $0.8 million was recorded by the Company. All of the Class A Debentures, Class B Debentures and Class C Debentures were converted into shares of the Company's Common Stock subsequent to September 30, 1999. See Note 9. From time to time subsequent to September 30, 1999, the Company has received advances from certain of the Company's other investors (the "Investor Loans"). The Investor Loans have been made on the same terms and conditions as the Bridge Notes, but rank senior to the Bridge Notes. The Investor Loans were repaid subsequent to September 30, 1999. See Note 9. Principal payments due on all long-term debt consist of the following: Fiscal year ending June 30, 2000 274,674 Fiscal year ending June 30, 2001 13,871,772 Fiscal year ending June 30, 2002 154,051 Fiscal year ending June 30, 2003 5,398 ---------- 14,305,895 ========== See Note 9. 7 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 5. Stock Subscriptions Receivable Stock subscriptions receivable consist of the following at September 30, 1999: Notes from former officers $ 154,450 Note from a director 35,000 ---------- $ 189,450 ========== 6. Loss Per Share Loss per common share was computed by dividing the net loss by the weighted average number of shares of common stock outstanding during each of the periods presented. The loss per share calculations for the three-month periods ended September 30, 1999 and September 30, 1998 do not give effect to common stock equivalents because they would have an antidilutive effect. 7. Operating Segments At September 30, 1999, the Company had two reportable segments: point-to-multipoint ("PMP"), and traveling wave tube amplifiers ("TWTAs"). The Company designs, manufactures and markets solid state, broadband wireless communications infrastructure equipment, subsystems and modules used to provide PMP terrestrial and satellite-based distribution services in frequency bands from 24 GHz to 38 GHz. The Company's products enable telecommunications service providers to establish reliable and cost-effective data, voice and video communications links within their networks. The Company's infrastructure equipment includes solid-state power amplifiers, hub transmitters, active repeaters, cell-to-cell relays, Internet access systems and other millimeter wave-based modules and subsystems. These products are used in various applications, such as broadband communications, including LMDS, local loop services and Ka-band satellite communications. In addition to the Company's broadband products, at September 30, 1999, the Company designed, manufactured and marketed a wide range of high power amplifiers, including TWTAs, instrumentation amplifiers and other peripheral transmission equipment used to transmit communication signals for industrial, commercial and military applications. The Company's TWTAs operate in frequency bands from 0.5 GHz to 45 GHz, with power levels up to 10 kiloWatts. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates the financial performance of its business units based on operating income of the respective business units. 8 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Segment information for the three-month periods ended September 30, 1999 and 1998 was as follows:
PMP TWTA Division Division Intercompany Total -------- -------- ------------ ----- 1999 Net sales from external customers $ 234,461 $ 302,854 $ - $ 537,315 Operating loss (1) 1,093,011 2,152,092 3,245,103 Interest expense 26,078 446,101 472,179 Total assets 1,734,852 4,948,252 (2,995,264) 3,687,840 Capital expenditures 48,531 1,492 50,023 Depreciation and amortization 53,340 213,539 266,879 1998 Net sales from external customers $ 426,199 $ 2,192,513 $ - $ 2,618,712 Operating (loss) gain(1) (759,399) 156,631 (602,768) Interest expense 9,357 354,979 364,336 Total assets 1,536,188 4,889,270 (541,115) 5,884,343 Capital expenditures 2,110 10,109 12,219 Depreciation and amortization 9,588 119,512 129,100
(1) Includes depreciation and amortization. 8. Related Party Transactions Mr. Brand owns 40% of the outstanding common stock of Advanced Control Components, Inc. ("ACC"). ACC sublets space from the Company at its Eatontown, New Jersey facility and pays to mmTech $36,474 in annual rent. Employees from mmTech perform services for ACC and employees from ACC perform services for mmTech from time to time. The company utilizing such services pays to the company providing such services an amount equal to two times the base hourly salary of the employees providing such services for the number of hours involved. Pursuant to such arrangements, ACC paid to mmTech a net amount of $23,421 for the three months ended September 30, 1999. 9. Subsequent Events From time to time subsequent to September 30, 1999, the Company has received advances in the form of the Investor Loans. The Investor Loans have been made on the same terms and conditions as the Bridge Notes, but rank senior to the Bridge Notes. The aggregate principal amount of the Investor Loans advanced to the Company was $1,000,000. See below for a discussion of the repayment of the Investor Loans. In August 1998, the Company entered into a three-year employment agreement with Mr. Kenneth C. Thompson, pursuant to which Mr. Thompson agreed to serve as the Company's Chief Executive Officer. Effective November 15, 1999, Mr. Thompson resigned as the Company's Chief Executive Officer. In connection with his resignation, the Company and Mr. Thompson entered into a separation agreement (the "Separation Agreement"). In the Separation Agreement, the Company agreed to pay Mr. Thompson an aggregate of $137,097 in five monthly installments, without interest, in repayment of certain amounts owed to him and in lieu of any rights Mr. Thompson had under the employment agreement he entered into with the Company in August 1998. In addition, the Company issued to Mr. Thompson stock options exercisable for an aggregate of 500,000 shares of Common Stock (the "Option Shares") at an exercise price of $0.60 per share (the "Thompson Option"). The Thompson Option expires, as to one-half of the Option Shares, on November 15, 2001, and as to the remainder of such Option Shares, on November 15, 2002. Pursuant to the terms of the Separation Agreement, all prior agreements between Mr. Thompson and the Company were terminated and the Company and Mr. Thompson agreed to release certain claims against each other and certain related parties. Under the Separation Agreement, Mr. Thompson is subject to certain confidentiality obligations and agreed to non-competition and certain other covenants for a period of one year. 9 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) In July 2000, the Company and L-3 Communications Corporation ("L-3") entered into a Purchase Agreement, dated July 10, 2000 (the "Purchase Agreement"), pursuant to which, among other things, L-3 acquired on July 11, 2000, beneficially and of record, 93,236,794 newly issued shares (the "L-3 Shares") of the Company's outstanding Common Stock, for an aggregate purchase price of $15.0 million, $8.5 million of which was paid in cash at the closing on July 11, 2000 of the transactions contemplated by the Purchase Agreement (the "Closing") and the balance of which was paid in the form of a secured promissory note (the "Note"). At the Closing, the L-3 Shares constituted approximately 53.5% of the Company's outstanding Common Stock on a fully diluted basis (calculated after giving effect to the transactions contemplated by the Purchase Agreement and certain anti-dilution adjustments set forth in the Purchase Agreement). Pursuant to the terms of a Stock Pledge Agreement, dated July 10, 2000 (the "Stock Pledge Agreement"), executed by L-3 in favor of the Company, the obligations of L-3 under the Note are secured by a pledge of 43.33% of the L-3 Shares. The Note will be prepaid from time to time as necessary to fund the Company's reasonable ongoing working capital needs. If not paid prior thereto, the Note will be paid in full on the earlier of (i) January 2, 2001 and (ii) the date that the Company consummates a qualifying Public Offering (as defined in the Purchase Agreement) of its equity securities (a "Qualifying Offering"). The number of shares of Common Stock issuable to L-3 will be adjusted, if necessary, after the Closing so that the L-3 Shares will, following such adjustment, constitute 53.5% of the Company's outstanding Common Stock after giving effect to the dilutive effects of the conversion of certain contingently issuable securities as specified in the Purchase Agreement. Under the Purchase Agreement, L-3 has agreed, subject to the satisfaction of certain conditions, to purchase up to 3,333,333 shares of Common Stock (the "Additional Shares") for $5.0 million on or after January 2, 2001 (unless L-3 elects to acquire any Additional Shares in its sole discretion prior to January 2, 2001), to the extent the Company requires additional reasonable ongoing working capital to operate its business. Pursuant to the terms of the Purchase Agreement, the Company has granted to L-3 an option (the "L-3 Option") to acquire up to 5,555,555 shares of Common Stock at an exercise price of $0.54 per share (subject to adjustment in certain circumstances). The L-3 Option is exercisable upon the purchase of all of the Additional Shares. In the Purchase Agreement, L-3 granted to the Company the option, exercisable by a majority of the entire Board of Directors of the Company (the "Board"), to cause L-3 to transfer without further consideration certain technology and other assets to the Company in connection with the Qualifying Offering upon the satisfaction of certain conditions. Pursuant to the Purchase Agreement, L-3 may, in its sole discretion, provide administration and other services and equipment (including team services, support services, facilities, tools and equipment) to the Company. Such services and equipment will be billed, from time to time, at cost to the Company, including direct labor, direct material, other direct charges and expenses and overhead (including a corporate expense allocation charge equal to 1.5% of the Company's consolidated sales). L-3 also has agreed to use its reasonable best efforts (i) for a specified period of time after the Closing to obtain an additional $5.0 million investment in the Company from one or more investment banks on the same terms as L-3's purchase of the Additional Shares; and (ii) to cooperate with the Company to consummate the Qualifying Offering no later than December 31, 2000, subject to market and economic conditions. Pursuant to the Purchase Agreement, the Company has agreed to maintain directors' and officers' insurance in place for a period of six years (subject to certain expense limitations) and to maintain certain provisions in its charter and by-laws relating to the indemnification of directors and officers for such six-year period. 10 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Under the Purchase Agreement, the Company may not, without the approval of either (i) those holders of Common Stock (excluding L-3, entities controlled, directly or indirectly, by L-3 and executive officers (within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of L-3) (the "Minority Stockholders") that represent not less than a majority of the outstanding Common Stock held by all such holders (a "Special Stockholder Majority") or (ii) a majority of the directors elected by the Existing Holders (as defined below), effect the following extraordinary transactions: (A) certain mergers, consolidations or share exchanges, (B) the sale of all or substantially all of its assets in one transaction or a series of related transactions, (C) the seeking of protection under applicable bankruptcy and insolvency laws, (D) the issuance, offer or sale of any shares of its capital stock or securities exercisable for, convertible into or otherwise giving the holder the right to obtain shares of capital stock (other than the issuance of shares and options pursuant to the Purchase Agreement, shares issuable upon the exercise or conversion of outstanding securities, the granting of certain options and rights to purchase Common Stock contemplated by the Purchase Agreement and shares of Common Stock issuable upon the exercise of such options and rights), (E) the amendment of its certificate of incorporation or by-laws if the terms of such amendment would conflict with the terms of the Purchase Agreement and the transactions contemplated thereby or would materially and adversely affect the rights of the Minority Stockholders, (F) amend or modify any of the provisions of the documents relating to the Purchase Agreement, (G) enter into a Rule 13e-3 transaction (as defined in Rule 13e-3 promulgated under the Exchange Act), or (H) enter into, assume or become bound by any agreement, instrument or understanding to do any of the foregoing or otherwise attempt to do any of the foregoing. In addition, L-3 has agreed not to sell to a non-affiliated third party more than 53.27% of the L-3 Shares prior to December 31, 2001. The directors appointed by the Existing Holders will have the right to enforce the provisions of the Purchase Agreement and to otherwise act on behalf of the Company with respect to the Purchase Agreement and the other documents relating thereto. These provisions will expire upon the earlier of (i) the consummation of a Qualifying Offering and (ii) the date upon which the Existing Holders collectively cease to own at least 10% of the outstanding Common Stock (as determined pursuant to the provisions of the Purchase Agreement). Under the Purchase Agreement, L-3 has the right to cancel (in whole or in part), at L-3's option, its obligation to make any payment in respect of the Note if, in L-3's reasonable discretion: (i) a breach by the Company of any representation, warranty, covenant or agreement contained in the Purchase Agreement or any other document relating thereto results from or has resulted in a Material Adverse Effect (as defined in the Purchase Agreement) with respect to either (A) the Company, or (B) L-3; or (ii) a Material Adverse Effect (as defined in the Purchase Agreement) has occurred or shall occur with respect to the Company as a result of certain specified litigation claims. If L-3 exercises its right not to pay amounts due under the Note and it is determined by a court of competent jurisdiction in a final, non-appealable judgment or order or by a final, non-appealable arbitration award that L-3 did not in fact have the right to cancel its obligation to make any payment in respect of the Note, then L-3 must pay to the Company the Liability Amount (as defined below), as liquidated damages for loss of a bargain and not a penalty. The payment of the Liability Amount will be the sole and exclusive remedy of the Company in connection with such a breach by L-3 and L-3 will have no other liability to the Company in respect thereof. The term "Liability Amount" is defined in the Purchase Agreement as the portion of the purchase price for the L-3 Shares not paid in cash by L-3 to the Company at such time. In addition, pursuant to the terms of the Purchase Agreement, L-3 has the right to cancel (in whole or in part), at L-3's option, its obligation to purchase Additional Shares if, in L-3's reasonable discretion: (i) a breach by the Company of any representation, warranty, covenant or agreement contained in the Purchase Agreement or any other document relating thereto results from or results in a Material Adverse Effect (as defined in the Purchase Agreement) with respect to either (A) the Company, or (B) L-3; or (ii) after the Closing, a Material Adverse Effect has occurred or shall occur with respect to the Company. If L-3 exercises its right not to consummate the purchase of the Additional Shares and it is determined by a court of competent jurisdiction in a final, non-appealable judgment or order or by a final, non-appealable arbitration award that L-3 did not in fact have the right to cancel its obligation to purchase the Additional Shares, then L-3 must pay to the Company the Damage Amount (as defined below), as liquidated damages for loss of a bargain and not a penalty. The payment of the Damage Amount will be the sole and exclusive remedy of the Company in connection with such a breach by L-3 and L-3 will have no other liability to the Company in respect thereof. The term "Damage Amount" is defined in the Purchase Agreement as the portion of the purchase price for the Additional Shares not paid in cash by L-3 to the Company at such time. 11 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Each of the Company and L-3 has agreed in the Purchase Agreement to indemnify the other party and certain related parties and hold them harmless from any losses arising from, in connection with or otherwise with respect to its breach of any representation or warranty contained in the Purchase Agreement (subject to the expiration of such representations and warranties) or its failure to perform any covenant or agreement made or contained in the Purchase Agreement or fulfill any obligation in respect thereof. If the Company is required to indemnify L-3 pursuant to these provisions (as determined by a court of competent jurisdiction or by an arbitration award), then L-3 is entitled, in addition to any other right or remedy it may have, to exercise rights of set-off against any amounts then due and payable to the Company under the Purchase Agreement or that may thereafter become due and payable to the Company under the Purchase Agreement (including under the Note and in respect of the purchase price for the Additional Shares). L-3's obligation to indemnify the Company and certain related parties pursuant to these provisions (as determined by a court of competent jurisdiction or by an arbitration award) shall not exceed in the aggregate $20 million, such $20 million to be reduced from time to time beginning on the Closing by any and all amounts paid in cash to the Company or on its behalf pursuant to the Purchase Agreement (including the $8.5 million which was paid in cash at the Closing, payments or other credits with respect of the Note and the purchase price paid for the Additional Shares). Effective as of the Closing, the number of directors constituting the Board was reduced to three; Charles S. Brand, Frank A. Brand and Mark B. Fisher resigned as directors of the Company and Jay B. Langner was appointed as a director of the Company. Pursuant to the terms of the Stockholders Agreement, dated July 10, 2000 (the "Stockholders Agreement"), among the Company, L-3 and the other parties thereto (the "Existing Holders"), upon compliance by the Company with the requirements of Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (the "Effective Time"), the number of directors constituting the Board was set at seven. The Existing Holders have the right to designate three directors so long as they continue to beneficially own at least 15% of the outstanding Common Stock (as determined pursuant to a specified formula). If the Existing Holders beneficially own less than 15% of the outstanding Common Stock (as so determined), the number of directors the Existing Holders will have the right to appoint will be reduced to two. If the Existing Holders beneficially own less than 10% of the outstanding Common Stock, they no longer will have the right to designate directors of the Company. From and after the Effective Time, L-3 has the right under the Stockholders Agreement to designate the remaining members of the Board so long as it continues to be the owner of at least 25% of the outstanding Common Stock (as so determined). Under the terms of the Stockholders Agreement, so long as L-3 remains the owner of at least 25% of the Common Stock (as so determined), L-3 has a right of first offer with respect to the proposed transfer, in one or a series of related transactions, by a Major Selling Stockholder (as defined in the Stockholders Agreement) of (i) 10% or more of the Common Stock Equivalents (as so defined), other than in certain specified market transactions, or (ii) Common Stock Equivalents which to the actual knowledge of the Major Selling Stockholder, together with the holdings of Common Stock Equivalents of the person to which the transfer is to be made, would result in such person owning more than 10% of the Common Stock Equivalents (after giving effect to such transfer). Pursuant to the terms of the Stockholders Agreement, the Existing Holders effected the conversion or exchange of certain convertible indebtedness and warrants held by them as described below, waived certain anti-dilution rights, including rights resulting from the Transaction, waived certain registration rights and consented to the Transaction. In addition, the Existing Holders agreed to extend the maturity date of the Bridge Notes to the earlier of (i) the fifth day following the consummation of a Qualifying Offering and (ii) June 30, 2001, and agreed to waive certain other rights specified in the Stockholders Agreement. The Stockholders Agreement terminates upon the earliest to occur of (i) the consummation of a Qualifying Offering, (ii) with respect to L-3 or an Existing Holder, when such party has effected the transfer of its entire ownership interest in the Company to persons that are not affiliates of L-3 or the Existing Holders, as the case may be, (iii) the consummation of a qualifying "Company Sale" (as defined in the Stockholders Agreement), and (iv) the written mutual consent of L-3 and the Existing Holders that collectively own a majority of the Common Stock Equivalents then held by all Existing Holders. 12 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Effective upon the Closing, the following persons were elected to hold the offices set forth opposite their respective names. John S. Mega......................... Acting President Charles S. Brand..................... Senior Vice President of Technology and Acting General Manager -- New Jersey Operations Norman M. Phipps..................... Senior Vice President of Administration Christopher C. Cambria............... Vice President and Secretary In connection with and prior to the Closing, the holders of the Company's outstanding Class A Debentures, Class B Debentures and Class C Debentures (collectively, the "Convertible Debt") converted such indebtedness into an aggregate of 30,612,420 shares of Common Stock. In addition, prior to the Closing, the holders of the Company's outstanding Series A 12% Cumulative Convertible Redeemable Preferred Stock, stated value $50,000 per share (the "Series A Preferred Stock"), converted the Series A Preferred Stock into an aggregate of 2,358,500 shares of Common Stock. The conversion of the Series A Preferred Stock resulted in the elimination of accrued and unpaid dividends on the Series A Preferred Stock of approximately $0.9 million. Prior to the Closing, the Existing Holders also exchanged their outstanding warrants to purchase Common Stock for an aggregate of 12,301,802 shares of Common Stock. In connection with and prior to the Closing, the Company amended (i) its Certificate of Incorporation to increase the number of authorized shares to 355,000,000 shares, consisting of 350,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share, and (ii) its By-laws to allow the holders of a majority of the outstanding Common Stock to call special meetings of the stockholders of the Company. Copies of the amendment of the Company's Certificate of Incorporation and By-laws have been filed as Exhibits to the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999. The Company, L-3 and the Existing Holders also entered into a Registration Rights Agreement, dated as of July 10, 2000 (the "Registration Rights Agreement"). Pursuant to the terms of the Registration Rights Agreement, L-3 (or certain qualifying holders of shares purchased by L-3) has the right to demand at any time that the Company effect the registration of the shares of Common Stock acquired by L-3 for offering and sale under applicable securities laws (subject to certain black-out provisions described below). L-3 (or such qualifying successors) have the right to make four such demands. Under the Registration Rights Agreement, after the earlier to occur of (i) consummation of a Qualifying Offering and (ii) March 31, 2001, one or more Existing Holders meeting certain requirements have the right to demand that the Company effect the registration of the shares of Common Stock acquired by such Existing Holders (and any other Existing Holders who timely agree to participate in such offering) for offering and sale under applicable securities laws (subject to certain black-out provisions described below). The Existing Holders have the right to make two such demands. A registration effected pursuant to the provisions described above is hereinafter referred to as a "Long-Form Registration." In addition, if at any time after the earlier of (i) January 2, 2001 and (ii) the consummation of a Qualifying Offering, the Company is eligible to effect such registration on Form S-3 (or a successor form), L-3 and the Existing Holders have the unlimited right to demand that the Company effect the registration of their shares of Common Stock (a "Short-Form Registration") so long as the shares to be offered for the benefit of the requesting holders (and any other parties to the Registration Rights Agreement who timely agree to participate in such offering) are reasonably expected to have an aggregate offering price of at least $1,000,000. The Company is not required to prepare and file a registration statement pursuant to a Long-Form Registration for a period of not more than 90 days following receipt by the Company of a request for registration, if (i) the Company in good faith gives written notice within five days after such receipt by the Company of such request that the Company is commencing to prepare a Company-initiated registration statement, and (ii) the Company actively employs in good faith all reasonable efforts to cause such registration statement to become effective. If the Company receives a request to effect a Long-Form Registration within 90 days of the date on which a previous registration statement filed pursuant to a Long-Form Registration has become effective, the Company is not required to commence preparation of such Long-Form Registration in accordance with such request until 90 days has elapsed since such effective date. 13 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) If the Company furnishes to the persons requesting registration a certificate signed by the chief executive or chief financial officer of the Company stating that the Company, in good faith, has determined that (i) there exists material non-public information about the Company which the Company has a bona fide business purpose for preserving as confidential, or (ii) is undertaking (or is about to undertake) a proposed acquisition or financing that would significantly impact the pricing of the contemplated public offering, and in each case the Company provides such persons written notice thereof promptly after the Company makes such determination, then the Company has the right to defer the filing or the declaration of effectiveness of a registration statement, for a period of not more than (A) 90 days, in the case of a Long-Form Registration, or (B) 60 days, in the case of a Short-Form Registration, after receipt of the request to register; provided, however, that the Company is not entitled to defer such filing or declaration of effectiveness more than 120 days in any 12-month period. The parties to the Registration Rights Agreement also have unlimited "piggy back" rights with respect to any registration effected by the Company for its own account or for the account of another person (other than registrations relating to sales of securities to participants in a Company stock plan or in a transaction covered by Rule 145 promulgated under the Securities Act of 1933, as amended), subject to certain cut-back provisions. The Company will be required to bear all expenses incurred in effecting any Long-Form Registration and up to six Short-Form Registrations, including the fees and disbursements of any counsel or accountant retained by the holders of more than fifty percent of the stock being registered, but excluding underwriting discounts and brokerage fees or commissions. In addition, the Company has agreed to indemnify participants in any registration for certain liabilities, including liabilities arising under applicable securities laws, and is obligated to contribute to any damages paid by such participants if such indemnification is unavailable to such participants. In connection with the Transaction, the Company entered into new two-year employment agreements with Messrs. Brand and Phipps (the "New Employment Agreements"). Pursuant to the New Employment Agreements, Mr. Brand and Mr. Phipps will each receive an annual base salary of $210,000. The base salary is subject to periodic increases at the discretion of the Board. Under his New Employment Agreement, Mr. Phipps was granted an option to acquire 750,000 shares of Common Stock at an exercise price of $0.54 per share (subject to adjustment in certain circumstances) (the "Phipps Option"). The Phipps Option vests in equal installments of one-third per year and expires, subject to earlier termination, ten years from the date of grant. Under the New Employment Agreements, the Company agreed to reimburse Mr. Brand and Mr. Phipps for the costs of maintaining a $1,000,000 term-life insurance policy for the benefit of each of Mr. Brand and Mr. Phipps, subject to a cap of $2,000 per annum. Mr. Brand and Mr. Phipps also are entitled to participate in certain compensation and employee benefit plans maintained by the Company. In the event of the termination of employment by the Company (other than upon death, permanent disability or a termination for "Cause" (as defined in the New Employment Agreements)) or a termination of employment by the employee for "Good Reason" (as so defined), each of Mr. Brand and Mr. Phipps would be entitled to receive his then-current base salary for a period equal to the greater of (i) the remainder of the term of his employment agreement, and (ii) 12 months (in the case of Mr. Brand) or six months (in the case of Mr. Phipps) from the effective date of termination. The Phipps Option will vest immediately upon a termination of employment giving Mr. Phipps the right to continue to receive his base salary as described above or upon the occurrence of a "Change in Control Event" (as defined in the Phipps Option). The New Employment Agreements also contain certain non-competition, confidentiality and intellectual property ownership covenants. Pursuant to the terms of the Transaction, options to purchase 150,000 shares of Common Stock were issued to each of Dr. Frank A. Brand, Mr. Carreras and Mr. Fisher (collectively, the "Former Director Options"). The Former Director Options have an exercise price of $0.54 per share (subject to adjustment in certain circumstances), are immediately exercisable and expire, subject to earlier termination, ten years from the date of grant. In addition, as described above, Mr. Phipps received an option to acquire 750,000 shares of Common Stock in connection with the execution of his new employment agreement. Options to purchase an aggregate of 8,902,200 shares of Common Stock also were issued under the Stock Compensation Program to certain other employees of the Company and to certain employees of L-3 in connection with the Transaction (the "Employee Options"). All of the Employee Options have an exercise price of $0.54 per share (subject to adjustment in certain circumstances), vest in equal installments of one-third per year and expire, subject to earlier termination, ten years from the date of grant. Pursuant to this grant, two officers of the Company, Mr. James Meckstroth and Mr. Erik Kruger received options to acquire 740,000 shares and 400,000 shares of Common Stock, respectively. 14 LOGIMETRICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) In addition, pursuant to the Transaction, options to purchase an aggregate of 12,665,308 shares of Common Stock were granted to L-3, Cramer Rosenthal McGlynn, LLC ("CRM") and Cerberus Partners, L.P. ("Cerberus") (the "Founder Options") (with each such party having the ability to direct all or part of its options to certain parties related to such party). The Founder Options have an exercise price of $0.54 per share (subject to adjustment in certain circumstances), are immediately exercisable and expire ten years from the date of grant. On July 20, 2000, the Company filed with the Securities and Exchange Commission (the "Commission") an Information Statement pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (the "Information Statement"). The Information Statement was mailed on July 21, 2000 to all holders of record of the Company at the close of business on July 10, 2000 in connection with the appointment by L-3 of a majority of the members of the Board. In connection with the Transaction, the Company terminated its letter of intent (the "Signal Letter of Intent") with Signal Technology Corporation ("Signal") relating to the proposed merger of the Company with a subsidiary of Signal. In connection with the Signal Letter of Intent, Signal had loaned $2,000,000 to the Company for working capital and other purposes (the "Signal Loan"). Concurrently with the making of the Signal Loan, certain existing investors in the Company also loaned the Company $1,000,000 (the "Investor Loans"). The Signal Loan and the Investor Loans were repaid with a portion of the net proceeds of the Transaction. The Company and Signal also had entered into a Management Agreement (the "Management Agreement") pursuant to which Signal, through its Keltec division, assumed the management and operation of the Company's high-power amplifier business, formerly conducted by the Company at its Bohemia, New York facility (the "New York Business") and assumed certain liabilities of the New York Business. Under the Management Agreement, Signal was responsible for all expenses incurred and was entitled to retain all revenues generated in connection with its operation of that business. Signal also agreed to make interest payments on the Company's outstanding bank indebtedness during the period it is operating the New York Business. In November 2000, Signal acquired the New York Business, and the Company paid Signal $2.1 million to offset certain costs incurred by Signal during the course of its management of the New York Business and certain known liabilities of this business. Additionally, the Company has agreed to retain other specific liabilities of the New York Business. In connection with the proposed acquisition of the Company by Signal, the Company and the Bank entered into a Consent Letter (the "Consent Letter") pursuant to which the Bank consented to the transactions contemplated by the Signal Letter of Intent and agreed to waive any defaults under the Replacement Note resulting therefrom. In addition, in the Consent Letter, the Bank agreed to modify and extend the maturity date of the Replacement Note from December 31, 1999 to June 30, 2000 and to eliminate certain covenants contained therein. In exchange, the Company agreed, among other things, (i) to reduce the amount available under the Replacement Note to $1.8 million (the amount outstanding thereunder as of such date), (ii) that no further advances would be made under the Replacement Note, (iii) to pay all past due amounts outstanding under the Replacement Note, and to pay the Bank certain additional fees specified in the Consent Letter, and (iv) to extend the expiration date of the Common Stock Purchase Warrants, Series J (the "Series J Warrants") to June 30, 2000. Pursuant to the terms of the Consent Letter, the Replacement Note matured on June 30, 2000. On August 21, 2000, the Bank agreed to modify and extend the maturity date of the Replacement Note from June 30, 2000 to January 2, 2001 (the "Modified Replacement Note"). In exchange, the Company agreed, among other things, (i) to reduce the amount outstanding under the Modified Replacement Note to $1.5 million, (ii) that no further advances would be made under the Modified Replacement Note, (iii) to pay all past due interest on the Modified Replacement Note, and to pay the Bank certain additional fees specified in the Modified Replacement Note, (iv) to make mandatory prepayments to the Modified Replacement Note equal to a minimum of 25% of any prepayments made by L-3 to the Company under the Note, and (v) to extend the expiration date of the Series J Warrants to January 2, 2003. 15 LOGIMETRICS, INC. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS Three Months Ended September 30, 1999 Compared to Three Months Ended September 30, 1998 Revenues for the three months ended September 30, 1999 decreased $2.1 million, or 79.5%, to $0.5 million from $2.6 million for the comparable period of 1998. The decrease in revenues for the quarter ended September 30, 1999 resulted primarily from a decrease in the Company's sale of traveling wave tube amplifiers ("TWTAs"). Cost of revenues for the three months ended September 30, 1999 decreased $0.7 million, or 35.2%, to $1.2 million from $1.9 million for the comparable period of 1998. The decrease resulted primarily from a lower level of sales and the costs related thereto, offset in part by the write-off of obsolete inventory and overhead costs spread over a lower revenue base. Selling, general and administrative expenses for the three months ended September 30, 1999 increased $0.9 million, or 81.9%, to $2.0 million from $1.1 million for the comparable period of 1998. The increase in SG&A expenses was primarily a result of increases in financing fees and allowance for doubtful accounts, offset in part by a decrease in professional fees. Research and development expenses for the three months ended September 30, 1999 increased $0.4 million, or 131.5%, to $0.6 million from $0.2 million for the comparable period of 1998. The increase was due primarily to a shift in personnel from production to design and development activities related to new product development and product enhancements of both the Company's point-to-multipoint ("PMP") and TWTA product lines. For the reasons discussed above, the operating loss for the three months ended September 30, 1999 increased $2.6 million, or 438.4%, to $3.2 million from $0.6 million for the comparable period in 1998. Interest expense for the three months ended September 30, 1999 increased $0.1 million, or 29.6%, to $0.5 million from $0.4 million for the comparable period of 1998, primarily as a result of a higher level of average outstanding indebtedness used to finance the Company's working capital requirements. During the quarter ended September 30, 1999, the Company had no income tax benefit compared to an income tax benefit of $20,000 for the quarter ended September 30, 1998. LogiMetrics and mmTech currently file separate federal and state income tax returns. The tax benefit recorded in the quarter ended September 30, 1999 relates to pre-tax losses generated by mmTech in that period. The Company accrued dividends on its outstanding preferred stock of $60,000 during each of the quarters ended September 30, 1999 and 1998. See "Recent Developments" for a description of the elimination of the accrued dividends. For the reasons discussed above, net loss attributable to common stockholders for the quarter ended September 30, 1999 increased $2.8 million, or 274.9%, to $3.8 million from $1.0 million for the comparable period in 1998. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1999, the Company had cash of $0.4 million. At such date, the Company had total current assets of $2.4 million and total current liabilities of $16.6 million. Net cash used in operating activities was $0.9 million for the three months ended September 30, 1999, and $0.3 million for the comparable period in 1998. Net cash used in operating activities during the three months ended September 30, 1999 resulted primarily from a net loss of $3.7 million, offset in part by decreases in accounts receivable and inventory, and increases in financing fees, accounts payable and accrued expenses and accrued interest expense. Net cash used in operating activities during the three months ended September 30, 1998 resulted primarily from a net loss of $0.9 million, and an increase in inventory, offset in part by increases in accounts payable and accrued expenses and accrued interest expense. 16 LOGIMETRICS, INC. Net cash used for investing activities was $50,000 for the three months ended September 30, 1999, and $12,000 for the comparable period in 1998. Net cash used for investing activities in each period resulted from the purchase of equipment to support the Company's operations. Net cash provided by financing activities was $0.9 million for the three months ended September 30, 1999, and $0.4 million for the three months ended September 30, 1998. Net cash provided by financing activities during both periods resulted primarily from the proceeds of debt and warrant issuances by the Company, offset in part by the repayment of outstanding indebtedness. From July 1, 1998 to September 30, 1999, the Company raised $3.5 million from private sales of convertible debentures, warrants and bridge financing to fund a portion of its cash flow needs. However, to date, the Company has continued to record losses and has failed to generate sufficient cash flow to fund working capital requirements. To the extent that the Company is unable to meet its working capital requirements by generating positive cash flow from operations, the Company intends to continue to fund a portion of its working capital requirements through the sale of its securities. There can be no assurance that the Company can continue to finance its operations through the sale of securities or as to the terms of any such sales that may occur in the future. If the Company is unable to attain profitable operations and to generate sufficient cash flow or to obtain sufficient financing to fund its operations, the Company may not be able to achieve its growth objectives and may have to curtail its marketing, development or operations. As of September 1, 1999, the Company entered into a Reduced and Extended Revolving Credit Note (the "Replacement Note") and a Recognition and Limited Forebearance Agreement (the "Forebearance Agreement") with North Fork Bank (the "Bank"). Pursuant to the terms of the Replacement Note, the amount available for borrowing under the Replacement Note was reduced to $1.93 million (the amount outstanding as of such date) and the maturity date of the Replacement Note was extended to December 31, 1999. At September 30, 1999, the Company had $11,000 available under the Replacement Note. Outstanding amounts under the Replacement Note bear interest at the rate of 2% per annum in excess of the Bank's prime rate. At September 30, 1999, the Bank's prime rate was 8.25%. At September 30, 1999, the Company was in violation of two covenants contained in the Replacement Note that the Company report net income of at least $1.00 for each fiscal quarter (the "Net Income Covenant") and that the Company file its Form 10-KSB for the fiscal year ended June 30, 1999 by September 30, 1999 (the "Reporting Requirement Covenant"). Under the terms of the Forebearance Agreement, the Bank agreed to forbear, until December 31, 1999, from declaring any event of default or from exercising any remedies under the Replacement Note. See "Recent Developments" for a discussion of the subsequent extension of the Replacement Note. On September 7, 1999, the Company sold an aggregate of $1,000,000 of its Negotiable Secured Senior Subordinated Promissory Notes due March 7, 2000 (the "Bridge Notes") to a group of institutional investors (the "Lenders") for an aggregate cash purchase price of $1,000,000. The Bridge Notes bear interest at a rate of 13% per annum. Pursuant to the terms of the Second Amended and Restated Security Agreement, Intercreditor Agreement, Waiver and Consent (the "Intercreditor Agreement"), the Bridge Notes are secured by a security interest in all of the Company's assets which ranks junior to the Replacement Note, and senior to the Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures, due July 29, 1999 (the "Class A Debentures"), the Amended and Restated 13% Senior Subordinated Convertible Pay-in-Kind Debentures due July 29, 1999 (the "Class B Debentures") and the Class C 13% Senior Subordinated Debentures due September 30, 1999 (the "Class C Debentures"). Pursuant to the terms of the Intercreditor Agreement, each of the holders of the Class A Debentures, the Class B Debentures and the Class C Debentures consented to the issuance of the Bridge Notes and the granting of the security interest described above. As consideration for the purchase of the Bridge Notes, Mr. Charles S. Brand, the Company's Chairman, transferred to the Lenders an aggregate of 3,000,000 shares of the Company's common stock, par value $0.01 per share (the "Common Stock") owned by him. In addition to the Replacement Note, at September 30, 1999, the Company had issued and outstanding $4.9 million of its Class A Debentures, $2.1 million of its Class B Debentures, $3.0 million of its Class C Debentures and $1,000,000 of its Bridge Notes. The Class A Debentures and the Class B Debentures contained financial covenants identical to those contained in the Replacement Note. Accordingly, at September 30, 1999, the Company was in default of the Net Income Covenant and the Reporting Requirement Covenant to the same extent as under the Replacement Note. As of September 30, 1999, the holders of the Class A Debentures and the Class B Debentures had waived compliance with the Net Income Covenant and the Reporting Requirement 17 LOGIMETRICS, INC. Covenant until maturity. Pursuant to the terms of the Class A Debentures and the Class B Debentures, the Company was required to file a registration statement covering, among other things, the resale of the shares of Common Stock issuable upon the conversion of the Class A Debentures and the Class B Debentures on or prior to October 27, 1997 and to have the registration statement declared effective by the Securities and Exchange Commission (the "SEC") on or prior to January 25, 1998. Unless the Company completed the required registration, the interest rate on the Class A Debentures and the Class B Debentures increased (subject to a maximum interest rate of 17% per annum). At September 30, 1999, the interest rate was 17% per annum. The holders of the Class A Debentures and the Class B Debentures had the right to declare all amounts thereunder due and payable if the registration statement was not declared effective by the SEC on or prior to April 25, 1998. The holders of the Class A Debentures and the Class B Debentures have waived their respective rights until maturity to declare any default arising as a result of the Company's failure to have the required registration statement declared effective by the SEC. See "Recent Developments" for a discussion of the subsequent conversion of all the Class A Debentures, Class B Debentures and Class C Debentures. From time to time subsequent to September 30, 1999, the Company has received advances from certain of the Company's other investors (the "Investor Loans"). The Investor Loans have been made on the same terms and conditions as the Bridge Notes, but rank senior to the Bridge Notes. See "Recent Developments" for a discussion of the repayment of the Investor Loans. RECENT DEVELOPMENTS In July 2000, the Company and L-3 Communications Corporation ("L-3") entered into a Purchase Agreement, dated July 10, 2000 (the "Purchase Agreement"), pursuant to which, among other things, L-3 acquired on July 11, 2000, beneficially and of record, 93,236,794 newly issued shares (the "L-3 Shares") of the Company's outstanding Common Stock, for an aggregate purchase price of $15.0 million, $8.5 million of which was paid in cash at the closing on July 11, 2000 of the transactions contemplated by the Purchase Agreement (the "Closing") and the balance of which was paid in the form of a secured promissory note (the "Note"). At the Closing, the L-3 Shares constituted approximately 53.5% of the Company's outstanding Common Stock on a fully diluted basis (calculated after giving effect to the transactions contemplated by the Purchase Agreement and certain anti-dilution adjustments set forth in the Purchase Agreement). Pursuant to the terms of a Stock Pledge Agreement, dated July 10, 2000 (the "Stock Pledge Agreement"), executed by L-3 in favor of the Company, the obligations of L-3 under the Note are secured by a pledge of 43.33% of the L-3 Shares. The Note will be prepaid from time to time as necessary to fund the Company's reasonable ongoing working capital needs. If not paid prior thereto, the Note will be paid in full on the earlier of (i) January 2, 2001 and (ii) the date that the Company consummates a qualifying Public Offering (as defined in the Purchase Agreement) of its equity securities (a "Qualifying Offering"). The number of shares of Common Stock issuable to L-3 will be adjusted, if necessary, after the Closing so that the L-3 Shares will, following such adjustment, constitute 53.5% of the Company's outstanding Common Stock after giving effect to the dilutive effects of the conversion of certain contingently issuable securities as specified in the Purchase Agreement. Under the Purchase Agreement, L-3 has agreed, subject to the satisfaction of certain conditions, to purchase up to 3,333,333 shares of Common Stock (the "Additional Shares") for $5.0 million on or after January 2, 2001 (unless L-3 elects to acquire any Additional Shares in its sole discretion prior to January 2, 2001), to the extent the Company requires additional reasonable ongoing working capital to operate its business. Pursuant to the terms of the Purchase Agreement, the Company has granted to L-3 an option (the "L-3 Option") to acquire up to 5,555,555 shares of Common Stock at an exercise price of $0.54 per share (subject to adjustment in certain circumstances). The L-3 Option is exercisable upon the purchase of all of the Additional Shares. In the Purchase Agreement, L-3 granted to the Company the option, exercisable by a majority of the entire Board of Directors of the Company (the "Board"), to cause L-3 to transfer without further consideration certain technology and other assets to the Company in connection with the Qualifying Offering upon the satisfaction of certain conditions. Pursuant to the Purchase Agreement, L-3 may, in its sole discretion, provide administration and other services and equipment (including team services, support services, facilities, tools and equipment) to the Company. Such services and equipment will be billed, from time to time, at cost to the Company, including direct labor, direct material, other direct charges and expenses and overhead (including a corporate expense allocation charge equal to 1.5% of the Company's consolidated sales). 18 LOGIMETRICS, INC. L-3 also has agreed to use its reasonable best efforts (i) for a specified period of time to obtain an additional $5.0 million investment in the Company from one or more investment banks on the same terms as L-3's purchase of the Additional Shares; and (ii) to cooperate with the Company to consummate the Qualifying Offering no later than December 31, 2000, subject to market and economic conditions. Pursuant to the Purchase Agreement, the Company has agreed to maintain directors' and officers' insurance in place for a period of six years (subject to certain expense limitations) and to maintain certain provisions in its charter and by-laws relating to the indemnification of directors and officers for such six-year period. Under the Purchase Agreement, the Company may not, without the approval of either (i) those holders of Common Stock (excluding L-3, entities controlled, directly or indirectly, by L-3 and executive officers (within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of L-3) (the "Minority Stockholders") that represent not less than a majority of the outstanding Common Stock held by all such holders (a "Special Stockholder Majority") or (ii) a majority of the directors elected by the Existing Holders (as defined below), effect the following extraordinary transactions: (A) certain mergers, consolidations or share exchanges, (B) the sale of all or substantially all of its assets in one transaction or a series of related transactions, (C) the seeking of protection under applicable bankruptcy and insolvency laws, (D) the issuance, offer or sale of any shares of its capital stock or securities exercisable for, convertible into or otherwise giving the holder the right to obtain shares of capital stock (other than the issuance of shares and options pursuant to the Purchase Agreement, shares issuable upon the exercise or conversion of outstanding securities, the granting of certain options and rights to purchase Common Stock contemplated by the Purchase Agreement and shares of Common Stock issuable upon the exercise of such options and rights), (E) the amendment of its certificate of incorporation or by-laws if the terms of such amendment would conflict with the terms of the Purchase Agreement and the transactions contemplated thereby or would materially and adversely affect the rights of the Minority Stockholders, (F) amend or modify any of the provisions of the documents relating to the Purchase Agreement, (G) enter into a Rule 13e-3 transaction (as defined in Rule 13e-3 promulgated under the Exchange Act), or (H) enter into, assume or become bound by any agreement, instrument or understanding to do any of the foregoing or otherwise attempt to do any of the foregoing. In addition, L-3 has agreed not to sell to a non-affiliated third party more than 53.27% of the L-3 Shares prior to December 31, 2001. The directors appointed by the Existing Holders will have the right to enforce the provisions of the Purchase Agreement and to otherwise act on behalf of the Company with respect to the Purchase Agreement and the other documents relating thereto. These provisions will expire upon the earlier of (i) the consummation of a Qualifying Offering and (ii) the date upon which the Existing Holders collectively cease to own at least 10% of the outstanding Common Stock (as determined pursuant to the provisions of the Purchase Agreement). Under the Purchase Agreement, L-3 has the right to cancel (in whole or in part), at L-3's option, its obligation to make any payment in respect of the Note if, in L-3's reasonable discretion: (i) a breach by the Company of any representation, warranty, covenant or agreement contained in the Purchase Agreement or any other document relating thereto results from or has resulted in a Material Adverse Effect (as defined in the Purchase Agreement) with respect to either (A) the Company, or (B) L-3; or (ii) a Material Adverse Effect (as defined in the Purchase Agreement) has occurred or shall occur with respect to the Company as a result of certain specified litigation claims. If L-3 exercises its right not to pay amounts due under the Note and it is determined by a court of competent jurisdiction in a final, non-appealable judgment or order or by a final, non-appealable arbitration award that L-3 did not in fact have the right to cancel its obligation to make any payment in respect of the Note, then L-3 must pay to the Company the Liability Amount (as defined below), as liquidated damages for loss of a bargain and not a penalty. The payment of the Liability Amount will be the sole and exclusive remedy of the Company in connection with such a breach by L-3 and L-3 will have no other liability to the Company in respect thereof. The term "Liability Amount" is defined in the Purchase Agreement as the portion of the purchase price for the L-3 Shares not paid in cash by L-3 to the Company at such time. In addition, pursuant to the terms of the Purchase Agreement, L-3 has the right to cancel (in whole or in part), at L-3's option, its obligation to purchase Additional Shares if, in L-3's reasonable discretion: (i) a breach by the Company of any representation, warranty, covenant or agreement contained in the Purchase Agreement or any other document relating thereto results from or results in a Material Adverse Effect (as defined in the Purchase Agreement) with respect to either (A) the Company, or (B) L-3; or (ii) after the Closing, a Material Adverse Effect has occurred or shall occur with respect to the Company. If L-3 exercises its right not to consummate the purchase of the Additional Shares and it is determined by a court of competent jurisdiction in a final, non-appealable judgment or order or by a final, non-appealable arbitration award that L-3 did not in fact have the right to cancel its obligation to purchase the Additional Shares, then L-3 must pay to the Company the Damage Amount (as defined below), as liquidated damages for loss of a bargain and not a penalty. 19 LOGIMETRICS, INC. The payment of the Damage Amount will be the sole and exclusive remedy of the Company in connection with such a breach by L-3 and L-3 will have no other liability to the Company in respect thereof. The term "Damage Amount" is defined in the Purchase Agreement as the portion of the purchase price for the Additional Shares not paid in cash by L-3 to the Company at such time. Each of the Company and L-3 has agreed in the Purchase Agreement to indemnify the other party and certain related parties and hold them harmless from any losses arising from, in connection with or otherwise with respect to its breach of any representation or warranty contained in the Purchase Agreement (subject to the expiration of such representations and warranties) or its failure to perform any covenant or agreement made or contained in the Purchase Agreement or fulfill any obligation in respect thereof. If the Company is required to indemnify L-3 pursuant to these provisions (as determined by a court of competent jurisdiction or by an arbitration award), then L-3 is entitled, in addition to any other right or remedy it may have, to exercise rights of set-off against any amounts then due and payable to the Company under the Purchase Agreement or that may thereafter become due and payable to the Company under the Purchase Agreement (including under the Note and in respect of the purchase price for the Additional Shares). L-3's obligation to indemnify the Company and certain related parties pursuant to these provisions (as determined by a court of competent jurisdiction or by an arbitration award) shall not exceed in the aggregate $20 million, such $20 million to be reduced from time to time beginning on the Closing by any and all amounts paid in cash to the Company or on its behalf pursuant to the Purchase Agreement (including the $8.5 million which was paid in cash at the Closing, payments or other credits with respect of the Note and the purchase price paid for the Additional Shares). Effective as of the Closing, the number of directors constituting the Board was reduced to three; Charles S. Brand, Frank A. Brand and Mark B. Fisher resigned as directors of the Company and Jay B. Langner was appointed as a director of the Company. Pursuant to the terms of the Stockholders Agreement, dated July 10, 2000 (the "Stockholders Agreement"), among the Company, L-3 and the other parties thereto (the "Existing Holders"), upon compliance by the Company with the requirements of Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (the "Effective Time"), the number of directors constituting the Board was set at seven. The Existing Holders have the right to designate three directors so long as they continue to beneficially own at least 15% of the outstanding Common Stock (as determined pursuant to a specified formula). If the Existing Holders beneficially own less than 15% of the outstanding Common Stock (as so determined), the number of directors the Existing Holders will have the right to appoint will be reduced to two. If the Existing Holders beneficially own less than 10% of the outstanding Common Stock, they no longer will have the right to designate directors of the Company. From and after the Effective Time, L-3 has the right under the Stockholders Agreement to designate the remaining members of the Board so long as it continues to be the owner of at least 25% of the outstanding Common Stock (as so determined). Under the terms of the Stockholders Agreement, so long as L-3 remains the owner of at least 25% of the Common Stock (as so determined), L-3 has a right of first offer with respect to the proposed transfer, in one or a series of related transactions, by a Major Selling Stockholder (as defined in the Stockholders Agreement) of (i) 10% or more of the Common Stock Equivalents (as so defined), other than in certain specified market transactions, or (ii) Common Stock Equivalents which to the actual knowledge of the Major Selling Stockholder, together with the holdings of Common Stock Equivalents of the person to which the transfer is to be made, would result in such person owning more than 10% of the Common Stock Equivalents (after giving effect to such transfer). Pursuant to the terms of the Stockholders Agreement, the Existing Holders effected the conversion or exchange of certain convertible indebtedness and warrants held by them as described below, waived certain anti-dilution rights, including rights resulting from the Transaction, waived certain registration rights and consented to the Transaction. In addition, the Existing Holders agreed to extend the maturity date of certain loans made by them to the earlier of (i) the fifth day following the consummation of a Qualifying Offering and (ii) June 30, 2001, and agreed to waive certain other rights specified in the Stockholders Agreement. 20 LOGIMETRICS, INC. The Stockholders Agreement terminates upon the earliest to occur of (i) the consummation of a Qualifying Offering, (ii) with respect to L-3 or an Existing Holder, when such party has effected the transfer of its entire ownership interest in the Company to persons that are not affiliates of L-3 or the Existing Holders, as the case may be, (iii) the consummation of a qualifying "Company Sale" (as defined in the Stockholders Agreement), and (iv) the written mutual consent of L-3 and the Existing Holders that collectively own a majority of the Common Stock Equivalents then held by all Existing Holders. Effective upon the Closing, the following persons were elected to hold the offices set forth opposite their respective names. John S. Mega.......................... Acting President Charles S. Brand...................... Senior Vice President of Technology and Acting General Manager -- New Jersey Operations Norman M. Phipps...................... Senior Vice President of Administration Christopher C. Cambria................ Vice President and Secretary In connection with and prior to the Closing, the holders of the Company's outstanding Class A Debentures, Class B Debentures and Class C Debentures (collectively, the "Convertible Debt") converted such indebtedness into an aggregate of 30,612,420 shares of Common Stock. In addition, prior to the Closing, the holders of the Company's outstanding Series A 12% Cumulative Convertible Redeemable Preferred Stock, stated value $50,000 per share (the "Series A Preferred Stock"), converted the Series A Preferred Stock into an aggregate of 2,358,500 shares of Common Stock. The conversion of the Series A Preferred Stock resulted in the elimination of accrued and unpaid dividends on the Series A Preferred Stock of approximately $0.9 million. Prior to the Closing, the Existing Holders also exchanged their outstanding warrants to purchase Common Stock for an aggregate of 12,301,802 shares of Common Stock. In connection with and prior to the Closing, the Company amended (i) its Certificate of Incorporation to increase the number of authorized shares to 355,000,000 shares, consisting of 350,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share, and (ii) its By-laws to allow the holders of a majority of the outstanding Common Stock to call special meetings of the stockholders of the Company. Copies of the amendment of the Company's Certificate of Incorporation and By-laws have been filed as Exhibits to the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999. The Company, L-3 and the Existing Holders also entered into a Registration Rights Agreement, dated as of July 10, 2000 (the "Registration Rights Agreement"). Pursuant to the terms of the Registration Rights Agreement, L-3 (or certain qualifying holders of shares purchased by L-3) has the right to demand at any time that the Company effect the registration of the shares of Common Stock acquired by L-3 for offering and sale under applicable securities laws (subject to certain black-out provisions described below). L-3 (or such qualifying successors) have the right to make four such demands. Under the Registration Rights Agreement, after the earlier to occur of (i) consummation of a Qualifying Offering and (ii) March 31, 2001, one or more Existing Holders meeting certain requirements have the right to demand that the Company effect the registration of the shares of Common Stock acquired by such Existing Holders (and any other Existing Holders who timely agree to participate in such offering) for offering and sale under applicable securities laws (subject to certain black-out provisions described below). The Existing Holders have the right to make two such demands. A registration effected pursuant to the provisions described above is hereinafter referred to as a "Long-Form Registration." In addition, if at any time after the earlier of (i) January 2, 2001 and (ii) the consummation of a Qualifying Offering, the Company is eligible to effect such registration on Form S-3 (or a successor form), L-3 and the Existing Holders have the unlimited right to demand that the Company effect the registration of their shares of Common Stock (a "Short-Form Registration") so long as the shares to be offered for the benefit of the requesting holders (and any other parties to the Registration Rights Agreement who timely agree to participate in such offering) are reasonably expected to have an aggregate offering price of at least $1,000,000. 21 LOGIMETRICS, INC. The Company is not required to prepare and file a registration statement pursuant to a Long-Form Registration for a period of not more than 90 days following receipt by the Company of a request for registration, if (i) the Company in good faith gives written notice within five days after such receipt by the Company of such request that the Company is commencing to prepare a Company-initiated registration statement, and (ii) the Company actively employs in good faith all reasonable efforts to cause such registration statement to become effective. If the Company receives a request to effect a Long-Form Registration within 90 days of the date on which a previous registration statement filed pursuant to a Long-Form Registration has become effective, the Company is not required to commence preparation of such Long-Form Registration in accordance with such request until 90 days has elapsed since such effective date. If the Company furnishes to the persons requesting registration a certificate signed by the chief executive or chief financial officer of the Company stating that the Company, in good faith, has determined that (i) there exists material non-public information about the Company which the Company has a bona fide business purpose for preserving as confidential, or (ii) is undertaking (or is about to undertake) a proposed acquisition or financing that would significantly impact the pricing of the contemplated public offering, and in each case the Company provides such persons written notice thereof promptly after the Company makes such determination, then the Company has the right to defer the filing or the declaration of effectiveness of a registration statement, for a period of not more than (A) 90 days, in the case of a Long-Form Registration, or (B) 60 days, in the case of a Short-Form Registration, after receipt of the request to register; provided, however, that the Company is not entitled to defer such filing or declaration of effectiveness more than 120 days in any 12-month period. The parties to the Registration Rights Agreement also have unlimited "piggy back" rights with respect to any registration effected by the Company for its own account or for the account of another person (other than registrations relating to sales of securities to participants in a Company stock plan or in a transaction covered by Rule 145 promulgated under the Securities Act of 1933, as amended), subject to certain cut-back provisions. The Company will be required to bear all expenses incurred in effecting any Long-Form Registration and up to six Short-Form Registrations, including the fees and disbursements of any counsel or accountant retained by the holders of more than fifty percent of the stock being registered, but excluding underwriting discounts and brokerage fees or commissions. In addition, the Company has agreed to indemnify participants in any registration for certain liabilities, including liabilities arising under applicable securities laws, and is obligated to contribute to any damages paid by such participants if such indemnification is unavailable to such participants. In connection with the Transaction, the Company entered into new two-year employment agreements with Messrs. Brand and Phipps (his "New Employment Agreements"). Pursuant to the New Employment Agreements, Mr. Brand and Mr. Phipps will each receive an annual base salary of $210,000. The base salary is subject to periodic increases at the discretion of the Board. Under his New Employment Agreement, Mr. Phipps was granted an option to acquire 750,000 shares of Common Stock at an exercise price of $0.54 per share (subject to adjustment in certain circumstances) (the "Phipps Option"). The Phipps Option vests in equal installments of one-third per year and expires, subject to earlier termination, ten years from the date of grant. Under the New Employment Agreements, the Company agreed to reimburse Mr. Brand and Mr. Phipps for the costs of maintaining a $1,000,000 term-life insurance policy for the benefit of each of Mr. Brand and Mr. Phipps, subject to a cap of $2,000 per annum. Mr. Brand and Mr. Phipps also are entitled to participate in certain compensation and employee benefit plans maintained by the Company. In the event of the termination of employment by the Company (other than upon death, permanent disability or a termination for "Cause" (as defined in the New Employment Agreements)) or a termination of employment by the employee for "Good Reason" (as so defined), each of Mr. Brand and Mr. Phipps would be entitled to receive his then-current base salary for a period equal to the greater of (i) the remainder of the term of his employment agreement, and (ii) 12 months (in the case of Mr. Brand) or six months (in the case of Mr. Phipps) from the effective date of termination. The Phipps Option will vest immediately upon a termination of employment giving Mr. Phipps the right to continue to receive his base salary as described above or upon the occurrence of a "Change in Control Event" (as defined in the Phipps Option). The New Employment Agreements also contain certain non-competition, confidentiality and intellectual property ownership covenants. 22 LOGIMETRICS, INC. Pursuant to the terms of the Transaction, options to purchase 150,000 shares of Common Stock were issued to each of Dr. Frank A. Brand, Mr. Carreras and Mr. Fisher (collectively, the "Former Director Options"). The Former Director Options have an exercise price of $0.54 per share (subject to adjustment in certain circumstances), are immediately exercisable and expire, subject to earlier termination, ten years from the date of grant. In addition, as described above, Mr. Phipps received an option to acquire 750,000 shares of Common Stock in connection with the execution of his new employment agreement. Options to purchase an aggregate of 8,902,200 shares of Common Stock also were issued under the Stock Compensation Program to certain other employees of the Company and to certain employees of L-3 to be designated by L-3 in connection with the Transaction (the "Employee Options"). All of the Employee Options have an exercise price of $0.54 per share (subject to adjustment in certain circumstances), vest in equal installments of one-third per year and expire, subject to earlier termination, ten years from the date of grant. Pursuant to this grant, two officers of the Company, Mr. James Meckstroth and Mr. Erik Kruger received options to acquire 740,000 shares and 400,000 shares of Common Stock, respectively. In addition, pursuant to the Transaction, options to purchase an aggregate of 12,665,308 shares of Common Stock were granted to L-3, Cramer, Rosenthal McGlynn, LLC ("CRM") and Cerberus Partners, L.P. ("Cerberus") (the "Founder Options") (with each such party having the ability to direct all or part of its options to certain parties related to such party). The Founder Options have an exercise price of $0.54 per share (subject to adjustment in certain circumstances), are immediately exercisable and expire ten years from the date of grant. Copies of the Purchase Agreement, the Note, the Stock Pledge Agreement, the Stockholders Agreement and the Registration Rights Agreement (collectively, the "Agreements") have been attached as Exhibits to the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999, and are incorporated herein by reference. The description of each Agreement set forth above is a summary only, is not intended to be complete, and is qualified in its entirety by reference to such Agreement. The transactions described above are collectively referred to as the "Transaction." On July 20, 2000, the Company filed with the Securities and Exchange Commission (the "Commission") an Information Statement pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (the "Information Statement"). The Information Statement was mailed on July 21, 2000 to all holders of record of the Company at the close of business on July 10, 2000 in connection with the appointment by L-3 of a majority of the members of the Board. A copy of the Information Statement has been attached as an Exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999, and is incorporated herein by reference. In connection with the Transaction, the Company terminated its letter of intent (the "Signal Letter of Intent") with Signal Technology Corporation ("Signal") relating to the proposed merger of the Company with a subsidiary of Signal. In connection with the Signal Letter of Intent, Signal had loaned $2,000,000 to the Company for working capital and other purposes (the "Signal Loan"). Concurrently with the making of the Signal Loan, certain existing investors in the Company also loaned the Company $1,000,000 (the "Investor Loans"). The Signal Loan and the Investor Loans were repaid with a portion of the net proceeds of the Transaction. The Company and Signal also had entered into a Management Agreement (the "Management Agreement") pursuant to which Signal, through its Keltec division, assumed the management and operation of the Company's high-power amplifier business, formerly conducted by the Company at its Bohemia, New York facility (the "New York Business") and assumed certain liabilities of the New York Business. Under the Management Agreement, Signal was responsible for all expenses incurred and was entitled to retain all revenues generated in connection with its operation of that business. Signal also agreed to make interest payments on the Company's outstanding bank indebtedness during the period it is operating the New York Business. In November 2000, Signal acquired the New York Business, and the Company paid Signal $2.1 million to offset certain costs incurred by Signal during the course of its management of the New York Business and certain known liabilities of this business. Additionally, the Company has agreed to retain other specific liabilities of the New York Business. 23 LOGIMETRICS, INC. On August 21, 2000, the Bank agreed to modify and extend the maturity date of the Replacement Note from June 30, 2000 to January 2, 2001 (the "Modified Replacement Note"). In exchange, the Company agreed, among other things, (i) to reduce the amount outstanding under the Modified Replacement Note to $1.5 million, (ii) that no further advances would be made under the Modified Replacement Note, (iii) to pay all past due interest on the Modified Replacement Note, and to pay the Bank certain additional fees specified in the Modified Replacement Note, (iv) to make mandatory prepayments to the Modified Replacement Note equal to a minimum of 25% of any prepayments made by L-3 to the Company under the Note, and (v) to extend the expiration date of the Series J Warrants to January 2, 2003. FORWARD-LOOKING STATEMENTS Certain information contained in this Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. When used in this Form 10-QSB, the words "estimate," "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," the negative thereof and similar expressions are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Important factors that could contribute to such differences include, but are not limited to, the following: general economic and political conditions, as well as conditions in the markets for the Company's products; the Company's history of losses and cash constraints; the shift in the Company's business focus; the Company's dependence on and the effects of government regulation; the Company's dependence on the PMP market and uncertainties relating to the size and timing of any such market that ultimately develops; the Company's dependence on large orders and the effects of customer concentrations; the Company's dependence on the private sale of securities to meet its working capital needs; the Company's dependence on future product development and market acceptance of the Company's products, particularly in the PMP market; the Company's limited proprietary technology; possible fluctuations in quarterly results; the effects of competition; risks related to international business operations; and the Company's dependence on a limited number of suppliers. Other factors may be described from time to time in the Company's other filings with the Securities and Exchange Commission, news releases and other communications. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The Company cautions readers that a number of important factors discussed herein, and in other reports filed with the Securities and Exchange Commission, particularly the Company's Form 10-KSB for the year ended June 30, 1999, could affect the Company's actual results and cause actual results to differ materially from those in the forward looking statements. Subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements set forth above and contained elsewhere in this Form 10-QSB. 24 PART II - OTHER INFORMATION Item 3. Defaults Upon Senior Securities For a description of certain defaults under the Company's debt securities, see Item 2. Management's Discussion and Analysis or Plan of Operation - Liquidity and Capital Resources. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Number Description 27 Financial Data Schedule (b) Reports on Form 8-K: None 25 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. LOGIMETRICS, INC. Dated: December 4, 2000 By: /s/ Erik S. Kruger ------------------ Erik S. Kruger Vice President - Finance and Administration and Principal Accounting Officer 26